Genetic Testing And Global Launches Will Expand Rare Disease Access

Key Takeaways

• Expanded patient identification and accelerated adoption of therapies are driving growth beyond market expectations, with international markets providing significant additional revenue potential.
  
• Advances in diagnostics and a strong financial position enable Mirum to extend treatment durations, acquire new assets, and maintain robust profitability and pricing power.
  
• Heavy reliance on a concentrated rare disease portfolio and high R&D spending exposes Mirum to significant regulatory, pricing, and competitive risks that threaten future profitability.

Catalysts

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

• Analyst consensus highlights the addressable patient population for Mirum's therapies increasing due to improved diagnosis and disease awareness, but this may substantially understate the magnitude and speed of expansion since recent data suggest there are far more undiagnosed later-onset PFIC and other cholestatic conditions than previously believed, with specialist outreach revealing new patients every quarter; this enhanced patient identification could propel revenue growth well above current estimates.
  
• While analysts broadly agree international launches and reimbursement wins (such as in Japan) will be durable drivers, they may not fully appreciate how the adoption curve is accelerating, especially with early prescription feedback indicating rapid uptake outpacing initial projections and key geographies (Europe, Middle East, Asia) potentially adding hundreds of millions in incremental sales, driving top-line revenue and operating leverage.
  
• Unprecedented advances in next-generation genetic and biomarker testing are not only expanding diagnosis rates but also enabling targeted therapy earlier in the disease course, leading to higher patient retention, longer treatment durations, and ultimately higher per-patient lifetime revenues.
  
• Mirum's ongoing cash flow positivity and robust balance sheet give the company a unique position to opportunistically acquire or in-license additional rare disease assets, allowing it to swiftly build a diversified pipeline with high-margin revenue expansion potential and accelerate earnings growth.
  
• With the strong global focus and policy momentum around rare disease reimbursement, pricing, and expedited regulatory pathways, Mirum's existing and future entries could enjoy sustained premium pricing power and minimal generic/biosimilar competition for many years, supporting superior gross and net margins.

Mirum Pharmaceuticals Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Mirum Pharmaceuticals compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Mirum Pharmaceuticals's revenue will grow by 26.8% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from -13.6% today to 16.9% in 3 years time.
• The bullish analysts expect earnings to reach $147.6 million (and earnings per share of $2.97) by about September 2028, up from $-58.6 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 41.9x on those 2028 earnings, up from -66.6x today. This future PE is greater than the current PE for the US Biotechs industry at 15.3x.
• Analysts expect the number of shares outstanding to grow by 4.65% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.81%, as per the Simply Wall St company report.

Mirum Pharmaceuticals Future Earnings Per Share Growth

Risks

• Mirum's current and forecasted revenue growth relies heavily on its rare disease portfolio, especially Livmarli, creating significant revenue concentration risk should any regulatory, clinical, or commercial challenge emerge, and this could result in a steep reduction in top-line revenue and increased earnings volatility.
  
• The company's substantial R&D expenses, highlighted by a quarterly R&D spend of $46 million against net product revenue of $128 million, underscore its reliance on successful clinical trial outcomes for pipeline expansion; late-stage trial failures or delays would increase costs and dampen future earnings growth.
  
• Increasing U.S. and international pricing pressure from governments and insurers, combined with expanding value-based reimbursement requirements, poses a threat to the company's ability to maintain current pricing and net margins over the long term, potentially pushing down profitability.
  
• Mirum's ability to access favorable financing may worsen as interest rates remain elevated and capital becomes costlier for small-cap biotech firms, leading to either higher dilution for shareholders or limits on R&D investment, ultimately restricting future revenue and earnings growth.
  
• Heightened scrutiny from regulators and potential competition from both biosimilars and larger pharmaceutical companies entering the rare disease and hepatology spaces could erode Mirum's market exclusivity and bargaining power with payers, compressing revenue and net margins in the long run.

Valuation

• The assumed bullish price target for Mirum Pharmaceuticals is $89.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Mirum Pharmaceuticals's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $89.0, and the most bearish reporting a price target of just $53.0.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $874.2 million, earnings will come to $147.6 million, and it would be trading on a PE ratio of 41.9x, assuming you use a discount rate of 6.8%.
• Given the current share price of $77.69, the bullish analyst price target of $89.0 is 12.7% 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.