Form 4: Madrigal Pharmaceuticals Directors Receive Equity Compensation from Baker Bros. Affiliates

Julian C. Baker and Dr. Raymond Cheong, directors of Madrigal Pharmaceuticals, Inc., received grants of restricted stock units and non-qualified stock options as compensation, reported by Baker Bros. Advisors LP and its affiliated entities.

Summary

• Julian C. Baker and Dr. Raymond Cheong, directors of Madrigal Pharmaceuticals, Inc. (MDGL), received equity compensation on June 20, 2025.
• Each director was granted 715 Restricted Stock Units (RSUs) and 1,290 Non-Qualified Stock Options, totaling 1,430 RSUs and 2,580 Stock Options in aggregate for both directors.
• These grants were made under the Issuer's Amended 2015 Stock Plan.
• The RSUs and Stock Options fully vest on the date of Madrigal's annual meeting of stockholders in 2026, contingent on the directors' continuous service on the Board.
• The Stock Options have a strike price of $285.73 and expire on June 20, 2035.
• The reporting persons, including Baker Bros. Advisors LP and its affiliates, disclaim beneficial ownership of these securities except to the extent of their pecuniary interest, as the compensation is for the directors' service on the Board.
• The Adviser (Baker Bros. Advisors LP) retains voting and dispositive power over these securities.
• The filing also notes previous beneficial ownership of 3,110 shares of Common Stock received from vested RSUs previously granted to Julian C. Baker and Dr. Cheong.

Sentiment

Score: 6

Explanation: The document reports routine equity compensation for directors, which is a neutral to slightly positive event as it aligns director interests with shareholders. There are no negative implications or unexpected events reported.

Positives

• Directors Julian C. Baker and Dr. Raymond Cheong received equity compensation (RSUs and stock options), aligning their interests with shareholders.
• The compensation is part of a pre-existing plan (Amended 2015 Stock Plan), indicating a structured approach to executive and director incentives.

Future Outlook

The document primarily reports past and current transactions related to director compensation and does not provide specific forward-looking statements or guidance regarding the company's financial performance or strategic direction, beyond the vesting schedule of the granted equity.

Management Comments

• "Julian C. Baker, a managing member of Baker Bros. Advisors (GP) LLC, and Dr. Raymond Cheong, a full-time employee of Baker Bros. Advisors LP, are directors of Madrigal Pharmaceuticals, Inc."
• "By virtue of their representation on the board of directors of the Issuer, for purposes of Section 16 of the Securities Exchange Act of 1934, as amended, the reporting persons other than Julian C. Baker are deemed directors by deputization of the Issuer."
• "Pursuant to the policies of the Adviser, Julian C. Baker and Dr. Cheong do not have a right to any of the Issuer's securities issued as compensation for their service on the Board and the Funds are entitled to an indirect proportionate pecuniary interest in such securities."
• "Julian C. Baker, Felix J. Baker, the Adviser GP and the Adviser disclaim beneficial ownership of the securities held directly by or held for the benefit of the Funds except to the extent of their pecuniary interest therein."

Industry Context

This SEC Form 4 filing is a standard disclosure in the biotechnology and pharmaceutical industry, reporting changes in beneficial ownership by company insiders. It specifically details equity compensation granted to directors, a common practice to align management and board interests with shareholder value. The involvement of Baker Bros. Advisors, a prominent life sciences investor, highlights their continued engagement and investment in Madrigal Pharmaceuticals.

Comparison to Industry Standards

• The granting of Restricted Stock Units (RSUs) and Non-Qualified Stock Options to directors as part of their compensation package is a common and standard practice across the biotechnology and broader corporate landscape.
• The vesting schedule tied to continuous service and the 10-year expiration for options are typical terms designed to incentivize long-term commitment and performance.
• While specific comparable companies or projects are not mentioned in the filing, this type of equity grant aligns with general industry benchmarks for director compensation in publicly traded life sciences companies.

Corporate Governance

Related Party Transactions

• The grants of RSUs and Stock Options were made to Julian C. Baker and Dr. Raymond Cheong, who are directors of Madrigal Pharmaceuticals, Inc. and also affiliated with Baker Bros. Advisors LP and its related funds (667, L.P. and Baker Brothers Life Sciences, L.P.), which are significant shareholders of Madrigal Pharmaceuticals.
• The compensation is structured such that the affiliated funds (667, L.P. and Baker Brothers Life Sciences, L.P.) are entitled to an indirect proportionate pecuniary interest in the securities, rather than the individual directors having a direct pecuniary interest, reflecting the policies of Baker Bros. Advisors LP.

Stakeholder Impact

• Shareholders: The grants represent a form of compensation that aligns the interests of key directors (who are also representatives of significant shareholders) with the long-term performance of the company. It also involves a minor dilution from the issuance of new shares upon vesting/exercise.
• Directors (Julian C. Baker, Dr. Raymond Cheong): Receive equity-based compensation, providing a direct financial incentive tied to the company's stock performance and their continued service.
• Baker Bros. Advisors LP and Affiliated Funds: Maintain indirect pecuniary interest and control over the voting and dispositive power of these securities, reinforcing their strategic influence and investment in Madrigal Pharmaceuticals.

Next Steps

• The granted RSUs and Stock Options are scheduled to fully vest on the date of Madrigal's annual meeting of stockholders in 2026, subject to continuous board service.
• The Non-Qualified Stock Options will expire on June 20, 2035.

Key Dates

Keywords

Madrigal Pharmaceuticals, MDGL, SEC Form 4, Insider Transaction, Restricted Stock Units, RSUs, Stock Options, Equity Compensation, Director Compensation, Beneficial Ownership, Baker Bros. Advisors, Biotechnology, Pharmaceuticals