Good morning, and thank you for standing by. Welcome to Madrigal Pharmaceuticals' third quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's 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.
Thanks. Good morning, everyone, and thank you for joining us to discuss Madrigal's third quarter 2026 results. We issued a press release this morning and posted a slide deck to accompany this webcast on the Investor Relations section of our website. On the call with me today are Bill Sibold, Chief Executive Officer, Dave Soergel, Chief Medical Officer, and Mardi Dier, Chief Financial Officer. They will provide prepared remarks, followed by Q&A. Please note that on slide two, 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 three.
Thanks, Tina, and thank you all for joining. The business is performing exceptionally well. Rezdiffra is growing rapidly, and the MASH market is accelerating. Rezdiffra's best-in-disease profile and our team's strong execution have established Rezdiffra as the foundational therapy in MASH. I'll summarize a few highlights. First, we delivered a $431 million quarter, crossed the $1 billion milestone in year-to-date net sales, and are now annualizing at more than $1.7 billion based on this quarter's results. We're continuing to steadily add patients and believe we're well on our way to mega-blockbuster status. Second, the U.S. F2/F3 MASH market is accelerating, on track to grow more than 30% this year. When you combine rapid market growth with Rezdiffra's patent protection expected into 2045, it's hard to find a more attractive growth opportunity in biotech.
Third, we're advancing our F4c program with the same objective that has guided us in F2/F3, to be first and best. Our ongoing MAESTRO-NASH OUTCOMES trial positions us to deliver the first approved therapy for F4c. Our new MAESTRO-CSPH phase III trial is designed to be a practice-shaping trial that we expect to extend our competitive advantage and strengthen our long-term leadership. Let's move to our Q3 results, where I'll cover Rezdiffra and the expanding MASH market. Dave will discuss our pipeline progress, and Mardi will close with our financials. Turning to slide five, third quarter 2026 net sales were $431 million, up 50% year-over-year. This performance reflects growing demand for Rezdiffra and outstanding execution by our team. We built a broad and durable prescriber base early, and now we are driving depth.
The positive experience our target specialists are having with Rezdiffra in the real world is translating into action. They are prescribing it more often. That growing depth, combined with excellent access, Rezdiffra's differentiated profile, and strong patient adherence, is why we continue to steadily add patients. As shown on slide six, we ended the third quarter with more than 55,850 active Rezdiffra patients, compared to more than 29,500 a year ago. That's nearly twice as many patients on therapy. As a reminder, this is the number of patients actively on therapy at quarter end, net of discontinuations. Slide seven shows why we are so confident in the opportunity ahead. Our latest research shows that the market is accelerating. As we said, at the end of 2025, the diagnosed U.S. F2/F3 MASH population had grown nearly 50% in two years to 460,000 patients.
As of June 30th of this year, we estimate the market expanded to more than 530,000 patients and is on track to grow more than 30% by the end of 2026. The growth in this market is primarily being driven by an increase in awareness and diagnosis. Slide eight makes clear just how much runway remains. The MASH diagnosis rate is still only around 10%, and Rezdiffra has penetrated approximately 10% of the market. At 10% of 10%, we are only about 1% into the total opportunity. With more than $1 billion in year-to-date net sales, we are at the very beginning of what we believe will become one of the largest specialty markets in the industry. As noted on slide 10, building a successful medicine takes much more than a positive top-line readout. That's only the beginning of the story. Launch success depends on several important drivers.
Labels matter. Boxed warnings and burdensome monitoring requirements create barriers. You need efficacy, safety, and tolerability to translate into a positive real-world experience. You need a medicine that is easy to prescribe, easy to take, and easy to stay on. Then there's execution, the right infrastructure, the field team, medical affairs, reimbursement, market access, fulfillment, and patient support all working together to get patients on therapy and keep them on therapy. Building that system takes experience, resources, and time. Ten quarters into launch, those questions have been answered for Rezdiffra, as shown on slide 11. We have what we believe is the best-in-disease profile. Rezdiffra is highly effective across each patient subtype. It's well tolerated and simple to use, and with nearly 56,000 patients on therapy, its safety profile is exceptionally well defined, which actually may be the most important thing.
That's the real-world profile you want for a chronic disease. We also built the industry-leading infrastructure, and we are continuously improving it. We've done the hard work to wire the system and have set an extremely high bar. This doesn't just happen overnight, and it is difficult to replicate. We already have thousands of prescribers and more than two years of real-world experience. Any new entrant will have to build what we are already optimizing and answer the question, what problem are they trying to solve? We have delivered one of the best specialty launches of the last decade and established clear leadership in F2, F3 by being first and best. We will leverage this formidable advantage in F4c as well. Let's turn to slide 12. The F4c market is increasingly attractive. It's a rapidly growing multi-billion dollar market opportunity.
We now estimate 360,000 addressable F4c patients in the U.S., up more than 45% from the 245,000 we previously shared. That is larger than the F2, F3 patient population when we launched Rezdiffra. Expanding into F4c could double Rezdiffra's opportunity and bring patients their first approved therapy. We have also seen recently that competitors have modified their programs, increased their study sizes, and delayed their timelines, with the earliest potential entrant now not expected until 2030. Our lead in F4c has widened. MAESTRO-NASH-OUTCOMES puts us in a unique position to be first to market. Events continue to accrue in this study, and we are now anticipating a readout in late 2027. We are confident in Rezdiffra's potential in F4c and are exceptionally well positioned to lead. The addition of our new phase III trial, MAESTRO-CSPH, raises the bar for the field.
It builds on MAESTRO-NASH-OUTCOMES while unlocking new opportunities to shape clinical practice as the treatment landscape continues to evolve. This trial will benefit from what we have learned about F4c over the last five years and is another tangible demonstration of our leadership in MASH. Our objective remains clear: be first and best in F4c. Dave will walk you through our plans. Over to you, Dave.
Thanks, Bill. Patients with F4c MASH face serious risks, including liver decompensation, liver cancer, and premature death. The unmet need is urgent. Our two-year data from the 122-patient open-label F4c cohort in MAESTRO-NAFLD-1 shows that patients treated with Rezdiffra for two years have improved MASH-related biomarkers and imaging parameters. Among the patients with clinically significant portal hypertension, or CSPH, confirmed at baseline, 65% moved to a lower risk category, suggesting a lower risk of liver decompensation. These data reinforce our confidence in Rezdiffra's potential to benefit these patients. MAESTRO-NASH-OUTCOMES gives us the opportunity to deliver the first approved treatment for F4c. This is our 845-patient, placebo-controlled, event-driven phase III trial. The primary endpoint is improvement in liver-related clinical outcomes, consistent with FDA guidance. A positive result would support both an F4c indication and full approval across F2 through F4c MASH.
We continue to accrue events, and as Bill referenced, we now anticipate a readout in late 2027. In parallel, we plan to initiate MAESTRO-CSPH in the first half of 2027. This second phase III outcomes trial will draw on our open-label F4c data, our experience conducting MAESTRO-NASH-OUTCOMES, and the latest advances in the field to generate highly relevant data to support Rezdiffra's benefit in F4c. There are four features that distinguish this new trial and our F4c program, as noted on slide 14. First is the patient population. We plan to enroll more than 2,000 patients and enrich the trial for CSPH. Development of CSPH is a critical inflection point in the pathophysiology of compensated cirrhosis, so we are focusing this new trial where the unmet need is greatest and where preventing or delaying a clinical event is especially meaningful. Second is the breadth of evidence we intend to generate.
We expect to have the most comprehensive data set in F4c. The size of this new trial, combined also with MAESTRO-NASH OUTCOMES, should allow us to conduct meaningful analyses across clinically important subgroups. Third, MAESTRO-CSPH enhances our opportunity to build Rezdiffra-specific biomarker evidence. We plan to collect a rich set of biomarkers and noninvasive data in MAESTRO-CSPH, as we've done in MAESTRO-NASH OUTCOMES. Using the data from MAESTRO-NASH OUTCOMES, we can identify measures that are most closely associated with treatment benefit and potentially validate those findings in MAESTRO-CSPH. Fourth is scale. Across MAESTRO-NASH OUTCOMES and MAESTRO-CSPH, we expect our F4c outcomes-based clinical program to include approximately 3,000 patients, which will give us the greatest insight into this population and further strengthen our competitive advantage. Overall, we believe MAESTRO-CSPH will be the defining F4c study in this space.
We plan to finalize the study protocol following our discussions with FDA and initiate the study in the first half of next year, with results expected in the early 2030s. Having two complementary outcomes trials gives us a unique advantage and the opportunity to demonstrate consistent clinical benefit across studies, replicate key biomarker findings, advance the science in F4c, and give prescribers a more complete understanding of Rezdiffra. Now let's turn to what we're doing today to further expand the evidence base supporting Rezdiffra in F2, F3. In a heterogeneous disease like MASH, predictable efficacy across patient subgroups is critical for patients and providers. The forest plot on slide 15 from our phase III MAESTRO-NASH trial demonstrates Rezdiffra's consistent efficacy across each patient subgroup, including patients with F2 or F3 fibrosis, with or without type 2 diabetes, across BMI categories, and across common genetic variants.
Slide 16 builds on that evidence with a more detailed examination of Rezdiffra's profile in patients with common genetic variants associated with MASH progression, recently published in the Journal of Hepatology. As shown in the genetic subgroups evaluated, Rezdiffra improved fibrosis and reduced liver fat with a consistent treatment effect. These data support Rezdiffra's utility as a foundational treatment for MASH and form the basis of the combination programs in our pipeline. We're also expanding Rezdiffra's evidence base to include data from everyday clinical practice. This will be a major theme at AASLD later this week. resmetirom will be featured in more abstracts than any other MASH therapy across the conference. This includes 13 real-world data abstracts, the largest of which includes nearly 12,000 patients. We continue to hear the feedback from prescribers that Rezdiffra is performing even better than they expected.
The data highlight the evidence base supporting this positive real-world experience with Rezdiffra. Slide 18 outlines three areas where we're continuing to broaden our understanding of MASH and Rezdiffra. This includes real-world evidence generation, data in special populations, and practice-informing studies evaluating Rezdiffra with approved therapies to treat common comorbidities. Examples include combinations with pioglitazone or an SGLT2 inhibitor. These initiatives are intended to answer the practical questions prescribers face when treating complex patients with MASH. We'll use what we learn to inform future development. Slide 19 showcases our pipeline. In addition to our ongoing phase III studies, our portfolio now includes more than 10 resmetirom combination programs. Each program follows the same strategy: start with resmetirom as the foundation and add complementary mechanisms with the potential to deliver better efficacy to some or all MASH patients.
We expect to initiate three phase II combination trials in 2027 following regulatory discussions. The first will evaluate our oral DGAT2 inhibitor, ervogastat, with resmetirom, following a phase I drug-drug interaction study initiated in October. The second will evaluate MGL-2086, our oral GLP-1 agonist, with resmetirom, following completion of the ongoing phase I SAD/MAD study. Our goal remains to dial in the right amount of weight loss to enhance resmetirom's antifibrotic effect while preserving tolerability. The third will evaluate MGL-0795, our siRNA targeting PNPLA3, with resmetirom. This is our genetically targeted approach for patients homozygous for a PNPLA3 disease-accelerating mutation. Our earlier stage pipeline is advancing as well, with six siRNA programs and three exploratory assets. Our approach to our pipeline remains disciplined and focused on combination programs with the potential to deliver the greatest benefit to patients living with MASH. With that, I'll hand it over to Mardi.
Thank you, Dave. Turning to slide 20 and a summary of our financial results, where comparisons are made to the prior year period. Third quarter 2026 net sales were $431.3 million, up 50% year-over-year, with year-to-date net sales of $1.1 billion. This was another outstanding demand quarter. In addition, the team continues to do an excellent job managing gross-to-net. With nine months of the year behind us and good visibility into the fourth quarter, we expect gross-to-net to come in at the low end of our mid-to-high 30% range for 2026. Moving to operating expenses, which included $38.9 million of non-cash stock-based compensation in the quarter compared to $26.3 million. Cost of sales for the third quarter was $37.8 million compared to $18.1 million. Cost of sales was primarily driven by an increase in royalties payable to Roche.
R&D expenses for the third quarter were $71.8 million compared to $174 million. The decrease was primarily due to one-time upfront business development expenses of $117.3 million in the third quarter of last year. SG&A expenses for the third quarter were $265.7 million compared to $209.1 million. The increase was primarily due to continued investment in commercial activities for Rezdiffra. Looking ahead, we expect full-year 2026 R&D expenses to be nominally lower than 2025, inclusive of the previously announced upfront business development expenses in both periods. We expect full-year 2026 SG&A expenses to increase compared to 2025 as we continue to support Rezdiffra's growth. As we discussed earlier in the year, we expected some quarter-to-quarter choppiness in SG&A throughout the year due to the timing of certain marketing expenses and expect higher Q4 SG&A expenses compared to Q3.
The third quarter marked another important milestone for Madrigal, our first quarter of profitability. We reported net income of $55.4 million compared to a net loss of $114.2 million. As we've said, we remain a top-line growth story and may dip in and out of profitability in the near term based on the timing of investments, business development, as well as typical 1Q dynamics. We will continue to make investments thoughtfully with a focus on long-term value creation. We also ended the quarter with a cash position of $961.8 million. We've been operating cash flow positive for the last two quarters, driven by strong revenue generation and disciplined investment. We remain well-resourced to support Rezdiffra, advance our pipeline, and pursue continued business development. To conclude, on slide 21, there are four important takeaways.
First, Rezdiffra is tracking toward mega blockbuster status with year-to-date net sales of more than $1 billion. We continue to steadily add patients, ending the quarter with nearly twice as many patients as a year ago. Second, the addressable market is accelerating, expected to grow more than 30% for the full-year. Third, we are strengthening our leadership position in F4c with our new trial, MAESTRO-CSPH. And fourth, we continue to advance our industry-leading MASH pipeline with more than 10 programs, including a leading F4c clinical development program and three phase II combination trials planned for next year. We are in an incredible position of strength.
Less than three years post-launch, we are already generating positive operating cash flow while continuing to invest in our rapidly growing top line and pipeline. Our operating model is working. We are in a unique position to be able to self-fund strategically important initiatives that we believe will result in sustained value creation. Thank you, and I will now turn the call back over to Tina to begin the Q&A session.
Thanks, Mardi. Let us move into the Q&A portion of the call. Operator, please go ahead and provide instructions for the Q&A session.
We will now open the lines for questions. To open your line, please press star, and you will be added to the queue on the call. Our first question comes from Prakhar Agrawal with Cantor Fitzgerald. Your line is now open.
Hi. Thank you so much for taking my questions, and congrats on a great quarter. First question, Q3 looked great on new patient adds and revenue as well. Maybe if you can talk about the Q4 trends based on what you're seeing in October. Should we continue to assume steady patient adds or any pushes, pulls in Q4 that we should be aware of? Secondly, if you can talk about the new F4c trial in detail. Why start this trial now, and how will it differ versus the MAESTRO-NASH OUTCOMES trial, both on trial design and event rate assumption, and then the addressable market? Thank you so much.
Hi, Prakhar. Thanks for the question. First of all, just a little context on the quarter. Great quarter, $431 million, greater than $1 billion year-to-date, annualizing at $1.7 billion. We are firing on all cylinders. In the backdrop, we have the market, which is now accelerating, expected to grow over 30% this year in F2/F3. We're up to over 530,000 patients at the middle of the year. All the dynamics are really great, and that led to steadily adding patients in the third quarter, and that's exactly what we expect to continue doing, is to steadily add patients. Maybe, Mardi, I'll pass it over to you to talk about Q4.
Yes. Look, Q4 looks really good as we steadily add patients. We'll just remind you what we said last quarter. For Q3 to Q4, we feel good about the consensus growth rate between the two quarters, and we'll just reiterate that today. Again, good growth into Q4, and that leads to the robust growth rate for 2026. We're in good shape.
With the second question, Prakhar, thanks. Why the F4c study now, etc. L ook, we're building a mega blockbuster here, and this is the type of trial that leaders in a space do. We talked, and you heard me say in the prepared remarks, first and best. That's what we're trying to do. This is a practice-shaping trial that it's a leapfrog study, if you will. We are going to raise the bar for the entire industry, drive the science forward, and we're going to win in the category. That's ultimately the objective here. You do a study like this so that it can be the most useful for you when you are launching.
I f you look at the timing, we are going to be reading this study out about the same time there could be some potential other companies there, and we move the bar even further. So, this is truthfully a study which, as a leader, you do, and it is consistent with first and best. But Dave, I don't know if you could comment just a little bit on the study?
Yeah. Thanks, Bill. A couple things, Prakhar. We have learned a lot about F4c, about the patient population over the last several years, both from the open label study that we have talked quite a bit about from MAESTRO-NAFLD-1, but also from executing the MAESTRO-NASH OUTCOMES study and learning more about the patient population through that. And then the field has evolved as well. So there have been new approaches, ways of being able to identify patients with CSPH and be able to enrich the population more effectively. So in terms of the scientific understanding in the field, the timing is also really great because a lot of things sort of are converging to create the possibility of delivering that practice-shaping study that Bill was just describing.
Thanks, Prakhar.
Thanks, Prakhar. Angela, next question, please.
Your next question comes from the line of Andrea Newkirk with Goldman Sachs. Your line is now open.
Good morning. Thanks for taking the question, and congrats on the quarter. Dave, maybe I can ask you on the MAESTRO-NASH OUTCOMES trial that's currently guided for late 2027 readout. Just wondering if you could provide any color on what you're observing in terms of the blinded aggregate event rate accrual relative to the baseline assumptions in your statistical analysis plan. Secondly, just given increasing real-world uptake of GLP-1 agonists, are you able to share what proportion of patients in the trial are on these background therapies, and how will the stat plan adjust for background or drop in use of these competing agents? Thanks so much.
Thanks, Andrea. Dave?
Yeah, thanks, Bill. So, yeah, great question. What we're talking about now is we've talked about in the past about MAESTRO-NASH OUTCOMES. We've talked about sort of 2027 timeframe in terms of when we expect the trial to deliver. We've always said as more events accrue over time, we'll be able to be more precise. Now we're able to be more precise and say late 2027. I think that's the answer to your first question. We're not providing really specifics around event accrual because these more modest-sized trials, it tends to be a bit choppy. The important information is that events are accruing, and we expect a late 2027 delivery now. With respect to the GLP-1, about 25%-30% of patients were on stable GLP-1 therapy at the start of MAESTRO-NASH OUTCOMES.
We presented those data a couple of years ago at EASL. GLP-1s haven't been shown to be effective in F4, and therefore they're excluded in the trial as patients continue on the study. It would be a protocol deviation to add a GLP-1 for weight loss, for example, in the study.
Great. Thanks, Andrea. Angela, next question, please.
Your next question comes from the line of Yasmeen Rahimi with Piper Sandler. Your line is now open.
Good morning, team. Congrats on an outstanding quarter and also giving guidance, closer fine-tuning, narrowing down the MAESTRO-NASH OUTCOMES study. I guess first quick question is, given that's late 2027, can we say you are, based on the visibility of the events tracking, that there is no chance that it could get pushed in 2028, just like the confirmation of truly having this in late 2027 rather than falling off? Also if there's a translation from this study and its event rates to predicting the probability of success in your new CSPH study.
Yes. Thanks for the question. It's an event-driven trial, and we've been saying that all along. Our best estimate now is late 2027. Again, as I've said for a long time, if we're at December 31st, 2027, and we don't have the right number of events, we're just not going to stop the study. This is our latest. We're going to keep you up to date along the way if anything changes with that. Dave, you want to handle the second piece?
Yeah, i f I understood your question properly, MAESTRO-CSPH is designed to really provide a depth of data to complement MAESTRO-NASH OUTCOMES. There's a real power in having two outcome studies where, in the first study, in MAESTRO-NASH OUTCOMES, we can identify potential biomarkers or imaging approaches or subpopulations to then confirm or validate in the second trial. That's a real power behind having the two studies together. I think it really presents us with a clear advantage because we can provide data to the practicing community about these relevant subpopulations and biomarkers to accentuate, to sort of make it clearer about which patients should be treated and how they should be treated and followed with resmetirom once the drug's approved.
Great. Thanks so much. Next question, please, Angela.
Your next question comes from the line of Nicole Martucci with TD Cowen. Your line is now open.
Hi, all. Thank you for taking my question. I am on for Ritu Baral. I am wondering if you guys can comment on how long you think the diagnosis can continue growing at the current rate, and if you can comment on any details for Rezdiffra use within the endocrinology practice.
Thanks for the question, Nicole. Look, what we have talked about is we expect to see double-digit growth for the foreseeable future. I think that this year, let us just take a step all the way back. At the end of 2023, prior to launch, we communicated there were 315,000 patients. We reran the analysis at the end of 2025. We were up to 460,000, so that was almost 50% growth in two years. Now we wanted to take a peek in the middle of the year to see what was happening, and that is where we saw the over 530,000, which, if we project that out, is greater than 30% growth that we would anticipate for this year.
Remember where we are. We are at about a 10% diagnosis rate, and we are at about a 10% penetration rate, which, you do the math, is about 1% into this opportunity. We are at the very beginning of the MASH market, the F2/F3 market. So we really see this growing for years, this market. This is going to be one of those specialty areas that I think probably takes decades to fully emerge. If you look at RA, IBD, psoriasis, after 20 and almost 30 years, they are still growing.
I would expect this is going to be consistent with that. We are starting to see that diagnosis rates are starting to go up. People are looking for the disease. That usually happens when you have an approved therapy, when you have more companies that start to do any of their pre-marketing work, or even if they are approved, it leads to greater diagnosis and so forth. So we really see that this is a very long-term growth market. That is what gives us really such confidence in the future. 1%, $1.7 billion annualized. Find another opportunity in the industry that looks like that.
Regarding endo, making progress with endo. We got going with endo in fourth quarter of last year, and it is really interesting. The big takeaway for us, or kind of two key takeaways. One is they have got a lot of patients sitting at their practice. They are tending to follow the pattern similar to gastroenterology. Remember, they are still learning to put their pathways in place, etc. One of the things we have seen actually is when endos convert, they tend to go deeper faster. We have some examples of practices that have really been some of the probably best growth practices that we have seen. So, confident in endo. Again, remember, we are not solving this overnight. This is providing us long-term growth as we get deeper into endo and deeper into diagnosis rates across all the specialties that we're calling on. Thanks for the question.
Yeah. Thanks, Nicole. Angela, next question, please.
Your next question comes from the line of Ash Verma with UBS. Your line is now open.
Morning. Thank you for taking the question. This is Paritosh on for Ash. Couple quick ones. The first one, can you talk about the Medicare channel for Rezdiffra and how much of that is already contracted? As we head towards 2027, is there appetite to contract more, and what type of volume pull-through could drive that, and what would be the impact on overall gross-to-net? The second quick one is on the F4 outcome study. Historically, some of the highest placebo event rates cited for F4 patients come from natural history cohorts instead of controlled interventional studies, and the controlled studies have reported placebo rates close to 2%-3%. The question for this is, what makes you confident that a placebo event rate above 5% is achievable in the outcome study? Thank you.
Thanks for the question. Mardi, do you want to start with Medicare?
Yep, I would. Thanks for the question. I think I'll take this moment and just comment more broadly on gross-to-net, and then we'll get into the Medicare Part D question specifically as it affects 2027. Let's start with 2026 and looking into the fourth quarter and with respect to gross-to-net. We had an outstanding demand quarter this quarter again, and we could expect that to continue. We focus and we're very disciplined on gross-to-net as we're solving for 2045. We're solving for the long term, so we spend a lot of time here managing gross-to-net. With nine months behind us in 2026, we have really good visibility into the fourth quarter, and just want to say that we expect to come in at the low end of our stated range for 2026, for the fourth quarter in 2026, which is mid to high 30%.
The low end of that range for 2026. Now, thinking about 2027. What have we said? We have terrific access both from the commercial standpoint, and now on the Medicare side as well. We said that we're in the middle of negotiating Medicare Part D contracts that will go into effect in Q1 2027, and that's ongoing right now. It's a little early to get very specific about 2027, but we can reiterate that we're comfortable that the big step-up in gross-to-net happened between 2025 and 2026 as we entered commercial contracting, and there will be an impact, somewhat of an impact in 2027 as those Medicare Part D contracts go into an effect.
While I said it was a little early, we do expect our gross-to-net next year to be plus or minus the high end of our range that we gave this year, which was mid to high 30%. Great management by the team, and we remain really happy about our gross-to-net efforts.
Great. Thanks, Mardi. Dave?
Yeah. Paritosh, on the F4 study, y ou're right. You can look at natural history studies, and you'll find a whole range of estimates. As you're aware, we've talked about a placebo rate in our trial between 5% and 10%. The basis for that is really that F4c is not a monolithic disease. There's a gradation in risk of decompensation as you go from the patients who've just converted from F3 to F4, for example, all the way to those who are starting or have already developed portal hypertension. The risk profile of that patient population across that spectrum is very different. Becky and the team did very well four or five years ago was actually enrich MAESTRO-NASH OUTCOMES to be able to have a good representation of patients on the sort of more advanced part of the spectrum of cirrhosis.
What we're doing now is, having had that five years of experience, we can do that even better. We can now enrich for CSPH even more effectively because of that experience we've had in MAESTRO-NASH OUTCOMES, because of the experience we've had with the open-label cohort from MAESTRO-NAFLD-1, and because of some of the advances in the field, especially through the Baveno consortium and so forth. There have been a variety of advances that really allow us to now run an even more contemporary and practice-shaping study.
Great. Thanks for the question. Angela, next question, please.
Your next question comes from the line of Akash Tewari with Jefferies. Your line is now open.
Hi, this is Manoj on for Akash. Just one from our end. How do you view the new emerging siRNA data sets from the space? Specifically, how does that compare with your internal in-license assets preclinical efficacy? Also, Regeneron has started a phase III with non-invasive endpoint, as the secondary endpoint, of course. But do you expect this going forward, you can run the registrational trials with non-invasive measures as the primary endpoint? Just wondering on that timeline.
Great. Thanks for the question. Dave, do you want to have a comment?
Yeah. Manoj, the field has been moving more and more towards non-invasive evaluation of MASH. There are several consortia now that are working towards eliminating biopsy as a requirement for clinical trials. We participate in all of those consortia, of course. The latest understanding, though, at this point is that for a diagnosis of MASH, for a clinical trial, for clinical trial purposes, a biopsy is still required. You would have to ask the sponsor of that particular trial what exactly their approach is. My understanding is that it is a high-risk MASLD study, so it is not actually MASH.
But again, you would have to ask for the details. With respect to the target itself, I don't think we have seen data yet from that trial. I think it is coming out in the next week or so, maybe at AASLD. So it would be premature to comment on it. But I think what you are raising is there are a lot of great, approachable genetic targets with siRNA, and that is why we are especially excited about our PNPLA3 program and the research collaboration we have with Ribocure around six siRNA targets.
Yeah. Remember, just to fill in there, we have seven total siRNA targets. We have not named them for competitive reasons, but it sure would be interesting to see how these siRNAs do in combination with Rezdiffra. Next question.
Yep. Next question.
Thank you.
Thanks, Manoj. Angela?
Your next question comes from the line of Eric Joseph with Citi. Your line is now open.
Hi, good morning. Congrats on the progress and congrats on the quarter, and thanks for taking the questions. Just on MAESTRO-NASH OUTCOMES, I am curious to know the extent to which you have visibility into the study's dropout rate, how that is tracked relative to expectations, and whether that is a factor here in terms of timing of the study readout. Just also on MAESTRO-CSPH, just trying to better understand some of the contrasts with the NASH outcome study. Would patients in this trial be closer to potential disease progression? Just wondering whether the event rate might be a little bit faster in this additional planned outcomes study relative to the one well underway, MAESTRO-NASH OUTCOMES. Thank you.
Great. Thanks for the question, Eric. Dave?
Yeah, thanks for the question, Eric. MAESTRO-NASH OUTCOMES, as we've said, it's an event-driven trial, and as events accumulate, we can get more precise about how we estimate the trial delivery date, when that would occur. We've gotten to a point now where we can estimate that late 2027 is when we would expect the data. We track blinded event rates, we track dropouts. We're heavily involved in managing this trial, as one always is with an outcomes trial. It's crucial to have a very compulsive approach to outcomes trials and just making sure that the quality and the retention in the study is as expected. The dropout rates that we're seeing is within our expectations. I think I'll leave it there.
With respect to MAESTRO-CSPH, yeah, like I've said a couple of times now, we're better able to enrich the population for CSPH, given the experience that we've had with Rezdiffra in the F4 population, as well as how the science and medicine has evolved in cirrhosis. We are better able to identify patients at higher risk. What I'll point out, I made the comment that F4 is not a monolithic disorder, and there could be a point at which patients are too far along in the CSPH journey to where it gets more and more difficult to treat them. We also have visibility not just on the less severe end, but also on the more severe end. It gives us really the opportunity to identify the sweet spot within CSPH to find patients for the trial.
Thanks so much. Angela, next question, please.
Your next question comes from the line of John Wolleben with Citizens. Your line is now open.
Hi, thanks for taking the questions, and congrats on the progress. Just wondering, you guys mentioned mega blockbuster a few times. Wondering if you could give us some guideposts on what you consider as mega blockbuster. Then with a lot of investor coming next year in the pipeline, can you talk about how you think about profitability versus reinvesting in the pipeline and the strategic initiatives there?
Yeah. John, thanks a lot for the question. Mega blockbuster, it's a little bit of a moving target in how it's defined. Certainly, if you look at kind of where consensus is for us for peak, that certainly puts you, from our definition, in the mega blockbuster category. I think that there's very few products in the industry that could actually make a claim like that we believe that there's that much potential in the market. Again, it's just based on, as we've said from the beginning, high unmet need, increasing number of patients, and we have what I continually have said that I believe, we really have a holy grail profile with a once-a-day pill that is effective, well-tolerated, and safe, kind of what you need to be successful. I'm just talking about F2/F3 at this point.
One of the things that's happening in F4c, that market opportunity has gotten to be as big as the F2/F3 opportunity was in 2023, with signs of rapid growth and a long future ahead of it. As we've said, F4c could double the opportunity for us. So, the fundamentals in this market are so positive that we believe that this could really be a mega blockbuster product, and we're well on our way with each of the quarters that we're delivering out here. So, maybe I'll turn over to Mardi with the question on profitability.
Yeah. Thanks for the question, John. Good morning. We are pretty excited that we hit our milestone of our first quarter of profitability. It is another milestone for Madrigal and Rezdiffra. Again, it just reflects our excellent launch execution and the strength of the business and the underlying demand. It was a good question about, is profitability and cash flow positivity going to be sustainable? It is a good time to remind everybody that we are still a top-line growth story, and that is our focus right now, and we continue to invest in that top line, as well as building our pipeline, which you mentioned.
I am going to reiterate the same message that we said in our prepared remarks, that we may dip in and out of profitability in the near term, based on those investments, and also remind you of the 1Q dynamics, which for us is very consistent with the analogs in specialty medicines. The good news is the operating model is working, and we are in this great position that we are able to self-fund these important initiatives, like MAESTRO-CSPH, and that we believe will result in the sustained value creation. We are in good shape, lots of momentum. We do believe the growth of the top line will outstrip the spend, even with these investments, but right now, we may dip in and out of profitability in certain of the quarters in the near term.
Great. Thanks, John. Angela, next question, please.
Your next question comes from the line of Thomas Smith with Leerink Partners. Your line is now open.
Hi, guys. Good morning. Congrats on the quarter. Thanks for taking our questions. With respect to the new phase III F4 study, could you talk a little bit more about how exactly you plan to enrich for patients with CSPH, and how that compares to the population you've already enrolled in the MAESTRO-NASH OUTCOMES study? Then, can you just talk about next steps for engagement with FDA? What's outstanding that you need to gain alignment on here with this study, and how are you thinking about the potential to achieve differentiated labeling with this study relative to MAESTRO-NASH OUTCOMES and some of the competing F4 programs? Thanks so much.
Yeah, sure. Tom, thanks for the question. Dave, I'm going to pass it over to you.
Yeah. Thanks, Tom. Yeah, great question. The MAESTRO-CSPH is really being designed as a practice-shaping study. Again, I've said it a couple of times, we can really leverage our experience in the F4 population to be able to enrich more effectively. At this point, it's a bit of a competitive advantage for us, so we're not going to go into a lot of detail, but suffice it to say, we have imaging, we have biomarkers, we have a lot of things from the open-label study and from MAESTRO-NASH OUTCOMES that helps us understand more about how to shift that patient population to the more severe group.
E ven if you look into the, look at some of the published literature recently, you look at ANTICIPATE-NASH scores, or you look at the Baveno consensus criteria, there have been continued evolution of those consensus statements over time and a refining of the ability to be able to identify these folks with more severe disease. That's kind of the broad brushstrokes. Of course, as we get more information, we get closer to finalization with the protocol, we'll share more information with you.
Part of that, to your second question about FDA engagement, really around the finalization of the protocol, we'll be engaging with FDA to talk about exactly your third question, which is, how does this study potentially affect labeling? Our goal is that this study would be designed to fully be represented in the product label. And so obviously, in engaging with the agencies required for that, just make sure we are all aligned.
Right. J ust one other comment on this is, a lot of companies would wait and start a trial after approval and ultimately find themselves in a bit of a data desert, and they are playing continuous catch-up. That is not what you do as the leader in the space. We don't want to have any daylight between our approval and ultimately, if any other company is successful to get there. We want to assert ourselves as the leader, and that is why you start this study today, so that you have no daylight between anyone potentially launching and you generating new, important data for the field.
Good. Thanks, Tom. Angela, next question, please.
Your next question comes from the line of Ellie Merle with Barclays. Your line is now open.
Hi, guys. Thanks for taking my question, and congrats on a quite strong quarter. On 2027, how are you thinking about revenue growth there, as well as consensus as it currently stands, and your latest thinking around whether you would issue revenue guidance? Thank you so much.
Ellie, thanks for the question. Mardi?
Hi, Ellie. Thanks for the question. For 2027, we're a little on the early side to give specific direction on 2027. But listen, the business is doing great. We have a lot of momentum, and I would say the underlying characteristics of 2027 are lining up in a fantastic way. We're continuing to steadily add patients, we have great access, and the market, of course, is accelerating. As Bill said a couple times, we're firing on all cylinders, and that'll continue into 2027. I can give a little bit of direction. We did look at consensus for 2027, and I think we're in a pretty good spot there. We can say that about 2027, but I'll also take this opportunity to once again remind everybody about the Q1 dynamics, going from Q4 to Q1, just like what you see with the analogs.
We're not immune to that, and we expect similar Q1 dynamics, and you can just look at the analogs for the specialty products in the sector. Otherwise, we look forward to continued growth, continued fantastic growth into 2027. With respect to guidance, yep, nope, we're not providing guidance at this point, but we'll continue, as we have, give pretty good direction, both on the quarters and the years as we have.
Great. Thanks a lot, Ellie. Angela, next question, please.
Your next question comes from the line of Andy Chen with Wolfe Research. Your line is now open.
Hi, thank you for taking the question. Regarding the TAM expansion to 530,000, if you can talk about the patient journey and how that has evolved through your launch, especially the prescribers and how they work up the patient. Are physicians behaving differently today? Is time to diagnosis, is that becoming shorter? Do you also anticipate any future changes in a favorable way going into the future? Thank you.
Hi, Andy. Thanks for the question. Look, the patient journey. Let me answer a few things for you here. First of all, we are seeing increased diagnosis, as evidenced by the numbers, and what's driving that is familiarity with the disease and familiarity as well with the product that's approved in the disease. We also see that there is more of an emphasis in guidelines on testing and looking for MASH, and that certainly helps people start to look for the disease. Th at's what we're seeing in all of the specialties that we're calling on, including endocrinology. What happens after somebody starts diagnosing is, there is this moment where they put their own pathway in place, and the sophistication level of that really varies upon the practice and the institution.
Some are all the way an institution where they are using electronic medical records to actually go out and proactively find patients using either beyond a diagnosis code, looking at symptoms somebody may have, or are they at high risk factors? That is kind of on the far end. That is what the future, I think, holds, where there will be much more of a desire to go out and look for these patients. Then in other practices, it is, "I have a suspicion someone is obese, has type 2 diabetes. That is reason enough that I should be testing." Access to NITs is something that will continue to grow in time as well. We are seeing a continued increase in the number of scanning equipment that is available, and that certainly helps as well. I would say, like everything else, we are at the very beginning here.
There is still variability on the far end of people using technology, etc, and at the beginning where people have a suspicion of a patient or something that they have previously seen in a file that triggers it. But everyone is formalizing, starting to formalize their approach. The one thing that we cannot control for, we can help try to accelerate, but it is really time. It just takes time for people to incorporate something into their day-to-day practice. All these positive signs, greater than 30% growth that was previously greater than 50% growth over two years, this acceleration, those are all signs that it is becoming more incorporated into the daily practice. We only expect that to increase and improve over time, which again, is why we have such confidence in the prospects of this market and of us competing in that market.
Great. Thanks, Andy. Next question, please, Angela.
Your next question comes from the line of Jay Olson with Oppenheimer. Your line is now open.
Hi . Congrats on a great quarter. Since Madrigal has pioneered the diagnosis and treatment of MASH with non-invasive methods, are you planning to drive similar innovations in CSPH to provide diagnosis and monitoring with safe, easy-to-use, non-invasive approaches that could replace the current gold standard invasive testing for CSPH? Separately, since you have a wealth of combination programs, and recognizing that your decisions will be entirely data-driven, how will you prioritize this portfolio of combos, and how much clinical data will you need to generate before identifying the ideal combination or combinations to advance into registrational development? Thank you.
Great, Jay. Thank you very much for the question. Dave?
Yeah, great question, Jay, on non-invasive diagnosis of CSPH. Short answer is yes. The idea of combining MAESTRO-NASH OUTCOMES with MAESTRO-CSPH gives us the opportunity to really move the field forward with respect to non-invasive tests and biomarkers, and specifically do it for Rezdiffra. A lot of these biomarkers are mechanism-dependent, and so we will have a large data set that we'll be able to use to validate some of these measures. So, when a practitioner puts a patient on Rezdiffra, a cirrhotic patient on Rezdiffra after it's approved, they'll be able to have tools to be able to monitor that patient's progress. That's the vision of being able to validate some of these markers. So, that's exactly the whole idea. The second question you had was with respect to the combination therapy pipeline.
Look, our stated strategy has been to be disciplined and efficient in developing the pipeline, and really only bring forward combination products that have a meaningful benefit for patients, either some patients or all patients. So, if you think about the PNPLA3 siRNA, for example, there's a clearly defined population of people who live with disease-accelerating homozygous mutations of PNPLA3, who are the natural targets for that siRNA treatment in combination with resmetirom. T hat's one very clear example. Similarly, if you think about the DGAT2 inhibitor, some patients will require additional efficacy to really pull them back from a rapidly accelerating disease process. So, the type of data we'll be generating in phase II will help us make those decisions. As I said during the remarks, we'll have those three programs starting in 2027. So, it's very exciting to see this pipeline evolve.
Yeah, and remember, we'll be generating data in combo therapy where others will be still attempting to move forward in monotherapy, and jumping off a great product with just a great profile. So, trying to make it even better.
Thanks, Jay. Thanks for the question. Angela, looks like we have time for one more question.
Your last question comes from the line of Michael DiFiore with Evercore. Your line is now open.
Hi, guys. Thanks so much for taking my question, and congrats on all the great progress. Two questions from me. When you say that a positive F4c trial could support full approval in F2 and F3, I guess, what constitutes a sufficient result? Is it just on the primary composite alone, or consistency across components? Separately, earlier this year, you said around 25% of Rezdiffra patients were also on a GLP-1, and you expected that to rise. So, now we're a year into Wegovy's MASH launch. Has that share moved, and are you seeing more patients come to Rezdiffra after trying a GLP-1? Thank you.
Yeah. Mike, thanks for the question. First of all, that 25%, it is moving up some. It has stayed fairly consistent. What we are seeing is GLP-1s as a background therapy here. They are kind of ubiquitous, and it is hard to say when have people been on one. A lot of them, if you ask, they have been on one at some point, so it is kind of this background therapy. Yes, we are seeing some patients that have come over, but again, it has not really dented us, our growth in any way, having the GLP-1 Wegovy approved on the market.
In fact, I think that that has helped with some of the market growth. Again, as I said, we are seeing it more as a background therapy, though we are very interested in trying our combo. We have our oral GLP-1, and we think that with just the right amount of weight loss, that it can potentiate the impact of Rezdiffra. Dave, you want to take the first question?
Yeah, on MAESTRO-NASH OUTCOMES, Mike. Guidance from the agency is that a positive MAESTRO-NASH OUTCOMES trial could support both the new indication of F4c and full approval for F2/ F3. So, it serves both those purposes. I guess I will leave it at that.
Dave, why don't we end there? Maybe just to sum things up a little bit here. Launch is objectively outstanding for us, and it has continued to be so for the 10 quarters that we have been on the market, and on all metrics. I think some of the context here is important. This has been while competing against one of the largest companies in the industry, with one of the largest products in the history of the industry.
We have had five quarters of competition with Wegovy, and it has not made an impact on our growth. We are going to have at least 15 quarters of a lead on the next potential competitor. In the background, the market is growing at 30% as well. We are at 1% penetration, and that is at 55,850 patients in F2/ F3. Every day, we are adding patients. Every day, the real-world experience is increasing.
I can tell you, in the conversations I have had with many, many prescribers, I have never had anyone question the efficacy of Rezdiffra. In fact, they have been extremely pleased with what they are seeing in the real world. Next is F4c. We have MAESTRO-NASH OUTCOMES quickly followed by CSPH, our new study, in a market which is now bigger than the F2/ F3 opportunity when we started 10 quarters ago. Finally, we have the leading pipeline, and all of this is going to be in combination with Rezdiffra, as I said, while others are attempting to bring their first product to market. So, we are performing exceptionally, and we are exceptionally well-positioned for the future. This remains, from certainly my perspective, the best opportunity that is out there. We thank you for joining us today and look forward to updating you with our future progress.
Great. Thanks, Bill. Thank you all for your time and interest today. This now concludes our call. A replay of this webcast will be available on our website in about two hours. 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.