Mirum Pharmaceuticals, Inc. — Form 10-Q Summary
Business context and reporting period
Mirum is an early-stage biopharmaceutical company developing therapies for debilitating liver diseases. Its clinical-stage pipeline consisted of maralixibat, initially targeted at progressive familial intrahepatic cholestasis (PFIC) and Alagille syndrome (ALGS), and volixibat, targeted at adult cholestatic liver diseases. The filing covers the quarter and six months ended June 30, 2019. The company had no approved products and had generated no product revenue.
Mirum commenced significant operations in November 2018 and had 25 full-time employees as of June 30, 2019. The Phase 3 MARCH-PFIC trial began enrollment in the second quarter of 2019.
Financial condition and operating metrics
| Metric | Three months ended June 30, 2019 | Six months ended June 30, 2019 |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $11.6 million | $16.5 million |
| General and administrative expense | $2.4 million | $3.8 million |
| Loss from operations | $(14.0) million | $(20.2) million |
| Net loss | $(13.6) million | $(19.5) million |
| Basic and diluted net loss per share | $(5.31) | $(7.70) |
| Interest income | $0.5 million | $0.7 million |
- Cash and cash equivalents were $41.8 million at June 30, 2019, compared with $52.0 million at December 31, 2018.
- Short-term and long-term investments totaled $58.5 million, resulting in cash, cash equivalents and investments of approximately $100.3 million.
- Total assets were $104.3 million; total liabilities were $12.4 million.
- Accumulated deficit was $36.9 million, compared with $17.3 million at December 31, 2018.
- There was no debt reported. Operating lease liabilities totaled $1.5 million.
- Net cash used in operating activities was $10.4 million for the six months. Net cash used in investing activities was $58.4 million, primarily for purchases of investments. Net cash provided by financing activities was $58.8 million from preferred-stock issuance, net of deferred offering costs.
- Stock-based compensation expense was $1.6 million for the quarter and $1.9 million year to date.
Material changes versus the prior comparable period and prior year-end
- The filing does not provide a clear prior-year second-quarter comparative income statement because the company had only limited activity before commencing significant operations in November 2018.
- Compared with December 31, 2018, cash and cash equivalents decreased by $10.1 million, while investments increased from zero to $58.5 million as the company invested financing proceeds.
- Total assets increased from $52.0 million to $104.3 million, primarily reflecting the April 2019 issuance of approximately $60.0 million of Series A preferred stock and the investment of proceeds.
- Series A preferred stock outstanding increased from 59.9 million shares to 119.8 million shares. The preferred stock was temporary equity before the IPO.
- Accrued expenses increased from $2.2 million to $8.5 million, including accrued development milestones, clinical-trial costs, professional fees and manufacturing costs.
- Research and development expense included $3.0 million of development milestone expense related to the initiation of the Phase 3 MARCH-PFIC trial, consisting of $2.5 million payable to Shire and $0.5 million payable to Satiogen.
Guidance, outlook, risks and unusual items
- Management expected continued substantial operating losses as clinical development, regulatory activities, hiring, manufacturing, intellectual-property protection and public-company costs increased.
- Management expected to complete enrollment in the Phase 3 MARCH-PFIC trial in the second quarter of 2020 and report topline Phase 3 data in late 2020. A Phase 3 ALGS trial was expected to begin in the first half of 2020, and Phase 2 trials for volixibat were expected to begin in 2020.
- In July 2019, after the reporting date, Mirum completed its IPO of 5.0 million shares at $15.00 per share and received approximately $67.3 million of net proceeds. The preferred stock converted into 14.97 million common shares, and the redeemable common stock issued to Shire was reclassified into permanent equity.
- The IPO proceeds, together with cash, cash equivalents and investments at June 30, 2019, were expected to fund operations for at least twelve months from the financial-statement issuance date. The company will likely require additional financing before achieving product revenue, if ever.
- Key contingencies include up to $109.5 million of development and regulatory milestones for maralixibat under the Shire agreement, additional indication-based milestones, up to $30.0 million of volixibat milestones, sales milestones and tiered royalties. Additional obligations exist under the Satiogen, Pfizer and Sanofi licenses.
- The company relies on third-party contract research organizations and manufacturers, has limited operating history, and has not independently completed a clinical trial. Major risks include clinical-trial failure or delay, patient-enrollment difficulty in rare diseases, regulatory non-approval, safety issues, manufacturing and supply constraints, intellectual-property challenges, dependence on licensors, competition and future capital needs.
- Management reported that disclosure controls and procedures were effective as of June 30, 2019, with no material changes in internal control over financial reporting during the quarter. No material legal proceedings were pending.
Most important facts for investors to verify
- Actual cash runway after incorporating the July 2019 IPO proceeds and the rate of quarterly cash burn.
- Progress, enrollment and topline results for the MARCH-PFIC trial, including whether the expected 2020 timelines remain achievable.
- FDA and other regulatory feedback regarding trial design, patient-reported pruritus endpoints, ALGS development and the potential scope of any approval.
- Clinical safety and efficacy, particularly gastrointestinal events, liver-enzyme elevations and the effects of planned higher doses.
- Milestone, royalty and sublicensing obligations under the Shire, Satiogen, Pfizer and Sanofi agreements, including future payment timing.
- Availability and terms of additional financing, potential dilution and the company’s ability to fund development through regulatory approval.
- Patent coverage and freedom-to-operate for maralixibat and volixibat, noting that maralixibat was primarily protected by method-of-use and formulation applications rather than composition-of-matter patents.