Madrigal Pharmaceuticals, Inc.

Good day, and thank you for standing by. Welcome to Medical Pharmaceuticals' third quarter 2024 earnings conference call. At this time, all participants are in 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'd like to introduce Ms. Tina Ventura, Chief Investor Relations Officer. Please go ahead.

Thank you, Marvin. Good morning, everyone, and thank you for joining us to discuss Madrigal's third 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 will 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 the risks that may cause actual results to differ from the forward-looking statements. 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 RISDiffer launch. Second, how we see the NASH treatment landscape evolving over time. And third, the progress we've made to strengthen our long-term leadership position in NASH, including completing enrollment of our cirrhosis outcomes trial. Let's start with the U.S. ResDifera launch on slide four. As we announced in our earnings release this morning, we delivered an exceptional quarter generating $62 million in net sales. This was another strong demand quarter with inventory at the low end of our expected two- to four-week range. We're now six months into the launch, and the feedback we're hearing from prescribers continues to be very positive. They're finding it easier to prescribe ResDiffer to their patients thanks to our efforts to wire the system and the improved access we've secured. They also have high confidence in ResDiffer's real-world performance as an effective, well-tolerated, once-a-day pill supported by positive patient experiences to date. healthcare providers are beginning to recognize ResDifera as standard of care, reinforcing its position as the foundational therapy for NASH. And while we are still early in the launch phase, we're continuing to see great progress across all key performance metrics. This gives us confidence in our strong growth expectations for ResDifera and reinforces that the launch is tracking in line with other best-in-class specialty medicine blockbuster launches. So let's start with patients. As a reminder, we're focused on the 315,000 patients diagnosed with NASH with moderate to advanced fibrosis. We ended the quarter with greater than 6,800 patients on ResDifera. The figure represents patients on drug or the bottom of the patient funnel and the most rigorous metric to measure. By comparison, we ended the second quarter with more than 2,000 patients on ResDifera. We know that the early quarters of the launch are crucial and often predictive of future success. During these initial quarters, we are closely tracking our metrics, including the pace of patient ads against a group of top-tier specialty medicine launches. We are steadily adding patients at a rate consistent with those benchmarks. As we discussed last quarter, we have dedicated significant effort with our field and patient support teams to reduce the time it takes for prescriptions to be filled. Thanks to their outstanding work, we achieved our six-month goal with time-to-fill trending at 30 days or less. We're also encouraged by the progress we've made with payers. One of our ambitious pre-launch objectives was to secure coverage for 80% of commercial lives by year-end, and we achieved this goal during the third quarter, a full quarter ahead of schedule. At quarter end, more than 80% of commercial lives have coverage in place for ResDifera. Notably, greater than 95% of ResDifera-covered lives accept non-invasive tests or NITs and do not require a biopsy in line with current standard of care. As we noted last quarter, Medicaid coverage was in place as of July 1st, and we expect Medicare coverage to begin on January 1st of next year. Currently, Medicare patients are accessing ResDifera through the medical exception process with prior authorization requirements aligned with our label. This process has been smooth, allowing patients to readily access ResDifera. We expect many Medicare plans to start to list ResDifera in 2025 and would expect this favorable access to continue. Our business mix has been running in line with our expectations with commercial at 50 to 55%, Medicare at 30 to 35%, and Medicaid and other at about 10%. Moving on to prescribers. As a reminder, we have 14,000 total targets with a primary focus on the top 6,000. These include hepatologists and gastroenterologists who treat the majority of the 315,000 diagnosed F2, F3 patients. The goal with any successful launch is to expand both the breadth and depth of prescribing, and we're making strong progress on both fronts. In the third quarter, around 40% of our top targets prescribed resdifera, doubling the 20% penetration rate from the second quarter. Our top targets are continuing to write more than 75% of resdifera prescriptions, giving us confidence that we're targeting the right prescribers with our efforts. And as we look at depth among our top targets, we are seeing an increasing number of prescriptions written per prescriber as well. The launch is off to a fantastic start with all of our metrics either meeting or exceeding our high expectations. Our success to date has also been driven by our ability to continue to wire the system as noted on slide five. This is a first in disease launch where the market needs to be built from the ground up. Prior to ResDifera's approval in March, there had never been a prescription written for NASH. Our goal has been to drive changes in clinical practice and develop processes for efficient patient and prescription flow to establish a strong foundation that will support our peak sales expectations. While we still have a lot of work left to do, we have made terrific progress to date. Success here allows us to strengthen our leadership position in NASH and achieve one of the most successful specialty launches in the industry. A key factor of our success thus far has been ResDifera's strong value proposition, which has been recognized by healthcare providers, payers, and patients. As a reminder, ResDifera is a liver-directed medicine that has set a high bar for efficacy and safety. It's the only medicine to achieve statistically significant results on both endpoints in Phase III, NASH resolution and fibrosis improvement. Importantly, ResDifera stopped or improved fibrosis in more than 80% of patients after one year of therapy. It's a once-a-day pill that's well-tolerated with simple dosing. It's this favorable profile that should allow patients to stay on the medicine over time. Early indicators suggest persistency in line with other well-tolerated oral medicines. It's clear from these real-world results that risdifera is well on its way to becoming the foundational therapy for NASH patients with moderate to advanced liver fibrosis. We believe that this strong product profile will provide a sustainable advantage for risdifera when new competition emerges. The next potential entrant could be from the GLP-1 class. As we look at the profile of semaglutide on slide seven, you'll see that risdifera compares very favorably across key attributes. Importantly, more patients taking a GLP-1 in the real world struggle to stay on treatment long-term. In fact, data show that only about 30% of patients with obesity remained on semaglutide after one year, which is especially important given their NASH study of 72 weeks. For NASH patients with moderate to advanced fibrosis who are one or two steps away from having cirrhosis, healthcare providers will want to be confident that their patient is going to take his or her medicine consistently over time to see an effect. So as we look ahead and consider the potential impact of a GLP-1 launch on the market on slide 8, we believe it will further accelerate the growth opportunity for risdifera. We are focused on the 315,000 patients diagnosed with moderate to advanced NASH fibrosis. On its own, this is an attractive specialty market, and we are still early in the journey with 2% of those patients on treatment. Novo Nordisk, is focused on a much larger population of both diagnosed and undiagnosed patients, many multiples of our 315,000. Their efforts will expand the market and, most importantly, benefit patients with NASH by increasing awareness, patient screening, diagnosis, and treatment. And this significant expansion will also benefit ResDifera, both as the foundational therapy in NASH for first-line patients, and from the high world discontinuation rate of semaglutide. And there is clearly room in this large and underpenetrated market for multiple mechanisms to treat this challenging disease. We expect combination therapy to be part of the treatment paradigm. In fact, it's already happening. Approximately 25% of resdifera patients today are using resdifera in combination with GLP-1s to treat their comorbidities. and the percentage is likely much higher when including patients that have previously been on a GLP-1. In summary, we continue to be optimistic about the future market dynamics. Between ResDiffer's attractive real-world profile, the significant opportunity to penetrate our target market of 315,000, and the potential for significant market expansion beyond that with new competition, we are confident that ResDifera can continue to deliver strong growth in the years ahead. We're also pursuing additional growth opportunities for ResDifera beyond our launch in the U.S., as highlighted on slide 9. This includes our efforts in Europe, where we are preparing for a potential second half 25 launch of ResDifera pending EMA approval. Additionally, we're working to bring ResDifera's benefits to patients with NASH cirrhosis, Earlier this month, we completed enrollment in our Maestro NASH outcomes trial, marking a significant milestone for Madrigal and the NASH field. Subject to regulatory approval, positive results could make ResDiffer the first medicine for patients with compensated NASH cirrhosis. Cirrhosis patients are at a high risk of progressing to serious liver-related outcomes. While F2-F3 patients have a 10 to 17 times greater risk of liver-related mortality, in F4 or cirrhosis patients, that risk is 42 times higher. This stark statistic underscores the urgent need for an effective treatment in this vulnerable population. Results from our outcomes trial in cirrhosis patients, as well as the outcomes portion of our Maestro NASH trial in F2, F3 patients, could very well position resdifera as the only approved therapy with outcomes data in NASH in this decade. providing us with data years ahead of the competition. I'd also like to highlight two exciting developments in our R&D organization that further strengthen our leadership in NASH. Dr. Michael Charlton has joined us as head of clinical development. As a world renowned expert in NASH, we are thrilled he decided to join Madrigal at such a pivotal time for the company. Secondly, we are preparing for a strong presence at the upcoming AASLD liver meeting in mid-November in San Diego, where ResDifera will be in the spotlight as the first ever approved therapy for NASH. Madrigal is leading the NASH field to advance the science. Our ResMetarom development program produced more NASH abstracts at ASLD than any other program. Moreover, AASLD recently released guidance that reinforces Riz Differ's role as the foundational therapy for NASH, following similar recommendations from the EASL guidelines in June and the expert panel in July. Clinicians now have multiple guidance documents to support patient identification, treatment initiation, and monitoring. Before I hand it over to Marty, let me briefly summarize our progress on slide 10. This quarter, we delivered outstanding results meeting or exceeding our ambitious targets. Net sales of $62 million driven by strong demand. Greater than 6,800 patients on ResDifera. More than 80% of commercial lives covered, achieving this milestone a full quarter ahead of schedule. About 40% of our top targets are prescribing ResDifera, and we continue to drive both breadth and depth with significant opportunity ahead. The completed enrollment of our NASH cirrhosis outcomes trial, one step closer to bringing the first therapy to market for this vulnerable patient population. And we're tracking well to launch ResDifera in Europe in the second half of 2025, pending EMA approval. With that, I'll turn it over to Marty.

Thank you, Bill. Earlier today, we issued a press release with our full financial results. So I'll provide you a few highlights of the third quarter of 2024 as noted on slide 11. U.S. net sales for the quarter totaled $62 million. As we've mentioned previously, we expect inventory to run between two to four weeks for risdifera, which is typical for specialty medicine. As Bill noted, this was another strong demand quarter with inventory at the low end of that range. Our gross to net was again favorable to our expectation this quarter as our copay assistance program utilization was lower than anticipated for the third quarter. As we said before, we expect gross to net to be choppy quarter to quarter, particularly early in the launch. R&D expenses for the third quarter of 2024 were $68.7 million compared to $71 million in the third quarter of 2023. We continue to anticipate relatively stable R&D expenses this year compared to last year. SG&A expenses were $107.6 million compared to $27.6 million for the third quarter of 2023. This year-over-year increase was expected due primarily to the expansion of our commercial operations in the U.S. following Redifera's approval in March. Turning to our balance sheet, as of September 30th, we had $1 billion in cash, cash equivalents, restricted cash, and marketable securities. With this strong cash position, we are well resourced to support the ongoing launch of RISDFRA in both the U.S. and our planned launch in Europe. I'll now turn the call back over to Tina.

Thanks, Marty. Let's move into the Q&A portion of the call. So, Marvin, please provide the instructions for the Q&A session, and we'll get started.

Thank you. We will now open the lines for question and answers. To open your line, please press star 111, and you will be added to the queue on the call. Please stand by while we compile the Q&A roster. Our first question comes from the line of Yasmin Rahimi of Piper Sandler. Your line is now open.

Good morning, team. Congrats on an amazing quarter. Really incredible. Team, my guest question is, given the strong performance Could you maybe talk to us about what your forecast or what your thoughts are around moving forward into fourth quarter and sort of growth into 2025? And I'll jump back into the queue.

Yes, thanks very much for the question. Yeah, we're really thrilled with how the launch is progressing. You know, the team is executing at all levels, made great progress on coverage, adding prescribers, adding patients. Yeah, we're really off to a very strong start. And, you know, as I said, the trajectory in early launch quarters is an important indicator for future success. Now, we have our own internal metrics that we look at, but we're also benchmarking ourselves, again, against about 10 specialty launches in the last 10 years that are unmitigated successes. These are great launches. And we're doing really great against these benchmarks as well. And looking at those benchmarks for growth, What you typically see in the third quarter of launch of growth is in the 50% zone on average. And like with the other metrics, we're tracking well on this. So we're off to a great start. So maybe for 2025, Marty, you want to comment on that?

Yeah, absolutely. Like Bill said, we're off to a strong start. We're really pleased with our third quarter growth and what we're looking forward into fourth quarter. But absolutely, we want to see how 2024 plays out before we provide any more specific points of view on 2025. But what we can say, if you look at fiscal year 2025, and based on our performance of third quarter and into fourth quarter, we would anticipate that 2025 expectations to increase some to account for this robust growth that we're generating.

All right. Good. Thanks, Yaz. Marvin, next question, please.

Thank you. We'll move on to our next question. Our next question comes from the line of Elena Merle of UPS. Your line is now open.

Hey, guys. Thanks for taking the question and congrats on the quarter. Just curious what you're seeing in terms of the cadence of new patient starts.

Are you seeing a similar number of new patient starts per week or month, or is the number of new patient starts accelerating? And then just second, in terms of the essence data, what are your expectations for whether the payers will require a step through with the GLP-1 if the essence data shows a very strong fibrosis benefit? Thanks.

Thanks, Ellie. Appreciate the question. So, yeah, as we said, we have been continuing to steadily add patients. you know, we have, there's a lot of interest out there. You have to remember, we're not at steady state yet either, right? You know, we haven't fully penetrated all of the prescribing physicians. So that's going to take longer as we continue to wire the system. And then you get to your baseline that you start to grow from in a patient ad perspective. But, you know, we're making progress every day, adding new prescribers, new patients, et cetera. So, you know, that's, we expect this pace to continue.

And the second question was around essence and step through GLP-1.

Yeah, so look, thanks for that as well. To date, we haven't seen any requirement for step through. Look, we're waiting to see what the results look like as well. And when we get the results, we're really trying to, we're going to want to try to understand what the data says and doesn't say. And we'll have a number of questions to really probe a little deeper on because, as you know, top line readouts don't always translate into labels so well. So some of the things we're going to be looking for are the following. What do the intent to treat results look like? How are discontinuations handled? What percent of patients reach the 2.4 milligram therapeutic dose? And even things like how are the biopsies read? Because that can result in higher response rate as you've seen in other NASH trials. But in the end, we're talking about a well-controlled trial here versus real-world practice, and that's where I think the profiles really matter. That's where we're really set up for that. So we'll see what happens with the results of the trial to see what happens, if anything happens, with payers. Now, what I will just reinforce is we are in a really strong position. We have a very good profile. We've had ongoing dialogue with payers now for well over a year. they understand the profile of the product and what it can offer. So we feel like we're in a very strong position as we go into any potential readout that takes place for methods.

Great. Thanks, Bill. Marvin, next question, please.

Thank you. One moment for our next question. Our next question comes from the line of Akash Tiwari of Jefferies. Your line is now open.

Hey, this is Manoj in for others. Thanks for taking our question. Just one. Which trial are you more confident on hitting on outcomes, the extension of mastronash or like the patient trial? Why are you confident that you could show a definite benefit in these late-stage patients?

Oh, thanks for the question. Look, you know, we're confident in both trials. Of course, we don't have the answer yet, though, so we have to wait and see what that looks like. You know, we have for the cirrhosis trial, We had a group of 180 cirrhosis patients in the NAFLD-1 trial that went on to the open label. It was based on some of the results that we were seeing there that we feel that there's a very good reason why RedDifera may work in this population. In fact, you know, RedDifera has been referred to as the kind of master regulator or the for fibrosis, so we think that this is something that there's a good chance that we hit. We're, of course, always going to push the science here and ask the question about what does the community want to learn about and know. We think, especially through the cirrhosis trial, that there's going to be a ton of learnings for the community overall. We're out in front. We're leading these efforts. It's something that, you know, we think as a leader it's important to do to drive the science. So, you know, we'll have to see what the results say, but based upon the really significant interest in the cirrhosis trial, we know that the community is interested in hearing the answer to the question. You know, you saw that we had about 840 patients that enrolled and that was exceeding expectations really just because of the interest of the trial. Thanks.

Thanks. Yes. Thank you. Marvin, next question, please.

Thank you. One moment for our next question. Our next question comes from your line is now open.

Good morning, guys. Thanks for taking the question. Congratulations on the quarter, but I'm going to complain a little anyway. I wanted to ask about Medicare free drug. Can you talk about the amount of free drug that's being utilized going into the number? We've heard some discomfort, I would say, from doctors treating Medicare patients with the free drug program that you guys have offered, I guess, just around logistics. And are you satisfied right now with your commercial copay program to promote use in the commercial population? Just because you guys did say, I think, Marty, you said that copay utilization was low this quarter. Do those two things need to be optimized to set up 2025 to success?

Risu, thank you for the question. First of all, from a free goods perspective, very little this quarter, and there was very little last quarter. That's something that we expect in time. There's a little bit more utilization of. So not worried at all about where we are. As you're launching any new product, as it relates to any of the services that you offer, it takes some time for the community to, A, know exactly what is out there, and then, B, how do they utilize those potential offerings. But we're seeing good progress on all those things. We haven't heard that feedback. I have to say, and I spend a lot of time talking with practices, haven't heard the feedback that it's been a challenge for physicians to access any of the service offerings that we have. But, you know, it's certainly something that we keep an eye on. We want to be, you know, absolutely best in class in this and deliver the best experience that we can for not only the practices but for the providers. You know, co-pay utilization... We have a very good program where that for commercial patients, you would expect that they would pay $10 per month, that we would cover the rest of their obligation. Again, it's pretty early, and it's more of an issue of patients making sure they know about it, how to access it, have physicians that are directing them towards it and the practices that are directing them towards it. So we expect that that is going to increase in time. In fact, we want it to increase in time. because we want it to be affordable for patients. And as you recall, what we have emphasized in this launch is affordability for patients. We've done that and we've offered it. The way we've done that is through a very, very robust copay assistance program. We do have a PAP program as well. And that's if patients can access drugs through any of the other means that are possible for them, we will fulfill that obligation. But we'll keep an eye on any feed that we get. We react very quickly. And we've said to the community, we've been very clear. If a patient needs the product, we will find a way to help that patient get the product, including it being free product. Equitable access is really important here. We take it really seriously. So we'll keep an eye on it. And if you have any specific feedback from where you heard that, we're happy to follow up and talk with them as well.

Perfect. Sounds good. It just reads you on, you know, what we're seeing from prescription to drug filled. You know, we mentioned this in the script as well, that we've already achieved our goal for the six-month mark, which was bringing that down from 60 days to 30 days. So things are very much working in the system for us right now.

Good. Wonderful.

Thanks.

Great. Marvin, next question, please.

Thank you. We'll move on to our next question. Our next question comes from the line of John Wolpin of JMP. Your line is now open.

Thank you for taking my question. This is Catherine on for John. I have a question about how payers are currently handling those patients that are already on GLP therapies or want to go on GLP therapies and are as deaf. Are you seeing any issues there and how this informs sort of what will happen if GOVI is approved for NASH as well?

Yeah, so look, I think what we're seeing, we found, I believe that about, from our estimations, about 25% of patients that are on ResDiff are also on a GLP-1. And that GLP-1 has been prescribed for comorbidity, right? And the indications that GLP-1s are indicated for. Now, we've done some market research which could suggest that up to 50% of patients are either on or have been exposed already to a GLP-1. So we expect to see GLP-1s continue to be used to treat comorbidities. And I think as you're getting to the real world here, when a physician has a patient who has NASH, they may be on or may have been on a GLP-1, but if they are an F2, F3 patient, they're evaluating if therapy is required to treat that problem. And that's where they're reaching for res difera, regardless of whether the patient has been exposed or not. So how much of a glimpse to the future does that give us? Not so sure, but what it would say is that If the market research is correct that 50% of patients are on or have been exposed, they're kind of out there already being used, and there's still a lot of patients with NASH despite the availability of them for many years. We feel like we're in a strong position, and I think that it is two very different things you're evaluating. if you're evaluating somebody for obesity versus you're evaluating somebody for NASH, and we're extremely well positioned for that. Great.

Thanks, Bill. Marvin, next question, please.

Thank you. One moment for our next question. Our next question comes from the line of Andy Chan of Wolf. Your line is now open.

Hi, this is Emma for Andy. Thanks for taking our question, and congrats on the quarter. Just following up on a question asked about utilization of the free drug program, are you able to provide a split across Bridge versus Pap? And then another question from us, just your recent patient campaign in September raised a lot of awareness. Can you speculate on whether they can be converted to Q4 revenue or Q1 revenue? Thank you.

Great. Thanks for the question. Now, look, with the utilization of Bridge and Pap, so let me just provide a little perspective first. So we do have a bridge program for commercially insured patients if we have the option to send them product in the interim period while their reimbursement is being finalized with the insurer. As I've said in the past, you have decide when you want to use a bridge program. You may not come out of the gates using one. In this case, since there's such assurance now of a path to reimbursement with 80% of commercial lives covered, it is a good time to have a bridge program. And this way, we don't want to have a patient delayed in getting product while insurance is being worked out. So we have offered a patient the ability to start while insurance is being worked out. And there's utilization of that program. I wouldn't call it broad at this point. From a free goods perspective, again, we said there were very few free goods patients in the quarter. And that's similar to what we said last quarter, very few free goods patients. So to me, that's an indicator that coverage is very strong and that patients are finding a path to product without relying on path However, it is available. People are using it. And we would expect in time that that number is going to increase. But let me be clear about the patients that we have on. This is a really strong demand quarter. There's very few free patients. And we're really, really excited about it. Now, you asked the question about some of the patient work that's been done, the patient campaign, and how there seems to be a lot of interest. Will that ultimately turn into Q4? You know, a lot of what you have to do in a launch is drive awareness. It's the first step to patients taking action or physicians being comfortable and knowledgeable and ultimately taking action. So, yeah, we did see, we have seen so far you know, positive response to our efforts to directly reach out to patients with our DTC efforts. How much of that translates into future demand? Well, you know, our hope, obviously, is that it plays a role in it, but in itself, it is a piece of it. You still need to have the practices ready, that they have their pathway to bring patients through and along through everything from diagnosis through to prescription and fulfillment of prescription and follow-up. So it's an important component, but I would consider it a piece of the full effort that we're making rather than a standalone.

Great. Thanks so much. Thanks for the question. Marvin, next question, please.

One moment for our next question. Our next question comes from the line of Prakhar Awal of Cantor Fitzgerald. Your line is now open.

Hi, Prakhar here from Cantor. Congrats on the great quarter. So maybe my first question is if you can comment on the month-over-month patient ads seen in 3Q and whether you saw a lot of ads in July and more steadier ads in August, September. The reason I'm asking is a linear patient ad in 3Q would imply a lower sales number, assuming inventory is at the low end. So just trying to reconcile the patient growth. seen throughout 3Q and the revenue number. And as a follow-up, would you expect similar sequential growth on new patient ads in 4Q, or would there be some moderation given the month-on-month trends seen in 3Q? Thank you, and congrats again.

Thanks, Prakhar. Look, we're steadily adding patients and prescribers, and that continued pretty consistently through the summer, and even as we look ahead to October. We're very pleased with the uptake, and really it's each day, each week, each month we're adding, and you get the cumulative effect of that. So not going to give specifics on a per month because it can be a little noisy from a month to month. We're looking at it from a quarter perspective, and what you're seeing is the cumulative effect of all those things make for really strong quarterly growth. So that's what we had in the third quarter, and as we move into the fourth quarter, the dynamics remain.

Good. Yeah, and Prakhar, I would just add that Bill addressed the fourth quarter during the script, so if you want to go back and listen to that.

Great. All right. Marvin, next question, please.

Thank you. We'll move on to our next question. Our next question comes from the line of Adrienne Newkirk of Goldman Sachs. Your line is now open.

Adrienne Newkirk Good morning. Thanks so much for taking the question and congratulations on the quarter. Bill, you've mentioned this or maybe referred to this a couple times here, but in terms of the specialty drug analogs or benchmarks that you're looking at, I'm wondering if you're willing to maybe provide a little bit more specifics there as to which ones specifically as we think about the forward trajectory. And then would love an update here on how uptake has been going across your hepatologist versus your gastroenterologist. I know last quarter the latter had been a key point of focus, as they are the majority of the prescribers here, but how has that been going? Thank you so much.

Great. Thanks for the question. So, look, these are the group of around 10 over the last 10 years that I mentioned. These are all blockbuster specialty medicines. They tend to be first in class, first in disease medicines and, you know, high on med need areas. That's about all we'll get for now. But, you know, look, I think you can see with our results, strong results, and we say that we are performing well against the benchmarks and our own internal metrics. I think we've picked the right competitors, and I think that we're really holding a high bar for ourselves. And the team that we brought on board is not here as for a hobby. They're here to win. They're here to create a market and have a product being RISDifera be looked at as amongst one of the best launches in the industry. So we have our goals set really, really high. And the team, as you can see, I think, has done a remarkable job, especially if you think about where we were initially. 12 months ago. Well, actually where we were in January, which isn't even 12 months ago when we had, uh, not even a commercial team in place of significance and what we've been able to do in that short period of time. So, you know, I have to say been involved in a lot of, uh, launches, been a lot, been involved in a lot of outstanding launches. Uh, we're doing a great job with this launch. I put this one at the top of the top of the pile. So just a little bit of commentary there. Um, so a little bit about Hefson GIs. Uh, I would say, uh, similar to what i said in the last quarter but obviously progress by both groups you know if you think about the um 14 000 uh physicians that we're targeting six thousand is really the key there's under a thousand hepatologists in in the country so by virtue of you know where the numbers are per se of patients just by a sheer volume of physicians you know you've got a lot more gastroenterologists than you do hepatologists and what we've seen is kind of steady growth in breadth and depth across both the groups. Now, remember, the hepatologists, they are liver doctors. That is their organ of specialty. So they're a little bit earlier, moving a little bit faster, I would say, on average, because they knew the disease. They've been looking at the liver for a long time and off to a little bit faster start. However, you know, the GIs, represent and will represent the majority overwhelming majority of the scripts just based on the sheer number of them and they're making progress now they had to start from a little bit different space though right they didn't have pathways established in their practices for how to process NASH patients let alone treat NASH patients you know somewhere and and the ones that we're focused on in that target 6000 are interested in NASH, interested in the liver. That's how we've enriched that target population, or target group of prescribers. They have taken steps to create these pathways. Now, I'll just give two points in time. A year ago, there was the ACG, American College of Gastroenterology meeting in Vancouver. And last week, or beginning of this week, the meeting was in Philadelphia. gastroenterology meeting, and it was like a night and day difference. People knew the drug, people were taking steps to create pathways, people were hiring staff to help process their NASH treatment in the form of APPs, et cetera, and taking steps to acquire imaging equipment. So that wasn't categorically across every one, but you have the whole gastroenterology target group, which is moving towards creating these pathways and so forth. So where we are in launch at seven months out or so, it's remarkable how quickly people are shifting towards really, I would say, creating their pathway in each of their practices for how to process a NASH patient. And it just, you know, it's taken some time, but it's really happening quickly. They understand the unmet need. They're happy to see that there's now a foundational therapy that's available that's pretty easy to use, right? So that gives you a little bit more color around it, but HEP's still ahead of GIs just because I think of, you know, their training, their knowledge of the space. but GIs are moving along really quickly, and we're going to be relying on them heavily throughout the future. Great. Thanks, Bill.

Marvin, next question, please.

Thank you. We'll move on to our next question. Our next question comes from a line of Lisa Baco of AeroCorp. Your line is now open.

Hi. Thanks for taking the question. I have sort of two types of questions. One is U.S.-based and one Europe. So if we're You asked related questions. Can you give us a little more color on the growth to net? Marty, I know you said it was favorable and would be choppy, but where did we land this quarter? Any color on sort of discontinuation rate thus far that you're seeing? And then as you think about semaglutide and assuming that data is positive, do you expect any changes in growth to nets as a result of that? And then for Europe, could you give us kind of a lens on, you know, from the same kind of way you looked at the U.S. market, you had, you know, kind of diagnosed patients and then the ones with significant fibrosis in care. Could you provide those kind of numbers for Europe? Thank you.

Okay, great. Maybe what I'll do is let me start with Europe and then we'll move on back to gross to net. So, you know, first of all, Lisa, thank you for the questions. Europe is It's kind of interesting. Europe, I would say, is ahead of the US versus where we were a year ago. They've had the benefit of knowing that a product was approved for NASH. And as a result, they're planning for success that a product will get approved in Europe. And so they're taking more action. As I said over the past calls and in meetings, When physicians told us here that they hadn't really taken steps in advance of approval to kind of wire their system, so to speak, they meant it. I mean, with the exception of a few practices, it wasn't until March 14th that they started thinking about how they were going to process patients. Now, Europe's a little bit different in that they see the success in the U.S. of an approval. They plan for it. The first indicator of that was the easel guidelines that came out, essentially a year, a year plus in advance of approval, anticipating that if approved, this is how it would fit into the treatment regimen. So, you know, we feel that they're really in good shape. Now, look, we're getting started. a little bit later, obviously, in Europe than we did in the U.S. We've had a medical team that's been over there for years now, but we are just starting those efforts, and we're going to do it in a very, very targeted way. The reason that we're going is NASH is prevalent in Europe, and there's patient numbers there that we think you know, approximate the U.S. opportunity from the number of F2, F3 patients that are most in need. As we get closer to launch, we're going to come back and give a little bit more of an assessment of what do patient numbers look like, exactly who the targets are, et cetera, and, you know, be able to give you a little bit better idea. We're well on the way. We're hiring leadership, but we're doing so in a very, very focused, diligent manner. You know, we are planning for success. We think that Europe still will recognize value. We've seen that in other launches when I said recognize innovation. So that's how we're progressing there. That's why we're going there. So maybe, Marty, do you want to pick up the U.S. gross to net?

Yes, absolutely. And thanks for the question, Lisa. And you're right. Gross to net can be choppy, particularly in these early quarters of launch. And as we look forward for growth to net, we do expect some additional impacts, as we've already said. So one of the biggest factors in our growth to net right now is the growth to copay assistance program. And we said that that was slightly lower again this quarter than our own expectations. And we do want that to grow, as Bill already described. We think that benefits the patients and keeps more patients on drugs looking forward. So we will see some, you know, some growth there on the copay assistance. I can comment on 2025, of course, and we anticipate that we'll see typical Q1 dynamics with growth to net, including insurance re-offs, plan changes, et cetera. So we, like other pharma companies, we expect an impact from the IRA as well in that Q1 2025 growth to net. So bottom line, gross net will step up in Q1 2025, but still within the range of like specialty medicines. And just to answer your question specifically about SEMA and the potential impact of gross net if SEMA is approved in NASH, I'll go back and say that we really believe that our gross net will stay within the range that is typical for specialty medicines.

And maybe, Lisa, you may ask a question about persistency and discontinuations. You know, look, it's still pretty early, but everything that we're seeing so far gives us a reason to believe that persistency is going to be strong. For this product, it'll tend to look like good oral persistency. You know, the one thing, again, discontinuations, yeah, there have been discontinuations like you would with any product. have some, and that's, you know, we're presenting the net number of patients that were on drug at the end of the quarter, the 6,800, over 6,800, right? So, you know, that's net of everything. But we're really optimistic. We think, you know, we saw in the clinical trials, discontinuation was really low. And, you know, we really think persistency is going to be strong with this. It's a strong profile drug. I mean, you know, you've heard me say in the past, like, this is in kind of my career, This is kind of a holy grail profile. Everyone wants a pill that's once a day. And we've had patients say that hearing there was this solution beyond anything gave them hope that there was a path forward. And we've heard that from a number of patients. And we think that that in itself is a really good sign.

Thanks, Bill. Marvin, next question, please. Try to get a couple more in.

Thank you, Marvin, for our next question. Our next question comes from the line of Jay Olson of Oppenheimer. Your line is now open.

Oh, hey, congrats on all the progress, and thank you for taking our question. Can you talk about the event rate in maestro NASH, and how is that rate tracking versus your expectations, and the importance of fibrosis improvement for driving a clinical outcomes benefit for res difera, and then also your expectations for the fibrosis improvement endpoint in the ESSENCE trial? Thank you.

Thank you, Jay. There's a lot there to try to answer. Let me start with Essence. I'll work backwards. We're not sure. We haven't seen the data. We don't know. As I said, there's a few questions that we're going to want to understand. Top line results, as I said, don't always translate into labels very well. There's the what do you present versus what's the regulatory standard you're going to be held to when it becomes labeling. So, you know, we'll ask what the intent to treat population look like, how we're discontinuation categorized or handled. And also what happens from a dosing perspective, how many patients got to the top dose, not sure what it's going to look like. Right. So I think, you know, we hear that it's going to be in the coming weeks anyways, that we'd get an answer. So look, Regardless of what the results show, we're in a really strong position. We have just a product profile, as I said, a very strong product profile. We've got a lot of patients that are on drugs. We've got a lot of physicians that are using the drug, and that momentum is picking up. Regardless of how it looks, we feel like we're in a strong space, and as we talked about on the call, we know that there's going to be a real effort by any new entrant to try to drive the size of the market and number of patients that are prescribed and so forth. And we're in a position to benefit from that as well. Regarding the other, our trials that are ongoing, you know, we haven't commented and, you know, we're not going to be able to comment on what event rates look like. You know, this is an ongoing trial and we will continue to monitor. You know, part of, if you think about the outcomes trial, and I'm saying the psoriasis pardon me, psoriasis, cirrhosis outcomes, old habits, the cirrhosis outcomes trial, you know, we had to think about what would event rates look like. And since this is really not so well understood population, we used the best measures that we could around us to try to understand what that would look like. And as I said, I think this trial is going to really help educate the community on that cirrhosis population about what event rates do look like and so forth. So, you know, we're anxiously awaiting, as we have more data, we'll obviously, when I say data, we're not going to give a running update of the trial, but now that we're fully enrolled, we're excited to be monitoring the trial and seeing what the outcomes look like in that, you know, 27 timeframe. Right.

Thanks, Bill. Marvin, time for one more question, please, if you could queue for that.

Thank you. We'll move in for our next question. Our next question comes from the line of Thomas Smith of Lurie Partners. Your line is now open.

Hey, guys. Good morning. Thanks for taking the questions, and let me add my congrats on the nice launch quarter. I wanted to ask whether you have any visibility into early patient persistence and refill rates. I know it's still early days, but you're clearly continuing to drop new patient ads. And I'm just wondering if you're able to put any numbers around persistence or if you have a sense of when you'll be able to quantify that. And then just separately with respect to business development, Having brought Dr. Charlton on board, I think it's pretty notable. Could you just speak to how you're thinking about BD from here and potentially building out a pipeline beyond ResDifera? Any preference on stage of development as you're potentially evaluating some of those opportunities? Thanks so much.

Tom, thanks for the question. Yeah, with persistence, as we've said a little bit earlier, it's early. We're only seven months or so into the launch, but what we've seen so far we're optimistic about. I think we need to get past the 12-month mark to be able to at least start looking at cohorts. And even then, as you know, with the growing number of patients, even from the beginning, there's going to be very few that have been on for 12 months. At the 12-month mark, it's going to get to the 18 months to have enough of a sample of patients to really be able to say. But we're really optimistic about it based on clinical trials and what we're seeing in the real world already. From a BD perspective, thanks for the question. You know, look, what we've said is we want to build a pipeline and our focus is really in Nash. And, you know, what are we looking at? Hey, we look at everything. And one of the things that I think is always a measure of leadership in a space is inbound calls that you get about people wanting to talk to you because you are the leader. And, you know, that's clearly something that we're experiencing already. I think anyone who has a NASH product that they're looking at and has an interest in partnership and so forth is certainly going to reach out to us. From a stage perspective, you know, we'll look across the gamut. You know, we have the advantage. We're in the leadership position now. We have what we believe is the foundational therapy with ResDifera. ResDifera alone is a fantastic product. But we are going to look for opportunities of, you know, next best mechanism of action or what would potentially be a good combination, et cetera. And we have deep, deep, deep experience in this space. So we feel like we're in a good position to make the call of what would be the right product to add to the portfolio, product or product. And we're going to do so in a very thoughtful way and make sure we pick something that truly is the right thing for us. So, you know, we'll continue to evaluate. And when we see something that's right, that is actionable, then we'll consider moving forward with that. But let me just be perfectly clear. What our stated intent is, is to be the leading NASH company in the industry, period. That has a short, medium, and long-term side to it. And we feel we're well underway, especially when you see how strong a start we are off to.

Great. Thanks, Bill. And, you know, thank you all for your time today and your interest. We're going to conclude the call. A replay of this webcast will be available on our website in about two hours. So thank you for joining us.

Ladies and gentlemen, thank you for your participation in today's conference. You may now disconnect. Have a wonderful day.