Mirum (MIRM) Q3 2026 Earnings Call Transcript

DATE

Tuesday, Nov. 3, 2026

CALL PARTICIPANTS

• Senior Vice President of Strategic Finance and Investor Relations - Andrew McKibben
• Chief Executive Officer - Christopher Peetz
• President and Chief Operating Officer - Peter Radovich
• Chief Medical Officer - Rob Myers
• Chief Financial Officer - Eric Bjerkholt

TAKEAWAYS

• Net Product Sales -- $185.7 million for the third quarter, representing a 40% increase from $133.0 million in the prior year quarter.
• LIVMARLI Revenue -- $133.4 million, reflecting 45% growth year over year driven by steady uptake in Alagille syndrome and expansion into the adult PFIC market.
• U.S. LIVMARLI Sales -- $100 million for the quarter, highlighting the significance of the domestic market for the company's lead product.
• Bile Acid Medicines Revenue -- $52.3 million, a 28% increase from $40.8 million in the prior year quarter reflecting growth in CHOLBAM and CTEXLI.
• Full-Year 2026 Guidance -- Increased to a range of $715 million to $720 million, reflecting strong year-to-date performance across the product portfolio.
• Net Loss -- $40.8 million for the third quarter, compared to a net income of $2.9 million in the third quarter of 2025.
• Diluted Net Loss Per Share -- $0.87, compared to a diluted net income per share of $0.05 in the prior year period.
• Cash Contribution Margin -- High 50s percent of sales for the commercial business, contributing to a cash use in operations of approximately $4 million.
• Cash Position -- $500.5 million in cash, cash equivalents, and investments as of Sept. 30, 2026, providing liquidity for upcoming product launches.
• Debt Management -- Repurchased $20 million in aggregate principal of 4.0% convertible notes for $62 million in cash, reducing the outstanding 2029 note balance by over 80%.
• R&D Expense Outlook -- Management expects R&D expenditures to remain at approximately 50% of revenue for two more quarters before decreasing to 10% of revenue long term.
• Growth Cadence -- Management anticipates a revenue step-up of $10 million to $15 million per quarter to persist through the end of 2026 and into 2027.
• Adult PFIC Market Opportunity -- Management identified at least 2,000 addressable patients in the United States, representing a potential growth driver for LIVMARLI.
• ATEBRIOZ Launch -- Commenced in October 2026 for FOP patients aged 12 and older, following FDA approval in September.
• Regulatory Filing Timeline -- Submissions planned in the first half of 2027 for volixibat in PSC, LIVMARLI in biliary atresia, ATEBRIOZ for younger pediatric patients, and Brelovitug in HDV.
• Peak Revenue Target -- Management reiterated a peak revenue potential exceeding $4 billion for the current product and pipeline portfolio.
• Takeda Revenue Impact -- Revenues were minimal in the third quarter, and management does not expect new orders in the fourth quarter.
• SG&A Expenses -- $70.4 million on a cash basis for the quarter, excluding stock-based compensation, as the company expanded commercial efforts.
• R&D Expenses -- $93.6 million on a cash basis, including $42.1 million dedicated to the development of Brelovitug.
• Accounts Receivable -- $156.3 million as of Sept. 30, 2026, an increase from $123.3 million at the end of 2025 due to higher sales volume.

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RISKS

• Radovich noted that while the adult PFIC market is a significant driver, the substantial majority of those patients remain undiagnosed, which requires expanded commercial efforts and genetic testing to improve diagnosis rates.
• Radovich indicated that testing rates for hepatitis delta remain low, with only single-digit percentages of hepatitis B patients having received a delta test, representing a challenge for market development.
• Peetz acknowledged that the company's regulatory interactions regarding primary sclerosing cholangitis occurred mostly in 2019 and 2020, representing a more distant timeframe compared to other active programs.

SUMMARY

Mirum Pharmaceuticals, Inc. (NASDAQ:MIRM) reported total net product sales of $185.7 million for the third quarter of 2026 and increased its full-year revenue guidance. Management stated that the company is transitioning toward a phase of financial independence, with expectations to reach cash-flow-positive status in 2027 as research and development expenses are projected to decline relative to total sales. Strategic priorities remain focused on the commercial launch of Atebrioz and the preparation of five regulatory filings in the first half of 2027, including applications for volixibat and Brelovitug. The company also improved its capital structure by repurchasing a portion of its 2029 convertible notes, reducing future interest expense and potential dilution.

• Peetz stated, "The strong performance commercially paired with our pipeline advancements positions us to be cash flow positive next year."
• Radovich stated that management expects Atebrioz to experience "faster adoption dynamics" than the historical trajectory seen with the LIVMARLI rollout.
• Peetz noted that the primary objective of regulatory meetings for the primary sclerosing cholangitis program is to familiarize the agency with the data in preparation for the filing.
• Bjerkholt reported that research and development spending is expected to "decrease rapidly" to approximately 10% of revenue after two more quarters of elevated activity.
• Radovich noted that diagnosis rates for hepatitis delta are historically low, as single-digit percentages of patients with hepatitis B have ever received a delta test.
• Peetz indicated that the company is entering its next phase of growth from a position of strength as it approaches its eighth anniversary with four approved medicines.

INDUSTRY GLOSSARY

• ALT: Alanine aminotransferase, an enzyme found primarily in the liver that is used as a marker for liver health and disease activity.
• BSEP: Bile salt export pump, a protein responsible for transporting bile acids out of liver cells.
• FOP: Fibrodysplasia ossificans progressiva, a rare genetic connective tissue disease characterized by the abnormal formation of bone in muscles and soft tissues.
• HDV: Hepatitis delta virus, a serious liver disease that only occurs in people who are also infected with the hepatitis B virus.
• IBAT: Ileal bile acid transporter, a protein responsible for the reabsorption of bile acids in the small intestine.
• PBC: Primary biliary cholangitis, a chronic disease in which the bile ducts in the liver are slowly destroyed.
• PFIC: Progressive familial intrahepatic cholestasis, a group of rare genetic disorders that cause progressive liver disease.
• PSC: Primary sclerosing cholangitis, a chronic liver disease characterized by inflammation and scarring of the bile ducts.

Full Conference Call Transcript

Operator: [Operator Instructions] Good afternoon, and welcome to Mirum Pharmaceuticals Third Quarter 2026 Earnings Conference Call. My name is Joel, and I will be your operator today. [Operator Instructions] I would now like to hand the conference over to Andrew McKibben, SVP of Strategic Finance and Investor Relations. Please go ahead.

Andrew McKibben: Thank you, Joel, and good afternoon, everyone. I'd like to welcome you to Mirum Pharmaceuticals Third Quarter 2026 Conference Call. I'm joined today by our Chief Executive Officer, Chris Peetz; our President and Chief Operating Officer, Peter Radovich; our Chief Medical Officer, Rob Myers; and our Chief Financial Officer, Eric Bjerkholt. Earlier today, Mirum issued a press release announcing the company's results for the third quarter of 2026. Copies of the press release and our SEC filings are available on the Investors section of our website.

Before we start, I'd like to remind you that during the course of this conference call, we'll be making certain forward-looking statements based on management's current expectations, including statements regarding Mirum's programs and market opportunities for its approved medicines and product candidates and financial guidance. These statements represent our judgment and knowledge of events as of today and inherently involve risks and uncertainties that may cause actual results to differ materially from the results discussed. We are under no duty to update these statements. Please refer to the risk factors in our latest Form 10-Q and subsequent SEC filings for more information about these risks and uncertainties. With that, I'd like to turn the call over to Chris. Chris?

Christopher Peetz: Thanks, Andrew. Third quarter was another strong period for Mirum, both commercially and across our clinical programs. We generated $186 million in third quarter net product sales, and we are increasing our full year net product sales guidance to $715 million to $720 million. We've also had great progress across the portfolio since our last earnings call, positive phase III AZURE-1 data for Brelovitug, positive EXPAND data for LIVMARLI, the approval and launch of Atebrioz, and another positive Atebrioz readout in younger patients. Our recent progress feels quite meaningful as Mirum approaches its eighth anniversary. It's remarkable to think about what this team has accomplished in 8 years.

We started Mirum around a simple idea that by identifying important opportunities in rare diseases, combining great medicines with relentless execution, we could have a meaningful impact for patients and build an enduring company. 8 years later, we now have 4 approved medicines, a commercial business approaching $0.75 billion in annual net product sales and a late-stage pipeline with multiple opportunities to drive our next phase of growth. Coming up, we have 2 more potentially registrational readouts approaching with the Brelovitug AZURE-4 study in HDV expected this quarter and the volixibat VANTAGE study in PBC expected in the first quarter of next year.

Together, these are part of 5 potential approvals and label expansions ahead of us as we work towards realizing the greater than $4 billion peak revenue potential of the Mirum portfolio. So 8 years in, we're entering our next phase from a position of real strength, and we're excited to touch on some highlights and updates today. With that, I'll turn the call over to Peter. Peter?

Peter Radovich: Thanks, Chris. The third quarter was another excellent quarter for Mirum's commercial business with $186 million in net product sales. LIVMARLI continues to be the primary growth driver, with third quarter net product sales of $133 million, including $100 million in the United States. Our bile acid medicines also provided steady growth, generating $52 million in net product sales for the quarter. Continued growth across LIVMARLI and our bile acid medicines has allowed us to increase that outlook throughout the year. And based on our performance through the first 9 months, we are increasing full year guidance today to $715 million to $720 million.

This is a testament to our high-impact medicines and high-performing team dedicated to getting them to patients. For a little more color on LIVMARLI. In Alagille syndrome, uptake remains steady and durable, supported by new patient starts, persistence on therapy and weight-based dose increases. PFIC continues to be an important driver, particularly among adults, where we believe there are at least 2,000 addressable patients in the United States, though the substantial majority of these patients remain undiagnosed. Greater awareness of later onset PFIC and increasing use of genetic testing will continue to help improve diagnosis rates. And we are expanding our commercial efforts on this front, which should lay a strong foundation for 2027.

This expansion will also enable our other upcoming potential launches for LIVMARLI, volixibat and Brelovitug. I'm also happy to say that our fourth medicine, Atebrioz, was approved in September for adults and pediatric FOP patients ages 12 and older, and our U.S. launch commenced in October. Atebrioz is a natural addition to our rare genetic disease business. The FOP community is uniquely engaged and the response to the approval to date reinforces our belief that Atebrioz can address a significant unmet need for patients and families living with FOP with the convenience of oral dosing and a mechanism designed to address the underlying cause of the disease.

Our near-term focus is on patient identification and access, and we're encouraged by the strong early engagement from patients, caregivers and health care professionals. Overall, I'm very happy with the progress we made this quarter. We are growing our existing medicines, launching our fourth medicine and laying a strong foundation for multiple new potential indications and launches in 2027 and beyond. With that, I'll turn it over to Rob. Rob?

Rob Myers: Thanks, Peter. It's been an exciting couple of months for Mirum, significant clinical progress across rare liver and rare genetic -diseases. We are now working towards 5 potential regulatory submissions across the portfolio, NDAs for volixibat in PSC and PBC, a BLA for Brelovitug and hepatitis delta, a label expansion for Atebrioz in FOP and an sNDA for LIVMARLI based on the EXPAND study. Starting with volixibat and PSC, we continue to make progress toward our planned NDA submission in the first half of 2027. We remain confident in the strength of the VISTAS results and the potential for volixibat to address an important unmet need for patients with PSC and pruritus.

We look forward to submitting our NDA and we'll provide an update if there's any material change in our plans or an FDA's prior feedback. We've also recently reported positive results from 3 important studies across the portfolio. In FOP, Cohort 2 of the pivotal PROGRESS study extended the encouraging Atebrioz results into children ages 6 to under 12. The results were consistent with Cohort 1 with reductions in heterotopic ossification, encouraging improvements in joint mobility and a safety profile consistent with that observed in older patients. The mobility findings are particularly encouraging in a progressive disease like FOP, where preserved function by -- preserving function by intervening early is especially important.

Our next step is a planned sNDA submission in the first half of 2027, to potentially expand Atebrioz to children ages 6 to under 12. Cohort 3 evaluating zilurgisertib in even younger children continues to enroll. Now turning to the liver portfolio. EXPAND was another positive Phase III study for LIVMARLI, meeting its primary endpoint and all prespecified secondary endpoints with particularly encouraging results in biliary atresia. These findings further strengthen the body of evidence supporting IBAT inhibition for pruritus across a range of underlying cholestatic liver diseases. And in hepatitis delta, the positive Phase III AZURE-1 results provide important validation for Brelovitug, demonstrating meaningful improvements across key measures of virologic and liver disease activity.

We'll build on this momentum at AASLD later this week, where we'll present new data across our rare liver disease portfolio, including the full AZURE-1 results and longer-term Brelovitug data as well as additional analyses from VISTAS and LIVMARLI data in rare cholestatic liver disease. Without getting ahead of these presentations, we're particularly excited by the growing body of evidence with Brelovitug, showing deepening virologic suppression and continued improvements in ALT normalization and liver stiffness with longer treatment, including in patients with cirrhosis, a population with particularly urgent unmet medical need.

Looking beyond AASLD, we expect the AZURE full readout this quarter, an important next milestone for the Brelovitug program and our planned BLA submission in the first half of 2027. Overall, these recent clinical successes, together with the regulatory milestones ahead, give us strong confidence in the potential for our portfolio to deliver meaningful new treatment options for patients. With that, I'll turn it over to Eric to discuss the financials. Eric?

Eric Bjerkholt: Thanks, Rob, and good afternoon, everyone. Our third quarter financial performance reflects our ongoing operating priorities, continued top line growth with focused investment in bringing our late-stage programs through several potential approvals and launches. As Peter mentioned, net product sales for the third quarter were approximately $186 million compared with $133 million in the third quarter last year. Through the first 9 months of the year, net product sales were approximately $522 million, which I'm excited to point out already equals full year 2025 revenues. In the third quarter, the cash contribution margin from our commercial business was in the high 50s percent of sales and cash used in operations was approximately $4 million.

Total operating expenses for the quarter were approximately $245 million. cost of sales of approximately $28 million, SG&A expense of approximately $70 million, R&D expense of approximately $94 million, all on a cash basis, in-process research and development of $13 million and stock-based compensation, depreciation and amortization expense of $40 million. Our investment in R&D reflects the breadth of activity across our expanded late-stage pipeline as well as the planned manufacturing expenses for our HDV program. On a cash basis, R&D was approximately 50% of revenues as expected. We expect this level of R&D spend to continue for approximately 2 more quarters. In total, revenues this quarter exceeded expectations, while expenses are on plan.

We also took steps this quarter to improve our capital structure. In September, we repurchased $20 million in aggregate principal amount of our 2029 convertible notes for approximately $62 million in cash, thus further reducing both future dilution and ongoing interest expense. This follows the financing we completed in the second quarter when we issued $690 million of 0 coupon convertible notes due in 2032 and settled 75% of the outstanding 2029 notes. Together, these transactions have reduced the outstanding balance of our '29 notes by over 80%, while preserving substantial financial flexibility. As of September, cash, cash equivalents and investments were approximately $500 million.

Our commercial business continues to scale, and our balance sheet gives us the resources to support our upcoming launches and late-stage clinical programs. With that, I'll turn the call back to Chris.

Christopher Peetz: Thanks, Eric. We're keeping stock of where we are today, Mirum is at a strong inflection point. Commercial business continues to outperform, driving an increase in our full year guidance. We launched Atebrioz as a fourth commercial medicine and including the Atebrioz supplemental NDA for younger patients, we have 5 upcoming approval opportunities to further accelerate the commercial business. The strong performance commercially paired with our pipeline advancements positions us to be cash flow positive next year. As we wrap up our prepared remarks, I want to direct attention again to the upcoming Brelovitug datasets being presented at AASLD this weekend.

With data maturity now out to 2 years from the early program, we'll be able to share more of a complete picture of what Brelovitug can achieve for patients with hepatitis delta. And as we approach our eighth anniversary, I'm incredibly proud of what this team has built, but even more excited about what's ahead as we enter a unique period of commercial growth, multiple launch opportunities and strong financial performance. And finally, as always, I want to thank the entire Mirum team for their exceptional execution and the patients, families and physicians whose partnership keeps us focused on what matters most. We have a lot to look forward to. With that, operator, please open the call for questions.

Operator: Operator Instructions] Your first question is from Josh Schimmer with Cantor Fitzgerald.

Joshua Schimmer: Just a couple of quick ones. First, were there any Takeda purchases of LIVMARLI this quarter or expected in the next quarter as part of the revised guidance? And then second, for the CHENODAL and the CHOLBAM CTEXLI -- CTEXLI franchise, at least combined, you're starting to get to levels that I think historically, you've suggested might attract generic interest or competition, not necessarily breaking out the relative contribution of each, but how should you -- how should we be thinking about modeling the exclusivity of that franchise?

Christopher Peetz: First, I can hit on the bile acid franchise. And we are really excited with how these have grown. Just as a quick reminder on the backdrop on exclusivity. For CHOLBAM that is now is beyond its orphan exclusivity time period. But CTEXLI does have orphan protection. They're both contributors here. And for both of them, we actually -- we've not seen an entrant. That's really all we have visibility to at this point to speak to. So you can see the trends we're seeing for the near term in any case to roll forward. And I'll ask Eric to maybe speak to Takeda dynamics.

Eric Bjerkholt: Yes. So we had very minimal revenues from Takeda this past quarter, and we don't really expect any new orders in Q4.

Operator: Your next question is from Kalpit Patel with Wolfe Research. Your next question is from Brian Skorney with Baird.

Luke Herrmann: Could you provide a little more color on the -- your confidence in the timing of the planned PSC submission? What's the next regulatory touchstone we should be looking for here? This is Luke, by the way.

Christopher Peetz: On the PSC situation, for the time being, really nothing changed in what we're -- what we can speak to and the status of the program. Strategy is underway. And as we spoke about previously, multiple different touch points as we work towards a potential submission in the first half of next year. I think we're really confident in the datasets. Rob called out some of the abstracts at AASLD that touched on IBD safety, for example, some of that work coming out of our prep for that NDA submission. So just kind of come back to -- we feel really confident in our guidance to submit an NDA in the first half of next year.

Beyond that, no material updates to what we've seen or heard.

Luke Herrmann: Great. And then on Atebrioz, I guess, has there been any difference in the early launch experience thus far as compared to your expectations going into it?

Christopher Peetz: It's early days. I'll hand over to Peter to give some color.

Peter Radovich: Yes, Luke, as Chris mentioned, early days, just launched in October, so we're a couple of weeks in, but really positive feedback from patients, caregivers, physicians, I think high receptivity to the value proposition we see with Atebrioz. So we're really excited, but obviously, early days to get any more detail than that.

Operator: Your next question is from Gavin Clark-Gartner with Evercore ISI.

Yesha Patel: This is Yesha on for Gavin. We were just wondering if ahead of the Q1 VANTAGE readout for PBC, there were any blinded baseline or trial conduct metrics you're expecting to share, in particular, maybe like baseline itch severity, background therapies, discontinuation rates, anything along that realm?

Christopher Peetz: I think maybe Rob can speak to a little bit of the trial design, but probably not too much on the actual data to speak to at this point.

Rob Myers: Yes. Really not much to report at this point. I mean we're still tracking towards reporting the data in the first quarter of next year. I think premature to talk about baseline characteristics and aspect of study conduct at this point.

Operator: Your next question is from Kalpit Patel with Wolfe Research.

Kalpit Patel: Two from us. For the guidance raise, is most of that related to the adult PFIC patients that are growing for LIVMARLI? Or are there other areas that are contributing to that growth? And then for the second question, for the PSC IBD subgroup data that you'll be presenting, can you comment if those data have been submitted previously to the FDA? Or are these new analysis that need to be set?

Christopher Peetz: I mean I can just touch on the PSC one briefly and then hand the guidance question over to Peter. I mean these are new analyses. So kind of more detailed review of data that FDA had not seen previously.

Peter Radovich: Yes. Kalpit, on the guidance question, we do see strength across the portfolio, continued growth in Alagille syndrome, bile acid products doing very well. But adult PFIC is the biggest driver. And we have line of sight now after several quarters of this cadence of $10 million to $15 million quarter-on-quarter step-up for that to persist through this year and through next year as well.

Operator: Your next question is from Ryan Deschner with Raymond James.

Ryan Deschner: Congrats on the quarter. I'm curious on sort of your expectations for the relative launch trajectory for Atebrioz. And if you expect at least early on, any sort of -- any signs of a bolus kind of coming in for that to sort of slow down later on in the early launch. Just curious on your thoughts there.

Christopher Peetz: I'll let Peter speak to that and probably even speak to the kind of broader portfolio as we roll into next year.

Peter Radovich: Yes. The Atebrioz early adoption and inbound interest has been really strong, and we're excited about that. I think if I were to compare the Atebrioz launch trajectory and adoption curve to LIVMARLI, probably will be faster. I think you take LIVMARLI, we're in Alagille syndrome. It's been about 5 years since the original FDA approval and about 50% of addressable patients with Alagille syndrome have gone on LIVMARLI, and we're still seeing growth quarter-over-quarter. And I think if you were to think about that as a comparator, we would expect Atebrioz to be faster adoption dynamics at this point.

Christopher Peetz: The one thing I'd add on is, as you look at Q4 and even into next year, the cadence of growth we've seen for total revenue in this kind of $10 million to $15 million a quarter, we fully expect that to continue throughout next year.

Operator: Your next question is from James Condlis with Stifel.

James Condulis: And maybe just one on PSC, and I appreciate there's only so much you could say. But I think you've mentioned in the past that in the discussion with the FDA, there was nothing really new you felt was new that wasn't in the original VISTAS study. And just curious if that's still the case from your perspective? And then just like in general, do you expect there to be a sort of formal alignment here kind of ahead of filing? Or is it just sort of TBD in terms of how the discussion evolves?

Christopher Peetz: Overall, because of the situation we're seeking multiple different interaction points, multiple meetings, we're not providing kind of meeting-by-meeting updates. So really, what I can say is we're pointing towards that first half NDA -- and kind of remind on the goal here is given that the dataset is so robust and there's a lot to review, the goal of the interactions we're having is to get more familiarity with the data set before submission, not necessarily, in all cases, complete alignment.

Operator: Your next question is from Jessica Fye with JPMorgan.

Jessica Fye: I was looking at the press release, and it looks like there is a lot of regulatory submissions going in, in the first half of 2027. And I was curious if you could just speak to kind of the organizational bandwidth to bring in additional assets via business development during what seems like a really busy time. Basically, should we expect a little breather on the BD side in the near term while you get all these things into the FDA?

Christopher Peetz: Yes, it is a very busy first half of the year for submissions. You're absolutely spot on with that. We've done a lot -- we saw this coming. So we've done a lot to organize for it, and we're in really good shape from a team standpoint on having these efforts staffed and expect that we'll be able to manage through it without issue. In terms of what it means for BD? We continue to be opportunistic. So if the right opportunity comes, we want to be able to pursue it. However, more of an earlier clinical stage opportunity would be a little easier to add in at this point.

But that doesn't mean we're not continuing to have an opportunistic lens on all opportunities.

Jessica Fye: Does that include commercial stage?

Christopher Peetz: Yes, absolutely. I mean I'd pass it over to Peter to kind of talk about our lens on, again, more broadly on BD scope and targets that we like.

Peter Radovich: Yes. I mean, as Chris mentioned, I think our philosophy is you always have to be active and we look clinical stage through commercial stage. We think about rare disease as a capability in the therapeutic area in and of itself have the know-how to be successful with rare disease medicines, whether it's development, regulatory, patient finding, patient access. We feel really good about the capabilities we've built there and kind of look broadly for underappreciated rare disease assets where we think we could potentially add value.

Operator: Your next question is from Yigal Nochomovitz from Citi.

Yigal Nochomovitz: Congrats on the strong quarter. I just want to switch topics on to HDV and the AZURE-4 readout. Obviously, that's a second Phase III trial, which is good. But can you just speak to what additional nuances or additional learnings you might glean from AZURE-4 to further drive the strength of the BLA? And then with regard to the HDV market, could you just talk to what you're watching for in terms of HDV diagnosis rates potentially expanding as you get closer to a launch?

Christopher Peetz: I'll ask Rob to maybe recap some of the A ZUR4 design and rationale and then let Peter speak to the market question.

Rob Myers: Yes. AZURE-4 is an important part of the registrational package for Brelovitug in the U.S. And just as a reminder, it's designed very similarly to AZURE-1, with the exception of patients in the late treatment arm crossing over 12 weeks instead of 24 weeks. And in terms of our expectations, of course, we expect to see complementarity in -- or consistency in the neurologic responses and ALT normalization as well as safety to that which we observed in AZURE-1.

Peter Radovich: Then in terms of the question on HDV diagnosis rates and kind of how we see this undeveloped market developing over time. We actually have a small team that's pretty active now doing disease state education and awareness with the providers across the country who manage hepatis B patients and in areas where they likely have undiagnosed delta patients as well. And I think one of the things we've learned as we've been out in the field is there's really been very little testing to date. There's papers that show single-digit percentages of -- low single-digit percentages of hep B patients have ever received a delta test.

So I think one of the big pushbacks from providers historically has been lack of therapies for this condition. And I think we're seeing that change now and look to see increased interest in testing over time and excited about the early trends we're seeing.

Operator: Your next question is from Mike Ulz with Morgan Stanley.

Michael Ulz: Congratulations on the strong quarter as well. Maybe just a follow-up on volixibat and the upcoming VANTAGE data next quarter. Can you just remind us what the bar is on pruritus and then what you think is sort of a meaningful benefit there?

Christopher Peetz: I can make a couple of observations and ask Rob to maybe speak to expectations. I think the one thing that I'd point towards is for the study, we have the interim readout. So we kind of -- we know what's possible for volixibat really substantial improvements versus placebo over a 2-point placebo-adjusted difference. That is really compelling and competitive if we're anywhere in the ballpark of what we saw in the interim. And I don't know, Rob, do you have anything to add on to that?

Rob Myers: Yes. Just that the interim data were quite compelling. As mentioned, we see over a 2-point placebo-adjusted improvement in the volixibat arms. We've done a bit of work to validate the adult ItchRO to show that this magnitude of reduction is actually clinically important. And so we feel very confident going into the readout next quarter.

Operator: Your next question is from Lisa Walter with RBC Capital Markets.

Lisa Walter: Congrats on the quarter. Maybe just given the recent challenges with the FDA and PSC, just curious if the same group of regulators will also be reviewing your filings for biliary atresia as part of the EXPAND study as well as a potential filing for PBC. And if so, what gives you confidence that the FDA will understand those rare diseases a little bit better and your trial designs better versus what we have seen for PSC? Any color here would be helpful.

Christopher Peetz: From a simple standpoint, these are all with the liver division. However, knowing who is assigned to the review is something we don't have visibility to at this point in time. What I would say is for VANTAGE and for expand, really clear dialogue along the way on study design, all of the choices we made in those studies and some of it quite recent interactions. So I do feel confident in our position heading into those submissions. And the one thing I'd add on is what the contrast of that to PSC is that interactions with PSC were really mostly in 2019, 2020, so a bit more distant just from a time standpoint.

Operator: Your next question is from Joe Schwartz with Leerink Partners.

Joseph Schwartz: Can you talk about what we should watch for at AASLD for Brelovitug in terms of the full AZURE-1 presentation, what our focus should be? And will any updates from the Phase II trials be presented to? And then we noticed that the Brelovitug BLA is now described as subject to supportive AZURE-4 results. Is that new caution or just standard language? And can you talk about what counts is supportive? And given that AZURE-4s control group waits only 12 weeks, would you file on AZURE-1 plus the Phase IIb data if AZURE-4 were more mixed?

Christopher Peetz: On that last point, there's nothing new here. So AZURE-1 and 4 have always been the proposed Phase III package for Brelovitug. And the simple way to think of it is the study was designed with the FDA before orphan designation was granted. So they were looking for 2 pivotals. Really nothing different from patient population overall dynamics here that would suggest a big difference between the 2. It's just about having 2 pivotals. Now we do have orphan designation. So hindsight, hard to say how that would have been treated, but that's the case and has always been the plan for submission. And I'll ask Rob to maybe give the highlights and directions for AASLD.

Rob Myers: Yes. We have some exciting data on Brelovitug at AASLD. As you mentioned, we'll present the AZURE-1 results in full 24-week data, Phase III data and as well the 48-week Phase IIb component of. And then lastly, we have an abstract on patients with cirrhosis from the original Phase II study who've been treated out to 2 years. And really, that entire data package, it's really robust. I mean it tells us that we do see excellent rates of virologic suppression and ALT normalization as early as week 24, that with prolonged treatment, greater virologic suppression, greater rates of ALT normalization, including in patients with advanced disease cirrhosis. And quite significantly elevated ALT.

So I think the Brelovitug package is quite strong. Looking forward to our AZURE-4 data by the end of this year.

Operator: Your next question is from Jon Wolleben with Citizens JMP.

Jonathan Wolleben: I was hoping to get some more color on how you guys are thinking about your peak sales guidance in HDV and then PBC, PSC. Just given the relative prevalence and moving dynamics in those markets, what's underlying that $1 billion? Or is that just a simple guidepost to think of as a starting point? Just wondering how granular you guys have gotten internally there?

Christopher Peetz: The one thing I'd say is overall meant to be an approach on how we give these on giving kind of greater than a certain target, important lens to put on it as you're thinking about it, but Peter can speak a little bit to some of the color on how we came to these numbers.

Peter Radovich: Yes. So I think in delta the guidance of greater than $1 billion, there's a lot of ways to get there, quite frankly. I mean, even if you just look at the U.S. market today, about 15,000 patients diagnosed with insurance under management, you don't only really need to get a few thousand of those on therapy chronically to get towards that greater than $1 billion guidance. Obviously, we know this is an underdiagnosed disease. And as we commented, very low rates of testing have happened historically in the U.S. And not to mention, there's a substantial international opportunity for Brelovitug as well.

So I think I'd say the theme there, a lot of ways to get to greater than $1 billion. And as you move over to vol, PSC, PBC, similar addressable patient population in the U.S. for PSC, about 20,000 patients with PSC and pruritus, no competition there. And then PBC, a larger addressable market with about 50,000 addressable patients in the U.S., but a bit more competition. But I think you could kind of do the math in a number of different ways to get to the kind of numbers you need to get to, to get to the greater...

Operator: Your next question is from Charles Wallace with H.C. Wainwright.

Charles Wallace: This is Charles on for RK. So for my first question, I was wondering how should we think about the R&D spend going forward in fourth quarter and then also 2027 with the placebo-controlled portion of AZURE-1 and 4 studies completing. I'll come back with my second question.

Christopher Peetz: Speak to some of those trends?

Eric Bjerkholt: Yes. So we like to measure it both in absolute terms and also as a percent of revenue. And as I alluded to in my comments, the past couple of quarters we have been around 50% of revenue. We think that's going to continue at about that pace for 2 more quarters and then subsequently decrease rapidly, I think, to 10% of revenue. That should be true long term as well.

Charles Wallace: And then for my second question, beyond the AZURE-4 results, what additional items remain before you can file the BLA in the first half for Brelovitug?

Christopher Peetz: For Brelovitug, it really just comes down to pulling together the submission. So all of the work streams from both the clinical studies and the CMC submission all tracking towards being ready first half. So all that's a lot of document prep and write-up that's left to do.

Operator: Your next question is from Joseph Thome with TD Cowen.

Joseph Thome: Maybe another one on HDV. We may have several agents approved for HDV, I guess, currently or over the next couple of years here. What do you see as sort of the main differentiating features of Breobitug based on the data you have in hand that will drive adoption of Breobitug over some of these others? And then second, when we think about the potential cadence of BA coming online for LIVMARLI, obviously, the FDA just kind of ask you to do this based on request. Is there a pocket of patients ready to come on therapy rapidly? Or will it be gradual? Kind of how should we think about the cadence of that launch?

Christopher Peetz: I'll make a couple of observations on HDV and let Peter add to it and speak to BA as well. But the one thing I'd say is when we put together the transaction with Bluejay around Brelovitug, what we found really exciting about this program is that you had a fully human antibody that was a single treatment that could drive continued improvement over time to some really impressive response rates, both on normalizing liver inflammation and on controlling and lowering viral levels. A lot of that data is what we're looking forward to sharing this weekend at AASLD to show updates on what that can get to at 2 years.

That kind of gives the answer to how we think about our positioning with HDV. Pass over to Peter to touch up and add the BA comments.

Peter Radovich: I think it's very well stated on HDV. And on the BA question, these patients are at the same centers, the pediatric liver docs that prescribe LIVMARLI today for pediatric PFIC and Alagille patients. So it's -- the patients are there. As you noted in your kibbenkkquestion, the study was really started as a response to inbound interest from clinicians to use the product in this way. So it's a pretty captive audience who we're very familiar with the product who have these patients in our clinic under management now.

Operator: There are no further questions at this time. I will now turn the call back to Chris Peetz, CEO, for closing remarks.

Christopher Peetz: Great. Thanks, everyone, for joining today's call. Looking forward to a strong end of the year and a busy 2027. Good afternoon, everyone.

Operator: This concludes today's call. Thank you so much for attending. You may now disconnect.

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