Mirum Pharmaceuticals, Inc. (MIRM) stock intrinsic value fair value estimate & owner earnings analysis

Mirum Pharmaceuticals sells medicines for rare liver and bile-acid diseases: Livmarli (for cholestatic itch in Alagille syndrome and progressive familial intrahepatic cholestasis), Cholbam and Ctexli. Product sales grew from $19 million in 2021 to $521 million in 2025 and reached $336 million in the first half of 2026. About 77% of 2025 sales were in the United States, with the rest in Europe, Canada, Japan (through partner Takeda) and other countries. How we measure earnings. We start from operating cash flow, remove the cash effect of working-capital swings, subtract stock-based compensation as a real cost, and subtract the small maintenance part of capital spending (total capital spending is under $1 million a year). On that basis the company lost between $1.29 and $5.70 per share in each of 2021 through 2024 and earned $0.07 per share ($3.5 million) in 2025, its first positive year. Only 2025 reflects a business of today's scale, so we use it as the reference point instead of a multi-year median; the earlier years describe a company still launching Livmarli (approved September 2021). The January 2026 acquisition. Mirum acquired Bluejay Therapeutics, which owns brelovitug, an antibody in development for chronic hepatitis D, for $224 million in cash plus about 4.7 million shares, and raised $268.5 million in a share sale. The first-quarter 2026 net loss was about $790 million against $67 million in the second quarter; the difference is tied to the acquisition and is a one-time cost that we do not carry forward. Brelovitug is not approved and the company's volixibat trials are still under way, so we give neither any value. For consistency we also leave out the extra research spending that funds brelovitug: second-quarter 2026 research expense was $90.5 million against $46.1 million a year earlier, and we hold research at roughly the 2025 level of $190 million a year. This is a judgement, and it matters: if the company keeps spending at the current rate and the drug fails, shares are worth less than our base case, and if the drug succeeds they are worth more. At the current spending rate the business consumes cash after stock compensation. Base case, $7.90 per share. Revenue of about $680 million in 2026 (the first half's $336 million, annualized), then growth of 8% in 2027 and 5% in 2028, flat through 2032. Livmarli is a chronic therapy that patients stay on and it is approved in the United States, the European Union, Canada and Japan; that supports modest growth, and we credit far less than the +55% of 2025 and roughly +40% of the first half of 2026. Owner earnings rise from $0.07 per share in 2025 to about $1.00 in 2027 and about $1.30 from 2029. The 2025 improvement of $1.36 per share over 2024 is larger than the improvement assumed for 2027, so no reversal of a slowdown is being assumed. Costs: selling and administrative expense of about $335 million, research of $190 million, and cost of sales and related direct costs at about 19% of revenue. Cost of sales was about 15% in 2025 but near 23% in the second quarter of 2026; we could not reconcile that increase from the filings and used a midpoint. Livmarli has no composition-of-matter patent. Its method-of-use patents expire in October 2032, and a patent on tablets and solid dosage forms runs to October 2043. We assume generic competition begins to erode sales in 2033 and fades earnings to zero by about 2038. Bear case, about $(0.40) per share. Revenue stalls at the 2026 level and cost of sales stays near the recent 23%, leaving owner earnings close to break-even. Generic makers were permitted to file applications for Livmarli from September 29, 2025; in this case a generic is approved in mid-2029 after a successful challenge to the patents, sales fall sharply, cost cuts only partly keep pace, and owner earnings turn negative that year. The company's $316 million of 4.00% convertible notes mature in May 2029, which would have to be repaid or refinanced at the same moment. On this measure the shares are worth slightly less than nothing, roughly $0.40 each. Bull case, about $22.40 per share. Livmarli sales grow 20% in 2027, 12% in 2028 and 8% in 2029, continuing the recent trend as Livmarli's approved Alagille and PFIC labels in Europe and Japan (approved March 2025) build, cost of sales stays near 19%, selling and administrative costs grow only modestly, and generic erosion is slower, beginning in 2034 and helped by the tablet patent to 2043. Margin-of-safety price. The margin-of-safety price is about $3.00, well under the base case, because the range of outcomes is wide, Livmarli depends on patents that are method-of-use only, pipeline spending is rising, and the notes come due in 2029. What would make this wrong. Higher-than-assumed cost of sales, faster growth or margin gains than we credit, or approval of brelovitug or volixibat would raise value; earlier generic competition, or continued heavy pipeline spending without approvals, would lower it. Up to $25.8 million in cash and 522,375 shares still owed to Bluejay holders, and up to $200 million of commercial milestones for brelovitug, are not included; the milestones would be payable only if the drug succeeds commercially.