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SUMMARY OF RISKS ASSOCIATED WITH OUR BUSINESS
An investment in shares of our common stock involves a high degree of risk. Below is a list of the more significant risks associated with our
business. This summary does not address all of the risks that we face. Additional discussion of the risks listed in this summary, as well as other risks that we face, are set forth under Risk Factors below.
An investment in shares of our common stock involves a high degree of risk. You should carefully consider the following risk factors, as
well as the other information contained in our most recent Annual Report on Form 10-K, our most recent Quarterly Report on Form 10-Q, including the section titled
Management s Discussion and Analysis of Financial Condition and Results of Operations and our condensed consolidated financial statements and related notes, before deciding whether to purchase, hold or sell shares of our common
stock. The occurrence of any of the following risks could harm our business, financial condition, results of operations and/or growth prospects or cause our actual results to differ materially from those contained in forward-looking statements we
have made in our most recent Annual Report on Form 10-K, our most recent Quarterly Report on Form 10-Q and those we may make from time to time. You should consider all
of the risk factors described when evaluating our business.
Risks Related to Commercialization of Products and Development of our Product
The success of our business depends, in part, on our ability to sell our approved medicines profitably.
Livmarli (maralixibat) oral solution ( Livmarli ), Chenodal (chenodiol) tablets ( Chenodal ), Cholbam (cholic acid) capsules ( Cholbam ) are our approved medicines. The success
of our business depends, in part, on our ability to commercialize our approved medicines profitably. Our successful commercialization depends on a number of factors, including, among others, the following:
If one or more of the above factors is not present, many of which
are beyond our control, in a timely manner or at all, we could experience significant delays or an inability to market and sell our approved medicines profitably, which would harm our business, financial condition, operating results and prospects.
If we are unable to adequately grow, maintain and scale our marketing and sales capabilities or enter into or maintain rights pursuant to
agreements with third parties to market and sell our approved medicines, we may not be able to generate viable revenues.
successfully commercialize our approved medicines, we must grow, maintain and appropriately scale our marketing, sales, distribution, managerial and other non-technical capabilities or make arrangements with
third parties to perform these services. We have established our own commercial capabilities in the U.S. to commercialize our approved medicines. We are also in the process of further establishing our capabilities related to Livmarli in certain
major European markets and Canada and have entered into a limited number of partner and distributor agreements in other select geographies. We plan to continue to evaluate opportunities to partner with pharmaceutical companies that have established
sales and marketing capabilities to commercialize Livmarli and our other product candidates, if approved, outside of these geographies. Our projections of the commercial and sales needs to target these markets may not be accurate. If we are
materially off from our projections, our business and operating results would be harmed.
Growing and maintaining of our own sales force to market Livmarli and Cholbam is expensive
and time-consuming. Moreover, we may not be able to successfully or adequately develop this capability for our product candidates in development. We compete with other pharmaceutical and biotechnology companies to recruit, hire, train and retain
marketing and sales personnel. We also face competition in our search for third parties to assist us with the sales and marketing efforts of our approved medicines, and any agreements with such third parties may not be on terms that are favorable to
us. To the extent we do rely on third parties to commercialize our approved medicines and our other product candidates, if approved, we may have little or no control over the marketing and sales efforts of such third parties and our revenues from
product sales may be lower than if we had commercialized our product candidates ourselves. In addition, we have entered into a limited number of partner and distributor agreements. Any loss, commercial failure, or termination of rights pursuant to
these agreements could delay or hinder our commercialization efforts.
In the event we are unable to successfully grow and maintain our
marketing and sales force or collaborate with necessary third-party marketing and sales organizations, we would not be able to commercialize our approved medicines and our business, results of operations, financial condition, and prospects would be
materially adversely affected.
Our commercial success may be severely hindered if we are unable to obtain and/or maintain adequate coverage and
reimbursement for our approved medicines and any future product candidates, if approved.
The availability of coverage and adequate
reimbursement from private third-party payors such as pharmacy benefit managers and commercial insurers, and governmental healthcare programs, such as Medicaid in the US and equivalent programs in foreign countries, is critical to the commercial
success of our approved medicines in the U.S. and in international markets. Coverage may be adversely affected by a number of factors, including, but not limited to:
A trend in the healthcare industry is cost containment. Third-party payors are developing increasingly sophisticated methods of controlling
healthcare costs by, among other methods, limiting or preventing (for example via prior authorization, prior therapy or step edit requirements) coverage for particular medications, requiring drug companies to provide them with varying levels of
discounts from list prices and/or challenging the value of list prices charged for medical products. Similarly, the containment of healthcare costs has become a priority for federal and state governments around the world. Coverage decisions may
depend upon the size of a patient population, perceptions of clinical efficacy and economic standards that may disfavor new drug products when more established or lower cost therapeutic alternatives are already available or subsequently become
Coverage and reimbursement for drug products can differ significantly across payors. As a result, the coverage determination
process is often a time-consuming and costly process that will require us to provide scientific and clinical support for the use of our approved medicines to each third-party payor separately, with no assurance that coverage will be obtained or
maintained. Additionally, coverage policies and third-party reimbursement rates may change at any time. For example, rebate payments may increase, or prices be adjusted under value-based purchasing arrangements based on evidence-based measures or
outcomes-based measures for a patient or beneficiary based on use of our drug. Thus, even if favorable coverage and reimbursement status is attained for one or more drug products for which we receive regulatory approval, less favorable coverage
policies and reimbursement rates may be implemented in the future.
In many foreign countries, including Member States of the EU, the
pricing of prescription drugs is subject to governmental control and the proposed pricing for a drug must be approved before it may be lawfully marketed. In such countries, pricing negotiations with governmental authorities can take considerable
time after receipt of regulatory approval for a product and varies between countries. In addition, there can be considerable pressure by governments and other stakeholders on prices and reimbursement levels. For instance, governmental authorities in
the EU Member States and third-party payors could base pricing and reimbursement terms on what they perceive to be comparable products, even if approved for different indications. In addition, the EU provides options for EU Member States to restrict
the range of medicinal products for which their national health insurance systems provide reimbursement and to control the prices of medicinal products for human use. An EU Member State may approve a specific price for the medicinal product, it may
refuse to reimburse a product at the price set by the manufacturer or it may instead adopt a system of direct or indirect controls on the profitability of the company placing the medicinal product on the market. These pricing and reimbursement
decisions may impact the pricing and reimbursement of Livmarli in such jurisdictions. Many EU Member States also periodically review their reimbursement procedures for medicinal products, which could have an adverse impact on reimbursement status.
Moreover, political, economic and regulatory developments may further complicate pricing negotiations, and pricing negotiations often continue after coverage and reimbursement have been obtained. Reference pricing or pricing comparisons to our
competitors used by various countries and parallel distribution, or arbitrage between low-priced and high-priced countries, can further reduce prices. Publication of discounts by third-party payors or
authorities may lead to further pressure on the prices or reimbursement levels within the country of publication and other countries.
We expect that legislators, policymakers and healthcare insurance funds in the EU Member
States will continue to propose and implement cost-containing measures, such as lower maximum prices, lower or lack of reimbursement coverage and incentives to use cheaper, usually generic, products as an alternative to branded products, and/or
branded products available through parallel import to keep healthcare costs down. Moreover, in December 2021, Regulation No 2021/2282 on Health Technology Assessment, or HTA, amending Directive 2011/24/EU ( HTA Regulation ), was adopted in
the EU. The Regulation will apply from January 2025. It is intended to boost cooperation among EU Member States in assessing health technologies, including new medicinal products, and providing the basis for cooperation at EU level for joint
clinical assessments in these areas. The Regulation foresees a three-year transitional period and will permit EU Member States to use common HTA tools, methodologies, and procedures across the EU, working together in four main areas, including joint
clinical assessment of the innovative health technologies with the most potential impact for patients, joint scientific consultations whereby developers can seek advice from HTA authorities, identification of emerging health technologies to identify
promising technologies early, and continuing voluntary cooperation in other areas. Individual EU Member States will continue to be responsible for assessing non-clinical (e.g., economic, social, ethical)
aspects of health technologies, and making decisions on pricing and reimbursement. If we are unable to maintain favorable pricing and reimbursement status in EU Member States for product candidates that we may successfully develop and for which we
may obtain regulatory approval, any anticipated revenue from and growth prospects for those products in the EU could be negatively affected.
Historically, products launched in the EU and other foreign countries do not follow price structures of the U.S. and generally prices tend to
be significantly lower and the time to obtain pricing and reimbursement approvals is significantly longer. If pricing is set at unsatisfactory levels or if reimbursement of Livmarli and any future product candidates, if approved, is unavailable or
limited in scope or amount, our revenues from sales by us or our partners and the potential profitability of our approved medicines or any future product candidates, if approved, in those countries would be negatively affected.
Our approved medicines or any one of our product candidates, if approved, may fail to achieve the market acceptance among physicians, patients and
others in the medical community necessary for commercial success.
The commercial success of our approved medicines or any one of
our product candidates, if approved, depends significantly on the market acceptance among physicians, patients, tertiary care centers, transplant centers and others in the medical community. The degree and rate of market acceptance depends on a
number of factors, including, among other things:
If any of our approved medicines fail to achieve the market acceptance among
physicians, patients, tertiary care centers, transplant centers or others in the medical community necessary for commercial success, our operating results and financial condition will be adversely affected, which may delay, prevent or limit our
ability to generate revenue and continue our business.
Our approved medicines and our product candidates may cause undesirable side effects or have
other properties that could limit their commercial profile, expose us to product liability claims, delay or prevent regulatory approval of our product candidates or additional indications, or result in significant negative consequences following any
additional marketing approval, any of which may adversely impact our business, financial condition, operating results and prospects.
As is the case with biopharmaceuticals generally, it is likely that there may be side effects and adverse events ( AEs ) associated
with our product candidates use. Results of our clinical trials and expanded access program could reveal a high and unacceptable severity and prevalence of side effects or unexpected characteristics. Undesirable side effects caused by our
product candidates could cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA, European Commission or comparable foreign
regulatory authorities. The drug-related side effects could affect patient recruitment or the ability of enrolled patients to complete the trial or result in potential product liability claims. Any of these occurrences may harm our business,
financial condition and prospects significantly.
In clinical trials of Livmarli, the most commonly reported AEs were diarrhea, abdominal pain and
vomiting, and were mostly mild to moderate in severity and transient in nature. Additionally, AEs reported in greater than 5% of patients included fat-soluble vitamin deficiency, nausea, liver transaminase
increases, gastrointestinal bleeding and bone fracture. The frequency of observed AEs has not increased over time. In clinical trials of volixibat, the most common AEs reported were mild to moderate GI events observed in the volixibat groups. The
most common adverse events for Cholbam ( 1%) are diarrhea, reflux esophagitis, malaise, jaundice, skin lesion, nausea, abdominal pain, intestinal polyp, urinary tract infection, and peripheral neuropathy. Related adverse events seen in one
patient each from the RESTORE study assessing Chenodal in patients with cerebrotendinous xanthomatosis ( CTX ), included fatigue, gait disturbance, diarrhea, liver transaminase increase, bilirubin increase, ataxia, tremors, decreased
appetite and psychiatric disorder.
Additionally, in respect of our approved medicines or if one or more of our product candidates
receives marketing approval, and we or others later identify undesirable side effects caused by our approved medicines or such product candidates or other products with the same or related active ingredients, a number of potentially significant
negative consequences could result, including, among other things:
Such events could prevent us from achieving or maintaining market acceptance of our approved medicines, and could significantly harm our
business, results of operations and prospects.
If we fail to comply with our reporting and payment obligations under the Medicaid Drug Rebate
Program or other governmental pricing programs in the U.S., we could be subject to additional reimbursement requirements, fines, sanctions and exposure under other laws which could have a material adverse effect on our business, results of
operations and financial condition.
We participate in, or are subject to, the Medicaid Drug Rebate Program, as administered by
Centers for Medicare & Medicaid Services ( CMS ), and other federal and state government pricing programs in the U.S., and we may participate, or be asked to participate, in additional government pricing programs or supplemental