Madrigal And Resmetirom In NASH: Killing Liver Fat

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About: Madrigal Pharmaceuticals, Inc. (MDGL)
by: First Genesis Consulting
Summary

Liver Therapy Forum weekly digest provides an overview on what’s happening in the NASH landscape in 2019. This week focuses on Madrigal.

In late Q1/2019, Madrigal announced the initiation of the Phase 3 clinical trial on the study of MGL-3196, in NASH fibrosis. Top-line data readout is anticipated Q4/2021.

The Phase 3 trial should confirm the clinically meaningful benefits comprising of liver fat reduction, NASH resolution and regression of liver fibrosis induced by MGL-3196 in Phase 2b NASH.

Recent evidence further highlights the clinical benefits of weight loss in liver fat reduction that leads to NASH resolution.

Overall, this weekly newsletter provides news-related events on stocks focused on the development of liver therapeutics.

Market Assessment

Madrigal (NASDAQ:MDGL) is a mid-cap ($2B) founded in 2011 by Dr. Rebecca Taub, the current Chief Medical Officer. Since its reverse merger with Synta Pharmaceuticals in early Q3/2016, Madrigal has meticulously demonstrated through its clinical program why its clinical stage status may soon be upgraded to commercial stage. Its focus on developing therapeutics for the preventive and treatment of cardiometabolic disorders of high unmet medical needs is being validated through its lead investigative drug candidate, MGL-3196 or resmetirom.

MGL-3196 is a first-in-class, orally-administered, small-molecule protein that is eliminated mainly in feces through the bile. Radiographic analysis has shown that MGL-3196 is a liver-directed, Thyroid Hormone Receptor (THR)-β-selective agonist with negligible expression in the heart, bone, and brain.

In the Phase 2b NASH study, Madrigal clearly demonstrated via MGL-3196 the critical role of liver fat in driving NASH pathogenesis and ensuing liver fibrosis. The study showed that patients with ≥30% liver fat reduction, in response to MGL-3196 treatment, always attained greater medical benefits, including histological NASH resolution and regression of liver fibrosis. The notable total regression of liver fibrosis (i.e. normalization of liver) in some patients that achieved NASH resolution is a correlation and confirmation of Madrigal thesis that treating NASH is key to addressing the disease and related pathological events.

Recently, Madrigal provided further data analysis on the clinical benefits of liver fat reduction and weight loss in NASH resolution. In the press release, placebo patients with weight loss ≥5% were most likely to achieve ≥30% hepatic fat reduction that correlated with reductions in inflammation and hepatocyte ballooning that induces NASH resolution. Madrigal's study confirms a previous report that correlates weight loss with NASH resolution. They concluded that liver fat reduction is a critical component in NASH improvement and resolution. These findings are very encouraging for the medical communities and primary care providers.

Institutional Investors, Insiders Purchase, And Analyst Ratings

The latest 13F filings revealed large Institutional ownership of 177 holders accounting for 58.44% with 9,009,039 total shares held. Top two institutional holders are Capital Research Global Investors and Baker Brothers. 12 analyst firms recommend a strong buy, with a 12-month consensus price target of $217.

Financially, there are sufficient funds to successfully conclude 2 Phase 3 trials, with the dyslipidemia trial being less expensive than the NASH trial. At the end of Q4/2018, cash, cash equivalents and marketable securities of $483.7M were reported. That is more than enough funds for both trials. Given the impressive results in the Phase 2b NASH trial, Madrigal is considered a leader or a trailblazer in the clinical development of NASH therapeutics for early phase F2/F3 NASH fibrosis.

Market Outlook

Madrigal has convincingly demonstrated the clinical effects of MGL-3196. MGL-3196 exerts a plethora of clinically meaningful benefits in NASH comprising liver fat reduction, NASH resolution, regression of liver fibrosis, and reduced cardiovascular risks due to sustained reduction of pro-atherogenic lipids. These therapeutic benefits, together with good safety and tolerability, definitely enhances the broad clinical application of MGL-3196 in NASH, metabolic syndrome and fatty liver/NAFL. Madrigal is demonstrating why MGL-3196 is considered "first-in-class" with a clinical efficacy standard that may be impossible to achieve by others.

Disclosure: I am/we are long MDGL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.