• Change in glycosylated hemoglobin (HbA1c) from baseline to Week 26 [ Time Frame: 26 weeks ]
• Change in the weighted average of standardized AST, CK-18, and HbA1c values (standard deviations) from baseline to Week 26 [ Time Frame: 26 weeks ]
  This is a single composite outcome measure. This is derived by standardizing the values of AST, CK-18, and HbA1c by subtracting the respective study population means and dividing by respective study population standard deviations at each time point; averaging these standardized AST, CK-18,and HbA1c values (or z-scores) for a given patient at each time point; and then computing the difference from baseline to week 26 with respect to these averages.

• Mean change in glycosylated hemoglobin (HbA1c) from Baseline to 6 months follow-up in the first 800 subjects randomized with poorly controlled T2D [ Time Frame: 6 months ]
  Mean change in glycosylated hemoglobin (HbA1c) from Baseline (Baseline HbA1c is defined as the average of HbA1c values from Screening 2 and Randomization) to 6 months follow-up in the first 800 subjects randomized in the stratum of poorly controlled T2D (defined as average Screening HbA1c > 7.0%) with baseline (average Screening 2 and Randomization) HbA1c > 7.0% who have reached 6-month follow-up.
• Biopsy-confirmed hepatic histological resolution of NASH as evidenced by ALL of the following at 12 months: o Inflammation score of 0-1; o Ballooning score of 0; o At least a 2-point improvement (decrease) in the NAS; and o NO worsening of fibrosis [ Time Frame: 12 months ]
  Biopsy-confirmed hepatic histological resolution of NASH as evidenced by ALL of the following at 12 months:

  • Inflammation score of 0-1;
  • Ballooning score of 0;
  • At least a 2-point improvement (decrease) in the NAS; and
  • No worsening of fibrosis defined as no increase in CRN fibrosis score

  in the first 1000 subjects randomized into the NASH histology stratum with NASH criteria confirmed by central histopathology.

• Time to first event of death, adjudicated nonfatal MI or USA hospitalization, adjudicated hospital admission for HF, or adjudicated nonfatal ischemic stroke. [ Time Frame: through study completion, an expected average of 15 months ]
• Time to first event of death or adjudicated non-fatal MI or USA hospitalization, adjudicated hospital admission for HF, adjudicated nonfatal ischemic stroke, or liver event in all randomized subjects. [ Time Frame: through study completion, an expected average of 15 months ]
  A liver event consists of ascites (confirmed by paracentesis or abdominal imaging), hepatic encephalopathy (defined clinically), variceal hemorrhage (confirmed by endoscopy), or liver transplant.

This is a randomized, double-blind study of MSDC-0602K or placebo given orally once daily to subjects with pre-T2D or T2D and evidence of NAFLD/NASH. Visits will include a Screening Period, a minimum Treatment of 26 weeks, and a Long-Term Follow-up Period during which subjects will continue taking assigned treatment.

Safety will be assessed by periodic measurement of vital signs, physical examinations, blood laboratory analyses, and the occurrence of adverse events.

• Type2 Diabetes
• NASH - Nonalcoholic Steatohepatitis
• Nonalcoholic Steatohepatitis
• Non-Alcoholic Fatty Liver Disease

• Drug: MSDC-0602K
  MSDC-0602K tablet
• Drug: Placebo
  Matching tablet

• Active Comparator: MSDC-0602K
  MSDC-0602K one tablet per day taken orally
  Intervention: Drug: MSDC-0602K
• Placebo Comparator: Placebo
  Placebo one tablet per day taken orally
  Intervention: Drug: Placebo

Key Inclusion Criteria:

1. Written informed consent.
2. Adult subjects with an age of > 18 years but < 80 years.

3. Male or female subjects with reproductive potential must agree to comply with approved double barrier contraceptive method for the duration of the trial. Females of non-childbearing potential are considered:

   Post-menopausal Surgically sterile

4. Diagnosis of NAFLD
5. AST>27 U/L
6. HgbA1c >6%
7. Diagnosis of Pre-T2D or T2D
8. History of macrovascular cardiovascular disease

Key Exclusion Criteria:

1. Prior liver transplantation or currently on transplant list.
2. Other well-documented causes of active chronic liver disease
3. Current cirrhosis
4. Pregnant or nursing women
5. AST or ALT > 5 times the upper limit of normal
6. Total bilirubin > 1.3 mg/dL unless diagnosis of Gilbert's disease with direct bilirubin within normal reference range
7. Serum albumin < 3.5 g/dL at Screening
8. Alkaline phosphatase >2 times the upper limit of normal at Screening
9. Estimated glomerular filtration rate (eGFR by MDRD) <30 ml/min/1.73 m2 but ≤75 ml/min/1.73 m2
10. In patients who are not anticoagulated, INR ≥ 1.3 times ULN at Screening or other evidence of impaired coagulation.
11. Acute vascular events including ACS, stroke or TIA, worsening of peripheral vascular disease or any vascular/cardiac procedure
12. Limb amputation for reason other than trauma.
13. HbA1c >10%
14. Any planned surgery or device implantation after screening
15. Ejection fraction < 35% or Heart failure with NYHA class IV
16. History of alcohol abuse or drug abuse within 6 months prior to Screening Diagnosis at any time of Type 1 diabetes.
17. Current or history of recent (≤ 6 months) use of ursodeoxycholic acid.
18. Current use of insulin.
19. Current use of thiazolidinediones.
20. Any history or current concomitant disorder such as haematological, pulmonary, metabolic, endocrine disorders that are severe or life-threatening.
21. Use of concomitant medications with a known significant metabolism by CYP2C8 including paclitaxel or repaglinide for the duration of the study.
22. History of diabetic ketoacidosis or hyperosmolar non-ketotic coma within the 6 months prior to Screening.
23. Known or suspected intolerance or hypersensitivity to the study drugs, closely related compounds such as PPARγ agonists (pioglitazone or rosiglitazone), or any of their stated ingredients.