Morning, everyone. I'm Eliana Merle. I'm one of the Biotech Analysts here at UBS. Thank you, everyone, for joining us for day two of the UBS Global Healthcare Conference in person. Very happy to have Madrigal Pharmaceuticals here with us for a fireside chat this morning. Joining us from Madrigal are Paul Friedman, Chairman and Chief Executive Officer. Alex Howarth, Chief Financial Officer, and Rebecca Taub, Founder, CMO and President of R&D, and Remy Sukhija, Chief Commercial Officer, who may be in the audience here for some Q&A. With that, thank you guys so much for joining us.
Maybe just to kick it off, can you tell us sort of high-level some sort of background on the company, where you are, and it's certainly been an eventful past couple of years and an eventful year to come and sort of frame for us all the important milestones that we should be looking out for?
Yeah. Well, this was a private company that on its own got through phase I, made API and was ready to go to phase II, but did not have the funds to do it. It turned out fortuitously that Synta Pharmaceuticals had had a phase III failure for an HSP90 inhibitor for metastatic lung cancer, non-small cell. It ended that in about five years ago, the companies did a reverse merger. Madrigal, the company became Madrigal, the public entity, and the funds were available in Synta that allowed Madrigal to go ahead and do the proof of concept study that has propelled us to the point we are currently.
We are currently well into phase III with a key readout in the fourth quarter of this year. Becky is the founder of the company and was the CEO of the private company, and it was felt that there was going to be so much clinical activity that she needed a somebody to tag along and help out. That's kinda how we got to where we are.
Awesome. Maybe just in terms of framing kind of a huge year for you guys with the phase III readout. You know, before we get into that, kind of tell us a little bit more about resmetirom, the mechanism of action, and what we've learned so far from the phase II data?
Yes. As Paul said, resmetirom, which is a thyroid hormone receptor beta agonist, is in phase III development for the treatment of NASH in patients who also have significant liver fibrosis. The mechanism of action is that it interacts with a liver receptor for thyroid hormone called thyroid hormone receptor beta. This receptor is responsible for the metabolic benefits of thyroid hormone in the liver, such as lipid-lowering, LDL cholesterol-lowering, triglyceride-lowering, and as we've discovered, also for the treatment of NASH. Resmetirom doesn't interact with the thyroid hormone receptor alpha, which is a very important receptor in many tissues of the body, but also responsible for the adverse consequences of excess thyroid hormone, such as increased heart rate and bone effects.
The beta receptor, which is predominant in the liver, mediates the metabolic benefits that we're looking for. As we've learned and it's been known for many years, is very important in the liver for normal liver function, which NASH patients do not have. We've shown that patients with NASH or fatty liver disease and inflammation in the liver have a defective thyroid hormone beta pathway function. Resmetirom in phase II showed activity in all components of NASH, including reduction of steatosis, which is very profound and can be observed within a few weeks of starting the therapy. Also reduction of inflammation, ballooning liver injury, reduction in liver enzymes from baseline in these patients.
It's treating all aspects of NASH, including in patients who have these reduction in liver fat and reduction in inflammation. They also observe reduction in liver fibrosis. That was in the 36-week phase II study, where the primary endpoint was actually reduction in steatosis as measured non-invasively on MRI-PDFF and then serial liver biopsies, which showed NASH resolution and trends to fibrosis reduction. We then took a very similar design study into phase III using somewhat higher doses than that we had used in phase II. We have placebo, 80 mg and 100 mg orally once a day. In phase III, it's a 52-week serial liver biopsy study called MAESTRO-NASH.
It's in upwards of more than 1,000 patients of liver biopsy readout for MAESTRO-NASH, as Paul mentioned, near the end of this year in the fourth quarter, and that would be the basis for submitting for filing for Subpart H or accelerated approval with the FDA. We also completed another greater than 1,000-patient MAESTRO-NAFLD study. It was a non-invasive study in patients with earlier forms of NASH that was completed and read out in January of this year. Together with these two large phase III trials and a number of other trials that we've completed, we have abundant safety data with resmetirom that we believe will support the filing for the treatment of NASH.
Great. You also recently amended the design or at least the statistics of the phase III trial and added a second outcomes trial. Could you tell us a little bit more about the phase III design as well as the recent announcements in terms of the phase III and outcome study plans?
Based on the FDA guidance document, the FDA is recognizing two liver biopsy endpoints potentially to support approval for the treatment of NASH. This is in patients who are felt to have significant liver fibrosis. They're not cirrhotic. They're called non-cirrhotic NASH, but the stage of fibrosis is at least F2, which is moderate fibrosis, and F3, which is considered to be advanced fibrosis, the precursor of F4, which is cirrhotic NASH. The two endpoints are resolution of NASH, which means resolution of the inflammation in the liver, which is characterized by an inflammation score and what's called the ballooning score. That was the original primary endpoint that we had for our 52-week serial liver biopsy study.
However, there's a second endpoint, a 1-point reduction in fibrosis, that initially we hadn't included as an endpoint. More recently and, you know, upwards of a year ago, we engaged with the agency about adding that endpoint, because what it can do is then you have two primary endpoints, which is called dual primary endpoints. You don't have to make both endpoint. You can make either endpoint, and then have a successful trial. The fibrosis endpoint was moved up the hierarchy from a key secondary into the primary endpoint recently that we announced. We have two doses, 80 mg and 100 mg in phase III, and then two primary endpoints.
We also have another key secondary endpoint for LDL cholesterol alone, which is very critical in these patients who die most commonly of cardiovascular disease. What the change that's being referred to is moving that fibrosis endpoint from a key secondary into the primary, moving it up the hierarchy. In part, that statistical plan is supported by the fact that we're adding a second outcome study. The primary MAESTRO-NASH study has a serial liver biopsy at week 52, but the patients don't leave the study at week 52. They continue for a total of 54 months or 4.5 years to be followed for clinical benefit. That's an outcome, a clinical outcome. That's used to support full approval for the indication.
The serial liver biopsy at the end of 52 weeks is considered to be reasonably likely to predict clinical benefit, but it's not establishing clinical benefit, whereas the month 54 establishes clinical benefit. The second outcome, which is something that is highly favored by the agency, having two phase III confirmatory trials, allows us to have better statistics in the first trial as well, where we're guaranteed a 0.05 outcome or alpha, as it's called, in the first trial and also in the second trial. The second trial is actually looking for improvement relative to placebo in cirrhotic NASH. We can talk about that a bit more. The point is, we had two outcomes demonstrating clinical benefit in this population, and then we have more alpha for the first trial, and that also supported adding that second primary endpoint.
That's helpful context, especially in thinking about the alpha and the likelihood of success. I mean, I'm paraphrasing here, but it sounds like you're more confident on statistical success with this modification.
Correct. Yeah. I mean, it gives you a lot more power for the study. Yeah.
You have a, I guess, to use a terrible sell-side line, 2 shots on goal now with the primary endpoint. Can you tell us a little bit more about this new outcome study? I think it's interesting that you don't necessarily need to use some of these biopsy measures for outcomes and m aybe elaborate how this could potentially get to a full approval faster?
I think one of the things the NASH field is probably some of you are aware has evolved quite a bit in the last several years. Prior to the first trials with obeticholic acid that I think read out some time in 2014. There really weren't significant serial liver biopsy studies. This was not that large a study. I think it had 200 participants at that time, a very large study. There have been a couple of phase III's that are even larger since then. The liver biopsy is an invasive procedure, and it's very difficult to conduct a study where you have serial liver biopsies.
Madrigal is one of the few with, you know, well over 1,000 patients in a phase III serial liver biopsy study. Certainly if we could show clinical benefit without having to rely on liver biopsies, that would be better. Particularly in patients who are cirrhotic, it's not at all customary to conduct liver biopsies in patients where it's already established that they have cirrhosis. What our new outcome study, which is called MAESTRO-NASH OUTCOMES, does is it enrolls very well compensated NASH cirrhosis patients. They've never had liver decompensation. They've really transitioned fairly recently from a temporal perspective from advanced non-cirrhotic NASH into cirrhotic NASH.
The idea is to follow them and look at decompensation events that usually occur within a few years of that transition into cirrhosis. We've already studied with resmetirom in one of our trials called MAESTRO -NAFLD more than 180 NASH cirrhotic patients. We know that resmetirom, and we'll be talking about some of these data at EASL coming up in about a month. We know that resmetirom is active in NASH cirrhotic patients. It's patients who are doing very well, and that the rate of decompensation when patients with NASH cirrhosis are on resmetirom is extremely low based on our early data.
There's a series of different activities of improvement in liver enzymes, reduction in liver volume, reduction in liver fat, reduction in liver stiffness, or presumably the fibrotic score based on FibroScan and MRE in NASH cirrhotic patients. The outcome study is simply comparing resmetirom-treated NASH cirrhosis patients to placebo-treated NASH cirrhosis patients and looking at the rate of decompensation as characterized by new ascites. These are markers of portal hypertension, ascites, hepatic encephalopathy, bleeding varices or increasing MELD score, and a couple of other measures like liver transplantation, which would occur very rarely, or overall mortality.
That study will be in parallel to MAESTRO-NASH, and we expect the number of events to support the clinical benefit to accrue in 2-3 years, as compared with the 4.5 years for the MAESTRO-NASH OUTCOMES. Which is actually a serial liver biopsy study where they're having another liver biopsy after 4.5 years. Non-invasive versus invasive patients who are further along on the spectrum compared to earlier non-cirrhotic. This is why we think it will be completed sooner and that the opportunity to support full approval was something that FDA has been clear on using this full approval for non-cirrhotic NASH, using a NASH cirrhotic outcome study.
In addition, the potential for approval for cirrhotic NASH, which is a very important. There's no treatment for these patients, so that's a critical unmet need in a growing population. This is NASH cirrhosis is actually becoming more and more common a s this disease evolves.
That certainly makes sense. Since you alluded to the regulatory landscape and, you know, thinking about full approval, maybe we can talk a bit about accelerated approval, which hopefully would come before full approval.
Right.
This has been one I know we've spoken about that's been a big debate in the, at least in the investor community. What drives your confidence and kind of understanding of the pathway in NASH from an accelerated approval standpoint?
Yeah. You know, based on our phase II data and a lot of non-invasive data that we have with resmetirom, we know the drug's very active in NASH, that is anti-steatotic, anti-inflammatory, anti-liver injury. Also, as we've shown, reduces fibrosis, especially in patients who have the NASH reduction. The fibrosis component is driven by the NASH, the form of hepatitis. This is the same with all liver diseases that cause hepatitis. The fibrosis follows as a consequence of the hepatitis. Resolving the NASH was demonstrated in phase II in a much smaller study. We have 10 times more patients, so the study is extremely well-powered to demonstrate NASH resolution, and it's also well-powered to demonstrate fibrosis reduction in patients with NASH.
I was gonna say that there is this misconception in the investor community that the goalposts have been moved since obeticholic acid and Intercept got their CRL. The FDA has gone out of its way, including a publication last year in Hepatology, to make it very clear that the goalposts haven't been changed at all, and that they still adhere to the requirement to make one of those two endpoints to be able to put a Subpart H submission in. One of the issues and one of the reasons that Becky's team designed MAESTRO -NAFLD, the non-invasive study that read out in January, was to make certain that we had an adequate safety database.
Because for chronic therapy, you really need a lot of patients on the drug at the dose that you're gonna market. One of the main issues with the obeticholic acid study was the fact that they had nowhere near the number of patients at the 25 mg dose, which was the dose they wanted to market. We have dealt with that hurdle by running the second parallel study with like 1,200 patients. Every indication from the FDA has been solid that there have been no changes in the goalpost, that these requirements are the same as they have been for the last 5 years.
Yeah. That's helpful and reassuring. Maybe since you mentioned it, can you elaborate a bit more about what we learned from this NAFLD study, both in terms of safety as well as some of the non-invasive markers for resmetirom activity, particularly perhaps on the metabolic front? What we can expect to learn as well at EASL when we learn a bit more about this data set?
To, you know, summarize, MAESTRO -NAFLD, as I mentioned, was a four-arm, and then became five-arm, but four-arm, randomized, double-blind study, in which fatty liver disease patients were identified non-invasively. You know, I also mentioned that it was an earlier population from MAESTRO- NASH. How did we identify these patients? Well, we identified the patients in MAESTRO- NASH and MAESTRO -NAFLD very similarly. First of all, NASH is associated with metabolic disease, a very high proportion of obese, about 90%, diabetes more than 50%, dyslipidemia, hypertension. If you have more of those metabolic risk factors, the likelihood of actual NASH, not just fat in the liver, but inflammation in the liver, is much higher.
Both of our MAESTRO trials require three metabolic risk factors to start with. In order for patients to screen, they have to have that metabolic profile. Then we use a test, a non-invasive office-based measurement called a FibroScan, to then categorize the patients in terms of their potential risk to have fibrosis. Many of the same sites were participating in both MAESTRO- NASH and MAESTRO -NAFLD. If a patient had a FibroScan score, a stiffness of 8.5 or higher, then they needed to screen for MAESTRO- NASH. If they had lower than 8.5 but higher than 5.5, which was consistent with an F1 stage of fibrosis, then they could screen for MAESTRO -NAFLD.
If they screen failed for MAESTRO-NASH after, you know, all of the testing, but they had F1 on their liver biopsy, then they could enter MAESTRO-NAFLD. The MAESTRO-NAFLD itself, the non-invasive testing was a FibroScan, as I mentioned, and then it was followed by an MRI-PDFF, where they had to have at least 8% liver fat, which meant that they, by definition, had NAFLD. NAFLD presumed NASH, and there were a series of other, you know, safety tests, and they entered the study. The readouts, as we mentioned, were non-invasive. They had serial MRI-PDFFs. Serial lipid measurements, you know, safety analyses for 52 weeks.
We also serial FibroScan, serial MRE, which is another test for liver stiffness and other biomarkers. To your point, it was a very large safety study, 52 weeks. What we saw that we announced at the end of January and then another brief update in May was that the safety in the study, in this very large population, was consistent with our phase II study. The only AE that was disproportionate in the resmetirom population was an early increase in loose stools, very transient or diarrhea. There was no increase after the first few weeks of therapy relative to placebo, and it didn't result into drug discontinuation.
The discontinuation rate based on an adverse event was only 1 or 2% in the arms of the study. I mentioned there were four arms. There was also a parallel open label 100 mg arm that was randomized at the same time as the three double blind arms. The three double blind arms were 100 mg, 80 mg and placebo. We had read out the open label arm at the end of last year. The data that we discussed and is gonna be discussed in much more detail next month at EASL and then late-breaker presentation was that the primary endpoint, which was safety, was achieved and that the key secondary endpoints, which were LDL, ApoB, triglyceride lowering, MRI-PDFF lowering, were also achieved.
The serial measurements in the fibrosis scanning devices, we were able to show that the patients on resmetirom who had serial FibroScans or and/or serial MRE tests, the drug-treated groups had more responders than the placebo-treated group, and that was statistically significant for both the FibroScan and the MRE test. We believe that's consistent with the phase III NASH study, where you're looking at the responder rate, the percentage of patients that have a fibrosis reduction in each treatment arm compared to placebo.
That's helpful. Turning to the NASH phase III, maybe for those in the room and on the line, can you remind us some of the design changes or design from the phase II to phase III in terms of the dose, patient population, and how to think about that?
The differences between the phase II and the phase III, I already mentioned the major difference is that it's a 10 times bigger study in phase III, so it makes the powering much more appropriate for a serial liver biopsy study. The concentration of patients who are the advanced F3 population is a lot higher in the MAESTRO-NASH study than we did in the phase II. But I will comment that the fibrosis benefit we saw in the F3, the phase II study was the most significant based on both biomarkers and a liver biopsy review using a technique called second harmonic generation. When patients have more advanced fibrosis, it's more established.
There's very little placebo effect in our study, and that's where we saw the biggest drug effect. More than half of the patients in MAESTRO-NASH are what's called the F3 stage of fibrosis. The dosing is very different in phase. The phase II was essentially a dose-ranging study. We were trying to arrive at the phase III dose, so half the patients were on 60 mg and another half were on 80 mg, and there were very few at a higher dose of 100 mg. 80 mg or 60 mg. We showed that 60 mg was not a sufficient dose for phase III. We ended up with a higher dose of 100 mg in phase III, and another 80 mg.
There's an 80 mg arm, a 100 mg arm in the phase III MAESTRO-NASH study. We've got a higher dose. We showed that 100 mg was safe in MAESTRO-NAFLD, and that the magnitude of effect on the MRI-PDFF is significantly higher at 100 mg than even than 80 mg. We showed that in MAESTRO-NAFLD. In the phase II, we tied the effect on MRI-PDFF to NASH resolution, including all component improvement in NASH, as well as fibrosis reduction. More patients achieving that 50% mark or that 30% mark on the PDFF means more patients with NASH resolution and fibrosis reduction.
When we get this top line later this year, how are you thinking about what's meaningful, I guess, on NASH resolution without worsening in fibrosis and improvement in fibrosis, each of those endpoints respectively, although I guess they're intertwined. What magnitude of effect size is meaningful, both statistically but also from a regulatory and commercial perspective in your view?
Yeah. I think you know what we've found with resmetirom is that it has a very high responder rate. You know, essentially all patients will respond to resmetirom with some benefits in LDL lowering and liver fat reduction, etc. NASH resolution means that you know they can't have any little residual this, that, or the other. It's a bit artificial. One of the things we showed in phase II is that going along with this PDFF reduction, more than 70% of the patients actually had improvement in their NASH, and a high percentage had resolution. Around 40% had resolution. If we look at compared to placebo, you know, let's say the placebo rate, which is typically we power the study based on very conservative numbers.
Let's say the placebo rate of NASH resolution in these populations, you know, on the order of high single digits or low double digits, then we expect the differential to be statistically significant for NASH resolution. We powered it, you know, with a relatively low percent. We're understanding that, you know, there's a lot of patients who have also improved. We have other endpoints that look at NASH improvement. With fibrosis, there's a similar kind of situation where there's a placebo response that we believe is primarily based on sampling variability of the liver. There's always about a 20% apparent placebo response in fibrosis. Almost always. There's maybe one study where it's lower, but it's typically 20%. That could just be sampling.
You know, F1 versus F2, slightly different area of the liver, you know, etc. You need to get above that 20% to show the drug effect. Anything statistically significant, you know, in the thirties, above that amount, would be statistically significant. We believe that, you know, with the risk benefit of resmetirom, that's really what we're looking for. We're not as concerned about the absolute what is that number, as long as we have a statistically meaningful, you know, statistically significant outcome to the study.
I just would add to that. I agree with that. I mean, there have been enough failures in the space that people should be over the moon about statistical significance for a primary endpoint. But the data is going to show that those patients who did not quite resolve their NASH really got a lot better. Maybe there's a ballooning cell that was still seen in a high-power field. That data will be published and/or will be in the label in some way. I think our data that we've gathered with healthcare providers who take care of significant numbers of these patients indicates that they're looking for something that's been approved. They have a great need and stables of patients who are either currently on nothing or on non-approved therapies.
Absolutely. Doing biopsies is no small feat, particularly amidst a pandemic or endemic COVID, I guess however you want to label it now these days. How are things going from a timing perspective and as well as the data analysis and how we should think about the timeframe for last patient visit and the amount of time it takes for the pathologist to read the biopsies?
Yeah, you know, the pandemic had more of a significant effect on our non-invasive trial, MAESTRO-NAFLD, in terms of the data analysis and etc. Also, patient visits, whereas MAESTRO-NASH was highly protected, in terms of, you know, the patients and the discontinuation rate, was not higher than we've expected right from the get-go. Really the COVID impact, except for a delay for a few months, primarily at the beginning and primarily in Europe, actually, the beginning of the pandemic, has not impacted MAESTRO-NASH. In terms of the data plan and data analysis, going very well. You know, I think having read out one large phase III trial, that we have the experience. We've hired a new Chief Data Officer who's really experienced, and so it's all really going well as far as the data.
Awesome to hear. Alex, NASH is a large space and presumably quite expensive to commercialize and run these large studies. Can you remind us where you guys are from a cash runway perspective and potential plans for commercialization, particularly thinking about any strategy with ex U.S.?
Sure. Absolutely. Just a level set from a cash perspective, we just announced our Q1 results. We ended March 31 with $220 million in cash. As part of that announcement, actually in May, we completed a term loan financing, totaling $250 million facility. Of that facility, we've drawn down $50 million. In addition to the $220 million at the end of March, we've drawn down another $50 million, leaving a facility of obviously $200 million left, which aligns with our operational growth going forward, into registration and commercialization. Again, just to round it out, we do have an existing ATM facility with $160 million available to us.
In the round, we're very well positioned going into the data readout, and have a number of options for raising additional capital to fund ourselves going forward. In terms of ex-U.S. commercialization, as you mentioned, we've been very public about saying that we're going to be looking for a partner ex-U.S.. Unfortunately, Remy's not here today, but he's clearly spearheading the effort for commercializing in the U.S. Just a quick aside there, in terms of you mentioned sort of the significant sums required to commercialize. We actually believe we can be very effective with a specialty care-focused sales force of circa 150-200 field force. It's not some huge primary care sales force that requires that sort of gargantuan commercial investment.
In terms of the ex U.S. partnership, as I say, we are looking to conclude that deal after we get the MAESTRO-NASH data readout. We've already got the funding for it. We've got obviously under Becky's leadership, the team and the resources and the wherewithal to complete those studies. What we're looking for is a partner on the back of that data readout to then commercialize ex U.S. Now obviously, you know, that's a global infrastructure. That's not something that we're going to be doing ourselves. We're already in discussions as of now with partners. Lots of interest, as you can imagine, for a very late stage asset and a new market opportunity with to date, a very sort of attractive profile.
Yeah, it's exciting. With one minute left, let me see if there's any questions in the audience or on the webcast. Okay. Well, I'll ask one more, and then I'll let you guys go. You alluded to this earlier, Becky, but how do you think about minimizing reader variability when it comes to the biopsies, particularly, you know, when the close statistics like this very much matter?
Yeah. I think, you know, in our phase II study, we had one primary reader, and then we had a second reader who read the whole study. Even though they didn't agree on every patient, every biopsy, the bottom line was the same. We also had the study read by an AI method that got the same result. We're gonna show those data at EASL. We believe that if the drug is effective, you know, that the variability doesn't have as much impact and you'll get your result that you want. That's kind of how our plan has evolved with our same 2 readers for phase II.
Same two.
Got it. Well, that's very helpful. We're very much looking forward to seeing this data later this year. Thank you guys so much for joining us.
Thanks for having us.
Thank you.