Company: MIRM
Filing Date: 2025-02-26
Form Type: 10-K
Source: 0001759425-25-000014
Chunk: 135

Company: Mirum Pharmaceuticals, Inc.
Filing Date: 2025-02-26
Form: 10-K
Item: Item 7
Chunk 135
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 can be inconsistent and can create quarter-to-quarter variation in revenue.

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Table of Contents

License Revenue

Under the exclusive licensing agreements with CANbridge and GC Biopharma, we have recognized as revenue the upfront nonrefundable payments related to the licenses granted upon satisfaction of certain performance obligations. Pursuant to the agreements, we are eligible to receive future milestone payments. These milestone payments are fully constrained and will be recognized in revenue in the period when it is probable that a significant reversal of cumulative revenue recognized for the contract would not occur. We are also eligible to receive royalty payments related to the agreements, which will be recognized as the underlying product sales occur.

Our license revenue is dependent upon our licensees’ achievement of future milestones, which are not within our control, and we are unable to reliably estimate the timing of such revenues.

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. 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 exceeds the historical cost to manufacture the inventory and has a negative impact on our gross margin. As of the balance sheet date we have sold the majority of acquired inventory that is recorded at fair value. 

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. 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;

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