Madrigal Pharmaceuticals, Inc.

Good morning everyone. Welcome to day three of our Piper Sandler health care conference. My name is Yaz Rahimi. I'm a senior biotech analyst here at Piper. Really thrilled to have Bill from Madrigal here. What an amazing 2025. Madrigal as many of you know was my first stock that I covered as a covering analyst. And it's been an incredible journey to see with Deborah approved like I truly cried when I saw that on March. And not only got it approved, you guys have crushed the launch. So I cannot be more proud and excited for you. So after all the nice things, now I'm going to grill you with tough questions. But I want to say congratulations, and you have done a tremendous job, you and all the team at Madrigal.

Thank you. Very nice of you.

I think investors, we're also continuing to see, I think, A three QE report is 62.2 million in revenue. And so now the question becomes is where do you go from here? If you could maybe share with us how you're thinking about the trajectory of the launch and the upcoming quarters, that would be great.

Yeah, look, so first of all, thanks for letting us be here and also thanks for the compliment. I mean, 24 has just been a remarkable year. It's been a remarkable year for patients. I mean, when you think about it, there's never been anything for MASH. And it's not from lack of trying. Over 20 products failed getting there, and we finally made it over the finish line. And we're off to a great start. 62.2 for Q3. Some of the other metrics that we presented were number of patients over 6,800, which is greater than 2,000 that we saw at the end of Q2. We have 40% of our target prescribers. versus 20% at Q2, and we a full quarter early achieved the 80% commercial lives covered that we'd hoped for the end of the year, full quarter in advance. So I think all the metrics are great, and we're also comparing against benchmarks as well to not trust our own internal view, but also to get an external view of things. So we were off to a really strong start, and kind of where to from here. I think that we've been steadily adding patients, steadily adding prescribers, And we continue to see that we see that we saw that in the numbers in the quarter. And you know that's what we continue to expect. As I said we are looking at benchmarks and in that benchmarks one of the things that we're looking at is kind of the quarter to quarter growth. And in the group that we were looking at from that second quarter of launch to third quarter it's kind of in that 50 percent zone. So, you know, that's a metric that we'll continue to look at, and that seems to be pretty consistent with how the street is thinking about things as well.

Okay. So given that 50% to 50% quarter-over-quarter growth, and you feel pretty confident, I think, in terms of, I think the street is modeling about $87 million, so you've It's very achievable.

No, I mean, look, you know, we are doing what we said that we would do. We're continuing to wire the system. We're having, I think, really incredible results on each of the quarters. And, you know, just referencing back to that benchmark, you know, it's something that one of the benchmarks we're certainly looking at. It's in that 50% zone that those other products are at. So, as I said, the street seems to be interpreting kind of what what that looks like.

Okay. And do you expect when we go into the fourth quarter update to give color on any new matrices that we didn't have or should we be expecting a very similar update just with new numbers?

Yeah, look, you know, I think that we've done a really great job in saying what we thought was going to happen with the market and saying what are the key drivers of market success such as penetration of prescribers etc so you know we'll continue to read out on from a patient perspective from a prescriber perspective and from a payer perspective though that is essentially done for now at least from the commercial side Medicare which is going to be coming online in January so we'll give metrics that have the details there and we'll continue to look to see if there's anything else which is helpful for you and the community to be able to interpret launch results. But, you know, we think that right now what we're giving is actually very informative and also the color around what's happening.

Okay, perfect. Maybe the second bucket of questions is around the recent Essence data that became available at ASLD. Maybe just what are Madrigal's overall impressions of the data?

Yeah, I'd say it's pretty much as expected, right? Consistent with what we had been thinking about going in and certainly consistent with the November press release. And I think, you know, as we look at it, we don't have access to all their data, so it's hard to really know all the details. it's really a reminder to us how good ResDifera looks from a fibrosis perspective. Ours is a 52-week study. I think we've demonstrated really strong, consistent results. And so more than anything to me, it's an affirmation of how good we look. And at the end of the day, real-world profile matters, and we think we've got a great, well, we do have a great real-world profile. Some would call it the holy grail, a once-a-day pill that is effective, well-tolerated, etc., So that's something that we think is ultimately going to drive us in the market.

I think one of the questions that has come up, and we'll continue, is just thinking about what peers' views are going to be in terms of differential pricing between Rastafari versus the current obese product. So how do you think about, like, do you think there's going to be a requirement for a step at it before you can get, just because of the differential pricing, how do you think pricing will...

Well, I mean, yeah, look, I mean, we spent a lot of time with PEARS before launch and after launch. And what has been compelling for them is the profile of the product. Well, first of all, start with the seriousness of the disease. This is a really serious disease. It's a costly disease for PEARS, not just at the F2, F3, but when they convert into cirrhosis, it's a problem as well, a more significant problem. If you end up having a transplant, that even pushes you further. So when we those discussions with our compelling data and you saw from a really through third party review as well with ICER we're a very cost effective product. Now I would say in every category there are products with very different prices in them and that's something which is I think you know kind of well identified and supported in the industry. We feel that the merits of our product are going to put us in a position. Now, anytime you have a change to a category, anytime you just have a calendar change, there's discussions that you continue to have with payers. It's a little too early to know, but what we do know is that all the discussions we've had to date have been extremely productive with the payers. They are really, really understanding the unmet need and the benefit that we're bringing. So I think it will evolve as more parties launch and so forth. But for now, we believe that we've taken the right approach. I think we've priced the product extremely well for this disease. And we'll see what happens. You say, could there be a step through? There aren't any step throughs at the moment. I think that's something that we'll look towards the future to see what happens. And we can talk a little bit about how I think the market dynamics are going to evolve in the future. about the GLP-1s being here in general?

Yeah, I think that's going to be critically important because I think what investors are trying to figure out is, you know, Novo is communicating there are 22 million Americans with, you know, F2 to F4. And you guys have been very transparent to communicate that under the GI and hepatology, there are about 315,000 patients in need. So the question that investors have is, like, Who is going to be on Rastafra versus on some of Glutide. So we could kind of share the good part as we have abundance of patients. But how will physicians make that decision and what will the distribution of.

I think there's two things there you say who's going to be on one or the other. And what we're seeing already is that about 25 percent of Rastafra patients are on the GLP one as well. So it's not necessarily one or the other. And in markets like this many products can be supported. I mean there is not a winner take all market that I know of. When you look at large specialty markets or good sized specialty markets they typically support you know 10 15 more or more products. And within those you've got blockbusters and mega blockbusters. So I think this notion of you know there's somebody who is who is just the undisputed winner 100 percent share it just doesn't happen that way. Now. There is a little bit of a difference in how we look at the patient population versus others. What we were always clear about is if you're diagnosed and actionable, that's our target. So there were 1.5 million diagnosed NASH patients in the U.S., 525,000 F2, F3. And then remember, we're targeting 14,000 prescribers. That's our universe. And that's where the 315,000 fits. So as a company coming in launching for the first time rather than spending the resource and the time trying to improve diagnosis. We know it's not a very well diagnosed disease at this moment. The plan was always focus on the patients that are in those practices that we're targeting and an overwhelming majority of them sit in the 6000 that we're really hyper focusing on. And that's been our approach and that will continue to be our approach. Now, you know, we've looked at it as a specialty market because these are the patients that are most in need, F2, F3s, one to two steps away from cirrhosis and really costly to the system. As you said, Novo's view is a little bit different. It's on what's the prevalent population and how do you drive awareness, diagnosis, et cetera, and grow that number significantly. So from our perspective, we're going to stay focused on the 315. Now, if they drive those multi-millions that you're talking about, and I think the 22 million was US, EU5, and Japan, with the profile difference, that is a potential huge source of growth for us. For instance, we know that Novo has reported out that with Wagovi in weight loss, after about one year, 70% of patients drop off the product. So if we have somebody who is helping us develop the market and building the top of the funnel, which is millions of patients, of which millions of patients are going to discontinue, which then still have not dealt with their MASH, we're sitting there as well. Now, we think also from a newly diagnosed patient, we'll be highly competitive based upon our profile. So how efficient are physicians going to choose? Our HEPs and GIs that we're focused on, they're busy. They have to make room in their practice now for a new disease because they haven't had anything to treat with before. And do they want to spend the time dose titrating, et cetera, a patient, or do they want to because their organ that they're thinking about is the liver, have a liver-directed therapy with the profile that we have, and have a patient that's going to stay on drug actually to the 52 weeks that our RETO was and beyond, rather than having a higher discontinuation rate perhaps a hassle to monitor the pit to dose titrate etc and be waiting longer and getting no additional benefit so I mean I think that people will look at it one by each patient in front of them decide what's going to be best how do they think they'll do but we feel really really comfortable that regardless of how the market unfolds we're in a great position because of the profile that we have yeah and the leadership position that we're building now and I think I

I completely agree with you on this perspective but sometimes speaking with investors their view would be look if you look at the essence data the discontinuation rates were quite low and so even though they agree that there's a lot of literature of in real world data establishing that more than half of the patients don't stay on the drug they will say well essence in the real world could have a low discontinuation rate. which then would mean that the funnel of patients progressing to F2, F3 and being referred to the specialties could become less, that it could shrink your target population. So what do you say to those individuals? Because I do get it at times that there is a group of investors out there thinking that you know, semi-glutide could shrink the market for you instead of expanding the market for you.

Yeah, I would say that that is probably maybe not such a great understanding of how the markets work and what the practical realities are. I mean, you know, even in the most severe health conditions, there's still a compliance issue. The very fact that people are going to have tolerability problems Yeah it is this is usually not their primary. Diagnosis right this is usually they have a bunch of other things and now they have mash. It shouldn't we don't expect that it would be any different and even if you say fine so it's not 70 percent. 12 months let's say it's 50% let's say it's 40% still 40% of millions 70% of millions 50% of millions is a big number yeah and that's a bigger number than the 315 so I think that you know there's this there's this look back at clinical trials is great but that is the most controlled setting and the best of product is going to look the real world is what matters and we know what happens in the real world. People have a much different view. They're not trial participants any longer. So we look to the real world a little bit more. And what I'm happy to see is that although it's early, the feedback that we're getting are patients are tolerating risk differ really well. Physicians are reporting really good results. And persistency seems to be strong. We anticipate it's going to be strong. It's too early to be able to make a call on it. We really need 12 months of a big cohort of patients to go through to really start to say, you know, what do the numbers look like? But we anticipate persistency is going to be strong with us. So our real-world evidence is already pointing towards something which is completely opposite to what some other products are experiencing and other indications.

Great. Could you also talk about all the activities that are ongoing at Madrigal and especially in 2025 in terms of physician outreach and...

you know continue to grow the number of prescribing physicians yeah I mean look the breadth and it's a breadth and depth story here ultimately you know you need to continue to add new prescribers and then those prescribers have to continue to write more really encouraging the 40% of our targets and that's of the 6,000 had written a prescription And we're continuing to steadily add prescribers every day, every week, every month. And with that comes, if you're a new prescriber, it's definitionally you have another prescription. And we see the depth increasing in each of the prescribers. And as I said, versus benchmarks, we're performing extremely well for very high performing launches. So, you know, it's really still that blocking and tackling. It's out calling on physicians, or calling on prescribers because we have a lot of APPs that we're calling on as well, especially in the GI practices. But it's the more people get familiar with the story, with the product, understanding how to identify their patients and process them through their practice, and that's why a meeting like ASLD was so important to us. It was absolutely clear that there was one single leader there, and that was us. We want it on the science. We want it on our presence. We want it on our visibility there. And I think that, again, is confidence building for not only our team, but also for the community to see, look, there's a company here that is really making a difference. And that starts to get new prescribers, et cetera, et cetera, et cetera. So we're right on track to continued strong growth of addition in a steady way of prescribers and then depth within.

And I think one of the questions that will be upcoming in 2025 will be, you know, some patients who have been on drug for a year, right, and for them to keep them on the drug. Can you talk to us what Madrigal is doing in terms of, you know, working with pairs, working with the physician, so I'm like, what will be the requirement be to keep them on? Is it as simple as, hey, how are you doing? How are you feeling running a fiber scanner in IT? Is there certain kind of, so just kind of help us understand what is the criteria? from a payer perspective to then allow the patients to continue being on Restapro?

Yeah, you know, it's pretty broad. There are some that may have a specific NIT, but for the most part, it's how can you show that there's some response that's taking place. What was encouraging in the ASLD guidance as well was that it was really trying to put it back in the physician's hands because, you know, this is a complicated disease, and If you recall an approval in the FDA press release, they said it was surprising to see an effect on fibrosis at 52 weeks. But fibrosis isn't the only thing that's going on. We're having an effect on lipids. We're having an effect on liver enzymes. There's an effect on the NAS itself. So you have a number of variables that can be looked at by prescribing physicians. And I think where most people are landing is to say, if there's not a clear worsening, that would be grounds for still keeping a patient on the drug. So we'll see when we get to that 52 weeks, but we're not anticipating that the criteria that there leads to any significant change in whether someone's on the drug or not.

Okay, perfect. Maybe another place to talk about is when it comes to expansion of the market is your strategy in Europe. So if you could just talk about sort of the European MASH market and as you're expecting the European decision to come in in 2025. So how are your discussions going with the agency? What do you hope to gain and how do you think, what is the market opportunity there?

Yeah, you know, really excited about the market opportunity. There are similar amounts of MASH patients in Europe. There was a belief that some countries don't have it, but lo and behold, whenever studies are done, they appear to be quite consistent with what you're seeing in the U.S. There's a lot of anticipation in Europe. One of the advantages that Europe has versus the U.S. is they can look back to see that there's been a product approved in the U.S., and so that increases their expectation that it's going to get launched in Europe. So there was good familiarity there. 125 of our trial sites, about a third of our patients are in Europe, so high awareness there. There's been very action-oriented steps by the community. You saw at EASL, there's the EASL guidelines that a year plus in advance anticipated the approval of ResDifera. So I think things are coming along really well there from a community expectation and interest perspective. And we've started to build our infrastructure there. Now, when we say Europe, that's probably not the right way to think of it because we're not launching everywhere in Europe unless we're going country by country. to make sure that it has what we see as the opportunity and the requirements to be worthwhile for us. So we want to have a positive return within two to three years, and we're setting really high criteria for ourselves so that we'll be very diligent in thinking about, on a country-by-country basis, how we launch.

You did a great job when you, before launch, to kind of target sort of the addressable market with the 315,000 patients under GI and hepatologists. Will you be able, at the time of the approval, also build a similar market sizing map for us, how we should be thinking?

Yeah, we'll do that. As we get closer. I mean, our head of international just started. Great guy, great experience in Europe. As we get closer to launch, we'll come back and we'll provide a little bit more detail about the market dynamics in each of the countries.

And given that Europe is quite heterogeneous, a lot of investors just have difficulty thinking about the size of a sales force that's needed to really, you know, how do you build a very efficient team? How do you think about in terms of expansion of the sales team in Europe and and as well as the capital needed to be successful there?

Yeah, well, I mean, look, it's as we would do in the U.S. You know the number of prescribers, you know the geography, and there's very, very specific analysis that you can do to figure out how many reps that you're going to need and what your footprint look like overall. And then it's a matter of we decide how to sequence. And as I said, we're going about this in a very responsible way, and we'll sequence it in that way. So that's really not so different. And myself, all the products I've launched, they've been in Europe as well. So we know exactly what to do, and we're hiring the team that knows all the details on a per-country basis.

Okay. And in the U.S., it was very clear that the focus was on our GI hepatologists. We are making the assumption that in Europe, the target focus will also be that specialty. Is there something different in Europe in terms of who sees MASH patients more versus others? Or should we be expecting a similar specialty focus?

Way more similar than different. Both GIs and HEPs, there may be. And even in the US, we have some endocrinologists as well that prescribe. And we constantly are surveilling. We're the first, so we're learning along the way as well. And if there ends up being a prescriber that's really interested that maybe doesn't fit the criteria that we thought about initially, that's something that we reassess, and we can add them to the list as well. So the one thing just to know and launch It is an evolving, you're constantly iterating as you learn more in the market. So you don't change strategy, but you evolve your deployment and how you think about it. And we'll learn in each of the markets, there's subtle differences in Europe.

And maybe like in the next minute and a half, I think if you could talk about the patent state and what work is being done in terms of applying the patent extension.

Yeah. So two key patents that we started with composition of matter which is 26 and form one polymorph which is 33 and with the five year extension that becomes 31 or 38. The goal always has been to aggressively pursue new IP so that we would feel abundantly confident putting the five year patent term extension on the form one polymorph which gets you to 38. As I said we subsequently have a new orange book listed patent a dosing patent. that goes to 33, but with a pediatric extension takes you to 34. So with that patent, it further increases our comfort assigning the PTE to the Form 1 polymorph. Now we're also generating new IP that we hope to take beyond 38. So it's been an area of focus for us. I think we've got a great team and we've done a great job. I feel really, really comfortable with where we are.

Great. Of course, my investors would be mad if I don't ask your partnership and how you're thinking about BD activities, maybe in the 20 seconds.

We're the leaders in NASH today. We want to be leaders for a long time, and we believe that leadership includes building a pipeline. Pipeline's initially going to focus on how do we extend within NASH. So that's a key part of our future strategy.

Wonderful. Bill wonderful to have you. Congrats on an incredible 2024 and we can't wait for 2025.