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

Good morning, everyone, and thank you for joining us. My name is Edward Nash. I'm 1 of the senior biotech analysts here at Canaccord Genuity. I'm pleased to have with us today the management team from Madrigal Pharmaceuticals. This is a name that I currently cover with a buy rating. Joining us, we have Dave Soergel, Executive Vice President and Chief Medical Officer; Carole Huntsman, Executive Vice President and Chief Commercial Officer; and Tina Ventura, who is the Head of Investor Relations. Thank you all for joining us today. I really appreciate you taking the time.

So we see a number of major announcements of over Madrigal's -- that Madrigal's had over between the first quarter and second quarter of this year. Could you maybe provide a quick update on some of those important things that you guys hit over that time period? And then maybe talk about the Rezdiffra watch experience that you've seen to date?

Absolutely. So it's been a really busy and exciting past few months. We've accomplished a lot and each has been the deliberate execution of our strategy. So first, we have a new U.S. patent that extends out to February of 2045 that we're really excited about and building long term. We also have received CHMP opinion in June and we're expecting an EC decision later this month, we'll be launching in Germany in the near term. We also shared a compelling 2-year F4c data from our OLE study at EASL and that data gives us great confidence in the outcome study that will read out in 2027 in F4c. And then we in-licensed an oral GLP-1 most recently to combine with Rezdiffra. So really, really exciting news and milestones. But also what really underlies and is critical to our success is the execution of the U.S. launch. We had earnings last week, and we announced $213 million in sales, so annualizing now over $800 million. And we reached a major milestone in that 80% of our top targets have begun to prescribe Rezdiffra and 60% of our total targets, so 14,000 have now prescribed Rezdiffra, and breadth and depth are really critical to the long-term success of a product. We also announced more than 23,000 patients on therapy, and that's super exciting. We have steadily added patients and will continue to do so throughout 2025. And then -- that's at the end of the second quarter. And so we're really, really excited about how the launch is going and really excited about what's going forward, especially as you think about what we look at, which is -- we look at the best specialty launches over the last 10 years, and we're tracking aligned to those launches and all of the KPIs that we follow. So very exciting news that we shared last week.

So definitely on the metrics you just went through that shows that there's obviously it's been a very successful launch to date. Maybe could you give us a little bit of color on what have been some of the feedback from KOLs in treating patients because you guys have advantage of being the first approved drug in the mass space. So that would be great to kind of hear with what the docs are saying on a qualitative basis.

Absolutely. So a lot of times, when a new medicine is introduced, if their profile looks the best that it's ever going to look, it diminishes after entering the real world. We see really just the opposite with Rezdiffra. We are hearing very positive feedback from providers on all of the metrics that matter to patients. So liver stiffness, liver fat, liver enzymes, LDL, triglycerides, really, really looking very positive in their experience. Recently, I was at a dinner in New York with about 25 hepatologists and they were sharing their experiences and talking about how Rezdiffra has really outperformed their expectations. Our label includes a composite endpoint, biopsy-driven endpoint, and people don't do that in the real world. They really follow patients with noninvasive tests. And so what they're seeing is that at a year, patients are improving 1 or 2 fibrosis stages at a year and really exceeding expectations. And that was really the consensus in the whole room of hepatologists that were there. And so that consistency of effect was really -- is really what our feedback is. And when you think about consistency, it's also consistency of effect across patient subtype. So for instance, patients with type 2 diabetes. These patients are at more risk of progression and often have more difficulty losing weight. And about 60% of patients with MASH, actually a type 2 diabetes, so this is a very important subtype and Rezdiffra is consistently effective regardless of whether you have type 2 diabetes or not, but also regardless of your fibrosis stage, of your BMI or even your genetic makeup, very consistent efficacy results, which gives prescribers a lot of confidence in prescribing and knowing that the patients will actually respond. It's also very easy to prescribe and to take. So it has a very easy -- it's a once-daily, well-tolerated pill. And that kind of simplicity matters. It matters to prescribers. It also matters to patients. So we're really positioned well moving forward.

So the -- it's often with the case, you have to adjust as things happen on the fly and as much as you plan, especially for something as major and important as a new drug launch. How -- has the commercial strategy at all changed from what you initially had planned and have enacted in any way? Is there anything that's kind of you've learned on the fly and really kind of had to adjust for it?

Well, we hired a very, very experienced team at Madrigal, and we've taken a long-term view. This is really just the start of treating MASH in this category. It's going to be a very, very significant category over time. So we've really planned for the long term. And for a first-in-disease launch, there's been a lot of work to do in terms of education, in terms of really ensuring that providers not only understand the disease, but also have access to noninvasive tests, and they also understand the product. So we've had a lot of wiring the system to do so to speak. And we have field teams that are working with providers, educating not only on the disease, but also on Rezdiffra. And then we've begun to educate patients as well, and we've initiated DTC to really activate patients to go into their provider and ask for Rezdiffra. And so in the second year of launch, we're really continuing to execute the plan. We talked a little bit about breadth and depth and how important that is to your long-term success. And now that very positive experience with the product, the very positive real-world profile is leading to further focus on depth. Now we certainly watch what's happening very quickly, very closely. And we listen to what's happening in the field from the community, from providers and advocacy organizations, patients about what's happening in MASH, so we're constantly looking to course correct, minor course corrections, tweaks to our strategy. But for the most part, we're really executing our launch plan, and we're very confident that we'll continue to see additional success and growth in the quarters and years to come.

One of the things you mentioned at the top is the new patent that you guys had issued. Maybe you could talk a little bit to the importance of that patent and your confidence that it's something that's very defendable.

Absolutely. This patent, which was just listed last week is a game changer for our company. And it's a game changer in 2 ways. One, it really gives us the benefit of time and flexibility to be very thoughtful and deliberate about how we build our future pipeline. And two, it gives us another decade of protected sales, which really is, of course, a big value driver for the company. The protection takes us out to February 4 and 2045, and it will be listed in the FDA orange book. It covers claims directed to commercial dosing of the product. And there's a clear and compelling finding that our internal clinical teams found related to dosing of the product. And basically, they found that different doses of Rezdiffra that were provided to different subgroups of cohorts of patients comprising different body weights really optimizes the efficacy and the safety of the product. And our teams did this -- had this finding and shared it with the FDA, and now it's part of our label. And it's really important to note that there was nothing in the public domain either from the study design or the publication of the study results itself from MAESTRO-NASH prior to filing the patent. So we feel really confident about the patent. It's also supported by precedent U.S. case law, and we're so confident in the patent that we're actually -- this has become our new base case in terms of planning moving forward. The bottom line is that any potential generic competitor would take on our label. And then by definition, they would be infringing on our patents. So we feel really, really confident about this moving forward.

Thank you for that. So 1 of the other key milestones you mentioned at the top is the F4 compensated cirrhotic patient population. This is another real driver for the company. Could you talk a little bit, Dave, just about the data that was presented at EASL in your outcomes trial? And then how do you see Rezdiffra kind of competing with the FGF21s?

Sure. Yes. So maybe I'll comment on the data first, and I'll ask Carole to talk a little bit about the implications on the opportunity for Rezdiffra in the market. So the data we presented at EASL a few months ago were from 122 patient cohort of individuals with compensated cirrhosis, so F4c, as you said. So these are folks on the far end of the spectrum of MASH and are really kind of at that tipping point towards decompensated cirrhosis. And that's where morbidity and mortality really escalates in this population. And -- so historically, 1 of the biggest issues in this population has been nothing has worked and there's been nothing that's really been effective to reverse their disease. So it's particularly exciting to see these data where we showed that resmetirom actually did have a beneficial impact on these patients. So let me come to the last question you asked about FGF21s first. After we presented these data, 1 of the leading experts in the field came up and said, "Well, basically, these data look like in FGF21." And the only difference, and it's a crucial difference, is that resmetirom is a single day oral pill that's well tolerated. FGF21s are injectables, obviously. And secondly, they come along with certain side effects, especially bone mineral density which in a cirrhotic patient population are particularly challenging to manage. So these are folks who are already frail and fragile. So reducing bone mineral density in that population might be an even bigger issue. So we think the profile of resmetirom for F4c as a chronic therapy is much more compelling. So let's talk about the data. So what we showed in this 122 patient cohort is that over a 2-year period, we're able to reduce liver stiffness. And liver stiffness is a measure of fibrosis. It's a pretty well-validated measure of fibrosis. So we'll be able to reverse their disease and show a beneficial effect on stiffness. In addition, beyond VCT liver stiffness measurements, we showed improvements in MR Elastography, which is another measure of liver fibrosis and other biomarkers that are consistent with protecting the liver like reduction in liver enzymes, for example, and other effects on lipids like Carole mentioned earlier. So these are all very compelling findings, I think, from this open-label experience. And importantly, the cohort that we enrolled and presented in this study is very similar to the cohort of patients that we've enrolled in the Phase III outcomes trial that we're currently prosecuting, called MAESTRO OUTCOMES. So that gives us even more confidence that the MAESTRO OUTCOMES study could be positive. And that study, of course, we expect in 2027. So on balance, I think very exciting data in this very difficult-to-treat patient population. We're years ahead of the competition in this space and in this indication with a really compelling profile.

And so just to add on to that, Dave. I mean, very exciting that we're going to be first to market in F4c, there's a huge unmet patient need there. And when we look at the population in the marketplace is about 245,000 patients with F4c. So a smaller patient population than what we target in F2, F3, which is 315,000. However, because they're much sicker, we would anticipate a deeper penetration and a more rapid uptake in this group. So essentially, this doubles our opportunity, the F4c indication doubles our opportunity in MASH. And since there's so much positive experience with Rezdiffra based on their -- the positive profile that we have, we really see providers being quite comfortable by the time these study results are released in prescribing an F2 through F4c period to really cement our leadership in MASH going forward.

I mean, obviously, you don't market it this way, but I assume you see much off-label usage already in the F4 patient population because there's nothing there that doctors are saying we're going to go ahead and put it there because -- we put it in there because we've seen in 2 other studies where you had patients who head up for, the drug is effective in that patient group.

Yes, certainly, there is some off-label use. We don't track that. So essentially, what we're seeing right now is about a 50-50 split between F2 and F3, and we're actually really dissuading the F4c patients from going on until we get the study results. But you're right, as the data is released and we get closer to that date, there's certainly -- because of the great unmet need, a temptation to go there.

So you recently announced the acquisition of an oral GLP-1 that you're looking to combine with Rezdiffra. Could you maybe discuss a little bit how you decided on this particular mechanism? And is oral delivery the most important attribute of the drug? Or are there other attributes that you guys saw that you think would be very amenable to use in combination with Rezdiffra.

Yes, yes, yes. Well, I mean, look, combining a GLP-1 with Rezdiffra, I think just makes a ton of sense just from a clinical standpoint from a scientific standpoint. So if you think about it, GLP-1 reduces the excess intake of calories, which is going to reduce liver steatosis. And we've seen that from the ESSENCE study and from other Phase II experiences with GLP-1s. So we know that the reduction of external caloric intake is going to improve leber steatosis, and combine that with resmetirom that works in the liver to improve the efficiency of burning liver fat. So those 2 combined mechanisms will reduce liver fat more effectively together. And that reduction of liver fat then reduces the stimulus for inflammation and fibrosis and scarring, which leads to mash and progression of disease. So we think combining the 2 mechanisms makes a lot of sense. With respect to our data, the other piece of information we had as we were looking at potential opportunities, is from MAESTRO-NASH, we know that resmetirom works better if you get a little bit of weight loss. So if you get for example, greater than or equal to 5% weight loss, there's an improvement in the histologic outcome of patients treated with resmetirom. And we -- so we saw that in the MAESTRO-NASH study. We presented that at scientific conferences. The important thing to realize is that weight loss was actually not from the GLP-1 administration that it just happened during the trial and actually probably because resmetirom has a little bit of a weight loss effect itself, so we saw a bit of a shift in weight loss in the study. So the way we look at the GLP-1 component of the combination therapy is a way to enhance resmetirom's efficacy. And we don't need to achieve annual weight loss of 20% to be successful. We just need to get patients above that 5% threshold to show better efficacy with resmetirom. So it's a different hurdle. The differentiation of the oral GLP-1 in our hands is a combination with resmetirom. And we've been scouring the earth for business development opportunities for quite a while. And this particular opportunity was the 1 that sort of rose to the top the quickest, and we were able to execute. The molecule was licensed from CSPC Pharmaceuticals, which is a major producer of pharmaceuticals in China. Just an impressive organization. I had the opportunity to go visit there a couple of weeks ago. And this molecule is based on the orforglipron structure. So it's derisked from a chemical standpoint. And the preclinical pharmacology looks very similar to what you see with orforglipron in preclinical species, both rodents and [ mice]. So we still have some work to do to get the IND work completed. But once that's complete, we expect to enter the clinic in a prototypical first time in-human study SAD and MAD in the first half of 2026.

Does this have the potential to be co-formulated? Is that something you're going to be looking at?

Yes, that's something that we're looking at. Based on our evaluation of the molecule, it's a crystalline structure, it looks like it should be combinable in a fixed dose combination, but it doesn't have to be. It could be a loose combination as well. We would consider that. We haven't done any studies yet combining the 2 products either in vitro, in preclinical species or in humans. So we'll have to test that during the development process.

Right. So is there -- would this product with it, if approved, would this replace Rezdiffra or would there still be a place for Rezdiffra as a stand-alone?

I mean I think that's a great question, and we'll have to see how the studies turn out. But I think if we see an improvement in the efficacy as we think we'll see, then I think it will probably be used in place of Rezdiffra.

Yes. I mean I think it depends on the profile. I mean we'll see. I mean, it's a little early to make that definition right now.

So the prevailing thought is that GLP-1s, if approved for MASH, would be required as a step edit before using the therapies. As an advantage of the GLP-1s is that they are approved for multiple indications beyond MASH, so the comorbidity such as type 2 diabetes and obesity. Would the approval of Rezdiffra's GLP-1 combo potentially circumvent this potential step edit for your peers in your minds?

Well, you know, I think, as Dave said, it's -- we're probably years out from actually having the combination product of Rezdiffra and the oral GLP-1. So -- but we have certainly been asked about step edits in advance of the launch of semaglutide. So I think what's important to remember is that GLPs are not new, they've actually been on the market for more than 10 years. And while we're hearing, as we've discussed, very positive feedback about the profile of Rezdiffra, we also know that there are 10 million patients on GLPs in the U.S. and yet the incidence of MASH is increasing. So today, about 25% of the patients who are on Rezdiffra are also on a concomitant GLP and about 50% of the patients are already exposed to a GLP. And when you think about step edits, it's really a bit too early to tell, because we don't have an improved product yet, and we haven't seen the FDA-approved label. And we really need those 2 pieces to continue our dialogue with payers. I mean we're in discussion with payers now and partnering with them, but those 2 pieces are needed to really see where we land. I think what's important for us is that we have planned for all scenarios. And no matter what scenario there is, it doesn't change our position on the opportunity for Rezdiffra. When you think about what the GLPs are looking for, they are looking to drive millions of patients into the top of the funnel. And because of the challenges that they have with persistence, ultimately, those patients will all end up on Rezdiffra. And also, if you think about the 315,000 patients that we're targeting right now, we're only 7% penetrated into those patients that are already diagnosed and sitting in our providers' offices right now. And when you look at the math, you do the math with the patients that NOVA will drive into the top of the funnel and the discontinuation rates that is multiples of our 315,000 that we're targeting today. So we're planning for all scenarios where we see huge success for us in all scenarios because, again, we're really at the beginning of the market development in MASH, and there'll be room for multiple MOAs there. So we're quite confident going forward.

So with the little time we have remaining, you guys are expecting EU approval this month for Rezdiffra. And I just want to see how the launch prep is going over in Europe.

Thank you for that. So as we discussed, CHMP opinion in June, we're expecting EC decision by the end of this month and plan to launch in Germany. We will take a country-by-country approach as it relates to launch in Europe, but we have committed to the launch in Germany. Now we've made a lot of progress in the launch in Germany. We've hired the leadership. The field teams are in place. We're continuing to do the disease education. We've identified who the prescribers are for MASH and we're continuing -- we're starting to wire the system there. And also, Rezdiffra is already noted as a first-line therapy in the EASL guidelines. So we're very well positioned for progress moving forward there. Like the U.S., we took the approach of identifying patients who are already diagnosed with F2, F3 MASH and under the care of a liver specialist in Europe. And we estimate that number to be 370,000 patients across Europe who are diagnosed with F2, F3. And we will take the learnings from our U.S. launch, obviously, first in disease, it will take some time, but we have this real world experience from the U.S. that will transfer to our outstanding teams in Europe as they continue to move forward with the launch. So we will share more details as we decide where we go from Germany.

Fantastic. Well, it's definitely been a very strong launch in the U.S. So look forward to bringing the EU on board there and then further expansion into the F4 indications. So I really appreciate you taking the time to be here with us.

Excellent. Thank you so much.

Thank you.