Madrigal: Beyond NASH

Summary

• After the robust Phase 2 NASH data for resmetirom, Madrigal commenced its Phase 3 trial earlier this year.
• There is another upcoming Phase 3 investigation to study resmetirom's potential use for heart disease related to NASH. That's in similar territory for Amarin's Vascepa.
• Riding ample cash and a potential mega-blockbuster, Madrigal is worth much higher than its current stock price.

A company with research centered around each of these divisions, like a cluster of trees each growing additional branches form its own trunk, will usually do much better than a company working on a number of unrelated new products which, if successful, will land it in several new industries unrelated to its existing business. - Phillip Fisher

If you've been following my blog, you'd notice that I've increased my focus on high probability event forecasting. That's my new trading and investing secrets to predict when certain stocks or sectors will rally. In doing so, I analyzed the company's fundamentals, industry trends, and technicals to arrive at a gut feeling (i.e. instinct). So, looking at the larger industry headwinds, the China Trade War and drug pricing concerns are lessening their grips. Hence, certain bioscience niches like nonalcoholic steatohepatitis ("NASH") or oncology is enjoying a resurgence.

Of those sectors, I believe only Phillip Fisher's growth equities will enjoy the most gains. Moreover, the leaders in the pack will procure the most sizable profits. That being said, my top two NASH stocks are Intercept Pharmaceuticals (ICPT) and Madrigal Pharmaceuticals (NASDAQ:MDGL). As you saw, Intercept shares nearly doubled in the past two months. Likewise, Madrigal procured 39.0% in profits since October 14. However, I believe there are more going forward. In this article, I'll feature a fundamental analysis of Madrigal and provide my expectations for this special growth equity.

Figure 1: Madrigal chart (Source: StockCharts)

About The Company

As usual, I'll present a brief corporate overview for new investors. If you are familiar with the firm, you should skip to the next section. Based in Conshohocken, Pennsylvania, Madrigal is engaged in the innovation and commercialization of medicines to serve the unmet needs in heart and liver diseases.

As shown below, Madrigal has a focused pipeline

Analyst’s Disclosure:I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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.

As a medical doctor/market expert, I’m not a registered investment advisor. Despite that I strive to provide the most accurate information, I neither guarantee the accuracy nor timeliness. Past performance does NOT guarantee future results. I reserve the right to make any investment decision for myself and my affiliates at any time pertaining to any security without notification except where it is required by law. I am also NOT responsible for the actions of my affiliates. The thesis that I presented may change anytime due to the changing nature of information itself. Investment in stocks and options can result in a loss of capital. The information presented should NOT be construed as a recommendation to buy or sell any form of security. My articles are best utilized as educational and informational materials to assist investors in your own due diligence process. That said, you are expected to perform your own due diligence and take responsibility for your actions. You should also consult with your own financial advisor for specific guidance, as financial circumstances are individualized.