Madrigal Pharmaceuticals - Earnings Call - Q4 2024

Executive Summary

• Q4 2024 net revenue was $103.3M, up 66% quarter-over-quarter from $62.2M in Q3 2024, driven by strong Rezdiffra adoption, expanding prescriber penetration, and broad payer coverage.
• More than 11,800 patients were actively on Rezdiffra by year-end; management highlighted momentum into 2025 and expects robust year-over-year net sales growth with gross-to-net discounts increasing as the launch matures.
• New two-year MAESTRO-NAFLD-1 open-label F4c data showed a mean 6.7 kPa reduction in liver stiffness and 51% of patients achieving ≥25% reduction, reinforcing confidence in the fully enrolled MAESTRO-NASH OUTCOMES trial (data anticipated in 2027).
• No formal 2025 financial guidance was provided; management indicated consensus could tighten and move higher based on early Q1 2025 trends and reiterated plans for a targeted Europe launch beginning with Germany in H2 2025, pending approval.

What Went Well and What Went Wrong

What Went Well

• “We generated $103 million in net sales in the fourth quarter of 2024, reflecting 66% quarter-over-quarter growth… Our launch trajectory continues to track in line with some of the most successful specialty medicine launches in the past decade.” — CEO Bill Sibold.
• Prescriber penetration improved: ~60% of top 6,000 targets wrote Rezdiffra in Q4 (up from ~40% in Q3), and ~40% of the broader 14,000 target base wrote prescriptions; >75% of scripts came from top targets.
• Two-year F4c VCTE results showed a mean 6.7 kPa reduction and 51% achieving ≥25% reduction, supporting confidence in outcomes data and potential indication expansion to F4c MASH.

What Went Wrong

• Operating expenses scaled materially with commercialization: Q4 SG&A rose to $141.2M (from $107.6M in Q3), reflecting launch activities and headcount expansion; net loss remained high at $(59.4)M for Q4.
• Gross-to-net discount expected to increase in 2025 due to normal early-launch dynamics and Medicare Part D redesign, potentially tempering net revenue conversion despite strong demand.
• No formal 2025 guidance; while management tone was positive, the lack of explicit targets may limit near-term visibility for investors tracking the trajectory versus consensus.

Transcript

Operator (participant)

Good day, and thank you for standing by. Welcome to Madrigal Pharmaceuticals' fourth quarter and full year 2024 earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. As a reminder, today's conference call is being recorded. I would now like to introduce Ms. Tina Ventura, Chief Investor Relations Officer. Please go ahead.

Tina Ventura (Chief Investor Relations Officer)

Thank you, Marvin. Good morning, everyone, and thank you for joining us to discuss Madrigal's fourth quarter and full year 2024 earnings. We're also sharing this morning new two-year data from the active treatment open-label compensated MASH cirrhosis, or F4C, arm of the Phase 3 Maestro NAFLD trial. We issued a press release this morning and have a slide deck that accompanies this webcast, which we'll post on the investor relations section of our website right after the call. On the call with me today is Bill Sibold, Chief Executive Officer, and Mardi Dier, Chief Financial Officer.

They'll provide prepared remarks, and then we'll take your questions. Dr. Michael Charlton, our head of clinical development, will join us for the Q&A portion of the call. Dr. Charlton has more than 30 years of experience in MASH as a leading hepatologist, head of the Mayo Clinic Hepatology Group, and a treating physician. We plan to keep today's call to about 45 minutes. Please note on slide two, we will be making certain forward-looking statements today. We refer you to our SEC filings for a discussion of the risks that may cause actual results to differ from the forward-looking statements, and with that, I will now turn the call over to Bill on slide three.

Bill Sibold (CEO)

Well, thanks, Tina. Good morning, and thanks for joining. Today, I'll provide an update on the significant momentum we're building with the U.S. launch of Rezdiffra. We ended 2024 strong, and we're pleased with how we've started the year in 2025. I'll also share an update on new two-year data from an open-label study for F4C patients, as Tina mentioned. The results are very promising and support Rezdiffra's potential to benefit this high-risk patient population if approved. But before we look ahead, I want to take a moment to reflect on 2024, a year of remarkable transformation and achievement for the company.

I've been in the industry a long time, and I've launched a lot of successful medicines. I'll be the first to attest to the tremendous amount of work required for any successful launch, let alone a first-in-disease therapy. And the launch of Rezdiffra is no exception. We worked to meet or exceed our high expectations last year and started to lay the foundation for Rezdiffra to potentially become a blockbuster therapy. I'm incredibly proud of our team's accomplishments highlighted on slide four. These are the things that we said that we would do, and we did them.

We built a world-class team to drive the launch of Rezdiffra and support Madrigal's long-term aspirations. Our groundbreaking Rezdiffra phase 3 trial data were published in the New England Journal of Medicine. On March 14th, we achieved a milestone for the MASH field, the landmark approval of Rezdiffra, the first-ever treatment approved for this disease. This achievement was further validated by two top-tier liver societies in Europe and the U.S., both updating their guidelines to include Rezdiffra as first-line therapy for MASH.

And we made significant progress expanding Rezdiffra's reach both geographically and clinically, submitting Rezdiffra for approval in Europe and completing enrollment in our Maestro NASH outcomes trial. Importantly, these accomplishments are translating into thousands of patients now benefiting from Rezdiffra and building a strong foundation for Madrigal's future as the leader in MASH. Let's move to the U.S. Rezdiffra launch update on slide five. As we detailed in our earnings release this morning and first previewed at JPMorgan in January, we generated $103 million in net sales in the fourth quarter of 2024, reflecting 66% quarter-over-quarter growth.

This was another strong demand quarter, with inventory well within our expected two to four-week range. For the full year 2024, we generated $180 million in net sales, a remarkable achievement considering we launched in April, and these figures represent just three-quarters of performance. Our launch trajectory continues to track in line with some of the most successful specialty medicine launches in the past decade. This confirms the urgent need Rezdiffra is addressing in the MASH community, its excellent product profile, and the exceptional execution of our team.

These strong financial results are driven by the key performance indicators critical to any successful drug launch: patients on therapy, prescribers, and access. In the third quarter of 2024, on our payer metric, we reached a key milestone one quarter ahead of schedule, achieving greater than 80% commercial coverage for Rezdiffra. Since then, we've continued to make great progress on the other two launch metrics. First on patients, as noted on slide six, we ended the fourth quarter with more than 11,800 patients on Rezdiffra, an incredible accomplishment in just nine months.

Crossing the 10,000 patient threshold is a significant milestone, and we continue to steadily add patients at a rate that's consistent with other top-tier specialty medicine launches. Importantly, this figure represents patients actively on therapy, meaning it accounts for any discontinuations, making it the most rigorous and meaningful metric to track sustained treatment adoption. Yet, we're still in the early days. We have penetrated only a fraction of the market with Rezdiffra, less than 4% of the 315,000 diagnosed patients with F2/F3 MASH. We remain focused on the 315,000 diagnosed patients, which represents a highly attractive specialty market.

Looking ahead, the stated efforts of the next entrant are focused on expanding the market to many multiples of 315,000. We believe that the strength of Rezdiffra's profile positions it for leadership in either scenario, creating multiple paths to success for Rezdiffra in the years ahead. Our ability to steadily add Rezdiffra patients quarter over quarter is directly tied to increased penetration of our prescriber base. From day one, we've talked about wiring the system, how we have been laying the foundation to support the patient volume we expect in the years ahead.

And we're seeing real progress as we've engaged providers, driven change in clinical practice, and helped build the infrastructure necessary for sustained prescription growth. On slide seven, the bar graph on the left illustrates this progress. As a reminder, our field team is focused on a total of 14,000 target prescribers, primarily hepatologists and gastroenterologists, with a concentrated effort on the top 6,000 prescribers. In the fourth quarter, approximately 60% of our top 6,000 targets prescribed Rezdiffra, up from 40% in the third quarter. We are steadily adding new prescribers, and we are seeing increased depth of prescribing from current writers.

Both metrics are tracking exceptionally well with other successful blockbuster launches. As expected, our top target prescribers have driven more than 75% of our prescriptions. Just as we've successfully driven adoption among our top target prescribers, we plan to continue shaping clinical practice and expanding access across our full prescriber base as we build Rezdiffra towards its peak sales potential. We're already making meaningful progress. By year-end, approximately 40% of the 14,000 had prescribed Rezdiffra, reflecting a strong and growing foundation of support.

Rezdiffra's broad-based uptake is being driven by its attractive profile. It's a liver-directed therapy that halts or improves liver stiffness, a proxy for liver fibrosis, in 91% of patients out to three years. It's also a once-daily, well-tolerated pill with simple dosing. With a chronic and serious liver disease like MASH, this favorable profile supports long-term adherence, with early data continuing to indicate persistency rates comparable to other well-tolerated oral therapies. We're also hearing overwhelmingly positive feedback on Rezdiffra from both physicians and patients.

They continue to highlight the benefits of the medicine, including improvements in liver function tests and lipid levels, reduced fatigue, increased physical activity, and improvement in fibrosis. These real-world outcomes really matter. We recently heard from one Rezdiffra patient diagnosed with F2 MASH. She said, "Living with MASH felt like having a time bomb in my body. Rezdiffra gave me hope and my life back." Our goal is to be the leader in MASH and help patients for many years to come. As noted on slide nine, our long-term strategy builds on the success of Rezdiffra's U.S. launch.

First, we are expanding geographically and remain on track for a mid-year regulatory decision for Rezdiffra in Europe. Assuming a positive outcome, we plan to take a targeted country-by-country approach to commercialization, beginning with Germany in the second half of the year. Beyond Europe, we are also assessing opportunities to bring Rezdiffra to patients in additional attractive geographies. Second, we're advancing Rezdiffra for patients with compensated MASH cirrhosis.

Approval in F4C would represent a major step forward for the MASH field and for patients, significantly expanding the treatment landscape and effectively doubling Rezdiffra's market opportunity. I'll spend some more time on the data we shared this morning in a moment. And third, we are committed to building a strong pipeline beyond Rezdiffra. We're in the enviable position of providing a highly meaningful medicine to the MASH community today, and we are now focused on building the right pipeline behind it.

We are evaluating assets at different stages of development across multiple mechanisms of action, all with the goal of strengthening and extending our leadership position in MASH. Moving to slide 10 and the unmet need in compensated MASH cirrhosis. It's a chronic progressive liver disease characterized by significant liver damage, loss of liver function, liver cancer, and death. A substantial portion of compensated MASH cirrhosis patients also suffer from portal hypertension, which often leads to life-threatening complications such as hepatic encephalopathy, ascites, and variceal bleeding.

While patients with F2/F3 fibrosis face a 10-17 times higher risk of liver-related mortality, F4 patients are at a staggering 42 times increased risk. In this very sick F4 patient population, preventing progression to adverse clinical outcomes is the central treatment goal. This is reflected in FDA guidance, which recommends that clinical trials in compensated MASH cirrhosis use outcomes as an endpoint, as opposed to biopsy-based surrogate endpoints. This guidance, along with data from our open-label F4C cohort, informed the design of our ongoing Maestro NASH outcomes trial.

We believe that Rezdiffra's liver-directed mechanism of action should deliver a benefit not only in F2/F3 MASH patients, but in F4C MASH patients as well. Therefore, as shown on slide 11, we included a separate open-label active treatment arm of patients with compensated MASH cirrhosis in our Maestro NAFLD-1 trial to begin evaluating Rezdiffra's safety and efficacy in F4C. As a reminder, Maestro NAFLD-1 was a double-blind, randomized, placebo-controlled phase 3 safety trial to support regulatory approval.

We previously presented positive one-year data from the F4C cohort of this trial and are highlighting new two-year VCTE data in 101 patients on slide 12. VCTE, or vibration-controlled transient elastography, is a widely used non-invasive test conducted with a FibroScan that measures liver stiffness as a proxy for fibrosis. It's also a strong predictor of clinical outcomes. The two-year results show that patients achieved a mean 6.7 kPa, or kilopascal, reduction in liver stiffness at two years, which represents the largest mean kPa reduction reported in an F4C MASH patient population to date.

While this was a single-arm open-label trial, this reduction was highly statistically significant versus baseline. Physicians used the Baveno rule of five kPa to stratify risk of liver-related events in patients with MASH, so a 6.7 reduction suggests that many patients are moving into a lower risk category. 51% of patients achieved a 25% or greater decrease in liver stiffness as measured by VCTE.

This level of reduction in liver stiffness has been associated with reduced progression to end-stage liver disease, moving patients further away from the risks of cirrhosis and its complications, and Rezdiffra's safety profile was consistent with other Rezdiffra clinical trials, with a low rate of discontinuations due to adverse events. We look forward to sharing more details from this two-year cohort at a future medical meeting. These data add to the growing body of evidence supporting Rezdiffra's potential benefit in this high-risk patient population and support continued confidence in our fully enrolled cirrhosis outcomes trial.

As noted on slide 13, Maestro NASH outcomes is a large phase three double-blind, placebo-controlled trial evaluating progression to liver decompensation events in 845 patients with compensated MASH cirrhosis. We expect to announce data from this trial in 2027. Looking ahead to the opportunity in F4C and assuming today's results translate to Maestro NASH outcomes and Rezdiffra obtains regulatory approval, we believe Rezdiffra is and will be the leading therapy in F2 to F4C. Before I hand it over to Marty, let me briefly summarize our progress on slide 14. 2024 was a transformational year for Madrigal.

We secured FDA approval for Rezdiffra and are executing on a highly successful launch. We see significant runway for growth with less than 4% of the U.S. target market penetrated and an attractive real-world profile. Rezdiffra is well-positioned for continued strong momentum in 2025 and beyond. We are preparing for global expansion. We see a significant opportunity in F4C and believe we will be first to market. We continue to build for the future as we actively explore opportunities to expand our pipeline. With that, I'll turn it over to Mardi.

Mardi Dier (CFO)

Thank you, Bill. Earlier today, we issued a press release detailing our full financial results. I will highlight a few key takeaways for the fourth quarter and full year as noted on slide 15. Fourth quarter net sales totaled $103.3 million, bringing full year 2024 net sales to $180.1 million, an impressive achievement considering this reflects only nine months of commercialization. We delivered another strong demand quarter with inventory well within the expected two- to four-week range. Our gross-to-net discount increased in line with what we previously discussed. As we said, we expect some variability in gross-to-net early in the launch.

Looking ahead to 2025, as expected, we anticipate an increase in the gross-to-net discount compared to 2024, as is typical at this stage of a specialty medicine launch. Importantly, this is already reflected in our expectations for robust year-over-year net sales growth in 2025. R&D expenses for the fourth quarter and full year of 2024 were $25.6 million and $236.7 million, respectively, compared to $70.6 million and $272.4 million in the prior year periods.

R&D expenses decreased by $35.6 million in 2024 due primarily to a reduction in clinical trial accruals and the change in accounting for inventory costs following FDA approval of Rezdiffra, partially offset by an increase in headcount. Looking ahead, we expect a somewhat higher level of R&D spend in 2025 compared to 2024. SG&A expenses for the fourth quarter and full year of 2024 were $141.2 million and $435.1 million, respectively, compared to $46.5 million and $108.1 million in the prior year periods. This year-over-year increase was expected and reflects the rapid scale-up of our U.S. commercial operations following Rezdiffra's approval in March 2024.

Looking ahead, we expect SG&A expenses to increase in 2025 as we continue to invest in the U.S. launch and our international expansion. Turning to our balance sheet, we ended 2024 with $931.3 million in cash, cash equivalents, restricted cash, and marketable securities. With this strong cash position, we are well-resourced to support the ongoing launch of Resdifra in both the U.S. and our planned launch in Europe. I'll now turn the call back over to Tina.

Tina Ventura (Chief Investor Relations Officer)

Thanks, Mardi. Let's move into the Q&A portion of the call. Marvin, please go ahead and provide instructions for the Q&A session.

Operator (participant)

We will now open the lines for questions. To open your line, please press star 11, and you'll be added to the queue on the call. Our first question comes from the line of Thomas Smith of Leerink Partners. Your line is now open.

Thomas Smith (Senior Managing Director)

Hey, guys. Good morning. Thanks for taking the questions and congrats on the strong launch and the new cirrhosis data. Just had a question with respect to the ongoing Rezdiffra launch now that we're roughly two-thirds of the way through the quarter. So we're wondering if you could comment on what you've seen in the first two months of the year in terms of new patient adds, any change in the cadence of patients starting on drug, or anything notable as patients and prescribers kind of work through their insurance or copay adjustments.

And then historically, you've given some high-level guidance based on the comp group of specialty drug launches. I guess any color that you could provide as we think about Q1 and maybe 2025 broadly. Thanks so much.

Bill Sibold (CEO)

Tom, thanks for the question. Look, as just a couple of points first, 2024 was really an incredible year. When you think about going back 12 months from now, there wasn't a product on the market for MASH, and in a very short period of time, we've really done, I think, a remarkable job executing and finishing off the year with a $103 million quarter, which is really very impressive. By any measure you look at, as we look at metrics all across the blockbuster launches that you referred to, we're tracking extremely well on all fronts. There's no weakness here on any of them. We carried, I would say, the momentum of 2024 into 2025 of steadily adding patients and prescribers.

So we've seen more of that in the first quarter of 2025. We also do have, like everyone else, the Q1 dynamic that is clearly a phenomenon each year, and teams have been well prepared, and I think we're managing through that extremely well. As I think about what's happening at the prescriber level, I would say there isn't a prescriber yet that has maxed out or even close to maxing out the patients that exist in their practice or that are being referred into their practice. And each practice is learning. We talk about wiring the system. That's been a lot of hard work, and we've done it on a practice-by-practice basis.

And as you can see, we continue to add new prescribers, and we're now at the 60% penetration into that target group. For each of those, as they start prescribing, they're doing their wiring. So what we're continuing to do is just bring on steadily each day, each week, each month, each quarter prescribers, have them get ready to be able to handle the volume of their patients, how they work through the system, etc. Now, from a Q1 dynamic perspective, as I said, certainly that's something that we're seeing like anyone else. I think the teams have done a good job getting ready to manage through that. No real other challenges that we've seen with the quarter. It's pretty standard.

Mardi Dier (CFO)

Yeah. Maybe I'll just add a little bit, Tom, to answer your question about the analogs. So yeah, we do track very closely with our group of 10 specialty launches over the last 10 years. It gets a little tricky when you go from a Q4 to Q1, so we're not giving specific guidance in that percentage for Q1 and may not give that guidance going forward, but we're really tracking with these analogs thus far. But I will also say, if we just look at consensus, as Bill said, we're very pleased with what we're seeing going into 2025.

And a little commentary there that we believe consensus for Q1 2025 will narrow and go up a little bit as a result of what we've been seeing so far.

Tina Ventura (Chief Investor Relations Officer)

Great. Thanks, Tom. Marvin, next question, please.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from the line of Andrea Newkirk of Goldman Sachs. Your line is now open.

Andrea Newkirk (VP and Equity Analyst)

Good morning. Thanks for taking the question. Maybe I can ask you here on the cirrhosis data that you shared. I was hoping you could speak a little bit more on the clinical meaningfulness of achieving that 6.7 kilopascal reduction. And I know in the context of your three-year data for the F2, F3 NASH patient population, we had talked about how a VCTE measure below 10 kilopascals was correlated with fewer liver-related outcomes. Just wondering if that same threshold stands for the F4 cirrhotic patient population.

And then finally, just how did today's data change how you're thinking about the NASH outcomes trial, if at all, and does that change how you're thinking about the powering of the study? Thanks so much.

Bill Sibold (CEO)

Great. Thanks for the question, Andrea. I'll turn it over to Michael in a second. But as we think about how does it change our view on Maestro NASH outcomes, look, we've been confident about that study. This is just another piece of information which gives us, I would say, greater confidence in it. We're doing something here which is really, again, as we've done with our F2, F3 program, we're pioneering the way. And we believe that we have designed the right trial for Maestro NASH outcomes. This trial that we announced today actually helped to inform our thinking on Maestro NASH outcomes.

And with the really exciting news that we presented today, as I said, it gives us even more confidence. But maybe, Michael, do you want to answer the first couple of questions that Andrea had?

Michael Charlton (Head of Clinical Development)

It's a great question. The predictivity of decreases in liver stiffness increases with a higher baseline level. So our baseline level was 25 kilopascals. The predictivity really starts to tick up at around 15 kilopascals. So there are 6.7 kilopascal reduction. We'll start with a starting point of 25 kilopascals. It should be highly predictive of decreased risk of clinical outcomes.

Tina Ventura (Chief Investor Relations Officer)

Great. Thanks, Andrea. Next question, please, Marvin.

Michael Charlton (Head of Clinical Development)

Thank you. One moment for our next question. Our next question comes from the line of Yasmeen Rahimi of Piper Sandler. Your line is now open.

Yasmeen Rahimi (Managing Director and Senior Research Analyst)

Good morning, team. And thank you so much for all the great updates. I guess, could you comment on, as we go into 2025, if you'll be in a position to provide guidance? I think that, Mardi, your commentary was very helpful around that the consensus is going to a little increase, tighten a little bit. So just maybe help us understand how you're thinking about moving forward. We understand the dynamics of first quarter. But beyond that, at what point will you feel comfortable to kind of share with us what the 2025 or 2026 guidance would look like? That would be really helpful, and I'll jump back in the queue.

Bill Sibold (CEO)

Great. Mardi, let me pass that over to you.

Mardi Dier (CFO)

Yeah. Thanks, Yaz. Yeah. With respect to guidance, we've been very clear. We're not giving guidance right now. We consider it internally, but that's not something we're providing at this time. We're just too early in the launch. I did provide a little commentary on Q1 2025, and I think the same commentary goes for the full year 2025. We like what we're seeing, the momentum going into 2025. We commented on the robust year-over-year growth. So where consensus sits for 2025, we expect that to narrow as well and go up a little bit based on what we're seeing.

Yasmeen Rahimi (Managing Director and Senior Research Analyst)

Good.

Mardi Dier (CFO)

Thanks, Yaz.

Tina Ventura (Chief Investor Relations Officer)

Marvin, next question, please.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from the line of Ellie Merle of UBS. Your line is now open.

Ellie Merle (Biotech Analyst)

Hey, guys. Thanks for taking the question. Interesting F4 data. I guess, were those FibroScan benefits seen irrespective of the liver fat content at baseline? And any color on sort of which patients were more or less likely to show these VCTE reductions? And then just in terms of this study, I guess, can we expect any further long-term data cuts from this study, like the three-year data? Just curious the timing here since I think the study has been going on for a few years already. Thanks.

Bill Sibold (CEO)

Yep. Thanks, Ellie. Look, so more to come. This is just some really top-line look at the data. At an upcoming medical meeting, we'll go into a little bit more detail on things. I think there's certainly still a lot left that we can learn from this study just with the data that we have at two years. Is there anything else, Michael, to comment on? We're not giving out any more than the top line that we've given today.

Michael Charlton (Head of Clinical Development)

No, I think the essential predictivity for these results with the clinical outcomes and with the decline of 25% based on that study of 10,000 patients from a perspective, that you project a 30%-40% decreased likelihood of a liver-related clinical event. So that's our main takeaway from these results.

Bill Sibold (CEO)

Great. Thanks, Ellie.

Ellie Merle (Biotech Analyst)

Thanks, Ellie.

Tina Ventura (Chief Investor Relations Officer)

Marvin, next question, please.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from the line of Akash Tewari of Jefferies. Your line is now open.

Amy Li (SVP of Equity Research)

Hey, this is Amy on for Akash. Thanks so much for taking our question. Starting off, just wanted to get your thoughts on the competitor FGF21 data in cirrhotic NASH and how that could read across to your F4 outcome study. Also, on PARD redesign, I think our preliminary math is getting to a potential full-year net sales impact of around 3%-5% for Resdifra going forward. Just wanted to sense-check this number with you. And will you do any additional discounts ahead of the semi-launch? Thanks so much.

Bill Sibold (CEO)

Well, Amy, thank you. That's a lot of questions to get through. Let me see if we can talk through. First of all, as we launched the product from a gross-to-net perspective, we have been extremely, extremely diligent about gross-to-net. We weren't contracting as we launched the product. And when we launched the product, you don't think about launch in a quarter or two or four. You think about kind of the years ahead. And we thought about gross-to-net, anticipating that there will be additional competition in the marketplace in time, additional indications, hopefully, for us, etc.

We take an extremely disciplined approach here. Now, we will react to market dynamics as any company does. You always have a dynamic in Q1, which we've talked about. As it relates to working with the payers and so forth, there's a constant dynamic there. So we'll continue to react to the market as these dynamics continue to shift. I think your other question was on PARD. I mean, look, Mardi, I think, covered it a little bit in some of the opening remarks. But Mardi, do you want to make any comments?

Mardi Dier (CFO)

Yeah. I'll just say specifically about the PARD and how it impacts gross-to-net. Remember, Medicare patients are about a third of our business. And PARD, we've always said that there will be some impact going into 2025 with the redesign. That's absolutely true. But we also had, in 2024, we were paying Medicare rebates, really. So the impact is a little more incremental in 2025 versus a significant step up. So I think the good news with our gross-to-net, particularly in 2025, is everything's going as expected, right? So we see a little bit of increase in our copay assist as expected and included in our expectations for net revenue for the year.

Bill Sibold (CEO)

Yeah. I mean, our excitement and belief in this product and just also where you think about where we are at the very beginning stages, all of this is taken into account to our enthusiasm. And then maybe on the first question that you had, Ellie, look, we're not going to comment on competitive data. But what we do believe is we're very confident in our data. We think that the release of this morning gives us further confidence, as I said, in Maestro NASH outcomes. The 6.7 kilopascal reduction, that really is meaningful. Michael, team, everyone's really excited.

And people that we've spoken to in the community as well, that's a number that really gets people's attention. And we think that translates into a real meaningful effect for patients. And as we said, ours is an outcome study. We have followed FDA guidance and believe that we've designed the right study for approval.

Tina Ventura (Chief Investor Relations Officer)

Great. Thanks, Amy. Next question, Marvin.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from the line of Liisa Bayko of Evercore ISI. Your line is now open.

Liisa Bayko (Managing Director and Senior Research Analyst)

Hi. Thanks for taking the question. Just two quick ones for me. First, the kilopascal change and the changes you talked about today, could you put that in context of any change in sort of F4 to F3 changes in fibrosis score? And then also just wanted to touch upon Semaglutide coming to market in NASH and NASH, sorry, and how you think about your positioning there, in particular with respect to the pricing differential and how you might handle that. Thank you.

Bill Sibold (CEO)

Yeah. Thank you for the questions, Liisa. Maybe I'll start off, and then I'll pass it over to Michael with your first question. But as it relates to semi, I think, look, we've been really clear. First of all, we're at the very beginning of this market evolution, right? Less than 4% penetration. So we've got many years of growth ahead. You then look at the profile of our product. We've got a great profile. As I look towards the future, I don't see any product with a profile that actually is as good as ours. Semi, assuming they come to the market, we're planning for that.

We would assume that it's kind of maybe as early as late Q3, beginning of Q4. That's a very different profile of product. Remember, the problem we're trying to solve here, you've got patients that are one to two steps away from cirrhosis, and what they can't afford is time, and by that, I mean, if you're waiting months to dose titrate and then have a high discontinuation rate, you have to be on a drug for it to work, and the one thing that we do know is that with our liver-directed therapy, it's easy to take.

It works fast, and the results that we're seeing in the real world are extremely promising, so what we believe is that actually, assuming semi does get approved, it's actually going to drive additional market growth, which is something that ultimately, as the leader in the space, we're going to benefit from. But kind of final point, this is a specialty market that can support multiple products being in it. It then comes down to things like profile, which we have a great profile, order of entry.

We're first and have built this market. So we feel extremely, extremely confident in our ability to grow through any of the potential competitive entrants. So maybe, Michael, why don't I turn it over to you for the first part of the question?

Michael Charlton (Head of Clinical Development)

Yeah. It's a great question. The literature supports that when compared to baseline, a change in liver stiffness, a reduction in liver stiffness of five kilopascals or 25% in a comparable population compensated cirrhosis is highly predictive for a reduction in fibrosis of one stage or more. So that's how we would look at these data. We had about over 50% of our patients achieve that 25% reduction threshold.

Tina Ventura (Chief Investor Relations Officer)

Great. Thanks, Liisa. Marvin, next question, please.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from the line of David Lebowitz of Citi. Your line is now open.

David Lebowitz (Senior Research Analyst)

Thank you very much for taking my question. On the emergence of GLP-1s, once they actually get approved and they can officially get reimbursed for MASH, how do you think that impacts usage vis-à-vis Rezdiffra in terms of combination? Do you think it makes it an easier discussion with payers, or do you think it makes it a harder discussion?

Bill Sibold (CEO)

Well, thanks, David. Look, looking at the data now, and we've reported this before, that about 25% of Rezdiffra patients are already on a GLP-1. And when you look at who's already been exposed, it's about 50%. So they're already there being used for the comorbidities. And look, as a company, we are supportive of GLP-1s being used in comorbidities that can benefit patients such as obesity. So they're already there. That's the thing. And they've been there for 14 years. Now, we know that at the lower doses, they clearly haven't had an impact on NASH because we're still seeing high diagnosis rates and so forth.

So they can only solve it at the highest doses. And we know that that takes time and that there are challenges with tolerability. So we really, as we think about the GLP-1s coming in, it's going to be a market expansion focus that they're going to have. And we believe that given their profile and our profile, those patients are going to ultimately, the majority of them anyways, are going to end up on a Rezdiffra anyways because they're going to still need to treat the problem that they're having, which is now a really severe liver disease, right? This is not a mild disease.

We hear from patients all the time, their stories of family members that have died as a result and how grateful they are to have an opportunity to avoid that. So we are fully planning on GLP-1s being here. We expect that with our profile, we continue to be the product of choice in the space. And as it relates to, I think you alluded to from a kind of an even payer dynamic perspective, hey, with our profile and with the benefit that we've shown to preventing downstream costs, we think that we have an attractive profile. We've had extremely productive conversations with payers. And we believe that will remain the case with or without the introduction of GLP-1s.

Tina Ventura (Chief Investor Relations Officer)

Good. Thanks.

David Lebowitz (Senior Research Analyst)

[crosstalk] Thank you very much.

Tina Ventura (Chief Investor Relations Officer)

Marvin, next question, please.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from the line of Andy Chen of Wolfe Research. Your line is now open.

Andy Chen (Director and Senior Analyst)

Hey, thank you for taking the question and congrats on the new data. Just curious if you can talk about the Europe launch in the second half. So I believe the European regulators, they may be less receptive to your U.S. pricing. Can you talk about the unique challenges and opportunities there? Have you crafted a strategy to win there in that geography? Just curious if you can share some color there. Thank you.

Bill Sibold (CEO)

Yeah. Thanks, Andy. I mean, look, remember, as we think about Europe, it's not Europe overall. It's going to be a country-by-country review. And we will be extremely disciplined. And we have an objective of within two to three years to be a positive contribution in any country that we launch in. Obviously, a key piece of that is going to be the pricing. We think from an EPI perspective, there are patients there. The unmet need is there. And that tends to, as a Europe overall, kind of approximate U.S. patient numbers. Now, the regulators aren't obviously involved in the pricing discussion.

As you go country by country, talk to HTAs, etc., one of the things that I have found in previous launches is that if you have an innovative product that provides value, that there is a recognition of that value in Europe. Clearly, we will be having discussions with each of the countries and be making our argument as to the value of the product. Fortunately, we have really great data, and we think that we will ultimately be able to support favorable pricing within Europe. However, as I said, we will be making decisions on a country-by-country basis, and we will pursue the countries where we believe the value of Rezdiffra is recognized.

Tina Ventura (Chief Investor Relations Officer)

Good. Thanks, Andy. Marvin, next question, please.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from the line of Ritu Baral of TD Cowen. Your line is now open.

Ritu Baral (Managing Director and Senior Biotechnology Analyst)

Good morning, guys.Thanks for taking the question. Just following up on that, Bill, can you talk a little more to the health technology assessment assessments that you are preparing to face? What parts of the dataset that you've generated so far drive value that the national plans have, either in writing or in meetings, indicated they're willing to pay for? And then just a quick follow-up on the safety of the F4 open-label dataset that you presented today. Just given even with compensated patients, they're more fragile, KOL focus has been on things like hypoglycemia and liver events. Can you give us the outlines of safety?

Bill Sibold (CEO)

Yeah. So first of all, with discussions in Europe with the HTAs, I mean, look, as you know, there's a very formal process that you go through in each of the countries. You prepare your value dossier. And we're at various stages of that, depending on the country. But again, a lot of this, a lot of the evaluation looks at, are you offsetting downstream costs, etc.? I mean, I take you back to our ICER analysis, which showed Rezdiffra to be a very cost-effective therapy. So again, they use slightly different tools in each country.

But we will be a part of that process. And we feel that the severity of the disease and the merits of the product really do stand on their own. And we're looking forward to, I think, productive discussions that we'll have with each of those entities. Maybe, Michael, do you want to comment briefly on the second question?

Michael Charlton (Head of Clinical Development)

Yeah. It's an important question. So the same study, of course, included patients in other arms that had lower degrees of fibrosis. And the AE, the type and frequency, was comparable between patients with F4C and non-cirrhotic disease. It's a good question.

Tina Ventura (Chief Investor Relations Officer)

Good. Thanks, Ritu. Next question, please, Marvin.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from the line of Prakhar Agrawal of Cantor Fitzgerald. Your line is now open.

Prakhar Agrawal (VP and Equity Research Analyst)

Hi. Good morning. And thank you so much for taking my questions. So maybe, Bill, you'd previously talked about GI docs being a little bit slower to adopt. But maybe if you can talk about the latest trends there, what you're seeing in terms of the GIs versus hepatologists for Rezdiffra. Thank you.

Bill Sibold (CEO)

Great. Thanks for the question. Look, we're predominantly focused on hepatologists and gastroenterologists. If you just look at the numbers of those specialists, there's less than 1,000 hepatologists. So when we start talking about targeting 14,000 prescribers, the overwhelming majority are gastroenterologists. So on the backs of the gastroenterologists, we've really seen this really strong performance to date. So when we talked about them coming on a little bit slower, it was a little bit more of the time that it takes to kind of wire their practice. It's not a disease that they had been treating.

So they had to hire staff in some cases if they wanted access to NITs and wanted to have their own NIT internally. So it's just those mechanics to create the pathway within their practice. But when they come on, they come on. And by that, I mean the gastroenterologists, I've been extremely, extremely happy with the way that they have adopted the product. And as I said, just based upon the numbers, they are really the driving force of the performance that we have seen and will likely see in the future.

Clearly, the hepatologists are, I would say, and remain further ahead in most cases just because the liver is what they are most familiar with. They're more familiar with the disease. And their practices are probably initially a little better suited. But really happy with what we've seen. We've seen some of the big super groups come on. And we've seen them go from, I would call, more or less dabbling to full-on NASH treatment and literally treating hundreds and hundreds of patients with many more to come. So we're feeling that the evolution of the prescriber base is in a really great place.

And I would say that the breadth of prescription that we're seeing in this launch is a true standout and something which is a great prognosticator for future uptake of the product. You need prescribers. You need patients. And we have both of those.

Tina Ventura (Chief Investor Relations Officer)

Good. Thanks, Prakhar. Marvin, it looks like we've got time for one more question, please.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from the line of Katherine Okoniewski of Citizens. Your line is now open.

Katherine Okoniewski (Analyst)

Hi. This is Katherine on for John. I just have a quick question about dose adjustment in the two-year open-label extension. Do all patients stay at the 80-milligram dose? And also, just as far as patient retention goes, how many cirrhotics started the study? And how many continued through the two-year time point? Thank you.

Bill Sibold (CEO)

Okay. Great. Michael, maybe I'll turn this one over to you for those specific.

Michael Charlton (Head of Clinical Development)

122 patients entered the second year of the open-label extension. And these data are from 101 that had a second VCTE. [inaudible].

Katherine Okoniewski (Analyst)

And then did everyone stay on dose?

Michael Charlton (Head of Clinical Development)

Yes. Everybody had 80. Yes.

Katherine Okoniewski (Analyst)

Everybody had 80. Great.

Tina Ventura (Chief Investor Relations Officer)

Thanks, Katherine. And thank you all for your time and interest today. This now concludes our call. A replay of this webcast will be available on our website in approximately two hours. So thanks for joining.

Operator (participant)

Ladies and gentlemen, thank you for your participation in today's conference. You may now disconnect. Have a wonderful day.