Madrigal Pharmaceuticals said Wednesday it could win Food and Drug Administration approval for its nonalcoholic steatohepatitis treatment in March, and MDGL stock jumped.
The FDA accepted Madrigal's application for its drug, resmetirom, in patients with the liver disease also known as NASH. NASH is a leading cause of liver transplants and it's often asymptomatic until the late stages of the disease. But, so far, most studies in NASH treatment have disappointed. This means Madrigal could be the first to the finish line.
Bullishly, the FDA said it won't hold an advisory committee meeting to discuss the benefits and risks of Madrigal's drug, Leerink Partners analyst Thomas Smith said in a report.
"While (new drug application) acceptance with priority review was our expectation, we believe that the FDA's indication that they do not expect to convene an advisory committee will be viewed favorably with positive implications for the quality of the pivotal (study) data and level of regulatory alignment Madrigal has with FDA on the registrational (study goals)," he said.
On today's stock market, MDGL stock surged 7.7%, ending the regular session at 190.84.
MDGL Stock: A First In NASH Treatment
Madrigal tested resmetirom in a Phase 3 study called Maestro-NASH. To gain approval for NASH treatment, a drug must lead to a one-stage improvement in fibrosis with no worsening in NASH — defined as the presence of fatty liver disease. Or, a drug can resolve fatty liver disease, but it must not lead to worse fibrosis.
Last December, the company said 30% of patients who received the highest dose of resmetirom had a two-point improvement in their NASH symptoms on an eight-point scale. Meanwhile, their fibrosis didn't worsen. The results sent MGDL stock into the stratosphere, rocketing 268% on Dec. 19.
Shares hit a recent high at 322.67 in early May, but have since dropped off markedly amid success for weight-loss drugs from Novo Nordisk and a potential approval for Eli Lilly in weight loss. Companies that treat diseases related to obesity — including NASH, diabetes, sleep apnea and cardiovascular conditions — have been under pressure.
MDGL stock hit a recent low point of 156 in early August. Now, shares are working up toward their 50-day moving average, according to MarketSmith.com. Still, shares have a very good Relative Strength Rating of 97 out of 99, IBD Digital shows. This puts Madrigal stock's 12-month performance in the top 3% of all stocks.
A Promising Risk/Benefit
The next notable catalyst will be an FDA meeting this month to discuss diagnosing NASH in patients before cirrhosis appears. Once cirrhosis shows up, a patient's only option is a liver transplant. But diagnosis involves an expensive and invasive liver biopsy, which makes diagnosing asymptomatic patients much more difficult.
"Overall, we continue to view the results from the pivotal Maestro program as promising, with data suggesting a strongly positive benefit/risk profile for resmetirom that should support approval in NASH patients with liver fibrosis," Leerink's Smith said.
He kept his outperform rating on MDGL stock.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
