Madrigal Pharmaceuticals (MDGL) Q3 2026 Earnings Call: Rezdiffra Sales Rise 50%

Key Takeaways

• Madrigal Pharmaceuticals reported Q3 2026 Rezdiffra net sales of $431.3 million, up 50% year over year, bringing year-to-date net sales to $1.1 billion.
• Rezdiffra ended the quarter with more than 55,800 active patients, compared with more than 29,500 one year earlier.
• Madrigal recorded its first quarterly profit, with net income of $55.4 million versus a net loss of $114.2 million in the prior-year period. The company has also generated positive operating cash flow for two consecutive quarters.
• Management estimates the diagnosed U.S. F2/F3 MASH population exceeded 530,000 as of June 30 and is on track to grow more than 30% in 2026. It estimates diagnosis and penetration rates at about 10% each, implying Rezdiffra has reached roughly 1% of the total opportunity.
• The company now estimates 360,000 addressable U.S. F4C patients, up more than 45% from its previous estimate of 245,000. The event-driven Phase III Maestro MASH Outcomes readout is expected in late 2027.
• Madrigal plans to begin the new Phase III Maestro CSPH trial in the first half of 2027, enrolling more than 2,000 patients and enriching the study for clinically significant portal hypertension.

Key Financial Data

Business and Operating Performance

Rezdiffra demand remained the main growth driver. Management attributed the increase to a broader and deeper prescriber base, favorable real-world physician experience, access, patient adherence and the drug’s efficacy, safety and tolerability profile.

The company said the U.S. F2/F3 MASH market continues to expand through greater disease awareness and diagnosis. The diagnosed population increased from 315,000 at the end of 2023 to 460,000 at the end of 2025, then surpassed 530,000 by June 30, 2026. Management expects double-digit market growth for the foreseeable future.

Madrigal also reported progress among endocrinologists, a commercial focus since Q4 2025. Management said endocrinology practices have substantial eligible patient populations and that some practices deepen prescribing relatively quickly after adoption.

For F4 compensated cirrhosis, the 845-patient, placebo-controlled Maestro MASH Outcomes trial continues to accrue events. A positive result could support an F4C indication and full approval across F2 through F4, according to the company.

The planned Maestro CSPH trial will complement that study. Madrigal expects the two F4C outcomes trials to include approximately 3,000 patients in total. Maestro CSPH is intended to generate subgroup, biomarker and noninvasive monitoring evidence, with results expected in the early 2030s.

Madrigal’s pipeline includes more than 10 resmetirom combination programs. The company expects to initiate three Phase II combination trials in 2027 involving the oral DGAT2 inhibitor ervogastat, oral GLP-1 agonist MGL-2086 and PNPLA3-targeting siRNA MGL-0795.

Management Guidance

• Management expects Rezdiffra patient additions to continue steadily into Q4 2026.
• Full-year 2026 gross-to-net deductions are expected at the low end of the mid-to-high 30% range.
• For 2027, management expects gross-to-net deductions to be around, plus or minus, the high end of the 2026 range as Medicare Part D contracts take effect.
• Full-year 2026 R&D expense is expected to be nominally lower than in 2025, including previously announced upfront business development expenses in both periods.
• Full-year 2026 SG&A expense is expected to increase from 2025, with Q4 SG&A expected to exceed Q3 because of marketing expense timing.
• Madrigal did not issue formal 2027 revenue guidance, but management said patient growth, access and market expansion should continue to support growth.

Risks and Watch Items

The Maestro MASH Outcomes trial is event-driven. Although management’s current estimate points to a late-2027 readout, the study would continue if the required number of events has not accrued by year-end. Management said dropout rates remain within expectations.

Near-term profitability may fluctuate as Madrigal invests in commercial growth, clinical development and business development. Management also highlighted typical first-quarter dynamics for specialty medicines after Q4.

The financial effect of 2027 Medicare Part D contracting is not yet final. Management expects some gross-to-net impact but said the larger step-up occurred between 2025 and 2026.

GLP-1 therapies remain common background treatment. Approximately 25% to 30% of Maestro MASH Outcomes patients were on stable GLP-1 therapy at baseline, while adding a GLP-1 for weight loss during the study would be a protocol deviation.

Analyst Q&A Highlights

• F4C trial timing: Management described Maestro CSPH as a practice-shaping trial designed to enrich for higher-risk CSPH patients and validate biomarkers or imaging measures identified in Maestro MASH Outcomes.
• Event rates and retention: Madrigal declined to provide detailed blinded event accrual data but reiterated the late-2027 estimate and said study dropout rates are within expectations.
• Diagnosis growth: Management believes the MASH market can expand for years because diagnosis remains low, clinical pathways are still developing and access to noninvasive testing continues to improve.
• Profitability and reinvestment: The company expects top-line growth to outpace spending over time but may move in and out of profitability as it funds commercial and pipeline initiatives.
• Combination strategy: Management said Phase II data will determine which combinations advance, with priority given to programs that provide meaningful additional benefit for defined patient groups or the broader MASH population.

Full Earnings Call Transcript

Complete Earnings Call Transcript

Management Remarks

Operator

Good morning, and thank you for standing by. Welcome to Madrigal Pharmaceuticals Third Quarter 2026 Earnings Conference Call.

[Operator Instructions]

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

Thanks. Good morning, everyone, and thank you for joining us to discuss Madrigal's Third Quarter 2026 results. We issued a press release this morning and posted a slide deck to accompany this webcast on the Investor Relations section of our website. On the call with me today are Bill Sibold, Chief Executive Officer; Dave Soergel, Chief Medical Officer; and Mardi Dier, Chief Financial Officer. They will provide prepared remarks followed by Q&A. Please note that 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.

William Sibold

Thanks, Tina, and thank you all for joining. The business is performing exceptionally well. Rezdiffra is growing rapidly and the MASH market is accelerating. Rezdiffra is best-in-disease profile and our team's strong execution have established differ as the foundational therapy and MASH.

I'll summarize a few highlights. First, we delivered a $431 million quarter crossed the $1 billion milestone in year-to-date net sales and are now annualizing at more than $1.7 billion based on this quarter's results. We're continuing to steadily add patients and believe we're well on our way to mega blockbuster status. Second, the U.S. F2/F3 MASH market is accelerating on track to grow more than 30% this year. When you combine rapid market growth with Rezdiffra's patent protection expected into 2045, it's hard to find a more attractive growth opportunity in biotech.

And third, we're advanced program with the same objective that has guided us in F2S3 to be first and best.Our ongoing Mitra MASH outcomes trial positions us to deliver the first therapy for FC. Our new Maestro CSH Phase III trial is designed to be a practice shaping trial that we expect to extend our competitive advantage and strengthen our long-term leadership.

Let's move to our Q3 results, where I'll cover Rezdiffra and the expanding MASH market. Dave will discuss our pipeline progress, and Mardi will close with our financials. Turning to Slide 5. Third quarter 2026 net sales were $431 million, up 50% year-over-year. This performance reflects growing demand for Rezdiffra and outstanding execution by our team. We built a broad and durable prescriber base early, and now we are driving depth. The positive experience or got specialists are having with Rezdiffra in the real world is translating into action. They are prescribing it more often. That growing depth combined with excellent access, Rezdiffra's differentiated profile and strong patient adherence is why we continue to steadily add patients.

As shown on Slide 6, we ended the third quarter with more than 55,800 active risk different patients compared to more than 29,500 a year ago. That's nearly twice as many patients on therapy. As a reminder, this is the number of patients actively on therapy at quarter end net of discontinuations. Slide 7 shows why we are so confident in the opportunity ahead. Our latest research shows that the market is accelerating. As we've said, at the end of 2025, the diagnosed U.S. F2/F3 mass population had grown nearly 50% in 2 years to 460,000 patients.

As of June 30 of this year, we estimate the market expanded to more than 530,000 patients and is on track to grow more than 30% by the end of 2026. The growth in this market is primarily being driven by an increase in awareness and diagnosis. Slide 8 makes clear just how much runway remains. The MASH diagnosis rate is still only around 10% and and Rezdiffra has penetrated approximately percent of the market. At 10% of 10%, we are only about 1% into the total opportunity. With more than $1 billion in year-to-date net sales, we are at the very beginning of what we believe will become one of the largest specialty markets in the industry.

As noted on Slide 10, building a successful medicine takes much more a positive top line readout. That's only the beginning of the story. Launch success depends on several important drivers. Labels matter, boxed warnings and burdensome monitoring requirements create barriers. You need efficacy, safety and tolerability to translate into a positive real-world experience and you need a medicine that is easy to prescribe, easy to take and easy to stay on.

Then at execution, the right infrastructure, the field team, medical affairs, reimbursement, market access, fulfillment and patient support all working together to get patients on therapy and keep them on therapy. Building that system takes experience, resources and time. 10 quarters into launch, those questions have been answered for Rezdiffra shown on Slide 11. We have what we believe is the best in disease profile. Rezdiffra is highly effective across each patient subtype. It's well tolerated and simple to use and with nearly 56,000 patients on therapy, its safety profile is exceptionally well defined, which actually may be the most important thing. That's the real-world profile you want for a chronic disease.

We also built the industry-leading infrastructure, and we are continuously improving it. We've done the hard work to wire the system and have set an extremely high bar. This doesn't just happen overnight, and it is difficult to replicate. We already have thousands of prescribers and more than 2 years of real-world experience. Any new entrant will have to build what we are already optimizing and answer the question, what problem are they trying to solve? We have delivered some of the best specialty launches of the last decade and established clear leadership in F2-F3 by being first and best. We will leverage this formidable advantage in S4C as well.

Let's turn to Slide 12. The S4C market is increasingly attractive. It's a rapidly growing multibillion-dollar market opportunity. we now estimate 360,000 addressable F4C patients in the U.S., up more than 45% from the 245,000 we previously shared. That is larger than the F2F3 patient population when we launched Rezdiffra. Expanding into FC could double resides opportunity and bring patients their first approved therapy. We've also seen recently that competitors have modified their programs, increased their study sizes and delayed the time lines with the earliest potential entrant now not expected until 2030.

Our lead in F4C has widened. Mastro MASH outcomes put us in a unique position to be first to market. events continue to accrue in this study, and we're now anticipating a readout in late 2027. We are confident in Rezdiffra's potential in F4 and are exceptionally well positioned to lead. The addition of our new Phase III trial, Maetro CSPH, raises the bar for the field. It builds on maestro MASH outcomes while unlocking new opportunities to shape clinical practice as the treatment landscape continues to evolve. This trial will benefit from what we've learned about F4C over the last 5 years and is another tangible demonstration of our leadership in MASH.

Our objective remains clear, the first and best in F4C. Dave will walk you through our plans. Over to you, Dave.

David Soergel

Thanks, Bill. Patients with F4 Mash face serious risks, including liver decompensation, liver cancer and premature death. The unmet need is urgent. Our 2-year data from the 122 patient open-label F4C cohort in Mastro NAFLD-1 shows that patients treated with Rezdiffra 2 years have improved MASH-related biomarkers and imaging parameters. Among the patients with clinically significant portal hypertension or CSPH, confirmed at baseline, 65% moved to a lower risk category, suggesting a lower risk of Liberty compensation. These data reinforce our confidence in Rezdiffra potential to benefit these patients. Mastro MASH outcomes gives us the opportunity to deliver the first approved treatment for FC -- this is our 845 patient placebo-controlled, event-driven Phase III trial.

The primary endpoint is improvement in liver-related clinical outcomes consistent with FDA guidance. A positive result would support both an F4C indication and full approval across F2 through F4. We continue to accrue events and as Bill referenced, we now anticipate a readout in late 2027. In parallel, we plan to initiate Mastro CSPH in the first half of 2027. This second Phase III outcomes trial withdraw on our open-label F4C data or experience conducting Mastro NASH outcomes and the latest advances in the field to generate highly relevant data to support Rezdiffra benefit in F4C. There are 4 features that distinguish this new trial and our F4C program, as noted on Slide 14.

First is the patient population. We plan to enroll more than 2,000 patients and enrich the trial for CSPH. Development of CSPH is a critical inflection point in the pathophysiology of compensated cirrhosis. So we're focusing this new trial where the unmet need is greatest and we're preventing or delaying a clinical event is especially meaningful. Second is the breadth of evidence we intend to generate. We expect to have the most comprehensive data set in F4C. The size of this new trial combined also with Mastro NASH outcomes should allow us to conduct meaningful analyses across clinically important subgroups.

Third, Maestro CSPH enhances our opportunity to build risk differ specific biomarker evidence. We plan to collect a rich set of biomarkers and noninvasive data in Maestro CSPH, as we've done in Maestro Nash outcomes. Using the data from Maestro NASH outcomes, we can identify measures that are most closely associated with treatment benefit and potentially validate those findings in Maestro CSPH.

And fourth is scale. Across Maestro NASH outcomes and Maestro CSPH, we expect our F4C outcomes-based clinical program to include approximately 3,000 patients, which will give us the greatest insight into this population and further strengthen our competitive advantage. Overall, we believe Maestro-CSPH will be the defining a 4C study in this space. We plan to finalize the study protocol following our discussions with FDA and initiate the study in the first half of next year with the results expected in the early 2030s.

Having 2 complementary outcomes trials gives us a unique advantage and the opportunity to demonstrate consistent clinical benefit across studies, replicate key biomarker findings, advanced designs and get prescribers a more complete understanding of step.

Now let's turn to what we're doing today to further expand the evidence base supporting Rezdiffra in F2-F3. In a heterogeneous disease like MASH, predictable efficacy across patient subgroup is critical for patients and providers. The fourth slot on Slide 15, our Phase III Maestro NASH trial demonstrates Rezdiffra's consistent efficacy across each patient subgroup, including patients with F2 or F3 fibrosis with or without type 2 diabetes across BMI categories and across common genetic variants. Slide 16 builds on that evidence with a more detailed examination of Rezdiffra profile in patients with common genetic variants associated with MASH progression recently published in the DuraHepatology. As shown in the genetic subgroups evaluated Rezdiffra improved fibrosis and reduced liver fat with a consistent treatment effect. These data support Rezdiffra differs utility as a foundational treatment for NASH and form the basis of the combination programs in our pipeline.

We're also expanding Rezdiffra evidence base to include data from everyday clinical practice. This will be a major theme at AASLD later this week. Rezdiffra be featured in more abstracts than any other MASH therapy across the conference. This includes 13 real-world data abstracts, the largest of which includes nearly 12,000 patients. We continue to hear the feedback from prescribers that Rezdiffra is performing even better than they expected. The data highlight the evidence base supporting this positive real-world experience with Rezdiffra.

Slide 18 outlines 3 areas where we're continuing to broaden our understanding of MASH and Rezdiffra. This includes real-world evidence generation, data in special populations and practice-informing studies evaluating Rezdiffra with approved therapies to treat common comorbidities. Examples include combinations with pioglitazone or an SGLT2 inhibitor. These initiatives are intended to answer the practical questions prescribers face when treating complex patients with MASH. We'll use what we learn to inform future development.

Slide 19 showcases our pipeline. In addition to our ongoing Phase III studies, our portfolio now includes more than 10 resmetirom combination programs. Each program follows the same strategy. Start with resmetirom is the foundation and add complementary mechanisms with the potential to deliver better efficacy to some or all MASH patients. we expect to initiate 3 Phase II cation trials in 2027 following regulatory discussions. The first will evaluate our oral DGAT2 inhibitor or vergostat with resmetirom following a Phase I drug-drug interaction study initiated in October.

The second will evaluate MGL-2086, our oral GLP-1 agonist with resmetirom following completion of the ongoing Phase I SAD MAD study. Our goal remains to dial in the right amount of weight loss to enhance resmetirom antifibrotic effect while preserving tolerability. The third will evaluate MGL-0795, our sRNA targeting PNPLA3 with. This is our genetically targeted approach for patients homozygous for a PNPLA3 disease accelerated mutation. Our earlier-stage pipeline is advancing as well with 6 siRNA programs and 3 exploratory assets.

Our approach to our pipeline remains disciplined and focused on combination programs with the potential to deliver the greatest benefit to patients living with NASH. With that, I'll hand it over to Mardi.

Mardi Dier

Thank you, Dave. Turning to Slide 20 and a summary of our financial results, where comparisons are made to the prior year period. Third quarter 2026 net sales were $431.3 million, up 50% year-over-year with year-to-date net sales of $1.1 billion. This was another outstanding demand quarter. In addition, the team continues to do an excellent job managing gross to net with 9 months of the year behind us, and good visibility into the fourth quarter, we expect gross to net to come in at the low end of our mid- to high 30s range for 2026.

Moving to operating expenses, which included $38.9 million of noncash stock-based compensation in the quarter compared to $26.3 million. Cost of sales for the third quarter was $37.8 million compared to $18.1 million. Cost of sales was primarily driven by an increase in royalty payable for Roche. R&D expenses for the third quarter were $71.8 million compared to $174 million. The decrease was primarily due to onetime upfront business development expense of $117.3 million in the third quarter of last year.

SG&A expenses for the third quarter were $265.7 million compared to $209.1 million. The increase was primarily due to continued investment in commercial activities for Rezdiffra.

Looking ahead, we expect full year 2026 R&D expenses to be nominally lower than 2025, inclusive of the previously announced upfront business development expenses in both periods. We expect full year 2026 SG&A expenses to increase compared to 2025 as we continue to support Rezdiffra growth. As we discussed earlier in the year, we expected some quarter-to-quarter choppiness in SG&A throughout the year due to timing of certain marketing expenses and expect higher Q4 SG&A expenses compared to Q3.

The third quarter marked another important milestone for, our first quarter profitability. We reported net income of $55.4 million compared to a net loss of $114.2 million. As we said, we remain a top line growth story and may dip in and out of profitability in the near term based on the timing of investments, business development as well as typical One key dynamics. We will continue to make investments thoughtfully with a focus on long-term value creation. We also ended the quarter with a cash position of $961.8 million.We've been operating cash flow positive for the last 2 quarters, driven by strong revenue generation and disciplined investment. We remain well resourced to support Rezdiffra, advance our pipeline and pursue continued business development.

So to conclude, on Slide 21, there are 4 important takeaways. First, Rezdiffra tracking toward mega blockbuster status with year-to-date net sales of more than $1 billion. We continue to steadily act patients ending the quarter with nearly twice as many in as a year ago. Second, the addressable market is accelerating, expected to grow more than 30% for the full year. Third, we're strengthening our leadership position in F4C with our new trial, Maestro CSTH. And fourth, we continue to advance our industry-leading NASH pipeline with more than 10 programs, including a leading F4C clinical development program and 3 Phase II combination trials planned for next year.

We're in an incredible position of strength. Less than 3 years post launch, we're already generating positive operating cash flow by continuing to invest in our rapidly growing top line and pipeline. Our operating model is working. We are in a unique position to be able to sell fund strategically important initiatives that we believe will result in sustained value creation. Thank you, and I'll now turn the call back over to Tina to begin the Q&A session.

Tina Ventura

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

Operator

[Operator Instructions]

Our first question comes from Prakar Agarwal with Cantor.

Question-and-Answer Session

Prakhar Agrawal

Congrats on a great quarter. So first question, 3Q look great on new patient adds and revenue as well. Maybe if you can talk about the 4Q trends based on what you're seeing in October should we continue to assume steady patient adds or any pushes pulls in 4Q that we should be aware of? And secondly, if you can talk about the new F4C trial in detail, why start this trial now and how will it differ versus the master outcomes trial, both on trial design and event rate assumption and then the addressable market?

William Sibold

It's Bill. Thanks for the question. First of all, just a little context on the quarter. Great quarter, $431 million, greater than $1 billion year-to-date, annualizing at $1.7 billion, we are firing on all cylinders. And in the backdrop, we have the market which is now accelerating, expected to grow over 30% this year in F2F3. So we're up to over 530,000 patients at the middle of the year. So all the dynamics are really great. And that led to steadily adding patients in the third quarter. And that's exactly what we expect to continue doing is to steadily add patients. But maybe, Mardi, I'll pass it over to you to talk about Q4.

Mardi Dier

Yes. Q4 looks really good as we steadily add patients. We'll just remind you what we said last quarter. For Q3 to Q4, we feel good about the consensus growth rate between the 2 quarters. And we'll just reiterate that today. So again, good growth into Q4, and that led to the robust growth rate for 2026. We're in good shape.

Prakhar Agrawal

And with the second question, thanks kind of why the FC study now, et cetera. Well, I mean look, we're building a mega blockbuster here. And this is the type of trial that leaders in a space do. We talked and you heard me say in the prepared remarks, first and best. That's what we're trying to do. This is a practice shaping trial that it's a leapfrog study, if you will.

So we are going to raise the bar for the entire industry, drive the science forward. And we're going to win in the category. That's ultimately the objective here. And you do assess so that it can be the most useful for you when you are launching -- and if you look at the timing, we're going to be reading the study out about the same time, there could be some potential other companies there, and we moved the bar even further. So this is a truthfully, a study which, as a leader you do and it's consistent with first invest. But Dave, I don't know if you could comment just a little bit on the study.

William Sibold

Yes, I thanks, Bill. I mean a couple of things for Karl. I mean, we've learned a lot about F4C about the patient population over the last several years both from the open-label study that we've talked quite a bit about from Maestro Naturality One, but also from executing the Maestro outcome study and learning more about the patient population through that. And then the field has evolved as well. So there have been new approaches of ways of being able to identify patients with CSPH and be able to enrich the population more effectively.

So in terms of the scientific understanding in the field, the timing is also really, really great because a lot of things sort of are converging to create the possibility of of delivering that practice shaping study that Bill was just describing.

Operator

Your next question comes from the line of Andrea Newkirk with Goldman Sachs.

Andrea Tan

Congrats on the quarter. Dave, maybe I can ask you on the Maestro NASH outcomes trial that's currently guided for late 2027 readout. Just wondering if you could provide any color on what you're observing in terms of the blinded aggregate event rate accrual relative to the baseline assumptions in your statistical analysis plan?

And then secondly, just given increasing real-world uptake of GLP-1 agonist, are you able to share what proportion of patients in the trial are on these background therapies? And how will the stat plan adjust for background or drop in use of these competing agents?

William Sibold

Thanks, Andrea. Dave.

David Soergel

Yes. Thanks,. So yes, great question. So what we're talking about now as we talked about in the past about Master outcomes. We've talked about sort of 2027 time frame in terms of when we expect the trial to deliver. And we've always said as more events accrue over time, we'll be able to be more precise. And so now we're able to be more precise and say, late 2027. And so I think that's the answer to your first question. We're not providing really specifics around the vent accrual because these more modest trials, it tends to be a bit choppy. So the important information is that events are accruing and we expect the late 2027 delivery now.

With respect to the GLP-1, so about 25% to 30% of patients were on stable GLP-1 therapy. At the start of Maestro NASH outcomes. That's we presented those data a couple of years ago at EASL.Now GLP-1s are not -- haven't been shown to be effective and therefore, they're excluded in the trial as patients continue on the study. So it would be a protocol deviation to add a GLP-1 for weight loss, for example, in the study.

Operator

Your next question comes from the line of Yasmeen Rahimi with Piper Sandler.

Yasmeen Rahimi

Congrats an outstanding quarter and also giving guidance, closer fine-tuning narrowing down the Maestro outcome study. I guess first quick question, Ana. Given that's late 2027, can we say you are like based on the visibility of the events tracking that there is no chance that it could get pushed in 2028, just like the confirmation of truly having this in late 2027 rather than falling off? And then also, if there's a translation from this study and its event rates to predicting the probability of success in your nearly CSPH study.

William Sibold

Yes. Thanks for the question. It's an event-driven trial, and we've been saying that all along. Our best estimate now is late Again, as I've said for a long time, if we're at December 31, 2027, and we don't have the right number of events, we're just not going to stop the study. So this is our latest. We're going to keep you up to date along the way if anything changes at that.

David Soergel

Dave, do you want to handle the second case? SP-4 Yes. I mean the -- I understood your question properly. I mean -- so Maestro CSPH is designed to really provide a depth of data to implement Maestro outcomes. So there's a real power in having 2 outcome studies where in the first study in Maestro outcomes, we can identify potential biomarkers or imaging approaches or subpopulations to then confirm or validate in the second trial. So that's the real power behind having the 2 studies together.

And I think it really presents us with a clear advantage because we can provide data at the practitioner practicing community about these relevant subpopulations and biomarkers to to accentuate to sort of make it clear about which patients should be treated and how they should be treated and followed with resmetirom once the drug is approved.

Operator

Your next question comes from the line of Nicole Marcus with TD Cohen.

Unknown Analyst

I'm on for Ritu Baral. I'm wondering if you guys can comment on how long do you think the diagnosis can continue growing at the current rate? And if you can comment on any detailed for was differ use within the endocrinology practice?

William Sibold

Thanks for the question, Nicole. Look, what we've talked about is we expect to see double-digit growth for the foreseeable future. I think that this year, let's just take all the step all the way back. At the end of 2023, prior to launch, we communicated there were 315,000 patients. We reran the analysis at the end of '25. We were up to 460. So that was almost 50% growth in 2 years.

And now we wanted to take a peak in the middle of the year to see what was happening. -- and that's where we saw the over 530, which if we project that out is greater than 30% growth that we'd anticipate for this year. Remember where we are -- we're at about a 10% diagnosis rate, and we're at about a 10% penetration rate, which you do the math, is about 1% into this opportunity. We are at the very beginning of the MASH market, the F23 market. So we really see this growing for years, this market. This is going to be one of those specialty areas that I think probably takes decades to fully emerge. If you believe -- if you look at RA, IBD psoriasis, after 20 in almost 30 years, they're still growing, I would expect this is going to be consistent with that.

We're starting to see that diagnosis rates are starting to go up. People are looking for the disease that usually happens when you have an approved therapy. When you have more companies that start to do any of their premarketing work or even if they're approved, it leads to greater diagnosis and so forth. So we really see that this is a very long-term growth market. And that's what gives us really such confidence in the future, 1%, $1.7 billion annualized, find another opportunity in the industry that looks like that.

Regarding Endo, making progress with Endo. We got going with Endo in fourth quarter of last year. And it's really interesting. I mean the big takeaway for us or kind of 2 key takeaways. One is they've got a lot of patients sitting at their practice. And they are tending to follow the pattern similar to gastroenterology. Remember, they're still learning to put their pathways in place, et cetera. And one of the things we've seen actually is when endos convert, they tend to go deeper, faster. And we have some examples of practices that have really been some of the probably best growth practices that we've seen.

So confident in endo. Again, remember, we're not solving this overnight. This is providing us long-term growth as we get deeper into Endo and deeper into diagnosis rates across all the specialties that we're calling on. So thanks for the question.

Operator

Your next question comes from the line of Ash Verma with UBS.

Unknown Analyst

This is Barry Tosh on for Ash. A couple of quick ones. The first one, can you talk about the Medicare channel for us if and how much of that is already contracted -- and then as we head towards 2027, is there appetite to contract more? And what type of volume pull-through could drive that? And what would be the impact on overall gross to net -- and the second quick one is on the FO outcome study. Historically, some of the highest placebo event rates cited by 4 patients come from natural history cohorts instead of controlled interventional studies. -- and the controlled studies have reported placebo rates close to 2% to 3%. So the question for this is what makes you confident that a placebo event rate above 5% is achievable in the ATOM study?

William Sibold

Thanks for the question. Mardi, do you want to start with Medicare?

Mardi Dier

Yes, I would. And thanks for the question. I'll take this moment and just comment more broadly on gross to net, and then we'll get into the Medicare Part D question specifically as it affects 2027. So let's start with 2026 and looking into the fourth quarter with respect to gross to net. So we had an outstanding demand quarter this quarter again, and we expect that to continue. We focus and we're very disciplined on growth to net in that as we're solving for 2045 for the long term. So we spend a lot of time here managing gross to net.

And so with 9 months behind us in 2026, we have really good visibility into the fourth quarter. And just want to say that we expect to come in at the low end of our stated range for 2026 for the fourth quarter in 2026, which is mid- to high 30s. So the low end of that range for 2026. So now thinking about 2027. So what have we said? We have terrific access, right, both from a commercial standpoint and now on the Medicare side as well. And we said that we're in the middle of negotiating Medicare Part D contracts that will go into effect in Q1 2027. And that's ongoing right now.

So it's a little early to get very specific about 2027 but we can reiterate that we're comfortable that the big step-up in gross to net happened between '25 and '26 as we entered commercial contracting and there will be an impact -- somewhat of an impact in 2027 as those Medicare Part D contracts go into an effect. So while I said it was a little early. We do expect our gross to net next year to be plus or minus the high end of our range that we gave this year, which was mid- to high 30s. So great management by the team, and we remain really happy about our gross-to-net efforts.

William Sibold

Thanks, Mardi. Dave.

David Soergel

Yes. So Parash, on the F4 study, I mean, you're right, you can look at natural history studies, and you'll find a whole range of estimates. So as you're aware, we've talked about a placebo rate in our trial between 5% and 10%. And the basis for that is really that FFC is not a monolithic disease there's a gradation and risk of decompensation as you go from the patients who just converted from F3 to F4 for example, all the way to those who are starting to have already developed portal hypertension. And so the risk profile of that patient -- of that patient population across that spectrum is very different.

And so what Becky and the team did very well 4 or 5 years ago was actually enriched Maestro and NASH outcomes to be able to have a good representation of patients on the sort of more advanced part of the spectrum of cirrhosis. And what we're doing now is having had that by the years of experience is we can do that even better, right? So we can now enrich for CSPH, even more effectively because of that experience we've had in Maestro NASH outcomes because of the experience we've had in the -- with the open-label cohort from Maestro NASH and because of some of the advances in the field, especially to the Avino Consortium and so forth. So there have been a variety of advances that really allow us to now run an even more contemporary and practice shaping study.

Operator

Your next question comes from the line of Akash Tewari with Jefferies.

Unknown Analyst

This is Manos on for gas. Just 1 from our end. How do you view the new emerging SARNA data sets from the space specifically, like how does that compare with your internal in-license assets preclinical efficacy. Also Regeneron has started a Phase III with see endpoint as a secondary endpoint, of course. But do you expect this going forward, you can run the registrational trials with the noninvasive measures as the primary endpoint? Just wondering on that time line.

William Sibold

Great. Thanks for the question. Dave, do you want to do the comment?

David Soergel

Yes, yes. I think -- I mean, Manos, the field has been moving more and more towards noninvasive evaluation of of NASH. So there are several consortia now that are working towards eliminating biopsy as a requirement. -- for clinical trials. And we participate in all of those consortia of course. But the latest understanding though at this point is that for a diagnosis of mash for a clinical trial for clinical trial purposes. A biopsy is still required. So -- I mean, you'd have to ask the sponsor of that particular trial, what exactly their approach is. My understanding is that it's a high-risk MAD study, so it's not actually match. So -- but again, you'd have to ask for the details. With respect to the target itself, we haven't I don't think we've seen data from that trial.

I think it's coming out in the next week or so of maybe -- so it'd be premature to comment on it. But I think what you're raising is there are a lot of great approachable genetic targets with sRNA and that's why we're especially excited about our PNPLA3 program and the research collaboration we have with around 6 FRNA targets.

William Sibold

Yes. Remember, just to fill in there, we have 7 total siRNA targets. We haven't named them for competitive reasons, but sure it would be interesting to see how these SIs do in combination with Rezdiffra.

Operator

Your next question comes from the line of Eric Joseph with Citi.

Eric Joseph

Congrats in the quarter -- just on Maestro NASH outcomes, curious to know the extent to which you have visibility into the study's dropout rate, how that's tracked relative to expectations and whether that's a factor here in terms of timing study readout? And just also on Maestro CSPH, just trying to better understand some of the contrasts with the NASH outcome study. Would patients in this trial be closer to potential disease progression. Just wondering whether the event rate might be a little bit faster in this planned additional planned outcome study relative to the one well underway, NASH outcomes.

William Sibold

Thanks for the question, Eric. Dave.

David Soergel

Yes, thanks for the question, Eric. I mean -- so Mister NASH outcomes, as we've said, it's an event-driven trial. And as events accumulate, we can get more precise about how we estimate the the trial delivery date when that would occur. And so we've gotten to a point now where we can estimate that late 2027 is when we would expect the data. We track blinded event rates, we track dropouts. We're heavily involved in managing this trial as 1 always is with an outcomes trial. It's crucial to to have a very sort of compulsive approach to outcomes trials and just making sure that the quality and the retention of the study is is as expected. And we are -- the dropout rates that we're seeing is within our expectations.

So I think I'll leave it there. And with respect to Maestro CSPH, yes, I mean, like I've said a couple of times now, we're better able to enrich the population for CSPH given the experience that we've had with Rezdiffra in the F4 population as well as how the science and medicine is shaped has evolved in in cirrhosis. So we are better able to identify patients at higher risk. But what I'll point out, I made the comment that F4 monolithic disorder. And there could be a point at which patients are too far along in the CSPH journey to where it gets more and more difficult to treat them. So we also have visibility, not just on the the less severe end, but also in the more severe end. So it gives us really the opportunity to identify the sweet spot within CSPHto find patients for the trial.

Operator

Your next question comes from the line of Jon Wolleben with Citizens.

Jonathan Wolleben

Congrats on the progress. Just wondering, you guys mentioned mega blockbuster a few times. Wondering if you could give us some guidepost on what you consider as like a blockbuster. And then with a lot of investment coming next year in the pipeline. Can you talk about how you think about profitability versus reinvesting the pipeline and the strategic initiatives there?

William Sibold

Yes. Jon, thanks a lot for the question. Mega blockbuster. It's a little bit of a moving target and how it's defined. Certainly, if you look at kind of where consensus is for us for peak, that certainly puts you from our definition in the mega blockbuster category. I think that there's very few products in the industry that could actually make a claim like that. that we believe that there's that much potential in the market.

And again, it's just based on, as we've said from the beginning, high unmet need, increasing number of patients and we have what I continually have said that I believe we really have a holy grail profile with a once-a-day pill that is effective, well tolerated and safe kind of what you need to be successful.

And I'm just talking about F2F3 at this point. One of the things that's happening in F4C, that market opportunity has gotten to be as big as the F2-F3 opportunity was in 2023 with signs of rapid growth and a long future ahead of it. And as we said, FC could double the opportunity for us. So the fundamentals in this market are so positive that we believe that this could really be a mega blockbuster product, and we're well on our way with each of the quarters that we're delivering out here. So maybe I'll turn it over to Mardi with the question on profitability.

Mardi Dier

Yes. Thanks for the question, Jon. So yes, we're pretty excited that we hit our milestone of our first quarter of profitability. So it's another milestone for magical and Rezdiffra. And again, it just reflects our excellent launch execution strength of the business and the underlying demand. So it was a good question about is profitability and cash flow positivity going to be sustainable -- and it's a good time to remind everybody that we're still a top line growth story, and that's our focus right now. And we continue to invest in that top line as well as building our pipeline, which you mentioned.

So I'm going to reiterate the same message that we said in our prepared remarks that we may dip in and out of profitability in the near term based on those investments and also remind you of the 1Q dynamics, which, for us, is very consistent to what the analogs and specialty medicines. But the good news is the operating model is working, and we're in this great position that we're able to self-fund these import initiatives like Maestro CSTH and that we believe will result in the sustained value creation.

So we're in good shape, lots of momentum. We do believe the growth of the top line will outstrip the spend even with these investments. But right now, we may dip in and out profitability in certain other quarters in the near term.

Operator

Your next question comes from the line of Thomas Smith with Leerink Partners.

Thomas Smith

Congrats on the quarter. With respect to the new Phase III X4 study, talk a little bit more about how exactly you plan to enrich for patients with CSCH and how that compares to the population you've already enrolled in the Master NASH outcome study. And then can you just talk about next steps for engagement with FDA, like what's outstanding that you need to get alignment on here with this study? And -- how are you thinking about the potential to achieve differentiated labeling with this study relative to Maestro NASH outcomes and some of the competing F4 programs?

William Sibold

Yes, sure. Tom, thanks for the question. Dave, I'm going to pass it over to you.

David Soergel

Yes. Thanks, Tom. Yes, great question. So the -- Mister CPH is really being designed as a practice shaping study. So again, I've said it a couple of times, we can really leverage our experience in the F4 population to be able to enrich more effectively. At this point, it's a bit of a competitive advantage for us. So we're not going to go into it in a lot of detail. Suffice it to say, we have imaging, we have biomarkers. We have a lot of things from the open-label study and from Maestro NASH outcomes that helps us understand more about how to shift that patient population to the more severe group.

I mean even if you look into the at some of the published literature recently, you look at anticipate NASH scores or you look at the Baveno consensus criteria continued evolution of those consensus statements over time and the refining of the ability to be able to identify these folks with more severe disease. So that's kind of the broad brush strokes. And of course, as we get more information, we'll -- we get closer to foliation with the protocol, we'll share more more information with you.

And part of that, to your second question about FDA engagement, really around the finalization of the protocol will be engaging with FDA to talk about exactly your third question, which is what -- how does this study potentially affect labeling. Our goal is that this study would be designed to fully be represented in the product label. And so obviously, in engagement with the agencies required for that to make sure we're all aligned.

William Sibold

Right. And just one other comment on this. A lot of companies would wait and start a trial after approval and ultimately find themselves in a bit of a data desert. And they're playing continuous catch-up. That's not what you do as the leader in the space. We don't want to have any daylight between our approval -- and ultimately, if any other company is successful to get there, we want to assert ourselves as the leader. And that's why you start this study today so that you have no daylight between anyone potentially launching and you generating new important data for the field.

Operator

Your next question comes from the line of Ellie Merle with Barclays.

Eliana Merle

Congrats on a quite strong quarter. On 2027, how are you thinking about revenue growth there as well as consensus as it currently stands and your latest thinking around whether you would issue revenue guidance.

William Sibold

Kelly, thanks for the question, Mardi.

Mardi Dier

Yes. Great. Ali, thanks for the question. For 2027, we're a little on the early side to give a specific direction on 202. But listen, the business is doing great. We have a lot of momentum. And I would say the underlying characteristics of 2027 are lining up in a fantastic way. So we're continuing to steadily add patients. We have great access and the market, of course, is accelerating. So as Bill said a couple of times, we're firing on all cylinders, and that will continue into 2027.

So I can't give a little bit of direction. We did look at consensus for 2027, and I think we're in a pretty good spot there. So we can say that about 2027, but I'll also take this opportunity to once again remind everybody about the Q1 dynamics going from Q4 to Q1, just like what you see with the analogs we're not immune to that, and we expect similar Q1 dynamics, and you can just look at the analogs for the specialty products in the sector. But otherwise, if we look forward to continued growth, continued fantastic growth into 2027. And with respect to guidance, yes, no, we're not providing guidance at this point, but we'll continue as we have a pretty good direction both on the quarters and the years as we have.

Operator

Your next question comes from the line of Andy Chan with Wolfe Research.

Andy Chen

Regarding the time expansion to $530 -- if you can talk about the patient journey and how that has evolved through your launch, especially the prescribers and how they work up with the patient. Are physicians behaving differently today is time to diagnosis. Is that becoming shorter? And do you also anticipate any future changes in a favorable way going into the future?

William Sibold

Andy, thanks for the question. Look, the patient journey -- well, here's -- let me answer a few things for you here. First of all, we are seeing increased diagnosis as evidenced by the numbers. And what's driving that is familiarity with the disease and familiarity as well with the product that's approved in the disease. We also see that there is more of an emphasis in guidelines on testing and looking for MAS. And that certainly helps people start to look for the disease, right? I mean that's what we're seeing in all of the specialties that we're calling on, including endocrinology.

Now what happens after somebody starts diagnosing is there is a moment where they put their own pathway in place. And the sophistication level of that really varies upon the practice and the institution some are all the way an institution where they're using electronic medical records to actually go out and proactively find patients using either beyond the diagnosis code looking at symptoms somebody may have or are they at high risk factors that's kind of on the far end. That's what the future, I think, holds where there'll be much more of a desire to go out and look for these patients. And then in other practices, I have a suspicion someone is obese has type 2 diabetes. That's reason enough that I should be testing.

Access to NITs is something that will continue to grow in time as well. We're seeing a continued increase in the number of scanning that equipment that's available, and that certainly helped as well. So I would say -- like everything else, we're at the very beginning here. There's still variability on the far end of people using technology, et cetera. And at the beginning where people are under-avea suspicion of a patient something that they've previously seen in a file that triggers it. But everyone is formalizing, starting to formalize their approach.

And the one thing that we can't control for -- we can help try to accelerate, but it's really time. It just takes time for people to incorporate something into their day-to-day practice. And all these positive signs greater than 30% growth that was previously greater than 50% growth over 2 years. So this acceleration -- those are all signs that it is becoming more incorporated into the daily practice. And we only expect that to increase and improve over time, which, again, is why we have such confidence in the prospects of this market and of us competing in that market.

Operator

Your next question comes from the line of Jay Olson with Oppenheimer.

Jay Olson

Congrats on a great quarter. Since Magical has pioneered the diagnosis and treatment of mash with noninvasive methods. Are you planning to drive similar innovations in CSPH, to provide diagnosis and monitoring with safe, easy-to-use noninvasive approaches that could replace the current gold standard invasive testing for CSPH? And then separately, since you have a wealth of combination programs and recognizing that your decisions will be entirely data-driven. How will you prioritize this portfolio of combos? And how much clinical data will you need to generate before identifying the ideal combination or combinations to advance into registrational development.

William Sibold

Jay, thank you very much for the question. Dave?

David Soergel

Yes, great question, Jay. On noninvasive diagnosis of CSPH, I mean the short answer is yes. I mean the idea of combining Maester NASH outcomes with Maestro CSPH, gives us the opportunity to really move the field forward with respect to noninvasive tests and biomarkers and specifically do it for resi. So a lot of these biomarkers are mechanism dependent. And so we will have a large data set that we'll be able to use to validate some of these measures.

So when a practitioner puts a patient on Rezdiffra cirrhotic patient on Rezdiffra after it's approved. They'll be able to have tools to be able to monitor that patient's progress. That's the vision of being able to validate some of these markers. So that's exactly the whole idea.

So the second question you had was with respect to the combination therapy pipeline. Look, our stated strategy has been to be disciplined and efficient in developing the pipeline and really only bring forward combination products that make a -- have a meaningful benefit for patients, either some patients or all patients. So if you think about the PNPLA3 siRNA, for example, there's a clearly defined population of people who live with disease accelerating homozygous mutations on P&P. 3, who are the natural targets for that sRNA treatment in combination with metro.

So that's one very clear example -- similarly if you think about the 2 inhibitor, patients will require additional efficacy to really pull them back from a rapidly accelerated disease process. So the type of data we'll be generating in Phase II will help us make those decisions. And as I said during the remarks, we'll have those 3 programs starting in 2027. So it's very exciting to see this pipeline evolve.

William Sibold

Yes. And remember, we'll be generating data in combo therapy where others will be still attempting to move forward in monotherapy and jumping off a great product that just a great profile. So trying to make it even better.

Operator

Your last question comes from the line of Michael DiFiore with Evercore.

Michael DiFiore

Congrats on all the great progress. Two questions from me. When you say that a positive F 4C trial could support full approval in F2 and F3 guess what constitutes a sufficient result? Is it just on the primary composite alone or consistency across components? -- separately. Earlier this year, you said around 25% of differ patients who are also on LPI and you expected that to rise. So now we're a year into go mash launch, has that share moved? And are you seeing more patients come to Rezdiffra after trying a Jill?

William Sibold

Yes. Mike, thanks for the question. First of all, that 25% is moving up some. It stayed fairly consistent. I mean what we're seeing is GLP-1s as a background therapy here. They're kind of ubiquitous. And it's hard to say when have people been on one. A lot of them, if you ask, they've been on one at some point. So it's kind of this background therapy.

Yes, we are seeing some patients that have come over. But again, it hasn't really dented us. Our growth in any way, having the GLP-1 will go be approved on the market. In fact, I think that, that's helped with some of the market growth -- so again, as I said, we're seeing it more as a background therapy. Though we're very interested in trying our combo we have RLP and we think that with just the right amount of weight loss that it can potentiate the impact of risk different. Dave, do you want to take the first question?

David Soergel

Yes, on Maestro outcomes, Mike. So guidance from the agency is that a positive Maestro NASH outcomes trial could support both the new indication of F4C and full approval for F2/F3. So it serves both those purposes. That's -- I guess, I'll leave it at that.

William Sibold

Dave, look, why don't we end there? Maybe just to sum things up a little bit here. Launch is objectively outstanding for us and it's continued to be so for the 10 quarters that we've been on the market and on all metrics. And I think some of the context here is important. This has been while competing against 1 of the largest companies in the industry with one of the largest products in the history of the industry. We've had 5 quarters of competition with Wibobi, and it has not made an impact on our growth and we're going to have at least 15 quarters of a lead on the next potential competitor.

Now in the background, the market is growing at 30% as well. We're at 1% penetration, and that's at 55,850 patients in F2, F3. We -- every day, we're adding patients every day, the real-world experience is increasing. And I can tell you in the conversations I've had with many, many prescribers I have never had any 1 question the efficacy of Rezdiffra. In fact, they've been extremely pleased with what they're seeing in the real world. And next is a we're seeing, we have Maestro NASH outcomes quickly followed by CSPH, our new study in a market which is now bigger than the F2/F3 opportunity when we started 10 quarters ago.

And finally, we have the leading pipeline and all of this is going to be in combination with Rezdiffra. As I said, while others are attempting to bring their first product to market. So we are performing exceptionally, and we are exceptionally well positioned for the future. This remains from, certainly, my perspective, the best opportunity that's out there. So we thank you for joining us today and look forward to updating you with our future progress.

Tina Ventura

Great. Thanks, Joe. 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 about 2 hours. Thank you for joining us.

Operator

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