MADRIGAL PHARMACEUTICALS, INC. 10-K

Item 9A. Controls and Procedures. Disclosure Controls and Procedures We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. 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 Annual 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, 2024. Limitations on the Effectiveness of Controls and Procedures In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Management’s Report On Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) for our company. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). This process 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 our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Our management, including our principal executive officer and our principal financial officer, assessed the effectiveness of our internal control over financial reporting as of December 31, 2024. In making this assessment, our management used the criteria set forth in the “Internal Control—Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on its assessment under that framework, our management concluded that our internal control over financial reporting was effective as of December 31, 2024. PricewaterhouseCoopers LLP, an independent registered public accounting firm, has audited the effectiveness of our internal control over financial reporting as of December 31, 2024, as stated in its report, which is included herein. 78 Table of Contents Changes in Internal Control Over Financial Reporting There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) for the quarter ended December 31, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information. Director and Executive Officer 10b5-1 Plans Our policy governing transactions in our securities by our directors, officers and employees permits our directors, officers and employees to enter into trading plans complying with Rule 10b5-1 under the Exchange Act. The following table describes the written plans for the sale of our securities that were adopted by our executive officers and directors during the quarter ended December 31, 2024. Each of the plans was entered into during an open trading window and is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) (each a “ Trading Plan ”). Name and Title Action Taken (Date) Duration of Plan (1) Aggregate Number of Securities that May be Sold Bill Sibold , Chief Executive Officer Adoption (11/15/2024) 11/15/24 – 6/30/26 7,616 Mardi Dier , Chief Financial Officer Adoption (11/13/2024) 11/13/24 – 10/31/25 2,218 (2) Carole Huntsman , Chief Commercial Officer Adoption (11/5/2024) 11/5/24 – 1/31/26 4,701 (2) Shannon Kelley , General Counsel Adoption (11/7/2024) 11/7/24 – 1/31/26 2,409 (2) (1) Each Trading Plan is subject to a “cooling-off” period as set forth in Rule 10b5-1(c). Each Trading Plan may expire on an earlier date if all contemplated transactions are completed before such Trading Plan’s expiration date, upon termination by the broker or the holder of the Trading Plan, or as otherwise provided in the Trading Plan. (2) Each Trading Plan provides for the sale of shares to be received upon future vesting of certain outstanding equity awards, net of any shares sold to satisfy applicable taxes. The number of shares to be sold to satisfy taxes, and thus the exact number of shares to be sold pursuant to each Trading Plan, can only be determined upon the occurrence of future vesting events. For purposes of this disclosure, we have reported the maximum aggregate number of shares to be sold without subtracting any shares to be sold to satisfy tax obligations. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. Not applicable. 79 Table of Contents PART III Item 10. Directors, Executive Officers and Corporate Governance. Incorporated by reference from the information in our Proxy Statement for our 2025 Annual Meeting of Stockholders, which we will file with the SEC within 120 days of the end of the fiscal year to which this Annual Report relates. Item 11. Executive Compensation. Incorporated by reference from the information in our Proxy Statement for our 2025 Annual Meeting of Stockholders, which we will file with the SEC within 120 days of the end of the fiscal year to which this Annual Report relates. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. Incorporated by reference from the information in our Proxy Statement for our 2025 Annual Meeting of Stockholders, which we will file with the SEC within 120 days of the end of the fiscal year to which this Annual Report relates. Item 13. Certain Relationships and Related Transactions, and Director Independence. Incorporated by reference from the information in our Proxy Statement for our 2025 Annual Meeting of Stockholders, which we will file with the SEC within 120 days of the end of the fiscal year to which this Annual Report relates. Item 14. Principal Accountant Fees and Services Incorporated by reference from the information in our Proxy Statement for our 2025 Annual Meeting of Stockholders, which we will file with the SEC within 120 days of the end of the fiscal year to which this Annual Report relates. 80 Table of Contents PART IV Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES Item 15(a) The following documents are filed as part of, or incorporated by reference into, this Annual Report: Item 15(a)(1) and (2) The Consolidated Financial Statements beginning on page F-1 are filed as part of this Annual Report. 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 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. Exhibit Number Exhibit Description Filed Herewith Incorporated by Reference herein from Form or Schedule Filing Date SEC File / Registration Number 3.1 Restated Certificate of Incorporation of the Registrant. 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. 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 . Form 8-K (Exhibit 3.1) 12/23/2022 001-33277 3.5 Bylaws of the Registrant, as amended April 13, 2016. 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. and affiliates. Form 10-Q (Exhibit 4.1) 08/04/2022 001-33277 4.2† Form of Tranche 2 Warrant Agreement, dated February 3, 2023, by and among the Registrant and Hercules Capital, Inc. and affiliates. 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. Form 8-K (Exhibit 10.1) 6/21/2017 001-33277 10.2 Amendment No. 2, dated December 22, 2022, to Securities Purchase Agreement, dated June 20, 2017, by and among the Registrant and the investors listed on the signature pages thereto. Form 8-K (Exhibit 10.2) 12/23/2022 001-33277 10.3 S ales Agreement, dated May 7, 2024, by and between Mad rigal Pharmaceuticals , Inc. and TD Securities (USA) LLC. Form 8-K (Exhibit 1.1) 5/7/2024 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 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 81 Table of Contents Exhibit Number Exhibit Description Filed Herewith Incorporated by Reference herein from Form or Schedule Filing Date SEC File / Registration Number Debt Agreements 10.7†# L oan and Security Agreement , dated May 9, 2022, as amended by the First Amendment to Loan and Security Agreement, dated F ebruary 3, 2023, and the Second Amendment to Loan and Security Agreement , dated August 22, 2024, by and among Madrigal Pharmaceuticals, Inc., Canticle Pharmac euticals, Inc., the several banks and other financial ins titutions or entities from time to time party thereto and Hercules Cap ital, Inc. Form 10-Q (Exhibit 10.2) 10/31/2024 001-33277 Agreements with Respect to Collaborations, Licenses, Research and Development 10.8†# Research, Development and Commercialization Agreement, dated December 18, 2008, by and between Hoffmann-La Roche, Inc., F. Hoffmann-La Roche Ltd and the Registrant.† Form 10-Q (Exhibit 10.5) 11/14/2016 001-33277 Equity Compensation Plans 10.9* Amended 2015 Stock Plan . Form 8-K (Exhibit 10.1) 6/27/2024 001-33277 10.10* Form of Incentive Stock Option Agreement under Amended 2015 Stock Plan. Form 10-K (Exhibit 10.10) 3/31/2017 001-33277 10.11* Form of Nonqualified Stock Option Agreement under Amended 2015 Stock Plan. Form 10-K (Exhibit 10.11) 3/31/2017 001-33277 10.12* 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* Form of RSU Agreement for Directors under Amended 2015 Stock Plan . Form 10-Q (Exhibit 10.3) 8/8/2023 001-33277 10.14* Form of RSU Agreement for Executive Officers (2023) under Amended 2015 Stock Plan . Form 10-Q (Exhibit 10.4) 8/8/2023 001-33277 10.15* Form of RSU Agreement for Employees under Amended 2015 Stock Plan . Form 10-Q (Exhibit 10.5) 8/8/2023 001-33277 10.16*† 2023 Inducement Plan . Form S-8 9/11/2023 333-27445 10.17*† Form of Stock Option Agreement under 2023 Inducement Plan . Form S-8 9/11/2023 333-27445 10.18*† Form of Restricted Stock Unit Agreement under 2023 Inducement Plan . Form S-8 9/11/2023 333-27445 Agreements with Executive Officers and Directors 10.19* Form of Indemnification Agreement between the Registrant and certain directors and executive officers. Form 10-K (Exhibit 10.20) 2/28/2024 001-33277 10.20* Letter Agreement, dated April 13, 2016, by and between the Company and Rebecca Taub, M.D. Form 8-K (Exhibit 10.4) 7/22/2016 001-33277 10.21*† Letter Agreement (including agreements attached as exhibits thereto), dated September 7, 2023, by and between Madrigal Pharmaceuticals, Inc. and William J. Sibold . Form 8-K (Exhibit 10.1) 9/13/2023 001-33277 10.22*† Letter Agreement (including agreements attached as exhibits thereto), dated November 5, 2023, by and between Madrigal Pharmaceuticals, Inc. and Carole Huntsman. Form 10-Q (Exhibit 10.1) 5/7/2024 001-33277 10.23*† Letter Agreement (including agreements attached as exhibits thereto), dated February 25, 2024, by and between Madrigal Pharmaceuticals, Inc. and Mardi Dier. Form 10-Q (Exhibit 10.2) 5/7/2024 001-33277 10.24*† Letter Agreement, dated January 3, 2024, by and between Madrigal Pharmaceuticals, Inc. and Shannon Kelley, as amended and supplemented by the Letter Agreement, dated August 2, 20 24 , by and between Madrigal Pharmaceuticals , I nc. and Shannon Kelley. Form 10-Q (Exhibit 10.1) 10/31/2024 001-33277 Lease 10.25# O ffice Lease (with resp ect to corporate headquarters facility located in West Conshohocken , Pennsylvania) and am endments thereto. X 82 Table of Contents Exhibit Number Exhibit Description Filed Herewith Incorporated by Reference herein from Form or Schedule Filing Date SEC File / Registration Number 10.26# First Amendment to Office Lease. X 10.27# S econd Amendment to O ffice Lease. X 10.28# T hird Amendment to Office Lease. X 10.29# F ourth Amendment to Office Lease. X 10.30# F ifth Amendment to Office Lease. X 10.31# Sixth Amendment to Office Lease. X 10.32# S event h Amendment to Office Lease . X 10.33# E ight h Amendment to Office Lease. X 10.34# N inth Amendment to Office Lease. X Commercial Supply Agreement 10.35†# Commercial Supply Agreement, dated as of August 21, 2023, by and between Gregory Pharmaceutical Holdings, In c. (d/b/a UPM Pharmaceuticals) and Madrigal Pharmaceuticals, Inc. X 10.36†# Resmetirom Commercial Supply Agreement, dated as of December 23, 2024, by and between Evo nik Corporation and M adrigal Pharmaceuti cals , Inc. X 19.1 I nsider Trading Policy. X 21.1 List of Subsidiaries. X 23.1 Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm. X 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. X 31.2 Certification of Principal Financial Officer pursuant to 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. X 32.1** Certifications of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. X 97.1 Incentive Compensation Recovery Policy . Form 10-K (Exhibit 97.1) 2/28/2024 001-33277 97.2 S upplemental Compensation Recovery Policy. Form 10-Q (Exhibit 10.3) 5/7/2024 001-33277 101.INS Inline XBRL Instance Document. X 101.SCH Inline XBRL Taxonomy Extension Schema Document. X 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document. X 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. X 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document. X 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document. X 104 Inline XBRL for the cover page of this Annual Report on Form 10-K, included in the Exhibit 101 Inline XBRL Document Set. X _____________ * Indicates a management contract, compensatory plan or arrangement. ** The certifications attached as Exhibit 32.1 that accompany this Annual Report on Form 10-K are not deemed filed with the SEC and are not to be incorporated by reference into any filing of the registrant under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Annual Report on Form 10-K, regardless of any general incorporation language contained in any filing. 83 Table of Contents † Certain portions of this exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K. # Exhibits and schedules omitted pursuant to Item 601(a)(5) of Regulation S-K. Item 16. Form 10-K Summary. None. 84 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized. MADRIGAL PHARMACEUTICALS INC. Date: February 26, 2025 By: /s/ WILLIAM J. SIBOLD William J. Sibold 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 William J. Sibold and Mardi Dier and each or either of them, acting individually, as his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Report, and to file the same, with all exhibits thereto and other documents in connection therewith, with the SEC, granting unto said attorney-in-fact and agent, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully for all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or any of them, or their or his or her substitutes, may lawfully do or cause to be done or by virtue hereof. Pursuant to the requirements of the Exchange Act, as amended, this Annual Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signatures Title Date /s/ WILLIAM J. SIBOLD President and Chief Executive Officer (Principal Executive Officer) February 26, 2025 William J. Sibold /s/ MARDI C. DIER Chief Financial Officer (Principal Financial and Accounting Officer) February 26, 2025 Mardi C. Dier /s/ JULIAN C. BAKER Chair of the Board February 26, 2025 Julian C. Baker /s/ REBECCA TAUB, M.D. Director February 26, 2025 Rebecca Taub, M.D. /s/ FRED B. CRAVES, PH.D. Director February 26, 2025 Fred B. Craves, Ph.D. /s/ KENNETH M. BATE Director February 26, 2025 Kenneth M. Bate /s/ PAUL A. FRIEDMAN, M.D. Director February 26, 2025 Paul A. Friedman, M.D. /s/ RAYMOND CHEONG, M.D., PH.D. Director February 26, 2025 Raymond Cheong, M.D., Ph.D. 85 Table of Contents Signatures Title Date /s/ RICHARD S. LEVY, M.D. Director February 26, 2025 Richard S. Levy, M.D. /s/ JAMES M. DALY Director February 26, 2025 James M. Daly 86 Table of Contents INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm (PCAOB ID 238 ) F- 2 Consolidated Financial Statements: Consolidated Balance Sheets F- 4 Consolidated Statements of Operations F- 5 Consolidated Statements of Comprehensive Loss F- 6 Consolidated Statements of Stockholders’ Equity F- 7 Consolidated Statements of Cash Flows F- 8 Notes to Consolidated Financial Statements F- 9 F-1 Table of Contents Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of Madrigal Pharmaceuticals, Inc. Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of Madrigal Pharmaceuticals, Inc. and its subsidiaries (the "Company") as of December 31, 2024 and 2023, and the related consolidated statements of operations, of comprehensive loss, of stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2024, including the related notes (collectively referred to as the "consolidated financial statements"). We also have audited the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report On Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. 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; 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. F-2 Table of Contents Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Recognition of Product Revenue, Net As described in Note 2 to the consolidated financial statements, the Company recognizes revenue at a point in time when the customer obtains control of promised goods or services in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. Revenue is recorded net of variable consideration, which includes prompt pay discounts, returns, chargebacks, rebates, and co-payment assistance. Total product revenue, net, recognized during the year ended December 31, 2024 was $180.1 million. The principal consideration for our determination that performing procedures relating to the recognition of product revenue, net is a critical audit matter is a high degree of auditor effort in performing procedures related to the Company’s revenue recognition. 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 relating to the revenue recognition process. These procedures also included, among others, (i) testing revenue recognized for a sample of revenue transactions by obtaining and inspecting source documents, such as customer contracts, purchase orders, invoices, proof of delivery and subsequent cash receipts, where applicable; (ii) testing the Company’s reconciliation of gross revenue recognized from product sales to third-party information, and (iii) testing, on a sample basis, variable consideration transactions by obtaining and inspecting source documents such as rebate claims received from indirect customers and corresponding payments, and evaluating for consistency with the contractual terms and the Company’s policies. /s/ PricewaterhouseCoopers LLP Philadelphia, Pennsylvania February 26, 2025 We have served as the Company’s auditor since 2016. F-3 Table of Contents MADRIGAL PHARMACEUTICALS, INC. Consolidated Balance Sheets (in thousands, except share and per share amounts) December 31, 2024 December 31, 2023 Assets Current assets: Cash and cash equivalents $ 100,019 $ 99,915 Restricted cash 5,000 — Marketable securities 826,232 534,216 Trade receivables, net 53,822 — Inventory 34,068 — Prepaid expenses and other current assets 13,786 3,150 Total current assets 1,032,927 637,281 Property and equipment, net 2,190 1,553 Intangible assets, net 4,729 — Right-of-use asset 2,401 1,713 Total assets $ 1,042,247 $ 640,547 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 43,599 $ 28,041 Accrued liabilities 124,695 89,980 Lease liability 983 527 Total current liabilities 169,277 118,548 Long term liabilities: Loan payable, net of discount 117,569 115,480 Lease liability 1,018 1,186 Total long term liabilities 118,587 116,666 Total liabilities 287,864 235,214 Stockholders’ equity: Preferred stock, par value $ 0.0001 per share authorized: 5,000,000 shares at December 31, 2024 and December 31, 2023; 2,369,797 and 2,369,797 shares issued and outstanding at December 31, 2024 and December 31, 2023, respectively — — Common stock, par value $ 0.0001 per share authorized: 200,000,000 at December 31, 2024 and December 31, 2023; 22,004,679 and 19,875,427 shares issued and outstanding at December 31, 2024 and December 31, 2023, respectively 2 2 Additional paid-in-capital 2,556,095 1,741,153 Accumulated other comprehensive income 468 468 Accumulated deficit ( 1,802,182 ) ( 1,336,290 ) Total stockholders’ equity 754,383 405,333 Total liabilities and stockholders’ equity $ 1,042,247 $ 640,547 See accompanying notes to consolidated financial statements. F-4 Table of Contents MADRIGAL PHARMACEUTICALS, INC. Consolidated Statements of Operations (in thousands, except share and per share amounts) Year Ended December 31, 2024 2023 2022 Revenues: Product revenue, net $ 180,133 $ — $ — Operating expenses: Cost of sales 6,233 — — Research and development 236,718 272,350 245,441 Selling, general and administrative 435,057 108,146 48,130 Total operating expenses 678,008 380,496 293,571 Loss from operations ( 497,875 ) ( 380,496 ) ( 293,571 ) Interest income 46,654 19,578 2,185 Interest expense ( 14,671 ) ( 12,712 ) ( 3,964 ) Net loss $ ( 465,892 ) $ ( 373,630 ) $ ( 295,350 ) Net loss per common share: Basic and diluted net loss per common share $ ( 21.90 ) $ ( 19.99 ) $ ( 17.23 ) Basic and diluted weighted average number of common shares outstanding 21,272,962 18,687,774 17,137,201 See accompanying notes to consolidated financial statements. F-5 Table of Contents MADRIGAL PHARMACEUTICALS, INC. Consolidated Statements of Comprehensive Loss (in thousands, except share and per share amounts) Year Ended December 31, 2024 2023 2022 Net Loss $ ( 465,892 ) $ ( 373,630 ) $ ( 295,350 ) Other comprehensive income: Unrealized gain on available-for-sale securities — 500 48 Comprehensive loss $ ( 465,892 ) $ ( 373,130 ) $ ( 295,302 ) See accompanying notes to consolidated financial statements. F-6 Table of Contents MADRIGAL PHARMACEUTICALS, INC. Consolidated Statements of Stockholders’ Equity (in thousands, except share and per share amounts) Preferred stock Common stock Additional paid-in Capital Accumulated other comprehensive income (loss) Accumulated deficit Total stockholders’ equity Shares Amount Shares Amount Balance at December 31, 2021 1,969,797 $ — 17,103,395 $ 2 $ 863,495 $ ( 80 ) $ ( 667,310 ) $ 196,107 Issuance of common and preferred shares in equity offering, 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 Stock-based compensation expense related to equity-classified awards — — — — 31,625 — — 31,625 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 shares in equity offerings, excluding to related parties, net of transaction costs — — 1,346,199 — 260,187 — — 260,187 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 Stock-based compensation expense related to equity-classified awards — — — — 49,735 — — 49,735 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 Issuance of common shares in equity offerings, excluding to related parties, net of transaction costs — — 1,096,153 — 397,487 — — 397,487 Sale of warrants and common shares to related parties and exercise of common stock options, net of transaction costs — — 1,033,099 — 337,575 — — 337,575 Stock-based compensation expense related to equity-classified awards — — — — 79,880 — — 79,880 Net loss — — — — — — ( 465,892 ) ( 465,892 ) Balance at December 31, 2024 2,369,797 $ — 22,004,679 $ 2 $ 2,556,095 $ 468 $ ( 1,802,182 ) $ 754,383 See accompanying notes to consolidated financial statements. F-7 Table of Contents MADRIGAL PHARMACEUTICALS, INC. Consolidated Statements of Cash Flows (in thousands, except share and per share amounts) Year Ended December 31, 2024 2023 2022 Cash flows from operating activities: Net loss $ ( 465,892 ) $ ( 373,630 ) $ ( 295,350 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation expense 79,880 49,735 31,625 Depreciation and amortization expense 1,096 527 467 Amortization of debt issuance costs and discount 2,089 2,414 797 Amortization and interest accretion related to operating leases ( 400 ) — — Changes in operating assets and liabilities: Trade receivables, net ( 53,822 ) — — Inventory ( 34,068 ) — — Prepaid expenses and other current assets ( 10,636 ) ( 555 ) ( 1,257 ) Accounts payable 15,558 4,210 2,451 Accrued liabilities 34,715 ( 1,481 ) 36,413 Accrued interest, net of interest received on maturity of investments ( 24,092 ) ( 5,450 ) ( 3 ) Net cash used in operating activities ( 455,572 ) ( 324,230 ) ( 224,857 ) Cash flows from investing activities: Purchases of marketable securities ( 1,131,207 ) ( 834,439 ) ( 143,478 ) Sales and maturities of marketable securities 863,283 333,398 350,381 Acquisition of intangible asset ( 5,000 ) — — Purchases of property and equipment, net of disposals ( 1,462 ) ( 1,479 ) ( 217 ) Net cash provided by (used in) investing activities ( 274,386 ) ( 502,520 ) 206,686 Cash flows from financing activities: Proceeds from issuances of stock, excluding related parties, net of transaction costs 397,487 260,187 255,382 Proceeds from related parties - warrants, exercise of common stock options, net of transaction costs 337,575 270,292 8,955 Proceeds from issuance of loan payable — 65,000 50,000 Payment of debt issuance costs — ( 363 ) ( 886 ) Net cash provided by financing activities 735,062 595,116 313,451 Net increase (decrease) in cash and cash equivalents 5,104 ( 231,634 ) 295,280 Cash, cash equivalents, and restricted cash at beginning of period 99,915 331,549 36,269 Cash, cash equivalents, and restricted cash at end of period $ 105,019 $ 99,915 $ 331,549 Supplemental disclosure of cash flow information: Obtaining a right-of-use asset in exchange for a lease liability $ 1,330 $ 1,628 $ 583 See accompanying notes to consolidated financial statements. F-8 Table of Contents MADRIGAL PHARMACEUTICALS, INC. Notes to Consolidated Financial Statements 1. Organization, Business and Basis of Presentation Organization and Business Madrigal Pharmaceuticals, Inc. (the “Company” or “Madrigal”) is a biopharmaceutical company focused on delivering novel therapeutics for metabolic dysfunction-associated steatohepatitis (“MASH”), a serious liver disease with high unmet medical need that can lead to cirrhosis, liver failure and premature mortality. MASH is expected to become the leading cause of liver transplantation in the United States and is already the leading cause of liver transplantation among women in the United States. The Company’s medication, Rezdiffra (resmetirom), is a once-daily, oral, liver-directed THR-β agonist designed to target key underlying causes of MASH. In March 2024, Rezdiffra became the first and only FDA-approved therapy for patients with MASH. Rezdiffra became commercially available in the United States in April 2024. Rezdiffra is indicated in conjunction with diet and exercise for the treatment of adults with noncirrhotic MASH with moderate to advanced liver fibrosis (consistent with stages F2 to F3 fibrosis). Basis of Presentation The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and include accounts of the Company and its wholly-owned subsidiaries. Certain prior period amounts have been reclassified to align with current period presentation. During the three months ended December 31, 2024, the Company recorded an out-of-period adjustment related to clinical trial accruals that reduced research and development expense, net loss, and accrued liabilities by $ 36.9 million, $ 25.6 million of which related to fiscal years 2021 through 2023. The Company evaluated the impact of the error and out-of-period adjustment and concluded the error was not material to any previously filed interim or annual consolidated financial statements, and the out-of-period adjustment for the cumulative correction is not material to the year ended December 31, 2024. 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. Revenue Recognition The Company recognizes revenue in accordance with ASC Topic 606 - Revenue from Contracts with Customers. Revenue is recognized at a point in time when the customer obtains control of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as) the Company satisfies its performance obligation(s). Product Revenue, Net On March 14, 2024, the Company announced that the U.S. Food and Drug Administration (“FDA”) granted accelerated approval of Rezdiffra (resmetirom) in conjunction with diet and exercise for the treatment of adults with F-9 Table of Contents noncirrhotic MASH with moderate to advanced liver fibrosis (consistent with stages F2 to F3 fibrosis). The Company enters into agreements with specialty pharmacies and specialty distributors (each a “Customer” and collectively the “Customers”) to sell Rezdiffra in the U.S. Revenues from product sales are recognized when the Customer obtains control of the Company’s product, which occurs at a point in time, typically upon delivery to the Customer. Revenue is recorded net of variable consideration, which includes prompt pay discounts, returns, chargebacks, rebates, and co-payment assistance. The variable consideration is estimated based on contractual terms as well as management assumptions. The amount of variable consideration is calculated by using the expected value method, which is the sum of probability-weighted amounts in a range of possible outcomes, or the most likely amount method, which is the single most likely amount in a range of possible outcomes. Estimates are reviewed quarterly and adjusted as necessary. Accruals are established for gross to net deductions and actual amounts incurred are offset against applicable accruals. The Company reflects these accruals as either a reduction in the related account receivable from the customer or as an accrued liability, depending on the means by which the deduction is settled. Sales deductions are based on management’s estimates that involve a substantial degree of judgment. Prompt Pay : Customers receive a prompt pay discount for payments made within a contractually agreed number of days before the due date. The discounts are accounted for as a reduction of the transaction price and recorded as a contra receivable. Returns : The Company records allowances for product returns as a reduction of revenue at the time product sales are recorded. Product returns are estimated based on forecasted sales and historical and industry data. Returns are permitted in accordance with the return goods policy defined within each customer agreement. A returns reserve is recorded as an accrued liability. Chargebacks : The Company estimates obligations resulting from contractual commitments with the government and other entities to sell products to qualified healthcare providers at prices lower than the list prices charged to the customer who directly purchases from the Company. The customer charges the Company for the difference between what it pays to the Company for the product and the selling price to the qualified healthcare providers, with the difference recorded as a contra receivable. Co-Payment Assistance : Co-payment assistance programs are offered to eligible end-users as price concessions and are recorded as accrued liabilities and a reduction of the transaction price. The Company uses a third-party to administer the co-payment program for pharmacy benefit claims. Rebates : The Company is subject to discount obligations under government programs, including Medicaid and Medicare. Reserves for rebates are recorded in the same period the related product revenue is recognized, resulting in a reduction of product revenues and a current liability that is included in accrued expenses on the consolidated balance sheet. The Company’s estimate for rebates is based on statutory discount rates, expected utilization or an estimated number of patients on treatment, as applicable. Trade Receivables, Net The Company's trade receivables relate to amounts due from Customers related to product sales and are recorded net of prompt pay discounts and chargebacks. The Company assesses collectibility of overdue receivables and those determined to be uncollectible are written-off. As of December 31, 2024, there were no receivables written off. 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. 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. F-10 Table of Contents 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, 2024, 2023 and 2022, 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 year ended December 31, 2024, realized gains and losses on marketable securities were not material. During the years ended December 31, 2023 and 2022, 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 December 31, 2024 and 2023, 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, 2024, 2023 and 2022, the Company did not have any transfers of financials assets between Levels 1 and 2. As of December 31, 2024 and 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, which consists of work in process and finished goods, is stated at the lower of cost or estimated net realizable value, using actual cost, based on a first-in, first-out method. The balance sheet classification of inventory as current or non-current is determined by whether it will be consumed within the Company’s normal operating cycle. 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 sales in the accompanying Consolidated Statements of Income. The Company capitalizes inventory costs when future commercial sale in the ordinary course of business is probable. 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 rather were expensed as incurred as F-11 Table of Contents research and development expenses. The Company began capitalizing inventory in March 2024 after FDA approval was granted. 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 cash compensation and 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 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. Selling, General and Administrative Expenses Selling, general and administrative expenses consist primarily of salaries, benefits and stock-based compensation expenses for employees, management costs, costs associated with obtaining and maintaining our patent portfolio, commercial and marketing activities, advertising, corporate insurance, professional fees for accounting, auditing, consulting and legal services, and allocated overhead expenses. Leases The Company determines if an arrangement is a lease at contract inception. All leases are classified as operating leases. Lease assets represent the right to use an underlying asset for the lease term and lease liabilities represent an obligation to make lease payments arising from the leasing arrangement. Operating lease assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. When an implicit rate is not readily determinable, an incremental borrowing rate is estimated based on information available at commencement. Lease expense is recognized on a straight-line basis over the lease term. Short-term leases of twelve months or less at commencement date are expensed on a straight-line basis over the lease term. Patents Costs to secure and defend patents are expensed as incurred and are classified as selling, general and administrative expense in the Company’s statements of operations. Patent expenses were approximately $ 0.7 million, $ 0.9 million and $ 0.5 million for the years ended December 31, 2024, 2023 and 2022, respectively. Intangible Assets Intangible assets with finite lives are amortized to cost of sales 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. F-12 Table of Contents 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 accounts for income taxes in accordance with ASC 740, “Income Taxes”, which prescribes the use of the liability method where deferred tax asset and liability account balances are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance, if necessary, to reduce deferred tax assets to their estimated realizable value if it is more likely than not that a portion or all of the deferred tax assets will not be realized based on the weight of available positive and negative evidence. 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 years ended December 31, 2024, 2023 and 2022, 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, 2024 2023 2022 Common stock options 1,528,143 2,355,779 2,857,054 Restricted stock units 499,559 376,117 — Performance-based restricted stock units 235,520 150,000 — Preferred stock 2,369,797 2,369,797 2,369,797 Warrants 3,625,244 2,067,552 14,899 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 F-13 Table of Contents for fiscal years beginning after December 15, 2023, and interim periods beginning after December 15, 2024. Refer to Note 15 for the Company's segment information. 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. In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses ("DISE"), which applies to all public entities and requires disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses. Public entities must adopt the new standard prospectively for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption and retrospective application are permitted. The Company is currently evaluating the impact of ASU 2024-03 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 and other government regulations. The Company has incurred losses since inception, including approximately $ 465.9 million for the year ended December 31, 2024, resulting in an accumulated deficit of approximately $ 1,802.2 million and $ 1,336.3 million as of December 31, 2024 and 2023, respectively. Management expects to incur losses until the Company is able to generate sufficient revenue from Rezdiffra and any other approved products. To date, the Company has funded its operations primarily through proceeds from sales of the Company’s capital stock and debt financings. The Company believes that its cash, cash equivalents and marketable securities at December 31, 2024 will be sufficient to fund operations past one year from the issuance of these financial statements. 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 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. 4. Product Revenue, Net The following table summarizes balances and activity for gross to net adjustments (in thousands): Chargebacks, Discounts for Prompt Pay and Other Allowances Rebates, Customer Fees/Credits, Co-Pay Assistance, and Other Totals Balance at December 31, 2023 $ — $ — $ — Provision related to sales in the current year 8,045 35,115 43,160 Adjustments related to prior year sales — — — Payments and customer credits issued ( 3,857 ) ( 13,412 ) ( 17,269 ) Balance at December 31, 2024 $ 4,188 $ 21,703 $ 25,891 Concentrations of Credit Risk and Significant Customers The Company generates revenue from a small number of large, reputable customers. The following customers accounted for over 10% of total gross product revenue during the year ended December 31, 2024. As Rezdiffra was made commercially available in April 2024, there were no sales and no corresponding customer concentrations in 2023 or 2022. F-14 Table of Contents Year ended December 31, 2024 2023 2022 Customer A 39 % — % — % Customer B 21 % — % — % Customer C 14 % — % — % Customer D 12 % — % — % 5. Cash, Cash Equivalents, Restricted Cash, and Marketable Securities The Company held restricted cash of $ 5.0 million as of December 31, 2024 as collateral to its corporate credit card program. The Company had no restricted cash as of December 31, 2023. A summary of cash, cash equivalents and available-for-sale marketable securities held by the Company as of December 31, 2024 and 2023 is as follows (in thousands): December 31, 2024 Cost Unrealized gains Unrealized losses Fair value Cash and cash equivalents: Cash (Level 1) $ 24,495 $ — $ — $ 24,495 Money market funds (Level 1) 65,302 — — 65,302 US government and government sponsored entities (Level 1) 12,711 — — 12,711 Corporate debt securities due within 3 months of date of purchase (Level 2) 2,511 — — 2,511 Total cash and cash equivalents 105,019 — — 105,019 Marketable securities: Corporate debt securities due within 1 year of date of purchase (Level 2) 367,950 190 ( 64 ) 368,076 US government and government sponsored entities due within 1 year of date of purchase (Level 2) 382,793 279 ( 62 ) 383,010 US government and government sponsored entities due within 1 to 2 years of date of purchase (Level 2) 71,739 156 ( 25 ) 71,870 Corporate debt securities due within 1 to 2 years of date of purchase (Level 2) 3,282 — ( 6 ) 3,276 Total cash, cash equivalents, restricted cash, and marketable securities $ 930,783 $ 625 $ ( 157 ) $ 931,251 F-15 Table of Contents 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 6. Inventory The following table summarizes the Company's inventory balances as of December 31, 2024 and 2023 (in thousands): December 31, 2024 December 31, 2023 Raw materials $ — $ — Work in process 29,533 — Finished goods 4,535 — Total $ 34,068 $ — There was no provision for excess inventory recorded as of December 31, 2024. 7. Accrued Liabilities Accrued liabilities as of December 31, 2024 and 2023 consisted of the following (in thousands): December 31, 2024 December 31, 2023 Contract research organization costs $ 30,250 $ 50,737 Other clinical study related costs 2,161 3,724 Manufacturing and drug supply 9,941 9,705 Compensation and benefits 34,957 17,030 Professional fees 17,512 6,814 Gross to net accrued liabilities 21,703 — Other 8,171 1,970 Total accrued liabilities $ 124,695 $ 89,980 F-16 Table of Contents 8. 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 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 extended to May 3, 2027, upon the achievement of regulatory approval milestones and future revenue covenants, 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 “First 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 was unchanged by the First Amendment, and such borrowings became available when the Company achieved a milestone with FDA approval for Rezdiffra in March 2024. The Company did not elect to draw Tranche 3 before it expired in June 2024, but subsequently entered into an amendment to extend the availability of these funds in August 2024. Coincident with the expansion of Tranche 2 borrowing capacity by $ 15.0 million, the First Amendment reduced the fourth tranche under the Loan Facility (“Tranche 4”) by $ 15.0 million to $ 60.0 million. In connection with the $ 35.0 million drawn under Tranche 2 at the closing of the First Amendment, $ 15.0 million drawn in June of 2023, and $ 15.0 million drawn in September 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 First 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 First 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. On August 22, 2024, the Company entered into the Second Amendment (the “Second Amendment”) to the Loan Facility (as amended by the First Amendment and the Second Amendment, the “Second Amended Loan Facility”). Under the Second Amended Loan Facility, the Company’s borrowing capacity available under Tranche 4 is increased to include the $ 75.0 million available under Tranche 3 that was not utilized by the Company. After such increase, the Company’s current borrowing capacity is $ 135.0 million under Tranche 4, which is available subject to Hercules’ sole discretion. 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. The Loan Facility also includes a revenue-based covenant that could apply commencing at or after the time that financial reporting became due for the quarter ended September 30, 2024, however, the revenue-based covenant will be automatically waived pursuant to the terms of the Loan Facility at any time in which the Company maintains, as measured monthly, (i) a certain level of cash, cash equivalents and liquid funds relative outstanding debt under the Loan Facility or (ii) a market capitalization of at least $ 1.2 billion. 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), F-17 Table of Contents investments, distributions (including dividends), collateral, investments, distributions, transfers, mergers or acquisitions, taxes, corporate changes, and deposit accounts. As of December 31, 2024, the outstanding principal under the Loan Facility was $ 115.0 million. The interest rate as of December 31, 2024 was 9.95 %. As of December 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 December 31, 2024 are as follows (in thousands): Period Ending December 31, 2024: Amount 2025 $ 11,616 2026 78,791 2027 53,107 $ 143,514 Less amount representing interest ( 22,361 ) Less unamortized discount ( 3,584 ) Loans payable, net of discount $ 117,569 9. 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 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 F-18 Table of Contents 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. 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 United States 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, 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 2023 Offering for its clinical and commercial activities in preparation for a potential launch of resmetirom in the United States 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 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. At-The-Market Issuance Sales Agreement 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. 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 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 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 F-19 Table of Contents 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. Since the entry into the Sales Agreement Amendment in May 2023, the Company sold 98,101 shares in total under the 2021 Sales Agreement, as amended by the Sales Agreement Amendment, 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. In total, the Company sold 1,334,044 shares of Common Stock having an aggregate offering price of $ 225.1 million pursuant to the 2021 Sales Agreement, as amended by the Sales Agreement Amendment. In May 2024, the Company entered into a Sales Agreement (the “2024 Sales Agreement”) with Cowen, replacing and superseding the 2021 Sales Agreement, as amended by the Sales Agreement Amendment which was terminated effective upon the entry into the 2024 Sales Agreement. The Company is authorized to issue and sell up to $ 300.0 million in shares of the Company’s common stock under the 2024 Sales Agreement. The Company sold no shares in the year ended December 31, 2024 under either the 2021 Sales Agreement, as amended by the Sales Agreement Amendment (the “2024 Sales Agreement”). 10. Stock-based Compensation 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, 2024, 1,205,990 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, 2024, 25,176 shares were available for future issuance under the 2023 Inducement Plan. F-20 Table of Contents Stock Options The following table summarizes stock option activity during the year ended December 31, 2024: Shares Weighted average exercise price Weighted average remaining contractual life (years) Aggregate intrinsic value (in thousands) Outstanding at December 31, 2023 2,355,779 $ 79.94 Options granted 170,872 234.80 Options exercised ( 928,800 ) 82.81 Options cancelled ( 69,708 ) 122.50 Outstanding at December 31, 2024 1,528,143 $ 93.57 4.52 $ 328,574 Exercisable at December 31, 2024 1,172,585 $ 74.84 3.83 $ 274,073 The total cash received by the Company as a result of stock option exercises was $ 76.9 million, $ 34.0 million and $ 9.0 million for the years ended December 31, 2024, 2023, and 2022. The total intrinsic value of options exercised was $ 167.8 million $ 70.4 million and $ 47.3 million for the years ended December 31, 2024, 2023, and 2022. The weighted-average grant date fair values, based on the Black-Scholes option model, of options granted during the year ended December 31, 2024, 2023 and 2022 was $ 155.42 , $ 149.15 , and $ 54.68 , 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 December 31, 2024, the Company had 499,559 restricted stock units outstanding, with a weighted average grant date fair value of $ 237.07 per unit. The following table summarizes RSU activity, excluding performance-based RSUs, during the year ended December 31, 2024: Shares Weighted average grant date fair value Outstanding at December 31, 2023 376,117 $ 241.45 RSUs granted 295,916 236.90 RSUs vested ( 113,154 ) 248.37 RSUs forfeited ( 59,320 ) 242.48 Outstanding at December 31, 2024 499,559 $ 237.07 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. F-21 Table of Contents The following table summarizes PSU activity during the year ended December 31, 2024: PSUs Eligible to Earn PSUs Weighted average grant date fair value Outstanding PSUs at December 31, 2023 50,000 150,000 $ 146.37 PSUs granted 51,202 102,404 388.02 PSUs attained — — — PSUs forfeited ( 8,442 ) ( 16,884 ) 388.02 Outstanding at December 31, 2024 92,760 235,520 $ 257.77 Exercisable at December 31, 2024 — — $ — Outstanding Awards As of December 31, 2024, the Company had restricted stock units, performance stock units, and options outstanding pursuant to which an aggregate of 2,263,222 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 years ended December 31, 2024, 2023 and 2022 was as follows (in thousands): Year Ended December 31, 2024 2023 2022 Stock-based compensation expense by type of award: Stock options $ 26,977 $ 30,613 $ 31,625 Restricted stock units 35,136 14,974 — Performance-based restricted stock units 17,767 4,148 — Total stock-based compensation expense $ 79,880 $ 49,735 $ 31,625 Effect of stock-based compensation expense by line item: Research and development $ 22,158 $ 20,864 $ 13,876 Selling, general and administrative 57,722 28,871 17,749 Total stock-based compensation expense included in net loss $ 79,880 $ 49,735 $ 31,625 Unrecognized stock-based compensation expense as of December 31, 2024 was $ 127.3 million with a weighted average remaining period of 2.60 years. 11. Leases In 2019, the Company entered into an operating lease for office space located in West Conshohocken, PA (the “Office Lease”), which was later updated by three amendments entered into from 2019 to 2022. In May 2023, the Company entered into the Fourth Amendment to the Office Lease (the “Fourth Lease Amendment”), which did not have a financial impact. In August 2023, the Company entered into the Fifth Amendment to the Office Lease (the “Fifth Lease Amendment”). The Fifth Lease Amendment extended the term of the Office Lease through November 2026. As a result of the Fifth Lease Amendment, an incremental $ 1.6 million right-of-use asset and lease liabilities were recorded during the year ended December 31, 2023. In April 2024 and May 2024, the Company entered into the Sixth Amendment (the “Sixth Lease Amendment”) and the Seventh Amendment (the “Seventh Lease Amendment”) to the Office Lease, respectively, leasing additional office space in the same premises under the Office Lease. The lease for such additional office space commenced in September 2024 and resulted in an incremental $ 1.2 million right-of-use asset and lease liability being recorded. In August 2024, the Company entered into the Eighth Amendment (the “Eighth Lease Amendment”) and in October 2024, the Company entered into the Ninth Amendment (the “Ninth Lease Amendment”) to the Office Lease, further expanding the amount of F-22 Table of Contents office space in the same premises. The lease for the additional office space under the Eighth and Ninth Lease Amendments commenced in December 2024 and resulted in an incremental $ 0.2 million right-of-use asset and lease liability recorded. Future minimum payments under the Company’s operating leases related to the ROU asset and lease liability as of December 31, 2024 was as follows (in thousand): Operating Leases 2025 $ 1,150 2026 1,072 Total minimum payments $ 2,222 Less: imputed interest ( 221 ) Present value of lease liabilities $ 2,001 As of December 31, 2024, the weighted average remaining operating lease term was 1.9 years and the weighted average discount rate used to determine the operating lease liabilities was 10.66 %. Cash paid related to the lease liability was $ 1.1 million and $ 1.1 million for years ended December 31, 2024 and 2023 respectively. Operating lease costs were $ 0.9 million and $ 1.1 million for years ended December 31, 2024 and 2023 respectively. Rent, short term and variable leases costs were immaterial during the years ended December 31, 2023 and 2022. 12. 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 was subsequently paid to Roche. The remaining milestone obligation under the agreement is $ 3.0 million and is 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 began accruing for royalty payments following its commercial launch of Rezdiffra in April 2024. The Company had no Licensed Product sales for the years ended December 31, 2023 and 2022. The Company has entered into customary contractual arrangements and letters of intent in preparation for and in support of the clinical trials as well as manufacturing costs of Rezdiffra. 13. Income Taxes At December 31, 2024, the Company had federal net operating loss (“NOL”) carryforwards of approximately $ 850.2 million available to reduce future taxable income, of which $ 40.4 million will expire between 2031 and 2037. The Company also has state operating loss carryforwards of approximately $ 823.5 million, available to reduce future taxable income, which expire between 2031 and 2043. The Company has unused federal and state research and development carryforwards of approximately $ 69.7 million which will begin to expire in 2031. The Internal Revenue Code (“IRC”) limits the amounts of NOL carryforwards that a Company may use in any one year in the event of certain cumulative changes in ownership over a three-year period as described in Section 382 of the IRC. Such change in ownership could limit the Company's utilization of the NOL, and could be triggered by subsequent sales of securities by the Company or stockholders. The deferred tax asset related to the NOL reflected on the financial statements could be affected by this limitation. 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. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. As there is no assurance of future taxable income, a full valuation allowance has been established to offset the deferred tax assets. The valuation allowance increased $ 125.7 million for the year ended December 31, 2024. Changes in the deferred tax asset will be recorded as an income tax benefit or expense on the accompanying consolidated statements of operations. F-23 Table of Contents Entities are also required to evaluate, measure, recognize and disclose any uncertain income tax provisions taken on their income tax returns. The Company has analyzed its tax positions and has concluded that as of December 31, 2024 there were no uncertain positions. The 2020 through 2023 tax returns are open to review by the IRS and state taxing authorities. To the extent the Company has tax attribute carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the IRS or state taxing authorities, to the extent utilized in a future period. 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 2024. Temporary differences that give rise to deferred tax assets and liabilities are as follows (in thousands): For the years ended December 31, 2024 2023 2022 Deferred Tax Liabilities Unrealized gains on investments $ 117 $ 117 $ — Other deferred tax liabilities 100 — — Total Deferred Tax Liabilities $ 217 $ 117 $ — Deferred Tax Assets Charitable contributions $ 37 $ 37 $ 45 Accrued expenses 8,082 3,857 2,398 Intangibles 401 503 589 Gross to net accruals 167 — — Stock compensation 16,342 33,976 27,226 Property, plant & equipment 172 95 106 Unrealized loss on investment — — 8 Net operating losses 214,427 121,552 68,305 Capitalized R&D 200,199 175,145 137,328 R&D credit 69,201 48,074 35,103 Total deferred tax assets before valuation allowance 509,028 383,239 271,108 Valuation allowance ( 508,811 ) ( 383,122 ) ( 271,108 ) Total deferred tax assets 217 117 — Net deferred tax assets $ — $ — $ — Differences between the effective income tax rate and the U.S. statutory rate were as follows (in thousands): For the years ended December 31, 2024 2023 2022 Tax benefit at U.S. federal statutory rate $ ( 97,837 ) $ ( 78,462 ) $ ( 62,023 ) Stock based compensation ( 9,954 ) ( 8,287 ) ( 7,844 ) 162M limitation 21,627 3,183 7,996 Other nondeductible expenses 835 53 16 State income taxes benefit before valuation allowance, net of federal benefit ( 19,280 ) ( 16,246 ) 13,090 Increase in domestic valuation allowance 125,689 112,606 59,466 Research and development credit ( 17,679 ) ( 12,971 ) ( 10,712 ) Other adjustments ( 3,401 ) 124 11 Income tax expense (benefit) $ — $ — $ — F-24 Table of Contents 14. Segment Information The Company operates as one reportable segment focused on delivering novel therapeutics for metabolic dysfunction-associated steatohepatitis (“MASH”). The Company's Chief Executive Officer, as the chief operating decision maker ("CODM"), leads the Company in support of four core values—focus on the patient, having an owner mindset, the relentless pursuit of innovation and commitment to collaboration. To best align the Company with these values, the CODM reviews consolidated financials, along with qualitative information, to evaluate performance, manage and allocate resources, make operating decisions, and assess planning and forecasting on a total company basis. Assets, liabilities, and equity are reviewed and presented on the same level as the Company's consolidated balance sheet. Management does not segment business operations for internal reporting or decision making purposes. As the Company has a single reporting segment, the segment accounting policies are the same as those at the Company level, as described in Note 2 "Summary of Significant Accounting Policies". As of December 31, 2024, the Company did not have revenue or material assets outside of the U.S. The following table presents net income reported at the segment measure of profit and loss: Year Ended December 31, 2024 2023 2022 Product revenue, net $ 180,133 $ — $ — Cost of sales ( 6,233 ) — — Research and development - personnel and internal expense ( 73,418 ) ( 56,824 ) ( 39,121 ) Research and development - external expense ( 163,300 ) ( 215,526 ) ( 206,320 ) Selling, general and administrative ( 435,057 ) ( 108,146 ) ( 48,130 ) Other segment income (expense) (1) 31,983 6,866 ( 1,779 ) Net loss $ ( 465,892 ) $ ( 373,630 ) $ ( 295,350 ) (1) Other segment expense includes interest income and interest expense. F-25