Mirum Pharmaceuticals Inc.

11/04/2025 | Press release | Distributed by Public on 11/04/2025 15:06

Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited condensed consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and notes thereto and the related Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K ("Annual Report") for the year ended December 31, 2024, which was filed with the Securities and Exchange Commission ("SEC") on February 26, 2025. Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to the "Company," "Mirum," "we," "us" and "our" refer to Mirum Pharmaceuticals, Inc. and its consolidated subsidiaries.
Forward-Looking Statements
In addition to historical financial information, this discussion and analysis contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in the section titled "Risk Factors" under Part II, Item 1A below. In some cases, you can identify forward-looking statements by terminology such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potentially," "predict," "should," "will" or the negative of these terms or other similar expressions.
In addition, statements that "we believe" and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.
Overview
We are a biopharmaceutical company dedicated to transforming the treatment of rare diseases. We have three approved medicines: LIVMARLI® (maralixibat) ("Livmarli"), CHOLBAM® (cholic acid) capsules ("Cholbam"), and CHENODAL® or CTEXLI® (chenodiol) tablets ("Chenodal" or "Ctexli").
Livmarli is a novel, orally administered, minimally-absorbed ileal bile acid transporter ("IBAT") inhibitor ("IBATi") that is approved for the treatment of cholestatic pruritus in patients with Alagille syndrome ("ALGS") in the United States ("U.S."), the European Union ("EU") and various other countries around the world and for cholestatic pruritus in patients with progressive familial intrahepatic cholestasis ("PFIC") in the U.S. and for the treatment of PFIC in the EU. We market and commercialize Livmarli in the U.S., Canada and certain countries in Europe through our specialized and focused commercial team. We have also entered into license and distribution agreements with several rare disease companies for the commercialization of Livmarli in additional countries. In March 2025, our partner Takeda received approval by the Japanese Ministry of Health, Labour, and Welfare for Livmarli for the treatment of cholestatic pruritus in patients with ALGS and PFIC.
On October 22, 2024, we completed a license agreement with Enthorin Therapeutics, LLC and Dart Neuroscience LLC granting us the worldwide right to develop and commercialize MRM-3379, an allosteric inhibitor of Phosphodiesterase 4D ("PDE4D"). We intend to develop MRM-3379 for the treatment of Fragile-X Syndrome ("FXS").
On August 31, 2023, we completed the acquisition of assets of Travere Therapeutics, Inc. ("Travere") that are primarily related to the development, manufacture (including synthesis, formulation, finishing or packaging) and commercialization of chenodiol and Cholbam (also known as Kolbam) (and together with chenodiol, the "Bile Acid Medicines") pursuant to an asset purchase agreement dated July 16, 2023 (such acquisition, the "Bile Acid Portfolio Acquisition").
The FDA approved Cholbam in March 2015, as the first FDA-approved treatment for pediatric and adult patients with bile acid synthesis disorders due to single enzyme defects, and for adjunctive treatment of patients with peroxisomal disorders, including peroxisome biogenesis disorder-Zellweger spectrum disorder ("PBD-ZSD"). Chenodiol is standard of care for the treatment of cerebrotendinous xanthomatosis ("CTX") in the United States with a medical necessity recognition by the FDA and was commercialized under the brand name Chenodal. We submitted a new drug application ("NDA") for chenodiol for the treatment of CTX in 2024 and received FDA approval for the treatment of adults with CTX in February 2025, which is commercialized under the brand name Ctexli. We currently commercialize Cholbam and Ctexli in the U.S. through our specialized and focused commercial team. We have also assumed license and distribution
agreements with several rare disease companies for the commercialization of Cholbam and chenodiol in additional countries.
We are developing Livmarli for certain rare cholestatic conditions through the Phase 3 EXPAND study, which we initiated in the fourth quarter of 2024. We expect to complete enrollment of the EXPAND study in 2026 with topline data expected in the first half of 2027. In addition, we are advancing our product candidate, volixibat, a novel, oral, minimally-absorbed agent designed to inhibit IBAT, for the treatment of adult patients with cholestatic liver diseases. We are developing volixibat in the setting of primary sclerosing cholangitis ("PSC") and primary biliary cholangitis ("PBC"), and in October 2024, we announced that the FDA granted Breakthrough Therapy Designation for volixibat as a potential treatment for cholestatic pruritus in patients with PBC. We conducted an interim analysis of our VISTAS Phase 2b clinical trial in PSC and reported interim data from our VANTAGE Phase 2b clinical trial in PBC in June 2024. The VISTAS Phase 2b clinical trial in PSC completed enrollment in the third quarter of 2025 and topline data is expected in the second quarter of 2026. We expect the VANTAGE Phase 2b clinical trial in PBC to complete enrollment in 2026 with topline data expected in the first half of 2027. We are also developing MRM-3379, a novel PDE4D inhibitor, for the treatment of FXS. A Phase 2 multi-dose safety and efficacy trial has begun enrolling patients.
To date, we have focused primarily on acquiring and in-licensing our product candidates, organizing and staffing our company, business planning, raising capital, advancing our product candidates through clinical development, preparing for commercialization of our product candidates, commercializing our approved medicines, and conducting business development activities relating to, among other things, portfolio expansion through collaborations and acquisitions.
Financial Overview
Our net income was $2.9 million for the three months ended September 30, 2025, our net loss was $14.2 million for the three months ended September 30, 2024, and our net loss was $17.6 million and $64.2 million for the nine months ended September 30, 2025 and 2024, respectively. As of September 30, 2025, we had an accumulated deficit of $661.8 million, compared to $644.2 million as of December 31, 2024. As of September 30, 2025, we had unrestricted cash, cash equivalents and investments of $378.0 million, compared to unrestricted cash, cash equivalents and investments of $292.8 million as of December 31, 2024.
While we generated net income in the third quarter of 2025, we anticipate we will continue to generate net losses for the foreseeable future as we continue commercial activities for our approved medicines, conduct our ongoing and planned clinical trials, seek regulatory approvals for our product candidates and make potential milestone payments to the licensors and other third parties from whom we have in-licensed or acquired our product candidates. We expect that total product sales of our approved medicines will continue to increase on an annual basis; however, due to large periodic orders from Takeda and our distributors, our product revenue may experience fluctuations. Additionally, our product revenues from Takeda are based upon variable consideration estimates. If actual results vary from our estimates, we will make adjustments in the period when such variances become known. As a result, our net losses may fluctuate significantly from quarter-to-quarter and year-to-year.
We expect to satisfy future cash needs through existing capital balances, revenue from our approved medicines and through a combination of equity offerings, debt financings or other capital sources, collaborations, licenses and other similar arrangements. However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all. Our failure to raise capital or enter into such other arrangements when needed could have a negative impact on our financial condition and on our ability to pursue our business plans and strategies. If we are unable to raise additional capital when needed, we could be forced to delay, limit, reduce or terminate the development of one or more of our product candidates or future commercialization efforts or grant rights to develop and market our product candidates even if we would otherwise prefer to develop and market such product candidates ourselves.
Components of Results of Operations
Revenue
Product Sales, Net
We have three approved medicines: Livmarli, Cholbam and Chenodal, or Ctexli. We expect total product sales of our approved medicines will continue to increase on an annual basis.
Our U.S. revenue from product sales, net further depends on our prescription mix of commercial payors, Medicaid and amounts of free medicines provided under our patient assistance program. We expect our prescription mix and resulting gross to net adjustment in the U.S. to remain materially consistent. Our revenue from product sales is recognized when the control of the product is transferred. Under our license agreement with Takeda as well as agreements with distributors, we may receive large periodic orders for our products. The timing of these orders can be inconsistent and can create significant quarter-to-quarter variation in product sales. In addition, we recognize our best estimate of the
consideration that we expect to receive when control of the inventory is transferred to our licensed partners and distributors. Such estimates may be complex and include estimates as to if and when our distributors and licensed partner's sales in the market will occur. Estimates are reviewed and updated quarterly as additional information, including in-market pricing and sales information of our authorized distributors and licensed partners, becomes known which may cause variability of quarterly revenue particularly during periods of product launch.
Although we expect product revenues to increase as we continue commercial activities for our approved medicines, we may not achieve commercial success. Certain of our approved medicines, including the Bile Acid Medicines, are subject to immediate competition from compounded and generic entrants, as the abbreviated new drug application ("ANDA") and NDA for these drug products have no remaining or current patent exclusivity. Chenodiol is standard of care for the treatment of CTX in the U.S. and was commercialized with a medical necessity recognition by the FDA until February 2025. We submitted an NDA for chenodiol for the treatment of CTX in 2024 and received FDA approval for the treatment of adults with CTX in February 2025, which is now commercialized under the brand name Ctexli. The FDA has granted orphan exclusivity for chenodiol for the treatment of CTX.
Operating Expenses
Cost of Sales
Cost of sales consist of raw materials, third-party manufacturing costs, personnel, facility and other costs of manufacturing commercial products, transportation and freight, amortization of finite-lived intangible assets and royalty payments payable on net sales of our approved medicines under licensing agreements. Cost of sales may also include period costs related to certain manufacturing services and charges for inventory valuation reserves. In addition, we have firm commitments for the purchase of minimum order quantities for active pharmaceutical ingredients ("APIs"). We periodically evaluate these firm commitments to determine if these commitments are in excess of our needs. If any net loss is determined, we record a charge to cost of sales in the period identified. As of the date of our acquisition of the Bile Acid Medicines from Travere, inventory acquired was valued at its fair value. As a result, our cost of sales exceeded cost to manufacture the inventory and had a negative impact on our gross margin.
We expect cost of sales to increase in the future mainly due to variable costs associated with increased product sales such as royalties payable and inventory costs, partially offset by lower unit cost of sales for the Bile Acid Medicines, as we sold the acquired inventory valued at fair value in prior periods. We expect cost of sales to remain approximately unchanged as a percent of product sales in the future.
Research and Development Expenses
Research and development expenses primarily relate to clinical development and manufacturing activities of our product candidates. Our research and development expenses include, among other things:
•salaries and related expenses for employee personnel, including benefits, travel and expenses related to stock-based compensation granted to personnel in development functions;
•external expenses paid to clinical trial sites, contract research organizations ("CROs") and consultants that conduct our clinical trials;
•expenses related to drug formulation development and the production of clinical trial supplies, including fees paid to contract manufacturers;
•licensing milestone payments related to development or regulatory events;
•payments made for the acquisition or licensing of in-process research and development assets with no alternative future use;
•expenses related to non-clinical studies;
•expenses related to compliance with drug development regulatory requirements; and
•other allocated expenses, which include direct and allocated expenses for rent and maintenance of facilities, depreciation of equipment, and other supplies.
We expense research and development costs as incurred. Nonrefundable advance payments for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. The prepaid amounts are expensed as the related goods are delivered or the services are performed. Upfront payments, research and development funding and milestone payments made to third parties in connection with licenses and research and development collaborations are expensed as incurred.
We expect our research and development expense may increase in the future as we continue to develop our volixibat product candidates, execute the EXPAND label expansion study for Livmarli and initiate development of MRM-3379.
Selling, General and Administrative Expense
Sales and marketing expense, which is a component of selling, general and administrative expense, primarily consisted of employee-related expenses for our sales group, brand marketing, patient support groups and pre-commercialization expenses related to our product candidates. General and administrative expense, which is a component of selling, general and administrative expense, primarily consists of corporate support and other administrative expenses, including employee-related expenses.
We anticipate that our selling, general and administrative expenses will increase in the future to support our continued commercialization efforts of our approved medicines in the U.S. and internationally as well as increased costs of operating as a global commercial stage biopharmaceutical public company. These increases will likely include increased costs related to hiring of additional personnel and fees to outside consultants to support further marketing, legal, tax, planning and accounting activities.
Interest Income
Interest income consists of interest earned on our cash equivalents and investments.
Interest Expense
We incur interest expense on our convertible notes. Interest on our convertible notes consists of a 4.00% per annum fixed rate of interest and amortization of debt discount and amortization costs.
Other Income, Net
Other income, net consists of miscellaneous other income and expense and unrealized and realized currency gains and losses on net assets and liabilities denominated in foreign currency.
Critical Accounting Estimates
The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles ("GAAP") and our discussion and analysis of our financial condition and operating results require our management to make judgments, assumptions and estimates that affect the amounts reported. Management bases its estimates on historical experience, known trends and events, and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ materially from these estimates under different assumptions or conditions.
There have been no significant changes during the three and nine months ended September 30, 2025, except as described below, in our critical accounting policies and estimates as compared to the critical accounting policies and estimates disclosed in the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report.
Product Sales, Net
Revenues from direct product sales are recorded net of reserves established for applicable discounts and allowances that are offered within contracts with our customers, including amounts from payors and other third parties on behalf of our customers. For revenues from distributors and our licensed partner, Takeda, we record net product sales at the time control of the product is transferred, based on the estimated variable consideration to be received. The transaction price, which may include fixed or variable consideration may be subject to constraint and is included in the product sales price only to the extent that it is probable that a significant reversal of the amount of the cumulative revenue recognized will not occur in a future period. We recognize our best estimate of the consideration that we expect to receive when control of the inventory is transferred to our customer and revenue is recognized. For our distributor and license partner sales, such estimates may be more complex and include estimates as to if and when our distributors and licensed partner's sales in the market will occur. These estimates are reviewed and updated quarterly as additional information, including in-market sales information of our authorized distributors and licensed partners, becomes known. Actual amounts may ultimately differ from our estimates. If actual results vary, we adjust these estimates, which could have an effect on earnings in the period of adjustment.
We are obligated to pay rebates for mandated discounts under the Medicaid Drug Rebate Program and other foreign government programs. Our rebate calculations may require estimates based upon our actual historical experience, customer and payor mix and revenue projections. We update estimates and assumptions on a quarterly basis and record any
necessary adjustments to revenue in the period identified. Estimated rebates are recorded as a reduction of revenue in the period the related sale is recognized. To date, actual government rebates have not differed materially from our estimates.
Recent Accounting Pronouncements
A description of recent accounting pronouncements that may potentially impact our financial position, results of operations or cash flows is disclosed in Note 2 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Results of Operations for the Three Months Ended September 30, 2025 and 2024
The following table summarizes our results of operations for the three months ended September 30, 2025 and 2024 (in thousands):
Three Months Ended September 30,
Change
2025 2024
Revenue:
Product sales, net $ 133,010 $ 90,302 $ 42,708
License and other revenue - 75 (75)
Total revenue 133,010 90,377 42,633
Operating expenses:
Cost of sales 25,537 20,806 4,731
Research and development 42,960 31,710 11,250
Selling, general and administrative 61,910 50,545 11,365
Total operating expenses 130,407 103,061 27,346
Income (loss) from operations 2,603 (12,684) 15,287
Other income (expense):
Interest income 3,251 3,469 (218)
Interest expense (3,606) (3,586) (20)
Other income (expense), net 395 (1,087) 1,482
Net income (loss) before provision for income taxes 2,643 (13,888) 16,531
(Benefit from) provision for income taxes (262) 347 (609)
Net income (loss) $ 2,905 $ (14,235) $ 17,140
Product Sales, Net
Product sales, net was $133.0 million for the three months ended September 30, 2025, compared to $90.3 million for the three months ended September 30, 2024. The increase in product sales, net was a result of our continued commercialization of Livmarli in the U.S. for the treatment of ALGS and PFIC, and in certain international markets directly or through distributor and partner orders and from our sales of the Bile Acid Medicines.
The following table disaggregates total Product sales, net (in thousands):
Three Months Ended September 30,
2025 2024
Change
Product sales, net:
Livmarli $ 92,235 $ 59,126 $ 33,109
Bile Acid Medicines 40,775 31,176 9,599
Total product sales, net $ 133,010 $ 90,302 $ 42,708
Cost of Sales
For the three months ended September 30, 2025, cost of sales was $25.5 million, compared to $20.8 million for the three months ended September 30, 2024. The increase in cost of sales was primarily a result of increases in royalty expense of $3.9 million on net sales of Livmarli and the Bile Acid Medicines under licensing agreements, $1.0 million PDUFA fees primarily associated with the approval of our solid dose formulation in Livmarli and $0.7 million in general supply chain support costs. These increases were partially offset by lower product cost of sales of $1.6 million primarily
related to the Bile Acid Medicines as we substantially completed the sale of acquired inventory in prior periods which had been recorded at fair value.
Research and Development Expenses
The following table summarizes the period-over-period changes in research and development expenses relating to our product candidates in development for the periods indicated (in thousands):
Three Months Ended September 30, Change
2025 2024
Product-specific costs:
Livmarli $ 3,033 $ 6,060 $ (3,027)
Volixibat 12,725 8,270 4,455
MRM-3379 3,510 - 3,510
Non product-specific costs:
Stock-based compensation 5,676 3,571 2,105
Personnel 13,022 8,760 4,262
Other 4,994 5,049 (55)
Total research and development expenses $ 42,960 $ 31,710 $ 11,250
Research and development expenses were $43.0 million for the three months ended September 30, 2025, an increase of $11.3 million compared to the three months ended September 30, 2024. The increase was primarily due to:
•for volixibat programs, an increase of $4.5 million, primarily due to increased expenses associated with conduct of the PSC and PBC trials as well as manufacturing development expenses;
•for MRM-3379, an increase of $3.5 million, primarily due to planning for our Phase 2 study in FXS and clinical manufacturing expenses; and
•for personnel related and stock-based compensation expenses, an increase of $6.4 million related primarily to increased employee headcount and related equity award grants to support our development pipeline, partially offset by
•for Livmarli, a decrease of $3.0 million, primarily due to lower costs from the PFIC rollover study and other clinical costs partially offset by increased expenses associated with the Livmarli Phase 3 EXPAND label expansion study.
Selling, General and Administrative Expenses
Selling, general and administrative expenses were $61.9 million for the three months ended September 30, 2025, an increase of $11.4 million compared to the three months ended September 30, 2024. The increase was primarily due to increases of $7.7 million in personnel and other compensation-related expenses, including an increase of $4.1 million in stock-based compensation, reflecting an increase in the number of our selling, marketing and administrative employees to support commercial activities for our approved medicines, $1.7 million of legal, accounting and other outside services, $1.0 million in general administrative expenses and $1.0 million of expenses associated with post marketing approval studies.
Interest Income
Interest income was $3.3 million for the three months ended September 30, 2025, a decrease of $0.2 million compared to the three months ended September 30, 2024 largely due to lower yields on investments.
Interest Expense
Interest expense was $3.6 million for the three months ended September 30, 2025 and September 30, 2024, and related to interest expense incurred on our convertible notes.
(Benefit from) provision for income taxes
Benefit from income taxes was $0.3 million benefit for the three months ended September 30, 2025 compared to $0.3 million provision for the three months ended September 30, 2024. The $0.3 million benefit for the three months ended September 30, 2025 was a result of the impact of the One Big Beautiful Bill Act (the "OBBBA") as the Company
will no longer be required to capitalize its domestic research and experiment costs under Section 174 of the Internal Revenue Code.
Results of Operations for the Nine Months Ended September 30, 2025 and 2024
The following table summarizes our results of operations for the nine months ended September 30, 2025 and 2024 (in thousands):
Nine Months Ended September 30,
Change
2025 2024
Revenue:
Product sales, net $ 372,380 $ 236,979 $ 135,401
License and other revenue - 495 (495)
Total revenue 372,380 237,474 134,906
Operating expenses:
Cost of sales 71,976 58,863 13,113
Research and development 135,071 96,604 38,467
Selling, general and administrative 182,902 145,391 37,511
Total operating expenses 389,949 300,858 89,091
Loss from operations
(17,569) (63,384) 45,815
Other income (expense):
Interest income 9,307 10,588 (1,281)
Interest expense (10,791) (10,732) (59)
Other income, net
2,589 982 1,607
Net loss before provision for income taxes
(16,464) (62,546) 46,082
Provision for income taxes
1,169 1,606 (437)
Net loss
$ (17,633) $ (64,152) $ 46,519
Product Sales, Net
Product sales, net was $372.4 million for the nine months ended September 30, 2025, compared to $237.0 million for the nine months ended September 30, 2024. The increase in product sales, net was a result of our continued commercialization of Livmarli in the U.S. for the treatment of ALGS and PFIC, and in certain international markets directly or through distributor and partner orders and from our sales of the Bile Acid Medicines.
The following table disaggregates total Product sales, net (in thousands):
Nine Months Ended September 30,
2025 2024
Change
Product sales, net:
Livmarli $ 253,619 $ 149,202 $ 104,417
Bile Acid Medicines 118,761 87,777 30,984
Total product sales, net $ 372,380 $ 236,979 $ 135,401
Cost of Sales
For the nine months ended September 30, 2025, cost of sales was $72.0 million, compared to $58.9 million for the nine months ended September 30, 2024. The increase in cost of sales was primarily a result of increases in royalty expense of $11.2 million on net sales of Livmarli and the Bile Acid Medicines under licensing agreements, a $2.3 million increase primarily associated with increased PDUFA fees associated with the approval of our solid dose formulation in Livmarli and higher commercial supply chain costs of $2.8 million. These increases were partially offset by lower product cost of sales of $5.5 million primarily related to the Bile Acid Medicines, as we substantially completed the sale of acquired inventory in prior periods which had been recorded at fair value.
Research and Development Expenses
The following table summarizes the period-over-period changes in research and development expenses relating to our product candidates in development for the periods indicated (in thousands):
Nine Months Ended September 30, Change
2025 2024
Product-specific costs:
Livmarli $ 11,596 $ 20,187 $ (8,591)
Volixibat 37,382 23,140 14,242
MRM-3379 6,957 - 6,957
Non product-specific costs:
Stock-based compensation 18,529 10,978 7,551
Personnel 39,015 26,374 12,641
License fees (milestone payments) 5,000 - 5,000
Other 16,592 15,925 667
Total research and development expenses $ 135,071 $ 96,604 $ 38,467
Research and development expenses were $135.1 million for the nine months ended September 30, 2025, an increase of $38.5 million compared to the nine months ended September 30, 2024. The increase was primarily due to:
•for volixibat programs, an increase of $14.2 million, primarily due to increased expenses associated with conduct of the PSC and PBC trials as well as manufacturing development expenses;
•for MRM-3379, an increase of $7.0 million, primarily due to planning for our Phase 2 study in FXS and clinical manufacturing expenses;
•for personnel related and stock-based compensation expenses, an increase of $20.2 million related primarily to increased employee headcount and related equity award grants to support our development pipeline; and
•for license fees, an increase of $5.0 million due to a development milestone payment associated with our Livmarli Phase 3 EXPAND label expansion study, partially offset by
•for Livmarli, a decrease of $8.6 million primarily due to completion of clinical trials including the biliary atresia, PFIC rollover study and a safety study, lower general clinical support costs partially offset by increased expenses associated with the Livmarli Phase 3 EXPAND label expansion study.
Selling, General and Administrative Expenses
Selling, general and administrative expenses were $182.9 million for the nine months ended September 30, 2025, an increase of $37.5 million compared to the nine months ended September 30, 2024. The increase was primarily due to increases of $24.5 million in personnel and other compensation-related expenses, including an increase of $9.4 million in stock-based compensation, reflecting an increase in the number of our selling, marketing and administrative employees to support commercial activities for our approved medicines, $4.0 million in advertising, promotion and medical affairs expenses associated with commercial activities, $4.0 million in other general administrative expenses, $2.6 million of expenses associated with post marketing studies and $2.4 million associated with legal, accounting and other outside services.
Interest Income
Interest income was $9.3 million for the nine months ended September 30, 2025, a decrease of $1.3 million compared to the nine months ended September 30, 2024 largely due to lower yields on investments.
Interest Expense
Interest expense for the nine months ended September 30, 2025 was unchanged in comparison to the nine months ended September 30, 2024, and related to interest expense incurred on our convertible notes.
Liquidity and Capital Resources
Overview
Since inception, we have funded our operations primarily through debt, equity, revenue interest financings and, to a lesser extent, cash from our product sales and license and collaboration revenue. We had $378.0 million of unrestricted cash, cash equivalents and investments as of September 30, 2025, compared to unrestricted cash, cash equivalents and investments of $292.8 million as of December 31, 2024. We have incurred significant operating losses since our inception. As of September 30, 2025, we had an accumulated deficit of $661.8 million, compared to $644.2 million as of December 31, 2024.
In August 2025, we filed an automatic shelf registration statement on Form S-3 with the SEC (the "2025 Shelf Registration"), which became effective upon filing, pursuant to which we may register for sale from time to time in one or more offerings an unlimited amount of any combination of our common stock, preferred stock, debt securities and warrants, so long as we continue to satisfy the requirements of a "well-known seasoned issuer" under SEC rules. This automatic shelf registration statement will remain in effect for up to three years from the date it became effective. As of September 30, 2025, we have not issued any securities pursuant to the 2025 Shelf Registration.
In November 2023, we entered into a Sales Agreement (the "2023 Sales Agreement") with Leerink and Cantor Fitzgerald & Co. (the "Sales Agents"), pursuant to which we may, from time to time, sell up to an aggregate amount of $200.0 million of our common stock through the Sales Agents in an "at-the-market" offering (the "ATM Offering") pursuant to the 2025 Shelf Registration. We are not required to sell shares under the 2023 Sales Agreement. Sales of our common stock, if any, under the 2023 Sales Agreement may be made in any transactions that are deemed to be "at the market offerings" as defined in Rule 415 under the Securities Act. We will pay a given designated Sales Agent a commission of up to 3.0% of the aggregate gross proceeds of any shares of common stock sold through it pursuant to the 2023 Sales Agreement. As of September 30, 2025, we have not issued any securities pursuant to the 2023 Sales Agreement.
Based on our current and anticipated level of operations and cash generated from sales of our approved medicines, we believe our existing unrestricted cash, cash equivalents and investments will be sufficient to fund current operations through at least the next 12 months from the filing of this Quarterly Report on Form 10-Q and beyond.
While we generated net income in the third quarter of 2025, we anticipate that we will continue to incur net losses for the foreseeable future as we continue research efforts and the development of our product candidates, continue commercialization activities for our approved medicines and potentially expand into additional markets, hire additional staff, including clinical, scientific, operational, financial and management personnel and pay potential development milestones. Net loss is also impacted by significant non-cash charges related to stock-based compensation and amortization of intangible assets.
Our primary use of cash is to fund operating expenses. Our cash flow from operating activities may experience material quarter to quarter fluctuations due to a number of factors, including the timing of inventory builds, accounts receivable collections, receipt and payment of invoices, development milestone payments to our license partners as well as the magnitude and timing of cash receipts from our product revenues associated with periodic orders from Takeda and our distributors.
Our principal source of liquidity is product revenue from sales of our approved medicines. In recent quarters, liquidity from product revenues has been sufficient to fund current operations. There can be no assurances that future revenues will continue to be sufficient to fund operations. Should product revenues from our currently approved medicines, our current product candidates or any future product candidates, if approved, be insufficient to fund operations, we would expect to finance our cash needs through a combination of equity offerings, debt financings and potential collaboration, license or development agreements. Our primary cash needs are for day-to-day operations and to fund our working capital requirements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect rights as a stockholder. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.
If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may be required to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us. Additionally, if the equity and credit markets deteriorate from adverse geopolitical and macroeconomic developments or otherwise, it may make any necessary debt or equity financing more difficult, more costly and more dilutive. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce
or terminate our drug development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
Material Cash Requirements
In addition to ongoing capital needs to fund our ongoing operations, our material cash requirements include the following contractual and other obligations.
In April 2023, we completed an offering of $316.3 million aggregate principal of the Notes, which includes the exercise of the initial purchasers' option in full. The offering resulted in net proceeds of $305.3 million after deducting the initial purchasers' discounts and commissions and offering expenses. The Notes are our senior, unsecured obligations and accrue interest at a rate of 4.00% per annum, payable semi-annually in arrears on May 1 and November 1 of each year. The Notes will mature on May 1, 2029, unless earlier converted, redeemed or repurchased by us. The terms of these Notes are further described in Note 9 to our unaudited condensed consolidated financial statements.
During the third quarter of 2025, the last reported sale price of our common stock exceeded 130% of the conversion price of the Notes for more than 20 trading days during the 30 consecutive trading days ended September 30, 2025. As a result, the Notes are convertible at the option of the holders of the Notes during the fourth quarter of 2025, the quarter immediately following the quarter when the conditions were met, as stated in the terms of the Notes. If holders of the Notes elect to convert their Notes, we may elect to settle such conversions by paying or delivering, as applicable, cash, shares of our common stock or a combination of cash and shares of our common stock.
Under the Shire License Agreement, the Asset Purchase Agreement with Travere and license agreement with Enthorin as well as our other license and acquisition agreements, we have payment obligations that are contingent upon future events such as our achievement of specified development, regulatory and commercial milestones and are required to make royalty payments in connection with the sale of products developed under those agreements. The amount and timing of milestone obligations are unknown or uncertain as we are unable to estimate the timing or likelihood of achieving the milestone events. Additionally, the amount of royalty payments are based upon future product sales, which we are unable to predict with certainty. These potential obligations are further described in Note 6 to our unaudited condensed consolidated financial statements.
We additionally have contractual obligations for our operating leases for our corporate headquarters. These obligations are further described in Note 8 to our unaudited condensed consolidated financial statements.
We enter into contracts in the normal course of business with clinical research organizations and clinical sites for the conduct of clinical trials, non-clinical research studies, professional consultants for expert advice and other vendors for clinical supply manufacturing or other services. These contracts generally provide for termination on notice, and therefore are cancellable contracts.
We enter into commercial inventory supply agreements that obligate us to firm commitments for the purchase of minimum order quantities, which may be material to our financial statements.
Cash Flows
The following table provides a summary of the net cash flow activity for the periods indicated (in thousands):
Nine Months Ended September 30,
2025 2024
Net cash provided by operating activities $ 49,760 $ 15,393
Net cash used in investing activities (24,960) (90,766)
Net cash provided by financing activities 31,143 12,359
Effect of exchange rate on cash, cash equivalents and restricted cash 3,630 82
Net increase (decrease) in cash, cash equivalents and restricted cash $ 59,573 $ (62,932)
Net Cash Provided by Operating Activities
Net cash provided by operating activities was $49.8 million for the nine months ended September 30, 2025, reflecting our net loss of $17.6 million offset by adjustments of $73.1 million. Adjustments consisted primarily of stock-based compensation, depreciation and amortization of our intangible assets and fixed assets, and charges associated with excess and obsolete inventory and firm commitment losses. Additionally, cash provided by operating activities reflected a cash outflow for changes in net operating assets of $5.7 million, primarily related to an increase in accounts receivable and payments made for inventory and prepaid assets. The net use of cash was partially offset by an increase in accrued sales
deductions and royalties due to the growth from our product sales in the nine months ended September 30, 2025, an increase in accrued clinical trial expenses during the period and an increase in accrued interest in relation to the Notes.
Net cash provided by operating activities was $15.4 million for the nine months ended September 30, 2024, reflecting our net loss of $64.2 million partially offset by adjustments of $55.3 million. Adjustments consisted primarily of stock-based compensation, depreciation and amortization of our intangible assets and fixed assets, and charges associated with excess and obsolete inventory and firm commitment losses. Additionally, cash provided by operating activities reflected changes in net operating assets of $24.3 million, primarily related to the increase in accounts payable, accrued expenses and other liabilities resulting primarily from an increase in accrued sales deductions and royalties due to the growth from our product sales in the nine months ended September 30, 2024, and an increase in accrued expenses driven by our growth, including accrued expenses related to clinical studies and contract manufacturing activities, offset by payments made for the purchase of inventory.
Net Cash Used in Investing Activities
Net cash used in investing activities was $25.0 million for the nine months ended September 30, 2025, primarily due to purchases of investments offset by proceeds from maturities of investments.
Net cash used in investing activities for the nine months ended September 30, 2024 was $90.8 million primarily due to purchases of investments resulting from the changing interest rate environment and milestone payments associated with the approval of Livmarli for cholestatic pruritus in patients with PFIC in the U.S. and for the treatment of PFIC in the EU, offset by proceeds from maturities of investments.
Net Cash Provided by Financing Activities
Net cash provided by financing activities was $31.1 million for the nine months ended September 30, 2025, due to proceeds from employee equity award exercises.
Net cash provided by financing activities was $12.4 million for the nine months ended September 30, 2024, due to proceeds from employee equity award exercises.
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