After a bumpy road madrigal pharmaceutical (MDGL) has received Food and Drug Administration approval for the first-ever MASH treatment, Rezdiffra. Madrigal shares rose by double digits at midday Friday as analysts raised their price targets.
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Rezdifla, formerly known as Resmetilom, is the first approved treatment for steatohepatitis associated with metabolic dysfunction. In this condition, formerly known as NASH, fatty tissue accumulates in the liver, causing scarring. Eventually, the patient will require a liver transplant.
UBS analyst Eliana Merle called the approval “an important de-risking event for stocks.” She raised her target price for Madrigal shares from 337 yen to 410 shares. She said it will take some time for Madrigal to get through insurance reimbursement and commercialization, she said in her report.
“However, (we) believe that the long-term size of the MASH opportunity has been underestimated,” she said. “We reiterate our assertion that MASH is a large and growing market.”
In afternoon trading on the stock market, Madrigal stock soared 11.9% to 272.46. Stock prices briefly hit their highest since June of last year. Madrigal stock is now up 62% from its February lows. The stock recently broke out of consolidation at buy points of 245.17 and 245.31. The volatile stock then triggered an automatic sell rule before regaining the buy point.
Stocks of other MASH treatment development companies 89 bio (ETNB) It also rose on Friday. In recent trading, 89bio stock rose 4.8% to 13.22. Previously, Viking Therapeutics (VKTX), Akello Therapeutics (acro) and Ultimune (alternative) also rose, but all three companies subsequently fell.
Madrigal stock: focus on release in April
Madrigal plans to launch Les DiFla in April, which means the company will not record any sales in the first quarter, Merle said. The company said Rezdiffra’s continued approval is contingent on further confirmatory testing.
Some payers may not reimburse you for resdifla until confirmation testing is complete.
“However, of note, management expects 80% of commercial living to be covered by the end of the year and fully covered by Medicare in 2025,” Merle added. He maintained a Buy rating on Madrigal stock.
William Blair analyst Andy Hsieh noted that the FDA will not require patients to undergo a liver biopsy to confirm the presence of MASH. Liver biopsy is invasive and expensive, and has long been an obstacle to improving the diagnostic yield of MASH.
However, there are non-invasive tests that can confirm the level of disease and fibrosis. Rezdifla was approved for patients with fibrosis stages 2 and 3 on a scale of 0 to 4. 4 is the worst level of fibrosis and requires a liver transplant.
“Notably, there is no liver biopsy requirement on the label, a regulatory decision that removes a potential access barrier for patients and could accelerate patient identification and adoption of RezdiFla. Yes,” Hsieh said in the report. “Therefore, we expect biotech companies with exposure to MASH to broadly rebound today, given that one of their commercial salient pieces has been removed.”
The rocky road in MASH treatment
Brian Abrahams, an analyst at RBC Capital Markets, said in a report that the daily pill Rezdifla costs $47,400 a year at wholesale prices. This price is before insurance reimbursements and discounts.
Leerink Partners analyst Thomas Smith said this was higher than the level recommended by the Institute for Clinical and Economic Review. This nonprofit organization, also known as ICER, studies the effectiveness of upcoming medicines to determine fair prices. However, this recommendation is not binding.
Smith reiterated his outperform rating on Madrigal stock and raised his price target from 315 to 390. He expects sales of $76 million in 2024, rising to $3.5 billion by 2030.
In a separate report, Smith acknowledged that other MASH treatments have a difficult path. There were numerous mid- and late-stage clinical failures and one case of rejection. Intercept Pharmaceuticals, acquired by Italy’s AlphaSigma, is the only company to apply for approval for a MASH treatment, but the FDA rejected the drug in 2020 and 2023.
To be approved for MASH treatment, a drug must improve fibrosis by at least one step on a scale of 0 to 4, with 4 being the worst. However, patients should not worsen on other scales measuring MASH symptoms. Alternatively, the drug could improve her MASH symptoms but not worsen the fibrosis. There have been many failures in this area.
In December 2022, Dr. Madrigal announced that two doses of resmetilom had met both goals. That month, Madrigal’s stock price soared nearly 314%. marketsurge.com indicates.
“The approval of Rezdifla de-risks the clinical/regulatory pathway for subsequent (MASH) treatment,” Smith said.
Follow Alison Gatlin on Platform X, formerly known as Twitter. @IBD_AGatlin.
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