On Wednesday, Madrigal Pharmaceuticals (NASDAQ:MDGL) received a new coverage initiation from Citi, with a Buy rating and a price target set at $382.
The pharmaceutical company, which is currently focused on developing its drug resmetirom, has caught the attention of the financial institution due to its potential to address the largely untapped market for non-alcoholic steatohepatitis (NASH).
Citi's analysis suggests that resmetirom, a thyroid hormone receptor-beta agonist, is on track to potentially become the first approved therapy in the NASH space, a sector that has seen significant challenges in drug development. The optimism surrounding the drug is further heightened by the upcoming Prescription Drug User Fee Act (PDUFA) target date on March 14, 2024, when resmetirom could receive approval.
In anticipation of this event, Citi has opened a Catalyst Watch for Madrigal, signaling heightened interest from investors ahead of the likely approval. The firm also plans to host a Key Opinion Leader (KOL) call to discuss the implications of the drug's assumed approval on its labeling.
The potential market for resmetirom is considerable, with Citi expecting the drug's label to target NASH patients with stage F2/F3 fibrosis. An expanded label could offer additional market opportunities, although the necessity for liver biopsies could present a significant hurdle to the drug's uptake and peak potential. However, Citi notes that such a requirement is considered unlikely, as liver biopsies are not commonly required in current industry practice.
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