If you're willing to be patient, biotech stocks can provide significant upside even if you only invest a relatively small amount, such as $1,000. In that sense, Madrigal pharmaceutical products (NASDAQ: MDGL) has a lot to offer. Between the recently launched new drug and the fact that it was the first in its market, the company still has a long road to growth. Here's why it's a worth investment today, provided you're willing to hold onto your shares for at least a few years.
Madrigal makes a drug 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. Currently, the target market includes the roughly 315,000 US patients with MASH already diagnosed and under the care of specialists, but the addressable market could one day be as large as the entire population of 1.5 million people in the US which is a form of MASH.
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Since its approval in mid-March 2024, sales of Rezdiffra have been increasing rapidly, reaching $62.2 million in the third quarter, the drug's first full quarter on the market. Just a year ago, Madrigal had no sales at all, and it's likely that sales will continue to rise for at least a few more years as the commercial rollout continues.
More than 6,800 patients are currently following the treatment. The company hopes to have the drug approved for sale in the EU sometime in the second half of 2025, which will be a key catalyst for further growth.
The next hurdle to overcome is that the company will become profitable as growth accelerates. In the third quarter, operating expenses were $178.5 million, and it reported cash, equivalents, restricted cash and short-term investments of $1 billion. In other words, it has plenty of time to become profitable before it needs 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 MASH drug market forever. But one of the most powerful aspiring entrants, Novo Nordiskmay not be as intimidating to biotechnology as it once was. Novo's molecule semaglutide (commonly known by the trade names Ozempic and Wegovy) has already been marketed for the treatment of cardiometabolic diseases such as type 2 diabetes and obesity, both diseases common in patients with MASH.
