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Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Jun. 30, 2018	Aug. 02, 2018
Document and Entity Information
Entity Registrant Name	MADRIGAL PHARMACEUTICALS, INC.
Entity Central Index Key	0001157601
Document Type	10-Q
Document Period End Date	Jun. 30, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		15,366,634
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q2

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 264,861	$ 148,627
Marketable securities	225,444	42,900
Prepaid expenses and other current assets	968	485
Total current assets	491,273	192,012
Property and equipment, net	255	301
Total assets	491,528	192,313
Current liabilities:
Accounts payable	588	1,929
Accrued expenses	4,848	8,125
Total current liabilities	5,436	10,054
Total liabilities	5,436	10,054
Stockholders' equity:
Preferred stock, par value $0.0001 per share authorized: 5,000,000 shares at June 30, 2018 and December 31, 2017; 1,969,797 shares issued and outstanding at June 30, 2018 and December 31, 2017
Common stock, par value $0.0001 per share authorized: 200,000,000 at June 30, 2018 and December 31, 2017; 15,365,384 and 14,227,634 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively	2	1
Additional paid-in-capital	605,418	288,750
Accumulated other comprehensive loss	(43)	(31)
Accumulated deficit	(119,285)	(106,461)
Total stockholders' equity	486,092	182,259
Total liabilities and stockholders' equity	$ 491,528	$ 192,313

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2018	Dec. 31, 2017
Condensed Consolidated Balance Sheets
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	1,969,797	1,969,797
Preferred stock, shares outstanding	1,969,797	1,969,797
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized	200,000,000	200,000,000
Common stock, shares issued	15,365,384	14,227,634
Common stock, shares outstanding	15,365,384	14,227,634

Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Operating expenses:
Research and development	$ 5,109	$ 6,816	$ 10,307	$ 11,196
General and administrative	2,717	1,623	4,588	3,318
Total operating expenses	7,826	8,439	14,895	14,514
Loss from operations	(7,826)	(8,439)	(14,895)	(14,514)
Interest income	1,166	92	1,871	168
Other income	200		200
Net loss	$ (6,460)	$ (8,347)	$ (12,824)	$ (14,346)
Net loss per common share:
Basic and diluted net loss per common share (in dollars per share)	$ (0.45)	$ (0.69)	$ (0.90)	$ (1.20)
Basic and diluted weighted average number of common shares outstanding	14,383,720	12,039,005	14,256,501	11,997,602

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Cash flows from operating activities:
Net loss	$ (12,824)	$ (14,346)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense	3,394	1,278
Depreciation and amortization expense	47	8
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	(3)	3
Accounts payable	(1,341)	523
Accrued expense	(3,277)	1,113
Net cash used in operating activities	(14,004)	(11,421)
Cash flows from investing activities:
Purchases of marketable securities	(251,869)	(31,113)
Sales and maturities of marketable securities	68,834	20,033
Purchases of property and equipment, net of disposals	(1)	(125)
Net cash used in investing activities	(183,036)	(11,205)
Cash flows from financing activities:
Proceeds from issuance of stock, net of transaction costs	311,825	38,278
Proceeds from exercise of common stock options	1,449
Net cash provided by financing activities	313,274	38,278
Net increase in cash and cash equivalents	116,234	15,652
Cash and cash equivalents at beginning of period	148,627	19,145
Cash and cash equivalents at end of period	$ 264,861	$ 34,797

Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2018

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Principle of Consolidation

The consolidated financial statements include the financial statements of the Company and its wholly owned subsidiaries. All significant intercompany balances have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. The Company bases its estimates on historical experience and various other assumptions that management believes to be reasonable under the circumstances. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. The Company maintains its cash in bank accounts, the balance of which, at times, exceeds Federal Deposit Insurance Corporation insured limits.

The primary objective of the Company's investment activities is to preserve its capital for the purpose of funding operations and the Company does not enter into investments for trading or speculative purposes. The Company's cash is deposited in highly rated financial institutions in the United States. The Company invests in money market funds and high-grade, short-term commercial paper and corporate bonds, which management believes are subject to minimal credit and market risk.

Marketable Securities

Marketable securities consist of investments in high-grade corporate obligations and government and government agency obligations that are classified as available-for-sale. Since these securities are available to fund current operations, they are classified as current assets on the consolidated balance sheets.

The Company adjusts the cost of available-for-sale debt securities for amortization of premiums and accretion of discounts to maturity. The Company includes such amortization and accretion as a component of interest income, net. Realized gains and losses and declines in value, if any, that the Company judges to be other-than-temporary on available-for-sale securities are reported as a component of interest income, net. To determine whether an other-than-temporary impairment exists, the Company considers whether it intends to sell the debt security and, if the Company does not intend to sell the debt security, it considers available evidence to assess whether it is more likely than not that it will be required to sell the security before the recovery of its amortized cost basis. During the three and six months ended June 30, 2018 and 2017, the Company determined it did not have any securities that were other-than-temporarily impaired.

Marketable securities are stated at fair value, including accrued interest, with their unrealized gains and losses included as a component of accumulated other comprehensive income or loss, which is a separate component of stockholders' equity. The fair value of these securities is based on quoted prices and observable inputs on a recurring basis. Realized gains and losses are determined on the specific identification method. During the three and six months ended June 30, 2018 and 2017, the Company did not have any realized gains or losses on marketable securities.

Fair Value of Financial Instruments

The carrying amounts of the Company's financial instruments, which include cash equivalents, and marketable securities, approximate their fair values. The fair value of the Company's financial instruments reflects the amounts that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy has the following three levels:

Level 1—quoted prices in active markets for identical assets and liabilities.

Level 2—observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.

Level 3—unobservable inputs that reflect the Company's own assumptions about the assumptions market participants would use in pricing the asset or liability.

Financial assets and liabilities are classified in their entirety within the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement. The Company measures the fair value of its marketable securities by taking into consideration valuations obtained from third-party pricing sources. The pricing services utilize industry standard valuation models, including both income and market based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. These inputs include reported trades of and broker-dealer quotes on the same or similar securities, issuer credit spreads, benchmark securities and other observable inputs. As of June 30, 2018, the Company's financial assets valued based on Level 1 inputs consisted of cash and cash equivalents in a money market fund and its financial assets valued based on Level 2 inputs consisted of high-grade corporate bonds and commercial paper. During the three and six months ended June 30, 2018 and 2017, the Company did not have any transfers of financial assets between Levels 1 and 2. As of June 30, 2018 and December 31, 2017, the Company did not have any financial liabilities that were recorded at fair value on a recurring basis on the balance sheet.

Research and Development Costs

Research and development costs are expensed as incurred. Research and development costs are comprised of costs incurred in performing research and development activities, including internal costs (including stock-based compensation), costs for consultants, and other costs associated with the Company's preclinical and clinical programs. In particular, Madrigal has conducted safety studies in animals, optimized and implemented the API manufacturing process, and conducted Phase 1 & 2 clinical trials, all of which are considered research and development expenditures.

Patents

Costs to secure and defend patents are expensed as incurred and are classified as general and administrative expense in the Company's consolidated statements of operations.

Stock-Based Compensation

The Company recognizes stock-based compensation expense based on the grant date fair value of stock options granted to employees, officers, and directors. The Company uses the Black-Scholes option pricing model to determine the grant date fair value as management believes it is the most appropriate valuation method for its option grants. The Black-Scholes model requires inputs for risk-free interest rate, dividend yield, volatility and expected lives of the options. The expected lives for options granted represent the period of time that options granted are expected to be outstanding. The Company uses the simplified method for determining the expected lives of options. Expected volatility is based upon an industry estimate or blended rate including the Company’s historical trading activity. The risk-free rate for periods within the expected life of the option is based on the U.S. Treasury yield curve in effect at the time of the grant. The Company estimates the forfeiture rate based on historical data. This analysis is re-evaluated at least annually and the forfeiture rate is adjusted as necessary.

Certain of the employee stock options granted by the Company are structured to qualify as incentive stock options (“ISOs”). Under current tax regulations, the Company does not receive a tax deduction for the issuance, exercise or disposition of ISOs if the employee meets certain holding requirements. If the employee does not meet the holding requirements, a disqualifying disposition occurs, at which time the Company may receive a tax deduction. The Company does not record tax benefits related to ISOs unless and until a disqualifying disposition is reported. In the event of a disqualifying disposition, the entire tax benefit is recorded as a reduction of income tax expense. The Company has not recognized any income tax benefit for its share-based compensation arrangements due to the fact that the Company does not believe it is more likely than not it will realize the related deferred tax assets.

Income Taxes

The Company uses the asset and liability method to account for income taxes. Deferred tax assets and liabilities are determined based on the expected future tax consequences of temporary differences between the Company's financial statement carrying amounts and the tax basis of assets and liabilities using enacted tax rates expected to be in effect in the years in which the differences are expected to reverse. The Company currently maintains a 100% valuation allowance on its deferred tax assets.

Comprehensive Loss

Comprehensive loss is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. Changes in unrealized gains and losses on marketable securities represent the only difference between the Company's net loss and comprehensive loss.

Basic and Diluted Loss Per Common Share

Basic net loss per share is computed using the weighted average number of common shares outstanding during the period, excluding restricted stock that has been issued but is not yet vested. Diluted net loss per common share is computed using the weighted average number of common shares outstanding and the weighted average dilutive potential common shares outstanding using the treasury stock method. However, for the three and six months ended June 30, 2018 and 2017, diluted net loss per share is the same as basic net loss per share because the inclusion of weighted average shares of unvested restricted common stock, common stock issuable upon the exercise of stock options, and common stock issuable upon the conversion of preferred stock would be anti-dilutive.

The following table summarizes outstanding securities not included in the computation of diluted net loss per common share, as their inclusion would be anti-dilutive:


	Six months ended
	June 30,
	2018	2017
Common Stock Options	1,137,507	976,711
Unvested Restricted Common Stock	104,127	157,262
Preferred Stock	1,969,797	1,969,797

Recent Accounting Pronouncements

In June 2018, The Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2018-07, “Improvements to Nonemployee Share-Based Payment Accounting” to simplify the accounting for share-based payment transactions with non-employees of the Company. The guidance within this accounting standard update generally requires that share-based payment transactions for acquiring goods or services from non-employees of the Company be accounted for under the same guidance and model as all other share-based payment transactions, including employees of the Company. For public business entities, ASU 2018-07 is effective for annual and interim reporting periods beginning after December 15, 2018, with early adoption permitted. The Company elected to early adopt the guidance within this accounting standard update in the second quarter of 2018. There was no significant impact from the adoption.

In May 2017, the FASB issued ASU No. 2017-09, "Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting," to provide clarity and reduce both diversity in practice, and cost and complexity when a change is made to the terms or conditions of a share-based payment award. For public business entities, ASU 2017-09 is effective for annual and interim reporting periods beginning after December 15, 2017, with early adoption permitted. The update should be applied prospectively to an award modified on or after the adoption date. The Company adopted ASU No. 2017-09 effective January 1, 2018. There was no significant impact from the adoption.

In August 2016, the FASB issued ASU No. 2016-15, "Statement of Cash Flows (Topic 230): Clarification of Certain Cash Receipts and Cash Payments." The objective of ASU No. 2016-15 is to eliminate the diversity in practice related to the classification of certain cash receipts and payments in the statement of cash flows, by adding or clarifying guidance on eight specific cash flow issues. For public business entities, ASU 2016-15 is effective for annual and interim reporting periods beginning after December 15, 2017, with early adoption permitted. ASU 2016-15 provides that the amendments in the update should be applied retrospectively to all periods presented, unless deemed impracticable, in which case, prospective application is permitted. The Company adopted ASU No. 2016-15 effective January 1, 2018. There was no significant impact from the adoption.

In January 2016, the FASB issued ASU No. 2016-01, "Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities," which amends the guidance in U.S. generally accepted accounting principles on the classification and measurement of financial instruments. Changes to the prior guidance primarily affect the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, the ASU clarifies guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The amendments in this ASU are effective for fiscal years and interim periods beginning after December 15, 2017, and are to be adopted by means of a cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which the guidance is effective. Early adoption is not permitted except for the provision to record fair value changes for financial liabilities under the fair value option resulting from instrument-specific credit risk in other comprehensive income. The Company adopted ASU No. 2016-01 effective January 1, 2018. There was no significant impact from the adoption.

Cash, Cash Equivalents and Marketable Securities

6 Months Ended

Jun. 30, 2018

Cash, Cash Equivalents and Marketable Securities

Cash, Cash Equivalents and Marketable Securities

4. Cash, Cash Equivalents and Marketable Securities

A summary of cash, cash equivalents and available-for-sale marketable securities held by the Company as of June 30, 2018 and December 31, 2017 is as follows (in thousands):


	June 30, 2018
			Unrealized		Unrealized		Fair
	Cost		gains		losses		value

Cash and cash equivalents:
Cash (Level 1)	$	1,615	$	—	$	—	$	1,615
Money market funds (Level 1)		230,822		—		—		230,822
Corporate debt securities due within 3 months of date of purchase (Level 2)		32,424		—		—		32,424
Total cash and cash equivalents		264,861		—		—		264,861
Marketable securities:
Corporate debt securities due within 1 year of date of purchase (Level 2)		225,487		41		(84)		225,444
Total cash, cash equivalents and marketable securities	$	490,348	$	41	$	(84)	$	490,305


	December 31, 2017
			Unrealized		Unrealized		Fair
	Cost		Gains		losses		value

Cash and cash equivalents:
Cash (Level 1)	$	2,725	$	—	$	—	$	2,725
Money market funds (Level 1)		145,902		—		—		145,902
Corporate debt securities due within 3 months of date of purchase (Level 2)		—		—		—		—
Total cash and cash equivalents		148,627		—		—		148,627
Marketable securities :
Corporate debt securities due within 1 year of date of purchase (Level 2)		42,931		—		(31)		42,900
Total cash, cash equivalents and marketable securities	$	191,558	$	—	$	(31)	$	191,527

Stockholders' Equity	6 Months Ended
Stockholders' Equity	Jun. 30, 2018
Stockholders' Equity
Stockholders' Equity	5. Stockholders’ Equity Common Stock Each common stockholder is entitled to one vote for each share of common stock held. The common stock will vote together with all other classes and series of stock of the Company as a single class on all actions to be taken by the Company’s stockholders. Each share of common stock is entitled to receive dividends, as and when declared by the Company’s board of directors. The Company has never declared cash dividends on its common stock and does not expect to do so in the foreseeable future. June 2018 Registered Offering In June 2018, the Company entered into an underwriting agreement with Goldman Sachs & Co. LLC, as representative of the several underwriters named therein (the "June 2018 Underwriters"), relating to an underwritten public offering (the "June 2018 Offering") of 1,079,580 shares of the Company's common stock, including 95,973 shares of the Company's common stock purchased by the June 2018 Underwriters pursuant to a 30-day option to purchase such additional shares granted therein, at a public offering price of $305.00 per share. The June 2018 Offering resulted in net proceeds to the Company of approximately $311.8 million, after deducting the June 2018 Underwriters' discount and other offering costs. The June 2018 Offering closed on June 11, 2018. December 2017 Registered Offering In December 2017, the Company entered into an underwriting agreement with Goldman Sachs & Co. LLC, as representative of the several underwriters named therein (the " December 2017 Underwriters"), relating to an underwritten public offering (the "December 2017 Offering") of 1,731,929 shares of the Company's common stock, including 225,904 shares of the Company's common stock purchased by the December 2017 Underwriters pursuant to a 30-day option to purchase such additional shares granted therein, at a public offering price of $83.00 per share. The December 2017 Offering resulted in net proceeds to the Company of approximately $135.5 million, after deducting the December 2017 Underwriters' discount and other offering costs. The December 2017 Offering closed on December 21, 2017. June 2017 Private Placement Offering and its Series A Convertible Preferred Stock In June 2017, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement)” with a group of institutional accredited investors, who were existing, non-controlling stockholders of the Company, pursuant to which the Company sold securities to the Investors in a private placement transaction (the “June 2017 Offering”). Under the terms of the Purchase Agreement, the Company sold 328,300 shares of its common stock at a price of $15.23 per share, and 1,969,797 shares of its Series A Convertible Preferred Stock (the “Series A Preferred Stock”) at a price of $15.23 per share. The June 2017 Offering resulted in gross proceeds to the Company of approximately $35.0 million, and net proceeds to the Company of approximately $34.9 million. The June 2017 Offering closed on June 23, 2017. The Series A Preferred Stock has a par value of $0.0001 per share and is convertible into shares of the common stock at a one-to-one ratio, subject to adjustment as provided in the Purchase Agreement. The terms of the Series A Preferred Stock are set forth in the Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock, that the Company filed with the Secretary of State of the State of Delaware on June 21, 2017. Each share of the Series A Preferred Stock is convertible into shares of Common Stock at any time at the holder’s option. Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, after the satisfaction in full of the debts of the Company and the payment of any liquidation preference owed to the holders of shares of capital stock of the Company ranking prior to the Series A Preferred Stock upon liquidation, the holders of the Series A Preferred Stock shall participate pari passu with the holders of the Common Stock (on an as-if-converted-to-Common-Stock basis) in the net assets of the Company. Shares of the Series A Preferred Stock will generally have no voting rights, except as required by law. Shares of the Series A Preferred Stock will be entitled to receive dividends before shares of any other class or series of capital stock of the Company (other than dividends in the form of the Common Stock) equal to the dividend payable on each share of the Common Stock, on an as-converted basis. At-The-Market Issuance Sales Agreement In October 2015, the Company entered into an at-the-market issuance sales agreement (the "October 2015 Sales Agreement"), with Cowen and Company, LLC ("Cowen"), pursuant to which the Company may issue and sell shares of its common stock, having an aggregate offering price of up to $100 million, from time to time, at the Company's option, through Cowen as its sales agent. Sales of common stock through Cowen may be made by any method that is deemed an "at-the-market" offering as defined in Rule 415 promulgated under the Securities Act of 1933, as amended, including by means of ordinary brokers' transactions at market prices, in block transactions or as otherwise agreed by the Company and Cowen. Subject to the terms and conditions of the October 2015 Sales Agreement, Cowen will use commercially reasonable efforts consistent with its normal trading and sales practices to sell the common stock based upon the Company's instructions (including any price, time or size limits or other customary parameters or conditions the Company may impose). The Company is not obligated to make any sales of its common stock under the October 2015 Sales Agreement. Any shares sold will be sold pursuant to an effective shelf registration statement on Form S-3 (file no. 333-206135). The Company will pay Cowen a commission of up to 3% of the gross proceeds. The October 2015 Sales Agreement may be terminated by the Company at any time upon 10 days' notice. As of June 30, 2018, 597,356 shares have been sold under the October 2015 Sales Agreement for an aggregate of approximately $9.6 million in gross proceeds. Net proceeds to the Company were approximately $9.4 million after deducting commissions and other transactions costs. Of those shares sold, none were sold in 2018, and 215,539 were sold in 2017. Approximately $90.4 million remained reserved under the Company's shelf registration statement and the applicable prospectus supplement for possible future issuance under the October 2015 Sales Agreement.

Stock-based Compensation

6 Months Ended

Jun. 30, 2018

Stock-based Compensation

Stock-based Compensation

6. Stock-based Compensation

In June 2015, upon obtaining stockholder approval at its annual shareholder meeting, the Company implemented its new 2015 Stock Plan. The 2015 Stock Plan replaced the 2006 Stock Plan, which was terminated upon adoption of the 2015 Stock Plan. Shares of common stock reserved for outstanding awards under the 2006 Stock Plan that lapse or are canceled will be added back to the share reserve available for future awards under the 2015 Stock Plan. The 2015 Stock Plan provides for the grant of incentive stock options, non-statutory stock options, restricted stock and other stock-based compensation awards to employees, officers, directors, and consultants of the Company. The administration of the 2015 Stock Plan is under the general supervision of the compensation committee of the board of directors. The exercise price of the stock options is determined by the compensation committee of the board of directors, provided that incentive stock options are granted with an exercise price not less than fair market value of the common stock on the date of grant and expire no later than ten years from the date the option is granted. As of June 30, 2018, the Company had options outstanding to purchase 1,137,507 shares of its common stock, which includes options outstanding under its 2006 Stock Plan that was terminated in June 2015. As of June 30, 2018, 1,239,595 shares were available for future issuance.

The following table summarizes stock option activity during the six months ended June 30, 2018:


		Weighted
		average
		exercise
	Shares	price
Outstanding at January 1, 2018	976,777	$	11.97
Options granted	218,900		164.00
Options exercised	(58,170)		24.90
Options canceled	—		—
Outstanding at June 30, 2018	1,137,507	$	40.57
Exercisable at June 30, 2018	478,898	$	11.19

The total cash received by the Company as a result of stock option exercises was $1.4 million and $0, respectively, for the six months ended June 30, 2018 and 2017. The weighted-average grant date fair values, based on the Black-Scholes option model, of options granted during the six months ended June 30, 2018 and 2017 were $129.03 and $12.68, respectively.

Restricted Common Stock

The Company's share-based compensation plan provides for awards of restricted shares of common stock to employees, officers, directors and consultants to the Company. Restricted stock awards are subject to forfeiture if employment or service terminates during the prescribed retention period. Restricted shares vest over the service period. There were 104,127 unvested restricted shares outstanding at a weighted average grant date fair value of $9.45 at June 30, 2018 and December 31, 2017.

Stock-Based Compensation Expense

Stock-based compensation expense during the three and six months ended June 2018 and 2017 was as follows (in thousands):


	Three Months				Six Months
	Ended June 30,				Ended June 30,
	2018		2017		2018		2017
Stock-based compensation expense by type of award:
Stock options	$	2,104	$	527	$	3,150	$	981
Restricted stock		123		149		244		297
Total stock-based compensation expense	$	2,227	$	676	$	3,394	$	1,278

Effect of stock-based compensation expense by line item:
Research and development	$	732	$	168	$	1,108	$	305
General and administrative		1,495		508		2,286		973
Total stock-based compensation expense included in net loss	$	2,227	$	676	$	3,394	$	1,278

Unrecognized stock-based compensation expense as of June 30, 2018 was as follows (in thousands):


			Weighted
	Unrecognized		average
	stock		remaining
	compensation		period
	expense		(in years)
Stock options	$	26,400	2.38
Restricted stock		520	1.06
Total	$	26,920	2.35

Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2018

Summary of Significant Accounting Policies

Principle of Consolidation

The consolidated financial statements include the financial statements of the Company and its wholly owned subsidiaries. All significant intercompany balances have been eliminated in consolidation.

Use of Estimates

Cash and Cash Equivalents

Marketable Securities

Fair Value of Financial Instruments

Level 1—quoted prices in active markets for identical assets and liabilities.

Level 3—unobservable inputs that reflect the Company's own assumptions about the assumptions market participants would use in pricing the asset or liability.

Research and Development Costs

Patents

Costs to secure and defend patents are expensed as incurred and are classified as general and administrative expense in the Company's consolidated statements of operations.

Stock-Based Compensation

Income Taxes

Comprehensive Loss

Basic and Diluted Loss Per Common Share

The following table summarizes outstanding securities not included in the computation of diluted net loss per common share, as their inclusion would be anti-dilutive:


	Six months ended
	June 30,
	2018	2017
Common Stock Options	1,137,507	976,711
Unvested Restricted Common Stock	104,127	157,262
Preferred Stock	1,969,797	1,969,797

Recent Accounting Pronouncements

Cash, Cash Equivalents and Marketable Securities (Tables)

6 Months Ended

Jun. 30, 2018

Cash, Cash Equivalents and Marketable Securities

Summary of cash, cash equivalents and available-for-sale marketable securities

A summary of cash, cash equivalents and available-for-sale marketable securities held by the Company as of June 30, 2018 and December 31, 2017 is as follows (in thousands):


	June 30, 2018
			Unrealized		Unrealized		Fair
	Cost		gains		losses		value

Cash and cash equivalents:
Cash (Level 1)	$	1,615	$	—	$	—	$	1,615
Money market funds (Level 1)		230,822		—		—		230,822
Corporate debt securities due within 3 months of date of purchase (Level 2)		32,424		—		—		32,424
Total cash and cash equivalents		264,861		—		—		264,861
Marketable securities:
Corporate debt securities due within 1 year of date of purchase (Level 2)		225,487		41		(84)		225,444
Total cash, cash equivalents and marketable securities	$	490,348	$	41	$	(84)	$	490,305


	December 31, 2017
			Unrealized		Unrealized		Fair
	Cost		Gains		losses		value

Cash and cash equivalents:
Cash (Level 1)	$	2,725	$	—	$	—	$	2,725
Money market funds (Level 1)		145,902		—		—		145,902
Corporate debt securities due within 3 months of date of purchase (Level 2)		—		—		—		—
Total cash and cash equivalents		148,627		—		—		148,627
Marketable securities :
Corporate debt securities due within 1 year of date of purchase (Level 2)		42,931		—		(31)		42,900
Total cash, cash equivalents and marketable securities	$	191,558	$	—	$	(31)	$	191,527

Stock-based Compensation (Tables)

6 Months Ended

Jun. 30, 2018

Stock-based Compensation

Summary of stock option activity


		Weighted
		average
		exercise
	Shares	price
Outstanding at January 1, 2018	976,777	$	11.97
Options granted	218,900		164.00
Options exercised	(58,170)		24.90
Options canceled	—		—
Outstanding at June 30, 2018	1,137,507	$	40.57
Exercisable at June 30, 2018	478,898	$	11.19

Schedule of stock-based compensation expense

Stock-based compensation expense during the three and six months ended June 2018 and 2017 was as follows (in thousands):


	Three Months				Six Months
	Ended June 30,				Ended June 30,
	2018		2017		2018		2017
Stock-based compensation expense by type of award:
Stock options	$	2,104	$	527	$	3,150	$	981
Restricted stock		123		149		244		297
Total stock-based compensation expense	$	2,227	$	676	$	3,394	$	1,278

Effect of stock-based compensation expense by line item:
Research and development	$	732	$	168	$	1,108	$	305
General and administrative		1,495		508		2,286		973
Total stock-based compensation expense included in net loss	$	2,227	$	676	$	3,394	$	1,278

Schedule of unrecognized stock-based compensation expense

Unrecognized stock-based compensation expense as of June 30, 2018 was as follows (in thousands):


			Weighted
	Unrecognized		average
	stock		remaining
	compensation		period
	expense		(in years)
Stock options	$	26,400	2.38
Restricted stock		520	1.06
Total	$	26,920	2.35

Cash, Cash Equivalents and Marketable Securities (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Cash, Cash Equivalents and Marketable Securities
Total cash, cash equivalents and marketable securities, Unrealized gains	$ 41
Total cash, cash equivalents and marketable securities, Unrealized losses	(84)	$ (31)
Carrying value
Cash, Cash Equivalents and Marketable Securities
Cash and cash equivalents	264,861	148,627
Total cash, cash equivalents and marketable securities, Cost	490,348	191,558
Fair value
Cash, Cash Equivalents and Marketable Securities
Cash and cash equivalents	264,861	148,627
Total cash, cash equivalents and marketable securities, Fair value	$ 490,305	$ 191,527
Corporate debt securities due within 3 months of date of purchase
Cash, Cash Equivalents and Marketable Securities
Maturity period from date of purchase to classify an investment as marketable securities	3 months	3 months
Corporate debt securities due within 3 months of date of purchase \| Carrying value \| Level 2
Cash, Cash Equivalents and Marketable Securities
Marketable securities, cost	$ 32,424
Corporate debt securities due within 3 months of date of purchase \| Fair value \| Level 2
Cash, Cash Equivalents and Marketable Securities
Marketable securities, fair value	$ 32,424
Corporate debt securities due within 1 year of date of purchase
Cash, Cash Equivalents and Marketable Securities
Maturity period from date of purchase to classify an investment as marketable securities	1 year	1 year
Corporate debt securities due within 1 year of date of purchase \| Level 2
Cash, Cash Equivalents and Marketable Securities
Marketable securities, unrealized gains	$ 41
Marketable securities, unrealized losses	(84)	$ (31)
Corporate debt securities due within 1 year of date of purchase \| Carrying value \| Level 2
Cash, Cash Equivalents and Marketable Securities
Marketable securities, cost	225,487	42,931
Corporate debt securities due within 1 year of date of purchase \| Fair value \| Level 2
Cash, Cash Equivalents and Marketable Securities
Marketable securities, fair value	225,444	42,900
Cash \| Carrying value \| Level 1
Cash, Cash Equivalents and Marketable Securities
Cash and cash equivalents	1,615	2,725
Cash \| Fair value \| Level 1
Cash, Cash Equivalents and Marketable Securities
Cash and cash equivalents	1,615	2,725
Money market funds \| Carrying value \| Level 1
Cash, Cash Equivalents and Marketable Securities
Cash and cash equivalents	230,822	145,902
Money market funds \| Fair value \| Level 1
Cash, Cash Equivalents and Marketable Securities
Cash and cash equivalents	$ 230,822	$ 145,902

Stockholders' Equity - June 2017 Private Placement (Details) $ / shares in Units, $ in Thousands	1 Months Ended	6 Months Ended
	Jun. 30, 2017 USD ($) Vote $ / shares shares	Jun. 30, 2018 USD ($) $ / shares	Jun. 30, 2017 USD ($) Vote $ / shares	Dec. 31, 2017 $ / shares
Stockholders' Equity
Net proceeds after deducting commissions and other transactions costs \| $		$ 311,825	$ 38,278
Preferred Stock, Par or Stated Value Per Share		$ 0.0001		$ 0.0001
Series A Convertible Preferred Stock
Stockholders' Equity
Preferred Stock, Par or Stated Value Per Share	$ 0.0001		$ 0.0001
Preferred stock conversion ratio \| shares	1
Preferred shares number voting rights \| Vote	0		0
Private Placement Offering \| Purchase Agreement
Stockholders' Equity
Value of shares sold by the entity \| $	$ 35,000
Net proceeds after deducting commissions and other transactions costs \| $	$ 34,900
Private Placement Offering \| Common stock \| Purchase Agreement
Stockholders' Equity
Number of shares sold by the entity \| shares	328,300
Issue price of stock	$ 15.23		$ 15.23
Private Placement Offering \| Series A Convertible Preferred Stock \| Purchase Agreement
Stockholders' Equity
Number of shares sold by the entity \| shares	1,969,797
Issue price of stock	$ 15.23		$ 15.23

Stockholders' Equity - At The Market Issuances (Details) - At-The-Market Issuance Sales Agreement - USD ($) $ in Millions	1 Months Ended	6 Months Ended	12 Months Ended	33 Months Ended
	Oct. 31, 2015	Jun. 30, 2018	Dec. 31, 2017	Jun. 30, 2018
Stockholders' Equity
Number of shares sold by the entity		0	215,539	597,356
Value of shares sold by the entity				$ 9.6
Net proceeds after deducting commissions and other transactions costs				9.4
Remaining reserved amount under shelf registration		$ 90.4		$ 90.4
Cowen & Co. LLC \| Maximum
Stockholders' Equity
Maximum aggregate offering price	$ 100.0
Percentage of gross proceeds payable as commission	3.00%
Notice period of termination of sales agreement	10 days

Stock-based Compensation - Stock Option (Details) - USD ($)	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Additional disclosures
Proceeds resulting from exercise of stock options	$ 1,449,000
Stock options
Stock-based compensation expense
Shares available for future issuance	1,239,595
Shares
Outstanding at the beginning of the period (in shares)	976,777
Options granted (in shares)	218,900
Options exercised (in shares)	(58,170)
Outstanding at the end of the period (in shares)	1,137,507
Exercisable at the end of the period (in shares)	478,898
Weighted average exercise price
Outstanding at the beginning of the period (in dollars per share)	$ 11.97
Options granted (in dollars per share)	164.00
Options exercised (in dollars per share)	24.90
Outstanding at the end of the period (in dollars per share)	40.57
Exercisable at the end of the period (in dollars per share)	$ 11.19
Additional disclosures
Proceeds resulting from exercise of stock options	$ 1,400,000	$ 0
Weighted-average grant date fair value of options (in dollars per share)	$ 129.03	$ 12.68
Stock options \| Maximum
Stock-based compensation expense
Expiration period	10 years

Organization, Business, and Basis of Presentation	6 Months Ended
Organization, Business, and Basis of Presentation	Jun. 30, 2018
Organization, Business, and Basis of Presentation
Organization, Business, and Basis of Presentation	1. Organization, Business, and Basis of Presentation Organization and Business Madrigal Pharmaceuticals, Inc. (the "Company" or "Madrigal") is a clinical-stage pharmaceutical company developing novel, high-quality, small-molecule drugs addressing major unmet needs in cardiovascular, metabolic, and liver diseases. The Company's lead compound, MGL-3196, is being advanced for non-alcoholic steatohepatitis ("NASH"), a liver disease that commonly affects people with metabolic diseases such as obesity and diabetes, and indications in dyslipidemia, particularly genetic dyslipidemias such as familial hypercholesterolemia ("FH"), including both homozygous and heterozygous forms of the disease. The Company initiated a Phase 2 study of MGL-3196 in NASH in October 2016. In February 2017, the Company initiated a Phase 2 study of MGL-3196 in patients with Heterozygous Familial Hypercholesterolemia ("HeFH"). Both Phase 2 studies were fully enrolled in 2017, the HeFH study was completed in February 2018, and the NASH study was completed in May 2018. Madrigal was originally incorporated as a private company ("Private Madrigal") on August 19, 2011 and commenced operations in September 2011. On July 22, 2016, Private Madrigal completed a reverse merger (the "Merger") into Synta Pharmaceuticals Corp. ("Synta"). Upon the consummation of the Merger, the historical financial statements of Private Madrigal became the Company's historical financial statements. The Company, or Madrigal, as used in the accompanying notes to the unaudited condensed consolidated financial statements, refers to Private Madrigal prior to the completion of the Merger and Public Madrigal subsequent to the completion of the Merger. Basis of Presentation Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted. Accordingly, the unaudited condensed consolidated financial statements do not include all information and footnotes required by GAAP for complete annual financial statements. However, we believe that the disclosures included in these financial statements are adequate to make the information presented not misleading. The unaudited condensed financial statements, in the opinion of management, reflect all adjustments, which include normal recurring adjustments, necessary for a fair statement of such interim results. The interim results are not necessarily indicative of the results that we will have for the full year ended December 31, 2018 or any subsequent period. These unaudited condensed financial statements should be read in conjunction with the audited consolidated financial statements and the notes to those statements for the year ended December 31, 2017.

Liquidity and Uncertainties	6 Months Ended
Liquidity and Uncertainties	Jun. 30, 2018
Liquidity and Uncertainties
Liquidity and Uncertainties	3. Liquidity and Uncertainties The Company is subject to risks common to development stage companies in the biopharmaceutical industry including, but not limited to, uncertainty of product development and commercialization, dependence on key personnel, uncertainty of market acceptance of products and product reimbursement, product liability, uncertain protection of proprietary technology, potential inability to raise additional financing necessary for development and commercialization, and compliance with the U.S. Food and Drug Administration and other government regulations. The Company has incurred losses since inception, including approximately $12.8 million for the six months ended June 30, 2018, resulting in an accumulated deficit of approximately $119.3 million as of June 30, 2018. Management expects to incur losses for the foreseeable future. To date, the Company has funded its operations primarily through the issuance of convertible debt, the proceeds from the Merger on July 22, 2016, and proceeds from sales of the Company's equity securities (see Note 5). The Company believes that its cash, cash equivalents and marketable securities at June 30, 2018 will be sufficient to fund operations past one year from the issuance of these financial statements. To meet its future capital needs, the Company intends to raise additional capital through debt or equity financings, collaborations, partnerships or other strategic transactions. However, there can be no assurance that the Company will be able to complete any such transactions on acceptable terms or otherwise. The inability of the Company to obtain sufficient funds on acceptable terms when needed could have a material adverse effect on the Company's business, results of operations and financial condition. The Company has the ability to delay certain research activities and related clinical expenses if necessary due to liquidity concerns until a date when those concerns are relieved.

Commitments and Contingencies	6 Months Ended
Commitments and Contingencies	Jun. 30, 2018
Commitments and Contingencies
Commitments and Contingencies	7. Commitments and Contingencies The Company has a Research, Development and Commercialization Agreement with Hoffmann-La Roche (“Roche”) which grants the Company a sole and exclusive license to develop, use, sell, offer for sale and import any Licensed Product as defined by the agreement. The agreement requires future milestone payments to Roche, the remainder of which total $10 million and are earned by the commencement of Phase 3 clinical trials as well as future regulatory approval in the United States and Europe of a product developed from MGL-3916. A single-digit royalty payment range is based on net sales of products developed from MGL-3196, subject to certain reductions. In October 2016, the Company commenced a Phase 2 study in Non-Alcoholic Steatohepatitis (NASH), which triggered a milestone payment under the agreement. Except as described above, the Company has not achieved any additional product development or regulatory milestones to date and has no Licensed Product sales for the six months ended June 30, 2018 and 2017. The Company has entered into customary contractual arrangements and letters of intent in preparation for and in support of the Phase 2 clinical trials.

Summary of Significant Accounting Policies - Income Taxes (Details)	6 Months Ended
	Jun. 30, 2018
Income Taxes
Valuation allowance on deferred tax assets (as a percent)	100.00%

Stockholders' Equity - Common Stock (Details)	6 Months Ended
Stockholders' Equity - Common Stock (Details)	Jun. 30, 2018 Vote
Stockholders' Equity
Number of votes per share that common stockholders are entitled to receive	1

Stockholders' Equity - Registered Offering (Details) - Common stock - Goldman Sachs & Co. LLC - Underwriting Agreement - USD ($) $ / shares in Units, $ in Millions	1 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Registered Offering
Stockholders' Equity
Number of shares sold by the entity	1,079,580	1,731,929
Number of days granted to purchase additional shares	30 days	30 days
Issue price of stock	$ 305.00	$ 83.00
Net proceeds after deducting commissions and other transactions costs	$ 311.8	$ 135.5
Additional Shares
Stockholders' Equity
Number of shares sold by the entity	95,973	225,904

Stock-based Compensation - Restricted Common Stock (Details) - Unvested Restricted Common Stock - $ / shares	Jun. 30, 2018	Jun. 30, 2017
Shares
Unvested restricted shares outstanding (in shares)	104,127	104,127
Weighted average grant date fair value
Weighted average grant date fair value (in dollars per share)	$ 9.45	$ 9.45

Stock-based Compensation - Unrecognized Expense (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2018 USD ($)
Unrecognized stock-based compensation expense
Unrecognized stock compensation expense	$ 26,920
Weighted average remaining period (in years)	2 years 4 months 6 days
Stock options
Unrecognized stock-based compensation expense
Unrecognized stock compensation expense	$ 26,400
Weighted average remaining period (in years)	2 years 4 months 17 days
Unvested Restricted Common Stock
Unrecognized stock-based compensation expense
Unrecognized stock compensation expense	$ 520
Weighted average remaining period (in years)	1 year 22 days