Madrigal Pharmaceuticals experienced a significant surge in its stock price on Friday, following the release of promising results from Novo Nordisk regarding its weight-loss drug, Wegovy, in patients suffering from metabolic dysfunction-associated steatohepatitis (MASH).
Although Novo’s findings were seen as favorable, analysts noted they did not represent a “game-changing” breakthrough for the condition.
Madrigal’s stock soared by 23.2%, reaching $319.58, marking a breakout from a cup base formation with a buy point at $298, according to MarketSurge chart analysis. The stock peaked at $321.19, reflecting a 49% increase since the previous Wednesday’s close. This upward trend followed a strong third-quarter earnings report for Madrigal’s treatment, Rezdiffra.
MASH is a serious liver condition characterized by the accumulation of fat, leading to inflammation and, ultimately, cirrhosis, which typically requires a liver transplant. The positive developments for Madrigal are underscored by the performance of its MASH treatment, which analysts believe is positioning it favorably in the market.
Novo Nordisk tested its semaglutide drug, sold as Wegovy, in MASH patients with stage two or three fibrosis. Results indicated that 37% of those receiving semaglutide experienced improvements in fibrosis without worsening steatohepatitis, compared to 23% in the placebo group. Additionally, 63% of patients saw resolution of their steatohepatitis without worsening fibrosis, against 34% for the placebo.
Analyst Andy Hsieh from William Blair noted that the magnitude of fibrosis improvement seen with Novo’s drug is comparable to that of Madrigal’s Rezdiffra. He highlighted that the placebo-adjusted improvement for the 100-milligram dose of Rezdiffra was 12%, closely matching the 14% seen with semaglutide.
While there is optimism surrounding the results, RBC Capital Markets analyst Brian Abrahams cautioned that weight-loss drugs like Wegovy and Eli Lilly’s Zepbound might not provide a definitive solution for MASH. Leerink Partners analyst Thomas Smith echoed this sentiment, suggesting that Novo’s findings indicate GLP-1-based drugs will not serve as a “silver bullet” for treating MASH.
Despite the competitive landscape, Madrigal’s management is optimistic about the potential growth of the MASH market and positions Rezdiffra as a cornerstone treatment in a multi-drug approach for the condition. Smith maintained an outperform rating for Madrigal’s stock, reflecting confidence in the company’s strategy and market potential.
On Thursday, Madrigal reported third-quarter sales for Rezdiffra totaling $62.2 million, significantly exceeding analysts’ expectations of $35.5 million. This strong performance, bolstered by robust demand from patients and prescribers, reinforces confidence in Madrigal’s capacity to capitalize on its early market entry and experience in commercializing treatments for MASH. The stock’s relative strength rating stands at 85, indicating it has outperformed 85% of stocks over the past year.
With input from Investor’s Business Daily.
