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

Great. Thanks, everyone, for joining us this morning. I'm really pleased to be joined by Bill Sibold, CEO of Madrigal. Thanks so much for joining us.

Thank you for having me.

Bill, maybe we could start here your recently commercial company. What has the transition been like as you've been CEO for the last 9 months, you now have a commercial drug, you're now launching that? Maybe help us understand and give some perspective on that front.

Well, thank you, Andrea. It's -- this is the 9-month anniversary actually, of being there, and we have got a lot accomplished. When I go back to the week that I started, we found out that the file was accepted from the FDA and that we had priority review. So since then, I think we've done everything from building the team that we need for the future, attracting truly, I think, a team that we talk about in terms of hiring for peak rather than just for launch. So people that are experienced that have been in the industry a long time, that understand how to scale a product to being a very significant product. So that's number one. I think we've made great progress on -- from a commercial perspective, that started with building a team. When you think about it, when I got here and even as we moved into January, we didn't have field teams in place other than medical affairs. So we had to build that organization and bring people in and we've attracted people. Leadership has over -- experience. All the field teams have experience in hepatology and gastroenterology. So we have a really strong group there to deal with launch. We've advanced the science I think if you take a look at even last week at EASL, hard to believe it was last week. I'm not sure if -- it feels like it was days ago or months ago at this point, but starting to generate some new data, we'll talk about that. And progress along our MAESTRO-NASH outcomes and then also our 54-month data. So from a launch perspective and from a company perspective, we've got a team in place. We have our approvals in the U.S., our approval file in Europe, so as the next stage of growth. We've gone out and raised capital so in the last call, we announced that we had about $1.1 billion in cash. So we really positioned ourselves for the shorter term of launch execution, but also for the future. And we're really excited about that future.

Maybe I can get the EASL question out of the way. In the context of maybe first, remind us what you did present from on Rezdiffra because you had some nice data sets there. But then also maybe some thoughts on the emerging data that we saw from tirzepatide, from survodutide, there's clearly a lot of focus right now on GLP-1, how do you see that impacting the NASH base and the Rezdiffra launch?

Yes. So look, it was a really exciting meeting for us. It was -- I have to say, of all the medical meetings that I've been to, this one was maybe the most fun because it was probably the busiest -- there was so much going on. And we're at this really formative moment where we're building a market. And usually, somebody has gone ahead and done that and you're just picking up kind of the pieces that are left, we're starting right at the beginning. And what we do now is going to shape that market for years to come. So from a data perspective, there are a few things. First of all, we presented evidence we had -- first of all, we had 10 abstracts, 2 oral presentations within that. Really data showing THR beta as the master regulator of fibrosis progression. And this is really important because we also showed data, real-world evidence from a cohort of about 19,000 NASH patients that there's actually a much more rapid progression than some people had thought. The patients that actually did advance to cirrhosis, about 80% went straight to decompensation. So it showed that this is a very serious disease that you've got to intervene on. Secondly, what I was really excited about was our durable term data. We had 3-year data, which really showed that over the course of that time, we maintained a very strong effect on things like liver stiffness, and it showed that 91% of patients after 3 years had either reversed or had stabilized liver stiffness. So that's a really important measure because we've been getting questions about, well, what happens in the long term. And because we are so in advance of everyone else, we're generating now 3-year data where some companies are still doing very small, I would say, not so well controlled studies. That's a second piece. The other thing that we showed is quality of life data for the first time in NASH, which we were excited about, And then finally, for MetALD, there was a group of about 75 patients. And this has been a big question. What happens in a population that has been exposed to a little bit higher alcohol use that would qualify as a MetALD definition. And what we showed was essentially identical results as you in the NASH population. So that's another important step. So I feel overall, we're at the beginning of generating additional data form just the data set that we have, the study is ongoing and then what we'll do in the future, but really good progress. Regarding the other companies, boy, lots of swirl certainly. I think it's just important to keep in perspective. These are early programs, very few numbers of patients, less than 50 in some cases per arm. And I would say a lot of massaging of the data to try to show an effect, which even after all the massaging, it doesn't look like there's really a compelling reason above Rezdiffra. And I think that's important because you got -- think about the data that was presented in 1 day maybe if Phase IIIs are pursued, we've studied thousands of patients versus hundreds or tens. So that's a big difference. But when you look across the pipeline, the portfolio of products that are out there, there is nothing, nothing that stood out that said Rezdiffra's profile won't hold up. And that's what's really exciting because that's everything that there is. And if that's all there is, I feel very confident about our ability to perform in the future. And when you think about it, first-mover advantage is so important. If you look at all the research that's been done, if you're the first to launch, even many years later, you hold a market share position that is hard for anyone else to catch up. So I walk away from the meeting saying, there's some data out there. I don't really know how to interpret it because of the size and numbers, pardon me, size and stage. And I look at what we're presenting, we're many years ahead from a data generation, makes me more excited about the future than I even was going into last week.

All right. Well, maybe let's jump to the launch because that's clearly a focus here. Maybe if you could provide some high-level thoughts on how the launch is progressing. We heard some very early commentary on your 1Q call, I'm sure we'll hear more on the 2Q call. But maybe any updates you can provide there?

Yes. Look, I'd say we're tracking as we had expected, and it's exciting. This is a -- you didn't hear much on Q1 because we were 3 weeks in. We're now at 8 weeks in total that we've had drug on the market. So this is as early as it gets, and it's exciting. We're doing all the things that you have to do. You have to educate the physicians. You have to educate the practice as well as the physicians because they're often responsible for the pull-through of the product. And this is this whole notion of wiring the system. We are well into wiring. We are 3 months since approval into wiring. We have another 9 months really, we will continue this. And a couple of observations would be that each of the practices is almost customized in that how they're thinking about how they're going to use the product, how they use their supporting staff to help process a prescription and how we're working with them to help them through that journey. And a lot of it's just muscle memory. Before the product was approved, if you were a trialist, you had one or two options, right? You would either have somebody who comes into your office with NASH and you look at inclusion, exclusion criteria to see if you can get them in a trial or you stage them and follow them. The overwhelming majority of physicians aren't trialists. So they would just do a quick staging and then follow those patients. And typically see them maybe 6 to 12 months. So now you've got a patient that comes in and you have a product, and the way you talk to them is different because now you have something you can offer them. And so physicians are working through how are they going to educate patients, how are they then introducing a prescription, and then how do they procure that prescription, so to speak. So that's what they're learning, and it's just muscle memory, in time it becomes just incorporated into behavior and daily practice and just becomes easy. Right now, they go to payer X, which may have different interim policy than payer Y. So they're just trying to learn through that. So that's where we come in and, first of all, trying to work on making sure that access is there. And in the last call, we talked about 30% of covered commercial lives have a policy. We're working towards 80% at the end of the year. So as we have certainty there. It helps the practices or pull a patient through on to prescription much easier. So overall, I'd say things are tracking as we would expect. And it's really exciting. I would probably tell everyone, if you are doing surveys and things yourselves because of the pace of learning and so forth. If you did something at approval or when product was available, each week, people get more and more experience and know what they are doing to process a patient that much better. So I would say, look at your most recent rather than if you heard of someone having initially uncertainty about how they would work through reimbursement. That gets more certain as you get each week into launch.

Maybe to that point, given that it is still variable, it's changing so rapidly, what is the requirement of your sales force then? What is the frequency that they need to go back and revisit? How many touch points do they need to have with a particular prescriber to help them really get comfortable in using Rezdiffra?

Yes. Well, it's more than one. Right? And when you think about any practice, it's a team that's at the practice. That's responsible for having a patient get on drugs. The physicians one piece of it or the APP that actually they generate the prescription. It's how does the rest of the staff handle the pull through. Everything from scheduling to who does an NIT to who is talking with insurers, who's generating the PA, et cetera, et cetera. So when we go to a practice, we have to take a real total office approach. You've heard that term for years and years, but that's very true in a first approval in a disease where nobody has been doing it before. So we spend a lot of time on that education. Now we also have a number of teams that can help people. We've got not only our sales reps but there's also the medical affairs team, which is there to provide really deep education in the science and the product. We've got a team that helps specifically with reimbursement. We've got a team that can help coordinate some of the larger practices, et cetera. So we are surround sound, so to speak, and working on bringing the whole practice along from an education perspective. And that takes a number of calls to get people there. And it doesn't mean that they're not writing. They just -- until they find there and create their pathway in their office so that it's well orchestrated and everyone knows exactly how to do it very quickly in efficiency. That's where we talk about initially at launch on average about 60 days to get a script filled down to 30 after 6 months. And then as you get to best in class, it's kind of in the mid-20s. So all of that education, kind of that system education, if you will, for the practices coming along. And we'll provide a little bit in more details when we get to the Q2 call about some of those efforts. But this is right where I would expect that we'd be and maybe just to think about a preview to what makes me excited is I kind of look at three buckets. One is kind of intent, another is action and then the third is results. From an intent perspective, any market research that we do, any third-party research that I've seen and what we're hearing at the practice is there is a strong willingness to prescribe now and in the future. Secondly, action, we're seeing that scripts are being written. Right? And we haven't reported out on that at the moment. And then third, are patients getting on drug. So the answer is kind of yes to those three. And those three are all really good I would say, proof points and prognosticators for where we're headed.

I guess maybe to that point, if you think about the intent translating to action and recognizing it's early and we're ahead of your Q2 call. But maybe help us understand maybe even trends that you're seeing there. How is that translating to action?

Yes. Well, look, before the launch, a lot of the questions that I got or at least one of the questions was is there a bolus of patients? And the way bolus was defined in that sense was do practices have a bunch of patients identified that day 1, they're just going to put on drug. And I said, maybe a few, but we see that most physicians are going to wait and as patients come in. And that's exactly what we've seen, right? There are very, very far into the distribution. There are practices, practices, not many that went ahead and started planning to say, how do we identify, how do we get our patients lined up to come in, in a more defined period of time. The overwhelming majority, virtually all of them are waiting to see the patients as they come in, right? So that gives you a sense. A lot of them, it's interesting the NASH community has been disappointed so many times, 23 products failed before us that they didn't want to get their hopes up. And until it was approved, they almost didn't believe that something is going to get approved. So now they're taking that action. And it just takes them their time to incorporate it. It's muscle memory, really, that is going to get them as each patient sits in front of them, their own pathway and protocol that they pull through. So that's what we're seeing. And I would say, each week, people get more experience and more hardwired into how they're thinking about their pathway. I'm not going to give any deltas between them. But really, I think if you do kind of an early survey comparatively along the way, you see that people are -- say, if you heard somebody had an experience week 2, it's very different than we gave.

And when you think about your -- you've talked about 6,000 target prescribers here. How many have you reached? And if you are able to share how many -- what proportion of those have written a script?

Yes. So not going to tell you that right now, but just to remind people of the numbers. So there's 14,000 physicians in our universe and about 6,000 are the targets that we think will drive the majority of the business, overwhelming majority of the business. And that's -- and that's not anything specific for this launch or this disease. That's just in general, what happens in most specialty areas, you have this larger group of somewhere between 10,000 to 15,000 physicians and a fraction of those are the ones that really drive things. So that's what we're seeing. We did announce on the last call that I think it was overwhelming majority, I think it was 75% of the scripts were coming through that target list. Maybe it was even a little more than that. Yes, about 75%. So that's going to be where we put our focus is in that group of doctors. And as I said, we're progressing really nicely. We'll report out on that a little bit more in Q2.

Maybe a follow-up there. Since I'm sure this is of interest. But when you do report on Q2, what metrics will you provide to the Street? And help us understand how the launch is going.

Yes. So look, I think, I would say, expect three buckets. One is more of a demand related, right? So I think you're going to look at sales, but I think more representative is going to be patients just because of we started partway into the quarter and you know the time it takes to get somebody on drug. But we'll provide some patient numbers. Secondly, you're going to -- it'd be more of a prescriber bucket. So the target 6,000. What's happening there? What's the progress -- perspective. So how are we doing with that 80% target. So we're still -- we're working through the precise metrics that we'll use, but you can expect it in those three buckets.

Got it. Maybe on the payer front then, we can transition there. How have those conversations been going? You've talked about securing access from the Big 3 becomes a step change for you. But -- maybe if you can provide some color on that front?

Yes. I mean, so first of all, you're exactly right. The Big 3 are -- represent the significant steps that you take. We announced that about 30% of commercial lives, covered commercial lives had a policy in place as of the last call, and we continue to make progress every day. These are really important discussions because they set the stage, as I said, a little bit for the future. I've been in the industry a long time. But no payer discussion is just a simple thing to do. They have their objectives in mind, and we certainly have our objectives in mind as well. So we try to find kind of a good kind of a green middle ground, if you will. Now let me break up the discussion a little bit into the 2 categories. One is with the clinical team that is really opining on what's the utility of the product? Who are the patients that it should be used and how do you diagnose, et cetera. I think that you look virtually across the board, clinical teams see the utilization of NITs being an adequate way to prescribe and they understand the downstream costs and complications more than anything that you're trying to avoid liver transplant. HCC death, et cetera. So they understand that within their system. Those conversations are very clinical conversations and we've got the biggest, most comprehensive NASH program ever with, I think, really, really strong data that's getting stronger. Those are great discussions. You've got the other side of the organization, which is looking at the trade groups, et cetera, that's a different discussion. They both got different mandates. So it's not just -- when you say payer, it's not this monolithic 1 payer sitting there, we're working with the different teams. So those are, I'd say, productive discussions. Those are good discussions that we're having and we're further along with some than the others, but we're going through their process, which is a P&T committee and then there's usually like a value and access committee, et cetera. So all moving in the right direction towards an answer. But we feel that on the clinical front, in particular, there tends to be more alignment than not.

And you've spoken, I think, on your last call about there being some exceptions, right? The VA requiring a biopsy, maybe some local payers also having maybe higher bars to access. I guess, maybe if you could speak to step edits. Are you seeing that? Are you hearing that being a requirement? How is that process playing out?

I would say that virtually all of the plans are accepting NITs, which again gets to this notion or the opposite that virtually none are requiring a biopsy. And this is where we had said all along, there will be outliers that do that. We don't believe that's from a clinical reason at all. That is not the intent. So yes. And we think that's going to remain the case. You always have that in any launch, somebody takes a very extreme position that isn't representative of the whole.

Do you expect to maybe to your understanding and your conversations with payers that they will require reauthorizations over a certain period of time? What type of maybe level of evidence would be necessary?

Yes. I mean -- so a little bit of what we've heard is that mostly, they're saying at 12 months, you'd need some kind of reauthorization, not so different than with other drugs. We've heard 6 months in some cases as well. And I think this is something which will evolve. Again, this is part of being the pioneer that we are, is we're forging this path for the first in the industry to do so. And these are the typical questions that people will ask. So far, what we've seen is generally either you have a stabilization, in some cases an improvement. And I think those are all things, if you -- we're very confident in the product. And what we saw is virtually all patients had a positive effect being defined as improvement or stabilization. So we feel that those are reasonable.

And as you think about building out this commercial NASH market, and obviously, you are setting the groundwork here, and you've talked about having a first-mover advantage, just how significant could that be? And what type of moat does that provide you as other agents come on board after you?

Yes, I think it's very significant. I think it's something that gets overlooked all the time in the industry. I think that the data is compelling and says that those that are first with a profile that's a decent profile. They do very, very well. I mean it is hard for somebody to come in behind you when you've established essentially what the expectation is of how you work with the community. We take that very seriously. We are focused very heavily on the community as a whole being the physicians, health care professionals, office staff, patient advocacy, any patient groups and with the payers as well, and we take that very seriously. I think that it's even more of an advantage when you've got the profile that we do. There's -- if you ask anyone in the industry for the last 20 years, maybe 50 years, what's the ideal profile of a product. Once-a-day pill, right? I've never heard an answer -- I've never heard someone say like a weekly infusion or I would love it to be subcu, once a day pill. Rarely does such an optimized profile have the advantage of launching first, right? All the data that you saw at the meeting from the GLP-1, those were all injectables, right? Not the best profile. Blue Cross Blue Shield showed that you had a 60% discontinuation rate, and I think it was the first 3 months -- 3 to 6 months. I mean, that's -- you got to stay on the drug for it to work. That's why people like the pill. So I think that we are in a very, very strong position to be a foundational to be -- pardon me, the foundational therapy in NASH, not only in the near term but in the long term as well.

And when you think about the long term, you have outcomes data that should be reading out in the '26 to '28 time frame. Maybe help frame for us how meaningful that is as you think about your competitive differentiation? What does that mean as you look out to the competitive landscape?

Yes, we'll be years ahead from an outcomes perspective. One of the -- I don't think that people have really -- when I say given us credit for it, everybody has been so focused on just this, the first stage of launch and what's happening and is there a market and is the world going to change. We're not just focused on this F2-F3 population with our MAESTRO-NASH outcomes. It's this well compensated cirrhotic patients. And that is a significant opportunity because you are then one step away from decompensation and there is no turning back. So that data opens up essentially an entirely new population for us, which is really remarkable. The 54-month data which measures kind of the true long-term outcomes. That puts, I would say, just a further exclamation point on how serious the disease is and what it is that we're trying to prevent. And again, we will be years ahead. The positive outcome in either of those studies supports full approval of Rezdiffra. So those studies are, I think, going to be really monumental. We're learning a lot, and we're again forging a path for the whole field to understand just what our progression rates and cirrhosis patients, et cetera. There's decent literature, but I think as the first program really to answer -- ask the question in such a comprehensive manner, what we generate is going to really, I think, the standard by which others are going to be judged.

Remind us what is the commercial opportunity or the incremental commercial opportunity afforded by being able to capture these F4 patients?

Yes. I mean, look, from a patient number, it's not double, but you would expect a high more -- a higher treatment rate because that is such a high unmet need. So the opportunity essentially is double that of the F2, F3.

Got it. And then as you think about this landscape, we've touched on GLP-1, they've clearly been a focus here. And I think one of the natural questions is, how will Rezdiffra with GLP-1? What are your latest thoughts on potential combinations with the GLP-1? Do you see utility there in the advanced F2, F3 patient population?

Yes. Look, I think that in time, there's every reason to believe that you would see more combinations taking place. I don't think there's any one single mechanism, if you will, that's going to 100% solve the problem. And it could be timing related depending on where the patient is in their journey. Journey could be looking for a specific type of patient that you're trying to intervene. So. I would expect that there will be a combination. In our Phase III study, we had about 14% of patients that were on a GLP-1. And there was the same treatment effect, whether you were on one or not. We're certainly hearing it in the community that people are asking the question. We know that there are some patients that are on a combo today. We expect that there probably will be more just because of the number of prescriptions there are for GLP-1s. And we think that probably ends up being certainly a good thing for patients. Again, a liver-directed therapy by -- for a disease that is in the liver being prescribed by physicians that focus on the liver. That's why we see Rezdiffra as that foundational therapy in this space. The rest, it's an indirect effect, and we're still not sure of what the effect is because there hasn't been a large enough studies.

I guess maybe when you think about the NASH patient, and so many of them are comorbid with obesity. How important is that weight loss component that's provided by a GLP-1 agent as physicians or patients think about what drug to come on to, to treat their NASH?

Well, I mean, look, we know that weight loss is important in general for this. I mean, if you -- in all of our protocols, we have counseling on diet and exercise. And then in our label, Rezdiffra to be prescribed in conjunction with diet and exercise. So we do think it's important. We think it's important for the overall status -- health status of the patient and probably for the NASH as well.

Got it. And you've been -- I think you've been very careful here to say your target population is 315,000, diagnosed patients sitting at -- maybe being seen by specialists right now. What is the capacity to expand beyond that to find maybe undiagnosed patients? What are your efforts and work towards that?

Yes. So just to remind you of the epi because it's a really important question. And I think a lot of times, companies don't spend the time to understand the epi that they do kind of more what's the theoretical prevalence and then they just say, if we get a percentage of that, this is going to be something really meaningful. It's kind of lazy launch math. I've always preferred to say, let's really understand kind of who is -- who is the patient that can most benefit today. So if you go back to the clinical trials, F2, F3, and that is supported by our label, which is F2, F3, so we looked and we started with essentially claims databases and said how many patients are diagnosed in the U.S. with NASH and it's about $1.5 million. Now literature also when we take a look to say how many of those are F2, F3, a little bit harder because they're not always coded by stage. It's about 525,000 patients. Our universe of 14,000 physicians, that gets you to the 315,000 patients. So our efforts are almost entirely focused on that group that is already diagnosed. And it's how do we identify them at the -- how do we -- they're identified, how do we help the practices pull them through. And how do we get to those patients and let them know that something is available. So that's the focus on that. When you look at 315,000, that's a specialty market. Now what's always hard to know is how does diagnosis rate increase over time. And that could -- that should, but that's not where we're going to focus our efforts right now. We would expect that certainly, it will increase in time, but it doesn't need to in many ways because we have, we think, a really targeted group that we can focus on now. But for most specialty markets, you see, it takes probably 15 to 20 years for diagnosis rates to stabilize and for the actual opportunity for the drugs that are used to stabilize and even then they're still growing. So we've got a great population to focus on, and there is many, many years for the market to evolve to a mature market. And again, I will remind our profile is a great profile to be first, middle or even late, I think, in the disease, and again, it reinforces foundational therapy.

Got it. Maybe that's a good segue to a question on your IP. Where do you stand with that? And what commercial runway does that afford you?

Yes. So we have kind of the two main patents. One is composition of matter, which has a 2026 expiration. And then we have our Form 1 polymorph, which is 2033. What we've said from the beginning is that we are aggressively pursuing new IP in order to support placing the patent term extension on the 2033 polymorph, which should take us to 2038. In the next couple of weeks, we'll have another Orange Book-listed patent, which will be a dosing patent, which goes to 2033. So we have been executing exactly as we said. We will continue to generate additional IP with the intent of 2038 with the PT on the Form 1 polymorph or beyond that even.

Great. And maybe in the last 30 seconds here, if you could remind us on your cash runway, what activities is that intended to support? Obviously, you have the U.S. launch, you have Europe ex U.S. plans. But maybe walk us through that?

Yes. So we announced on the last call about $1.1 billion in cash. That's to support launch. We feel that, that is really very supportive of launch. Also the other activities ex U.S. approval and finally, any other strategic activities such as business development.

Well with that, Bill, thank you so much for joining us.

Thank you so much.

Thank you, everyone.

Bye-bye.