MIRUM PHARMACEUTICALS, INC. You should read the following discussion and analysis of our financial condition
and results of operations in conjunction with our unaudited condensed
consolidated financial statements and the related notes and other financial
information included elsewhere in this Quarterly Report on Form 10-Q and our
audited consolidated financial statements and notes thereto and the related
Management's Discussion and Analysis of Financial Condition and Results of
Operations included in our Annual Report on Form 10-K ("Annual Report") for the
year ended
Forward-Looking Statements
In addition to historical financial information, this discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in the section titled "Risk Factors" under Part II, Item 1A below. In some cases, you can identify forward-looking statements by terminology such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potentially," "predict," "should," "will" or the negative of these terms or other similar expressions.
In addition, statements that "we believe" and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.
Overview
We are a biopharmaceutical company focused on the development and
commercialization of a late-stage pipeline of novel therapies for debilitating
liver diseases. We focus on diseases for which the unmet medical need is high
and the biology for treatment is clear. Our pipeline consists of two
clinical-stage product candidates with mechanisms of action that have potential
utility across a wide range of orphan cholestatic liver diseases. We are
developing maralixibat for the treatment of pediatric patients with Alagille
syndrome ("ALGS"), progressive familial intrahepatic cholestasis ("PFIC") and
biliary atresia ("BA"). In the third quarter of 2020, we initiated a rolling
submission of a New Drug Application ("NDA") for the treatment of cholestatic
pruritus in patients with ALGS to the
We were incorporated in
We have a limited operating history and incurred significant operating losses since our inception and expect to continue to incur significant operating losses for the foreseeable future. We have no products approved for commercial sale and have never generated any revenues from product sales. We have funded our operations to date primarily through debt, equity and revenue interest financings.
Financing Transactions
In
In
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LLC ("SVB Leerink") pursuant to which we may elect to issue and sell, from time
to time, shares of common stock having an aggregate offering price of up to
In
In
Concurrently with our entry into the RIPA, we entered into a Common Stock
Purchase Agreement (the "Stock Purchase Agreement") with
Financial Overview
Our net loss was
We expect our expenses and operating losses will increase substantially as we conduct our ongoing and planned clinical trials, continue our research and development activities, continue commercial preparation activities for maralixibat, and seek regulatory approvals for our product candidates, as well as hire additional personnel and protect our intellectual property. In addition, as our product candidates progress through development and toward commercialization, we will need to make milestone payments to the licensors and other third parties from whom we have in-licensed or acquired our product candidates. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending in particular on the timing of our clinical trials and non-clinical studies and our expenditures on other research and development activities.
We do not expect to generate any revenue from product sales unless and until we successfully complete development and obtain regulatory approval for one or more of our product candidates, which could take a number of years. If we obtain regulatory approval for any of our product candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution.
Accordingly, until such time as we can generate substantial product revenues to support our cost structure, if ever, we expect to finance our cash needs through equity offerings, debt financings or other capital sources, including through the RIPA, collaborations, licenses and other similar arrangements. However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all. Our failure to raise capital or enter into such other arrangements when needed could have a negative impact on our financial condition and on our ability to pursue our business plans and strategies. If we are unable to raise additional capital when needed, we could be forced to delay, limit, reduce or terminate the development of one or more of our product candidates or future commercialization efforts or grant rights to develop and market our product candidates even if we would otherwise prefer to develop and market such product candidates ourselves.
COVID-19
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The COVID-19 pandemic has had a significant economic impact across the global marketplace presenting challenges to maintaining business continuity. We are working diligently to ensure the advancement of all of our clinical development programs in the safest manner possible. While we are unable to reliably estimate the duration or extent of any potential business disruption or financial impact during this time, we remain committed to (i) prioritizing the safety, health and well-being of patients, their caregivers, healthcare providers and our employees; (ii) ensuring patients are well supported and have continued uninterrupted access to our product candidates, for which we currently do not expect any supply disruption; and (iii) advancing our clinical trials. Examples include a "Work from Home Policy" for our employees and access to home health care to assist families with safer participation in our trials.
Although we did not see a significant financial impact to our business
operations as a result of COVID-19 for the three months ended
We continue to believe that existing cash, cash equivalents and investments and existing sources of and access to financing are adequate to satisfy our needs for working capital, capital expenditures, debt service requirements and other business development initiatives that we plan to strategically pursue. However, should the COVID-19 pandemic and any associated recession or depression continue for a prolonged period, our results of operations, financial condition, liquidity and cash flows could be materially impacted as a result of a lower likelihood of effectively and efficiently developing new medicines and successfully commercializing our products.
Option, License and Collaboration Agreements with Vivet
In
Pursuant to the Vivet Collaboration Agreement, we have paid an upfront fee of
€3.5 million and initial research and development funding of €5.3 million (
Licensing Agreement with CANbridge
In
Assignment and License Agreement with Shire (Takeda)
In
Under the Shire License Agreement and Assigned License Agreements, we have paid
aggregate development milestones of
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See Note 6 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Components of Results of Operations
Operating Expenses
Research and Development Expenses
Research and development expenses primarily relate to clinical development and manufacturing activities of our product candidates. Our research and development expenses include or could include:
• salaries and related expenses for employee personnel, including benefits,
travel and expenses related to stock-based compensation granted to
personnel in development functions;
• external expenses paid to clinical trial sites, contract research
organizations and consultants that conduct our clinical trials;
• expenses related to drug formulation development and the production of
clinical trial supplies, including fees paid to contract manufacturers;
• licensing milestone payments related to development or regulatory events;
• expenses related to non-clinical studies;
• expenses related to compliance with drug development regulatory
requirements; and
• other allocated expenses, which include direct and allocated expenses for
rent and maintenance of facilities, depreciation of equipment, and other
supplies.
We expense research and development costs as incurred. Nonrefundable advance payments for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. The prepaid amounts are expensed as the related goods are delivered or the services are performed.
General and Administrative Expense
General and administrative expenses consist primarily of salaries and employee-related costs, including stock-based compensation, for personnel in executive, finance and other administrative functions. Other significant costs include facility-related costs, legal fees relating to intellectual property and corporate matters, professional fees for accounting and consulting services and insurance costs.
We expect that our general and administrative expenses will increase as we expand our operating activities, including commercial preparation activities and increased headcount.
Interest Income
Interest income consists of interest earned on our cash equivalents and investments.
Interest Expense
Interest expense for the three months ended
Change in Fair Value of Derivative Liability
Change in fair value of derivative liability consists of the gain or loss from remeasurement of the compound derivative liability related to the revenue interest liability during the period.
Other Expense, Net
Other expense, net consists of transactional currency exchange loss.
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Critical Accounting Policies and Estimates
Our management's discussion and analysis of our financial condition and results
of operations are based on our consolidated financial statements, which have
been prepared in accordance with accounting principles generally accepted in
We believe that the assumptions and estimates associated with accrued research and development expenditures, revenue interest liability and stock-based compensation have the most significant impact on our unaudited condensed consolidated financial statements. Therefore, we consider these to be our critical accounting policies and estimates.
There have been no significant changes during the three months ended
Recent Accounting Pronouncements
A description of recent accounting pronouncements that may potentially impact our financial position, results of operations or cash flows is disclosed in Note 2 to our unaudited condensed consolidated financial statements.
Results of Operations for the Three Months Ended
The following table summarizes our results of operations for the three months
ended
Three Months Ended March 31,
2021 2020 Change
Operating expenses:
Research and development $ 38,134 $ 17,340 $ 20,794
General and administrative 9,479 4,692 4,787
Total operating expenses 47,613 22,032 25,581
Loss from operations (47,613 ) (22,032 ) (25,581 )
Other income (expense): -
Interest income 149 749 (600 )
Interest expense (3,381 ) - (3,381 )
Change in fair value of derivative
liability 334 - 334
Other expense, net (16 ) (23 ) 7
Net loss before provision for income
taxes (50,527 ) (21,306 ) (29,221 )
Benefit from income taxes 5 4 1
Net loss $ (50,532 ) $ (21,310 ) $ (29,222 )
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Research and Development Expenses
The following tables summarize the period-over-period changes in research and development expenses for the periods indicated (in thousands):
Three Months Ended March 31,
2021 2020 Change
Product-specific costs:
Maralixibat $ 9,732 $ 11,282 $ (1,550 )
Volixibat 2,749 1,534 1,215
Non product-specific costs:
Stock-based compensation 2,743 1,042 1,701
Personnel-related 4,913 2,520 2,393
Other 997 962 35
Milestone payments 17,000 - 17,000
Total research and development expenses
Research and development expenses were
General and Administrative Expenses
General and administrative expenses were
Interest Income
Interest income was
Interest Expense
Interest expense was
Change in Fair Value of Derivative Liability
Change in fair value of derivative liability was
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Liquidity and Capital Resources
Overview
We had
In
In
In
Pursuant to the RIPA, through
Pursuant to the Stock Purchase Agreement, entered into concurrently with our
entry into the RIPA, we issued an aggregate of 509,164 shares of our common
stock at a price per share of
Based on our current and anticipated level of operations, we believe our cash, cash equivalents and investments will be sufficient to fund current operations through at least the next 12 months. Our cash, cash equivalents and investments include money market funds, government agency securities, corporate debt and commercial paper. We maintain established guidelines relating to diversification and maturities of our investments to preserve principal and maintain liquidity.
We anticipate that we will continue to incur net losses for the foreseeable future as we continue research efforts and the development of our product candidates, continue commercial preparation activities for maralixibat, hire additional staff, including clinical, scientific, operational, financial and management personnel and pay potential development and commercial milestones in connection with our license agreements.
Our primary use of cash is to fund operating expenses, which consist primarily of research and development expenditures, and to a lesser extent, general and administrative expenditures, including commercial planning expenses. Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable and accrued expenses.
Until such time, if ever, as we can generate substantial product revenue from sales of maralixibat, volixibat or any future product candidates, we expect to finance our cash needs through a combination of equity offerings, debt financings, revenue interest purchase agreements and potential collaboration, license or development agreements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect rights as a stockholder. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.
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If we raise additional funds through the RIPA, collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may be required to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us. As a result of the COVID-19 pandemic and actions taken to slow its spread, the global credit and financial markets have experienced volatility and disruptions, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates and uncertainty about economic stability. If the equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult, more costly and more dilutive. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our drug development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
Cash Flows
The following table provides a summary of the net cash flow activity for the period indicated (in thousands):
Three Months Ended March 31,
2021 2020
Net cash used in operating activities $ (25,210 ) $ (18,351 )
Net cash provided by (used in) investing activities (32,784 ) 33,761
Net cash provided by financing activities 6,594 44,659
Effect of exchange rate on cash and cash equivalents (9 ) (4 )
Net increase (decrease) in cash and cash equivalents
Net cash used in operating activities was
Net cash used in operating activities was
Net cash used in investing activities was
Net cash provided by investing activities was
Net Cash Provided by Financing Activities
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Net cash provided by financing activities was
Net cash provided by financing activities was
Contractual Obligations and Commitments
There have been no material changes in the amount of our contractual obligations
and commitments during the three months ended
Under the Vivet Collaboration Agreement, we are committed to fund research and development costs associated with the two gene therapy programs covered under the agreement for six months, which is equal to the termination provisions under the agreement. As of the date of this filing, we are obligated for up to €5.7 million.
From time to time we enter into certain types of contracts that contingently require us to indemnify parties against third-party claims, including the Shire License Agreement, RIPA, and certain real estate leases, supply purchase agreements, and agreements with directors and officers. The terms of such obligations vary by contract and in most instances a maximum dollar amount is not explicitly stated therein. Generally, amounts under these contracts cannot be reasonably estimated until a specific claim is asserted, thus no liabilities have been recorded for these obligations on our unaudited condensed consolidated balance sheets for the periods presented.
We enter into contracts in the normal course of business with clinical research organizations and clinical sites for the conduct of clinical trials, non-clinical research studies, professional consultants for expert advice and other vendors for clinical supply manufacturing or other services. These contracts generally provide for termination on notice, and therefore are cancelable contracts.
Contractual Arrangements
Under the Shire License Agreement, as well as our other license and acquisition
agreements, we have payment obligations that are contingent upon future events
such as our achievement of specified development, regulatory and commercial
milestones and are required to make royalty payments in connection with the sale
of products developed under those agreements. Under the Shire License Agreement
and Assigned License Agreements, we have paid development milestones of
For additional information regarding these license agreements, including our payment obligations thereunder, see Note 7 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
JOBS Act
As an emerging growth company under the Jumpstart Our Business Startups Act of 2012 ("JOBS Act"), we can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this exemption and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. We intend to rely on other exemptions provided by the JOBS Act, including without limitation, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002 ("Sarbanes-Oxley Act").
We will remain an emerging growth company until the earliest of (i)
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