Two weeks ago, at the Las Vegas Money Show, John McCamant was given our "stock picker of the year award", recognizing the 500%+ gain of Madrigal Pharmaceuticals (MDGL), which he chose as his favorite stock in last year's annual MoneyShow Top Picks report. Last week, the company reported favorable news and the stock jumped another 130%.

Madrigal reported excellent top-line, 36-week results from a Phase II trial in patients with biopsy-proven non-alcoholic steatohepatitis (NASH), a huge unmet medical need. This is the best and most highly significant NASH data ever.

In this trial, MGL-3196 demonstrated statistical significance in the primary endpoint (p<0.0001), relative reduction of liver fat on magnetic resonance imaging-estimated proton density fat fraction (MRI-PDFF) at 12 Weeks in December 2017, and, reported here, statistically significant results in multiple Week 36 endpoints including key secondary endpoints, reduction and resolution of NASH.

We are particularly impressed by the NASH resolution in sicker patients (those with a NAS ≥5) of 35% on ‘3196 vs. 0% on placebo. Even bullish consensus expectations were for a significant reduction in NAS score but only a trend in the right direction in NASH resolution, due to the relatively small sample size.

In our view, ‘3196 has leaped to the head of the NASH drug development race with a very safe once-a-day pill that continues to demonstrate best-in-class potential.  

In our view, a bidding war is likely and Celgene (CELG) would appear to top the list with their recent string of disappointments drawing negative attention from Wall Street for very low success rate. This Phase II data is a significant de-risking event for ‘3196 and makes it that much easier for an acquirer to make the big move.

Regardless of an actual buyout, the net present value of MDGL has risen significantly on this excellent data. As a reflection of our growing confidence in both MDGL’s management team and their ability to maximize shareholder value combined with this major de-risking event for ‘3196, we are raising our buy to $250 and our target to $300.

Watch John McCamant's interview on Madrigal Pharmaceuticals here...

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