Earnings Call Transcript - MIRM Q1 2022

Operator, Operator

Hello, and welcome to the Mirum Pharmaceuticals first quarter business update. My name is Harry, and I'll be coordinating your call today. It's now my pleasure to hand you over to Ian Clements, Mirum's Chief Financial Officer, to begin. Mr. Clements, please go ahead.

Ian Clements, CFO

Thanks, Harry, and good morning, everyone. I'd like to welcome you to Mirum Pharmaceuticals' first quarter 2022 conference call. I'm 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 morning, Mirum issued a news release announcing the company's results for the first quarter of 2022. Copies of this news release and SEC filings can be found in the Investors section of our website. Before we begin, I'd 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 all of that said, I'd like to turn the call over to Chris Peetz. Chris?

Chris Peetz, CEO

Thanks, Ian, and good morning, everyone. The first quarter of 2022 was another strong one for Mirum. In the first quarter, we achieved nearly $13 million of revenue, including nearly $11 million in net sales of LIVMARLI, a testament to our team's expertise and execution. The exciting pace of building value has existed at Mirum since inception, and we expect it to continue in the years ahead. We'll keep our call brief today with a quick launch and business update and then take questions. First, for the context of the launch, I'll remind you of the heavy burden of disease and pruritus and Alagille syndrome and the tremendous impact that LIVMARLI has seen in our clinical program. Our launch has been informed by broad clinical experience spanning many years showing durable improvements in pruritus. More recent data have evaluated the long-term impact of LIVMARLI, suggesting potential improvement and event-free survival over time in Alagille syndrome. The success of our launch has been underpinned by the urgency we see to bring LIVMARLI to patients. The importance of LIVMARLI to this community is evident in our commercial launch achievements in the first quarter, namely net product revenue of $10.9 million, continuing to show the progress of our commercial efforts. Our first quarter performance gives us confidence in continued growth throughout the year. And the LIVMARLI opportunity for cholestatic pruritus and Alagille syndrome is only the beginning of what's possible for Mirum. The foundation of our pipeline and Mirum's success is innovative research for rare disease to bring new medicines to patients as quickly as possible. As we continue to execute against the greater-than-$500 million U.S. market opportunity in Alagille syndrome, we are progressing our five other late-stage LIVMARLI and volixibat clinical programs which will generate multiple data readouts over the next two years. While in parallel, we are progressing expansion in global markets of LIVMARLI for Alagille syndrome. Now with that, I'll turn it over to Peter, who will provide an update on our LIVMARLI launch progress. Peter?

Peter Radovich, COO

Thanks, Chris. We are proud of LIVMARLI's launch success and its role as the first and only FDA-approved medication for pruritus and Alagille syndrome. Today, I'll share further color about our $10.9 million net LIVMARLI revenue, what we're seeing in the commercial business, and why we're so excited about the growth trajectory. Before I get into the details of the quarter, I think it's important to note that there is no inventory in our reported product sales. Thus, the revenue number here is a true representation of demand. Now taking a closer look at the first quarter, revenue was driven by strong demand dynamics, consistent refill cadence, and both broader and earlier-than-expected support from payers. On this point, in the first quarter, approximately 75% of expenses were reimbursed. And we expect that rate in Q2 and beyond to be 90% or higher. Regarding payer mix, we continue to see approximately 50% Medicaid and 50% commercial at this stage of the launch. And we have heard very positive feedback on treatment benefits from clinicians and families, observing impressive treatment compliance in the commercial setting. In fact, we are seeing similar compliance from what we saw in our clinical trials in the real-world setting, a testament to the importance of this medicine for patients and parents. On adoption dynamics, we are pleased that the majority of our targeted key accounts have prescribed LIVMARLI. Further, we have seen that some patients residing in outlying areas often don't travel to a major center in a metropolitan area and instead receive care from a community-based pediatric GI or liver doctor. Accordingly, we've added a few sales territories to ensure our team can adequately reach patients. Turning to our plans for LIVMARLI's international launches. The Mirum international team and our partners are preparing for launch following anticipated approval in Europe later this year. Our team is initiating early access programs now while ensuring readiness for launch in key European countries. Further, our seven commercialization partners outside Western Europe are matching our dedication to introduce LIVMARLI to patients around the world, with potential approvals starting early next year in these geographies. And now I'll hand it over to Pam to provide an update on our pipeline. Pam?

Pam Vig, Head of R&D

Thanks, Peter. In the first quarter of 2022, our team has been focused on laying the groundwork for our important upcoming milestones for this year and beyond. Most notably, we expect top line data from our MARCH-PFIC Phase III clinical trial in the fourth quarter. As a reminder, the MARCH-PFIC study, now fully enrolled, includes multiple PFIC subtypes and higher doses than the Phase II INDIGO study, which was the basis for breakthrough therapy designation. And the MARCH study is the largest randomized Phase III clinical trial ever conducted in PFIC with more than 90 patients enrolled. Moving to the rest of our pipeline, we have four additional indications under evaluation in cholestasis. By year-end 2022, we're expecting two interim analyses from our volixibat programs. The first interim analysis will be from our Phase IIb VISTAS study, evaluating volixibat in patients with primary sclerosing cholangitis. And the second will be open-label data from our Phase IIb OHANA study for patients with intrahepatic cholestasis of pregnancy. And in 2023, we're targeting interim data from our Phase IIb VANTAGE study, evaluating volixibat in patients with primary biliary cholangitis. In addition, we're expecting primary data from our Phase IIb EMBARK study, evaluating LIVMARLI for children with biliary atresia. Mirum prides itself on its innovative research and for being recognized in well-respected peer-reviewed journals. And with that, I'm very excited to share that our PFIC INDIGO Phase II data have been published in Hepatology Communications just yesterday. The authors found that maralixibat led to rapid and sustained reductions in serum bile acid levels in patients with nontruncated PFIC2, leading to five-year transplant-free survival, as well as reductions in pruritus and meaningful improvements in growth and quality of life. They further concluded that maralixibat appears to be a realistic and effective treatment strategy, which benefited the lives of patients and caregivers by relieving disease symptoms, increasing transplant-free survival and providing a well-tolerated nonsurgical alternative. We're excited about the potential to confirm and hopefully improve upon these results in our MARCH-PFIC Phase III readout later this year. In addition, the European Medical Journal also published our recent presentations from AASLD and NASPGHAN. So all in all, we are very excited for what's to come as we build upon the incredible success of LIVMARLI for cholestatic pruritus in patients with Alagille syndrome one year of age and older. And we will keep you all updated on our progress across the various additional programs and data readouts. And on that note, I will turn the call over to Ian. Ian?

Ian Clements, CFO

Thanks, Pam. The press release filed earlier today and the 10-Q to be filed later today provide a full financial update. I'll call out a few of the highlights here. Total revenue for the quarter is $12.9 million, including $10.9 million of net product revenue from LIVMARLI sales and $2 million in licensing revenue from our partner, Cambridge in China. Our total operating expenses for the quarter were $45.6 million, which includes research and development expenses of $24.1 million and SG&A expenses of $19.1 million and cost of sales of $2.4 million. Mirum remains well funded, and at the close of the first quarter ended March 31, 2022, we had cash, cash equivalents, and investments of $239.9 million. With that, I'll turn the call back over to Chris for any final comments. Chris?

Chris Peetz, CEO

Thanks, Ian, and thanks, everyone, for joining today. To close, Mirum continues to make remarkable progress. And nearly $13 million in revenue we achieved this quarter speaks to not only our team's dedication to ensure this medicine is in the hands of patients, but also to LIVMARLI's impressive safety and efficacy profile and ability to fill an urgent unmet medical need. We look forward to continuing on this trajectory in the months and years ahead as we both build on this initial launch of LIVMARLI and advance the balance of our pipeline to develop meaningful therapies for communities living with rare diseases. Operator, please open the line for questions.

Operator, Operator

Our first question is from Jessica Fye of JPMorgan.

Nick Lenard, Analyst

This is Nick asking for Jess. Our first question is about the revenue of $10.9 million, which appears to be strong and significantly above the $8 million floor you mentioned last quarter. Can you discuss what factors influenced this performance? What are the dynamics behind it? Additionally, how do you view the remaining quarters leading up to reaching at least $50 million for the full year 2022? Could you also explain how you expect that revenue to be distributed?

Chris Peetz, CEO

Thank you for the question. I can address the full year and guidance, and then I'll pass it over to Peter to discuss the underlying dynamics. Regarding the full year, the at least $50 million figure we mentioned earlier is a minimum target, not a definitive guide. Looking ahead for the full year, we are comfortably expecting to exceed that figure. Therefore, I wouldn't consider it a guidance number, as we are tracking to be significantly above it. Now, I'll let Peter explain the factors that drove demand in the quarter and the related dynamics in the field.

Peter Radovich, COO

Yes, sure. In terms of the Q1 performance, I think we saw really strong demand dynamics and as well as refill dynamics. I think we've been really pleased there with the cadence of refills. And as I mentioned in the prepared comments, also from the payer perspective, our team has kind of executed really well. And now we're expecting, going forward, that 90% of our prescriptions will be reimbursed, and that kind of came in a little faster than other rare launches that we booked at, which is what informed our expectations for the prior thoughts.

Nick Lenard, Analyst

Great. And maybe just one quick follow-up on that 90% drug reimbursed by year '22. Where do you currently stand now? And should we expect you to achieve that 90% in Q4? Or could we potentially see that we didn't maybe before that in Q3?

Peter Radovich, COO

We think Q2 and going forward, it would be the expectation for the 90%.

Operator, Operator

And our next question is from Mani Foroohar from SVB.

Rick Bienkowski, Analyst

This is Rick on the call for Mani. Congrats on the quarter. So we're just looking for some additional color on the LIVMARLI launch. I guess, first, as far as the expanded access patients in the U.S. goes, have those patients really been transitioned to commercial product at this point? Or is that still an ongoing process?

Chris Peetz, CEO

Yes, thanks for the question. The conversion of the expanded access and clinical study patients to commercial drug was quite rapid. We observed this transition occurring in the fourth quarter, which marked our first launch quarter.

Rick Bienkowski, Analyst

Okay. Got it. I guess, also thinking about later this year with the potential launch in Europe, could you just maybe discuss a little bit how you see the timeline to reimbursement across the EU? And maybe some of the target countries for the initial launch there?

Peter Radovich, COO

Sure. Following EMA approval, the first country we will launch in is Germany, where we will have the opportunity to start shortly after central approval. Our primary focus has been on Western European countries, and typically, we can expect to launch in other Western European nations such as France, Italy, and hopefully the U.K. over the course of 2023.

Chris Peetz, CEO

Yes. I would add that, in addition to the Mirum territories where we will be present, the teams on the ground will be launching the products through some of our partner and distributor markets. We expect to see approvals starting early next year, leading to launches in some of those partner markets.

Rick Bienkowski, Analyst

Fantastic. One more question from us. Are you considering any updates for the rest of the year? Could we see any revisions in guidance as you get more information on the LIVMARLI launch throughout the year? Or are you satisfied with the current guidance and do not anticipate any changes for the remainder of the year?

Chris Peetz, CEO

Yes. At this point, we are not providing further guidance, but I want to emphasize that we are confident we are above that figure. Therefore, I wouldn't consider the $50 million as a guidance number in any way. We are still in the early stages of the launch and things continue to progress positively. We anticipate growth from quarter to quarter throughout the year. As we approach the end of the year, we will assess whether to offer formal guidance at that time.

Operator, Operator

And our next question is from the line of Josh Schimmer of Evercore.

Josh Schimmer, Analyst

You highlighted growth throughout the year. How much of that growth do you anticipate will be driven by additional patients in the U.S. in comparison to contributions from other regions? Given the progress you've made in addressing the unmet medical needs of Alagille, how long do you believe you can maintain this growth rate?

Chris Peetz, CEO

Thanks for the question, Josh. Looking at the dynamics and as we look at the growth for this year, we're seeing it largely driven by the U.S. So Alagille's contributions will be very modest in the calendar year. We do expect some of it to come online. But as we talk about our growth expectations and that full year number, we're looking primarily at the U.S. And maybe I'll let Peter chime in a little bit on kind of what the dynamics in that over the year will be.

Peter Radovich, COO

Yes. Yes. I think within the U.S. We're really pleased with where we're at today in terms of adoption. We're tracking ahead of comparable rare launches that we look at, but still see more addressable Alagille patients that haven't received with LIVMARLI than those who have. And kind of the typical pattern we see is our accounts maybe prescribed LIVMARLI for a more severely affected Alagille syndrome patients kind of gain experience, gain comfort and then broaden. So we expect to see how those dynamics continue to play out throughout 2022.

Josh Schimmer, Analyst

Great. And then R&D spend has ticked down nicely over the past couple of quarters. How should we think about that line going forward?

Ian Clements, CFO

Yes. So from an R&D spend perspective, I think that one would anticipate kind of fairly flat, I think, is the way that I'd look at it, I'm not giving kind of formal guidance on that OpEx for the year. But clearly, as we look at some of the studies that are kind of coming off, other studies are starting to ramp up. So you see some of that, for example, the MARCH-PFIC study kind of as we come towards the end of that, that will wind down a little bit. But conversely, obviously, we look at the ramp up on the volixibat studies to replace the expenses there. So I'd characterize it as kind of flat throughout the year from that perspective.

Operator, Operator

Our next question is from Yasmeen Rahimi from Piper Sandler.

Yasmeen Rahimi, Analyst

Congratulations on a successful quarter. I have two questions for you. First, there is a competitor product that will be evaluated in Phase III for Alagille. In the fourth quarter, what strategies will be implemented in the latter half of the year to ensure that physicians continue to foster strong brand awareness for LIVMARLI and maintain their patients on this product rather than switching to the competitor? That's my first question. Secondly, regarding the VISTAS study, could you provide some insight into the interim cutoffs that would allow the Phase IIb to transition into Phase III? What information will you be able to share with us?

Chris Peetz, CEO

Thank you, Yas. To address the first question, I will hand it over to Pam to discuss VISTAS. This year, our main focus is on the impact of the LIVMARLI analysis and ensuring we provide access to as many patients as possible as quickly as we can. We aim to publish some of the data we've collected from LIVMARLI and Alagille syndrome. Pam brought up the journal article that showcased some long-term event-free survival data, which is important for building awareness and highlighting the exciting results from the broader clinical program. Now, I will let Pam talk about VISTAS.

Pam Vig, Head of R&D

Thanks for the question. At a high level, we're very enthusiastic about the maralixibat programs and the opportunities they offer for cholestatic indications. Regarding the VISTAS study, we're currently enrolling participants and anticipate completing a blinded interim analysis this year. Since this analysis is blinded, we won't be disclosing any data, as we need to maintain blinding to retain patients for the Part 2 registrational phase of the study. From this interim analysis, we intend to make a dose selection, which will inform both the dosing decisions and determine the sample size for the second part of the study, including whether an increase in trial size is necessary. We'll keep you informed as we progress into that segment of the study.

Chris Peetz, CEO

And I think just to kind of reiterate and recap the point on the VISTAS study design, we discussed it with FDA and incorporated all of their feedback for this to be the pivotal study once it moves into the second part.

Yasmeen Rahimi, Analyst

Team, I want to clarify something. If the announcement indicates that there's no need to increase the sample size and we proceed with the highest dose, does that imply that the committee reviewing the data observed significant improvements in pruritus, which gave them confidence in its high statistical power for the pivotal study? Essentially, how confident can we be in that announcement regarding the efficacy being notably strong and the predictability of Phase III?

Chris Peetz, CEO

Yas, you're thinking about it the right way. So there's a prespecified threshold that does mean that if the results remain blinded, there's an effect in there. And so that's exactly how we designed the study. And if that's not the case, we'll have an open analysis and share the findings with you.

Operator, Operator

And our final question is from the line of Ed Arce of H.C. Wainwright.

Ed Arce, Analyst

Congratulations on the impressive quarter. First, I wanted to ask about what you're seeing? I know you've spoken about in terms of the commercial progress early in this launch on several aspects, including on the payer side. But I'm wondering if you could speak about the dynamic between the physicians and patients and sort of the push and pull there that is also underlying the strong demand that you're seeing? And I guess in a related question, some companies have been reporting impact from the Omicron wave this quarter, especially in January, February. Any thoughts or commentary around that as well? And I have a follow-up.

Chris Peetz, CEO

I'll ask Peter to speak to that.

Peter Radovich, COO

Thank you for the question. The relationship between physicians and patients is quite significant, especially regarding pruritus and Alagille syndrome, which can be extremely debilitating. It's widely acknowledged that addressing the needs and management of these patients is critical. As I mentioned, physicians involved in our clinical program are eager to become familiar with LIVMARLI. They typically try it on patients with more severe conditions to gain confidence with this new treatment before expanding its use over time. The Omicron wave has been a relevant point in this discussion. Now that we are moving past it, most parts of the country have returned to in-person consultations. However, COVID and the staffing challenges that emerged during the pandemic have posed considerable difficulties for many new product launches. Many patients have not seen their hepatologists in years, leading to scheduling and logistical backlogs that delay clinic visits, which is when clinicians usually consider starting new chronic medications. Despite these obstacles, our performance has remained very strong. As these issues get resolved and we emerge from the pandemic, I believe we could see continued growth as these dynamics improve.

Ed Arce, Analyst

That's great. And then I just wanted to ask sort of as you continue to build on this commercial platform that is growing quite rapidly. And with the additional LIVMARLI indications, obviously, strongly overlapping in terms of call points and just thinking about how you could leverage what you're building now for future indications. And thinking about how would you communicate the efficiencies there that you could gain in future indications?

Chris Peetz, CEO

A couple of points to make on that. First, within LIVMARLI, you're spot on that there's 100% call point overlap between the indications. In particular, Alagille syndrome probably is the broader call point of the three, just given the dynamic of the indication and number of patients out there. So that sets us up well to have a highly leveraged organization here as we launch the additional LIVMARLI indications eventually, and then expand into adult hepatology. I'd say already, the commercial business is highly performing. In the first quarter, if you just look at the net revenue and commercial expenses, we're already breakeven as a commercial organization. So see this as a really attractive business model as we go and push further into the Alagille launch and add the additional indications.

Operator, Operator

And our next question is from Brian Skorney of Baird.

Brian Skorney, Analyst

The launch has been impressive, and it would be helpful to have some qualitative insights into the penetration of the identified ALGS market in the U.S. It's clearly off to a fast start, but could you share any thoughts on the penetration among patients who are already familiar with maralixibat? Additionally, when can we expect to reach a stage where we are considering patients who are not currently under active care and those who are not yet part of the system?

Chris Peetz, CEO

Thanks, Brian. Overall, it's been a strong beginning, but we see potential for more patients as we continue to dive deeper here. We are still in the early stages of the launch. Perhaps I can ask Peter to discuss some of the strategies we are implementing to further expand the launch.

Peter Radovich, COO

Yes, sure. I believe Alagille syndrome has a very high diagnosis rate, so the majority of patients with the condition are likely identified and receiving care. We have observed that some patients prefer to manage their condition with local pediatric gastroenterologists instead of traveling to major metropolitan areas. This presents a valuable opportunity for us, as there are still relatively few pediatric GI specialists across the country, which is an area where we can grow. Importantly, as Chris mentioned, there are still more patients who have not yet initiated treatment with LIVMARLI than those who have, which suggests we anticipate continued growth.

Brian Skorney, Analyst

Great. And then maybe if I could ask another question on the MARCH-PFIC study. I think you're dosing at 570 micrograms per kilogram BID versus the LIVMARLI label, which is at 380 QD, but titrated up from 190. So I just wanted to see, could you give us a reminder of the clinical experience that you have at this dose to date? And any thoughts on sort of this higher level of dosing or expectations for how much this could further impact bile acid reductions and pruritus here? And given the LIVMARLI pricing, if it is not in the same milligram basis, would seem like a pretty substantial step up. Would you be able to offer two brands with differential pricing?

Chris Peetz, CEO

Thanks, Brian. Regarding pricing, it’s still early to discuss a strategy, and we will finalize that as we approach potential label expansion. I'll let Pam address some of the clinical questions.

Pam Vig, Head of R&D

Yes, thank you for the question. We are very excited about our recent publication regarding the INDIGO study. Initially, we started with a lower dose of 280 micrograms per kilogram per day. When we doubled that dose in the Phase II study, we observed a greater proportion of patients responding and expelling more bile acids from the body with the higher doses. We believe that by increasing the dose even further in the Phase III study, we can enhance the elimination of bile acids from the hepatocytes and systemic circulation. We hope this leads to improved response rates in the noncompeting BSEP2 population, and we look forward to seeing how this affects the various subtypes among the 90 patients we enrolled in the study.

Operator, Operator

And our final question is from the line of Steve Seedhouse of Raymond James.

Ryan Deschner, Analyst

This is Ryan Deschner substituting for Steve. I'm curious if you are still looking for partners to potentially develop candidates with alternative mechanisms, similar to your previous collaboration with Vivet, to address additional PFIC genetic subtypes.

Chris Peetz, CEO

Overall, we do have, what I'd say, is an active corporate development effort. And the overall objective here is to continue to grow Mirum and really grow in a way that is back to the roots of how the company started by finding underappreciated programs that need the attention to bring them to patients. So we look at opportunities kind of broadly across pediatric rare disease and orphan liver. That's it with the team here, the expertise that we have in-house from a development and regulatory standpoint, and then also the commercial team that has broad experience across rare and liver disease. So it's still active and looking broader than the current indications that we have.

Operator, Operator

And we have no further questions at this time. So my pleasure to hand back to Chris Peetz for any closing remarks.

Chris Peetz, CEO

Great. Thank you, operator, and thanks, everyone, for joining us. And thanks for your continued support of Mirum. We look forward to sharing our progress with you next quarter. Goodbye.