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What changed in MADRIGAL PHARMACEUTICALS, INC.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of MADRIGAL PHARMACEUTICALS, INC.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+521 added−459 removedSource: 10-K (2024-02-28) vs 10-K (2023-02-23)

Top changes in MADRIGAL PHARMACEUTICALS, INC.'s 2023 10-K

521 paragraphs added · 459 removed · 280 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

121 edited+86 added−104 removed94 unchanged
Biggest changeThe process required by the FDA before a drug or biologic may be marketed in the United States generally involves the following: • completion of preclinical laboratory tests, animal studies and formulation studies, some in accordance with the FDA’s current Good Laboratory Practices, or GLP, the Animal Welfare Act administered and enforced by the United States Department of Agriculture, and other applicable regulations; • submission to the FDA of an IND which must become effective before human clinical trials may begin; 21 • approval by an institutional review board, or IRB, before each trial may be initiated at each clinical site; • performance of adequate and well-controlled human clinical trials under protocols submitted to the FDA and reviewed and approved by each IRB, conducted in accordance with federal regulations and according to Good Clinical Practices, or GCP, to establish the safety and efficacy of the proposed drug for its intended use; • submission to the FDA of an NDA; • completion of registration batches and validation of the manufacturing process to show ability to consistently produce quality batches of product; • satisfactory completion of an FDA Advisory Committee review, if applicable; • satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the drug is produced to assess compliance with current good manufacturing practice, or cGMP, to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity; and • FDA review and approval of the NDA.
Biggest changeThe process required by the FDA before a drug or biologic may be marketed in the United States generally involves the following: • completion of preclinical laboratory tests, animal studies and formulation studies, some in accordance with the FDA’s current Good Laboratory Practices, or GLP, the Animal Welfare Act administered and enforced by the United States Department of Agriculture, and other applicable regulations; • submission to the FDA of an IND which must become effective before human clinical trials may begin; 16 Table of Contents • approval by an institutional review board, or IRB, before each clinical trial may be initiated at each clinical site; • performance of adequate and well-controlled human clinical trials under protocols submitted to the FDA and reviewed and approved by each IRB, conducted in accordance with federal regulations and according to Good Clinical Practices, or GCP, to establish the safety and efficacy of the proposed drug for its intended use; • preparation and submission to the FDA of an NDA (and the FDA’s acceptance for filing of the NDA); • completion of registration batches and validation of the manufacturing process to show ability to consistently produce quality batches of product; • satisfactory completion of an FDA Advisory Committee review, if applicable; • satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the drug is produced to assess compliance with current good manufacturing practice, or cGMP, to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity; • satisfactory completion of FDA audits of clinical trial sites to assure compliance with GCP and the integrity of the clinical data; • payment of user fees and procurement of FDA approval of the NDA; • FDA review and approval of the NDA; and • compliance with any post-approval requirements, including, as applicable, REMS and post-approval studies required by the FDA.
Resmetirom 80 mg Resmetirom 100 mg Placebo Safety population (N=327) (N=324) (N=318) At least one TEAE 289 (88.4) 279 (86.1) 260 (81.8) At least one Serious TEAE 20 (6.1) 24 (7.4) 20 (6.3) TEAE ≥ Grade 3 Severity 26 (8.0) 29 (9.0) 29 (9.1) AE discontinuations from study All treatments combined, n=21; (2.17%) 10 Resmetirom 80 mg Resmetirom 100 mg Placebo Maximum NCI CTCAE Severity Grade Grade 1 99 (30.3) 99 (30.6) 92 (28.9) Grade 2 164 (50.2) 151 (46.6) 139 (43.7) AEs over 10% Diarrhea 76 (23.2) 101 (31.2) 44 (13.8) Nausea 38 (11.6) 59 (18.2) 25 (7.9) AE (adverse event); TEAE (treatment emergent adverse event); NCI (National Cancer Institute); CTCAE (Common Terminology Criteria for Adverse Events) The following hierarchically-controlled key secondary endpoints were reported for both the 80 and 100 mg resmetirom dose groups.
Resmetirom 80 mg Resmetirom 100 mg Placebo Safety population (N=327) (N=324) (N=318) At least one TEAE 289 (88.4) 279 (86.1) 260 (81.8) At least one Serious TEAE 20 (6.1) 24 (7.4) 20 (6.3) TEAE ≥ Grade 3 Severity 26 (8.0) 29 (9.0) 29 (9.1) AE discontinuations from study All treatments combined, n=21; (2.17%) Resmetirom 80 mg Resmetirom 100 mg Placebo Maximum NCI CTCAE Severity Grade Grade 1 99 (30.3) 99 (30.6) 92 (28.9) Grade 2 164 (50.2) 151 (46.6) 139 (43.7) AEs over 10% Diarrhea 76 (23.2) 101 (31.2) 44 (13.8) Nausea 38 (11.6) 59 (18.2) 25 (7.9) AE (adverse event); TEAE (treatment emergent adverse event); NCI (National Cancer Institute); CTCAE (Common Terminology Criteria for Adverse Events) The following hierarchically-controlled key secondary endpoints were reported for both the 80 and 100 mg resmetirom dose groups.
The cost-effectiveness model publication found that resmetirom is a potentially cost-effective treatment option for patients with NASH patients with significant liver fibrosis based on an analysis performed from a U.S. commercial payer perspective. In the U.S., the Institute for Clinical and Economic Review (“ICER”) performs value assessments of prescription drugs, medical tests, devices, and health system delivery innovations.
The cost-effectiveness model publication found that resmetirom is a potentially cost-effective treatment option for NASH patients with significant liver fibrosis based on an analysis performed from a U.S. commercial payer perspective. In the U.S., the Institute for Clinical and Economic Review (“ICER”) performs value assessments of prescription drugs, medical tests, devices, and health system delivery innovations.
We do not have long-term supply agreements for any of our product candidates and regularly obtain supplies and services related to our product candidates from CMO’s on a purchase order basis. We currently have a single source for API and finished product for resmetirom and are developing a second source for API.
We do not have long-term supply agreements for any API of our product candidates and regularly obtain supplies and services related to our product candidates from CMO’s on a purchase order basis. We currently have a single source for API and finished product for resmetirom and are developing a second source for API.
Phase 1 clinical trials are generally designed to evaluate the 22 safety, dosage tolerance, absorption, metabolism, distribution and excretion of the product candidate in humans, and, if possible, to gain early evidence of effectiveness. • Phase 2: This phase involves studies in a limited patient population to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product candidate for specific targeted diseases and to determine dosage tolerance and optimal dosage. • Phase 3: This phase involves trials undertaken to further evaluate dosage, clinical efficacy and safety in an expanded patient population at geographically dispersed clinical study sites.
Phase 1 clinical trials are generally designed to evaluate the safety, dosage tolerance, absorption, metabolism, distribution and excretion of the product candidate in humans, and, if possible, to gain early evidence of effectiveness. • Phase 2: This phase involves studies in a limited patient population to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product candidate for specific targeted diseases and to determine dosage tolerance and optimal dosage. • Phase 3: This phase involves trials undertaken to further evaluate dosage, clinical efficacy and safety in an expanded patient population at geographically dispersed clinical study sites.
For example, the Patient Protection and Affordable Care Act, as amended the ACA, contains provisions that may reduce the profitability of drug products, including, for example, increased rebates for drugs reimbursed 29 by Medicaid programs, extension of Medicaid rebates to Medicaid managed care plans, mandatory discounts for certain Medicare Part D beneficiaries and annual fees based on pharmaceutical companies’ share of sales for branded prescription drugs to federal health care programs.
For example, the Patient Protection and Affordable Care Act, as amended the ACA, contains provisions that may reduce the profitability of drug products, including, for example, increased rebates for drugs reimbursed by Medicaid programs, extension of Medicaid rebates to Medicaid managed care plans, mandatory discounts for certain Medicare Part D beneficiaries and annual fees based on pharmaceutical companies’ share of sales for branded prescription drugs to federal health care programs.
The primary endpoint of MAESTRO-NASH OUTCOMES is the incidence of composite liver-related outcome events, including all-cause mortality, liver transplant, hepatic decompensation (ascites, hepatic encephalopathy, gastroesophageal variceal hemorrhage), and confirmed increase of Model for End-Stage Liver Disease (MELD) score from 11 A positive outcome is expected to support the full approval of resmetirom for noncirrhotic NASH, potentially accelerating the timeline to full approval.
The primary endpoint of MAESTRO-NASH OUTCOMES is the incidence of composite liver-related outcome events, including all-cause mortality, liver transplant, hepatic decompensation (ascites, hepatic encephalopathy, gastroesophageal variceal hemorrhage), and confirmed increase of Model for End-Stage Liver Disease (MELD) score from A positive outcome is expected to support the full approval of resmetirom for noncirrhotic NASH, potentially accelerating the timeline to full approval.
FDA may also require, as appropriate, that certain post-approval studies be 24 underway prior to accelerated approval or within a specified time from the date of approval. Accelerated approval sponsors must submit progress reports every six months on required post-approval trials. An approval letter authorizes commercial marketing of the product candidate with specific prescribing information for specific indications.
The FDA may also require, as appropriate, that certain post-approval studies be underway prior to accelerated approval or within a specified time from the date of approval. Accelerated approval sponsors must submit progress reports every six months on required post-approval trials. An approval letter authorizes commercial marketing of the product candidate with specific prescribing information for specific indications.
Payers frequently review ICER reports when making coverage decisions about new therapies. In October 2022, ICER announced plans to perform a value assessment of resmetirom and obeticholic acid for the treatment of NASH. We have engaged in the assessment process by responding to data requests from ICER and providing public comment on ICER’s cost-effectiveness modeling methods.
Payers frequently review ICER reports when making coverage decisions about new therapies. In October 2022, ICER announced plans to perform a value assessment of resmetirom and obeticholic acid for the treatment of NASH. We engaged in the assessment process by responding to data requests from ICER and providing public comment on ICER’s cost-effectiveness modeling methods.
In that instance, the exclusivity period does not preclude filing or review of an ANDA or 505(b)(2) application; rather, the FDA is precluded from granting final approval to the ANDA or 505(b)(2) 25 application until three years after approval of the RLD. Additionally, the exclusivity applies only to the conditions of approval that required submission of the clinical data.
In that instance, the exclusivity period does not preclude filing or review of an ANDA or 505(b)(2) application; rather, the FDA is precluded from granting final approval to the ANDA or 505(b)(2) application until three years after approval of the RLD. Additionally, the exclusivity applies only to the conditions of approval that required submission of the clinical data.
The manufacturing process must be capable of consistently producing quality batches of the product candidate and, among other things, the manufacturer must develop methods for testing the identity, strength, quality and purity of the final drug.
The manufacturing process must be capable of consistently producing quality batches of the product candidate and, among other things, the manufacturer must develop methods for testing and assuring the identity, strength, quality and purity of the final drug.
To evaluate the potential value and cost effectiveness of resmetirom as a treatment for NASH patients with significant liver fibrosis, we have initiated a series of health economics outcomes research studies and published a preliminary cost-effectiveness model (Javanbakht, Pharmacoecon Open, 2022) using data from the Phase 2 study of resmetirom.
To evaluate the potential value and cost effectiveness of resmetirom as a treatment for NASH patients with significant fibrosis, we initiated a series of health economics outcomes research studies and published a preliminary cost-effectiveness model (Javanbakht, Pharmacoecon Open, 2022) using data from the Phase 2 study of resmetirom.
Each of these patents and applications relates to resmetirom, including composition-of-matter, certain dosage forms, methods of making resmetirom, its use in the treatment of key disease indications, or other THR beta analogs and uses thereof. Our current patent portfolio covers the United States and certain other jurisdictions worldwide.
Each of these patents and applications relates to resmetirom, including composition-of-matter, certain polymorph forms, methods of making resmetirom, its use in the treatment of key disease indications, or other THR beta analogs and uses thereof. Our current patent portfolio covers the United States and certain other jurisdictions worldwide.
An IRB at each institution participating in the clinical trial must review and approve each protocol before a clinical trial commences at that institution and must also approve the information regarding the trial and the consent form that must be provided to each trial subject or his or her legal representative, monitor the study until completed and otherwise comply with IRB regulations.
An IRB at each institution participating in the clinical trial must review and approve each protocol before a clinical trial commences at that institution and must also approve the consent form that must be provided to each trial subject or his or her legal representative, monitor the study until completed and otherwise comply with IRB regulations.
The U.S. government and state legislatures have shown significant interest in implementing cost containment programs to limit the growth of government-paid health care costs, including price controls, restrictions on reimbursement and requirements for substitution of generic products for branded prescription drugs.
Healthcare Reform The U.S. government and state legislatures have shown significant interest in implementing cost containment programs to limit the growth of government-paid health care costs, including price controls, restrictions on reimbursement and requirements for substitution of generic products for branded prescription drugs.
In particular, please read our definitive proxy statement, which will be filed with the SEC in connection with our 2023 annual meeting of stockholders, our quarterly reports on Form 10-Q and any current reports on Form 8-K that we may file from time to time.
In particular, please read our definitive proxy statement, which will be filed with the SEC in connection with our 2024 annual meeting of stockholders, our quarterly reports on Form 10-Q and any current reports on Form 8-K that we may file from time to time.
The three international patent applications can be used as the basis for multiple additional patent applications worldwide. In addition, pursuant to the Roche Agreement, Roche granted us an exclusive license to certain United States and foreign patents and patent applications owned by Roche and Roche know-how relating to resmetirom.
The two international patent applications can be used as the basis for multiple additional patent applications worldwide. In addition, pursuant to the Roche Agreement, Roche granted us an exclusive license to certain United States and foreign patents and patent applications owned by Roche and Roche know-how relating to resmetirom.
Resmetirom 100 mg OL Resmetirom 80 mg p-value Resmetirom 100 mg p-value Placebo LDLc %CFB (SE) (Week 24) -21 (1.9) -12.7 (2.1) -14.4 (2.1) -1.7 (2.0) ApoB %CFB (SE) (Week 24) -22 (1.5) -14.6 (1.5) -16.6 (1.6) -0.1 (1.5) MRI-PDFF %CFB (Week 16) -49% -41% -48% -6% Liver volume PDFF correction %CFB -60% MRI-PDFF %CFB (Week 52) -53% -43% -48% -8% Liver volume PDFF correction %CFB -61% Triglycerides baseline >150 mg/dL, CFB (SE) -65 (8.3) -55.6 (8.6) NA -59 (6.5) NA -6.9 (16.1) Triglycerides baseline >150 mg/dL (geomean) %CFB (95% CI) -25 (3.1) -19.5 (-27.0 to -11.1) =.0005 -21.5 (-28.0 to -14.3) -2.1 (-10.6 to 7.4) CFB (change from baseline); SE (standard error); APOB (Apolipoprotein B); MRI-PDFF (magnetic resonance imaging proton density fat-fraction); CI (confidence interval); OL, open label non-cirrhotic arm randomized concurrently with double-blind arms MASESTRO-NASH OUTCOMES.
Resmetirom 100 mg OL Resmetirom 80 mg p-value Resmetirom 100 mg p-value Placebo LDLc %CFB (SE) (Week 24) -21 (1.9) -12.7 (2.1) -14.4 (2.1) -1.7 (2.0) ApoB %CFB (SE) (Week 24) -22 (1.5) -14.6 (1.5) -16.6 (1.6) -0.1 (1.5) MRI-PDFF %CFB (Week 16) -49 % -41 % -48 % -6 % Liver volume PDFF correction %CFB -60 % MRI-PDFF %CFB (Week 52) -53 % -43 % -48 % -8 % Liver volume PDFF correction %CFB -61 % Triglycerides baseline >150 mg/dL, CFB (SE) -65 (8.3) -55.6 (8.6) NA -59 (6.5) NA -6.9 (16.1) Triglycerides baseline >150 mg/dL (geomean) %CFB (95% CI) -25 (3.1) -19.5 (-27.0 to -11.1) =.0005 -21.5 (-28.0 to -14.3) -2.1 (-10.6 to 7.4) CFB (change from baseline); SE (standard error); APOB (Apolipoprotein B); MRI-PDFF (magnetic resonance imaging proton density fat-fraction); CI (confidence interval); OL, open label non-cirrhotic arm randomized concurrently with double-blind arms 10 Table of Contents MAESTRO-NASH OUTCOMES.
Important inclusion criteria included the presence of three risk factors of metabolic syndrome, a level of liver fibrosis (measured by FibroScan) consistent with a range of stages of liver fibrosis, and >=8% liver fat (measured by MRI-PDFF). Adverse events observed in the MAESTRO-NAFLD-1 trial were generally mild to moderate in severity.
Important inclusion criteria included the presence of three risk factors of metabolic syndrome, a level of liver fibrosis (measured by FibroScan) consistent with a range of stages of liver fibrosis, and >=8% liver fat (measured by MRI-PDFF). 9 Table of Contents Adverse events observed in the MAESTRO-NAFLD-1 trial were generally mild to moderate in severity.
We currently rely, and expect to rely, on third-party contract manufacturers, or CMOs, for all required starting materials, API and finished product for the manufacture of any product candidates that we may develop for larger-scale preclinical and clinical testing, as well as for commercial quantities of any drug candidates that are approved.
We currently rely, and expect to rely, on third-party contract manufacturers, or CMOs, for all required starting materials, active pharmaceutical ingredients (API) and finished product for the manufacture of any product candidates that we may develop for larger-scale preclinical and clinical testing, as well as for commercial quantities of any drug candidates that are approved.
In addition, the FDA may require a sponsor to conduct Phase 4 testing which involves clinical trials designed to further assess a drug’s safety and effectiveness after NDA approval, and may require testing and surveillance programs to monitor the safety of approved products which have been commercialized.
In addition, the FDA may require a sponsor to conduct additional (i.e., Phase 4) testing which involves clinical trials designed to further assess a drug’s safety and effectiveness after NDA approval, and may require testing and surveillance programs to monitor the safety of approved products which have been commercialized.
A product that is not an NCE may qualify for a three-year period of exclusivity if the NDA contains new clinical data (other than bioavailability studies), derived from studies conducted by or for the sponsor, that were necessary for approval.
A product that is not an NCE may qualify for a three-year period of exclusivity if the NDA or supplement to an approved NDA contains new clinical data (other than bioavailability studies), derived from studies conducted by or for the sponsor, that were necessary for approval.
Under FDORA, FDA must specify the conditions for any post-approval studies by the date of the accelerated approval and gives the agency much flexibility in setting forth such conditions, which may include enrollment targets, study protocol and milestones – including the target date of study completion.
Under FDORA, the FDA must specify the conditions for any post-approval studies by the date of the accelerated approval and the agency has flexibility in setting forth such conditions, which may include enrollment targets, study protocol and milestones – including the target date of study completion.
Consistent with previous Phase 2 and Phase 3 data, the most common adverse events reported with greater frequency in the resmetirom groups versus placebo were an excess of generally mild and transient diarrhea at the beginning of therapy, in 28%, 34%, 16% in the 80 mg, 100 mg and placebo groups, respectively, and generally mild nausea that occurred at rates of 22%, 19% and 13% in the 80 mg, 100 mg and placebo arms, respectively.
Consistent with previous Phase 2 and Phase 3 data, the most common adverse events reported with greater frequency in the resmetirom groups versus placebo were an excess of generally mild and transient diarrhea at the beginning of therapy, in 27%, 33%, 16% in the 80 mg, 100 mg and placebo groups, respectively, and generally mild nausea that occurred at rates of 22%, 19% and 13% in the 80 mg, 100 mg and placebo arms, respectively.
The Roche Agreement imposes various diligence, milestone payment, royalty payment, insurance, indemnification, and other obligations on us. Issued patents directed to resmetirom, including certain dosage forms, have statutory expiration dates between 2026 and 2037, excluding any patent term extensions or equivalents thereof that might be available following the grant of marketing authorizations.
The Roche Agreement imposes various diligence, milestone payment, royalty payment, insurance, indemnification, and other obligations on us. Issued patents directed to resmetirom have statutory expiration dates between 2026 and 2037, excluding any patent term extensions or equivalents thereof that might be available following the grant of marketing authorizations.
The FDASIA made permanent the Best Pharmaceuticals for Children Act, or BPCA, which provides for an additional six months of marketing exclusivity if a sponsor conducts clinical trials in children in response to a written request from the FDA, or a Written Request.
The FDASIA made permanent the Best Pharmaceuticals for Children Act, or BPCA, which provides for an additional six months of marketing 20 Table of Contents exclusivity if a sponsor conducts clinical trials in children in response to a written request from the FDA, or a Written Request.
If new safety issues are identified following approval, the FDA may require the NDA sponsor to take certain measures, such as revising the approved labeling to reflect the new safety information, conducting post-market studies or clinical trials to assess the new safety information, and/or implementing or changing a risk evaluation and mitigation strategy, or REMS, program to mitigate newly-identified risks.
If new safety issues are identified following approval, the FDA may require the NDA sponsor to take certain measures, such as revising the approved labeling to reflect the new safety information, conducting post-market studies or clinical trials to assess the new safety information, and/or implementing or changing a REMS program to mitigate newly-identified risks.
The key factors affecting the success of any approved product will be its efficacy, safety profile, drug interactions, method of administration, pricing, reimbursement and level of promotional activity relative to those of competing drugs. • Our potential competitors may have substantially greater financial, technical, and personnel resources than us. In addition, many of these competitors have significantly greater commercial infrastructures.
The key factors affecting the success of any approved product will be its efficacy, safety profile, drug interactions, method of administration, pricing, reimbursement and level of promotional activity relative to those of competing drugs. Our potential competitors include companies with substantially greater financial, technical, and personnel resources than us. In addition, our competitors may have significantly greater commercial infrastructures.
If a product receives regulatory approval, the approval may be further limited to specific diseases, dosages or patient populations, or the indications for use may otherwise be limited, which could restrict the commercial value of the product.
If a product receives regulatory approval, the approval may be further limited to specific diseases, 19 Table of Contents dosages or patient populations, or the indications for use may otherwise be limited, which could restrict the commercial value of the product.
In addition to the accumulation of fat in the liver, NASH is characterized by inflammation and cellular damage with or without fibrosis, the first stage of liver scarring, which may ultimately progress to cirrhosis. Within NASH cirrhosis, patients can be categorized as being compensated or decompensated.
Other NASH Disease State Characteristics In addition to the accumulation of fat in the liver, NASH is characterized by inflammation and cellular damage with or without fibrosis, the first stage of liver scarring, which may ultimately progress to cirrhosis. Within NASH cirrhosis, patients can be categorized as being compensated or decompensated.
We have 20 a pending patent application for other THR beta analogs that, if issued, would be expected to expire in the United States and in countries outside of the United States in 2043, excluding any patent term adjustment that might be available following the grant of the patent and any patent term extensions that might be available following the grant of marketing authorizations.
We have a pending patent application for other THR beta analogs that, if issued, would be expected to expire in the United States and in countries outside of the United States in 2043, excluding any patent term adjustment that might be available following the grant of the patent.
Our ability to compete successfully will depend largely on our ability to leverage our collective experience in drug discovery, development and commercialization to: • discover and develop medicines that are differentiated from other products in the market, • obtain patent and/or proprietary protection for our products and technologies; • obtain required regulatory approvals; • obtain a commercial partner; • commercialize our drugs, if approved; and • attract and retain high-quality research, development and commercial personnel.
Our ability to compete successfully will depend largely on our ability to leverage our collective experience in drug discovery, development and commercialization to: • discover and develop medicines that are differentiated from other products in the market, • obtain patent and/or proprietary protection for our products and technologies; 14 Table of Contents • obtain required regulatory approvals; • commercialize our drugs, if approved; and • attract and retain high-quality research, development and commercial personnel.
The Food and Drug Administration Safety and Innovation Act, or FDASIA, which was enacted in 2012, made permanent the Pediatric Research Equity Act, or PREA, which requires a sponsor to conduct pediatric studies for most drugs and biologics, for a new active ingredient, new indication, new dosage form, new dosing regimen or new route of administration.
The Food and Drug Administration Safety and Innovation Act, or FDASIA, which was enacted in 2012, made permanent the Pediatric Research Equity Act, or PREA, which requires a sponsor to conduct pediatric studies for most drug and biologic applications and supplements to applications, for a new active ingredient, new indication, new dosage form, new dosing regimen or new route of administration.
Product candidates may qualify for review and approval under the subpart H-accelerated approval pathway if the candidates are intended to treat a serious condition, provide meaningful therapeutic benefit over existing treatments, and demonstrate an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit or on an intermediate clinical endpoint.
Product candidates may qualify for review and approval under the 21 CFR Part 314, Subpart H accelerated approval pathway if the candidates are intended to treat a serious or life-threatening condition, provide meaningful therapeutic benefit over existing treatments, and demonstrate an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit or on an intermediate clinical endpoint.
We have pending patent applications for resmetirom that, if issued, would be expected to expire in the United States and in countries outside of the United States between 2033 and 2042, excluding any patent term adjustment that might be available following the grant of the patent and any patent term extensions that might be available following the grant of marketing authorizations.
We have pending patent applications for resmetirom that, if issued, would be expected to expire in the United States and in countries outside of the United States between 2033 and 2044, excluding any patent term adjustment that might be available following the grant of the patent.
In January 2022, Madrigal announced topline results from the Phase 3 MAESTRO-NAFLD-1 safety study of resmetirom. Madrigal reported that resmetirom demonstrated statistical significance for primary and key secondary endpoints summarized below, from the double-blind placebo-controlled 969-patient portion of the study.
In January 2022, Madrigal announced topline results from the Phase 3 MAESTRO-NAFLD-1 safety study of resmetirom. The MAESTRO-NAFLD-1 study was published in Nature Medicine in November 2023. Madrigal reported that resmetirom demonstrated statistical significance for primary and key secondary endpoints summarized below, from the double-blind placebo-controlled 969-patient portion of the study.
NASH is a serious inflammatory form of nonalcoholic fatty liver disease, or NAFLD. NAFLD has become the most common liver disease in the United States and other developed countries and is characterized by an accumulation of fat in the liver with no other apparent causes.
NASH is a more advanced form of nonalcoholic fatty liver disease (NAFLD). NAFLD has become the most common liver disease in the United States and other developed countries and is characterized by an accumulation of fat in the liver with no other apparent causes.
The rate of study discontinuation for adverse events was low: 2.8%, 7.7% and 3.7% for the 80 mg, 100 mg and placebo groups, respectively. SAEs occurred at expected rates based on the patient population.
The rate of study discontinuation for adverse events over the entire treatment period was low: 2.8%, 7.7% and 3.4 % for the 80 mg, 100 mg and placebo groups, respectively. SAEs occurred at expected rates based on the patient population.
The FDA must send a non-compliance letter to any sponsor that fails to submit the required assessment, keep a deferral current or fails to submit a request for approval of a pediatric formulation.
The FDA may send a non-compliance letter to any sponsor that fails to submit the required assessment, maintain a current deferral or submit a request for approval of a pediatric formulation.
The submission of an NDA is subject to the payment of user fees under the Prescription Drug User Fee Act, or PDUFA, as amended; a waiver of such fees may be obtained under certain limited circumstances.
The submission of an NDA is subject to the payment of user fees under the Prescription Drug User Fee Act, or PDUFA, as amended; a waiver of such fees may be obtained under certain limited circumstances. The sponsor under an approved NDA is also subject to annual program user fees.
After eight years, a biosimilar product application may be submitted and the sponsoring companies may rely on the marketing authorization holder’s data.
After eight years, a biosimilar product application may be submitted and the sponsoring 22 Table of Contents companies may rely on the marketing authorization holder’s data.
Coverage policies and third-party reimbursement rates may change at any time. Even if favorable coverage and reimbursement status is attained for one or more products for which we receive regulatory approval, less favorable coverage policies and reimbursement rates may be implemented in the future.
Coverage policies and third-party reimbursement rates may change at any time. Even if favorable coverage and reimbursement status is attained for a product for which we receive regulatory approval, less favorable coverage policies and reimbursement rates may be implemented in the future.
Sponsors of all controlled clinical trials, except for Phase 1 trials, are required to submit certain clinical trial information for inclusion in the public clinical trial registry and results data bank maintained by the National Institutes of Health, which are publicly available at http://clinicaltrials.gov.
In general, sponsors of most interventional clinical trials that are not Phase 1, are required to submit certain clinical trial information for inclusion in the public clinical trial registry and results data bank maintained by the National Institutes of Health, which are publicly available at http://clinicaltrials.gov.
Orphan drugs in Europe enjoy economic and marketing benefits, including up to ten years of market exclusivity for the approved indication unless another applicant can show that its product is safer, more effective or otherwise clinically superior to the orphan-designated product.
Orphan drugs in Europe enjoy economic and marketing benefits, including up to ten years of market exclusivity for the approved indication unless another applicant can show that its product is safer, more effective or otherwise clinically superior to the orphan-designated product. In 2023, the European Commission published a proposal that intends to reduce the orphan market exclusivity period.
In 2011, we commenced Phase 1 clinical trials and subsequently paid Roche a related milestone payment. In October 2016, we commenced a Phase 2 study in NASH and subsequently paid Roche a related milestone payment. In 2019, we commenced a Phase 3 study in NASH and subsequently paid Roche a $2 million related milestone payment.
In October 2016, we commenced a Phase 2 study in NASH and subsequently paid Roche a related milestone payment. In 2019, we commenced a Phase 3 study in NASH and subsequently paid Roche a $2.0 million related milestone payment.
Adoption of government controls and measures, and tightening of restrictive policies in jurisdictions with existing controls and measures, could limit payments for pharmaceuticals. On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022, or IRA, which, among other things, establishes Medicare Part B and Part D inflation rebate schemes.
Adoption of government controls and measures, and tightening of restrictive policies in jurisdictions with existing controls and measures, could limit payments for pharmaceuticals. The Inflation Reduction Act of 2022, or IRA, among other things, establishes Medicare Part B and Part D inflation rebate schemes.
A second biopsy was conducted after 52 weeks of treatment for assessment of the dual primary endpoints. The primary efficacy analysis assessed histological response at 52 weeks in 955 patients with biopsy-confirmed NASH with fibrosis (modified intent-to-treat (mITT) population) that excluded 11 ITT patients who had their Week 52 biopsy after Week 60 due to COVID-related reasons per regulatory guidelines.
The primary efficacy analysis assessed histological response at 52 weeks in 955 patients with biopsy-confirmed NASH with significant fibrosis (modified intent-to-treat (mITT) population) that excluded 11 ITT patients who had their Week 52 biopsy after Week 60 due to COVID-related reasons per regulatory guidelines.
MAESTRO-NASH is an ongoing blinded Phase 3 clinical trial, and enrolled patients continue on therapy after the Week 52 liver biopsy for up to a total of 54 months to accrue hepatic clinical outcome events including histologic conversion to cirrhosis and hepatic decompensation events. MAESTRO-NAFLD-1.
AE, adverse event; GI, gastrointestinal; MACE, major adverse cardiovascular event; TEAE, treatment emergent adverse event. MAESTRO-NASH is an ongoing blinded Phase 3 clinical trial, and enrolled patients continue on therapy after the Week 52 liver biopsy for up to a total of 54 months to accrue hepatic clinical outcome events including histologic conversion to cirrhosis and hepatic decompensation events. MAESTRO-NAFLD-1.
The Roche Agreement will expire, unless earlier terminated pursuant to other provisions of the agreement, on the last to occur of (i) the expiration of the last valid claim of a licensed patent covering the manufacture, use or sale of products containing resmetirom, or (ii) ten years after the first sale of a product containing resmetirom. 18 Competition The development and commercialization of new drugs is highly competitive.
The Roche Agreement will expire, unless earlier terminated pursuant to other provisions of the agreement, on the last to occur of (i) the expiration of the last valid claim of a licensed patent covering the manufacture, use or sale of products containing resmetirom, or (ii) ten years after the first sale of a product containing resmetirom.
That deadline can be extended under certain circumstances, including by the FDA’s requests for additional information. The targeted action date can also be shortened to within 6 months of the 60-day filing date for products that are granted priority review designation because they are intended to treat serious or life-threatening conditions and demonstrate the potential to address unmet medical needs.
The targeted action date can also be shortened to within 6 months of the 60-day filing date for products that are granted priority review designation because they are intended to treat serious or life-threatening conditions and demonstrate the potential to address unmet medical needs.
The FDA conducts a preliminary review of a submitted NDA within 60 days from receipt to ensure that the application is sufficiently complete for substantive review before it accepts the application for filing. The FDA may request additional information rather than accept an NDA for filing. In this event, the NDA must be resubmitted with the additional information.
The FDA conducts a preliminary review of a submitted NDA within 60 days from receipt to ensure that the application is sufficiently complete for substantive review before it accepts the application for filing. The FDA may 18 Table of Contents request additional information rather than accept an NDA for filing.
Patients without a second biopsy due to early study discontinuation or missing liver biopsy (~17% across treatment arms) were included and considered as non-responders in the primary efficacy analyses (mITT). The compliance to treatment was high and minimally impacted by COVID-19 pandemic restrictions.
Patients without a second biopsy due to early study discontinuation or missing liver biopsy (~17% across treatment arms) were included and considered as non-responders in the primary efficacy analyses (mITT).
We will face competition with respect to all product candidates we may develop or commercialize in the future from pharmaceutical and biotechnology companies worldwide.
Competition The development and commercialization of new drugs is highly competitive. We will face competition with respect to all product candidates we may develop or commercialize in the future from pharmaceutical and biotechnology companies worldwide.
In February 2023, a “Draft Evidence Report” was released with ICER’s initial assessment of resmetirom cost-effectiveness. Threshold analyses were conducted by ICER to calculate the annual price needed to meet commonly accepted cost-effectiveness thresholds for quality-adjusted life years (QALY) gained. In ICER’s draft assessment, the annual price to achieve $50,000 per QALY gained is $31,700.
In May 2023, a “Final Evidence Report” was released with ICER’s assessment of resmetirom cost-effectiveness. Threshold analyses were conducted by ICER to calculate the annual price needed to meet commonly accepted cost-effectiveness thresholds for quality-adjusted life years (QALY) gained.
Based on market research and an assessment of the potential market opportunity for therapies to treat NASH with significant fibrosis, we have developed a commercial strategy for the launch of resmetirom that focuses on NASH specialist healthcare providers (hepatologists, gastroenterologists and a subset of endocrinologists) who already treat NASH patients with significant fibrosis.
Based on market research and an assessment of the potential market opportunity for therapies to treat NASH with significant fibrosis, we have developed a commercial strategy for the potential launch of resmetirom that focuses on educating approximately 14,000 NASH specialist healthcare providers (hepatologists, gastroenterologists, a small number of endocrinologists and the associated advanced practice providers) in clinics that already treat NASH patients with significant fibrosis.
Other secondary liver biopsy endpoints that were achieved at both doses include ≥2 point reduction in NAS with no worsening of fibrosis, ≥2 point reduction in NAS with ≥1-stage improvement in fibrosis, NASH resolution (with ≥2 point reduction in NAS) with ≥1-stage improvement in fibrosis, and a 2-stage reduction in fibrosis without worsening of NAS. 9 Multiple secondary endpoints were achieved, including statistically significant reduction from baseline in liver enzymes (ALT, AST and GGT).
Other secondary liver biopsy endpoints that were achieved at both doses include ≥2 point reduction in NAS with no worsening of fibrosis, ≥2 point reduction in NAS with ≥1-stage improvement in fibrosis, NASH resolution (with ≥2 point reduction in NAS) with ≥1-stage improvement in fibrosis, and a 2-stage reduction in fibrosis without worsening of NAS.
Expedited Programs The FDA maintains several programs to facilitate and expedite the development and review of drug applications that are intended for the treatment of a serious or life-threatening disease or condition for which there is no effective treatment and that demonstrate the potential to address unmet medical needs for such a 26 disease or condition, including Fast Track Designation, Breakthrough Designation, Priority Review (discussed above in United States Review and Approval Processes), and the Accelerated Approval pathway (discussed above in United States Review and Approval Processes).
Expedited Programs The FDA maintains several programs to facilitate and expedite the development and review of drug applications that are intended for the treatment of a serious or life-threatening disease or condition that meet certain other criteria, including Fast Track Designation, Breakthrough Designation, Priority Review (discussed above in United States Review and Approval Processes), and the Accelerated Approval pathway (discussed above in United States Review and Approval Processes).
In addition, this study has the potential to support an additional indication for resmetirom in patients with well-compensated NASH cirrhosis. RESMETIROM PHASE 2 CLINICAL TRIAL in NASH. As summarized above, the Company successfully completed its Phase 2 clinical trial in NASH in 2018.
In addition, this study has the potential to support an additional indication for resmetirom in patients with compensated NASH cirrhosis. RESMETIROM PHASE 2 CLINICAL TRIAL in NASH. The Company successfully completed its Phase 2 clinical trial in NASH in 2018. In this clinical trial, resmetirom demonstrated statistical significance in the primary endpoint (p Lancet in 2019.
NASH is strongly associated with cardiovascular disease, or CVD, and the most common cause of death in NASH patients is CVD. Progression to cirrhosis and other late-stage complications can occur within five to ten years after an initial NASH diagnosis. NASH patients with type-2 diabetes have a heightened risk of NASH disease progression.
The progression rate from compensated cirrhosis to decompensation, HCC, or death is ~20% over two years. NASH is strongly associated with cardiovascular disease, or CVD, and the most common cause of death in NASH patients is CVD. Progression to cirrhosis and other late-stage complications can occur within five to ten years after an initial NASH diagnosis.
Third-party payors may limit coverage to specific products on an approved list which might not include all of the FDA-approved products for a particular indication. Moreover, a payor’s decision to provide coverage for a product does not imply that an adequate reimbursement rate will be approved.
The process for determining whether a payor will provide coverage for a product may be separate from the process for setting the reimbursement rate that the payor will pay for the product. Third-party payors may limit coverage to specific products on an approved list which might not include all of the FDA-approved products for a particular indication.
No portion of our website is incorporated by reference into this Annual Report on Form 10-K. 30 We advise you to read this Annual Report on Form 10-K in conjunction with other reports and documents that we file from time to time with the SEC.
We advise you to read this Annual Report on Form 10-K in conjunction with other reports and documents that we file from time to time with the SEC.
We plan to continue to rely on CMOs for API, finished product, packaging, storage, and distribution for both clinical supplies and any of our product candidates that receive health authority approval. Research and Development Research and development expenses primarily consist of costs associated with our research activities, including the preclinical and clinical development of our product candidates.
We plan to continue to rely on CMOs for API, finished product, packaging, storage, and distribution for both clinical supplies and any of our product candidates that receive health authority approval.
In clinical trials, a surrogate endpoint is a measurement of laboratory or clinical signs of a disease or condition that substitutes for a direct measurement of how a patient feels, functions, or survives. Surrogate endpoints can often be measured more easily or more rapidly than clinical endpoints.
In clinical trials, a surrogate endpoint is a measurement of laboratory or clinical signs of a disease or condition that is thought to predict clinical benefit, such as how a patient feels, functions, or survives, but is not itself a measure of clinical benefit. Surrogate endpoints can often be measured more easily or more rapidly than clinical endpoints.
We rely, and expect to continue to rely, on third parties for the production of clinical and commercial quantities of our product candidates. Future inspections by the FDA and other regulatory agencies may identify compliance issues at the facilities of our contract manufacturers that may disrupt production or distribution, or require substantial resources to correct.
Future inspections by the FDA and other regulatory agencies may identify compliance issues at the facilities of our contract manufacturers that may disrupt production or distribution, or require substantial resources to correct.
In addition, timely safety reports must be submitted to the FDA and the investigators for serious and unexpected adverse events or animal test results that suggest a significant risk to human subjects.
In addition, timely safety reports must be submitted to the FDA and the investigators for serious and unexpected suspected adverse reactions, any clinically important increase in the rate of a serious suspected adverse reaction over that listed in the protocol, or animal test results that suggest a significant risk to human subjects.
Phase 1, Phase 2, and Phase 3 testing may not be completed successfully within any specified period, if at all. Further, success in either preclinical studies or early-stage clinical trials does not assure success in later-stage clinical trials.
These decisions are based on the data monitoring committee’s independent review of data from the ongoing trial. Phase 1, Phase 2, and Phase 3 testing may not be completed successfully within any specified period, if at all. Further, success in either preclinical studies or early-stage clinical trials does not assure success in later-stage clinical trials.
Once a pharmaceutical candidate is identified for development, it enters the preclinical testing stage. Preclinical tests include laboratory evaluations of product chemistry, toxicity and formulation, as well as animal studies, to assess the safety and quality of the product. Animal studies must be performed in compliance with federal regulations and requirements, including, as applicable, GLP and the Animal Welfare Act.
Once a pharmaceutical candidate is identified for development, it enters the preclinical testing stage. Preclinical tests include laboratory evaluations of product chemistry, toxicity and formulation, as well as animal studies, to assess the initial safety and quality profile of the product.
An application for a drug that treats a serious condition and, if approved, would provide a significant improvement in treatment, prevention or diagnosis of disease may qualify for priority review. Priority review for an NDA for a new molecular entity will be six months from the date that the NDA is filed.
An application for a drug that treats a serious condition and, if approved, would provide a significant improvement in the safety or effectiveness of the treatment, prevention or diagnosis of disease may qualify for priority review.
The FDA has ten months in which to complete its initial review of a standard new molecular entity NDA. The FDA does not always meet its goal dates and in certain circumstances the goal date may be extended. Priority review does not change the standard for approval, but may expedite the approval process.
The FDA does not always meet its goal dates and in certain circumstances, the goal date may be extended. Priority review does not change the standard for approval, but may expedite the approval process.
Reimbursement Significant uncertainty exists regarding the coverage and reimbursement status of products approved by the FDA and other government authorities. In the United States, sales of any products for which we may receive regulatory approval for commercial sale will depend in significant part on the availability and adequacy of coverage and reimbursement from third-party payors.
In the United States, sales of any products for which we may receive regulatory approval for commercial sale will depend in significant part on the availability and adequacy of coverage and reimbursement from third-party payors. Third-party payors include federal and state government authorities, managed care providers, private health insurers and other organizations.
Dual Primary Endpoints (52 Weeks) and Key Secondary Endpoint (24 weeks) Primary Endpoint Resmetirom 80 mg (n=316) p-value Resmetirom 100 mg (n=321) p-value Placebo (n=318) NASH resolution (ballooning o, inflammation 0,1) with ≥2-point reduction in NAS and no worsening of fibrosis 26 % 30 % 10 % ≥-stage improvement in fibrosis with no worsening of NAS 24 % 0.0002 26 % 14 % Key Secondary Endpoint LDL-C lowering (24 weeks) -12 % -16 % 1 % All biopsies were read independently by two central pathologists.
The compliance to treatment was high and minimally impacted by COVID-19 pandemic restrictions. 7 Table of Contents Dual Primary Endpoints (52 Weeks) and Key Secondary Endpoint (24 weeks) Primary Endpoint Resmetirom 80 mg (n=316) p-value Resmetirom 100 mg (n=321) p-value Placebo (n=318) NASH resolution (ballooning 0, inflammation 0,1 with ≥2-point reduction in NAS) and no worsening of fibrosis 25.9 29.9 9.7 ≥1-stage improvement in fibrosis with no worsening of NAS 24.2 25.9 14.2 Key Secondary Endpoint LDL-C lowering (24 weeks) -13.6 -16.3 0.1 All biopsies were read independently by two central pathologists.
Driven by this epidemic of obesity, NASH is projected to become the leading cause of liver transplants in the near future. Given the extremely limited availability of organ donors and high transplant costs, NASH patients who require transplantation will place a significant economic burden on the healthcare system.
NASH is the leading cause of liver transplants for women in the U.S. and is expected to soon be the leading cause of liver transplants overall. Given the extremely limited availability of organ donors and high transplant costs, NASH patients who require transplantation will place a significant economic burden on the healthcare system.
During the development of a new drug, sponsors are given opportunities to meet with the FDA at certain points. These points may be prior to submission of an IND, at the end of Phase 2, and before an NDA is submitted. Meetings at other times may be requested.
These points may be prior to submission of an IND, at the end of Phase 2, and before an NDA is submitted. Meetings at other times may be requested.
To support patient access and affordability, we intend to establish a specialty pharmacy network to distribute resmetirom and a patient services hub to help patients initiate and remain adherent to resmetirom therapy.
We will distribute resmetirom through a specialty pharmacy network and, to support patient access and affordability, we will provide patient support services including reimbursement programs and educational support to help appropriate patients initiate and remain adherent to resmetirom therapy.
From time to time, legislation is drafted, introduced and passed in Congress that could significantly change the statutory provisions governing the approval, manufacturing and marketing of products regulated by the FDA. In addition to new legislation, FDA regulations and guidance are often revised or interpreted by the agency in ways that may significantly affect our business and our products.
From time to time, legislation is drafted, introduced and passed in Congress that could significantly change the statutory provisions governing the approval, manufacturing and marketing of products regulated by the FDA.
These studies and analytics evaluated the size of the market opportunity for resmetirom as well as physician, patient and payer perspectives on unmet needs in NASH patient care and the resmetirom product profile.
We have conducted quantitative and qualitative market research studies and secondary data analytics to inform the commercial strategy for resmetirom. These studies and analytics evaluated the size of the market opportunity for 12 Table of Contents resmetirom as well as physician, patient and payer perspectives on unmet needs in NASH patient care and the resmetirom product profile.
Our principal executive offices are located at 200 Barr Harbor Drive, Suite 200, West Conshohocken, PA 19428. Our Internet website address is www.madrigalpharma.com.
Our principal executive offices are located at 200 Barr Harbor Drive, Suite 200, West Conshohocken, PA 19428. Our Internet website address is www.madrigalpharma.com. No portion of our website is incorporated by reference into this Annual Report on Form 10-K.
Sales and Marketing Madrigal has established a commercial leadership team with expertise in launching pharmaceutical products. As of the date of this filing, Madrigal has no field sales team and no product distribution capabilities.
Commercial Organization Madrigal has established a commercial leadership team with expertise in launching pharmaceutical products. As of the date of this filing, Madrigal has built out a field sales team and product launch capabilities in anticipation of potential accelerated approval in the U.S. for resmetirom.
Except as described above, we have not achieved any additional product development or regulatory milestones under the Roche Agreement and have generated no net sales of products developed from resmetirom. Pursuant to the Roche Agreement, we must use commercially reasonable efforts to conduct clinical and commercial development programs for products containing resmetirom.
Except as described above, we have not achieved any additional product development or regulatory milestones under the Roche Agreement and, as of the filing date of this Form 10-K, have generated no net sales of products developed from resmetirom.
Under the Roche Agreement, Roche exclusively licensed certain patent rights and know-how relating to resmetirom in exchange for consideration consisting of an upfront payment, milestone payments, the remainder of which total $8 million and are tied to regulatory approval in the United States and Europe of resmetirom or any derivative product, and single-digit royalty payments based on net sales of resmetirom and any derivative products, subject to certain reductions.
Under the Roche Agreement, Roche exclusively licensed certain patent rights and know-how relating to resmetirom in exchange for consideration consisting of an upfront payment, milestone payments and single-digit royalty payments based on net sales of resmetirom and any derivative products, subject to certain reductions. In 2011, we commenced Phase 1 clinical trials and subsequently paid Roche a related milestone payment.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

106 edited+102 added−46 removed237 unchanged
Biggest changeThe future regulatory and commercial success of resmetirom is subject to a number of risks, including the following: • we may not have sufficient financial and other resources to complete the necessary clinical trials for resmetirom, including, but not limited to, our planned registrational clinical trials to obtain drug approval; • the mechanism of action of resmetirom is complex and we do not know the degree to which it will translate into a therapeutic benefit, if any, in NASH or any other indication, and we do not know the degree to which the complex mechanism of action may contribute to long term safety issues or adverse events, if any, when resmetirom is taken for prolonged periods such as in the treatment of NASH or any other indication; 32 • delay or inability to reach agreement with the FDA or comparable foreign regulatory authorities on acceptable clinical trial design; • regulators, IRBs or ethics committees may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site; • we may not be able to obtain adequate evidence from clinical trials of efficacy and safety for resmetirom in NASH or any other indication; • we do not know the degree to which resmetirom will be accepted as a therapy by physicians, patients and payors, even if approved; • in our clinical programs for resmetirom, we may experience variability in patients, adjustments to clinical trial procedures and the need for additional clinical trial sites, which could delay our clinical trial progress; • the results of our clinical trials may not meet the level of statistical or clinical significance required by the FDA or comparable foreign regulatory bodies for marketing approval; • patients in our clinical trials may die or suffer other adverse effects for reasons that may or may not be related to resmetirom, which could delay or prevent further clinical development; • the standards implemented by clinical or regulatory agencies may change at any time; • we cannot be certain what efficacy endpoints clinical or regulatory agencies may require in a Phase 3 clinical trial of NASH or for approval of our product candidates; we also cannot be certain if we will be able to gain Subpart H approval of any of our product candidates based on surrogate endpoints; • foreign clinical or regulatory agencies may require efficacy and safety endpoints for Phase 3 clinical trials that may not be favorable to us and different from the results we have observed to date in our current trials; • other differences in the design of our ongoing and planned Phase 3 clinical trials of the treatment of NASH, including the use of a new tablet formulation of resmetirom and/or the inclusion of patients with more advanced NASH, could cause the results of our Phase 3 trials to be less favorable than the results we observed in our Phase 2 trials in NASH; • if we obtain Subpart H approval of resmetirom based on a surrogate endpoint, consistent with our ongoing Phase 3 trial, we will be required to conduct a post-approval clinical outcomes trial under conditions set by FDA to confirm the clinical benefit of the product candidate and if the post-approval trial is not successful we may not be able to continue marketing the product; • we cannot be certain of the number and type of clinical trials and non-clinical studies that FDA or other regulatory agencies will require in order to approve resmetirom for NASH; • if approved for NASH, resmetirom will likely compete with the off-label use of currently marketed products and other therapies in development that may reach approval for NASH prior to resmetirom; and • we may not be able to obtain, maintain or enforce our patents and other intellectual property rights.
Biggest changeThe future success of resmetirom is subject to a number of risks, including the following: • a delay, or inability to reach agreement with the FDA, concerning approval of resmetirom; • regulators, IRBs or ethics committees may not authorize us or our investigators to continue to conduct ongoing trials or complete a clinical trial; • we may not be able to demonstrate or obtain adequate evidence from clinical trials of efficacy and safety for resmetirom; • we do not know the degree to which resmetirom will be accepted as a therapy by physicians, patients and payors, even if approved; • commercial execution risks; • patients in our clinical trials may die or suffer other adverse effects for reasons that may or may not be related to resmetirom, which could delay or prevent clinical development; • we cannot be certain if we will be able to gain full approval of our product candidate following any Subpart H approval based on surrogate endpoints; and • even if we obtain Subpart H approval of resmetirom based on a surrogate endpoint, we are required to conduct complete the clinical outcomes trial under conditions set by FDA to confirm the clinical 26 Table of Contents benefit of the product candidate and if the post-approval trial is not successful we may not be able to continue marketing the product.
In such an event, competitors might be able to enter the market earlier than would otherwise have been the case; • patent applications may not result in any patents being issued; • patents may be challenged, invalidated, modified, revoked, circumvented, found to be unenforceable or otherwise may not provide any competitive advantage; • we and our licensor(s) may not have been the first to make the inventions covered by pending patent applications or issued patents; • we and our licensor(s) may not have been the first to file patent applications for our product candidates or the compositions developed, or for their uses; • others may independently develop identical, similar or alternative products or compositions and uses thereof; • we and our licensor(s)’ disclosures in patent applications may not be sufficient to meet the statutory requirements for patentability; • others may design around our owned and licensed patent claims to produce competitive products which fall outside of the scope of the patents; • others may identify prior art or other bases which could invalidate our or our licensor(s)’ patents; 51 • our competitors might conduct research and development activities in the United States and other countries that provide a safe harbor from patent infringement claims for certain research and development activities, as well as in countries where us and our licensor(s) do not have patent rights, and then use the information learned from such activities to develop competitive products for sale in major commercial markets; • there may be significant pressure on the United States government and international governmental bodies to limit the scope of patent protection both inside and outside the United States for disease treatments that prove successful, as a matter of public policy regarding worldwide health concerns; and • countries other than the United States may have patent laws less favorable to patentees than those upheld by United States courts, allowing foreign competitors a better opportunity to create, develop and market competing product candidates.
In such an event, competitors might be able to enter the market earlier than would otherwise have been the case; • patent applications may not result in any patents being issued; • patents may be challenged, invalidated, modified, revoked, circumvented, found to be unenforceable or otherwise may not provide any competitive advantage; • we and our licensor(s) may not have been the first to make the inventions covered by pending patent applications or issued patents; • we and our licensor(s) may not have been the first to file patent applications for our product candidates or the compositions developed, or for their uses; • others may independently develop identical, similar or alternative products or compositions and uses thereof; • we and our licensor(s)’ disclosures in patent applications may not be sufficient to meet the statutory requirements for patentability; • others may design around our owned and licensed patent claims to produce competitive products which fall outside of the scope of the patents; • others may identify prior art or other bases which could invalidate our or our licensor(s)’ patents; • our competitors might conduct research and development activities in the United States and other countries that provide a safe harbor from patent infringement claims for certain research and development activities, as well as in countries where us and our licensor(s) do not have patent rights, and then use the information learned from such activities to develop competitive products for sale in major commercial markets; • there may be significant pressure on the United States government and international governmental bodies to limit the scope of patent protection both inside and outside the United States for disease treatments that prove successful, as a matter of public policy regarding worldwide health concerns; and • countries other than the United States may have patent laws less favorable to patentees than those upheld by United States courts, allowing foreign competitors a better opportunity to create, develop and market competing product candidates.
A suspension or termination may be imposed due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, 33 inspection of the clinical trial operations or trial site by the FDA, EMA, competent authorities and/or ethics committees of the EU Member States or other regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a product or treatment, failure to establish or achieve clinically meaningful trial endpoints, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial.
A suspension or termination may be imposed due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA, EMA, competent authorities and/or ethics committees of the EU Member States or other regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a product or treatment, failure to establish or achieve clinically meaningful trial endpoints, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial.
Pharmaceutical and other healthcare companies have been sued or found to have violated these laws for a variety of promotional and marketing and other activities, such as: providing free trips, free goods, sham consulting fees and grants and other monetary benefits to prescribers; reporting to pricing services average prices that are then used by federal programs to set reimbursement rates, rebates, and discounts; engaging in off-label promotion; and knowingly submitting false pricing information to the federal government, knowingly misrepresenting that information, or failing to timely submit that information.
Pharmaceutical and other healthcare companies have been sued or found to have violated these laws for a variety of promotional and marketing and other activities, such as: providing free trips, free goods, sham consulting fees and grants and other monetary benefits to prescribers; inaccurately reporting to pricing services average prices that are then used by federal programs to set reimbursement rates, rebates, and discounts; engaging in off-label promotion; and knowingly submitting false pricing information to the federal government, knowingly misrepresenting that information, or failing to timely submit that information.
The Loan Agreement also includes a revenue-based covenant (the “Revenue Covenant”) that could apply commencing at or after the 57 time that financial reporting is due for the quarter ending September 30, 2024; however, the Revenue Covenant will be waived at any time in which the Company maintains, as measured monthly (i) a certain level of cash, cash equivalents and liquid funds relative to outstanding Hercules debt or (ii) a market capitalization of at least $1.2 billion.
The Loan Agreement also includes a revenue-based covenant (the “Revenue Covenant”) that could apply commencing at or after the time that financial reporting is due for the quarter ending September 30, 2024; however, the Revenue Covenant will be waived at any time in which the Company maintains, as measured monthly (i) a certain level of cash, cash equivalents and liquid funds relative to outstanding Hercules debt or (ii) a market capitalization of at least $1.2 billion.
Data protection authorities from the different EU member states, as well as in the United Kingdom and Switzerland, have promulgated national privacy laws that impose additional requirements, which add to the complexity of processing and transferring EU personal data, with the United Kingdom and Switzerland following the EU with the publication of new Model Clauses to be incorporated in all applicable contracts within a specified timeframe in order to legitimize data transfers from those jurisdictions.
Data protection authorities from the different European member states, as well as in the United Kingdom and Switzerland, have promulgated national privacy laws that impose additional requirements, which add to the complexity of processing and transferring EU personal data, with the United Kingdom and Switzerland following the EU with the publication of new Model Clauses to be incorporated in all applicable contracts within a specified timeframe in order to legitimize data transfers from those jurisdictions.
A successful product liability claim or series of claims brought against us, particularly if judgments exceed our insurance coverage, could decrease our cash resources and adversely affect our business, financial condition and results of operations. 41 Our employees, contractors, vendors and partners may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements and insider trading.
A successful product liability claim or series of claims brought against us, particularly if judgments exceed our insurance coverage, could decrease our cash resources and adversely affect our business, financial condition and results of operations. Our employees, contractors, vendors and partners may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements and insider trading.
We may be subject to fines, 48 penalties, or private actions in the event of non-compliance with such laws. The CCPA, the CPRA or other domestic privacy and data protection laws and regulations may increase our compliance costs and potential liability. European data collection is governed by restrictive regulations governing the use, processing and cross-border transfer of personal information.
We may be subject to fines, penalties, or private actions in the event of non-compliance with such laws. The CCPA, the CPRA or other domestic privacy and data protection laws and regulations may increase our compliance costs and potential liability. European data collection is governed by restrictive regulations governing the use, processing and cross-border transfer of personal information.
Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant information from the USPTO or made a misleading statement during prosecution. Third parties may also raise similar claims before the USPTO, even outside the context of litigation. The outcome following legal assertions of invalidity and 53 unenforceability is unpredictable.
Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant information from the USPTO or made a misleading statement during prosecution. Third parties may also raise similar claims before the USPTO, even outside the context of litigation. The outcome following legal assertions of invalidity and unenforceability is unpredictable.
These manufacturers might only be required to conduct a 38 relatively inexpensive study to show that their product has the same active ingredient(s), dosage form, strength, route of administration and conditions of use, or labeling, as our product and that the generic product is bioequivalent to our product, meaning it is absorbed in the body at the same rate and to the same extent as our product.
These manufacturers might only be required to conduct a relatively inexpensive study to show that their product has the same active ingredient(s), dosage form, strength, route of administration and conditions of use, or labeling, as our product and that the generic product is bioequivalent to our product, meaning it is absorbed in the body at the same rate and to the same extent as our product.
Under the Roche Agreement, Roche exclusively licensed certain patent rights and know-how relating to resmetirom in exchange for consideration consisting of an upfront payment, milestone payments tied to the achievement of product development and regulatory milestones, and royalty payments based 49 on net sales of products containing resmetirom or another licensed product, subject to certain reductions.
Under the Roche Agreement, Roche exclusively licensed certain patent rights and know-how relating to resmetirom in exchange for consideration consisting of an upfront payment, milestone payments tied to the achievement of product development and regulatory milestones, and royalty payments based on net sales of products containing resmetirom or another licensed product, subject to certain reductions.
As our operations expand, we likely will need to manage additional relationships with such third parties, as well as additional collaborators, distributors, marketers and suppliers. 39 Maintaining third party relationships for these purposes will impose significant added responsibilities on members of our management and other personnel.
As our operations expand, we likely will need to manage additional relationships with such third parties, as well as additional collaborators, distributors, marketers and suppliers. Maintaining third party relationships for these purposes will impose significant added responsibilities on members of our management and other personnel.
Competitors may 55 use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where we have patent protection but enforcement is not as strong as that in the United States.
Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where we have patent protection but enforcement is not as strong as that in the United States.
If any of our product candidates are approved, but fail to achieve market acceptance or such market is smaller than anticipated, we may not be able to generate significant revenue and our business would suffer.
If any of our product candidates are approved, but fail to achieve full market acceptance or such market is smaller than anticipated, we may not be able to generate significant revenue and our business would suffer.
While we have licensed rights to issued patents in the United 50 States and other jurisdictions for resmetirom, we cannot be certain that the claims in issued patents will not be found invalid or unenforceable if challenged.
While we have licensed rights to issued patents in the United States and other jurisdictions for resmetirom, we cannot be certain that the claims in issued patents will not be found invalid or unenforceable if challenged.
A small number of our stockholders own a substantial amount of our outstanding common stock and may be deemed to have substantial control over us; therefore, your ability to influence corporate matters may be limited.
A small number of our stockholders beneficially own a substantial amount of our outstanding common stock and may be deemed to have substantial control over us; therefore, your ability to influence corporate matters may be limited.
Moreover, because patent applications can 52 take many years to issue, there may be currently-pending patent applications that may later result in issued patents that our product candidates may infringe.
Moreover, because patent applications can take many years to issue, there may be currently-pending patent applications that may later result in issued patents that our product candidates may infringe.
The market price of our common stock could be impacted due to a variety of factors, including: global market or financial developments; prevailing macroeconomic conditions, including potential recession or economic downturns; US market events (including the potential for unusual market trading activity following external short interest developments or social media activity); the outbreak of war or hostilities; NASH therapeutic company developments and/or FDA developments, regardless of whether occurring generally and/or specifically as to our clinical trials and development programs; industry-wide events; and the following events or developments: • the losses we may incur, including increased losses resulting from costs associated with increases in our clinical trial activity; • developments in patent or other proprietary rights owned or licensed by us, our collaborative partners or our competitors; • the progress and results of our clinical trials; 58 • public or regulatory concern as to the safety and efficacy of NASH products developed by us or others or public safety generally; and • litigation.
The market price of our common stock could be impacted due to a variety of factors, including: global market or financial developments; prevailing 50 Table of Contents macroeconomic conditions, including potential recession or economic downturns; US market events (including the potential for unusual market trading activity following external short interest developments or social media activity); the outbreak of war or hostilities; NASH therapeutic company developments and/or FDA developments, regardless of whether occurring generally and/or specifically as to our clinical trials and development programs; industry-wide events; and the following events or developments: • the losses we may incur, including increased losses resulting from costs associated with increases in our clinical trial activity; • developments in patent or other proprietary rights owned or licensed by us, our collaborative partners or our competitors; • the progress and results of our clinical trials; • public or regulatory concern as to the safety and efficacy of NASH products developed by us or others or public safety generally; and • litigation.
Regardless of merit or eventual outcome, liability claims may result in: • decreased demand for any of our future approved products; • injury to our reputation; • withdrawal of clinical trial participants; • termination of clinical trial sites or entire trial programs; • significant litigation costs; • substantial monetary awards to or costly settlements with patients or other claimants; • product recalls or a change in the indications for which products may be used; • loss of revenue; • diversion of management and scientific resources from our business operations; and • the inability to commercialize our product candidates.
Regardless of merit or eventual outcome, liability claims may result in: • decreased demand for any of our future approved products; • injury to our reputation; 37 Table of Contents • withdrawal of clinical trial participants; • termination of clinical trial sites or entire trial programs; • significant litigation costs; • substantial monetary awards to or costly settlements with patients or other claimants; • product recalls or a change in the indications for which products may be used; • loss of revenue; • diversion of management and scientific resources from our business operations; and • the inability to commercialize our product candidates.
In particular, these obligations and restrictions concern the consent of the individuals to whom the personal data relates, the processing details disclosed to the individuals, the sharing of personal data with third parties, the transfer of personal data out of the EU, security breach notifications, as well as substantial potential fines for violations of the data protection obligations.
In particular, these obligations and restrictions concern the consent of the individuals to whom the personal data relates where applicable, the processing details disclosed to the individuals, the sharing of personal data with third parties, the transfer of personal data out of the EU, security breach notifications, as well as substantial potential fines for violations of the data protection obligations.
The IRA further makes changes to the Medicare Part D benefit, including a limit on annual out-of-pocket costs, and a change in manufacturer liability under a new discount program which could negatively affect the profitability of our product candidates. Failure to pay a discount under this new program will be subject to a civil monetary penalty.
The IRA further makes changes to the Medicare Part D benefit, including a limit on annual out-of-pocket costs, and a change in manufacturer liability under a new discount program which could negatively affect the profitability of our product candidates. Failure to pay a 35 Table of Contents discount under this new program will be subject to a civil monetary penalty.
Moreover, even if competitors do not actively promote their product for our targeted indications, physicians may prescribe these products “off-label.” Although off-label prescriptions may infringe or contribute to the infringement of method-of-use patents, the practice is common and such infringement is difficult to prevent or prosecute.
Moreover, even if competitors do not actively promote their product for our targeted indications, physicians may prescribe these products “off-label.” Although off-label prescriptions 44 Table of Contents may infringe or contribute to the infringement of method-of-use patents, the practice is common and such infringement is difficult to prevent or prosecute.
The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection, particularly those relating to biopharmaceuticals, which could make it difficult for us to stop the infringement of our patents or marketing of competing products in violation of our proprietary rights generally.
The legal systems of certain countries, particularly certain developing countries, do not favor the 48 Table of Contents enforcement of patents and other intellectual property protection, particularly those relating to biopharmaceuticals, which could make it difficult for us to stop the infringement of our patents or marketing of competing products in violation of our proprietary rights generally.
The Roche Agreement will expire, unless earlier terminated pursuant to other provisions thereof, on the last to occur of (i) the expiration of the last valid claim of a licensed patent covering the manufacture, use or sale of products containing resmetirom, or (ii) ten years after the first sale of a product containing resmetirom.
The Roche Agreement will expire, unless earlier terminated pursuant to other provisions thereof, on the last to occur of (i) the expiration of the last valid claim of a licensed patent covering the manufacture, use or sale of products containing resmetirom, or (ii) ten years after the first sale of a product 43 Table of Contents containing resmetirom.
An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate, our patent rights, allow third parties to commercialize our technology or products and compete directly with us, without payment to us, or result in our inability to manufacture or commercialize products without infringing third party patent rights.
An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate, our patent rights, allow third parties to commercialize our technology or products and compete directly with us, without payment to us, or 46 Table of Contents result in our inability to manufacture or commercialize products without infringing third party patent rights.
We will evaluate internal opportunities from our compound libraries, and also may choose to in-license or acquire other product candidates as well as commercial products to treat patients suffering from thyroid hormone, orphan or other disorders with high unmet medical needs and limited treatment options.
We will evaluate internal opportunities from our compound libraries, and also may choose to in-license or acquire other product candidates as well as commercial products to treat patients suffering from disorders with high unmet medical needs and limited treatment options.
However, we may not receive an extension if we fail to apply within applicable deadlines, fail to apply prior to expiration of relevant patents or otherwise fail to satisfy applicable requirements. Moreover, the length of the extension could be less than we request.
However, we may not receive an extension if we fail to apply within applicable deadlines, fail to apply prior to expiration 39 Table of Contents of relevant patents or otherwise fail to satisfy applicable requirements. Moreover, the length of the extension could be less than we request.
Similar rules may apply under state tax laws. We have not performed a detailed analysis to determine whether an ownership change under Section 382 of the Code, or similar state provisions, has previously occurred.
Similar rules may apply under state tax laws. We have not 49 Table of Contents performed a detailed analysis to determine whether an ownership change under Section 382 of the Code, or similar state provisions, has previously occurred.
We will be required to demonstrate through adequate and well-controlled clinical trials that our product candidates are safe and effective, with a favorable benefit-risk profile, for use in our target indications before we can seek regulatory approvals for commercial sale.
Drug development has inherent risk. We will be required to demonstrate through adequate and well-controlled clinical trials that our product candidates are safe and effective, with a favorable benefit-risk profile, for use in our target indications before we can seek regulatory approvals for commercial sale.
We would have no right to prevent them, or those to whom they communicate it, from using that technology or information to compete with us. Further, intellectual property rights have limitations and do not necessarily address all potential threats to our competitive position.
We would 45 Table of Contents have no right to prevent them, or those to whom they communicate it, from using that technology or information to compete with us. Further, intellectual property rights have limitations and do not necessarily address all potential threats to our competitive position.
The amendments introduced by the CPRA went into effect on January 1, 2023, and new implementing regulations are expected to be introduced by the CPPA. Failure to comply with the CCPA may result in, among other things, significant civil penalties and injunctive relief, or statutory or actual damages.
The amendments introduced by the CPRA went into effect on January 1, 2023, and implementing regulations continue to be introduced by the CPPA. Failure to comply with the CCPA may result in, among other things, significant civil penalties and injunctive relief, or statutory or actual damages.
If we sell common stock, convertible securities or other equity securities in more than one transaction, investors may be materially diluted by subsequent sales. Such sales may also result in material dilution to our existing stockholders, and new investors could gain rights superior to our existing stockholders.
If we sell common stock, convertible securities or other equity securities in more than one transaction, investors may be materially diluted by subsequent sales. Such sales may also result in material dilution to our existing stockholders, and new investors could gain rights superior to our existing stockholders. Funds affiliated with Baker Bros.
The amount and timing of any expenditure needed to implement our development and commercialization programs will depend on numerous factors, including: • the type, number, scope, progress, expansion costs, results of and timing of our future clinical trials and projected product label or the need for additional clinical trials of resmetirom for NASH and dyslipidemia or any of our other product candidates which we are pursuing or may choose to pursue in the future; • the costs of obtaining, maintaining and enforcing our patents and other intellectual property rights; • the costs and timing of obtaining regulatory approval for resmetirom for NASH and any of our other potential product candidates; • the costs and timing of obtaining or maintaining manufacturing for resmetirom for NASH and any of our other product candidates, including commercial manufacturing if any product candidate is approved; • the costs and timing of establishing sales, marketing and reimbursement capabilities and enhanced internal controls over financial reporting; • the terms and timing of establishing and maintaining collaborations, license agreements and other partnerships, including for ex-US resmetirom opportunities; • costs associated with any new product candidates that we may develop, in-license or acquire; and • the effect of competing technological and market developments.
The amount and timing of any expenditure needed to fund our development and commercialization programs will depend on numerous factors, including: • the type, number, scope, progress, expansion costs, results of and timing of our ongoing and future clinical trials and projected product label or the need for additional clinical trials ; • the costs of obtaining, maintaining and enforcing our patents and other intellectual property rights; • the timing of obtaining regulatory approval for resmetirom for NASH and any potential future product candidates; • the costs and timing of obtaining or maintaining manufacturing for resmetirom for NASH, including commercial manufacturing if such product candidate is approved; • the costs and timing of establishing and initiating sales, marketing and reimbursement capabilities and enhanced internal controls over financial and compliance reporting requirements; • the terms and timing of establishing and maintaining collaborations, license agreements and other partnerships, including for ex-US resmetirom opportunities; • costs associated with any new product candidates that we may develop, in-license or acquire; and • the effect of competing technological and market developments.
If we fail to develop and commercialize other product candidates, we may be unable to grow our business. Although the development and commercialization of resmetirom is our primary focus, as part of our longer-term growth strategy, we plan to evaluate the development and commercialization of other therapies related to thyroid hormone, orphan and other diseases.
If we fail to develop and commercialize other product candidates, we may be unable to grow our business. Although the development and commercialization of resmetirom is our primary focus, as part of our longer-term growth strategy, we plan to evaluate the development and commercialization of other therapies.
Moreover, data security incidents and other security breaches can be difficult to detect, and any delay in identifying them may lead to increased harm.
Moreover, data security incidents and other cybersecurity attacks can be difficult to detect, and any delay in identifying them may lead to increased harm.
These and other circumstances may cause us to delay certain research activities and related clinical expenses, but such delays will not alter our need to raise additional funding. As a result, we will need to raise substantial additional funds in the future.
Some of these factors are outside of our control. These and other circumstances may cause us to delay certain research activities and related clinical expenses, but such delays will not alter our need to raise additional funding. As a result, we will need to raise substantial additional funds in the future.
Although we have satisfied Subpart H patient enrollment for MAESTRO-NASH, clinical enrollment is not complete as of December 31, 2022 and significant additional enrollment will be necessary and will be ongoing for some time.
Although we have satisfied Subpart H patient enrollment for MAESTRO-NASH, clinical enrollment for our MAESTRO-NASH Outcomes trial is not complete as of December 31, 2023 and significant additional enrollment will be necessary and will be ongoing for some time.
If we enter into arrangements with third parties to perform sales, marketing or distribution services, any product revenues that we receive, or the profitability of these product revenues to us, are likely to be lower than if we were to market and sell any products that we develop without the involvement of these third parties.
If we enter into arrangements with third parties (such as ex-US arrangements or arrangements described in the succeeding section) to perform sales, marketing or distribution services, any product revenues that we receive, or the profitability of these product revenues to us, are likely to be lower than if we were to market and sell any products that we develop without the involvement of these third parties.
Outside the United States, our clinical trial programs and operations implicate international data protection laws, including the EU General Data Protection Regulation 2016/679 (“GDPR”). The GDPR increases our responsibility and liability in relation to the processing of personal data of individuals located in the EU.
Outside the United States, our clinical trial programs and operations implicate international data protection laws, including the EU General Data Protection Regulation including as implemented in the UK (collectively, “GDPR”). The GDPR increases our responsibility and liability in relation to the processing of personal data of individuals located in the EU.
Certain stockholders affiliated and associated with our officers and directors collectively own approximately 21.9% of our outstanding common stock as of December 31, 2022 and acting together, may have the ability to substantially affect matters submitted to our stockholders for approval.
Certain stockholders affiliated and associated with our officers and directors collectively beneficially own approximately 24.24% of our outstanding common stock as of December 31, 2023 and acting together, may have the ability to substantially affect matters submitted to our stockholders for approval.
Any failure or perceived failure by us or any third-party collaborators, service providers, contractors or consultants to comply with our privacy, confidentiality, data security or similar obligations to third parties, or any data security incidents or other security breaches that result in the unauthorized access, release or transfer of sensitive information, including personally identifiable information, may result in governmental investigations, enforcement actions, regulatory fines, litigation or public statements against us, could cause third parties to lose trust in us or could result in claims by third parties asserting that we have breached our privacy, confidentiality, data security or similar obligations, any of which could have a material adverse effect on our reputation, business, financial condition or results of operations.
Any failure or perceived failure by us or any third-party collaborators, service providers, contractors or consultants to comply with our privacy, confidentiality, data security or similar obligations to third parties, or any data security incidents or other security breaches that result in the unauthorized access, release or transfer of sensitive information, including personally identifiable information, may result in: governmental investigations, litigation, regulatory enforcement actions, fines, sanctions or other penalties, injunctive relief requiring costly compliance measures, required notification and credit monitoring, public statements against us, third parties to lose trust in us, or claims by third parties asserting that we have breached our privacy, confidentiality, data security or similar obligations, any of which could have a material adverse effect on our reputation, business, financial condition or results of operations.
Competition that our or any of our partners’ products may face from generic versions of our products could materially and adversely impact our future revenue, profitability and cash flows and substantially limit our ability to obtain a return on the investments we have made in those product candidates.
Competition that our or any of our partners’ products may face from generic versions of our products could materially and adversely impact our future revenue, profitability and cash flows and substantially limit our ability to obtain a return on the investments we have made in those product candidates. Resmetirom has only been studied in a limited number of patients.
(“Canticle”) entered into a Loan and Security Agreement with Hercules, as amended on February 3, 2023 (as amended, the “Loan Agreement”), providing for an aggregate of $250.0 million in term loans that will be available to us in four tranches subject to the conditions set forth in the Loan Agreement (collectively, the “Term Loans”).
(“Hercules”), as amended on February 3, 2023 (as amended, the “Loan Agreement”), providing for an aggregate of $250.0 million in term loans that will be available to us in four tranches subject to the conditions set forth in the Loan Agreement (collectively, the “Term Loans”).
After an approval process, the European Commission is expected to adopt the final adequacy decision, which will allow data to flow freely from the EU to the U.S.
After an approval process, the European Commission is expected to adopt the final adequacy decision, which will allow data to flow freely from the EU to the U.S between companies certified under the new framework.
With respect to our existing and future product candidates, we may choose to collaborate with third parties that have direct sales forces and established distribution systems, either to augment our own sales force and distribution systems or as an alternative to our own sales force and distribution systems.
In addition, we may in the future choose to collaborate with third parties that have direct sales forces and established distribution systems, either to augment our own sales force and distribution systems or as an alternative to our own sales force and distribution systems.
Risks Relating to our Indebtedness Our Loan and Security Agreement contains restrictive and financial covenants that may limit our operating flexibility. On May 6, 2022, we and our subsidiary, Canticle Pharmaceuticals, Inc.
Risks Relating to our Indebtedness Our Loan and Security Agreement contains restrictive and financial covenants that may limit our operating flexibility. On May 6, 2022, we and our subsidiary, Canticle Pharmaceuticals, Inc. (“Canticle”) entered into a Loan and Security Agreement with Hercules Capital, Inc.
We must be able to effectively manage our development efforts, recruit and train sales and marketing personnel, effectively manage our participation in the clinical trials in which our product candidates are involved and improve our managerial, development, operational and finance systems, all of which may impose a strain on our administrative and operational infrastructure.
We must be able to effectively manage our development efforts, and marketing personnel, effectively manage our participation in ongoing clinical trials and improve our managerial, development, operational and finance systems, all of which may impose a strain on our administrative and operational infrastructure.
Ensuring that our internal operations and future business arrangements with third parties comply with applicable healthcare laws and regulations will involve substantial costs. It is possible that governmental authorities will conclude that our business practices do not comply with current or future statutes, regulations, agency guidance or case law involving applicable fraud and abuse or other healthcare laws and regulations.
It is possible that governmental authorities will conclude that our business practices do not comply with current or future statutes, regulations, agency guidance or case law involving applicable fraud and abuse or other healthcare laws and regulations.
In addition, California residents have the right to bring a private right of action in connection with certain types of incidents. These claims may result in significant liability and damages. Virginia and Colorado also adopted laws, effective January 1, 2023, and July 1, 2023, respectively, introducing new privacy obligations for which we may need to take additional steps to comply.
In addition, California residents have the right to bring a private right of action in connection with certain types of incidents. These claims may result in significant liability and damages. Virginia and Colorado also have enacted similar laws that impose new privacy obligations for which we may need to take additional steps to comply.
As of December 31, 2022, we had an accumulated deficit of approximately $962.7 million. Losses have principally resulted from costs incurred in our preclinical and clinical trials, research and development programs and from our general and administrative expenses. As of December 31, 2022, we had cash, cash equivalents and marketable securities of approximately $358.8 million.
As of December 31, 2023, we had an accumulated deficit of approximately $1,336.3 million. Losses have principally resulted from costs incurred in our preclinical and clinical trials, research and development programs and from our general and administrative expenses. As of December 31, 2023, we had cash, cash equivalents and marketable securities of approximately $634.1 million.
Historically, the market price of our common stock has fluctuated over a wide range, and it is likely that the price of our common stock will continue to be volatile in the future. The closing price of our common stock has ranged from $55.89 to $296.54 per share during the period from January 1, 2022 to January 31, 2023.
Historically, the market price of our common stock has fluctuated over a wide range, and it is likely that the price of our common stock will continue to be volatile in the future. The closing price of our common stock has ranged from $58.39 to $312.00 per share during the period from December 1, 2022 to January 31, 2024.
Our current and anticipated future dependence upon others for the manufacture of our product candidates may adversely affect our future profit margins and our ability to develop our product candidates and commercialize any products that receive regulatory approval on a timely basis.
Our current and anticipated future dependence upon others for the manufacture of our product candidates may adversely affect our future profit margins and our ability to develop our product candidates and commercialize any products that receive regulatory approval on a timely basis. 41 Table of Contents A failure of our information technology infrastructure and cybersecurity threats may adversely affect our business and operations.
We expect that the ACA, its implementation, efforts to challenge or modify the ACA or its implementing regulations, or portions thereof, and other healthcare reform measures including those that may be adopted in the future, could have a material adverse effect on our industry generally and on our ability to maintain or increase sales of existing products or to successfully commercialize product candidates, if approved. 40 On August 16, 2022, President Biden signed into law the IRA, which, among other things, establishes Medicare Part B and Part D inflation rebate schemes.
We expect that the ACA, its implementation, efforts to challenge or modify the ACA or its implementing regulations, or portions thereof, and other healthcare reform measures including those that may be adopted in the future, could have a material adverse effect on our industry generally and on our ability to maintain or increase sales of existing products or to successfully commercialize product candidates, if approved.
Many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of our product candidates.
Many of the factors that cause, or lead to, a delay in the completion of clinical trials may also ultimately lead to the adverse regulatory action.
Further, the FDA, EMA or other regulatory authorities may disagree with our clinical trial design and our interpretation of data from clinical trials, or may change the requirements for approval even after they have reviewed and commented on the design for our clinical trials. Our product development costs will increase if we experience delays in clinical testing or marketing approvals.
Further, the FDA, EMA or other regulatory authorities may disagree with our clinical trial design for ingoing trials and our interpretation of data from clinical trials, or may change the requirements for approval even after they have reviewed and commented on the design for our clinical trials.
In addition, if our clinical trials are delayed, our competitors may be able to bring products to market before we do and the commercial viability of our product candidates could be limited. 35 If we inadvertently fail to comply with foreign regulatory requirements governing human clinical trials and marketing approval for drugs, we could be prevented from selling our drug candidates in foreign markets, which may adversely affect our operating results and financial condition.
If we inadvertently fail to comply with foreign regulatory requirements governing human clinical trials and marketing approval for drugs, we could be prevented from selling our drug candidates in foreign markets, which may adversely affect our operating results and financial condition.
As a result, the only return to stockholders will be appreciation in the price of our common stock, which may never occur. Investors seeking cash dividends should not invest in our common stock.
We have never declared or paid any cash dividend on our common stock and do not anticipate paying cash dividends on our common stock in the future. As a result, the only return to stockholders will be appreciation in the price of our common stock, which may never occur. Investors seeking cash dividends should not invest in our common stock.
We expect to experience pricing pressures in connection with the sale of any products that we develop due to the trend toward managed healthcare, the increasing influence of health maintenance organizations, and additional legislative proposals. In March 2010, the Patient Protection and Affordable Care Act, as amended, (the ACA) became law in the United States.
We expect to experience pricing pressures in connection with the sale of any products that we develop due to the trend toward managed healthcare, the increasing influence of health maintenance organizations, and additional legislative proposals.
See “Risk Factors; Risks Relating to Ownership of Our Common Stock — The price of our common stock has been, and may continue to be, volatile . ” Such sales or short sales also may impair our ability to raise capital through the sale of additional shares in the future at a time and price that our management deems acceptable, if at all.
See “Risk Factors; Risks Relating to Ownership of Our Common Stock -- The price of our common stock has been, and may continue to be, volatile . ” Such sales or short sales also may impair our ability to raise capital through the sale of additional shares in the future at a time and price that our management deems acceptable, if at all. 52 Table of Contents We do not anticipate paying cash dividends on our common stock, and accordingly, stockholders must rely on stock appreciation for any return on their investment.
The FDA may also require a REMS Program as a condition of approval of our product candidates, which could include requirements for a medication guide, physician communication plans or additional elements to ensure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. 37 If we fail to comply with the regulatory requirements of the FDA and other applicable domestic and foreign regulatory authorities, or previously unknown problems with any approved product, manufacturer, or manufacturing process are discovered, we could be subject to administrative or judicially imposed sanctions, including: • restrictions on marketing or manufacturing of our products, withdrawal of the product from the market; • holds on clinical trials; • warning letters or untitled letters; • civil or criminal penalties; • fines; • injunctions; • product seizures or detentions; • pressure to initiate voluntary product recalls; • suspension or withdrawal of regulatory approvals; and • refusal to approve pending applications for marketing approval of new products or supplements to approved applications.
If we fail to comply with the regulatory requirements of the FDA and other applicable domestic and foreign regulatory authorities, or previously unknown problems with any approved product, manufacturer, or manufacturing process are discovered, we could be subject to administrative or judicially imposed sanctions, including: • restrictions on marketing or manufacturing of our products, withdrawal of the product from the market; • holds on clinical trials; • warning letters or untitled letters; • civil or criminal penalties; • fines; • injunctions; • product seizures or detentions; 31 Table of Contents • pressure to initiate voluntary product recalls; • suspension or withdrawal of regulatory approvals; and • refusal to approve pending applications for marketing approval of new products or supplements to approved applications.
As we advance our product candidates through clinical trials, we will need to expand our development, regulatory, manufacturing, and marketing and sales capabilities and may need to further contract with third parties to provide these capabilities.
As we have been advancing resmetirom through clinical trials, we have been expanding our development, regulatory, manufacturing, and marketing and sales capabilities and commitments and may need to further contract with third parties to provide these capabilities.
Furthermore, the results of preclinical studies and early clinical trials are not always predictive of future results. Any product candidate that we advance into clinical trials, including resmetirom, may not have favorable results in later clinical trials or receive regulatory approval. Drug development has inherent risk.
Clinical trials are very expensive, time-consuming and difficult to design and implement and involve uncertain outcomes. Furthermore, the results of preclinical studies and early clinical trials are not always predictive of future results. Any product candidate that we advance into clinical trials, including resmetirom, may not have favorable results in later clinical trials or receive regulatory approval.
The GDPR, together with the national legislation of the EU member states governing the processing of personal data, impose strict obligations and restrictions on the ability to collect, analyze and transfer personal data, including health data and samples from clinical trials and adverse event reporting.
The GDPR, together with the national legislation of the EU member states governing the processing of personal data, places certain obligations on the processing of such personal data including ensuring the lawfulness of processing personal data, health data and samples from clinical trials and adverse event reporting.
If clinical trials or regulatory approval processes for our product candidates are prolonged, delayed or suspended, we may be unable to commercialize our product candidates on a timely basis, which would require us to incur additional costs and delay our receipt of any revenue from potential product sales.
Regulatory approval of new product candidates such as resmetirom can be more expensive and take longer than approval for candidates for the treatment of more well-understood diseases with previously approved products. 28 Table of Contents If clinical trials or regulatory approval processes for our product candidates are prolonged, delayed or suspended, we may be unable to commercialize our product candidates on a timely basis, which would require us to incur additional costs and delay our receipt of any revenue from potential product sales.
Physicians may decide not to recommend our treatments for a variety of reasons including: • timing of market introduction of competitive products; • demonstration of clinical safety and efficacy compared to other products; • cost-effectiveness; • limited or no coverage by third-party payers; • convenience and ease of administration; • prevalence and severity of adverse side effects; • restrictions in the label of the drug; • other potential advantages of alternative treatment methods; and • ineffective marketing and distribution support of its products.
Physicians may decide not to recommend our treatments or a patient though prescribed our product may not receive it for a variety of reasons including: • timing of market introduction of competitive products; • demonstration of clinical safety and efficacy compared to other products; • cost-effectiveness; • limited or no coverage by third-party payers; • convenience and ease of administration; • restrictions in the label of the drug; • other potential advantages of alternative treatment methods; • unanticipated post-marketing events; • ineffective marketing and distribution support of its products; • inability of third-party patient services to achieve patient access to therapy; and • inability of specialty pharmacies to communicate effectively with patients, coordinate shipments and effect adherence to therapy.
Furthermore, even if we do receive regulatory approval to market resmetirom, any such approval may be subject to limitations on the indicated uses or patient populations for which we may market the products.
Any delays in our clinical development programs may harm our business, financial condition and results of operations significantly. Furthermore, even if we do receive regulatory approval to market resmetirom, any such approval may be subject to limitations on the indicated uses or patient populations for which we may market the products.
We have not sold any products, and we do not expect to sell or derive revenue from any product sales for the foreseeable future. We may seek additional funding through future debt and equity financings, as well as potential additional collaborations or strategic partnerships with other companies or through non-dilutive financings.
We have not sold any products prior to the filing of this Form 10-K, and we cannot estimate the amounts of any revenue from any product sales, if approved, in the future. We may seek additional funding through future debt and equity financings, as well as potential additional collaborations or strategic partnerships with other companies or through non-dilutive financings.
In addition, we and/or our partners may be subject to patient data privacy and security regulation, including the Health Insurance Portability and Accountability Act of 1996, and its implementing regulations (“HIPAA”), which impose specified requirements relating to the privacy, security and transmission of protected health information. 45 Most states also have statutes or regulations similar to these federal laws, which may apply to items such as pharmaceutical products and services reimbursed by private insurers.
In addition, we and/or our partners may be subject to patient data privacy and security regulation, including the Health Insurance Portability and Accountability Act of 1996, and its implementing regulations (“HIPAA”), which impose specified requirements relating to the privacy, security and transmission of protected health information.
In addition, only a small percentage of drugs under development result in the submission of an NDA to the FDA and even fewer are approved for commercialization. 34 We cannot be certain that any of our ongoing or future clinical trials will be successful, and any safety concerns observed in any one of our clinical trials in our targeted indications could limit the prospects for regulatory approval of our product candidates in those and other indications.
We cannot be certain that any of our ongoing or future clinical trials will be successful, and any safety concerns observed in any one of our clinical trials in our targeted indications could limit the prospects for regulatory approval of our product candidates in those and other indications.
As we evolve from a company that is primarily involved in clinical development to a company that is also involved in commercialization, we may encounter difficulties in expanding our operations successfully.
As we evolve from a company that is primarily involved in clinical development to a company that is also involved in commercialization, we may encounter difficulties in expanding our operations successfully, including successfully optimizing manufacturing for our product/product candidate in sufficient quality and quantity or within targeted timelines.
In addition, success in early clinical trials does not mean that later clinical trials will be successful, because later-stage clinical trials may be conducted in broader patient populations and involve different study designs.
In addition, success in early clinical trials does not mean that later clinical trials will be successful, because later-stage clinical trials may be conducted in broader patient populations and involve different study designs. Furthermore, our ongoing and future trials will need to demonstrate sufficient safety and efficacy in large patient populations for approval by regulatory authorities.
In addition, market perception that we need to issue additional shares, the issuance of additional shares by us, or the possibility of such issuance, may cause the market price of our shares to decline.
In addition, market perception that we need to issue additional shares, the issuance of additional shares by us, or the possibility of such issuance, may cause the market price of our shares to decline. If we are unable to obtain additional funding on a timely basis, our business may be materially and adversely affected.
Similarly, there are a number of legislative proposals in the United States, at both the federal and state level, that could impose new obligations or limitations in the area of consumer protection. For example, Utah and Connecticut have enacted privacy laws similar to the CCPA that impose new obligations or limitations in areas affecting our business.
Similarly, there are a number of legislative proposals in the United States, at both the federal and state level, that could impose new obligations or 42 Table of Contents limitations in the area of consumer protection.
In addition, we cannot assure you that 42 any such products that are approved will be manufactured or produced economically, be successfully commercialized, be widely accepted in the marketplace, or be more effective than other commercially available alternatives.
In addition, we cannot assure you that any such products that are approved will be manufactured or produced economically, be successfully commercialized, be widely accepted in the marketplace, or be more effective than other commercially available alternatives. If we lose key senior management personnel, it could have a material adverse effect on our business and stock price.
The timing to conduct and complete clinical trials, is affected by many factors, including the size and nature of the patient population, the proximity of patients to clinical sites, the eligibility criteria for the trial, the design of the clinical trial, competing clinical trials, and clinicians’ and patients’ perceptions as to the potential advantages and disadvantages of the product candidate being studied in relation to other available therapies, including any new drugs that may be approved for the indications we are investigating.
The timing to conduct and complete clinical trials, is affected by many factors, including the size and nature of the patient population, the proximity of patients to clinical sites, the eligibility criteria for the trial, the design of the clinical trial, competing clinical trials, and clinicians’ and patients’ perceptions as to the potential advantages and disadvantages of the product candidate being studied in relation to other available therapies. 29 Table of Contents Any product candidate in our current or future clinical trials may cause unacceptable adverse events or side effects or have other properties that may delay or prevent its regulatory approval or commercialization or limit its commercial potential.
Our business depends on the success of resmetirom, which is still in clinical development and has not completed a pivotal trial. If we are unable to obtain regulatory approval for and successfully commercialize resmetirom, or we experience significant delays in doing so, our business will be materially harmed.
Our business depends on the success of resmetirom. If we are unable to obtain regulatory approval for and successfully commercialize resmetirom, or we experience significant delays in doing so, our business will be materially harmed. The primary focus of our product development since mid-2018 has been resmetirom for potential use in non-alcoholic steatohepatitis, or NASH.
We likely will have little control over such third parties, and any of them may fail to devote the necessary resources and attention to sell and market our products effectively. If we do not establish sales and marketing capabilities successfully, either on our own or in collaboration with third parties, we will not be successful in commercializing our products.
We likely will have little control over such third parties, and any of them may fail to devote the necessary resources and attention to sell and market our products effectively.
With respect to our commercial agreements, we indemnify our vendors from any third-party product liability claims that could result from the production, use or consumption of the product, as well as for alleged infringements of any patent or other intellectual property right by a third party.
With respect to our commercial agreements, we indemnify our vendors from any third-party product liability claims that could result from the production, use or consumption of the product, as well as for alleged infringements of any patent or other intellectual property right by a third party. 38 Table of Contents Should our obligation under an indemnification provision exceed applicable insurance coverage or if we are denied insurance coverage, our business, financial condition and results of operations could be adversely affected.
In addition to extracting sensitive information, such attacks could include the deployment of harmful malware, ransomware, denial-of-service attacks, social engineering and other means to affect service reliability and threaten the confidentiality, integrity and availability of information. The prevalent use of mobile devices also increases the risk of data security incidents.
In addition to potentially extracting sensitive information, such as trade secrets or other intellectual property, such attacks could include the deployment of harmful malware, ransomware, denial-of-service attacks, social engineering and other means, including ransom demands, to affect service reliability and/or threaten the confidentiality, integrity and availability of information.
We have invested, and will continue to invest, a significant portion of our time and financial resources in the clinical development of resmetirom. We will need to raise sufficient funds to successfully complete our clinical development program for resmetirom in NASH.
Successful regulatory approval of resmetirom for NASH is critical to the future success of our business. We have invested, and will continue to invest, a significant portion of our time and financial resources in the clinical and commercial development of resmetirom.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe plan to lease or acquire additional space as our business continues to grow. We continue to evaluate our facility requirements and believe that appropriate space will be available to accommodate our future needs.
Biggest changeWe plan to lease or acquire additional space as our business continues to grow. We continue to evaluate our facility requirements and believe that appropriate space will be available to accommodate our future needs. Item 3. Legal Proceedings We currently are not a party to any material legal proceedings. Item 4.
Item 2. Properties As of December 31, 2022, we leased our approximately 30,500 square-foot corporate headquarters facility located in West Conshohocken, Pennsylvania. We believe our facility is adequate for our current needs. Our lease contains extension rights beyond the scheduled lease expiration date of November 30, 2023.
Item 2. Properties As of December 31, 2023, we leased our approximately 30,500 square-foot corporate headquarters facility located in West Conshohocken, Pennsylvania. We believe our facility is adequate for our current needs. Our lease contains extension rights beyond the scheduled lease expiration date of November 30, 2026.
Added
Mine Safety Disclosures Not applicable. 54 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeAny future determination to pay cash dividends will be at the discretion of our board of directors and will depend on our financial condition, results of operations, contractual restrictions, capital requirements, and other factors that our board of directors deems relevant. 62 Stock Performance Graph The graph set forth below compares the cumulative total stockholder return on our common stock between January 1, 2018 and December 31, 2022, with the cumulative total return of (a) the Nasdaq Biotechnology Index and (b) the Nasdaq Composite Index, over the same period.
Biggest changeAny future determination to pay cash dividends will be at the discretion of our board of directors and will depend on our financial condition, results of operations, contractual restrictions, capital requirements, and other factors that our board of directors deems relevant.
This graph assumes the investment of $100 on January 1, 2018 in our common stock, the Nasdaq Biotechnology Index and the Nasdaq Composite Index and assumes the reinvestment of dividends, if any. The comparisons shown in the graph below are based upon historical data.
This graph assumes the investment of $100 on January 1, 2019 in our common stock, the Nasdaq Biotechnology Index and the Nasdaq Composite Index and assumes the reinvestment of dividends, if any. The comparisons shown in the graph below are based upon historical data.
We currently intend to retain all available funds and any future earnings to fund the development and expansion of our business, and we do not anticipate paying any cash dividends in the foreseeable future.
Dividends We have not paid any cash dividends on our common stock. We currently intend to retain all available funds and any future earnings to fund the development and expansion of our business, and we do not anticipate paying any cash dividends in the foreseeable future.
The above Stock Performance Graph and related information shall not be deemed to be “soliciting material” or to be “filed” with the Securities and Exchange Commission, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or Securities Exchange Act of 1934, each as amended, except to the extent that we specifically request that such information be treated as soliciting material or specifically incorporate it by reference into a filing.
We caution that the stock price performance shown in the graph below is not necessarily indicative of, nor is it intended to forecast, the potential future performance of our common stock. 55 Table of Contents The above Stock Performance Graph and related information shall not be deemed to be “soliciting material” or to be “filed” with the Securities and Exchange Commission, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or Securities Exchange Act of 1934, each as amended, except to the extent that we specifically request that such information be treated as soliciting material or specifically incorporate it by reference into a filing.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchase of Equity Securities. Market Information Our common stock has traded on the Nasdaq stock market under the symbol “MDGL” since July 25, 2016.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchase of Equity Securities. Market Information Our common stock has traded on the Nasdaq stock market under the symbol “MDGL” since July 25, 2016. Holders As of December 31, 2023, there were approximately 28 holders of record of our common stock.
In addition, we had two holders of record who owned shares of our Series A Convertible Preferred Stock and Series B Convertible Preferred Stock. Dividends We have not paid any cash dividends on our common stock.
This number does not include “street name” or beneficial holders, whose shares are held of record by banks, brokers, financial institutions and other nominees. In addition, we had two holders of record who owned shares of our Series A Convertible Preferred Stock and Series B Convertible Preferred Stock and three holders of our pre-funded warrants.
Removed
Prior to July 25, 2016, our common stock was traded on the Nasdaq stock market under the symbol “SNTA.” Holders As of December 31, 2022, there were approximately 43 holders of record of our common stock. This number does not include “street name” or beneficial holders, whose shares are held of record by banks, brokers, financial institutions and other nominees.
Added
Stock Performance Graph The graph set forth below compares the cumulative total stockholder return on our common stock between January 1, 2019 and December 31, 2023, with the cumulative total return of (a) the Nasdaq Biotechnology Index and (b) the Nasdaq Composite Index, over the same period.
Removed
We caution that the stock price performance shown in the graph below is not necessarily indicative of, nor is it intended to forecast, the potential future performance of our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

44 edited+50 added−27 removed19 unchanged
Biggest changeOur most significant use of capital pertains to salaries and benefits for our employees, including clinical, scientific, operational, financial and management personnel, and external research and development expenses, such as clinical trials and preclinical activity related to our product candidates. 69 As of December 31, 2022, we had cash, cash equivalents and marketable securities totaling $358.8 million compared to $270.3 million as of December 31, 2021, with the increase attributable to our fundraising activities, including net proceeds of $155.9 million from our $200 million at-the-market sales agreement entered into in June of 2021, with Cowen and Company, LLC (the “2021 Sales Agreement”), net proceeds of $99.5 million from our registered direct offering (“Registered Direct Offering”) of shares of our common stock and Series B Convertible Preferred Stock (“Series B Preferred Stock”) in December 2022, and $50.0 million drawn on our Loan Facility, partially offset by cash used in operating activities.
Biggest changeOur most significant use of capital pertains to salaries and benefits for our employees, including commercial, clinical, scientific, operational, financial and management personnel, along with manufacturing costs and commercialization costs to support a potential U.S. approval. 62 Table of Contents As of December 31, 2023, we had cash, cash equivalents and marketable securities totaling $634.1 million compared to $358.8 million as of December 31, 2022, with the increase primarily attributable to our October 2023 public offering which provided $472.0 million net cash proceeds, partially offset by funding of operations.
Our future long-term liquidity requirements will be substantial and will depend on many factors. To meet future long-term liquidity requirements, as well as maintain compliance with certain of our Loan Facility covenants, we will need to raise additional capital to fund our operations through equity or debt financings, collaborations, partnerships or other strategic transactions.
Our future long-term liquidity requirements will be substantial and will depend on many factors. To meet future long-term liquidity requirements, as well as maintain compliance with certain of our Loan Facility covenants, we may need to raise additional capital to fund our operations through equity or debt financings, collaborations, partnerships or other strategic transactions.
We account for nonrefundable advance payments for goods and services that will be used in future research and development 65 activities as expenses when the service has been performed or when the goods have been received. Manufacturing expense includes costs associated with drug formulation development and clinical drug production.
We account for nonrefundable advance payments for goods and services that will be used in future research and development activities as expenses when the service has been performed or when the goods have been received. Manufacturing expense includes costs associated with drug formulation development and clinical drug production.
Recent Accounting Pronouncements Refer to Note 2, “Summary of Significant Accounting Policies,” in the accompanying notes to the consolidated financial statements for a discussion of recent accounting pronouncements. 71
Recent Accounting Pronouncements Refer to Note 2, “Summary of Significant Accounting Policies,” in the accompanying notes to the consolidated financial statements for a discussion of recent accounting pronouncements.
Management analyzes and estimates the progress of its preclinical studies and clinical trials, completion of milestones events per underlying agreements, invoices received and contracted costs when estimating the research and development costs to accrue in each reporting period. Actual results could differ from the Company’s estimates.
Management analyzes and estimates the progress of its preclinical studies and clinical trials, completion of milestones events per underlying agreements, invoices received and contracted costs when estimating the research and development costs to accrue in each reporting period. Actual results could differ from our estimates.
We regularly consider fundraising opportunities and may decide, from time to time, to raise capital based on various factors, including market conditions and our plans of operation. Additional capital may not be available on terms acceptable to us, or at all.
We regularly consider fundraising opportunities and may decide, from time to time, to raise capital based on various factors, including market conditions and our plans of operation. Additional capital, if needed, may not be available on terms acceptable to us, or at all.
Interest Income Our interest income was $2.2 million for the year ended December 31, 2022 compared to $0.4 million for the year ended December 31, 2021. The increase in interest income was due primarily to a higher average principal balance in our investment account in 2022 and increased interest rates.
The increase in interest income was due primarily to a higher average principal balance in our investment account in 2022 and increased interest rates. Interest Expense Our interest expense was $4.0 million for year ended December 31, 2022, compared to $0.0 million for the year ended December 31, 2021.
The Company has entered into customary contractual arrangements in support of the Phase 3 clinical trials. Off-Balance Sheet Arrangements We do not have any off balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.
The Company has entered into customary contractual arrangements in support of the Phase 3 clinical trials. 65 Table of Contents Off-Balance Sheet Arrangements We do not have any off balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.
Research and development costs are comprised of costs incurred in performing research and development activities, including internal costs (including stock-based compensation), costs for consultants, milestone payments under licensing agreements, and other costs associated with the Company’s preclinical and clinical programs.
Research and development costs are comprised of costs incurred in performing research and development activities, including internal costs (including stock-based compensation), costs for consultants, milestone payments under licensing agreements, and other costs associated with our preclinical and clinical programs.
We expect that we will make determinations as to which programs and product candidates to pursue and how much funding to direct to each program and product candidate on an ongoing basis in response to the scientific success of early research programs, results of ongoing and future clinical trials, our ability to enter into collaborative agreements with respect to programs or potential product candidates, as well as ongoing assessments as to each current or future product candidate’s commercial potential.
We expect that we will make determinations as to which programs and product candidates to pursue and how much funding to direct to each program and product candidate on an ongoing basis in response to the scientific success of research, results of ongoing and future clinical trials, potential collaborative agreements with respect to programs or potential product candidates, as well as ongoing assessments as to each current or future product candidate’s commercial potential.
In particular, the Company has conducted safety studies in animals, optimized and implemented the manufacturing of our drug, and conducted Phase 1-3 clinical trials, all of which are considered research and development expenditures. Management uses significant judgment in estimating the amount of research and development costs recognized in each reporting period.
In particular, we have conducted safety studies in animals, optimized and implemented the manufacturing of our drug, and conducted Phase 1-3 clinical trials, all of which are considered research and development expenditures. Management uses significant judgment in estimating the amount of research and development costs recognized in each reporting period.
The Company uses the Black-Scholes option pricing model to determine the grant date fair value as management believes it is the most appropriate valuation method for its option grants. The Black-Scholes model requires inputs for risk-free interest rate, dividend yield, volatility and expected lives of the options.
We use the Black-Scholes option pricing model to determine the grant date fair value of stock options as management believes it is the most appropriate valuation method for its option grants. The Black-Scholes model requires inputs for risk-free interest rate, dividend yield, volatility and expected lives of the options.
Financing Activities Net cash provided by financing activities was $313.5 million for the year ended December 31, 2022 and consisted primarily of sales of our common stock under the 2021 Sales Agreement and Registered Direct Offering in December, and debt borrowings under our Loan Facility.
Net cash provided by financing activities was $313.5 million for the year ended December 31, 2022 and consisted primarily of sales of our common stock under the 2021 Sales Agreement and a registered direct offering of Series B Convertible Preferred Stock and common stock in December, and debt borrowings under our Loan Facility.
Contractual Obligations and Commercial Commitments As of December 31, 2022, we had contractual obligations and commercial commitments as follows (in thousands): Payments Due by Period Contractual Obligations Total Less Than 1 Year 1 - 3 Years 4 - 5 Years More Than 5 Years Operating Leases 622 622 — — — Total contractual Obligations 622 622 — — — Operating leases relate to our corporate headquarters facility located in West Conshohocken, Pennsylvania.
Contractual Obligations and Commercial Commitments As of December 31, 2023, we had contractual obligations and commercial commitments as follows (in thousands): Payments Due by Period Contractual Obligations Total Less Than 1 Year 1 - 3 Years 4 - 5 Years More Than 5 Years Operating Leases 1,861 937 924 — — Total contractual Obligations 1,861 937 924 — — Operating leases relate to our corporate headquarters facility located in West Conshohocken, Pennsylvania.
Investing Activities Net cash provided by investing activities was $206.7 million for the year ended December 31, 2022 and consisted primarily of $350.4 million from sales and maturities of marketable securities, partially offset by $ $143.5 million of purchase of marketable securities for our investment portfolio. 70 Net cash used in investing activities was $5.1 million for the year ended December 31, 2021 and consisted primarily of $394.1 million of purchase of marketable securities for our investment portfolio, partially offset by $389.3 million from sales and maturities of marketable securities.
Net cash used in investing activities was $206.7 million for the year ended December 31, 2022 and consisted primarily of $350.4 million from sales and maturities of marketable securities, partially offset by $143.5 million of purchase of marketable securities for our investment portfolio.
Our research and development expenses have increased year over year in each of 2020, 2021, and 2022 and we expect that our research and development expenses will increase substantially in the future. The process of conducting preclinical studies and clinical trials necessary to obtain regulatory approval is costly and time consuming.
Our research and development expenses have increased year over year in each of 2021, 2022, and 2023 and we expect that our research and development expenses may increase in the future. The process of conducting preclinical studies and clinical trials necessary to obtain regulatory approval is costly 58 Table of Contents and time consuming.
We believe our general and administrative expenses may increase over time as we advance our clinical and preclinical development programs for resmetirom, prepare for commercialization, and expand our operating activities, which will likely result in an increase in our headcount, consulting services, and related overhead needed to support those efforts.
We believe our general and administrative expenses will increase over time as we prepare for commercialization and expand our operating activities, which will result in an increase in our headcount, consulting services, and related overhead needed to support those efforts.
Research and development expenses increased by $40.3 million in the 2022 period due primarily to the additional activities related to our Phase 3 clinical trials, an increase in headcount, and an increase in stock compensation expense. We expect our research and development expenses to increase as we advance our clinical and preclinical development programs for resmetirom.
Research and development expenses increased by $40.3 million in the 2022 period due primarily to the additional activities related to our Phase 3 clinical trials, an increase in headcount, and an increase in stock compensation expense.
We contract with clinical research organizations to manage our clinical trials under agreed upon budgets for each study, with oversight by our clinical program managers.
We expense our research and development expenses as incurred. We contract with clinical research organizations to manage our clinical trials under agreed upon budgets for each study, with oversight by our clinical program managers.
The Company’s historical estimates for research and development costs have not been materially different from the actual costs. Stock-Based Compensation The Company recognizes stock-based compensation expense based on the grant date fair value of stock options granted to employees, officers and directors.
Our historical estimates for research and development costs have not been materially different from the actual costs. Stock-Based Compensation We recognize stock-based compensation expense based on the grant date fair value of stock options, restricted stock units, and other stock-based compensation awards granted to employees, officers, directors, and consultants.
Cash Flows The following table summarizes our net cash flow activity (in thousands): Year Ended December 31, 2022 2021 2020 Net cash used in operating activities $ (224,857 ) $ (183,917 ) $ (157,561 ) Net cash provided by (used in) investing activities 206,686 (5,055 ) 159,780 Net cash provided by financing activities 313,451 171,237 5,088 Net increase (decrease) in cash and cash equivalents $ 295,280 $ (17,735 ) $ 7,307 Operating Activities Net cash used in operating activities was $224.9 million, $183.9 million, and $157.6 million for the years ended December 31, 2022, 2021 and 2020, respectively.
Cash Flows The following table summarizes our net cash flow activity (in thousands): Year Ended December 31, 2023 2022 2021 Net cash used in operating activities $ (324,230) $ (224,857) $ (183,917) Net cash provided by (used in) investing activities (502,520) 206,686 (5,055) Net cash provided by financing activities 595,116 313,451 171,237 Net increase (decrease) in cash and cash equivalents $ (231,634) $ 295,280 $ (17,735) Operating Activities Net cash used in operating activities was $324.2 million, $224.9 million, and $183.9 million for the years ended December 31, 2023, 2022 and 2021, respectively.
General and administrative expenses increased by $10.8 million in the 2022 period due primarily to increases in commercial preparation activities, including corresponding increase in headcount, and an increase in stock compensation expense.
General and administrative expenses increased by $60.0 million in 2023 due primarily to increases in commercial preparation activities, including a corresponding increase in headcount, and an increase in stock compensation expense.
Net cash provided by investing activities was $159.8 million for the year ended December 31, 2020 and consisted primarily of $489.5 million from sales and maturities of marketable securities, partially offset by $329.3 million of purchase of marketable securities for our investment portfolio.
Net cash used in investing activities was $5.1 million for the year ended December 31, 2021 and consisted primarily of $394.1 million of purchase of marketable securities for our investment portfolio, partially offset by $389.3 million from sales and maturities of marketable securities.
Liquidity and Capital Resources Since inception, we have incurred significant net losses and we have funded our operations primarily through the issuance of convertible debt, the issuance of shares of our common stock and shares of our preferred stock, and the proceeds from the merger.
Liquidity and Capital Resources Since inception, we have incurred significant net losses and we have funded our operations primarily through the issuance of shares of our common stock, shares of our convertible preferred stock, issuances of pre-funded warrants, borrowings under the Loan Facility with Hercules, the issuance of convertible debt and the proceeds from the merger with Synta Pharmaceuticals Corp.
Operating Expenses The following table provides comparative results of our operating expenses for the years ended December 31, 2022 and 2021 (in thousands): Year Ended December 31, Increase / (Decrease) 2022 2021 $ % Research and Development Expenses $ 245,441 $ 205,164 40,277 20 % General and Administrative Expenses 48,130 37,318 10,812 29 % Interest (Income) (2,185 ) (363 ) 1,822 502 % Interest Expense 3,964 — 3,964 100 % Other (income) — (273 ) (273 ) (100 %) $ 295,350 $ 241,846 53,504 22 % Research and Development Expense Our research and development expenses were $245.4 million for the year ended December 31, 2022 compared to $205.2 million for the year ended December 31, 2021.
Comparison of the Years Ended December 31, 2022 and 2021 Revenue We did not generate any revenue during the years ended December 31, 2022 and 2021, respectively. 61 Table of Contents Operating Expenses The following table provides comparative results of our operating expenses for the years ended December 31, 2022 and 2021 (in thousands): Year Ended December 31, Increase / (Decrease) 2022 2021 $ % Research and Development Expenses $ 245,441 $ 205,164 40,277 20 % General and Administrative Expenses 48,130 37,318 10,812 29 % Interest (Income) (2,185) (363) 1,822 502 % Interest Expense 3,964 — 3,964 100 % Other (income) — (273) (273) (100 %) $ 295,350 $ 241,846 53,504 22 % Research and Development Expense The following represents our research and development expenses for the years ended December 31, 2022 and 2021 (in thousands): Year Ended December 31, Increase / (Decrease) 2022 2021 $ % Personnel and Internal Expense $ 39,121 $ 26,232 12,889 49 % External Expense 206,320 178,932 27,388 15 % Total $ 245,441 $ 205,164 40,277 20 % Our research and development expenses were $245.4 million for the year ended December 31, 2022 compared to $205.2 million for the year ended December 31, 2021.
As of December 31, 2022, we had drawn $50 million under the facility.
As of December 31, 2023, we had drawn $115.0 million under the facility.
The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, and expenses and the disclosure of contingent assets and liabilities at the date of the financial statements. On an ongoing basis, we evaluate our estimates and judgments, including those related to accrued research and development expenses.
The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, and expenses and the disclosure of contingent assets and liabilities at the date of the financial statements.
The increase in interest expense was as a result of the Loan and Security Agreement (“Loan Facility”) we entered into with Hercules during the second quarter of 2022. 68 Comparison of the Years Ended December 31, 2021 and 2020 Revenue We did not generate any revenue during the years ended December 31, 2021 and 2020, respectively.
The increase in interest expense was as a result of the Loan and Security Agreement (“Loan Facility”) we entered into with Hercules during the second quarter of 2022.
NAFLD has become the most common liver disease in the United States and other developed countries and is characterized by an accumulation of fat in the liver with no other apparent causes. NASH can progress to cirrhosis or liver failure, require liver transplantation and can also result in liver cancer.
NASH is a more advanced form of nonalcoholic fatty liver disease (NAFLD). NAFLD has become the most common liver disease in the United States and other developed countries and is characterized by an accumulation of fat in the liver with no other apparent causes.
While our rate of cash usage will likely increase in the future, in particular to support our product development and clinical trial efforts, we believe our available cash resources as of December 31, 2022 will be sufficient to fund our operations past one year from the issuance of the financial statements contained herein.
We anticipate continuing to incur operating losses for the foreseeable future. While our rate of cash usage will likely increase in the future, in particular to support our preparation for commercialization, we believe our available cash resources are sufficient to fund our operations past one year from the issuance of the financial statements contained herein.
General and administrative expenses increased by $15.5 million in the 2021 period due primarily to increases in commercial activities, including a corresponding increase in headcount, and an increase in stock compensation expense.
General and administrative expenses increased by $10.8 million in the 2022 period due primarily to increases in commercial preparation activities, including a corresponding increase in headcount, and an increase in stock compensation expense. Interest Income Our interest income was $2.2 million for the year ended December 31, 2022 compared to $0.4 million for the year ended December 31, 2021.
In the event of a disqualifying disposition, the entire tax benefit is recorded as a reduction of income tax expense.
We do not record tax benefits related to ISOs unless and until a disqualifying disposition is reported. In the event of a disqualifying disposition, the entire tax benefit is recorded as a reduction of income tax expense.
The Company has not recognized any income tax benefit for its share-based compensation arrangements due to the fact that the Company does not believe it is more likely than not it will realize the related deferred tax assets. 67 Results of Operations Comparison of the Years Ended December 31, 2022 and 2021 Revenue We did not generate any revenue during the years ended December 31, 2022 and 2021, respectively.
We have not recognized any income tax benefit for its share-based compensation arrangements due to the fact that we do not believe it is more likely than not we will realize the related deferred tax assets.
The use of cash in these periods resulted primarily from our losses from operations, as adjusted for non-cash charges for stock-based compensation, and changes in our working capital accounts. Net cash used in the year ended December 31, 2022 increased from prior years predominately due to escalated clinical trial related activity.
The use of cash in these periods resulted primarily from our losses from 64 Table of Contents operations, as adjusted for non-cash charges for stock-based compensation, and changes in our working capital accounts.
Interest Income Our interest income was $0.4 million for the year ended December 31, 2021 compared to $4.3 million for the year ended December 31, 2020. The decrease in interest income was due primarily to a lower average principal balance in our investment account in 2021 and decreased interest rates.
Interest Income Our interest income was $19.6 million for the year ended December 31, 2023 compared to $2.2 million for the year ended December 31, 2022. The increase in interest income was due primarily to a higher average principal balance in our investment account in 2023, along with increased interest rates in 2023.
Certain of the employee stock options granted by the Company are structured to qualify as incentive stock options (ISOs). Under current tax regulations, the Company does not receive a tax deduction for the issuance, exercise or disposition of ISOs if the employee meets certain holding requirements.
Under current tax regulations, we do not receive a tax deduction for the issuance, exercise or disposition of ISOs if the employee meets certain holding requirements. If the employee does not meet the holding requirements, a disqualifying disposition occurs, at which time we may receive a tax deduction.
Furthermore, any sales of additional equity securities may result in dilution to our stockholders, and any debt financing may include covenants that restrict our business.
If adequate funds are not available, or if the terms of potential funding sources are unfavorable, our business and our ability to develop our product candidates would be harmed. Furthermore, any sales of additional equity securities may result in dilution to our stockholders, and any debt financing may include covenants that restrict our business.
We also have the ability to delay certain research activities and related clinical expenses if necessary due to liquidity concerns until a date when those concerns are relieved. If adequate funds are not available, or if the terms of potential funding sources are unfavorable, our business and our ability to develop our product candidates would be harmed.
We also have the ability to delay certain research activities and related clinical expenses, as well as commercial preparation investments, if necessary due to liquidity concerns until a date when those concerns are relieved.
We expect these potential increases will likely include management costs, legal fees, accounting fees, directors’ and officers’ liability insurance premiums and expenses associated with investor relations. 66 Critical Accounting Policies and Estimates Our management’s discussion and analysis of our financial condition and results of operations are based on our financial statements which have been prepared in accordance with GAAP.
We expect these potential increases will likely include management costs, legal fees, accounting fees, directors’ and officers’ liability insurance premiums and expenses associated with investor relations.
The risk-free rate for periods within the expected life of the option is based on the U.S. Treasury yield curve in effect at the time of the grant. The Company estimates the forfeiture rate based on historical data. This analysis is re-evaluated at least annually and the forfeiture rate is adjusted as necessary.
Expected volatility is based upon an industry estimate or blended rate including our historical trading activity. 59 Table of Contents The risk-free rate for periods within the expected life of the option is based on the U.S. Treasury yield curve in effect at the time of the grant. We estimate the forfeiture rate based on historical data.
The expected lives for options granted represent the period of time that options granted are expected to be outstanding. The Company uses the simplified method for determining the expected lives of options. Expected volatility is based upon an industry estimate or blended rate including the Company’s historical trading activity.
The expected lives for options granted represent the period of time that options granted are expected to be outstanding. We use the simplified method for determining the expected lives of options.
Net cash provided by financing activities was $5.1 million for the year ended December 31, 2020 and consisted primarily of sales of our common stock under our at-the-market sales agreements with Cowen and Company, LLC and the exercise of stock options.
Financing Activities Net cash provided by financing activities was $595.1 million for the year ended December 31, 2023 and consisted primarily of $472.0 million in proceeds from our October 2023 public offering, in addition to $65.0 million in borrowings under the Loan Facility, $34.0 million from proceeds from the exercise of common stock options, and $24.5 million from sales of our common stock under the 2023 Sales Agreement, partially offset by $0.4 million of loan issuance costs.
Interest Expense Our interest expense was $4.0 million for year ended December 31, 2022, compared to $0 million for the year ended December 31, 2021.
Interest Expense Our interest expense was $12.7 million for the year ended December 31, 2023, compared to $4.0 million for the year ended December 31, 2022. The increase in interest expense was primarily a result of higher outstanding principal balances during the period under the Loan Facility with Hercules.
General and Administrative Expense Our general and administrative expenses were $37.3 million for the year ended December 31, 2021 compared to $21.9 million for the year ended December 31, 2020.
Research and development expenses increased by $26.9 million in 2023 due primarily to a scale up of manufacturing activities, an increase in headcount, and an increase in stock compensation expense. General and Administrative Expense Our general and administrative expenses were $108.1 million for the year ended December 31, 2023 compared to $48.1 million for the year ended December 31, 2022.
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Our operating results are not necessarily indicative of results that may occur for the full fiscal year or any other future period. About Madrigal Pharmaceuticals, Inc. Our Focus . We are a clinical-stage biopharmaceutical company pursuing novel therapeutics for nonalcoholic steatohepatitis, or NASH.
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About Madrigal Pharmaceuticals, Inc. We are a clinical-stage biopharmaceutical company pursuing novel therapeutics for nonalcoholic steatohepatitis, or NASH, a liver disease with high unmet medical need. Our lead candidate, resmetirom, is a once-daily, oral, liver-directed thyroid hormone receptor-ß (THR-ß), agonist designed to target key underlying causes of NASH. NASH Disease State Overview.
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Our lead product candidate, resmetirom, is a proprietary, liver-directed, selective thyroid hormone receptor-ß, or THR-ß, agonist being developed as a once-daily oral pill for the treatment of NASH. Our Patient Market Opportunity. NASH is a serious inflammatory form of nonalcoholic fatty liver disease, or NAFLD.
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NASH can progress to cirrhosis or liver failure, require liver transplantation and can also result in liver cancer. NASH is the leading cause of liver transplants in the U.S. for women, and is expected to soon be the leading cause of liver transplants overall.
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Progression of NASH to end stage liver disease will soon surpass all other causes of liver failure requiring liver transplantation. Importantly, beyond these critical conditions, NASH and NAFLD patients additionally suffer heightened cardiovascular risk and, in fact, die more frequently from cardiovascular events than from liver disease. NASH and NAFLD have grown as a consequence of rising worldwide obesity-related disorders.
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Additionally, patients with NASH, especially those with more advanced metabolic risk factors (hypertension, concomitant type 2 diabetes), are at increased risk for adverse cardiovascular events and increased morbidity and mortality. Once patients progress to NASH with significant fibrosis (consistent with fibrosis stages 2 and 3), the risk of adverse liver outcomes increases substantially.
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In the United States, NAFLD is estimated to affect approximately 25% of the population, and approximately 25% of those will progress from NAFLD to NASH. Current estimates place NASH prevalence at approximately 22 million people in the United States by 2024, with similar prevalence in Europe and Asia.
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NASH is also known as metabolic dysfunction-associated steatohepatitis (“MASH”) following a change in disease nomenclature introduced by hepatology medical societies in 2023. Our Patient Focus. Madrigal estimates that approximately 1.5 million patients have been diagnosed with NASH in the U.S., of which approximately 525,000 have NASH with significant fibrosis.
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The prevalence of NASH is also increasing in developing regions due to the adoption of a more sedentary lifestyle and a diet consisting of processed foods with high fat and fructose content. Our Completed Studies. For NASH, we enrolled 125 patients in a Phase 2 clinical trial with resmetirom.
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Madrigal estimates that approximately 315,000 diagnosed patients with NASH with significant fibrosis are under the care of the liver specialist physicians Madrigal will be targeting during the planned launch of resmetirom following approval. Our Clinical Development Program.
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We achieved the 12-week primary endpoint for this Phase 2 clinical trial and reported the results in December 2017, and we reported positive topline 36-week results at the conclusion of the Phase 2 clinical trial in May 2018.
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Madrigal is currently conducting multiple Phase 3 clinical trials to evaluate the safety and efficacy of resmetirom for the treatment of NASH, including the pivotal MAESTRO-NASH biopsy study in patients with significant fibrosis, the MAESTRO-NASH Outcomes study in patients with NASH with compensated cirrhosis and the MAESTRO-NAFLD-1 safety study.
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We also completed a 36-week, open-label extension study in 31 participating NASH patients from our Phase 2 clinical trial, which included 14 patients who received placebo in the main study.
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Positive results from the pivotal MAESTRO-NASH biopsy study were published in the New England Journal of Medicine in February 2024.
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On December 18, 2019 the Company announced it had opened for enrollment MAESTRO-NAFLD-1, a 52-week, non-invasive, multi-center, double-blind, placebo-controlled Phase 3 clinical study of patients with biopsy-confirmed or presumed NASH recruited from sites in the U.S. Key endpoints are safety, including safety biomarkers. Secondary endpoints include LDL cholesterol, lipid biomarkers, MRI-PDFF, NASH and fibrosis biomarkers.
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Data from the 52-week first 1,000 patient portion of MAESTRO-NASH, together with data from MAESTRO-NAFLD-1, the open-label extension of the MAESTRO-NAFLD-1 study, Phase 2 and Phase 1 data, including safety parameters, formed the basis for Madrigal’s subpart H submission to the FDA for accelerated approval of resmetirom for treatment of NASH with liver fibrosis.
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Except for serial liver biopsies, the study protocol is similar to the MAESTRO-NASH study (discussed below under “—Our Ongoing and Planned Studies”), with resmetirom doses of 80 mg or 100 mg or placebo. Enrollment objectives for this study were exceeded, with approximately 1,300 patients enrolled overall.
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Key Developments In February 2024, primary results from the MAESTRO-NASH study were published in the New England Journal of Medicine. In September 2023, Madrigal announced we had commenced a public underwritten offering of common stock and pre-funded warrants to purchase common stock (the “Offering”). The Offering closed in October 2023. We received gross proceeds totaling $500.0 million.
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The MAESTRO-NAFLD-1 study will help support the adequacy of the safety database at the time of NDA submission for Subpart H approval for treatment of patients with NASH with fibrosis.
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Our net proceeds were $472.0 million, after deducting fees and commissions.
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In November of 2021, we 64 reported data from the open label non-cirrhotic arm of MAESTRO-NAFLD-1, and in January 2022 we announced that we achieved primary and secondary endpoints for the double-blind portion of MAESTRO-NAFLD-1, as summarized in “- Key Developments” below. Our Ongoing and Planned Studies.
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We intend to use the net proceeds from the Offering for our clinical and commercial activities in preparation for a potential launch of resmetirom in the U.S. and for general corporate purposes, including, without limitation, research and development expenditures, clinical trial expenditures, manufacture and supply of drug substance and drug products, potential acquisitions or licensing of new technologies, capital expenditures and working capital. 57 Table of Contents Also in September 2023, Madrigal announced our Board of Directors (the “Board”) appointed Bill Sibold as the President and Chief Executive Officer of the Company.
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On March 28, 2019, the Company announced that it had initiated MAESTRO-NASH, a Phase 3 trial in NASH with its once daily, oral thyroid hormone receptor beta selective agonist, resmetirom. This double-blind, placebo-controlled study is being conducted at more than 220 sites in the United States and the rest of the world.
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In connection with this appointment, the size of the Board was increased to nine, and Mr. Sibold was also appointed a member of the Board. On Mr. Sibold’s start date, he assumed the duties and responsibilities of the Company’s principal executive officer from Paul Friedman, M.D., who previously served as the Chief Executive Officer since July of 2016. Dr.
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MAESTRO-NASH is a multicenter, randomized, double-blind, placebo-controlled Phase 3 study of resmetirom in patients with liver biopsy-confirmed NASH and was initiated in March 2019.
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Friedman continues to serve on the Board as a director of the Company. Additionally in September 2023, the U.S. Food and Drug Administration (the “FDA”) informed Madrigal that it accepted for review our New Drug Application (“NDA”) for resmetirom for the treatment of adult patients with NASH with liver fibrosis and granted a Priority Review designation.
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The subpart H portion of the study enrolled more than 1,000 patients with biopsy-proven NASH (at least half with F3 (advanced) fibrosis, the remainder F2 or F1B (moderate fibrosis) with a few earlier F1 patients), randomized 1:1:1 to receive once-daily resmetirom 80 mg, resmetirom 100 mg, or placebo. After 52 weeks of treatment, a second liver biopsy is performed.
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The FDA has assigned a Prescription Drug User Fee Act (“PDUFA”) date of March 14, 2024, the target date by which the FDA intends to complete its review and take action on the NDA. The FDA noted in its September 2023 correspondence that it is not currently planning to hold an advisory committee meeting to discuss our application.
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The dual primary surrogate endpoints on biopsy are NASH resolution with ≥2-point reduction in NAS (NAFLD Activity Score), and with no worsening of fibrosis OR a 1-point decrease in fibrosis with no worsening of NAS. Achievement of either primary endpoint is considered a successful trial outcome. A key secondary endpoint is lowering of LDL-C.
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In April 2023, Madrigal announced that resmetirom has received Breakthrough Therapy designation from the FDA for the treatment of patients with NASH with liver fibrosis. Breakthrough Therapy designation is a process intended to expedite the development and review of drugs for serious or life-threatening conditions.
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All patients enrolled in the MAESTRO-NASH study (up to 2,000 in total) continue on therapy after the initial 52-week treatment period for up to 54 months to accrue and measure hepatic clinical outcome events including progression to cirrhosis on biopsy (52 weeks and 54 months) and hepatic decompensation events, as well as all-cause mortality.
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The criteria for breakthrough therapy designation require preliminary clinical evidence that demonstrates the drug may have substantial improvement on at least one clinically significant endpoint over available therapy, or over placebo if there is no available therapy.
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In December 2022, we reported topline results from the subpart H portion of the study: resmetirom achieved both primary endpoints with both daily oral doses, 80 mg and 100 mg, relative to placebo, as summarized in “- Key Developments” below.
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A drug that receives Breakthrough Therapy designation is eligible for more intensive guidance on an efficient drug development program and organizational commitment involving senior managers from FDA. Also in April 2023, Madrigal announced that the outcomes portion of the Phase 3 MAESTRO-NASH biopsy trial has completed enrollment.
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On July 13, 2021 we announced first patient dosed in a planned 52-week open label active treatment extension study of MAESTRO-NAFLD-1, named MAESTRO-NAFLD-Open Label Extension (OLE).
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Enrollment of the MAESTRO-NASH study was closed at approximately 1,750 patients based on the enrollment target of the 54-month long-term clinical outcome portion of the study. Basis of Presentation Research and Development Expenses Research and development expenses primarily consist of costs associated with our research activities, including the preclinical and clinical development of our product candidate, resmetirom.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeOur ability to raise funds in this manner depends upon, among other things, capital market forces affecting our stock price. Inflation Risk Inflation has not had a material effect on our business, financial condition or results of operations during the years ended December 31, 2022, 2021 or 2020.
Biggest changeOur ability to raise funds in this manner depends upon, among other things, capital market forces affecting our stock price. Inflation Risk Inflation has not had a material effect on our business, financial condition or results of operations during the years ended December 31, 2023, 2022 or 2021. Item 8. Financial Statements and Supplementary Data.
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The information required by this Item 8 is referred to in Item 15, listed in the Index to Financial Statements as a part of this Annual Report on Form 10-K, and is incorporated herein by this reference. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None.

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