Good day, thank you for standing by. Welcome to Madrigal's Pharmaceuticals First Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, today's conference is being recorded. I'd now like to introduce Ms. Tina Ventura, Chief Investor Relations Officer. Please go ahead.

Thank you, Lisa. Good morning, everyone, and thank you for joining us to discuss Madrigal's First Quarter 2024 Earnings Call. We issued a press release this morning. There's also a supplementary slide deck that accompanies this webcast that will post immediately following the call on the Investor Relations section of our website. On the call with me today is Bill Sibold, Chief Executive Officer; and Mardi Dier, Chief Financial Officer. They'll provide prepared remarks, and then we'll take your questions. We're shooting to keep today's call to about 45 minutes. Please note we'll 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'll now turn the call over to Bill.

Well, thanks, Tina. Good morning, and thanks to everyone for joining the call today. Before we begin, I wanted to take a moment to acknowledge Dr. Stephen Harrison, who passed away at the end of April. Becky and I attended his celebration of life last week. Stephen was a leader in the field and a great partner with Madrigal as our principal investigator for the MAESTRO-NASH trial. He worked closely with Becky and had the same tenacity and determination to bring Rezdiffra through clinical development and ultimately FDA approval as the first medicine approved for NASH. We're grateful for his years of dedication that advance this field, and our thoughts go out to his family, friends and colleagues. I know that many of you listening to our call today knew Stephen well. I'll now move to our earnings call and an update on the business. We're off to a terrific start in 2024 and have made substantial progress against our goal to establish Madrigal as the clear leader in NASH. We achieved U.S. FDA approval on March 14, this followed the landmark publication of our Phase III trial in The New England Journal of Medicine. Following approval, our field teams were deployed and Madrigal Patient Support Program was up and running. In April, we started shipping product to our specialty pharmacy network and most importantly, patients started receiving Rezdiffra. From a supply perspective, we're confident in our ability to fully meet demand. As we work to expand our leading position in NASH, we're also focused on maximizing the value and future growth of Rezdiffra. To that end, so far this year, we submitted Rezdiffra for approval in Europe, our MAA was validated and we expect a decision in the first half of 2025. We continue to advance the MAESTRO-NASH outcomes…

Thank you, Bill. The press release we issued earlier today contains our full financial results, so I'll provide a few highlights for the first quarter of 2024. As we discussed on the launch call, initial Rezdiffra shipments to our specialty distribution network began in April. So we recorded no Rezdiffra revenue for the first quarter. As Bill discussed, there is good momentum with the launch, and given the need to wire the system early on and our expectation for it to take 60 days on average to fill a prescription through the first 6 months of launch. We expect revenue to be weighted to the back half of the year with modest sales in the second quarter. We're still in the early days of the Rezdiffra launch, and we look forward to sharing more about our progress in the coming quarters. R&D expenses for the first quarter 2024 were $71 million compared to $62 million for the first quarter of 2023. This increase was related to timing of manufacturing, headcount growth, activities in our Madrigal Peer Group and stock compensation expense. We'd anticipate a relatively steady level of R&D expense for the rest of the year. SG&A expenses were $81 million compared to $16 million for the first quarter of 2023 and an increase sequentially from $47 million in the fourth quarter of 2023. This significant increase is as expected due to the scale-up of our commercial operations in anticipation of the March FDA approval of Rezdiffra. We hired the field team in January and February, so the second quarter will be more reflective of a full quarter of spend. Moving to our balance sheet. We announced an oversubscribed public offering that grew $690 million for the company and further strengthened our financial position. Our net cash balance as of March 31, 2024, stood at $1.1 billion. Note that the green shoot from the offering was executed in early April and therefore, an additional $86 million in net cash will be recognized in the second quarter. We're fully resourced to support a successful multiyear launch of Rezdiffra. Now I'll turn the call back over to Tina.

Thanks, Mardi. Let's move into the Q&A portion of the call. We'd ask that you limit your questions to 1 as our goal is to wrap up the call by 8:45. So Lisa, please provide instructions for the Q&A session.

[Operator Instructions] Our first question today will be coming from Yasmeen Rahimi of Piper Sandler.

Thank you for the update. And maybe before I go with my question, I want to express my sincere condolences to you and the entire team of Madrigal for Dr. Stephen Harrison. He will be greatly missed of what he has done for the space. On my question, I guess, team, it would be wonderful if you could maybe highlight whether there is heterogeneity in the payers' discussions or if it seems that majority of the payers are aligned in terms of their requirements of just simple blood-based tests? If you could just talk about how many payers you've spoken with, the heterogeneity, et cetera? And I'll move back into the queue.

Thanks, Yas. Thanks for the question. Thanks for the comments about Stephen. Look, regarding the payer discussions, first of all, I think it's still really early. We're out having conversations. Remember, we've been having conversations for a year with the payers. And I can tell you some of the themes. Some of the themes are, first of all, from a clinical perspective, there is tremendous interest in Rezdiffra in NASH. People are aware of the unmet need. They're very aware, the payers, are of the cost that NASH patients have to bound. So great interest in learning about the product, learning about our outcomes, just learning about our approach. And the reason why I say the approach, what's resonated very well with payers is the fact that we're focusing on 315,000 patients. We're focused on those that are diagnosed that are in the office of specialist, which is also important for them. So that has been the starting point of all of our conversations. And whether it be a regional or international player, we're out meeting with them. P&T committee meetings have been scheduled. We're getting some reads early on as you saw -- heard in the prepared remarks. We're at about 30% of covered lives now, commercial covered lives, well on the way to our target of 80% by the year-end. And I'd say that at this point, there's no real surprises that we're having in these conversations, especially with the bigger plans. We expect to get this resolved. Patients are still getting drug. That's really the great thing. While this is going on, patients are moving through. We're getting prescriptions. Prior authorizations are required, medical necessity, in some cases, so right where we're right now is where I'd expect it to be. I'm happy with the 30%. We're well on the way to be 80%. There's always going to be some outliers that I talked about even before we launched. We're seeing a little bit of that, but that's certainly by no means the trend.

And our next question is coming from Ellie Merle of UBS.

You mentioned that 75% of prescriptions have been written by top targets. Can you give us any color on what proportion of your top physician targets have written a prescription? And then just in terms of the prescriptions that have been written, could you give us any color on physician feedback on the medical exception process? And are most physicians going through medical exceptions at this point when they prescribe Rezdiffra?

Thanks, Ellie. So on the latter, I'd say that most are going through medical exceptions at this point. That's completely what we'd expect. In fact, if any aren't going through medical exception, that would be more of a surprise, because there just isn't the established pathways yet. So just to give you the lay out, the prescribers and where we're seeing -- where we're focusing and where we're seeing the prescriptions? So the universe of physicians is about 14,000. Our target physicians are about 6,000 of that. And that's where we've said that we've seen -- we've had great success in seeing those physicians, the reps have been out and had interactions, sometimes a couple or 3 interactions with those high prescribers. We -- and this is exactly what you'd expect in any launch is that those target physicians should drive the majority of your prescription. And in this case, we're really encouraged by the 75% of the prescriptions coming from that group. We haven't said how many have prescribed or anything yet, but these are all some stats as we get further along into the launch. I mean, again, we've only had product out in the market for less than a month. It's still really, really early and difficult to project from such a short period of time. But all leading indicators -- and that's why we went with the leading indicators, are very supportive of things going really, really well for us.

And our next question will be coming from Liisa Bayko of Evercore.

I wanted to ask about the VA along the lines of an earlier question about heterogeneity and wanted to understand their requirement for a liver biopsy? And can you talk about how you interpret that? What you can do to lift that? And also what percentage of the 315,000 patients are part of the VA?

Thanks for the question, Liisa. And look, the VA is pretty particular, right, in that if you're going to launch a product inside of a budget year, it's difficult because they've a fixed budget. And that requires congressional approval every year. So any changes to the budget are actually kind of problematic for them. So look, we're disappointed in the decision. It certainly isn't great for patients. It certainly is countered to any guideline that's been written anywhere, that says the use of NITs is adequate. And that's certainly what we believe the field is. So however, the facts are the facts, that's where we're at this point. Now as we look forward to '25, then it's a new budget year, we're going to be working with the VA to have that corrected. We think that certainly the guidelines and the medical community. And certainly, the patient community is on our side to have that happen. But this is just one of those things, as I said, the 12 months that you're wiring the system, sometimes you've to rewire portions of it. And in this case, this is one of those examples where just based on a number of those reasons, we're -- we find -- that's the decision that they made.

Sorry, Lisa, just adjusting in, in terms of the number of patients that VA covers, it's very small. So when we do a product mix, and we've that 10% that's Medicaid and VA patients, it's in the single digit. So it's not going to be a large impact at this point, particularly in '24.

And our next question is coming from Jay Olson of Oppenheimer.

Congrats on the launch progress. Can you just talk about some of the work you're doing to prepare for launch in the EU? And also how -- what your strategy is for launching in the EU and how that may impact your operating expenses?

Okay. Jay, thanks for the question. We're really excited, as we said in the call about the opportunity to expand geographically. And the EU is certainly a very interesting market for us. We announced in the first quarter, obviously, that we had filed. We're now working through the strategy for the EU. And what we're looking -- and this is the way we're making all decisions in the company. We're looking at 1 3, 5 years from now. And where do we want to be? Where are we today, the realities of where we're today versus what we think we're going to grow and become? We want to be the leading company in NASH. We think that's achievable. And we think that, obviously, that's going to come not only through Rezdiffra, but we'll develop a pipeline, and that's going to be geographic expansion as well. So we're working through those details. A little early for us to report out on them. We'll come back to you at a later call and be more specific about what we're doing in Europe. But it's an exciting moment for us to be able to expand globally. And we look forward to reporting out to you on it.

Yes. The only comment I'd make, Jay, because we're early in our decision-making there and mapping out the expenses that the investment that we'd make, the payback will be -- would be within the 1 to 2 years. That's how we look at our strategic decision-making. So there would be an impact likely if we get approval in '25 and going into '26, but then it should pay itself back. And that's just looking at Europe specifically. Clearly, the U.S. launch will cover a lot of the spends there in the EU.

Our next question is coming from Ritu Baral of TD Cowen.

I want to dig in a little further about the noninvasive algorithm for pre-authorization that may be coming together in your insurance discussions. Per Yasmeen's question, are you finding that things are mostly blood based? Are you finding that it's -- there's a blood-based plus an imaging and which imaging is being preferred? And then how could that ultimately affect time to fill? Or how could these be affected by ASLP guidelines?

Ritu, thank you very much for the question. Really appreciate it. And look, it's still early in the process. Generally, payers are evaluating a menu of the NITs. There isn't 100% consistency across. And I think you've heard me mention even the community is still working through what's the best sequence? What's the best combination of NITs? I think that the guidelines have started to help with that. I think pending guidelines will hopefully again, provide additional comments on NITs. Regarding the availability, and I think you kind of hinted to that, we don't see that as a limitation at the moment. Certainly, any of the decisions that we've seen, the physicians in the area certainly seem to have access to those types of NITs. Between blood and imaging, it's -- I'd say, it's typically a combination of blood and imaging. But as we've more final decisions and we've trends, we'll be able to report out to you what that looks like. We're really excited about updated guidelines. We know the community is working on them. I think one of the things we've to remember, the guidelines are pretty set. What you need to do now is put Rezdiffra into those guidelines. So we're not expecting wild differences, where just they've been void of a treatment before, now you'll be able to put Rezdiffra in there. But -- so I guess the conclusion is still early. We're seeing the gamut, if you'll, of NITs. And it doesn't appear to be any kind of barrier to access to these in -- where the decisions have been made. So physicians can test them. And this will be a continued to evolve field as I think the community kind of really, now that they've a product, thinks about how to use NITs, how to sequence and combined.

And our next question will be coming from Thomas Smith of Leerink Partners.

Congrats on the early launch progress. I wanted to follow up on some of the early payer coverage and specifically on the VA decision. Do you expect to still have any read-through to how any other commercial or government plans are likely to cover Rezdiffra, at least with their initial coverage policy decisions? And then how important are updates to the treatment guidelines with respect to the payer discussions? Have you received any feedback from payers suggesting that this could help drive either more favorable coverage or less restrictive prior off coverage?

Great, Thomas. Thanks for the question. First of all, I don't think there's a read-through there. We're having independent conversations with each payer. And as I said, with the payers, especially the larger players that we're speaking with, there is a true, true acceptance of the seriousness of the disease and appreciation to the clinical data and an appreciation for how we're approaching the launch. So I think that they're independent decisions. I mean, people -- payers all make their own independent decisions. So we don't see the read-through. And the second question was the guidelines. Look, I think the guidelines are important. And as I said in the previous question, the guidelines that are in place are already being referred to. I think it will be helpful for the physician community and the payer community though, to have updated guidelines that do contemplate Rezdiffra and provide a little bit more direction about how you'd use it, when you would use it, et cetera. So we're -- we know that the various bodies are working on it, and we're hopeful that we'll see at least something draft in the not-too-distant future.

And our next question will be coming from Akash Tewari of Jefferies.

So do we've any early color on the patient enrollment form? Are they exceeding your internal expectations? And when we think about rewiring of the system, Bill, you previously indicated we should not expect to see any significant revenues for Rezdiffra in 2024. Is that still the case? I just want to make sure we're clear on what expectations are going to be. And then maybe if I could sneak this in, if semaglutide shows a fibrosis benefit that's in line with Rezdiffra and its upcoming Phase III trial, do you expect GLP-1s to be step added by payers ahead of your product? And would that affect your internal launch projections for next year?

Okay. Thank you for the questions. Let me see if I can get through them all here. Look, we aren't providing anything with patient numbers or initiations or anything at this point. So it's just too early. I think it's pretty clear in the call that I'm really pleased with the way things are progressing with the launch. Our focus right now is really this wiring the system. If we don't build a strong foundation, we'll not be able to push through high volumes of patients in the future. A lot of companies make the mistake that they just try to chase getting patients on drug without preparing the practice, the payers and the whole system for being able to handle the flow. And we're focusing on that. However, we're still having patients come through, which is really great. So I'm very pleased where we're. I'm looking forward to as we get through the next quarters of being able to further wire and also to give you a report out on just how things are going. Your next question was about the expectations for revenues. Mardi, do you want to take that one?

Thanks. Yes. So Akash, just to be really clear what we said, we said because of the time to wire the system and the time for prescriptions to be filled for the first 6 months, which we estimate on average to be 60 days. So we think that comes down to 30 days after 6 months, that 2Q sales will be modest. And that sales for the year will really be back-end loaded for Q3 and Q4. We haven't given numbers for that. We haven't given guidance on that. But we're -- we've validated and said where the Street is as an average or consensus that we feel confident with. So that's the message regarding revenues for 2024. And then the step added?

I mean, look, I guess we'll find out more this year about if anyone manages to show the same impressive efficacy results that we've by hitting on both primary endpoints. Let's see. So look, looking ahead to the future, regardless of what happens, what they show, I think you've to come back to the facts. The facts are, first of all, that there's an incredibly high unmet need. There's 315,000 patients, so there's a lot of patients. And up until March 14, I think, there was not an approved therapy. Now what was the therapy that was approved? Rezdiffra. And look at that profile. Efficacy hit on both endpoints, greater than 80% of patients have a stop or reverse fibrosis. So the response is deep, and the response is wide. So we've an effective product that happens to be a once-a-day pill that has been shown to be well tolerated and safe. So we've got a profile, which is really a fantastic profile. I mean, it's every kind of drugmakers dream is to have a once-a-day pill for a serious disease. And I'll take that profile and we'll compete against anyone, especially since we're at the beginning of the market, we're not talking about a zero-sum game here, where market shares are all locked in place and one person is going to lose share and one person is going to gain it. We're hopeful that there's going to be other products in NASH, because it helps to grow the market. And we think that with our profile, which is still emerging. Look, we only had -- we've got a proven 52-week data, and we saw this as a 54-month study. We think some of the -- our best days are ahead actually in showing what this product can do. So will they force a product for the patient to go through a GLP-1? I don't know. We'll see what they do. But I think that on our profile alone, there is a very compelling reason for patients to be on Rezdiffra. So we're extremely confident under any scenario of what anyone else shows in data.

And our next question will be coming from Jon Wolleben of Citizens.

Wondering if you could talk about the patient services you're providing and if you're expecting patients to start on paid therapy after that 60 to 30 days or if there's going to be a lot of free drug in the system?

Okay. So Jon, thanks for the question. You mean the types of services that we're going to offer or do you want more specifically how we see that mix of patients.

I guess the latter is more informative, but if you could speak to the first -- the former as well.

Yes. Look, so we've put together a very comprehensive patient support group. We think that's really important. We think it's important that the first interaction that they've with the product through patient support is important and establish as kind of a long-term relationship, hopefully helps them navigate any challenges they may have along the way. Through Madrigal Patient Support, they get co-pay assistance, et cetera. If they're underinsured or have no insurance, they can qualify potentially for our patient assistance program to receive free drug, et cetera. So it's important not only on the front end, but also as you look over the long term, establishing that long-term relationship and helping through any kind of adherence challenges somebody may have. So we fundamentally believe that a strong patient support services group is important. And we think that we've got really a great one that we've started. Regarding kind of free drug and so forth, look, you've heard me say before that as you look through kind of that first year, you've got patients that are -- some are going to be on free drug. We'll have a bridging program, et cetera. So it's a little bit choppy if you're thinking of it from a gross to net perspective for that first year. What we've committed to the community is this whole notion of equitable access. We don't want to -- we want to be able to provide product to patients, who need it. So we've focused on affordability for patients. If you're a commercial patient, you can have a $10 co-pay. The challenge right now is with Medicare, since we missed the window for '24, we're now talking about what will happen in '25. So those Medicare patients are either going to have an opportunity through their own plan if they've made a midyear decision or some of them are going to have to wait for 2025. So we're going to try to help those patients. We'll look to see if there's alternatives for them such as charitable foundations, et cetera. And in the end, if they can't get it through other means and they've a high unmet need, we'll provide a free product. So we'll have free patients. But that's not where we're today. We've patients that are coming through the system and they're paid prescriptions. So we feel like we're in a really good place, but we're always going to have this balance of some patients for their -- for structural reasons, won't be able to get drug through that means, we're going to help those patients. But we're going to try to keep things in -- very much in sync between the various types of patients, whether you're insured, uninsured, commercial, Medicare. So that kind of is a little bit of more flavor around it rather than a real specific number that I'm giving you, but expect all those components, especially you'll see in this first kind of 12-month period.

Lisa, it looks like we've time for one more question, please.

Okay. Our next question is coming from Andrea Tan of Goldman Sachs.

Maybe one question here on the prescriptions that have come through. Just wondering if you're able to speak about the dynamics that you're seeing to date. Is that generally one prescription per specialist or maybe multiple prescriptions per specialist?

Thanks, Andrea. It varies, right? I mean, everyone starts with one, so to speak, or actually some have started with more than that. But one of the things we expect to see is in this top 6,000 or this target 6,000 is it's going to go beyond one and that they're going to go pretty deep actually, because we know they've the patients and we know that there's a lot of favorable belief about Rezdiffra. So over time, we're going to see, again, this notion of breadth and depth, and it's going to be concentrated in that top 6,000. So still pretty early. I mean, look, again, with just what we found is that the physicians until drugs available weren't giving a lot of thought to how they're going to process all their patients, right? Now the drug is available, they're making it part of their pathway in their practice, and that takes a little bit of time to think how they're going to do it, right? But we're really encouraged. Patients are being prescribed, patients are getting on drug. So we're kind of fulfilling our promise. We're trying to change lives here. And it's really exciting. And maybe I'll just end on that and say this is a really great and exciting opportunity. As you heard me, Tan, I'm more excited about the opportunity now than I was 6 months ago or 3 months ago. And it's just -- I can't tell you how much fun it is to be out there with a product that's so meaningful in a disease that has had absolutely nothing. And we get to set the bar for all others that come. There's -- it's rare that you get an opportunity to be the first one to establish how do you engage with companies? What's the expectation you set for patient services and everything along the way? We've that opportunity as the leader. And our intent is to go out there, and we're leading like leaders. First launch, but we've a really experienced team. We know what we're doing. We've the resource, we've the product, the opportunity is there. It just takes time to get it right, build the foundation as we wire the system and we'll put ourselves in a great position to win and be the leader in this space.

Thanks, Andrea, and thanks, Lisa, and thank you all for your time and interest today. This concludes our call. A replay of the webcast will be available on our website in approximately 2 hours. So thank you so much for joining us.

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