Good day, and thank you for standing by. Welcome to Madrigal Pharmaceuticals Third Quarter 2024 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speakers’ 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, Mervin. 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 will post on the Investor Relations section of our website right after the call. On the call with me today is Bill Sibold, Chief Executive Officer; and Mardi Dier, 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 2, 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 3.

Well, thanks, Tina. Good morning, and thanks for joining. I'll cover three topics on our call this morning. First, an update on the Rezdiffra 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 US Rezdiffra launch on Slide 4. 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 are now six months into the launch and the feedback we are getting from prescribers continues to be very positive. They are finding it easier to prescribe Rezdiffra to their patients, thanks to our efforts to wire the system and the improved access we secured. They also have high confidence in Rezdiffra’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 Rezdiffra as standard-of-care, reinforcing its position as the foundational therapy for NASH. And while we are still early in the launch phase, we are continuing to see great progress across all key performance metrics. This gives us confidence in our strong growth expectations for Rezdiffra 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 are 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 Rezdiffra. 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 Rezdiffra. 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 additions 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 are 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 Rezdiffra. Notably, greater than 95% of Rezdiffra covered lives accept non-invasive tests for 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 Rezdiffra through the Medical Exception Process with prior authorization requirements aligned with our label. This process has been smooth, allowing patients to readily access Rezdiffra. We expect many Medicare plans to start to list Rezdiffra in 2025 and would expect its 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 Rezdiffra, doubling the 20% penetration rate from the second quarter. Our top targets are continuing to write more than 75% of Rezdiffra 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 5. This is a first-in-disease launch where the market needs to build from the ground up. Prior to Rezdiffra’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 Rezdiffra’s strong value proposition, which has been recognized by healthcare providers, payers, and patients. As a reminder, Rezdiffra 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 3; NASH resolution and fibrosis improvement. Importantly, Rezdiffra has 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 Rezdiffra 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 Rezdiffra 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 7, you'll see that Rezdiffra 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 shows that only about 30% of patients with obesity remained on Semaglutide after one year, which is especially important given their NASH study at 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 that it will further accelerate the growth opportunity for Rezdiffra. 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 Rezdiffra. It opens the foundational therapy in NASH for first-line patients from the high world discontinuation rate of Semaglutide. And there's clearly room in this large and under-penetrated 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 Rezdiffra patients today are using Rezdiffra 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 Rezdiffra’s attractive real-world profile, the significant opportunity to penetrate our target market of 315,000 and the potential 18,000 for a significant market expansion beyond that with new competition, we are confident that Rezdiffra can continue to deliver strong growth in the years ahead. We're also pursuing additional growth opportunities for Rezdiffra beyond our launch in the US, as highlighted on Slide 9. This includes our efforts in Europe where we are preparing for a potential second half ‘25 launch of Rezdiffra pending EMA approval. Additionally, we're working to bring Rezdiffra’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 Rezdiffra the first medicine for patients with compensated NASH cirrhosis. Cirrhosis patients are at a higher 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 convey well to this in Rezdiffra 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. Doctor Michael Charlton has joined us as Head of Clinical Development; he is world-renowned in NASH, and 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 Rezdiffra will be in the spotlight as the first ever approved therapy for NASH. Madrigal is leading the NASH field to advance the science. Our resmetirom development program produced more NASH abstracts at AASLD than any other program. Moreover, AASLD recently released guidance that reinforces Rezdiffra’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 Mardi, 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 Rezdiffra; more than 80% of the commercial lives covered, achieving this milestone a full quarter ahead of schedule; about 40% of our top targets are prescribing Rezdiffra; and we continue to drive both breadth and depth with significant opportunity ahead. The completed enrollment of our NASH Cirrhosis OUTCOMES Trial brings us one step closer to bringing the first therapy to market for this vulnerable patient population. And we are tracking well to launch Rezdiffra in Europe in the second half of 2025 pending EMA approval. With that, I’ll turn it over to Mardi.

Thank you, Bill. Earlier today, we issued a press release with our full financial results. So I will provide you a few highlights of the third quarter of 2024 as noted on Slide 11. US net sales for the quarter totaled $62 million. As we've mentioned previously, we expect inventory to run between 2 to 4 weeks for Rezdiffra, which is typical for a 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 Co-Pay Assistance program utilization was lower than anticipated for the third quarter. As we said before, we expect gross 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 US, following Rezdiffra’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 position, we are well-resourced to support the ongoing launch of Rezdiffra in both the US and our planned launch in Europe.

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

Our first question comes from Yasmeen Rahimi of Piper Sandler. Your line is now open.

Good morning, team. Congrats on an amazing quarter. Really incredible. Team, I guess the question is, given the strong performance, could you maybe talk to us about what your forecasts or what your thoughts are around moving forward into the 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. The team is executing at all levels and have made great progress on coverage, adding prescribers, and adding patients. We’re really off to a very strong start, and as I said, the trajectory in the early launch quarters is an important indicator for future success. Now, we have our own internal metrics that we look at, but we are also benchmarking ourselves 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 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, Mardi, do you want to comment on that?

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

All right. Good. Thanks, Yas. Mervin, next question, please.

Thank you. One moment for our next question. Our next question comes from the line of Eliana Merle of UBS. Your line is now open.

Hey guys. Thanks for taking my question. And good job on the quarter. Just curious what you're seeing in terms of the cadence of new patients. Is the number of new patient starts per week or month accelerating? And then, just second, in terms of the Essence data, what are your expectations on whether the payers will require a step through with the GLP-1 if the Essence data shows a very strong fibrosis benefit? Thanks.

Thanks, Eliana. I appreciate the question. So, yeah, as we said, we have been continuing to steadily add patients. We have, there's a lot of interest out there. You have to remember, we're not at steady state yet either, right? We haven't fully penetrated all 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 add perspective. But we're making progress every day adding new prescribers, new patients, et cetera. So, 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 requirements for steps through. Look, we're waiting to see what the results look like, as well. And when we get the results, we're really 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 bit deeper on because, as you know, top-line readouts don’t always translate into labels so well. 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 aspects like how are the biopsies handled, because that can result in a 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 profile really matters to us, that’s where we are really set up for success. So we’ll see what happens with the results of the trial to see what happens, if anything happens with payer. 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 readouts that take place from that first.

Great. Thanks, Bill.

Mervin, next question, please.

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

Hey, this is Manoj, in for Akash. Thanks for taking our question. Just one, which trial are you more confident in getting on OUTCOMES; the extension of MAESTRO-NASH or the F4 patient trial? Why are you confident that you could show a benefit in these late-stage patients?

Thanks for the question. Look, we're confident in both trials. Of course, we don't have the answer yet, so we have to wait and see what that looks like. For the cirrhosis trial, we had a group of 180 cirrhosis patients in the NAFLD-1 trial that went on to the open label. And it was based on some of the results that we are seeing there that we feel that there is a very good reason why Rezdiffra may work in this population. In fact, Rezdiffra has been referred to as the kind of master regulator for fibrosis. So we think that this is something that has a good chance of showing efficacy. We're, of course, always going to push the science here and ask the questions about what the community wants 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 to something that we think as a leader it’s important to drive the science. So, we'll have to see what the results say. But based upon the significant interest in the cirrhosis trial, we know that the community is interested in hearing the answers to those questions. You saw that we had about 840 patients that enrolled, and that was exceeding expectations really just because of the interest in the trial. Thanks.

Thank you. Mervin, next question, please.

Thank you. One moment for our next question. Our next question comes from Ritu Baral of TD Cowen. 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 the 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 offered. I guess just around logistics. Are you satisfied right now with your commercial co-pay program to promote use in the commercial population, just because you guys did say, I think Mardi you said that co-pay utilization was low this quarter. Do those two things need to be optimized to set up for 2025 success?

Ritu, 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 is a little bit more utilization up. So not worried at all about where we are. It’s, as you're launching any new product as it relates to any of the services that you offer, it takes some time for the communities to A. know exactly what is out there and then, B. how they utilize those potential offerings. What we're seeing is good progress on all those things. So, we haven’t heard that feedback. I have spent a lot of time talking with practices and haven’t heard feedback that has been a challenge for physicians to access any of the service offerings that we have. But it’s certainly something that we’ll keep an eye on. We want to be absolutely best in class in this and deliver the best experience that we can for not only the practices but with the providers. Co-pay utilization, we have a very good program where that for commercial patients, he 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 and how to access it, and how physicians that are directing them towards 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 over 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 robust co-pay assistance program. We do have a PATH program as well, and that’s if patients can access the drug through any of the other means that are possible for them, we will fill that obligation. But we’ll keep an eye on it, and if you have any specific feedback from where you heard that, we’ll take a follow-up and talk with them, as well.

Just Ritu, on what we're seeing from prescription to drug filled., we mentioned that’s 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.

Okay. Wonderful that is.

Great. Mervin, next question please.

Thank you. One moment for our next question. Our next question comes from the line of Jon Wolleben of JMP. Your line is now open.

Thank you for taking my question. This is Catherine on for Jon. I just had a question about how payers are currently handling those patients who are already on GLP therapies or want to go on GLP therapy and Rezdiffra? Are you seeing any issues there? And how this has informed sort of what will happen if Wegovy is approved for NASH, as well.

Yes, look, I think what we are seeing, we haven’t – we currently believe that about 25% of patients that are on Rezdiffra are also on a GLP-1, and that GLP-1 has been prescribed for a comorbidity, right? 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 kind of the real world here, when a physician has a patient who has NASH, they may be on or they 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 Rezdiffra, 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, if they are out there already being used, and there are still a lot of patients with NASH, despite the availability of them for many years. So, we feel like we're in a strong position. I think that it is two very different things; you're evaluating. If you are evaluating somebody for obesity versus you are evaluating somebody for NASH, and we're extremely well positioned for that.

Thanks, Bill.

Mervin, next question, please.

Thank you. One moment for our next question. Our next question comes from Andy Chen of Wolfe. Your line is now open.

Hi. This is on for Andy. Thanks for taking our question and congratulations on the quarter. I'm following up on the question regarding the utilization of the free drug program. Can you provide a breakdown between BRIDGE and PATH? Additionally, your recent patient campaign in September generated significant awareness. Can you share your thoughts on whether this awareness might translate into revenue in Q4 or Q1? Thank you.

Great. Thanks for the question. Now, look, with the legalization of BRIDGE and PATH, let me just provide a perspective first. 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 don’t have to come under the gates using one. In this case, since there's such assurance now, of a path to reimbursement would have 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 if we have the opportunity to offer patients the ability to start while insurance is being processed, does that mean that we wouldn’t have patients utilizing 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. 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, 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; this is a really strong demand quarter. There are very few free patients, and we are really excited about it. Now you asked a question about some of the patients work that’s been done, the patient campaign, and there seems to be a lot of interest for that ultimately turning to Q4. Now, 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 a positive response to our efforts to directly reach out to patients with our DTC efforts. How much of that translates into future demand? Our hope is that it plays a role itself that is a piece of it. You still need to have the practices ready that they have their pathway to bring patients through everything from diagnosis to prescription fulfillment and follow-up. So it's an important component. But I would consider a piece of the full effort that we're making rather than a standalone.

Great. Thank you so much.

Mervin, thanks for the question. Next question, please.

Mervin, next question please.

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

Hi, Prakhar Agrawal from Cantor. Congrats on the great quarter. So maybe my first question is, if you can comment on the month-over-month patient adds seen in 3Q? And whether you saw a lot of adds in July and more steady adds in August and September. The reason I'm asking is that a linear patient add in 3Q would imply a lower sales number assuming inventories 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 in new patient adds in 4Q or would there be some moderation given the month-to-month trends being intriguing. Thank you and congrats again.

Yes, thanks, Prakhar. Look, we are steadily adding patients and prescribers, and that continued pretty consistently through the summer and even as we look ahead to October. We are very pleased with the uptake. Each day and each week, we are adding, and you get the cumulative effect of that. So, I’m not going to give specifics on a per month basis, because, it can be a little noisy month to month. We are looking at from a quarterly perspective. What you are seeing is the cumulative effect of all those things; really strong quarterly growth. So, that’s what we had in the third quarter, and as we move into the fourth quarter, that dynamic remains.

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

Great. Mervin, next question please.

Thank you. Please hold for our next question. Our next question comes from Luker of Goldman Sachs. Your line is now open.

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 of 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 with - updates here on how updates have been going across your hepatologists versus your gastroenterologists. In your 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. These are the group of around 10 over the last 10 years that I mentioned. These are just – these are all blockbuster specialty medicines. They tend to be first-in-class, first into these medicines and high unmet need areas. That’s about all we’ll give for now. But I think you can see with our results that we're saying that we're performing well against our benchmarks and our own internal metrics. I think we picked the right comparatives and we think that we are really holding a high bar for ourselves. The things that we brought on board are not here for a hobby. They're here to win. They're here to create a market and have a product being Rezdiffra. We looked at it as amongst one of the best launches in the industry. So we have our high goal set, really, really high. And the team has done a remarkable job, especially if you think about where we were 12 months ago. Well, actually, it’s where we were in January, which isn't even 12 months ago, when we had not even a commercial team in place looks significant and what we've been able to do in that short period of time. So, yeah, I have to say we’ve been involved in a lot of launches; been involved in a lot of outstanding launches. We're doing a great job with this launch and we think this is at the top of the pile. In terms of hepatologists and GIs, I would say similar to what I said in the last quarter, but obviously progressed by both groups. If you think about the 14,000 ambitions that we are targeting, 6,000 really is the case. There are under 1,000 hepatologists in the country. So, by virtue of the numbers just based on the share volume of physicians, you got a lot more gastroenterologists than hepatologists. And what we’ve seen is steady growth in breadth and depth across both groups. Remember that hepatologists 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, the GIs represent and will represent the overwhelming majority of the scripts just based on the share number of them. They are making progress. Now they had to start from a little bit different space; they didn’t have pathways established in their practices for how to process NASH patients, let alone treat NASH patients. Somewhere, and the ones that we're focused on in this target 6,000 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. I’ll just give two points in time: A year ago, there was the ACG American College of Gastroenterology Meeting in Vancouver; last week or at the beginning of this week the meeting was in Philadelphia, and it was like a 90-day difference. People knew the drug; people were taking steps to create pathways; people were hiring staff to help process the NASH treatment in the form of APPs, etc., and taking steps to acquire imaging equipment. So, that was a category across everyone but you have the whole gastroenterology target group, which is moving towards creating these pathways. It’s taken some time, but it’s really happening quickly. They understand the unmet need. They're happy to see that there is now a foundational therapy that's available, that’s pretty easy to use, right? So that gives you a little bit more color around this, but hepatologists are still ahead of GIs just because I think of their training and 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.

Mervin, next question please.

Thank you. Please hold on for our next question. Our next question comes from the line of an unidentified caller. Your line is now open.

Hi, thanks for the question. I have sort of two types of questions. One is US based and one is Europe. So first, US related questions. Can you give us a little more color on the gross to net? Mardi, I know you said it was favorable and would be choppy but where did we land at this quarter? Any color on sort of discontinuation rates 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 gross to net as a result of that? And then, for Europe, could you give us kind of a lens on from the same kind of way you look at the US market, you had kind of diagnosed patients and then the ones with significant fibrosis in care. Could you provide those kinds of numbers for Europe? Thank you.

Okay, great. Maybe, what I’ll do, let me start with Europe.

Yes.

And then, we’ll move on back to gross to net. So, first of all, Lisa, thank you for the questions. In Europe, it’s kind of interesting; Europe, I would say, is ahead of the US versus where we were a year ago. They had the benefit of knowing that a product was approved for NASH. And as a result, they are planning for success that the product will get approved in Europe. And so they’re taking more actions. As I said over the past calls and meetings that when physicians told us here that they hadn't really taken steps in advance of approval to kind of wire their systems so to speak, they meant it. With the exception of a few practices, it wasn’t until March 14th that they said they were thinking about how they can process patients. Now the US will be different in that they see the success in the US of an approval. They plan for it. The first indicator was the EASL guidelines that came out essentially a year, a year plus in advance of approval anticipating that if approved, Rezdiffra would fit into the treatment regimen. We feel they are really in good shape. Now, look, we are getting started a little bit later obviously in Europe than we did in the US. We 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 are going is that NASH is prevalent in Europe. This is patients' numbers there that we think approximate the US opportunity from the number F2, F3 patients that are most in need. As we get closer to launch, we are going to come back and give a little bit more an assessment of what could patient numbers look like exactly who the targets are, etc. We’re well on the way to hiring leadership. We are planning for success. We think that Europe still will recognize value. We’ve seen that in other launches as when I said recognize innovation.

So that’s how we are progressing, and that’s why we're going there.

So maybe, Mardi, do you want to take up the US 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 at the gross to net, we do expect some additional impacts, as we’ve already said. So, a lot of the biggest factors in our gross to net right now is the gross to our co-pay assistance program. And as we said that that was slightly lower again, this quarter than our expectations. And we do want that to grow with where you described. We think that it benefits the patients and keeps more patients on drug looking forward. We will see some growth there in the co-pay assistance. I can’t comment on 2025 of course and we anticipate that we’ll see typical Q1 dynamics with gross to net including insurance reops, plan changes, etc. So we, like other pharma companies, we expect an impact on the IRA on that Q1 2025 gross to net. So bottom line, gross to net is set up in Q1 2025, but still within the range of specialty medicines. And just to answer your question specifically about SEMA and the potential impact on gross to net if SEMA is approved in NASH, I’ll go back and say that we really believe that our gross to net will stay within the range that is common for specialty medicines.

And basically SEMA has said both persistency and discontinuations. Look, it’s still pretty early, but everything that we are seeing so far gives us reason to believe that persistency is going to be strong for this product; it will tend to look like good oral persistency. The one thing, again, discontinuations – yes there have been discontinuations, like with any product you have some. That’s why we are presenting the net number of patients that were on drug at the end of the quarter; the 6,800, right? So that’s net of everything. But we are really optimistic; we think – we found in the clinical trials that discontinuation was low, and we really think persistency is going to be strong. It’s the strong profile of the drug; I mean you've heard me say in the past, like this is in It’s kind of my career; this is kind of a holy grail profile. Everyone wants a pill that’s once-a-day that’s once-a-day and we've had patients say that hearing what 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 was a really good sign.

Sure. Thanks, pal.

Mervin, next question, please.

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

Well, hey congrats on all the progress and thank you for taking our questions. 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 Rezdiffra. And then, also your expectations for the fibrosis improvement end-point 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 we’re going to want to understand. Top-line results, as I said, don't always translate into labels that well. There's the – what you present versus what’s the regulatory standard they are going to be held to when it comes to labeling. So, we’ll ask what the intent-to-treat population looked like? How are discontinuations categorized or handled? And also, what happens from a dosing perspective and how new patients got to top dose? Not sure what it's going to look like, right. So I think we're hearing that it’s going to be in the coming weeks anyways that we’ll be getting the answers. Regardless of what the results show, we are in a really strong position. We have just the product profile, as I said, a very strong product profile. We've got a lot of patients that are on drug, a lot of physicians that are using the drug and that momentum is picking up. So, regardless of how that we feel like we are in a strong space, and as I said, we talked about on the call. We know that there's going to be a real effort by any new entrants to try to drive the size of the market and number of patients that are prescribed and so forth. We are in a position to benefit from that as well. Regarding the other trials that are ongoing, we haven’t commented, and we are not going to be able to comment on what the rates look like. This is an ongoing trial and we will continue to monitor. Part of – if you think about the OUTCOMES trial in cirrhosis, we had to think about what the event rates look like. Since this is really not so well an understood population, we had the best measures to try to understand what that would look like. As I said, 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, we are anxiously awaiting – as we have more data, we’ll obviously – we are not going to give a running update of the trial but now that we are fully enrolled, we are excited to be monitoring the trial and seeing what the outcomes look like in that ’27 timeframe.

Great. Thanks, Bill. Mervin, it’s time for one more question please if you could queue for that.

Thank you. One moment for our next question. Our next question comes from the line of Thomas Smith of Leerink 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. Wanted to ask whether you have any visibility into early patient persistence and default rates. I know it’s still early days, but you are clearly continuing to drive new patient adds. I am just wondering if you are able to put any numbers around persistence or do you have a sense of when you’ll be able to quantify that? And then, just separately with respect to business development, having brought Charlton on board, I think it’s pretty notable. Could you just speak to how you are thinking about business development from here and potentially building out a pipeline beyond Rezdiffra; any conference on the stage of development as you are potentially evaluating some of these opportunities? Thanks so much.

Thanks for the question, Jay. 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 it. I think we need to get to the half to 12 month mark to be able to at least start looking at cohorts and even managing with the growing number of patients. Even from the beginning, there are going to be very few that have been on for 12 months – after the 12 months mark, you are going to get to the 18 months as a number of samples of patients that will really be able to say. But we are really optimistic about it based on clinical trials and what we are seeing in the real world already. From a business development perspective, thanks for the question, look, what we've said is we want to build a pipeline, and our focus is really on NASH. And 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 this space is inbound calls that you get; both people wanting to talk to you because you are the leader. 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, we'll look across the gamut. We have the advantage of being in the leadership position now; we have what we believe is the foundational therapy, with Rezdiffra. Rezdiffra alone is a fantastic product, but we are going to look for opportunities that are the next best mechanism of action or what would potentially be a good combination, etc. We have deep, deep experience in this space. We feel we're in a good position to make the call on what would be the right product to add to the portfolio product or products. We are going to do so in a very thoughtful way and make sure we pick something that truly is the right thing for us. So, we’ll continue to evaluate, and when we see something that's right, that is actionable, then we’ll consider moving forward to 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 sight to us. And we feel we are well underway, especially when we see how strong a start we are off to.

Great. Thanks, Bill, and 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.