Q2 2024 Madrigal Pharmaceuticals Inc Earnings Call

August 7, 2024

Speaker Change: I'm going to ask you a question and make you an earner. You Satan. Easy I said. Oh, épée c'est pas agréable

Operator: Good day, and thank you for standing by. Welcome to the Madrigal Pharmaceuticals Second Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. As a reminder, today's conference call is being recorded. I would now like to introduce Ms. Tina Ventura, Chief Investor Relations Officer. Please go ahead.

Speaker Change: Good day and thank you for standing by. Welcome to the Madrigal Pharmaceuticals 2nd Quarter 2024 Earnings Conference Call.

Speaker Change: At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. As a reminder, today's conference call is being recorded.

Tina Ventura: I would now like to introduce Ms. Tina Ventura, Chief Investor Relations Officer. Please go ahead.

Tina Ventura: Thank you, Luella. Good morning, everyone, and thank you for joining us to discuss Madrigal's second quarter 2024 earnings. We issued a press release this morning and have a slide deck that accompanies this webcast, which we'll post on the investor relations section of our website right after the call. Please note on slide two that we will be making certain forward-looking statements today. We refer you to our SEC filings for a discussion of risks that may cause actual results to differ from forward-looking statements.

Speaker Change: On the call with me today is Bill Sibold, Chief Executive Officer, and Mardi Dier, Chief Financial Officer. They'll provide prepared remarks, and then we'll take your questions. Our goal is to keep today's call to about 45 minutes.

Speaker Change: Please note on slide 2, we will be making certain forward-looking statements today. We refer you to our SEC filings for a discussion of risks that may cause actual results to differ from the forward-looking statements.

Speaker Change: And with that, I will now turn the call over to Bill on slide 3. Well, thanks, Tina. Good morning and thanks for joining. I'll cover three topics on our call this morning. First, an update on the ResDiffra launch, where we are off to a strong start this quarter.

Tina Ventura: Our key metrics are also showing strength and are consistent with market research reflecting high physician awareness and intent to prescribe. Second, our progress wired the system, where we are four months into what we expect to be about a 12-month process.

Bill Sibold: Our key metrics are also showing strength and are consistent with market research reflecting high physician awareness and intent to prescribe.

Bill Sibold: Second are progress wiring the system.

Bill Sibold: where we are four months into what we expect to be about a 12-month process. This is our number one priority.

Bill Sibold: As with other first in disease launches, we are driving a change in clinical practice and physician behavior and developing processes for efficient patient and prescription flow. Our goal is to establish a strong foundation to support peak sales.

Bill Sibold: And third, our strategy to maximize the long-term value of Resdifra. In addition to the untapped opportunity in the U.S., we announced today that we plan to directly launch Resdifra in Europe following an EMA decision expected next year.

Tina Ventura: As discussed in our first quarter call, we are providing second quarter metrics on three key areas, demand, including patient numbers, payer coverage, and prescriber uptake. We generated $14.6 million in net sales in the second quarter and exited the quarter with more than 2,000 patients on Resdifra, and payers are executing on medical exceptions more efficiently because they recognize the unmet need. As a result, patients are moving more quickly through the reimbursement process. As far as government payers are concerned, as of July 1st, Medicaid coverage was in place across all 50 states.

Bill Sibold: Let's start with the launch on slide four. As discussed in our first quarter call, we are providing second quarter metrics on three key areas, demand, including patient numbers, payer coverage, and prescriber uptake.

Bill Sibold: We generated $14.6 million in net sales in the second quarter and exited the quarter with more than 2,000 patients on Resdifra.

Bill Sibold: In addition to driving demand, we have put a lot of focus on the time it takes to fill a prescription.

Bill Sibold: with the physician community, Madrigal patient support, specialty pharmacies, and payers. Our field team is focused on patient selection with prescribers. Our patient support team and the specialty pharmacies in our limited distribution network are driving efficient prescription processing.

Bill Sibold: And payers are executing on medical exceptions more efficiently because they recognize the

Bill Sibold: As a result, patients are moving more quickly through the reimbursement process.

Bill Sibold: We have previously discussed our expectation for time to fill to improve from about 60 days at launch to about 30 days or less at six months. Because of our efforts, time to fill was running faster in the second quarter compared to those initial expectations.

Bill Sibold: We're also very encouraged by the progress we've made with payers. They understand the significant unmet need in NASH, which is the number one driver of liver transplants for women in the United States.

Bill Sibold: They also recognize the clinical benefits of resdifra for F2-F3 patients and that non-invasive tests or NITs, not biopsies, are standard of care.

Bill Sibold: Last quarter coverage was at 30% of commercial lives.

Bill Sibold: As of June 30th, more than 50% of commercial lives now have coverage in place for resdifra, with over 95% of resdifra-covered lives accepting NITs and not requiring biopsies.

Bill Sibold: We are well on our way to achieving our goal of 80% of commercial lives covered by year-end.

Bill Sibold: As far as government payers, as of July 1st, Medicaid coverage was in place across all 50 states. Similar to what we've seen with commercial coverage, virtually all accept NITs and do not require biopsies.

Tina Ventura: Similar to what we've seen with commercial coverage, virtually all accept NITs and do not require buyouts. We are pleased with the progress we have made with the 6,000 top hepatologists and gastroenterologists that we are targeting, who are caring for the vast majority of the 315,000 diagnosed F2F3 patients. We're in the early stages of what we expect to be about a 12-month process to substantially accomplish that goal. Just like other disease states with first-time treatment, we are working to change physician behavior and help build a pathway to efficiently process risk-different prescriptions at doctors' offices. We've made great progress.

Bill Sibold: For Medicare, we are on track for full coverage beginning January 1st of next year based on the annual review process for new medications.

Bill Sibold: Currently, Medicare patients are accessing Resdipra via the medical exception process with prior authorization requirements consistent with our label.

Bill Sibold: We are pleased with the progress we have made with the 6,000 top hepatologists and gastroenterologists that we are targeting, who are caring for the vast majority of the 315,000 diagnosed F2F3 patients.

Bill Sibold: In the second quarter, approximately 20% of our top targets wrote a resdiffer prescription, which is aligned with the penetration level often seen in launches of blockbuster medicines.

Bill Sibold: As you'd expect, early in launch, we've seen hepatologists adopting more quickly due to their expertise with the disease and NITs. Gastroenterology practices can take a bit longer, given that NASH isn't their primary disease area, and they need to think through practice dynamics for patients.

Bill Sibold: Across the board, each physician is at a different stage of activation, and we continue to steadily add prescribers.

Bill Sibold: Our top targets are writing more than 75% of prescriptions, giving us conviction that we're targeting the right physicians with our efforts.

Bill Sibold: Significant opportunity remains to expand new prescribers and shift initial prescribers to more frequent prescribers. To do this well, we need to continue to successfully wire the system as noted on slide 5.

Bill Sibold: We're in the early stages of what we expect to be about a 12-month process to substantially accomplish that goal. Just like other disease states with first-time treatment, we are working to change physician behavior and help build a pathway to efficiently process resdiffered prescriptions at physicians' offices.

Tina Ventura: We are steadily adding patients and prescribers, but it's early in the launch, and there's still a lot of work to do. For physicians, it's about educating them on the risks of NASH and motivating them to write a prescription. The risks are real, and they are urgent.

Bill Sibold: We've made great progress. We are steadily adding patients and prescribers, but it's early in the launch and there's still a lot of work to do.

Bill Sibold: For physicians, it's about educating on the risks of NASH and activating them to write a prescription. The risks are real, and they are urgent. For example, our health economics study of an Optum claims database highlights alarming rates of progression to adverse liver-related outcomes.

Tina Ventura: For example, our health economics study of an Optum claims database highlights alarming rates of progression to adverse liver-related outcomes. Of 19,000 NASH patients without cirrhosis at baseline, approximately 17% progressed to decompensated cirrhosis within three years. With office staff, it's about helping practices create a pathway to process patients and prescriptions to handle the future volume we anticipate. This can require additional staff to manage patients and navigate the evolving reimbursement process. For payers, we continue to have productive dialogue on the costs of NASH, the clinical benefits of resdifra, and non-invasive testing of patients. And that's been paying off with favorable resdifra coverage.

Bill Sibold: Of 19,000 NASH patients without cirrhosis at baseline, approximately 17% progressed to decompensated cirrhosis within three years.

Speaker Change: In addition to disease state and res different education, we are also helping physicians identify the appropriate patients for res differ using NITs, as well as using the recently published U.S. expert panel recommendations and easel guidelines.

Speaker Change: For the office staff, it's about helping practices create a pathway to process patients and prescriptions to handle the future volume we anticipate. This can require additional staff to manage patients and navigate the evolving reimbursement process.

Speaker Change: For payers, we continue to have productive dialogue on the costs of NASH, the clinical benefits of res diffra, and non-invasive testing of patients. That's been paying off with favorable res diffra coverage.

Tina Ventura: And for patients, we're continuing to educate them on NASH and resdipra while helping them navigate through the complexities of the healthcare system to support their treatment journey. So we're absolutely doing the work, physician by physician, practice by practice, payer by payer, and patient by patient. This is a tailored approach that requires discipline, repetition, and time.

Speaker Change: And for patients, we're continuing to educate them on NASH and RISDFRA while helping them navigate through the complexities of the healthcare system to support their treatment journey.

Speaker Change: So, we're absolutely doing the work, physician by physician, practice by practice.

Speaker Change: payer by payer and patient by patient.

Tina Ventura: As accounts become wired, the pull-through process becomes smoother, and it's easier to send more prescriptions through. We're still in the early stages, but we are confident that we're building the foundation needed to create a blockbuster medicine. The optimism of our U.S. launch drives our decision to directly commercialize RISDiFR in Europe, as noted on slide 6. We have been evaluating our European strategy following the submission of our marketing application earlier this year.

Speaker Change: This is a tailored approach that requires discipline, repetition, and time. As accounts become wired, the pull-through process becomes smoother, and it's easier to send more prescriptions through. We're still in the early stages, but we are confident that we're building the foundation needed to create a blockbuster medicine.

Speaker Change: The optimism of our U.S. launch.

Speaker Change: drives our decision to directly commercialize RISDiFER in Europe , as noted on slide 6. We have been evaluating our Europe strategy following the submission of our marketing application earlier this year.

Tina Ventura: We expect an EMA decision mid-year next year, which would make RISDIPR the first NASH treatment available in Europe. Our decision to commercialize Resdifra in Europe allows us to preserve the full value of the asset, maintain strategic flexibility, and create a platform for future growth. Europe is an attractive opportunity for several reasons. The NASH patient population in Europe is significant. NASH is driving a marked increase in the prevalence of hepatiocellular carcinoma in Europe.

Speaker Change: We expect an EMA decision mid-year next year, which would make RISDFIR the first NASH treatment

Speaker Change: Our decision to commercialize Resdifra in Europe allows us to preserve the full value of the asset, maintain strategic flexibility, and create a platform for future growth. Europe is an attractive opportunity for several reasons.

Speaker Change: The NASH patient population in Europe is significant. NASH is driving a marked increase in the prevalence of hepatocellular carcinoma in Europe . From 2016 to 2030, cases of NASH-related HCC are expected to increase by more than 100%.

Tina Ventura: From 2016 to 2030, cases of NASH-related HCC are expected to increase by more than 100%. We've established Resdipra as a potentially foundational therapy for NASH through our Maestro NASH Phase III clinical trial. We have 125 trial sites in Europe. We've formed strong relationships with the NASH European community through our clinical development program and on-the-ground presence with our European medical affairs team. And RISDFAR has been favorably positioned as first-line therapy for moderate to advanced NASH consistent with F2-F3 fibrosis in the ESL clinical practice guidelines, despite it not being approved yet in Europe.

Speaker Change: We've established resdipra as a potentially foundational therapy in NASH through our Maestro NASH Phase III clinical trial.

Speaker Change: We have 125 trial sites in Europe . We form strong relationships with the NASH European community through our clinical development program and on-the-ground presence with our European medical affairs team.

Speaker Change: And RISDFR has been favorably positioned as first-line therapy for moderate to advanced NASH, consistent with F2-F3 fibrosis in the easel clinical practice guidelines.

Tina Ventura: The guidelines also note that Resdifra is the only disease-specific agent in NASH with positive results from a registrational phase 3 clinical trial. We are starting to build the infrastructure now to commercialize Resdifra in Europe in 2025. Another key aspect of our lifecycle management strategy is expanding the use of RISDiFRA to patients with compensated cirrhosis, as seen on slide seven. There is even more urgency to treat patients with cirrhosis because they are at a 42 times higher risk for liver-related mortality. Our Maestro NASH Outcomes Trial evaluates risk differently in this patient population. It's an event-driven trial that non-invasively measures progression to liver decompensation events in patients with compensated NASH cirrhosis.

Speaker Change: This was despite it not being approved yet in Europe . The guidelines also note that Resdifra is the only disease-specific agent in NASH with positive results from a registrational Phase III clinical trial.

Speaker Change: We are starting to build the infrastructure now to commercialize Resdifra in Europe in 2025.

Speaker Change: Another key aspect of our lifecycle management strategy is expanding the use of risdipra to patients with compensated cirrhosis as seen on slide 7. There is an even higher urgency to treat patients with cirrhosis because they are at a 42 times higher risk for liver related mortality.

Speaker Change: Our MAESTRO-NASH outcomes trial evaluates risk differ in this patient population.

Speaker Change: It's an event-driven trial that non-invasively measures progression to liver decompensation events in patients with compensated NASH cirrhosis. An indication in this patient population has the potential to double our opportunity.

Tina Ventura: An indication in this patient population has the potential to double our opportunity. Let me conclude by summarizing our progress on slide eight. We have the enviable position of being first to market in NASH, giving us a strong and sustainable competitive advantage. We are fully leveraging this opportunity, positioning ourselves for long-term leadership in the U.S. and now globally with our expected launch in Europe. We have a highly desirable product profile. It's an effective, once-daily, well-tolerated pill.

Speaker Change: Let me conclude by summarizing our progress on slide 8.

Speaker Change: We have the enviable position of being first to market in NASH, giving us a strong and sustainable competitive advantage. We are fully leveraging this opportunity, positioning ourselves for long-term leadership in the U.S. and now globally with our expected launch in Europe .

Speaker Change: We have a highly desirable product profile. It's an effective once-daily, well-tolerated pill. It's a liver-directed medicine that has demonstrated the ability to halt or improve liver stiffness in 91% of patients out to three years.

Tina Ventura: It's a liver-directed medicine that has demonstrated the ability to halt or improve liver stiffness in 91% of patients out to three years. And we've resourced the launch to match the opportunity in front of us, starting with an expert team that has launched dozens of blockbuster medicines. While we're still early in the launch, we're making good progress on many metrics. For example, net sales of $14.6 million; more than 2,000 patients on drugs. More than 50% of commercial lives covered, virtually all accept NITs and do not require biopsies in line with what we have communicated. Additionally, approximately 20% of our top targets have prescriptions with significant room for growth. Recently published easel guidelines and U.S. expert panel recommendations endorse ResDiffer as a first-line therapy for F2F3 NAT.

Speaker Change: And we've resourced the launch to match the opportunity in front of us, starting with an expert team that's launched dozens of blockbuster medicines.

Speaker Change: While we're still early in the launch, we're making good progress on many metrics.

Speaker Change: Net sales of $14.6 million.

Speaker Change: More than 2,000 patients on drug.

Speaker Change: More than 50% of commercial lives covered, virtually all accept NITs and do not require biopsies in line with what we have communicated. Approximately 20% of our top targets have prescribed, with significant room for growth.

Speaker Change: Recently published EASL guidelines and U.S. expert panel recommendations endorse ResDiffer as a first-line therapy for F2F3 NASH. We have more work to do to change clinical practice to educate and activate physicians and to help them create efficient care pathways for patients.

Tina Ventura: We have more work to do to change clinical practice, to educate and activate physicians, and to help them create efficient care pathways for patients. However, we are steadily adding patients and prescribers and tracking right in line with what we would expect at this point in the law. As we look forward, we are well on our way to building a blockbuster medicine with patient expansion, as we execute on the untapped opportunity in F2-F3 NASH, indication expansion, as we look forward to data from our outcomes trial in cirrhosis patients, and geographic expansion, as we plan to launch ResDiffer in Europe next year.

Speaker Change: We are steadily adding patients and prescribers and tracking right in line with what we would expect at this point in the launch.

Speaker Change: As we look forward,

Speaker Change: We are well on our way to building a blockbuster medicine with patient expansion, as we execute on the untapped opportunity in F2-F3 NASH, indication expansion, as we look forward to data from our outcomes trial in cirrhosis patients, and geographic expansion, as we plan to launch ResDiffer in Europe next year.

Tina Ventura: Before I turn the call over to Mardi, let me briefly reflect on the progress we've made as a company. I've been in my role for 11 months, and what we've accomplished is pretty incredible. I'm very proud of this.

Speaker Change: Before I turn the call over to Mardi, let me briefly reflect on the progress we've made as a company. I've been in my role 11 months, and what we've accomplished is pretty incredible. I'm very proud of this team.

Tina Ventura: The FDA accepted the res defer filing, we received priority review, and no ADCOM was required. We very quickly built an expert team at the leadership level and the commercial level, including a full field team ready to support the launch on day one. We built a sufficient supply. We received approval with a best case label, importantly, with no biopsy requirement. The team was out promoting Red Zipper within weeks of approval, and we shipped product in less than a month. We have been building strong physician relationships. We've seen favorable RISDFRA guidelines published. Payer coverage is favorable, and virtually all plans are not requiring a buyout.

Speaker Change: The FDA accepted the res diffra filing, we received priority review, no adcom was required. We very quickly built an expert team at the leadership level and the commercial level, including a full field team ready to support the launch on day one.

Speaker Change: We built sufficient supply. We received approval with a best-case label, importantly, with no biopsy requirement.

Speaker Change: The team was out promoting RISDFR within weeks of approval, and we shipped product in less than a month. We have been building strong physician relationships. We've seen favorable RISDFR guidelines published.

Speaker Change: Payer coverage is favorable and virtually all plans not requiring a biopsy.

Tina Ventura: So, we are executing on everything that we said we would. We're making progress. It's early, and there's still more work to do. As we look forward, we are about a third of the way through our plans to wire the system to build a strong foundation to support our aspiration for peak sales. We have the right strategy in place to do that, and we're even more confident in the significant potential of ResDifra. So with that, Mardi? Yes, thank you.

Speaker Change: So, we are executing on everything that we said we would. We're making progress. It's early and there's still more work to do. As we look forward, we are about a third of the way through our plans to wire the system to build a strong foundation to support our aspiration for peak sales.

Mardi Dier: We have the right strategy in place to do that, and we're even more confident in the significant potential of RISDFRA. So with that, Mardi?

Mardi Dier: Yes, thank you, Bill. The press release we issued earlier today contains our full financial results, so I will provide a few highlights, as noted on slide 9, for the second quarter of 2024. U.S. net product sales for the quarter were $14.6 million, comprised of demand and inventory. For the quarter, it was mostly demand. We expect inventory to run between two to four weeks for Res Diffra, as is typical for a specialty medicine.

Mardi Dier: U.S. net product sales for the quarter were $14.6 million, comprised of demand and inventory. For the quarter, it was mostly demand. We expect inventory to run between two to four weeks for rosdifra, as is typical for specialty medicine.

Mardi Dier: Growth to net was favorable to our expectations for the quarter, as our copay assistance was lower than anticipated for this particular quarter. As we said, we expect growth to net to be choppy from quarter to quarter, particularly this early in the launch. R&D expenses for the second quarter of 2024 were $71.1 million, compared to $68.6 million in the second quarter of 2023. We continue to anticipate a relatively steady level of R&D expenses for the rest of the year between $105.4 million and $17.8 million for the second quarter of 2023.

Mardi Dier: Growth to Net was favorable to our expectations for the quarter, as our copay assistance was lower than anticipated for this particular quarter. As we said, we expect Growth to Net to be choppy quarter-to-quarter, particularly this early in the launch.

Mardi Dier: R&D expenses for the second quarter 2024 were $71.1 million compared to $68.6 million in the second quarter of 2023. We continue to anticipate a relatively steady level of R&D expenses for the rest of the year.

Mardi Dier: FG&E

Mardi Dier: $105.4 million to $17.8 million for the second quarter of 2023. This year-over-year increase is as expected, as we discussed last quarter, due to the scale-up of our commercial operations following the March approval of RISDFRA.

Mardi Dier: This year-over-year increase is as expected, as we suspended last quarter due to the scale-up of our commercial operations following the March approval of RISDFRA. With the announcement of our intent to launch Rosdifra in Europe, we expect a modest increase related to our infrastructure build in 2024 and more so in 2025. Moving to our balance sheet, the balance of our cash, cash equivalents, restricted cash, and marketable securities as of June 30, 2024, stood at $1.1 billion, which is slightly higher than what we reported last quarter due to the closing of the green shoe from our March public offering and proceeds from option exercises. With our strong cash position, we are well positioned to support a successful multi-year launch of RISDiFRA. I'll now turn the call back over to Tina. Thanks, Mardi.

Mardi Dier: With the announcement of our intent to launch Resdifra in Europe , we expect a modest increase related to our infrastructure build in 2024 and more so in 2025. Moving to our balance sheet.

Mardi Dier: The balance of our cash, cash equivalents, restricted cash, and marketable securities as of June 30, 2024 stood at $1.1 billion, which is slightly higher than what we reported last quarter due to the closing of the green shoe from our March public offering and proceeds from option exercises.

Mardi Dier: I'll now turn the call back over to Tina.

Tina Ventura: Thanks, Mardi. We will now open the call for questions. We would like to limit questions to one as we're trying to get through as many questions as possible today. Luella, if you could open the call, we will now open the lines for questions and answers. To open your line, please press star one, and you will be added to the queue on the call. Our first question comes from Thomas.

Tina Ventura: Thanks, Mardi. We will now open the call for questions.

Tina Ventura: We would like to limit questions to one as we're trying to get through as many questions as possible today. Luella, if you could open the call.

Operator: We will now open the lines for questions and answers. To open your line, please press star one, and you will be added to the queue on the call. Our first question comes from Thomas Smith with Lyrinc Partners. Please go ahead.

Mardi Dier: Great, Tom. Thanks. Mardi?

Mardi Dier: Yeah. Great, Tom. Great question.

Luella: Hey guys, good morning. Thanks for taking the questions and congrats on the nice launch quarter.

Speaker Change: I was just wondering if you could, I appreciate all the color in the prepared remarks, I was just wondering if you could just elaborate and maybe quantify a little bit more within that $14.6 million of net revenues, how much of that was due to underlying patient demand and prescriptions being filled versus how much of that was...

Speaker Change: related to initial inventory and stocking. Thanks.

Mardi Dier: How we're going to characterize that...characterize the demand versus inventory in the $14.6 million in net sales is that it's mostly demand for this quarter. So we're really pleased how our team performed cross-functionally and, you know, had a nice result for the quarter. However, we just want to reiterate that the typical days on hand for inventory moving forward are two to four weeks, as we've seen with most specialty medicines. And we also want to reiterate that we're at the beginning stages of our launch, right?

Mardi Dier: Great, Tom. Thanks. Mardi?

Speaker Change: characterize the demand versus inventory in the 14.6 million in net sales is that it's mostly demand for this quarter. So we're really pleased how our team performed cross-functionally and you know had a nice result for the quarter. However, we just want to reiterate

Speaker Change: that the typical days on hand for inventory moving forward is two to four weeks as we've seen with most specialty medicines.

Mardi Dier: We're about a third of the way through what we think we need to wire the system. So we just want everyone to be careful not to get ahead of ourselves as we look forward to the next quarter. And I'll just make one other point that Bill made very clearly that looking forward, you know, we made nice progress into our launch quarter and that we'll steadily add both patients and prescribers as we move forward. Great.

Speaker Change: We also want to reiterate that we're at the beginning stages of our launch, right? We're about a third of the way through what we think we need to wire the system. So we just want everyone to be careful not to get ahead of ourselves as we look forward in the next quarter. And I'll just make one other point that Bill made.

Bill Sibold: very clearly that looking forward we had nice progress into our launch quarter and that we'll steadily add both patients and prescribers as we move forward.

Mardi Dier: Great. Thanks, Tom.

Bill Sibold: Thanks, Tom. Luella, next question, please.

Operator: Luella, next question, please. Our next question comes from Andrea Tan with Goldman Sachs. Please go ahead.

Luella: Our next question comes from Andrea Tan with Goldman Sachs. Please go ahead.

Andrea Tan: Good morning. Thanks for taking our questions. Maybe just given the focus on the launch cadence here, I was just wondering if you're able to provide an update on patient numbers exiting July . I know you have over 2,000 as of the end of the quarter. And then what proportion are on paid drug? Thank you.

Mardi Dier: Thanks for the question, Andrea. Look, we're not going to talk about month-to-month progression. I think the way we've characterized it is that we're steadily adding patients and prescribers, and that was certainly what we continued to see through July. As it relates to free drugs, you know, there was very little this quarter. As we look towards the future, though, we expect that there'll be some more free drugs because we have more patients utilizing the various services that we provide.

Speaker Change: Thanks for the question, Andrea. Look, we're not going to talk about month-to-month progression. I think the way we've characterized it is that we're steadily adding patients and prescribers, and that was certainly what we continued to see through July .

Speaker Change: As it relates to free drug, you know there was very little this quarter. As we look towards the future though we expect that there'll be some more free drug as we have more patients utilizing the various services that we provide.

Operator: Great. Thanks, Andrea. Luella, next question, please.

Speaker Change: Great, thanks Andrea. Luella, next question please.

Operator: Our next question comes from Akash Tewari with Jeffries. Please go ahead. Hey, this is Amy. I'm for Akash.

Speaker Change: Our next question comes from Akash Tewari with Jeffreys. Please go ahead.

Mardi Dier: Thanks so much for taking our question. So there is an inflection implied by consensus on risk differentiated revenues next year. Do you feel like there will be a significant acceleration on the launch trajectory next year once access is properly in line, or is your base case that launch will be more gradual? And then, if I could just sneak in one more. Of the less than 5% plans that require a biopsy, can you give us a sense of the plans, what they are, and the covered lives? Are these mostly Medicare?

Mardi Dier: Thanks so much.

Speaker Change: Hey, this is Amy on Surakash. Thanks so much for taking our question. So there is an inflection implied by consensus on RISDFRA revenues next year. Do you feel like there will be a significant acceleration on launch trajectory next year, once Axis is properly in line, or is your base case that launch will be...

Speaker Change: more gradual. And then if I could just sneak in one more. Of the less than 5% plans that require a biopsy, can you give us a sense of the plans, what they are, and the covered lives? Are these mostly Medicare? Thanks so much.

Mardi Dier: Sorry, with the last one, what we are talking about was commercially covered lives, not Medicare, but I guess Medicare will have come online in January. So just to be clear, the greater than 50% is commercially covered lives. So those were the stats around it.

Speaker Change: So just to be clear, the greater than 50% is commercial covered lives. So those were the stats around it.

Mardi Dier: Regarding uptake, you know, look, I think what we've been really clear about from the beginning is that we have to wire the system, and that it takes time when you're launching a first-in-disease product in a community that's never had anything close, including anything that they went to really in an off-label capacity. And we've said that that is about a 12-month process. We're about a third of the way through that for now.

Speaker Change: Regarding the uptake, look, I think what we've been really clear about from the beginning is that we have to wire the system and that it takes time when you're launching a first-in-disease

Speaker Change: product in a community that's never had anything close, including anything that they went to really in an off-label capacity.

Speaker Change: And we've said that that is about a 12-month process. We're about a third away.

Mardi Dier: Now, as we have, we move through Q4 of this year, remember, then you get into Q1 of next year, and there's always the reset in Q1. So that's what we've talked about, the 12 months through Q1 of 25. And by the end of that time, we'll have our reimbursement system we feel in place. We will have physician practices that have been trained and just much more comfortable with writing a prescription and pulling it through. So that's when we expect to see that more patients will be able to move through practices, both from an identification and just ease of ushering them through the whole process.

Speaker Change: Now, as we have, we move through Q4 of this year, remember, then you get into Q1 of next year, and there's always the reset in Q1. So we're, that's what we've talked about, the 12 months through Q1 of 25. And in, by the end of that time, we'll have our reimbursement, we feel, in place.

Operator: And wonderful. Thanks, Amy. Our next question comes from the line of Andy Chen with Wolf Research. Please go ahead. Thank you for taking the question and congratulations on the quarter. So if you can remind me, based on your market research among the

Amy: And wonderful. Thanks, Amy. Next question, please.

Mardi Dier: Are you patient-experienced, Andy, or did you say physicians have experience with GLP-1? Oh, patient experience, like in the past they have used it, yeah.

Operator: Our next question comes from the line of Andy Chen with Wolf Research. Please go ahead.

Speaker Change: Our next question comes from the line of Andy Chen with Wolf Research. Please go ahead.

Andy Chen: Thank you for taking the question and congratulations on the quarter. So if you can remind me, based on your market research among the 315,000 patients, what percent of them are GLP-1 experienced? I'm thinking about a very hypothetical scenario where payers require a GLP-1 step. I know that's not the case right now, but please entertain me for a moment. What fraction of these patients would basically bypass that requirement right off the bat? Thank you.

Speaker Change: Patient experience, Andy, or did you say physicians have experience with GLP-1s? Oh, a patient experience, like in the past they have used it, yeah.

Mardi Dier: Yeah, look, we're hearing from practices that there are more patients that have been exposed at some point to GLP-1. As you know, even in our clinical trial, we had 14% of patients that were on GLP-1s. Now, that was on the diabetes dose, I'll remind you. However, we're certainly hearing that more patients are being exposed to GLP-1s. The question always is, when were they exposed? Was it one month ago, six months ago, or 12 months ago, or are they still on?

Speaker Change: Yeah, look, we're hearing from practices that there's more patients that have been exposed at some point to GLP-1. As you know, even in our clinical trial, we had 14 percent of patients that were on GLP-1. Now, that was on the diabetes dose, I'll remind you. However, we're certainly hearing that more patients are being exposed to GLP-1. Question always is, is when were they exposed? Was it one month ago, six months ago, or 12 months ago, or are they still on? And as you know, with the discontinuation rates, it could be yes to any of those answers.

Mardi Dier: And as you know, with the discontinuation rates, it could be yes to any of those answers. So what we're seeing from our own data is that there are some patients that are concomitantly on a GLP-1, but it's still pretty early, and it's tough to get some of that information right now. Regarding payers, we haven't seen anyone requiring a step up from a GLP-1.

Speaker Change: So, what we're seeing from our own data is that there are some patients that are concomitantly on a GLP-1, but it's still pretty early and it's tough to get some of that information right now. Regarding payers, we haven't seen anyone requiring a step through a GLP-1.

Operator: Thank you. Llewellyn, next question, please. Our next question comes from Eliana Merle with UBS. Please go ahead. Hey guys, thank you for taking the question and congratulations on the progress.

Operator: Our next question comes from Eliana Merle with UBS. Please go ahead.

Speaker Change: Good, thanks Bill. Thank you. Luella, next question please.

Speaker Change: Our next question comes from Eliana Merle with UBS. Please go ahead.

Eliana Merle: Hey guys, thanks for taking the question and congrats on the progress.

Eliana Merle: You mentioned that you were seeing faster uptake with hepatologists versus gastroenterologists. Can you just give us a little bit more color on the latest trends that you're seeing with the gastros now versus at the start of the launch and if you're seeing an uptake in prescribing from the gastroenterologist segment? Thanks.

Mardi Dier: Thanks. Yeah, Ellie.

Mardi Dier: Thanks for the question. So, I mean, look, it makes sense that hepatologists are going to get off to a little bit faster start, right? They have been treating the disease. That's something that they know very well.

Speaker Change: Yeah, Ellie, thanks for the question. So, I mean, look, it makes sense that hepatologists are going to get off to a little bit faster start, right? They have been treating the disease. That's something that they know very well. They're familiar, very familiar with the liver.

Mardi Dier: They're very familiar with the liver, and so we did see the hepatologists get started a little quicker. Now gastroenterologists. There are a lot more of them than hepatologists, and they're working through their practice dynamics as well. As you know, there's a pretty high focus on scoping in gastroenterology. So it's how do they make room in their practice for it or how will they process a patient using, oftentimes, a lot of APPs? And there are different stages of how they actually process a patient through.

Speaker Change: than hepatologists.

Speaker Change: And, you know, they're working through.

Speaker Change: their practice dynamics as well. As you know, there's a, you know, pretty high focus on scoping in gastroenterology. So it's how do they make room in their practice, or how will they process a patient using oftentimes a lot of APPs.

Speaker Change: And, you know, they're at different stages of how do they actually process a patient through. Great interest in doing so, but there's just a practical matter that you're running a practice.

Mardi Dier: Great interest in doing so, but there's just a practical matter that you're running a practice, and you now have to start to make room for that. And that's what we're spending time doing, working with them. Now, there are a lot of gastroenterologists that are writing. We talked about 20% of our target list. And the majority of that target list is gastroenterologists because there are just not that many hepatologists in the country. So we expect that gastroenterologists are going to be a key prescribers in this because there are so many, and that's where the bulk of the patients sit. And just as we expected, hepatology was a little bit ahead, but gastroenterology was making progress. And as we said from the beginning, we're steadily adding new prescribers and steadily adding patients. Great

Speaker Change: and you now have to start to make room for that.

Speaker Change: And, you know, that's what we're spending time doing, is working with them. Now, there's, you know, a lot of gastroenterologists that are writing, you know. We talked about 20 percent of our target list, and the majority of that target list is gastroenterologists because there's just not that many hepatologists in the country.

Speaker Change: So, we expect that gastroenterologists are going to be

Speaker Change: key prescriber in this because there's so many and that's where the bulk of the patients sit. And just as we expected, hepatology a little bit ahead, but gastroenterology making progress. And as we said from the beginning, we're steadily adding new prescribers and steadily adding patients.

Operator: Great. Thanks, Ellie, for the question. Luella, next question, please.

Speaker Change: Great. Thanks, Ellie, for the question. Luella, next question, please.

Operator: Our next question comes from Yasmeen Rahimi of Piper Sandler. Please go ahead.

Speaker Change: Our next question comes from Yasmeen Rahimi from Piper Sandler. Please go ahead.

Mardi Dier: Yes, team, congratulations, really on a solid quarter and all the great work. I guess you've commented now that you're thinking about expansion into Europe as well as, you know, thoracic patients. Could you maybe think about, you know, your plans in Europe to really do this on your own and build a commercial sales force, or are you still, between now and the end of the year, potentially entertaining, you know, a partnership that could allow them to commercialize, and you could focus on the U.S.?

Yasmeen Rahimi: Yes, team, congrats, really on a solid quarter and all the great work.

Yasmeen Rahimi: I guess you commented now that you're thinking about for 2025 into expansion into Europe as well as

Yasmeen Rahimi: and to thoracic patients. Could you maybe think about...

Speaker Change: If you have plans in Europe to really do this on your own and build a commercial sales force, or are you still, between now and the end of the year, potentially entertaining a partnership?

Mardi Dier: So, I would love sort of for you to maybe think about how we should be thinking about that just because it has its own, you know, its own caveats involved in Europe. So, I would love, you know, like, are you fully committed? Do you want to partner? What are your thoughts there?

Speaker Change: that could allow them to commercialize and you could focus on the US. So I would love sort of for you to maybe think about how we should be thinking about that just because it's its own, you know,

Speaker Change: its own caveats involved in Europe . So would love, you know, like are you fully committed? Do you want to partner? What are your thoughts are there?

Mardi Dier: Yes, thanks very much for the question. Let me provide some clarification.

Mardi Dier: We're fully committed to commercializing on our own in Europe. First of all, I've commercialized multiple products in Europe. In fact, every product that we commercialize has been globally.

Speaker Change: Yes, thanks very much for the question. Let me provide the clarification. We're fully committed to commercializing on our own in Europe . First of all, I've commercialized multiple products in Europe , in fact.

Mardi Dier: We have a team that has done that as well, so we feel like we're in an extremely good position to do so. Now, what are the ingredients to doing that?

Speaker Change: Every product that commercialized has been globally.

Speaker Change: We have a team that has done that as well, so we feel like we're in extremely well-positioned to do so. Now, what's the ingredients to doing that? What we did here with the whole leadership team is we built the right team and put them in place so that they could execute to do what they know what to do. That's the same thing that we're going to be doing in Europe . We will be very focused, targeted in the way that we launch. A likely starting point is Germany, and one of the things that we've learned

Mardi Dier: What we did here, with the whole leadership team, is we built the right team and put them in place so that they could execute on doing what they know what to do. That's the same thing that we're going to be doing in Europe. You know, we will be very focused and targeted in the way that we launch. The likely starting point is Germany.

Mardi Dier: And, you know, one of the things that we've learned, or several of the things that we've learned, if I look at Europe, and a lot of this is coming off of our experience being there at EASL as well, there's real excitement in Europe for the drug. And I would say if I look back at a year ago, though I wasn't here exactly a year ago, but a year before approval in Europe versus the U.S., you know, in the U.S., because there had been so many failures before, there was this question, will ResDiffer get approved? And a lot of physicians didn't take action until after post-approval. And when they said that they weren't going to take action, they really meant it. You know, they were waiting till the product was approved.

Speaker Change: There are several of the things that we've learned if I look at Europe , and a lot of

Speaker Change: coming off of our experience being there at EASL as well. You know, there's real excitement in Europe for the drug. And I would say if I look back a year ago, though I wasn't here exactly a year ago, but a year before approval in Europe versus the U.S.,

Speaker Change: You know, in the U.S., because there had been so many failures before, there was this...

Speaker Change: question, will ResDiffer get approved? And a lot of the physicians didn't take action until post-approval. And when they said that they weren't going to take action, they really meant it.

Mardi Dier: In Europe, there is, I would say, greater certainty for them because they believe that U.S. approval is a good prognosticator for approval in Europe. And at EASL, we certainly heard that people were taking steps. We saw that leadership in Europe got very well organized and had the EASL guidelines out well in advance of approval, and despite not even being approved, put ResDiffer in the lead position there. So, you know, we think that Europe, as well as the 125 trial sites that we've had there, is quite experienced with, knows ResDiffer, and is excited about it.

Speaker Change: You know, they were waiting until the product was approved.

Speaker Change: Europe , there is, I would say, greater certainty for them because they believe that the U.S. approval is a good prognosticator for approval in Europe .

Speaker Change: And at Easel, we certainly heard that people were taking steps.

Speaker Change: We saw that leadership in Europe got very well organized and had the EASL guidelines out well in advance of approval, and despite not even being approved, put ResDiFRA in the lead position there. So, you know, we think that Europe , as well as the 125 trial sites that we've had there, is quite experienced with, knows ResDiFRA, is excited about it, but, you know, we are going to be very disciplined in the way that we approach Europe , and we'll be able to give you a little bit more updates on it as we progress throughout the year to tell you exactly how we're going about that launch.

Mardi Dier: But, you know, we are going to be very disciplined in the way that we approach Europe, and we'll be able to give you a little bit more updates on it as we progress throughout the year to tell you exactly how we're going about that launch.

Mardi Dier: Good. Thanks, Yasmeen.

Speaker Change: Good. Thanks, Yasmeen. Good question. Next question, please, Isabella.

Operator: Good question. Next question, please, Isabella. Our next question comes from Liisa Bayko with Evercore IFI. Please go ahead.

Operator: Our next question comes from Liisa Bayko with Evercore ISI. Please go ahead.

Isabella: Our next question comes from Liisa Bayko with Evercore ISI. Please go ahead.

Lisa Bacow: Hi, thanks for taking the question. I wonder if you could give us a view on patient start forms at the end of the quarter and then also just a little more color on growth to net. I know you said it would be a little choppy, maybe a sense of what it was and where you ultimately want to get to. Thanks.

Mardi Dier: Liisa, thank you very much for the question. Let me start with the patient's initial forms. We're not giving any update on patient start forms. We are just providing the patients that were on the drug at the end of the quarter. That to say, though, that we're clearly seeing steady additions to patients and, as I said, prescribers throughout the quarter and since the quarter. Maybe from a gross to net perspective, Mardi, I'll have you.

Lisa Bacow: Liisa, thank you very much for the question. Let me start just with the patient start forms. We're not giving any...

Mardi Dier: Yes, absolutely. Thanks, Liisa, for the question. So, our second quarter or first quarter of LaunchQuestionNet was favorable versus our expectations, but it's all within the realm of what would be typical for a specialty product. We want to be clear about that.

Mardi Dier: Sort of the biggest swing factor for us right now is the copay assistance program that we set up to make sure that we can get and help our patients get on the drug as efficiently as possible. We saw less use of our copay assistance program this quarter, but going forward, we expect that to grow a little bit. So, that was sort of the essence of Growth2Net: it could be choppy. And then, of course, as you get into the first quarter, you have other issues with Growth2Net and IRA, et cetera. But that was the main driver for this quarter.

Speaker Change: We saw less use of our co-pay assistant program this quarter, but going forward we expect that to grow a little bit. So that was sort of the essence of gross to net could be choppy. And then, of course, as you get into first quarter, you have other issues with gross to net and IRA, et cetera. But that was the main driver for this quarter.

Operator: Good, thanks. Luella, next question, please.

Operator: Our next question comes from Ritu Baral, with T.G. Cohen. Please go ahead.

Mardi Dier: Good morning, guys. Thanks for taking the time to answer the question. I wanted to ask a little bit more about the prior ops that you're seeing for the plans that have established coverage. Our own survey work and KOL work indicates there's a lot of MRE imaging and maybe MRI-PDFS diagnostic imaging required. Can you talk about access and what you guys are doing to assist access to those imaging technologies for diagnosis? And is that consistent with the prior authorization requirements and diagnostic requirements that you guys are seeing in your finalized plans? Thanks.

Speaker Change: Good morning guys, thanks for taking the question. I wanted to ask a little bit more about the prior ops that you're seeing for the plans that have established coverage. Our own survey work and KOL work indicates there's a lot of MRE imaging and maybe MRI PDFS.

Mardi Dier: Well, thank you very much for the question, Ritu. In fact, we're not seeing access to any of the NITs as being problematic. In fact, we're actually really happy with what we're seeing as requirements. Most of them include imaging, yes, but blood tests as well for the imaging fiber scan, MRE, MRI, PDFF, and then we also have ELF and FIB4 from a blood test perspective.

Ritu: Well, thank you very much for the question, Ritu. You know, we are not seeing access to any of the NITs as being problematic.

Speaker Change: In fact, you know, we're really happy with what we're seeing as requirements. Most of them include imaging, yes, but blood tests as well for the imaging fiber scan, MRE, MRI, PDFF.

Mardi Dier: So, you know, it does vary, but there hasn't been anything that's been concerning, I would say. And as we map out the access that physicians have to these various technologies, they have very good access. Now, is it perfect? Do everyone have access to everything?

Allison Fittford: And then we also have Allison Fittford from a blood test perspective. So, you know, it does vary, but...

Allison Fittford: There hasn't been anything that's been concerning, I would say. And as we map out the access that physicians have to these various technologies, they have very good access. Now, is it perfect? Does everyone have access to everything? No. But, you know, we're at the very beginning here. And as I said, as it relates to NITs, I think it's going to be a three-year process.

Mardi Dier: No, but, you know, we're at the very beginning here. And as I said, as it relates to NITs, I think it's going to be a three-year process for NITs to sort themselves out. There isn't complete alignment in the physician community about which combos to use. There are new technologies that people are thinking about as well. So I think it's going to take a few years before there is just real – well, there may never be alignment, but I think that there will be better information to say what are the combinations and sequencing that are going to be best for various physicians. So we think we're in a really good place.

Allison Fittford: There isn't complete alignment in the physician community about which combos to use There's new technologies that people are thinking about as well. So I think it's going to take a few years before there is Just real well, there may never be alignment but I think that there's going to be better information to say what is the are the combinations and sequencing that are going to be Best for for various physicians. So we think we're in a really good place as you recall, you know The big concern out there was our biopsy is going to be required and that just has not been the case

Mardi Dier: As you recall, the big concern out there was, are biopsies going to be required? And that just has not been the case. You know, we talked about less than 5%.

Mardi Dier: And, you know, now – Going back to this wiring the system. The challenge for practices is where, historically, they just had to stage somebody and watch them wait. Now they have to actually stage somebody as they're deciding to treat with res diffra, and it's one thing to do it for the sake of staged. It's another thing when you start thinking about the implementation of a pathway that leads to the prescription of res diffra.

Allison Fittford: the implementation of

Mardi Dier: And that is kind of the muscle memory we talk about where practices are getting used to that. The more they do it, the easier it is so that it becomes more of a behavior change rather than a curiosity or going and trying to find a high-priority patient. And that's what takes the time here to get us to that steady state.

Allison Fittford: a pathway which leads to the prescription of RISDiFR. And that is kind of the muscle memory we talk about, where practices are getting used to that, the more they do it, the easier it is, so that it becomes.

Operator: Good. Thanks, Ritu.

Operator: Luella, next question, please. Your next question comes from David Lebowitz with Citi. Please go ahead. Thank you very much for taking my question.

Operator: Your next question comes from David Lebowitz with Citi. Please go ahead.

Speaker Change: Thank you very much for taking my question. You'd indicated the time to fill was coming in faster than the original expectations of starting at 60 days and eventually dropping to 30 days. Are we to assume that it's in between 30 to 60 days this point and it actually already reached 30 days?

Mardi Dier: David, thank you for the question. And maybe just a little bit of context first: you know, as we were starting to launch, one of the real directions of the field was to help practices with patient selection. And that was a very conscious effort.

Speaker Change: or potentially is exceeding 30 days.

Mardi Dier: The reason is, you know, we've been clear from the beginning saying that we want only F2, F3 patients. And that's been a partnership with the payers, too, letting them know that we're not trying to expand on either side until we have data. And I think this is a testament to the team doing a really great job in choosing the right patients so that their experience of gaining access, even if it was a temporary policy in place, actually moved quicker.

Speaker Change: And that's been a partnership with the payers, too, letting them know that we're not trying to expand on either side until we have data. And I think this is a testament to the teams doing a really great job in that the practices chose the right patients.

Mardi Dier: I think it's also an acknowledgment that payers see the unmet need and they don't wanna deny a patient that really needs the drug either to get it. They know what happens when a patient crosses the line to cirrhosis; it's just not good. So that's why I think that explains why there has been that acceleration, if you will. It was kind of deliberate to make sure we have the right patients and also the practices wanting to make sure that they only had so many resources and time; they didn't wanna get stuck having to fight back and forth, so they chose the right patients as well.

Speaker Change: it actually moved quicker. I think it's also an acknowledgment that the payers see the unmet need and they don't want to deny a patient that really needs the drug either to get this. They know what happens when a patient crosses the line to cirrhosis. It's just not good. So that's how I think...

Speaker Change: And I think that explains why there has been that acceleration, if you will. It was kind of deliberate to make sure we had the right patient and also the practices wanting to make sure that they only had so many resources and time. They didn't want to get stuck having to fight back and forth, so they chose the right patients as well. Now, as we scale this back up and you start putting more volume through, probably the quality of the prescription comes in, that can begin to drift a little bit, so you may not be able to move quite as fast.

Mardi Dier: Now, as we scale this back up and you start putting more volume through, probably the quality of the prescription will come in, that can begin to drift a little bit, so you may not be able to move quite as fast.

Mardi Dier: All we've said in the time is that we're directionally closer to 30 than to 60. Good. 60 days, that is. Thank you for taking my question.

Operator: Thanks, David. Luella, next question, please.

Operator: Our next question comes from Ed Arce with HC Wainwright. Please go ahead.

Mardi Dier: Hi, good morning and thanks for taking my questions and congratulations on this quarter. Just wanted to ask about the COGS of 0.6 million. Initially, I would think for the first few quarters you're just working off of prior inventory. When would you expect COGS to normalize and if you can discuss the rate there? And also on the payers that require a biopsy commercially; could you identify which one of those is and what pressure you think might exist over time for that to change? Thank you.

Speaker Change: Hi, good morning and thanks for taking my questions and congrats on this quarter.

Speaker Change: prior inventory, when would you expect COGS to normalize?

Speaker Change: And if you can discuss the rate there, and also on the payers that require a biopsy commercially, could you identify which one of those are and what pressure you think might exist over time for that to change?

Mardi Dier: Ed, thank you very much. Gee, you know, I don't have the list in front of me of the payers, and we're not gonna get specific about the plans, especially when we're still in a pretty dynamic phase right now. We still have some more work to do. Look, I think that any of the payers that have required a biopsy are beginning to hear that from prescribers and, in a lot of cases, from patients and advocacy.

Speaker Change: Ed, thank you very much.

Speaker Change: Gee, you know, I don't have the list in front of me of the payers, and we're not going to get specific to the plans, especially when we're still in a pretty dynamic phase right now. We still have some more work to do. Look, I think that any of the payers that have required a biopsy are beginning to hear that from prescribers and, in a lot of cases, from patients and advocacy. You know, in a day and age where there are good NITs,

Mardi Dier: You know, in a day and age when there are good NITs that allow for the appropriate diagnosis and staging, it's just not necessary to subject somebody to a biopsy, which has its own set of complications. So we would expect, over time, that those discussions will take place, and we're hopeful that those plans will come around. But remember, we always said that there would be outliers. And just as we said, there are some outliers out there that are requiring biopsies.

Speaker Change: that allow for the appropriate diagnosis and staging. It's just not necessary to subject somebody to a biopsy which has its own set of complications. So we would expect over time that those discussions will take place and you know we're hopeful that those plans will come around but remember we always said that there would be outliers.

Speaker Change: And just as we said, there are some outliers out there that are requiring biopsy. So, you know, we'll keep working at it. We don't want any patient to be subject to it, and that is what will drive our engagement with all the payers to make sure that patients are well treated and have an option to have non-invasive tests.

Mardi Dier: So, you know, we'll keep working at it. We don't want any patient to be subjected to it, and that is what will drive our engagement with all the payers to make sure that patients are well treated and have an option to have non-invasive tests. On the COGS question, I'll turn that over to Marty. Yeah, thanks for the question.

Mardi Dier: Yeah. Thanks for the question, Ed. You are right.

Mardi Dier: On the COGS question, I'll turn that over to Mardi. Yeah, thanks for the question, Ed. You are right, COGS is quite low because we are burning off what we have set up in inventory.

Mardi Dier: COGS is quite low because we are burning off what we have set up in inventory currently. And we don't think COGS will normalize for another – for about a year and a half to two years from this point, really depending on the demand on the top line, of course. One thing I would note is that we have a small single-digit royalty to Roche, which also flows through COGS. So that is one component. But I will remind you, we are a small-molecule medicine, so COGS for resdipra is going to be quite low.

Mardi Dier: Thanks so much, Ed. Next question, Luella.

Mardi Dier: is going to be quite low. Great. Thanks so much, Ed. Next question, Luella.

Operator: Our next question comes from Jay Olson with Oppenheimer. Please go ahead.

Mardi Dier: Oh hey, congratulations on the launch progress and thank you for taking the question. Of your 2,000 patients, can you comment on the approximate proportions of F2 versus F3, and are you seeing any off-label use in F4s? And then, since Bill has the benefit of leveraging his Dupixent launch experience, can you comment on the strategy and timing of communicating directly with patients, and how important is the direct-to-patient strategy with MASH, where patients may not be symptomatic compared to other more symptomatic diseases? Thank you.

Mardi Dier: Jay, thanks for the question. On the split of F2 and F3, it's pretty even.

Speaker Change: Of your 2,000 patients, can you comment on approximate proportions of F2 vs. F3?

Speaker Change: Can you comment on the strategy and timing of communicating directly with patients, and how important is the direct-to-patient strategy with MASH where patients may not be symptomatic compared to other more symptomatic diseases? Thank you.

Mardi Dier: You know, I think if you were to ask physicians which they'd prefer to start with, they'd prioritize a patient and say, we'd probably want to put an F3 on first. But the reality is, you can't control who's coming into your office that day. So they make a decision based upon how that patient feels, what the NIT shows, et cetera. So we see a balance actually between the two. Regarding off-label use, I don't have any real insight into that.

Mardi Dier: You know, we've been very clear with physicians about who is appropriate and who is not appropriate for res diffra and make sure that they understand that we just don't have the data to support it. And obviously, it's not in our label, so we would never ask for it or talk about a patient with cirrhosis. So we have no way of really knowing.

Speaker Change: and make sure that they understand that we just don't have the data to support and obviously it's not in our label so we would never ask for it or talk about a patient with cirrhosis.

Mardi Dier: Certainly, I haven't heard it said broadly. I think people are really focused on the right patients, and I think that's why, again, we saw a little bit better time to fill and so forth. Regarding direct patient or patient education, so we've been educating patients already, but our efforts through more of a direct reach out DTC perspective, et cetera, you know, those are just about to get started. And I think that it is really important.

Speaker Change: Is there some, we have no way of really knowing. Certainly I haven't heard it as being a, broadly. I think people are really focused on the right patients and I think that's why, again, we saw a little bit better time to fill and so forth.

Speaker Change: Regarding the direct patient or the patient education, so we've been educating patients already, but our efforts through more of a direct reach out, DTC perspective, et cetera, those are just about to get started.

Mardi Dier: It's really important when you have a disease that is not well understood, a disease that is not well recognized by many, but a disease that has very serious consequences. As I said, the number one cause for liver transplants for women in the United States, a staggering statistic. We believe that patients have to be educated, and we believe by activating the patients that are already diagnosed, and let me be crystal clear on that, our efforts are going to be directed towards the 315,000 patients that are already diagnosed.

Speaker Change: It's really important when you have a disease that is

Speaker Change: not well understood, a disease that is not well recognized by many, but a disease that has very serious consequences. As I said, number one cause for liver transplants for women in the United States. Staggering statistic.

Speaker Change: We believe that patients have to be educated, and we believe by activating the patients that are already diagnosed, and let me be crystal clear on that, our efforts are going to be directed towards the 315,000 patients that are already diagnosed. Having them educated and activated will be important.

Mardi Dier: Having them educated and activated will be important for the field to be better able to treat NASH and for patients to be able to get access to res differis. So those efforts are kind of ongoing, but they're really starting in the near future. And we expect those to be helpful and certainly provide a source for patients to learn more about the disease and learn more about the product.

Speaker Change: for I'd say the field to better be able to treat NASH and for patients to be able to get access to res differis. So those efforts are kind of ongoing but they're really starting in the near future and we expect those to be helpful and certainly provide a source for patients to learn more about the disease and learn more about the product.

Operator: Thanks, Jay. Luella, next question, please. Our next question comes from Prakhar Agrawal on Cancer. Please go ahead.

Speaker Change: to track response for res deferral at 12 months and beyond for reauthorization.

Speaker Change: Specifically, will stable patients under the deferral be reauthorized or only patients who show some improvement or non-invasive?

Mardi Dier: Thank you. Yeah, Prakara, thank you very much for the question.

Mardi Dier: You know, yeah, we are hearing that there is kind of a reauthorization period of around 12 months. And that's typical, right? For specialty products, you have a reauthorization at that point. It varies, but as you said, it's either, you know, stabilization or improvement. You know, we're still... nine months away from the first patient, actually going through that or so, ten months, eight months, whatever it is in that range. And, you know, that's why the policies are where they are today as well. We think that they're reasonable. But if there's any that aren't, you know, we have between now and that period of time to continue to talk to the payers about them.

Speaker Change: Thank you

Speaker Change: there are kind of a reauthorization period at around 12 months. And that's typical, right? For specialty products, you have a reauthorization at that point. It varies, but as you said, it's either stabilization or improvement. You know, we're still...

Mardi Dier: You know, what we're seeing, for instance, with the expert recommendations that recently came out in clinical gastroenterology and hepatology, they talked about kind of three stages. They talked about identifying a patient, taking a look after several months to measure what's happening with the patient, and then at 12 months looking at efficacy. And we think that's right. We think that a 12 month look at efficacy is the right time.

Mardi Dier: Because you have to remember with fibrosis, and the FDA said this in their press release as well, that, you know, to have seen the effect that we did at 52 weeks was really early, they thought, because fibrosis is such a significant hurdle to overcome. So, you know, we think that we're very comfortable right now with what the policies say, and we're comfortable with the expert recommendations that have been put forward as well. Right? Thanks.

Speaker Change: You know, a significant hurdle to overcome. So, you know, we think that we're very comfortable right now with what the policies say and we're comfortable with the expert recommendations that have been put forth as well.

Operator: Great. Thanks for the question. It's 845. We're at the mark, so we have time for one more question, Luella. Our next question comes from John Wolleben with Citizens JMP. Please go ahead.

Speaker Change: Great, thanks for the question. It's 845, we're at the mark, so we have time for one more question, Luella.

Operator: Our next question comes from John Wolleben with Citizens JMP. Please go ahead.

Mardi Dier: John, it's a great question. Thanks for calling me out on that.

Speaker Change: John , it's a great question. Thanks for...

Mardi Dier: And I'm not going to tell you what we think peak is right now, other than, you know, look. I think you look at the market dynamics. We said, just in the US alone, there are about 315,000 patients. Any way you start to look at where this ends up penetrating, and it's a specialty category, this becomes a specialty-like category. I mean, NASH overall, we're talking about billions. And as the product that has, I think, a durable profile, when we look at any information that's presented at easel, you know, we don't think anyone is even as good as us. And none of them are pills. And, you know, I'll tell you, when you ask patients, especially these patients, they have a lot of other stuff that they have to take.

John: Thanks for calling me out on that and I'm not going to tell you what we think peak is right now other than you know Look, I think you look at the market dynamics. We said just us alone. There's about 315,000 patients

John: and none of them are pills. And, you know, I'll tell you, you ask patients, especially these patients, they have a lot of other stuff that they have to take.

Operator: Ladies and gentlemen, thank you for your participation in today's conference. You may now disconnect. Have a wonderful day.

Speaker Change: Good day and thank you for standing by. Welcome to the Madrigal Pharmaceuticals 2nd Quarter 2024 Earnings Conference Call.

Speaker Change: Please note on slide 2 we will be making certain forward-looking statements today. We refer you to our SEC filings for a discussion of risks that may cause actual results to differ from the forward-looking statements.

Speaker Change: And with that, I will now turn the call over to Bill on Slide 3.

Bill Sibold: Our key metrics are also showing strength and are consistent with market research reflecting high physician awareness and intent to prescribe.

Bill Sibold: Second are progress wiring the system.

Tina Ventura: This is our number one priority. As with other first-in-disease launches, we are driving a change in clinical practice and physician behavior and developing processes for efficient patient and prescription flow. Our goal is to establish a strong foundation to support peak sales. Let's start with the launch on slide four. We generated $14.6 million in net sales in the second quarter and exited the quarter with more than 2,000 patients on Resdifra.

Speaker Change: And third, our strategy to maximize the long-term value of Resdifra. In addition to the untapped opportunity in the U.S., we announced today that we plan to directly launch Resdifra in Europe following an EMA decision expected next year.

Speaker Change: We generated $14.6 million in net sales in the second quarter and exited the quarter with more than 2,000 patients on Resdifra.

Speaker Change: with the physician community, Madrigal patient support, specialty pharmacies, and payers. Our field team is focused on patient selection with prescribers. Our patient support team and the specialty pharmacies in our limited distribution network are driving efficient prescription processing.

Speaker Change: And payers are executing on medical exceptions more efficiently because they recognize the

Speaker Change: As a result, patients are moving more quickly through the reimbursement process.

Speaker Change: We have previously discussed our expectation for Time to Fill to improve from about 60 days at launch to about 30 days or less at six months. Because of our efforts, Time to Fill was running faster in the second quarter compared to those initial expectations.

Speaker Change: We're also very encouraged by the progress we've made with payers. They understand the significant unmet need in NASH, which is the number one driver of liver transplants for women in the United States.

Speaker Change: As of June 30th, more than 50% of commercial lives now have coverage in place for resdifra, with over 95% of resdifra-covered lives accepting NITs and not requiring biopsies.

Speaker Change: We are well on our way to achieving our goal of 80% of commercial lives covered by year-end.

Speaker Change: As far as government payers, as of July 1st, Medicaid coverage was in place across all 50 states.

Speaker Change: Similar to what we've seen with commercial coverage, virtually all accept NITs and do not require biopsies.

Speaker Change: For Medicare, we are on track for full coverage beginning January 1st of next year based on the annual review process for new medications.

Speaker Change: Currently, Medicare patients are accessing ResGPRA via the medical exception process with prior authorization requirements consistent with our label.

Speaker Change: As you'd expect, early in launch, we've seen hepatologists adopting more quickly due to their expertise with the disease and NITs. Gastroenterology practices can take a bit longer, given that NASH isn't their primary disease area, and they need to think through practice dynamics for patients.

Speaker Change: Across the board, each physician is at a different stage of activation, and we continue to steadily add prescribers.

Speaker Change: Our top targets are writing more than 75% of prescriptions, giving us conviction that we're targeting the right physicians with our efforts.

Speaker Change: Significant opportunity remains to expand new prescribers and shift initial prescribers to more frequent prescribers.

Speaker Change: To do this well, we need to continue to successfully wire the system as noted on slide 5.

Tina Ventura: We're in the early stages of what we expect to be about a 12-month process to substantially accomplish that goal. Just like other disease states with first-time treatments, we are working to change physician behavior and help build a pathway to efficiently process risk-different prescriptions at doctors' offices.

Speaker Change: We're in the early stages of what we expect to be about a 12-month process to substantially accomplish that goal. Just like other disease states with first-time treatments, we are working to change physician behavior and help build a pathway to efficiently process risk-different prescriptions at physicians' offices.

Speaker Change: For physicians, it's about educating on the risks of NASH and activating them to write a prescription. The risks are real, and they are urgent. For example, our health economics study of an Optum claims database highlights alarming rates of progression to adverse liver-related outcomes.

Speaker Change: For payers, we continue to have productive dialogue on the costs of NASH, the clinical benefits of resdifra, and non-invasive testing of patients. That's been paying off with favorable resdifra coverage.

Speaker Change: And for patients, we're continuing to educate them on NASH and resdifra while helping them navigate through the complexities of the healthcare system to support their treatment journey.

Speaker Change: So, we're absolutely doing the work, physician by physician, practice by practice.

Q2 2024 Madrigal Pharmaceuticals Inc Earnings Call

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