MADRIGAL PHARMACEUTICALS, INC. 10-Q

Item 1. Financial Statements. MADRIGAL PHARMACEUTICALS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited; in thousands, except share and per share amounts) March 31, 2024 December 31, 2023 Assets Current assets: Cash and cash equivalents $ 622,517 $ 99,915 Marketable securities 436,546 534,216 Inventory 854 — Prepaid expenses and other current assets 14,035 3,150 Total current assets 1,073,952 637,281 Property and equipment, net 1,742 1,553 Intangible assets, net 5,000 — Right-of-use asset 1,586 1,713 Total assets $ 1,082,280 $ 640,547 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 21,528 $ 28,041 Accrued expenses 92,271 89,980 Lease liability 542 527 Total current liabilities 114,341 118,548 Long term liabilities: Loan payable, net of discount 116,135 115,480 Lease liability 1,045 1,186 Total long term liabilities 117,180 116,666 Total liabilities 231,521 235,214 Stockholders’ equity: Preferred stock, par value $ 0.0001 per share authorized: 5,000,000 shares at March 31, 2024 and December 31, 2023; 2,369,797 and 2,369,797 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively — — Common stock, par value $ 0.0001 per share authorized: 200,000,000 at March 31, 2024 and December 31, 2023; 20,684,663 and 19,875,427 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively 2 2 Additional paid-in-capital 2,334,760 1,741,153 Accumulated other comprehensive income (loss) ( 172 ) 468 Accumulated deficit ( 1,483,831 ) ( 1,336,290 ) Total stockholders’ equity 850,759 405,333 Total liabilities and stockholders’ equity $ 1,082,280 $ 640,547 See accompanying notes to condensed consolidated financial statements. 3 Table of Contents MADRIGAL PHARMACEUTICALS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited; in thousands, except share and per share amounts) Three Months Ended March 31, 2024 2023 Revenues: Total revenues $ — $ — Operating expenses: Research and development 71,237 62,154 Selling, general and administrative 80,800 16,182 Total operating expenses 152,037 78,336 Loss from operations ( 152,037 ) ( 78,336 ) Interest income 8,334 3,776 Interest expense ( 3,838 ) ( 2,336 ) Net loss $ ( 147,541 ) $ ( 76,896 ) Net loss per common share: Basic and diluted net loss per common share $ ( 7.38 ) $ ( 4.23 ) Basic and diluted weighted average number of common shares outstanding 20,001,569 18,187,924 See accompanying notes to condensed consolidated financial statements. 4 Table of Contents MADRIGAL PHARMACEUTICALS, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited; in thousands) Three Months Ended March 31, 2024 2023 Net Loss $ ( 147,541 ) $ ( 76,896 ) Other comprehensive loss: Unrealized loss on available-for-sale securities ( 640 ) ( 54 ) Comprehensive loss $ ( 148,181 ) $ ( 76,950 ) See accompanying notes to condensed consolidated financial statements. 5 Table of Contents MADRIGAL PHARMACEUTICALS, INC. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited; in thousands, except share and per share amounts) Additional paid-in Capital Accumulated other comprehensive income (loss) Accumulated deficit Total stockholders’ equity Preferred stock Common stock Shares Amount Shares Amount Balance at December 31, 2023 2,369,797 $ — 19,875,427 $ 2 $ 1,741,153 $ 468 $ ( 1,336,290 ) $ 405,333 Issuance of common shares and sale of warrants in equity offerings, excluding to related parties, net of transaction costs — — 750,000 — 311,560 — — 311,560 Sale of warrants to related parties in equity offerings, exercise of common stock options, and restricted stock vesting, net of transaction costs — — 59,236 — 262,145 — — 262,145 Stock-based compensation expense related to equity-classified awards — — — — 19,902 — — 19,902 Unrealized loss on marketable securities — — — — — ( 640 ) — ( 640 ) Net loss — — — — — — ( 147,541 ) ( 147,541 ) Balance at March 31, 2024 2,369,797 $ — 20,684,663 $ 2 $ 2,334,760 $ ( 172 ) $ ( 1,483,831 ) $ 850,759 Balance at December 31, 2022 2,369,797 $ — 18,102,523 $ 2 $ 1,160,079 $ ( 32 ) $ ( 962,660 ) $ 197,389 Sale of common shares to related parties and exercise of common stock options, net of transaction costs — — 180,551 — 17,903 — — 17,903 Stock-based compensation expense related to equity-classified awards — — — — 11,250 — — 11,250 Unrealized loss on marketable securities — — — — — ( 54 ) — ( 54 ) Hercules warrant — — — — 544 — — 544 Net loss — — — — — — ( 76,896 ) ( 76,896 ) Balance at March 31, 2023 2,369,797 $ — 18,283,074 $ 2 $ 1,189,776 $ ( 86 ) $ ( 1,039,556 ) $ 150,136 See accompanying notes to condensed consolidated financial statements. 6 Table of Contents MADRIGAL PHARMACEUTICALS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited; in thousands) Three Months Ended March 31, 2024 2023 Cash flows from operating activities: Net loss $ ( 147,541 ) $ ( 76,896 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation expense 19,902 11,250 Depreciation and amortization expense 168 124 Amortization of debt issuance costs and discount 655 433 Changes in operating assets and liabilities: Prepaid expenses and other current assets ( 10,885 ) 788 Inventory ( 854 ) — Accounts payable ( 11,513 ) ( 11,703 ) Accrued expense 2,291 ( 5,894 ) Accrued interest, net of interest received on maturity of investments ( 1,380 ) ( 2,169 ) Net cash used in operating activities ( 149,157 ) ( 84,067 ) Cash flows from investing activities: Purchases of marketable securities ( 84,197 ) ( 198,822 ) Sales and maturities of marketable securities 182,607 11,993 Purchases of property and equipment, net of disposals ( 357 ) ( 35 ) Net cash provided by (used in) investing activities 98,053 ( 186,864 ) Cash flows from financing activities: Proceeds from issuances of stock, excluding related parties, net of transaction costs 311,561 — Proceeds from related parties - warrants, exercise of common stock options, net of transaction costs 262,145 17,903 Proceeds from issuance of loan payable — 35,000 Payment of debt issuance costs — ( 213 ) Net cash provided by financing activities 573,706 52,690 Net increase (decrease) in cash, cash equivalents, and restricted cash 522,602 ( 218,241 ) Cash, cash equivalents, and restricted cash at beginning of period 99,915 331,549 Cash, cash equivalents, and restricted cash at end of period $ 622,517 $ 113,308 Supplemental disclosure of cash flow information: Intangible assets in accounts payable at the end of the period $ 5,000 $ — See accompanying notes to condensed consolidated financial statements. 7 Table of Contents MADRIGAL PHARMACEUTICALS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Organization, Business, and Basis of Presentation Organization and Business Madrigal Pharmaceuticals, Inc. (the “Company” or “Madrigal”) is a biopharmaceutical company dedicated to transforming care for patients with nonalcoholic steatohepatitis (“NASH”), a serious liver disease that can lead to cirrhosis, liver failure and premature mortality. The Company's medication, Rezdiffra (resmetirom), is a once-daily, oral, liver-directed THR-β agonist designed to target key underlying causes of NASH. In March 2024, Rezdiffra became the first and only FDA-approved therapy for patients with NASH. Rezdiffra is indicated in conjunction with diet and exercise for the treatment of adults with noncirrhotic NASH with moderate to advanced liver fibrosis (consistent with stages F2 to F3 fibrosis). Basis of Presentation Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted. Accordingly, the unaudited condensed consolidated financial statements do not include all information and footnotes required by GAAP for complete annual financial statements. However, the Company believes that the disclosures included in these financial statements are adequate to make the information presented not misleading. The unaudited condensed consolidated financial statements, in the opinion of management, reflect all adjustments, which include normal recurring adjustments, necessary for a fair statement of such interim results. The interim results are not necessarily indicative of the results that the Company will have for the full year ending December 31, 2024 or any subsequent period. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes to those statements for the year ended December 31, 2023. 2. Summary of Significant Accounting Policies Principle of Consolidation The consolidated financial statements include the financial statements of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities, and the reported amounts of revenues and expenses during the reporting periods. The Company bases its estimates on historical experience and various other assumptions that management believes to be reasonable under the circumstances. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates. Cash and Cash Equivalents The Company considers all highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. The Company maintains its cash in bank accounts, the balance of which, at times, exceeds Federal Deposit Insurance Corporation insured limits. The primary objective of the Company’s investment activities is to preserve its capital for the purpose of funding operations and the Company does not enter into investments for trading or speculative purposes. The Company’s cash is deposited in highly rated financial institutions in the United States. The Company invests in money market funds and high-grade, commercial paper and corporate bonds, which management believes are subject to minimal credit and market risk. Marketable Securities Marketable securities consist of investments in high-grade corporate obligations and government and government agency obligations that are classified as available-for-sale. Since these securities are available to fund current operations, they are classified as current assets on the consolidated balance sheets. 8 Table of Contents 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. 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 three months ended March 31, 2024 and 2023, 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. The fair value of these securities is based on quoted prices and observable inputs on a recurring basis. Realized gains and losses are determined on the specific identification method. During the three months ended March 31, 2024 and 2023, the Company did no t have any realized gains or losses on marketable securities. Fair Value of Financial Instruments The carrying amounts of the Company’s financial instruments, which include cash equivalents and marketable securities, approximate their fair values. The fair value of the Company’s financial instruments reflects the amounts that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy has the following three levels: Level 1—quoted prices in active markets for identical assets and liabilities. Level 2—observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active. Level 3—unobservable inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability. Financial assets and liabilities are classified in their entirety within the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement. The Company measures the fair value of its marketable securities by taking into consideration valuations obtained from third- party pricing sources. The pricing services utilize industry standard valuation models, including both income and market based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. 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 March 31, 2024, 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 three months ended March 31, 2024 and 2023, the Company did not have any transfers of financial assets between Levels 1 and 2. As of March 31, 2024 and December 31, 2023, the Company did not have any financial liabilities that were recorded at fair value on a recurring basis on the balance sheet. Inventory Inventory is stated at the lower of cost or estimated net realizable value, using actual cost, based on a first-in, first-out (“FIFO”) method. The Company analyzes its inventory levels quarterly and writes down inventory subject to expiry or in excess of expected requirements, or that has a cost basis in excess of its expected net realizable value. These write downs are charged to cost of goods sold in the accompanying Consolidated Statements of Income. The Company considered regulatory approval of its product candidate to be uncertain and product manufactured prior to regulatory approval could not have been sold unless regulatory approval was obtained. As such, the manufacturing costs incurred prior to regulatory approval were not capitalized as inventory, but were expensed as incurred as research and development expenses. Research and Development Costs 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 stock-based compensation), 9 Table of Contents 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 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. Actual results could differ from the Company’s estimates. Patents Costs to secure and defend patents are expensed as incurred and are classified as selling, general and administrative expense in the Company’s consolidated statements of operations. Intangible Assets Intangible assets with finite lives are amortized to cost of goods sold over their estimated useful lives using the straight-line method. Intangible assets are tested for recoverability whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. Stock-Based Compensation 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. The expected lives for options granted represent the period of time that options granted are expected to be outstanding. The Company uses the simplified method for determining the expected lives of options. Expected volatility is based upon an industry estimate or blended rate including the Company’s historical trading activity. The risk-free rate for periods within the expected life of the option is based on the U.S. Treasury yield curve in effect at the time of the grant. 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. 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). Under current tax regulations, the Company does not receive a tax deduction for the issuance, exercise or disposition of ISOs if the employee meets certain holding requirements. If the employee does not meet the holding requirements, a disqualifying disposition occurs, at which time the Company may receive a tax deduction. The Company does not record tax benefits related to ISOs unless and until a disqualifying disposition is reported. In the event of a disqualifying disposition, the entire tax benefit is recorded as a reduction of income tax expense. The Company has not recognized any income tax benefit for its share-based compensation arrangements due to the fact that the Company does not believe it is more likely than not it will realize the related deferred tax assets. Income Taxes The Company uses the asset and liability method to account for income taxes. Deferred tax assets and liabilities are determined based on the expected future tax consequences of temporary differences between the Company’s financial statement carrying amounts and the tax basis of assets and liabilities using enacted tax rates expected to be in effect in the 10 Table of Contents years in which the differences are expected to reverse. The Company currently maintains a 100 % valuation allowance on its deferred tax assets. 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 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. 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 three months ended March 31, 2024 and 2023, 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: Outstanding at March 31, 2024 2023 Common stock options 2,458,227 2,676,598 Restricted stock units 530,671 199,125 Performance-based restricted stock units 252,404 — Preferred stock 2,369,797 2,369,797 Warrants 3,625,244 17,352 Recent Accounting Pronouncements 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. 3. Liquidity and Uncertainties The Company is subject to risks common to development stage companies and early commercial companies in the biopharmaceutical industry including, but not limited to, uncertainty of product development and commercialization, dependence on key personnel, uncertainty of market acceptance of products and product reimbursement, product liability, uncertain protection of proprietary technology, potential inability to raise additional financing necessary for development and commercialization, and compliance with the U.S. Food and Drug Administration (“FDA”) and other government regulations. The Company has incurred losses since inception, including approximately $ 147.5 million for the three months ended March 31, 2024, resulting in an accumulated deficit of approximately $ 1,483.8 million as of March 31, 2024. To date, the Company has funded its operations primarily through proceeds from sales of the Company’s capital stock and debt financings. In March 2024, the FDA approved Rezdiffra in the U.S. for the treatment of adults with noncirrhotic NASH with moderate to advanced liver fibrosis (consistent with stages F2 to F3 fibrosis). Rezdiffra became available in the U.S. in April 2024. In March 2024, the Company completed a public offering and received approximately $ 574.0 million net cash proceeds. In April 2024, underwriters exercised in full their option to purchase additional shares as part of the public offering, resulting in additional net cash proceeds of approximately $ 85.9 million. Please see “Note 11 – Subsequent Events” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for 11 Table of Contents more information. The Company believes that its cash, cash equivalents and marketable securities will be sufficient to fund operations past one year from the issuance of these financial statements. The Company’s future long-term liquidity requirements will be substantial and will depend on many factors, including the Company’s ability to effectively commercialize Rezdiffra. 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, 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 research activities and related clinical expenses if necessary due to liquidity concerns until a date when those concerns are relieved. 4. Cash, Cash Equivalents and Marketable Securities The Company held restricted cash of $ 1.2 million as of March 31, 2024 as collateral to its corporate credit card program. The Company had no restricted cash as of December 31, 2023. Restricted cash is included within the cash and cash equivalents balance on the Consolidated Balance Sheet. A summary of cash, cash equivalents and available-for-sale marketable securities held by the Company as of March 31, 2024 and December 31, 2023 is as follows (in thousands): March 31, 2024 Cost Unrealized gains Unrealized losses Fair value Cash and cash equivalents: Cash (Level 1) $ 3,094 $ — $ — $ 3,094 Money market funds (Level 1) 604,553 — — 604,553 Corporate debt securities due within 3 months of date of purchase (Level 2) 14,870 — — 14,870 Total cash and cash equivalents 622,517 — — 622,517 Marketable securities: Corporate debt securities due within 1 year of date of purchase (Level 2) 260,811 32 ( 140 ) 260,703 U.S. government and government sponsored entities due within 1 year of date of purchase (Level 2) 175,907 25 ( 89 ) 175,843 Total cash, cash equivalents and marketable securities $ 1,059,235 $ 57 $ ( 229 ) $ 1,059,063 December 31, 2023 Cost Unrealized gains Unrealized losses Fair value Cash and cash equivalents: Cash (Level 1) $ 2,729 $ — $ — $ 2,729 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 Marketable securities: 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 12 Table of Contents 5. Inventory The following table summarizes the Company's inventory balances as of March 31, 2024 and December 31, 2023 (in thousands): March 31, 2024 December 31, 2023 Raw Materials $ — $ — Work In Process 235 — Finished Goods 619 — Total $ 854 $ — 6. Accrued Liabilities Accrued liabilities as of March 31, 2024 and December 31, 2023 consisted of the following (in thousands): March 31, 2024 December 31, 2023 Contract research organization costs $ 52,974 $ 50,737 Other clinical study related costs 3,775 3,724 Manufacturing and drug supply 1,284 9,705 Compensation and benefits 16,952 17,030 Professional fees 13,241 6,814 Other 4,045 1,970 Total accrued liabilities $ 92,271 $ 89,980 7. Long Term Debt In May 2022 the Company and its wholly-owned subsidiary, Canticle Pharmaceuticals, Inc., entered into the $ 250.0 million 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. Under the terms of the Loan Facility, the first $ 50.0 million tranche was drawn at closing. The Company also could draw up to an additional $ 125.0 million in two separate tranches upon achievement of certain resmetirom clinical and regulatory milestones. A fourth tranche of $ 75.0 million could have been drawn by the Company, subject to the approval of Hercules. The Loan Facility had a minimum interest rate of 7.45 % and adjusted with changes in the prime rate. The Company was originally scheduled to pay interest-only monthly payments of accrued interest under the Loan Facility through May 1, 2025, for a period of 36 months. In March 2024, the interest-only period was extended to May 1, 2026 when the Company achieved a milestone when Rezdiffra received FDA approval. The interest only period can further be extended to May 3, 2027, upon the achievement of future revenue milestones, subject to compliance with applicable covenants. The Loan Facility originally matured in May 2026, but the maturity date was extended to May 2027 when the Company achieved a milestone upon receipt of FDA approval in March 2024. The Loan Facility is secured by a security interest in substantially all of the Company’s assets, other than intellectual property. It includes an end of term charge of 5.35 % of the aggregate principal amount, which is accounted for in the loan discount. 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. 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 became available when the Company achieved a milestone with FDA approval for Rezdiffra in March 2024. As of March 31, 2024, the Company has not drawn down on Tranche 3, and the $ 75.0 million remains available until June 12, 2024. 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 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 13 Table of Contents 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 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. The Loan Facility contains event of default provisions for: the Company’s failure to make required payments or maintain compliance with covenants under the Loan Facility; the Company’s breach of certain representations or default under certain obligations outside the Loan Facility; 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 a clinical milestone or approval milestone 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. As of March 31, 2024, the outstanding principal under the Loan Facility was $ 115.0 million. The interest rate as of March 31, 2024 was 10.95 %. As of March 31, 2024, the Company was in compliance with all loan covenants and provisions. Future minimum payments, including interest and principal, under the loans payable outstanding as of March 31, 2024 are as follows (in thousands): Period Ending March 31, 2024: Amount 2024 $ 9,619 2025 12,768 2026 79,604 Thereafter 53,387 $ 155,378 Less amount representing interest ( 34,225 ) Less unamortized discount ( 5,018 ) Loans payable, net of discount $ 116,135 8. Stockholders’ Equity Common Stock Each common stockholder is entitled to one vote for each share of common stock held. 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 (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 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 14 Table of Contents 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 basis. 2024 Public Offering On March 18, 2024, the Company entered into an Underwriting Agreement with Goldman Sachs & Co. LLC, Jefferies LLC, Cowen and Company, LLC, Evercore Group L.L.C. and Piper Sandler & Co, as representatives of the several underwriters named therein (the “2024 Underwriters”), pursuant to which the Company sold to the 2024 Underwriters in an underwritten public offering (the “2024 Offering”): (i) 750,000 shares of common stock at a public offering price of $ 260.00 per share, (ii) pre-funded warrants (the “2024 Pre-Funded Warrants”) to purchase 1,557,692 shares of common stock at a public offering price of $ 259.9999 per 2024 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, and (iii) a 30-day option for the 2024 Underwriters to purchase up to 346,153 additional shares of common stock at the public offering price of $ 260.00 per share (the “Underwriters’ Option”). The 2024 Offering closed on March 21, 2024. The gross proceeds of the 2024 Offering was $ 600.0 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 $ 574.0 million. The Underwriters’ Option was later exercised in full, and closed on April 2, 2024. The net proceeds to the Company for the exercise of the Underwriters’ Option, after deducting the underwriting discounts and commissions and estimated offering expenses payable by the Company, was approximately $ 85.9 million. See Note 11- Subsequent Events for more information. The Company intends to use the net proceeds from the 2024 Offering for its commercial activities in connection with the launch of Rezdiffra in the U.S. and for general corporate purposes, including, without limitation, research and development expenditures, ongoing clinical trial expenditures, manufacture and supply of drug substance and drug products, potential ex-U.S. commercialization or partnering opportunities, potential acquisitions or licensing of new technologies, capital expenditures and working capital. The 2024 Pre-Funded Warrants are exercisable at any time after the date of issuance. A holder of 2024 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 2024 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. 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 (the “2023 Underwriters”), pursuant to which the Company sold to the 2023 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 “2023 Pre-Funded Warrants”) to purchase 2,048,098 shares of common stock at a public offering price of $ 151.6899 per 2023 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 2023 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 t he net proceeds from the Offering for its clinical and commercial activities in preparation for the 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 2023 Pre-Funded Warrants are exercisable at any time afte r the date of issuance. A holder of 2023 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 15 Table of Contents 2023 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. At-The-Market Issuance Sales Agreement 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 initially authorized an aggregate offering of up to $ 200.0 million in shares of the Company’s 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. 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). 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 through December 31, 2022. 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 March 31, 2024, no amounts remained reserved and available for sale under the 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 March 31, 2024, under the Sales Agreement Amendment, the Company sold no shares. 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 March 31, 2024, $ 174.8 million remained reserved and available for sale under the 2023 Sales Agreement Amendment and the Company’s related prospectus supplement. 9. Stock-based Compensation 2015 Stock Plan The Company’s 2015 Stock Plan, as amended (the “2015 Stock Plan”), is one of the Company’s equity incentive compensation plans 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. 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 March 31, 2024, 456,241 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 16 Table of Contents 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 March 31, 2024, 23,366 shares were available for future issuance under the 2023 Inducement Plan. Stock Options The following table summarizes stock option activity during the three months ended March 31, 2024: Shares Weighted average exercise price Outstanding at December 31, 2023 2,355,779 $ 79.94 Options granted 135,518 229.77 Options exercised ( 18,319 ) 74.90 Options cancelled ( 14,751 ) 88.80 Outstanding at March 31, 2024 2,458,227 $ 88.18 Exercisable at March 31, 2024 1,850,988 $ 75.49 The total cash received by the Company as a result of stock option exercises was $ 1.4 million and $ 17.9 million, respectively, for the three months ended March 31, 2024 and 2023. The total intrinsic value of options exercised was $ 3.8 million and $ 32.5 million, respectively, for the three months ended March 31, 2024 and 2023. The weighted-average grant date fair values, based on the Black-Scholes option model, of options granted during the three months ended March 31, 2024 and 2023 were $ 152.05 and $ 219.02 , 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. As of March 31, 2024, the Company had 530,671 restricted stock units outstanding, with a weighted average grant date fair value of $ 231.44 per unit. The following table summarizes RSU activity, excluding performance-based RSUs, during the three months ended March 31, 2024: Shares Weighted average grant date fair value Unvested at December 31, 2023 376,117 $ 241.45 RSUs granted 209,347 229.11 RSUs vested ( 47,114 ) 297.22 RSUs forfeited ( 7,679 ) 254.45 Unvested at March 31, 2024 530,671 $ 231.44 Performance-Based Restricted Stock Units The Company has granted various performance-based restricted stock units (“PSUs”) to certain members of 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. 17 Table of Contents As of March 31, 2024, the Company granted 101,202 PSUs. The maximum number of outstanding PSUs eligible to be earned as of March 31, 2024 are 252,404 PSUs, with a weighted average grant date fair value of $ 268.63 per unit. Outstanding Awards As of March 31, 2024, the Company had restricted stock units, performance stock units, and options outstanding pursuant to which an aggregate of 3,241,302 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 Stock-based compensation expense during the three months ended March 31, 2024 and 2023 was as follows (in thousands): Three Months Ended March 31, 2024 2023 Stock-based compensation expense by type of award: Stock options $ 6,886 $ 8,598 Restricted stock units 8,625 2,652 Performance-based restricted stock units 4,391 — Total stock-based compensation expense $ 19,902 $ 11,250 Effect of stock-based compensation expense by line item: Research and development $ 5,907 $ 5,385 Selling, general and administrative 13,995 5,865 Total stock-based compensation expense included in net loss $ 19,902 $ 11,250 Unrecognized stock-based compensation expense as of March 31, 2024 was $ 177.3 million with a weighted average remaining period of 3.00 years. 10. 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 agreement requires future milestone payments to Roche. In March 2024, upon receiving FDA approval of Rezdiffra, a milestone was achieved and $ 5.0 million became due to Roche. Remaining milestones under the agreement total $ 3.0 million and are payable upon the Company achieving specified objectives related to future regulatory approval in 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 achieved the U.S. regulatory approval milestone but had no Licensed Product sales for the three months ended March 31, 2024. The company did no t achieve any product development or regulatory milestones for the three months ended March 31, 2023. The Company has entered into customary contractual arrangements and letters of intent in preparation for and in support of clinical trials and commercialization. In August 2023, the Company entered into the Fifth Amendment to the Office Lease (the “Lease Amendment”). The Lease Amendment extended 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. 11. Subsequent Events As part of the 2024 Offering, on April 2, 2024, the Underwriters’ Option exercise closed. The 2024 Underwriters exercised in-full their option to purchase 346,153 additional shares of Common Stock at the public offering price for the Shares of $ 260.00 per share, less underwriting discounts and commissions, pursuant to the Underwriting Agreement. Gross proceeds were $ 90.0 million. The net proceeds to the Company for the exercise of the Underwriters’ Option, after 18 Table of Contents deducting the underwriting discounts and commissions and estimated offering expenses payable by the Company, was approximately $ 85.9 million. ********** END OF FINANCIAL STATEMENTS ********** 19 Table of Contents CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q includes “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, that are based on our beliefs and assumptions and on information currently available to us, but are subject to factors beyond our control Forward-looking statements: reflect management’s current knowledge, assumptions, judgment and expectations regarding future performance or events; include all statements that are not historical facts; and can be identified by terms such as “accelerate,” “achieve,” “allow,” “anticipates,” “appear,” “be,” “believes,” “can,” “continue,” “could,” “demonstrates,” “design,” “estimates,” “expectation,” “expects,” “forecasts,” “future,” “goal,” “help,” “hopeful,” “inform,” “informed,” “intends,” “may,” “might,” “on track,” “planned,” “planning,” “plans,” “positions,” “potential,” “powers,” “predicts,” ”predictive,” “projects,” “seeks,” “should,” “will,” “will achieve,” “will be,” “would” or similar expressions and the negatives of those terms. In particular, forward-looking statements contained in or incorporated by reference to this Quarterly Report relate to, among other things: • Anticipated or estimated future results, including the risks and uncertainties associated with our future operating performance and financial position; • Our possible or assumed future results of operations and expenses, business strategies and plans (including potential ex-U.S. commercial or partnering opportunities), capital needs and financing plans, including incurrence of indebtedness and compliance with debt covenants under the Loan and Security Agreement with Hercules Capital, Inc., as agent and lender, market trends, market sizing, competitive position, industry environment and potential growth opportunities, among other things; • Post-approval requirements and commitments, including verification of a clinical benefit in confirmatory trials; • Our ability to delay certain research activities and related clinical expenses as necessary; • Our clinical trials, including the anticipated timing of disclosure, presentations of data from, or outcomes from our trials; • Research and development activities, and the timing and results associated with the future development of our Rezdiffra/resmetirom, including projected market size, sector leadership, and patient treatment estimates for NASH and nonalcoholic fatty liver disease (“NAFLD”) patients; • The timing and completion of projected future clinical milestone events, including enrollment, additional studies, top-line data and open label projections; • Rezdiffra’s potential to be a cost-effective specialty therapy for NASH patients with significant liver fibrosis (consistent with fibrosis stages 2 and 3); • Projections or objectives for obtaining full approval for resmetirom for NASH patients with significant fibrosis (or non-cirrhotic NASH patients) and NASH patients with compensated cirrhosis, including all statements concerning potential clinical benefit to support approval and/or potential approval; • Estimates of patients diagnosed with NASH; • Our primary and key secondary study endpoints for resmetirom, and the potential for achieving such endpoints and projections, including NASH resolution, safety, fibrosis treatment, cardiovascular effects and lipid treatment with resmetirom; • Optimal dosing levels for resmetirom and projections regarding potential NASH or NAFLD and potential patient benefits with resmetirom, including future NASH resolution, safety, fibrosis treatment, cardiovascular effects, lipid treatment and/or biomarker effects with resmetirom; • The relationship between NASH progression and adverse patient outcomes; • The estimated clinical burden of uncontrolled NASH; • Analyses for patients with NASH with significant fibrosis concerning potential progression to cirrhosis, decompensated cirrhosis, liver transplant or death, and cardiovascular risks, comorbidities and outcomes; • Our ability to address the unmet needs of patients suffering from NASH with significant fibrosis, • The potential efficacy and safety of resmetirom for non-cirrhotic NASH patients and cirrhotic NASH patients, • The potential for resmetirom to become the best-in-class treatment option for patients with NASH and significant fibrosis; 20 Table of Contents • The ability to develop clinical evidence demonstrating the utility of non-invasive tools and techniques to screen and diagnose NASH and/or NAFLD patients; • The predictive power of liver fat reduction with resmetirom, as measured by non-invasive tests, on NASH resolution and/or fibrosis reduction or improvement, and potential NASH or NAFLD patient risk profile benefits with resmetirom; • The predictive power of liver fat, liver volume changes or MAST scores for NASH and/or NAFLD patients; • The predictive power of NASH resolution and/or fibrosis reduction with resmetirom or improvement using non-invasive tests, including the use of ELF, FibroScan, MRE and/or MRI-PDFF; • The predictive power of non-invasive tests generally, including for purposes of diagnosing NASH, monitoring patient response to resmetirom, or recruiting and conducting a NASH clinical trial; • Market demand for and acceptance of our products; • Research, development and commercialization of new products; • The potential for resmetirom to be an effective treatment for other disease indications; • Obtaining and maintaining regulatory approvals, including, but not limited to, potential regulatory delays or rejections; • Risks associated with meeting the objectives of our clinical studies, including, but not limited to our ability to achieve enrollment objectives concerning patient numbers (including an adequate safety database), outcomes objectives and/or timing objectives for our studies, any delays or failures in enrollment, the occurrence of adverse safety events, and the risks of successfully conducting trials that are substantially larger, and have patients with different disease states, than our past trials; • The potential impact of cyber attacks and other security incidents on our operations or business; • Our continued reliance on third-party contract manufacturers for the manufacture of our product candidates, including resmetirom; • Risks related to the effects of resmetirom’s mechanism of action and our ability to accomplish our business and business development objectives and realize the anticipated benefit of any such transactions; and • Assumptions underlying any of the foregoing. We caution you that the foregoing list may not include all of the forward-looking statements made in this Quarterly Report. Although management presently believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct and you should be aware that actual results could differ materially from those contained in the forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties including, but not limited to: our clinical and commercial development of resmetirom; the challenges with the commercial launch of a new product, particularly for a company that does not have commercial experience; enrollment and trial outlook uncertainties, generally, based on blinded, locked or limited trial data; our potential inability to raise sufficient capital to fund our ongoing operations as currently planned or to obtain financings on terms similar to those we have arranged in the past; our ability to meet post-approval commitments and requirements, including completion of enrollment of—and ability to obtain positive data from—any confirmatory studies required by the FDA; our ability to service our indebtedness and otherwise comply with our debt covenants; outcomes or trends from competitive studies; future topline data timing or results; the risks of achieving potential benefits in studies that includes substantially more patients, and patients with different disease states, than our prior studies; our ability to prevent and/or mitigate cybersecurity attacks, unauthorized exfiltration of data or other security incidents; limitations associated with early stage or non-placebo controlled study data; the timing and outcomes of clinical studies of resmetirom; and the uncertainties inherent in clinical testing; and uncertainties concerning analyses or assessments outside of a controlled clinical trial. Undue reliance should not be placed on forward-looking statements, which speak only as of the date they are made. Madrigal undertakes no obligation to update any forward-looking statements to reflect new information, events or circumstances after the date they are made, or to reflect the occurrence of unanticipated events. Please refer to Madrigal’s submissions filed or furnished with the U.S. Securities and Exchange Commission for more detailed information regarding these risks and uncertainties and other factors that may cause actual results to differ materially from those expressed or implied. We specifically discuss these risks and uncertainties in greater detail in the section appearing in Part II, Item 1A of this Quarterly Report on Form 10-Q and Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 28, 2024 (the “2023 Form 21 Table of Contents 10-K”), as well as in our other filings with the SEC. You should read the 2023 Form 10-K, this Quarterly Report, and the other documents that we file or have filed with the SEC, with the understanding that our actual future results may be materially different from the results expressed or implied by these forward-looking statements. Moreover, we operate in an evolving environment. New risks and uncertainties emerge from time to time and it is not possible for our management to predict all risks and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual future results to be materially different from those expressed or implied by any forward-looking statements. Except as required by applicable law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. We qualify all of our forward-looking statements by these cautionary statements. 22 Table of Contents