FDA And Japanese Approvals Will Open New Markets

Key Takeaways

• Strong revenue growth and recent regulatory approvals are set to expand market reach and positively impact future revenues.
  
• Advancing clinical pipeline and new product formulations could significantly boost future earnings by capturing greater market share.
  
• Increasing operating expenses and reliance on new drug approvals could hinder profitability and revenue growth due to regulatory and market challenges.

Catalysts

A biopharmaceutical company, focuses on the development and commercialization of novel therapies for debilitating rare and orphan diseases.

• Strong revenue growth driven by commercial execution: The company experienced a 61% increase in total revenues compared to the first quarter of the previous year, and they raised their full-year revenue guidance to $435 million to $450 million. This robust growth reflects successful expansion of their commercial medicines, potentially impacting future revenue positively.
  
• Recent regulatory approvals: Three significant regulatory approvals, including FDA and Japanese market approvals for their medicines, will likely expand their market reach and increase patient access. These approvals are expected to boost revenues in new and existing markets.
  
• Advancing clinical pipeline: Enrollment in the VISTAS study for PSC and anticipation of top-line data by the second quarter of 2026 are notable catalysts, as PSC has no approved therapies. The success of these studies could significantly impact future earnings by opening up a new market.
  
• Introduction of new formulations: The new single tablet formulation of LIVMARLI and its upcoming patent extension to 2043 can improve patient adherence and convenience, potentially impacting net margins positively by capturing a greater market share and protecting it from competitors.
  
• Financial position strength: The company is cash flow positive and has improved its cash contribution margin, reflecting increased operational efficiency. Such financial discipline can enhance gross and net margins, positively affecting overall earnings in the future.

Mirum Pharmaceuticals Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Mirum Pharmaceuticals's revenue will grow by 20.5% annually over the next 3 years.
• Analysts assume that profit margins will increase from -20.4% today to 8.9% in 3 years time.
• Analysts expect earnings to reach $59.2 million (and earnings per share of $0.82) by about July 2028, up from $-77.3 million today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as $31.5 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 76.9x on those 2028 earnings, up from -33.4x today. This future PE is greater than the current PE for the US Biotechs industry at 16.5x.
• Analysts expect the number of shares outstanding to grow by 3.83% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.46%, as per the Simply Wall St company report.

Mirum Pharmaceuticals Future Earnings Per Share Growth

Risks

• The financial results show a strong increase in operating expenses, such as R&D and SG&A expenses, which may impact net margins despite revenue growth.
  
• The company's profitability is affected by significant noncash charges, which suggests it may not reach profitability in a GAAP sense anytime soon, impacting earnings.
  
• Volixibat's progression depends on the upcoming study results, but there is always a risk that these trials may not meet endpoints, affecting future revenue projections.
  
• Due to the reliance on new drug approvals like CTEXLI and LIVMARLI, any regulatory delays or market access challenges could impact revenue growth.
  
• There is potential volatility with international inventory and sales, especially since this dynamic was noted as a new factor this quarter, which could impact revenue stability.

Valuation

• The analysts have a consensus price target of $68.6 for Mirum Pharmaceuticals based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $79.0, and the most bearish reporting a price target of just $53.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $663.3 million, earnings will come to $59.2 million, and it would be trading on a PE ratio of 76.9x, assuming you use a discount rate of 6.5%.
• Given the current share price of $52.19, the analyst price target of $68.6 is 23.9% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.