Madrigal Pharmaceuticals, Inc. ($MDGL)

Great. Well, first, I'd like to welcome Madrigal Pharmaceuticals, CEO, Bill Sibold; CFO, Mardi Dier; and CMO, Dave Sorgel. Welcome to the Goldman Healthcare Conference. Maybe first, starting on the launch. Can you give us an update of [indiscernible] progressing, some highlights from, call it, the last 12 months and what investors should be looking for, for the rest of the year?

Yes. Well, first of all, thanks for having us. It's always great to be at the conference. And it's always good when you have a conference like this to look back what's happened since last time we were here. So when you look like over the last 12 months, it's been really quite a remarkable 2 months for us, transformational in anyways. We've continued to have a best-in-industry launch with Rezdiffra over the last 12 months. We've seen that we are part of a market that is growing rapidly, and we're at the very beginning we secured IP out to 2045, which is, again, allows us to think in the very long term about the evolution of the business. And because of the success that we've had, we've invested in a pipeline. So we now have over [indiscernible] in the pipeline, and hopefully, Dave can cover those. And so it was a very strong '25. And we've carried that momentum into '26 when you take a look at our first quarter. Over 42,250 patients on Rezdiffra at the end of the first quarter, which, again, leads to our -- or confirms our steadily adding patients. If you look back the last 12 months of launch, over $1.1 billion in sales. So on over -- already a blockbuster on the way to being a mega blockbuster. Market access is really exceptional. And penetration rate, we're still at a -- if you look at the market that's growing from about 315,000 to 460,000 patients in a short period of time, we're still at about 10% penetration into that. So all very, very good prognosticators of the future. And when we look ahead towards the rest of the year, it's really a focus on continued launch. Launch execution is really the key the ability to perform with Rezdiffra really allows us to enact the rest of our strategy. So continued launch, new data readouts at meetings new data generation initiatives so that we can continue to drive the science in the space. We'll have progress with the pipeline. Also, we continue to aggressively pursue new IP. So we would expect some additional IP around the F2, F3 label that we got and also even in advance of a cirrhosis label look for additional IP there. So stay tuned, but there's a lot that's going on with us. And I think '26 is shaping up to be a really, really strong year for us.

Great. Let's take a step back and go beyond '26. Can you give us some insight in your views on where Madrigal will be 5 years from now, putting everything into perspective, competition, market and the company.

Yes. Look, I think that when I look across the industry, and I look across even my career in the industry, you're hard pressed to find an opportunity that is attractive as this. First of all, you have to start with the unmet need. This is a high net need disease. You've got -- it's the #1 cause of liver transplants for women in America, #2 for men seem to be number one. And it has been void of therapies for ever. Over 23 programs had tried, they all failed. We were the first group. So you start with the market dynamics you've got high unmet need disease. You've got a healthy patient population. By that, I mean by size, we talk about 315,000 in 2023 that were diagnosed in the practices that we were calling on, and in 2 years' time, that's grown to 460,000. So if you look at the prevalence number, people talk about millions. And if you take our 460 and say it's diagnosis rate, that gets you into that 1 million number right away. So you've got a market where there hadn't been a therapy, now there's a solution and that provides in itself a good starting point. then you look and you've got rid different, which is I like to describe it as the holy grail of profiles. Once they fill, that's effective, safe, well tolerated. That allows you to become this foundational therapy, which we can grow from. So we see that if you look ahead 5 years, treatment rates are going to go up because diagnosis rates have gone up. Penetration of Rezdiffer, which is already a blockbuster moves towards mega blockbuster status. We have now over 10 things in the pipeline. So we will have data readouts in the combinations. And we don't know which combination is going to be the one that is either and even more efficacy to the whole population or to a subpopulation but we are -- we have the tools now and the potential combos that can look for driving more efficacy. So we'll have readouts from that. And we've really put ourselves in a position, I think, to be looked at as not only the leading company in MASH, but somebody who has become a leading company in the industry because of what we've been able to do in this really growing market. So I think all of the -- look, at the end of the day, we'll be a more valuable company. How much more valuable I'm going to let you guys do your math on that, but all the prognosticators are exceptionally strong about this space.

Great. You mentioned the F2/F3 market of initially 315 grown to 460. Can you give a little bit more detail in terms of what drove the growth and your expectations from here?

You know it's like any disease diagnosis rates tend to remain lower when you don't have a therapy. Because if I diagnose somebody -- and these people -- these patients tend to have multiple morbidities, and so what's the value of coding them for something else, especially when there's no treatment. So just by virtue of having a new therapy in the market, it helps with diagnosis rates all of a sudden, people are looking for it and then the professional society start to write their guidelines, which say on high suspicion, you should be testing for MASH. And then you have more of the diagnostics that are available, the NITs, whether they be liver stiffness measures or blood tests, et cetera, that become more ingrained. So you have all these things that help and you have us as a company talking about it, and we've had competition come in the market [indiscernible] as an enabler rather than competition with Novo coming in, who've also created awareness and you've got all the companies that have products in the pipeline. So it's this virtuous cycle, if you will, that because there's therapy and because there's more people talking about it, it's just awareness lifts, and that's what we think has driven the $315 million to $460 million and we expect double-digit growth for the foreseeable future. I mean this is a market that we truly believe is set up to grow for decades because it should mirror other large specialty markets that are all over $20 billion in annual sales with penetration rates that have continued to go up year after year for really tens of years. So we think this is going to be modeled after that.

Great. Continuing on commercial theme, you've -- I believe your numbers are -- you've reached 10,000 out of 14,000 approximately prescribers. Can you talk a little bit about the depth and breadth of prescribers today and what you expect coming forward?

Yes. We -- 10,000 -- achieving 10,000 was the last, I think, number that we've provided. The reason being is that from my experience, getting over 10,000 prescribers is a real prognosticator for the future. If you have that breadth, it allows you to build the product that we're trying to build, which is a mega blockbuster. We've continued to add prescribers. Just to remind everyone, hepatologists and gastroenterologists were the initial focus. And in the fourth quarter, we started with endocrinologists in a more concentrated way. So it's -- we're seeing scripts across all of these. One of the things when you've got a new disease, when I say new disease, not a new disease, but a treatment for a disease, so it gets you actually intervening with that disease is it takes you time to ways so that patients can be processed through the [indiscernible] and it takes a little time. So with the hepatologists, they were probably out first because it was a disease they were very familiar with. They had access to the NITs and the various tests. Gastroenterologists took them a little bit longer because they had to build their pathways, sometimes they were adding staff, APPs to help with the actual treatment, getting access to NITs, et cetera. And now with the endocrinologists, they are essentially starting from where gastroenterology was 2 years ago. So they're going to go through that wiring of the system, if they will, for their own practice. So we're seeing pretty consistently across any of the specialties time corrected, so to speak, so when that specialty started. Similar behavior where they start with a patient, some patients and then it grows over time. So we have established the breadth right now, which we think is necessary and can carry us a long way. And the focus more is on depth and having people just go deeper into their prescriber base. The good thing is that when we think about even the highest writers they're nowhere near fully penetrated into their own practices and patients are still being referred into those practices. So again, even on that front, we're at the very beginning.

Great. Maybe shifting gears a little bit to financials. You had mentioned on your quarterly call that gross to net was favorable compared to your expectations. Can you talk a little bit about, one, what's driving this? How that could impact the rest of 2026 and how to think about it for '27 and beyond?

Great. Thanks, Rob. As Bill said, we are in excellent shape with respect to market access and gross to net in total. We take very seriously at the company.The team has done an excellent job managing gross to net to date. We also talked about in 2026 was the first time that we had our commercial contracting take effect in Q1. And the way the commercial contracting works, it remained in first-line access. We had improved utilization management criteria, et cetera. And we work really with the big 3 PBMs and establish those contracts. Thereafter, all the partner plans or downstream plans, then we'll adopt the plans of the big 3, and that takes some time. So what we said about gross to net going into 2026 that we did see some favorability in Q1, mainly because of the time of these downstreams coming on to the plan. So we saw some favorability there. And for the rest of 2027, then we believe that gross to net will be in that mid- to high 30s range for the rest of the year, and Q1 was a little more favorable for everything I just mentioned. So we're in very good shape, excellent market access across the board. Now going into 2027, 2025 to 2026 was really the big impact. That was our biggest step as we brought on the commercial contracting. In 2027, you will still see some impact on gross to net as we do Medicare contracting, et cetera. But the real big impact was in 2026. And we really haven't talked about specifics yet in 2027, but just we're in great shape and have great access. Did you talk about sales too? What was that part of the question?

How -- I think you largely addressed it. How is it impacting the rest of '26 and then '27 and beyond?

Yes. Okay. Let me just mention then just to reiterate that gross to net, we take very seriously, and we also talked about on the Q1 call, no change here for Q2, looking at Q2 and the rest of the year, we feel very good about consensus of what we discussed on the Q1 call. So we're in great shape for the rest of the year.

Great. Let's shift to overall MASH landscape. Wegovy has been on the market for a few quarters. First, how are you seeing the impact of Rezdiffra of Wegovy on the market? And then second, there continues to be MASH data across other mechanisms, including later this year. How do you see the market continuing to evolve?

Maybe I'll start and maybe, Dave, do you want to cover the pipeline. So it's been great having another product on the market. As I said, we think that Novo has really been helping to increase diagnosis and treatment, and we're the benefactor of that. So Wegovy is getting used, but certainly not to the detriment of Rezdiffra. We've talked about steadily adding patients. We've steadily added patients since launch. We expect to continue to steadily add patients. And when they were -- they've been approved and on the market since August, we've continued to steadily add patients through that. So no impact from a Rezdiffer perspective, but certainly helpful in driving the diagnosis rate and so forth. And I think their focus -- they're tending to spend some time on primary care, which really is where the referral pool comes to the specialists that we call on. So from our perspective, works out well. The more people that are talking about it, the better. So I think that the other piece is that a large number of our patients are on a GLP-1 as well. So combination therapy is over 25% of patients are on. And when you look at patients that have been previously exposed to a GLP-1, it's 50%. We expect GLP-1s are going to become just a background therapy, right, kind of ubiquitous. I think people -- most people we expect will have been on or are on. and there's enough comorbidities that they can be really effective at that it leads kind of the combo for MASH for Rezdiffra. So that's how we see it as a real enabler more than anything. And the other specialty markets that we've talked about, many of them, despite being over $20 billion markets, they have 10, 15, greater than 15 products that are on the market at one time. So this is clearly one of those specialty markets that can support multiple products. Part of our strategy is to have those multiple products within our portfolio with combination strategy that hopefully we can talk about at some point. Dave, do you want to maybe comment on other stuff.

Yes, other stuff. Yes. I think the statement that incretins are going to kind of be in the water is probably likely going to happen over time. But Rezdiffra is still going to be the foundational therapy for NASH just based on where we are in the life cycle, as Bill has already described. So the advantage that we have is we can take complementary mechanisms and add them to the foundational therapy and demonstrate either better efficacy or either within the entire NASH population or within a subset of individuals. So a really good example of that is the PNPLA3 siRNA that we just in-licensed from Arrowhead. So PNPLA3 is a genetic driver of NASH and drives very poor outcomes for people who are homozygous for that mutation. And this isn't a rare problem. So it's about 30% or so of the NASH population who have this homozygous mutation. So combining -- the thesis is combining a PNPLA3 siRNA with Rezdiffra will deliver even better efficacy for these folks who are at even higher risk. So the advantage that we have is that when you look across all of the mechanisms, you always want to think of Rezdiffra as the first product that patients are having something added to. And that's how we thought about building our pipeline. And then, Rob, I think you're talking about any other kind of competitive threats as well.

Yes. I mean, Dave, do you want to comment? Look, I don't think there's anything on the horizon that we think about too much, right? I mean we -- I think you have to remember, profiles matter with a drug. And it is hard to beat the profile that we have. And it's also hard to beat the fact that we very quickly, I would say, the community has transitioned from clinical trial data to real-world evidence. And what we're hearing to a doctor or a prescriber is that Rezdiffra is performing extremely well in the real world. They're seeing that fibrosis counts are moving down, patients are doing well, and that is actually helping to spark additional prescribing. So that real-world profile, the first-mover advantage that we have, the continued data generation that we're setting up and just the system that we've wired, I think for anyone else to replicate that, it's a tall order. And we are -- the one thing we don't talk about that much, but really we should lead with is we've got an exceptional team. We've got people who have launched some of the biggest products in the industry. They know what scale looks like. They know what it's like to interact with a specialty, how to provide high levels of service, et cetera. That isn't something that you can just pick up and replicate tomorrow. That has been careers of in-depth experience, knowledge and know-how that we're applying to this situation, and that's what somebody else has to come in and try to compete against. And I don't care whether it's the biggest pharma company in the world or some small biotech company that's trying to dip their toe in the space. It is a tough job, and we are experts at it.

You've discussed previously you're preparing for profitability, but also expecting an increase in OpEx this year. First, can you provide any views around how you're balancing continued investment in the business while achieving that profitability? And then second, can you discuss when you might expect profitability?

Yes, at least the first part, we didn't indeed say in our first quarter call that we are preparing for profitability. And we also did say that our OpEx will continue to grow. We're building a mega blockbuster brand, and we're going to support what it takes to make sure that we're driving the top line. So our focus is gaining market share and continuing to drive the top line. Also, we've done a lot of BD in the last 6 to 8 months, and we'll be growing out the R&D expenditure as well over time, although early on, it's a lot of Phase I work, so it's not that much in terms of incremental spend. But with the growth -- as long as we support the growth of the top line the right way, which we anticipate, we see the rate of growth of net sales far outstrips the OpEx growth over time. So again, that just sets us up nicely for profitability. It's inevitable with this business model. In 2026, we were very clear on the Q1 call that we do not expect to be profitable in 2026. Now there may be quarters in the near term where we dip our toe into profitability and then are not profitable, so we can expect that. But for 2026, that's not our expectation. We really haven't commented beyond that. But again, understanding the growth drivers of the top line and then the spend increases, you will see a divergence of those curves soon.

Maybe 2 things, just to confirm that's full year '26, not profitability, as Mardi said. The other thing, just as you think about spend and the pipeline. I'll take people back to 12 months ago when we were at this pipeline, we had our 2 ongoing trials with Rezdiffra, products in the pipeline, and we've done so at less than $300 million upfront. And these are quality assets that we've added. The reason we could do that is because the world still hasn't woken up, we believe, to MASH being an attractive place to play. And if the world has woken up, they also realize that they've got to go through Rezdiffra, so to speak. I mean with Rezdiffra as a foundational therapy, we now have this pipeline that we're going to use in combo. If you've got a monotherapy -- that is a big lift to say, how am I going to show more efficacy with a monotherapy over a combo therapy of a product that already works and was the first to be approved and has over 42,250 patients on and the company has spent about $3 billion to get to this point and and and. So we're doing this in a -- as Mardi said, we are all in for the commercial launch. We are all in for the pipeline, but we've also done so in an exceptionally disciplined way. Our pipeline we have built, as I said, very efficiently. And you can assume that when we do the clinical trials, we're going to have that same idea of efficiency. So we're not going to go out and run 10 Phase III programs, right? We will set a high bar, and we'll have to find a place where either all patients have even more efficacy or a subpopulation. So this is, again, a unique moment that we are taking full advantage of. And it presented itself, we've identified it and we put the resource towards it.

Great. On that BD topic, as you mentioned, you've been very busy over the last 12 months. Can you discuss how investors should think about business development on the forward?

Yes. I mean, look, we've done a lot. In 10 months -- 12 months, we've done a lot. Now I would don't expect the same pace going forward, but there are additional mechanisms that we may be interested in. And if we can find 1 or 2 of those, great, that's something that we would be interested in. But we feel like we have set the table really well. However, again, there's other mechanisms that we would like to add. Again, you can also expect that it will be done in an efficient manner. One of the real cornerstones of our strategy has been we're not going to bet the company on a BD deal. We don't have to and we're not going to. So anything we do will have to be on terms that are acceptable and favorable for us.

Great. Shifting to F4C. I think you've commented publicly before that it could roughly double the size of the market. You obviously have an outcomes trial underway that could potentially give you full approval from F2 all the way to F4C. Can you discuss a little bit around what gives you confidence in Rezdiffra's potential in that market?

Yes, sure. So as you pointed out, we actually have 2 Phase III studies going on right now. We have MAESTRO-NASH, which is in the F2, F3 population, looking at progression to cirrhosis. So that was a study where the interim analysis got us approval, accelerated approval. And then the second study we have is a time to event-driven F4C study called MAESTRO Outcomes. So that study is ongoing and expected to deliver in 2027. So the reason why we're confident in F4 is because what we've already seen with the drug in an earlier study called MAESTRO-NAFLD-1, where we had an open-label cohort of 122 people with F4C in that study. And we were able to look at a variety of measures in that population, most importantly, looking at liver stiffness measurements and risk of clinically significant portal hypertension. So just by way of background, people who develop cirrhosis progress through cirrhosis to get to clinically significant portal hypertension. And when their portal pressures go up, it's when you start to see the decompensation events like ascites and variceal bleeding, et cetera. So patients have to move through that portal hypertension sort of milestone before they start to have decompensation events. And what we saw in those 122 patients is that we were able to move the people who had the highest risk of clinically significant portal hypertension into lower-risk categories. So it shows us that we're having an effect of the drug on liver stiffness measurements and kind of this critical measure in people with F4. And so when you think about that and then you think about the ongoing outcomes trial, if you're able to pull patients back from clinically significant portal hypertension, you should also then see fewer events in those individuals because they're no longer having the key pathophysiologic finding in those patients. So that's really the foundation of our confidence in the trial. And the other thing I'll just point out is there is no good standard of care for F4, right? So there is no available effective therapy for patients with F4. So usually, when you're going after a new disease where there's no good standard of care, you really do expect an effective drug to show through and show efficacy.

Great. You recently presented some new data at EASL. Can you give investors a recap and overview of that?

Yes, sure. So -- so there were 3 pieces of data that we presented there. The first, coming back to the clinically significant portal hypertension discussion, we looked at those 122 patients in the open-label study and looked at a different measure of clinically significant portal hypertension called anticipate NASH score. And the reason why we looked at this particular score is because it's sort of an orthogonal way of risk in the population compared to the other approach that we've used in the past, which is called the Baveno criteria. And what we showed is that the results when you use this different approach, different analytic approach were very consistent with what we saw in the -- with the Baveno data. So clear shift to lower risk categories and lower risk status in patients using this measure. The second presentation was on measures of CV risk and specifically looking at atherogenic lipids, changes of -- produced by resmetirom in the MAESTRO-NASH study. And so what we see with resmetirom and sometimes we miss talking about this because we talked so much about histology and liver fat and all that because obviously, we're talking about a liver-directed drug. But resmetirom has systemic effects also. So because THR-beta, thyroid hormone beta receptor triggers many different downstream effects. What we see is reductions in LDL cholesterol, reductions in Lp(a), which put together gives you reductions in ApoB of about 20%. And so why does that matter? Reducing ApoB is one of the best biomarkers for reducing cardiovascular outcomes. if you look across all the statins and PCSK9s and all the other new mechanism of drugs, it's ApoB lowering that actually leads to better outcomes for patients. So I think that was another crucial piece of evidence that we showed. And then we also had some real-world evidence that we also presented at the meeting.

Great. We talked a few times about the 10 programs in the pipeline. Maybe briefly rationale behind some of the mechanisms that are in the pipeline and any that you would highlight that you're particularly excited about?

Yes. So I'd come back to what we were saying before. So we're treating Rezdiffra as the foundational therapy in NASH. So we treat it that way when we look at the competitive landscape, and we treat it that way when we think about business development deals. So -- what we look at are complementary mechanisms. So GLP-1, DGAT2 and PNPLA3 are the 3 clinical assets that we have in the near term that I'll give you a little bit more detail on a second. But in each of those cases, there's a scientific rationale for why that mechanism would be -- would give you at least additive effect with resmetirom. And so if you talk about GLP-1, for example, we in-licensed from CSPC last year an orforglipron analog GLP-1, oral GLP-1. That should be able to be combined with -- and what we -- the reason -- the rationale is that we saw that even a little bit of weight loss with resmetirom produces better antifibrotic efficacy. So we can dial in a little bit of weight loss with this GLP-1, enhance resmetirom's efficacy and deliver a better efficacy profile for patients. So that new molecular entity is entering the clinic in June, so this month. So that will be a prototypical first-in-human study and then Phase II, we anticipate next year. DGAT2 was a molecule we in-licensed from Pfizer. It inhibits the production of triglyceride droplets in the liver through inhibition of the incorporation of the last fatty acid into the triglyceride molecule. And so there's a very good rationale for preventing production of triglyceride droplets with the DGAT2 inhibitor and then burning the fat with THR beta. So we're both preventing the production and we're burning the fatty acids with 2 complementary mechanisms. So that compound will be going through a drug-drug interaction study with resmetirom later this year and then, again, anticipating a Phase II next year. And then PNPLA3 is our latest addition. I've already touched on that, but that's a molecule that sort of is associated with lipid droplets in the liver and has been shown to -- if you inhibit PNPLA3 production, you can improve liver fat, and that's what they saw in their Phase I study. So again, a good complementary mechanism for THR beta.

Great. Maybe in our last couple of minutes, in closing, Bill, anything you would like to leave with investors? Anything you think might be underappreciated about Madrigal today?

Look, I think there's actually quite a bit that's underappreciated. I think that sometimes you say, well, is this too good to be true, the market dynamics? Every now and then, it is true. And I think in this case, it's a perfect example, as I started with high unmet need, large population, low diagnosis rate, great first asset -- it's a foundational therapy that we're going to combine everything that we've built get even more efficacy somewhere. done is we kind of have started with the end and work back to say, how do you truly create value in this space over time? How do you ensure consistent top line growth for years and years and years? And we have the right market opportunity, the right first asset, and we'll see about the right pipeline as things read out. But we've really taken a thoughtful approach to how do we become the leaders in this space and therefore, serve as really kind of leaders in the entire industry. And that doesn't happen too often. But I think every proof point that we've put out there or said that this is what's going to happen, at least in the last 3 years, I'm coming up to my 3-year anniversary, that we've hit each one. We've knocked down each payer thesis. And I can tell you, I'm more excited today than I was in September '23 when I joined because the opportunity has only gotten better.

Well, thank you, Bill, Mardi and Dave for the time today. Really appreciate it.

Thanks for having me.

Thanks, Rob.

Thank you.