Executive Summary / Key Takeaways

• Mirum Pharmaceuticals achieved positive net income and operating cash flow in 2025 while growing revenue 47% year-over-year, proving its rare disease commercial model works at scale and de-risking the investment case beyond typical biotech speculation.

• Livmarli has established a dominant position in cholestatic pruritus with approximately 40% U.S. penetration in Alagille syndrome and a rapidly expanding PFIC market that management believes is "probably an underestimate" of historical estimates, while the new tablet formulation and EXPAND study provide clear pathways to $1 billion-plus revenue potential.

• Volixibat's Breakthrough Therapy Designation in PBC and compelling interim data position it as a potentially best-in-class IBAT inhibitor for adult cholestatic diseases, with two pivotal readouts expected over the next 18 months that could more than double Mirum's addressable market.

• The Bile Acid Portfolio generates stable cash flow with 31% growth while management actively pursues underappreciated rare disease assets, demonstrating capital discipline and providing financial flexibility to invest in high-return pipeline opportunities.

• Key risks include Livmarli concentration driving approximately 70% of product sales, direct competition from Ipsen's Bylvay in the IBAT duopoly, and potential generic competition for Bile Acid Medicines that lack composition-of-matter patent protection, though method-of-use patents and orphan exclusivity provide meaningful defense.

Setting the Scene: Building a Profitable Rare Disease Company from Scratch

Mirum Pharmaceuticals, incorporated in Delaware on May 2, 2018, represents a rare success story in biotech: a company that built a cash-flow positive rare disease business from a standing start in under seven years. Unlike typical development-stage biotechs that burn cash for a decade before commercial proof, Mirum commenced significant operations in November 2018 through a foundational Assignment and License Agreement with Shire International GmbH (later Takeda (TAK)), securing exclusive worldwide rights to develop and commercialize Livmarli and volixibat. This in-licensing strategy, later solidified through the May 2022 acquisition of Satiogen to reduce royalty obligations, demonstrates management's capital-efficient approach to asset acquisition.

The company makes money by commercializing novel therapies for rare cholestatic liver diseases—conditions characterized by impaired bile flow that causes debilitating pruritus and progressive liver damage. Mirum's place in the industry structure is uniquely attractive: it shares a duopoly with Ipsen (IPSEY) in the IBAT inhibitor space for pediatric cholestasis while holding method-of-use patents that protect specific indications. The value chain is straightforward: Mirum develops or acquires assets, secures orphan drug designation (providing seven years of U.S. exclusivity), commercializes through a specialized rare disease sales force, and maintains pricing power through demonstrated clinical value in small patient populations.

Industry trends strongly favor Mirum's strategy. The cholestatic pruritus market is projected to grow at 23.4% CAGR through 2034, driven by increased genetic screening and diagnosis of previously overlooked patients. Regulatory agencies have embraced orphan drug development, with streamlined approval pathways and incentives that reduce both time and cost to market. For Mirum, this translates to faster commercialization and extended market protection—critical advantages when serving patient populations measured in thousands rather than millions.

Technology, Products, and Strategic Differentiation: The IBAT Franchise Advantage

Mirum's core technology revolves around ileal bile acid transporter (IBAT) inhibition, a mechanism that blocks bile acid reabsorption in the intestine, reducing the pruritus and liver injury caused by cholestasis. Unlike traditional approaches using off-label generics like ursodeoxycholic acid or cholestyramine that provide only modest relief, IBAT inhibitors directly address the underlying pathophysiology with demonstrated efficacy. This translates to superior clinical outcomes, enabling premium orphan drug pricing—typically $300,000-$500,000 annually per patient—and creating recurring revenue from chronic therapy.

Livmarli's competitive advantages extend beyond mechanism. The drug is the only IBAT inhibitor offering flexible formulations across all ages, with both liquid and tablet options. The single-tablet formulation approved in April 2025 provides meaningful convenience for patients over 25 kilograms (typically ages 8-10 and older), with a substantial proportion of eligible patients already switching from liquid. This improves adherence and expands the addressable population while creating novel intellectual property—an allowed patent covering the formulation that extends coverage to 2043. The tablet also strengthens Mirum's competitive moat against Ipsen's Bylvay, which lacks this formulation flexibility.

The label expansion strategy further differentiates Livmarli. Approved for cholestatic pruritus in Alagille syndrome and PFIC in both the U.S. and EU, the drug benefits from "real synergy" between indications, with providers increasingly viewing it as the preferred treatment across pediatric cholestasis settings. Management estimates approximately 40% penetration in the U.S. Alagille syndrome market, indicating significant remaining growth potential from further penetration, new infant diagnoses, and weight-based dose adjustments. More importantly, the EXPAND Phase 3 study targeting ultra-rare cholestatic conditions represents a PFIC-sized opportunity or larger, with management estimating 1,000 patients in the U.S. and Europe based on real compassionate use demand.

Volixibat extends the IBAT franchise into adult cholestatic diseases with even larger market potential. The Phase 2b VISTAS study in PSC completed enrollment in Q3 2025, with topline data expected in Q2 2026. Interim analysis met pre-specified efficacy thresholds, recommending continuation with the current sample size—a strong signal for the final analysis. The VANTAGE study in PBC showed a durable 3.8-point reduction from baseline and 2.5-point placebo-adjusted reduction in pruritus at 28 weeks, earning Breakthrough Therapy Designation in October 2024. PSC currently has no FDA-approved therapies, while PBC has several second-line treatments but none that directly address pruritus as effectively as volixibat's mechanism. This positions volixibat as potentially best-in-class with first-mover advantage in PSC.

The pipeline's third leg, MRM-3379 for Fragile X syndrome , provides pure optionality. The Phase 2 BLOOM study initiated in Q4 2025 targets 52 male participants with full mutation FXS, with preclinical data showing reversal of disease phenotype across multiple behavioral assessments. While early-stage, this program demonstrates management's ability to acquire underappreciated assets (worldwide rights for $7.5 million upfront) in large addressable markets (50,000 male patients in U.S. and EU, supporting $1 billion-plus market potential).

Financial Performance: Commercial Validation at Scale

Mirum's financial results provide compelling evidence that its strategy is working. Total net product revenue reached $133.0 million in Q3 2025, a 47% year-over-year increase, driven by Livmarli's $92.2 million (+56% YoY) and Bile Acid Medicines' $40.8 million (+31% YoY). This demonstrates that Mirum can sustain high growth rates even as it scales beyond $500 million annually—a point where many biotechs see growth decelerate. The growth is broad-based: U.S. Livmarli sales reflect "continued momentum from the PFIC launch and expanding international demand," while international markets benefit from "expanding reimbursement and launches in new geographies."

Margin expansion validates the operating leverage of Mirum's commercial model. Gross margin reached 79.9% in the latest period, reflecting premium orphan drug pricing and manufacturing efficiency.

More significantly, the company achieved positive net income for the first time in Q3 2025, with quarterly net income of $2.9 million compared to a $87.9 million loss in the prior year period. This proves the business can be profitable while still investing in growth, a rare combination in biotech that de-risks the investment case. Operating cash flow turned positive in Q1 and Q2 2025, with Q3 generating $39.7 million, giving the company $378 million in cash and investments as of September 30, 2025.

Segment dynamics reveal a balanced growth engine. Livmarli represents approximately 70% of product sales, with Alagille syndrome growth remaining "durable" and PFIC contributing meaningfully. The Bile Acid Portfolio, acquired from Travere (TVTX) in August 2023 for $210.4 million upfront, generated $118.8 million in the first nine months of 2025, demonstrating the value of management's capital allocation. Ctexli's February 2025 approval for CTX in adults, with seven years of orphan exclusivity, is driving "increased patient finding" across neurology, ophthalmology, and GI specialties. This stable cash generator funds investment in higher-risk, higher-return pipeline assets.

The balance sheet supports continued investment. With $378 million in cash and no traditional debt (only convertible notes), Mirum has sufficient capital to continue operations for at least twelve months while funding three pivotal studies.

The convertible notes do create potential dilution risk, but management's achievement of cash flow positivity reduces reliance on external financing. This gives Mirum strategic flexibility to acquire additional rare disease assets without issuing equity at depressed valuations.

Outlook and Execution: Three Pivotal Readouts in 18 Months

Management's guidance reflects remarkable confidence and execution discipline. Full-year 2025 revenue guidance has been raised three times: from $420-435 million to $435-450 million, then to $490-510 million, and most recently to the upper end of $500-510 million. This demonstrates that Mirum consistently under-promises and over-delivers, a hallmark of quality management. The guidance implies 49% growth at the midpoint, yet management explicitly notes "typical quarter-to-quarter variability in international partner and distributor ordering patterns," showing realistic expectations.

The pipeline catalyst timeline is exceptional for a company of Mirum's size. Three potentially pivotal readouts are expected over the next 18 months: VISTAS PSC data in Q2 2026, VANTAGE PBC enrollment completion in 2026 with data in H1 2027, and EXPAND study completion targeted for 2026 with data in H1 2027. This provides multiple near-term value inflection points that are largely independent of each other, diversifying pipeline risk. Success in any one program could add hundreds of millions in peak revenue potential.

Commercial execution continues to drive upside. The tablet formulation launched in June 2025 is already seeing "a substantial proportion of eligible patients switching," improving adherence and patient satisfaction. Takeda's Japan launch, with Q3 2025 representing the first full quarter of commercialization, shows "adoption dynamics generally consistent with LIVMARLI's U.S. launch," suggesting international markets can replicate domestic success. In the U.S., PFIC patient adds remain "healthy" across a broad age range, driven by "increased disease awareness and broader use of genetic testing" that is expanding the diagnosed population beyond historical infant-onset assumptions.

Management's business development strategy provides additional upside optionality. The company continues to "actively seek underappreciated rare disease programs" while maintaining a "high bar for value creation opportunities without immediate urgency." This signals disciplined capital allocation rather than growth-for-growth's-sake M&A. The October 2024 acquisition of MRM-3379 for Fragile X syndrome exemplifies this approach: a small upfront payment ($7.5 million) for a program with $1 billion-plus potential in a large orphan market.

Risks and Asymmetries: What Could Break the Thesis

The most material risk is Livmarli concentration, representing approximately 70% of product sales. While this reflects the drug's success, it also means any competitive, regulatory, or safety setback would disproportionately impact Mirum's valuation. Ipsen's Bylvay (odevixibat) is the direct IBAT competitor, approved for PFIC and ALGS with overlapping indications. Bylvay could capture market share through aggressive pricing or differentiated data, though Mirum's method-of-use patents and formulation advantages provide defense. Management notes they are "prepared to defend" their IP position, but litigation is costly and uncertain.

Generic competition threatens the Bile Acid Portfolio. Chenodal, Ctexli, and Cholbam lack composition-of-matter patent protection, relying on regulatory exclusivity and method-of-use patents. The risk factors explicitly state these medicines "face potential immediate competition from compounded and generic entrants." While these products represent only about 30% of sales, they provide stable cash flow that funds pipeline investment. Generic erosion could reduce this funding source and pressure margins.

Regulatory changes in Europe pose a growing threat. New Health Technology Assessment regulations and proposed pharmaceutical legislation could reduce data and market exclusivity periods, leading to earlier generic competition and decreased reimbursement. Germany has already lowered its orphan drug sales threshold from €50 million to €30 million, which could impact reimbursement for products exceeding this threshold. Mirum's international expansion strategy depends on European markets replicating U.S. growth, and pricing pressure could limit profitability.

Clinical trial execution risks remain significant despite positive interim data. Patient enrollment in rare diseases can be delayed by small target populations, eligibility criteria, and competing trials. The VISTAS PSC study completion in Q3 2025 is encouraging, but topline data expected in Q2 2026 could still fail to meet endpoints. Volixibat represents Mirum's largest pipeline value driver, and any clinical setback would eliminate a major growth pillar and likely cause significant stock volatility.

Supply chain concentration creates operational vulnerability. Mirum relies completely on third-party manufacturers, including sole-source suppliers, for clinical and commercial drug supply. Disruptions from natural disasters, business interruptions, or geopolitical events could severely impact development and commercialization efforts. Rare disease patients cannot tolerate treatment interruptions, and any supply disruption could damage physician confidence and patient adherence.

Competitive Context: Leading the IBAT Duopoly

Mirum's competitive positioning is strongest in the pediatric cholestasis market, where it shares a duopoly with Ipsen. Livmarli and Bylvay are the only approved IBAT inhibitors for PFIC and ALGS, creating a protected market with high barriers to entry. This allows both players to maintain premium pricing while focusing on market expansion rather than destructive price competition. Mirum's advantages include broader formulation options, stronger method-of-use patents, and what appears to be superior commercial execution—evidenced by 47% revenue growth versus Ipsen's overall 11% growth.

In adult cholestatic diseases, the competitive landscape is more complex but favors Mirum's approach. For PBC, several second-line treatments exist (Alfasigma's Ocaliva, Gilead (GILD)'s Livdelzi, Ipsen's Iqirvo), but these target alkaline phosphatase levels rather than pruritus. Volixibat's Breakthrough Designation and compelling itch reduction data (3.8-point durable reduction, 2.5-point placebo-adjusted) position it as the first therapy specifically targeting cholestatic pruritus in PBC. Pruritus is the most debilitating symptom for many PBC patients, and volixibat could become the preferred agent regardless of alkaline phosphatase status, expanding the treatable population.

For PSC, no FDA-approved therapies exist, making volixibat's VISTAS study a potential first-mover opportunity. Calliditas (CALT)'s seladelpar and Genfit (GNFT)'s elafibranor target inflammatory pathways but have not demonstrated the same magnitude of pruritus relief. Mirum's focus on bile acid modulation offers a mechanistic advantage for itch reduction, which is the primary patient complaint. First-mover status in PSC could generate $500 million-plus peak sales with limited competition.

Mirum's financial metrics compare favorably to peers. With 47% revenue growth and positive cash flow, it outpaces Ipsen's 11% growth and Calliditas' 39% growth while achieving profitability that eludes most rare disease peers. The 79.9% gross margin exceeds Ipsen's 83.3% only modestly but is achieved with a much smaller scale, indicating pricing power. The key disadvantage is size—Ipsen's $11.6 billion market cap provides diversification and scale advantages—but Mirum's pure-play focus enables faster decision-making and more efficient capital allocation.

Valuation Context: Premium for Proven Execution

At $69.04 per share, Mirum trades at a market capitalization of $3.55 billion and enterprise value of $3.49 billion, representing approximately 7.4x trailing twelve-month revenue of $471.8 million. The multiple appears reasonable for a rare disease company growing revenue 47% year-over-year with achieved profitability and multiple pipeline catalysts. Peer comparisons support this assessment: Ipsen trades at lower revenue multiples but with slower growth, while Calliditas trades at higher multiples despite remaining unprofitable.

Key valuation metrics must be interpreted in context of Mirum's transition to profitability. The price-to-earnings ratio is not meaningful given the company only recently achieved positive net income, with trailing twelve-month earnings still negative due to earlier losses. Instead, investors should focus on enterprise value-to-revenue (7.4x), price-to-operating cash flow (78.6x), and free cash flow yield. The high cash flow multiples reflect the company's early stage of profitability; Q3 2025's $39.7 million in operating cash flow, if annualized, would imply a more reasonable 22x multiple, suggesting the market has not yet fully recognized the durability of cash generation.

Balance sheet strength supports the valuation. With $378 million in cash and investments, no traditional debt, and positive cash flow, Mirum has approximately 2.5 years of runway at current burn rates even if profitability were to reverse. The convertible notes ($143 million outstanding) create potential dilution but also demonstrate that management accessed capital on favorable terms before achieving profitability. The current ratio of 3.31 and quick ratio of 3.01 indicate strong liquidity, reducing financial risk.

Growth-adjusted valuation appears attractive. With 47% revenue growth and a 7.4x revenue multiple, the price-to-growth ratio of approximately 0.16 is well below typical biotech valuations of 0.5-1.0x for commercial-stage rare disease companies. This suggests the market is not fully pricing in either the growth durability or the pipeline optionality. Success in any of the three upcoming pivotal studies could justify a significant re-rating.

Conclusion: A De-Risked Growth Story With Multiple Catalysts

Mirum Pharmaceuticals has achieved what few biotech companies accomplish: it has built a profitable, cash-flow positive rare disease business while maintaining a robust pipeline with multiple shots at $1 billion-plus revenue opportunities. The central thesis rests on two pillars: first, that the IBAT franchise (Livmarli and volixibat) is establishing a dominant position in cholestatic diseases with clear expansion pathways; second, that management's capital discipline and commercial execution have de-risked the investment while preserving significant upside optionality.

Livmarli's performance demonstrates the power of Mirum's model. With approximately 40% U.S. penetration in Alagille syndrome, a growing PFIC market that is expanding through genetic testing, and the EXPAND study targeting ultra-rare conditions, the drug has a visible path to $1 billion revenue. The tablet formulation and international expansion provide near-term growth drivers, while method-of-use patents and orphan exclusivity protect long-term value.

Volixibat represents the largest pipeline value driver. With Breakthrough Designation in PBC, compelling interim data showing durable pruritus reduction, and a clear path to market in PSC where no approved therapies exist, success in the upcoming Q2 2026 VISTAS readout could more than double Mirum's addressable market. The adult cholestatic disease opportunity is substantially larger than pediatric, offering transformational growth potential.

The investment thesis hinges on execution of three key variables: volixibat's clinical success in VISTAS and VANTAGE, Livmarli's ability to penetrate the EXPAND patient population, and competitive dynamics with Ipsen's Bylvay. While concentration risk and generic competition for Bile Acid Medicines create vulnerabilities, Mirum's achieved profitability and strong balance sheet provide resilience that is rare in biotech.

Trading at 7.4x revenue with 47% growth and positive cash flow, the stock prices in success but not perfection. For investors seeking exposure to rare disease growth with reduced development risk, Mirum offers a compelling combination of commercial validation, pipeline optionality, and management execution that is difficult to find elsewhere in the biotech landscape.