Q3 2025 Madrigal Pharmaceuticals Inc Earnings Call

Speaker #1: That's MADRIGAL's third quarter, 2025 earnings. We issued a press release this morning and posted a slide deck that accompanies this webcast on the investor relations section of our website.

Speaker #1: On the call with me today is Bill Sibold, Chief Executive Officer. Dave Soergel, Chief Medical Officer. And Mardi Dier, Chief Financial Officer. They will provide prepared remarks and then we'll take your questions.

Speaker #1: Please note on slide two, we will be making certain forward-looking statements today. We refer you to our SEC filings for a discussion of the risks that may cause actual results to differ from the forward-looking statements.

Speaker #1: With that, I will now turn the call over to Bill.

Speaker #2: Thanks, Tina. Good morning and thanks for joining us. We have delivered another excellent quarter as we continue to execute on our strategic priorities. We're maximizing the value of Riz-Difra and building our pipeline, which sets us up for continued value creation.

Speaker #2: Riz-Difra is quickly becoming one of the most successful specialty launches in the industry, with sales now annualizing at greater than $1 billion in only its sixth quarter of launch.

Speaker #2: More than 29,500 patients are being treated with Riz-Difra, and more than 10,000 healthcare providers have prescribed it. We've made great progress on our 2026 payer contracting strategy for first-line access.

Speaker #2: Our new US Riz-Difra patent was listed in the Orange Book. It extends Riz-Difra's value into 2045. And we're expanding globally with our launch in Germany following European approval.

Speaker #2: On the pipeline front, we're advancing our Phase 3 Maestro NASH outcomes trial in F4C, where we could once again be first to market, this time for compensated MASH cirrhosis.

Speaker #2: We look forward to sharing more from our F4C open label cohort at AASLD later this week. We're executing on our Riz-Difra combination strategy, where we completed the transaction of our new oral GLP-1.

Speaker #2: And we continue to evaluate opportunities to add additional assets to our pipeline through business development. So today, we'll focus on our two key priorities: our top line and our pipeline.

Speaker #2: Starting with Riz-Difra's third quarter performance on slide four, we delivered net sales of $287 million, up 35% quarter over quarter. The significant demand we're generating is driven by the positive response to Riz-Difra from prescribers and patients and the strong execution by our team.

Speaker #2: As shown on slide five, we ended the third quarter with more than 29,500 patients on Riz-Difra, up from more than 23,000 patients at the end of the second quarter.

Speaker #2: This number represents patients actively on therapy, accounting for any discontinuations. As we've discussed since the beginning of our launch, we've been steadily adding patients each quarter, and we expect that to continue going forward.

Speaker #2: It's incredibly gratifying to see Riz-Difra already making a meaningful difference for so many patients. But what's most exciting is that we've only just begun.

Speaker #2: More than 90% of our 315,000 target population remains untreated. That leaves tremendous room for growth, driven by Riz-Difra's highly differentiated profile and our clear first mover advantage.

Speaker #2: Moving to slide six in our continued progress on physician penetration. As I've said before, building a strong prescriber base early in a launch is one of the best indicators of long-term success.

Speaker #2: That's why the pace of adoption has been so encouraging. This quarter, we hit another launch milestone: more than 10,000 prescribers. This breadth achieved this quickly is at the high end of the benchmarks we track, and it reflects the work we've done to wire the system.

Speaker #2: Looking ahead, our focus will increasingly shift to depth. This metric is already tracking at the high end of best-in-class launches. We're also continuing to enhance our targeting.

Speaker #2: While our efforts have mostly centered on hepatologists and gastroenterologists, we're seeing growing interest from endocrinologists. These are specialists with a deep expertise in metabolic health who are interested in Riz-Difra's mechanism and its potential in MASH.

Speaker #2: In response, we've expanded our field team to further target this group. These efforts substantially started in the fourth quarter. On slide seven, let's take a look at how we see the MASH market evolving.

Speaker #2: We see clear parallels between MASH and other large chronic disease markets like IBD, rheumatoid arthritis, and psoriasis. Each of these evolved into multi-billion dollar categories through continuous innovation, driven by new mechanisms and tailored treatment regimens that address diverse patient needs.

Speaker #2: We believe MASH will follow that same path. Today, this market is still in its early stages, essentially where those categories were two decades ago, but with one important difference: Riz-Difra's profile.

Speaker #2: As an effective, liver-directed, well-tolerated oral medicine, it far surpasses that of the other first-to-market products in those diseases. We believe this gives us a durable advantage and a unique opportunity to lead and shape the market's evolution.

Speaker #2: First with Riz-Difra, and next with the pipeline we are building. So we welcome new entrants to this evolving market. Wegovy's recent approval in MASH adds momentum to a market that's just starting to take shape.

Speaker #2: As seen on slide eight, our focus remains on the 315,000 diagnosed patients with moderate to advanced fibrosis. NOVO is targeting a much larger population, which will raise awareness and drive more screening, diagnosis, and treatment.

Speaker #2: As a reminder, GLP-1s aren't new. They have been available for over a decade and are already used to treat the metabolic comorbidities that oftentimes accompany MASH.

Speaker #2: As we've reported, about 50% of Riz-Difra patients are currently on or have previously been on a GLP-1. We also understand the limitations of GLP-1 monotherapy in MASH.

Speaker #2: Few patients reach and sustain a therapeutic dose and tolerability remains a real challenge. Real-world data show that 70% of obese patients discontinue within one year.

Speaker #2: New data to be presented at AASLD shows similar discontinuation rates in patients with MASLD. So looking ahead, we expect Riz-Difra to benefit in two ways.

Speaker #2: As first-line therapy in a market that will expand, and from the high real-world discontinuation rates of GLP-1s. We're in a strong position and are confident in Riz-Difra's growth potential going forward.

Speaker #2: As we've already mentioned, it's Riz-Difra's best-in-class profile that gives us such strong confidence as summarized on slide nine. It is a liver-directed medicine that delivers consistent efficacy across F2, F3 fibrosis, BMI, genetic makeup, and patient subtypes, including those with type 2 diabetes, who comprise approximately 60% of the MASH population.

Speaker #2: It's also simple to use. It's a once-daily, well-tolerated pill with no titration requirements. That simplicity matters to providers, to patients, and ultimately to adherence.

Speaker #2: We continue to see strong adherence consistent with other well-tolerated oral therapies. The seriousness of MASH and Riz-Difra's compelling profile continue to resonate with payers.

Speaker #2: Our objective is to provide first-line access to patients preserving treatment choice for patients and providers. And we're pleased to share an update on slide 10.

Speaker #2: We're making great progress with our payer negotiations for 2026, which to date have resulted in contracts for broad first-line access, no step-edit requirements, and improvements in utilization management criteria that are better aligned with clinical practice.

Speaker #2: Overall, the dialogue has been collaborative and productive, and discussions are progressing really well. Payers understand the seriousness of the disease, the unique clinical value of Riz-Difra, and the importance of access and choice for patients and providers.

Speaker #2: We've already achieved favorable outcomes with several national payers, while continuing constructive dialogue with others. We're encouraged by the progress and expect contracts to be finalized by the end of the year, covering the vast majority of commercial lives.

Positive results could make Risa for the first approved therapy for f4c and support full approval in S2 F3.

Our ongoing phase 3 Mister National trial in f2f. Mash is expected to read out in 2028 and would also support full FDA approval.

Beyond risk. We're building a pipeline through our business development, efforts to date, we've added an oral glp-1 it now called mgl 2086, which we intend to develop in combination, with risk meter on to deliver a best in disease. Well, tolerated oral combination.

As we think about how to build our pipeline further, we're looking for mechanisms that fit scientifically strategically and commercially those with complimentary biology and combination potential.

Continued success in treating patients will come from combining mechanisms and tailoring treatment regimens to specific risk. Factors much like what we've seen in other chronic complex diseases.

With risk difference patent protection into 2045. We can be thoughtful and disciplined and build the right kind of pipeline that will Define the future of mash care.

The combination of our oral GLP-1 and TH are beta agonists is a great example of this approach to building the pipeline.

From Maestro, Nash, we know that even a modest amount of weight loss enhances metformin's efficacy.

So, unlike in cretan mono therapies that strive for double-digit weight loss. We've seen that, as little as 5% weight loss can enhance resident efficacy in Mash.

This will allow us to dose escalate the mgl 2086 component of the combination, with the goal of optimizing, both efficacy and tolerability in a 1, daily oral pill.

It is also important to note that with the combination patients would be on an effective dose of ResMed on day 1 as the mgl 2086 dose, is being adjusted. In contrast to injectable and creatine mono therapies. That require a lengthy titration period.

On slide 13. We see how these mechanisms could work well together.

Glp1 works from the outside in improving. Systemic metabolism, insulin, sensitivity, and weight loss.

Reservoir works from the inside out. Reversing hypothyroidism in the liver restoring mitochondrial function and increasing fat processing through beta oxidation,

The combined mechanisms lead to lower levels of inflammation, and inhibition of stellate Cell Activation and downstream fibrosis.

By combining these complimentary mechanisms, we expect to see greater reductions in both liver fat and fibrosis.

We plan to start a Phase 1 trial for mgl 286, and the first half of next year.

Next, let's move to our phase 3 Maestro, Nash outcomes, trial in compensated, Mash, steros or f4c, on slide 14.

People living with f4c. Mash today have no effective treatment options that prevent progression of their disease to decompensated cirrhosis.

Our 2-year open label extension data. Presented an easel earlier this year. Demonstrated sustained efficacy of resera in this population and supports our confidence in the ongoing Maestro, Nash outcomes trial

Need liver stiffness decreased by 6.7 kilopascals at 2 years. A statistically significant reduction from Baseline.

More than half the patients achieved at least a 25% reduction in liver stiffness, a level tied to improved outcomes.

Clinically significant portal hypertension or csdh at Baseline, move to a lower risk category by year 2.

CST is a key driver of the most severe outcomes of Saros and marks the Tipping Point into decompensated disease.

improving in CSP suggests differ could delay or even prevent life-threatening complications,

We'll be presenting new data from this 2-year, open-label, F4C cohort at ASLD later this week, as noted on slide 15.

And what I'm really excited about is that this data shows promising efficacy and even the most advanced f4c patients who are on the cusp of progressing to deliver deck compensation.

This is the first time any data will be shown in such a severe population, which gives us additional confidence in our outcomes trial.

Also at asld from our phase 3 Maestro napfield 1 trial will highlight how F2 F3 patients regress when RES different treatment is interrupted demonstrating the importance of staying on therapy.

We'll also share multiple postures that examine early, Real World experience with Risa and the burden of uncontrolled mesh across Health Systems.

In total Mash will have 15 abstracts, including 2, oral presentations, and 2, posters of Distinction.

With that, I'll hand over to Marty. Yes thank you. Dave turning to slide 16 in a summary of our financials, third quarter, 2025 net sales, total 287.3 million of 35% from the second quarter of 2025. This was another strong demand quarter as Bill mentioned, we're making great progress with our Contracting discussions for continued. Broad first, line access to resera in 2026 with net. No net, no. Step through requirements and improve utilization management, criteria.

As a reminder, there are several components to gross. Net, including commercial rebates. Government, rebates co-pay assistance costs and channel distribution costs.

Across the board, the team has done an exceptional job managing these dynamics, and we're seeing minimal impact through the third quarter of this year.

as certain contracts take effect in the fourth quarter, we anticipate a step up in the growth to net impact to the midpoint of our 20 to 30% range, resulting in a full year average near the low, end of that range, a great outcome for 2025

Looking ahead to 2026, we expect a full effect of our payer agreements to begin January 1st, bringing our total gross to net impact into the high 30% range, consistent with specialty medicine analogs.

As noted, we are confident that we will continue to steadily address different patients, and we expect robust net sales growth for Resera in 2026 and beyond.

R&D expenses for the third quarter of 2025 we're 174 million compared to 6 8. 7, 2 4.

the increase was primarily due to the 1-time 117 million expense associated with the global licensing agreement for mgl 2086

This was expensed in the third quarter and will impact fourth quarter, cash flows.

Sg&a expenses for the third quarter of 2025 where 209.1 million dollars compared to 1 0 7. 6 4.

Looking ahead. We expect fourth quarter R&D expenses to be modestly higher than third quarter levels, excluding the third quarter 1-time expense for our oral glp-1 and expect fourth quarter, sgna expenses to continue to increase quarter over quarter, as we continue to support the launch of Risa

Turning to our balance sheet, we ended the third quarter of 2025 with $1.1 billion in cash, cash equivalents, restricted cash, and marketable securities.

The increase reflects the 3505050 million initial Term Loan under our senior secured credit facility, a portion of which was used to repay all outstanding obligations under the Hercules loan facility offset by the funding of operations.

With a strong cash position, we continue to be well-resourced to support the ongoing launch of our Deborah in advanced multiple pipeline programs.

with that on slide 17, let me briefly recap our third quarter progressed where we we remain focused on our Top Line and our pipeline

We are driving strong performance in our 64, quarter of our launch, with r different. Now, annualizing over a billion dollars in net sales and expect continued strong growth in 2026 and Beyond.

Patients are on therapy, and we expect to continue to steadily add patients going forward.

We've reached another major launch Milestone with greater than 10,000 prescribers.

Our payer discussions are progressing very well and we expect continued strong access for patients in 2026.

And we're working to further expand our pipeline to solidify our leadership in F2 to f4c bash.

And now I'll turn the call back over to Tina and open up the Q&A session. Thanks, Marty. Let's move into the Q&A portion of the call. Marvin, please go ahead and provide instructions for the Q&A session.

Who are now open the lines for questions to open your line, please press star, 1 1 1 and you'll be added to queue on the call.

Our first question comes from Yasmine Rahimi of Piper Sandler. Your line is now open.

Hi, good morning team and congrats to a great quarter um team with asld right around the corner would love to learn sort of how this 2-year data especially the NIT driven responses. Could further Derek, um might throw Nash outcome which is reading out in 2028 and also maybe also some color on what visibility do you guys get in terms of that? It's on track. Um based on event rates to come in at that time point and I'll jump back in the queue.

Yes, thanks for the call. And look, we're really, really excited about asld. I'll tell you, you know, we're just coming off of the ACG meeting, uh, in Phoenix. I guess it was just last week, uh, and what a difference a year makes when you think about the progress that we've made with the gastroenterologist. I mean, a year ago, people didn't know about, uh, nits. They were still putting their Pathways in place. And now, we're seeing that red zipper has really moved to being the foundational therapy standard of care with that audience and a lot of positive feedback. So, you know, we're headed into the Super Bowl this week with, uh, asld. We're really excited about it. We have a lot going on but maybe Dave, you want to provide a little bit of context around some of the data and so forth. Yeah, I I think your your question. Yeah. It's had to do with uh the data that we're reading out at asld and how it reflects on, on my Morrow outcomes. Is that correct?

That's correct.

Okay, great. Yeah, so, um, as we presented at easel and as we showed in the presentation, um, we have an open label cohort of individuals from the Maestro, knafl study, um, where we've been able to show sustained efficacy of Risa in in this cohort, both on liver stiffness and in a variety of biomarkers, including, um, you know, uh, lfts and so forth. So, at asld we're, we're looking more deeply into this cohort and examining, um, some of the more severe patients within this cohort and understanding, uh, whether you know, uh, res differce aicy in this group as well.

Well and what we see is really exciting and gives us a lot of confidence about about my start outcomes. And so the reason why this is important is because when you think about Meister outcomes and you think about this open label cohort, the patient populations are really very similar. Um so the Baseline characteristics are similar and so when we see efficacy in the open label group, it gives us, it gives us evidence. Um, and and a lot of confidence, that, uh, the outcomes outcomes trial will end up being positive as well.

Great, thanks. Yeah. Marvin next question, please.

Thank you. 1 more for our next question.

Our next question comes from the line of Jay Olsson of Oppenheimer. Your line is now open.

Oh hey. Congrats on the quarter and thanks for taking the question.

Can you talk about the pros and cons of combining resmetirom with mgl 2086 versus some other oral glp-1 like or for glipon? And then any other potential mechanisms beyond glp1 that might be synergistic with resmetirom. Thank you.

Jay. Thanks, uh, for the question, you know, just for clarification as well. Um, our oral glp-1 is an orphic, lapan. Derivative so we were very, very specific in the criteria that we had for selecting a oral glp-1 and we wanted to be in an orphan lapan. Derivative but maybe Dave, do you want to talk a little bit about it in a little bit about the future mechanisms and just how we're thinking in general about potential cam.

To consider combining with the glp-1 that can can produce a bit of weight loss. Have some metabolic benefits and enhance resms, efficacy in a fixed dose combination. So, um, that's the rationale for combining with with the glp1 but your your points a great 1, there are other mechanisms that may also be attractive to combine uh, res matter on with. And there are multiple Pathways in this very complex disease of mash that lead to hepatic steatosis fibrosis and ultimately poor outcomes in patients. So uh, you know, as we've said before, we're looking at pretty much every mechanism of action uh to potentially combine with uh risk meeteren where there's a good scientific rationale for it. And where we believe that the combined efficacy is going to be um, an advantage to patients. So um you know, we're casting the net wide and we're looking for the best opportunities. Yeah. Jay and just also a little context as well here with the IP to 2045 that gives us time to really thoughtfully think about building this pipeline

You know, we're not in a rush just to try to fix a problem of a of a pending uh, patent Cliff. We can thoughtfully think about building a franchise that's durable because starting with the 2045 ip4 uh risk. Thanks for the question. Next question, please Marvin

Thank you. Walnut for next question.

Hi guys, thanks for taking my question and congrats on the continued progress. Uh, just 2 quick ones for me. Um, in light of the recent m&a in the space, I would love to get your thoughts on Madrid Bell's future competitive positioning and Market access. Once large Pharma inevitably bundles their Mash assets. If, if approved and the second question to have is, just any thoughts on sag plans for testing, Denny fans that with res. I I realize your priority is focusing on, on the combination therapy with your own lp1, but would magic go be open in principle to

Uh combinations, such as this, or is this just too early at this stage? Thank you.

Yeah, Mike, thanks for the questions. Let me start with that. We don't know what SAg is doing. Uh, we haven't spoken with them and don't know any of their plans. So, is it a combination that makes sense? Maybe, but, you know, we're not involved in that and don't really know. So, that's all a comment at the moment there. You know, look, the recent M&A really for us is a validation of the MASh market. You know, ultimately what we see happening in these markets, and you know, we talked about IBD, RA, and psoriasis, you would have; you would have. And we're a little bit like that, where you have a company that shows there is a market and an attractive opportunity, and then the investment in innovation, science, and ultimately more.

Products really accelerates. And that's what we think is going to happen in Mash. We're leading the way in this case. Now, the recent moves of the, a big Pharma to get an fgf21, we think validates that and we're excited about it. Because that means there's going to be more attention on the space which ultimately leads to Greater diagnosis treatment, and with the profile that we have with Reds different. We think It ultimately saves us.

So, we are creating our market access strategy. You know, we've taken a very long-term approach, just like we did from day one when we announced approval of the product.

You almost have to start with 2045 whereas different. IP goes out to that, we're going to have f4c that we're going to have a pipeline, and there's going to be other products that enter, so everything's been thoughtfully designed with that end in mind to preserve the most value, for not only red zipper, but for our franchise of the future. So we still want to really strong place. Now, Dave, just talked a little bit about f4c. We're really excited about the data that we've seen and we're, uh, very confident about hitting in our mistro Nash outcome study which we're reading out in 2027. Of course, we've got to read out. It's an event driven study. Um, and, you know, we'll anticipate those, uh, results.

We think that from a competitive perspective, uh our data is going to be the leading data in that space with that population. So that, you know, we will be the leaders, not only in F2 F3, but from F2 to f4c. So, all of this is thought out, we're thinking of things in the long term. We think of that, how we build a pipeline, how we evolved gross to net and how we interact with the community. Let me just be crystal clear. Our goal is to not be leaders in the short term but to have long-term leadership in Mash

Great, thanks. Mike for the question. Marvin. Next question, please.

Thank you. 1 moment for our next question.

Next question comes from lined up, aashari of Jeffrey's Elias. Now open?

Hey, thanks so much. Um, so we're hearing feedback that res differ is adherence rate is meaningfully higher than the kind of 40 to 60% your team cited for drugs in this category, more in the order of 80% plus, um, can you confirm that? And then also, how should we think about res, different, net pricing? I know you've talked about GB, you know, we've heard gb1 players. Talk about mid single digit net price, declines annually. Is that a similar Dynamic for resera or should we see stable net price pricing? After you get into like the high 30s range on gross net next year. Thank you.

Thanks for the question, natash.

Uh, look uh, first of all on the adherence, I think what we've said at about the at the 1 year rate well, tolerated orals are in that, you know, 60 to 70% range. Um, so that doesn't that hasn't changed. Our view and we are the data that we have today. Remember, there's still only so many patients that are getting to that 1 year mark, uh, that we are similar to well tolerated, orals. Um, and like you, we've heard very positive feedback from a lot of of clinicians that are treating, uh, patients and seeing very strong adherence. And I think that's again goes back to uh, the profile of the product. So, um, all encouraging and as we would expect

Uh, to the question of uh, uh, gross to net, and what we would expect to see, um, look, I think that you looking ahead to the future, you know, gross to not only goes in 1 direction, right? And the difference after 26, you don't have this zero to Contracting effect after 26. Uh, you know, we'll have, uh, Contracting right now. We're, we're going to be, uh, bidding on 2027, uh, Medicare. Uh, we have some Medicare in place for 26. So, you know, you expect to see some future, uh, decline in Gross to net, because that's just, that's just what happens. But again, you know, we had this effect of 0 to Contracting in in uh, as we entered 2026. So, you know, look, we think that uh, we are in a really great place. You know, our strategy is for broad first line access no step edits and improved utilization management criteria. That was the goal, that's what we're achieving. So we're really, really excited about

Where we are entering 2026. In fact, I would say in my experience I really believe that this is as good as you could possibly be for a product of this stature at this point in launch. Uh in fact I would go as far as to say, I think this is the best Market access from a criteria perspective and everything that I've seen with any of the launches that I've done.

Thanks, great. Thanks the cash. Marvin next question, please.

Thank you. 1 moment for next question.

Our next question comes from the line of Thomas Smith of the Ring Partners. Your line is now open.

Hey guys. Good morning. Thanks for taking the questions and uh, let me add my congrats on the really strong quarter. Um the other 1 on coverage, I appreciate the high level comments here on the payer Contracting efforts. I think everyone saw the recent Aetna. Formulary coverage decision. Could you just comment specifically on that and the potential impact of uh, non covered decisions. And then any comments on um kind of where you are with respect to the Contracting for commercial lives? Next year, is there an explicit goal or expectation for what percent of commercial lives? Uh, you think will continue to have that uh broad first line access to reserve for 2026? Thanks so much. Yeah, let me. Yeah. Thanks Tom. Maybe we'll start there. Like, we're expecting broad uh, commercial live coverage. Um, so we still really, really good about that at this point. As it relates to, uh, adna, you know, let me start with red zipper, wasn't on formulary in 2025, and it's not again, in 2026. So that is really no change. Um, so, you know, we don't expect to see a, uh, a

Meaningful impact here, it'll be available through prior, authorization or medical exception. And so that's not a practical change in Access for patients. And our magical patient support team are really experts at helping patients, navigate and having, uh, helping practices navigate through that. Um, so yeah, no change, uh, uh, no effect.

Great.

Next question, please.

Thank you. 1 moment for our next question.

And then, Marty, if I can just ask quickly, just in the context of the successful launch that you've seen to date, how are you thinking about the path to profitability from here? Thanks so much.

Thanks Andrea. Well, you know, look, this is the first quarter where we've had, uh, Novo in the market and you saw that we continued to steadily add patients and I think uh by all measures had an absolutely outstanding quarter. So 3 months in uh we haven't really seen too much. Um you know, we know that they seem to be educating pcps and trying to drive diagnosis, which we think is ultimately great for patients and the market, you know, we're starting to hear some practices say and this is this is very anecdotal at this point that they're reporting more of referrals that are coming in. Uh, but you know, it's a little early to quantify if there is uh, additional growth, uh, to the market as we get through the end of the year and be able to do a more proper analysis. We'll come back with any, uh, real growth rates now, the 315,000, great question. You know, look, let's just remind people the 315,000 is, the are the diagnosed patient?

In the 14,000 of of prescribers that were targeting. And we know that we have patients that are on res different. Now, that weren't part of that 315, that they were newly diagnosed, um, and we also know that the diagnosis rate, uh, at the moment remains quite low, um, originally

We saw it as around, 10% diagnosis rate. So we know that there are more prevalent patients out there and I think what we will see and what we're excited about is having somebody else that is going to help us carry the load of increasing diagnosis. It's not something that's been a focus of ours. It Still Remains Not a focus of ours, but when we have somebody else who needs to have, you know, literally millions of patients that are diagnosed in order to serve their needs. That ultimately helps us. That's why we said in the script, it's also the, it's the 315,000 that we win from and the increase diagnosis and ultimately people that can't tolerate or have an effect with, uh, a new competitor that will ultimately come to us. So, uh, a little early to quantify, we'll do so, uh, in later quarters. But we see some signs that we're starting to see, uh, additional growth Novo, uh, we just don't really have a lot of information. Haven't seen them too much out there, uh, but, uh, you know, clear,

Clearly they are there and and starting to uh drive a little bit more diagnosis. Thanks, great. Yeah. Go ahead. Oh yeah. Oh thanks. Andrea for the question on the passive profitability and, you know, our Focus right now and into 2026 is really focused on driving our Top Line and then building our pipeline which Dave described. Um that's going to be our Focus going forward. It doesn't mean profitability won't happen at some point. Um but again we're focused on the top line of building out R&D and and and continuing to support. Um,

Our efforts in building out, the mesh, our leadership in mesh.

Good. Thanks. Andrea for the question, Marvin. Next question, please.

Thank you. 1 moment for our next question.

our next question, comes from line of Andy Chang of wolf research, your line is now open,

Hi, it's Emma on for Andy. Thanks for taking our question. Um, was different uptake?

So far and you mentioned the strong 60 to 70% and here's rate. I know it's still very early days in the launch but I guess how do these Dynamics inform your view of the drugs. Uh chronic use potential and just steady state uh demand over the long term. Thank you.

Thanks Emma. Look, I think that this is where we win.

We have a profile once a day pill.

That is well, tolerated and the feedback, you know, some of the reported uh uh,

Extremely high adherence rates.

So we feel extremely well, positioned for this to be a long-term chronic therapy. Uh, it's really 1 of the exciting parts of, uh,

Read different, you know, and as I said versus other categories, which have become, you know, really multi-billion over 20 billion dollar categories.

The profile is the profile is initially a products to launch. We're kind of hairy, right? They just they, they, they they, they weren't orals. Uh, they uh, had tolerability issues sometimes safety issues. We feel that we have got and you've heard me refer to it in the past. As you know, what I believe is, kind of like a Holy Grail profile.

That's something which is, uh, where we win in this category. Frankly, at the end of the day, profiles matter, this is a product which is really designed for chronic use.

So, of course, matters as sustained efficacy. And I think, you know what, we're showing at asld gives us a lot of confidence in the sustained, efficacy of risk, metarom in the in, in, on this group. Um, and in fact, what we show in the F to F3 population is that if you come off of therapy,

You have reversion of your disease which is um of course a big, a big challenge. So I I think you know, those 2 facets both the efficacy and efficacy and the sustained tolerability are 2 big

Big. Yeah. Thanks for that Dave great thanks uh thanks so much next question please Marvin

Thank you. 1 moment for our next question.

our next question comes from the line of 32 Bar of TDC calling and has now open

Good morning guys, thanks for taking the question. Um, I wanted to ask well, 1 and a half questions 1 on this growth forward. Given the 2, strategies bill that you outlined um, 1 Sales, force expansion and marketing to the endocrinologists. But at the same time you mentioned that you want um depth uh in the going forward marketing strategy, so can you help us reconcile to do and what sort of metrics and current targets? Um for deaths that you hope to report and how glp1 figure into all this. And this is a very quick email um that we've been getting from clients. We're having a problem, sort of stretching that

Patient numbers with the revenue numbers. Are there any elements to either stocking or Europe or some other aspect of those numbers that um, need to be addressed in our models to reconcile, everything. Reported this morning. Thanks.

Yeah, for the quarter, nothing to do with inventory. Nothing to do with Europe. I mean, just be Crystal. Clear us demand is the driver of of the success for the quarter. So let me let me take that 1 next. Um, let's talk about growth going forward and your question about, uh, how do we manage expansion? If you will of, uh, into, uh, endocrinology and, uh, depth. Otherwise, you know, we can walk and chew gum at the same time. So to speak. We have to, we have to continue to be building for the future as well. Remember, we've got 20 years ahead of us from an IP perspective. So we are going to look for where to currently focus. And where do we want to explore? And that's exactly what we're doing here. You know, we've already from and and, you know, we've been always looking at uh, uh, ah, ah, a basket of products in the last 10 years that have been great specialty launches and we look at each metric and we're, you know,

Kind of at or near the top on a number of those, uh, breath. We're doing great as well, uh, but you need to continue to grow your uh, depth of uh, prescribing, right? I mean we have 10,000 uh, plus prescribers. Now, your next step and I consider that like a check. Check mark, now you go deeper and deeper into that set of Core Physicians, which are gastroenterologists and herpetologists. Now, the pursuit now of the endocrinologist that we had endocrinologist, targeted in as part of the 14,000. But what we've seen is additional endocrinologists have come forward and said, you know what, I'm still seeing a lot of mash and would like to learn more about res differ.

So there is enough interest that we said, let's put a dedicated team on that uh opportunity. You know, just to give you a sense. It's not a huge number, it's a couple thousand uh Physicians that uh we add to the Target list and you know that can be handled with a very concentrated dedicated effort and you know, we'll see how that evolves. I want to be interesting. Things is

As you talk about glp1.

If glp1 were truly solving match.

There wouldn't be a need in. This prescriber group that uses glp1.

Right. Thanks. Thanks so much. Um next question, please. Marvin.

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Our next question comes from the line of John Walden of citizens. Your life is not open.

Hey, thanks for taking the question. Uh, Bill wondering if you could comment a little bit as we look down the road, at, you know, expected, glp price, erosion, and how that might affect access and paired decisions for resera.

Thanks John. Well, look, I think if you, uh, you know, I'll take you back to the comments that we made. Uh, on the call that, you know, in uh January, uh, we would expect to be in the, uh, High 30% range. Um, that is in.

The presence of a rapidly. I would say eroding gross to net of glp ones.

So, you know, we believe that, uh, we're well positioned for the future. As I said, Gross to not only goes in 1 Direction, but I think you have to start with the problem that we're trying to solve. This is an, uh, expensive disease. I think, if you take a look at iser, uh, recently, uh, commented again on, uh, products that they have, uh, recently, uh, reviewed and, uh, we're seeing that, uh, once again, uh, red Dara is highlighted as a, a product that is,

Looked at as, uh, cost-effective and uh, really is offsetting the uh uh, you know, very costly disease uh, without uh without intervention.

So, you know, I think that you have to start with the problem you're trying to solve. This is an expensive disease, I think, payers understand that, certainly the system is starting to understand that. So you're always going to have a product that have different, uh, prices, uh, within the category. And we've seen even with the categories that I mentioned today, IBD ra and psoriasis. There's huge variability. Uh, but there's a need for more than 1 uh, medication. There's a need for multiple mechanisms and you ultimately have to try to solve the problem in front and, you know, we through an independent, third party iser, uh, have proven, uh, twice now, uh, about the cost effectiveness of where it's different.

Great. Thanks so much. Next question, please.

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Our next question comes from the line of broker. Our wall of cancer Fitzgerald.

The Line is now open.

Hi, uh, thank you for taking my questions and congrats on another strong quarter. Um, so appreciate the clarity on the growth to net, uh, for 4 and 2026, but maybe you can talk about your expectations, for 4, q growth, and comfort around 2026, uh, consensus estimates. Um, we decide and maybe second question. Uh, what percentage of residential volume currently is Medicare? And how are you thinking about?

About the implications of some of the diet, Ira pricing decision uh on the long uh on the long-term prospects for that channel. Thank you.

Great. So let me just give you that. I'll give you the quick answer on what the uh distribution is. We're anticipating its 50 to 55% commercial you know 30 to 35% Medicare and then about 10% Medicaid and other. Um, you know, we're still remember we're at less than 10% penetration here, so that's going to evolve a little bit in time, but we're staying in that range at the moment. Maybe Marty, do you want to talk about Q4? Yeah, definitely. Uh, hypercar thanks for the question. So, uh, you know, listen, we've had a, a great, uh, 2025 so far in fourth quarter. We expect that to continue in terms of steadily adding patients, really sort of the driver for our business. Uh, we don't see any change there. Uh, you know, we, we did have a very high base in our Revenue coming into third quarter, that was, you know, uh, very much patient demand. We just have some favorability and growth in net which we discussed and a high demand quarter uh from an inventory standpoint. Um, so we're very strong position. Uh but going into fourth quarter working off.

That base, and taking into account that there are fewer selling days in the fourth quarter in general, and that, as we discussed, growth to net begins to take effect, we will see the commercial rebating starting to take effect in the fourth quarter. So, we'll be at the midpoint of that 20% to 30% range. All that put together, we think we'll see high single-digit growth this quarter.

Over a quarter, going into the fourth quarter, but still a very strong quarter. Of course, we're on over a $1 billion run rate in revenue. So, fantastic.

Steadily adding patients. And that's something that is going to, we've said, remain to be steadily adding in the future. And, uh, feel really, really great. Again, where we are, it's less than 10% penetration. There's a ton of patients that are out there that still need to be treated and that represents great opportunity for us. Yeah, and I just wanted to come back to 2026 for car asked about 2. So again, everything bill just said for the steadily adding patients, we see that going into 2026 as well. So um, steadily adding patients. We uh, anticipate and we said in the script robust, net sales, growth in 2026. Um, but if you think about, you know, just think about the phasing, right? So, we're going to have the impact of the, uh, gross to net starting in January, uh, right at the beginning of the year. So, you're going to see that step up from the, from the Contracting. Uh, and we'll be in the high 30s. Uh, and of course, we always have the, the q1 effect on top of that, right? So, in terms of the phasing, you'll see some of that, uh, play through in 2026, but net net. We see row.

West growth, uh, going into 202.

This is Marty uh, operator. But next question, please.

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Our next question comes from the line of Secret of true security. Your line is now open

Hey guys, thank you so much for taking my question and uh, congratulations on the quarter. Um, I was wondering if you can talk a little bit, um, on the expected Cadence for EU launch. And how that, you know, when we think about 2026 that might add to the growth, I know it takes time for EU launches, um, and also the sgna that was reported does that include sales force in Europe or should we be thinking about you know slight increase in SG over the next several months to reflect um sales force and the ground in Europe. Thank you.

Marty, do you want to yeah, that person? Yeah, yeah. I'll, I'll definitely answer the sgna question first, and we can talk about just EU launch in general. Um, so sgna for uh, building out Germany, right? So that's for only launching their as of right now uh is included in uh, our sgna expenses, um and you'll continue to see that included in sgna, but as we've said, when we move into country by country, we're going to be very disciplined and we look at a 2 to 3 year uh positive contribution metric for each country. So, uh, the spend will increase with Europe, um, um, but again, we're mindful with each country and then just the EU wants us to talk about that. Um, I'll start and build, I don't know if you want to add, um, but, you know, we did start launching in the third quarter. But really, we were just testing

The channel. So just the minimum amount of Revenue, uh, for 2025, uh, we believe and what we said we could start that, uh, we can start seeing some impact in 2026. So I would say, the robust sales growth that we're talking about 2026 is by far and predominantly the Us sales growth and adding patients which we've discussed um, and Europe again, you know, it's it's it's going to play out, it is slow, we have to build the system, we have to wire the system in in countries in Europe. They'll just be Germany next year. So it'll be, um, it'll add but not, not a significant amount. Yeah, I think that that, that's really, really great comment, you know, it is Germany right now, uh, and we're really excited. I mean, first of all, we've hired an outstanding team there, the the team is great. The feedback that we're getting is that, uh, Mash is, uh, needs to be treated as prevalent, uh, very similar, uh, to the US in that sense,

But it takes time, right? You know, you got to wire the system. Uh, it's practiced by practice, prescriber by prescriber, and we're taking all the steps in, you know, the usual, uh, next countries, uh, to look at as well. We've started putting teams in place uh, that are evaluating the market and our launch strategy there and uh, again just absolutely high quality team that's in place. So, you know, we feel really good about the long term, uh, prospects. Uh, but we also know that there's a lot of wiring to do.

Do and we've got to navigate the, uh, reimbursement process in each country, which, you know, takes some time. But, you know, we got a great team to do that. Thanks, thanks Bill. Uh, operator, we have time for 1 more question, please.

Thank you. 1 moment for our next question.

Our next question, comes on line of cavari Pullman of clear Street. Your line is not open.

Technical data that you showed on slide 14, is there any real world evidence uh that you have collected or you know showing that was different can prevent or delay, the progression of f4 cirrhosis Pro, perhaps based on the feedback from, you know, its current used by physicians in other words, is there like any evidence leading to preference offers different or glp ones in F2 F3 mudgear?

Yeah, thanks for the question. Maybe, maybe starting their we're seeing more and more real world evidence. That's coming to light. Some of it will be presented at asld, uh, this week or this week into next week. And we expected more patients start to hit the 1 year mark and beyond that, there will be more anecdotally. We're hearing really, really great feedback. You know, when you launch a product, you never know what's going to happen in the real world. You have your clinical data and you're not sure what Real World experience is going to be so far. The anecdotal feedback has been extremely strong, uh, by prescribers and they're seeing effects on, obviously, uh, uh, liver uh, fat. They're seeing effects on fibrosis and all the other, uh, Myriad of other things, uh, lsts, lipids, Etc. So we're really excited uh, about uh, the uh, real world evidence reading out and we've done work with claims databases Etc. So more to come but early indicators are extremely strong so really excited about that.

You know, to your first question it really is pair to pair about this. Is this utilization management criteria, you know, who can prescribe Etc? And for the most part it is it refers to Specialists and in the Specialists that can be hepatologists and gastroenterologists and then in some cases, uh, it may or may not name endocrinologists. So it's usually either uh, requirement to be prescribed by a specialist or in consultation with a specialist. But again, that's something which really varies on a plan by plan basis. Uh, we don't see that as a uh, any kind of a hindrance, uh, now. And remember our focus is the Specialists. We Believe risk difference should be prescribed by these specialists.

Now in time that may change, but we think that this is a very serious disease, it is a very serious disease and we want to have the Specialists get experience with res different and treating these patients uh before it would ever extend beyond that and that's Crystal Clear. We make that crystal clear with the payers as well. That is our intent.

Great. Thanks Bill. And thank you all for your time and interest today. This now concludes our call, a replay of this webcast will be available on our website in approximately 2 hours. Thanks for joining us.

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