Madrigal Pharmaceuticals, Inc. (MDGL) Earnings Call Transcript & Summary

Hello. Welcome to the UBS Global Healthcare Conference. My name is Navin Jacob, senior analyst covering large-cap pharma and SMID cap biotech. Our next presentation and fireside chat is with Madrigal Pharmaceuticals. I'm happy to have with me today, Madrigal's management team; Becky Taub, Chief Medical Officer and Founder; as well as the other founder, Paul Friedman, Chairman and CEO; as well as Marc Schneebaum, CFO. Thank you all 3, for joining us today. We're going to have a short presentation given by Dr. Taub. And following that, we will do some Q&A. Thank you all for joining us, Paul, Becky and Marc. Becky, do you want to go ahead with your short presentation? And for folks on the line, when you see the slides online, you can scroll through them via the slide deck that's posted online. You can just click on the arrow button to go through. Go ahead, Becky.

Okay. Thank you very much. So these are -- this is a very brief overview of our program with resmetirom and if you look at Slide 1, resmetirom is currently in Phase III development. There are 2 ongoing Phase III clinical trials in patients with NASH. One, the pivotal Phase III trials called MAESTRO-NASH. It is well underway and is based on what our guidance is due to read out near the end of next year. So complete recruitment of the first 900 or so F2, F3 NASH patients by the end of this year. And so it's targeted, and it's a very similar trial to some of the other trials that have read out for NASH, such as the Intercept trial REGENERATE and Genfit's trial that just read out, RESOLVE, in terms of the patient population and the overall design of the study. And addition to a NASH resolution endpoint, there is a fibrosis reduction and liver fibrosis endpoint and an LDL-cholesterol lowering endpoint. And then post-approval for treatment of NASH based on the liver biopsy at week 52, there's a long-term outcome study to look at prevention of liver events. And what you see on the slide, in addition, is the approximate patient numbers with various stages of NASH of fibrosis. And so the number of F3, which is a more advanced stage right before cirrhosis and then F2 and then down the scale. Now one of the properties of resmetirom that is unique is that it also has the potential to provide cardiovascular benefits to NASH patients who die most frequently of cardiovascular disease. In fact, as it turns out, patients who have more advanced NASH fibrosis. Are at a greater cardiovascular risk, and this risk tends to go up with the more advanced their NASH is. And the fatty liver, than the advanced fibrosis of the fatty liver, et cetera, all contribute to cardiovascular risk. So in addition to lowering multiple atherogenic lipids, such as LDL cholesterol, APoB, triglycerides, Lp(a) resmetirom, as you'll see, also reduces the fatty liver and associated fibrosis. So we have another clinical trial. It's based on a real-life NASH cohort called MAESTRO-NAFLD-1, in which the diagnosis is based on noninvasive testing. And that study is also ongoing. It has an open-label arm. Its design is very similar to MAESTRO-NASH with the exception that it's not -- it doesn't require a liver biopsy. So this is -- this trial represents it's more similar to how NASH will be treated in the future. So that study is also ongoing, and both studies together will be used for approval, a subpart H approval for the treatment of NASH. So then on the next slide, get into a little bit more detail on the background of this target, which is a liver-directed thyroid hormone receptor beta agonist, that is the thyroid hormone receptor beta receptor in the liver, is responsible for the metabolic benefits of thyroid hormone, such as LDL cholesterol lowering and reduction of NASH, as we've shown. This is a very highly selective molecule. It's been in hundreds of patients already. It doesn't have exposure outside of liver or hit the thyroid hormone receptor alpha, which is the thyroid receptor that's present in most of systemic tissues, including the heart and bone. And is -- would be responsible for unwanted side effects of thyroid hormone. The mechanism of action of thyroid hormone receptor beta in the liver is pleiotropic. NASH patients have a deficiency of thyroid hormone receptor beta activity as we've shown and resmetirom is able to restore this activity to normal. So it reduces lipotoxicity, inflammation, ballooning, fibrosis both directly and indirectly. And the action to reduce liver fat or lipotoxic fat is primarily through the breakdown of fatty acids. And then the normalization over time of mitochondrial and liver function, both of which are deficient in patients with NASH. And then Slide 3 shows you what we are expecting to see from our Phase III clinical development program. So based on the data that we obtained from Phase II and the Phase II NASH extension study and the powering of the Phase III study, we believe that this is a highly powered clinical trial to achieve both the NASH resolution endpoint and the key secondary endpoints of reduction in fibrosis and reduction in LDL cholesterol. And then in the second trial, MAESTRO-NAFLD-1, truly a way to get a picture of all of the different biomarkers that change and improve with treatment with resmetirom. It provides additional safety database that we need for subpart H approval for NASH. And we'll show how we will use resmetirom once the drug is approved. And it will also add significantly to our database on the lowering of LDL cholesterol, multiple atherogenic lipids and reducing hepatic fat and also improving fibrosis biomarkers. So that will significantly differentiate resmetirom from other drugs currently in terms of Phase III NASH programs, given what the failure of Genfit's trial to meet the endpoint for NASH resolution, which was announced, I guess, in the last week or so. Resmetirom is the next Phase III clinical trial in NASH that would be up for completion. And so we believe that we're poised very well in -- with a highly differentiated molecule. Slide 4 shows the data from -- that we had in a recent press release that is analysis of our Phase II data -- our Phase II liver biopsy data in which we were able to demonstrate -- this was a presentation that would have taken place at EASL in April. And now it's -- I guess it's put off till the end of August, but we released the data about the same time, it would have been released at EASL. And what's shown here is that liver fat reduction at 3 months after starting resmetirom has predictive power for NASH resolution and fibrosis reduction on a subsequent liver biopsy. The Phase III doses, 80 and 100 milligrams, we've shown, based on Phase II data, delivered at least 50% to more than 60% reduction in liver fat. And these were associated with statistically significant, high incidence of NASH resolution and about a 60% fibrosis reduction. And we also showed additional data that resmetirom reduces not only the formation of new fibrosis, but resolution of ongoing fibrosis also occur. So the net -- the markers of net collagen deposition are reduced. And this supports the antifibrotic action of resmetirom. And in the graph, what you see is that the higher the PDFF, the more like -- the PDFF reduction, the more likely NASH resolution and fibrosis reduction occur. And that in patients with this magnitude of fat reduction, there's high likelihood that they'll have both NASH resolution and fibrosis reduction. So if we then go to the last slide and we compare this type of activity to other pathways. You see that resmetirom has a high potential in NASH patients to show both NASH resolution and fibrosis reduction and also reduction in cardiovascular markers, where most of the other therapeutics have either show an incomplete response. So for example, there was a -- with the Novo Nordisk molecule that was just shown, there was a NASH resolution, but there wasn't a fibrosis improvement. And we, not shown on this slide, but the PPAR alpha -- delta molecule did not show either NASH resolution or fibrosis reduction. The FXR and FGF19 pathway does show fibrosis reduction and NASH resolution with FGF19, but there's also a marked increase in LDL cholesterol. So this is a highly differentiated -- resmetirom is highly differentiated from other NASH agents. It's a once-a-day oral medication and potentially a best-in-class NASH therapeutic. It's obviously a molecule that can combine with many other mechanisms and it can be used with a -- and is being used with the other types of medications that NASH patients are taking, including other lipid-lowering drugs and antidiabetic therapeutics. So I'll stop here, and we'll take questions now.

Perfect. Thanks so much, Becky. We'll -- maybe just at a high level before we dig into some of the details. Obviously, we can't escape COVID-19. Just wondering if you could give us an update on how the trials have been going for the NAFLD study as well as for the MAESTRO-NAFLD and MAESTRO-NASH for -- is there any delay in time lines as far as you see? Any kind of color would be helpful.

Yes. So what we said in our press release, and it's true, and we were just on the phone this afternoon, this morning -- this afternoon with a bunch of other companies, NASH companies and FDA and experts in NASH. It's a group called the Liver Forum. And what we did was not -- it was similar to other companies, I think what we might -- what we did was a little bit faster -- we were very fast to respond to the potential COVID-19 restrictions that occurred. Both in Europe, U.S., Australia, we issued a guidance that was consistent with regulators in all of these countries that allowed patients to continue in the trial if they were already enrolled in the trial. And this is -- I'm talking about MAESTRO-NASH now. MAESTRO-NAFL, which is only a U.S. study, there wasn't a significant impact, and we can talk about that. So MAESTRO-NASH -- because it's a serial liver biopsy study for new screening, that was held up for a few weeks because there was a general guideline across many countries that elective procedures like liver biopsies were not being done. And so therefore, that meant that new screens -- we held off on new screens during that time period. And now because most of our sites are in areas of the country -- and the U.S. that are in the southern part of the country, they have had less restrictions. And most of the liver biopsy sites are now open. And we've never really had much issue with other, the imaging sites, et cetera, et cetera. So we see with just to mention MAESTRO-NAFL, that study doesn't require a liver biopsy. So it -- we're on target with the open-label -- of that for the end -- before the end of this year. And that study in general hasn't been impacted with MAESTRO-NASH. We ask that the sites continue to identify patients to screen. And then once the restrictions at the sites were lifted, we're hoping to see a burst of screening. So we haven't made any comments about the time lines with MAESTRO-NASH at this point as to whether we'll have an impact of a couple of months or whatever on the net screening in that trial. But we will, once we see how the reopening goes. But I do think it's fair to say that the reopening has been occurring, as you've seen sort of general reopening recurring, the conduct of clinical trials in the United States, in particular, has opened up as well.

And Paul, maybe or Marc, for you, with regards to supply of product and inventory can you just confirm for us that there's no disruption in ability to supply MGL-3196 resmetirom for the clinical trials.

Yes. So we already had all the drug supply for the clinical trials. And we are -- our manufacturing if that's what you're asking about was -- our manufacturers or U.S.-based. We haven't had impacts on manufacturing of our drug.

Perfect. And then so Becky, you alluded to interim analysis in the second half from MAESTRO-NAFLD and from MAESTRO-NASH as well towards the end of the year or second half. What some of the inferences or read-throughs that we can make? I think so far, we will see that LDL data, safety data, any noninvasive biomarker data that we're going to see, particularly as it relates from -- to NAFLD, what are some of the -- whether it's from the interim or the final look, what are some of the read-throughs we can make from the noninvasive data in NAFLD as it relates to NASH?

Yes. So I mean, I think, one of the big questions that I think we've answered really well, but both in our Phase II and now in our Phase III, including the MAESTRO-NAFLD-1 and MAESTRO-NASH is, in the long term, liver biopsies are not going to be used to diagnose NASH. They're going to be -- NASH is going to be diagnosed the way we're diagnosing it in MAESTRO-NAFLD-1, we're using noninvasive testing. And even in MAESTRO-NASH, we are prescreening with noninvasive testing to identify patients with NASH, who then go on to have the liver biopsy. And our liver biopsy success rate in MAESTRO-NASH is very high. So I think just providing this real-world data and showing the feasibility of using noninvasive testing to effectively diagnose NASH is a really important component. We're also carefully assessing the level of cardiovascular risk in both studies. And this is different from the way other companies approach NASH patients. So we're approaching them as more the whole patient. And what is that patient's risk going to be? What is their clinical risk? So we have a huge data set there and then in MAESTRO-NASH. Again, we're going to be following patients based on the impact on noninvasive markers. So markers, right now, MRI-PDFF is a very expensive test, but it's one that shows the impact of the drug. Obviously, things that are less specific like liver enzymes, we're finding that PRO-C3 is a very robust biomarker. It's one that we've used. And has recent publications that show that it's very -- not only correlated with the stage of fibrosis, but also the stage of NASH. So that -- those sorts of biomarker results in addition to the obvious ones like the cardiovascular risk factors like LDL, APoB and triglycerides will all be part of the output. And I think what people will see is the dose effect. So there's going to be more data at the 100-milligram arm, than what we had in the Phase II. The Phase III employs both an 80-milligram arm and 100-milligram arm. So we'll see more data on the 100-milligram arm from the open-label study. And that, I think, will read -- it's going to read through to how we're going to follow these patients in the long run, and it's also going to read through to the expected outcome from the serial liver biopsy from MAESTRO-NASH, where we've shown a very good correlation of the biopsy results with the PDFF and the effect on the PRO-C3 biomarker.

And then with regards to NASH and the 52-week endpoint, when you measure -- when you take biopsies for NASH solution and fibrosis improvement. What are some of the data points that we should be looking through -- looking at whether it's from your studies or outside of your studies that suggest you get better efficacy over time that there was a progressive effect or there's slowing of the disease, that could allow for a better outcome at 52 weeks relative to the 36-week time point data that we've seen from the Phase II study?

Yes. I mean, I think, 52 weeks is kind of an ideal time. That's why we chose it. It's long enough to see a clear difference between the drug treated and placebo. But as you go longer, it becomes very difficult for the patients to stay in the study. It's just the way all long-term studies are. So that's why we chose 52 weeks. We already saw a very clear difference at 36 weeks, and we thought that 52 would be ideal.

But are there any sort of -- are there specific data points that you look at to show -- that give you confidence that you're going to continue to see even better efficacy by having patients on drug out through 52 weeks I guess?

Well, I don't -- I'm not sure I understand the question. I mean, I think that the doses we're using, we've shown are very efficacious based on Phase II, and we expect them to be very efficacious in Phase III as well. And I think there's -- that's the translation. I don't think that we really -- the difference between 36 and 52 weeks is the major difference. I think we've already shown that 80 work better than 60 in the Phase II and that 100 worked better than 80 in the extension study, and we're carrying 80 and 100. And the NASH resolution rate was already high at 80 in the Phase II study.

Well, that's -- sure. So dose translation but not necessarily time translation. A dose response that not -- you're suggesting that perhaps there's not as much of a time response going from 36 to 52 weeks.

Yes. That's right. But I think it makes sense that 52 weeks would give you a better separation from placebo than 36 weeks. I guess that's what I'm saying.

Sure. And then -- and we'll talk about NASH and NAFLD in quite a bit of depth as we continue forward. But there is one sort of -- I think when the company was initially starting out with resmetirom. There was a positioning of the product as potentially also having a dyslipidemia indication, we move towards -- well, you always were a NASH company, but also work following this potential dyslipidemia indication. You moved more towards NAFLD specifically and continue on with NASH. But I guess, why move away from dyslipidemia is an indication as well, just given that we've now seen a lot of companies starting to return to the CV metabolic space. We've seen, obviously, PCSK9 RNAi, a big part associated with that with Amarin's VASCEPA product, to its patent issues, had a relatively large equity value associated with it. I think in part because many drugs that have originally been -- which I think the CV space have been considered extremely commoditized. But after years of no new innovation, I think there is sort of a hunger for that treatment-resistant refractory population. Wondering if there's a place -- and maybe that's what NAFLD is, but beyond an NAFLD, if there is a place for resmetirom in the "dyslipidemia" setting, particularly given all the effects that you have on multiple different lipids. Any thoughts there? Or is sort of NAFLD the clear sort of indication you want to go and don't necessarily want to go down with dyslipidemia?

So let me be clear. NAFLD is NASH. It's not a different disease. We're not talking about -- so NAFLD means the whole spectrum of fatty liver disease. And we're only really focused on those with NASH fibrosis. And the reason for that is really that they have more cardiovascular risk. So we're not looking at using the drug in patients with kind of fatty liver, where they just have fat in their liver and maybe they're 35 years old, and they don't really have cardiovascular risk. So we're looking at really more of a risk population and we call it NAFLD-1 because it differentiates from a serial liver biopsy study, but it's still NASH. And why we think that's important. And I agree with you, if you look at dyslipidemia space, of course, this drug could be helpful in other forms of dyslipidemia. But where we think it really has the best ability is in NASH because the fatty liver is an important risk factor for cardiovascular disease. And's so if you take that component plus the other lipid-lowering properties of the drug, there's a very high potential for cardiovascular benefit in NASH patients with this drug. And it's something that we're exploring, but we're -- it's not something we'd go for pre-approval for NASH. So what we are hoping for is that we'll have LDL lowering in our NASH label, but not as a separate indication. And that possibly -- and this is something we're still looking at. But possibly, we will look at sort of post-approval, showing that the drug has the cardiovascular benefit in this population. We are in the long term -- the 2,000 patient outcome study. We are looking at liver events, of course, but we're also looking at cardiovascular events. And then with additional studies, we could look at cardiovascular events. And we see that as a clear point of decision, especially among the usual providers for NASH-NAFL patients are -- the endocrinologists or diabetologists. It's not the hepatologists that have most of these patients. And so I don't know if that makes sense. But what we -- we're really interested in, what we see that happened in the diabetes space where the SGLT2 inhibitor was just another diabetes drug. But then when it actually showed cardiovascular benefit, it became the preferred drug. So we're thinking of resmetirom with that potential profile down the road. It's not something we're doing immediately. Right now, we're focusing on our NASH studies, but it is something that we have in mind.

Got it. So just to be clear that if you were to do a CV separate CV outcome study, that would be something that you start post-approval for NASH as opposed to thinking about starting that anytime soon.

Yes. I mean it's -- even if we started it before, it wouldn't read out until after the approval.

Yes. Of course. And then you touched upon some competitive assets. It's impossible to talk about NASH. Without talking about the landscape, given how many assets are being developed with many different mechanisms and even within the same mechanisms you see vastly different results sometimes. And so you touched upon Novo's semaglutide, which showed a placebo-adjusted roughly 40% NASH resolution. They also showed a 10% numerical difference in fibrosis improvement, which wasn't statistically significant. Wondering how you think about the fact that they showed a very large NASH resolution improvement at 72 weeks. It wasn't translating necessarily to a fibrosis improvement. How do we think about that? And then can you describe some of the differences that may be associated with that? How do you think about the GLP-1 mechanism versus THR-beta agonism that could lead to a difference in how NASH resolution translates to fibrosis improvement? Or are they completely separate?

Yes. So I mean, I they -- Novo showed almost no data. So it's really -- so usually, we try to talk about comparisons when there's actually been at least a presentation by a NASH expert or the principal investigator of a trial or a publication. So it's really hard to interpret what they showed. And we don't know how they measure NASH resolution. We don't know who their pathologist is. And so we just -- we can't interpret it. But I would say that their fibrosis data is negative. And the reason I say that is that if you look at what happens with NASH resolution with our mechanism with NGM with the FGF19. We'll see what happens with Akero. But I think it's going to be in the same line, is that there's going to be a coincidence of -- and I even believe Intercept's drug, there was a coincidence in Phase II, and they chose not to talk about it in Phase III. And this is what you expect to see. These are all drugs that act in the liver. Ours happens to be an oral drug. And FGF19 is an injectable. But they're working in the liver, and they're having direct anti-inflammatory action in the liver as well as lipotoxic reduction of fat. And there is a correlation between fat reduction, NASH reduction and fibrosis reduction. So what I think GLP may turn out to be is kind of the outlier where GLP doesn't have a direct effect in the liver. It's never been shown that weight loss effectively reduces fibrosis. In fact, the study everyone quotes is the weight loss with NASH resolution, 60% of those patients, I mean it was an odd cohort, didn't have -- they were [ F0 ] or they didn't have any fibrosis. So it's not a -- it's never been proven and I think it's fair to say that it would have been seen in this study. If we took our NASH resolution data and we had that percent, we would see a fibrosis response in the study. There -- I mean we've done the math, and it's just -- they're not seeing a fibrosis response.

Yes. And we also had some other data sets come out or news rather solid tumor-based seladelpar starting up again. While Elafibranor failed both PPARs. Any learnings from the readout, particularly of Elafibranor their higher than usual placebo activity in the RESOLVE, the trial?

Yes. So this is one of the reasons that we use a more stringent NASH resolution endpoint, then because what they're looking at is of patients with low NASH scores to begin with. And you can have patients of all fibrosis stages that have low NASH activity and it's just variability that is NASH resolution. I mean you basically need 1 point change in the NASH score to call it NASH resolution. That's nothing. I mean that's arbitrary. So I think -- I don't think that these placebo patients are necessarily better or that the drug treated are necessarily better. Some of them may be. But I'm sure that there's a significant percentage. It's just biopsy variability and not a real change. And so they use that endpoint because their drug wasn't robust enough to see a greater improvement in NASH.

Last question on the competition. Akero will have fibrosis data for AKR-001 soon what are your thoughts on -- you talked about FGF19, what are your thoughts about FGF21 as a mechanism?

Yes. So I mean, I think that at Akero's data is really the same data in line with BMS' data. They have a more potent molecule than BMS. Again, this was a press release and they don't have biopsy data or they didn't have biopsy data. But given the activity I know from BMS publication, that I would expect that they'll have activity, NASH activity that it will reduce NASH activity as well.

And finally, I think we're running up against time here. But what are your thoughts of potentially combining resmetirom, particularly because of how clean and safe it has looked, it certainly looks like it could be combined with other mechanisms, that's always been something that's been talked about. But yet, we still haven't seen those kind of combo trials being set up. Understanding that it's challenging to do so when nothing is yet approved, but we have seen potential for combination trials happening in other therapeutic areas, even before approval of one of the components has been completed. Any thoughts there? Or do we wait for an approval of an asset before combinations are started?

Yes. So I wasn't sure if you meant like a fixed combo -- combination.

No. Not necessarily fixed. And just curious about just the idea of looking at any regimens that are a combination of NASH products. Is that something that you are interested in? Only from the perspective of if it was something that could be combined together in an oral-fixed combination, that what we would be interested in. Is that what you're saying?

Okay. So I mean I'm not -- so what I'm saying is that for like GLPs, for example, those are [ in use ] in our clinical trial. So we would have some combination data from our clinical trial with GLP analogs. And that's obviously approved but not approved for NASH. If there is a drug approved for NASH, I'm sure that at some point, we will show the safety of dosing our drug with, for example, with obeticholic acid or whatever. That would be a normal thing to do. But it's very hard to select the drug to do a combination when they're kind of in Phase IIa. And certainly, with the injectables, it's really hard to it's not a natural combination. I think from a market perspective, 2 separate expensive drugs would be a bit of a hard sell. So you would want to think about it in a somewhat different way in terms of the type of combination. Like it would be better if -- like a GLP, that would make sense because they're already a prescribed medicine, if you understand what I'm saying. You're not adding 2 new drugs each of which has a high price. And that's why a fixed combination, which you could sell as one drug would could make sense. That's why I asked that question.

Fair enough. Well, with that, we're up against time. Thank you so much to Dr. Becky Taub and Marc Schneebaum and Paul Friedman as well with Madrigal. We really enjoyed this discussion. Thanks so much, everyone.

Thank you. Bye-bye.