Madrigal Pharmaceuticals (MDGL) has pitched a “perfect game” with their pristine MAESTRO-NASH Phase III trial for resmetirom hitting both primary, FDA agreed upon endpoints, asserts John McCamant, biotech expert and editor of The Medical Technology Stock Letter.
The stock — which was my Top Pick for 2022 — jumped sharply on these recently announced results, boosting the stock's year-to-date gain to over 200%. Despite these gains, I still consider the stock a conservative Top Pick for 2023.
The FDA had agreed that even hitting one primary endpoint would lead to approval. They hit both. This is first ever positive Phase III trial for Non-Alcoholic SteatoHepatitis — a liver disease known as NASH — and is a watershed event for both NASH patients and MDGL.
The company also had great Phase III MAESTRO-NAFLD data for resmetirom in early 2022. With two positive Phase III trials in the bank, MAESTRO-NASH & MAESTRO-NAFLD, resmetirom is poised to become a multi-billion dollar drug as a once-a-day pill to treat both NAFLD and all stages of NASH.
In our view, the drug is a true best-in-class compound with both outstanding safety and efficacy all in an easy to take daily pill. The company is expected to file for FDA approval in early H2:23.
We expect a premium buyout for the company given that resmetirom is both wholly-owned and completely de-risked. There are two additional reasons that MDGL will be acquired; the Baker Bros. who are major stock owners and just saw another of their stocks, Horizon acquired in a bidding war by Amgen (AMGN).
With this pristine data from two Phase III trials, MAESTRO-NASH & MAESTRO-NAFLD, we continue to recommend buying MDGL — with its with best-in-class drug — even at this new level. MDGL is now a "buy" under $300 (our previous buy level was $200) with a target price of $400 (our previous target was $275).
