All right. Welcome everyone to day two of Cantor's Global Healthcare Conference. My name is Prakhar Agrawal. I am a biotech analyst at Cantor, and for the next session, we are very excited to host the team of Madrigal. Joining us today, we have the entire management team, Bill, CEO, Mardi, CFO, and David, Chief Medical Officer. Thank you so much for taking the time to join our conference.
Thank you.
Bill, we can start off with just level setting expectations. Coming out of 2Q, what were some of the key highlights for you internally on Rezdiffra's performance and things that Street fully didn't appreciate?
Yeah. Well, first of all, thanks for having us, Prakhar. We are really happy to be here. Q2 was a great quarter for us. If you look at it from any of the metrics that we share, starting with $364 million in sales, that puts us in a very elite group. When you take out some of the already mega blockbusters that exist, there's very few companies that could put up a quarter like that, with some differences, and I will get to that in a second. We also announced that we had greater than 49,000 patients. That was the end of Q2, but we also said that we crossed the 50,000 mark in July, which is a big. It is a significant milestone when you cross 50,000.
Now, the other piece, which is really interesting, and this is getting a little bit more to the what's underappreciated, I think that there's still a lack of appreciation for the market dynamics that exist in MASH. That 50,000 and that $364 million, just to put in context, we are in a disease that's about 10% diagnosed today and 10% penetration. That's 1% of the opportunity. We are at the very beginning of what could be a big market, and the market growth dynamics are certainly exceptional. We reported at the end of 2023 that there was about 315,000 patients that were sitting in the practices that we were going to be calling on, our target prescribers, and that number grew to 460,000 at the end of 2025, almost 50% growth in two years.
What we're seeing through the first half of 2026 is very robust market growth that's continuing. We said that we expect double-digit market growth for the foreseeable future, and that's certainly the case. I think the market is treating us at times like it's a mature market where you are in a zero-sum game for market share, et cetera. Instead of looking and saying, "This is a lot like some specialty markets that evolved over 20- 30 years, RA, psoriasis, IBD," and those have become $20, even $30 billion markets. We feel that that's what's going to happen with the MASH market. The difference, we're the leaders, we have a first-mover advantage, and because of the success of the product, we've now built a pipeline which really leads to longer-term growth and success as well.
I think that it's sometimes you look at something and say, "Is it too good to be true?" Well, this is not too good to be true. This is true.
Yep. There was a big debate that GLP-1s are going to impact the volume, but you've been constantly adding 6,000- 7,000 net patient adds in the past few quarters. I feel like since Wegovy's launch, the patient adds have actually accelerated a little bit. What's driving some of that growth? Is it that now being in the market, just increasing the diagnosis rate, treatment rate? Just maybe expand on that.
Yeah. Well, look, a couple things. I think anytime you add a competitor or another launch to a market, it certainly helps with the growth of that market. We are seeing that. As I said, we are seeing a really robust growth continuing with MASH, with diagnosis, and Wegovy has helped that. What it has not done is it has not had any impact on the growth of Rezdiffra, and I think that really comes down to profiles. The Rezdiffra profile, you often hear me refer to it as kind of a holy grail profile, an effective, well-tolerated, safe, once-a-day pill. That has kind of been the gold standard, at least in my 35-year career experience so far, and that is what I think is driving a lot of the uptake of Rezdiffra.
People are seeing that it has got a great profile, and even more importantly, the real-world evidence looks really good. I think we look better than we did in clinical trials. That is the report that we got from physicians constantly are saying, "Patients are doing really well, even better than I would have expected." So all of that leads to this steadily adding comment that we have been making really for a number of quarters now that we have steadily added and expect to continue to steadily add patients, which is what we are going for here. You cannot fight certain dynamics of a new market. Rarely, and in fact, I do not think I have ever seen in my career where first product launches and every single patient just gets treated out of the gates. It takes time.
Each physician, each prescriber has to go through their own checklist. They have to make sure they have got the resource to pull through a prescription. They have got to make sure they know how to identify, how they source, how they create pathways. So it just takes some time. That is why we use benchmarking so frequently in our launch metrics, and on all the key metrics, we are at or near the top of those various metrics against other really successful specialty products.
Got it. You have talked about the increase in diagnosis rate as well since the Rezdiffra launch. I guess, where can it go at peak? Are there any analogs that you look at internally to really understand that, and any further steps you could take to increase that diagnosis?
Yeah. Look, as I said, some of that's just on a gradually you increase that diagnosis rate. Let me start with, that's why we were so specific and have been so specific about what the diagnosed population is that's at our target prescribers. Because that's ultimately what is the opportunity immediately in front of you. I'll get to the diagnosis in a second, but when you look at the 315 growing to 460 and growing well beyond that in itself represents an opportunity, which is a big specialty market if you were not to at all increase the diagnosis rate. So it's a way to give surety that, we have multiple paths to victory, so to speak. Now, when you think about diagnosis rates, it really depends. You look at the real high end, cystic fibrosis is over 75%.
If you look at something like psoriasis, sorry. You have the cirrhosis, psoriasis. Psoriasis after almost 30 years of products on the market is still in the upper 20s, I believe. Now, where do we land? It's not going to be up at the 75%+ just because it's not as visible a disease and so forth. But if you look at just even the lower end of that, you're talking about a population of diagnosed which could exceed 1 million plus people. So that's why us doing the counts and knowing who exactly is diagnosed and already there, and building our approach around that to take advantage of that opportunity is the approach that we've taken. But look, where it's going to land, I'm not sure, but is it going to be a lot bigger than the 460 today? Absolutely. Is it showing signs of that today?
Absolutely. When's it going to get there? It's going to take years, but we are going to make this. It's a big specialty market.
Okay. I think in terms of the breadth of prescribing and depth of prescribing, you've said that you've reached most of the 10,000+ target physicians. Focus is on the depth of prescribing. Maybe just talk about the steps that you're taking to increase the depth of prescribing, and what are the constraints? Is it just a matter of time as physicians get comfortable with the drug?
Yeah. Just to recall, we had originally targeted 14,000 prescribers, and about 6,000 were the real high target, where you had the highest potential. We announced the 10,000. The 10,000 because 10,000 is a really important milestone that breadth becomes just a little less important. Because when you have that many prescribers, if you can start to go deeper, you actually have set yourself up for what you need to do. So we kind of treated that as check the box, we are above 10,000. Now, in reality, we are adding prescribers every day. So the number is north of 10,000. So we have enough prescribers. Driving depth now, there is a few things that drive it. One is time. People just get more familiar. I am picking up lay press now that talks about fatty liver that I had never seen before.
So I think that is always just familiarity, having us on the market talking about it, having other companies as well. Then it becomes for each prescriber, the experience they have. As I said, the good news is that in the real world, people are reporting back they are really satisfied, prescribers and patients, with what Rezdiffra is offering, exceeding the clinical trial results.
So that own personal experience is helpful. But we also use real-world evidence and other data that is generated. So you get this continuous feedback loop, and that just leads to more and more experience. And you see physicians or prescribers, I should say, on a curve where they all start with one, and then they add and add and add. So, again, when we look at depth of prescribing, we are tracking extremely well. I said at or near the top of the benchmarks that we are using. So it is time, it is experience, it is generation of data, it is ease of use as we refine our service model and to make it easier to write a prescription and to make sure that the patient gets that prescription.
Okay. That is great. And maybe on access, I guess when the GLP-1, like Wegovy was launching, there was a big debate on whether there will be step edits, more extensive prior authorization. You guys did contracting. We have not seen much of that. I guess firstly, how are you going to convince the payers on getting such a broad access for Rezdiffra? And secondly, as we look forward, any reason to believe that it could change maybe into 2027 or beyond?
Yeah. You want me to take that?
Yeah.
Yeah. Great. Thanks, Prakhar. It's great to be here. Yep, we have excellent access, just as you said, even with the launch of Wegovy, which did put us in a position where we contracted with the commercial payers at the start of 2026. We are able to retain that first-line access, no step edits, and improved utilization criteria. It's something we take very seriously. We have a whole team that works on it. We think they've done an excellent job. We're also solving for 2045, right? We're here for the long term. Everything we do, we want to protect that gross to net and make sure we maintain the best access that we can for these patients. We think about it and work on it continually, and I think we've done a very good job.
Now, we talked about 2026 with respect to commercial contracting and then looking ahead for 2027 and beyond. 2027, we've talked about contracting with the Medicare payers, right? You usually do your commercial contracting, about a year later it comes in with Medicare. We already have some Medicare that we're contracting with already. We'll see some of that in 2027 beyond. But honestly, where we are now with the access that we have, both commercial and the Medicare, we're feeling really good about accessing our gross net.
Maybe the big hit to gross net was for 2026. Do you still expect 2027 to increase, but maybe not to the same extent as what happened in 2026?
Yeah, generally, yes, that's correct. Because going from no contracting to stepping up from 2025 to 2026, yeah, that was meaningful, and we talked about that quite a bit. Going forward, you still see some degradation to gross to net, just naturally as you do in the business on the commercial side, but we'll also have some of the Medicare impact as well. But generally, the biggest impact was in 2026.
Maybe just one comment as well about Wegovy and Rezdiffra. First of all, our company view on GLP-1s is that for other indications, assuming the prescriber thinks that it makes sense and it's on label, that GLP-1s are great. For MASH, Rezdiffra, we believe, is the product that patients should be on. Are there combination therapy? Yeah. Look, we got our own oral GLP-1. So we're interested in can we get a little bit of weight loss in association, in combination with Rezdiffra? We know we get a better effect. We haven't tried that through a pharmacologic intervention, but we think that's good. I think what it shows is real-world profiles matter. Because when you look at both products from a clinical trial perspective, they're quite similar.
But when you look in the real world, that's where things change, and that's where our profile matters so much and is driving the uptake. And I think payers, we've explained that to them, that if someone has to stay on a drug for it to work, they know that this is an expensive disease, and they want something that people are going to take and work. You can have something which costs much less, but if you can't get to the therapeutic dose or stay on it long enough to have the effect, you're going to end up paying for that later, either in the form of somebody progressing or having to then switch to a Rezdiffra. So I think we've really hit this stable point of people understanding where each product is appropriately used.
Okay. And we're in September right now, almost getting close to end of the year. So people have already started talking about 2027, and I guess any initial thoughts on how do you see 2027 panning out versus 2026? The drug will already be analyzing at $1.75+ billion exiting based on where consensus sits right now. Any dynamics, maybe apart from the contracting on the Medicare side, that we should be aware of in 2027?
Well, I can answer that. So we haven't talked a lot about 2027 yet, so we're not talking specifics, and we haven't given specific direction on that front. But I think everything that Bill said before is the setup for 2027, the rest of 2026 and into 2027, which is considerable market growth that we think continues to grow at double-digit rates. Market access, we just talked about, having good first-line access across the board. The depth of prescribing that we're seeing out there with Rezdiffra and our IP patent life into 2045. So the setup is fantastic. We talked about robust sales growth for the rest of 2026, and we just think where we are on patient adds as well and where we are in the dynamics and the benchmarks and the analogs, it's a great setup for 2027 and beyond.
Okay. Got it. With any large market, there's always more competition. So we have a few readouts coming in the next 12 to 18 months. Inventiva has a readout in 4Q. We have the FGF21 reading out sometime in 2027. I guess for you internally, is there any scenario out of these readouts where you think, "All right, we need to up our game commercially because we have seen analogs in markets like we mentioned about psoriasis." Any new drug increases the size of the market. But for any scenario from these readouts where you think, "All right, we need to figure out a way to really expand commercially, make sure that our infrastructure is right there because competitors are coming.
Well, look, I think you're right. Any time a new product launches, it helps the overall growth of the market. We've got a great profile. It's really hard for me to look ahead and see anything in the upcoming pipeline that offers something beyond Rezdiffra. Also, what no one has is over 50,000 patients that are on drug and it'll be three plus, four years of real-world experience. We continually up our game. So the way we launched, we continue to iterate on the services that we provide, how we interact with the community, how we partner with the community, really, and that's just gotten better and better. So we will continue to do that regardless of whether there's competition or not.
I think, if I take a look at 12 months ago, we had some were thinking the falling off the cliff of the world moment when Wegovy was approved. We're 12 months into their launch, and we haven't seen an impact on Rezdiffra. That's competing against one of the biggest pharmaceutical companies in the world. We feel we can compete against anybody.
Great. That is a good segue to the pipeline. I guess firstly, there is a big focus on the F4C readout that is coming. What drives your confidence internally that this should be a positive readout for Rezdiffra.
Well, I think, first of all, it starts with the data that we have in our hands. We have a very rich experience with 122 patients in an open label study. So all with F4 cirrhosis who have baseline characteristics that are very similar to the phase III population, in the MAESTRO outcome study. In that open label study, we see compelling changes in some of the key measures of liver effects. We see reductions in liver stiffness measurements over two years of 6.7 kPa. And just to put that into context, in cirrhosis, you usually work on the rule of 5 kPa. If you increase your liver stiffness by 5 kPa, you are entering a new level of risk category with respect to portal hypertension.
A reduction of 6.7 kPa suggests that we are able to put a lot of patients into a lower risk category after a couple of years of therapy. And indeed, about 65% of patients who had clinically significant portal hypertension at baseline shifted to lower risk categories over that two-year period. So that is the CSPH measures using liver stiffness measurements. But there are also other measures in that trial, including MR elastography, including liver enzymes and other biomarkers that all go in the right direction and give us a lot of confidence. And then last, again, these are sick patients with cirrhosis, and yet what we see is a 2%-3% annualized event rate in that open label cohort. So a lower event rate than one would expect from natural history, which we would expect to be more in the 5%-10% range.
Okay.
That kind of sets the sort of expectation that we are seeing a positive effect of the drug and gives us confidence about what we will see in the phase III trial.
Right. You mentioned about the placebo event rate, 5%-10%, seems like a pretty wide range.
Yeah.
I guess, how was the trial powered and in terms of enrichment as well, where do you think the placebo, the base case expectation of where the placebo lands?
Yeah. I mean,
What drove that 5%-10% assumption as well, if you can,
Yeah, it's really the natural history data. There are sort of large meta-analyses of a kind of broad F4C population that gives you an event rate around 5% of decompensation events. Importantly, if you enrich more and more and more for higher severity of disease, you can get closer to that 10%. Becky Taub and the team did very well in this study when they were setting it up years ago, was to enrich for higher risk patients. You do that by setting criteria around platelet count, around MR elastography measures, VCTE, et cetera, to try to really push the patient population into the higher severity range. The reason why that's important is because those are the patients who are on the cusp of having decompensation events. You really do need to enrich these trials to see the events accrue.
That's where the placebo event range comes from, and I agree, it is a broad range just because the natural history data doesn't pinpoint a number for us like in some therapy areas. The powering assumptions for the trial are for a hazard ratio of 0.5, which is based on other analogs in hepatology like hep B, hep C, and PBC. There have been data sets that show that you can achieve that large an effect size in a hepatology indication. Again, this is an indication where there is no standard of care. It's not like heart failure where you're introducing the fifth therapy, on top of a good standard of care. There's no standard of care. The modifiable disease burden is larger in cirrhosis than in some areas where there's already a good standard of care. We would expect a larger modifiable disease burden.
Okay. Assuming the F4 readout is positive, I guess, the addressable population is smaller, but should the treatment rate be higher in this population given it's more severe? Is there any halo effect on the F2/F3 population as well?
Yeah, look, what we've presented previously is that we think there's about 245,000 F4C patients in the U.S. And we would expect that you would have a much higher urgency to treat those patients. So fewer patients, higher urgency to treat, therefore, we see the opportunity as essentially doubling our opportunity. Your other question was? Sorry.
Does it help you in the F2, F3 as well?
Oh, yeah. I think, I would assume it can't do anything but help. Just the positive read-through. It just gives more certainty about what the product can do.
Okay.
I think we're going to learn a lot. There's still a lot to be learned from all these populations. And as pioneers, we're really trying to drive the science here, and essentially set a bar for others to try to get over as well.
Okay. You do have a big pipeline as well now internally, apart from Rezdiffra. Maybe just lay it out in terms of any near-term readouts that you expect that we should be starting to pay more attention to.
Yeah. The pipeline is one, or the aspiration to build the pipeline was one of the reasons I was really interested in joining Madrigal, actually. Bill's vision around not just making Rezdiffra an incredibly successful product, but then using resmetirom as sort of the focal point for building a pipeline was an incredible opportunity. We have three assets that we've been talking quite a lot about. The GLP-1 and oral GLP-1, orforglipron analog, great chemical properties, very good pharmacology preclinically. It's now in a first time in human study, so going through the initial opening IND trial to get into healthy volunteers to establish safety and tolerability initially. We'll run a small resmetirom drug interaction study as well, just to assure that there's no pharmacokinetic issues with the two products together. That kind of happens through this year.
Next year, we anticipate starting a phase II study with a combination product. As Bill mentioned earlier, the compelling thing about the GLP-1 combination therapy with resmetirom is you just have to tickle in a little bit of weight loss to boost resmetirom's anti-fibrotic efficacy. We think, with a really well-tolerated combination product, we might be able to get to better efficacy for patients. The second product we licensed from Pfizer, ervogastat which had actually been through a phase II-B study, a well-conducted phase II-B trial. We know a lot about the drug. It didn't look to us, or apparently to Pfizer, like a monotherapy. But it looked like a really nice combination opportunity for resmetirom.
Complementary mechanism of action, it inhibits DGAT2, which is the terminal step in de novo lipogenesis, which is the process that leads to triglyceride droplet formation in the hepatocyte. By inhibiting that last step and then treating with resmetirom and ramping up mitochondrial fatty acid burning, we have two complementary mechanisms that could get us better anti-fibrotic efficacy as well. The last is the more recent addition to the pipeline, which is an siRNA for PNPLA3 that we licensed from Arrowhead. PNPLA3 is a genetic determinant of MASH progression and MASH severity. While resmetirom actually works well in patients with PNPLA3 mutations, these are people who have even higher burden of disease. So combining two treatments might offer a better efficacy for those patients as well. Those last two programs, the ervogastat program and the PNPLA3 siRNA, similarly, we expect to be in phase II next year.
Okay. As you start planning for phase II trials for these programs in combination with Rezdiffra, how do you think about the most capital efficient way to decide which asset to move into large phase III?
I can talk about the clinical part. I think the question is the bar is high. Let's just start with the bar is high. Resmetirom, Rezdiffra, is already a great drug. A combination product's going to have to really deliver something that is compelling and clearly differentiated for some patients or all patients with MASH. The phase II program will be designed with that in mind and looking primarily at the usual biomarkers like MRI-PDFF and serum markers like ALT or PRO-C3, so the typical markers we use. All of those data together with the tolerability data will help us make a decision. The nice thing is all three of those programs are kind of happening around the same time. There's some efficiency there, because we can sort of screen and enroll in the most appropriate protocol.
Yeah. Just remember on the pipeline, we built this pipeline only spending about $300 million up front. We were capital efficient from the start. David is correct. We'll design those phase IIs in a capital efficient manner so that we can decide what to move forward before we commit to the phase IIIs.
Okay. Go ahead. I know you won't provide peak sales guidance for Rezdiffra, but you've called it a mega blockbuster, Bill. What's a mega blockbuster?
Yes.
What do you mean by mega blockbuster?
Well, no, look, I think that-
Pardon me? How much is it?
Okay. Look, I think that for all the reasons that I described, the market dynamics, the rare space that we're in at $364 million in a single quarter at nine quarters in, this has potential to be a very big product. We haven't given guidance. We're not going to. I think if you start looking at even kind of what your models suggest, that certainly in my definition is a mega blockbuster. So, it's a big product.
Okay. Maybe in the last minute or so, what are investors right now missing about Madrigal's business?
Look, I think they're missing just what we talked about, where they're missing the fact that the market dynamics are incredibly favorable. You're launching with a product that isn't like a typical first-in-launch product where it's pretty hairy, and it's like, well, there's such a high unmet need, we'll approve it. This is a really good product that I'm not so sure there's going to be anything that's better. The market dynamics are so favorable. It's showing that performance already nine quarters in. The company has made the strategic step to say we're building a pipeline and we're building this for the long term, and we've made progress on all things like IP, et cetera. I think they're just not appreciating all of that. On a personal note, I'm in my three-year anniversary this week joining Madrigal.
Congrats.
Thank you. The reason why I joined is because I thought that this was the best opportunity in the industry, the best opportunity that I had ever seen. I believe that more today. We have more proof today that it's going to be possible based on the performance that we've had, the team that we've built, the product, and the portfolio. So, it's kind of all systems go for a really, really great product, great company.
Okay. I know we're out of time, but that's a great way to end the conversation. Thank you to the entire management team for taking time out to come to the conference.
Thank you.
Thanks.