Madrigal climbs amid hopes for new NASH drug; B. Riley upgrades

Shares of Madrigal Pharmaceuticals (NASDAQ:MDGL) gained in the premarket Friday as Wall Street welcomed the company's newly approved liver disease medication, Rezdiffra, indicated for nonalcoholic steatohepatitis (NASH).

The landmark decision enables Madrigal (MDGL) to launch the first U.S.-approved therapy for NASH, currently known as metabolic dysfunction-associated steatohepatitis (MASH). The company has a set list price of $47K for Rezdiffra.

With its approval under the FDA's accelerated pathway, MDGL is required to provide further evidence to confirm Rezdiffra's benefit in order to receive full approval for the therapy.

However, Wall Street is already celebrating, sending Madrigal's (MDGL) shares ~26% higher in the premarket. Meanwhile, B. Riley has upgraded the stock to Neutral from Sell, noting that the FDA's "timely" approval of Rezdiffra has come with a label that exceeded analysts' expectations.

In a major victory for the company, the FDA hasn't required a liver biopsy to confirm patients' eligibility for the pill. In the lead-up to the approval, it was a main sticking point among investors, as the invasive nature of the procedure could have limited access to Rezdiffra.

"The absence of liver biopsy requirement in Rezdiffra's label should buoy biotech stocks with exposure to MASH," William Blair analyst Andy Hsieh wrote, referring to the potential of other drug developers targeting the condition.

Madrigal’s (MDGL) rivals in NASH space, Terns Pharma (TERN), Galectin Therapeutics (GALT), Viking Therapeutics (VKTX), Inventiva (IVA), NGM Biopharma (NGM), 89bio (ETNB), Akero (AKRO) are also trading higher.

Other NASH drug developers include Novo Nordisk (NVO), Eli Lilly (LLY), Ionis Pharma (IONS), Arrowhead Pharma (ARWR) Sagimet Biosciences (SGMT) and Enanta Pharma (ENTA).