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Madrigal Pharmaceuticals (MDGL) is poised to deliver positive Phase III data in 2022 for resmetirom, its best-in-class NASH (nonalcoholic steatohepatitis) compound.

The company remains on track to complete the double-blind portion of the Phase III non-invasive imaging and biomarker study, MAESTRO-NAFLD-1, and report topline data in early 2022. The Phase III data will measure the reduction in imaging and biomarker measures of NASH, as well as the lowering of LDL-cholesterol and other atherogenic lipids.

Resmetirom has huge potential due to its excellent efficacy at reducing both NASH/NAFLD and the underlying cause of NASH high LDL/atherogenic lipids, accompanied by outstanding safety and oral delivery. There are no current treatments approved for NASH/NAFLD, and an efficacious and safe pill like resmetirom has the potential, in our view, to dominate the sector and become a multi-billion drug.

The upcoming data will not just be watched by investors, Big Pharma/Big Bio will also be watching closely as MDGL is a fully-owned, de-risked asset that would make an excellent M&A target for the big pharmaceutical companies.

MDGL is about to release dominant Phase III/registration data for resmetirom and based on the excellent Phase II results and the drug candidate’s novel mechanism of action — we expect the data to positive. The recent data presented at AASLD both de-risks the Phase III data and also points out the potential for resmetirom to be not just the first but also the best-in-class drug for NASH and NAFLD.

The use of non-invasive imaging is huge for the potential launch and uptake as liver biopsies are painful/expensive and avoiding their use will help transform the diagnosis of both NASH and NAFLD, and significantly increase the target patient populations.

To this end, MDGL recently partnered with Fatty Liver Foundation (FLF), a patient advocacy group, to raise awareness around the NASH/NAFLD treatment paradigm along with importance of non-invasive tests for patient identification and diagnosis

In our view, MDGL is poised to deliver positive Phase III data which will serve as major stock catalyst and also lead to a premium takeover candidate in 2022. I would say MDGL is a "buy" under $200 with a target price of $275.