NVO - Madrigal Pharmaceuticals: The GLP-1 Threat May Be Overcooked

2024-06-12 10:16:29 ET

Summary

• Madrigal Pharmaceuticals, Inc. stock has enjoyed peaks and troughs as it has pursued its path to the approval of NASH drug Rezdiffra.
• The company's stock was buoyant yesterday, enjoying a 15% gain after Wolfe Research initiated positive coverage.
• Competition from GLP-1 agonists like Eli Lilly's tirzepatide and Novo Nordisk's semaglutide are expected to pose a threat to Rezdiffra's commercial success.
• I suspect these fears are overblown, however. Madrigal has a significant first mover advantage, an orally available drug, and every chance to develop Rezdiffra into a "blockbuster" drug.
• Despite challenges, Madrigal's strong financial position, experienced CEO, and potential market expansion make it a compelling investment opportunity.

Investment Overview - Madrigal Stock's Pattern Of Highs And Lows

I have been covering Madrigal Pharmaceuticals ( MDGL ) for Seeking Alpha since February 2021, when I published my first note , and if I had stuck with my "buy" recommendation made back then I would be looking at a 142% return on investment in a little over 3 years - a handsome return by anybody's standards.

That doesn't quite tell the full story, however - Madrigal's only drug of note is Resmetirom, a once-daily, oral, liver-directed thyroid hormone receptor-? (THR-?) agonist, indicated to treat patients with nonalcoholic steatohepatitis ("NASH"), now known by a different name, metabolic dysfunction-associated steatohepatitis ("MASH") - we will stick with NASH for the purposes of this post, however....

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