What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-08-08 compared with 2023-05-09 · 61 added, 24 removed, 123 unchanged (41% of the section changed)

27 unchanged sentences

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 patients with NASH with fibrosis.

Using noninvasive measures, MAESTRO-NAFLD-1 was designed to provide incremental safety information to support the NASH indication as well as provide additional data regarding clinically relevant key secondary efficacy endpoints to better characterize the potential clinical benefits of resmetirom on cardiovascular- and liver-related endpoints.

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.

An additional open-label active treatment arm in 180 patients with early (well-compensated) NASH cirrhosis was conducted.

Resmetirom was safe and well tolerated in the MAESTRO-NAFLD-1 open-label cohort of patients with well-compensated NASH cirrhosis.

As observed in patients with noncirrhotic NASH, mild GI adverse events were seen at the beginning of therapy.

Resmetirom reduced LDL-C, other atherogenic lipids and lipoproteins, and MRI-PDFF in patients with NASH cirrhosis and also reduced liver and spleen volume.

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.

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.

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.

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Key Developments

In July 2023, Madrigal announced the completion of the rolling submission of its New Drug Application (NDA) to the FDA for resmetirom for the treatment of adults with NASH with liver fibrosis, a disease with no approved therapy.

Madrigal has requested a priority review of the resmetirom NDA.

In April 2023, Madrigal announced that resmetirom has received Breakthrough Therapy designation from the FDA for the treatment of patients with NASH with liver fibrosis.

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

There have been no material changes in our critical accounting policies and significant judgments and estimates during the three months ended March 31, 2023, as compared to those disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the SEC on February 23, 2023.

There have been no material changes in our critical accounting policies and significant judgments and estimates during the six months ended June 30, 2023, as compared to those disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the SEC on February 23, 2023.

Results of Operations

Three months Ended March 31, 2023 and 2022

The following table provides comparative unaudited results of operations for the three months ended March 31, 2023 and 2022 (in thousands):

Three Months Ended March 31,

Three Months Ended June 30, 2023 and 2022

The following table provides comparative unaudited results of operations for the three months ended June 30, 2023 and 2022 (in thousands):

Three Months Ended June 30,

Increase / (Decrease)

3 unchanged sentences

Interest Expense

We had no revenue for the three months ended March 31, 2023 and 2022.

We had no revenue for the three months ended June 30, 2023 and 2022.

Research and Development Expenses

Our research and development expenses were $62.2 million for the three months ended March 31, 2023, compared to $47.9 million in the corresponding period in 2022.

Research and development expenses increased by $14.2 million in the 2023 period due primarily to the additional activities related to our Phase 3 clinical trials, including MAESTRO-NASH Outcomes for which no expenses were incurred in the prior year quarter, an increase in headcount, and an increase in stock compensation expense.

Our research and development expenses were $68.6 million for the three months ended June 30, 2023, compared to $58.5 million in the corresponding period in 2022.

Research and development expenses increased by $10.1 million in the 2023 period due primarily to the additional activities related to our Phase 3 clinical trials, including MAESTRO-NASH Outcomes, an increase in headcount, and an increase in stock compensation expense.

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

General and Administrative Expenses

Our general and administrative expenses were $16.2 million for the three months ended March 31, 2023, compared to $9.7 million in the corresponding period in 2022.

Our general and administrative expenses were $17.8 million for the three months ended June 30, 2023, compared to $11.8 million in the corresponding period in 2022.

General and administrative expenses increased by $6.1 million in the 2023 period due primarily to increases in commercial preparation activities, including a corresponding increase in headcount, and an increase in stock compensation expense.

1 unchanged sentence

Interest Income

Our net interest income was $3.8 million for the three months ended March 31, 2023, compared to $0.1 million in the corresponding period in 2022.

Our net interest income was $3.6 million for the three months ended June 30, 2023, compared to $0.3 million in the corresponding period in 2022.

The increase in interest income was due primarily to higher principal balances and interest rates in 2023.

Interest Expense

Our interest expense was $2.3 million for the three months ended March 31, 2023, compared to $0 million in the corresponding period in 2022.

The increase in interest expense was as a result of the Loan Facility we entered into with Hercules during the second quarter of 2022.

Our interest expense was $2.9 million for the three months ended June 30, 2023, compared to $0.8 million in the corresponding period in 2022.

The increase in interest expense was primarily as a result of higher outstanding principal balances during the period under the Loan Facility with Hercules.

Six Months Ended June 30, 2023 and 2022

The following table provides comparative unaudited results of operations for the six months ended June 30, 2023 and 2022 (in thousands):

Six Months Ended June 30,

Increase / (Decrease)

Research and Development Expenses

General and Administrative Expenses

Interest (Income)

Interest Expense

We had no revenue for the six months ended June 30, 2023 and 2022.

Research and Development Expenses

Our research and development expenses were $130.8 million for the six months ended June 30, 2023, compared to $106.4 million in the corresponding period in 2022.

Research and development expenses increased by $24.3 million in the 2023 period due primarily to the additional activities related to our Phase 3 clinical trials, including MAESTRO-NASH Outcomes, an increase in headcount, and an increase in stock compensation expense.

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

General and Administrative Expenses

Our general and administrative expenses were $34.0 million for the six months ended June 30, 2023, compared to $21.4 million in the corresponding period in 2022.

General and administrative expenses increased by $12.6 million in the 2023 period due primarily to increases in commercial preparation activities, including a corresponding increase in headcount, and an increase in stock compensation expense.

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

Interest Income

Our net interest income was $7.3 million for the six months ended June 30, 2023, compared to $0.4 million in the corresponding period in 2022.

The increase in interest income was due primarily to higher principal balances and interest rates in 2023.

Interest Expense

Our interest expense was $5.2 million for the six months ended June 30, 2023, compared to $0.8 million in the corresponding period in 2022.

The increase in interest expense was primarily as a result of higher outstanding principal balances during the period under the Loan Facility with Hercules.

Liquidity and Capital Resources

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

As of March 31, 2023, we had cash, cash equivalents and marketable securities totaling $329.5 million compared to $358.8 million as of December 31, 2022, with this decrease attributable to funding of operations, partially offset by $35.0 million drawn from the Loan Facility with Hercules and proceeds from the exercise of stock options.

As of June 30, 2023, we had cash, cash equivalents and marketable securities totaling $298.4 million compared to $358.8 million as of December 31, 2022, with this decrease attributable to funding of operations, partially offset by $50.0 million drawn from the Loan Facility with Hercules, proceeds from the exercise of stock options, and proceeds from the at-the-market sales agreement with Cowen and Company, LLC (“Cowen”).

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

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

While our rate of cash usage will likely increase in the future, in particular to support our product development and clinical trial efforts, as well as preparation for commercialization, we believe our available cash resources as of March 31, 2023 will be sufficient to fund our operations past one year from the issuance of the financial statements contained herein.

While our rate of cash usage will likely increase in the future, in particular to support our product development and clinical trial efforts, as well as preparation for commercialization, we believe our available cash resources as of June 30, 2023 will be sufficient to fund our operations past one year from the issuance of the financial statements contained herein.

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

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Furthermore, any sales of additional equity securities may result in dilution to our stockholders, and any debt financing may include covenants that restrict our business.

At-the-Market Sales Agreement

On May 9, 2023, the Company entered into Amendment No.

1 (the “Amendment”) to the Sales Agreement, dated June 1, 2021 (as amended, the “Sales Agreement”) with Cowen, which Amendment increased by up to an additional $200,000,000 the amount of common stock that can be issued and sold by the Company from time to time through or to Cowen under the Sales Agreement, acting as agent or principal.

Sales of our common stock, if any, under the Sales Agreement will be made by any method that is deemed to be an “at the market” offering as defined in Rule 415(a)(4) of the Securities Act of 1933, as amended.

The Company has no obligation to sell any common stock and may at any time suspend offers under the Sales Agreement or terminate the Sales Agreement pursuant to its terms.

Loan Facility

Please see “Note 6 – Long Term Debt” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for information on our Loan Facility with Hercules.

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

Three Months Ended March 31,

Six Months Ended June 30,

Net cash used in operating activities

Net cash (used in) provided by investing activities

Net cash provided by (used in) investing activities

Net cash provided by financing activities

Net increase (decrease) in cash and cash equivalents

Net cash used in operating activities was $84.1 million for the three months ended March 31, 2023, compared to $49.9 million for the corresponding period in 2022.

Net cash used in operating activities was $159.4 million for the six months ended June 30, 2023, compared to $107.3 million for the corresponding period in 2022.

The use of cash in these periods resulted primarily from our losses from operations, as adjusted for non-cash charges for stock-based compensation, and changes in our working capital accounts.

Net cash used in investing activities was $186.9 million for the three months ended March 31, 2023, compared to $55.9 million provided by for the corresponding period in 2022.

Net cash used in investing activities for the three months ended March 31, 2023 consisted of $198.8 million of purchases of marketable securities for our investment portfolio, partially offset by $12.0 million from sales and maturities of marketable securities.

Net cash provided by for the corresponding period in 2022 consisted of $93.5 million from sales and maturities of marketable securities, partially offset by $37.6 million of purchases of marketable securities for our investment portfolio.

Net cash provided by financing activities was $52.7 million for the three months ended March 31, 2023, compared to $0 million for the corresponding period in 2022.

Financing activities for the three months ended March 31, 2023 consisted of $35.0 million from issuance of the Loan Facility and $17.9 million from proceeds from the exercise of common stock options, partially offset by $0.2 million of loan issuance costs.

Net cash used in investing activities was $190.6 million for the six months ended June 30, 2023, compared to $75.2 million provided by for the corresponding period in 2022.

Net cash used in investing activities for the six months ended June 30, 2023 primarily consisted of $290.7 million of purchases of marketable securities for our investment portfolio, partially offset by $100.2 million from sales and maturities of marketable securities.

Net cash provided by investing activities for the corresponding period in 2022 primarily consisted of $191.8 million from sales and maturities of marketable securities, partially offset by $116.5 million of purchases of marketable securities for our investment portfolio.

Net cash provided by financing activities was $95.6 million for the six months ended June 30, 2023, compared to $49.1 million for the corresponding period in 2022.

Financing activities for the six months ended June 30, 2023 consisted of $50.0 million from borrowings under the Loan Facility, $24.2 million of proceeds from the exercise of common stock options, and $21.8 million from sales of our common stock under the 2023 Sales Agreement, partially offset by $0.3 million of loan issuance costs.

Contractual Obligations and Commitments

Except for the future minimum payments due on the Loan Facility with Hercules set forth in “Note 6 – Long Term Debt” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, no significant changes to contractual obligations and commitments occurred during the three months ended March 31, 2023, as compared to those disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the SEC on February 23, 2023.

Except for the future minimum payments due on the Loan Facility with Hercules set forth in “Note 6 – Long Term Debt” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, no significant changes to contractual obligations and commitments occurred during the six months ended June 30, 2023, as compared to those disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the SEC on February 23, 2023.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis