May 31, 2018 / 11:13 AM / 6 months ago

Madrigal Pharma more than doubles after liver drug study success

(Reuters) - Madrigal Pharmaceuticals Inc’s shares more than doubled after mid-stage trial data showed its lead drug reduced liver fat in patients with fatty liver disease, placing it ahead of larger rivals to tap into a potential market worth $30 billion.

Often dubbed the “silent disease” because it frequently goes undiagnosed, non-alcoholic steatohepatitis or NASH is one of the fastest growing diseases in the developed world and is expected to become the leading cause of liver transplants by 2020.

The lucrative size of the market has led large drugmakers to hunt for deals with smaller companies that have promising medicines to treat NASH, which currently has no approved treatment.

Madrigal’s oral drug, MGL-3196, met the main goal of the study at week 36 and the company said the results indicate a “high likelihood of success” in a larger trial with a longer treatment period.

An FDA approval is contingent on demonstrating the treatment can either resolve NASH or reduce fibrosis, or liver scarring.

“I think they’ve already kind of nailed it with the resolution of NASH,” JMP Securities analyst Liisa Bayko said. “This is the best result we’ve seen across all the NASH studies so far to date.”

NASH onset is unrelated to alcohol use, but diabetes and obesity have been linked to those at risk and any treatment must be able to reduce the main characteristic of the disease — a build-up of fat in the liver that leads to inflammation and damaged cells.

Madrigal, which had $182.8 million in cash as of March 31, said it intends to start the trial by the end of 2018.

But H.C. Wainwright & Co analyst Ed Arce said a partnership is now fairly likely as the company would need additional funds to see through a late-stage trial.

“We are in a much better position to talk to people who might be interested in partnering with us,” Chief Executive Officer Paul Friedman said on a conference call with analysts.

Madrigal will have to jostle with other drugmakers, including Gilead Sciences, Allergan Plc and Intercept Pharmaceuticals, who are all developing treatments for the disease.

However, experts believe the market is large enough to accommodate more than one treatment option.

“This is much less about a ‘winner takes it all’ market,” Arce said.

Madrigal’s shares have risen over seven-fold over the past year and were trading at $244.32 on Thursday morning.

Reporting by Tamara Mathias in Bengaluru; Editing by Sriraj Kalluvila and Shounak Dasgupta

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