This is a randomized, double-blind study of MSDC-0602K or placebo in subjects with pre-T2D or T2D and evidence of NAFLD/NASH.

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.

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.