Goldman Sachs Cuts Madrigal Pharma To Neutral Given No Near-Term Catalysts

Madrigal Pharmaceuticals Inc MDGL is positioned to dominate a “blockbuster market,” according to Goldman Sachs. But while the bank believes in the biotech’s longer-term prospects, it sees no near-term catalysts for Madrigal’s stock.

The Rating

Analyst Salveen Richter downgraded Madrigal to Neutral but maintained his $314 price target.

The Thesis

Richter forecasts limited upside to his fundamental discounted cash flow value and anticipates few value-driving catalysts in the near future. However, he maintains high expectations for MGL-3196.

“We continue to view MGL-3196, a once-daily oral thyroid hormone receptor (THR)-beta agonist, as a best-in-class and industry drug for NASH driven by the positive liver and cardiometabolic profile (per the Phase 2 36-week study) and corroborating KOL feedback,” Richter wrote in a note. “Specifically, based on the efficacy/safety profile seen to date with MDGL’s MGL-3196 - our KOLs suggest this would be a first choice as monotherapy.”

He identifies a “clear development path” for MGL-3196 and anticipates New Drug Applications for two indications with global peak sales of $6 billion.

Additionally, given management’s interest in business development activities to commercialize the candidate, Madrigal could eventually drive value with a merger.

“Post the highly impressive MGL-3196 Ph2 36-week liver biopsy data, MDGL is positioned as a leading next-generation NASH player with a best-in-class strategic asset in a blockbuster market where there are currently no approved therapies,” Richter wrote.

Price Action

At time of publication, shares traded down 3.5 percent at $242.05.

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