Madrigal (MDGL) Q1 2026 Earnings Transcript

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DATE

Wednesday, May 6, 2026 at 8 a.m. ET

Call participants

• Chief Executive Officer — William Sibold
• Chief Medical Officer — David Soergel
• Chief Financial Officer — Mardi Dier
• Head of Investor Relations — Tina Ventura
• Operator

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Takeaways

• Net sales -- $311.3 million, up 127% year over year, attributed primarily to escalating demand for Rezdiffra.
• Active patients -- Over 42,250 on Rezdiffra at quarter end, representing a 2.5 times increase in patients in therapy.
• Trailing 12-month net sales -- Exceeded $1.1 billion, establishing Rezdiffra as a blockbuster in a nascent market.
• Prescribers -- More than 10,000 physicians have prescribed Rezdiffra, with ongoing expansion across specialties.
• U.S. addressable market -- Rezdiffra’s eligible population grew nearly 50% in two years to 460,000 F2/F3 MASH patients managed by target specialists.
• Market penetration -- Diagnosis rate just over 10%, and Rezdiffra penetration just under 10% of the addressable patients.
• New patient adds, fiscal first quarter (ended Mar. 31, 2026) -- 36,000 new patients added, affected by the “Q1 effect” from insurance resets, consistent with seasonality described by management.
• Prescribing mix -- 50-50 split between F2 and F3 MASH remains stable; approximately 25% of Rezdiffra patients use GLP-1 in combination, with over 50% previously exposed.
• Pipeline expansion -- Acquisition of siRNA asset (ARO-PNPLA3) targeting PNPLA3 mutation; accompanied by $25 million upfront payment to be recorded in the fiscal second quarter (ending June 30, 2026), with $54.3 million of fiscal first quarter business development expenses for additional pipeline investments.
• Operating expenses -- Cost of sales at $26.8 million (primarily Roche royalties); R&D expenses at $108.7 million (driven by upfront payments); SG&A at $268.5 million (increased headcount and marketing, including endocrinology force); $34 million in non-cash stock compensation included.
• Gross to net discount -- Expected to be in the mid- to high 30% range for the remainder of 2026; management reported fiscal first quarter discounts were more favorable than anticipated.
• Cash position -- $817.9 million in cash, cash equivalents, restricted cash, and marketable securities at quarter end; down from $988.6 million due to business development payments and API purchases.
• Upcoming data catalysts -- Maestro MASH F4C outcomes trial expected to deliver in 2027; F2/F3 trial data forecast for 2028.
• Real-world performance -- Company highlighted direct community feedback indicating “efficacy continues to exceed expectations in the real world,” including positive data on liver stiffness, fat, enzymes, LDL-cholesterol, and Lp(a).
• Market feedback -- Poster at DDW cited “nearly 70% of Rezdiffra prescribers surveyed said Rezdiffra has improved their patient's quality of life, and nearly 70% expect to increase their Rezdiffra's use over the next 6 months.”

Summary

Madrigal Pharmaceuticals (NASDAQ:MDGL) reported rapid Rezdiffra sales growth and patient expansion as the MASH market accelerates. Management disclosed stable product adoption across F2 and F3 patients and consistent combination use patterns with GLP-1. The addition of a PNPLA3-targeted siRNA program and progression of two late-stage Rezdiffra trials signal committed pipeline investment. Operating metrics reflect increased scale and targeted acquisition spending; gross to net discounts are expected to remain elevated as payer contracting matures.

• Management confirmed that profitability is not targeted for 2026 and specifically will not occur in the fiscal second quarter, mainly due to upfront development costs.
• R&D strategy emphasizes combining Rezdiffra with pipeline assets to optimize efficacy for genetic subgroups and broader patient populations, using a data-driven development approach.
• Rezdiffra’s foundational positioning is underscored by first-line payer access and resilience against competitor launches in MASH.
• Ongoing enrichment of late-stage outcomes studies includes tailored patient selection criteria and real-world biomarker tracking, including platelet counts and fibrosis risk measures.
• The company plans to pursue further pipeline additions if mechanistically justified and financially disciplined, indicating ongoing business development activity may continue but at a measured pace.

Industry glossary

• MASH: Metabolic Dysfunction-Associated Steatohepatitis; a progressive liver disease formerly known as NASH.
• F2/F3/F4C: Fibrosis stages 2 and 3 (moderate to advanced scarring), and well-compensated cirrhosis (“F4C”), referring to the progression of liver fibrosis.
• siRNA: Small interfering RNA; a therapeutic modality that uses targeted RNA molecules to silence disease-driving genes.
• PNPLA3: Patatin-like phospholipase domain-containing protein 3; a gene mutation recognized as a key risk factor for liver disease in some populations.
• Maestro NASH/NAFLD trials: Madrigal’s pivotal clinical studies for Rezdiffra in both steatohepatitis and non-alcoholic fatty liver disease populations.
• GLP-1: Glucagon-like peptide 1 receptor agonists; a drug class used for metabolic disorders, including diabetes and obesity, with emerging relevance in MASH therapy.
• Gross to net: Represents the adjustment from a drug's list price to net sales after discounts, rebates, allowances, and payer contracting.
• DTC campaign: Direct-to-consumer advertising campaign aimed at patient awareness and product demand.
• API: Active Pharmaceutical Ingredient; primary component in drug manufacturing that produces therapeutic effect.
• LDL-cholesterol / Lp(a): Low-density lipoprotein cholesterol and lipoprotein(a); blood-based biomarkers relevant in liver and cardiovascular outcomes.

Full Conference Call Transcript

William Sibold: Thanks, Tina. Good morning, and thanks for joining us. 2026 is off to a terrific start. We've made impressive progress towards our strategic growth priorities to maximize the value of Rezdiffra and build our pipeline. Rezdiffra has achieved blockbuster status generating more than $1.1 billion in net sales in the last 12 months. That's a $1 billion run rate in a market that's still in its infancy. Penetration is low, the diagnosis rate is low, unmet need is high and the market is expanding at a double-digit pace. When you put those fundamentals together, the future growth opportunity is quite remarkable. Competition has helped grow the market but not at the expense of Rezdiffra.

Beyond F2/F3 MASH, we're advancing our F4C outcomes trial, where an indication expansion could double the opportunity for Rezdiffra. And because we believe this is one of the most compelling opportunities in the industry, we've moved quickly to build the leading pipeline in MASH. We added to it yesterday with a new siRNA asset that targets a mutation in the PNPLA3 gene, a genetically validated driver of disease in a meaningful subset of patients. When you step back, it is hard to find another opportunity with this combination of market fundamentals and product strength. We have a first-in-disease approval a foundational therapy, a rapidly expanding market, and we are building an industry-leading pipeline.

We believe Madrigal is exceptionally well positioned to win here and continue to shape the future of MASH. I'll begin with an update on the Rezdiffra launch, hand it to Dave to discuss our pipeline and R&D strategy, and Mardi will wrap up with a review of our financials. Turning to Slide 5 and net sales. first quarter 2026 net sales were $311 million, representing year-over-year growth of 127%. This performance continues to reinforce that Rezdiffra is tracking in line with and, in many cases, exceeding the best-in-class specialty launches we compare ourselves to. Over the last 2 years, we have wired the system to drive Rezdiffra's growth.

We built a large and growing prescriber base, secured first-line access with commercial payers and establish Rezdiffra as the foundational therapy in MASH. Combined with Rezdiffra's differentiated profile and strong patient adherence, our execution has enabled us to steadily add patients quarter-over-quarter as shown on Slide 6. We ended the first quarter with more than 42,250 active patients on Rezdiffra. On a year-over-year basis, patients on therapy increased by 2.5x compared to the first quarter of 2025. That is a significant achievement by any standard, but especially in a market that didn't exist before Rezdiffra's approval. This momentum reflects strong execution by the team the clear unmet need in MASH and continued demand from both prescribers and patients.

And importantly, we are seeing that momentum carried into the second quarter. Slide 7 shows how quickly the MASH market is expanding. Since launch, we've seen the U.S. addressable market grow nearly 50% from 315,000 patients at the end of 2023 to 460,000 patients at the end of 2025. These are diagnosed F2/F3 patients seen by our target specialists. Rezdiffra's approval, together with increased industry investment has helped transform the market by driving greater awareness, referrals, diagnosis, specialist involvement and more patients seeking care. And yet, this market is still in its earliest stages. The diagnosis rate is just over 10%, and Rezdiffra penetration remains just under 10% of the 460,000 addressable patients.

The MASH market has expanded rapidly and the opportunity ahead is substantial. That gives us a clear path to peak sales, and we believe no company is better positioned than Madrigal to capitalize on it. But being first in a large and growing market is only part of the story. We have established this leadership position because Rezdiffra delivering what the MASH market wants. And that is what Slide 8 highlights. After 2 years on the market, 3 things are clear. First, profile matters. Rezdiffra is the only approved liver-directed therapy in me. It has broad proven efficacy across all patient subtypes and is an oral, once-daily, well-tolerated medicine with no titration requirements.

In a chronic disease, this profile is a key reason why we continue to see strong persistence and increasing depth of prescribing. Second, real-world performance matters. Pinnacle trials get a drug approved, but real-world experience determines a product success. With tens of thousands of patients treated, we've received overwhelming feedback from the community that Rezdiffra's efficacy continues to exceed expectations in the real world. This includes improvements across liver stiffness, liver fat, liver enzymes, LDL-cholesterol and Lp(a). This is the kind of real-world experience that builds confidence with prescribers and helps establish a true standard of care. And third, we have built not only a leading product but a leading MASH company.

We have the right team, the right model and the right start in a market we developed from the ground up. We have executed one of the best launches in the industry where our differentiated specialty model has set a high bar for anyone launching in this space. And we have learned, refined and improved our approach along the way. We were first to market and now have a pipeline with more than 10 programs designed to extend our leadership over time. Our leadership is also reflected in our presence at key hepatology, gastroenterology and endocrinology-focused medical meetings this month where more than 40 Rezdiffra abstracts -- with more than 40 Rezdiffra extracts being presented.

This includes a poster presented at DDW this week where nearly 70% of Rezdiffra prescribers surveyed said Rezdiffra has improved their patient's quality of life and nearly 70% expect to increase their Rezdiffra's use over the next 6 months. Later this month at EASL in Barcelona, we will present additional data that reinforce the breadth of Rezdiffra's effect. That includes a secondary analysis from our Maestro NASH and NAFLD 1 trials showing that reduced Lp(a) and LDL-C in patients with MASH supporting its potential to reduce cardiovascular risk independent of baseline statin use along with 2 real-world data sets that demonstrate Rezdiffra's benefit in everyday clinical practice. We believe evidence generation is a strategic advantage for Madrigal.

The more we can show prescribers and payers about Rezdiffra's performance across clinically relevant endpoints, the more it's solidified as the foundational therapy. Everything we've discussed so far speaks to the strength of Rezdiffra in F2-F3 match, but there is another significant opportunity ahead of us in well-compensated mash cirrhosis or F4 C, as noted on Slide 10. It's an untapped market with no approved therapies and a much higher urgency to treat. We believe F4C to double Rezdiffra's opportunity with approximately 245,000 patients under specialist care in the U.S. We have an event-driven outcomes trial underway in 4 that, if positive, is expected to support expansion into this indication as well as support full approval across F2 to F4C.

So before I turn it over to Dave to talk about our pipeline, let me reiterate how rare an opportunity Magical has. We were first to launch, we rapidly achieved blockbuster status and we are still at the very beginning of the development of this market. It's hard to find a comparable opportunity in the industry where the fundamentals are this attractive. And from that position of strength, we are now investing in the next wave of innovation to extend our leadership and define the future of MASH. With that, I'll turn it over to Dave.

David Soergel: Thanks a lot, Bill. Our objective in R&D is straightforward: deliver the industry-leading pipeline in MASH to make better therapies for patients with Rezdiffra as the foundation. As shown on Slide 11, we're doing that through targeted business development and smart clinical execution, leveraging the expertise of an R&D team that pioneered modern mash drug development. Our strategy has 4 goals: first, deliver outcomes data and full approval for Rezdiffra from F2 through F4C. Second, advanced complementary mechanisms for combination with Rezdiffra to deliver the best efficacy across the mass spectrum. Third, remain modality-agnostic with development of the best combination regimens as our strategic gain. The recent addition of siRNA assets to our pipeline underscores that approach.

And fourth, leverage our experience to design smarter, more informative clinical trials and use capital efficiently, taking more shots on goal and advancing only programs that serve patients' needs more effectively. The first pillar of this strategy is delivering outcomes data in FC on Slide 12. our confidence in the Maestro MASH outcomes trial is informed by the 2-year open-label experience in 122 F 4C patients from our Maestro NAFLD-1 trial. Those data are best understood in the context of how mash progresses to cirrhosis. The critical inflection point in this process is the development of clinically significant portal hypertension or CSH. It marks the transition from well-compensated disease towards decompensation when the most serious complications begin to occur.

The literature is clear that patients with CFPH have meaningfully higher rates of liver-related events, and reducing CSP risk lowers those event rates. That's why the 2-year data are so important. 65% of patients with CFPH at baseline shifted into lower-risk categories by year 2. We also saw a favorable movement in other biomarkers, including liver stiffness and fibrosis-related measures. Taken together, these results support riders potential in F4C and reinforce confidence in our event-driven outcomes trial. The second pillar of our R&D strategy is advancing combination therapies anchored by Rezdiffra, which we know works broadly across patient subtypes. Slide 13 highlights our newest addition, ARO-PNPLA3, a clinical stage siRNA that we recently in-licensed from Arrowhead.

We're especially excited about this asset for a couple of reasons. One, PML is a well-understood and known target for MASH based on extensive epidemiological and genome-wide association studies. Two, this is a clinical stage asset that has completed Phase I studies. And three, we know Rezdiffra works well across all patient subtypes, including PNPLA3. So a combo including Rezdiffra and this asset has the potential for improved efficacy in a subset of patients that are especially vulnerable due to their genetics. The PNPLA3 mutation is particularly prevalent among Hispanic patients. Compared to those with wild-type PNPLA3, [indiscernible] patients homozygous for the I148M mutation of PNPLA3 have a twofold higher risk of liver-related events.

Approximately 30% of F2-F3 MASH patients are homozygous carriers of the PNPLA3 mutation making it a meaningful target for our development efforts. This asset is completed Phase I studies and demonstrated 2 important things. First, it's selectively effective in the genetically defined population of PNPLA3 homozygote. Second, after a single dose, it reduced liver fat by up to 46% at 12 weeks at the highest dose. We know from Maestro NASH that greater reductions in MRI-PDFF are associated with better fibrosis reductions with is different. So the goal here is straightforward.

Combine a foundational therapy, Rezdiffra, that works broadly with a targeted agent that may move more patients into a high response category and potentially improve antifibrotic efficacy with a genetically tailored approach. Stepping back on Slide 14. Our pipeline now includes more than 10 programs. Rezdiffra continues in 2 Phase III outcomes-based trials. First, our F4C study, which is an event-driven trial that we expect to read out in 2027, and second, the F2/F3 study, which is primarily histology driven with data expected in 2028. These trials would make Rezdiffra the first fully approved drug with outcomes data, well ahead of other competitors.

Moving down the pipeline for [indiscernible] Stat, or D2 inhibitor, the drug-drug interaction study with resmetirom remains on track to begin in the fourth quarter of this year, and we expect to initiate a Phase II combination study in 2027 following regulatory discussions. For MGL-2086, our oral GLP-1, the Phase I single ascending dose study remains on track to initiate later this quarter. For ARO-PNPLA3, our next step will be to engage with regulatory authorities on the Phase II combination trial. And our 6 siRNA targets are progressing at various stages of preclinical development. Our approach is consistent.

We're building around a foundational therapy and prioritizing mechanisms that we believe are complementary mechanistically sound and capable of improving outcomes either broadly across the population or in important patient subgroups. Our goal is to ensure Madrigal is engaging with the community and driving the science, so we are delivering meaningful advances for patients. With Rezdiffra's long-term patent protection, we have the runway to invest, innovate and define the future of mash care. With that, I'll hand it over to Mardi.

Mardi Dier: Thank you, Dave. Turning to Slide 15 and a summary of our financials. First quarter 2026 net sales totaled $311.3 million, up 127% year-over-year. We're off to a strong start in 2026. As we discussed on the last call, our results reflect the typical Q1 effect due to benefit plan changes in insurance reverifications plus a step-up in gross to net related to our commercial contracting efforts for first-line access. The team did an excellent job managing all the moving parts in the quarter. We were able to steadily add patients and our gross to net came in better than we anticipated.

We now expect our gross to net discount to be in the mid- to high 30s for the rest of 2026. Looking ahead, the fundamentals of the business are strong. And as Bill discussed, Q2 is off to a great start. For the rest of 2026, we expect to steadily add patients and generate robust net sales growth. Moving to operating expenses, which include a total of $34 million of noncash stock-based compensation expense in the quarter. Cost of sales for the first quarter of 2026 was $26.8 million compared to $4.5 million in the prior year period. Cost of sales at this point primarily reflects royalties owed to Roche.

R&D expenses for the first quarter of 2026 were $108.7 million compared to $44.2 million in the prior year period. The increase was primarily due to onetime upfront business development expenses of $54.3 million. As a reminder, the $25 million upfront payment and related expenses for ARO-PNPLA3 will be recorded in the second quarter. SG&A expenses for the first quarter of 2026 were $268.5 million compared to $167.9 million in the prior year period. The increase was primarily due to continued investment in commercial activities for Rezdiffra, including head count for the endocrinology field force expansion that occurred in the fourth quarter of 2025, as well as marketing efforts, including our DTC campaign.

Looking ahead, we expect full year 2026 R&D expenses to be roughly the same as 2025 which is inclusive of the onetime upfront payments we've announced for strategic business development investments in both periods. We expect full year 2026 SG&A expenses to increase compared to 2025 with the annualization of the Endo sales force as we continue to support the launch of Rezdiffra and build the foundation for our expected long-term growth. This includes some choppiness with higher Q2 SG&A expenses in 2026 due to timing of certain marketing expenses, including DTC, then studies for the rest of the year. Net loss for the first quarter of 2026 was $94.4 million compared to $73.2 million for the prior year period.

Net loss for the first quarter was inclusive of onetime upfront business development expenses of $54.3 million. While our focus remains on supporting our top line growth and building our pipeline, we are also preparing for profitability. Turning to our balance sheet. We ended the first quarter of 2026 with $817.9 million in cash, cash equivalents, restricted cash and marketable securities compared to $988.6 million at the end of 2025. The balance reflects several quarter specific uses of cash, including onetime upfront business development payments and timing of API purchases to support future Rezdiffra manufacturing.

With this strong cash position, we continue to be well resourced to support the ongoing launch of Rezdiffra and the advancement of multiple pipeline programs and continued business development. So to close, Slide 16 captures what we've discussed this morning. Rezdiffra continues to deliver incredible commercial performance with a trailing 12-month net sales now exceeding $1.1 billion, and demand remained strong with patient growth more than doubling since Q1 2025. We are leading in a market that is still in the early stages of development, but has already expanded nearly 50% in the last 2 years. This reinforces both the scale and the opportunity and the runway that remains ahead of us.

We also see significant upside beyond F2-F3 with F4C representing an important next phase of growth in an indication where there are currently no approved therapies. And importantly, we're not standing still. We're investing in our pipeline of more than 10 programs designed to build on Rezdiffra's foundation and extend our leadership across the full spectrum of MASH. Taken together, this is a company built for sustainable value creation. We believe Madrigal is exceptionally well positioned in 2026 and beyond. I'll now turn the call back over to Tina and open the Q&A session.

Tina Ventura: Thanks, Mardi. Let's move into the Q&A portion of the call. Brilla, please go ahead and provide instructions for the Q&A session.

Operator: [Operator Instructions] Our first question comes from the line of Prakhar Agarwal with Cantor Fitzgerald.

Prakhar Agrawal: Congrats on the quarter. Maybe just on Rezdiffra. What are you seeing on the 2Q trends so far and the expectations for patient adds for the rest of the year? And as a follow-up, now that [indiscernible] has been on the market for MASH for a few quarters, what are you seeing on the impact to rise in the market, if any?

William Sibold: Thanks for the question, Prakhar. Look, as we take a look at the Q2 trends, I mean stepping -- first of all, they're great. So I'll get to that in a second. Context over 42,250 patients on drug as we exit Q1, 2.5x growth over last year at this time, really impressive. And in the context of we are at the very beginning of a market. We fully expect this is going to be a mega blockbuster, $1.1 billion in the last 4 quarters, we're in a really great space. So to put in perspective, how are things going in the second quarter, we're off to a strong start. We're carrying that momentum. We're steadily adding patients.

Maybe it's best to put it in the context of Wegovy that you mentioned as well. Wegovy had now 3/4 of launch that we've been out there. It's being used, but certainly not to the detriment of Rezdiffra. We continue to steadily add patients through it. You have to think Wegovy and GLP-1s are really becoming a background therapy. In fact, most of the doctors that we talk to say they're already on a GLP-1 when they come into the office. So they're coming into the office on a GLP-1 and they have F2-F3 MASH. So our profile looks really, really strong there. So it's out there. We're seeing them, but we're not seeing any real difference.

And maybe as a final proof point as I talked about us having our best MBRx week in the last quarter. And as we exit April, it's been our best NBRx month since launch. So we're really excited about the rest of the year. We'll be steadily adding patients, just as we've said from [indiscernible]

Operator: The next question comes from the line of Ash Verma with UBS.

Ashwani Verma: Congrats on the quarter. So maybe just can you talk about the breadth of prescribing right now? And how do you think that would evolve? Is it fair to assume that bulk of the prescribing right now is coming from gastroenterologists. And when do you start to get traction from hepatology, which is kind of like a smaller patient audience and then endos when does that become a big source. And then on the 1Q new patient ad dynamic. So it seems like of 36,000 new patients that you added, which is lower than some of the recent quarters.

We saw this dynamic in the first quarter of last year as well when you have 5,000 and then kind of doubled from there. So is it primarily the New Year insurance deductible reset that's driving that? And how does the rest of the year shake out on a new patient dynamic?

William Sibold: Great. Thanks, Ash. Let me start there. So the Q1 adds, again, it falls into our steadily adding patients, and it is a Q1 effect. That's really it. I mean when you think about the Q1 effect, the Q1 effect applies to virtually 100% of your patients on therapy. And remember, what we are presenting is the number of patients that are on drug on the last day of the quarter, right? So you have patients that are coming in the top and then the patients that are on drug. So it is a -- that's the Q1 effect that you have since everyone is exposed to it.

So as I said in the last question, we expect to steadily add patients throughout the rest of the year. Q2 is off to a strong start. Maybe the discussion then about breadth of prescriber. We have over 10,000 prescribers now, which is plenty of breadth for us, though we continue to add new prescribers every day. When you think about just the numbers of physicians, gastroenterologists, outnumber hepatologists, 10:1. So you're going to see the majority of prescriptions that are flowing through them. hepatologists, they were out of the gates a little faster. They have treated the disease longer, probably a little bit better prepared. In fact, we know they were better prepared.

We had to wire the system practice by practice with the others. Endocrinology, they're just coming on board. It was really fourth quarter that we started our efforts there. And you have to think about endocrinologists as being where gastroenterologists were about 2.5 years ago, right? So it's something that they've been seeing some match, but they haven't really thought about it. Now they're starting to more actively look and we're wiring the system for each of those endocrinologists as well. So we see them as in the future being a really productive specialty for us. As I said, they see all these patients with background -- on background GLP-1s, yet they're still seeing F2F3 MASH.

So we think that in the future, that becomes a valuable specialty for us as well.

Operator: The next question comes from the line of Kripadwar Kunda with Truist Securities.

Unknown Analyst: I have a question about patient mix. I think you just mentioned that GLPs are likely going to be backbone therapy. But you had also previously talked about how 25% of refer patients are on a combo. Can you talk about how that has evolved over the last few quarters? And also, some of the KOL tracks, not all that we've done, say that they prefer [indiscernible] for F2 would be helpful to understand the F2/F3 split that you are seeing in the real world?

William Sibold: Yes. Thanks for the question. And you're right. We still continue to see 25-plus percent of patients that are on Rezdiffra also on a GLP-1 and over 50% have been previously exposed. So we expect that trend to continue. We expect that most patients that are going to come in, in the future will have had experience with the GLP-1. So those dynamics seem to be in place. Now your second question, was it's about?

Tina Ventura: 50-50 still.

William Sibold: And I know some people have thought, well, wouldn't prescribers want to clear the F3s first. And I think it has to do with you have a patient sitting in front of you that's 1 to 2 steps away from cirrhosis. Are you going to wait to treat an F2, not knowing how fast they're going to progress to F3 or to cirrhosis? And no, you're not going to wait. You're going to make the call on that patient what you think their risk factors are and initiate therapy. So we still see -- and that's been pretty consistent since the start of launch, about a 50-50 split between F2/F3.

Operator: The next question comes from the line of Ritu Baral with TD Cowen.

Ritu Baral: I have a more sort of high-level question on diagnostic growth as you see it, Bill, through the rest of the year and next year. Do you think that you could be that it could be worthwhile to spend more on disease awareness. Now that competitive diagnostic awareness programs may be slowing with the maturity of the GLP-1 launches in MASH, and how you think about maybe stepping up SG&A to support top line growth versus clinical development, versus your approach to profitability. And then if you have -- there's some client questions coming in on how you think about estimates for the full year, which still sit at 1.48, I think, but this change in gross to net.

William Sibold: Okay. So let me start off with on the diagnostic growth question, Ritu. Thanks for the question. So look, I think the proof is in the market sizing that we've seen. In just 2 years, the market grew almost 50% from 315,000 addressable patients to 460,000 addressable patients. And we think that -- and remember, diagnosis went from 1.5 million to 1.9 million. What you're seeing there is that there are more patients that are being diagnosed. And most importantly, they're getting into the specialist offices that were calling on it so that there is a potential for them to get a Rezdiffra prescription.

So I think our efforts -- and this is where we believe Novo's helped as well by creating more awareness of the disease. So I think that we've already seen the proof point that by having a product, by having more than one company, the market is growing. Now specifically on diagnostics, what we're also seeing is more and more interest by practices purchasing NITs and being able to do point-of-care diagnosis. And that's another good trend that we expect to continue over time. So I think that will also facilitate staging of patients and then the ability to treat and then most importantly, to see how the patients are doing over time.

So maybe what I'll do now is turn it over to Mardi to answer the rest of the questions.

Mardi Dier: Yes. Thanks, Ritu. And I think you had a number of questions embedded in there, so I'll pick through them. Starting with SG&A. Yes. So clearly, we want to support this what we think is going to be a mega blockbuster brand through the efforts of our sales force and our commercial efforts, including marketing campaign and DTC. And we talked about that -- and we talked about SG&A for the rest of the year, you're going to see an increase in Q2 and then steadies for the rest of the year. But absolutely, we want to be in front of the growth and support the brand as best we can.

And then that leads to a question about gross to net for the year as well. So how did that look? So gross to net, as we said, we believe we have some favorability going into the rest of the year. We now have better clarity after we got through Q2. Remember, we -- this is a new brand. So we get clarity every quarter. This was a Q1 quarter that we look at what the various components are. And I would say the team did an excellent job managing gross to net for the quarter and set us up for the rest of the year.

So we believe we'll be in the mid- to high 30s for the rest of the year. And I would say, for Q1, we were even a little bit more favorable to that, but we're in good shape on the gross to net side. So that leads us to now SG&A and gross to net, what we think for the full year. So the full year, yes. We are good with the consensus that you mentioned for the full year. That sounds good, and we're also looking good for with the same analogy. So we seem to be right on track and feel good about the rest of the year.

And then the last point that you brought up was about profitability. As we look at it, profitability, we believe is inevitable. We're going to be a profitable company, and that's why we're preparing for profitability now. If we look at 2026 specifically, we're not going to be profitable in 2026. And specifically in Q2, with the PNPLA3 acquisition, we will not be profitable in Q2 either. Could there be other quarters where we tip into profitability perhaps, but it's really going to depend on our onetime spend. But beyond 2026 without specifics, profitability is inevitable, and we're planning for that.

Operator: The next question comes from the line of Yasmeen Rahimi with Piper Sandler.

Yasmeen Rahimi: Congrats to a strong quarter and also really great news on hearing gross tomato go down with one of our favorite questions. But let we transition to MAESTRO outcome. I mean we're almost halfway through the year. Would love to understand at what point do you really get visibility on how the events are tracking and fine-tuning guidance? And sort of also helping understand expectations. I know you take point that looks at the event rate you've been consistent saying they're tracking.

Would love to kind of get sort of color on how you're thinking about what we could learn more around [indiscernible] outcome and the upcoming between now and sort of year-end to kind of crop us for a very important pipeline expansion opportunity.

William Sibold: Great, Yas. Thank you very much for the question. And it represents a huge opportunity for us. This is a really high unmet . Dave, could you -- could I pass it over to you to answer the specific questions, please?

David Soergel: Sure. Yes. Thanks, Yas. Yes, I mean, obviously, a critical study for us. And as we said, we're seeing events track in range of our expectations. -- and we continue to project the trial to deliver in 2027. With these smaller-sized trials, precision is sometimes difficult, and we want to give you a good estimate of when to expect that. And so when we have that precision, we'll provide you an update. But right now, we're still saying '27 events are tracking and we're excited to see the results.

Operator: The next question comes from Eli -- more with Barclays.

Eliana Merle: Bill, you alluded to this with patients coming in already on GLP-1, but can you elaborate on what you're seeing in terms of combination use with GLP-1 specifically, maybe the latest in terms of the proportion of risk creation also -- and then, I guess, what does payer coverage for combination looked like since [indiscernible] got the formal label for MASH?

William Sibold: Great. Thanks, Ellie. We're still seeing around 25% of patients that are concomitantly on GLP-1 with Rezdiffra. And we think that's going to increase. That's our belief is that it's just inevitable. I mean there's just really so many patients that are on a GLP. Regarding access, we have great access. I have to say. I mean, since day 1 of launch, we have had, I would call it even exceptional access. And as we moved into 2026 with the contracting that we bid, we maintain that great access. I think it's like everything else, it's a subtlety.

You can use a GLP-1 in combination with Rezdiffra if the GLP-1s prescribed for one of the other indications that GLP-1 is indicated in. Now what we haven't seen and don't have good data on is just if there's any that have a double mass prescription, we don't think payers would allow that, but they're certainly allowing a GLP-1 to be used for another indication and then Rezdiffra being used for MASH. And I think from what we're hearing more and more from prescribers is that having the combination makes sense in a lot of ways.

And certainly, we believe that based upon us going out and getting an oral GLP-1 last year, we think that it is a combination that could make sense. If you recall, if we saw a greater than 5% weight loss in patients that were not on the GLP-1 and our Maestro NASH trial, that it led to an improved effect on fibrosis for Rezdiffra. So we're going to pharmacologically induce that, so to speak, with the GLP-1. That's the hope, and that's the study that, as Dave said, or we said previously, we have that Phase I study of our oral GLP-1 kicking off in the next weeks.

Operator: The next question comes from Thomas Smith with Leerink Partners.

Thomas Smith: Congrats on the quarter. Your pipelines expanded substantially here over the last 12 months, multiple [indiscernible] programs. The oral lift that you got 2 inhibitor. It sounds like a lot of optionality, but can you just provide some updated thoughts on the clinical strategy and positioning across these doublet or triplet combos, maybe the criteria you're going to use to advance these programs beyond proof of concept. And then can you also comment on your appetite for additional deals in BD following the string of recent deals?

William Sibold: Thanks, Tom. Let me just provide maybe some context about how we're thinking about our pipeline. And then Dave, if you could jump into the specifics. It goes back to this opportunity that we have. We're at the very beginning of the treatment of the disease that's had no therapies and is an incredibly high unmet need, #1 cause of liver transplants for women in America, #2 for men. We have the foundational therapy and we expect that this market is really set up for decades of growth. We're at the front end with a foundational therapy that is really effective, and we're seeing that in the real world.

Feedback has just been truly impressive from what we're hearing from prescribers that are using the product and from patients as well. So when you've got this opportunity with a product that's already a blockbuster to think about long-term leadership, you take that opportunity based on the success of Rezdiffra and the future dynamics of the market and the fact that so many people have decided to step out of the market. Pfizer steps out, J&J steps out, BMS steps out, et cetera, et cetera, based on failure with some of the mining Pfizer actually just -- they just can't bring it -- they couldn't bring it forward. So it was better in our hands.

So what we've done is we've gone out and looked for mechanisms of action that we think make sense in combination with Rezdiffra. Those mechanisms may not have been strong enough, good enough to compete as a monotherapy. But if we can put them together with Rezdiffra and get even more efficacy across the whole population or a subpopulation, that is a step to long-term leadership. Either as a fixed-dose combination, if it's oral or is a regimen where you've got a once-a-day pill and in every 3- to 6-month siRNA, just like the deal that we did with Arrowhead, which we think is fantastic. We've also been able to do this in an incredibly capital-efficient manner.

For under $300 million, we have assembled a leading pipeline. You just don't see that. I haven't seen that in any other therapeutic area. And we -- because of our leadership position, I think, have been able to access opportunities that others it probably wouldn't make sense for. So that's how we're thinking about it. And yes, we've done a really good amount of BD in the last 10 months now, I guess it is. what's our appetite going forward? Look, we're still constantly looking at everything out there that is potential in MASH.

And where we see an opportunity that could make sense with the mechanism that we like and we don't have we would look at that opportunity and bring it in. But again, Think about how we've done it already, which is extremely efficiently, and we will keep that discipline going forward. So maybe with that, I'll just pass it over to Dave to comment on any specifics.

David Soergel: Yes. That's a great summary, Bill. I mean I think the one way to think about it, as Bill was highlighting, is we have the foundational therapy, right? So we Rezdiffra to look for combination partners with to improve efficacy and improve outcomes for patients. So it's the idea. And our approach has been, we look for validated targets with complementary biology, and we're modality agnostic. So that's how we built the pipeline. We have small molecules. We have siRNAs, anything that could potentially work more effectively with Rezdiffra, that's great. Now it's important to start off with -- Rezdiffra also sets a high bar. Rezdiffra works very well across all subpopulations as we've seen from MAESTRO NASH.

So our bar for bringing products forward when we conduct Phase II studies is that they have to be meaningfully that could deliver an potential meaningful benefit to patients at the end of Phase II. But our decisions will all be data-driven. And we've talked about a couple of different examples where we talk about, for example, PNPLA3, where there's a very specific patient population that we're targeting. So patients who are homozygous for I148M, PNPLA3 mutations, again, highly prevalent mutation, highly burdensome in terms of clinical outcome. But we believe that with Rezdiffra as the foundation, adding PNPLA3 may provide an even greater benefit for those patients.

And as Bill was just highlighting for GLP-1, it's a different strategy, right? So that's to produce modest but important weight loss for patients that can drive Rezdiffra's antifibrotic effect. So what we're looking for in early clinical development in these sort of initial combination studies are primarily will be biomarkers like changes in MRI-PDFF, but also other biomarkers of fibrosis and other blood-based and imaging biomarkers to help us make decisions about what to move forward into Phase III. But that Phase III transition has to be underpinned by data that leads us to believe that these products are going to be meaningful additions to the therapeutic armamentarium.

And in every case, we believe that these programs all have that potential.

William Sibold: Right. And just maybe to put a finer point on it as well. If they show a benefit, move them forward fast, if they don't, kill them fast. And that is a little bit of a -- again, another difference at Magical because we're not beholden to a single pipeline asset performing for the company to actually be something, we can be ruthless in our prosecution of these trials and we will. If it works, great. If it doesn't, I mean, great, we move on because we're already starting with the product that we have, which is Rezdiffra, which is the enabler of this strategy.

Operator: The next question comes from Akash Tewari with Jeffries.

Unknown Analyst: This is Manoj on for Akash. Just one on from [indiscernible] So master outcome baseline post show around 150,000 mean platelet count in the population. While this seems lower than the around 180 in the symmetry Phase II, it still seems to be higher than the FC, the LA data you were showing like which was, I think, around 120,000. So -- in the oil data you saw around 2% to 3% of [indiscernible] even, but given this outcome that baseline population platelet count is above that data. Do you expect to see some difference in the even rate there based on this platelet count difference, mean platelet count difference?

William Sibold: Great. Thanks for the question. Dave, I'm going to pass it over to you.

David Soergel: You got it. Yes, so you're highlighting a really important point, which is in these F4c trials, you have to ensure that you enroll the right patient population within the F4c population. F4c is not a monolithic disease, right? So patients who've just transitioned, for example, from F3 to F4 might take them a while to progress to decompensation, whereas patients who have CSPH, plenty significant portal hypertension are right on the cusp of having a decompensation event -- and those are the patients that are more likely to drive events in the near term.

So as you're highlighting, one way that you measure clinically significant portal hypertension is including platelet counts, along with liver stiffness measurements, using the Baveno criteria. And as we've talked about before, in our -- both in our open-label extension study and in MAESTRO outcomes, we've allowed patients with low platelet counts, so greater than or equal to 70,000 to enroll in the study. So there are patients with quite low platelet counts. And that's not uniform across all Phase III protocols. So we believe that our outcomes trial is enriched exactly the right way.

So using a variety of criteria to enrich the population to make sure that we see the outcomes as we are and yet have an opportunity to bring these patients back from the brink of big on the cusp of decompensation and bring them into less urgent stage of their disease. So I think on that basis, if you look across the open-label extension period -- open-label extension study and MAESTRO outcomes, the populations are broadly comparable. There are going to be some differences just because the sample sizes are very different. But the inclusion criteria are very similar and we are seeing rates of CS PH in both studies that give us confidence.

Paul, I think we'll leave it there.

Operator: The next question comes from Michael DiFiore with Evercore ISI.

Unknown Analyst: Congrats on all the progress. Two for me. First, on PNPLA3, that was previously partnered and later returned to Arrowhead. And without asking you to speak for J&J, can you walk us through what Madrigal saw in the asset that made it attractive today? And what diligence gave you confidence in the program? And then I have a follow-up.

William Sibold: Great. Look, maybe just a general statement, and I start with that, then I'll pass it to Dave. A lot of companies, big pharma have opted out of match, right? They either had failures or they thought they have a single asset, maybe it's not enough, which is a little bit different than us. But Dave, I'll pass it over to you to ask a specific question about why we're so excited about this asset.

David Soergel: Yes. Look, I think -- I mean, you touched on it before, Bill. I mean, I think starting with the fact that we have Rezdiffra we think in our hands, adding a PNPLA3 targeted agent could deliver even better efficacy of patients who are homozygous. So again, coming back to the strategy, so validated targets complementary biology to Rezdiffra and being modality-agnostic, so why did this asset sort of fit into this? So well, clearly, it's a validated genetic target. PNPLA3 is a validated genetic target clearly linked to more rapid and progression of disease of mash and emergence of liver-related events in patients who are homozygous versus those who are wild type.

And I think second, it's a proven modality. So siRNA as we've seen with other products getting to the products -- siRNA getting to the market, it's a safe modality that you can deliver once every 3 to 6, even up to 12 months. So a highly attractive modality with great tolerability. And then last, there are clinical data, right? So we had we had Phase I data in patients where we could see reductions of liver fat.

So we had a proof of concept in Phase I and as we've seen with the Maestro NASH data with Rezdiffra, if you can reduce more liver fat, we can see more efficacy with [ resmetirom. ] So again, the complementarity of these 2 mechanisms was particularly compelling as well. So I think for all those reasons, we bring in a clinical stage asset, advance our pipeline and have a potential offering for patients who really need a therapy.

William Sibold: Yes. And I mean, look, it was a 46% reduction in liver fat. So I mean, that's pretty impressive efficacy from our perspective. And let's see what happens when you put it in combination. I think it's a really exciting question to ask. And look, it's been through Phase I, right? This is an acceleration of our siRNA efforts.

Operator: The next question comes from Andy Chan with Wolfe Research.

Unknown Analyst: This is Brandon on for Andy. We're curious to know if you can rank order the different NASH combos that you have, which one are you most excited about clinically? Thanks for the question. I'll pass it over to my view is it's whichever one works the best is going to be the one that we like the best or those that work the best. But Dave, how are you thinking about it?

David Soergel: Pick amongst our children. I mean I think they're -- look, we brought them in. We brought each of these assets in for the reasons that we've talked about because they all have the potential to significantly move the needle on efficacy for a subpopulation or within the broader group. The decision is about which to move forward into Phase III programs and ultimately to registration, depends on the combination data. So as we've outlined, we have -- because we're focused on MASH and we have experience in this field, a lot of experience running clinical trials in MASH. We know the sites well. We know how to run the trials.

So we're going to be able to be efficient, run these studies and deliver the data that helps us make that decision. But as I said, the data have to be meaningfully different. So for PNPLA3, like Bill said, 46% reduction in MRI-PDFF is great. combined with Rezdiffra, if that's even more, we push more patients into that super responder category, amazing. We're going to bring that program into Phase III. And that's true for all of these programs. So it's really will come Phase II, and we'll move the programs forward in a way that's going to make sense to build the pipeline and to deliver value to patients.

Operator: The next question comes from Jon Wolleben with Citizens.

Jonathan Wolleben: Congrats on the progress. Bill, you made a comment about, I think, a path to peak sales. And I'm wondering if you could talk a little bit about what that path looks like in terms of timing, how long you get there and how big you think reefer could be down the road?

William Sibold: Thanks, Jon. You noticed. Look, I think that in our belief, this is going to be a mega blockbuster. How do we get there? We continue to do what we're doing. We have the diagnosis rates increasing. We have more patients get on drug, we steadily add patients and we build our path to feed sales. I think it's pretty straightforward. We just continue to do the hard work we're doing. There's plenty of patients. The market is growing penetration rated low diagnosis rate at the moment is low. All of these things are increasing. So there's literally years and years and years ahead of this market expanding.

And as I said earlier, as more companies come in, it actually helps us because it drives market expansion. Our initial focus was always on that 315,000 just who was sitting in those prescribers' offices, at the moment. Fortunately now, we even have more potential with the advent of other companies coming in and driving diagnosis, et cetera. So keep doing what we're doing, steadily add and we'll find our path to peak.

Tina Ventura: Great. Thanks, Jon. Operator, we have time for 1 more question, please.

Operator: And the next question comes from William Wood with B. Riley Securities.

William Wood: Congrats on a very nice quarter. Just thinking about in terms of your pipeline, as you said, you've got about 10 pipeline assets as is. should we expect any more add-ons to your pipeline? And if so, what might you be looking for, whether it's more oral options, more siRNAs or maybe something that we're not really discussing here.

And then also in terms of just sort of in terms of that go, no-go situation, I was curious if any projects that you've sort of brought on or been developing internally has sort of hit that threshold that you've already called and maybe speak to anything might have changed where you're looking in the future or if you're pretty content with what you're guiding now you're just looking to execute.

William Sibold: William, thank you very much for the question. Look, we have assembled, I think, the leading pipeline in NASH, and we've done it for less than $300 million. again, as I said a few things, it says a lot of people still aren't interested in mesh, which is great because we are, and we're in a better position to lead the innovation based on our ability to use Rezdiffra's foundational backbone therapy. So yes, we're still looking. Clearly, we've taken quite a bit off the table for us to pursue. But it will be very mechanistic-driven is there something that we think looks particularly interesting. There's still I would say a couple of mechanisms out there, which look interesting.

Then the question becomes finding one and finding one that's transactable. So expect that there may be additional. Certainly, we'd like to kind of round out the pipeline, if you will, with our -- with the remaining -- some remaining mechanisms, but we're a big way through it now. Efforts are really focused towards now getting these in the clinic generating data and being able to make decisions. So that's how we're thinking about it.

But it's really, again, in less than a year's time to have come from a single asset company, that has an incredibly promising future growing into a mega blockbuster to now, because of that success, be able to build that next stage of leadership, which we think is really long-term focused.

Tina Ventura: Great. Thanks, Bill. And thank you, Brilla, 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 about 2 hours. Thanks for joining us.

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

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