3 Reasons Why Buying Madrigal Pharmaceuticals Would Be a Smart Move Today

When a company’s shares rise 82% in 12 months, investors clearly think this is a good time to become a shareholder, and that’s exactly what’s happening with the company’s shares. Madrigal Pharmaceuticals (MDGL 5.53%). Earlier this year, the promising biotech won approval for a pioneering liver disease treatment. And looking at the current situation, there isn’t much reason to expect this budding player’s growth to slow down anytime soon.

In fact, the bull thesis for buying it still looks pretty good. There are three reasons why buying stocks is a smart move.

1. Its first drug is brought to market very efficiently

When Rezdiffra was approved in March 2024, it became the only drug approved by the Food and Drug Administration (FDA) to treat metabolic-related steatohepatitis (MASH), a disease characterized by fatty deposits in the liver and hardening and hardening of liver tissue. (fibrosis) and eventually scarring of the liver (cirrhosis).

Since then, Madrigal has focused on getting more patients treated to generate sales. More than 6,800 patients were using Rezdiffra in the third quarter, leading to sales of $62.2 million. Since the business had no revenue prior to the drug’s launch, this number is expected to continue growing rapidly for at least the next few years.

By the middle of next year, the company is expected to hear back from EU regulators on whether the drug can be sold there. It is also actively working to network with specialist physicians who management believes will be disproportionately important to prescribing volume; so far, Rezdiffra has been in contact with 40% of the doctors it targeted during the launch period.

This figure will likely continue to rise, and the continued success of Rezdiffra’s launch is a fair reason to consider buying shares.

2. Work continues to expand the addressable market

Initially, Madrigal identified Rezdiffra’s target market as the 315,000 or so patients in the U.S. who were already diagnosed with MASH, working with an expert clinician, and had moderate to advanced liver fibrosis. This makes sense because this is the disease context in which the drug worked in clinical trials. However, the total population of MASH patients is much larger; perhaps up to 1.5 million people. And with some additions research and development (R&D) Working in the form of additional clinical trials, this biotech is eager to expand its scope addressable market to also capture some of the larger patient group.

In particular, there is a population of patients with more advanced liver scarring called compensated cirrhosis, which accounts for 15% of all patients affected by MASH. In October, the company completed enrollment for a new clinical trial investigating whether Rezdiffra could help these patients. If it eventually wins regulatory approval to treat the condition, it would be the first drug to do so. This will give Madrigal access to a previously untapped segment of the market, potentially saving patients from needing a liver transplant.

The possibility of being the only operator able to treat MASH with cirrhosis is another reason to buy the stock.

3. May be developing a competitive advantage that is difficult to replicate

As previously mentioned, Madrigal is doing its best to contact liver doctors so they can prescribe Rezdiffra to their patients, many of whom have MASH in various stages of liver fibrosis or cirrhosis. It’s unclear exactly how financially valuable these efforts are today, but since there is no other drug approved to treat MASH yet, in the long run the company’s provider network could become one. competitive advantage.

Close relationships with specialist doctors open many doors for you. First, recruitment for clinical trials will become easier as clinicians are informed in detail about upcoming trials and appreciate which of their patients may be suitable, making it an obvious move to refer them.

Second, Madrigal will not be able to devote as much resources to physician support as larger competitors that are likely to enter its market soon. Novo NordiskIt has the advantage of focusing on drug development for MASH rather than having only a few programs in the pipeline aimed at treating it among many other candidates and target indications.

Thus, the ability to effectively engage with individual providers is likely to remain higher; this may encourage them to remain loyal and thus preserve the biotech’s market share in the face of the introduction of other products.

Finally, if doctors in its network want to conduct MASH research on their own, and most do, they can enter into a sponsorship agreement or collaboration with Madrigal. This could ultimately benefit the business directly in the form of access to new programs for its pipeline, but it could also directly spur greater demand for its drug if researchers find useful off-label uses or useful combinations with other drugs.

The possibility of a competitive advantage is definitely another reason to consider buying this stock.