Madrigal Pharmaceuticals, Inc. — Q3 2023 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2023. Madrigal is a clinical-stage biopharmaceutical company with no product revenue; its lead candidate, resmetirom, is being developed for NASH.
Financial results and liquidity
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development expense | $71.0 million | $68.3 million | $201.7 million | $174.7 million |
| General and administrative expense | $27.6 million | $12.1 million | $61.6 million | $33.6 million |
| Net loss | $98.7 million | $81.2 million | $261.4 million | $209.4 million |
| Basic and diluted loss per share | $5.34 | $4.75 | $14.27 | $12.25 |
Margins: Not meaningful because the company reported no revenue.
- Cash, cash equivalents and marketable securities: $232.4 million at September 30, down from $358.8 million at December 31, 2022. This includes $62.1 million cash and equivalents and $170.3 million marketable securities.
- Cash flows, nine months: $244.3 million used in operations, $140.4 million used in investing activities, and $115.2 million provided by financing activities. Cash and equivalents ended the period at $62.1 million.
- Debt: $115.0 million principal outstanding under the Hercules facility; carrying value, net of discount, was $114.7 million. The stated interest rate was 10.95%; maturity is May 2026. The company reported covenant compliance.
- Balance sheet: Total assets were $238.0 million, total liabilities $215.7 million, and stockholders’ equity $22.2 million at September 30. Accumulated deficit was $1.224 billion.
Material changes versus the prior comparable period
- Q3 net loss rose 22% year over year; nine-month net loss rose 25%.
- Nine-month R&D expense increased 15%, primarily due to Phase 3 trial activity, including MAESTRO-NASH-OUTCOMES, headcount growth, and stock compensation.
- Nine-month G&A expense increased 84%, mainly from commercial preparation, higher headcount, and stock compensation.
- Interest expense increased as debt balances grew; interest income also increased, reflecting higher balances and interest rates.
- In October 2023, after quarter-end, the company completed an offering of common stock and pre-funded warrants, raising approximately $472.0 million net. This is a subsequent event, not included in September 30 cash.
Outlook, developments and risks
- The FDA accepted the resmetirom NDA for review and granted Priority Review; the PDUFA target action date is March 14, 2024. The FDA was not planning an advisory committee meeting as of the filing. Approval is not assured.
- Management expects operating losses and substantial R&D spending to continue, with R&D and G&A expenses potentially increasing as development and commercialization preparation advance. The company said available resources were expected to fund operations beyond one year from issuance of the financial statements, considering the October offering.
- In September, Madrigal announced William Sibold’s appointment as CEO, succeeding Paul Friedman, who remains on the Board.
- Key risks include clinical and regulatory uncertainty, commercialization and market acceptance, dependence on external manufacturers, financing needs and debt covenants, and potential dilution from equity issuances.
- The company disclosed unauthorized access to part of its IT network on September 26, 2023. It reported no operational interruption, no evidence of public release or further risk to exfiltrated data, and no material adverse effect based on its assessment at filing; future cyber risks remain.
- Remaining Roche development and regulatory milestones total $8 million, with tiered single-digit royalties payable on future net sales. No material pending legal proceedings were reported.
Key facts for investors to verify
- FDA review progress and the March 14, 2024 PDUFA date, including any changes to the review timetable or requirements.
- Cash runway and planned use of the October offering proceeds, alongside continuing operating cash burn.
- Hercules facility terms, variable-rate exposure, repayment obligations, and ongoing covenant compliance.
- Clinical, manufacturing, cybersecurity, and potential product-liability developments, as well as dilution from outstanding equity awards and pre-funded warrants.