Madrigal Pharmaceuticals, Inc. — Q3 2020 Form 10-Q
Reporting period: Three and nine months ended September 30, 2020. Madrigal is a clinical-stage biopharmaceutical company with no product revenue; its lead candidate, resmetirom (MGL-3196), is in Phase 3 development for NASH.
Financial performance and liquidity
| Metric | Q3 2020 | Q3 2019 | Nine months 2020 | Nine months 2019 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development expense | $53.3 million | $19.4 million | $131.4 million | $47.4 million |
| General and administrative expense | $5.5 million | $4.7 million | $15.7 million | $17.6 million |
| Net loss | $58.0 million | $21.4 million | $143.1 million | $56.2 million |
| Basic and diluted loss per share | $3.75 | $1.39 | $9.27 | $3.65 |
| Net cash used in operating activities | Not separately stated | Not separately stated | $102.6 million | $29.3 million |
There is no meaningful revenue margin to assess. Q3 operating loss was $58.8 million; nine-month operating loss was $147.1 million. The filing does not report debt borrowings; liabilities were $49.9 million, including $0.9 million of lease liabilities.
At September 30, 2020, cash and cash equivalents were $109.1 million and marketable securities were $226.8 million, totaling $335.9 million, down from $439.0 million at December 31, 2019. Current assets were $337.6 million versus current liabilities of $49.4 million. Management said available funds were expected to support operations for more than one year from issuance of the financial statements. Accumulated deficit was $366.3 million.
Changes versus prior comparable periods
- Q3 R&D expense rose 174% year over year, primarily due to Phase 3 trial activity and increased headcount. Nine-month R&D expense increased 177% for similar reasons.
- Q3 net loss increased to $58.0 million from $21.4 million; nine-month net loss increased to $143.1 million from $56.2 million.
- Nine-month G&A expense fell 11%, mainly because of lower non-cash stock compensation, partly offset by higher other costs.
- Interest income declined to $0.8 million in Q3 and $3.9 million for nine months, attributed to lower average investment balances and lower interest rates.
- Nine-month operating cash use rose to $102.6 million from $29.3 million. Cash increased during the period because marketable securities were sold or matured; this was an investment-portfolio movement, not operating cash generation.
Outlook, developments, and risks
- Management expected substantial ongoing losses and increased R&D spending as clinical development advanced; it said future long-term liquidity needs would require additional capital. In November 2020, the company entered an optional at-the-market agreement allowing up to $200 million of common-stock sales, creating potential dilution; the filing does not report sales under the agreement.
- In October 2020, Madrigal completed enrollment in the double-blind, placebo-controlled arms of MAESTRO-NAFLD-1, which had enrolled approximately 1,200 participants overall. The company said this could allow topline data by the end of 2021. Open-label enrollment for compensated NASH cirrhosis continued.
- MAESTRO-NASH, initiated in 2019, is a Phase 3 study targeting approximately 2,000 patients. The filing describes a week-52 biopsy endpoint intended to support a potential accelerated-approval application; no trial results are reported here.
- COVID-19 had no material adverse impact on results, liquidity, or MAESTRO-NAFLD-1 through September 30, according to the company, but it continued to pose trial enrollment, execution, and operational uncertainties. A monitoring committee recommended that the Phase 3 studies proceed without modification.
- Key risks include clinical-trial uncertainty and timing, failure to demonstrate efficacy or safety, regulatory approval, future financing availability, and possible dilution or restrictive financing terms. The filing reports no material pending legal proceedings and no material changes to previously disclosed risk factors.
- Roche agreement obligations include $8 million in remaining regulatory milestones and single-digit royalties on future net sales, subject to reductions. There were no licensed-product sales in the reported periods.
Important facts for investors to verify
- Upcoming enrollment, data-readout timing, endpoints, safety findings, and regulatory progress for MAESTRO-NASH and MAESTRO-NAFLD-1.
- Actual quarterly cash burn and whether the $335.9 million of cash and marketable securities continues to support the stated runway.
- Whether and how much equity is issued under the $200 million ATM agreement, and the resulting dilution.
- Clinical-trial cost trends, including the sharp rise in R&D expense and accrued clinical research costs.
- Potential Roche milestone and royalty obligations if resmetirom advances toward approval and commercialization.