Madrigal Pharmaceuticals Announces Proposed Public Offering

Rhea-AI Summary

Madrigal Pharmaceuticals, Inc. initiates a public offering of $500 million in shares of common stock and pre-funded warrants to support commercial activities for Rezdiffra™ (resmetirom) launch in the U.S. The offering aims to drive research, development, clinical trials, acquisitions, and capital expenditures.

Insights

Financial Analyst

Madrigal Pharmaceuticals' decision to commence an underwritten public offering of $500 million in common stock and pre-funded warrants is a strategic move to bolster the company's financial position. The offering's size is significant, indicating a substantial capital infusion which could support the commercial launch of Rezdiffra™ in the U.S., a novel therapeutic for NASH. This influx of capital is expected to strengthen Madrigal's balance sheet, providing the flexibility needed for R&D, clinical trials and potential strategic opportunities such as acquisitions or partnerships.

However, the dilutive effect on existing shareholders cannot be overlooked. The introduction of additional shares to the market typically leads to the dilution of earnings per share, which may affect the stock price negatively in the short term. The 30-day option granted to underwriters to purchase an additional 15% of shares could further dilute current shareholder value if exercised. Investors should monitor the stock's performance post-announcement and consider the long-term value creation that this capital raise could enable versus the immediate dilutive impact.

Market Research Analyst

The biopharmaceutical sector is highly competitive and companies like Madrigal must continuously invest in research and development to stay ahead. The public offering's success will largely depend on market conditions and investor confidence in Madrigal's pipeline, particularly Rezdiffra™. The choice of joint bookrunning managers, including prominent investment banks, suggests confidence in Madrigal's prospects and the ability to reach a broad investor base.

It's important to consider how the market is valuing NASH treatments and Madrigal's positioning within this space. If Rezdiffra™ is well-received, the funds raised could significantly enhance Madrigal's market share and competitive edge. Nevertheless, if the market perceives the offering as a sign of financial weakness or if the launch of Rezdiffra™ encounters setbacks, there could be negative implications for the stock's value. Investors should assess Madrigal's market strategy and the potential ROI from the offering, keeping in mind the inherent risks of investing in biopharmaceutical companies with pending product launches.

Legal Expert

The offering is being conducted under an effective shelf registration statement, which expedites the process of capital raising by allowing the company to sell securities to the public without a lengthy SEC review process each time. This method demonstrates Madrigal's foresight in regulatory compliance and capital market strategies. However, the legal stipulation that securities cannot be sold in jurisdictions where it would be unlawful prior to registration or qualification under the respective securities laws is an important point for investors. It indicates that Madrigal is adhering to securities regulations, which is a positive sign of corporate governance.

Investors should be aware of the legal frameworks governing such offerings and the implications for their investments. The reliance on a preliminary prospectus supplement indicates that while the offering's terms are set, they are not final until the SEC filings are complete. This adds a layer of uncertainty that must be factored into investment decisions, as changes in terms or market conditions could alter the offering's outcome.

CONSHOHOCKEN, Pa., March 18, 2024 (GLOBE NEWSWIRE) -- Madrigal Pharmaceuticals, Inc. (Nasdaq: MDGL), a biopharmaceutical company focused on delivering novel therapeutics for nonalcoholic steatohepatitis (NASH), today announced that it has commenced an underwritten public offering of $500 million in shares of its common stock and pre-funded warrants to purchase common stock. The purchase price of each pre-funded warrant will equal the price per share at which shares of common stock are being sold to the public in this offering, minus $0.0001, which will be the per share exercise price of each pre-funded warrant. Madrigal also intends to grant the underwriters a 30-day option to purchase up to an additional fifteen percent (15%) of the shares of common stock offered in the public offering at the public offering price, less underwriting discounts and commissions. All of the shares in the proposed offering are to be sold by Madrigal.

Madrigal intends to use the net proceeds from this offering for its commercial activities in connection with the launch of Rezdiffra™ (resmetirom) in the U.S. and for general corporate purposes, including, without limitation, research and development expenditures, ongoing clinical trial expenditures, manufacture and supply of drug substance and drug products, potential acquisitions or licensing of new technologies, potential ex-U.S. commercialization or partnering opportunities, capital expenditures and working capital.

Goldman Sachs & Co. LLC, Jefferies, TD Cowen, Evercore ISI, Piper Sandler, UBS Investment Bank and Citizens JMP are acting as joint bookrunning managers of the proposed offering. The offering is subject to market and other conditions, and there can be no assurance as to whether or when the offering may be completed, or as to the actual size or terms of the offering.

The shares are being offered by Madrigal pursuant to an effective shelf registration statement on Form S-3 that was previously filed with the Securities and Exchange Commission (SEC) on June 1, 2021. A preliminary prospectus supplement and the accompanying prospectus relating to and describing the terms of the offering is expected to be filed with the SEC and, when filed, will be available on the SEC’s website at www.sec.gov. Alternatively, copies of the preliminary prospectus supplement and the accompanying prospectus relating to these securities may also be obtained by contacting the following: Goldman Sachs & Co. LLC, Attn: Prospectus Department, 200 West Street, New York, New York 10282, telephone: 1-866-471-2526, email: prospectus-ny@ny.email.gs.com; Jefferies LLC, Attn: Equity Syndicate Prospectus Department, 520 Madison Avenue, New York, NY 10022, by telephone at (877) 821-7388, or by email at Prospectus_Department@jefferies.com; Cowen and Company, LLC, 599 Lexington Avenue, New York, NY 10022, by telephone at (833) 297-2926 or by email at Prospectus_ECM@cowen.com; Evercore Group L.L.C., Attention: Equity Capital Markets, 55 East 52nd Street, New York, New York 10055, by telephone at (888) 474-0200, or by email at ecm.prospectus@evercore.com; Piper Sandler & Co., 800 Nicollet Mall, J12S03, Minneapolis, MN 55402, Attention: Prospectus Department, by telephone at (800) 747-3924 or by email at prospectus@psc.com; UBS Securities LLC, 1285 Avenue of the Americas, New York, NY 10019, Attn: ECM Syndicate, or by email: ol-prospectus-request@ubs.com; or Citizens JMP Securities, LLC, 600 Montgomery Street, Suite 1100, San Francisco, CA 94111, by telephone at (415) 835-8985, or by email at syndicate@jmpsecurities.com.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of, these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of such state or jurisdiction.

About Madrigal Pharmaceuticals, Inc.

Madrigal Pharmaceuticals, Inc. (Nasdaq: MDGL) is a biopharmaceutical company pursuing novel therapeutics for nonalcoholic steatohepatitis (NASH), a liver disease with high unmet medical need. Madrigal’s medication, Rezdiffra (resmetirom), is a once-daily, oral, liver-directed THR-β agonist designed to target key underlying causes of NASH.

Forward-Looking Statements

Forward-looking statements reflect management’s current knowledge, assumptions, judgment and expectations regarding forward-looking statements, future performance or events; include all statements that are not historical facts; and can be identified by terms such as “be,” “can,” “designed,” “expectation,” “may,” “plans,” “seeks,” “will,” “will be,” “would” or similar expressions and the negatives of those terms.

Statements in this release concerning Madrigal’s future expectations, plans and prospects, including, without limitation, statements about Madrigal’s proposed public offering and use of proceeds, constitute forward-looking statements for the purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results and future plans may differ materially from those indicated by these forward-looking statements as a result of various important factors, including, without limitation, risks associated with market conditions and the timing and success of the proposed offering and the anticipated use of proceeds from the proposed offering, as well as those risks more fully discussed in the “Risk Factors” filed in Part I, Item 1A of Madrigal’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 28, 2024, and in other filings that Madrigal makes with the SEC, including those included or incorporated by reference in the preliminary prospectus supplement and accompanying prospectus supplement related to the proposed public offering expected to be filed with the SEC. There can be no assurance that Madrigal will be able to complete the proposed public offering on the anticipated terms, or at all. You should not place undue reliance on these forward-looking statements. In addition, any forward-looking statements represent Madrigal’s views only as of today and should not be relied upon as representing its views as of any subsequent date. Madrigal explicitly disclaims any obligation, except to the extent required by law, to update any forward-looking statements.

Investor Contact
Tina Ventura, Madrigal Pharmaceuticals, Inc., IR@madrigalpharma.com

Media Contact
Christopher Frates, Madrigal Pharmaceuticals, Inc., media@madrigalpharma.com

FAQ

What is Madrigal Pharmaceuticals, Inc. initiating?

Madrigal Pharmaceuticals, Inc. is commencing a public offering of $500 million in shares of common stock and pre-funded warrants.

What is the purpose of the offering?

The offering aims to support commercial activities for the launch of Rezdiffra™ (resmetirom) in the U.S. and for general corporate purposes.

Who are the joint bookrunning managers of the proposed offering?

Goldman Sachs & Co. , Jefferies, TD Cowen, Evercore ISI, Piper Sandler, UBS Investment Bank, and Citizens JMP are acting as joint bookrunning managers.

Where can the preliminary prospectus supplement and accompanying prospectus be obtained?

The preliminary prospectus supplement and accompanying prospectus can be obtained by contacting the respective banks involved in the offering.

What is the purpose of the net proceeds from the offering?

Madrigal intends to use the net proceeds for commercial activities, research and development, clinical trials, acquisitions, capital expenditures, and working capital.