MADRIGAL PHARMACEUTICALS, INC. (MDGL)·Q3 2025 Earnings Summary

Executive Summary

• Net sales surged to $287.3M (+35% QoQ), with more than 29,500 patients on Rezdiffra and >10,000 prescribers; management reiterated the launch is annualizing above $1B and remains driven by U.S. demand .
• Payer contracting advanced materially: broad first-line access, no step edits, and improved UM criteria targeted for 2026; gross-to-net expected at midpoint of 20–30% in Q4 and high-30s in 2026, setting up durable growth .
• Strategic pipeline build: global license for an oral GLP‑1 (MGL‑2086) to combine with Rezdiffra; Phase 3 outcomes in F4c progressing with new data to be presented at AASLD; Rezdiffra launched in Germany post EC authorization .
• Operating intensity increased with Q3 R&D at $174.0M (includes $117M GLP‑1 upfront) and SG&A at $209.1M, while cash and investments ended Q3 at $1.115B supported by a $350M term loan .
• Near-term stock catalysts: Q4 contracting finalization, AASLD data readouts, ongoing patient adds and Q4 net sales (high single-digit QoQ growth expected), and continued payer clarity for 2026 .

What Went Well and What Went Wrong

What Went Well

• Strong commercial execution: net sales $287.3M (+35% QoQ), >29,500 patients on therapy, >10,000 prescribers, and a prescriber base “at the high end of best‑in‑class launches” .
• Payer progress: contracts for broad first‑line access, no step edits, improved UM; management: “best market access…at this point in launch” and gross‑to‑net roadmap communicated (20–30% in Q4; high‑30s in 2026) .
• Strategic assets and IP: oral GLP‑1 license (MGL‑2086) to enable a best‑in‑disease oral combination; new Orange Book patent extends U.S. protection to 2045; Germany launch initiated .

Quotes:

• CEO: “Rezdiffra is quickly becoming one of the most successful specialty launches…with quarterly sales now annualizing above $1 billion” .
• CFO: “Third quarter 2025 net sales totaled $287.3 million, up 35% from the second quarter of 2025” .
• CEO: “We are making great progress with our payer negotiations for 2026…broad first-line access, no step-edit requirements” .

What Went Wrong

• Elevated operating spend: R&D rose to $174.0M (one‑time $117M GLP‑1 license expense); SG&A increased to $209.1M on commercial investments; Q3 net loss per share widened to $(5.08) vs $(1.90) in Q2 .
• Gross‑to‑net headwind: minimal through Q3, but management expects a step‑up to the midpoint of 20–30% in Q4 and high‑30s starting Q1’26, creating a net price drag vs 2025 .
• EU contribution limited near‑term: Germany launched late Q3 with de minimis 2025 revenue; broader EU rollout is paced country‑by‑country with wiring and reimbursement processes (longer build) .

Financial Results

KPIs

Segment Breakdown (Company-reported)

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We delivered net sales of $287 million, up 35% quarter over quarter…driven by positive response from prescribers and patients and strong execution” (CEO) .
• “We are making great progress with our payer negotiations for 2026…broad first-line access, no step-edit requirements” (CEO) .
• “Starting in the first quarter and continuing throughout 2026, we expect our gross‑to‑net impact to be in the high 30% range” (CEO) .
• “R&D expenses…were $174 million…primarily due to the one-time $117 million expense associated with the global licensing agreement for MGL‑2086” (CFO) .
• “Germany launch…team is wiring the system…we anticipate our efforts will start to make an impact in 2026” (CEO) .

Q&A Highlights

• GLP‑1 combination rationale: modest (~5%) weight loss enhances resmetirom efficacy; oral fixed‑dose combo aims for optimized efficacy and tolerability, with resmetirom effective from day one .
• Payer/Aetna clarification: Rezdiffra not on Aetna formulary in 2025 or 2026; access via prior authorization/medical exception; no practical change expected .
• Adherence and pricing: Adherence tracking consistent with well‑tolerated orals (60–70%); gross‑to‑net expected to step up in Q4 and trend higher in 2026, with contracting effects normalizing thereafter .
• Q4 and 2026 outlook: High single‑digit QoQ net sales growth in Q4; robust net sales growth expected in 2026 despite gross‑to‑net step‑up; distribution ~50–55% commercial, 30–35% Medicare, ~10% Medicaid/other .
• EU cadence: Spend included in SG&A; de minimis 2025 revenue; disciplined country development focused on 2–3 year positive contribution per country .

Estimates Context

• Wall Street consensus (S&P Global) for EPS and revenue was not available at time of retrieval for Q1–Q3 2025; consequently, no beat/miss assessment vs consensus is provided. Values retrieved from S&P Global.*

Key Takeaways for Investors

• Commercial momentum intact: patient adds and prescriber depth are accelerating, with U.S. demand the core driver and Q4 net sales expected to grow high single‑digit QoQ .
• Access de‑risked: 2026 broad first‑line coverage with no step edits and improved UM criteria should support durable adoption; expect gross‑to‑net normalization into high‑30s .
• Near‑term headwinds manageable: gross‑to‑net step‑up and rising SG&A to support launch are known drags, but management signals robust FY26 net sales growth .
• Strategic optionality: oral GLP‑1 combo program (MGL‑2086) starts H1’26, aiming for best‑in‑disease oral combination; IP extends to 2045 enabling thoughtful pipeline build .
• Outcomes de‑risking: new AASLD data in severe F4c cohort reinforces confidence in MAESTRO‑NASH outcomes (2027 readout), a key medium‑term value driver .
• EU is a long game: Germany launched; broader EU build is paced and disciplined, with minimal impact in 2025 but potential contribution beginning in 2026 .
• Trading implications: Watch Q4 payer contracting finalization, AASLD data flow, and Q4 net sales cadence; gross‑to‑net step‑up may temper near‑term net pricing but improving access should sustain volume growth .