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Item 1. Business

2024-02-28 compared with 2023-02-23 · 322 added, 304 removed, 323 unchanged (66% of the section changed)

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Executive Overview

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.

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

We are a clinical-stage biopharmaceutical company pursuing novel therapeutics for nonalcoholic steatohepatitis, or NASH, a liver disease with high unmet medical need.

Our lead candidate, resmetirom, is a once-daily, oral, liver-directed thyroid hormone receptor-β (THR-β) agonist designed to target key underlying causes of NASH.

NASH Disease State Overview.

NASH is a more advanced form of nonalcoholic fatty liver disease (NAFLD).

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

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

Progression of NASH to end stage liver disease will soon surpass all other causes of liver failure requiring liver transplantation.

Importantly, beyond these critical conditions, NASH and NAFLD patients additionally suffer heightened cardiovascular risk and, in fact, die more frequently from cardiovascular events than from liver disease.

NASH and NAFLD have grown as a consequence of rising worldwide obesity-related disorders.

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 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.

Our Completed Studies.

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, 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.

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.

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.

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

This double-blind, placebo-controlled study 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.

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:

NASH is the leading cause of liver transplants in the U.S.

for women, and is expected to soon be the leading cause of liver transplants overall.

Additionally, patients with NASH, especially those with more advanced metabolic risk factors (hypertension, concomitant type 2 diabetes), are at increased risk for adverse cardiovascular events and increased morbidity and mortality.

Once patients progress to NASH with significant fibrosis (consistent with fibrosis stages 2 and 3), the risk of adverse liver outcomes increases substantially.

NASH is also known as “metabolic dysfunction-associated steatohepatitis (MASH)” following a change in disease nomenclature introduced by hepatology medical societies in 2023.

Our Patient Focus.

Madrigal estimates that approximately 1.5 million patients have been diagnosed with NASH in the U.S., of which approximately 525,000 have NASH with significant fibrosis.

Madrigal estimates that approximately 315,000 diagnosed patients with NASH with significant fibrosis are under the care of the liver specialist physicians Madrigal will be targeting during the planned launch of resmetirom following approval.

Our Clinical Development Program.

Madrigal is currently conducting multiple Phase 3 clinical trials to evaluate the safety and efficacy of resmetirom for the treatment of NASH, including the pivotal MAESTRO-NASH biopsy study in patients with significant fibrosis, the MAESTRO-NASH Outcomes study in patients with NASH with compensated cirrhosis and the MAESTRO-NAFLD-1 safety study.

Positive results from the pivotal MAESTRO-NASH biopsy study were published in the New England Journal of Medicine in February 2024.

Data from the 52-week first 1,000 patient portion of MAESTRO-NASH, together with data from MAESTRO-NAFLD-1, the open-label extension of the MAESTRO-NAFLD-1 study, Phase 2 and Phase 1 data, including safety parameters, formed the basis for Madrigal’s subpart H submission to the FDA for accelerated approval of resmetirom for treatment of NASH with liver fibrosis.

The following chart summarizes the status of our Phase 3 clinical development program for resmetirom:

Trial MAESTRO-NASH

Significant Fibrosis

MAESTRO-NAFLD-1

MAESTRO-NASH OUTCOMES

Compensated Cirrhosis

Study Design Evaluates NASH resolution and/or fibrosis improvement on liver biopsy and composite clinical events Evaluates safety & tolerability as measured by incidence of adverse events Event-driven trial evaluating progression to hepatic decompensation

Study Duration 52 weeks biopsy (completed);

54 months clinical outcomes

52 weeks (completed) ~36 months

Patient Enrollment ~1,750 patients (ongoing)

~1,200 patients, including 200 with compensated cirrhosis

~700 patients (recruiting)

Key Developments

In February 2024, primary results from the MAESTRO-NASH study were published in the New England Journal of Medicine.

In September 2023, Madrigal announced we had commenced a public underwritten offering of common stock and pre-funded warrants to purchase common stock (the “Offering”).

The Offering closed in October 2023.

We received gross proceeds totaling $500.0 million.

Our net proceeds were $472.0 million, after deducting fees and commissions.

We intend to use the net proceeds from the Offering for our clinical and commercial activities in preparation for a potential launch of resmetirom in the U.S.

and for general corporate purposes, including, without limitation, research and development expenditures, clinical trial expenditures, manufacture and supply of drug substance and drug products, potential acquisitions or licensing of new technologies, capital expenditures and working capital.

Also in September 2023, Madrigal announced our Board of Directors (the “Board”) appointed Bill Sibold as the President and Chief Executive Officer of the Company.

In connection with this appointment, the size of the Board was increased to nine, and Mr.

Sibold was also appointed a member of the Board.

Sibold’s start date, he assumed the duties and responsibilities of the Company’s principal executive officer from Paul Friedman, M.D., who previously served as the Chief Executive Officer since July of 2016.

Friedman continues to serve on the Board as a director of the Company.

Additionally in September 2023, the U.S.

Food and Drug Administration (the “FDA”) informed Madrigal that it accepted for review our New Drug Application (“NDA”) for resmetirom for the treatment of adult patients with NASH with liver fibrosis and granted a Priority Review designation.

The FDA assigned a Prescription Drug User Fee Act (“PDUFA”) date of March 14, 2024, the target date by which the FDA intends to complete its review and take action on the NDA.

The FDA noted in its September 2023 correspondence that it was not currently planning to hold an advisory committee meeting to discuss our application.

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

Breakthrough Therapy designation is a process intended to expedite the development and review of drugs for serious or life-threatening conditions.

The criteria for breakthrough therapy designation require preliminary clinical evidence that demonstrates the drug may have substantial improvement on at least one clinically significant endpoint over available therapy, or over placebo if there is no available therapy.

A drug that receives Breakthrough Therapy designation is eligible for more intensive guidance on an efficient drug development program and organizational commitment involving senior managers from FDA.

Also in April 2023, Madrigal announced that the outcomes portion of the Phase 3 MAESTRO-NASH biopsy trial completed enrollment.

Enrollment of the MAESTRO-NASH study was closed at approximately 1,750 patients based on the enrollment target of the 54-month long-term clinical outcome portion of the study.

Clinical Trial Overview

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.

In December 2022, Madrigal announced topline results from the pivotal Phase 3 MAESTRO-NASH biopsy study of resmetirom and the primary results were published in the New England Journal of Medicine in February 2024.

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.

The primary efficacy analysis assessed histological response at 52 weeks in 955 patients with biopsy-confirmed NASH with significant 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).

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Resmetirom 100 mg

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

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

≥1-stage improvement in fibrosis with no worsening of NAS

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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:

The frequency of serious adverse events (SAEs) was similar across treatment arms in the MAESTRO-NASH trial:

11%, 13% and 12% for the 80 mg, 100 mg, and placebo groups, respectively.

The rate of study discontinuation for adverse events was low:

The rate of study discontinuation for adverse events over the entire treatment period was low:

2.8%, 7.7% and 3.4 % for the 80 mg, 100 mg and placebo groups, respectively.

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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 27%, 33%, 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.

Approximately 50% of the diarrhea AEs were described as “worsening of preexisting diarrhea” or “intermittent/loose stool(s)”;

no episodes of severe diarrhea were reported.

The median duration of diarrhea was approximately 15-20 days, independent of resmetirom dose.

Study data indicated resmetirom treatment had no effect on heart rate or body weight and was not associated with arrhythmias.

Blood pressure appeared slightly reduced among resmetirom-treated patients.

Sex hormones were unchanged from baseline.

Independent of thyroxine replacement status, resmetirom treatment reduced prohormone T4, as reflected by free thyroxine (FT4), by approximately 16-19% with no effect on thyroid-stimulating hormone (TSH) or the active thyroid hormone, free triiodothyronine (FT3).

Relative to placebo resmetirom treated patients did not show increases in fractures, or fracture risk scores.

MAESTRO-NASH Safety Summary (Primary Population)

Resmetirom 80 mg (n = 322)

Resmetirom 100 mg (n = 323)

Placebo (n = 321)

Grade 1 (mild)

Grade 2 (moderate)

≥Grade 3 (severe)

≥1 drug-related AEs

≥1 serious AE

≥1 drug-related serious AE

TEAEs leading to study discontinuation prior to Week 52

TEAEs leading to study discontinuation (entire treatment period)

3-pt MACE** (adjudicated)

Other cardiovascular event (adjudicated)

Common AEs (>10%)

Urinary tract infection

*None of the fatal AEs in the table were treatment-related AEs.

**Nonfatal stroke, nonfatal myocardial infarction, and cardiovascular death.

AE, adverse event;

GI, gastrointestinal;

MACE, major adverse cardiovascular event;

TEAE, treatment emergent adverse event.

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.

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

The MAESTRO-NAFLD-1 study was published in Nature Medicine in November 2023.

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.

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Consistent with published data, the most common adverse event reported with greater frequency in the resmetirom groups vs placebo was generally mild diarrhea or increased stool frequency at the beginning of therapy, which occurred in 9% and ~17% over the placebo rate in the 80 and 100 mg dose groups, respectively.

Safety population

80 mg Resmetirom

100 mg Placebo

Safety population (N=327) (N=324) (N=318)

At least one TEAE 289 (88.4) 279 (86.1) 260 (81.8)

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TEAE ≥ Grade 3 Severity 26 (8.0) 29 (9.0) 29 (9.1)

AE discontinuations from study

All treatments combined, n=21;

AE discontinuations from study All treatments combined, n=21;

80 mg Resmetirom

100 mg Placebo

Maximum NCI CTCAE Severity Grade

Grade 1 99 (30.3) 99 (30.6) 92 (28.9)

Grade 2 164 (50.2) 151 (46.6) 139 (43.7)

Diarrhea 76 (23.2) 101 (31.2) 44 (13.8)

Nausea 38 (11.6) 59 (18.2) 25 (7.9)

AE (adverse event);

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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

100 mg OL Resmetirom

80 mg p-value Resmetirom 100

mg p-value Placebo

LDLc %CFB (SE) (Week 24) -21 (1.9) -12.7 (2.1) <.0001 -14.4 (2.1) <.0001 -1.7 (2.0)

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Liver volume PDFF correction %CFB -61 %

Triglycerides baseline >150 mg/dL, CFB (SE)

Triglycerides baseline >150 mg/dL (geomean) %CFB (95% CI)

-21.5 (-28.0 to

-2.1 (-10.6 to

Triglycerides baseline >150 mg/dL, CFB (SE) -65 (8.3) -55.6 (8.6) NA -59 (6.5) NA -6.9 (16.1)

Triglycerides baseline >150 mg/dL (geomean) %CFB (95% CI) -25 (3.1) -19.5 (-27.0 to -11.1) =.0005 -21.5 (-28.0 to -14.3) <.0001 -2.1 (-10.6 to 7.4)

CFB (change from baseline);

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

MASESTRO-NASH OUTCOMES.

MAESTRO-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.

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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.

In addition, this study has the potential to support an additional indication for resmetirom in patients with 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.

The Company successfully completed its Phase 2 clinical trial in NASH in 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.

This clinical trial was published in the Lancet in 2019.

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 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.

Resmetirom is a once-daily, oral, liver-directed THR-β agonist designed to target key underlying causes of NASH.

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-ß 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 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.

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.

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

Resmetirom is the only investigational medication for the treatment of NASH that has achieved two primary endpoints that FDA proposed as reasonably likely to predict clinical benefit in a Phase 3 trial:

NASH resolution with no worsening of fibrosis and fibrosis reduction with no worsening of NAFLD activity score (NAS).

Our goal is to become a leading biopharmaceutical company developing and commercializing innovative medications for the treatment of NASH.

To achieve our goal, we plan to:

Complete clinical development and seek regulatory approval of resmetirom in NASH.

We successfully completed a Phase 2 clinical trial in NASH in 2018.

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.

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

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.

• Obtain regulatory approval of resmetirom in NASH.

The resmetirom pivotal Phase 3 trial is the only Phase 3 trial in NASH to achieve both primary endpoints that FDA proposed as reasonably likely to predict clinical benefit:

NASH resolution with no worsening of fibrosis and fibrosis reduction with no worsening of NAFLD activity score.

Resmetirom received Breakthrough Therapy designation from the FDA and is under review to become the first medicine approved to treat patients with NASH with liver fibrosis.

The FDA granted resmetirom Priority Review and assigned a Prescription Drug User Fee Act (PDUFA) date of March 14, 2024, the target date by which FDA intends to complete its review.

• Deliver on the U.S.

launch of the first-to-market medicine for NASH.

We intend to launch resmetirom in the U.S.

for patients who have NASH with significant fibrosis (consistent with fibrosis stages 2 and 3).

To support the launch, we have established a full capability commercial organization including marketing, sales and market access expertise.

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

We believe this will enable us to execute on a specialty launch of resmetirom in an efficient, targeted manner.

Resmetirom’s product profile as a liver-directed, once-daily, oral therapy, as well as its first-to-market position, provide meaningful points of differentiation in the NASH competitive landscape.

• Expand our commitment to NASH.

We intend to maximize the full value of resmetirom by broadening its indication.

We are conducting a Phase 3 outcomes trial in patients with compensated cirrhosis.

A positive outcome is expected to support the full approval of resmetirom for noncirrhotic NASH and an additional indication for resmetirom in patients with compensated NASH cirrhosis.

We believe this outcomes data would be generated in advance of future competitors.

In addition, we are evaluating the opportunity for resmetirom outside of the U.S.

Furthermore, we expect to build on resmetirom's strong foundation through internal as well as external efforts, including accessing external innovation.

Target Indications

Nonalcoholic Fatty Liver Disease and Nonalcoholic Steatohepatitis

Nonalcoholic Steatohepatitis

Overview and Market Opportunity

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

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

NASH and NAFLD have grown as a consequence of rising worldwide obesity-related disorders.

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 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.

NASH is a is a more advanced form of nonalcoholic fatty liver disease (NAFLD).

Reported estimates state that 3-5% of adults have NASH, but the substantial majority of patients are undiagnosed.

NASH is a leading cause of liver-related mortality and an increasing burden on healthcare systems globally.

Once patients progress to NASH with significant fibrosis (consistent with fibrosis stages 2 and 3), the risk of adverse liver outcomes increases dramatically.

NASH is rapidly becoming the leading cause of liver transplantation in the U.S.

Madrigal estimates that approximately 1.5 million patients have been diagnosed with NASH in the U.S., of which approximately 525,000 have NASH with significant fibrosis.

Other NASH Disease State Characteristics

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.

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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.

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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.

The Centers for Disease Control and Prevention projects the prevalence of obesity to increase from 34% of the United States population to 42% of the United States population by 2030.

Driven by this epidemic of obesity, NASH is projected to become the leading cause of liver transplants in the near future.

NASH is the leading cause of liver transplants for women in the U.S.

and is expected to soon be the leading cause of liver transplants overall.

Given the extremely limited availability of organ donors and high transplant costs, NASH patients who require transplantation will place a significant economic burden on the healthcare system.

As such, there is a significant unmet medical need for well-tolerated oral treatments for NASH.

Because there are currently no therapeutic products approved for the treatment of NASH, the market size is difficult to estimate.

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.

As such, there is a significant unmet medical need for approved treatments for NASH.

Resmetirom Commercial Strategy

We intend to launch resmetirom as a specialty medication for patients with NASH with significant fibrosis (consistent with fibrosis stages 2 and 3) treated by liver specialist physicians.

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.

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, Madrigal estimates that approximately 1.5 million patients have been diagnosed with NASH in the U.S., of which approximately 525,000 have NASH with significant fibrosis.

Over time, as disease awareness improves and disease prevalence increases, we expect the number of identified NASH patients with significant fibrosis eligible for treatment could grow.

Madrigal’s launch plan for resmetirom includes a focus on educating physicians about the role of noninvasive tests for identifying patients who may be appropriate for resmetirom treatment, which have been reflected in published guidance documents from multiple medical societies.

To evaluate the potential value and cost effectiveness of resmetirom as a treatment for NASH patients with significant fibrosis, we 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 NASH patients with significant liver fibrosis based on an analysis performed from a U.S.

commercial payer perspective.

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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.

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

In May 2023, a “Final Evidence Report” was released with ICER’s 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.

ICER analyses suggested resmetirom would achieve common thresholds for cost-effectiveness if priced between $39,600 – $50,100 per year assuming that short-term effects on liver fibrosis translate into longer-term reductions in cirrhosis.

The cost-effectiveness threshold analyses included in ICER’s Final 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.

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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.

Our commercial strategy in the U.S.

includes a focus on access to therapy.

We will distribute resmetirom through a specialty pharmacy network and, to support patient access and affordability, we will provide patient support services including reimbursement programs and educational support to help appropriate 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 potential launch of resmetirom that focuses on educating approximately 14,000 NASH specialist healthcare providers (hepatologists, gastroenterologists, a small number of endocrinologists and the associated advanced practice providers) in clinics that already treat NASH patients with significant fibrosis.

Patient marketing initiatives include unbranded NASH disease education resources prior to potential approval of resmetirom, which will be followed by branded product advertising post-approval.

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 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.

We have completed multiple studies in animal models of metabolic diseases, dyslipidemia and NASH in which resmetirom demonstrated a statistically significant reduction in liver TGs, insulin resistance, liver enzymes (which may be elevated in NASH), and markers of inflammation and fibrosis.

We believe that resmetirom will treat the underlying lipotoxicity that drives the inflammation and liver cell damage observed in NASH patients, and after the underlying lipotoxicity is treated, NASH-related liver fibrosis will resolve as the liver regenerates.

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 diabetes.

Patients continued treatment through 36 weeks.

The study was conducted in the United States.

The primary endpoint was to evaluate the efficacy of resmetirom as measured by the reduction of liver fat at 12 weeks, and the secondary endpoint was to evaluate the efficacy of resmetirom as measured by a reduction of NASH, which was assessed by liver biopsy, at 36 weeks.

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.

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

We believe that the designs of our Phase 2 and Phase 3 NASH studies are consistent with principles for NASH drug development outlined by the FDA in its public communications and draft guidance for industry and based on our past interactions with FDA, including our end of Phase 2 meeting with the FDA in 2019.

Because of the slow progression of NASH and the time required to conduct an outcomes trial that would evaluate clinical endpoints such as progression to cirrhosis or survival, the FDA recommends sponsors consider the following liver histological improvements as Phase 3 trial endpoints reasonably likely to predict clinical benefit to support accelerated approval under subpart H regulations:

Resolution of steatohepatitis on overall histopathological reading and no worsening of liver fibrosis;

Improvement in liver fibrosis greater than or equal to one stage and no worsening of steatohepatitis;

Both resolution of steatohepatitis and improvement in fibrosis.

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.

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).

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.

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.

See “ – Key Developments” above.

and are evaluating strategic options for commercializing resmetirom in ex-U.S.

Resmetirom in NASH Clinical Development Program

Our Clinical Development Program.

Madrigal is currently conducting multiple Phase 3 clinical trials to evaluate the safety and efficacy of resmetirom for the treatment of NASH:

• The pivotal MAESTRO-NASH (Significant Fibrosis) study includes a 52-week biopsy assessment to support accelerated approval and an ongoing 54-month outcomes study designed to generate confirmatory data that, if positive, will help verify resmetirom’s clinical benefit and support full approval.

Positive topline results from the study were reported in December 2022 the primary results were published in the New England Journal of Medicine in February 2024.

• MAESTRO-NASH Outcomes (Compensated Cirrhosis) evaluates progression to liver decompensation events in patients with compensated NASH cirrhosis treated with resmetirom versus placebo.

A positive outcome is expected to support the full approval of resmetirom for noncirrhotic NASH and expand the eligible patient population for resmetirom with an additional indication in patients with compensated NASH cirrhosis.

• The MAESTRO-NAFLD-1 (Safety) study was designed to noninvasively evaluate the safety and tolerability of resmetirom and provide a larger safety database to support regulatory benefit-risk assessment.

Positive topline results from the study were reported in January 2022 and the primary publication appeared in Nature Medicine .

MAESTRO-NAFLD-OLE, an open-label active treatment extension of MAESTRO-NAFLD-1, is ongoing to collect additional safety data in patients with noncirrhotic NASH and patients with compensated NASH cirrhosis.

The Company completed a Phase 2 clinical trial in NASH in 2018.

This clinical trial was published in the Lancet .

Data from the 52-week first 1,000 patient portion of MAESTRO-NASH, together with data from MAESTRO-NAFLD-1, MAESTRO-NAFLD-OLE, Phase 2 and Phase 1 data, including safety parameters, formed the basis for Madrigal’s subpart H submission to FDA for accelerated approval of resmetirom for treatment of NASH with liver fibrosis.

Collaborations

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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.

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 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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In 2019, we commenced a Phase 3 study in NASH and subsequently paid Roche a $2.0 million related milestone payment.

Except as described above, we have not achieved any additional product development or regulatory milestones under the Roche Agreement and have generated no net sales of products developed from resmetirom.

The remaining milestone payment obligations under the Roche Agreement total $8.0 million, of which $5.0 million is tied to regulatory approval in the United States and $3.0 million is tied to regulatory approval in a major market country in Europe, in each case for resmetirom or any derivative product.

Except as described above, we have not achieved any additional product development or regulatory milestones under the Roche Agreement and, as of the filing date of this Form 10-K, have generated no net sales of products developed from resmetirom.

Pursuant to the Roche Agreement, we must use commercially reasonable efforts to conduct clinical and commercial development programs for products containing resmetirom.

If we determine that it is not reasonable to continue clinical trials or other development of resmetirom, we may elect to cease further development and Roche may terminate the license.

If we determine not to pursue the development or commercialization of resmetirom in certain jurisdictions, including the United States, Roche may terminate the license for such territories.

If we determine not to pursue the development or commercialization of resmetirom in certain jurisdictions, Roche may terminate the license for such territories.

The Roche Agreement will expire, unless earlier terminated pursuant to other provisions of the agreement, on the last to occur of (i) the expiration of the last valid claim of a licensed patent covering the manufacture, use or sale of products containing resmetirom, or (ii) ten years after the first sale of a product containing resmetirom.

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The key factors affecting the success of any approved product will be its efficacy, safety profile, drug interactions, method of administration, pricing, reimbursement and level of promotional activity relative to those of competing drugs.

Our potential competitors may have substantially greater financial, technical, and personnel resources than us.

In addition, many of these competitors have significantly greater commercial infrastructures.

Our potential competitors include companies with substantially greater financial, technical, and personnel resources than us.

In addition, our competitors may have significantly greater commercial infrastructures.

Our ability to compete successfully will depend largely on our ability to leverage our collective experience in drug discovery, development and commercialization to:

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• obtain required regulatory approvals;

obtain a commercial partner;

• commercialize our drugs, if approved;

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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.

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, Altimune, Poxel, Ascletis Pharma, 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

There are numerous drugs in development for the treatment of NASH by companies ranging in size from pre-public biotech companies to large pharma organizations that have product candidates in clinical development for the treatment of NASH.

While no company has reported positive topline Phase 3 data like Madrigal, we are aware of several companies with investigational NASH medications in active Phase 3 testing, including Novo Nordisk, Inventiva and Akero.

Glucagon-like peptide 1 (GLP-1) agonists and dual GLP-1/glucose-dependent insulinotropic polypeptide (GIP) agonists are being studied for the treatment of NASH in Phase 2 and Phase 3 trials.

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

Madrigal believes that resmetirom’s product profile and expected first-to-market advantage provide meaningful points of differentiation in the NASH competitive landscape.

Commercial Organization

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.

As of the date of this filing, Madrigal has built out a field sales team and product launch capabilities in anticipation of potential accelerated approval in the U.S.

for resmetirom.

Research and Development

Since our inception, we have focused significant resources on our research and development activities.

Costs incurred in performing research and development activities include internal costs (including salaries and stock-based compensation);

costs for clinical trial consultants, contract research organizations, clinical sites, and other external services;

drug manufacturing and supply costs;

milestone payments under licensing agreements;

other costs of conducting studies including the costs of materials and supplies;

the costs associated with seeking regulatory approval;

and other costs associated with the Company’s preclinical and clinical programs.

Please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” of this Annual Report on Form 10-K for a discussion of our research and development expenses incurred during the last three fiscal years.

Manufacturing

We do not own or operate, and currently have no plans to establish, any manufacturing facilities.

We currently rely, and expect to rely, on third-party contract manufacturers, or CMOs, for all required starting materials, API and finished product for the manufacture of any product candidates that we may develop for larger-scale preclinical and clinical testing, as well as for commercial quantities of any drug candidates that are approved.

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 rely, and expect to rely, on third-party contract manufacturers, or CMOs, for all required starting materials, active pharmaceutical ingredients (API) and finished product for the manufacture of any product candidates that we may develop for larger-scale preclinical and clinical testing, as well as for commercial quantities of any drug candidates that are approved.

We do not have long-term supply agreements for any API 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 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.

Research and Development

Research and development expenses primarily consist of costs associated with our research activities, including the preclinical and clinical development of our product candidates.

Our research and development expenses were $245.4 million for the year ended December 31, 2022, $205.2 million for the year ended December 31, 2021, and $184.8 million for year ended December 31, 2020.

The increase in research and development expenses was primarily due to the advancement of clinical programs to Phase 3 studies, further API manufacturing studies and the continuation of preclinical studies.

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

Intellectual Property

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As of December 31, 2023, 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.

seven United States and 44 foreign issued patents;

nine United States and 70 foreign pending patent applications;

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

Each of these patents and applications relates to resmetirom, including composition-of-matter, certain polymorph 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 three international patent applications can be used as the basis for multiple additional patent applications 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 Roche Agreement imposes various diligence, milestone payment, royalty payment, insurance, indemnification, and other obligations on us.

Issued patents directed to resmetirom, including certain dosage forms, have statutory expiration dates between 2026 and 2037, excluding any patent term extensions or equivalents thereof that might be available following the grant of marketing authorizations.

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.

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.

Issued patents directed to resmetirom have statutory expiration dates between 2026 and 2037, excluding any patent term extensions or equivalents thereof that might be available following the grant of marketing authorizations.

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 2044, excluding any patent term adjustment that might be available following the grant of the patent.

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.

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

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These agreements are designed to protect our proprietary information.

Orphan Drug Designation

Some potential target disease indications for resmetirom are rare diseases or may be designated rare diseases and we plan to pursue orphan drug designation where possible.

If granted, each such designation might provide for regulatory exclusivity for seven years in the United States and ten years in the EU from the date of product approval for individual indications.

Government Regulation

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• submission to the FDA of an IND which must become effective before human clinical trials may begin;

approval by an institutional review board, or IRB, before each trial may be initiated at each clinical site;

• approval by an institutional review board, or IRB, before each clinical trial may be initiated at each clinical site;

• performance of adequate and well-controlled human clinical trials under protocols submitted to the FDA and reviewed and approved by each IRB, conducted in accordance with federal regulations and according to Good Clinical Practices, or GCP, to establish the safety and efficacy of the proposed drug for its intended use;

submission to the FDA of an NDA;

• preparation and submission to the FDA of an NDA (and the FDA’s acceptance for filing of the NDA);

• completion of registration batches and validation of the manufacturing process to show ability to consistently produce quality batches of product;

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• satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the drug is produced to assess compliance with current good manufacturing practice, or cGMP, to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity;

• satisfactory completion of FDA audits of clinical trial sites to assure compliance with GCP and the integrity of the clinical data;

• payment of user fees and procurement of FDA approval of the NDA;

• FDA review and approval of the NDA;

• compliance with any post-approval requirements, including, as applicable, REMS and post-approval studies required by the FDA.

Once a pharmaceutical candidate is identified for development, it enters the preclinical testing stage.

Preclinical tests include laboratory evaluations of product chemistry, toxicity and formulation, as well as animal studies, to assess the safety and quality of the product.

Preclinical tests include laboratory evaluations of product chemistry, toxicity and formulation, as well as animal studies, to assess the initial safety and quality profile of the product.

Animal studies must be performed in compliance with federal regulations and requirements, including, as applicable, GLP and the Animal Welfare Act.

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Each protocol must be submitted to the FDA as part of the IND, and progress reports detailing the results of the clinical trials must be submitted at least annually.

In addition, timely safety reports must be submitted to the FDA and the investigators for serious and unexpected adverse events or animal test results that suggest a significant risk to human subjects.

An IRB at each institution participating in the clinical trial must review and approve each protocol before a clinical trial commences at that institution and must also approve the information regarding the trial and the consent form that must be provided to each trial subject or his or her legal representative, monitor the study until completed and otherwise comply with IRB regulations.

In addition, timely safety reports must be submitted to the FDA and the investigators for serious and unexpected suspected adverse reactions, any clinically important increase in the rate of a serious suspected adverse reaction over that listed in the protocol, or animal test results that suggest a significant risk to human subjects.

An IRB at each institution participating in the clinical trial must review and approve each protocol before a clinical trial commences at that institution and must also approve the consent form that must be provided to each trial subject or his or her legal representative, monitor the study until completed and otherwise comply with IRB regulations.

Foreign studies conducted under an IND must meet the same requirements that apply to studies being conducted in the U.S.

Data from a foreign study not conducted under an IND may be submitted in support of an NDA if the study was conducted in accordance with GCP and the FDA is able to validate the data.

Human clinical trials are typically conducted in three sequential phases that may overlap or be combined:

Human clinical trials are typically conducted in three sequential phases:

The product candidate is initially introduced into humans.

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.

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Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the drug has been associated with unexpected serious harm to patients.

In some cases, clinical trials are also monitored by an independent group of qualified experts organized by the trial sponsor.

These groups are often referred to as data monitoring committees.

This group typically provides recommendations to the trial sponsor for whether or not a trial may move forward at designated check points.

These decisions are based on the data monitoring committee’s independent review of data from the ongoing trial.

Phase 1, Phase 2, and Phase 3 testing may not be completed successfully within any specified period, if at all.

Further, success in either preclinical studies or early-stage clinical trials does not assure success in later-stage clinical trials.

Sponsors of all controlled clinical trials, except for Phase 1 trials, are required to submit certain clinical trial information for inclusion in the public clinical trial registry and results data bank maintained by the National Institutes of Health, which are publicly available at http://clinicaltrials.gov.

In general, sponsors of most interventional clinical trials that are not Phase 1, are required to submit certain clinical trial information for inclusion in the public clinical trial registry and results data bank maintained by the National Institutes of Health, which are publicly available at http://clinicaltrials.gov.

Sponsors are generally also obligated to disclose the results of these clinical trials after completion.

Competitors and others may use this publicly-available information to gain knowledge regarding the design and progress of our development programs.

During the development of a new drug, sponsors are given opportunities to meet with the FDA at certain points.

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Concurrent with clinical trials, companies usually complete additional animal studies and must also develop additional information about the chemistry and physical characteristics of the drug and finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements.

The manufacturing process must be capable of consistently producing quality batches of the product candidate and, among other things, the manufacturer must develop methods for testing the identity, strength, quality and purity of the final drug.

The manufacturing process must be capable of consistently producing quality batches of the product candidate and, among other things, the manufacturer must develop methods for testing and assuring the identity, strength, quality and purity of the final drug.

Additionally, appropriate packaging must be selected and tested and stability studies must be conducted to demonstrate that the product candidate does not undergo unacceptable deterioration over its shelf life.

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a waiver of such fees may be obtained under certain limited circumstances.

The sponsor under an approved NDA is also subject to annual program user fees.

Program fees are assessed for each approved prescription drug product identified in an approved application, with up to five program fees per application.

These fees are typically modified annually.

The FDA conducts a preliminary review of a submitted NDA within 60 days from receipt to ensure that the application is sufficiently complete for substantive review before it accepts the application for filing.

The FDA may request additional information rather than accept an NDA for filing.

request additional information rather than accept an NDA for filing.

In this event, the NDA must be resubmitted with the additional information.

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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.

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.

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NDAs receive either standard or priority review.

An application for a drug that treats a serious condition and, if approved, would provide a significant improvement in treatment, prevention or diagnosis of disease may qualify for priority review.

Priority review for an NDA for a new molecular entity will be six months from the date that the NDA is filed.

An application for a drug that treats a serious condition and, if approved, would provide a significant improvement in the safety or effectiveness of the treatment, prevention or diagnosis of disease may qualify for priority review.

Priority review for an NDA for a new molecular entity means the FDA will review the NDA within six months from the date that the NDA is accepted for filing by FDA.

The FDA has ten months in which to complete its initial review of a standard new molecular entity NDA.

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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.

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.

Product candidates may qualify for review and approval under the 21 CFR Part 314, Subpart H accelerated approval pathway if the candidates are intended to treat a serious or life-threatening 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 is thought to predict clinical benefit, such as how a patient feels, functions, or survives, but is not itself a measure of clinical benefit.

Surrogate endpoints can often be measured more easily or more rapidly than clinical endpoints.

As a condition of accelerated approval, the FDA requires that a sponsor of a drug receiving accelerated approval perform confirmatory adequate and well-controlled post-marketing clinical trials.

Approval of a product may be withdrawn if these trials fail to verify clinical benefit or do not demonstrate sufficient clinical benefit to justify the risks associated with the product.

Accelerated approval does not change the standards for approval.

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.

If a sponsor fails to conduct any required post-approval trial with “due diligence,” the FDA may withdraw approval of the product.

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.

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

The 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.

If a product receives regulatory approval, the approval may be further limited to specific diseases, dosages or patient populations, or the indications for use may otherwise be limited, which could restrict the commercial value of the product.

In addition, the FDA may require a sponsor to conduct Phase 4 testing which involves clinical trials designed to further assess a drug’s safety and effectiveness after NDA approval, and may require testing and surveillance programs to monitor the safety of approved products which have been commercialized.

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.

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.

If a product receives regulatory approval, the approval may be further limited to specific diseases,

dosages or patient populations, or the indications for use may otherwise be limited, which could restrict the commercial value of the product.

In addition, the FDA may require a sponsor to conduct additional (i.e., Phase 4) testing which involves clinical trials designed to further assess a drug’s safety and effectiveness after NDA approval, and may require testing and surveillance programs to monitor the safety of approved products which have been commercialized.

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 drug and biologic applications and supplements to applications, for a new active ingredient, new indication, new dosage form, new dosing regimen or new route of administration.

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

The sponsor or FDA may request a deferral of pediatric studies for some or all of the pediatric subpopulations.

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

Patent Term Restoration and Regulatory Exclusivities

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An ANDA or 505(b)(2) application may be submitted after four years, however, if the sponsor of the application makes a “Paragraph IV” certification.

A product that is not an NCE may qualify for a three-year period of exclusivity if the NDA contains new clinical data (other than bioavailability studies), derived from studies conducted by or for the sponsor, that were necessary for approval.

A product that is not an NCE may qualify for a three-year period of exclusivity if the NDA or supplement to an approved NDA contains new clinical data (other than bioavailability studies), derived from studies conducted by or for the sponsor, that were necessary for approval.

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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The issuance of a Written Request does not require the sponsor to undertake the described studies.

Orphan Drug Designation

Under the Orphan Drug Act, the FDA may grant orphan drug designation to a drug or biological product intended to treat a rare disease or condition, which is generally a disease or condition that affects fewer than 200,000 individuals in the United States, or more than 200,000 individuals in the United States and for which there is no reasonable expectation that the cost of developing and making available in the United States a drug for this type of disease or condition will be recovered from sales in the United States for that drug.

Orphan drug designation must be requested before submitting an NDA.

After the FDA grants orphan drug designation, the identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA.

Orphan drug designation does not convey any advantage in or shorten the duration of the regulatory review and approval process.

If a product that has orphan drug designation subsequently receives the first FDA approval for the disease for which it has such designation, the product is entitled to orphan product exclusivity, which means that the FDA may not approve any other applications to market the same drug for the same indication, except in very limited circumstances, for seven years.

Orphan drug exclusivity, however, also could block the approval of one of our product candidates for seven years if a competitor obtains approval of the same drug as defined by the FDA or if our product candidate is determined to be contained within the competitor’s product for the same indication or disease.

The FDA also administers an orphan drug clinical research grants program, whereby researchers may apply for funding to conduct clinical trials to support the approval of drugs, biologics, medical devices, and medical foods for rare diseases and conditions.

A product does not have to be designated as an orphan drug to be eligible for the grant program.

An application for an orphan grant should propose one discrete clinical study to facilitate FDA approval of the product for a rare disease or condition.

The study may address an unapproved new product or an unapproved new use for a product already on the market.

Expedited Programs

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).

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 that meet certain other criteria, 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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Later discovery of previously unknown problems with a product may result in restrictions on product marketing or even withdrawal of approval for the product application.

If new safety issues are identified following approval, the FDA may require the NDA sponsor to take certain measures, such as revising the approved labeling to reflect the new safety information, conducting post-market studies or clinical trials to assess the new safety information, and/or implementing or changing a risk evaluation and mitigation strategy, or REMS, program to mitigate newly-identified risks.

After approval, some types of changes to the approved product, such as adding new indications, manufacturing changes and additional labeling claims, are subject to further FDA review and approval.

Drug manufacturers and other entities involved in the manufacture and distribution of approved drugs are required to register their establishments with the FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with cGMP and other laws and regulations.

Changes to the manufacturing process are strictly regulated and often require prior FDA approval before being implemented.

FDA regulations also require investigation and correction of any deviations from cGMP and impose reporting and documentation requirements upon the sponsor and any third-party manufacturers that the sponsor may decide to use.

Accordingly, manufacturers must continue to expend time, money, and effort in the area of production and quality control to maintain cGMP compliance.

We rely, and expect to continue to rely, on third parties for the production of clinical and commercial quantities of our product candidates.

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From time to time, legislation is drafted, introduced and passed in Congress that could significantly change the statutory provisions governing the approval, manufacturing and marketing of products regulated by the FDA.

In addition to new legislation, FDA regulations and guidance are often revised or interpreted by the agency in ways that may significantly affect our business and our products.

In addition to new legislation, FDA regulations and guidance are often revised or interpreted by the agency in ways that may significantly

affect our business and our products.

It is impossible to predict whether further legislative changes will be enacted, or FDA regulations, guidance or interpretations changed or what the impact of such changes, if any, may be.

Foreign Regulation

In addition to regulations in the United States, we will be subject to a variety of foreign regulations governing clinical trials and commercial sales and distribution of its products.

In addition to regulations in the United States, we will be subject to a variety of foreign regulations governing clinical trials and commercial sales and distribution of our products.

Whether or not we obtain FDA approval for a product, we must obtain approval by the comparable regulatory authorities of foreign countries or economic areas, such as the European Union, before we may commence clinical trials or market products in those countries or areas.

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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.

The initial marketing authorization is valid for five years, but once renewed is usually valid for an unlimited period, unless the Competent Authority decides, on justified grounds relating to pharmacovigilance (e.g.

exposure of an insufficient number of patients to the medicinal product concerned), to mandate one additional five-year renewal.

The decentralized procedure provides for approval by one or more “concerned” member states based on an assessment of an application performed by one member state, known as the “reference” member state.

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The data exclusivity period begins on the date of the product’s first marketing authorization in the EU and prevents biosimilars from relying on the holder of the marketing authorization for the reference biological medicine’s pharmacological, toxicological and clinical data for a period of eight years.

After eight years, a biosimilar product application may be submitted and the sponsoring companies may rely on the marketing authorization holder’s data.

After eight years, a biosimilar product application may be submitted and the sponsoring

companies may rely on the marketing authorization holder’s data.

However, a biosimilar medicine cannot launch until 2 years later (or a total of ten years after the first marketing authorization in the EU of the innovator product), or 3 years later (or a total of eleven years after the first marketing authorization in the EU of the innovator product) if the marketing authorization holder obtains marketing authorization for a new indication with significant clinical benefit within the eight year data exclusivity period.

In April 2023, the European Commission published a proposal to reform the regulatory data protection system in the EU.

In the proposal, the ‘baseline’ of eight years of data exclusivity would be brought back to six years.

Additional years of exclusivity can be obtained, but under requirements that are perceived to be more difficult to meet than the current requirements.

This proposal is not final yet and it is uncertain if the proposal will be adopted in its current form, and if so, when the revised legislation would enter into force.

As in the United States, a sponsor may apply for designation of a product as an orphan drug for the treatment of a specific indication in the EU before the application for marketing authorization is made.

Orphan drugs in Europe enjoy economic and marketing benefits, including up to ten years of market exclusivity for the approved indication unless another applicant can show that its product is safer, more effective or otherwise clinically superior to the orphan-designated product.

Reimbursement

In 2023, the European Commission published a proposal that intends to reduce the orphan market exclusivity period.

However, it is currently uncertain if the proposal will be adopted in its current form and it is uncertain if and when the revised legislation would enter into force.

Coverage and Reimbursement

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.

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

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

Decisions regarding the extent of coverage and amount of reimbursement to be provided are made on a plan-by-plan basis.

One third-party payor’s decision to cover a product does not ensure that other payors will also provide coverage for the product.

The process for determining whether a payor will provide coverage for a product may be separate from the process for setting the reimbursement rate that the payor will pay for the product.

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Third-party payors are increasingly challenging the prices charged for, examining the medical necessity of, and assessing the cost-effectiveness of medical products and services, in addition to their safety and efficacy.

In order to obtain coverage and reimbursement for any product that might be approved for sale, we may need to conduct expensive pharmacoeconomic studies in order to demonstrate the medical necessity and cost-effectiveness of any products, in addition to the costs required to obtain regulatory approvals.

Our drug candidates may not be considered medically necessary or cost-effective.

If third-party payors do not consider a product to be cost-effective compared to other available therapies, they may not cover the product after approval as a benefit under their plans or, if they do, the level of payment may not be sufficient to allow a company to sell its products at a profit.

A decision by a third-party payor not to cover a product could reduce physician ordering and patient demand for the product.

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.

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

Even if favorable coverage and reimbursement status is attained for a product for which we receive regulatory approval, less favorable coverage policies and reimbursement rates may be implemented in the future.

In addition, sales of our products in other countries are also dependent, in large part, on complex coverage and reimbursement mechanisms and programs in those countries.

In some foreign countries, the proposed pricing for a drug must be approved before it may be lawfully marketed.

The requirements governing drug pricing vary widely from country to country.

For example, the EU provides options for its member states to restrict the range of medicinal products for which their national health insurance systems provide reimbursement and to control the prices of medicinal products for human use.

A member state may approve a specific price for the medicinal product or it may instead adopt a system of direct or indirect controls on the profitability of the company placing the medicinal product on the market.

There can be no assurance that any country that has price controls or reimbursement limitations for pharmaceutical products will allow favorable reimbursement and pricing arrangements for any of our products.

Historically, products launched in the EU do not follow price structures of the United States and generally tend to be significantly lower.

Healthcare Reform

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.

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.

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.

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.

The Inflation Reduction Act of 2022, or IRA, 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.

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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.

It is likely that federal and state legislatures and health agencies will continue to focus on additional health care reform measures in the future that will impose additional constraints on prices and reimbursements for our marketed products.

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.

Even if favorable coverage and reimbursement status is attained for one or more products for which we receive regulatory approval, less favorable coverage policies and reimbursement rates may be implemented in the future.

In addition, in some foreign countries, the proposed pricing for a drug must be approved before it may be lawfully marketed.

The requirements governing drug pricing vary widely from country to country.

Historically, products launched in the EU do not follow price structures of the United States and generally tend to be significantly lower

There have been several Congressional inquiries and proposed and enacted federal and state legislation and regulatory initiatives designed to, among other things, bring more transparency to product pricing, evaluate the relationship between pricing and manufacturer patient programs, and reform government healthcare program reimbursement methodologies for drug products.

Individual states in the U.S.

have also increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological product pricing, including by requiring pharmaceutical manufacturers to report to state agencies when they introduce new drugs to market with prices over a certain threshold, or when they increase the price of a drug over a certain threshold.

If healthcare policies or reforms intended to curb healthcare costs are adopted, the prices that we charge for any approved product may be limited, our commercial opportunity may be limited and/or our revenues from sales of our product and any future products, if approved, may be negatively impacted.

It is possible that the above-mentioned measures, as currently enacted or may be amended in the future, as well as other healthcare reform measures that may be adopted in the future, may result in additional reductions in Medicare and other healthcare funding, more rigorous coverage criteria, and new payment methodologies and additional downward pressure on coverage and payment and the price that we receive for any approved product.

Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors.

The implementation of additional cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability or commercialize our approved product or products.

We cannot be sure whether additional legislative changes will be enacted in the U.S.

or outside of the U.S., or whether regulatory changes, guidance or interpretations will be changed, or what the impact of such changes on our product candidates, if any, may be.

Pharmaceutical Price Reporting

A number of government pricing programs create certain price reporting obligations.

Under the Medicaid Drug Rebate program, a participating manufacturer is required to pay a rebate to each state Medicaid program for its covered outpatient drugs that are dispensed to Medicaid beneficiaries and paid for by the state Medicaid program as a condition of having federal funds being made available for drugs under Medicaid and Medicare Part B.

Those rebates are based on pricing data reported by the manufacturer on a monthly and quarterly basis to CMS.

These data include the average manufacturer price and, in the case of innovator products, the best price for each drug, which, in general, represents the lowest price available from the manufacturer to any wholesaler, retailer, provider, health maintenance organization, nonprofit entity, or governmental entity in the U.S.

in any pricing structure, calculated to include all sales and associated rebates, discounts, and other price concessions.

The ACA (addressed further above in the section on “-- U.S.

Healthcare Reform”) made significant changes to the Medicaid Drug Rebate Program, and CMS issued a final regulation to implement the changes to the Medicaid Drug Rebate Program under the ACA.

CMS also issued a final regulation that modified prior Medicaid Drug Rebate Program regulations to permit reporting multiple best price figures with regard to value based purchasing arrangements;

and provide definitions for “line extension,” “new formulation,” and related terms, with the practical effect of expanding the scope of drugs considered to be line extensions that are subject to an alternative rebate formula.

Federal law requires that a manufacturer also participate in the 340B Drug Pricing program in order for federal funds to be available for the manufacturer’s drugs under Medicaid and Medicare Part B.

The 340B program requires participating manufacturers to agree to charge no more than the 340B “ceiling price” for the manufacturer’s covered outpatient drugs to a specified “covered entities,” including community health centers and other entities that receive certain federal grants, as well as hospitals that serve a disproportionate share of low-income patients.

The 340B ceiling price is calculated using a statutory formula, which is based on the average manufacturer price and rebate amount for the covered outpatient drug as calculated under the Medicaid Drug Rebate Program.

Further, the IRA establishes a Medicare Part D inflation rebate schemes (the first rebate period is in fourth quarter 2022 through third quarter 2023) and a drug price negotiation program, with the first negotiated prices to take effect in 2026.

It also makes several changes to the Medicare Part D benefit, including the creation of a new manufacturer discount program in place of the current coverage gap discount program (beginning in 2025).

Finally, in order to be eligible to have its products paid for with federal funds under the Medicaid and Medicare Part B programs and purchased by the Department of Veterans Affairs (“VA”), Department of Defense (“DoD”), Public Health Service, and Coast Guard (the “Big Four agencies”) and certain federal grantees, a manufacturer is required to participate in the VA Federal Supply Schedule (“FSS”) pricing program, established under Section 603 of the Veterans Health Care Act of 1992.

Under this program, the manufacturer is obligated to make its covered drugs available for procurement on an FSS contract and charge a price to the Big Four agencies that is no higher than the Federal Ceiling Price (“FCP”), which is a price calculated pursuant to a statutory formula.

The FCP is derived from a calculated price point called the “non-federal average manufacturer price” (“Non FAMP”), which the manufacturer calculates and reports to the VA on a quarterly and annual basis.

Pursuant to applicable law, knowing provision of false information in connection with a Non FAMP filing can subject a manufacturer to significant penalties for each item of false information.

The FSS contract also contains extensive disclosure and certification requirements.

Under Section 703 of the National Defense Authorization Act for FY 2008, the manufacturer is required to pay quarterly rebates to DoD on utilization of its innovator products that are dispensed through DoD’s Tricare network pharmacies to Tricare beneficiaries.

The rebates are calculated as the difference between the annual Non FAMP and FCP for the calendar year that the product was dispensed.

Human Capital

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What changed 10-K

Item 1. Business