If you’re willing to be patient, biotech stocks can offer significant upside, even if you only invest a relatively small amount, like $1,000. In that vein, Madrigal Pharmaceuticals (NASDAQ: MDGL) has a lot to offer. Between its recently launched new drug and being the first in its market, it has a long runway for growth. Here’s why it’s worth an investment today, provided that you’re willing to hold on to your shares for at least a few years.
Madrigal makes a medicine called Rezdiffra, which is currently the only approved treatment for metabolic-associated steatohepatitis (MASH, formerly known as NASH) in patients with moderate to advanced fibrosis (scarring) of the liver. Right now, its target market comprises the roughly 315,000 patients in the U.S. with MASH who are already diagnosed and in the care of specialists, but its addressable market could one day be as large as the entire population of 1.5 million people in the U.S. who have some form of MASH.
Start Your Mornings Smarter! Wake up with Breakfast news in your inbox every market day. Sign Up For Free »
Since its approval in mid-March of 2024, sales of Rezdiffra are increasing expediciously, reaching $62.2 million in Q3, the drug’s first full quarter on the market. A mere year ago, Madrigal had no revenue at all, and it’s likely that its revenue will continue to rise for at least a couple of years as its commercial rollout continues.
Right now, more than 6,800 patients are taking the treatment. The company hopes to get the drug approved for sale in the E.U. sometime in the second half of 2025, which will be a major catalyst for further growth.
The next hurdle to clear is for it to become profitable as its growth accelerates. In the third quarter, its operating expenses were $178.5 million, and it reported cash, equivalents, restricted cash, and short-term investments worth $1 billion. In other words, it has plenty of time to reach profitability before it would need to raise additional capital. And that’s a solid set of reasons to consider investing $1,000 in the stock.
Madrigal probably won’t be the only competitor in the market for MASH drugs forever. But one of the most powerful aspiring entrants, Novo Nordisk, may not be as intimidating for the biotech as it once was. Novo’s molecule semaglutide (commonly known by the trade names Ozempic and Wegovy) is already marketed to treat cardiometabolic illnesses like type 2 diabetes and obesity, both of which are illnesses commonly present in patients with MASH.
