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Item 1. Business

2023-02-23 compared with 2022-02-24 · 271 added, 332 removed, 356 unchanged (63% of the section changed)

References in this Annual Report on Form 10-K

to Madrigal, the Company, we, our and us refer to Madrigal Pharmaceuticals, Inc.

References in this Annual Report on Form 10-K to Madrigal, the Company, we, our and us refer to Madrigal Pharmaceuticals, Inc.

“Madrigal” is a registered trademark of Madrigal Pharmaceuticals, Inc.

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Executive Overview

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, resmetirom, is a proprietary, liver-directed, selective thyroid hormone receptor-ß, or THR-ß,

agonist being developed as a once-daily oral pill that can potentially be used to treat a number of disease states with high unmet medical need, including non-alcoholic

steatohepatitis, or NASH.

We are a clinical-stage biopharmaceutical company pursuing novel therapeutics for nonalcoholic steatohepatitis, or NASH.

Our lead product candidate, resmetirom, is a proprietary, liver-directed, selective thyroid hormone receptor-ß, or THR-ß, agonist being developed as a once-daily oral pill for the treatment of NASH.

Our Patient Market Opportunity.

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In the United States, NAFLD is estimated to affect approximately 25% of the population, and approximately 25% of those will progress from NAFLD to NASH.

Current estimates place NASH prevalence at approximately 20 million people in the United States, or five to six percent of the adult population, with similar prevalence in Europe and Asia.

Current estimates place NASH prevalence at approximately 22 million people in the United States by 2024, with similar prevalence in Europe and Asia.

The prevalence of NASH is also increasing in developing regions due to the adoption of a more sedentary lifestyle and a diet consisting of processed foods with high fat and fructose content.

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For NASH, we enrolled 125 patients in a Phase 2 clinical trial with resmetirom.

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

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

We also completed a 36-week,

open-label extension study in 31 participating NASH patients from our Phase 2 clinical trial, which included 14 patients who received placebo in the main study.

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

non-invasive,

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

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

We also completed a 36-week, open-label extension study in 31 participating NASH patients from our Phase 2 clinical trial, which included 14 patients who received placebo in the main study.

On December 18, 2019 the Company announced it had opened for enrollment MAESTRO-NAFLD-1, a 52-week, non-invasive, multi-center, double-blind, placebo-controlled Phase 3 clinical study of patients with biopsy-confirmed or presumed NASH recruited from sites in the U.S.

Key endpoints are safety, including safety biomarkers.

Secondary endpoints include LDL cholesterol, lipid biomarkers, MRI-PDFF,

NASH and fibrosis biomarkers.

Except for serial liver biopsies, the study protocol is similar to the MAESTRO-NASH study (discussed below

under “—Our Ongoing and Planned Studies”), with resmetirom doses of 80 mg or 100 mg or placebo.

Secondary endpoints include LDL cholesterol, lipid biomarkers, MRI-PDFF, NASH and fibrosis biomarkers.

Except for serial liver biopsies, the study protocol is similar to the MAESTRO-NASH study (discussed below under “—Our Ongoing and Planned Studies”), with resmetirom doses of 80 mg or 100 mg or placebo.

Enrollment objectives for this study were exceeded, with approximately 1,300 patients enrolled overall.

The MAESTRO-NAFLD-1

study will help support the adequacy of the safety database at the time of NDA submission for Subpart H approval for treatment of NASH in patients with F2 or F3 fibrosis.

In November of 2021, we reported data from the open label non-cirrhotic

arm of MAESTRO-NAFLD-1,

and in January 2022 we announced that we achieved primary and secondary endpoints for the double-blind portion of MAESTRO-NAFLD-1,

as summarized in

“- Key Developments” below.

We also completed a 116 patient Phase 2 clinical trial and announced results in February 2018 for the use of resmetirom in patients with heterozygous familial hypercholesterolemia, or HeFH.

In addition to the NASH and HeFH Phase 2 clinical trials, resmetirom has also been studied in multiple completed Phase 1 trials in a total of

more than 300 subjects.

Resmetirom was well-tolerated in these trials, which included a single ascending dose trial, a multiple ascending dose trial, several drug interaction studies, a multiple dose mass balance study, a single dose relative bioavailability study of tablet formulation versus capsule formulation, a multiple dose drug interaction study, a multiple dose drug interaction with food effect study, and a hepatic impairment study.

The MAESTRO-NAFLD-1 study will help support the adequacy of the safety database at the time of NDA submission for Subpart H approval for treatment of patients with NASH with fibrosis.

In November of 2021, we reported data from the open label non-cirrhotic arm of MAESTRO-NAFLD-1, and in January 2022 we announced that we achieved primary and secondary endpoints for the double-blind portion of MAESTRO-NAFLD-1, as summarized in “- Key Developments” below.

Our Ongoing and Planned Studies.

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This double-blind, placebo-controlled study is being conducted at more than 220 sites in the United States and the rest of the world.

Patients with liver biopsy confirmed NASH with stage 2 or 3 fibrosis are being randomized 1:1:1 to receive a single oral daily dose of placebo, resmetirom 80 mg or resmetirom 100 mg.

A second liver biopsy at week 52 in the first 900 patients will be the basis of filing for accelerated approval under subpart H of applicable FDA regulations, which we refer to as subpart H-accelerated

The primary endpoint pertains to the percent of patients treated with either dose of resmetirom as compared with placebo who achieve NASH resolution on the week 52 liver biopsy, defined as the absence of hepatocyte ballooning (score=0), and minimal lobular inflammation (score 0-1),

associated with at least a 2-point

reduction in NAS (NAFLD Activity Score), and no worsening of fibrosis stage.

Two key secondary endpoints are reduction in LDL-cholesterol

and a 1-point

or more improvement in fibrosis stage on the week 52 biopsy with no worsening of NASH.

Patients will continue in the study for a total of approximately 54 months, and will be evaluated for a composite clinical outcome including cirrhosis on liver biopsy, or a liver related event such as hepatic decompensation.

The total anticipated enrollment currently is approximately 2,000 patients, and will include up to 15% high risk F1 fibrosis stage NASH patients whose efficacy responses will be evaluated as exploratory endpoints.

On June 30, 2021 we announced our achievement of the requisite enrollment of patients to support the planned Subpart H (Accelerated Approval of New Drugs for Serious or Life-Threatening Illnesses) submission to the US Food and Drug Administration (FDA).

On July 13, 2021 we announced first patient dosed in a planned 52-week

open label active treatment extension study of MAESTRO-NAFLD-1,

named MAESTRO-NAFLD-Open Label Extension (OLE).

The OLE study allows patients who complete MAESTRO-NAFLD-1

to consent to 52 weeks of active treatment with resmetirom, making this treatment available to both patients who were assigned to placebo in MAESTRO-NAFLD-1

and patients who were on resmetirom in MAESTRO-NAFLD-1.

MAESTRO-NASH is a multicenter, randomized, double-blind, placebo-

controlled Phase 3 study of resmetirom in patients with liver biopsy-confirmed NASH and was initiated in March 2019.

The subpart H portion of the study enrolled more than 1,000 patients with biopsy-proven NASH (at least half with F3 (advanced) fibrosis, the remainder F2 or F1B (moderate fibrosis) with a few earlier F1 patients), randomized 1:1:1 to receive once-daily resmetirom 80 mg, resmetirom 100 mg, or placebo.

After 52 weeks of treatment, a second liver biopsy is performed.

The dual primary surrogate endpoints on biopsy are NASH resolution with ≥2-point reduction in NAS (NAFLD Activity Score), and with no worsening of fibrosis OR a 1-point decrease in fibrosis with no worsening of NAS.

Achievement of either primary endpoint is considered a successful trial outcome.

A key secondary endpoint is lowering of LDL-C.

All patients enrolled in the MAESTRO-NASH study (up to 2,000 in total) continue on therapy after the initial 52-week treatment period for up to 54 months to accrue and measure hepatic clinical outcome events including progression to cirrhosis on biopsy (52 weeks and 54 months) and hepatic decompensation events, as well as all-cause mortality.

In December 2022, we reported topline results from the subpart H portion of the study:

resmetirom achieved both primary endpoints with both daily oral doses, 80 mg and 100 mg, relative to placebo, as summarized in “- Key Developments” below.

On July 13, 2021 we announced first patient dosed in a planned 52-week open label active treatment extension study of MAESTRO-NAFLD-1, named MAESTRO-NAFLD-Open Label Extension (OLE).

The OLE study allows patients who complete MAESTRO-NAFLD-1 to consent to 52 weeks of active treatment with resmetirom, making this treatment available to both patients who were assigned to placebo in MAESTRO-NAFLD-1 and patients who were on resmetirom in MAESTRO-NAFLD-1.

In August 2022, Madrigal initiated MAESTRO-NASH-OUTCOMES, a randomized double-blind placebo-controlled study in approximately 700 patients with early NASH cirrhosis to allow for noninvasive monitoring of progression to liver decompensation events.

A positive outcome is expected to support the full approval of resmetirom for noncirrhotic NASH, potentially accelerating the timeline to full approval.

In addition, this study has the potential to support an additional indication for resmetirom in patients with well-compensated NASH cirrhosis.

The following chart summarizes the status of our product candidate development programs for resmetirom:

Key Developments

In January 2022, Madrigal announced topline results from the Phase 3 MAESTRO-NAFLD-1

safety study of resmetirom.

Madrigal reported that resmetirom demonstrated statistical significance for primary and key secondary endpoints summarized below, from the double-blind placebo-controlled 969-patient

portion of the study.

and (3) significantly reduced atherogenic lipids, including LDLc, apolipoprotein B and triglycerides.

A total of 972 patients were randomized in the double-blind arms of the MAESTRO-NAFLD-1

969 patients were included in the safety population and 943 patients in a modified intent-to-treat

population for evaluation of key secondary and other endpoints.

MAESTRO-NASH TRIAL.

In December 2022, Madrigal announced topline results from the pivotal Phase 3 MAESTRO-NASH biopsy study of resmetirom.

Madrigal reported that resmetirom achieved both primary endpoints with both daily oral doses, 80 mg and 100 mg, relative to placebo.

Patients meeting eligibility requirements for MAESTRO-NASH were randomized 1:1:1 to receive resmetirom 80 mg, resmetirom 100 mg, or placebo taken orally once daily.

Baseline characteristics in the 966 randomized patients in the primary analysis NASH population (ITT, safety population) were balanced across treatment arms and include age 57 (10) (mean (SD)), female 56%, white 89%, Hispanic 21%, BMI 36 (7) kg/m2, type 2 diabetes 67%, hypertension 78%, dyslipidemia 71%, hypothyroidism 13%, FibroScan, kilopascals (kPa) 13 (7), CAP 348 (38), MRI-PDFF 18% (7), FIB-4 1.4 (0.7), ALT 55 (32) IU, AST 41 (23) IU, LDL 99 (40) mg/dL, triglycerides 188 (132) mg/dL, hemoglobin A1C 6.6 (1) %, ELF 9.8 (0.9).

Medications included 49% on statins, 14% on GLP-1 agonists, 14% on SGLT2 inhibitors.

Baseline liver biopsy fibrosis scores included F3 (~60%), F2 (~35%), F1B (~5%) (primary analysis population) with 84% with NAS ≥5 based on independent primary glass slide reads of the entire study by two central pathologists.

A second biopsy was conducted after 52 weeks of treatment for assessment of the dual primary endpoints.

The primary efficacy analysis assessed histological response at 52 weeks in 955 patients with biopsy-confirmed NASH with fibrosis (modified intent-to-treat (mITT) population) that excluded 11 ITT patients who had their Week 52 biopsy after Week 60 due to COVID-related reasons per regulatory guidelines.

Patients without a second biopsy due to early study discontinuation or missing liver biopsy (~17% across treatment arms) were included and considered as non-responders in the primary efficacy analyses (mITT).

The compliance to treatment was high and minimally impacted by COVID-19 pandemic restrictions.

Dual Primary Endpoints (52 Weeks) and Key Secondary Endpoint (24 weeks)

Primary Endpoint

Resmetirom 80 mg

Resmetirom 100 mg

NASH resolution (ballooning o, inflammation 0,1) with ≥2-point reduction in NAS and no worsening of fibrosis

≥-stage improvement in fibrosis with no worsening of NAS

Key Secondary Endpoint

LDL-C lowering (24 weeks)

All biopsies were read independently by two central pathologists.

Each pathologist’s scores showed a similar statistically significant magnitude of response at both doses for both liver biopsy endpoints.

Biopsy endpoints were achieved independent of baseline fibrosis stage or diabetes status, including similar statistical significance and magnitude of effect at both doses in subgroups of F2, F3, and F2/F3 patients.

Other secondary liver biopsy endpoints that were achieved at both doses include ≥2 point reduction in NAS with no worsening of fibrosis, ≥2 point reduction in NAS with ≥1-stage improvement in fibrosis, NASH resolution (with ≥2 point reduction in NAS) with ≥1-stage improvement in fibrosis, and a 2-stage reduction in fibrosis without worsening of NAS.

Multiple secondary endpoints were achieved, including statistically significant reduction from baseline in liver enzymes (ALT, AST and GGT).

Reductions in atherogenic lipids and lipoproteins, fibrosis biomarkers and imaging tests (MRI-PDFF, CAP and liver stiffness measures) were observed in resmetirom treatment arms as compared with placebo.

MAESTRO-NASH included many biomarker and imaging assessments that may be used in real world clinical practice to identify appropriate patients for treatment and monitor response to resmetirom, if approved.

Resmetirom was safe and well-tolerated at both the 80 mg and 100 mg doses.

The frequency of serious adverse events (SAEs) was similar across treatment arms:

11.8%, 12.7% and 12.1% for the 80 mg, 100 mg, and placebo groups, respectively.

The rate of study discontinuation for adverse events was low:

2.8%, 7.7% and 3.7% for the 80 mg, 100 mg and placebo groups, respectively.

SAEs occurred at expected rates based on the patient population.

Consistent with previous Phase 2 and Phase 3 data, the most common adverse events reported with greater frequency in the resmetirom groups versus placebo were an excess of generally mild and transient diarrhea at the beginning of therapy, in 28%, 34%, 16% in the 80 mg, 100 mg and placebo groups, respectively, and generally mild nausea that occurred at rates of 22%, 19% and 13% in the 80 mg, 100 mg and placebo arms, respectively.

MAESTRO-NASH is an ongoing blinded Phase 3 clinical trial, and enrolled patients continue on therapy after the Week 52 liver biopsy for up to a total of 54 months to accrue hepatic clinical outcome events including histologic conversion to cirrhosis and hepatic decompensation events.

MAESTRO-NAFLD-1.

In January 2022, Madrigal announced topline results from the Phase 3 MAESTRO-NAFLD-1 safety study of resmetirom.

Madrigal reported that resmetirom demonstrated statistical significance for primary and key secondary endpoints summarized below, from the double-blind placebo-controlled 969-patient portion of the study.

These endpoints indicated that resmetirom (1) was well-tolerated at 80 and 100 mg in patients treated for 52 weeks, (2) provided significant and clinically relevant reductions in liver fat as measured by MRI-PDFF and (3) significantly reduced atherogenic lipids, including LDLc, apolipoprotein B and triglycerides.

A total of 972 patients were randomized in the double-blind arms of the MAESTRO-NAFLD-1 study:

969 patients were included in the safety population and 943 patients in a modified intent-to-treat population for evaluation of key secondary and other endpoints.

Important inclusion criteria included the presence of three risk factors of metabolic syndrome, a level of liver fibrosis (measured by FibroScan) consistent with a range of stages of liver fibrosis, and >=8% liver fat (measured by MRI-PDFF).

Adverse events observed in the MAESTRO-NAFLD-1

trial were generally mild to moderate in severity.

Adverse events observed in the MAESTRO-NAFLD-1 trial were generally mild to moderate in severity.

The frequency of serious adverse events was similar across treatment arms and discontinuation for adverse events was low.

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The following hierarchically-controlled key secondary endpoints were reported for both the 80 and 100 mg resmetirom dose groups.

Resmetirom provided significant reductions in liver fat as measured by MRI-PDFF

and reduced atherogenic lipids, including LDLc, apolipoprotein B and triglycerides.

Resmetirom provided significant reductions in liver fat as measured by MRI-PDFF and reduced atherogenic lipids, including LDLc, apolipoprotein B and triglycerides.

Open-label arm data is reported in the far left column below and double-blind arm data are reported in the remaining columns below.

Although both arms were randomized in MAESTRO-NAFLD-1,

lipid reductions were numerically greater in the 100 mg open label treatment arm compared to the 100 mg double-blind arm, and we believe this is due to greater visit and dose interruptions experienced by open-label arm patients during the height of the COVID-19

patients in the open-label active 100 mg treatment arm were less impacted by COVID-related dose interruptions than double-blind patients.

Although both arms were randomized in MAESTRO-NAFLD-1, lipid reductions were numerically greater in the 100 mg open label treatment arm compared to the 100 mg double-blind arm, and we believe this is due to greater visit and dose interruptions experienced by open-label arm patients during the height of the COVID-19 pandemic, as patients in the open-label active 100 mg treatment arm were less impacted by COVID-related dose interruptions than double-blind patients.

Resmetirom 100

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ApoB %CFB (SE) (Week 24)

%CFB (Week 16)

MRI-PDFF %CFB (Week 16)

Liver volume PDFF correction %CFB

%CFB (Week 52)

MRI-PDFF %CFB (Week 52)

Liver volume PDFF correction %CFB

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APOB (Apolipoprotein B);

(magnetic resonance imaging proton density fat-fraction);

MRI-PDFF (magnetic resonance imaging proton density fat-fraction);

CI (confidence interval);

OL, open label non-cirrhotic

arm randomized concurrently with double-blind arms

Pandemic Effects on Madrigal Phase 3 Trials

In April 2020 we announced that in response to guidance from regulatory agencies, measures for COVID-19

at impacted sites were put in place for our Phase 3 MAESTRO-NASH and MAESTRO-NAFLD-1

studies, allowing both studies to continue without changes to the protocol.

Following a Data Monitoring Committee (DMC) meeting it was recommended that Phase 3 studies proceed without modification.

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

study or our liquidity for previous periods.

However, COVID-19

did introduce clinical trial and operational risks and uncertainties that are both general in nature and relate specifically to our MAESTRO-NASH study.

In addition, at the height of COVID-19,

MAESTRO-NAFLD-1

double blind patients had an average of two missed visits and two dose interruptions, with the dose interruptions primarily related to third-parties.

These risks and uncertainties, which are beyond our control, are summarized in the section entitled “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K.

OL, open label non-cirrhotic arm randomized concurrently with double-blind arms

MASESTRO-NASH OUTCOMES.

In August 2022, we announced initiation of MAESTRO-NASH OUTCOMES, a Phase 3, double-blind, randomized, placebo-controlled study that will noninvasively measure progression to liver decompensation events in approximately 700 patients with compensated NASH cirrhosis.

The primary endpoint of MAESTRO-NASH OUTCOMES is the incidence of composite liver-related outcome events, including all-cause mortality, liver transplant, hepatic decompensation (ascites, hepatic encephalopathy, gastroesophageal variceal hemorrhage), and confirmed increase of Model for End-Stage Liver Disease (MELD) score from <12 to ≥15 due to progression of NASH cirrhosis.

Key inclusion criteria are well-compensated NASH cirrhosis (Child-Pugh A) and presence of three metabolic risk factors (metabolic syndrome).

Patients will be randomized 3:1 in a blinded manner to receive 80 mg resmetirom or matching placebo, given orally once daily.

The study duration is expected to be two to three years for accrual of the required number of composite clinical outcome events.

A positive outcome is expected to support the full approval of resmetirom for noncirrhotic NASH, potentially accelerating the timeline to full approval.

In addition, this study has the potential to support an additional indication for resmetirom in patients with well-compensated NASH cirrhosis.

RESMETIROM PHASE 2 CLINICAL TRIAL in NASH.

As summarized above, the Company successfully completed its Phase 2 clinical trial in NASH in 2018.

which was reported in December 2017, and statistically significant results in multiple 36-week

endpoints, including key secondary endpoints, reduction and resolution of NASH on liver biopsy as set forth in the table below, which was reported in May 2018.

In this clinical trial, resmetirom demonstrated statistical significance in the primary endpoint (p<0.0001), the relative reduction of liver fat compared with baseline on magnetic resonance imaging-estimated proton density fat fraction, or MRI-PDFF, at 12-weeks which was reported in December 2017, and statistically significant results in multiple 36-week endpoints, including key secondary endpoints, reduction and resolution of NASH on liver biopsy as set forth in the table below, which was reported in May 2018.

This clinical trial was published in the Lancet in November, 2019.

Specific data from this study is as follows.

Responders(1)

Number of patients with baseline and end-of-study

liver biopsies(2)

>2 Point Decrease in NAS

NASH Resolution

resmetirom MRI-PDFF

Responders = resmetirom treated patients with >=30% relative fat reduction on Week 12 MRI-PDFF

does not include one end-of-study

liver biopsy that was inadequate

Resmetirom treated patients with greater than or equal to 30% fat reduction on MRI-PDFF

demonstrated a higher percentage of nonalcoholic fatty liver disease activity score, or NAS, reduction and NASH resolution.

In patients with NASH resolution, 35% of resmetirom treated patients and no placebo patients had a baseline NAS greater than or equal to five.

In resmetirom patients with NASH resolution, fibrosis also resolved in 50% of such patients and was decreased statistically significantly relative to all placebo patients.

Further, 36-week

results from our Phase 2 clinical trial in NASH showed:

Sustained, highly statistically significant (p<0.0001) reduction in liver fat compared with placebo on 36-week

and mean relative fat reduction of 37% with resmetirom treated patients in contrast with 8.5% with placebo patients;

Sustained, statistically significant reductions (p<0.0001) in resmetirom compared to placebo treated patients in low-density

lipoprotein cholesterol (LDL-C)

and apolipoprotein B (ApoB) of more than 20%, triglycerides (TG) of 36% and lipoprotein(a) of 37%;

Statistically significant reductions in liver enzymes (ALT, AST and GGT) relative to placebo (all p=0.002) and a 40% reduction in ALT in patients with elevated baseline levels (p=0.01);

Statistically significant reductions in fibrosis biomarkers in resmetirom treated patients as compared with placebo patients;

On liver biopsy, fibrosis was reduced by at least one point in 23% of placebo patients and 29% of resmetirom treated patients;

Very good all subject tolerability:

mostly mild and a few moderate adverse events, or AEs, which were balanced between drug treated patients and placebo patients;

An increase in incidence of a transient mild diarrhea at beginning of study, often a single episode, in resmetirom treated patients compared with placebo patients.

Resmetirom Phase 2 Clinical Trial in HeFH

In February 2018, we announced top-line

results from our Phase 2 clinical trial in HeFH.

In this trial, patients treated with resmetirom (placebo corrected) achieved highly significant (p< 0.0001) LDL-C

lowering of 18.8%, and 21% LDL-C

lowering in those patients receiving an optimal dose of resmetirom.

lowering was 28.5% in patients treated with resmetirom as compared to placebo in a prespecified group of patients who did not tolerate high intensity statin doses.

Highly significant (p<0.0001) and numerically similar results were observed with ApoB.

Highly significant (p<0.0001) TG (25-31%),

apolipoprotein CIII (22.7%), and Lp(a) lowering (26-33%)

were observed in all patients treated with resmetirom and certain prespecified subgroups, irrespective of statin treatment.

Resmetirom has been well-tolerated with mostly mild AEs and some moderate AEs, the numbers of which are balanced between placebo and drug-treatment groups.

Fewer than seven percent of patients did not complete the study, and patients who discontinued for AEs, all mild to moderate, were balanced between drug-treated and placebo patients.

There were two serious AEs in the study, both considered unrelated to treatment, one in a placebo and one in a drug-treated patient.

Lead Product Candidate—Resmetirom

We believe that resmetirom may be the first THR-agonist

product candidate in development for NASH that selectively targets the THR-ß

Active thyroid hormone, known as T3, interacts with two nuclear receptors, THR-α,

which is the predominant receptor expressed in most human tissues, including heart and bone, and THR-ß,

which has more restricted tissue expression, and is the predominant receptor responsible for metabolic actions in the liver, including both cholesterol- and TG-lowering.

Selective activation of the THR-ß

receptor in liver tissue is believed to favorably affect cholesterol and lipoprotein levels via multiple mechanisms, which may be complementary to those of other lipid-lowering therapies such as statin drugs.

We believe that these characteristics of THR-ß

activation by resmetirom will in turn lead to clinically meaningful reductions in LDL-C,

and plasma and liver TGs.

We believe that resmetirom is the first selective small molecule THR-ß

agonist compound.

Resmetirom, along with MGL-3745,

a potential backup compound to resmetirom, was discovered at Hoffmann-La

Roche, or Roche, in Nutley, New Jersey, by utilizing a novel functional assay that, unlike a simple receptor binding assay, assessed the functional activity of compounds which interacted with thyroid hormone receptors.

In a published study by Madrigal and Roche in the Journal of Medicinal Chemistry using this functional assay, resmetirom was shown to be highly selective for the THR-ß

receptor, with almost no effect on THR-α,

unlike other compounds purported in published studies to be ß -selective based on binding affinity, but which were shown to equally activate THR-α

in the novel functional assay.

activation by thyroid hormone and/or less selective THR agonists in tissues such as heart and bone.

We believe that resmetirom may be the first THR-agonist product candidate in development for NASH that selectively targets the THR-ß pathway.

Active thyroid hormone, known as T3, interacts with two nuclear receptors, THR-α, which is the predominant receptor expressed in most human tissues, including heart and bone, and THR-ß, which has more restricted tissue expression, and is the predominant receptor responsible for metabolic actions in the liver, including both cholesterol- and TG-lowering.

Selective activation of the THR-ßreceptor in liver tissue is believed to favorably affect cholesterol and lipoprotein levels via multiple mechanisms, which may be complementary to those of other lipid-lowering therapies such as statin drugs.

We believe that these characteristics of THR-ß activation by resmetirom will in turn lead to clinically meaningful reductions in LDL-C, and plasma and liver TGs.

We believe that resmetirom is the first selective small molecule THR-ß agonist compound.

Resmetirom, along with MGL-3745, a potential backup compound to resmetirom, was discovered at Hoffmann-La Roche, or Roche, in Nutley, New Jersey, by utilizing a novel functional assay that, unlike a simple receptor binding assay, assessed the functional activity of compounds which interacted with thyroid hormone receptors.

In a published study by Madrigal and Roche in the Journal of Medicinal Chemistry using this functional assay, resmetirom was shown to be highly selective for the THR-ß receptor, with almost no effect on THR-α, unlike other compounds purported in published studies to be ß -selective based on binding affinity, but which were shown to equally activate THR-α and THR-ß in the novel functional assay.

We believe that the ß-selectivity and liver-targeting properties of resmetirom are critically important for resmetirom’s beneficial metabolic actions in the liver, and enable avoidance of safety issues associated with THR-α activation by thyroid hormone and/or less selective THR agonists in tissues such as heart and bone.

In a variety of preclinical animal model studies, resmetirom showed enhanced safety relative to T3 or other thyroid agonists.

in human clinical trials, providing data to support the advancement of resmetirom into NASH and FH clinical trials.

In animal models, resmetirom demonstrated cholesterol lowering, liver TG lowering, and reduction of markers of NASH-related liver inflammation and fibrosis at drug levels similar to those that lowered LDL-C in human clinical trials, providing data to support the advancement of resmetirom into NASH clinical trials.

In chronic animal toxicology studies in dogs and rats, no effects on bone or cartilage histology were seen at any resmetirom dose in either species.

Resmetirom did not increase liver enzymes in Phase 1 studies and there were no bone and cartilage histologic findings in chronic animal toxicology studies.

Resmetirom Clinical and Non-Clinical

Development Program

To date, we have completed a series of Phase 1 and 2 clinical studies, Phase 2-enabling

preclinical good laboratory practice, or GLP, toxicology studies, and drug manufacturing studies to support further clinical development, including active pharmaceutical ingredient, or API, manufacturing and drug product development studies, drug metabolism studies, acute, subchronic and chronic animal toxicology studies, and other safety pharmacology and toxicology studies.

We have completed Phase 1 studies with resmetirom in a total of 252 subjects to evaluate the safety, tolerability, pharmacokinetics and pharmacodynamic effects of resmetirom.

Our Phase 1 studies included randomized, placebo-controlled, double-blind, single and 14-day

multiple-dose escalation studies, drug-interaction studies with statins, with the antidiabetic agent pioglitazone, and with the antiplatelet agent clopidogrel.

In addition, a study using radiolabeled resmetirom, a study of a tablet versus capsule formulation of resmetirom, and a multiple dose drug interaction and food effect study have also been completed.

In Phase 1 studies, resmetirom was well-tolerated up to 200 mg once daily.

The results of these studies suggest that resmetirom is suitable for once-daily oral dosing.

Currently there is an ongoing Phase 1 hepatic impairment study to characterize the safety and pharmacokinetics of resmetirom in patients with hepatic impairment, a Phase 1 drug-interaction study with warfarin, and a drug interaction study of resmetirom and pravastatin and simvastatin.

In a Phase 1 multiple ascending dose study in healthy subjects, the effects of resmetirom on lipid parameters were assessed as initial markers of pharmacodynamic activity (Atherosclerosis 230:373-380,

As illustrated in the figure below, daily doses of resmetirom ranging from 50 to 200 mg showed highly statistically significant reductions relative to placebo of up to 30% for LDL-C

(range, p=.05-<0.0001),

28% for non-high-density

lipoprotein cholesterol, or non-HDL-C

(range, p =0.027-p<0.0001)

and 24% for ApoB (range,

p =0.008-0.0004),

and statistical trends of up to 60% reduction in TG (range, p =0.13-0.016).

The near maximal lipid effects were observed at a resmetirom dose of 80 mg once-daily.

Resmetirom was well-tolerated at all doses, with no dose-related adverse events or liver enzyme, electrocardiography, or vital-sign changes.

At the highest dose of resmetirom (200 mg), there was a reversible reduction of 20% in the level of a precursor hormone to T3, free T4, which was significantly different from placebo (p < 0.0001) that may be explained by increased liver metabolism of free T4.

There was no change in thyrotropin, a pituitary hormone that regulates the level and production of thyroid hormone by the thyroid gland or T3, or other evidence of central thyroid axis dysfunction at any dose of resmetirom.

Change in Lipids After 14 Days

Change from Baseline (CFB) by mean % CFB calculated for each individual subject 24 h after 14th dose;

baseline value obtained just prior to first dose;

ApoB, apolipoprotein B;

Chol, total cholesterol;

LDL cholesterol directly measured;

TG, triglycerides (median %CFB).

In a Phase 2 double-blind, placebo-controlled, multi-center clinical trial, 116 patients with HeFH who were not at their LDL-C

goal were randomized in a 2:1 ratio to receive either resmetirom or placebo, in addition to their current cholesterol lowering regimen, which included approximately 75% taking high intensity statins (20/40 mg rosuvastatin or 80 mg atorvastatin), and about two-thirds

of patients also taking ezetimibe.

Compared to placebo, resmetirom treated patients achieved highly significant (p< 0.0001) LDL-C

lowering of 18.8%, and 21% LDL-C

lowering in those on an optimal dose of resmetirom.

lowering was 28.5% in resmetirom treated compared to placebo in a prespecified group of patients who did not tolerate high intensity statin doses.

Highly significant (p<0.0001) and numerically similar results were observed with ApoB.

Highly significant reductions (p<0.0001) in TG (25-31%),

ApoCIII (22.7%) and Lp(a) (26-33%)

were observed in all resmetirom treated patients and prespecified subgroups, irrespective of statin treatment.

In the NASH Phase 2 double-blind, placebo-controlled, multi-center clinical trial, 125 patients 18 years of age and older with liver biopsy-confirmed NASH were randomized at approximately 25 clinical sites in the United States.

Patients were randomized to receive either placebo (N=41) or resmetirom (N=84).

The starting dose in resmetirom-treated patients was 80 mg once a day.

The study employed an adaptive dosing design whereby, in a blinded fashion, the dose could be adjusted by small amounts (i.e.

20 mg up or down) or remain at

80 mg in each resmetirom-treated patient based on a pharmacokinetic analysis of drug level performed in each patient at 2 weeks.

The primary endpoint of the study was the reduction of liver fat at 12 weeks compared with baseline (relative change), assessed by MRI-PDFF, with efficacy confirmed at the end of the trial (36 weeks) by repeat MRI-PDFF and conventional liver biopsy to examine histological evidence for the resolution of NASH.

Other secondary endpoints included changes in clinically relevant biomarkers at 12 and 36 weeks, improvement in fibrosis by at least one stage with no worsening of steatohepatitis, and safety and tolerability.

Resmetirom demonstrated statistical significance (p<0.0001) in the primary endpoint, the relative reduction of liver fat on MRI-PDFF at 12 weeks.

At 36 weeks, statistically significant results were demonstrated in multiple histology endpoints including key secondary endpoints related to the reduction and resolution of NASH.

At 36 weeks, resmetirom treated patients demonstrated sustained, statistically significant (p<0.0001) reductions compared to placebo treated patients in LDL-C and ApoB of more than 20%, TGs of 36% and Lp(a) of 37%.

In addition, resmetirom demonstrated statistically significant reductions in liver enzymes (ALT, AST and GGT) relative to placebo (all p=0.002).

Published data showed that patients with >=30% PDFF reduction at Week 12 had a higher rate of NASH resolution and accompanying fibrosis reduction.

A secondary analysis of the Phase 2 NASH clinical trial further supported the potential of PDFF to predict NASH response.

Percentages of patients with NASH resolution at Week 36 increased with greater PDFF reduction (agreement between two independent pathologist central biopsy readers)

In resmetirom-treated patients with ≥ 50% fat reduction at Week 12, 64% had NASH resolution with a component response driven primarily by ballooning and inflammation

PDFF reduction ≥ 30 and ≥ 50% at Week 12 was associated with improvement in all NAS components including fibrosis reduction on subsequent liver biopsy and achievement of both endpoints:

NASH resolution and ≥ 1 point fibrosis reduction PDFF reduction ≥ 30 and ≥ 50% at Week 12 was also associated with fibrosis reduction on subsequent liver biopsy

These findings support the pathogenicity of liver steatosis in NASH and fibrosis progression.

Our goal is to become a leading biopharmaceutical company developing and commercializing innovative liver-directed, ß-selective thyroid hormone receptor agonists for the treatment of cardio-metabolic and liver disease, fibrosis and inflammation.

disease, fibrosis and inflammation.

A key element is building a multi-therapy NASH focused company.

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NASH is a disease driven by the growing epidemic of obesity, with a significant unmet need for approved therapies that are effective and well tolerated.

We believe resmetirom is an excellent candidate for the chronic treatment of NASH due to its safety profile and first-in-class

pleiotropic actions in liver cells and potential to reduce cardiovascular risk in NASH patients.

We believe resmetirom is an excellent candidate for the chronic treatment of NASH due to its safety profile and first-in-class pleiotropic actions in liver cells and potential to reduce cardiovascular risk in NASH patients.

Establish commercial capabilities to market resmetirom as a leading treatment for NASH.

If approved, we may choose either to establish a sales and marketing organization with technical expertise and supporting distribution capabilities to commercialize resmetirom, or to collaborate with one or more third parties to accomplish these tasks.

Patients with NASH are primarily managed by a concentrated group of liver specialists in the United States and Europe.

We believe this will enable us to launch resmetirom in NASH in a cost-effective, targeted manner.

Grow our pipeline through additional indications for resmetirom potentially including orphan indications.

We believe that resmetirom has the potential to be an effective treatment for other disease indications that are rare diseases or may be designated rare diseases and we may pursue orphan drug designation where possible.

If approved, we intend to establish a sales and marketing organization with technical expertise and supporting distribution capabilities to commercialize resmetirom in the United States and through a biopharma partner in rest of the world.

Patients with NASH and liver fibrosis are primarily managed by a concentrated group of NASH specialists in the United States.

We believe this will enable us to launch resmetirom in NASH in a cost-effective, targeted manner, in the United States.

Expand the resmetirom market opportunity to include patients with compensated NASH cirrhosis.

Madrigal is conducting a Phase 3 trial – MAESTRO-NASH OUTCOMES – to noninvasively evaluate the effects of resmetirom on progression to liver decompensation events in NASH patients with compensated cirrhosis.

A positive outcome is expected to support the full approval of resmetirom for noncirrhotic NASH, potentially accelerating the timeline to full approval.

In addition, this study has the potential to support an additional indication for resmetirom in patients with well-compensated NASH cirrhosis.

Target Indications

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In the United States, NAFLD is estimated to affect approximately 25% of the population, and approximately 25% of those will progress from NAFLD to NASH.

Current estimates place NASH prevalence at approximately 20 million people in the United States, or five to six percent of the adult population, with similar prevalence in Europe and Asia.

Current estimates place NASH prevalence at approximately 22 million people in the United States by 2024, with similar prevalence in Europe and Asia.

The prevalence of NASH is also increasing in developing regions due to the adoption of a more sedentary lifestyle and a diet consisting of processed foods with high fat and fructose content.

In addition to the accumulation of fat in the liver, NASH is characterized by inflammation and cellular damage with or without fibrosis, the first stage of liver scarring, which may ultimately progress to cirrhosis.

NASH is a severe condition that can lead to fibrosis and eventually progress to cirrhosis, portal hypertension, esophageal varices, ascites, liver cancer and liver failure.

Within NASH cirrhosis, patients can be categorized as being compensated or decompensated.

NASH with compensated cirrhosis is characterized by liver scarring / damage that reduces the ability to process blood supplied to the liver, though patients generally remain asymptomatic with normal liver function.

NASH patients with compensated cirrhosis are on the cusp of negative consequences associated with end-stage liver disease such as portal hypertension, esophageal varices, ascites, liver cancer and liver failure.

It is estimated that by 2024 the prevalent cirrhotic NASH population in the US will be approximately 2.4 million with the vast majority of these patients (2.1 million) being categorized as compensated.

The progression rate from compensated cirrhosis to decompensation, HCC, or death is ~20% over two years.

NASH is strongly associated with cardiovascular disease, or CVD, and the most common cause of death in NASH patients is CVD.

Progression to cirrhosis and other late-stage complications can occur within five to ten years after an initial NASH diagnosis.

NASH patients with type-2

diabetes have a heightened risk of NASH disease progression.

NASH patients with type-2 diabetes have a heightened risk of NASH disease progression.

Once the disease advances beyond NASH to such life-threatening conditions as liver cancer and liver failure, then liver transplantation is the only treatment alternative.

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However, based on our analysis of multiple market assessments, we estimate that the addressable NASH population is several million patients worldwide, and that NASH could become a multi-billion dollar market able to support multiple approved drug products.

Resmetirom Commercial Strategy

We have conducted quantitative and qualitative market research studies and secondary data analytics to inform the commercial strategy for resmetirom.

These studies and analytics evaluated the size of the market opportunity for resmetirom as well as physician, patient and payer perspectives on unmet needs in NASH patient care and the resmetirom product profile.

Based on published epidemiology data and an analysis of medical claims using ICD-10 disease diagnosis codes, we believe that approximately one million NASH patients in the US have been coded with NASH as of 2021.

Appropriate NASH patients with significant fibrosis within this group will be the initial focus of a potential resmetirom launch in the US.

Over time, as disease awareness improves and disease prevalence increases, we expect the number of identified NASH patients with significant fibrosis eligible for treatment to grow meaningfully following the potential launch of resmetirom.

Our market research indicates the following.

Key stakeholder audiences view NASH with significant fibrosis as an unmet medical need.

NASH specialist healthcare providers (hepatologists, gastroenterologists, a subset of endocrinologists and affiliated advanced practice providers) who currently manage patients with NASH perceive the urgency to treat NASH with significant fibrosis to be similar to uncontrolled type 2 diabetes.

In a market research survey, more than 70% of these healthcare providers indicated that they consider NASH with significant fibrosis to be a very high to extremely high unmet need.

A separate survey found that patients perceive NASH as a priority condition, with approximately 60% ranking NASH as a priority over their other comorbidities.

Patients reported low levels of satisfaction with current treatment options, and a majority of patients (~60%) strongly desire a new treatment for NASH.

Market research interviews conducted with payers found that the vast majority of payers consider NASH with significant fibrosis to be a high unmet need given the lack of approved treatment options and that they intend to cover new product entrants for the treatment of patients with NASH.

In market research conducted in Europe, payers indicated that the efficacy data demonstrated in our Phase 3 MAESTRO-NASH study may support reimbursement with key health technology assessment bodies in Europe similar to first-to-market products in disease categories with high unmet need.

In market research examining perceptions of the resmetirom product profile, U.S.

physicians prioritized NASH resolution, fibrosis improvement, reduction in liver stiffness and improvement in cardiovascular/metabolic risk parameters as key profile attributes.

Approximately 85% of physicians surveyed viewed the resmetirom product profile as offering high to extremely high clinical utility for the treatment of patients with NASH with significant fibrosis, with 40% of NASH specialists indicating anticipated use immediately at launch, if approved.

A key focus of our commercial strategy for the launch of resmetirom is educating physicians on the role of noninvasive tests for identifying patients who may be appropriate for resmetirom treatment and monitoring treatment response.

Multiple medical societies, including the American Association for the Study of Liver Disease (AASLD), European Association for the Study of the Liver (EASL), American Gastroenterological Association (AGA), American Association of Clinical Endocrinologists and American Heart Association (AHA) have published guidance documents or scientific statements that provide community physicians with information

about the use of noninvasive tests to identify and manage patients with NASH.

Our market research conducted in 2022 found that 80% of specialist healthcare providers managing patients with NASH in the U.S.

have access to FibroScan, a noninvasive test that measures liver stiffness to estimate progression of fibrosis in patients with liver disease.

By 2030, we believe, including based on published research, that the prevalence of NASH patients with significant fibrosis (excluding NASH patients with compensated cirrhosis) will be approximately 19.1 million patients across the US, Germany, France, United Kingdom, Italy, Spain and Japan.

To evaluate the potential value and cost effectiveness of resmetirom as a treatment for NASH patients with significant liver fibrosis, we have initiated a series of health economics outcomes research studies and published a preliminary cost-effectiveness model (Javanbakht, Pharmacoecon Open, 2022) using data from the Phase 2 study of resmetirom.

The cost-effectiveness model publication found that resmetirom is a potentially cost-effective treatment option for patients with NASH patients with significant liver fibrosis based on an analysis performed from a U.S.

commercial payer perspective.

In the U.S., the Institute for Clinical and Economic Review (“ICER”) performs value assessments of prescription drugs, medical tests, devices, and health system delivery innovations.

Payers frequently review ICER reports when making coverage decisions about new therapies.

In October 2022, ICER announced plans to perform a value assessment of resmetirom and obeticholic acid for the treatment of NASH.

We have engaged in the assessment process by responding to data requests from ICER and providing public comment on ICER’s cost-effectiveness modeling methods.

In February 2023, a “Draft Evidence Report” was released with ICER’s initial assessment of resmetirom cost-effectiveness.

Threshold analyses were conducted by ICER to calculate the annual price needed to meet commonly accepted cost-effectiveness thresholds for quality-adjusted life years (QALY) gained.

In ICER’s draft assessment, the annual price to achieve $50,000 per QALY gained is $31,700.

The annual price to achieve $100,000 per QALY gained is $39,400.

The cost-effectiveness threshold analyses included in ICER’s Draft Evidence Report are one input we will consider as we develop the pricing strategy for resmetirom.

Other inputs include primary market research with payers and our health economics outcomes research.

We plan to finalize and announce any U.S.

pricing of resmetirom following approval.

We are tailoring our commercial strategy in the U.S.

to support access and reimbursement for patients with different types of insurance coverage.

Based on an analysis of claims data, we estimate that approximately 55% of patients with NASH in the U.S.

have commercial insurance, 35% are insured through Medicare (half with the Medicare Part D Low Income Subsidy) and 10% through Medicaid.

To support patient access and affordability, we intend to establish a specialty pharmacy network to distribute resmetirom and a patient services hub to help patients initiate and remain adherent to resmetirom therapy.

Based on market research and an assessment of the potential market opportunity for therapies to treat NASH with significant fibrosis, we have developed a commercial strategy for the launch of resmetirom that focuses on NASH specialist healthcare providers (hepatologists, gastroenterologists and a subset of endocrinologists) who already treat NASH patients with significant fibrosis.

We estimate that there are 15,000 to 20,000 of these NASH specialists in the US.

We believe that a specialty pharmaceutical sales force of up to 200 field sales representatives and account managers in the U.S.

would be capable of reaching these healthcare providers during a launch of resmetirom.

In addition to educating healthcare providers, we intend to launch direct-to-patient marketing efforts to improve awareness of NASH and resmetirom.

Patient marketing initiatives will include unbranded NASH disease education resources prior to potential approval of resmetirom, followed by branded product advertising during the launch.

By 2030, we believe, including based on published studies, that the prevalence of NASH with compensated cirrhosis alone will be approximately 5.3 million patients across the US, Germany, France, United Kingdom, Italy, Spain and Japan.

In market research, NASH specialists indicated that the unmet need in NASH with compensated cirrhosis is seen as higher than the unmet need in NASH with significant fibrosis because patients with compensated cirrhosis are closer to progressing to negative outcomes.

Therefore, we believe that the

urgency to treat NASH patients with compensated cirrhosis will be high and resmetirom may be used in a larger proportion of NASH patients with compensated cirrhosis (relative to NASH patients with significant fibrosis).

By 2030, we believe, including based on published research, that the prevalence of NASH with significant fibrosis and NASH with compensated cirrhosis collectively will be approximately 24.4 million patients across the US, Germany, France, United Kingdom, Italy, Spain and Japan.

In 2022, we conducted market research examining physician perspectives on resmetirom’s potential treatment profile for patients with compensated NASH cirrhosis.

This research found that prescriber perceptions of efficacy and safety would improve if a medication were approved for use in patients with compensated NASH cirrhosis;

more than 40% of physicians indicated that an approval for the NASH-compensated cirrhosis population would increase their willingness to prescribe for patients with significant fibrosis.

Given that NASH patients with compensated cirrhosis require treatment from the same specialist physicians Madrigal is targeting for the launch of resmetirom in NASH with significant fibrosis, we anticipate that Madrigal will be able to support a potential expanded indication without a significant increase in the size of our commercial field force.

Over time, we believe primary care physicians will play a larger role in the management of patients with NASH, driven by factors that include improved disease awareness, uptake of noninvasive tests to screen and diagnose patients, and the growing global prevalence of NASH fueled by Western lifestyle.

We intend to commercialize resmetirom alone in the U.S.

and to engage with a strategic partner or partners for commercializing resmetirom in all ex-U.S.

We believe that the MAESTRO-NASH biopsy study results announced in December 2022 currently places resmetirom in a strong competitive position in Europe.

In a draft reflection paper on regulatory requirements for the development of medicinal products for chronic non-infectious liver diseases, the EMA indicated that conditional approval of NASH therapies in Europe may require achievement of two composite endpoints – (i) resolution of NASH with no worsening of the stage of fibrosis and (ii) improvement of fibrosis by at least one stage without any worsening of NASH – in a Phase 3 trial.

The draft reflection paper states that “efficacy in these two composites should be demonstrated in co-primary fashion, meaning that both will have to independently demonstrate a statistically significant and clinically relevant difference to placebo.” In the Phase 3 MAESTRO-NASH biopsy study, resmetirom achieved these composite endpoints.

Resmetirom in NASH

We are developing resmetirom for the treatment of non-cirrhotic

NASH with fibrosis.

Based on the scientific literature in human and animal studies, we believe that NASH livers in humans frequently have a deficiency in THR-ß

activity that leads to features of NASH, including fatty liver, inflammation and fibrosis, and that treatment with resmetirom will replace this hormone deficiency and be an effective NASH treatment.

and TGs in early-stage clinical trials, and its multiple beneficial effects in animal models of NASH.

We are developing resmetirom for the treatment of non-cirrhotic NASH with fibrosis and NASH with compensated cirrhosis.

Based on the scientific literature in human and animal studies, we believe that NASH livers in humans frequently have a deficiency in THR-ß activity that leads to features of NASH, including fatty liver, inflammation and fibrosis, and that treatment with resmetirom will replace this hormone deficiency and be an effective NASH treatment.

We believe that resmetirom is an excellent candidate for the chronic treatment of NASH because of its safety and tolerability profile observed to date in healthy subjects, its effects in reducing cardiovascular risk factors such as LDL-C and TGs in early-stage clinical trials, and its multiple beneficial effects in animal models of NASH.

CVD is the most common cause of death in patients with NASH.

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Resmetirom NASH Phase 2 and 3 Clinical Studies

In October 2016, we initiated a Phase 2 proof of concept clinical trial in patients with liver biopsy documented NASH, including those with type-2

diabetes, dyslipidemia and hypertension.

In the study we randomized 125 NASH patients 2:1, resmetirom or placebo QD in a double-blind, placebo-controlled, study of once-daily resmetirom versus placebo in patients with NASH, including those with type-2

In October 2016, we initiated a Phase 2 proof of concept clinical trial in patients with liver biopsy documented NASH, including those with type-2 diabetes, dyslipidemia and hypertension.

In the study we randomized 125

NASH patients 2:1, resmetirom or placebo QD in a double-blind, placebo-controlled, study of once-daily resmetirom versus placebo in patients with NASH, including those with type-2 diabetes.

Patients continued treatment through 36 weeks.

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Other secondary and exploratory endpoints included safety and tolerability, and effects on serum biomarkers at 12 and 36 weeks, lipid parameters, and biomarker measures of insulin sensitivity.

We reached our top-line

analysis of the primary endpoint in December 2017, and we reached our top-line

analysis of the secondary endpoint (NASH assessment on liver biopsy) in May 2018.

There was an extension study in a subset of the patients that completed the main 36-week

study which was completed in 2019.

We reached our top-line analysis of the primary endpoint in December 2017, and we reached our top-line analysis of the secondary endpoint (NASH assessment on liver biopsy) in May 2018.

There was an extension study in a subset of the patients that completed the main 36-week study which was completed in 2019.

Madrigal has ongoing Phase 3 resmetirom studies for patients with NASH or presumed NASH as discussed in detail in this report.

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Both resolution of steatohepatitis and improvement in fibrosis.

In March 2019, the Company announced that it had initiated a Phase 3 trial of resmetirom in patients with NASH.

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

Patients with liver biopsy confirmed NASH with stage 2 or 3 fibrosis will be randomized 1:1:1 to receive a single oral daily dose of placebo, resmetirom 80 mg or resmetirom 100 mg.

A second liver biopsy at week 52 in the first 900 patients will be the basis of filing for subpart H-accelerated

the primary endpoint pertains to the percent of patients treated with either dose of resmetirom as compared with placebo who achieve NASH resolution on the week 52 liver biopsy, defined as the absence of hepatocyte ballooning (score=0), and minimal lobular inflammation (score 0-1),

associated with at least a 2 point reduction in NAS, and no worsening of fibrosis stage.

Two key secondary endpoints are reduction in LDL-cholesterol

and a 1-point

or more improvement in fibrosis stage on the week 52 biopsy with no worsening of NASH.

Patients will continue in the study for a total of approximately 54 months and will be evaluated for a composite clinical outcome including cirrhosis on liver biopsy, or a liver related event such as hepatic decompensation.

The total anticipated enrollment is approximately 2,000 patients and is expected to include up to 15% high risk F1 fibrosis stage NASH patients whose efficacy responses will be evaluated as exploratory endpoints.

In December 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

In March 2019, the Company announced that it had initiated MAESTRO-NASH, a Phase 3 trial of resmetirom in patients with NASH.

MAESTRO-NASH is a multicenter, randomized, double-blind, placebo-controlled Phase 3 study of resmetirom in patients with liver biopsy-confirmed NASH and was initiated in March 2019.

After 52 weeks of treatment, a second liver biopsy is performed.

Achievement of either primary endpoint is considered a successful trial outcome.

A key secondary endpoint is lowering of LDL-C.

In December 2022, we reported topline results from the subpart H portion of the study:

resmetirom achieved both primary endpoints with both daily oral doses, 80 mg and 100 mg, relative to placebo, as summarized in “- Key Developments” above.

In December 2019 the Company announced it had opened for enrollment MAESTRO-NAFLD-1, a 52-week, double-blind, placebo controlled Phase 3 clinical study in 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.

Except for serial liver biopsies, the study protocol is similar to the MAESTRO-NASH study with resmetirom doses of 80 mg or 100 mg or placebo and includes key secondary lipid, MRI-PDFF

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.

Except for serial liver biopsies, the study protocol is similar to the MAESTRO-NASH study with resmetirom doses of 80 mg or 100 mg or placebo and includes key secondary lipid, MRI-PDFF 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.

The MAESTRO-NAFLD-1

study will help support the adequacy of the safety database at the time of NDA submission for subpart H approval or treatment of NASH in patients with F2 or F3 fibrosis.

MAESTRO-NAFLD-1

also includes an open label arm with approximately 170 non-cirrhotic

patients with NASH treated with 100 mg resmetirom.

Data from this open label portion of the MAESTRO-NAFLD-1

study have been reported at various professional society conferences, demonstrating statistically significant reductions from baseline in liver fat as assessed by MRI-PDFF

and Fibroscan CAP, as well as reductions in liver stiffness as determined by MRE and Fibroscan TE (a surrogate for liver fibrosis).

The MAESTRO-NAFLD-1 study will help support the adequacy of the safety database at the time of NDA submission for subpart H approval or treatment of NASH in patients with F2 or F3 fibrosis.

MAESTRO-NAFLD-1 also includes an open label arm with approximately 170 non-cirrhotic patients with NASH treated with 100 mg resmetirom.

Data from this open label portion of the MAESTRO-NAFLD-1 study have been reported at various professional society conferences, demonstrating statistically significant reductions from baseline in liver fat as assessed by MRI-PDFF and Fibroscan CAP, as well as reductions in liver stiffness as determined by MRE and Fibroscan TE (a surrogate for liver fibrosis).

Markers of liver fibrosis and inflammation were also reduced by resmetirom relative to baseline.

Additionally, atherogenic lipids, including LDL-cholesterol,

apolipoprotein B, triglycerides, and lipoprotein (a) were reduced relative to baseline.

Additionally, atherogenic lipids, including LDL-cholesterol, apolipoprotein B, triglycerides, and lipoprotein (a) were reduced relative to baseline.

The adverse event profile in this open label cohort has been similar to that observed in Phase 2.

The MAESTRO-NAFLD-1

open label arm over-enrolled and includes more than 150 patients with NASH and compensated cirrhosis to obtain a preliminary assessment of the use of resmetirom in patients with more advanced disease.

In January 2022, Madrigal announced topline results from the Phase 3 MAESTRO-NAFLD-1

safety study of resmetirom.

Primary and key secondary endpoints from the double-blind placebo-controlled 969-patient

portion of the study were achieved, as described herein.

The MAESTRO-NAFLD-1 open label arm over-enrolled and includes more than 150 patients with NASH and compensated cirrhosis to obtain a preliminary assessment of the use of resmetirom in patients with more advanced disease.

In January 2022, Madrigal announced topline results from the Phase 3 MAESTRO-NAFLD-1 safety study of resmetirom.

Primary and key secondary endpoints from the double-blind placebo-controlled 969-patient portion of the study were achieved, as described herein.

See “ – Key Developments” above.

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We subsequently assumed all of VIA’s rights in, to and under, and all of VIA’s obligations under, the Roche Agreement pursuant to an asset purchase agreement, dated September 14, 2011.

Pursuant to the terms of the Roche Agreement, we, as successor-in-interest

to VIA, assumed control of all development and commercialization of resmetirom and will hold exclusive worldwide rights for all potential indications.

Under the Roche Agreement, Roche exclusively licensed certain patent rights and know-how

relating to resmetirom in exchange for consideration consisting of an upfront payment, milestone payments, the remainder of which total $8 million and are tied to regulatory approval in the United States and Europe of resmetirom or any derivative product, and single-digit royalty payments based on net sales of resmetirom and any derivative products, subject to certain reductions.

Pursuant to the terms of the Roche Agreement, we, as successor-in-interest to VIA, assumed control of all development and commercialization of resmetirom and will hold exclusive worldwide rights for all potential indications.

Under the Roche Agreement, Roche exclusively licensed certain patent rights and know-how relating to resmetirom in exchange for consideration consisting of an upfront payment, milestone payments, the remainder of which total $8 million and are tied to regulatory approval in the United States and Europe of resmetirom or any derivative product, and single-digit royalty payments based on net sales of resmetirom and any derivative products, subject to certain reductions.

In 2011, we commenced Phase 1 clinical trials and subsequently paid Roche a related milestone payment.

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There are currently no therapeutic products approved and marketed for the treatment of NASH in North America and Europe.

There are several commercially available products that are currently used off-label

for NASH, such as vitamin E, an antioxidant, insulin sensitizers, such as pioglitazone, anti-hyperlipidemic agents, such as gemfibrozil, pentoxifylline, ursodiol and others.

There are several commercially available products that are currently used off-label for NASH, such as vitamin E, an antioxidant, insulin sensitizers, such as pioglitazone, anti-hyperlipidemic agents, such as gemfibrozil, pentoxifylline, ursodiol and others.

In addition, there are numerous drugs in development for the treatment of NASH.

We are aware of several companies that have product candidates in clinical development for the treatment of NASH, including Intercept Pharmaceuticals, Inc., Gilead Sciences, Inc., Galectin Therapeutics, Inc., Galmed Medical Research Ltd., Cirius Therapeutics, Novartis AG, Novo Nordisk A/S, Takeda, Inventiva, Boehringer Ingelheim GmbH, Bristol-Myers Squibb, Pfizer, Inc., Merck & Co., Lilly, Genentech, Sanofi S.A., NGM Biopharmaceutical, Viking Therapeutics, Akero Therapeutics, Enanta Pharmaceuticals, 89Bio Inc., Axcella, Can-Fite,

Hepion, NorthSea, Terns, Zydus Cadila and MedImmune LLC, and there are other companies with candidates in earlier stages of development.

Given resmetirom’s actions on the underlying biological pathways across the spectrum of early to late stages of NASH, its CV beneficial effects, and its complementary mechanism to other therapies, we believe that resmetirom has the potential to be used alone or in combination with some of these potential NASH products.

Glucagon-like peptide 1 (GLP-1) agonists play an increasing role in the management of patients with diabetes and obesity, and are being studied for the treatment of NASH in Phase 2 and Phase 3 trials.

Based on analysis of claims data, Madrigal estimates that approximately 6% of ICD-10 coded patients with NASH in the U.S.

are currently being treated with GLP-1 agonists for any indication.

As of the date of this filing, there have been no successful Phase 3 trials evaluating a GLP-1 agonist for the treatment of NASH.

Madrigal believes that resmetirom should have a competitive advantage based on its liver-directed efficacy, tolerability profile and once-daily oral dosing.

Madrigal anticipates that combination therapy with resmetirom and GLP-1 agonists may be used to manage NASH patients with significant fibrosis and comorbiditis such as diabetes or obesity Madrigal believes the introduction of GLP-1 medications for the treatment of NASH should not have a material adverse effect on market potential of resmetirom, if approved.

Sales and Marketing

Because we are focused on discovery and development of our product candidates, we currently have no sales, marketing or distribution capabilities in order to commercialize any approved product candidates.

If our product candidates are approved, we intend either to establish a sales and marketing organization with technical expertise and supporting distribution capabilities to commercialize our products, or to outsource this function to a third party.

Madrigal has established a commercial leadership team with expertise in launching pharmaceutical products.

As of the date of this filing, Madrigal has no field sales team and no product distribution capabilities.

As resmetirom nears potential accelerated approval in the U.S., we intend to expand our marketing organization, establish a sales organization, and build distribution capabilities to commercialize resmetirom.

Manufacturing

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We do not have long-term supply agreements for any of our product candidates and regularly obtain supplies and services related to our product candidates from CMO’s on a purchase order basis.

We currently have

a single source for API and finished product for resmetirom and are developing a second source for API.

We currently have a single source for API and finished product for resmetirom and are developing a second source for API.

We plan to continue to rely on CMOs for API, finished product, packaging, storage, and distribution for both clinical supplies and any of our product candidates that receive health authority approval.

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Patents and other proprietary rights are thus an essential element of our business.

We also rely on trade secrets, know-how,

continuing technological innovation and licensing opportunities to develop and maintain our competitive position.

Our success will depend in part on our ability to obtain and maintain patent and other proprietary protection for our current and future product candidates, technology and know-how,

to operate without infringing on the proprietary rights of others, and to prevent others from infringing our proprietary rights.

We also rely on trade secrets, know-how, continuing technological innovation and licensing opportunities to develop and maintain our competitive position.

Our success will depend in part on our ability to obtain and maintain patent and other proprietary protection for our current and future product candidates, technology and know-how, to operate without infringing on the proprietary rights of others, and to prevent others from infringing our proprietary rights.

We seek to protect our proprietary position by, among other methods, filing United States and foreign patent applications related to our proprietary technology, and maintaining the confidentiality of inventions and improvements that are important to the development of our business.

We own or co-own:

five United States and 32 foreign issued patents and allowed patent applications;

six United States and 45 foreign pending patent applications;

and two international patent applications filed under the Patent Cooperation Treaty.

As of December 7, 2022, we own or co-own:

five United States and 38 foreign issued patents;

five United States and 43 foreign pending patent applications;

and three international patent applications filed under the Patent Cooperation Treaty.

Each of these patents and applications relates to resmetirom, including composition-of-matter, certain dosage forms, methods of making resmetirom, its use in the treatment of key disease indications, or other THR beta analogs and uses thereof.

Our current patent portfolio covers the United States and certain other jurisdictions worldwide.

The two international patent applications can be used as the basis for multiple additional patent applications worldwide.

In addition, pursuant to the Roche Agreement, Roche granted us an exclusive license to certain United States and foreign patents and patent applications owned by Roche and Roche know-how

relating to resmetirom.

The three international patent applications can be used as the basis for multiple additional patent applications worldwide.

In addition, pursuant to the Roche Agreement, Roche granted us an exclusive license to certain United States and foreign patents and patent applications owned by Roche and Roche know-how relating to resmetirom.

The Roche Agreement imposes various diligence, milestone payment, royalty payment, insurance, indemnification, and other obligations on us.

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We have pending patent applications for resmetirom that, if issued, would be expected to expire in the United States and in countries outside of the United States between 2033 and 2042, excluding any patent term adjustment that might be available following the grant of the patent and any patent term extensions that might be available following the grant of marketing authorizations.

We have a pending patent application for other THR beta analogs that, if issued, would be expected to expire in the United States and in countries outside of the United States in 2043, excluding any patent term adjustment that might be available following the grant of the patent and any patent term extensions that might be available following the grant of marketing authorizations.

a pending patent application for other THR beta analogs that, if issued, would be expected to expire in the United States and in countries outside of the United States in 2043, excluding any patent term adjustment that might be available following the grant of the patent and any patent term extensions that might be available following the grant of marketing authorizations.

Our trademarks are protected under the common law and/or by registration in the United States and other countries.

We seek to protect our proprietary processes, in part, by confidentiality agreements and invention

assignment agreements with our personnel, including consultants and commercial partners.

We seek to protect our proprietary processes, in part, by confidentiality agreements and invention assignment agreements with our personnel, including consultants and commercial partners.

These agreements are designed to protect our proprietary information.

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A new drug must be approved by the FDA through the new drug application, or NDA, process before it may be legally marketed in the United States, and must be approved by foreign regulatory authorities via various analogous procedures before it can be marketed in the applicable country.

The animal and other non-clinical

data and the results of human clinical trials performed under an Investigational New Drug application, or IND, and under similar foreign applications will become part of the NDA.

The animal and other non-clinical data and the results of human clinical trials performed under an Investigational New Drug application, or IND, and under similar foreign applications will become part of the NDA.

United States Drug Development Process

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Some preclinical testing may continue even after the IND is submitted.

waiting period after the submission of each IND is required prior to the commencement of clinical testing in humans.

If during this 30-day

period the FDA does not raise any concerns or issues that must be addressed prior to the commencement of clinical trials or does not impose a clinical hold, the IND becomes effective 30 days following the FDA’s receipt of the IND and the clinical trial proposed in the IND may begin.

Clinical holds also may be imposed by the FDA at any time before or during studies due to safety concerns or non-compliance,

or other reasons.

A 30-day waiting period after the submission of each IND is required prior to the commencement of clinical testing in humans.

If during this 30-day period the FDA does not raise any concerns or issues that must be addressed prior to the commencement of clinical trials or does not impose a clinical hold, the IND becomes effective 30 days following the FDA’s receipt of the IND and the clinical trial proposed in the IND may begin.

Clinical holds also may be imposed by the FDA at any time before or during studies due to safety concerns or non-compliance, or other reasons.

All clinical trials must be conducted under the supervision of one or more qualified investigators in accordance with GCP.

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Phase 1 clinical trials are typically conducted in healthy human subjects, but in some situations are conducted in patients with the target disease or condition.

Phase 1 clinical trials are generally designed to evaluate the safety, dosage tolerance, absorption, metabolism, distribution and excretion of the product candidate in humans, and, if possible, to gain early evidence of effectiveness.

Phase 1 clinical trials are generally designed to evaluate the

safety, dosage tolerance, absorption, metabolism, distribution and excretion of the product candidate in humans, and, if possible, to gain early evidence of effectiveness.

This phase involves studies in a limited patient population to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product candidate for specific targeted diseases and to determine dosage tolerance and optimal dosage.

This phase involves trials undertaken to further evaluate dosage, clinical efficacy and safety in an expanded patient population at geographically dispersed clinical study sites.

These studies are

intended to establish the overall risk-benefit ratio of the product candidate and provide, if appropriate, an adequate basis for product approval and product labeling.

These studies are intended to establish the overall risk-benefit ratio of the product candidate and provide, if appropriate, an adequate basis for product approval and product labeling.

In most cases, the FDA requires two adequate and well controlled Phase 3 clinical trials to demonstrate the efficacy of the product candidate, although a single Phase 3 clinical trial with other confirmatory evidence may be sufficient in certain instances.

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The resubmitted application also is subject to review before the FDA accepts it for filing.

Once the submission is accepted for filing, the FDA begins an in-depth

substantive review.

The FDA’s PDUFA performance goals generally provide for action on an NDA within 10 months of the 60-day

Once the submission is accepted for filing, the FDA begins an in-depth substantive review.

The FDA’s PDUFA performance goals generally provide for action on an NDA within 10 months of the

60-day filing date.

That deadline can be extended under certain circumstances, including by the FDA’s requests for additional information.

The targeted action date can also be shortened to within 6 months of the 60-day

filing date for products that are granted priority review designation because they are intended to treat serious or life-threatening conditions and demonstrate the potential to address unmet medical needs.

The targeted action date can also be shortened to within 6 months of the 60-day filing date for products that are granted priority review designation because they are intended to treat serious or life-threatening conditions and demonstrate the potential to address unmet medical needs.

The FDA reviews an NDA to determine, among other things, whether a product is safe and effective for its intended use and whether its manufacturing is cGMP-compliant to assure and preserve the product’s identity, strength, quality and purity.

Before approving an NDA, the FDA will inspect the facility or facilities where the product is manufactured.

addition, the FDA often will conduct a bioresearch monitoring inspection of the clinical trial sites involved in conducting pivotal studies to ensure data integrity and compliance with applicable GCP requirements.

In addition, the FDA often will conduct a bioresearch monitoring inspection of the clinical trial sites involved in conducting pivotal studies to ensure data integrity and compliance with applicable GCP requirements.

The FDA may refer the NDA to an advisory committee for review, evaluation and recommendation as to whether the application should be approved and under what conditions.

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Priority review does not change the standard for approval, but may expedite the approval process.

Product candidates may qualify for review and approval under the subpart H-accelerated

approval pathway if the candidates are intended to treat a serious condition, provide meaningful therapeutic benefit over existing treatments, and demonstrate an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit or on an intermediate clinical endpoint.

Product candidates may qualify for review and approval under the subpart H-accelerated approval pathway if the candidates are intended to treat a serious condition, provide meaningful therapeutic benefit over existing treatments, and demonstrate an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit or on an intermediate clinical endpoint.

In clinical trials, a surrogate endpoint is a measurement of laboratory or clinical signs of a disease or condition that substitutes for a direct measurement of how a patient feels, functions, or survives.

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All promotional materials for drug candidates approved under the accelerated approval pathway are subject to prior review by the FDA.

If a sponsor fails to conduct any required post-approval trial with “due diligence” FDA may withdraw the drug from the market.

Further, on December 29, 2022, Congress enacted the Consolidated Appropriations Act of 2023, which included the Food and Drug Omnibus Reform Act (FDORA).

Under FDORA, FDA must specify the conditions for any post-approval studies by the date of the accelerated approval and gives the agency much flexibility in setting forth such conditions, which may include enrollment targets, study protocol and milestones – including the target date of study completion.

FDA may also require, as appropriate, that certain post-approval studies be

underway prior to accelerated approval or within a specified time from the date of approval.

Accelerated approval sponsors must submit progress reports every six months on required post-approval trials.

An approval letter authorizes commercial marketing of the product candidate with specific prescribing information for specific indications.

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The Food and Drug Administration Safety and Innovation Act, or FDASIA, which was enacted in 2012, made permanent the Pediatric Research Equity Act, or PREA, which requires a sponsor to conduct pediatric studies for most drugs and biologics, for a new active ingredient, new indication, new dosage form, new dosing regimen or new route of administration.

Under PREA, original NDAs and supplements thereto must contain a

pediatric assessment unless the sponsor has received a deferral or waiver.

Under PREA, original NDAs and supplements thereto must contain a pediatric assessment unless the sponsor has received a deferral or waiver.

The required assessment must assess the safety and effectiveness of the product for the claimed indications in all relevant pediatric subpopulations and support dosing and administration for each pediatric subpopulation for which the product is safe and effective.

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A deferral may be granted for several reasons, including a finding that the drug or biologic is ready for approval for use in adults before pediatric studies are complete or that additional safety or effectiveness data needs to be collected before the pediatric studies begin.

The FDA must send a non-compliance

letter to any sponsor that fails to submit the required assessment, keep a deferral current or fails to submit a request for approval of a pediatric formulation.

The FDA must send a non-compliance letter to any sponsor that fails to submit the required assessment, keep a deferral current or fails to submit a request for approval of a pediatric formulation.

Patent Term Restoration and Regulatory Exclusivities

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However, patent term restoration cannot extend the remaining term of a patent beyond a total of 14 years from the product’s approval date.

The patent term restoration period is generally one-half

the time between the effective date of an IND, and the submission date of an NDA, plus the time between the submission date of an NDA and the approval of that application, except that the period is reduced by any time during which the applicant failed to exercise due diligence.

The patent term restoration period is generally one-half the time between the effective date of an IND, and the submission date of an NDA, plus the time between the submission date of an NDA and the approval of that application, except that the period is reduced by any time during which the applicant failed to exercise due diligence.

Only one patent applicable to an approved drug is eligible for the extension, and the extension must be applied for prior to expiration of the patent and within 60 days of approval.

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In that instance, the exclusivity period does not preclude filing or review of an ANDA or 505(b)(2) application;

rather, the FDA is precluded from granting final approval to the ANDA or 505(b)(2) application until three years after approval of the RLD.

rather, the FDA is precluded from granting final approval to the ANDA or 505(b)(2)

application until three years after approval of the RLD.

Additionally, the exclusivity applies only to the conditions of approval that required submission of the clinical data.

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Pediatric exclusivity is another type of marketing exclusivity available in the United States.

The FDASIA made permanent the Best Pharmaceuticals for Children Act, or BPCA, which provides for an additional six

months of marketing exclusivity if a sponsor conducts clinical trials in children in response to a written request from the FDA, or a Written Request.

The FDASIA made permanent the Best Pharmaceuticals for Children Act, or BPCA, which provides for an additional six months of marketing exclusivity if a sponsor conducts clinical trials in children in response to a written request from the FDA, or a Written Request.

If the Written Request does not include studies in neonates, the FDA is required to include its rationale for not requesting those studies.

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Expedited Programs

The FDA maintains several programs to facilitate and expedite the development and review of drug applications that are intended for the treatment of a serious or life-threatening disease or condition for which there is no effective treatment and that demonstrate the potential to address unmet medical needs for such a disease or condition, including Fast Track Designation, Breakthrough Designation, Priority Review (discussed above in United States Review and Approval Processes), and the Accelerated Approval pathway (discussed above in United States Review and Approval Processes).

disease or condition, including Fast Track Designation, Breakthrough Designation, Priority Review (discussed above in United States Review and Approval Processes), and the Accelerated Approval pathway (discussed above in United States Review and Approval Processes).

Under the Fast Track Designation program, the sponsor of a new drug candidate may request that the FDA designate the drug candidate for a specific indication as a fast track drug concurrent with, or after, the filing of the IND for the drug candidate.

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The centralized procedure, which is compulsory for medicinal products produced by biotechnology or those medicinal products containing new active substances for specific indications such as the treatment of AIDS, cancer, neurodegenerative disorders, diabetes, viral diseases and designated orphan medicines, and optional for other medicines which are highly innovative.

Commission of a single marketing authorization that is valid for all EU member states within 67 days of receipt of the opinion.

Under the centralized procedure, a marketing application is submitted to the EMA where it will be evaluated by the Committee for Medicinal Products for Human Use and a favorable opinion typically results in the grant by the European Commission of a single marketing authorization that is valid for all EU member states within 67 days of receipt of the opinion.

The initial marketing authorization is valid for five years, but once renewed is usually valid for an unlimited period.

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These provisions require, among other things, that the prior authorization of an Ethics Committee and the submission and approval of a clinical trial authorization application be obtained in each Member State before commencing a clinical trial in that Member State.

As of January 31, 2022, the new EU Clinical Trials Regulation will apply.

The EU Clinical Trials Regulation will repeal and replace the EU Clinical Trials Directive, introduces a complete overhaul of the existing regulation of clinical trials for medicinal products in the EU, including a new coordinated procedure for authorization of clinical trials that is similar to the mutual recognition procedure for marketing authorization of medicinal products, and increased obligations on sponsors to publish clinical trial results.

On January 31, 2022, the EU Clinical Trials Regulation (EU) No 536/2014 (Clinical Trials Regulation) came into effect.

The Clinical Trials Regulation applies to clinical trials in all countries of the European Economic Area (EEA, i.e., the EU Member States plus Iceland, Norway and Liechtenstein).

The Clinical Trials Regulation allows investigators to start and conduct a clinical trial in accordance with the Clinical Trials Directive during a transitional period of one year after the application date (i.e., January 31, 2022).

Clinical trials authorized under the Clinical Trials Directive before January 31, 2023 can continue to be conducted under the Clinical Trials Directive until January 31, 2025.

An application to transition ongoing trials from the current Clinical Trials Directive to the new Clinical Trials Regulation will need to be submitted and authorized in time before the end of the transitional period.

The EU Clinical Trials Regulation introduces a complete overhaul of the existing regulation of clinical trials for medicinal products in the EU, including a new coordinated procedure for authorization of clinical trials that is similar to the mutual recognition procedure for marketing authorization of medicinal products, and increased obligations on sponsors to publish clinical trial results.

As in the United States, it may be possible in foreign countries to obtain a period of market and/or data exclusivity that would have the effect of postponing the entry into the marketplace of a competitor’s generic product.

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Significant uncertainty exists regarding the coverage and reimbursement status of products approved by the FDA and other government authorities.

In the United States, sales of any products for which we may receive

regulatory approval for commercial sale will depend in significant part on the availability and adequacy of coverage and reimbursement from third-party payors.

In the United States, sales of any products for which we may receive regulatory approval for commercial sale will depend in significant part on the availability and adequacy of coverage and reimbursement from third-party payors.

Third-party payors include government authorities, managed care providers, private health insurers and other organizations.

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government and state legislatures have shown significant interest in implementing cost containment programs to limit the growth of government-paid health care costs, including price controls, restrictions on reimbursement and requirements for substitution of generic products for branded prescription drugs.

For example, the Patient Protection and Affordable Care Act, as amended the ACA, contains provisions that may reduce the profitability of drug products, including, for example, increased rebates for drugs reimbursed by Medicaid programs, extension of Medicaid rebates to Medicaid managed care plans, mandatory discounts for certain Medicare Part D beneficiaries and annual fees based on pharmaceutical companies’ share of sales for branded prescription drugs to federal health care programs.

by Medicaid programs, extension of Medicaid rebates to Medicaid managed care plans, mandatory discounts for certain Medicare Part D beneficiaries and annual fees based on pharmaceutical companies’ share of sales for branded prescription drugs to federal health care programs.

Adoption of government controls and measures, and tightening of restrictive policies in jurisdictions with existing controls and measures, could limit payments for pharmaceuticals.

On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022, or IRA, which, among other things, establishes Medicare Part B and Part D inflation rebate schemes.

Failure to timely pay a Part B or Part D inflation rebate is subject to a civil monetary penalty.

The IRA also creates a drug price negotiation program under which the prices for Medicare units of certain high Medicare spend drugs and biologics without generic or biosimilar competition will be capped by reference to, among other things, a specified non-federal average manufacturer price, starting in 2026.

Failure to comply with requirements under the drug price negotiation program is subject to an excise tax and/or a civil monetary penalty.

The IRA further makes changes to the Medicare Part D benefit, including a limit on annual out-of-pocket costs, and a change in manufacturer liability on account of a new discount program which could negatively affect the profitability of our product candidates.

Failure to pay a discount under this new program will be subject to a civil monetary penalty.

Congress continues to examine various policy proposals that may result in pressure on the prices of prescription drugs in the government health benefit programs.

The IRA or other legislative changes could impact the market conditions for our product candidate.

The marketability of any products for which we receive regulatory approval for commercial sale may suffer if the government and third-party payors fail to provide adequate coverage and reimbursement.

In addition, an increasing emphasis on cost containment measures in the United States has increased and we expect will continue to increase the pressure on pharmaceutical pricing.

In addition, an emphasis on cost containment measures in the United States has increased and we expect will continue to increase the pressure on pharmaceutical pricing.

Coverage policies and third-party reimbursement rates may change at any time.

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Human Capital

As of February 21, 2022, we had seventy one full-time employees, including fifty two engaged in research, development, and regulatory activities, and nineteen in executive, commercial, general and administrative

functions, and multiple part-time consultants.

As of February 20, 2023, we had 92 full-time employees, including 66 engaged in research, development, and regulatory activities, and 26 in executive, commercial, general and administrative functions, and multiple part-time consultants.

We believe that our future success will be shaped by our continued ability to attract and retain highly skilled employees.

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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-K

Item 1. Business