Madrigal Pharmaceuticals Inc
NASDAQ:MDGL
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Madrigal Pharmaceuticals Inc
Earnings Call Analysis
Q3-2024 Analysis
Madrigal Pharmaceuticals Inc
Madrigal Pharmaceuticals reported an impressive net sales figure of $62 million for Q3 2024, reflecting robust demand for its product, Rezdiffra. The company noted that over 6,800 patients are currently on Rezdiffra, a substantial increase from just over 2,000 at the end of Q2 2024. This increase signals a successful ramp-up in its market penetration, driven by favorable prescriber feedback and heightened patient access.
One remarkable achievement was securing coverage for over 80% of commercial lives, which was accomplished a full quarter ahead of the company's goal timeline. This high coverage level, coupled with over 95% of covered lives accepting non-invasive tests for diagnosis rather than biopsies, bodes well for Rezdiffra's ongoing adoption and acceptance within the healthcare community. The company aims to launch Rezdiffra in Europe in the second half of 2025, pending approval.
Madrigal's R&D expenses decreased slightly to $68.7 million from $71 million year-over-year, indicating a stable investment in research activities. However, selling, general, and administrative (SG&A) expenses rose significantly to $107.6 million due to expanded commercial operations following Rezdiffra's approval in March. The company's balance sheet remains strong, with approximately $1 billion in cash and equivalents, ensuring robust support for ongoing operations and future growth.
Looking forward, Madrigal's leadership remains optimistic about growth. Internal metrics suggest they are tracking towards a 50% growth trajectory typical for successful specialty drug launches. The management anticipates that 2025 expectations will increase to reflect the company's current performance, although specific numbers will be clearer as the fourth quarter progresses.
The company emphasized the importance of their co-pay assistance program, noting that utilization was lower than anticipated this quarter. As they enhance patient access through various programs, including free drug options for Medicare patients, they are working to improve overall uptake. The leadership believes that ongoing education about these programs will bolster patient enrollment and ensure affordability.
With competitors potentially entering the market, particularly from the GLP-1 drug class, Madrigal is confident in Rezdiffra's advantages. The team believes that their product's efficacy and once-daily dosing regimen will sustain patient engagement over time, unlike some competitors with less favorable persistence results. The leadership team remains vigilant about market dynamics but feels well-prepared to meet and exceed growth expectations.
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Good day, and thank you for standing by. Welcome to Madrigal Pharmaceuticals Third Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, today's conference call is being recorded.
I'd like to introduce Ms. Tina Ventura, Chief Investor Relations Officer. Please go ahead.
Thank you, Marvin. Good morning, everyone, and thank you for joining us to discuss Madrigal's third quarter 2024 earnings. 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 will provide prepared remarks, and then we'll take your questions. Our goal is to keep today's call to about 45 minutes.
Please note, on Slide 2, 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.
With that, I will now turn the call over to Bill on Slide 3.
Well, thanks, Tina. Good morning, and thanks for joining. I'll cover 3 topics on our call this morning. First, an update on the Rezdiffra launch. Second, how we see the NASH treatment landscape evolving over time. And third, the progress we've made to strengthen our long-term leadership position in NASH, including completing enrollment of our cirrhosis OUTCOMES trial.
Let's start with the U.S. Rezdiffra launch on Slide 4. As we announced in our earnings release this morning, we delivered an exceptional quarter, generating $62 million in net sales. This was another strong demand quarter with inventory at the low end of our expected 2 to 4 week range. We're now 6 months into the launch and the feedback we're hearing from prescribers continues to be very positive. They're finding it easier to prescribe Rezdiffra to their patients thanks to our efforts to wire the system and the improved access we've secured.
They also have high confidence in Rezdiffra's real world performance as an effective, well-tolerated once a day pill supported by positive patient experiences to date. Healthcare providers are beginning to recognize Rezdiffra as standard of care, reinforcing its position as the foundational therapy for NASH. And while we are still early in the launch phase, we're continuing to see great progress across all key performance metrics. This gives us confidence in our strong growth expectations for Rezdiffra and reinforces that the launch is tracking in line with other best-in-class specialty medicine blockbuster launches.
So let's start with patients. As a reminder, we're focused on the 315,000 patients diagnosed with NASH with moderate to advanced fibrosis. We ended the quarter with greater than 6,800 patients on Rezdiffra. The figure represents patients on drug or the bottom of the patient funnel and the most rigorous metric to measure. By comparison, we ended the second quarter with more than 2,000 patients on Rezdiffra.
We know that the early quarters of a launch are crucial and often predictive of future success. During these initial quarters, we are closely tracking our metrics, including the pace of patient adds against a group of top tier specialty medicine launches. We are steadily adding patients at a rate consistent with those benchmarks. As we discussed last quarter, we have dedicated significant effort with our field and patient support teams to reduce the time it takes for prescriptions to be filled. Thanks to their outstanding work, we achieved our 6-month goal with time-to-fill trending at 30 days or less.
We're also encouraged by the progress we've made with payers. One of our ambitious pre-launch objectives was to secure coverage for 80% of commercial lives by year-end, and we achieved this goal during the third quarter, a full quarter ahead of schedule. At quarter end, more than 80% of commercial lives have coverage in place for Rezdiffra. Notably, greater than 95% of Rezdiffra covered lives accept non-invasive tests, or NITs, and do not require a biopsy, in line with current standard of care. As we noted last quarter, Medicaid coverage was in place as of July 1 and we expect Medicare coverage to begin on January 1 of next year.
Currently, Medicare patients are accessing Rezdiffra through the medical exception process with prior authorization requirements aligned with our label. This process has been smooth, allowing patients to readily access Rezdiffra. We expect many Medicare plans to start to list Rezdiffra in 2025, and would expect this favorable access to continue. Our business mix has been running in line with our expectations, with commercial at 50% to 55%, Medicare at 30% to 35% and Medicaid and other at about 10%.
Moving on to prescribers. As a reminder, we have 14,000 total targets with a primary focus on the top 6,000. These include hepatologists and gastroenterologists who treat the majority of the 315,000 diagnosed F2, F3 patients. The goal with any successful launch is to expand both the breadth and depth of prescribing, and we're making strong progress on both fronts.
In the third quarter, around 40% of our top targets prescribed Rezdiffra, doubling the 20% penetration rate from the second quarter. Our top targets are continuing to write more than 75% of Rezdiffra prescriptions, giving us confidence that we're targeting the right prescribers with our efforts. And as we look at depth among our top targets, we are seeing an increasing number of prescriptions written per prescriber as well.
The launch is off to a fantastic start with all of our metrics either meeting or exceeding our high expectations. Our success to date has also been driven by our ability to continue to wire the system, as noted on Slide 5. This is a first-in-disease launch where the market needs to be built from the ground up. Prior to Rezdiffra's approval in March, there had never been a prescription written for NASH. Our goal has been to drive changes in clinical practice and develop processes for efficient patient and prescription flow to establish a strong foundation that will support our peak sales expectations.
While we still have a lot of work left to do, we have made terrific progress to date. Success here allows us to strengthen our leadership position in NASH and achieve one of the most successful specialty launches in the industry. A key factor of our success thus far has been Rezdiffra's strong value proposition, which has been recognized by health care providers, payers and patients.
As a reminder, Rezdiffra is a liver-directed medicine that has set a high bar for efficacy and safety. It's the only medicine to achieve statistically significant results on both endpoints in Phase III, NASH resolution and fibrosis improvement. Importantly, Rezdiffra stopped or improved fibrosis in more than 80% of patients after 1 year of therapy. It's a once-a-day pill that's well tolerated with simple dosing. It's this favorable profile that should allow patients to stay on the medicine over time.
Early indicators suggest persistency in line with other well-tolerated oral medicines. It's clear from these real-world results that Rezdiffra is well on its way to becoming the foundational therapy for NASH patients with moderate to advanced liver fibrosis.
We believe that this strong product profile will provide a sustainable advantage for Rezdiffra when new competition emerges. The next potential entrant could be from the GLP-1 class. As we look at the profile of semaglutide on Slide 7, you'll see that Rezdiffra compares very favorably across key attributes. Importantly, more patients taking a GLP-1 in the real world struggle to stay on treatment long term.
In fact, data shows that only about 30% of patients with obesity remained on semaglutide after 1 year, which is especially important given their NASH study is 72 weeks. For NASH patients with moderate to advanced fibrosis who are 1 or 2 steps away from having cirrhosis, health care providers will want to be confident that their patient is going to take his or her medicine consistently over time to see an effect.
So as we look ahead and consider the potential impact of a GLP-1 launch on the market on Slide 8, we believe it will further accelerate the growth opportunity for Rezdiffra. We are focused on the 315,000 patients diagnosed with moderate to advanced NASH fibrosis. On its own, this is an attractive specialty market, and we are still early in the journey with 2% of those patients on treatment.
Novo Nordisk is focused on a much larger population of both diagnosed and undiagnosed patients, many multiples of our 315,000. Their efforts will expand the market, and most importantly, benefit patients with NASH by increasing awareness, patient screening, diagnosis and treatment. And this significant expansion will also benefit Rezdiffra, both as the foundational therapy in NASH for first-line patients and from the high overall discontinuation rate of semaglutide.
And there is clearly room in this large and underpenetrated market for multiple mechanisms to treat this challenging disease. We expect combination therapy to be part of the treatment paradigm. In fact, it's already happening. Approximately 25% of Rezdiffra patients today are using Rezdiffra in combination with GLP-1s to treat their comorbidities, and the percentage is likely much higher when including patients that have previously been on a GLP-1.
In summary, we continue to be optimistic about the future market dynamics. Between Rezdiffra's attractive real-world profile, the significant opportunity to penetrate our target market of 315,000 and the potential for significant market expansion beyond that with new competition, we are confident that Rezdiffra can continue to deliver strong growth in the years ahead.
We're also pursuing additional growth opportunities for Rezdiffra beyond our launch in the U.S., as highlighted on Slide 9. This includes our efforts in Europe, where we are preparing for a potential second half '25 launch of Rezdiffra pending EMA approval. Additionally, we're working to bring Rezdiffra's benefits to patients with NASH cirrhosis. Earlier this month, we completed enrollment in our MAESTRO-NASH OUTCOMES trial, marking a significant milestone for Madrigal in the NASH field. Subject to regulatory approval, positive results could make Rezdiffra the first medicine for patients with compensated NASH cirrhosis.
Cirrhosis patients are at a high risk of progressing to serious liver-related outcomes. While F2, F3 patients have a 10 to 17x greater risk of liver-related mortality, in F4 or cirrhosis patients that risk is 42x higher. This stark statistic underscores the urgent need for an effective treatment in this vulnerable population.
Results from our OUTCOMES trial in cirrhosis patients as well as the OUTCOMES portion of our MAESTRO-NASH trial in F2, F3 patients could very well position Rezdiffra as the only approved therapy with OUTCOMES data in NASH in this decade, providing us with data years ahead of the competition.
I'd also like to highlight 2 exciting developments in our R&D organization that further strengthen our leadership in NASH. Dr. Michael Charlton has joined us as Head of Clinical Development. As a world-renowned expert in NASH, we are thrilled he decided to join Madrigal at such a pivotal time for the company. Secondly, we are preparing for a strong presence at the upcoming AASLD Liver Meeting in mid-November in San Diego, where Rezdiffra will be in the spotlight as the first ever approved therapy for NASH.
Madrigal is leading the NASH field to advance the science. Our resmetirom development program produced more NASH abstracts at AASLD than any other program. Moreover, AASLD recently released guidance that reinforces Rezdiffra's role as the foundational therapy for NASH following similar recommendations from the EASL guidelines in June and the expert panel in July. Clinicians now have multiple guidance documents to support patient identification, treatment initiation and monitoring.
Before I hand it over to Mardi, let me briefly summarize our progress on Slide 10. This quarter, we delivered outstanding results, meeting or exceeding our ambitious targets. Net sales of $62 million driven by strong demand, greater than 6,800 patients on Rezdiffra, more than 80% of commercial lives covered, achieving this milestone a full quarter ahead of schedule.
About 40% of our top targets are prescribing Rezdiffra, and we continue to drive both breadth and depth with significant opportunity ahead. The completed enrollment of our NASH cirrhosis outcomes trial, one step closer to bringing the first therapy to market for this vulnerable patient population. And we're tracking well to launch Rezdiffra in Europe in the second half of 2025 pending EMA approval.
With that, I'll turn it over to Mardi.
Thank you, Bill. Earlier today, we issued a press release with our final -- our full financial results. So I will provide you a few highlights of the third quarter of 2024, as noted on Slide 11. U.S. net sales for the quarter totaled $62 million. As we've mentioned previously, we expect inventory to run between 2 to 4 weeks for Rezdiffra, which is typical for a specialty medicine.
As Bill noted, this was another strong demand quarter with inventory at the low end of that range. Our gross to net was again favorable to our expectation this quarter as our co-pay assistance program utilization was lower than anticipated for the third quarter. As we've said before, we expect gross to net to be choppy quarter-to-quarter, particularly early in the launch.
R&D expenses for the third quarter of 2024 were $68.7 million compared to $71 million in the third quarter of 2023. We continue to anticipate relatively stable R&D expenses this year compared to last year. SG&A expenses were $107.6 million compared to $27.6 million for the third quarter of 2023. This year-over-year increase was expected due primarily to the expansion of our commercial operations in the U.S. following Rezdiffra's approval in March.
Turning to our balance sheet. As of September 30, we had $1 billion in cash, cash equivalents, restricted cash and marketable securities. With this strong cash position, we are well resourced to support the ongoing launch of Rezdiffra in both the U.S. and our planned launch in Europe.
I'll now turn the call back over to Tina.
Thanks, Mardi. Let's move into the Q&A portion of the call. So Marvin, please provide the instructions for the Q&A session, and we'll get started.
[Operator Instructions] Our first question comes from the line of Yasin Rahimi of Piper Sandler.
Congrats on an amazing quarter, really incredible. Team, I guess, question is, given the strong performance, could you maybe talk to us about what your forecast or what your thoughts are around moving forward into fourth quarter and sort of growth into 2025? And I'll jump back into the queue.
Yes, we're really thrilled with how the launch is progressing. The team is executing at all levels, made great progress on coverage, adding prescribers, adding patients. We're really off to a very strong start. And as I said, the trajectory in early launch quarters is an important indicator for future success.
We have our own internal metrics that we look at, but we're also benchmarking ourselves against about 10 specialty launches in the last 10 years that are unmitigated successes. These are great launches. And we're doing really great against these benchmarks as well. And looking at those benchmarks for growth, what you typically see in the third quarter of launch of growth is in the 50% zone on average. And like with the other metrics, we're tracking well on this. So we're off to a great start. So maybe for 2025, Mardi, you want to comment on that?
Yes, absolutely. Like Bill said, we're off to a strong start. We're really pleased with our third quarter growth and what we're looking forward into fourth quarter. But absolutely, we want to see how 2024 plays out before we provide any more specific points of view on 2025. But what we can say is you look at fiscal year 2025, and based on our performance of third quarter and into fourth quarter, we would anticipate that 2025 expectations to increase some to account for this robust growth that we're generating.
Marvin, next question, please.
Our next question comes from the line of Eliana Merle of UBS.
Congrats on the quarter. Just curious what you're seeing in terms of the cadence of new patient starts. Are you seeing a similar number of new patients starts per week or month? Or is the number of new patients starts accelerating?
And then just second, in terms of the ESSENCE data, what are your expectations for whether the payers will require a step through with the GLP-1 if the ESSENCE data shows a very strong fibrosis benefit?
I appreciate the question. So yes, as we said, we have been continuing to steadily add patients. We have -- there's a lot of interest out there. You have to remember, we're not at steady state yet either, right? We haven't fully penetrated all of the prescribing physicians. So that's going to take longer as we continue to wire the system. And then you get to your baseline that you start to grow from in a patient add perspective. But we're making progress every day, adding new prescribers, new patients, et cetera. So that's -- we expect this pace to continue.
And the second question was around ESSENCE and step through GLP-1.
Yes. So look -- thanks for that as well. To date, we haven't seen any requirement for step-through. Look, we're waiting to see what the results look like as well. And when we get the results, we're really trying to -- we're going to want to try to understand what the data says and doesn't say. And we'll have a number of questions to really probe a little bit deeper on, because, as you know, top line readouts don't always translate into labels so well.
So some of the things we're going to be looking for are the following: What do the intent to treat results look like? How are discontinuations handled? What percent of patients reach the 2.4 milligram therapeutic dose? And even things like how are the biopsies read, because that can result in higher response rate as you've seen in other NASH trials. But in the end, we're talking about a well-controlled trial here versus real-world practice. And that's where I think the profiles really matter. That's where we're really set up for that. So we'll see what happens with the results of the trial to see what happens, if anything happens with payers.
Now what I will just reinforce is we are in a really strong position. We have a very good profile. We've had ongoing dialogue with payers now for well over a year. They understand the profile of the product and what it can offer. So we feel like we're in a very strong position as we go into any potential readout that takes place from ESSENCE.
Great. Marvin, next question, please.
Our next question comes from the line of Akash Tewari of Jefferies.
This is Manoj in for Akash. Just one. Which trial are you more confident on hitting on outcomes, the expansion of MAESTRO-NASH or like the F4 patient trial? Why are you confident that you could show a definite benefit in these late-stage patients?
Look, we're confident in both trials. Of course, we don't have the answer yet though, so we have to wait and see what that looks like. We have -- for the cirrhosis trial, we had a group of 180 cirrhosis patients in the NAFLD-1 trial that went on to the open label. It was based on some of the results that we are seeing there that we feel that there's a very good reason why Rezdiffra may work in this population. In fact, Rezdiffra has been referred to as the kind of master regulator for fibrosis. So we think that this is something that there's a good chance that we hit.
We're, of course, always going to push the science here and ask the question about, what does the community want to learn about and know? We think, especially through the cirrhosis trial, that there's going to be a ton of learnings for the community overall. We're out in front. We're leading these efforts. It's something that we think as a leader it's important to do to drive the science.
So we'll have to see what the results say. But based upon the really significant interest in the cirrhosis trial, we know that the community is interested in hearing the answer to the question. You saw that we had about 840 patients that enrolled, and that was exceeding expectations really just because of the interest in the trial.
Marvin, next question, please.
Our next question comes from the line of Ritu Baral of TD Cowen.
Congratulations on the quarter, but I'm going to complain a little anyway. I wanted to ask about Medicare free drug. Can you talk about the amount of free drug that's being utilized, going into the number? We've heard some discomfort, I would say, from doctors treating Medicare patients with the free drug program that you guys have offered, I guess, just around logistics.
And are you satisfied right now with your commercial co-pay program to promote use in the commercial population, just because you guys did say -- I think, Mardi, you said that co-pay utilization was low this quarter. Do those 2 things need to be optimized to set up 2025 to success?
First of all, from a free goods perspective, very little this quarter, and there was very little last quarter. That's something that we would expect in time, there's a little bit more utilization of. So not worried at all about where we are. As you're launching any new product as it relates to any of the services that you offer, it takes some time for the community to, a, know exactly what is out there, and then b, how do they utilize those potential offerings. But we're seeing good progress on all those things.
So we haven't heard that feedback, I have to say. And I spend a lot of time talking with practices. Haven't heard the feedback that it's been a challenge for physicians to access any of the service offerings that we have. But it's certainly something that we keep an eye on. We want to be absolutely best-in-class in this and deliver the best experience that we can for not only the practices, but for the providers.
Co-pay utilization, we have a very good program where that for commercial patients you would expect that they would pay $10 per month, that we would cover the rest of their obligation. Again, it's pretty early and it's more of an issue of patients making sure they know about it, how to access it, have physicians that are directing them towards it and the practices that are directing them towards it. So we expect that, that is going to increase in time. In fact, we want it to increase in time because we want it to be affordable for patients.
And as you recall, what we have emphasized in this launch is affordability for patients. We've done that and we've offered it. The way we've done that is through a very, very robust co-pay assistance program. We do have a PAP program as well. And that's if patients can access drug through any of the other means that are possible for them, we will fulfill that obligation. But we'll keep an eye on any feedback we get. We react very quickly.
And we've said to the community, we've been very clear, if a patient needs the product, we will find a way to help that patient get the product, including it being free product. Equitable access is really important here. We take it really seriously. So we'll keep an eye on it. And if you have any specific feedback from where you heard that, we're happy to follow up and talk with them as well.
Just Ritu, on what we're seeing from prescription to drug filled, we mentioned that -- it's in the script as well that we've already achieved our goal for the 6-month mark, which was bringing that down from 60 days to 30 days. So things are very much working in the system for us right now.
Great. Marvin, next question, please.
Our next question comes from the line of John Wolleben of JMP.
This is Catherine on for John. I had a question about how payers are currently handling those patients that are already on GLP therapies or want to go on GLP therapies and Rezdiffra. Are you seeing any issues there? And how this informs sort of what will happen if Wegovy is approved for NASH as well?
Yes. So look, I think what we're seeing regarding Wegovy, I believe that about -- from our estimation, about 25% of patients that are on Rezdiffra are also on a GLP-1. And that GLP-1 has been prescribed for a comorbidity, right, and the indications that GLP-1s are indicated for. Now, we've done some market research, which could suggest that up to 50% of patients are either on or have been exposed already to a GLP-1. So we expect to see GLP-1s continue to be used to treat comorbidities.
And I think as you're getting to kind of the real world here when a physician has a patient who has NASH, they may be on or may have been on a GLP-1, but if they are an F2, F3 patient, they're evaluating if therapy is required to treat that problem. And that's where they're reaching for Rezdiffra regardless of whether the patient has been exposed or not.
So how much of a glimpse to the future does that give us? I'm not so sure. But what I would say is that if the market research is correct that 50% of patients are on or have been exposed, they're kind of out there already being used, and there's still a lot of patients with NASH despite the availability of them for many years. So we feel like we're in a strong position. And I think that it is 2 very different things you're evaluating, if you're evaluating somebody for obesity versus you're evaluating somebody for NASH. And we're extremely well positioned for that.
Marvin, next question, please.
Our next question comes from the line of Andy Chen of Wolfe.
This is Emma on for Andy. Congrats on the quarter. Just following up on a question asked about utilization of the free drug program, are you able to provide a split across Bridge versus PAP?
And then another question from us, just your recent patient campaign in September raised a lot of awareness. Can you speculate on whether they can be converted to Q4 revenue or Q1 revenue?
Great. No. Look, with the utilization of Bridge and PAP, so let me just provide a little perspective first. So we do have a Bridge program for commercially insured patients if -- we have the option to send them product in the interim period while their reimbursement is being finalized with the insurer. As I've said in the past, you don't -- you have to decide when you want to use a Bridge program. You may not come out of the gates using one.
In this case, since there's such assurance now of a path to reimbursement with 80% of commercial lives covered, it is a good time to have a Bridge program. And this way, we don't want to have a patient delayed in getting product while insurance is being worked out. So we have offered to patients the ability to start while insurance is being worked out. And there's utilization of that program. I wouldn't call it broad at this point.
From a free goods perspective, again, we said there were very few free goods patients in the quarter, and that's similar to what we said last quarter, very few free good patients. So to me, that's an indicator that coverage is very strong and that patients are finding a path to product without relying on PAP. However, it is available. People are using it. And we would expect in time that, that number is going to increase. But let me be clear about the patients that we have on. This is a really strong demand quarter. There's very few free patients, and we're really, really excited about it.
Now, you asked the question about some of the patient work that's been done, the patient campaign and how there seems to be a lot of interest. Will that ultimately turn into Q4? A lot of what you have to do in a launch is drive awareness. It's the first step to patients taking action or physicians being comfortable and knowledgeable and ultimately taking action. So yes, we did see -- we have seen so far a positive response to our efforts to directly reach out to patients with our DTC efforts.
How much of that translates into future demand? Well, our hope, obviously, is that it plays a role in it, but in itself, it is a piece of it. You still need to have the practices ready, that they have their pathway to bring patients through and along through everything from diagnosis through to prescription and fulfillment of prescription and follow-up. So it's an important component, but I would consider it a piece of the full effort that we're making rather than a stand-alone.
Marvin, next question, please.
Our next question comes from the line of Prakhar Agrawal of Cantor Fitzgerald.
Prakhar here from Cantor. Congrats on the great quarter. So maybe my first question is, if you can comment on the month-over-month patient adds seen in 3Q? And whether you saw a lot of adds in July and more steadier adds in August, September? The reason I'm asking is a linear patient add in 3Q would imply a lower sales number assuming inventory is at the low end. So just trying to reconcile the patient growth seen throughout 3Q and the revenue number.
And as a follow-up, would you expect similar sequential growth on new patient adds in 4Q? Or would there be some moderation given the month-on-month trends seen in 3Q? Congrats again.
Look, we're steadily adding patients and prescribers, and that continued pretty consistently through the summer and even as we look ahead to October. We're very pleased with the uptake. And really, it's each day, each week, each month we're adding and you get the cumulative effect of that. So not giving -- I'm not going to give specifics on a per month because it can be a little noisy from a month-to-month. We're looking at it from a quarter perspective. And what you're seeing is the cumulative effect of all those things make for really strong quarterly growth. So that's what we had in the third quarter. And as we move into the fourth quarter, the dynamics remain.
Yes. And Prakhar, I would just add that Bill addressed the fourth quarter during the script, if you want to go back and listen to that.
Great. All right. Marvin, next question, please.
Our next question comes from the line of Andrea Newkirk of Goldman Sachs.
Congratulations on the quarter. Bill, you've mentioned this or maybe referred to this a couple of times here. But in terms of the specialty drug analogs or benchmarks that you're looking at, wondering if you're willing to maybe provide a little bit more specifics there as to which one specifically as we think about the forward trajectory?
And then would love an update here on how uptake has been going across your hepatologists versus your gastroenterologists. I know last quarter, the latter had been a key point of focus as they are the majority of the prescribers here. But how has that been going?
So look, these are -- the group of around 10 over the last 10 years that I mentioned, these are all blockbuster specialty medicines. They tend to be first-in-class, first-in-disease medicines in high unmet need areas. That's about all we'll give for now. But look, I think you can see with our results, strong results, and we say that we are performing well against the benchmarks and our own internal metrics. I think we picked the right -- I think we picked the right comparators. And I think that we're really holding a high bar for ourselves.
The team that we brought on board is not here for a hobby. They're here to win. They're here to create a market and have a product, being Rezdiffra, be looked at as amongst one of the best launches in the industry. So we have our goal set really, really high. And the team, as you can see, I think has done a remarkable job, especially if you think about where we were 12 months ago -- well, actually, where we were in January, which isn't even 12 months ago when we had not even a commercial team in place of significance, and what we've been able to do in that short period of time. So I have to say I've been involved in a lot of launches, been involved in a lot of outstanding launches. We're doing a great job with this launch. I put this one at the top of the pile. So just a little bit of commentary there.
So a little bit about heps and GIs. I would say similar to what I said in the last quarter, but obviously progress by both groups. If you think about the 14,000 physicians that we're targeting, 6,000 is really the key. There's under a thousand hepatologists in the country. So by virtue of where the numbers are per se of patients, just by a sheer volume of physicians, you've got a lot more gastroenterologists than you do hepatologists. And what we've seen is kind of steady growth in breadth and depth across both the groups.
Now remember, the hepatologists, they are liver doctors. That is their organ of specialty. So they're a little bit earlier, moving a little bit faster, I would say, on average because they knew the disease, they've been looking at the liver for a long time, and off to a little bit faster start. However, the GIs represent and will represent the majority, overwhelming majority of the scripts just based on the sheer number of them. And they're making progress.
Now, they had to start from a little bit different space though, right? They didn't have pathways established in their practices for how to process NASH patients, let alone treat NASH patients. Somewhere -- and the ones that we're focused on in that target 6,000 are interested in NASH, interested in the liver. That's how we've enriched that target population or target group of prescribers. They have taken steps to create these pathways.
Now, I'll just give 2 points in time. A year ago, there was the ACG, American College of Gastroenterology, meeting in Vancouver. And last week or beginning of this week, the meeting was in Philadelphia, gastroenterology meeting. And it was like a night and day difference. People knew the drug, people were taking steps to create pathways. People were hiring staff to help process their NASH treatment in the form of APPs, et cetera, and taking steps to acquire imaging equipment. So that wasn't categorically across everyone, but you have the whole gastroenterology target group which is moving towards creating these pathways and so forth.
So where we are in launch at 7 months out or so, it's remarkable how quickly people are shifting towards -- really, I would say, creating their pathway in each of their practices for how to process a NASH patient. And it just -- it's taken some time, but it's really happening quickly. They understand the unmet need. They're happy to see that there's now a foundational therapy that's available that's pretty easy to use, right? So that gives you a little bit more color around it. But heps still ahead of GIs just because I think of their training, their knowledge of the space. But GIs are moving along really quickly, and we're going to be relying on them heavily throughout the future.
Great. Marvin, next question, please.
Our next question comes from the line of Liisa Bayko of Evercore.
I have sort of 2 types of questions. One is U.S. based and one Europe. So for U.S.-related question, can you give us a little more color on the gross to net? Mardi, I know you said it was favorable and would be choppy, but where did we land this quarter? Any color on sort of discontinuation rate thus far that you're seeing? And then as you think about semaglutide and assuming that data is positive, do you expect any changes in gross to net as a result of that?
And then for Europe, could you give us kind of a lens on -- from the same kind of way you looked at the U.S. market, you had kind of diagnosed patients and then the ones with significant fibrosis in care. Could you provide those kind of numbers for Europe?
Okay. Great. Maybe what I'll do is, let me start with Europe and then we'll move on back to the gross to net. Europe is -- it's kind of interesting. Europe, I would say, is ahead of the U.S. versus where we were a year ago. They've had the benefit of knowing that a product was approved for NASH. And as a result, they're planning for success that the product will get approved in Europe. And so they're taking more action.
As I said over the past calls and in meetings, that when physicians told us here that they hadn't really taken steps in advance of approval to kind of wire their system, so to speak, they meant it. I mean, with the exception of a few practices, it wasn't until March 14 that they started thinking about how they're going to process patients.
Now, Europe is a little bit different in that they see the success in the U.S. of an approval, they plan for it. And I think the first indicator of that was the EASL guidelines that came out essentially a year plus in advance of approval, anticipating that if approved, Rezdiffra, this is how it would fit into the treatment regimen. So we feel that they're really in good shape.
Now look, we're getting started a little bit later, obviously, in Europe than we did in the U.S. We've had a medical team that's been over there for years now, but we are just starting those efforts. And we're going to do it in a very, very targeted way. The reason that we're going is NASH is prevalent in Europe and there's patient numbers there that we think are -- approximate the U.S. opportunity from the number of F2, F3 patients that are most in need.
As we get closer to launch, we're going to come back and give a little bit more of an assessment of what do patient numbers look like, exactly who the targets are, et cetera, and be able to give you a little bit better idea. We're well on the way. We're hiring leadership, but we're doing so in a very, very focused, diligent manner. We are planning for success. We think that Europe still will recognize value. We've seen that in other launches. When I say -- they recognize innovation. So that's how we're progressing there. That's why we're going there. So maybe, Mardi, do you want to pick up the U.S. gross to net?
Yes, absolutely. And you're right, gross to net can be choppy, particularly in these early quarters of launch. And as we look forward for gross to net, we do expect some additional impacts, as we've already said. So one of the biggest factors in our gross to net right now is the co-pay assistance program. And we said that, that was slightly lower again this quarter than our own expectations. And we do want that to grow, as Bill already described. We think that benefits the patients and keeps more patients on drug looking forward. So we will see some growth there on the co-pay assistance.
I can't comment on 2025, of course. And we anticipate that we'll see a typical Q1 dynamics with gross to net, including insurance reops, plan changes, et cetera. So we -- like other pharma companies, we expect an impact from the IRA as well in that Q1 2025 gross to net. So bottom line, gross to net will step up in Q1 2025, but still within the range of like specialty medicines.
And just to answer your question specifically about sema and the potential impact on gross to net if sema is approved in NASH, I'll go back and say that we really believe that our gross to net will stay within the range that is typical for specialty medicines.
And maybe, Liisa, asked a question about persistency and discontinuations. Look, it's still pretty early, but everything that we're seeing so far gives us a reason to believe that persistency is going to be strong for this product. It will tend to look like good oral persistency. The one thing, again -- discontinuations, yes, there have been discontinuations like you would with any product have some. And that's -- we're presenting the net number of patients that were on drug at the end of the quarter, the 6,800 -- over 6,800, right? So that's net of everything. But we're really optimistic. We think -- we saw in the clinical trials discontinuation was really low. And we really think persistency is going to be strong with this.
It's a strong profile drug. I mean, you've heard me say in the past like this is -- in kind of my career, this is kind of a Holy Grail profile. Everyone wants a pill once a day -- that's once a day. And we've had patients say that hearing there was this solution beyond anything gave them hope that there was a path forward. And we've heard that from a number of patients. And we think that, that in itself is a really good sign.
Marvin, next question, please. We'll try to get a couple more in.
Our next question comes from the line of Jay Olson of Oppenheimer.
Congrats on all the progress. Can you talk about the event rate in MAESTRO-NASH? And how is that rate tracking versus your expectations? And the importance of fibrosis improvement for driving a clinical outcomes benefit for Rezdiffra? And then also your expectations for the fibrosis improvement endpoint in the ESSENCE trial?
There's a lot there to try to answer. Let me start with ESSENCE, I'll work backwards. We're not sure. We haven't seen the data. We don't know. As I said, there's a few questions that we're going to want to understand. Top line results, as I said, don't always translate into labels very well. There's the, what do you present versus what's the regulatory standard you're going to be held to when it becomes labeling?
So we'll ask, what the intent-to-treat population look like? How are discontinuations categorized or handled? And also what happens from a dosing perspective? How many patients got to the top dose? Not sure what it's going to look like, right? So I think we hear that it's going to be in the coming weeks anyways that we get an answer. So look, regardless of what the results show, we're in a really strong position. We have just a product profile -- as I said, a very strong product profile.
We've got a lot of patients that are on drug. We've got a lot of physicians that are using the drug. And that momentum is picking up. So regardless of how it looks, we feel like we're in a strong space. And as we talked about on the call, we know that there's going to be a real effort by any new entrant to try to drive the size of the market and number of patients that are prescribed and so forth. And we're in a position to benefit from that as well.
Regarding the other -- our trials that are ongoing, we haven't commented. And we're not going to be able to comment on what event rates look like. This is an ongoing trial, and we will continue to monitor. Part of -- if you think about the OUTCOMES trial, and I'm saying the psoriasis -- pardon me, psoriasis -- cirrhosis outcomes -- old habit -- the cirrhosis OUTCOMES trial, we had to think about what would event rates look like. And since this is really not so well an understood population, we used the best measures that we could around us to try to understand what that would look like.
And as I said, I think this trial is going to really help educate the community on that cirrhosis population about what event rates do look like and so forth. So we're anxiously awaiting. As we have more data, we'll obviously -- when I say data, we're not going to give a running update of the trial, but we're -- now that we're fully enrolled, we're excited to be monitoring the trial and seeing what the outcomes look like in that '27 time frame.
Great. Marvin, time for one more question, please, if you could queue for that.
Our next question comes from the line of Thomas Smith of Leerink Partners.
Let me add my congrats on the nice launch quarter. I wanted to ask whether you have any visibility into early patient persistence and refill rates. I know it's still early days, but you're clearly continuing to drive new patient adds. And I'm just wondering if you're able to put any numbers around persistence or if you have a sense of when you'll be able to quantify that?
And then just separately with respect to business development, having brought Dr. Charlton on board, I think, is pretty notable. Could you just speak to how you're thinking about BD from here and potentially building out a pipeline beyond Rezdiffra? Any preference on stage of development as you're potentially evaluating some of those opportunities?
Yes, with persistence, as we've said a little bit earlier, it's early. We're only 7 months or so into the launch. But what we've seen so far, we're optimistic about. I think we need to get past the 12-month mark to be able to at least start looking at cohorts. And even then, as you know, with the growing number of patients, even from the beginning, there's going to be very few that have been on for 12 months at the 12-month mark. It's kind of you've got to get to the 18 months to have enough of a sample of patients to really be able to say. But we're really optimistic about it based on clinical trials and what we're seeing in the real world already.
From a BD perspective -- look, what we've said is we want to build a pipeline and our focus is really in NASH. And what are we looking at? Hey, we look at everything. And one of the things that I think is always a measure of leadership in a space is inbound calls that you get about people wanting to talk to you because you are the leader. And that's clearly something that we're experiencing already. I think anyone who has a NASH product that they're looking at and has an interest in partnership and so forth is certainly going to reach out to us.
From a stage perspective, we'll look across the gamut. We have the advantage. We're in a leadership position now. We have what we believe is the foundational therapy with Rezdiffra. Rezdiffra alone is a fantastic product. But we are going to look for opportunities of next best mechanism of action or what would potentially be a good combination, et cetera. And we have deep, deep, deep experience in this space. So we feel like we're in a good position to make the call of what would be the right product to add to the portfolio, product or products. And we're going to do so in a very thoughtful way and make sure we pick something that truly is the right thing for us.
So we'll continue to evaluate. And when we see something that's right, that is actionable, then we'll consider moving forward with that. But let me just be perfectly clear what our stated intent is, is to be the leading NASH company in the industry, period, that has a short, medium and long term side to it. And we feel we're well underway, especially when you see how strong a start we are off to.
Great. Thanks, Bill. And thank you all for your time today and your interest. We're going to conclude the call. A replay of this webcast will be available on our website in about 2 hours. So thank you for joining us.
Ladies and gentlemen, thank you for your participation in today's conference. You may now disconnect. Have a wonderful day.