Madrigal Soars 144% On NASH Results, Is There Room To Run Higher?


  • Madrigal Pharmaceuticals soars on positive phase 2 NASH results.
  • Stock climbed as MGL-3196 achieved primary endpoint of study, and also displayed statistically significant improvements in liver-biopsy endpoints.
  • The NASH space is crowded with a host of competitors, which means that if MGL-3196 is ultimately approved it won't be a guaranteed slam dunk on sales.
  • With ability to move on to a phase 3 study it is likely that Madrigal Pharmaceuticals will need to raise more cash soon, with a cash raise possible as soon as a few days.
  • The NASH market is expected to reach between $20 billion to $30 billion in the coming years, providing an opportunity for multiple players.

Recently, Madrigal Pharmaceuticals (NASDAQ:MDGL) announced that it had met both liver biopsy based endpoints for its phase 2 non-alcoholic steatohepatitis (NASH) study. This opens up the opportunity for the company to move on to a phase 3 study with more patients to confirm its findings. Seeing as it was able to hit both endpoints I believe that it becomes a good biotech to own. For that reason, I believe that Madrigal Pharmaceuticals is a good buy.

Phase 2 Data

The phase 2 study recruited 125 biopsy-proven NASH patients. Patients in the study were treated with either MGL-3196 or placebo. It was shown that this study met on the primary endpoint, which was looking for relative reduction of liver fat on magnetic resonance imaging-estimated proton density fat fraction ((MRI-PDFF)) at 12 Weeks. The liver fat reduction was 36.3% at 12 weeks. The new liver-biopsy based data proves that MGL-3196 is a strong drug for NASH. First, MGL-3196 treated patients achieved a statistically significant improvement compared to placebo for the two point reduction in NAS (NAFLD activity score) on biopsy. This was with 56% of patients responding, achieving a greater than or equal to 2 point decrease in NAS score. The second liver-biopsy endpoint was successful as well. This was where those treated with MGL-3196 achieved a statistically significant resolution of NASH on biopsy compared to placebo. Overall these results are good. The only thing I'm cautious about from the results is the fibrosis improvement. It was shown that those treated with MGL-3196 obtained a fibrosis reduction of 29% compared to 23% for those on placebo. That makes a fibrosis reduction difference of 6% which is not much for a NASH fibrosis drug. Therefore, it is important to track fibrosis reduction should MGL-3196 pass its phase 3 and be ultimately approved by the FDA.

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This article was written by

Terry Chrisomalis profile picture
Actionable ideas on small-large cap biotech stocks through deep analysis.

I am the Founder of Biotech Analysis Central, A subscription service on Seeking Alpha's Marketplace. If you want to learn more about biotech investing or you want to check out my biotech analysis you can do so with a free 2-week trial to my service. Just hit the "Learn More" button on the bottom of the Marketplace Research Tab. I have a Bachelors of Applied Science Degree In Technology Management, Industrial and Business Services Management from St. Petersburg College Florida. I have been investing in biotech stocks for many years, and I prefer to invest as a long term investor. With that In mind I seek stocks that have long term value! I primarily Like to Invest In biotechnology stocks and I accept the risks. I Write for the Healthcare Sector and Stock market in general. I contribute to Seeking Alpha.

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