Madrigal Pharmaceuticals, Inc.

Good morning and thank you for standing by. Welcome to Madrigal Pharmaceutical's second quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. After this 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, Demi. Good morning, everyone, and thank you for joining us to discuss Madrigal's second quarter 2025 earnings. We issued a press release this morning and posted a slide deck that accompanies this webcast on the investor relations section of our website. On the call with me today is Bill Sibbold, Chief Executive Officer, Dave Sorgel, Chief Medical Officer, and Marty Deer, Chief Financial Officer. They'll provide prepared remarks, and then we'll take your questions. 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. And with that, I will now turn the call over to Bill.

Thanks, Tina. Good morning and thanks for joining us. We have a lot to cover today. Before we move into this quarter's performance, as you can see on slide three, it's been an incredibly exciting and productive last few months at Madrigal. both driving the launch and building our future. We've accomplished a lot, and each of these milestones reflect the deliberate execution of our long-term strategy to maximize ResDiffers' value and expand our leadership in MASH. In a short time, we've transformed Madrigal into a company with a longer runway, a stronger foundation, and greater flexibility to build for the future. Fundamental to our success is our business in the US, which continues to outperform. ResDifera's quarterly run rate now exceeds $200 million, well on its way to blockbuster status. We can objectively say it stands among the best specialty launches of the last decade. Second, we've strengthened the long-term value of ResDifera with our new US patent providing protection to February 2045. This changes how we think about ResDifera's growth potential and our investment in the business. It's not about years of opportunity, but decades. Third, we're preparing to expand internationally beginning with Germany later this year. Geographic expansion adds another potential future growth opportunity for ResDifera. Fourth, we're working to expand ResDifera with an indication in compensated MASH cirrhosis, or F4C, where our outcomes trial continues to progress If positive, it could double ResDifera's market opportunity. And finally, we're building a pipeline for the next phase of leadership in MASH with the addition of a promising oral GLP-1 to combine with ResDifera. And we have the capital in place that will allow us to support and scale all of this. Each of these pieces adds value to the foundation we are building for long-term leadership in MASH. So let's move into the call with our agenda on slide four. A lot has happened since our last call. I wanted to take the opportunity first to talk about the new U.S. patent that was issued today. We believe it's a significant contributor to our long-term outlook. As we summarize on slide five, the patent covers claims directed to ResDifera's commercial weight threshold dosing regimen as prescribed in its FDA-approved label and will be listed in the FDA Orange Book. And we recently learned some favorable news. The patent reflects an updated expiration date of February 4, 2045, which is extended from the previously noted date of September 30, 2044. What gives us such high confidence in the strength of this patent is that it's based on the clear and compelling finding that different resdiferid doses given to two different cohorts of patients, each with different body weight, optimizes the efficacy and safety of ResDifera. This finding is based directly on our clinical team's independent analysis from our Phase III Maestro NASH trial, which was adopted by the FDA for our label. The bottom line, any potential generic competitor will need to adopt the ResDifera label and would infringe on our patent. Our confidence in this patent is also supported by precedent US case law. This patent changes the game for us in two ways. First, strategically, it gives us the privilege of time. This extension creates a lot of flexibility for us to pursue our long-term strategy. We can be very thoughtful and deliberate about how we build our future and shape our pipeline. Second, it adds another potential decade of protected revenue and materially increases our value proposition, creates additional opportunity in MASH, and extends our ability to keep innovating to address unmet patient needs. Now, let's turn to slide six and ResDiffra's second quarter performance, where we delivered net sales of $213 million, up 55% quarter over quarter. U.S. ResDiffra net sales are now annualizing at well over $800 million. The significant demand we're generating is driven by strong and consistent execution on two key launch metrics, patients on drug and prescriber penetration. First on patients, as shown on slide seven, we ended the second quarter of 2025 with more than 23,000 patients on ResDifera, up from more than 17,000 patients at the end of the first quarter. As we've noted before, this figure represents patients actively on therapy accounting for any discontinuations. We are encouraged by ResDifera's robust growth, and yet we're still in the early stages of this launch. Only about 7% of the 315,000 diagnosed F2-F3 MASH patients under the care of a liver specialist are being treated with ResDifera. There is significant opportunity ahead. Moving to slide eight and our progress on physician penetration. As I've said before, building a strong base of prescribers early in a launch is one of the best indicators of long-term success. That's why the pace of adoption has been so encouraging. In fact, in just over a year since approval, we've achieved another key launch goal. 80% of our 6,000 top targets have prescribed ResDifera. This level of penetration exceeds the benchmarks we tracked and is the direct result of the significant amount of work we've done to wire the system for a first in disease launch like ResDifera. We're also seeing strong progress as we expand into our broader 14,000 target prescriber base. By the end of the second quarter, 60% or roughly 8,500 healthcare providers had written a prescription for ResDifera up from 50% in the first quarter. Looking ahead, more of our focus will be on depth which is also tracking in line with best-in-class launches. We believe this is largely due to the positive experience that providers are having with ResDifera, and we anticipate that it will continue to drive depth going forward. And this positive experience is being driven by ResDifera's compelling profile shown on slide nine. ResDifera is a liver-directed medicine with a mechanism of action that improves the critical processes in the liver that drive MASH. It has consistently strong efficacy regardless of patient subtype, including those with type 2 diabetes who have a higher risk of progression and comprise approximately 60% of the MASH population. Additionally, ResDipro works effectively regardless of fibrosis stage, BMI, or genetic makeup. So it's very consistent when it comes to treatment effect. It's also easy to prescribe and to take. a once-daily, well-tolerated pill with no titration requirements. That simplicity matters to physicians, to patients, and ultimately to adherence. We continue to see strong early signs of adherence consistent with what we see from other well-tolerated oral therapies. So, as we look ahead to future competition, we believe ResDifera's attractive real-world profile gives us a durable advantage. The next potential entrant in MASH is likely to come from the injectable GLP-1 class. And you can see on slide 10, resdifera compares very favorably across key attributes. For example, while semaglutide demonstrated an improvement in fibrosis, it was less pronounced in patients with type 2 diabetes, whereas resdifera works consistently across patient subtypes. Another key difference is adherence in the real world. It's low for semaglutide. Most patients struggle to get to and maintain the 2.4 milligram dose. In addition, only approximately 30% of patients with obesity remain on the medicine after one year. This is especially relevant in MASH, where we're talking about a 72-week efficacy endpoint. For a progressive chronic disease like MASH, providers want a medicine that patients will stay on, and one that they can administer easily without a titration schedule, and that's where resdifera stands out. Certainly, a key attribute of a GLP-1 is its impact on weight loss, and we also know patients with MASH may benefit from a combination approach. Today, about 25% of patients on resdifera are taking it alongside an injectable GLP-1 to manage their comorbidities. And that figure increases to roughly 50% when you include prior GLP-1 users. So combination use is happening in the market today, and we expect it to grow over time. As we look ahead on slide 11 and consider the upcoming GLP-1 launch in MASH, we believe it has the potential to accelerate the growth opportunity for ResDifera. Our focus remains squarely on the 315,000 diagnosed patients with moderate to advanced fibrosis. This is our core specialty market. Novo is targeting a much larger population, many multiples of our 315,000. Their efforts will raise awareness and drive broader screening, diagnosis, and treatment. This will ultimately benefit patients, and we expect it will also benefit ResDifera, both as the foundational therapy and match for first-line patients and from the high real-world discontinuation rate of semaglutide. And there's clearly a need in this large and under-penetrated market for multiple mechanisms and better combinations to treat this challenging disease. That's why we're excited to study res difera in combination with our newly in-licensed oral GLP-1, as noted on slide 12. We're taking a differentiated approach focused on MASH. We are looking to develop a chronic therapy for a chronic disease with res difera as the foundation. We want to optimize the efficacy and tolerability in MASH by balancing the right amount of weight loss from a GLP-1 with the fibrosis and lipid reduction of resdifera in a once-daily, well-tolerated pill. And our data has shown that just 5 percent weight loss can increase resdifera's anti-fibrotic effect. And as we assessed the oral GLP-1 landscape, we had specific criteria that we were looking for. We wanted an orpaglipron derivative with a favorable stability and pharmacokinetic profile that was amenable to develop as a combination therapy and, of course, an asset that was actionable. We believe that SYH2086 from CSPC Pharma is the right oral GLP-1 asset for our program. It gives us the opportunity to develop what we believe could become a best in disease, well-tolerated oral combination for MASH. Importantly, We secured this asset with favorable terms. We have exclusive global rights for $120 million upfront payment and potential future payments based on achievement of development, regulatory, and commercial milestones. We expect the transaction to close in the fourth quarter and expect to enter the clinic in the first half of next year. We will provide additional updates on our clinical development plans on future calls. Let's briefly move on to two additional growth opportunities, starting with the international expansion of ResDifera on slide 13. In June, we received a positive CHMP opinion, a key regulatory milestone that sets the stage for approval across the European Union. We expect a final decision from the European Commission later this month and are preparing to launch in Germany in the second half of this year. As we've discussed, we've made an incredible amount of progress in Germany over the last year. Leadership in our field teams are in place. We understand which providers treat MASH. We're continuing to engage in disease education. We've begun our efforts to wire the system. And importantly, European guidelines already include ResDifera as a first-line treatment for MASH, which positions us well. Like the U.S., we've defined our initial target population as patients already diagnosed with F2F3 MASH and under the care of a liver specialist. Based on our research, we estimate that the population is approximately 370,000 patients across Europe. We believe resdifera can be the first medicine approved for MASH in Europe and the foundational therapy for this population, just as we've established in the US. Let's move to slide 14 and the opportunity we see in compensated MASH cirrhosis, or F4C, an important next step in our growth strategy. First, there is a high unmet need with no approved treatments and serious risk of progression. Second, Resdifera's liver-directed mechanism targeting fibrosis is well-suited for cirrhosis. Third, our two-year open-label data presented at EASL showed sustained efficacy and supports our confidence in the ongoing Maestro NASH outcomes trial. No other product or mechanism in development has shown this level of reduction in liver stiffness with such an attractive product profile. And finally, we have real world momentum, a clear first mover advantage with outcomes data expected in 2027 and what we believe will be a best in disease profile in F4C. We've learned what it takes to launch in MASH and we're ready to extend that leadership from F2 to F4C period. Slide 15 outlines the opportunity we see in F4C. We've taken a thoughtful approach to understanding the F4C population. Our research shows there are approximately 245,000 patients in the U.S. with compensated MASH cirrhosis who are already diagnosed and under the care of our target liver specialists. These patients are sicker and further along in disease progression, which typically translates to greater and faster adoptions. That's why we believe F4C has the potential to effectively double Red Dipper's market opportunity in the U.S. With that, I'll hand it over today to walk through the data on slide 60.