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

Good afternoon, everyone. Thanks for joining us here today. I'm [ Richard Mayland ]. I'm an associate on the healthcare investment banking team. It's my pleasure to introduce Madrigal Pharmaceuticals today. We're excited to be here with CEO, Bill Sibold. With that, Bill, I'll turn it over to you.

Thanks, Richard. It's, first of all, a real pleasure to be here. I'd like to thank JPMorgan for having us. This is my first JPMorgan as the CEO of Madrigal and it's an exciting time for us as we approach a March 14, PDUFA date, a very rare thing in the industry and to be able to be potentially the first product to be approved in NASH in the United States ever. It's an exciting time for us here. Forward-looking statements. And I thought I would start here to really talk a little bit about the problem that we're trying to solve. NASH is a very, I would say, poorly recognized disease, the severity of it. People don't understand the impact that it has on a patient's life. And this is Terri, who has become a real patient leader in the NASH community. And unfortunately, the story of Terri is not so different from a lot of people that have NASH. She was told you have fatty liver, but don't worry about it. And that's far too often what we hear. Now despite being told that, she had fibrosis that was continuing to accumulate over time. She went in and she had gallstones removed at which time they also detected that she had NASH cirrhosis. So she was already well down the path of a bad outcome of a disease. She developed ascites, which I don't know if everyone knows what that is, but that is essentially where fluid overflows into the abdomen from the liver. She gained 30 pounds in 1 week and had to have that constantly drained off, pretty serious. Hepatic encephalopathy, confusion, very difficult for a patient, big impact and then ultimately had liver cancer, had treatment for liver cancer, but ultimately had a liver transplant and hasn't had the best experience post-transplant. So really a tragic story. When you talk to hepatologists, gastroenterologists, too often, they have the Terris on the top of their mind, and they experienced this on a frequent basis. Now Terri, despite all of this is probably the most positive person you could ever meet and she was actually inspired a video that we did at numberoneliverfan.com, which was really the inspiration, as I said, was taken from her. So that's just to level set, because I think it really is important to know what it is that we're trying to talk about here. Oftentimes, we jump right into here's clinical data without a face on it, et cetera. But this is really somebody, this is what the NASH world looks like. So what's the opportunity? Why is it that I'm here. And it's really -- I'm here because of the great opportunity. The opportunity is to build the leading biopharmaceutical company in NASH. I believe that's possible. And the reason why is the following, and I'm going to go into this in the presentation. First of all, it's a high unmet need disease. You can see that from the previous slide when we were talking about Terri. It's a high unmet disease, and there is no treatment for that disease. Treatment today consists of go home and modify our lifestyle with some weight. You need a great product or you need a product that is effective. That's been well studied. That has tremendous evidence to support the use. We have that with resmetirom, and we'll go into those details a little bit later. Another thing that is somewhat underappreciated in the industry is being first to market. First to market where there are no other therapies, when you have a good therapy and a high unmet disease is very important. These fundamentals allow us to then do what it is we're going to do, which is an effective specialty launch, and we'll talk a little bit more about that. And one of the requisites of a great launch is having a great team, and that's something that we're well on the way to building as well. So I talked about the seriousness of the disease and a little bit before we review the launch plan, let me just focus in on a couple of things on this slide. It's not only a high burden for patients, but it's a high burden for the system as well, and I'll get into that as well. But with NASH comes an increased risk of cirrhosis, liver failure, liver cancer and premature mortality. When you look at the right panel here, NASH patients with significant fibrosis had a 10 to 17x higher risk of liver-related mortality than those patients with no fibrosis. So you can see these F2 and F3s. And on the bottom, you see that about 22% or 1 in 5 patients that are in F3 will progress to cirrhosis within 2 years. Now when you're at this F2 and F3, you really started on a pathway, which isn't a great one. It means, your risk level goes up and that it's very difficult to stop that cascade that's occurring. So when you're looking at what is the treatment goal, you really want to be able to stop that negative outcome. And where we're going to be focusing is in that high unmet need, high-risk patient population. There's been a lot of questions about what's the EPI of NASH. And let me walk you through this. There's about 1.5 million diagnosed NASH patients in the country. Now when you look at NASH with significant fibrosis, which is significant fibrosis consistent with F2 and F3 that gets you to about 525,000 patients. Now the next cut that you take is for patients that are being seen by the target specialists that we will be calling on. And that brings you down to 315,000 patients, and you can see the relative break between F2 and F3 there. So it is a sizable population that has a tremendous unmet need that are in specialist offices that are approachable by Madrigal. So what is it that you're going to want in a therapy for patients like this? And this is where resmetirom comes in. And we really see ourselves as becoming the first foundational therapy for NASH with significant fibrosis. And I emphasize foundational in many ways, because not only because it's first, but we really believe that's the one that patients are going to start with. We believe it could be the one that patients you would end up ultimately wanting to combine with, et cetera. Now the product profile is very compelling. A liver-directed oral therapy. It's in the pathway of THR-beta. This is something which is really, really important to the role of fat metabolism in the liver, having something which is directed versus an indirect effect on the liver is, again, one of the key attributes that we have of resmetirom. Efficacy, you need efficacy and you need safety. From an efficacy perspective, we're not only resolving NASH, but also improving fibrosis. And I'll show a slide in a moment from some of our clinical data, which is quite important. And we have a favorable emerging safety and tolerability profile, which again is important when you've got a lot of patients that are potentially candidates for this product that are going to be on the product, we think, for a long time as well. Now the efficacy is one piece of it and the profile of the drug, I think it's in today's day and age, important that you think about your evidence to support value. And we have an extremely, I would say, robust evidence package in that sense. And in fact, for all my years in the industry, I think that this is some of the best HUR work that I've seen. And this is a company that based upon the great clinical data went ahead and generated and tried to understand the problem that society faces with this disease, et cetera, and the cost to patients and society and generated really great work. And as a result, some of the third-party endorsement here by ICER from a cost-effectiveness perspective, put it in the range of $39,000 to $50,000 per year. And I put that out there because I think it's important that when you are looking at any medication in today's day and age, you have a good sense for what is the value that it brings to society. So the next question is where are we going to play? I think I gave you that already saying that it's going to be in this F2, F3. But this is just showing the treatment or I should say, the disease spectrum going from no or mild fibrosis all the way to cirrhosis. Now for the no-to-mild cirrhosis -- pardon me, no-to-mild fibrosis F0, F1, we think this is managed by cardiometabolic risk and how do you decrease that. Our focus is going to be in this, again, significant fibrosis group and with the treatment goal of being halting or improving fibrosis and resolving NASH. As I said, it's that progression of fibrosis, which really leads to these bad outcomes. Now, as a company, we've -- our first indication is going to be in this space. However, we are also conducting a trial that's looking more at the well compensated patients with cirrhosis. And that opens up another significant portion of patients that are potential for resmetirom. And that's our outcomes trial that I will talk about in a moment. But there's a very defined targeted population that we will start with, and our clinical development program will allow us, if successful, to move to an even more severe population. So maybe a little bit about the development program, and I think a lot of our confidence in the potential future for resmetirom lies in, I think, just an outstanding development program that was put together. When you join a company, and a small company, you wonder, have they done the trials right? Has it been comprehensive? And looking at this development program and really getting to understand it now, it is a really, really outstanding comprehensive. In fact, it's the most advanced in comprehensive clinical development program in NASH. We have MAESTRO-NASH, which is what the approval will initially be on with the 52-week biopsy study that will move on to a 54-month outcome study that's ongoing. We had a MAESTRO-NAFLD-1, which was a large safety study, 1,200 patients. And then we have also the ongoing MAESTRO-NASH outcome study, which is in the compensated -- well-compensated cirrhosis patients. So again, really, really well designed. It set the bar for everyone else. And when you take a look at the other development programs that are in progress that are coming, they're generally based off of the great work that was done by the team here. So maybe on this first slide, I think really important here are some of the results from our Phase 3 MAESTRO-NASH trial. And the results are really unprecedented. We hit on both of the primary endpoints. And just to remind you, that's the first program ever in the development of NASH to do so. And in order to get FDA approval, generally, you had to hit them on. We hit them both. And you look at the key secondary endpoint that we hit on LDL cholesterol, quite a profound effect there, too. So very, very strong data, and this is, as I said, the primary endpoint. Now let's take a look a little bit more at the depth of response data with patients with biopsies at 52 weeks. So the previous slide was ITT. This is looking at 52 weeks if you've had both biopsies. And what you can see is that when you look at the NASH resolution or fibrosis improvement, you had 50% of patients showed either NASH resolution or fibrosis improvement. And another sign of the depth when you add no progression of fibrosis to that, it gets you to 90% of patients. So overall, a very deep and broad response by patients. And I know it's a question that we've had in the past, and this begins to explore just how profound an effect there is for patients. Now this last slide I'll show on efficacy. This was showing how resmetirom improved key non-invasive measures of treatment response. So liver reduction -- liver fat reduction, I'm sorry, is measured by MRI-PDFF, which is considered extremely, extremely sensitive was highly associated with both NASH resolution and fibrosis improvement in resmetirom-treated patients. And you can see in the panel on the right how that's demonstrated. Now one of the interesting observations here was that the PDFF reduction in placebo patients was associated with an improvement in NASH, but not fibrosis. So there's a lot of question about what is the value of direct liver direct therapy versus indirect? And what we believe is that the liver direct nature of resmetirom has and allows for that effect on fibrosis. Now outside of these measures compared to placebo, there were demonstrated improvements in liver enzymes, liver fat, liver stiffness, ELF, as I said before, there was an impact on cholesterol as well. So I mean, really, when you look across the various metrics and the impact that resmetirom is having, it's actually quite profound across all these measures. Now safety is obviously very important, especially when you're talking about a population like this, that is on other medications as well, a population that we think is going to be on this drug for more of a chronic nature. And you can see that across the 80 milligram, 100 milligram and placebo, the emerging profile is very, very favorable from a safety and a tolerability perspective, looking at study discontinuations in the 100-milligram arm, they were increased over placebo, and this was during the first 12 weeks. By the end of 52 weeks, actually, placebo discontinuations were higher than the drug treatment arm. The type of AE that was seen mostly were the GI related. So it's reported as diarrhea, but that could be loose stools, and that's the way you categorize it, et cetera. So, generally, this was something that was transient in the first 2 to 3 weeks and then resolved over time. So overall, a very nice emerging safety profile and tolerability and there was no daily events. So where do we go from here? I think that what you see is we got a great potential with high unmet need disease, a product that works and a company that I think is extremely well suited to take advantage of this opportunity. Now I'm going to just say just a little bit here before getting into what we're doing for launch, just what happened to us in 2023, achieving breakthrough therapy and priority review, filing a product which is no minor feat, but we have it under review at the FDA now. I think most companies would be thrilled about that. We certainly are. And now we're moving into the exciting piece, which is launch of resmetirom with our PDUFA date, pardon me, of March 14. And then in the future, we're looking at full approval plus the compensated cirrhosis label. So let me just tell you a little bit about '24 and what we are going to be working on in our efforts leading up to launch and the priorities of launch. So kind of 3 key activities. We build the organization, we develop the market and we execute a specialty launch. First of all, I'm building the organization. We are fully greenlight hiring sales teams, we are ready to deploy. We are planning for success on March 14, and we will be ready to go. Now it's no small feat when you're scaling up a company like this, but we think that we brought an experienced team in and the team that we're bringing in, we're not bringing them in for launch, and it's a couple of quarters of trying to do great work. We're hiring people for peak. What does that mean? There's a difference. I think you're launching for essentially a 2- to 3-year period. But you need people that have seen what it's like to scale an asset, and that's the type of person that we're bringing in. I have personal experience. I was working in the atopic dermatitis world with Dupixent. I certainly understand what scale looks like and the people that we're bringing in to as well. Develop the market, and I just -- I do want to emphasize here that as the first, which is a great benefit, there's also a big responsibility because you're setting the standard for everyone else who follows and you have to take the time to ensure that there's a pathway for patients not only to get through a physician's office, get a prescription, have the script filled, and that takes work with insurers, takes work with specialty pharmacy with the company, with the patient, with the practice. We have to wire the system over the next 12 months post approval. That takes some time. It's not a bad thing. It's a good thing, but it does take time, and that allows you to kind of open the pipe, so to speak, for patients to get through more efficiently and effectively, and that's why we're hiring the team that has the experience doing that so that we can very rapidly and effectively do that. So I think that there's a lot of work to be done, but it is great work, and I feel we have a great team to do so. Finally, I'll just comment on the execution of a specialty launch. I think that there's been a lot of -- or some questions about where is it that you are going to, how are you going to target? Who are you going to launch to? And I think as you can see through this, we're only interested in the patients most in need, these NASH with significant fibrosis. We aren't trying to spread out to earlier patients. We think that, a, it's important for us to focus on the patients that are in the most need. I don't think you benefit patients or yourself by trying to go to places where you haven't studied the drug and where you see there's a benefit. So it's going to be targeted on hepatologists and gastroenterologists and who have these 315,000 patients that are currently diagnosed in their practice. So it's a, I think, really a tremendous opportunity. If you ask me, I don't think there's a better opportunity in the entire industry today. I believe that because I'll start and I say this in most of my presentations that I think this is the greatest industry in the world. It's the greatest industry in the world because if we do our jobs right, we can help patients that have really bad diseases. We can save lives, we can transform lives. And it's not only the patients, it's everyone who's associated with that patient. This is a huge unmet need. There are patients that are waiting their whole life for a drug like this. It's a real pleasure for us to get to launch in this space, and I think it's something that we can be incredibly successful at. And I think as we wait for March 14, which is 45 business days away, we are going to be ready to go. So with that, maybe I will open it up for Q&A.

Bill, thanks so much. Really great, really informative presentation. We're super excited to have you here today. I guess, first question for me. You've been in your current role a few months now. Can you talk us through the decision to join Madrigal and what led to that?

Yes. I mean, look, it was -- I was in a -- I think, a really great role previously at Sanofi Genzyme, I think what I liked about that was there was an ability to help a lot of patients and a lot of different diseases around the world. And so for me to be interested, it was having to have that same criteria to be able to say, how can you help a lot of people. And that's why this with it being such a high unmet need and no therapy that was very attractive. Now what also was attractive is I think the reality is in this industry, great assets determine success of companies. And there aren't so many great assets in the industry. I was in a position previously where I could survey the world to see what was really interesting, both internally and externally. And there aren't so many. And I think you can build a company around a great asset. I think for me, observation over the last years has been that if you have a great asset, I'd much rather go back and build a pipeline and other capabilities, then wait for a number of bets on science to pan out over time. Now in this case, I'm the benefactor of all the hard work that Becky and her team have done over the years. But there is this potential now that as we launch, we can build that truly leading NASH company and begin to just extend that leadership.

Great. Speaking of great assets, can you give us any color on how the FDA interactions are going and the NDA review progress?

Yes. So look, I can't -- I don't have any real -- I'm not going to give any play-by-play with the FDA, but maybe a couple of data points, as you heard me mention in the presentation, where I think it is 45 business days to PDUFA. FDA needs to give 55 days advanced warning for an advisory committee. So we've kind of passed that threshold. So that's encouraging. And as I also said earlier, our plan is around success on March 14. So all of our hiring and scale-up has that date in mind. So without providing any further details about it, I think that kind of gives a sense for the -- that things are proceeding towards March 14. And if there's any changes material, we would let people know immediately.

As a follow-up to that, what are you expecting to see on the label? And I guess as part of that question, will biopsy be required to diagnose patients? And also, will patients on the label be limited to the F2, F3, which you studied in Phase 3?

No. Look, great question. We don't anticipate that biopsy will be a part of the label, now -- or part of the indication of the label. Now, the question of what does that indication statements say? And again, not sure yet because that's something that will be clear at the end of the review. Now I guess you can look at one of a couple of ends of the spectrum. If it's a broader label that includes more than the F2, F3 or if it's something which is narrow or which is more related to F2, F3. Our view is it will not change at all who we target. So if it's a broad label, we will still only be looking at those NASH patients with significant fibrosis since that's what we studied. And if it's already narrowed to that, that's fine too. When we have the data available from our MAESTRO-NASH outcome study in that well compensated patients with cirrhosis. And if it shows a positive effect, then obviously, the indication we would update the indication, I guess, at that point, and that would be in our list of targets. But it's a little early to tell. And one of the challenges, and I know anyone who is following us, one of the challenges is predicting what does that label look like? And the reason why it's a bit of a challenge is since this is the first product to be approved, you don't have anything really to compare to. A lot of times when you're the 4th, 5th in some of these diseases, the 12th 20th, 25th product in the space, you have a pretty good sense of what the label could look like with the pluses and minuses here, the agency is making a decision not only about the label for resmetirom, but they're thinking ahead as well and thinking about NASH in general. So I would say as soon as we have the final label, we'll certainly share with everyone.

Super helpful. Moving on to a question about market sizing and segmentation. Building on what you just presented on the patient EPI data, you referred to targeting 315,000 NASH patients with resmetirom. I think historically, we've heard larger EPI numbers of NASH patients. Can you just help us understand the difference?

Yes. I mean I think there's a couple of things. When you try to apply EPI numbers to a population, it's certainly -- when you've got a country with 350 million, 400 million people, the numbers get pretty big. But what we did is wanted to be more rigorous in that we wanted to look and see who already had a coding for NASH. Now I think that, that's a great starting point. That's the 1.5 million. And since we're only focusing on that NASH with significant fibrosis, and that takes you down to the 525,000. But from our perspective, since we aren't going to be calling on primary care physicians, et cetera, if the patient isn't being treated by a specialist, who understands the disease and the product, then they won't be getting the drug because those -- that's who will be prescribing. So I think that's how we get down to the 315,000, which is by just being a huge denominator that doesn't have any real ability to at least currently be diagnosed, et cetera. To me, that isn't what should be included in the denominator. This is really the approachable population, we think. Now over time, things will change might be better diagnosis, et cetera. But for right now, that's where we're starting. And again, this, we very much believe is a specialty launch. And the reason we believe it's a specialty launch is because it is a very severe disease. It's a disease that specialists should be treating and it's a disease that is when I say small enough from a prescriber perspective, that it allows us as a company, I think, to very effectively approach the launch rather than if it was a primary care launch.

Great. Speaking of approaching the launch. So could you just talk a little bit more about the status of your commercial build, how that's going?