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Purchasing Madrigal Pharmaceuticals at the present moment holds three persuasive justifications.

Three Solid Justifications for Purchasing Madrigal Pharmaceuticals Shares Right Now
Three Solid Justifications for Purchasing Madrigal Pharmaceuticals Shares Right Now

Purchasing Madrigal Pharmaceuticals at the present moment holds three persuasive justifications.

When a corporation's shares surge by an impressive 82% within a year, it's a clear sign that investors believe it's an excellent time to own shares - and this is exactly the situation for Madrigal Therapeutics (MDGL -1.49%). In the first half of this year, the up-and-coming biotech received approval of a trailblazing treatment for liver diseases. With no signs of slowing down, it seems this rising star's growth trajectory will continue unabated.

Investors are eager to jump on board, and here are three compelling reasons to buy the stock:

1. Its debut drug is being successfully released

Approved by the Food and Drug Administration (FDA) in March 2024, Naugazol became the only medication authorized to treat metabolic-associated steatohepatitis (MASH), a disorder characterized by excessive fat buildup in the liver, liver stiffness, and eventual liver scarring (cirrhosis).

Since its approval, Madrigal has worked diligently to get more patients on treatment, aiming to boost sales. In the third quarter, there were more than 6,800 patients taking Naugazol, leading to sales of $62.2 million. Given that the company had no revenue previously, this significant increase is expected to continue for the next couple of years.

By mid-next year, regulators in the E.U. are expected to provide feedback regarding Naugazol's potential availability in Europe. Madrigal is also focused on establishing connections with specialist physicians who will be crucial in driving prescribing volumes. So far, the company has contacted over 40% of the targeted physicians during the drug's launch period, and this number is likely to continue climbing.

The successful rollout of Naugazol offers a solid reason to consider purchasing the stock.

2. Plans to broaden its market reach

Upon launch, Madrigal identified a U.S. market of approximately 315,000 patients with MASH, who meet specific diagnostic criteria and have moderate to severe liver scarring. While this is a logical focus, as the drug has been proven to be effective within this population, the total number of individuals with MASH is much higher, potentially reaching over 1.5 million people.

By conducting additional research and development (R&D) activities, Madrigal aims to expand its market reach. For instance, there is a significant population of patients with more advanced liver scarring, called compensated cirrhosis, representing around 15% of all MASH patients.

In October, Madrigal completed the enrollment process for a new clinical trial investigating the potential of Naugazol in treating this patient group. Should the drug receive regulatory approval for this indication, it would mark the first time a drug has been approved for this condition. This would open up a previously untapped market segment, not to mention potentially saving patients from the need for a liver transplant.

Gaining the ability to tackle MASH in patients with cirrhosis is yet another reason to choose Madrigal's stock.

3. It may be cultivating a hard-to-replicate competitive advantage

Madrigal is actively working to establish relationships with liver specialists, enabling them to recommend Naugazol to their patients with various stages of liver scarring or cirrhosis. While the financial value of these efforts is unclear, in the long term, this company's network of providers could establish a substantial competitive advantage.

Close ties with liver doctors offer several advantages. First, recruitment for clinical trials would become easier as these physicians have a detailed understanding of upcoming trials and can readily identify which of their patients might qualify.

Second, Madrigal may not have the same level of resources to invest in physician outreach as larger competitors entering its market in due time, such as Novo Nordisk. However, its focus on drug development for MASH rather than only having a couple of programs to target this disorder among many others could result in a stronger connection with individual providers, potentially ensuring they remain loyal and support the company's market share when competing products become available.

Finally, should these physicians wish to conduct their own research into MASH, they may consider partnering with Madrigal, providing potential benefits such as access to new programs for the company's pipeline as well as increasing the demand for its drug through the discovery of off-label uses or beneficial drug combinations.

The prospect of developing a unique competitive advantage is an additional compelling reason to consider this stock.

  1. With the substantial increase in revenue following the successful release of Naugazal, Madrigal Therapeutics is now exploring ways to invest its financial resources wisely, potentially looking into additional investment opportunities within the healthcare industry.
  2. As Madrigal's stock continues to grow, sophisticated investors may choose to diversify their portfolios by allocating a portion of their capital to this promising biotech company, recognizing its potential for long-term financial gain in the realm of liver disease treatments.

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