Madrigal Pharmaceuticals, Inc.

Good day and thank you for standing by. Welcome to the Madrigal Pharmaceuticals second quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. As a reminder, today's conference call is being recorded. I would now like to introduce Ms. Tina Ventura, Chief Investor Relations Officer, Please go ahead.

Thank you, Luella. Good morning, everyone, and thank you for joining us to discuss Madrigal's second quarter 2024 earnings. We issued a press release this morning and have a slide deck that accompanies this webcast, which we'll post on the investor relations section of our website right after the call. On the call with me today is Bill Sibbold, Chief Executive Officer, and Marty Deer, Chief Financial Officer. They'll provide prepared remarks, and then we'll take your questions. Our goal is to keep today's call to about 45 minutes. Please note on slide two, we will be making certain forward-looking statements today. We refer you to our SEC filings for a discussion of risks that may cause actual results to differ from the forward-looking statements. And with that, I will now turn the call over to Bill on slide three.

Well, thanks, Tina. Good morning, and thanks for joining. I'll cover three topics on our call this morning. First, an update on the ResDifera launch, where we are off to a strong start this quarter. Our key metrics are also showing strength and are consistent with market research, reflecting high physician awareness and intent to prescribe. Second, our progress wiring the system, where we are four months into what we expect to be about a 12-month process. This is our number one priority. As with other first in disease launches, we are driving a change in clinical practice and physician behavior and developing processes for efficient patient and prescription flow. Our goal is to establish a strong foundation to support peak sales. And third, our strategy to maximize the long-term value of ResDifera. In addition to the untapped opportunity in the U.S., we announced today that we plan to directly launch ResDiffer in Europe following an EMA decision expected next year. Let's start with the launch on slide four. As discussed in our first quarter call, we are providing second quarter metrics on three key areas, demand, including patient numbers, payer coverage, and prescriber uptake. We generated $14.6 million in net sales in the second quarter, and exited the quarter with more than 2,000 patients on ResDifera. In addition to driving demand, we have put a lot of focus on the time it takes to fill a prescription. With the physician community, magical patient support, specialty pharmacies, and payers, our field team is focused on patient selection with prescribers. Our patient support team and the specialty pharmacies in our limited distribution network are driving efficient prescription processing. And payers are executing on medical exceptions more efficiently because they recognize the unmet need. As a result, patients are moving more quickly through the reimbursement process. We have previously discussed our expectation for time to fill to improve from about 60 days at launch to about 30 days or less at six months. Because of our efforts, time to fill was running faster in the second quarter compared to those initial expectations. We're also very encouraged by the progress we've made with payers. They understand the significant unmet need in NASH, which is the number one driver of liver transplants for women in the United States. They also recognize the clinical benefits of ResDifera for F2, F3 patients, and that non-invasive tests or NITs, not biopsies, are standard of care. Last quarter coverage was at 30% of commercial lives. As of June 30th, more than 50% of commercial lives now have coverage in place for ResDifera, with over 95% of ResDifera-covered lives accepting NITs and not requiring biopsies. We are well on our way to achieving our goal of 80% of commercial lives covered by year-end. As far as government payers, as of July 1st, Medicaid coverage was in place across all 50 states. Similar to what we've seen with commercial coverage, virtually all accept NITs and do not require biopsies. For Medicare, we are on track for full coverage beginning January 1st of next year based on the annual review process for new medications. Currently, Medicare patients are accessing ResDipro via the medical exception process with prior authorization requirements consistent with our label. We are pleased with the progress we have made with the 6,000 top hepatologists and gastroenterologists that we are targeting, who are caring for the vast majority of the 315,000 diagnosed F2, F3 patients. In the second quarter, approximately 20% of our top targets wrote a ResDiffer prescription, which is aligned with the penetration level often seen in launches of blockbuster medicines. As you'd expect, early in launch, we've seen hepatologists adopting more quickly due to their expertise with the disease and NITs. Gastroenterology practices can take a bit longer given that NASH isn't their primary disease area and they need to think through practice dynamics for patients. Across the board, each physician is at a different stage of activation and we continue to steadily add prescribers. Our top targets are writing more than 75% of prescriptions. giving us conviction that we're targeting the right physicians with our efforts. Significant opportunity remains to expand new prescribers and shift initial prescribers to more frequent prescribers. To do this well, we need to continue to successfully wire the system, as noted on slide five. We're in the early stages of what we expect to be about a 12-month process to substantially accomplish that goal. Just like other disease states with first-time treatments, We are working to change physician behavior and help build a pathway to efficiently process resgifer prescriptions at physicians' offices. We've made great progress. We are steadily adding patients and prescribers, but it's early in the launch and there's still a lot of work to do. For physicians, it's about educating on the risks of NASH and activating them to write a prescription. The risks are real and they are urgent. For example, Our health economics study of an Optum claims database highlights alarming rates of progression to adverse liver-related outcomes. Of 19,000 NASH patients without cirrhosis at baseline, approximately 17% progressed to decompensated cirrhosis within three years. In addition to disease state and res differa education, we are also helping physicians identify the appropriate patients for res differa using NITs as well as using the recently published U.S. expert panel recommendations and easel guidelines. For the office staff, it's about helping practices create a pathway to process patients and prescriptions to handle the future volume we anticipate. This can require additional staff to manage patients and navigate the evolving reimbursement process. For payers, we continue to have productive dialogue on the costs of NASH, the clinical benefits of ResDifera, and non-invasive testing of patients. That's been paying off with favorable ResDifera coverage. And for patients, we're continuing to educate them on NASH and ResDifera while helping them navigate through the complexities of the healthcare system to support their treatment journey. So we're absolutely doing the work, physician by physician, practice by practice, payer by payer, and patient by patient. This is a tailored approach that requires discipline, repetition, and time. As accounts become wired, the pull-through process becomes smoother, and it's easier to send more prescriptions through. We're still in the early stages, but we are confident that we're building the foundation needed to create a blockbuster medicine. The optimism of our U.S. launch drives our decision to directly commercialize RIS-DIFRA in Europe, as noted on slide six. We have been evaluating our Europe strategy following the submission of our marketing application earlier this year. We expect an EMA decision mid-year next year, which would make ResDifera the first NASH treatment available in Europe. Our decision to commercialize ResDifera in Europe allows us to preserve the full value of the asset, maintain strategic flexibility, and create a platform for future growth. Europe is an attractive opportunity for several reasons. The NASH patient population in Europe is significant, NASH is driving a marked increase in the prevalence of hepatocellular carcinoma in Europe. From 2016 to 2030, cases of NASH-related HCC are expected to increase by more than 100%. We've established ResDifera as a potentially foundational therapy in NASH through our Maestro NASH Phase III clinical trial. We have 125 trial sites in Europe. We formed strong relationships with the NASH European community through our clinical development program and on-the-ground presence with our European medical affairs team. And ResDiffer has been favorably positioned as first-line therapy for moderate to advanced NASH, consistent with F2-F3 fibrosis in the easel clinical practice guidelines. This was despite it not being approved yet in Europe. The guidelines also note that ResDifera is the only disease-specific agent in NASH with positive results from a registrational Phase III clinical trial. We are starting to build the infrastructure now to commercialize ResDifera in Europe in 2025. Another key aspect of our lifecycle management strategy is expanding the use of ResDifera to patients with compensated cirrhosis, as seen on slide 7. There is an even higher urgency to treat patients with cirrhosis because they are at a 42 times higher risk for liver-related mortality. Our Maestro NASH Outcomes Trial evaluates where it differs in this patient population. It's an event-driven trial that non-invasively measures progression to liver decompensation events in patients with compensated NASH cirrhosis. An indication in this patient population has the potential to double our opportunity. Let me conclude by summarizing our progress on slide 8. We have the enviable position of being first to market in NASH, giving us a strong and sustainable competitive advantage. We are fully leveraging this opportunity, positioning ourselves for long-term leadership in the U.S. and now globally with our expected launch in Europe. We have a highly desirable product profile. It's an effective once-daily, well-tolerated pill. It's a liver-directed medicine that has demonstrated the ability to halt or improve liver stiffness in 91% of patients out to three years. And we've resourced the launch to match the opportunity in front of us, starting with an expert team that's launched dozens of blockbuster medicines. While we're still early in the launch, we're making good progress on many metrics. Net sales of $14.6 million, more than 2,000 patients on drugs, more than 50% of commercial lives covered, Virtually all accept NITs and do not require biopsies in line with what we have communicated. Approximately 20% of our top targets have prescribed with significant room for growth. Recently published EASL guidelines and U.S. expert panel recommendations endorse ResDiffer as a first-line therapy for F2F3 NASH. We have more work to do to change clinical practice to educate and activate physicians and to help them create efficient care pathways for patients. We are steadily adding patients and prescribers and tracking right in line with what we would expect at this point in the launch. As we look forward, we are well on our way to building a blockbuster medicine with patient expansion as we execute on the untapped opportunity in F2, F3 NASH, indication expansion as we look forward to data from our outcomes trial in cirrhosis patients, and geographic expansion as we plan to launch ResDiffer in Europe next year. Before I turn the call over to Marty, let me briefly reflect on the progress we've made as a company. I've been in my role 11 months, and what we've accomplished is pretty incredible. I'm very proud of this team. The FDA accepted the ResDefra filing. We received priority review. No adcom was required. We very quickly built an expert team at the leadership level and the commercial level, including a full field team ready to support the launch on day one. We built sufficient supply. We received approval with a best case label, importantly with no biopsy requirement. The team was out promoting ResDiffer within weeks of approval and we shipped product in less than a month. We have been building strong physician relationships. We've seen favorable ResDiffer guidelines published. Payer coverage is favorable in virtually all plans not requiring a biopsy. So we are executing on everything that we said we would. We're making progress. It's early and there's still more work to do. As we look forward, we are about a third of the way through our plans to wire the system to build a strong foundation to support our aspiration for peak sales. We have the right strategy in place to do that, and we're even more confident in the significant potential of ResDifera. So with that, Marty?