What changed in this filing

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Item 2. Management’s Discussion and Analysis

2020-11-05 compared with 2020-08-06 · 53 added, 42 removed, 149 unchanged (39% of the section changed)

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As disclosed in this report, our actual results could differ materially from those discussed in these forward-looking statements.

Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the sections entitled “Special Note Regarding Forward-Looking Statements” and “Risk Factors” included elsewhere in this report.

Factors that could cause or contribute to such differences include, but are not limited to, those discussed in “Special Note Regarding Forward-Looking Statements” in this Form 10-Q

and in the “Risk Factors” sections contained in Part I, Item 1A of our Annual Report on Form 10-K

for the year ended December 31, 2019, filed with the SEC on February 26, 2020, and Part II, Item 1A of the Quarterly Report on Form 10-Q for the period ended June 30, 2020, filed with the SEC on August 6, 2020.

Our operating results are not necessarily indicative of results that may occur for the full fiscal year or any other future period.

About Madrigal Pharmaceuticals, Inc.

We are a clinical-stage biopharmaceutical company focused on the development and commercialization of innovative therapeutic candidates for the treatment of cardiovascular, metabolic, and liver diseases.

We are a clinical-stage biopharmaceutical company focused on the development and commercialization of innovative therapeutic candidates

for the treatment of cardiovascular, metabolic, and liver diseases.

Our lead product candidate, MGL-3196

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NASH is a serious inflammatory form of nonalcoholic fatty liver disease, or NAFLD.

NAFLD has become the most common liver disease in the United States and other developed countries and is characterized by an accumulation of fat in the liver with no other apparent causes.

NAFLD has become the most

common liver disease in the United States and other developed countries and is characterized by an accumulation of fat in the liver with no other apparent causes.

NASH can progress to cirrhosis or liver failure, require liver transplantation and can also result in liver cancer.

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We achieved the 12-week

primary endpoint for this Phase 2 clinical trial and reported the results in December 2017, and we reported positive topline 36-week

primary endpoint for

this Phase 2 clinical trial and reported the results in December 2017, and we reported positive topline 36-week

results at the conclusion of the Phase 2 clinical trial in May 2018.

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Our Ongoing and Planned Studies.

On March 28, 2019, the Company announced that it had initiated MAESTRO-NASH, a Phase 3 trial in NASH with its once daily, oral thyroid hormone receptor beta selective agonist, resmetirom.

On March 28, 2019, the Company announced that it had initiated MAESTRO-NASH, a Phase 3 trial in NASH with

its once daily, oral thyroid hormone receptor beta selective agonist, resmetirom.

This double-blind, placebo-controlled study will be conducted at more than 150 sites in the United States and the rest of the world.

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On December 18, 2019 the Company announced it had opened for enrollment MAESTRO-NAFLD-1,

double-blind, placebo controlled Phase 3 clinical study in 700 patients with biopsy-confirmed or presumed NASH recruited from sites in the U.S.

double-blind, placebo controlled Phase 3 clinical study originally targeting enrollment of 700 patients with biopsy-confirmed or presumed NASH recruited from sites in the U.S.

Key endpoints are safety, including safety biomarkers, LDL cholesterol, lipid biomarkers, and fibrosis biomarkers.

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and NASH biomarker endpoints.

In addition, MAESTRO-NAFLD-1

includes an open label arm in which up to 100 patients will be dosed with 100 mg resmetirom.

Enrollment objectives for this study have been exceeded, with approximately 1,200 patients enrolled overall.

In October 2020 we completed enrollment of the double-blind, placebo controlled arms of the study.

This may allow topline data from the 52 week double blind arms by the end of 2021.

Open label enrollment is ongoing for patients with compensated NASH cirrhosis.

The MAESTRO-NAFLD-1

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Initiation of MAESTRO-NAFLD-1

Phase 3 clinical trial

Phase 3 clinical trial and completion of enrollment of the double-blind, placebo controlled arm

In December 2019 we initiated a Phase 3 trial in presumed NASH, described in detail above under “About Madrigal;

Our Ongoing and Planned Studies.”

In October 2020 we completed enrollment of the double-blind, placebo controlled arms of the study.

Pandemic Effects on Madrigal

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pandemic had no material adverse impact on our operating results, MAESTRO-NAFLD-1

study or liquidity for the period ended June 30, 2020, but it did introduce clinical trial and operational risks and uncertainties that are both general in nature and relate specifically to our MAESTRO-NASH study.

These risks and uncertainties, which are beyond our control, are referenced as “Risk Factors” and summarized in Part II, Item 1A in this Form 10-Q.

study or liquidity for the period ended September 30, 2020, but it did introduce clinical trial and operational risks and uncertainties that are both general in nature and relate specifically to our MAESTRO-NASH study.

These risks and uncertainties, which are beyond our control, are referenced as “Risk Factors” and summarized in Part II, Item 1A, “Risk Factors” on Form 10-Q

for the period ending June 30, 2020 filed with the SEC on August 6, 2020.

Basis of Presentation

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Actual results may differ materially from these estimates under different assumptions or conditions.

There have been no material changes in our critical accounting policies and significant judgments and estimates during the six months ended June 30, 2020, as compared to those disclosed in our Annual Report on Form 10-K

There have been no material changes in our critical accounting policies and significant judgments and estimates during the nine months ended September 30, 2020, as compared to those disclosed in our Annual Report on Form 10-K

for the fiscal year ended December 31, 2019 filed with the SEC on February 26, 2020.

Results of Operations

Three months Ended June 30, 2020 and 2019

The following table provides comparative unaudited results of operations for the three months ended June 30, 2020 and 2019 (in thousands):

Three Months Ended June 30,

Three months Ended September 30, 2020 and 2019

The following table provides comparative unaudited results of operations for the three months ended September 30, 2020 and 2019 (in thousands):

Three Months Ended September 30,

Increase / (Decrease)

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Interest (Income)

Other (income)

We had no revenue for the three months ended June 30, 2020 and 2019.

We had no revenue for the three months ended September 30, 2020 and 2019.

Research and Development Expenses

Our research and development expenses were $44.7 million for the three months ended June 30, 2020, compared to $15.6 million in the corresponding period in 2019.

Our research and development expenses were $53.3 million for the three months ended September 30, 2020, compared to $19.4 million in the corresponding period in 2019.

Research and development expenses increased by $33.8 million in the 2020 period due primarily to the additional activities related to the Phase 3 clinical trials initiated in 2019, and an increase in head count.

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General and Administrative Expenses

Our general and administrative expenses were $5.6 million for the three months ended June 30, 2020, compared to $7.1 million in the corresponding period in 2019.

General and administrative expenses decreased by $1.5 million in the 2020 period due primarily to a decrease in non-cash

stock compensation from stock option awards, partially offset by increases in other general and administrative expenses.

Our general and administrative expenses were $5.5 million for the three months ended September 30, 2020, compared to $4.7 million in the corresponding period in 2019.

General and administrative expenses increased by $0.7 million in the 2020 period due primarily to increases in head count and consulting costs.

We believe our general and administrative expenses may increase over time as we advance our clinical and preclinical development programs for resmetirom and expand our operating activities, which will likely result in an increase in our headcount, consulting services, and related overhead needed to support those efforts.

Interest Income

Our net interest income was $1.2 million for the three months ended June 30, 2020, compared to $3.0 million in the corresponding period in 2019.

Our net interest income was $0.8 million for the three months ended September 30, 2020, compared to $2.8 million in the corresponding period in 2019.

The decrease in interest income was due primarily to a lower average principal balance in our investment account in 2020 and decreased interest rates.

Six months Ended June 30, 2020 and 2019

The following table provides comparative unaudited results of operations for the six months ended June 30, 2020 and 2019 (in thousands):

Six Months Ended June 30,

Nine months Ended September 30, 2020 and 2019

The following table provides comparative unaudited results of operations for the nine months ended September 30, 2020 and 2019 (in thousands):

Nine Months Ended September 30,

Increase / (Decrease)

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Other (income)

We had no revenue for the six months ended June 30, 2020 and 2019.

We had no revenue for the nine months ended September 30, 2020 and 2019.

Research and Development Expenses

Our research and development expenses were $78.1 million for the six months ended June 30, 2020, compared to $28.0 million in the corresponding period in 2019.

Research and development expenses increased by $50.1 million in the 2020 period due primarily to the additional activities related to the Phase 3 clinical trials initiated in 2019, an increase in head count, and an increase in non-cash

stock compensation from stock option awards.

Our research and development expenses were $131.4 million for the nine months ended September 30, 2020, compared to $47.4 million in the corresponding period in 2019.

Research and development expenses increased by $84.0 million in the 2020 period due primarily to the additional activities related to the Phase 3 clinical trials initiated in 2019, and an increase in head count.

We expect our research and development expenses to increase over time as we advance our clinical and preclinical development programs for resmetirom.

General and Administrative Expenses

Our general and administrative expenses were $10.2 million for the six months ended June 30, 2020, compared to $12.9 million in the corresponding period in 2019.

Our general and administrative expenses were $15.7 million for the nine months ended September 30, 2020, compared to $17.6 million in the corresponding period in 2019.

General and administrative expenses decreased by $1.9 million in the 2020 period due primarily to a decrease in non-cash

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Interest Income

Our net interest income was $3.1 million for the six months ended June 30, 2020, compared to $6.0 million in the corresponding period in 2019.

Our net interest income was $3.9 million for the nine months ended September 30, 2020, compared to $8.8 million in the corresponding period in 2019.

The decrease in interest income was due primarily to a lower average principal balance in our investment account in 2020 and decreased interest rates.

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Our most significant use of capital pertains to salaries and benefits for our employees, including clinical, scientific, operational, financial and management personnel, and external research and development expenses, such as clinical trials and preclinical activity related to our product candidates.

As of June 30, 2020, we had cash, cash equivalents and marketable securities totaling $384.4 million compared to $439.0 million as of December 31, 2019, with the decrease attributable to the funding of operations.

As of September 30, 2020, we had cash, cash equivalents and marketable securities totaling $335.9 million compared to $439.0 million as of December 31, 2019, with the decrease attributable to the funding of operations.

Our cash and investment balances are held in a variety of interest bearing instruments, including obligations of U.S.

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We anticipate continuing to incur operating losses for the foreseeable future.

While our rate of cash usage will likely increase in the future, in particular to support our product development and clinical trial efforts, we believe our available cash resources as of June 30, 2020 will be sufficient to fund our operations past one year from the issuance of the financial statements contained herein, and this outlook takes into account circumstances that are currently reasonably foreseeable in connection with the COVID-19

While our rate of cash usage will likely increase in the future, in particular to support our product development and clinical trial efforts, we believe our available cash resources as of September 30, 2020 will be sufficient to fund our operations past one year from the issuance of the financial statements contained herein, and this outlook takes into account circumstances that are currently reasonably foreseeable in connection with the COVID-19

For a description of COVID-19

pandemic risks, including risks and uncertainties beyond our control, see Part II, Item 1A, “Risk Factors” in

this Form 10-Q.

pandemic risks, including risks and uncertainties beyond our control, see Part II, Item 1A, “Risk Factors” on Form 10-Q

for the period ending June 30, 2020 filed with the SEC on August 6, 2020.

Our future long-term liquidity requirements will be substantial and will depend on many factors.

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We regularly consider fundraising opportunities and may decide, from time to time, to raise capital based on various factors, including market conditions and our plans of operation.

This includes, but is not limited to, the use of a $200 million at-the-market

sales agreement entered into in November of 2020, with

Cowen and Company, LLC.

See footnote 9 to our condensed consolidated financial statements in this Form 10-Q.

Additional capital may not be available on terms acceptable to us, or at all.

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The following table provides a summary of our net cash flow activity (in thousands):

Six Months Ended June 30,

Nine Months Ended September 30,

Net cash used in operating activities

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Net increase in cash and cash equivalents

Net cash used in operating activities was $54.8 million for the six months ended June 30, 2020, compared to $18.0 million for the corresponding period in 2019.

Net cash used in operating activities was $102.6 million for the nine months ended September 30, 2020, compared to $29.3 million for the corresponding period in 2019.

The use of cash in these periods resulted primarily from our losses from operations, as adjusted for non-cash

charges for stock-based compensation, and changes in our working capital accounts.

Net cash provided by investing activities was $69.8 million for the six months ended June 30, 2020, compared to $32.9 million for the corresponding period in 2019.

Net cash provided by investing activities for the six months ended June 30, 2020 consisted of $224.0 million from sales and maturities of marketable securities, partially offset by $153.9 million of purchases of marketable securities for our investment portfolio and $0.3 million of purchases of property and equipment.

Net cash provided by investing activities for the six months ended June 30, 2019 consisted of $299.1 million from sales and maturities of marketable securities, partially offset by $266.1 million of purchases of marketable securities for our investment portfolio.

Net cash provided by financing activities was $0.1 million for the six months ended June 30, 2020, compared to $0.2 million for the corresponding period in 2019, both of which consisted of proceeds from exercise of stock options.

Net cash provided by investing activities was $164.6 million for the nine months ended September 30, 2020, compared to $61.2 million for the corresponding period in 2019.

Net cash provided by investing activities for the nine months ended September 30, 2020 consisted of $378.1 million from sales and maturities of marketable securities, partially offset by $213.2 million of purchases of marketable securities for our investment portfolio and $0.3 million of purchases of property and equipment.

Net cash provided by investing activities for the nine months ended September 30, 2019 consisted of $468.3 million from sales and maturities of marketable securities, partially offset by $407.1 million of purchases of marketable securities for our investment portfolio.

Net cash provided by financing activities was $0.5 million for the nine months ended September 30, 2020, compared to $0.2 million for the corresponding period in 2019, both of which consisted of proceeds from exercise of stock options.

Contractual Obligations and Commitments

No significant changes to contractual obligations and commitments occurred during the six months ended June 30, 2020, as compared to those disclosed in our Annual Report on Form 10-K

No significant changes to contractual obligations and commitments occurred during the nine months ended September 30, 2020, as compared to those disclosed in our Annual Report on Form 10-K

for the fiscal year ended December 31, 2019 filed with the SEC on February 26, 2020.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis