MADRIGAL PHARMACEUTICAL Q3 2026 EARNINGS CALL - MADRIGAL PHARMACEUTICALS INC

Explicit Guidance:

• Revenue/Growth: U.S. F2-F3 MASH market projected to grow >30% for full year 2026; market size expanded from 460,000 (end of 2025) to >530,000 (mid-2026) with continued double-digit growth expected for the foreseeable future.
• Gross-to-Net (2026): Expected to land at the low end of the mid-to-high 30s range for the full year.
• Gross-to-Net (2027): Anticipated to be at the low end of the mid-to-high 30s range, with a potential variance "plus or minus the high end" of the 2026 range due to new Medicare Part D contracts taking effect in Q1 2027; specific quantitative guidance for 2027 not provided.
• Operating Expenses (2026): Full-year R&D expected to be nominally lower than 2025 due to the absence of one-time upfront business development expenses; SG&A expected to increase compared to 2025 to support ResDifera growth, with higher Q4 SG&A anticipated compared to Q3.
• Patient Count: Targeting steady patient addition through Q4 2026, building on the 55,850 active patients at end of Q3 2026.
• Financial Performance: No formal EPS or revenue guidance issued for 2027; management reiterates they are a top-line growth story and may dip in and out of profitability in the near term based on investment timing (specifically Q1 seasonality and business development), though operating cash flow remains positive.

Business-Segment Outlook:

• ResDifera (F2-F3): Positioning as "foundational therapy" with potential for "mega-blockbuster" status; current annual run rate of >$1.7 billion; penetration remains low at ~1% of the total opportunity (10% of diagnosed 10%).
• ResDifera (F4C): Addressable U.S. F4C population estimated at 360,000 (up 45% from prior estimate), potentially doubling the company's total opportunity. Expecting to be the "first and best" with a readout anticipated in late 2027.
• New Patients: Expecting continued steady patient acquisition through Q4 2026 and into 2027; diagnosis rates expected to remain low (~10%) with significant runway remaining.
• Endocrinology Segment: Progress confirmed; endocrinologists converting patients and driving deepening uptake similar to gastroenterology; expected to contribute to long-term growth.
• Combination Programs: Expecting to initiate three Phase II combination trials in 2027: (1) ResDifera + oral DGAT2 inhibitor (Virgostat); (2) ResDifera + oral GLP-1 agonist (MGL-2086); (3) ResDifera + siRNA-targeting TMPLA-3 (MGL-0795) for homozygous PNPLA-3 patients.
• Pipeline: Advancing six siRNA programs and three exploratory assets; strategy focuses on ResDifera as a foundation for combination therapies.

Market and Competitive Outlook:

• Competitive Dynamics: First potential non-Madrigal competitor in F4C not expected until 2030; competitors have modified programs and delayed timelines, widening Madrigal's lead.
• Pricing/Reimbursement: Medicare Part D contracts currently being negotiated for Q1 2027 implementation; management expects gross-to-net impact in 2027 but remains comfortable with the trajectory.
• Real-World Usage: ~25-30% of patients in Maestro NASH Outcomes trial on stable GLP-1 therapy; no protocol deviation to add GLP-1 for weight loss; observing some patients transitioning to ResDifera after GLP-1, but GLP-1s are viewed as background therapy rather than a direct competitor for F4C.
• Market Evolution: Diagnosis and treatment landscape evolving with increasing emphasis on non-invasive testing and guidelines; patient journey and time-to-diagnosis expected to improve as prescribers formalize pathways.

Macro / Industry Outlook:

• Market Growth: MASH diagnosis and treatment market expected to grow over decades (analogous to RA, IBD, psoriasis), driven by awareness, diagnosis rates, and approved therapies.
• GLP-1 Impact: Increasing real-world uptake of GLP-1 agonists expected to expand the overall MASH market rather than cannibalize ResDifera; Madrigal sees synergy in future combo programs to manage weight loss while preserving anti-fibrotic efficacy.
• Regulatory/Labelling: Positive Maestro NASH Outcomes results expected to support both F4C indication and full approval across F2-F3; Maestro CSPH study designed to generate data for differentiated labeling.
• Biopsy Requirements: Management reiterates that for clinical trial purposes, biopsy is still currently required for MASH diagnosis, though consortia are working toward eliminating this requirement in the future.

Strategic Initiatives:

• Maestro CSPH Trial: New Phase III outcomes trial expected to initiate in first half of 2027 (finalizing protocol with FDA); targeting >2,000 patients enriched for Compensated Cirrhosis with Portal Hypertension (CSPH); results expected in early 2030s.
• Maestro NASH Outcomes: Event-driven Phase III trial with anticipated readout in late 2027; currently accruing events at expected rates with dropout rates within expectations.
• FDA Engagement: Ongoing discussions to finalize Maestro CSPH protocol and align on labeling strategies to ensure the study supports a comprehensive product label without "daylight" between approval and new data generation.
• Non-Invasive Diagnostics: Leveraging data from Maestro trials to validate non-invasive biomarkers and imaging tools for monitoring CSPH treatment response.
• Self-Funding: Utilizing positive operating cash flow to self-fund strategic initiatives like Maestro CSPH and pipeline expansion without external financing.

Risks and Headwinds to Outlook:

• Profitability Volatility: Management notes potential for near-term dips in profitability due to Q1 seasonality, timing of business development investments, and R&D spending, despite current cash flow positivity.
• Trial Execution: Maestro NASH Outcomes is event-driven; while late 2027 is the best estimate, delays are possible if event accrual is slower than expected (no fixed date guarantee beyond "best estimate").
• Regulatory Uncertainty: Finalization of Maestro CSPH protocol and FDA alignment on labeling are prerequisites for the study's success and potential differentiated positioning.
• Market Competition: While current lead is strong, future entrants in the F4C space (post-2030) could alter the landscape; however, competitors have recently delayed timelines.
• GLP-1 Dynamics: While currently viewed as complementary, management acknowledges the need to validate optimal weight loss parameters in combination strategies to ensure tolerability and efficacy.

Management Tone on the Future:

• Confidence Level: Extremely high; repeated use of phrases like "firing on all cylinders," "exceptionally well-positioned," and "best opportunity in biotech."
• Strategic Narrative: Emphasizes "first and best" philosophy, building a "practice-shaping" trial, and establishing a "holy grail" profile for ResDifera.
• Growth Outlook: Expects the business to remain in a "top-line growth story" mode, with growth outstripping spend even with heavy reinvestment; views the current 1% penetration as the beginning of a multi-billion dollar market.
• Differentiation: Highlights the difficulty for competitors to replicate the 2+ years of real-world experience, infrastructure, and defined safety profile of ResDifera.

Miscellaneous:

• F4C Population Definition: Addressable F4C population revised upward to 360,000 patients, noting it is larger than the F2-F3 population at launch; emphasizes F4C is not monolithic, with risk varying from early F4 to established CSPH.
• Trial Enrichment: Maestro CSPH aims to enrich for CSPH using advances in imaging, biomarkers, and BoVino consensus criteria to target the "sweet spot" of disease progression.
• Combination Strategy: Focus on dialing in weight loss (via GLP-1s) to enhance anti-fibrotic effect while maintaining tolerability; specific siRNA programs (e.g., PNPLA-3) target genetically defined subpopulations.