Madrigal Pharmaceuticals, Inc. — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021; filed February 24, 2022. This is an annual report, not a standalone Q4 filing. Madrigal was a clinical-stage biopharmaceutical company with no approved products or product revenue. Its lead candidate, resmetirom, was in Phase 3 development for nonalcoholic steatohepatitis (NASH).
Financial results and position
| Metric | FY2021 | FY2020 |
|---|---|---|
| Revenue | $0 | $0 |
| Research and development expense | $205.2 million | $184.8 million |
| General and administrative expense | $37.3 million | $21.9 million |
| Total operating expenses / operating loss | $242.5 million | $206.7 million |
| Net loss | $241.8 million | $202.2 million |
| Net loss per share, basic and diluted | $14.63 | $13.09 |
| Cash, cash equivalents and marketable securities at year-end | $270.3 million | $284.1 million |
| Net cash used in operating activities | $183.9 million | $157.6 million |
| Total liabilities | $77.2 million | $47.0 million |
Gross margin and conventional profitability margins are not meaningful because the company reported no revenue. The filing reports no borrowings; liabilities were principally accounts payable, accruals and lease obligations. Year-end current assets were $271.7 million and current liabilities were $76.8 million. The company said available cash and investments were expected to fund operations past one year from issuance of the financial statements, while also stating that substantial additional capital would be needed over the longer term.
FY2021 quarterly net losses were $52.5 million, $61.7 million, $63.1 million and $64.5 million, respectively. Fourth-quarter operating expenses were $64.6 million.
Material changes versus prior year
- Net loss increased 20% to $241.8 million, reflecting higher operating expenses and substantially lower interest income.
- R&D expense rose 11%, primarily due to Phase 3 trial activity, manufacturing work supporting trials and potential commercialization, and increased headcount.
- G&A expense rose 71%, mainly from higher non-cash stock-based compensation and other administrative costs.
- Operating cash use increased by $26.4 million to $183.9 million, primarily due to greater clinical-trial activity.
- Financing generated $171.2 million of cash, primarily from equity sales. Common shares outstanding increased from 15.5 million to 17.1 million during the year.
Business developments, outlook and risks
- MAESTRO-NASH, the pivotal Phase 3 study, was designed to support a potential FDA accelerated-approval application using week-52 liver-biopsy endpoints. The company reported reaching the enrollment needed to support its planned submission in June 2021; the longer outcomes study was planned to continue for approximately 54 months.
- In January 2022, after the fiscal year-end, Madrigal announced positive primary and key secondary topline results from the double-blind portion of the MAESTRO-NAFLD-1 safety study. Reported findings included liver-fat and lipid reductions and generally mild-to-moderate adverse events. These results are subsequent to FY2021 and are not the pivotal MAESTRO-NASH histology results.
- Management expected R&D spending to continue increasing as clinical and preclinical programs advanced. The company had no product-sales revenue and expected continued operating losses.
- Funding remains a key risk: Madrigal anticipated further capital needs and could use debt, equity, partnerships or other transactions. Its $200 million 2021 at-the-market equity program had $159.2 million remaining as of year-end, creating potential dilution.
- Other material risks include uncertain Phase 3 and regulatory outcomes, possible long-term safety issues, COVID-19-related trial disruption, competition, reimbursement and market acceptance, reliance on contract manufacturers (including a single current source for resmetirom API and finished product), and intellectual-property/license obligations to Roche.
- The company reported no material legal proceedings and no material changes in internal control over financial reporting; management and the auditor concluded controls were effective. PwC’s audit opinion on the financial statements was unqualified, with R&D accrual estimation identified as a critical audit matter.
Most important facts for investors to verify
- Progress, timing and endpoint results for the pivotal MAESTRO-NASH study, and the FDA’s requirements and decision on any accelerated-approval application.
- Whether the MAESTRO-NAFLD-1 safety findings translate into the pivotal trial’s biopsy-based efficacy endpoints, and how safety evolves with longer treatment.
- Cash burn, available liquidity and financing needs against the stated runway; monitor any ATM equity sales and resulting dilution.
- Manufacturing readiness and the development of a second API source, plus Roche milestone and royalty terms.
- Commercial prospects, including competition, pricing, reimbursement and the company’s plans for U.S. commercialization and ex-U.S. partnering.