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What changed in MADRIGAL PHARMACEUTICALS, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of MADRIGAL PHARMACEUTICALS, INC.'s 2023 and 2024 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 2024 report.

+860 added−639 removedSource: 10-K (2025-02-26) vs 10-K (2024-02-28)

Top changes in MADRIGAL PHARMACEUTICALS, INC.'s 2024 10-K

860 paragraphs added · 639 removed · 391 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

131 edited+156 added−76 removed94 unchanged
Biggest changeMadrigal is currently conducting multiple Phase 3 clinical trials to evaluate the safety and efficacy of resmetirom for the treatment of NASH: • The pivotal MAESTRO-NASH (Significant Fibrosis) study includes a 52-week biopsy assessment to support accelerated approval and an ongoing 54-month outcomes study designed to generate confirmatory data that, if positive, will help verify resmetirom’s clinical benefit and support full approval.
Biggest changeThe 54-month outcomes portion of the trial is designed to generate confirmatory data that, if positive, is expected to verify a clinical benefit and support the full approval of Rezdiffra in noncirrhotic MASH. • The MAESTRO-NAFLD-1 (Safety) trial was a 52-week trial that noninvasively evaluated the safety and tolerability of resmetirom and provided a larger safety database to support regulatory benefit-risk assessment.
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.
The Roche Agreement will expire, unless earlier terminated pursuant to other provisions of the Roche 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.
Our trademarks are protected under the common law and/or by registration in the United States and other countries. We seek to protect our proprietary processes, in part, by confidentiality agreements and invention assignment agreements with our personnel, including consultants and commercial partners. These agreements are designed to protect our proprietary information.
Our trademarks are protected under the common law or by registration in the United States and other countries. We seek to protect our proprietary processes, in part, by confidentiality agreements and invention assignment agreements with our personnel, including consultants and commercial partners. These agreements are designed to protect our proprietary information.
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.
The FDA may also require, as appropriate, that certain post-approval trials 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.
Clinical holds also may be imposed by the FDA at any time before or during studies due to safety concerns or non-compliance, or other reasons. All clinical trials must be conducted under the supervision of one or more qualified investigators in accordance with GCP.
Clinical holds also may be imposed by the FDA at any time before or during clinical trials due to safety concerns or non-compliance, or other reasons. All clinical trials must be conducted under the supervision of one or more qualified investigators in accordance with GCP.
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.
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 trial until completed and otherwise comply with IRB regulations.
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.
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 trials conducted by or for the sponsor, that were necessary for approval.
An additional one-year extension of marketing exclusivity is possible if during the data exclusivity period we obtain an authorization for one or more new therapeutic indications that is deemed to bring a significant clinical benefit compared to existing therapies.
An additional one-year extension of marketing exclusivity is possible if during the data exclusivity period we obtain an authorization for one or more new therapeutic indications that is deemed to bring a significant clinical benefit compared to existing therapies for the indication.
A deferral may be granted for several reasons, including a finding that the drug or biologic is ready for approval for use in adults before pediatric studies are complete or that additional safety or effectiveness data needs to be collected before the pediatric studies begin.
A deferral may be granted for several reasons, including a finding that the drug is ready for approval for use in adults before pediatric studies are complete or that additional safety or effectiveness data needs to be collected before the pediatric studies begin.
As in the United States, it may be possible in foreign countries to obtain a period of market and/or data exclusivity that would have the effect of postponing the entry into the marketplace of a competitor’s generic product.
As in the United States, it may be possible in foreign countries to obtain a period of market and/or data exclusivity that would have the effect of postponing the entry into the marketplace of a competitor’s generic or biosimilar product.
These sanctions could include, among other things, the FDA’s refusal to approve pending applications, withdrawal of an approval, a clinical hold, warning letters and other types of enforcement-related letters, requesting product recalls, product seizures, changes to the conditions surrounding marketing approval such as labeling changes or changes to a Risk Evaluation and Mitigations Strategies, or REMS, program, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, debarment, restitution, disgorgement of profits, or civil or criminal investigations and penalties.
These sanctions could include, among other things, the FDA’s refusal to approve pending applications, withdrawal of an approval, a clinical hold, warning letters and other types of enforcement-related letters, requesting product recalls, product seizures, changes to the conditions surrounding marketing approval such as labeling changes or changes to a Risk Evaluation and Mitigations Strategies (“REMS”) program, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, debarment, restitution, disgorgement of profits or civil or criminal investigations and penalties.
Pursuant to the terms of the Roche Agreement, we, as successor-in-interest to VIA, assumed control of all development and commercialization of resmetirom and will hold exclusive worldwide rights for all potential indications.
Pursuant to the terms of the Roche Agreement, we, as successor-in-interest to VIA, assumed control of all development and commercialization of resmetirom and hold exclusive worldwide rights for all potential indications.
MAESTRO-NASH included many biomarker and imaging assessments that may be used in real world clinical practice to identify appropriate patients for treatment and monitor response to resmetirom, if approved. Safety The frequency of serious adverse events (SAEs) was similar across treatment arms in the MAESTRO-NASH trial: 11%, 13% and 12% for the 80 mg, 100 mg, and placebo groups, respectively.
MAESTRO-NASH included many biomarker and imaging assessments that may be used in real world clinical practice to identify appropriate patients for treatment and monitor response to resmetirom. Safety The frequency of serious adverse events (SAEs) was similar across treatment arms in the MAESTRO-NASH trial: 11%, 13% and 12% for the 80 mg, 100 mg and placebo groups, respectively.
In addition, the FDA often will conduct a bioresearch monitoring inspection of the clinical trial sites involved in conducting pivotal studies to ensure data integrity and compliance with applicable GCP requirements. The FDA may refer the NDA to an advisory committee for review, evaluation and recommendation as to whether the application should be approved and under what conditions.
In addition, the FDA often will conduct a bioresearch monitoring inspection of the clinical trial sites involved in conducting pivotal trials to ensure data integrity and compliance with applicable GCP requirements. The FDA may refer the NDA to an advisory committee for review, evaluation and recommendation as to whether the application should be approved and under what conditions.
At the end of the review period, the FDA may issue an approval letter following satisfactory completion of all aspects of the review process, or the FDA may issue a complete response letter, or CRL, which generally outlines the deficiencies in the submission and may require additional clinical or other data or impose other conditions that must be met in order to secure final approval of the NDA.
At the end of the review period, the FDA may issue an approval letter following satisfactory completion of all aspects of the review process, or the FDA may issue a complete response letter (“CRL”), which generally outlines the deficiencies in the submission and may require additional clinical or other data or impose other conditions that must be met in order to secure final approval of the NDA.
If a product is a new chemical entity, or NCE—generally meaning that the active moiety has never before been approved in any drug—there is a period of five years from the product’s approval during which the FDA may not accept for filing any ANDA or 505(b)(2) application for a drug with the same active moiety.
If a product is a new chemical entity (“NCE”)—generally meaning that the active moiety has never before been approved in any drug—there is a period of five years from the product’s approval during which the FDA may not accept for filing any ANDA or 505(b)(2) application for a drug with the same active moiety.
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 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 2038, excluding any patent term extensions or equivalents thereof that might be available following the grant of marketing authorizations.
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.
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 trials 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 trial sites.
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.
In particular, please read our definitive proxy statement, which will be filed with the SEC in connection with our 2025 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 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.
The international patent application 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.
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.
We have a pending patent application for other THR-β 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 such patent.
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 rate of trial 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.
Our success will depend in part on our ability to obtain and maintain patent and other proprietary protection for our current and future product candidates, technology and know-how, to operate without infringing on the proprietary rights of others, and to prevent others from infringing our proprietary rights.
Our success will depend in part on our ability to obtain and maintain patent and other proprietary protection for our current product and future product candidates, technology and know-how, our ability to freely operate without infringing on the proprietary rights of others and our ability to establish proprietary rights and prevent others from infringing our proprietary rights.
If the Written Request does not include studies in neonates, the FDA is required to include its rationale for not requesting those studies. The FDA may request studies on approved or unapproved indications in separate Written Requests. The issuance of a Written Request does not require the sponsor to undertake the described studies.
If the Written Request does not include trials in neonates, the FDA is required to include its rationale for not requesting those trials. The FDA may request trials on approved or unapproved indications in separate Written Requests. The issuance of a Written Request does not require the sponsor to undertake the described trials.
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.
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 Rezdiffra for noncirrhotic MASH, potentially accelerating the timeline to full approval.
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.
Consistent with previous Phase 2 and Phase 3 data, the most common adverse events (“AEs”) 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% and 16% of subjects in the 80 mg, 100 mg and placebo groups, respectively, and generally mild nausea that occurred at rates of 22%, 19% and 13% of subjects in the 80 mg, 100 mg and placebo groups, respectively.
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.
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, MASH resolution (with ≥2 point reduction in NAS) with ≥1-stage improvement in fibrosis and a 2-stage reduction in fibrosis without worsening of NAS.
There can be no assurance that any country that has price controls or reimbursement limitations for pharmaceutical products will allow favorable reimbursement and pricing arrangements for any of our products. Historically, products launched in the EU do not follow price structures of the United States and generally tend to be significantly lower. 23 Table of Contents U.S.
There can be no assurance that any country that has price controls or reimbursement limitations for pharmaceutical products will allow favorable reimbursement and pricing arrangements for any of our products. Historically, products launched in the EU do not follow price structures of the United States and generally tend to be significantly lower. U.S.
Individual states in the U.S. have also increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological product pricing, including by requiring pharmaceutical manufacturers to report to state agencies when they introduce new drugs to market with prices over a certain threshold, or when they increase the price of a drug over a certain threshold.
Individual states in the United States have also increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological product pricing, including by requiring pharmaceutical manufacturers to report to state agencies when they introduce new drugs to market with prices over a certain threshold, or when they increase the price of a drug over a certain threshold.
The sponsor will also include a protocol detailing, among other things, the objectives of the clinical trial, the parameters to be used in monitoring safety, and the effectiveness criteria to be evaluated, if the trial lends itself to an efficacy evaluation. Some preclinical testing may continue even after the IND is submitted.
The sponsor will also include a protocol detailing, among other things, the objectives of the clinical trial, the parameters to be 14 Table of Contents used in monitoring safety and the effectiveness criteria to be evaluated, if the trial lends itself to an efficacy evaluation. Some preclinical testing may continue even after the IND is submitted.
The 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.
The process required by the FDA before a drug 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 (“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; • approval by an institutional review board (“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 (“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 (“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 trials required by the FDA.
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.
The primary efficacy analysis assessed histological response at 52 weeks in 955 patients with biopsy-confirmed MASH with significant fibrosis (modified intent-to-treat (mITT) population) that excluded 11 intent-to-treat patients who had their Week 52 biopsy after Week 60 due to COVID-related reasons per regulatory guidelines.
If third-party payors do not consider a product to be cost-effective compared to other available therapies, they may not cover the product after approval as a benefit under their plans or, if they do, the level of payment may not be sufficient to allow a company to sell its products at a profit.
If third-party payors do not consider a product to 21 Table of Contents be cost-effective compared to other available therapies, they may not cover the product after approval as a benefit under their plans or, if they do, the level of payment may not be sufficient to allow a company to sell its products at a profit.
The initial marketing authorization is valid for five years, but once renewed is usually valid for an unlimited period, unless the Competent Authority decides, on justified grounds relating to pharmacovigilance (e.g. exposure of an insufficient number of patients to the medicinal product concerned), to mandate one additional five-year renewal.
The initial marketing authorization is valid for five years, but once renewed is usually valid for an unlimited period, unless the EC decides, on justified grounds relating to pharmacovigilance (e.g. exposure of an insufficient number of patients to the medicinal product concerned), to mandate one additional five-year renewal.
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.
Our ability to compete successfully will depend largely on our ability to leverage our collective experience in drug development and commercialization to: 11 Table of Contents • develop medicines that are differentiated from other products in the market; • obtain patent or proprietary protection for our products and technologies; • obtain required regulatory approvals; • commercialize our drugs, if approved; and • attract and retain high-quality research, development and commercial personnel.
These studies are intended to establish the overall risk-benefit ratio of the product candidate and provide, if appropriate, an adequate basis for product approval and product labeling.
These trials are intended to establish the overall risk-benefit ratio of the product candidate and provide, if appropriate, an adequate basis for product approval and product labeling.
Accordingly, manufacturers must continue to expend time, money, and effort in the area of production and quality control to maintain cGMP compliance. We rely, and expect to continue to rely, on third parties for the production of clinical and commercial quantities of our product candidates.
Accordingly, manufacturers must continue to expend time, money, and effort in the area of production and quality control to maintain cGMP compliance. We rely, and expect to continue to rely, on third parties for the production of 18 Table of Contents clinical and commercial quantities of our product candidates.
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.
The submission of an NDA is subject to the payment of user fees under the Prescription Drug User Fee Act, as amended (“PDUFA”) ; 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.
Whether or not we obtain FDA approval for a product, we must obtain approval by the comparable regulatory authorities of foreign countries or economic areas, such as the European Union, before we may commence clinical trials or market products in those countries or areas.
Whether or not we obtain FDA approval for a product, we must obtain approval by the comparable regulatory authorities of foreign countries or economic areas, such as the EU, before we may commence clinical trials or market products in those countries or areas.
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.
Competition The development and commercialization of new drugs in MASH is highly competitive. We will face competition with respect to all product candidates we have developed or may develop or commercialize in the future from pharmaceutical and biotechnology companies worldwide.
A new drug must be approved by the FDA through the new drug application, or NDA, process before it may be legally marketed in the United States, and must be approved by foreign regulatory authorities via various analogous procedures before it can be marketed in the applicable country.
A new drug must be approved by the FDA through the new drug application (“NDA”) process before it may be legally marketed in the United States and must be approved by foreign regulatory authorities via various analogous procedures before it can be marketed in the applicable country.
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.
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.
The Hatch-Waxman Act also provides periods of regulatory exclusivity for products that would serve as a reference listed drug, or RLD, for an abbreviated new drug application, or ANDA, or application submitted under section 505(b)(2) of the FDCA, or 505(b)(2) application.
The Hatch-Waxman Act also provides periods of regulatory exclusivity for products that would serve as a reference listed drug (“RLD”) for an abbreviated new drug application (“ANDA”) or application submitted under section 505(b)(2) of the FDCA, or 505(b)(2) application.
Please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” of this Annual Report on Form 10-K for a discussion of our research and development expenses incurred during the last three fiscal years. Manufacturing We do not own or operate, and currently have no plans to establish, any manufacturing facilities.
Please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” of this Annual Report for a discussion of our research and development expenses incurred during the last three fiscal years. Manufacturing, Supply and Distribution We do not own or operate, and currently have no plans to establish, any manufacturing facilities.
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.
The Food and Drug Administration Safety and Innovation Act (“FDASIA”) which was enacted in 2012, made permanent the Pediatric Research Equity Act (“PREA”), which requires a sponsor to conduct pediatric studies for most drug applications and supplements to applications, for a new active ingredient, new indication, new dosage form, new dosing regimen or new route of administration.
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.
We have pending patent applications directed to resmetirom that, if issued, would be expected to expire in the United States and in countries outside of the United States in 2044, excluding any patent term adjustment that might be available following the grant of the patent.
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.
Each of these patents and patent applications is directed to resmetirom, including composition-of-matter, certain polymorph forms, methods of making resmetirom, the use of resmetirom in the treatment of key disease indications or other THR-β analogs and uses thereof. Our current patent portfolio covers the United States and certain other jurisdictions worldwide.
Costs incurred in performing research and development activities include internal costs (including salaries and stock-based compensation); costs for clinical trial consultants, contract research organizations, clinical sites, and other external services; drug manufacturing and supply costs; milestone payments under licensing agreements; other costs of conducting studies including the costs of materials and supplies; the costs associated with seeking regulatory approval; and other costs associated with the Company’s preclinical and clinical programs.
Costs incurred in performing research and development activities include internal costs (including cash compensation and stock-based compensation); costs for clinical trial consultants, contract research organizations, clinical sites and other external services; clinical drug manufacturing and supply costs; milestone payments under licensing agreements; other costs of conducting trials including the costs of materials and supplies; the costs associated with seeking regulatory approval and other costs associated with our preclinical and clinical programs.
These endpoints indicated that resmetirom (1) was well-tolerated at 80 and 100 mg in patients treated for 52 weeks, (2) provided significant and clinically relevant reductions in liver fat as measured by MRI-PDFF and (3) significantly reduced atherogenic lipids, including LDLc, apolipoprotein B and triglycerides.
These endpoints indicated that resmetirom (1) was well-tolerated at 80 and 100 mg in patients treated for 52 weeks, (2) provided significant and clinically relevant reductions in liver fat as measured by MRI-PDFF and (3) significantly reduced atherogenic lipids, including low-density lipoprotein cholesterol (“LDLc”), apolipoprotein B and triglycerides.
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.
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). AEs observed in the MAESTRO-NAFLD-1 trial were generally mild to moderate in severity.
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.
Under FDORA, the FDA must specify the conditions for any post-approval trials by the date of the accelerated approval and the agency has flexibility in setting forth such conditions, which may include enrollment targets, clinical trial protocol and milestones – including the target date of trial completion.
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.
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) LDLc (low-density lipoprotein cholesterol); CFB (change from baseline); SE (standard error); APoB (Apolipoprotein B); MRI-PDFF (magnetic resonance imaging proton density fat-fraction); PDFF (proton density fat-fraction); CI (confidence interval); OL (open label non-cirrhotic arm randomized concurrently with double-blind arms) 10 Table of Contents The MAESTRO-NAFLD-1 trial also included an open label active treatment arm with 180 patients with compensated MASH cirrhosis.
However, a biosimilar medicine cannot launch until 2 years later (or a total of ten years after the first marketing authorization in the EU of the innovator product), or 3 years later (or a total of eleven years after the first marketing authorization in the EU of the innovator product) if the marketing authorization holder obtains marketing authorization for a new indication with significant clinical benefit within the eight year data exclusivity period.
However, even with a market authorization a biosimilar or generic medicine cannot launch in the EU until two years after the data exclusivity expires (or a total of ten years after the first marketing authorization in the EU of the innovator product), or three years later (or a total of eleven years after the first marketing authorization in the EU of the innovator product) if the marketing authorization holder obtains marketing authorization for a new indication with significant clinical benefit within the eight year data exclusivity period.
A total of 972 patients were randomized in the double-blind arms of the MAESTRO-NAFLD-1 study: 969 patients were included in the safety population and 943 patients in a modified intent-to-treat population for evaluation of key secondary and other endpoints.
A total of 972 patients were randomized in the double-blind arms of the MAESTRO-NAFLD-1 trial: 969 patients were included in the safety population and 943 patients were included in a modified ITT population for evaluation of key secondary and other endpoints.
Consistent with published data, the most common adverse event reported with greater frequency in the resmetirom groups vs placebo was generally mild diarrhea or increased stool frequency at the beginning of therapy, which occurred in 9% and ~17% over the placebo rate in the 80 and 100 mg dose groups, respectively.
Consistent with published data, the most common AE reported with greater frequency in the resmetirom groups as compared to the placebo was generally mild diarrhea or increased stool frequency at the beginning of therapy, which occurred in 9% and approximately 17% over the placebo rate in the 80 mg and 100 mg dose groups, respectively.
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.
We currently rely, and expect to continue to rely, on third-party contract manufacturers (“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 Rezdiffra and any future drug candidates that may be approved.
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.
The FDASIA made permanent the Best Pharmaceuticals for Children Act (“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 (“Written Request”).
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.
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) MASH 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.
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.
In addition to the accumulation of fat in the liver, MASH is characterized by inflammation and cellular damage with or without fibrosis, which may ultimately progress to cirrhosis. Within MASH cirrhosis, patients can be categorized as being compensated or decompensated.
NASH with compensated cirrhosis is characterized by liver scarring / damage that reduces the ability to process blood supplied to the liver, though patients generally remain asymptomatic with normal liver function. NASH patients with compensated cirrhosis are on the cusp of negative consequences associated with end-stage liver disease such as portal hypertension, esophageal varices, ascites, liver cancer and liver failure.
MASH with compensated cirrhosis is characterized by liver scarring or damage that reduces the ability to process blood supplied to the liver, though patients generally remain asymptomatic with normal liver function. MASH patients with compensated cirrhosis are on the cusp of negative consequences associated with end-stage liver disease including decompensation, esophageal varices, ascites, hepatic encephalopathy, liver cancer and liver failure.
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.
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 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.
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.
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.
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.
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.
The key factors affecting the success of an approved product will generally be such product's 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.
These data include the average manufacturer price and, in the case of innovator products, the best price for each drug, which, in general, represents the lowest price available from the manufacturer to any wholesaler, retailer, provider, health maintenance organization, nonprofit entity, or governmental entity in the U.S. in any pricing structure, calculated to include all sales and associated rebates, discounts, and other price concessions. 24 Table of Contents The ACA (addressed further above in the section on “-- U.S.
These data include the average manufacturer price and, in the case of innovator products, the best price for each drug, which, in general, represents the lowest price available from the manufacturer to any wholesaler, retailer, provider, health maintenance organization, nonprofit entity, or governmental entity in the United States in any pricing structure, calculated to include all sales and associated rebates, discounts, and other price concessions.
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.
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 Rezdiffra and any derivative products of resmetirom, subject to certain reductions.
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.
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) 17 Table of Contents application until three years after approval of the RLD.
Decisions regarding the extent of coverage and amount of reimbursement to be provided are made on a plan-by-plan basis. One third-party payor’s decision to cover a product does not ensure that other payors will also provide coverage for the product.
Third-party payors include federal and state government authorities, managed care providers, private health insurers and other organizations. Decisions regarding the extent of coverage and amount of reimbursement to be provided are made on a plan-by-plan basis. One third-party payor’s decision to cover a product does not ensure that other payors will also provide coverage for the product.
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.
The MAESTRO-NAFLD-1 trial was published in Nature Medicine in November 2023. We 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 trial.
The frequency of serious adverse events was similar across treatment arms and discontinuation for adverse events was low.
The frequency of SAEs was similar across treatment arms and discontinuation for AEs was low.
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.
In 2011, we commenced Phase 1 clinical trials and subsequently paid Roche a related milestone payment. In October 2016, we commenced a Phase 2 clinical trial in MASH and subsequently paid Roche a related milestone payment. In 2019, we commenced a Phase 3 clinical trial in MASH and subsequently paid Roche a $2.0 million related milestone payment.
Based on published epidemiology data and an analysis of medical claims using ICD-10 disease diagnosis codes, 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.
Based on published epidemiology data and an analysis of medical claims using ICD-10 disease diagnosis codes, we estimate that approximately 1.5 million patients have been diagnosed with MASH in the United States, of which approximately 525,000 have MASH with moderate to advanced fibrosis.
Resmetirom’s product profile as a liver-directed, once-daily, oral therapy, as well as its first-to-market position, provide meaningful points of differentiation in the NASH competitive landscape. 11 Table of Contents • Expand our commitment to NASH. We intend to maximize the full value of resmetirom by broadening its indication.
We believe Rezdiffra’s product profile as a liver-directed, once-daily, generally well-tolerated oral therapy, as well as its first-to-market position, provide meaningful points of differentiation in the MASH competitive landscape. Deepen our commitment to MASH . We intend to maximize the value of Rezdiffra by broadening its indication.
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).
Patients without a second biopsy due to early trial discontinuation or missing liver biopsy (approximately 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.
Healthcare Reform”) made significant changes to the Medicaid Drug Rebate Program, and CMS issued a final regulation to implement the changes to the Medicaid Drug Rebate Program under the ACA.
The ACA (addressed further above in the section titled “—U.S. Healthcare Reform”) made significant changes to the Medicaid Drug Rebate Program, and CMS issued a final regulation to implement the changes to the Medicaid Drug Rebate Program under the ACA.
The approval process and requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement vary greatly from place to place, and the time may be longer or shorter than that required for FDA approval. Under EU regulatory systems, a company may submit marketing authorization applications either under a centralized or decentralized procedure.
The approval process and requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement vary greatly from place to place, and the time may be longer or shorter than that required for FDA approval.
The rebates are calculated as the difference between the annual Non FAMP and FCP for the calendar year that the product was dispensed. Human Capital As of February 22, 2024, we had 376 full-time employees, including 99 engaged in research, development, and regulatory activities, and 277 in executive, commercial, general and administrative functions, and multiple part-time consultants.
The rebates are calculated as the difference between the annual Non FAMP and FCP for the calendar year that the product was dispensed. Human Capital As of December 31, 2024, we had 528 full-time employees, including 136 engaged in research, development and medical affairs, 312 in commercial activities and 80 in general and administrative functions.
Phase 1 clinical trials are typically conducted in healthy human subjects, but in some situations are conducted in patients with the target disease or condition.
Human clinical trials are typically conducted in three sequential phases: • Phase 1: The product candidate is initially introduced into humans. Phase 1 clinical trials are typically conducted in healthy human subjects, but in some situations are conducted in patients with the target disease or condition.
The data exclusivity period begins on the date of the product’s first marketing authorization in the EU and prevents biosimilars from relying on the holder of the marketing authorization for the reference biological medicine’s pharmacological, toxicological and clinical data for a period of eight years.
The data exclusivity period begins on the date of the product’s first marketing authorization in the EU and prevents biosimilars or generics from referencing the pharmacological, toxicological and clinical data contained in the dossier of the reference product when applying for a generic marketing authorization for a period of eight years.
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.
Coverage and 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.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe 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.
Biggest changeThe 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; U.S. 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; MASH therapeutic company developments or FDA developments, regardless of whether occurring generally 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; • our cash position and rate of expenditures; • our ability to meet the estimates and projections of the investment community or that we may otherwise provide to the public; • product revenue; • regulatory decisions, including our ability to receive full regulatory approval for Rezdiffra and our ability to receive regulatory approval for any future product candidates; • changes in laws or regulations applicable to Rezdiffra and any other future product candidates, including but not limited to clinical trial requirements for approvals; • our ability to successfully commercialize Rezdiffra and any other future product candidates, if approved; 57 Table of Contents • developments in patent or other proprietary rights owned or licensed by us, our collaborative partners or our competitors; • disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our technologies; • the progress and results of our clinical trials; • public or regulatory concern as to the safety and efficacy of MASH products developed by us or others or public safety generally; • publication of research reports about us or our industry or positive or negative recommendations or withdrawal of research coverage by securities analysts; • introduction of new products or services offered by us or our competitors, or the release or publication of clinical trial results from competing product candidates; • changes in the market valuations of similar companies; • our ability to obtain coverage and adequate reimbursement of Rezdiffra and any future product candidates, if approved; • our ability to effectively manage our growth; • actual or anticipated variations in quarterly operating results; • announcements of significant acquisitions, strategic partnerships, joint ventures, or capital commitments by us or our competitors; • any changes to our relationship with any manufacturers, suppliers, licensors, future collaborators or other strategic partners; • our ability to obtain adequate product supply for any approved drug product or inability to do so at acceptable prices; • changes to the structure of healthcare payment systems; • our ability to establish collaborations, if needed; • additions or departures of key scientific or management personnel; • litigation; • issuances of debt or equity securities; • sales of our common stock by us or our stockholders in the future or the perception that such sales may occur; • trading volume of our common stock; • changes in accounting practices; • effectiveness of our internal controls; and • other events or factors, many of which are beyond our control.
As a result, we may not in the future successfully prevent service interruptions, exfiltrations or data security incidents that could materially adversely affect our business. In addition, insurance may not cover or be sufficient in type or amount to cover us against claims related cyber incidents.
As a result, we may not in the future successfully prevent service interruptions, exfiltrations or data security incidents that could materially adversely affect our business. In addition, insurance may not cover or be sufficient in type or amount to cover us against claims related to cyber incidents.
Only limited protection may be available and may not adequately protect our rights or permit us to gain or keep any competitive advantage. This failure to properly protect the intellectual property rights relating to our product candidates could have a material adverse effect on our financial condition and results of operations.
Only limited protection may be available and may not adequately protect our rights or permit us to gain or keep any competitive advantage. This failure to properly protect the intellectual property rights relating to our product or product candidates could have a material adverse effect on our financial condition and results of operations.
Even if we owned and licensed patent applications covering our product candidates, the patents may not be enforced against competitors. For example, a formulation patent may not be enforced against those making and marketing a product that has the same active pharmaceutical ingredient in a different formulation that is not claimed in the formulation patent.
Even if we owned and licensed patent applications covering our product and product candidates, the patents may not be enforced against competitors. For example, a formulation patent may not be enforced against those making and marketing a product that has the same active pharmaceutical ingredient in a different formulation that is not claimed in the formulation patent.
The patent application process and patent maintenance and enforcement are subject to numerous risks and uncertainties, and there can be no assurance that we or any of our future development partners will be successful in protecting our product candidates by obtaining and defending patents.
The patent application process and patent maintenance and enforcement are subject to numerous risks and uncertainties, and there can be no assurance that we or any of our future development partners will be successful in protecting our product and product candidates by obtaining and defending patents.
As the biotechnology industry expands and more patents are issued, the risk increases that our product candidates may be subject to claims of infringement of the patent rights of third parties.
As the biotechnology industry expands and more patents are issued, the risk increases that our product and product candidates may be subject to claims of infringement of the patent rights of third parties.
If we or any of our future development partners were to initiate legal proceedings against a third party to enforce a patent directed at one of our product candidates, or one of our future product candidates, the defendant could counterclaim that our patent is invalid and/or unenforceable.
If we or any of our future development partners were to initiate legal proceedings against a third party to enforce a patent directed at our product or one of our product candidates, or one of our future product candidates, the defendant could counterclaim that our patent is invalid and/or unenforceable.
If a defendant were to prevail on a legal assertion of invalidity and/or unenforceability, we would lose at least part, and perhaps all, of the patent protection on such product candidate.
If a defendant were to prevail on a legal assertion of invalidity and/or unenforceability, we would lose at least part, and perhaps all, of the patent protection on such product or product candidate.
Our reliance on third parties requires us to share our trade secrets, which increases the possibility that a competitor will discover them or that our trade secrets will be misappropriated or disclosed. Because we rely on third parties to research and develop and to manufacture our product candidates, we must, at times, share trade secrets with them.
Our reliance on third parties requires us to share our trade secrets, which increases the possibility that a competitor will discover them or that our trade secrets will be misappropriated or disclosed. Because we rely on third parties to research and develop and to manufacture our product and product candidates, we must, at times, share trade secrets with them.
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.
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 may need to raise substantial additional funds in the future.
Based on a Schedule 13G/A filed with the SEC on February 14, 2024, funds affiliated with Avoro Capital Advisors LLC (the “Avoro Holdings”) reported beneficial ownership of 2,288,888 shares of our Common Stock, including pre-funded warrants to purchase 400,000 shares of Common Stock that are subject to the Maximum Percentage.
Based on a Schedule 13G/A filed with the SEC on February 14, 2024, funds affiliated with Avoro Capital Advisors LLC reported beneficial ownership of 2,288,888 shares of our common stock, including pre-funded warrants to purchase 400,000 shares of common stock that are subject to the Maximum Percentage (the “Avoro Holdings”).
If there are significant sales or short sales of our stock, the price decline that could result from this activity may cause the share price to decline further, which, in turn, may cause long holders of the common stock to sell their shares, thereby contributing to sales of common stock in the market.
If there are significant sales or short sales of our stock, the price decline that could result from this activity may cause the share price to decline further, which, in turn, may cause long holders of our common stock to sell their shares, thereby contributing to sales of common stock in the market.
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.
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 or 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; 52 Table of Contents • 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 products.
The requirements governing the conduct of clinical trials, product licensing, pricing, and reimbursement for marketing our drug candidates outside the United States vary greatly from country to country and may require additional testing. We expect that our future clinical development of our drug candidates will involve a number of clinical trials in foreign jurisdictions, particularly in Europe.
The requirements governing the conduct of clinical trials, product licensing, pricing, and reimbursement for marketing products outside the United States vary greatly from country to country and may require additional testing. We expect that our future clinical development of our drug candidates will involve a number of clinical trials in foreign jurisdictions, particularly in Europe.
In addition, third parties may not be able to repeat their past successes in clinical trials. The failure of these third parties to carry out their obligations could delay or prevent the development, approval and commercialization of our product candidates or result in enforcement action against us.
In addition, third parties may not be able to repeat their past successes in clinical trials. The failure of these third parties to carry out their obligations could delay or prevent the development and approval of our product candidates and commercialization of our products or result in enforcement action against us.
A number of events, including but are not limited to any of the following, could delay or impede completely the completion of our ongoing and planned clinical trials and negatively affect our ability to obtain regulatory approval for, and to market and sell, a particular product candidate: • conditions imposed on us by the FDA or other regulatory authorities regarding the scope or design of our clinical trials; • insufficient supply of our product candidates or other materials necessary to conduct and complete our clinical trials; • slow enrollment and retention rate of subjects in our clinical trials; • challenges in identifying or recruiting sufficient study sites or investigators for clinical trials; and • serious and unexpected drug-related side effects related to the product candidate being tested.
A number of events, including but are not limited to any of the following, could delay or impede completely the completion of our ongoing and planned clinical trials and negatively affect our ability to obtain regulatory approval for, and to market and sell, a particular product candidate: • conditions imposed on us by the FDA or other regulatory authorities regarding the scope or design of our clinical trials; • insufficient supply of our product candidates or other materials necessary to conduct and complete our clinical trials; • slow enrollment and retention rate of subjects in our clinical trials; • challenges in identifying or recruiting sufficient trial sites or investigators for clinical trials; and • serious and unexpected drug-related side effects related to the product candidate being tested.
Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors. The implementation of additional cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability or commercialize our products.
Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability or commercialize our products.
Once an NDA or marketing authorization application outside the United States is approved, the product covered thereby becomes a “listed drug” that can, in turn, be cited by potential competitors in support of approval of an abbreviated new drug application in the United States.
Once an NDA or marketing authorization application outside the United States is approved, the product covered thereby becomes a “listed drug” that can, in turn, be cited by potential competitors in support of approval of an abbreviated new drug application in the United States or equivalent marketing authorization application outside the United States.
Any patent-related legal action against us claiming damages and seeking to enjoin commercial activities relating to our product candidate or processes could subject us to potential liability for damages and require us to obtain a license to continue to manufacture or market resmetirom or our other product candidates.
Any patent-related legal action against us claiming damages and seeking to enjoin commercial activities relating to our product and product candidates or processes could subject us to potential liability for damages and require us to obtain a license to continue to manufacture or market resmetirom or our other product candidates.
Failure to meet post-approval commitments and requirements, including completion of enrollment of—and in particular, any failure to obtain positive data from—any confirmatory studies required by the FDA, could result in negative regulatory action from the FDA and/or withdrawal of such accelerated approval.
Failure to meet post-marketing commitments and requirements, including completion of enrollment of—and in particular, any failure to obtain positive data from—any confirmatory studies required by the FDA, could result in negative regulatory action from the FDA and/or withdrawal of such accelerated approval.
Clinical studies are expensive, difficult to design and implement, can take many years to complete and are uncertain as to outcome. Delay or failure can occur at any stage of development, including after commencement of any of our clinical trials.
Clinical trials are expensive, difficult to design and implement, can take many years to complete and are uncertain as to outcome. Delay or failure can occur at any stage of development, including after commencement of any of our clinical trials.
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.
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 62 Table of Contents 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.
For drugs and biologics that have been designated as breakthrough therapies, interaction and communication between the FDA and the sponsor of the trial can help to identify the most efficient path for clinical development.
For drugs that have been designated as breakthrough therapies, interaction and communication between the FDA and the sponsor of the trial can help to identify the most efficient path for clinical development.
We are unable to predict the effect that sales by Baker Bros., or any perception that sales may occur, may have on the prevailing market price of our common stock.
We are unable to predict the effect that sales by Baker Bros., or any perception that such sales may occur, may have on the prevailing market price of our common stock.
We have adopted a Code of Business Conduct and Ethics, but it is not always possible to identify and deter misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations.
We have adopted a Code of Business Conduct and Ethics, but it is not always possible to identify and deter misconduct, and the precautions we take to detect and prevent misconduct may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations.
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.
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 and product candidates may infringe.
Additionally, we may be required to repay the outstanding indebtedness under the loan if an event of default occurs under the Loan Agreement or, if applicable, any future debt facility.
We may be required to repay the outstanding indebtedness under the Loan Agreement if an event of default occurs under the Loan Agreement or, if applicable, any future debt facility.
If our relationship with these third-party providers terminates, we may not be able to enter into arrangements with alternative providers or do so on commercially reasonable terms. Switching or adding additional third-party providers involves substantial cost and requires management time and focus, and could delay development and commercialization of our product candidates.
If our relationship with these third-party providers terminates, we may not be able to enter into arrangements with alternative providers or do so on commercially reasonable terms. Switching or adding additional third-party providers involves substantial cost and requires management time and focus, and could delay development and commercialization of our product candidates and approved products.
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.
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, including Rezdiffra, or another licensed product, subject to certain reductions.
We cannot predict whether we would prevail in any such actions or that any license required under any of these patents would be made available on commercially acceptable terms, if at all. In addition, we cannot be sure that we could redesign our product candidate or processes to avoid infringement, if necessary.
We cannot predict whether we would prevail in any such actions or that any license required under any of these patents would be made available on commercially acceptable terms, if at all. In addition, we cannot be sure that we could redesign our product or product candidates or processes to avoid infringement, if necessary.
If we do not effectively commercialize resmetirom, we will not be able to execute our business plan and may not be able to achieve profitability. If our revenues, market share and/or other indicators of market acceptance of resmetirom do not meet the expectations of investors or public market analysts, the market price of our common stock would likely decline.
If we do not effectively commercialize Rezdiffra, we will not be able to execute our business plan and may not be able to achieve profitability. If our revenues, market share or other indicators of market acceptance of Rezdiffra do not meet the expectations of investors or public market analysts, the market price of our common stock would likely decline.
The biotechnology industry has been characterized by frequent litigation regarding patent and other intellectual property rights. Numerous U.S. and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields in which we are developing product candidates.
The biotechnology industry has been characterized by frequent litigation regarding patent and other intellectual property rights. Numerous U.S. and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields in which we have and are developing products and product candidates.
Although we believe these provisions together provide for an opportunity to receive higher bids by requiring potential acquirers to negotiate with our board of directors, they would apply even if the offer may be considered beneficial by some stockholders.
Although we believe these provisions together provide for an opportunity to receive higher bids by requiring potential acquirers to negotiate with our board of directors, such provisions would apply even if the offer may be considered beneficial by some stockholders.
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.
Data protection authorities from the different European member states, as well as in the UK 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 UK 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.
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.
Regardless of merit or eventual outcome, liability claims may result in: • decreased demand for Rezdiffra or 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.
Specifically regarding the transfer of personal data outside of the EU, while there are legal mechanisms available to lawfully transfer personal data outside of the EU, including to the United States, there are certain unsettled legal issues regarding such data transfers, the resolution of which may adversely affect our ability to transfer personal data or otherwise may cause us to incur significant costs to come into compliance with applicable data transfer impact assessments and implementation of legal data transfer mechanisms.
Specifically regarding the transfer of personal data outside of the EU, while there are legal mechanisms available to 50 Table of Contents lawfully transfer personal data outside of the EU, including to the United States, there are certain unsettled legal issues regarding such data transfers, the resolution of which may adversely affect our ability to transfer personal data or otherwise may cause us to incur significant costs to come into compliance with applicable data transfer impact assessments and implementation of legal data transfer mechanisms.
We cannot be certain that the claims in owned and licensed patent applications covering our product candidates will be considered patentable by the United States Patent and Trademark Office, or USPTO, and valid by courts in the United States or by the patent offices and courts in foreign jurisdictions.
We cannot be certain that the claims in owned and licensed patent applications covering our product and product candidates will be considered patentable by the United States Patent and Trademark Office (“USPTO”) and valid by courts in the United States or by the patent offices and courts in foreign jurisdictions.
We have no experience in obtaining foreign regulatory approvals. The time required to obtain approvals outside the United States may differ from that required to obtain FDA approval. We may not obtain foreign regulatory approvals on a timely basis, if at all.
We have limited experience in obtaining foreign regulatory approvals. The time required to obtain approvals outside the United States may differ from that required to obtain FDA approval. We may not obtain foreign regulatory approvals on a timely basis, if at all.
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.
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.
Attacks on information technology systems are increasing in their frequency, levels of persistence, sophistication and intensity, and they are being conducted by increasingly sophisticated and organized groups and individuals with a wide range of motives and expertise.
Attacks on information technology systems are increasing in their frequency, levels of persistence, sophistication and intensity, and such attacks are being conducted by increasingly sophisticated and organized groups and individuals with a wide range of motives and expertise.
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.
While we have licensed rights to issued patents in the United States and other jurisdictions for resmetirom and its use, we cannot be certain that the claims in issued patents will not be found invalid or unenforceable if challenged.
Advisors LP hold a significant portion of our total outstanding shares of common stock (including shares of our common stock issuable upon conversion of shares of our Series A Convertible Preferred Stock and Series B Convertible Preferred Stock and pre-funded warrants), and any sale of such shares into the market, 51 Table of Contents or perception that sales could occur, in the future could cause the market price of our common stock to drop significantly.
Advisors LP hold a significant portion of our total outstanding shares of common stock (including shares of our common stock issuable upon conversion of shares of our Series A Convertible Preferred Stock and Series B Convertible Preferred Stock and pre-funded warrants), and any sale of such shares into the market, or a perception that such sales could occur, in the future could cause the market price of our common stock to drop significantly.
If we do not obtain protection under the Hatch-Waxman Act and similar foreign legislation by extending the term of patents covering each of our product candidates, our business may be materially harmed.
If we do not obtain protection under the Hatch-Waxman Act and similar foreign legislation by extending the term of patents covering our product or product candidates, our business may be materially harmed.
Any claims of patent infringement asserted by third parties would be time consuming and could likely: • result in costly litigation; • divert the time and attention of our technical personnel and management; • cause development delays; • prevent us from commercializing resmetirom for NASH or our other product candidates until the asserted patent expires or is held finally invalid or not infringed in a court of law; • require us to develop non-infringing technology, which may not be possible on a cost-effective basis; or • require us to enter into royalty or licensing agreements.
Any claims of patent infringement asserted by third parties would be time consuming and could likely: • result in costly litigation; • divert the time and attention of our technical personnel and management; • cause development delays; • prevent us from commercializing resmetirom for MASH or our other product candidates until the asserted patent expires or is held finally invalid or not infringed in a court of law; • require us to develop non-infringing technology, which may not be possible on a cost-effective basis; or 54 Table of Contents • require us to enter into royalty or licensing agreements.
These requirements include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with cGMP regulations, and GCPs for any clinical trials that we conduct post-approval, all of which may result in significant expense and limit our ability to commercialize such products.
These requirements include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with cGMP regulations, and GCPs for any clinical trials that we conduct post-approval, all of which may result in significant expense and limit our ability to commercialize Rezdiffra.
Our ability to continue to transfer personal data outside of the EU, United Kingdom, or Switzerland may become significantly more expensive and may subject us to increased scrutiny and liability under the GDPR or similar local laws, and we may experience operating disruptions if we are unable to conduct these transfers in the future.
Our ability to continue to transfer personal data outside of the EU, the UK, or Switzerland may become significantly more expensive and may subject us to increased scrutiny and liability under the GDPR or similar local laws, and we may experience operating disruptions if we are unable to conduct these transfers in the future.
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 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.
Commercialization of our product candidates may be delayed by the imposition of additional conditions on our clinical trials by the FDA or any other applicable foreign regulatory authority or the requirement of additional supportive studies by the FDA or such foreign regulatory authority.
Commercialization of any future product candidates may be delayed by the imposition of additional conditions on our clinical trials by the FDA or any other applicable foreign regulatory authority or the requirement of additional supportive trials by the FDA or such foreign regulatory authority.
We can provide no assurance that our patent applications or those of our licensors will result in additional patents being issued or that issued patents will afford sufficient protection against competitors with similar technologies, nor can we provide any assurance that the patents issued will not be infringed, designed around or invalidated by third parties.
We can provide no assurance that our patent applications or those of our licensors will result in additional patents being issued or that issued patents will afford sufficient protection against competitors with similar technologies, nor can 51 Table of Contents we provide any assurance that the patents issued will not be infringed, designed around or invalidated by third parties.
If securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the price of our common stock. We may not be successful in obtaining or maintaining necessary rights to our product candidates through acquisitions and in-licenses.
If securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the price of our common stock. 55 Table of Contents We may not be successful in obtaining or maintaining necessary rights to our product and product candidates through acquisitions and in-licenses.
Similarly, if we are relying on a collaborator to indemnify us and the collaborator is denied insurance coverage or the indemnification obligation exceeds the applicable insurance coverage, and if the collaborator does not have other assets available to indemnify us, our business, financial condition and results of operations could be adversely affected.
Similarly, if we are relying on a collaborator to indemnify us and the collaborator is denied insurance coverage or the 41 Table of Contents indemnification obligation exceeds the applicable insurance coverage, and if the collaborator does not have other assets available to indemnify us, our business, financial condition and results of operations could be adversely affected.
Our exclusively-owned pending patent applications that cover companion diagnostics, various solid forms of resmetirom, combination therapy, method of use, and method of manufacturing, if issued, are expected to expire between 2037 and 2042. Our exclusively-owned pending patent application that covers other THR beta analogs and uses thereof, if issued, is expected to expire in 2043.
Our exclusively-owned pending patent applications that cover companion diagnostics, various solid forms of resmetirom, combination therapy, method of use, and method of manufacturing, if issued, are expected to expire between 2037 and 2044. Our exclusively-owned pending patent application that covers other THR-β analogs and uses thereof, if issued, is expected to expire in 2043.
The pre-funded warrants are only exercisable to the extent that after giving effect to such exercise the holders thereof, together with their affiliates and any members of a Section 13(d) group with such holders, would beneficially own, for purposes of Rule 13d-3 under the Exchange Act, no more than 9.99% of the outstanding shares of Common Stock (the “Maximum Percentage”).
The pre-funded warrants are only exercisable to the extent that, after giving effect to such exercise, the holders thereof, 60 Table of Contents together with their affiliates and any members of a Section 13(d) group with such holders, would beneficially own, for purposes of Rule 13d-3 under the Exchange Act, no more than 9.99% of the outstanding shares of our common stock (the “Maximum Percentage”).
If we do find replacement manufacturers, we may not be able to enter into agreements with them on terms and conditions favorable to us and there could be a substantial delay before new facilities could be qualified and registered with the FDA and other foreign regulatory authorities. The FDA and other foreign regulatory authorities require manufacturers to register manufacturing facilities.
If we do find replacement manufacturers, we may not be able to enter into agreements with them on terms and conditions favorable to us and there could be a substantial delay before new facilities could be qualified and registered with the FDA and other foreign regulatory authorities.
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.
In addition to extracting information (which could be sensitive), 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.
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.
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.
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.
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.
We enter into various contracts in the normal course of our business in which we indemnify the other party to the contract. In the event we have to perform under these indemnification provisions, it could have a material adverse effect on our business, financial condition and results of operations.
We enter into various contracts in the normal course of our business in which we indemnify the other party to the contract. In the event we have to perform under these indemnification provisions, such performance could have a material adverse effect on our business, financial condition and results of operations.
Congress continues to examine various policy proposals that may result in pressure on the prices of prescription drugs in the government health benefit programs. The IRA or other legislative changes could impact the market conditions for our product candidate.
Congress continues to examine various policy proposals that may result in pressure on 31 Table of Contents the prices of prescription drugs in the government health benefit programs. The IRA or other legislative changes could impact the market conditions for our product candidate.
These data include the average manufacturer price and, in the case of innovator products, the best price for each drug, which, in general, represents the lowest price available from the manufacturer to any wholesaler, retailer, provider, health maintenance organization, nonprofit entity, or governmental entity in the U.S. in any pricing structure, calculated to include all sales and associated rebates, discounts, and other price concessions.
These data include the average manufacturer price and, in the case of innovator products, the best price for each drug, which, in general, represents the lowest price available from the manufacturer to any wholesaler, retailer, provider, health maintenance organization, nonprofit entity, or governmental entity in the United States in any pricing structure, calculated to include all sales and associated rebates, discounts, and other price concessions.
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, 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 36 Table of Contents patient populations for approval by regulatory authorities.
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.
The FDA may also require a REMS program as a condition of approval of Rezdiffra or any future 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.
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.
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.
Failure to comply with these regulatory requirements or obtain required approvals could impair our ability to develop foreign markets for our drug candidates and may have a material adverse effect on our results of operations and financial condition. We depend on enrollment of patients in our clinical trials for our product candidates.
Failure to comply with these regulatory requirements or obtain required approvals could impair our ability to develop foreign markets for our drug candidates and may have a material adverse effect on our results of operations and financial condition. 38 Table of Contents We depend on enrollment of patients in our clinical trials.
Depending upon the timing, duration and conditions of FDA marketing approval of our product candidates, one or more of our United States patents may be eligible for limited patent term extension under Hatch-Waxman Amendments.
Depending upon the timing, duration and conditions of FDA marketing approval of our products, one or more of our United States patents may be eligible for limited patent term extension under Hatch-Waxman Amendments.
We use third-party service providers to conduct and/or oversee the clinical trials of our product candidates and expect to continue to do so for the foreseeable future. We rely heavily on these parties for successful execution of our clinical trials.
We use third-party service providers to conduct and oversee our clinical trials and expect to continue to do so for the foreseeable future. We rely heavily on these parties for successful execution of our clinical trials.
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 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 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.
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.
(“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 and August 22, 2024 (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”).
These generic equivalents, which must meet the same quality standards as branded pharmaceuticals, would be significantly less costly than our product to bring to market, and companies that produce generic equivalents are generally able to offer their products at lower prices.
These generic equivalents, which must meet the same quality standards as branded pharmaceuticals, would 34 Table of Contents be significantly less costly than our product to bring to market, and companies that produce generic equivalents are generally able to offer their products at lower prices.
On December, 13 2022, the European Commission adopted a draft adequacy decision for the EU-U.S. Data Privacy Framework, which reflects the assessment by the European Commission of the US legal framework. The draft decision concludes that the United States ensures an adequate level of protection for personal data transferred from the EU to U.S. companies.
On December, 13 2022, the EC adopted a draft adequacy decision for the EU-U.S. Data Privacy Framework, which reflects the assessment by the EC of the U.S. legal framework. The draft decision concludes that the United States ensures an adequate level of protection for personal data transferred from the EU to U.S. companies.
If we encounter difficulties enrolling patients in our clinical trials, our clinical development activities could be delayed or otherwise adversely affected. Identifying and qualifying patients to participate in clinical trials of our product candidates is critical to our success.
If we encounter difficulties enrolling patients in our clinical trials, our clinical development activities could be delayed or otherwise adversely affected. Identifying and qualifying patients to participate in clinical trials is critical to our success.
If we fail to comply with our reporting and payment obligations under the Medicaid Drug Rebate program or other governmental pricing programs after we begin participating in these programs, we could be subject to additional rebate requirements, penalties, or other sanctions, which could have a material adverse effect on our business, financial condition, results of operations, and growth prospects.
If we fail to comply with our reporting and payment obligations under the Medicaid Drug Rebate program or other governmental pricing programs, we could be subject to additional rebate requirements, penalties, or other sanctions, which could have a material adverse effect on our business, financial condition, results of operations, and growth prospects.
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.
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, induce, or contribute to the infringement of method-of-use patents, the practice is common and such infringement may be difficult to prevent or prosecute.
Additionally, the Loan Agreement contains affirmative and restrictive financial covenants commencing on January 1, 2023, including maintenance of a minimum cash, cash equivalents and liquid funds covenant of $35.0 million, which may decrease in certain circumstances if the Company achieves both a certain FDA approval for resmetirom and a revenue milestone (the “Minimum Cash Covenant”).
Additionally, the Loan Agreement contains affirmative and restrictive financial covenants, including maintenance of a minimum cash, cash equivalents and liquid funds covenant of $35.0 million, which may decrease in certain circumstances if the Company achieves both a certain FDA approval for resmetirom and a revenue milestone (the “Minimum Cash Covenant”).
We have in the past utilized an “at-the-market” (“ATM”) sales program to raise capital by selling our securities through a sales agent up to established limits, and have also issued shares of our common stock in registered offerings and shares of convertible preferred equity to institutional investors in registered and private direct offerings.
We have in the past used, and currently have the ability to use, an “at-the-market” (“ATM”) sales program to raise capital by selling our securities through a sales agent up to established limits, and have also issued shares of our common stock in registered offerings and shares of convertible preferred equity to institutional investors in registered and private direct offerings.
Product liability claims may be brought against us or our partners by participants enrolled in our clinical trials, patients, healthcare providers or others using, administering or selling any of our future approved products. If we cannot successfully defend ourselves against any such claims, we may incur substantial liabilities.
Product liability claims may be brought against us or our partners by participants enrolled in our clinical trials, patients, healthcare providers or others 35 Table of Contents using, administering or selling any approved product. If we cannot successfully defend ourselves against any such claims, we may incur substantial liabilities.
Over the long term, if we are unable to establish name recognition based on our trademarks and trade names, then we may not be able to compete effectively and our business may be adversely affected.
Over the long term, if we are unable to establish name recognition 56 Table of Contents based on our trademarks and trade names, then we may not be able to compete effectively and our business may be adversely affected.
We expect that future commercial success of resmetirom for the treatment of patients with NASH will depend on many factors, including the following: • the efficacy, cost, approved use, and side-effect profile of resmetirom relative to competitive treatment regimens, if approved, for the treatment of NASH; • if approved for NASH, resmetirom may compete with the off-label use of currently marketed products and other therapies in development that may in the future obtain approval for NASH; • the effectiveness of our commercial strategy for the marketing of resmetirom, including our pricing strategy and the effectiveness of our efforts to obtain adequate third-party reimbursements; • developing, maintaining and successfully monitoring commercial manufacturing arrangements for resmetirom with third-party manufacturers to ensure they meet our standards and those of regulatory authorities, including the FDA, which extensively regulate and monitor pharmaceutical manufacturing facilities; • our ability to negotiate and enter into any additional commercial, supply and distribution contracts to support commercialization efforts, and to hire and manage additional qualified personnel; • our ability to meet the demand for commercial supplies of resmetirom at acceptable costs; • the acceptance of resmetirom by physicians, patients and third-party payors; 27 Table of Contents • our ability to remain compliant with laws and regulations that apply to us and our commercial activities; • the actual market-size, ability to identify targeted patients and the demographics of patients eligible for resmetirom, which may be different than what we currently expect; • the occurrence of any side effects, adverse reactions or misuse, or any unfavorable publicity in these areas; • our ability to obtain, maintain or enforce our patents and other intellectual property rights; and • the effect of recent or potential health care legislation in the United States.
We believe that the commercial success of Rezdiffra depends on many factors, including the following: • our ability to effectively educate healthcare providers and patients on the risks of MASH and the potential clinical benefits of Rezdiffra, the first FDA-approved treatment in MASH; • the efficacy, cost, approved use, and side-effect profile of Rezdiffra relative to competitive treatment regimens for the treatment of MASH; • Rezdiffra may compete with the off-label use of currently marketed products and other therapies in development that may in the future obtain approval for MASH; • the effectiveness of our commercial strategy for the marketing of Rezdiffra, including our pricing strategy and the effectiveness of our efforts to obtain adequate third-party reimbursements; • developing, maintaining and successfully monitoring commercial manufacturing arrangements for Rezdiffra with third-party manufacturers to ensure they meet our standards and those of regulatory authorities, including the FDA, which extensively regulate and monitor pharmaceutical manufacturing facilities; • our ability to negotiate and enter into any additional commercial, supply and distribution contracts to support commercialization efforts, and to hire and manage additional qualified personnel; • our ability to meet the demand for commercial supplies of Rezdiffra at acceptable costs; • the acceptance of Rezdiffra by physicians, patients and third-party payors; • our ability to remain compliant with laws and regulations that apply to us and our commercial activities; • the actual market-size, ability to identify targeted patients and the demographics of patients eligible for Rezdiffra, which may be different than what we currently expect; • the occurrence of any side effects, adverse reactions or misuse, or any unfavorable publicity in these areas; • our ability to obtain, maintain or enforce our patents and other intellectual property rights; and • the effect of recent or potential health care legislation in the United States.
Advisors LP beneficially owned (for SEC reporting purposes) 9.99% of our common stock and maintained an ownership interest in up to 5,851,323 shares of our common stock subject to exercise or conversion limits such as the Beneficial Ownership Limitation and Maximum Percentage (the “Baker Bros. Holdings”), as described in the preceding paragraph.
Advisors LP beneficially owned (for SEC reporting purposes) 9.99% of our common stock and maintained an ownership interest in up to 7,050,177 shares of our common stock subject to exercise or conversion limits such as the Beneficial Ownership Limitation and the Maximum Percentage (the “Baker Bros. Holdings”), as described in the preceding paragraph.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe have relationships with a number of third-party service providers to assist with cybersecurity containment and remediation efforts. Governance Management Oversight The controls and processes employed to assess, identify and manage material risks from cybersecurity threats are implemented and overseen by our Chief Information Officer (“CIO”).
Biggest changeGovernance Management Oversight Our controls and processes employed to assess, identify and manage material risks from cybersecurity threats are implemented and overseen by our Information Technology (“IT”) Security and Risk Committee, which consists of our Chief Information Officer (“CIO”) and internal and third-party cybersecurity professionals.
Item 1C. Cybersecurity We are increasingly dependent on sophisticated software applications and computing infrastructure to conduct key operations. We depend on both our own systems, networks, and technology as well as the systems, networks and technology of our contractors, consultants, vendors and other business partners.
Item 1C. Cybersecurity We are increasingly dependent on sophisticated software applications and computing infrastructure to conduct key operations. We depend on our own systems, networks, and technology as well as the systems, networks and technology of our contractors, consultants, vendors and other business partners.
The Audit Committee is responsible for reviewing, discussing with management, and overseeing the Company’s data privacy, information technology and security and cybersecurity risk exposures, including: (i) the potential impact of those exposures on the Company’s business, financial results, operations and reputation; (ii) the programs and steps implemented by management to monitor and mitigate any exposures; (iii) the Company’s information governance and cybersecurity policies and programs; and (iv) major legislative and regulatory developments that could materially impact the Company’s data privacy and cybersecurity risk exposure.
The Audit Committee is responsible for reviewing, discussing with management and overseeing our data privacy, information technology and security and cybersecurity risk exposures, including: (i) the potential impact of those exposures on the Company’s business, financial results, operations and reputation; (ii) the programs and steps implemented by management to monitor and mitigate any exposures; (iii) our information governance and cybersecurity 65 Table of Contents policies and programs and (iv) major legislative and regulatory developments that could materially impact our data privacy and cybersecurity risk exposure.
Cybersecurity Risks Our cybersecurity risk management processes are integrated into our overall Enterprise Risk Management (“ERM”) process. As part of our ERM process, department leaders identify, assess and evaluate risks impacting our operations across the Company, including those risks related to cybersecurity.
Cybersecurity Risks Our cybersecurity risk management processes are integrated into our overall Enterprise Risk Management (“ERM”) process. As part of our ERM process, department leaders identify, assess and evaluate risks impacting our operations across our organization, including those risks related to cybersecurity.
We use a number of means to assess cyber risks related to our third-party service providers, including vendor questionnaires/conducting due diligence in connection with onboarding new vendors and ongoing reviews / due diligence with key third-party vendors.
We use a number of means to assess cyber risks related to our third-party service providers, including collecting vendor questionnaires and conducting due diligence in connection with onboarding new vendors.
Our CIO provides regular briefings for our senior management team on cybersecurity matters, including threats, events, and program enhancements. 53 Table of Contents Board Oversight While the Board of Directors has overall responsibility for risk oversight, our Audit Committee oversees cybersecurity risk matters.
Our CIO provides regular briefings to our senior management team on cybersecurity matters, including threats, events and program enhancements. Board Oversight While our board of directors has overall responsibility for risk oversight, our Audit Committee oversees cybersecurity risk matters.
On a quarterly basis, our General Counsel, Chief Financial Officer (“CFO”) and CIO have been and are responsible to report to the Audit Committee on information technology and cybersecurity matters, including key risks, a detailed threat assessment relating to information technology risks, as applicable, the potential impact of those exposures on the Company’s business, financial results, operations and reputation, the programs and steps implemented by management to monitor and mitigate exposures, and significant legal developments that could materially impact the Company’s cybersecurity risk exposure.
On a quarterly basis, our General Counsel, Chief Financial Officer (“CFO”) and CIO report to the Audit Committee on information technology and cybersecurity matters, including, as appropriate, key risks, a detailed threat assessment relating to information technology risks, as applicable, the potential impact of those exposures on our business, financial results, operations and reputation, the programs and steps implemented by management to monitor and mitigate exposures and any major legal developments that could significantly impact our cybersecurity risk exposure.
Our CIO is responsible for the day-to-day management of the cybersecurity program, including the prevention, detection, investigation, response to, and recovery from cybersecurity threats and incidents, and are regularly engaged to help ensure the cybersecurity program functions effectively in the face of evolving cybersecurity threats.
The IT Security and Risk Committee is responsible for the day-to-day management of our cybersecurity program, including the prevention, detection, investigation, response to, and recovery from cybersecurity threats and incidents, and is regularly engaged to help ensure that the cybersecurity program functions effectively in the face of evolving cybersecurity threats.
Cybersecurity Program Given the importance of cybersecurity to our business, we maintain a cybersecurity program to support both the effectiveness of our systems and our preparedness for information security risks. This program includes a number of administrative, physical, and technical safeguards.
Cybersecurity Program Given the importance of cybersecurity to our business, we maintain a cybersecurity program to support the effectiveness of our systems and our preparedness for information security risks. This program includes a number of administrative, physical, and technical safeguards. We have conducted and continue to conduct evaluations of our cybersecurity program through periodic external audits and penetration tests.
While we believe we maintain an effective cybersecurity program, the techniques used to infiltrate information technology systems continue to evolve. Accordingly, we may not be able to timely detect threats or anticipate and implement adequate security measures.
While we believe we maintain an effective cybersecurity program, the techniques used to infiltrate IT systems continue to evolve. Accordingly, we may not be able to timely detect threats or anticipate and implement adequate security measures. We also maintain cybersecurity insurance providing coverage for certain costs related to cybersecurity-related incidents that impact our systems, networks and technology.
We also seek to collect and assess cybersecurity audit reports and other supporting documentation when available and include appropriate security terms in our contracts where applicable as part of our oversight of third party providers.
We also collect and assess cybersecurity audit reports and other supporting documentation when available and include appropriate security terms in our contracts where applicable as part of our oversight of third-party providers. Process for Assessing, Identifying and Managing Material Risks from Cybersecurity Threats In the event of a cybersecurity incident, we maintain an incident response program.
Our program is based on industry frameworks, including the National Institute of Standards and Technology (NIST) Cybersecurity Framework (CSF) to strengthen our program effectiveness and reduce cybersecurity risks.
We also require cybersecurity trainings when onboarding new employees, contractors and other workforce members, as well as annual cybersecurity awareness training for our employees, contractors and other workforce members. Our program is based on industry frameworks, including the National Institute of Standards and Technology (“NIST”) Cybersecurity Framework (“CSF”) to strengthen our program effectiveness and reduce cybersecurity risks.
For additional information, see “Item 1A—Risk Factors; A failure of our information technology infrastructure and cybersecurity threats may adversely affect our business and operations.” We also maintain cybersecurity insurance providing coverage for certain costs related to cybersecurity-related incidents that impact our own systems, networks, and technology.
See the section titled "Risk Factors—General Risk Factors—A failure of our information technology infrastructure and cybersecurity threats may adversely affect our business and operations." in this Annual Report for more information.
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We have conducted and plan to conduct evaluations of our cybersecurity program through periodic internal and external audits, penetration tests, and incident response simulations. We also require cybersecurity trainings when onboarding new employees and contractors/other workforce members, as well as annual cybersecurity awareness training for our employees and contractors/other workforce members.
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We have relationships with a number of third-party service providers to assist with cybersecurity monitoring, containment and remediation efforts.
Removed
Process for Assessing, Identifying and Managing Material Risks from Cybersecurity Threats In the event of a cybersecurity incident, we maintain a regularly tested incident response program.
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Our CIO has more than 25 years of experience as an IT professional overseeing and supporting IT operations in the biopharmaceutical industry, including several years of experience in cybersecurity . The members of the IT Security and Risk Committee also have expertise in cybersecurity.
Removed
Our CIO has more than 25 years of digital experience in the biopharmaceutical industry and was previously Senior Vice President Digital at Moderna, Inc., where he was responsible for technology leadership and digital transformation across core operations.
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To date, there have not been any risks from cybersecurity threats, including as a result of any cybersecurity incidents, which have materially affected or are reasonably likely to materially affect our company, including our business strategy, results of operations or financial condition.
Removed
Since January 1, 2021 (the first date covered by the financial statements presented in this Form 10-K), we have not experienced any material cybersecurity incident.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 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.
Biggest changeItem 2. Properties As of December 31, 2024, we leased our approximately 29,415 square-foot corporate headquarters facility located in West Conshohocken, Pennsylvania. Our lease contains extension rights beyond the scheduled lease expiration date of November 30, 2026. We continue to evaluate our facility requirements and believe that appropriate space will be available to accommodate our future needs. Item 3.
Mine Safety Disclosures Not applicable. 54 Table of Contents PART II
Legal Proceedings We currently are not a party to any material legal proceedings. Item 4. Mine Safety Disclosures Not applicable. 66 Table of Contents PART II
Removed
We 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 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeWe 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.
Biggest changeThe 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.
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.
Stock Performance Graph The graph set forth below compares the cumulative total stockholder return on our common stock between December 31, 2019 and December 31, 2024, with the cumulative total return of (a) the Nasdaq Biotechnology Index and (b) the Nasdaq Composite Index, over the same period.
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.
This graph assumes the investment of $100 on December 31, 2019 in our common stock, the Nasdaq Biotechnology Index and the Nasdaq Composite Index and assumes the reinvestment of dividends, if any. 67 Table of Contents The comparisons shown in the graph below are based upon historical data.
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.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchase of Equity Securities. Market Information Our common stock trades on the Nasdaq Stock Market under the symbol “MDGL.” Holders As of December 31, 2024, there were approximately 23 holders of record of our common stock.
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Securities Authorized for Issuance Under Equity Compensation Plans The information required by Item 5 of Form 10-K regarding equity compensation plans is incorporated herein by reference to Item 12 of Part III of this Annual Report.
Added
Purchases of Equity Securities by the Issuer and Affiliated Purchasers We did not purchase any of our registered equity during the period covered by this Annual Report. Unregistered Sales of Securities During the year ended December 31, 2024, we did not issue or sell any unregistered securities.
Added
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

50 edited+58 added−55 removed8 unchanged
Biggest changeOperating Expenses The following table provides comparative results of our operating expenses for the years ended December 31, 2023 and 2022 (in thousands): Year Ended December 31, Increase / (Decrease) 2023 2022 $ % Research and Development Expenses $ 272,350 $ 245,441 26,909 11 % General and Administrative Expenses 108,146 48,130 60,016 125 % Interest (Income) (19,578) (2,185) 17,393 796 % Interest Expense 12,712 3,964 8,748 221 % $ 373,630 $ 295,350 78,280 27 % 60 Table of Contents Research and Development Expense The following represents our research and development expenses for the years ended December 31, 2023 and 2022 (in thousands): Year Ended December 31, Increase / (Decrease) 2023 2022 $ % Personnel and Internal Expense $ 56,824 $ 39,121 17,703 45 % External Expense 215,526 206,320 9,206 4 % Total $ 272,350 $ 245,441 26,909 11 % Our research and development expenses were $272.4 million for the year ended December 31, 2023 compared to $245.4 million for the year ended December 31, 2022.
Biggest changeFor the year ended December 31, 2024, we recorded $6.2 million of cost of sales. 72 Table of Contents Research and Development Expense The following represents our research and development expenses for the years ended December 31, 2024, 2023 and 2022 (in thousands): Year Ended December 31, 2024 vs 2023 2023 vs 2022 2024 2023 2022 $ % $ % Personnel and Internal Expense $ 73,418 $ 56,824 $ 39,121 $ 16,594 29 % $ 17,703 45 % External Expense 163,300 215,526 206,320 (52,226) (24) % 9,206 4 % Total $ 236,718 $ 272,350 $ 245,441 $ (35,632) (13 %) $ 26,909 11 % Our research and development expenses were $236.7 million for the year ended December 31, 2024 compared to $272.4 million for the year ended December 31, 2023.
The Offering closed on October 3, 2023. The gross proceeds of the Offering was $500.0 million, and we received net proceeds, after deducting the underwriting discount and commissions and other estimated offering expenses payable by us, of approximately $472.0 million.
The 2023 Offering closed on October 3, 2023. The gross proceeds of the 2023 Offering was $500.0 million , and we received net proceeds, after deducting the underwriting discount and commissions and other estimated offering expenses payable by us, of approximately $472.0 million .
Investing Activities Net cash used in investing activities was $502.5 million for the year ended December 31, 2023 and consisted primarily of $834.4 million of purchases of marketable securities for our investment portfolio, partially offset by $333.4 million from sales and maturities of marketable securities from our investment portfolio.
Net cash used in investing activities was $502.5 million for the year ended December 31, 2023 and consisted primarily of $834.4 million of purchases of marketable securities for our investment portfolio, partially offset by $333.4 million from sales and maturities of marketable securities.
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.
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 2022, and debt borrowings under our Loan Facility.
The Pre-Funded Warrants are exercisable at any time after the date of issuance. A holder of Pre-Funded Warrants may not exercise the warrant if the holder, together with its affiliates, would beneficially own more than 9.99% of the number of shares of common stock outstanding immediately after giving effect to such exercise.
The 2023 Pre-Funded Warrants are exercisable at any time after the date of issuance. A holder of 2023 Pre-Funded Warrants may not exercise the warrant if the holder, together with its affiliates, would beneficially own more than 9.99% of the number of shares of common stock outstanding immediately after giving effect to such exercise.
The Loan Facility had a minimum interest rate of 7.45% and adjusted with changes in the prime rate. The Amendment reduced the interest rate under the Amended Loan Facility to the greater of (i) the prime rate as reported in The Wall Street Journal plus 2.45% and (ii) 8.25%.
The Loan Facility had a minimum interest rate of 7.45% and adjusted with changes in the prime rate. The First Amendment reduced the interest rate under the Amended Loan Facility to the greater of (i) the prime rate as reported in The Wall Street Journal plus 2.45% and (ii) 8.25%.
Critical Accounting 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 generally accepted accounting principles in the United States.
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 generally accepted accounting principles in the United States.
Our research and development expenses consist primarily of: • salaries and related expense, including stock-based compensation; • external expenses paid to clinical trial sites, contract research organizations, laboratories, database software and consultants that conduct clinical trials; • expenses related to development and the production of nonclinical and clinical trial supplies, including fees paid to contract manufacturers; • expenses related to preclinical studies; • expenses related to compliance with drug development regulatory requirements; and • other allocated expenses, which include direct and allocated expenses for depreciation of equipment and other supplies.
Our research and development expenses consist primarily of: • salaries and related expense, including stock-based compensation; • external expenses paid to clinical trial sites, contract research organizations, laboratories, database software and consultants that conduct clinical trials; • expenses related to development and the production of non-clinical and clinical trial supplies, including fees paid to contract manufacturers; • expenses related to preclinical studies; • expenses related to compliance with drug development regulatory requirements; and • other allocated expenses, which include direct and allocated expenses for depreciation of equipment and other supplies.
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 preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses and the disclosure of contingent assets and liabilities at the date of the financial statements.
We expect to continue to incur substantial expenses related to our development activities for the foreseeable future as we conduct our clinical studies programs, manufacturing and toxicology studies.
We expect to continue to incur substantial expenses related to our development activities for the foreseeable future as we conduct our clinical trial programs, manufacturing and toxicology studies.
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.
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 and ongoing assessments as to each product candidate’s commercial potential.
Completion dates and costs for our clinical development programs as well as our research program can vary significantly for each current and future product candidate and are difficult to predict. As a result, we cannot estimate with any degree of certainty the costs we will incur in connection with the development of our product candidates at this point in time.
Completion dates and costs for our clinical development programs as well as our research program can vary significantly for any future product candidate and are difficult to predict. As a result, we cannot estimate with any degree of certainty the costs we will incur in connection with the development of product candidates at this point in time.
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.
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 2023 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 2021 Sales Agreement, partially offset by $0.4 million of loan issuance costs.
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.
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 trial, with oversight by our clinical program managers.
LLC, as representative of the several underwriters named therein, pursuant to which we sold to the underwriters in an underwritten public offering (the “Offering”): (i) 1,248,098 shares of common stock at a public offering price of $151.69 per share, and (ii) pre-funded warrants (the “Pre-Funded Warrants”) to purchase 2,048,098 shares of common stock at a public offering price of $151.6899 per Pre-Funded Warrant, which represents the per share public offering price for the common stock less a $0.0001 per share exercise price for each such Pre-Funded Warrant.
LLC, as representative of the several underwriters named therein, pursuant to which we sold to the underwriters in an underwritten public offering (the “2023 Offering”): (i) 1,248,098 shares of common stock at a public offering price of $151.69 per share, and (ii) pre-funded warrants (the “2023 Pre-Funded Warrants”) to purchase 2,048,098 shares of common stock at a public offering price of $151.6899 per Pre-Funded Warrant, which represents the per share public offering price for the common stock less a $0.0001 per share exercise price for each such Pre-Funded Warrant.
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.
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.
On February 3, 2023, we entered into the First Amendment (the “Amendment”) to the Loan Facility (as amended, the “Amended Loan Facility”). Under the terms of the Loan Facility, the first $50.0 million tranche (“Tranche 1”) was drawn at closing. Under the Amended Loan Facility, $65.0 million was drawn in 2023 under the second tranche (“Tranche 2”).
Under the terms of the Loan Facility, the first $50.0 million tranche (“Tranche 1”) was drawn at closing. On February 3, 2023, we entered into the First Amendment (the “First Amendment”) to the Loan Facility (as amended, the “Amended Loan Facility”). Under the Amended Loan Facility, $65.0 million was drawn in 2023 under the second tranche (“Tranche 2”).
A holder of Pre-Funded Warrants may increase or decrease this percentage, but not in excess of 19.99%, by providing at least 61 days prior notice to us.
A holder of 75 Table of Contents Pre-Funded Warrants may increase or decrease this percentage, but not in excess of 19.99%, by providing at least 61 days prior notice to us.
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.
We intend to use the net proceeds from the 2023 Offering for our clinical and commercial activities in preparation for a potential launch of resmetirom in the United States and for general corporate purposes, including, without limitation, research and development expenditures, clinical trial expenditures, manufacture and supply of drug substance and drug products, potential acquisitions or licensing of new technologies, capital expenditures and working capital.
The 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.
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.
We are scheduled to pay interest-only monthly payments of accrued interest under the Loan Facility through May 1, 2025, which period may be extended to May 1, 2026 and May 3, 2027 upon the achievement of our regulatory approval milestone and future revenue milestones, and subject to compliance with applicable covenants.
We are scheduled to pay interest-only monthly payments of accrued interest under the Loan Facility through May 1, 2026, which period may be extended to May 3, 2027 upon the achievement of future revenue milestones, and subject to compliance with applicable covenants.
General and Administrative Expenses General and administrative expenses consist primarily of salaries, benefits and stock-based compensation expenses for employees, management costs, costs associated with obtaining and maintaining our patent portfolio, professional fees for accounting, auditing, consulting and legal services, and allocated overhead expenses.
Selling, General and Administrative Expenses Selling, general and administrative expenses consist primarily of salaries, benefits and stock-based compensation expenses for employees, management costs, costs associated with obtaining and maintaining our patent portfolio, commercial and marketing activities, corporate insurance, professional fees for accounting, auditing, consulting and legal services, and allocated overhead expenses.
On an ongoing basis, we evaluate our estimates and judgments, including those related to accrued research and development expenses and stock-based compensation expenses.
On an ongoing basis, we evaluate our estimates and judgments, including those related to gross to net expenses, inventory valuation, accrued research and development expenses and stock-based compensation expenses.
As of December 31, 2023, the outstanding principal under the Loan Facility was $115.0 million. The interest rate as of December 31, 2023 was 10.95%. As of December 31, 2023, we were in compliance with all loan covenants and provisions. 2023 Public Offering On September 28, 2023, we entered into an Underwriting Agreement with Goldman Sachs & Co.
As of December 31, 2024, the outstanding principal under the Loan Facility was $115.0 million. The interest rate as of December 31, 2024 was 9.95%. As of December 31, 2024, we were in compliance with all loan covenants and provisions. March 2024 Public Offering On March 18, 2024, we entered into an Underwriting Agreement with Goldman Sachs & Co.
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 have the ability to delay certain commercial activities, geographic expansion activities and certain research activities and related clinical expenses, if necessary, due to liquidity concerns until a date when those concerns are relieved.
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.
Cash Flows The following table summarizes our net cash flow activity (in thousands): Year Ended December 31, 2024 2023 2022 Net cash used in operating activities $ (455,572) $ (324,230) $ (224,857) Net cash provided by (used in) investing activities (274,386) (502,520) 206,686 Net cash provided by financing activities 735,062 595,116 313,451 Net increase (decrease) in cash and cash equivalents $ 5,104 $ (231,634) $ 295,280 Operating Activities Net cash used in operating activities was $455.6 million, $324.2 million, and $224.9 million for the years ended December 31, 2024, 2023 and 2022, respectively.
We expect that our general and administrative expenses will increase in the future as we expand our operating activities, maintain and expand our patent portfolio and incur additional costs associated with being a public company and maintaining compliance with exchange listing and SEC requirements.
We expect that our selling, general and administrative expenses will increase in the future as we expand our operating activities, continue commercialization efforts, including extending operations into new geographies (if approved), maintain and expand our patent portfolio and incur additional costs associated with being a public company and maintaining compliance with exchange listing and SEC requirements.
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.
Investing Activities Net cash used in investing activities was $274.4 million for the year ended December 31, 2024 and consisted primarily of $1,131.2 million of purchases of marketable securities for our investment portfolio, partially offset by $863.3 million from sales and maturities of marketable securities from our investment portfolio.
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.
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. Additional capital, if needed, may not be available on terms acceptable to us, or at all.
The Loan Facility includes affirmative and restrictive financial covenants which commenced on January 1, 2023, including maintenance of a minimum cash, cash equivalents and liquid funds covenant of $35.0 million, which may decrease in certain circumstances if we achieve certain clinical milestones and a revenue milestone, and a revenue-based covenant that could apply commencing at or after the time that financial reporting is due for the quarter ending September 30, 2024.
The Loan Facility includes affirmative and restrictive financial covenants which commenced on January 1, 2023, including maintenance of a minimum cash, cash equivalents and liquid funds covenant of $35.0 million, which may decrease in certain circumstances if we achieve certain clinical milestones and a revenue milestone.
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.
While our rate of cash usage will likely increase in the future, in particular to support our product development and clinical trial efforts, our commercialization efforts and geographic expansion activities and our business development goals, 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 Expense Our general and administrative expenses were $48.1 million for the year ended December 31, 2022 compared to $37.3 million for the year ended December 31, 2021.
Selling, General and Administrative Expense Our selling, general and administrative expenses were $435.1 million for the year ended December 31, 2024 compared to $108.1 million for the year ended December 31, 2023.
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.
Selling, general and administrative expenses increased by $326.9 million in 2024 due primarily to increases for commercial launch activities for Rezdiffra, including a corresponding increase in headcount, and an increase in stock compensation expense. Interest Income Our interest income was $46.7 million for the year ended December 31, 2024 compared to $19.6 million for the year ended December 31, 2023.
During the year ended December 31, 2023, and in total under the Sales Agreement Amendment, we sold 98,101 shares for an aggregate of $25.2 million in gross proceeds, with net proceeds of approximately $24.5 million after deducting commissions and other transaction costs. All shares were sold pursuant to our effective Registration Statement and the prospectus supplement relating thereto.
Since the entry into the Sales Agreement Amendment in May 2023, we sold 98,101 shares in total under the 2021 Sales Agreement, as amended by the Sales Agreement Amendment, for an aggregate of $25.2 million in gross proceeds, with net proceeds to us of approximately $24.5 million after deducting commissions and other transaction costs.
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 increase in interest income was due primarily to higher principal balances and interest rates in 2024. Interest Expense Our interest expense was $14.7 million for the year ended December 31, 2024, compared to $12.7 million for the year ended December 31, 2023.
In August 2023, we entered into the Fifth Amendment to our Office Lease (the “Lease Amendment”). The Lease Amendment extends the term of the lease through November 2026. As a result of the Lease Amendment, an incremental $1.6 million ROU asset and lease liabilities were recorded during the year ended December 31, 2023.
As a result of the Fifth Lease Amendment, an incremental $1.6 million right-of-use asset and lease liabilities were recorded during the year ended December 31, 2023.
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.
We have entered into customary contractual arrangements in support of the Phase 3 clinical trials as well as manufacturing costs of Rezdiffra. 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.
It includes an end of term charge of 5.35% of the aggregate principal amount, which is accounted for in the loan discount.
The Loan Facility is secured by a security interest in substantially all of our assets, other than intellectual property. The Loan Facility includes an end of term charge of 5.35% of the aggregate principal amount, which is accounted for in the loan discount.
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.
We intend to use the net proceeds from the 2024 Offering for our commercial activities in connection with the commercial launch of Rezdiffra in the United States and for general corporate purposes, including, without limitation, research and development expenditures, ongoing clinical trial expenditures, manufacture and supply of drug substance and drug products, potential ex-U.S. commercialization or partnering opportunities, potential acquisitions or licensing of new technologies, capital expenditures and working capital.
Net cash provided by financing activities was $171.2 million for the year ended December 31, 2021 and consisted primarily of sales of our common stock under the 2021 Sales Agreement and the exercise of stock options.
Financing Activities Net cash provided by financing activities was $735.1 million for the year ended December 31, 2024 and consisted primarily of $659.9 million in proceeds from the 2024 Offering, in addition to $76.9 million from proceeds from the exercise of common stock options.
We have no obligation to sell any common stock and may at any time suspend offers under the Sales Agreement or terminate the Sales Agreement pursuant to its terms. During the three months ended December 31, 2023, under the Sales Agreement Amendment, we sold no shares.
We have no obligation to sell any common stock and may at any time suspend offers under the Sales Agreement or terminate the Sales Agreement pursuant to its terms. Loan Facility In May 2022 we entered into the $250.0 million Loan Facility with Hercules.
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.
The increase in interest expense was primarily the result of a higher average outstanding principal balance during the period under the Loan Facility with Hercules.
The probability of success for each product candidate is affected by numerous factors, including preclinical data, clinical data, competition, manufacturing capability and commercial viability. Accordingly, we may never succeed in achieving marketing approval for any of our product candidates.
The process of conducting preclinical studies and clinical trials necessary to obtain regulatory approval is costly and time consuming. The probability of success for each product candidate is affected by numerous factors, including preclinical data, clinical data, competition, manufacturing capability and commercial viability.
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.
Liquidity and Capital Resources Since inception, we have incurred significant net losses and we have funded our operations primarily through proceeds from sales of our capital stock and debt financings.
We will pay interest-only monthly payments of accrued interest under the Loan Facility through May 1, 2025, for a period of 36 months, which period may be extended to May 1, 2026 and May 3, 2027, upon the achievement of regulatory approval milestones and future revenue covenants, subject to compliance with applicable covenants.
The interest-only period can be further extended to May 3, 2027, upon the achievement of regulatory approval milestones and future revenue covenants, subject to compliance with applicable covenants. The Loan Facility originally matured in May 2026, but the maturity date was extended to May 2027 when we achieved a milestone upon receipt of FDA approval in March 2024.
The Risk Factors in Part I, Item 1A and disclosures under “Cautionary Note Regarding Forward-Looking Statements” within this Annual Report on Form 10-K, the audited financial statements and accompanying notes, included elsewhere in this Annual Report on Form 10-K, and this Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read together.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion should be read in conjunction with our audited consolidated financial statements and the notes thereto contained elsewhere in this Annual Report on Form 10-K (this “Annual Report”). This discussion contains forward-looking statements that involve risks and uncertainties.
As of December 31, 2023, $174.8 million remained reserved and available for sale under the 2023 Sales Agreement Amendment and our related prospectus supplement. Loan Facility In May 2022 we entered into the $250.0 million Loan Facility (the “Loan Facility”) with Hercules Capital, Inc. (“Hercules”).
As of December 31, 2024, $300.0 million remained reserved and available for sale under the 2024 Sales Agreement and our related prospectus supplement.
Actual results may differ materially from these estimates under different assumptions or conditions. Research and Development Costs Research and development costs are expensed as incurred.
Actual results may differ materially from these estimates under different assumptions or conditions. Revenue Recognition Our accounting policy over revenue recognition has a significant impact on our financial results and involves substantial judgement and estimation.
At-the-Market Sales Agreement On May 9, 2023, we entered into Amendment No. 1 (the “Sales Agreement Amendment”) to the June 2021 Sales Agreement (the “2021 Sales Agreement”) with Cowen, which provided for up to an additional $200.0 million in the amount of common stock that can be issued and sold by us from time to time through or to Cowen under the 2021 Sales Agreement, acting as agent or principal.
At-the-Market Sales Agreement In May 2023, we entered into Amendment No. 1 (the “Sales Agreement Amendment”) to our prior sales agreement (the “2021 Sales Agreement”) with Cowen and Company, LLC, an affiliate of TD Securities (USA) LLC (“Cowen”), which was subsequently terminated in May 2024 when we entered into a Sales Agreement (the “2024 Sales Agreement”) with Cowen, replacing and superseding the 2021 Sales Agreement, as amended by the Sales Agreement Amendment.
As disclosed in this report, our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in “Cautionary Note Regarding Forward-Looking Statements” and in the “Risk Factors” sections contained in Part I, Item 1A in this Annual Report on Form 10-K.
As a result of many factors, such as those set forth under the sections titled “Risk Factors,” “Cautionary Note Regarding Forward-Looking Statements” and elsewhere herein, our actual results may differ materially from those anticipated in these forward-looking statements.
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Added
Executive Overview We are a biopharmaceutical company focused on delivering novel therapeutics for metabolic dysfunction-associated steatohepatitis (“MASH”), a serious liver disease with high unmet medical need that can lead to cirrhosis, liver failure and premature mortality.
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In addition to historical information, this discussion and analysis contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Exchange Act of 1934, as amended, or the Exchange Act, that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions.
Added
MASH is expected to become the leading cause of liver transplantation in the United States and is already the leading cause of liver transplantation among women in the United States. Our medication, Rezdiffra (resmetirom), is a once-daily, oral, liver-directed THR-β agonist designed to target key underlying causes of MASH.
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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.
Added
In March 2024, Rezdiffra became the first and only therapy approved by the U.S. Food and Drug Administration (the “FDA”) for patients with MASH and was commercially available in the United States beginning in April 2024.
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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.
Added
Rezdiffra is indicated in conjunction with diet and exercise for the treatment of adults with noncirrhotic MASH with moderate to advanced liver fibrosis (consistent with stages F2 to F3 fibrosis). See “Part I, Item 1. Business” for a summary of our commercial and clinical activities.
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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.
Added
Financial Overview We have incurred losses since inception resulting in an accumulated deficit of $1,802.2 million as of December 31, 2024. Prior to generating product revenue from sales of Rezdiffra beginning in April 2024, we financed our operations primarily through public and private offerings of our equity securities and through our loan facility (“Loan Facility”) with Hercules Capital, Inc. (“Hercules”).
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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.
Added
We have generated losses principally from costs associated with research and development activities, acquiring, filing and expanding intellectual property rights, establishing a commercial infrastructure to support the launch of Rezdiffra and selling, general and administrative expenses.
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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.
Added
As a result of planned expenditures to commercialize Rezdiffra, expand our commercial operations to Europe (subject to receipt of regulatory approval), continue research and development activities, manage and grow our intellectual property portfolio, engage in potential business development transactions and costs associated with general corporate activities, we expect to incur additional operating losses.
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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.
Added
Our ability to reduce operating losses and begin to generate positive cash flow from operations depends on our ability to successfully commercialize Rezdiffra and achieve positive results from our post-approval trials in order to obtain full approval of Rezdiffra in the United States and potentially expand the eligible patient population.
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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.
Added
Our financial results may fluctuate from quarter to quarter and will depend on, among other factors, the net sales of Rezdiffra; the scope and progress of our research and development efforts and the timing of certain expenses. See the section titled “Risk Factors—Risks Related to Our Financial Position and Need for Capital.” in this Annual Report for additional information.
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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.
Added
Key Components of Our Operating Results Product Revenue, Net In March 2024, the FDA approved Rezdiffra for the treatment of noncirrhotic MASH with moderate to advanced liver fibrosis (consistent with stages F2 to F3 fibrosis). Rezdiffra is a once-daily, oral, liver-directed, THR-ß agonist designed to target key underlying causes of MASH.
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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.
Added
Rezdiffra was launched for sale in the United States in April 2024. As described in the “Critical Accounting Policies and Estimates” section below, revenue is recorded net of variable consideration, which includes prompt pay discounts, service fees, returns, chargebacks, government rebates and co-payment assistance.
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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.
Added
Cost of Sales Cost of sales includes the cost of manufacturing and distribution of inventory related to sales of Rezdiffra.
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Our net proceeds were $472.0 million, after deducting fees and commissions.
Added
We expect cost of sales to increase in the future, as manufacturing costs incurred prior to regulatory approval were expensed to research and development rather than capitalized as inventory, as approval was considered uncertain. 69 Table of Contents Research and Development Expenses Research and development expenses primarily consist of costs associated with our research activities, including the clinical development of our product candidates.
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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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Interest Income Interest income consists primarily of interest and dividend income earned on cash equivalents and marketable securities. Interest Expense 70 Table of Contents Interest expense consists primarily of interest accrued on principal balances under the Loan Facility with Hercules.
Removed
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.
Added
The amount of revenue we recognize is impacted by variable consideration, as described in Note 2, “Summary of Significant Accounting Policies,” in the accompanying notes to the consolidated financial statements. Our gross to net estimates are based on contracts with customers, government agencies, healthcare providers, industry data, historical information, and other factors.

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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, 2023, 2022 or 2021. Item 8. Financial Statements and Supplementary Data.
Biggest changeWe do not believe inflation has had a material effect on our business, financial condition or results of operations during the years ended December 31, 2024, 2023 or 2022. Should global inflation increase in the future, we expect increases in clinical trial, selling, labor and other operating costs.
We invest in high-quality financial instruments, primarily money market funds, U.S. government and agency securities, government-sponsored bond obligations and certain other corporate debt securities, with the effective duration of the portfolio less than twelve months and no security with an effective duration in excess of twenty-four months, which we believe are subject to limited credit risk.
We invest in high-quality financial instruments, primarily money market funds, U.S. government and agency securities, government-sponsored bond obligations and certain other corporate debt securities, with the effective duration of the portfolio less than 12 months and no security with an effective duration in excess of 24 months, which we believe are subject to limited credit risk.
We do not believe that we have any material exposure to interest rate risk given the current principal amount of the loan. Capital Market Risk We currently have no product revenues and depend on funds raised through other sources. One source of funding is through future debt or equity offerings.
We do not believe that we have any material exposure to interest rate risk given the current principal amount of the loan. Capital Market Risk Although we receive product revenues from sales of Rezdiffra, we may in the future depend on funds raised through other sources. One potential source of funding is through equity offerings.
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.
The information required by this Item 8 is included in our Financial Statements and Supplementary Data set forth in Item 15 of Part IV of this Annual Report. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None.
Added
Our ability to raise funds in this manner depends upon, among other things, capital market forces affecting our stock price. Effects of Inflation Inflation generally may affect us by increasing our cost of labor, clinical trial costs and manufacturing costs.
Added
If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases of our product. Our inability or failure to do so could adversely affect our business, financial condition and results of operations. 77 Table of Contents Item 8. Financial Statements and Supplementary Data.

Other MDGL 10-K year-over-year comparisons