Madrigal Pharmaceuticals, Inc. — FY2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023; filed February 28, 2024. The filing also reports unaudited fourth-quarter results. Madrigal was a development-stage biopharmaceutical company with no product revenue, focused principally on resmetirom for NASH (also termed MASH).
Financial performance and position
| Metric | FY2023 | FY2022 |
|---|---|---|
| Revenue | $0 | $0 |
| Research and development expense | $272.4 million | $245.4 million |
| General and administrative expense | $108.1 million | $48.1 million |
| Operating loss | $380.5 million | $293.6 million |
| Net loss | $373.6 million | $295.4 million |
| Net loss per share, basic and diluted | $19.99 | $17.23 |
| Net cash used in operating activities | $324.2 million | $224.9 million |
Q4 2023 revenue was $0; R&D expense was $70.6 million, G&A expense was $46.5 million, and net loss was $112.2 million. Operating and profit margins are not meaningful because the company had no revenue and incurred operating losses.
At year-end, cash and cash equivalents were $99.9 million and marketable securities were $534.2 million, totaling $634.1 million, versus $358.8 million a year earlier. Total assets were $640.5 million; total liabilities were $235.2 million; stockholders’ equity was $405.3 million. Outstanding loan principal was $115.0 million (reported loan payable, net of discount, was $115.5 million); the stated interest rate was 10.95%. The company reported compliance with loan covenants at year-end and said available resources should fund operations beyond one year from issuance of the financial statements.
FY2023 financing cash flow was $595.1 million, including $472.0 million net proceeds from an October public offering, $65.0 million of loan borrowings, and $24.5 million net ATM proceeds. The offering included common shares and pre-funded warrants, increasing potential dilution. The company had an accumulated deficit of $1.336 billion.
Material changes and business developments
- Operating expenses rose 27% year over year. R&D increased 11%, primarily from manufacturing scale-up, additional headcount, and stock compensation; G&A increased 125%, primarily from commercial launch preparation, headcount, and stock compensation.
- Operating cash use increased from $224.9 million to $324.2 million, largely reflecting operating losses and the build-out of commercial operations.
- In September 2023, FDA accepted the resmetirom NDA for priority review and set a March 14, 2024 PDUFA action date. FDA said it was not then planning an advisory committee meeting. Resmetirom also received Breakthrough Therapy designation in April 2023.
- Bill Sibold became CEO in September 2023, succeeding Paul Friedman, who remained on the board.
- At December 31, 2023, Madrigal had approximately 19.9 million common shares outstanding; the October offering also issued pre-funded warrants.
Clinical results, outlook, and key risks
In the Phase 3 MAESTRO-NASH biopsy study, resmetirom met both 52-week primary endpoints at 80 mg and 100 mg: NASH resolution without worsening fibrosis was 25.9% and 29.9%, respectively, versus 9.7% for placebo; fibrosis improvement without worsening NAS was 24.2% and 25.9%, versus 14.2%. LDL-C fell 13.6% and 16.3% at 24 weeks, versus 0.1% for placebo. Serious adverse-event rates were similar across groups; diarrhea and nausea were more frequent with resmetirom. The study’s longer-term outcomes portion remained ongoing.
The MAESTRO-NASH Outcomes trial in compensated cirrhosis was recruiting, with approximately 700 patients planned and a study duration estimated at two to three years. Madrigal said positive outcomes could support full approval for noncirrhotic NASH and potentially an additional cirrhosis indication. The company planned a U.S. specialty launch if approved, had built commercial capabilities, and was evaluating ex-U.S. partnering options. It had not announced U.S. pricing; ICER’s 2023 analysis indicated a modeled cost-effectiveness range of $39,600–$50,100 annually under specified assumptions.
- Regulatory and clinical uncertainty: Approval was not assured; accelerated approval would require confirmatory trials, and unsuccessful or delayed outcomes could jeopardize continued marketing or full approval. Long-term safety and real-world results in larger populations remain uncertain.
- Commercial risks: Uptake, eligible-patient identification, coverage, reimbursement, pricing, and competition may fall short of expectations. The company had no commercial launch experience or product-sales revenue.
- Funding and debt: Losses and cash use are expected to continue. Additional funding may be needed; financing may be unavailable or dilutive. The Hercules facility is secured by substantially all assets other than intellectual property and includes a $35 million minimum-liquidity covenant and a potential revenue covenant beginning in late 2024, subject to waiver conditions.
- Operations and IP: Madrigal relies on third-party manufacturers, had a single source for resmetirom API and finished product while developing a second API source, and depends in part on Roche-licensed rights. The filing identifies patent, supply, regulatory, cybersecurity, reimbursement, and product-liability risks. It reports no material legal proceedings and no material cybersecurity incident since January 1, 2021, but discloses a prior cybersecurity attack.
PwC issued an unqualified audit opinion on the financial statements and internal control over financial reporting. The auditor highlighted accrued R&D costs as a critical audit matter: FY2023 R&D expense was $272.4 million and R&D costs accrued at year-end were $50.7 million. The auditor also emphasized that additional financing may be required.
Important facts for investors to verify
- FDA’s action on the NDA, any approved indication and label, and any post-approval confirmatory-trial requirements.
- Progress, enrollment, timing, and eventual results of the MAESTRO-NASH outcomes and compensated-cirrhosis trials.
- Cash runway against commercial launch costs, future operating cash burn, and any additional financing or dilution.
- Loan terms, covenant compliance, available tranches, maturity extensions, and the conditions for any revenue-covenant waiver.
- Manufacturing capacity and qualification of a second API source, as well as payor coverage, reimbursement, pricing, and launch uptake.
- Potential dilution from outstanding pre-funded warrants, equity awards, and unused ATM capacity; the filing reported $174.8 million remaining under the ATM program at year-end.