Mirum Pharmaceuticals, Inc. Q4 FY2021 Earnings Call

Good afternoon and thank you for attending today's Mirum Pharmaceuticals fourth quarter business update call. My name is Amber and I will be the moderator for today's call. I will provide instructions to participants as needed. It is now my pleasure to hand the conference over to our host, Ian Clements, CFO of Mirum Pharmaceuticals. Ian, please proceed.

Thanks Amber and good afternoon everyone. I would like to welcome you to Mirum Pharmaceuticals fourth quarter and year end 2021 conference call. I am joined today by our President and CEO, Chris Peetz, our Chief Operating Officer Peter Radovich and our head of R&D Pam Vig. Earlier this afternoon, Mirum issued a news release announcing the company's results for the fourth quarter and full year ended December 31, 2021. Copies of this news release and SEC filings can be found in the Investors section of our website. Before we begin, I would like to remind you that during the course of this conference call, we will be making certain forward-looking statements about Mirum and our programs based on management's current expectations, including statements regarding Mirum's business plans, development programs, strategies, prospects, market opportunities and financial forecasts and guidance. Mirum is under no duty to update these statements and they are subject to numerous risks and uncertainties and actual results could differ materially from the results anticipated by these statements. Investors should read the risk factors set forth in Mirum's 10-K for the year ended December 31, 2021 and any subsequent reports filed with the SEC. With that said, I would like to turn the call over to Chris Peetz. Chris?

Thank you, Ian. And good afternoon to everyone joining us on the call today. 2021 was a banner year for Mirum and marked a significant turning point for both the company and the Alagille Syndrome community. The LIVMARLI launch is off to a very strong start as we deliver on our mission to provide life changing medicines for rare diseases. Today, we will cover our accomplishments to date and our upcoming milestones with some brief prepared remarks and then take questions. Peter will share some launch details and then Pam will discuss our pipeline. And finally, Ian will touch on a few financial highlights. To start, I'd like to remind people of the devastating need for treatment of pruritus in Alagille syndrome. This is the most burdensome effect of cholestasis and Alagille syndrome. It impacts daily life and sleep for patients and families and is a leading indication for liver transplant. The launch of LIVMARLI has introduced a crucial new treatment for cholestatic pruritus in these patients. Our label and our clinical data show the tremendous potential of LIVMARLI. The impact of the long-term dataset with six years of treatment experience was recognized last year in The Lancet with late-breaking presentations at AASLD looking at event-free survival and transplant-free survival. The strength of the LIVMARLI clinical data and the hard work of our dedicated team is leading to great launch success. We are pleased to report fourth quarter 2021 net product revenue of $3.1 million, and we anticipate the strength to continue throughout the year. Based on what we're seeing so far in 2022, we expect first quarter net product revenue to be at least $8 million and the full year to be at least $50 million. As a reminder, we estimate the overall total opportunity in Alagille syndrome to be more than $500 million in the U.S. alone, and the early experience in the market confirms our view of this. We have built Mirum to be a compelling business based not only on the U.S. opportunities but with global reach. As the U.S. continues to grow, we expect to see approvals in Europe later this year, and in partner markets into 2023. Also protecting the value we've built in the business, today we announced the patent grant and U.S. Orange Book listing for LIVMARLI with coverage into 2040. Building further beyond the LIVMARLI commercialization, we have an exciting calendar of clinical readouts with data expected across all five of our additional programs over the next two years. In short, we expect 2022 to be a truly remarkable year for Mirum and the patients we serve. Now with that, I'll turn it over to Peter who will provide an update on our LIVMARLI launch progress. Peter?

Thanks, Chris. We are proud of the initial results from our launch of LIVMARLI, the first and only FDA-approved medication for this disease. Today I'll share further color about our $3.1 million net LIVMARLI revenue, what we're seeing in the commercial business, and why we're so excited about the growth trajectory. First, it's important to note that there is no inventory in our reported product sales. Thus, the revenue number is a true representation of demand. Revenue is recognized when the patient receives the drug. Also, approximately 60% of dispenses in the fourth quarter were reimbursed, which exceeded our expectations and is indicative of strong performance by our market access team. We believe the proportion of reimbursed dispenses will increase throughout 2022. In fact, we're seeing this happen already in the first quarter. We expect to track toward approximately 90% of dispenses being reimbursed by year-end. We are very pleased with this result and attribute our success both to LIVMARLI’s strong product profile, as well as stellar execution by the entire Mirum team who brought a tremendous amount of passion, ingenuity and experience to this launch. Looking ahead, we believe LIVMARLI has significant growth potential in the United States. We're encouraged by the high level of awareness of the treatment benefits of LIVMARLI, as evidenced by the breadth of physicians who have prescribed LIVMARLI to date. Encouragingly, we're seeing very high refill rates and treatment compliance in the commercial setting. We expected this based on the feedback we are hearing both from physicians and caregivers about LIVMARLI's rapid and robust symptomatic improvement in this highly symptomatic disease. This is further enhanced by our Mirum Access Plus Program, which is designed to maximize patient and family support to enable long-term treatment adherence. Putting all the dynamics together we're seeing in the business, we expect net revenue of LIVMARLI to be at least $8 million in the first quarter of this year. Looking at the full year, the strong start gives us confidence we'll achieve at least $50 million for 2022 LIVMARLI net product sales. Turning to our plans for LIVMARLI’s international launches, we remain on track for European approval in the fourth quarter of this year, and we have begun initiating commercial early access programs in Europe and other international markets. Outside of Western Europe, our seven commercialization partners are making excellent progress toward bringing LIVMARLI to patients suffering from Alagille syndrome around the world. In fact, we're excited to share that our partner GC Pharma recently filed in South Korea. Much like what we've seen in the United States, pre-launch engagements with healthcare professionals and payers in international markets revealed both a high unmet medical need in Alagille syndrome, as well as receptivity to LIVMARLI’s strong value proposition. In addition to the 2022 revenue growth driven by launch success in the United States, we believe we are also well positioned for LIVMARLI revenue growth in 2023 and beyond as international markets come online. And now I'll hand it over to Pam to provide an update on our pipeline.

Thanks, Peter. It has been an outstanding finish to 2021, where we presented groundbreaking data first in The Lancet from our pivotal study in Alagille syndrome, highlighting the rapid and sustained symptomatic relief provided by LIVMARLI, followed by two late-breaking presentations at AASLD showing LIVMARLI improved six-year event-free and transplant-free survival, as well as identifying predictive markers of event-free survival. These data have reinforced our belief that LIVMARLI is a huge step forward for patients with Alagille syndrome. We continue our efforts on research and analyses and remain committed to expanding our scientific knowledge and worldwide academic collaboration. Now on the PFIC front, we're excited to have recently announced that we have completed enrollment in our MARCH Phase 3 study, and we expect top-line data in the fourth quarter of this year. As a reminder, the MARCH-PFIC study enrolled all PFIC subtypes at higher doses than previously tested and is the largest randomized PFIC Phase 3 clinical trial ever conducted, with more than 90 patients enrolled in the study. This is a remarkable achievement given the size of the PFIC population. Lastly, we're pleased to share that we have opened an international extended access program for eligible patients with PFIC. In Mirum's pipeline we have four other indications addressing cholestasis in both children and adults with several milestones ahead. In 2022, we're expecting two interim analyses from our volixibat program: one from our Phase 2b VISTAS study evaluating volixibat in patients with primary sclerosing cholangitis and a second from our Phase 2b OHANA study for patients with intrahepatic cholestasis of pregnancy. In 2023, we're targeting interim data from our Phase 2b VANTAGE study evaluating volixibat in adults with primary biliary cholangitis as well as primary data from our Phase 2b EMBARK study evaluating LIVMARLI for children with biliary atresia. All of these upcoming milestones, as well as our robust R&D pipeline and research efforts, put us in a great position for continued growth. And on that note, I will turn the call over to Ian.

Thanks, Pam. The press release and 10-K issued and filed today provide a full financial update. I will call out a few of the highlights here. In addition to the $3.1 million of net product revenues discussed, we recorded $16 million in licensing revenue from our partners in South Korea and China, bringing our total revenue number to $19.1 million for the year. Our total operating expenses for the year were $192.6 million, which includes research and development expenses of $131.4 million, SG&A expenses of $59.2 million, and cost of sales of $1.9 million. Of note, these costs include $18.9 million of expense for the vet option agreement that will not continue into 2022, and also $23.2 million of expense from regulatory and clinical milestones related to the multiple progress points across the programs last year. Mirum remains well funded. At the close of the fourth quarter ended December 31, 2021, we had cash, cash equivalents and investments of $261.5 million. To recall, in November of last year, we announced the sale of our priority review voucher granted by the U.S. FDA in September 2021 with the approval of LIVMARLI, for $110 million. This, with our growing top-line contribution, puts us in a strong position to achieve critical milestones and expand our commercial presence over the next few years. So with that, I'll turn the call back over to Chris for any final comments. Chris?

Thank you, Ian. And thank you to everyone for joining today. To close, Mirum has made remarkable progress this past year as we continue to advance treatments for devastating rare diseases. Our launch is off to a great start and the Mirum team is energized by the stories we are hearing from physicians and caregivers on the impact that LIVMARLI is having on Alagille syndrome patients. Again, based on what we're seeing in these early days of commercialization, we have confidence in achieving at least $50 million in net product revenue this year. This will provide a tremendous base for our business as our pipeline of five late-stage clinical programs matures. Thank you again for joining us. Operator, please open the line for questions.

Of course. I will now open the lines for questions. Please follow the instructions for asking a question. Our first question comes from Jessica Fye with J.P. Morgan. Jessica, your line is now open.

Hey guys, good afternoon. Thanks for taking my questions. Just a couple: first, can you walk through the patient and reimbursement dynamics that underpin your expectation for at least $8 million of sales in the first quarter of 2022?

Yes, thanks for the question. We're quite excited about what we're seeing in the early days. I'll let Peter speak to some of the dynamics underneath that number.

Yes, thanks for the question, Jess. On the patient side, we're seeing really strong adoption as noted by our net revenue number. It's important to note that the net revenue number we're providing here doesn't have inventory. It's a very direct and transparent view into what's happening at the patient level, because revenue is recognized in our distribution model when the patient receives drug at home and the family signs for LIVMARLI. On the reimbursement side, we've been really pleased with where we've gotten with payers. This is a direct reflection of our early engagement last year, educating on the burden of Alagille syndrome and having clinical discussions. We expect by the end of the year to have roughly 90% of our dispenses reimbursed. As we've come into the year, we've seen coverage policies come down from several large plans that are very much in line with LIVMARLI labeling and allow physicians to use this medicine in line with that labeling, which is very broad.

Okay. A couple of follow-ups: how many current LIVMARLI patients were previously on expanded access? And can you talk a little bit more about the decision to launch the expanded access program for PFIC patients? How much use do you expect to get there in the context of odevixibat approved in that setting?

Thanks, Jess. I'll take the expanded access point briefly and then pass it to Peter. On the PFIC expanded access program, it's important to keep in mind that PFIC is more rare than Alagille syndrome, so we don't expect to see as many patients coming into that in total. There are many countries where PFIC treatments are not available, and response is not universal, so there is still unmet need and demand for an extended access program.

On the Alagille side, we've rolled over all of the U.S. expanded access patients to commercial drug. It's important to note, though, that in Q4, the $3.1 million net revenue number was actually driven primarily by de novo prescriptions. The expanded access rollovers were a minority of that total. The majority was driven by new prescriptions, and we're encouraged by the broad prescriber base we've seen. We've seen broad participation from across our roughly 120 key accounts as we've launched, which we think is a real indicator of health.

Great. And just a last one: can you elaborate on what the new 647 patent covers?

Yes. Briefly, it covers the use of LIVMARLI in Alagille syndrome at the labeled dose, and we're pleased to have that grant and the Orange Book listing.

Thank you, Jessica. Our next question comes from Mani Foroohar with SVB Securities. Mani, your line is now open.

Hey, thanks for having me and congratulations on all the progress. If I'm hearing you correctly, the $8 million for this quarter and $50 million for the year, is that exclusively U.S. sales? Or is there any contribution from Europe, Japan, etc., in those numbers? Second, how should we think about modeling licensing revenue coming in from your partners — will it be proportional to net product sales, or do you expect it to be lumpy?

I can start with the first question, Mani. While we are launching early access programs in international markets, we expect that to be very small in 2022. You should think of 2022 as substantially all revenue coming from the U.S. We are excited about international launches in 2023 and beyond and what that will mean for LIVMARLI revenue growth sustained over time.

Yes, and to round out the licensing front, there will be some contribution from our partners, but relatively modest compared to the U.S. business. The $8 million and $50 million figures we discussed are from the U.S. business exclusively.

Okay. And that suggests the number is kind of a floor for the quarter, which would indicate that it represents the revenue you would expect from prescriptions you already have in hand. Is there some assumption around new patient adds between now and the end of the quarter also baked into that $8 million, or is that all incremental?

When we look at those numbers, it is, in a sense, a floor based on what we are seeing in the business. It does assume some modest growth in prescriptions, but we are trying to be transparent and provide a conservative view from where we stand today early in the year. We're comfortable on hitting those numbers.

Thank you, Mani. Our next question comes from Steve Seedhouse with Raymond James. Steve, your line is now open. I show Ryan Deschner on for Steve. Ryan, your line is now open.

Hi, this is Ryan Deschner on for Steve. Wondered if you could give a little more detail on the prescription volume split between large and small accounts for LIVMARLI, and whether you've seen any 'super prescriber' accounts so far.

Thanks, Ryan. I'll pass that one to Peter to answer in detail.

Thanks, Ryan. We've seen prescriptions from across the board, which is very encouraging. Some of the biggest pediatric programs in the country have been early adopters, and we've also seen regional children's hospitals prescribe. It's been broad participation across our prescriber base.

Thank you very much. And then just real quick, can you comment on the duration of treatment that you're seeing so far?

Yes. That's one of the real strengths we're seeing: refills are happening on a very predictable cadence every month. The feedback from physicians and caregivers is very positive — they are seeing rapid and robust symptomatic improvement with LIVMARLI shortly after initiation, which drives predictable refills.

Thank you, Ryan. Our next question comes from Ed Arce with H.C. Wainwright. Ed, your line is now open.

Great. Thanks for taking my questions and congrats on the early progress. I have three questions. First, on reimbursement: you noted 60% of drug dispensed has already been reimbursed and you're targeting 90% reimbursed by year-end. Can you walk through the process as that improves throughout the year — what needs to happen? Second, some commentary around penetration across your targeted physicians — I think you said 120 key accounts — where does that stand now and how do you see it expanding this year? Third, if you have this metric it would be helpful: how long does it take between first writing the script and the drug being in the hands of patients? Thanks so much.

Great questions. Peter will walk through these.

Sure, Ed. On reimbursement, to get to roughly 90% of dispenses reimbursed, the first step is ensuring there is a reimbursement pathway in place, either via a plan policy or through medical exceptions. By the end of Q1 we expect 100% of Alagille lives in the U.S. to have a pathway to get reimbursed. The next step is ensuring high-quality coverage. The policies we've seen from large plans have been favorable and well aligned with the evidence and the FDA labeling for LIVMARLI. Now that we have pathways, our hub is working to convert that into paid dispenses. On penetration, we've seen a significant number of the 120 accounts prescribe. The pattern we observe is a new physician will often prescribe to one or two of their most severely affected patients, gain comfort with the medicine, and then expand use in their account as experience unfolds. Lastly, on prescription to fill timing, we're seeing an average time from prescription received to fill of a couple of weeks. In some cases it's as fast as days, and in others it can be longer. We expect to continue improving that metric as we go through the year.

Thank you, Ed. Our next question comes from Josh Schimmer with Evercore. Josh, your line is now open.

Thanks so much for taking the question. On the ICP program, can you give us a sense of what we should be looking for in the interim Phase 2 analysis later this year? What approvable endpoints for that indication are likely to be?

Thanks, Josh. I'll let Pam answer that.

Thanks, Josh. For intrahepatic cholestasis of pregnancy (ICP), the FDA's approvable endpoint is pruritus. It's a different disease setting in that women with ICP have pruritus and elevated serum bile acids, and very elevated serum bile acids are associated with fetal harm. Every increase in serum bile acid micromoles per liter is associated with increased fetal risk. Therefore, any reduction in serum bile acids we see in this setting will be meaningful for fetal risk and for pruritus. We expect to report open-label interim data later this year and look forward to sharing that.

Thank you, Josh. Our next question comes from Brian Skorney with Baird. Brian, your line is now open. I show Luke on for Brian. Luke, your line is now open.

Hi, this is Luke on for Brian. Thanks for taking the question. For the MARCH-PFIC readout, can you remind us of the powering assumptions on the observed primary endpoint? Also, is there a level of improvement on pruritus and serum bile acid reduction that you believe could provide a meaningful commercial advantage as a follower in the space?

Great question. I'll let Pam set expectations for the MARCH study powering and endpoints.

With regard to MARCH, we're very excited. The Phase 3 study enrolled over 90 patients across all PFIC subtypes. Importantly, this study uses higher doses than our prior Phase 2 INDIGO study. In INDIGO, when the dose was doubled, we observed an increased rate of response. We're hopeful that at these higher doses we'll see increased response rates across PFIC subtypes. The study has a six-month primary endpoint and we've completed enrollment, so we expect to report top-line data later this year.

Yes. Thanks.

Thank you. Our next question comes from Yasmeen Rahimi with Piper Sandler. Yasmeen, your line is now open.

Hi team, thanks for taking my questions. I have a few. First, can you comment if you're seeing any prescriptions being filled off-label for PFIC or other cholestatic diseases? Second, can you quantify the compliance rate you're seeing in the real world beyond descriptive commentary? Third, regarding the back-to-back readouts — VISTAS and OHANA both due later this year as well as MARCH-PFIC in the fourth quarter — how can we be comfortable these data will come in during the fourth quarter and not push into early 2023? Provide some color around timelines would be helpful. Thanks again.

Thanks Yasmeen. I'll address the first two and then Pam will provide color on the timelines. On off-label use, it's been insignificant so far; we're not seeing notable off-label prescriptions. On compliance, it's premature to provide a single percentage at this early stage of launch, but the adherence patterns are strikingly supportive and a highlight of the launch. As we gather more long-term treatment data, we'll have better metrics to report, similar to what we see in our six-year clinical follow-up. Pam, could you speak to the timing of the upcoming readouts?

Yes, thanks Yasmeen. We're excited about our volixibat and other readouts. For VISTAS in PBC, an interim analysis is expected later this year. Patients are rolling into the long-term extension and staying on drug, which we view as a strong signal. For OHANA in ICP, there have been enrollment challenges given COVID and the nature of pregnancy studies, but we're addressing those with protocol and operational adjustments. For VANTAGE in PBC, interim data is expected in 2023. Regarding MARCH-PFIC, we have completed enrollment, and because the primary endpoint is at six months, you can roughly wind the clock forward from enrollment completion — top-line data is expected this year.

There are currently no additional questions waiting at this time. I will pass the conference back over to Chris Peetz for any additional remarks.

Great, thank you operator. And thanks everyone for joining. Your support makes the advancement of our important medicines possible. We'll talk with you next quarter. Goodbye.

That concludes the Mirum Pharmaceuticals Q4 business update call. Thank you for your patience. You may now disconnect your lines.