Madrigal Pharmaceuticals, Inc. (MDGL) March 2026 Conference Transcript

Welcome, everyone, to the Madrigal Fireside Chat at the 46th Annual TD Cowan Healthcare Conference. I'm covering analyst Ratou Baral, and with us here from Madrigal, in order, is Bill Siebold, CEO, David Sorgel, CMO, and Marty Deer, CFO. Welcome everyone. Thank you for being here. So, maybe let's start with revenue growth and company goals. we came off another great earnings report the launch is going exceptionally well and at the same time you did three BD deals in about six months like within I don't know 14 months of Dave joining to build the pipeline and before we get into the questions maybe Bill can you just give a brief like three-minute update on the strategy and performance so far this year yeah Richard, first of all, thanks for having us.

It's always a great moment of the year to be here. It's, as you said, things are going just great. Taking a look at ResDifera, off to a strong start in its seventh quarter of launch, annualizing at 1.3 billion, market growing at about 50 percent over two years, and because of the current performance and what we anticipate for the future with the market growth and just with continued penetration.

50% is diagnosed patients?

50% diagnosed patients at the treating physicians that we are calling on.

Oh, okay.

And so because of those favorable dynamics, we've gone to start building a pipeline. So when you look specifically at 25, hard to imagine really a better year. As I said, we end up annualizing at over a billion, close to a billion in sales for 25. over 36,250 patients on therapy. As we finish the year, we exit, as we talk about this, 50% growth in the market. We've started to build a pipeline, I'll get to in a minute, but we've also secured 2045 IP for ResDifera. So we've really put ourselves in a position for long-term growth. The way we thought about the pipeline, really, is ResDifera is a great product. It's a foundational product. it's become quickly the standard of care. How do you make a better product even? So how do we get a better response in the overall population? Or how do we identify a subgroup of patients that may respond better? It's such a foundational therapy. When you look across all subgroups, subpopulations, the effect is pretty much the same. So as we add new mechanisms of action, as you said, in the last six months, we've gone from a company that has a single product in the pipeline to a company that now has over 10 products in the pipeline and the idea is we will look at combination therapy with res differ to see if we can get a better response for the whole population or a subgroup and take that forward fast otherwise kill it fast we started with an oral GLP one we think that mechanistically makes a lot of sense because we know from our trials that just with over 5% weight loss we can get a better effect with res differ we did the DGAT-2 with Pfizer we think mechanistically makes a lot of sense maybe we'll talk about that a little bit later and then siRNA we did six programs that we have brought in that we are directing towards mash as well we like it it's liver directed therapy as well and think that there's good rationale for combination with res differ so in a very short period of time I think about where we were last year in this meeting now we've really changed profile to being instead of a company with a promising asset a company that has a great asset that has mega blockbuster potential that now is building its next chapter with a pipeline and not to even mention the trials that we have ongoing that are going to read out in both 27 the F4C

trial and then in 28 our outcomes trial and so how should we think about the main sources of upside or downside to current. Full year 26, RISDA for expectation. You mentioned the $1.3 billion run rate. Consensus now starts at about 1.48. Now that's about 50% up from full year 25, but that also corresponds to the 50% increase in diagnosed patients that you guys mentioned. So as you see this 1.5 consensus, do you feel like that's easily achievable with the trends that you're seeing right now or could you grow share while the market well while the TAM sort of grows at the doctor's office as well?

Yeah well look I think this is all based on coming off a really strong Q4 and momentum that we're carrying from 25 into 26 so as we look at the full year yeah we're comfortable with consensus where it is I mean I wouldn't say anything is ever easy so You said, is it easily achievable? Nothing's easily achievable. You've got to work hard. You've got to be executing on the plans. You know, thank you for saying that. But it isn't easy. I mean, like, we have had to... I think people forget that we've had to build a market from scratch. There wasn't a blueprint. There were other markets we could look to to see how they evolved. I mean, we look at, you know, RA, psoriasis, IBD, which are over $20 billion markets with, you know, 10 to 15 products. And they're still growing after, you know, 25, 30 years. So, there are blueprints like that, but when you actually have to build from scratch, it's really hard work. And I think we started with great product, we added great people, we had a great strategy, and we have been executing one thing after another. So, 26, we see this continued momentum. We talk about Q1 is, we're subject to the Q... All the challenges. All the Q1 effects where, I mean, just so, we've had a lot of questions actually on what is this Q1 effect that you're talking about? What does it mean? You know, patients have to, if they're changing insurance or get re-verified, et cetera, with insurance, it leads to missed prescriptions. So they may miss a prescription or they may miss two prescriptions. So that means the patient's worth less, so to speak, from a revenue perspective. Now, that sorts itself out through the quarter. And by the time you get to the end of the quarter, they're back on. and so in Q2 you have more of a full quarter effect. We also have though in Q1 of this year this zero to contracting effect in commercial lives.

Right.

So that's just one other thing that we have to get through.

This is the step up in the gross to net.

So look we're in a really strong position for not only 26 but as we look towards the future.

As you think about the risks to consensus how is magical mitigating mitigating these risks either taking care of it the unexpected ones we're getting out ahead especially as continuing conversation from investors about headwinds from GLP ones oral or injected that you're observing well look we see way more opportunities than risks I mean we're at the very beginning of a of a market you know we talked about maybe we'll talk about EPI a little bit later, but we are less than 12% penetrated into the original 315,000.

That is the absolute beginning of a market, so we feel good about that. GLP-1s, look, we know GLP-1s are being used, but certainly not to the detriment of RISDifera. You know, in fact, as we were running into the last earnings call, we, the prior week, it had our best MBRX week ever since launch and that's in the presence of wagovi that was approved I think in August and also oral wagovi which you know had received a lot of attention but we're not seeing an impact what we are seeing though is having another company out there talking about mash helping to drive awareness and we think we win in that equation because we've got the best profile product we believe are all intended insurance plans at this point negotiated and sorted for

lack of a better word I think one of the are there any new pair agreements to be renegotiated over the course of the year because there seems to be significant investor concern that gross to net is going to go up even further even though you guys have clearly said like high 30 stable it keeps coming up yeah look so Gross to net, let's just first of all talk about the commercial contracting.

So virtually all of the commercial contracting is in place for 2026. You have some downstream accounts that will come in throughout the year. But for the most part, these are just, so if you have the payer and they have a group of accounts that fall under whatever decision they make, you've got a few accounts that don't have to follow the policy. Oh, and then they have to re-decide. and they they have to decide whether they want to accept that or not but the overwhelming majority of the business is locked in so there's you know there's no news there and that's on the commercial side so you know we're in a very strong place remember what we contracted for was first line access no step through we'll go be and then if we had any utilization management criteria that we wanted to improve we would put that in the agreement as well so you know we're in a really great spot I mean that was something we talked about like before there was a restriction around who could prescribe the GIs etc now that's opened up a little bit no I mean that's still typically it's specialists so HEPs GI some endocrinology okay and otherwise it's either it's either them or in consultation with one of them okay yeah and that's something that we're not trying to remove we believe that this is a specialty disease that specialists should write the prescription for and that's how we have organized ourselves to call on the 14,000 specialists that we're talking about and that we targeted with 6,000 being the real super high targets that we focus on so on the on the left to-do list that's really not going to drive the gross to net any further I just wanted to say one thing if it's okay on the gross to net you

said something about stabilizing at the high 30s. That's for 2026, and that's right by quarter. But I think the next part of your question is we have to think about Medicare reimbursement as well. And we did say that you'll see some, we're negotiating now for 2027. So you'll see somewhat of a step up, not to the extent what we saw with the commercial, the impact of the commercial contracting, but you will see a step up in 2027 before it stabilizes, you know, more Further, again.

And so on the Q1 call, Marty, you gave commentary that revenue could be down mid to high single Can you give any meaningful color or narrowing of those expectations now that we're more than halfway, well, we're through Q1? And how should we think about A, 2Q growth, and B, profitability as it comes?

Okay. So no more narrowing. we thought we did a really good job in looking at the analogs. A company's, you know, big brand in looking at the effect, the Q1 effect, that they're down mid to high single digits, you know, every Q1. And for us, it's basically the same. And we went into great detail about not only do we have the Q1 effect of patients getting re-verified, but also the impact of our commercial contracting, yet we're still in with the analogs at the mid to high single digit decline for Q1. we think we're doing very well coming into Q1. So what does that mean for Q2? The important piece of the puzzle that Bill talked about on the call was that at quarter end, we give a net patient add every quarter thus far. And we anticipate that to steadily add from Q4 to Q1 and beyond as we grow into 2026 and achieve that considerable growth for 2026 that we talked about earlier with consensus number, et cetera. In order to do that, you're going to have acceleration of net sales from Q1 into Q2, Q3, et cetera. Although the patient ads at the end of the quarter, the net patient ads will remain the same, steadily adding through the year. It's just the revenue driven by when it's filled and stuff like that. It's the Q1 effect of when it's filled. Correct. And profitability. Oh, yes. And then profitability. So profitability is inevitable, and it's on the horizon. So what we've said for 2026 is that we're doing everything we can to support the top line growth of this business, and we're continuing to invest, particularly in SG&A, to make sure that top line continues to grow. We're not going to get behind that. But at some point, the strength of the growth of the top line is going to outstrip the rate of growth in any spend, and so we'll see profitability, like I said, it's on the horizon. And if you look at our past two quarters, even on a cash flow basis, if you strip out the effect of one-time BD charges, we're already in a cash flow positive situation in the last two quarters. So we have a lot of strength to our P&L, and we'll see that more after 2026.

You're not going to let them bring back the caviar and smoked salmon to the liver meetings like during the Hep C days? we still we still can't can't outspend our top protected top-line girl yeah are there continued signals from endos wanting to prescribe resdiffra this was one of the commercial efforts that you guys started and how are your efforts in detailing them progressing yeah so we started that we put our team in place in Q4 it adds about 2,000 additional targets to our list and you know they're coming along just as anticipated first of all the reason we went there is because we had endocrinologists that were asking us to come because they had

mash patients which is kind of ironic when you think about it since they are the biggest users of GLP ones if GLP ones in themselves were sufficient they wouldn't need res different but the reality is they do so we're walking them through kind of the wiring of the system just like every gastroenterologist and hepatologist had to go through they're the ones who know how to use them the best to the GLP ones, like tolerability, so they should have maximum success rate with the GLP ones. One would think, which again gives us additional enthusiasm about the future. Right now, though, it's still pretty early. The awareness is there. They have to think through how they're going to utilize NITs, et cetera, just like the HEPs and GIs did, and make sure that they have access to an NIT, how they're going to bring somebody through the office etc so that just takes some time like everyone else but we're seeing really positive early signs and can continue to see that we'll see that grow in 26 and beyond is that an upside lever to your internal expectations for 26 and 27 Lee Endos it's built into our it's built into our all of our forecasting and and so what did they tell you about a GLP one versus res mediram for some patients I mean there may be some patients who have never seen a GLP one before and end up on their doorstep and they can't get a GI appointment etc like you know how does an endo see a first-time patient versus a versus a gastro well they tend to be saying that they don't talk so much about GLP ones they tend to be saying I need something for mash because what I have isn't sufficient and that's why they want to understand how to use it mechanistically they're really interested in it and believe that it's something that can help their patients. So I think that they've already made the call that either they can't dose titrate up to 2.4 which is the effective dose or stay there long enough that they want another therapy.

Let's briefly address XUS before moving on to F4. What are your, what is your expected contribution especially Europe to peak revenue growth what should we worry what should we think about in terms of potential for 27 beyond because you've you've clearly stated that 26 will still continue to be minimal and how does MFN and ongoing HTA discussions factor into your guide at your minimal guidance for 26 and what you believe for 27 yeah look 26 is a US year right just to be clear with that you know we're at the really tip of the spear when it comes to products launching in an MFN era and you know the Europe is not going to

immediately just accept US pricing you know it's something that they have to think about it's something that they weren't planning for it's something that they have to spend some time give some thought and it'll evolve it won't happen overnight so I think in the long term you mean like three plus years I think I think when you look out in the in the you know three to five year range everything will settle out and you'll have XUS being a meaningful part of a launch okay but there's still a lot of detail that's got to get worked out between now and then we are just that we don't have an answer yet because we're just going through these processes now and as we get more information we'll be able to read out I mean we made the decision to launch full launch in Germany which started last year but we haven't built out in any other country right so it'll be dependent upon the HTA discussions the good news is you know we're starting from a cost-effective place when you look at ICER's assessment of ResDifera in the U.S. we were considered cost effective and then two years later they did another assessment and they put us in the high value category which meant that it was fairly priced and of significant value to patients and society so that's a great platform to start from when we go to Europe but with Europe you know the price that we are offering the European countries is the is a blended U.S. government price and that's something which is just not what they're used to seeing and so we're in those discussions we're hopeful that we will be successful around the lines of that 23 percent the 30 percent it's my models usually the price is about thirty nine thousand five hundred dollars okay okay got it let's what Japan just a minute on Japan is Japan different or is it part of this whole discussion Japan's on the list as well countries that we'd like to pursue yeah proven okay f4 this is probably gonna be the first phase three

f4 mass trial to read out what magnitude of effect would you consider clinically meaningful for regulators in commercial second success not just like a statistically significant reduction in events but like when does that start to make sense for clinicians when does it start to make sense for payers I mean I think you've sort of answered your own question right so it's the first it's the first, will be the first trial to read out in F4C.

So this is an incredibly high unmet need population. So I think the answer is it's really something that achieves statistical significance and is provable and can get to patients, absolutely.

What's the powering on that, then?

The powering of the trial? We haven't talked a lot about the details of the powering of the trial. I can give you some of the sort of parameters that we've talked about. So in general, when you look at the F4C population, you know, it's a pretty heterogeneous group. So you have people who've recently transitioned from F3 into cirrhosis then you've got people who have who are right on the cusp of decompensation and they they're the ones who have clinically significant portal hypertension but haven't yet had an event right so one of the important things is making sure you have an enriched population for that latter group to make sure you've got enough people in the in the study who are gonna be on the cusp of having those events so you can measure an effect size so based on that enrichment we expect a placebo event rate somewhere in the five to ten percent range and there's some publications out there where you know there are some high-level assessments

of powering and study design which are in in the general range of an effect size of 50% to 35% how how sure are you based on prior data that these patients aren't too relentlessly on their march towards decompensation that you can't pull them back?

I'm so glad you asked that question. So this this is where the 122 patient open-label experience really tells us some really important information. Okay so so we had a we had a cohort of F4C patients in one of the earlier studies exposed to resmediram now for two years and we showed we showed these data last year, again, very similar baseline characteristics as the people enrolled in the Meister Outcomes randomized trial, so a lot of those patients with clinically significant portal hypertension.

Right, the CUSPY.

Yeah, the ones right on the CUSPY decompensation, and so what we see in that population is a shift towards lower portal hypertension risk scores called the Bovino classification, and And even in the sickest patients, in the people already with clinically significant portal hypertension, we can shift those people into lower classifications of clinically significant So you feel that between the Bovino and the portal hypertension, that's the best proxy for events? The Bovino criteria and clinically significant portal hypertension are very good predictors of liver-related events.

So if you could hold them back on that, they're saveable. Got it.

And I'll just add that there are other data. So we looked at clinically significant portal hypertension and that sort of classification shift, but we also saw important changes in other biomarkers like MRE, MR elastography, and liver function tests that also sort of, you know, trended in the right direction.

Can you review what the main operational risks are to the timeline for 2027 data? I think that's been a big fear is that you're gonna, for the outcome study, yeah you're gonna have 2027 data they're gonna open up the envelope and you're gonna be underpowered.

I mean look it's an event driven trial right so when we have enough events I mean look we're not we're not gonna December 31st isn't gonna come and if we haven't had enough events we're gonna say it studies over we're going to make sure that we have enough events. It is tracking towards 27 but we're going to be pragmatic and see what what what happens. Is that a fair?

Exactly so so I think with respect to you know like any outcomes trial the key is retaining patients in the study and we've done I think a great job at keeping patients in this study and as Bill said it's it's really about getting that to that target number of events.

And how how do you see positive or negative outcome study from this trial impacting Rose differs label expansion potential potentially destabilizing the accelerator approval or market opportunity revenue trajectory yep well look we've talked about this being a potential doubling of the opportunity fewer patients there's about 235, 245,000 F4C patients.

This was when we read it out in 2013. So fewer patients but higher unmet needs so we would expect increased penetration into that faster. So it's a great opportunity for us. I think it also has a carry through to F2, F3 where people will see well if it's working in F4C another reason to believe in F2 F3 and I think that what we have and you know nobody else has this we already have you know over 36,000 patients on drug by the time we read out in the time we get approval we're gonna have that much more in our denominator so just that much more experience and certainty about the profile of the brand for when you start to write for F4C.

I was just going to add that the you know the positive F4C study opens the F4C indication itself plus it gives us full approval in F2 F3.

All right I have left myself five minutes to go over your Oral-GEOP1, IRVO, and the Sterner programs. Dave which one should I start with?

I would start with IRVO.

Okay let's start with IRVO. How are you approaching the combo dose selection and what's the most important measurement when you're look when you're evaluating dose selection?

Yeah so I mean just for a bit of background. Avergastat's a DGAT2 inhibitor that we recently licensed in from Pfizer it had actually been through a phase two development program so we know a lot about this drug already and including the dose range the effective dose range which which helps us a lot so they've sorted through the Pfizer yeah through okay they had some they had dose ranging data in their phase two program so that helps us a lot and and some of the measures that they used are the same that we've used with risk for example, MRI-PDFF, which is reduction of fat content in the liver, and we see ervergostat's a very strong reducer of hepatic fat. So why is that important? So that's important because there's a strong relationship between resmediram's reduction of PDFF and improvement in fibrosis. So the concept here is because of the two complementary mechanisms of action of these two drugs, We'll be able to get more fat reduction out of the liver, push more patients into that high responder range, and get better anti-fibrotic efficacy with a combination. That's essentially the idea behind it.

And timelines for the program right now?

Yeah, so all the time when you license a program, there's a little bit of blocking and tackling, updating regulatory documents, all that kind of stuff. And then we'll conduct a drug-drug interaction study with resmederam and avergostat later this year go to the FDA talk about combination drug development studies in phase two and do that 2027 like a factorial start something like that something like that got it so 2086 this is your oral GLP one remind us what scaffold that is and how it differentiates from existing GLP ones in terms of efficacy safety convenience yeah so it's on the Orphaglipuron scaffold so that's there are a few things that were attractive about the product so it's on the Orphaglipuron scaffold the pre-clinical data were all done by CSPC our partner in China and actually they compared and to Orphaglipuron in a lot of the studies so we can get a good sense of the relative efficacy of the study pre-clinically at least and that sort of de-risks it for us and then from a chemical standpoint it looks like it should be combinable with resmediram into a fixed dose combination.

In like a co-formulation tablet?

That would be the idea, exactly. So I think for a lot of reasons 2086 was a great opportunity for us and looks like it could be a great combination.

And 2086, that's going to go into phase ones as a monotherapy this year? Yes. Okay, and then 2027 beyond.

Yeah, the usual sort of early phase drug development stuff.

Your GalNet conjugated CERNAs in the last minute or so. How are you going to prioritize which targets to advance into clinical development? And should we, when can we expect, like, preclinical data? Because, you know, with RNA mechanisms, preclinical, especially non-human primate data, can be particularly meaningful.

Yeah, I mean, so first of all, it was a great opportunity to work with with RIBO so they're a company based in Gottenberg and and also in China a lot of you know really great experience with siRNA technology and you know a great team over there so what we've talked about is we've we've done a deal on six targets we haven't been specific about the targets yet all of them are early they're all preclinical at this phase so it's a bit a bit premature for us to talk about exactly what the targets are But as we get more data and we have more to share, we'll, of course, update on that.

So don't expect preclinical data in 2026 or?

TBD. TBD.

Great. With that, we are at time. Thank you, guys. Thanks for the insight.