Madrigal Pharmaceuticals said Friday it plans to finish submitting its application for approval of a nonalcoholic steatohepatitis treatment in July, and MDGL stock popped.
If successful, Madrigal will be the first to launch a treatment for nonalcoholic steatohepatitis. Also known as NASH, the disease causes scar tissue called fibrosis to build up on the liver. It generally shows no symptoms until the disease becomes severe, requiring a liver transplant.
Madrigal already has submitted some of the data necessary for Food and Drug Administration approval of its drug, resmetirom. Once it sends the final components, the FDA could have a short, six-month review period vs. the standard 10-month schedule.
"Overall, we are encouraged with Madrigal's progress on a (new drug application) submission," SVB Securities analyst Thomas Smith said in a note to clients. He added that the studies "should provide a robust data package to support the FDA's review and approval for resmetirom in NASH with liver fibrosis."
On today's stock market, MDGL stock jumped 4.9% to close at 231.
MDGL Stock: A Big NASH Market
The market for an effective NASH treatment could be huge. The global market is expected to reach $160.7 billion by 2030, according to market researcher ReportLinker.
But efforts to treat the liver disease have flummoxed drugmakers so far. This week, Intercept Pharmaceuticals stock crashed after the FDA rejected its treatment for NASH. Now, the company is undergoing a restructuring and layoffs. It also shuttered its NASH program.
To gain FDA approval, a drug must either improve fibrosis by one stage without leading to worsening in NASH — defined as presence of fatty liver disease. Or, a drug can resolve fatty liver disease but can't lead to worse fibrosis.
In a Phase 3 study, 30% of patients who received a high dose of Madrigal's drug had resolved NASH with no worsening in fibrosis, and 26% showed improvement in fibrosis with no worsening in fatty liver disease. MDGL stock soared 268% on Dec. 19 after it unveiled that data.
Now, Madrigal is hoping to snag an accelerated approval.
Highly Rated Biotech Stock
Smith kept his outperform rating on MDGL stock.
Shares have a strong Relative Strength Rating of 97 out of a best-possible 99. This puts Madrigal stock in the leading 3% of all stocks when it comes to 12-month performance, according to IBD Digital.
MDGL stock remains above its 50-day moving average, MarketSmith.com shows.
But shares took a tumble earlier in the week when Eli Lilly said its next-generation diabetes and obesity treatment led to a significant reduction in liver fat. Analysts say that signals Lilly's drug — and others like it — could have a future foothold in the NASH market.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
