Mirum(MIRM) - 2020 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the unaudited financial statements, management's discussion and analysis, market risk disclosures, and internal controls Financial Statements (Unaudited) The company reported no revenue for the periods ended September 30, 2020, with net loss increasing to $66.1 million for the nine months ended September 30, 2020, from $34.6 million in the prior-year period, driven by higher R&D and G&A expenses Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2020 (Unaudited) | Dec 31, 2019 | | :--- | :--- | :--- | | Cash and cash equivalents | $48,778 | $11,970 | | Short-term investments | $84,971 | $104,690 | | Total assets | $141,865 | $146,712 | | Total current liabilities | $18,792 | $13,076 | | Total liabilities | $21,610 | $16,363 | | Accumulated deficit | $(135,968) | $(69,901) | | Total stockholders' equity | $120,255 | $130,349 | Condensed Consolidated Statements of Operations Operating Results Summary (in thousands, except per share data) | Metric | Three Months Ended Sep 30, 2020 | Three Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $15,984 | $12,159 | $51,879 | $28,611 | | General and administrative | $5,732 | $3,708 | $15,466 | $7,474 | | Loss from operations | $(21,716) | $(15,867) | $(67,345) | $(36,085) | | Net loss | $(21,506) | $(15,087) | $(66,067) | $(34,601) | | Net loss per share | $(0.86) | $(0.84) | $(2.65) | $(4.47) | Condensed Consolidated Statements of Cash Flows Cash Flow Summary for the Nine Months Ended September 30 (in thousands) | Cash Flow Activity | 2020 | 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | $(52,796) | $(25,664) | | Net cash provided by (used in) investing activities | $42,820 | $(122,637) | | Net cash provided by financing activities | $46,780 | $127,177 | | Net increase (decrease) in cash | $36,808 | $(21,149) | | Cash and cash equivalents at end of period | $48,778 | $30,814 | Notes to Unaudited Condensed Consolidated Financial Statements The company is a biopharmaceutical firm focused on developing therapies for debilitating liver diseases, with two main clinical-stage candidates: maralixibat and volixibat[23] - In January 2020, the company completed a follow-on public offering, selling 2,400,000 shares at $20.00 per share, resulting in net proceeds of $44.7 million[26] - In August 2020, the company initiated an at-the-market (ATM) offering program for up to $75.0 million, selling 98,708 shares during Q3 2020 and raising net proceeds of approximately $2.2 million[27] - Management believes that its cash, cash equivalents, and investments of $133.7 million as of September 30, 2020, are sufficient to fund operations for at least the next twelve months[28] - The company has future potential payment obligations to Shire, Satiogen, and Sanofi contingent on achieving clinical, regulatory, and commercial milestones for maralixibat and volixibat, with tiered royalties on net sales[50][52][54] - Subsequent to the quarter end, through November 12, 2020, the company sold an additional 189,757 shares under its ATM program, resulting in net proceeds of approximately $3.6 million[75] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's focus on developing maralixibat and volixibat for rare liver diseases, highlighting increased operating losses due to escalated R&D and G&A activities, supported by recent equity financings, and noting the potential impact of COVID-19 on clinical trial enrollment Overview - The company is developing maralixibat for Alagille syndrome (ALGS), progressive familial intrahepatic cholestasis (PFIC), and biliary atresia (BA), and volixibat for primary sclerosing cholangitis (PSC) and intrahepatic cholestasis of pregnancy (ICP)[80] - A rolling New Drug Application (NDA) submission for maralixibat for cholestatic pruritus in ALGS was initiated in Q3 2020, with completion expected in Q1 2021 and a potential launch in H2 2021[80] - The company plans to submit a marketing authorization application (MAA) to the European Medicines Agency (EMA) for the treatment of PFIC2 in Q4 2020[80] - The COVID-19 pandemic has impacted the enrollment and conduct of clinical trials, specifically the Phase 3 MARCH trial[90] Results of Operations Comparison of Operating Expenses for the Nine Months Ended September 30 (in thousands) | Expense Category | 2020 | 2019 | Change | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Research and development | $51,879 | $28,611 | $23,268 | +81.3% | | General and administrative | $15,466 | $7,474 | $7,992 | +106.9% | | Total operating expenses | $67,345 | $36,085 | $31,260 | +86.6% | - The $23.3 million increase in R&D expenses for the nine months ended Sep 30, 2020 was primarily due to a $11.2 million increase in manufacturing activities, an $8.0 million increase in personnel costs, and a $5.1 million increase in clinical trial expenses[111] - The $8.0 million increase in G&A expenses for the nine months ended Sep 30, 2020 was mainly driven by a $5.4 million increase in personnel costs and a $2.0 million increase in expenses related to operating as a public company[112] Liquidity and Capital Resources - As of September 30, 2020, the company had $133.7 million in cash, cash equivalents, and investments and an accumulated deficit of $136.0 million[114] - The company believes its existing capital is sufficient to fund operations through at least the next 12 months[118] - Net cash used in operating activities increased to $52.8 million for the nine months ended Sep 30, 2020, compared to $25.7 million for the same period in 2019, reflecting higher net loss partially offset by non-cash items like stock-based compensation[124][125] Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk exposure is to interest rate changes affecting its cash and investment portfolio, with foreign currency risk also considered not significant - Primary market risk is interest income sensitivity from changes in U.S. interest rates, but the impact is expected to be immaterial due to the short-term nature of the investment portfolio[137] - Foreign currency exchange rate risk, primarily from the Swiss Franc and Euro, is not currently believed to have a significant impact on operating results[138][139] Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of September 30, 2020, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that as of September 30, 2020, the company's disclosure controls and procedures were effective[141] - No changes in internal control over financial reporting occurred during the quarter ended September 30, 2020, that have materially affected, or are reasonably likely to materially affect, internal controls[142] PART II. OTHER INFORMATION This section details legal proceedings, significant risk factors, unregistered equity sales, and other required disclosures Legal Proceedings The company is not currently involved in any legal proceedings that are expected to have a material adverse effect on its financial condition or operations - Management believes there are currently no pending claims or actions against the company that would have a material adverse effect on its results of operations, financial condition, or cash flows[145] Risk Factors The company faces significant risks, including a limited operating history with substantial losses, dependence on the success of its two product candidates, potential delays in clinical trials due to patient enrollment issues, reliance on third-party manufacturers and licensed intellectual property, the need for substantial additional financing, and competition - The business is highly dependent on the success of its product candidates, maralixibat and volixibat, which require significant further clinical testing and regulatory approval[147][161] - The COVID-19 pandemic has adversely affected clinical trial operations, particularly patient enrollment in the Phase 3 MARCH trial, and could continue to cause delays and disruptions[151][154] - The company depends on intellectual property licensed from third parties like Shire, Pfizer, and Sanofi, and the termination of these licenses could result in the loss of significant rights[152][266] - Substantial additional financing will be needed to continue development and commercialization efforts, and failure to obtain it could force the company to delay or reduce its programs[147][277] - The company faces significant competition from other companies developing therapies for cholestatic liver diseases, including those with ASBT inhibitors like GlaxoSmithKline and Albireo[229][231] Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities during the reporting period, with the company detailing the net proceeds of $67.2 million from its July 2019 IPO, which remain unused and held in cash, cash equivalents, and investments - The company completed its IPO on July 22, 2019, with net proceeds of $67.2 million after deducting underwriting discounts and offering expenses[377][378] - Through September 30, 2020, the company has not used any of the net proceeds from its initial public offering, which are being held in cash, cash equivalents, and investments[379] Other Information (Items 3-6) This section confirms there were no defaults upon senior securities, no mine safety disclosures required, and no other material information to report for the quarter - Item 3 (Defaults Upon Senior Securities), Item 4 (Mine Safety Disclosures), and Item 5 (Other Information) are all noted as not applicable or having nothing to report[380][381][382]