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

Thank you for joing us on the second day of our 44th Annual Goldman Sachs Conference. We're really pleased to have the team from Madrigal with us, Paul Friedman, CEO; Becky Taub, President of R&D and CMO; Remy Sukhija, Chief Commercial Officer and Alex Howarth, CFO. With that, thank you, guys, for joining us this morning.

Paul and Becky, maybe I'll start with you. You guys have been in the NASH space for so many years, leaders in this space. Maybe from a high level, what has the last year meant to you to the space, the progress that's been [ named ] not only by yourselves, but by your competitors? And then maybe describe to us what it means to be here on the cusp of having the first approved therapy in NASH.

Yes, I'll talk about -- so I think -- thanks, first of all. And what I think one of the things to think about is that NASH drugs now -- it's almost -- it's been almost 10 years since we actually saw some data from serial liver biopsy, NASH trials starting with obeticholic acid in the FLINT trial. Almost, it was 2014, I think, when that data came out that showed the potential for a drug to modify -- disease modifying in NASH on both endpoints of fibrosis and NASH or the inflammatory state of the liver. And then subsequently, there were a number of programs targeting fibrosis or targeting NASH or targeting both, including some Phase III programs that were unsuccessful. And I think the early promise was been followed by some discouragement, to your point. And many drugs in Phase II also failed to show good efficacy on liver biopsy endpoints. Our Phase II trials had a lot of focus on a primary endpoint, which was liver fat lowering after 12 weeks and followed by liver biopsy data at 36 weeks. And we were able to show this relationship between what occurred by 12 weeks, which was a very -- highly significant liver fat reduction, and then reduction of NASH and resolution of NASH at 36 weeks. However, in Phase II, resmetirom did not achieve the fibrosis endpoint, which we attributed to small study size, and actually the rose the stage of the patients. And that has been a lot of the issue in the Phase II trials that the studies have not been large enough to really see the full effect of the drug and that Phase III studies are very difficult. So in the last year, I think we've seen some successful Phase IIs that have had -- last 2 years, some successful Phase II that have achieved either NASH resolution or -- and/or fibrosis benefit from semaglutide, from lanifibranor, from a couple of the FGF21 programs. And of course, Madrigal with our Phase III data announcement in December that in a 1,000-patient serial liver biopsy, a 52-week Phase III study in NASH patients that both endpoints of NASH resolution and fibrosis reduction were achieved. And so we're in process of submitting our NDA for approval -- for accelerated approval for the treatment of patients with NASH and liver fibrosis to the FDA now. So that's where we are.

Yes, I don't -- I have little to add to that. I think the field -- there's an uptick in excitement because -- and people have learned more about how not to fail in the clinical trials, and the compounds seem more on target for targets that matter. So I think it's an exciting time for a disease state that is in great need of something to treat these people.

And you'll have data next week at EASL. Maybe help frame for us what we should be specifically focused on that we haven't seen in the top line data release.

Yes. So the EASL data will be a more complete analysis of the liver biopsy results and the other results from the study. So just to first mention, this is a Phase III study. It's an analysis based on intention to treat. So every patient who did not have a liver biopsy at the week 52 time point, is considered a nonresponder. And so given that the study was conducted during COVID and that it's also hard to get liver biopsy, serial liver biopsies, this dilutes the treatment effect in a Phase III study. However, the endpoints were very highly [ statistically ] significant. So one of the things we'll show an EASL is really what the true response is in patients for either NASH resolution or fibrosis reduction or both and, I think, will be convincing that resmetirom responders is a very high percentage relative to placebo of patients, who are treated with the drug and continue on the treatment. And both doses we dosed, showed similar effects on the endpoints, the 100 milligram, the higher dose, was slightly better, and we'll be showing subgroups and the consistency of the data in various groups of patients, males, females, F2, F3, those sorts of data. Other liver biopsy endpoints will also show the types of imaging and biomarker endpoints that may be useful for following patients in real world. We do not expect with an approved drug of NASH that patients will be diagnosed based on liver biopsy. There will be other types of tests that are used to demonstrate that they have NASH with significant liver fibrosis. And so it will be very important to show data that how risk [ met ] around modified some of these measures as a correlate for a treatment response.

Perfect. And maybe I'll ask you as a follow-up there. On the back of this data, there was a lot of debate around your endpoint and NASH versus NAS and whether or not you were in true alignment with the FDA. Maybe just to level set here, where did this debate stem from? How confident are you that the FDA is in agreement with you on your selected endpoints?

Yes. So our end points were approved in 2018. So more than 5 years, we've not changed our endpoints. The endpoints are the same as we had in our Phase II study. They are reasonably likely to predict clinical benefit. I think that's kind of a silly -- there is no such thing as worsening of NASH. You have to say what you're actually measuring, and NAS is the measure of NASH. So we use worsening of NAS. However, I can tell you that resmetirom lowers every component of NASH. So it wouldn't matter what the endpoint is. When fibrosis is reduced, NASH has also reduced by any parameter. So it doesn't matter is the point.

Is there a scenario where you would come out and present that data set as a...

No, because it's not valid to show any of that. I mean I've seen that perhaps other drugs, why that might have been a concern of FDA with other drugs is that they can cause some liver damage. And so even if it looked like fibrosis went down, there might have been a concern by FDA that some other aspects of the liver looked worse. But this was not a concern with resmetirom. So we have no concern about it.

It doesn't happen. In Phase II, not a single...

There was not a single instance of a component increasing...

Got it. You touched upon this slightly, but you're in the throes of preparing for this NDA submission. Maybe just an update on where you stand there? And if you are still on track for the first half of this year?

Yes. We're still on track. And it's a lot to put together. We -- a lot of times, we don't speak with at meetings or with investors about the totality of the program, but we have almost 20 clinical trials, including a very large number of Phase I trials and obviously, a large nonclinical package and drug manufacturing package. And all of that has to go into the NDA. It's a big commitment.

How important is breakthrough therapy designation?

So the breakthrough therapy designation, we had Fast Track, which gives you most of what's needed for the type of NDA review process that you would want. And we got breakthrough status based on our Phase III data, which we said to the agency. And the fact that we got it on the -- with the Phase III data, we believe, is very helpful for us and -- when we request a priority review, which is you request at the time of your NDA submission, which would then be a more rapid target, would be a 6-month review as opposed to a longer review cycle. So that's the utility of it.

Perfect. Last month, we saw an [ Ad Comm ] for your competitor Intercept. Anything to take away from that or potential [ read-through ] that you see to Madrigal and to resmetirom?

I think that -- first of all, that [ Ad Comm ] was very, very helpful to us for a couple of reasons. Certainly, provided us with the perspective that the FDA has, around approval of NASH drugs, their adherence to the endpoint, the fact that they actually do not like liver biopsy as a methodology, which was stated in their briefing book, and also, their commitment to risk benefit and demonstrating risk benefit in the patients -- benefit over risk in the patients who are treated in an approved drug. We also were able to see the advisory committee, which we had not -- we weren't quite sure who was on the advisory committee. And -- so that was a good exposure for us. So it helps us for writing our NDA and also doesn't mean that we will have an advisory committee necessarily. The issue, of course, is that the study, MAESTRO-NASH, the 52-week liver biopsy endpoint is the first primary endpoint of the study. It's a 54-month study. It's ongoing. It's blinded. And the long-term outcome at 54 months is to prove clinical benefit in non-cirrhotic NASH. We also have a parallel outcome study in cirrhotic NASH. So the issue with the [ Ad Comm ] type of platform is that there is -- tends to be unblinding of individual patients in [ Ad Comms ], and there was plenty of that in the Intercept [ Ad Comm ]. So I know that FDA will be very sensitive about that. So we'll see whether we go -- have an [ Ad Comm ] or not.

One of the interesting points that came up is the idea that hitting only the fibrosis endpoint doesn't really give you the information on whether or not you have impact on the underlying disease. And you're in a position where you have achieved both endpoints. Do you feel like you are maybe -- in a better position, I think, to be able to make an argument for resmetirom as a therapeutic for NASH?

Yes, hitting both endpoints basically provides you a story. You could tell a story. The drug reduces NASH, reduces the inflammation in the liver and the fibrosis, which is a product of the inflammatory state of the liver, is also reduced. So it's sort of almost like a sequential effect that many pathologists, certainly in NASH experts, have always felt was very important to reduce NASH in order to reduce liver fibrosis. And this is how we're looking at our data. And the fibrosis reduction and potential lack of worsening of fibrosis, which is ultimately the issue, this is what we're concerned about in NASH patients, is that they're going to transition to cirrhosis, that, that is plausible when the drug is reducing the inflammatory state of the liver. So yes, I think it helps to hit both endpoints.

One other point from the [ Ad Comm ] was something mentioned on the use of noninvasive tests or the use of biopsies to identify these patients. Doctors we've spoken to are pretty mixed on biopsies versus noninvasive tests, but the guidelines seem to be shifting, and you've been heavily involved in that. Maybe just speak to where you see the field evolving? What will it take for maybe the FDA to get behind the...

Yes. So this is a very complicated issue, and it does sort of then get into the sort of medical affairs and the commercial aspects of patient diagnosis. The availability of diagnostic testing to confirm the diagnosis of NASH, which is in some ways a diagnosis of exclusion, so there are several causes of liver disease. And we want to make sure, first of all, they don't have hepatitis from viral causes or it's not an alcohol-related liver disease or some other form of liver disease. And so that is part of your diagnostic in our clinical trial protocols and also in real world. And so I think there's a lot of capability to do that. And then you're left with, well, a patient has a positive fibroscan test or they have a positive ultrasound or they have some other blood tests that suggest that they have -- and they have the metabolic constellation, which was very important in our trial. So you've got a few pieces there. But in the real world, the availability of fancy testing is probably less. And we believe that we have to allow physicians to have multiple options to confirm the diagnosis. And that's kind of what the guidelines are saying right now, that you get to a level of suspicion that this is probably NASH, and there are several sort of confirmatory types of approaches that can be taken. And the FDA in the past has always recognized that, that is what's going to happen in the real world that you can't require certain tests because they may not be uniformly available.

So to add to that, there are 1.3 million patients in the United States that have been ICD coded as NASH. And out of that 1.3 million, I'm not saying all of them actually have NASH, probably a significant portion of them do, only about 2% have had liver biopsies to make the diagnosis. It's just not done. And there isn't the capacity in the country to do it without providing a disservice for the patient population.

Remy, maybe I'll bring you in then on the third point and the work that you've been doing across different stakeholders here. What are you hearing from your research? Is this backing up this broad acceptance and this willingness to move to noninvasive testing?

Oh, yes, absolutely. I mean, I'll give a little flavor. So let's talk about patients. Who wants the harpoon into their liver? No one. Physicians, as Becky has mentioned, as Paul has mentioned, the treaters, so we're talking hepatologists, gastroenterologists, endocrinologists, I mean they are quite comfortable with noninvasive approaches. Guidances, as you have mentioned, are very much focused on noninvasive approaches. [ Payers ], that's also a very important question to ask, I mean we've done a ton of market research with U.S. payers. Their answer is clear. They are going to follow the guidances. They're going to follow what was done in the clinical trial to understand which noninvasive thought leaders, what are they saying. They only bring biopsy into the mix, if a company were to, for example, price a NASH drug at an orphan disease-level pricing, nobody is really going to do that. So listen, I mean, I think Becky and the clinical trials will have quite a bit of role in defining the future of NASH treatment. And our clinical trials have such a treasure trove of noninvasive data, it is going to be very, very important for the [Audio Gap].

On that point of pricing, you guys received a positive ICER draft evidence report that suggested there is quite a range that you could price resmetirom based off of its clinical profile. What is the latest thinking on where resmetirom might fit?

Listen, it's a good question, the one that we're not prepared to answer right now because, number one, we don't have label in hand, you would [ expect ] that. And also, I mean, we're meeting with the top executives of payers to understand some of their pressures, their thinking. This has to work for all people involved in delivering this drug to patients. But I ICER report gives us a lot of flexibility. I think people have not been close to it. A couple of points to keep in mind, ICER analysis for resmetirom profile indicates their assessment that the drug could be cost saving for the U.S. system at $20,000, cost effective at $30,000 to $50,000. So again, too early to signal anything specific around pricing, but that's a lot of flexibility to work with. That's a good place to be 8 months or so from [ PDUFA ].

And you've spoken in the past about your own independent work here that has suggested around that 18,000 to 19,000 annual price. Just curious if that is still consistent with the work as it's been evolving.

Yes. I mean I think what we have said in the past is, before the ICER report came out, payers were thinking about, for example, with [ GOV ], which is a treatment for obesity, but also being studied for NASH. I mean that's in their mind as some sort of pricing dynamic in NASH, but nothing more specific than that. But ICER has given us a better way of thinking about pricing.

And I guess maybe part of the pricing considerations rely on the patient population that you think will be addressable by resmetirom. Maybe walk us through the characteristic of the patients that you think will come on to resmetirom upon approval?

Yes. Again, it's very much in line with what Becky said. These physicians, we're not talking PCP, we're talking specialist hepatologists, gastroenterologists, a subset of endocrinologists, ones that truly have learned about this disease and their practices are very much in line with the guidance is, they look at the constellation of comorbidities, metabolic comorbidities. And then, as Becky said, assuring there's not another reason for why they're seeing the abnormalities in the liver. And then there's a proof of certain level of fibrosis progression. I mean, in market research, a physician -- what they're telling us the trigger to treat a patient could with resmetirom with the profile that has emerged, could be a kPa of 8, [ out ] around 7 to 8. And this is very much in line with AASLD and [ APA ] guidance. So they're very much looking forward to a liver-directed treatment. Fortunately, we have one coming soon, hopefully.

I guess maybe in the context of those criteria that you've just listed, how do you think about maybe this idea that only lean NASH patients should be treated with resmetirom or maybe those are the patients that would be most ideal because they're not on a background [ lip one ], they're not diabetic. They're not morbidly obese? Does that jive with any of the things that you've been hearing?

So only -- which patients?

Lean NASH.

Oh, I've never heard that, never. In fact, our study, if anything, focused -- will be focused on cardiovascular risk factors that included the 5 features of metabolic syndrome, of which one of them is obesity. So essentially, every patient in our study was obese. And one of the reasons that patients have lean NASH is if in the case of alcohol excess because at ASH, which is alcoholic steatohepatitis, and NASH, nonalcohol-related steatohepatitis, look the same on the liver biopsy. So I mean -- so we really wanted to make sure they had the metabolic form of fatty liver disease, so obese, diabetic or insulin resistant. I think it was 70% diabetic or 60%, 70% hypertension, 70% or 80% in our study; dyslipidemia, at least 70%. So this is the classic NASH population, and it's certainly not lean NASH. I think lean Nash is a heterogeneous population, and there may be some features of very high insulin resistance in patients that otherwise don't look obese, but they have that profile. And there are certain genetic factors that can contribute to that. But it's not a disease that we've studied with resmetirom. So...

And Andrea, I would just add, when I talk about physicians saying the trigger to treat, whether it's resmetirom or liver-directed therapy, could be a kPa of 8, assuming all those other things that we've mentioned are there, is on the background of GLP therapy on a big subset of patients. So there is a perception that GLP-1s for NASH are not sufficient. Liver-directed treatment is needed when the patient gets to a significant fibrosis level.

Yes. So I mean I think the GLP story is a little bit confused in people's minds. I mean people who are diabetic and including in our study, our MAESTRO-NASH study, about 12% or 14% of patients in each arm of the study were on diabetes -- chronic diabetes level of GLPs. They -- it's known that these GLPs, at those doses, don't treat NASH. And in fact, they have the same level of liver fat. They're just as obese. And they have just as much NASH, is patients who are not on GLPs. And we showed with MAESTRO-NAFL actually, our earlier study using noninvasive tests, that there's no actual beneficial contribution of patients who are on GLP to responses of using noninvasive technology. So it doesn't really do much. Now if we also showed that if patients acutely lose weight, and slightly more patients lose weight on resmetirom than placebo, but lose at least some weight, 5% or more, so not a huge amount, that it does help, is beneficial to resmetirom's effects and to the patients, in general. But especially it's beneficial to resmetirom's effects. So we do believe that diet and exercise is a component of the therapy. And I'm absolutely sure that if you started a GLP and the resmetirom at the same time, you'd get a really good benefit on NASH. But patients chronically treated with these diabetes levels, it's not a factor.

Perfect. And then remind us here, you spoke about MAESTRO-NAFLD having -- have a cohort, looking at F4 patients, how does that opportunity really, I guess, maybe magnify where is resmetirom could be used and especially as you think about the MAESTRO-NASH outcomes, that is a population that you could achieve here?

So I think this is one of the most important aspects of our program that it's critical when you're going of an indication in non-cirrhotic NASH as we will with resmetirom that we show that the drug is safe in cirrhotic NASH. And that was the goal of that study, where we had something like 200 patients with NASH cirrhosis. And they're out -- some of them are out almost 3 years now. So we've extended their dosing beyond that. And what the key feature is that they're taking the same doses of resmetirom as our non-cirrhotics. So they're taking 80 primarily, but [ some ] are also taking 100 milligrams. And the drug is safe and well tolerated in NASH cirrhosis. We also saw some very nice pharmacodynamic effects of the drug that could translate into long-term benefit in NASH cirrhosis. And that's why we're doing a clinical outcome study in NASH cirrhotic patients, which would be a great indication to get because it is a very, very high unmet medical need population. But for the current label that we're going to achieve, the cirrhotic NASH will not be part of it. However, just to comment that it's not always so straightforward, based on these noninvasive tests, to distinguish cirrhotic and non-cirrhotic or even on liver biopsy because the liver can be very heterogeneous in that range, so having that safety is really important.

So I just would add to that. If -- the data that we have so far gives us a high degree of confidence at that MAESTRO-NASH outcome study. With the F4, it's going to be a positive study. If it is, and we get that indication, that doubles the market potential because you get high penetrance into that population. That's a pretty important study.

[ Important ] to it. Remy, one more question for you. Where do you stand in terms of commercial launch preparation, the team build out? And do you think you're adequately positioned to launch this in the U.S.?

Yes. I mean, I'll give you a perspective on where we are internally, but also externally, what we're walking into, it's important to remember three things. One, Paul has mentioned, based on our patient analysis -- patient claims analysis, there's about 1.3 million NASH ICD-10-coded patients today. It's about 100,000 being coded every year and even without anybody doing anything to increase that or with the drug that's approved. Two physicians are expressing high unmet need to treat NASH F2, F3 sort of severity disease, with liver-directed treatment. [ Payers ], number 3 are expressing high degree of comfort, based on how they're thinking about NASH or openness to cover first-to-approve drugs. Where we are? Listen, we've been at the job for about 3 years now. We've had MSLs engaging with thought leaders for over 3 years. Strategy is set on the commercial side, go-to-market plan is that we're in execution mode now. Organization-wise, my leadership team is here. Our market access team gets fully onboarded, and it starts working with national accounts and regional accounts probably summer of this year, June, July. We've been educating payers for about 2 years now. Salesforce, probably a couple of 2, 3 months before PDUFA is the expectation. So we're doing all the right things we need to be doing to get ready for the U.S. launch. That is my job. We take it very seriously. Lastly, I would say is, we've been educating payers but also HCPs, we're about 1.5 years now through NASH Explored campaign, and we just launched our patient disease education campaign this month as well taking on fatty liver. So that's where we are.

Alex, maybe I'll bring you in here. You guys have discussed in the past an ex U.S. partnership. Maybe update us on where that stands. And then also within that context, where the filing in Europe also stands?

Yes. So in terms of the partnership, as we've said -- have said publicly, previously, our preference is for a single, typically large pharma partner that can obviously encompass all of the geographical regions outside of the U.S. versus doing separate regional deals across different areas of the globe. And those discussions are ongoing. Obviously, they're confidential, so we can't go into any details, but when we're ready to announce the deal, we'll announce the deal.

And then just remind us on your cash runway and what that's expected to support?

Sure. So we ended Q1 with 330 million. That will take us through the potential priority review and approval of resmetirom in the U.S. and into the early stages of launch. We will need to secure additional capital to get to profitability. And we have -- we basically reregistered our ATM facility, which will bring in an additional -- potential to bring in additional $200 million. We also have a credit facility with Hercules Capital for 165 million. [ $30 million ] of that is actually already committed by Hercules and an additional 75 tranche, which is linked to approval. And then the balance is basically a discretionary tranche that we have to request, and then Hercules then have to bless basically. But -- so that provides an additional of [ $665 million ].

And Paul, maybe I'll end in the last minute here. Just any last thoughts on where we stand in the NASH field? What else needs to be done to further advance it as resmetirom comes to market?

Well, I don't think a single drug is going to be a panacea for everyone. One can conceive a fixed-dose combinations and of multiple mechanisms that could cover a broader group of patients. But I think it's a is a miscalculation to just look at the percentage of response in the current studies. And I think as Becky said, at EASL, we will show that majority of patients do respond positively to resmetirom. So we feel as though resmetirom is going to be the foundational therapy for treatment, and other things might be added to it at a later date or used in the unusual situation where resmetirom is not working in a patient.

Perfect. Well, with that, thank you, everyone, for joining us.

Thank you.

Thank you for the Madrigal team.