What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-02-28 compared with 2023-02-23 · 329 added, 213 removed, 507 unchanged (52% of the section changed)

3 unchanged sentences

Under the supervision of our principal executive officer and principal financial officer, we evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Report.

Based on that evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of December 31, 2022.

Based on that

evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of December 31, 2023.

Limitations on the Effectiveness of Controls and Procedures

15 unchanged sentences

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting during the quarter ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.

There have been no changes in our internal control over financial reporting during the year ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.

Other Information.

Director and Executive Officer Adoption of 10b5-1 Plans

Our Section 16 officers and directors may enter into plans or arrangements for the purchase or sale of our securities that are intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Exchange Act.

Such plans and arrangements must comply in all respects with our insider trading policies, including our policy governing entry into and operation of 10b5-1 plans and arrangements.

During the quarter ended December 31, 2023:

the following Section 16 officers and directors adopted Rule 10b5-1 trading arrangements (as defined in Item 408 of Regulation S-K of the Exchange Act);

and no plans were modified or terminated .

All plans adopted covered sales of Madrigal common stock (including sales of Madrigal common stock following exercise of stock options).

Name of Director or Section 16 Officer

Title of Director or Section 16 Officer

Date of Adoption, Modification, or Termination Duration of the Plan Aggregate Number of Shares of Common Stock that may be Sold under the Plan

Becky Taub, MD

President of R&D, CMO and Director

11/27/2023 April 3, 2025 76,564

Kenneth Bate Director

11/16/2023 June 27, 2024 32,489

Paul Friedman, MD

11/27/2023 April 3, 2025 100,000

Richard Levy, MD

11/30/2023 June 16, 2025 26,000

Certain information required by Part III is omitted from this Annual Report on Form 10-K because we intend to file our definitive Proxy Statement for our next Annual Meeting of Stockholders, pursuant to Regulation 14A of the Securities Exchange Act of 1934, as amended, or the 2024 Proxy Statement, no later than April 29, 2024, and certain information to be included in the 2024 Proxy Statement is incorporated herein by reference.

Directors, Executive Officers and Corporate Governance.

The information required by this item concerning our directors, executive officers, Section 16 compliance and corporate governance matters is incorporated by reference in our 2023 Proxy Statement.

The information required by this item concerning our directors, executive officers, Section 16 compliance and corporate governance matters is incorporated by reference in our 2024 Proxy Statement (excluding the information contained under the heading "Executive Officer and Director Compensation--Pay Versus Performance").

Executive Compensation.

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EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The following documents are filed as part of, or incorporated by reference into, this Annual Report on Form 10-K:

Item 15(a)(1) and (2)

The Consolidated Financial Statements beginning on page F-1 are filed as part of this Annual Report on Form 10-K.

Item 15(a) The following documents are filed as part of, or incorporated by reference into, this Annual Report on Form 10-K:

Item 15(a)(1) and (2) The Consolidated Financial Statements beginning on page F-1 are filed as part of this Annual Report on Form 10-K.

Other financial statement schedules have been omitted because the information required to be presented in them is not applicable or is shown in the financial statements or related notes.

Item 15(a)(3)

We have filed, or incorporated into this Annual Report on Form 10-K by reference, the exhibits listed on the accompanying Exhibit Index.

See Item 15(a)(3) above.

See Item 15(a)(2) above.

Exhibit Description

Item 15(a)(3) We have filed, or incorporated into this Annual Report on Form 10-K by reference, the exhibits listed on the accompanying Exhibit Index.

Item 15(b) See Item 15(a)(3) above.

Item 15(c) See Item 15(a)(2) above.

Number Exhibit Description Filed

Incorporated by

Reference herein

Filing Date SEC File /

3.1 Restated Certificate of Incorporation of the Registrant.

(Exhibit 3.1)

Form 10-K (Exhibit 3.1) 3/31/2017 001-33277

3.2 Certificate of Amendment to Restated Certificate of Incorporation of Madrigal Pharmaceuticals, Inc., as filed on June 16, 2023 with the Secretary of State of the State of Delaware

Form 8-K (Exhibit 3.1) 6/20/2023 001-33277

3.3 Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock.

(Exhibit 3.1)

Form 8-K (Exhibit 3.1) 6/21/2017 001-33277

3.4 Certificate of Designation of Preferences, Rights and Limitations of Series B Convertible Preferred Stock

1 unchanged sentence

3.5 Bylaws of the Registrant, as amended April 13, 2016.

(Exhibit 3.1)

Form 8-K (Exhibit 3.1) 4/14/2016 001-33277

4.1 Form of Warrant Agreement, dated May 9, 2022, between the Registrant and Hercules Capital, Inc.

4 unchanged sentences

Form 8-K (Exhibit 4.1) 2/9/2023 001-33277

4.3 Form of Pre-Funded Warrant of the Registrant

Form 8-K (Exhibit 4.1) 10/2/2023 001-33277

4.4 Description of Securities of the Registrant

Form 10-K (Exhibit 4.3) 2/23/2023 001-33277

Equity Agreements

10.1 Securities Purchase Agreement, dated June 20, 2017, by and among the Registrant and the investors party thereto, including the Registration Rights Agreement attached as Exhibit B thereto.

(Exhibit 10.1)

Exhibit Description

Incorporated by

Reference herein

Form 8-K (Exhibit 10.1) 6/21/2017 001-33277

10.2 Amendment No.

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and Cowen and Company, LLC (concerning at-the-market offerings of Madrigal common stock).

(Exhibit 1.1)

Form 8-K (Exhibit 1.1) 6/1/2021 001-33277

10.4 Securities Purchase Agreement, dated December 21, 2022, by and among the Registrant and the institutional investors listed on the signature pages thereto.

Form 8-K (Exhibit 10.1) 12/23/2022 001-33277

Number Exhibit Description Filed

Incorporated by

Reference herein

Filing Date SEC File /

10.5 Amendment No.

1 to Sales Agreement, dated May 9, 2023, by and between Madrigal Pharmaceuticals, Inc.

and Cowen and Company, LLC.

Form 8-K (Exhibit 1.1) 5/9/2023 001-33277

10.6 Registration Rights Agreement, dated August 7, 2023, by and among Madrigal Pharmaceuticals, Inc., 667, L.P.

and Baker Brothers Life Sciences, L.P.

Form 10-Q (Exhibit 10.2) 8/8/2023 001-33277

Debt Agreements

Loan and Security Agreement, dated May 9, 2022, by and among the Registrant, Canticle Pharmaceuticals, Inc., the several banks and other financial institutions or entities from time to time party thereto and Hercules Capital, Inc.

(Exhibit 10.1)

Loan and Security Agreement, dated May 9, 2022, as amended by the First Amendment to Loan and Security Agreement, dated February 3, 2023, by and among the Registrant, Canticle Pharmaceuticals, Inc., the several banks and other financial institutions or entities from time to time party thereto and Hercules Capital, Inc.

(Exhibit 10.1)

Form 8-K (Exhibit 10.1) 2/09/2023 001-33277

Agreements with Respect to Collaborations, Licenses, Research and Development

1 unchanged sentence

Hoffmann-La Roche Ltd and the Registrant.†

(Exhibit 10.5)

Form 10-Q (Exhibit 10.5) 11/14/2016 001-33277

Equity Compensation Plans

Amended 2015 Stock Plan

Definitive Proxy Statement (Annex A) 4/30/2021 001-33277

Form of Incentive Stock Option Agreement under Amended 2015 Stock Plan.

(Exhibit 10.10)

Exhibit Description

Incorporated by

Reference herein

Form 10-K (Exhibit 10.10) 3/31/2017 001-33277

Form of Nonqualified Stock Option Agreement under Amended 2015 Stock Plan.

(Exhibit 10.11)

Form of Nonqualified Stock Option Agreement for Directors under Amended 2015 Stock Plan.

(Exhibit 10.13)

Form of Restricted Stock Unit Agreement under Amended 2015 Stock Plan.

Form 10-K (Exhibit 10.11) 3/31/2017 001-33277

Form of Nonqualified Stock Option Agreement for Directors under Amended 2015 Stock Plan (pre-2023) .

Form 10-K (Exhibit 10.13) 3/31/2017 001-33277

10.13* Non-Employee Director Equity Compensation Policy

(Exhibit 10.1)

Form 10-Q (Exhibit 10.1) 5/6/2021 001-33277

Form of RSU Agreement for Directors under Amended 2015 Stock Plan

Form 10-Q (Exhibit 10.3) 8/8/2023 001-33277

Form of RSU Agreement for Executive Officers (2023) under Amended 2015 Stock Plan

Form 10-Q (Exhibit 10.4) 8/8/2023 001-33277

Form of RSU Agreement for Employees under Amended 2015 Stock Plan

Form 10-Q (Exhibit 10.5) 8/8/2023 001-33277

2023 Inducement Plan

Form S-8 9/11/2023 333-27445

Form of Stock Option Agreement under 2023 Inducement Plan

Form S-8 9/11/2023 333-27445

Form of Restricted Stock Unit Agreement under 2023 Inducement Plan

Form S-8 9/11/2023 333-27445

Agreements with Executive Officers and Directors

Form of Indemnification Agreement between the Registrant and certain directors and executive officers.

(Exhibit 10.2)

Letter Agreement, dated April 13, 2016, by and between the Company and Paul A.

Friedman, M.D.

(Exhibit 10.3)

Letter Agreement, dated April 13, 2016, by and between the Company and Rebecca Taub, M.D.

(Exhibit 10.4)

Form 8-K (Exhibit 10.4) 7/22/2016 001-33277

Letter Agreement (including agreements attached as exhibits thereto), dated September 7, 2023, by and between Madrigal Pharmaceuticals, Inc.

and William J.

Form 8-K (Exhibit 10.1)

9/13/2023 001-33277

21.1 List of Subsidiaries.

Form 10-K (Exhibit 21.1)

2/23/2023 001-33277

23.1 Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm.

Number Exhibit Description Filed

Incorporated by

Reference herein

Filing Date SEC File /

31.1 Certification of Principal Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

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Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Inline XBRL Instance Document.

Inline XBRL Taxonomy Extension Schema Document.

Exhibit Description

Incorporated by

Reference herein

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

Inline XBRL Taxonomy Extension Definition Linkbase Document.

Inline XBRL Taxonomy Extension Label Linkbase Document.

Inline XBRL Taxonomy Extension Presentation Linkbase Document.

97.1 Incentive Compensation Recovery Policy

101.INS Inline XBRL Instance Document.

101.SCH Inline XBRL Taxonomy Extension Schema Document.

101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104 Inline XBRL for the cover page of this Annual Report on Form 10-K, included in the Exhibit 101 Inline XBRL Document Set.

_____________

* Indicates a management contract, compensatory plan or arrangement.

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February 28, 2024

FRIEDMAN, M.D.

Friedman, M.D.

Chief Executive Officer

/s/ WILLIAM J.

President and Chief Executive Officer

(Principal Executive Officer)

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each individual whose signature appears below hereby constitutes and appoints Paul A.

Friedman, M.D., Alex G.

KNOW ALL PERSONS BY THESE PRESENTS, that each individual whose signature appears below hereby constitutes and appoints William J.

Sibold, Alex G.

Howarth and Brian J.

1 unchanged sentence

Pursuant to the requirements of the Exchange Act, as amended, this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

FRIEDMAN, M.D.

Friedman, M.D.

Chairman of the Board of Directors and Chief Executive Officer (Principal Executive Officer)

Signatures Title Date

/s/ WILLIAM J.

SIBOLD President and Chief Executive Officer (Principal Executive Officer)

February 28, 2024

Chief Financial Officer (Principal Accounting and Financial Officer)

HOWARTH Chief Financial Officer (Principal Accounting and Financial Officer) February 28, 2024

/s/ JULIAN C.

February 28, 2024

/s/ REBECCA TAUB, M.D.

Director February 28, 2024

Rebecca Taub, M.D.

February 23, 2023

CRAVES, PH.D.

Director February 28, 2024

Craves, Ph.D.

February 23, 2023

/s/ KENNETH M.

February 23, 2023

/s/ DAVID MILLIGAN, PH.D.

David Milligan, Ph.D.

February 23, 2023

BATE Director February 28, 2024

FRIEDMAN, M.D.

Director February 28, 2024

Friedman, M.D.

/s/ RAYMOND CHEONG

Director February 28, 2024

Raymond Cheong

Signatures Title Date

/s/ RICHARD S.

February 23, 2023

Director February 28, 2024

DALY Director February 28, 2024

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

29 unchanged sentences

Emphasis of Matter

As discussed in Note 3 to the consolidated financial statements, the Company will require additional financing to fund future operations.

As discussed in Note 3 to the consolidated financial statements, the Company may require additional financing to fund future operations.

Management’s evaluation of the events and conditions and plans to mitigate this matter are also described in Note 3.

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A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

directors of the company;

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

6 unchanged sentences

As described in Notes 2 and 5 to the consolidated financial statements, management uses significant judgment in estimating the amount of research and development costs recognized in each reporting period.

Management analyzes and estimates the progress of its preclinical studies and clinical trials, completion of milestone events per underlying agreements, invoices received and contracted costs when estimating the research and development costs to accrue in each reporting period.

Management analyzes and estimates the progress of its clinical trials, completion of milestone events per underlying agreements, invoices received and contracted costs when estimating the research and development costs to accrue in each reporting period.

Total research and development costs incurred during the year ended December 31, 2023 were $272.4 million and research and development costs accrued were $50.7 million as of December 31, 2023.

The principal considerations for our determination that performing procedures relating to research and development costs is a critical audit matter are (i) the significant judgment by management when estimating:

the costs incurred for services performed by vendors that have not yet been invoiced, the completion of milestone events per underlying agreements, and invoices received and contracted costs, in estimating the research and development costs to accrue in the reporting period;

and (ii) the high degree of auditor judgment, subjectivity and effort in evaluating management’s significant assumption related to using contracted costs applied to the number of patients screened for and enrolled in the trials to reasonably estimate costs incurred that have not been invoiced.

and (ii) the high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s significant assumptions related to using contracted site and patient costs applied to the number of patients screened for and enrolled in the trials to estimate costs incurred that have not been invoiced.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls over management’s process relating to accruing research and development costs, including controls over estimating the costs incurred for services performed by vendors that have not yet been invoiced.

These procedures also included, among others, testing management’s process for estimating the research and development costs to accrue in the reporting period, evaluating the completeness and accuracy of underlying data used in management’s estimate by testing for consistency with a sample of contracts and invoices, testing the number of patients screened for and enrolled in the trial, testing the mathematical accuracy of the calculation of the accrual for research and development costs incurred, and evaluating the reasonableness of assumptions used in the estimate.

Evaluating the reasonableness of assumptions used in the estimate involved assessing management’s ability to reasonably estimate costs incurred that have not been invoiced by performing a comparison of the estimated accrual to contracted costs applied to the number of patients screened for and enrolled in the trials.

These procedures also included, among others, testing management’s process for estimating the research and development costs to accrue in the reporting period, evaluating the completeness and accuracy of underlying data used in management’s estimate by testing for consistency with a sample of invoices and assessing whether there were significant changes in contracts, testing the number of patients screened for and enrolled in the trial, testing the mathematical accuracy of the calculation of the accrual for research and development costs incurred, and evaluating the reasonableness of assumptions used in the estimate.

Evaluating the reasonableness of assumptions used in the estimate involved assessing management’s ability to estimate costs incurred that have not been invoiced by performing a comparison of the estimated accrual to contracted costs applied to the number of patients screened for and enrolled in the trials.

/s/ PricewaterhouseCoopers LLP

5 unchanged sentences

(in thousands, except share and per share amounts)

2023 December 31,

Current assets:

4 unchanged sentences

Property and equipment, net 1,553 601

Right-of-use asset 1,713 602

Total assets $ 640,547 $ 362,572

Liabilities and Stockholders’ Equity

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Additional paid-in-capital 1,741,153 1,160,079

Accumulated other comprehensive loss

Accumulated other comprehensive income (loss) 468 ( 32 )

Accumulated deficit ( 1,336,290 ) ( 962,660 )

6 unchanged sentences

Year Ended December 31,

2023 2022 2021

Total revenues $ — $ — $ —

6 unchanged sentences

Interest expense ( 12,712 ) ( 3,964 ) —

Other income — — 273

Net loss $ ( 373,630 ) $ ( 295,350 ) $ ( 241,846 )

Net loss per common share:

6 unchanged sentences

Year Ended December 31,

2023 2022 2021

Net Loss $ ( 373,630 ) $ ( 295,350 ) $ ( 241,846 )

Other comprehensive income (loss):

Unrealized gain (loss) on available-for-sale

Unrealized gain (loss) on available-for-sale securities 500 48 ( 127 )

Comprehensive loss $ ( 373,130 ) $ ( 295,302 ) $ ( 241,973 )

3 unchanged sentences

(in thousands, except share and per share amounts)

Preferred stock Common stock Additional

Capital Accumulated

comprehensive

1 unchanged sentence

stockholders’

Preferred stock

Shares Amount Shares Amount

Balance at December 31, 2020 1,969,797 $ — 15,508,146 $ 2 $ 665,385 $ 47 $ ( 425,464 ) $ 239,970

3 unchanged sentences

Unrealized loss on marketable securities — — — — — ( 127 ) — ( 127 )

Net loss — — — — — — ( 241,846 ) ( 241,846 )

Balance at December 31, 2021 1,969,797 $ — 17,103,395 $ 2 $ 863,495 $ ( 80 ) $ ( 667,310 ) $ 196,107

Issuance of common shares in equity offering, excluding to related parties, net of transaction costs

Issuance of common and preferred shares in equity offerings, excluding to related parties, net of transaction costs 400,000 — 783,344 — 255,382 — — 255,382

Sale of common shares to related parties and exercise of common stock options, net of transaction costs — — 215,784 — 8,955 — — 8,955

Compensation expense related to stock options for services — — — — 31,625 — — 31,625

Unrealized loss on marketable securities

Unrealized gain on marketable securities

— — — — — 48 — 48

Hercules warrant — — — — 622 — — 622

Net loss — — — — — — ( 295,350 ) ( 295,350 )

Balance at December 31, 2022 2,369,797 $ — 18,102,523 $ 2 $ 1,160,079 $ ( 32 ) $ ( 962,660 ) $ 197,389

Issuance of common and preferred shares in equity offerings, excluding to related parties, net of transaction costs — — 1,346,199 — 260,187 — — 260,187

Sale of common shares to related parties and exercise of common stock options, net of transaction costs

Sale of warrants and common shares to related parties and exercise of common stock options, net of transaction costs

— — 426,705 — 270,292 — — 270,292

Compensation expense related to stock options for services — — — — 49,735 — — 49,735

Unrealized loss on marketable securities

Unrealized gain on marketable securities

— — — — 500 — 500

Hercules warrant — — — — 860 — — 860

Net loss — — — — — — ( 373,630 ) ( 373,630 )

Balance at December 31, 2023 2,369,797 — 19,875,427 $ 2 $ 1,741,153 $ 468 $ ( 1,336,290 ) $ 405,333

4 unchanged sentences

Year Ended December 31,

2023 2022 2021

Cash flows from operating activities:

Net loss $ ( 373,630 ) $ ( 295,350 ) $ ( 241,846 )

Adjustments to reconcile net loss to net cash used in operating activities:

15 unchanged sentences

Proceeds from issuances of stock, excluding related parties, net of transaction costs 260,187 255,382 170,207

Proceeds from the sale of related party stock and exercise of common stock options, net of transaction costs

Proceeds from the sale of related party warrants and stock and exercise of common stock options, net of transaction costs 270,292 8,955 1,030

Proceeds from issuance of loan payable 65,000 50,000 —

5 unchanged sentences

Supplemental disclosure of cash flow information:

Obtaining a right-of-use

asset in exchange for a lease liability

Obtaining a right-of-use asset in exchange for a lease liability $ 1,628 $ 583 $ 376

See accompanying notes to consolidated financial statements.

4 unchanged sentences

Madrigal Pharmaceuticals, Inc.

(the “Company” or “Madrigal”) is a clinical-stage pharmaceutical company developing novel, high-quality, small-molecule drugs addressing major unmet needs in cardiovascular, metabolic, and liver diseases.

The Company’s lead compound, resmetirom, is being advanced for non-alcoholic

steatohepatitis (“NASH”), a liver disease that commonly affects people with metabolic diseases such as obesity and diabetes, and non-alcoholic

fatty liver disease (“NAFLD”).

The Company initiated two Phase 3 studies of resmetirom in NASH in 2019 that are ongoing.

The Company announced certain topline results from the MAESTRO-NAFLD-1

safety study of resmetirom in January 2022 and the MAESTRO-NASH study in December 2022.

In August 2022, Madrigal initiated a third study, MAESTRO-NASH-OUTCOMES.

(the “Company” or “Madrigal”) is a clinical-stage biopharmaceutical company pursuing novel therapeutics for nonalcoholic steatohepatitis (“NASH”), a liver disease with high unmet medical need.

The Company's lead candidate, resmetirom, a once-daily, oral, liver-directed thyroid hormone receptor-β (“THR-β”) agonist designed to target key underlying causes of NASH, is in registration status following review acceptance by the U.S.

Food and Drug Administration (the “FDA”) for its New Drug Application (“NDA”) in September 2023.

Basis of Presentation

Certain prior period amounts have been reclassified to align with current period presentation.

17 unchanged sentences

Since these securities are available to fund current operations they are classified as current assets on the consolidated balance sheets.

The Company adjusts the cost of available-for-sale

debt securities for amortization of premiums and accretion of discounts to maturity.

The Company adjusts the cost of available-for-sale debt securities for amortization of premiums and accretion of discounts to maturity.

The Company includes such amortization and accretion as a component of interest income, net.

Realized gains and losses and declines in value, if any, that the Company judges to be the result of impairment or as a result of recognizing an allowance for credit losses on available-for-sale

securities are reported as a component of interest income.

Realized gains and losses and declines in value, if any, that the Company judges to be the result of impairment or as a result of recognizing an allowance for credit losses on available-for-sale securities are reported as a component of interest income.

To determine whether an impairment exists, the Company considers whether it intends to sell the debt security and, if the Company does not intend to sell the debt security, it considers available evidence to assess whether it is more likely than not that it will be required to sell the security before the recovery of its amortized cost basis.

During the years ended December 31, 2022, 2021 and 2020, the Company determined it did not have any securities that were impaired or that required an allowance for credit losses.

During the years ended December 31, 2023, 2022 and 2021, the Company determined it did not have any securities that were other-than-temporarily impaired.

Marketable securities are stated at fair value, including accrued interest, with their unrealized gains and losses included as a component of accumulated other comprehensive income or loss, which is a separate component of stockholders’ equity.

1 unchanged sentence

Realized gains and losses are determined on the specific identification method.

During the years ended December 31, 2022, 2021 and 2020, the Company did not have any realized gains or losses on marketable securities.

During the years ended December 31, 2023, 2022 and 2021, the Company did no t have any realized gains or losses on marketable securities.

Fair Value of Financial Instruments

10 unchanged sentences

These inputs include reported trades of and broker-dealer quotes on the same or similar securities, issuer credit spreads, benchmark securities and other observable inputs.

As of December 31, 2022 and 2021, the Company’s financial assets valued based on Level 1 inputs consisted of cash and cash equivalents in a money market fund and its financial assets valued based on Level 2 inputs consisted of high-grade corporate bonds and commercial paper.

As of December 31, 2023 and 2022, the Company’s financial assets valued based on Level 1 inputs consisted of cash and cash equivalents in a money market fund, its financial assets valued based on Level 2 inputs consisted of high-grade corporate and government agency bonds and commercial paper, and it had no financial assets valued based on Level 3 inputs.

During the years ended December 31, 2023, 2022 and 2021, the Company did not have any transfers of financials assets between Levels 1 and 2.

2 unchanged sentences

Research and development costs are expensed as incurred.

Research and development costs are comprised of costs incurred in performing research and development activities, including internal costs (including

compensation), costs for consultants, milestone payments under licensing agreements, and other costs associated with the Company’s preclinical and clinical programs.

In particular, the Company has conducted safety studies in animals, optimized and implemented the manufacturing of our drug, and conducted Phase 1-3

clinical trials, all of which are considered research and development expenditures.

Research and development costs are comprised of costs incurred in performing research and development activities, including internal costs (including stock-based compensation), costs for consultants, milestone payments under licensing agreements, and other costs associated with the Company’s preclinical and clinical programs.

In particular, the Company has conducted safety studies in animals, optimized and implemented the manufacturing of its drug, and conducted clinical trials, all of which are considered research and development expenditures.

Management uses significant judgment in estimating the amount of research and development costs recognized in each reporting period.

Management analyzes and estimates the progress of its preclinical studies and clinical trials, completion of milestones events per underlying agreements, invoices received and contracted costs when estimating the research and development costs to accrue in each reporting period.

Management analyzes and estimates the progress of its clinical trials, completion of milestones events per underlying agreements, invoices received and contracted costs when estimating the research and development costs to accrue in each reporting period.

Actual results could differ from the Company’s estimates.

The Company’s historical estimates for research and development costs have not been materially different from the actual costs.

Costs to secure and defend patents are expensed as incurred and are classified as general and administrative expense in the Company’s statements of operations.

1 unchanged sentence

Stock-Based Compensation

The Company recognizes stock-based compensation expense based on the grant date fair value of stock options granted to employees, officers and directors.

The Company uses the Black-Scholes option pricing model to determine the grant date fair value as management believes it is the most appropriate valuation method for its option grants.

The Company recognizes stock-based compensation expense based on the grant date fair value of stock options, restricted stock units, and other stock-based compensation awards granted to employees, officers, directors, and consultants.

Awards that vest as the recipient provides service are expensed on a straight-line basis over the requisite service period.

The Company uses the Black-Scholes option pricing model to determine the grant date fair value of stock options as management believes it is the most appropriate valuation method for its option grants.

The Black-Scholes model requires inputs for risk-free interest rate, dividend yield, volatility and expected lives of the options.

5 unchanged sentences

The Company estimates the forfeiture rate based on historical data.

This analysis is re-evaluated

at least annually and the forfeiture rate is adjusted as necessary.

This analysis is re-evaluated at least annually and the forfeiture rate is adjusted as necessary.

For other stock-based compensation awards granted to employees and directors that vest based on market conditions, such as the trading price of the Company’s common stock achieving or exceeding certain price targets, the Company uses a Monte Carlo simulation model to estimate the grant date fair value and recognize stock compensation expense over the derived service period.

The Monte Carlo simulation model requires key inputs for risk-free interest rate, dividend yield, volatility, and expected life.

The assumptions used in computing the fair value of equity awards reflect the Company’s best estimates but involve uncertainties related to market and other conditions.

Changes in any of these assumptions may materially affect the fair value of awards granted and the amount of stock-based compensation recognized.

Certain of the employee stock options granted by the Company are structured to qualify as incentive stock options (ISOs).

8 unchanged sentences

Comprehensive Loss

Comprehensive loss is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner

Comprehensive loss is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources.

Changes in unrealized gains and losses on marketable securities represent the only difference between the Company’s net loss and comprehensive loss.

Basic and Diluted Loss Per Common Share

Basic net loss per share is computed using the weighted average number of common shares outstanding during the period, excluding restricted stock that has been issued but is not yet vested.

Basic net loss per share is computed using the weighted average number of common shares outstanding during the period.

Diluted net loss per common share is computed using the weighted average number of common shares outstanding and the weighted average dilutive potential common shares outstanding using the treasury stock method.

However, for the years ended December 31, 2022, 2021 and 2020, diluted net loss per share is the same as basic net loss per share because the inclusion of common stock issuable upon the exercise of stock options or warrants, and common stock issuable upon the conversion of preferred stock would be anti-dilutive.

However, for the years ended December 31, 2023, 2022 and 2021, diluted net loss per share is the same as basic net loss per share because

the inclusion of weighted average shares of common stock issuable upon the exercise of stock options and warrants or vesting of restricted stock units, and common stock issuable upon the conversion of preferred stock would be anti-dilutive.

The following table summarizes outstanding securities not included in the computation of diluted net loss per common share as their inclusion would be anti-dilutive:

As of December 31,

2023 2022 2021

Common stock options 2,355,779 2,857,054 2,301,574

Restricted stock units

Performance-based restricted stock units 150,000 — —

Preferred stock 2,369,797 2,369,797 1,969,797

Recent Accounting Pronouncements

Warrants 2,067,552 14,899 —

Recent Accounting Pronouncements Not Yet Adopted

In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which enhances the disclosures required for operating segments in the Company's annual and interim consolidated financial statements.

The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods beginning after December 15, 2024.

Early adoption is permitted.

The Company is currently evaluating the impact of ASU 2023-07 on its financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, which enhances the disclosures required for income taxes in the Company's annual consolidated financial statements.

The amendments are effective for annual periods beginning after December 15, 2024.

Early adoption is permitted.

The Company is currently evaluating the impact of ASU 2023-09 on its financial statements.

Liquidity and Uncertainties

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Management expects to incur losses for the foreseeable future.

To date, the Company has funded its operations primarily through proceeds from sales of the Company’s capital stock.

To date, the Company has funded its operations primarily through proceeds from sales of the Company’s capital stock and debt financings.

In October 2023, the Company completed a public offering and received approximately $ 472.0 million net cash proceeds.

The Company believes that its cash, cash equivalents and marketable securities at December 31, 2023 will be sufficient to fund operations past one year from the issuance of these financial statements.

To meet its future capital needs, the Company intends to raise additional capital through debt or equity financings, collaborations, partnerships or other strategic transactions.

To meet its future capital needs, the Company may need to raise additional capital through debt or equity financings, collaborations, partnerships or other strategic transactions.

However, there can be no assurance that the Company will be able to complete any such transactions on acceptable terms or otherwise.

The inability of the Company to obtain sufficient funds on acceptable terms when needed could have a material adverse effect on the Company’s business, results of operations and financial condition.

The Company has the ability to delay certain research activities and related clinical expenses if necessary due to liquidity concerns until a date when those concerns are relieved.

The inability of the Company to obtain sufficient funds on acceptable terms when needed, if at all, could have a material adverse effect on the Company’s business, results of operations and financial condition.

The Company has the ability to delay certain planned commercialization costs, product manufacturing, research activities and related clinical expenses if necessary due to liquidity concerns until a date when those concerns are relieved.

Cash, Cash Equivalents and Marketable Securities

A summary of cash, cash equivalents and available-for-sale

marketable securities held by the Company as of December 31, 2022 and 2021 is as follows (in thousands):

A summary of cash, cash equivalents and available-for-sale marketable securities held by the Company as of December 31, 2023 and 2022 is as follows (in thousands):

December 31, 2023

Cost Unrealized

gains Unrealized

Cash and cash equivalents:

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Money market funds (Level 1) 78,555 — — 78,555

US government and government sponsored entities (Level 1)

14,967 — — 14,967

Corporate debt securities due within 3 months of date of purchase (Level 2)

3,664 — — 3,664

Total cash and cash equivalents 99,915 — — 99,915

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Corporate debt securities due within 1 year of date of purchase (Level 2) 382,028 195 ( 7 ) 382,216

US government and government sponsored entities due within 1 year of date of purchase (Level 2)

150,743 280 ( 1 ) 151,022

Corporate debt securities due within 1 to 2 years of date of purchase (Level 2)

$ 977 $ 1 $ — $ 978

Total cash, cash equivalents and marketable securities $ 633,663 $ 476 $ ( 8 ) $ 634,131

December 31, 2022

Cost Unrealized

gains Unrealized

Cash and cash equivalents:

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Corporate debt securities due within 1 year of date of purchase (Level 2)

Corporate debt securities due within 1 to 2 years of date of purchase (Level 2)

27,257 7 ( 39 ) 27,225

Total cash, cash equivalents and marketable securities $ 358,806 $ 7 $ ( 39 ) $ 358,774

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Accrued liabilities as of December 31, 2023 and 2022 consisted of the following (in thousands):

2023 December 31,

Contract research organization costs $ 50,737 $ 53,119

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Professional fees 6,814 4,867

Other 1,970 767

Total accrued liabilities $ 89,980 $ 91,461

Long Term Debt

In May 2022 the Company and its wholly-owned subsidiary, Canticle Pharmaceuticals, Inc., entered into the $ 250.0 million Loan Facility (the “Loan Facility”) with the several banks and other financial institutions or entities party thereto (each, a “Lender” and collectively referred to as the “Lenders”), and Hercules Capital, Inc.

(“Hercules”), in its capacity

as administrative agent and collateral agent for itself and the Lenders.

In May 2022 the Company and its wholly-owned subsidiary, Canticle Pharmaceuticals, Inc., entered into the $ 250.0 million Loan Facility (the “Loan Facility”) with several banks and other financial institutions or entities party thereto (each, a “Lender” and collectively referred to as the “Lenders”), and Hercules Capital, Inc.

(“Hercules”), in its capacity as administrative agent and collateral agent for itself and the Lenders.

Under the terms of the Loan Facility, the first $ 50.0 million tranche was drawn at closing.

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The Loan Facility had a minimum interest rate of 7.45 % and adjusted with changes in the prime rate.

The Company will pay interest-only monthly payments of accrued interest under the Loan Facility through May 1, 2025, for a period of 36 months, which period may be extended to May 1, 2026 and May 3, 2027, upon the achievement of regulatory approval milestones and future revenue covenants, subject to

compliance with applicable covenants.

The Loan Facility matures in May 2026 and may be extended an additional year upon the achievement of certain regulatory milestones.

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In connection with the first tranche drawn at closing, the Company issued Hercules a warrant to purchase 14,899 shares of Company common stock, which had a Black-Scholes value of $ 0.6 million.

The Loan Facility includes affirmative and restrictive financial covenants commencing on January 1, 2023, including maintenance of a minimum cash, cash equivalents and liquid funds covenant of $ 35.0 million, which may decrease in certain circumstances if the Company achieves certain clinical milestones and a revenue milestone, and a revenue-based covenant that could apply commencing at or after the time that financial reporting is due for the quarter ending September 30, 2024 .

On February 3, 2023, the Company entered into the First Amendment (the “Amendment”) to the Loan Facility (as amended, the “Amended Loan Facility”).

Under the Amended Loan Facility, an additional $ 35.0 million was drawn under a second, expanded, $ 65.0 million tranche (“Tranche 2”) in February of 2023 following the Company’s achievement of the Phase 3 clinical development milestone.

An additional $ 15.0 million was drawn under Tranche 2 in June of 2023.

The remaining $ 15.0 million available under Tranche 2 was drawn in September of 2023 in accordance with the Amended Loan Facility.

The third tranche (“Tranche 3”) of $ 75.0 million remains unchanged by the Amendment, and such borrowings are available subject to the Company obtaining a certain FDA approval for resmetirom.

Coincident with the expansion of Tranche 2 borrowing capacity by $ 15.0 million, the Amendment reduced the fourth tranche under the Loan Facility (“Tranche 4”) by $ 15.0 million to $ 60.0 million, which amount is available subject to Hercules’ sole discretion.

In connection with the $ 35.0 million drawn under Tranche 2 at the closing of the Amendment, $ 15.0 million drawn in June of 2023, and $ 15.0 million drawn in September of 2023, the Company issued to Hercules and affiliates Tranche 2 Warrants to purchase an aggregate of 4,555 shares of common stock, which had a Black-Scholes value of $ 0.9 million.

The Amendment reduced the interest rate under the Amended Loan Facility to the greater of (i) the prime rate as reported in The Wall Street Journal plus 2.45 % and (ii) 8.25 %.

The Amendment and the Amended Loan Facility summary terms were disclosed in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 9, 2023.

The Loan Facility includes affirmative and restrictive financial covenants which commenced on January 1, 2023, including maintenance of a minimum cash, cash equivalents and liquid funds covenant of $ 35.0 million, which may decrease in certain circumstances if the Company achieves certain clinical milestones and a revenue milestone, and a revenue-based covenant that could apply commencing at or after the time that financial reporting is due for the quarter ending September 30, 2024.

The Loan Facility contains event of default provisions for:

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insolvency, attachment or judgment events affecting the Company;

and any circumstance which has occurred or could reasonably be expected to have a material adverse effect on the Company, provided that, any failure to achieve approval or certain other milestones

under the Loan Facility shall not in and of itself constitute a material adverse effect.

and any circumstance which has occurred or could reasonably be expected to have a material

adverse effect on the Company, provided that, any failure to achieve approval or certain other milestones under the Loan Facility shall not in and of itself constitute a material adverse effect.

The Loan Facility also includes customary covenants associated with a secured loan facility, including covenants concerning financial reporting obligations, and certain limitations on indebtedness, liens (including a negative pledge on intellectual property and other assets), investments, distributions (including dividends), collateral, investments, distributions, transfers, mergers or acquisitions, taxes, corporate changes, and deposit accounts.

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Period Ending December 31, 2023:

2024 $ 12,802

Less amount representing interest ( 24,641 )

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Loans payable, net of discount $ 115,480

See Footnote 13 for a description of certain amended terms set forth in the First Amendment to this Loan Facility, which was entered into during the first quarter of 2023.

Stockholders’ Equity

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The common stock will vote together with all other classes and series of stock of the Company as a single class on all actions to be taken by the Company’s stockholders.

Each share of common stock is entitled to receive dividends, as and when declared by the Company’s board of directors.

Each share of common stock is entitled to receive dividends, as and when declared by the Company’s Board of Directors ("The Board").

The Company has never declared cash dividends on its common stock and does not expect to do so in the foreseeable future.

Preferred Stock

The Series A and B Preferred Stock have a par value of $ 0.0001 per share and are convertible into shares of the common stock at a one -to-one

ratio, subject to adjustment as provided in the Certificates of Designation of Preferences, Rights and Limitations of Series A Preferred Stock and Series B Preferred Stock that the Company filed with the Secretary of State of the State of Delaware on June 21, 2017 and December 22, 2022, respectively.

The Series A and B Preferred Stock have a par value of $ 0.0001 per share and are convertible into shares of the common stock at a one -to-one ratio, subject to adjustment as provided in the Certificates of Designation of Preferences, Rights and Limitations of Series A Preferred Stock and Series B Preferred Stock that the Company filed with the Secretary of State of the State of Delaware on June 21, 2017 and December 22, 2022, respectively.

The terms of the Series A and B Preferred Stock are set forth in such Certificates of Designation.

Each share of the Series A and B Preferred Stock is convertible into shares of Common Stock following notice that may be given at the holder’s option.

Upon any liquidation, dissolution or winding-up

of the Company, whether voluntary or involuntary, after the satisfaction in full of the debts of the Company and the payment of any liquidation preference owed to the holders of shares of capital stock of the Company ranking prior to the Series A and B Preferred Stock upon liquidation, the holders of the Series A and B Preferred Stock shall participate pari passu with the holders of the Common Stock (on an as-if-converted-to-Common-Stock

basis) in the net assets of the Company.

Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, after the satisfaction in full of the debts of the Company and the payment of any liquidation preference owed to the holders of shares of capital stock of the Company ranking prior to the Series A and B Preferred Stock upon liquidation, the holders of the Series A and B Preferred Stock shall participate pari passu with the holders of the Common Stock (on an as-if-converted-to-Common-Stock basis) in the net assets of the Company.

Shares of the Series A and B Preferred Stock will generally have no voting rights, except as required by law.

Shares of the Series A and B Preferred Stock will be entitled to receive dividends before shares of any other class or series of capital stock of the Company (other than dividends in the form of the Common Stock) equal to the dividend payable on each share of the Common Stock, on an as-converted

2023 Public Offering

On September 28, 2023, the Company entered into an Underwriting Agreement with Goldman Sachs & Co.

LLC, as representative of the several underwriters named therein, pursuant to which the Company sold to the underwriters in an underwritten public offering (the “2023 Offering”):

(i) 1,248,098 shares of common stock at a public offering price of $ 151.69 per share, and (ii) pre-funded warrants (the “Pre-Funded Warrants”) to purchase 2,048,098 shares of common stock at a public offering price of $ 151.6899 per Pre-Funded Warrant, which represents the per share public offering price

for the common stock less a $ 0.0001 per share exercise price for each such Pre-Funded Warrant.

The 2023 Offering closed on October 3, 2023.

The gross proceeds of the 2023 Offering was $ 500.0 million, and the Company received net proceeds, after deducting the underwriting discount and commissions and other estimated offering expenses payable by the Company, of approximately $ 472.0 million.

The Company intends to use the net proceeds from the Offering for its 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.

The Pre-Funded Warrants are exercisable at any time after the date of issuance.

A holder of Pre-Funded Warrants may not exercise the warrant if the holder, together with its affiliates, would beneficially own more than 9.99 % of the number of shares of common stock outstanding immediately after giving effect to such exercise.

A holder of Pre-Funded Warrants may increase or decrease this percentage, but not in excess of 19.99 %, by providing at least 61 days prior notice to the Company.

December 2022 Registered Direct Offering

In December 2022, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with a group of institutional accredited investors, who were existing, non-controlling

stockholders of the Company, pursuant to which the Company sold securities to the Investors in an offering that was registered under the Company’s existing shelf registration statement (the “2022 Registered Direct Offering”).

In December 2022, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with a group of institutional accredited investors, who were existing, non-controlling stockholders of the Company, pursuant to which the Company sold securities to the Investors in an offering that was registered under the Company’s existing shelf registration statement (the “2022 Registered Direct Offering”).

Under the terms of the Purchase Agreement, the Company sold 44,444 shares of its common stock at a price of $ 225 per share, and 400,000 shares of its Series B Convertible Preferred Stock at a price of $ 225 per share.

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The 2022 Registered Direct Offering closed on December 23, 2022.

At-The-Market

Issuance Sales Agreement

In November 2020, the Company entered into an at-the-market

sales agreement (the “2020 Sales Agreement”), with Cowen and Company, LLC (“Cowen”), pursuant to which the Company could, from time to time, issue and sell shares of its common stock.

At-The-Market Issuance Sales Agreement

In November 2020, the Company entered into an at-the-market sales agreement (the “2020 Sales Agreement”), with Cowen and Company, LLC (“Cowen”), pursuant to which the Company could, from time to time, issue and sell shares of its common stock.

The 2020 Sales Agreement authorized an aggregate offering of up to $ 200.0 million in shares of our common stock, at the Company’s option, through Cowen as its sales agent.

Sales of common stock through Cowen could be made by any method that is deemed an “at-the-market”

offering as defined in Rule 415 promulgated under the Securities Act of 1933, as amended, including by means of ordinary brokers’ transactions at market prices, in block transactions or as otherwise agreed by the Company and Cowen.

Sales of common stock through Cowen could be made by any method that is deemed an “at-the-market” offering as defined in Rule 415 promulgated under the Securities Act of 1933, as amended, including by means of ordinary brokers’ transactions at market prices, in block transactions or as otherwise agreed by the Company and Cowen.

The 2020 Sales Agreement was terminated in June 2021 when the Company filed a new shelf registration statement.

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Of those shares sold, 1,087,126 were sold in 2021, and 39,607 were sold in 2020.

In June 2021, the Company entered into an at-the-market

sales agreement (the “2021 Sales Agreement”) with Cowen and Company, LLC (“Cowen”), pursuant to which the Company could, from time to time, issue and sell shares of its common stock.

The 2021 Sales Agreement authorized an aggregate offering of up to $ 200 million in shares of our common stock, at the Company’s option, through Cowen as its sales agent.

Sales of common stock through Cowen could be made by any method that is deemed an “at-the-market”

Subject to the terms and conditions of the 2021 Sales Agreement, Cowen would use commercially reasonable efforts consistent with its normal trading and sales practices to sell the common stock based upon the Company’s instructions (including any price, time or size limits or other customary parameters or conditions the Company imposed).The 2021 Sales Agreement replaced the 2020 Sales Agreement.

In December 2022, the Company sold 738,900 shares under the 2021 Sales Agreement for an aggregate of $ 159.1 million in gross proceeds, with net proceeds to the Company of $ 155.9 million after deducting commissions and other transaction costs.

In total, under the 2021 Sales Agreement the Company sold 1,235,943 shares for an aggregate of $ 199.9 million in gross proceeds, with net proceeds to the Company of approximately $ 195.8 million after deducting commissions and other transaction costs.

In June 2021, the Company entered into an at-the-market sales agreement (the “Original 2021 Sales Agreement”) with Cowen and Company, LLC (“Cowen”), pursuant to which the Company could, from time to time, issue and sell shares of its common stock.

The Original 2021 Sales Agreement authorized an aggregate offering of up to $ 200.0 million in shares of our common stock, at the Company’s option, through Cowen as its sales agent.

Subject to the terms and conditions of the Original 2021 Sales Agreement, Cowen would use commercially reasonable efforts consistent with its normal trading and sales practices to sell the common stock based upon the Company’s instructions (including any price, time or size limits or other customary parameters or conditions the Company imposed).

In December 2022, the Company sold 738,900 shares under the Original 2021 Sales Agreement for an aggregate of $ 159.1 million in gross proceeds, with net proceeds to the Company of $ 155.9 million after deducting commissions and other transaction costs.

In total, under the Original 2021 Sales Agreement the Company sold 1,235,943 shares for an aggregate of $ 199.9 million in gross proceeds, with net proceeds to the Company of approximately $ 195.8 million after deducting commissions and other transaction costs.

Of those shares sold, 738,900 were sold in 2022, and 497,043 were sold in 2021.

All shares were sold pursuant to the Company’s effective shelf registration statement and the prospectus supplement relating thereto.

As of December 31, 2022, no amounts remained reserved and available for sale under the 2021 Sales Agreement and the related prospectus supplement.

All shares were sold pursuant to the Company’s effective shelf registration statement on Form S-3 ( the

"Registration Statement") and the prospectus supplement relating thereto.

As of December 31, 2023, no amounts remained reserved and available for sale under the Original 2021 Sales Agreement and the related prospectus supplement.

In May 2023, the Company amended the 2021 Agreement (the “Sales Agreement Amendment”), with Cowen, pursuant to which the Company may, from time to time, issue and sell an additional $ 200.0 million in shares of its common stock.

The Company is not obligated to make any sales of its common stock under this arrangement.

Any shares sold will be sold pursuant to the Registration Statement and prospectus supplement filed pursuant to the Registration Statement.

The Sales Agreement Amendment authorizes sales of shares of the Company’s common stock, from time to time, at the Company’s option, through Cowen as its sales agent.

Sales of common stock through Cowen may be made by any method that is deemed an “at-the-market” offering as defined in Rule 415 promulgated under the Securities Act of 1933, as amended, and as described in the prospectus supplement.

During the three months ended December 31, 2023, under the Sales Agreement Amendment, the Company sold no shares.

During the year ended December 31, 2023, and in total under the Sales Agreement Amendment, the Company sold 98,101 shares for an aggregate of $ 25.2 million in gross proceeds, with net proceeds to the Company of approximately $ 24.5 million after deducting commissions and other transaction costs.

All shares were sold pursuant to the Company’s effective Registration Statement and the prospectus supplement relating thereto.

As of December 31, 2023, $ 174.8 million remained reserved and available for sale under the 2023 Sales Agreement Amendment and the Company’s related prospectus supplement.

Stock-based Compensation

The 2015 Stock Plan, as amended, is our primary plan through which equity based grants are awarded.

We ceased making new awards under the 2006 Stock Plan upon adoption of the 2015 Stock Plan.

The 2015 Stock Plan provides for the grant of incentive stock options, non-statutory

stock options, restricted stock and other stock-based compensation awards to employees, officers, directors, and consultants of the Company.

2015 Stock Plan

The 2015 Stock Plan, as amended (the “2015 Stock Plan”), is our shareholder-approved incentive plan through which equity based grants are awarded.

The 2015 Stock Plan provides for the grant of incentive stock options, non-statutory stock options, restricted stock, restricted stock units and other stock-based compensation awards to employees, officers, directors, and consultants of the Company.

The administration of the 2015 Stock Plan is under the general supervision of the Compensation Committee of the Board of Directors.

The terms of stock options awarded under the 2015 Stock Plan, in general, are determined by the Compensation Committee, provided the exercise price per share generally shall not be set at less than the fair market value of a share of the common stock on the date of grant and the term shall not be greater than ten years from the date the option is granted.

As of December 31, 2022, the Company had options outstanding to purchase 2,857,054 shares of its common stock.

As of December 31, 2022, 890,029 shares were available for future issuance.

The following table summarizes stock option activity during the twelve months ended December 31, 2022:

As of December 31, 2023, 711,054 shares were available for future issuance under the 2015 Stock Plan.

2023 Inducement Plan

In September 2023, the Company adopted the 2023 Inducement Plan (the “Inducement Plan”), pursuant to which the Company may from time to time make equity grants to new employees as a material inducement to their employment.

The Inducement Plan was adopted without stockholder approval, pursuant to Nasdaq Listing Rule 5635(c)(4), and is administered by the Compensation Committee of the Board.

The Inducement Plan provides for the granting of non-statutory stock options, restricted stock, restricted stock units, performance stock units and other stock-based compensation awards to new employees, but does not allow for the granting of incentive stock options.

The terms of the stock options under the Inducement Plan, in general, are determined by the Compensation Committee, provided the exercise price per share generally shall not be set at less than the fair market value of a share of the common stock on the date of grant and the term shall not be greater than ten years from the date the option or award is granted.

A total of 500,000 shares of the Company’s common stock were reserved for issuance under the Inducement Plan.

As of December 31, 2023, 193,392 shares were available for future issuance under the 2023 Inducement Plan.

Stock Options

The following table summarizes stock option activity during the year ended December 31, 2023:

average exercise

price Weighted

contractual life

(years) Aggregate

intrinsic value

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The weighted-average grant date fair values, based on the Black-Scholes option model, of options granted during the year ended December 31, 2023, 2022 and 2021 was $ 149.15 , $ 54.68 , and $ 73.29 , respectively.

Restricted Stock Units

The Company’s 2015 Stock Plan provides for awards of restricted stock units (“RSUs”) to employees, officers, directors and consultants to the Company.

The Company’s Inducement Plan provides for awards of RSUs to new employees.

RSUs vest over a period of months or years, or upon the occurrence of certain performance criteria or the attainment of stated goals or events, and are subject to forfeiture if employment or service terminates before vesting.

The following table summarizes RSU activity, excluding performance-based RSUs, during the year ended December 31, 2023:

Shares Weighted

average grant date fair value

Unvested at January 1, 2023 — $ —

398,600 243.81

( 356 ) 299.98

RSUs forfeited

( 22,127 ) 283.05

Unvested at December 31, 2023 376,117 $ 241.45

Performance-Based Restricted Stock Units

The Company has granted various performance-based restricted stock units (“PSUs”) to certain senior leadership.

Depending on the terms of the PSUs and the outcome of the pre-established performance criteria, which may include a market and/or performance condition, a recipient may ultimately earn the target number of PSUs granted or a specified multiple thereof at the end of the vesting period.

As of December 31, 2023, the Company granted 50,000 PSUs.

The maximum number of PSUs eligible to be earned of 150,000 are outstanding under the Inducement Plan as of December 31, 2023, with a weighted average grant date fair value of $ 146.37 per unit.

Outstanding Awards

As of December 31, 2023, the Company had restricted stock units, performance stock units, and options outstanding pursuant to which an aggregate of 2,881,896 shares of its common stock may be issued pursuant to the terms of all awards granted under the 2015 Stock Plan and Inducement Plan.

Stock-Based Compensation Expense

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Year Ended December 31,

2023 2022 2021

Stock-based compensation expense by type of award:

Stock options $ 30,613 $ 31,625 $ 26,873

Restricted stock units

Performance-based restricted stock units

Total stock-based compensation expense $ 49,735 $ 31,625 $ 26,873

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Total stock-based compensation expense included in net loss $ 49,735 $ 31,625 $ 26,873

Unrecognized stock-based compensation expense on stock options as of December 31, 2022 was $ 58.7 million with a weighted average remaining period of 2.57 years.

he Company entered into an operating lease for office space, which was renewed and extended in 2020.

We adopted ASU 2016-02,

“Leases,” on January 1, 2019 requiring, among other changes, operating and finance leases with terms exceeding twelve months to be recognized as a right-of-use

asset (or “ROU”) and lease liabilities on the balance sheet.

Unrecognized stock-based compensation expense as of December 31, 2023 was $ 118.2 million with a weighted average remaining period of 2.66 years.

In 2019, the Company entered into an operating lease for office space, which was renewed and extended in 2020.

The Company adopted ASU 2016-02, “Leases,” on January 1, 2019 requiring, among other changes, operating and finance leases with terms exceeding twelve months to be recognized as a right-of-use asset (or “ROU”) and lease liabilities on the balance sheet.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date.

The lease term is determined to be the non-cancelable

period including any lessee renewal options that are considered reasonably certain of exercise.

The lease term is determined to be the non-cancelable period including any lessee renewal options that are considered reasonably certain of exercise.

The interest rate implicit in lease contracts is typically not readily determinable.

As such, the Company used judgment to determine an appropriate incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term in a similar economic environment.

In August 2023, The Company entered into the Fifth Amendment to its Office Lease (the “Lease Amendment”).

The Lease Amendment extends the term of the lease through November 2026.

As a result of the Lease Amendment, an incremental $ 1.6 million ROU asset and lease liabilities were recorded during the year ended December 31, 2023.

Future minimum payments under the Company’s operating leases related to the ROU asset and lease liability as of December 31, 2023 was as follows (in thousand):

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As of December 31, 2023, the weighted average remaining operating lease term was 2.9 years and the weighted average discount rate used to determine the operating lease liabilities was 10.95 %.

Cash paid related to

the lease liability was $ 0.7 and $ 0.4 million for years ended December 31, 2022 and 2021 respectively.

Operating lease costs were $ 0.8 and $ 0.4 million for years ended December 31, 2022 and 2021 respectively.

Cash paid related to the lease liability was $ 1.1 million and $ 0.7 million for years ended December 31, 2023 and 2022 respectively.

Operating lease costs were $ 1.1 million and $ 0.8 million for years ended December 31, 2023 and 2022 respectively.

Rent, short term and variable leases costs were immaterial during the years ended December 31, 2023, 2022 and 2021.

Commitments and Contingencies

The Company has a Research, Development and Commercialization Agreement with Hoffmann-La

Roche (“Roche”) which grants the Company a sole and exclusive license to develop, use, sell, offer for sale and import any Licensed Product as defined by the agreement.

The Company has a Research, Development and Commercialization Agreement with Hoffmann-La Roche (“Roche”) which grants the Company a sole and exclusive license to develop, use, sell, offer for sale and import any Licensed Product as defined by the agreement.

The agreement requires future milestone payments to Roche.

In 2019, the Company commenced a Phase 3 study in Non-Alcoholic

Steatohepatitis (NASH), which triggered a $ 2 million milestone payment under the agreement.

Remaining milestones under the agreement total $ 8 million and are earned by achieving specified objectives related to future regulatory approval in the United States and Europe of a product developed from resmetirom.

A single-digit royalty payment range is based on net sales of products developed from resmetirom, subject to certain reductions.

Except as described above, the Company has not achieved any additional product development or regulatory milestones and had no Licensed Product sales for the years ended December 31, 2022, 2021 and 2020.

Remaining milestones under the agreement total $ 8.0 million and are earned by achieving specified objectives related to future regulatory approval in the United States and Europe of resmetirom or a product developed from resmetirom.

Furthermore, a tiered single-digit royalty is payable on net sales of resmetirom or a product developed from resmetirom, subject to certain reductions.

The Company has not achieved any additional product development or regulatory milestones and had no Licensed Product sales for the years ended December 31, 2023, 2022 and 2021.

In August 2023, The Company entered into the Fifth Amendment to the Office Lease (the "Lease Amendment").

The Lease Amendment extends the term of the lease through November 2026.

As a result of the Lease Amendment, an incremental $ 1.6 million ROU asset and lease liabilities were recorded during the year ended December 31, 2023.

The Company has entered into customary contractual arrangements and letters of intent in preparation for and in support of the clinical trials.

6 unchanged sentences

Although a formal analysis has not been completed, the Company has determined that an ownership change likely occurred for Madrigal during the year ended December 31, 2017.

The net operating losses are estimated to be subject to an annual limitation, of which none are expected to expire before becoming available to reduce future taxable income.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion of the deferred tax assets will not be realized.

6 unchanged sentences

The 2019 through 2023 tax returns are open to review by the IRS and state taxing authorities.

Interest and penalties, if any, as they relate to

income taxes assessed, are included in the income tax provision.

income tax related interest and penalties included in the income tax provision for 2022.

Interest and penalties, if any, as they relate to income taxes assessed, are included in the income tax provision.

There was no income tax related interest and penalties included in the income tax provision for 2023.

Temporary differences that give rise to deferred tax assets and liabilities are as follows (in thousands):

For the years ended December 31,

2023 2022 2021

Deferred Tax Liabilities

4 unchanged sentences

Accrued expenses 3,857 2,398 1,857

Intangibles 503 589 783

Stock compensation 33,976 27,226 24,335

3 unchanged sentences

Capitalized R&D 175,145 137,328 112,848

R&D credit 48,074 35,103 23,799

Total deferred tax assets before valuation allowance 383,239 271,108 211,642

4 unchanged sentences

For the years ended December 31,

2023 2022 2021

Tax benefit at U.S.

11 unchanged sentences

Three months ended

March 31, 2022

June 30, 2022

September 30,

March 31, 2023 June 30, 2023 September 30, 2023 December 31,

Total revenues $ — $ — $ — $ —

6 unchanged sentences

Interest expense ( 2,336 ) ( 2,901 ) ( 3,504 ) ( 3,971 )

Other income — — — —

Net loss $ ( 76,896 ) $ ( 85,800 ) $ ( 98,740 ) $ ( 112,194 )

Net loss per common share:

2 unchanged sentences

Three months ended

March 31, 2021

June 30, 2021

September 30,

March 31, 2022 June 30, 2022 September 30, 2022 December 31,

Total revenues $ — $ — $ — $ —

6 unchanged sentences

Interest expense — ( 780 ) ( 1,502 ) ( 1,682 )

Other income — — — —

Net loss $ ( 57,518 ) $ ( 70,730 ) $ ( 81,197 ) $ ( 85,905 )

Net loss per common share:

2 unchanged sentences

Subsequent Event

On February 3, 2023,

the Company entered into the First Amendment (the “Amendment”) to the Loan Facility described in Footnote 6 (as amended, the “Amended Loan Facility”).

Under the terms of the Loan

Facility, the first $ 50.0 million tranche was drawn at closing in May 2022 .

Under the Amended Loan Facility,

an additional $ 35.0 million was drawn

$ 65.0 million tranche (“Tranche 2”)

in February of

2023 following

the Company’s achievement of the Phase 3 clinical development milestone .

The Company has the ability to draw an additional $ 15.0 million under Tranche 2 by June 19, 2023 and an additional $ 15.0 million under Tranche 2 by September 30, 2023 (for a total of $ 30.0 million in additional committed Tranche 2 capacity).

The third tranche (“Tranche 3”) of $ 75.0 million remains unchanged by the Amendment, and such borrowings are available subject to the Company obtaining a certain FDA approval for resmetirom.

Coincident with the expansion of Tranche 2 borrowing capacity by

15 million, the Amendment reduced the fourth tranche

under the Loan Facility

15.0 million to $

60.0 million , which amount is available subject to Hercules’ sole discretion.

In connection with the $

35.0 million drawn under the second tranche at the closing of the Amendment, the Company issued

and affiliates

2 Warrants to purchase

2,453 shares of common stock

at an exercise price of $ 285.31 per share

The Amendment reduced the interest rate under the Amended Loan Facility to the greater of (i) the prime rate as reported in The Wall Street Journal plu

2.45 % and (ii)

The Amendment and the Amended Loan Facility summary terms were

disclosed in the Company’s Current Report on Form

filed with the Securities and Exchange Commission on February

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

What changed 10-K

Item 9A. Controls and Procedures