Morning. Welcome to Health CONx. My name is Liisa Bayko . I'm one of the SMID cap analysts. And as you know, I've been following the MASH space for a long time and covering Madrigal since its inception. And really thrilled to be here with Bill and Mardi, who are newer to the story, but doing a great job in getting Rezdiffra off to a fabulous launch. So we're going to dig into all of that. But just to step back, maybe we can start with a company overview
Yeah, sure. Liisa, thank you, first of all, for having us.
Of course.
Real pleasure to be here and spend some time with you.
Of course.
Look, we are quite simply the leaders in MASH, not just because we're first, but because we have a really bright future ahead of us, I think. It's been kind of an intractable area for a lot of years, as you know. There's been over 20 failures, and finally, through, I think, a lot of good, hard work, we were the first to ever be approved, so now we're looking at a lot of growth and opportunity in front of us. We think for many years to come. We're at our early stages. We've got Rezdiffra now, but we're also looking to actually build on Rezdiffra for the future, so the goal is to continue the leadership for many, many years to come, and look, personally, I think this is about as exciting an opportunity as there is in the industry right now.
The unmet need is so high in MASH still. It's the leading cause of transplant for women in the United States, second leading cause for men soon to be number one. You have a 10 to 17 higher likelihood of a liver-related mortality when you're an F2 or F3 patient that we're targeting, so huge unmet need, finally a therapy, but a lot more work to do.
It's amazing because you were the first to turn over a positive study, and now we just make the assumption everyone's studies are going to be positive.
I don't think it's interesting. I think there is this belief that everything now is de-risked. And I just don't think that's the case. This has been a hard disease for a reason. There's been some really big companies that have put a lot of resources into trying to find a solution. No one did. We were the first to do it. So I think that truly the good science is going to win the day.
So we've talked about your launch. You've got two quarters under your belt. You think you're off to a really, really strong start. What have been some surprises and learnings? What's different than expected?
Look, first of all, Q3 for us was really an outstanding quarter, $62 million, $62.2 million to be exact. And if you look at all of our metrics from a patient perspective, in Q2, we had announced greater than 2,000 patients. We announced that we had greater than 6,800 on at the end of Q3. And just to be clear, that is on that day end of the quarter how many patients are on drugs. So if you had patients discontinue through the quarter, et cetera, they're not in that count. It's really the most, we'd say, conservative way to count patients. So we were very careful with that. Prescribers are increasing. We had talked about 20% at the end of Q2 of our targets. And remember, we're targeting a group of 6,000, a universe of 14,000, but targeting 6,000.
That had grown to over 40% by the end of Q3. And also, we had had a pretty high ambition with our payer coverage to get to 80% coverage by the end of the year. We pulled that a quarter forward into the end of Q3. And that is with virtually no biopsies at any of the plans. So on all of the fronts, I think we've made great progress. Surprises, we've gotten experience seeing this launched a lot of products. And we think we did a really, really great job in planning ahead and thinking what we might see. I would say probably kind of the managing the perception surprise, in that there's kind of a perception or a thought that perhaps since this is the first product in a high unmet need area that just day one, everyone floods on. But that's just not the case.
And this notion that I've been talking about for a while, that we've been talking about for a while of needing to wire the system so there's pathways through, I mean, that is a real thing. I mean, it is real. Practices have to be able to adopt and change, adapt and change to really treating a new disease for them. And so I think it's just more that perception. And that's why what we've tried to do is measure ourselves against really great launches. And we put a basket of about 10 launches over the last 10 years that are either first in disease, first in—
What are some of those?
Well, we haven't disclosed what those are. But they're all.
How are you doing?
We're doing extremely well against them. And so we want to always have that third party, if you will, validation rather than just saying our forecast is absolutely correct or our expectations are absolutely correct. You've always got to test that against what great looks like. And we've set an extremely high bar for ourselves. And we're performing extremely well on each of the metrics.
Where are we with payers now? You talked about you pushed it out, pulled it ahead of quarter. Any update there?
Yeah. Look, it's where it was in that sense. So I mean, that is not.
So, just remind us then.
Yeah. So what we had stated was that by the end of Q4, we were hoping to have 80% of covered commercial lives. And we had that by the end of Q3. Now, the way the business is, the mix of the business, we had anticipated about 50% commercial, 35% or so Medicare, and about 10% other. And that includes Medicaid. And that's the way the business is rolling out at the end of the third quarter. So we feel like we've done a really nice job in anticipating what the mix of patients would be. There's been a question about, do you expect when Medicare comes on in Q1, do you see this mass of Medicare patients? The reality is that we're getting, as you can see, 30%, 35% Medicare patients right now. So through medical exception, it's actually been very efficient, people getting on drug.
So we think that the Medicare demand that's there is being fulfilled and that you don't turn the clock in January and all of a sudden see a big change to the mix at all. In fact, what you can have happen because medical exception is sometimes more efficient in some ways. If you now have the various criteria that you have to provide from NITs, et cetera, you could actually have it not be quite as efficient moving through.
Interesting.
But the final piece I should say is we had also talked in terms of hoping to get to kind of less than 30 days time to fill. And we're also achieved that, what I'd say, early.
OK, great. How are you thinking about first quarter? There's always a first quarter dynamics. At this point in the launch and with Medicare coming on board and all the other change dynamics, are we expecting some sort of first quarter seasonality? Or how would you guide people to think about that?
Yeah, we'll definitely incur the typical first quarter seasonality that is industry-wide, and I would also point to gross to net a little bit as well, so gross to net coming into the first two quarters were favorable for us, mainly because of our co-pay assist program, which is a big pendulum in our gross to net. It's a program that we believe in and support, but was below our expectations the first two quarters, so we see that growing into the fourth quarter to impact gross to net, but really in the first quarter, Liisa, to address your seasonality, we'll see the typical re-auths for insurance that will impact gross to net and then also the IRA impact, so you're going to see some seasonality in that first quarter.
Do you have any bottlenecks in the system distribution or anything like that that you think about adjusting going forward?
What do you mean by bottlenecks? Just you mean from physical product or?
Yeah, just like do you have enough distributors, specialty pharmacy, all this kind of stuff?
Yeah. So we have a closed system where we have seven specialty pharmacies that are distributing the product. We think that's been really, really effective. We'll always consider how do you look at that. Do you look to expand it in the future, et cetera, depending on the market needs. But as we're at this stage in the launch, it's worked out really, really well for us.
OK, so nothing there. I got a question on this. That's why I'm asking.
I mean, there's nothing. No, I mean, I don't think there's a there there. I mean, things have been really efficient dealing with completely top-tier organizations who are experts in the space. So no problems.
OK, so we had some interesting GLP-1 news throughout 2024, so I'm glad that's behind us because that was like the big talk of the year, and the data is positive across two programs, and I heard tirzepatide they are going to be doing a phase III in NASH. I heard that from a KOL for that program, as well as tirzepatide as well, but I guess how are you thinking about your response to these weight loss drugs also having an impact on MASH, and sort of how do you respond to that? Do you do anything differently? How does that change the market dynamics for you?
Well, I mean, look, I think that the data is kind of as expected. I don't think there was any real surprises at AASLD or before that in the Novo press release. I feel as though the market is developing for us in a really, really positive way. First of all, if you look at our profile, we've got kind of that holy grail profile, once-a-day pill, well tolerated, that works. I mean, that's what in my 30+ years, that's always been kind of the goal. So we have a great product. And we have a very focused strategy. We've talked about we're not going after undiagnosed. Our focus is 315,000 diagnosed patients. Because we can deploy against that, we've got a field organization that is focused on the top 6,000, which is where we're seeing the most productivity as well, which is driving our quarter.
When we look at purely just from a data perspective, when I see other companies read out, it just takes us back to we look really good, especially on fibrosis. I mean, we look really, really good. And when you look at something that no one else has is three-year data. We had 91% of patients that had either reversed liver stiffness or kept it the same. That's a pretty great data point. Yeah, so we've got a great profile. Now, how does the market evolve? You've got the GLP-1s, which, by the way, have been on the market for 14 years or whatever the number is. And right now, we see that about 25% of patients are on a GLP-1 with Rezdiffra. And market research suggests that 50% are either on or have been exposed to. So the two are coexisting, treating different comorbidities.
What we've heard is that we've heard the data results from a well-controlled trial, obviously, with sema, but it's a real world that patients are treated in, and we know that based on what Novo has said, that there is about a 70% discontinuation rate in weight loss after one year. This is a 72-week trial. Our data is 52 weeks. I haven't seen their 52-week data. I'm not sure. I don't think they have it, so just practically speaking, if you've got that type of discontinuation, you're going to have to drive a lot of diagnosis, which we haven't been focusing on, so you can see a world where you have many more patients diagnosed, which ultimately we'd benefit from if people aren't going to tolerate a GLP-1. So look, we look at it as it's good because it's going to drive awareness.
More patients are going to be diagnosed. More patients are going to be treated. It's good because that grows the market, and this market can support multiple products. It's not going to be a winner takes all. We've seen that combo use has started as well, so I think it's just kind of that next stage in the overall market development, and the data kind of fell in line with where we thought, and it's a reminder of just how good a product we have and how good data we have.
Do you think that the data from semaglutide, at least for now, does it give payers any leverage to say, hey, there's a pretty big price differential here between semaglutide and Rezdiffra, notwithstanding the discontinuations and all those differences that we've talked about? Is that something that you need to, is that real? I mean, would payers say something like that? And would that force you to give some discounting or something like that?
I think you have to remember the number, probably one through nine challenge for payers right now are GLP-1s. As I had said, the GLP-1s are interested in the 115 million obese people in the U.S. You saw we talked about on the call that 22 million apparent NASH patients in U.S., E.U., and Japan. That is a bigger concern for a payer having millions of patients versus what we're talking about targeting. Now, does that mean that we have discussions with payers? We have probably twice a year updates with payers and them wanting to have further discussions about the long term with us. The good news, remember, is our pricing was based a lot on cost effectiveness. You looked at the ICER report. We were right in that range. I mean, payers understand these are really, really expensive patients.
It's not when you become cirrhotic that you become expensive. You're already expensive at F2, F3. And they know the downstream costs. That's why we've had such good coordination and good discussions with payers today because they understand the cost of this disease. So look, I think you're always in discussions with payers about things. We feel that the merits of Rezdiffra are really, really strong and that we'll remain in a good position. So it's going to be a long-term discussion. But I feel like we're in a really, really strong place.
OK. I want us to turn to other world areas. What are you doing? Sort of where are we with the EU? What's the kind of pathway there in terms of next steps and timing?
Yeah, I'll take that. So we announced at our launch when we were launching the drug, actually, that we were going to go into Europe. And we've started the regulatory process. And if everything continues and goes well, we think we'll have approval and be able to launch in the second half of 2025. So we are doing the blocking and tackling of setting up our European infrastructure. And exciting news, we just hired our head of the EU. And we're very excited about that as well. And we've had a multi-year presence there. We've had MSLs on the ground for a number of years. We've run clinical trials out of Europe. We have 125 clinical sites. We feel very good about the reception for Europe. In fact, EASL came out with guidelines early in June.
They were on the leading edge even before the drug was approved in Europe with very strong guidelines for first-line therapy for Rezdiffra once and if it's approved. So we're feeling really good about the opportunity. And we're taking the steps, being cautious and prudent in our spend there. But we will hopefully launch in multiple countries. And the whole idea there is from a spend standpoint that we'll have positive contribution, that we'll see success and positive contribution in a two to three-year time frame.
OK, and how should we think about pricing in Europe?
Well, look, one of my experiences has been that Europe and the whole world still does recognize innovation. And I think this is being such an innovative product that we feel that we can achieve a price that is certainly acceptable.
OK. And so you'll set up infrastructure and all that in Europe?
Yeah. And I would be careful to just say Europe because Europe implies kind of all countries in Europe. We're going country by country. And assuming that the opportunity and the conditions are correct or good, I should say, then we will move into those countries. We want a positive contribution in two to three years. So we're being extremely, extremely disciplined about it. So we think of it more as a group of countries on a country-by-country basis rather than just a region.
I understand. OK. And do you need to do the same wiring of the system, so to speak, as you did here?
Yeah, there is certainly wiring that has to go on. The payer piece, though, if you have a single payer, it's a little bit cleaner, clearer. But still, the practices have to make way to start having a pathway within the practice for a patient. I mean, the good news is what will end up being a year plus in advance, you've got the EASL guidelines, which lay out Rezdiffra assuming approval. And I think the community has already been thinking more about it because they feel there's a higher certainty that they're going to have a product since it was approved in the U.S. So yes, there will be wiring because you still have to think about how you're going to process a patient through. But I think there's more time for them to start thinking about it.
I wanted to ask you this before, and it slipped my mind, so I'm just going to sneak it in now. Where are you in terms of wiring of the system in the U.S.? Do you feel like you're like halfway through, 75% through, still early? Where are you in that process?
We're still wiring. We had said initially, if we recall, take 12 months. That 12 months isn't a hard stop. It really is practice by practice. I think some of the major elements of it, there's the wiring in that from a reimbursement perspective. We've really made great progress there. Now it's just really practice by practice, making sure that they have the right resource and pathway in place to pull patients through. And part of that is the wiring gets complete as they put more and more patients on because then it becomes more standard within their practice. So we stick to the 12 months that you're substantially through it. But you're going to be doing elements of it beyond that. And the reason being is, well, we have no infrastructure to drop into. Everything is de novo based upon us being the very first to launch.
The good news, though, is that we get to help with that wiring and not have to inherit somebody else's.
Right, true.
We're setting a bar for the rest of the industry to come into rather than us having to react to somebody else's good or bad decisions.
OK, and then just a final couple of practical questions to wrap up. Should we anticipate that you would pre-announce in San Francisco in January and are you planning to provide guidance for 2025? Maybe not in January, but let's say in your fourth quarter call.
I'll do the second question first. So, on guidance, what we've said is we're not even considering it until after 12 months of launch. So it's just not a question that we're debating right now. So no promises there. And neither on the pre-announcing either. So we're just quarter to quarter figuring out where fourth quarter is. We don't know at this point. But that's something we'll do. We're evaluating all scenarios.
OK. Yeah, great. Thank you for your time today.
Thank you.
Really appreciate it.
We appreciate it.
Thanks, everyone.