Executive Summary / Key Takeaways

• Pioneering Market Leadership: Madrigal Pharmaceuticals has transformed into a commercial-stage leader with Rezdiffra, the first FDA and EC-approved therapy for noncirrhotic MASH with moderate to advanced fibrosis, achieving over $1 billion in annualized sales in its sixth quarter of launch.
• Durable Competitive Moat: Rezdiffra's liver-directed THR-β agonist technology offers a best-in-class profile with consistent efficacy and high adherence, bolstered by a U.S. patent extending protection to 2045, providing a significant long-term advantage.
• Robust Growth Trajectory: The company is steadily adding patients, with over 29,500 on therapy and 10,000+ prescribers, targeting a vast untreated market (over 90% of 315,000 diagnosed F2/F3 patients). International expansion in Germany and a potential F4c indication could significantly expand market opportunity.
• Strategic Pipeline Expansion: Madrigal is actively building a pipeline, including the in-licensed oral GLP-1 MGL-2086, aiming for a best-in-disease oral combination with Rezdiffra to further enhance efficacy and solidify long-term leadership.
• Strong Financial Foundation: With $1.1 billion in cash and equivalents as of Q3 2025 and a new $500 million credit facility, Madrigal is well-resourced to fund its commercialization efforts, pipeline development, and strategic growth initiatives.

The Dawn of a New Era in MASH Treatment

Madrigal Pharmaceuticals, Inc. stands at the forefront of a transformative era in treating metabolic dysfunction-associated steatohepatitis (MASH), a severe liver disease previously known as NASH. MASH represents a critical unmet medical need, being the leading cause of liver transplantation in women and the second leading cause overall in the United States, with a rapidly growing incidence in Europe. Patients with moderate to advanced liver fibrosis (F2-F3) face a 10-to-17 times higher risk of liver-related mortality, while those with compensated MASH cirrhosis (F4c) endure a staggering 42-times increased risk. This dire prognosis underscores the urgent demand for effective therapies that can halt or reverse disease progression.

Madrigal's journey has been one of pioneering innovation, evolving from an R&D-focused entity to a fully integrated commercial-stage biopharmaceutical company. The company's strategic vision, forged through years of development and significant investment, culminated in the landmark U.S. FDA approval of Rezdiffra (resmetirom) in March 2024. This achievement was particularly notable given the numerous prior failures in MASH drug development, establishing Rezdiffra as the first and only approved treatment for noncirrhotic MASH with moderate to advanced liver fibrosis. This success has laid the foundation for Madrigal's overarching strategy: to maximize Rezdiffra's value, expand its leadership across the MASH spectrum, and build a durable franchise through strategic pipeline development.

Technological Edge: Rezdiffra's Differentiated Profile

At the heart of Madrigal's investment thesis is Rezdiffra, a once-daily, oral, liver-directed thyroid hormone receptor beta (THR-β) agonist. This core technology is designed to specifically target the underlying causes of MASH by reversing hypothyroidism in the liver, restoring mitochondrial function, and increasing fat processing through beta-oxidation. The tangible benefits of this liver-directed mechanism are significant and quantifiable. In its Phase 3 MAESTRO-NASH trial, Rezdiffra demonstrated statistically significant improvement in MASH resolution with no worsening of fibrosis, and an improvement in fibrosis by at least one stage with no worsening of the NAFLD activity score. Furthermore, two-year open-label data in F4c patients showed a mean reduction of 6.7 kilopascals in liver stiffness, a statistically significant improvement from baseline and the largest mean kPa reduction reported in this patient population to date. Over half of these patients achieved at least a 25% reduction in liver stiffness, a level associated with a lower risk of progression to end-stage liver disease.

Rezdiffra's profile is further enhanced by its consistent efficacy across diverse patient subtypes, including those with type 2 diabetes (comprising approximately 60% of the MASH population), varying BMIs, and genetic makeups. Its simplicity as a once-daily, well-tolerated pill with no titration requirements contributes to strong early adherence rates, comparable to other successful oral therapies. For investors, this technological differentiation translates into a robust competitive moat, enabling premium pricing, fostering strong physician and patient loyalty, and supporting long-term market leadership. The issuance of a new U.S. patent for Rezdiffra in August 2025, extending protection until February 2045, further solidifies this advantage, providing decades of protected revenue and strategic flexibility for future innovation.

Madrigal's R&D initiatives are strategically aligned with extending this technological leadership. The ongoing Phase 3 MAESTRO-NASH OUTCOMES trial in compensated MASH cirrhosis (F4c) aims to expand Rezdiffra's indication, potentially doubling its market opportunity. The company is also building a pipeline of complementary assets, exemplified by the acquisition of MGL-2086, a preclinical oral GLP-1 receptor agonist. This asset is intended for combination therapy with Rezdiffra, leveraging the insight that even modest weight loss (as little as 5%) enhances Rezdiffra's antifibrotic efficacy. This combination strategy seeks to optimize both efficacy and tolerability, offering a potentially best-in-disease oral treatment that combines the systemic metabolic benefits of a GLP-1 with Rezdiffra's liver-directed action. A Phase 1 trial for MGL-2086 is expected to commence in the first half of 2026.

Competitive Dynamics and Strategic Positioning

The MASH market, while nascent, is attracting significant attention, with recent M&A activity validating its multi-billion dollar potential. Madrigal, as the first-mover, is strategically positioned to lead and shape its evolution. While larger pharmaceutical companies like Novo Nordisk (NVO), Gilead Sciences (GILD), and Pfizer (PFE) have interests in metabolic and liver diseases, Madrigal's specialized focus and Rezdiffra's unique liver-directed mechanism provide a distinct advantage.

Competitors like Novo Nordisk, with their GLP-1 therapies (e.g., Wegovy), are targeting a much larger population, which Madrigal views as a catalyst for increased disease awareness, screening, and diagnosis. However, Madrigal highlights the limitations of GLP-1 monotherapy in MASH, citing challenges with patients reaching and sustaining therapeutic doses and high real-world discontinuation rates (up to 70% in obese patients within one year). This positions Rezdiffra to benefit both as a first-line therapy in an expanding market and from the high discontinuation rates of GLP-1s, as patients seek more durable and liver-specific solutions. Approximately 50% of current Rezdiffra patients are either on or have previously used a GLP-1, indicating a clear need for combination or alternative therapies.

Madrigal's competitive strategy extends to market access. The company is making significant progress in 2026 payer negotiations, securing broad first-line access with no step-edit requirements and improved utilization management criteria. This disciplined approach, consistent with other successful specialty launches, is designed to ensure optimal patient access and durable long-term growth. Madrigal's profile has also been recognized by independent bodies like ICER as a cost-effective therapy, offsetting the high costs associated with untreated MASH. While larger players like Gilead and Pfizer possess extensive commercial infrastructure and diversified portfolios, Madrigal's targeted innovation and first-mover advantage in MASH provide a strong competitive edge in this specialized market.

Financial Performance and Operational Momentum

Madrigal's financial performance reflects the strong demand and successful execution of Rezdiffra's launch. For the third quarter of 2025, the company reported net product revenue of $287.3 million, marking a substantial 35% increase quarter-over-quarter. For the nine months ended September 30, 2025, net product revenue reached $637.3 million, a significant increase from $76.8 million in the corresponding period of 2024, driven by a full nine months of sales and increased demand. This momentum places Rezdiffra's annualized sales at over $1 billion, positioning it as one of the most successful specialty launches in the industry.

Operational metrics underscore this success: over 29,500 patients are actively being treated with Rezdiffra, up from 23,000 in Q2 2025, and more than 10,000 healthcare providers have prescribed the therapy. This represents a penetration of less than 10% of the estimated 315,000 diagnosed F2/F3 MASH patients under specialist care, indicating substantial room for continued growth.

Despite robust revenue growth, Madrigal reported a net loss of $114.19 million for Q3 2025 and $229.71 million for the nine months ended September 30, 2025, as the company continues to invest heavily in commercialization and pipeline development. Research and development (R&D) expenses for Q3 2025 were $174 million, including a one-time $117 million expense for the MGL-2086 licensing agreement. Selling, general, and administrative (SG&A) expenses were $209.1 million in Q3 2025, reflecting increased commercial activities and headcount to support the Rezdiffra launch.

Liquidity remains strong, with $1.1 billion in cash, cash equivalents, restricted cash, and marketable securities as of September 30, 2025.

This position was bolstered by a $350 million initial term loan from a $500 million senior secured credit facility with Blue Owl Capital in July 2025, which also facilitated the repayment of the Hercules Loan Facility. This capital ensures Madrigal is well-resourced to fund its ongoing operations, strategic initiatives, and pipeline expansion for over a year from the financial statement issuance date.

Strategic Initiatives and Future Outlook

Madrigal's outlook is characterized by a clear roadmap for sustained growth and market expansion. The company anticipates robust net sales growth in 2026 and beyond, driven by continued patient additions and the full impact of its payer contracting strategy. Gross-to-net discounts are expected to be at the midpoint of 20-30% in Q4 2025, increasing to the high 30% range in 2026, aligning with typical specialty medicine dynamics.

International expansion is a key pillar, with Rezdiffra launched in Germany in September 2025 following European Commission approval in August 2025. While initial impact from Europe is expected in 2026, Madrigal is adopting a disciplined country-by-country approach, leveraging its U.S. launch learnings to build infrastructure and drive adoption.

A significant growth driver is the potential expansion into compensated MASH cirrhosis (F4c). The Phase 3 MAESTRO-NASH OUTCOMES trial is expected to yield data in 2027, and if successful, could double Rezdiffra's eligible patient population. The promising two-year open-label data in F4c patients, showing significant reductions in liver stiffness and improvements in clinically significant portal hypertension (CSPH), provides strong confidence in this program.

Pipeline development is another strategic priority. The in-licensed oral GLP-1, MGL-2086, is slated for Phase 1 clinical development in the first half of 2026, aiming to create a differentiated oral combination therapy with Rezdiffra. This long-term view, supported by Rezdiffra's 2045 patent protection, allows Madrigal to thoughtfully build a diversified portfolio that addresses the complex needs of MASH patients.

Risks and Challenges

Despite the compelling growth trajectory, Madrigal faces inherent risks common to the biopharmaceutical industry. These include the uncertainties of product development and commercialization, dependence on key personnel, market acceptance and reimbursement dynamics, and the ability to raise additional financing on acceptable terms if needed. The company's substantial future long-term liquidity requirements will depend on effective Rezdiffra commercialization, geographic expansion, clinical trial success, and potential milestone payments. While Madrigal maintains a strong cash position, the inability to secure additional funds could materially impact its business.

Competitive pressures, particularly from the anticipated entry of GLP-1s into the MASH market, could influence market dynamics and pricing. While Madrigal views this as a market expansion opportunity, the long-term impact on market share and gross-to-net remains a factor to monitor. Furthermore, interest rate fluctuations and foreign exchange risks, as international operations expand, could affect financial performance.

Conclusion

Madrigal Pharmaceuticals is rapidly establishing itself as the definitive leader in the burgeoning MASH treatment landscape. With Rezdiffra, the first-ever FDA and EC-approved therapy, the company has demonstrated exceptional commercial execution, achieving significant patient uptake and revenue growth in a short period. The robust clinical profile of Rezdiffra, coupled with its extended patent protection until 2045, provides a formidable competitive advantage and a clear path to long-term value creation.

The strategic expansion into compensated MASH cirrhosis and the proactive development of combination therapies, such as the oral GLP-1 MGL-2086, underscore Madrigal's commitment to sustained innovation and market leadership. While the company operates in a competitive and evolving environment, its strong financial position, differentiated technology, and disciplined strategic approach position it favorably to unlock the multi-billion dollar potential of the MASH market. Investors should closely monitor the ongoing MAESTRO-NASH OUTCOMES trial results, the progress of international launches, and the advancement of its pipeline, as these will be critical indicators of Madrigal's continued success in transforming MASH care.