Madrigal Pharmaceuticals: What Is Going On?

Madrigal Pharmaceuticals (MDGL) had an incredibly very productive 2017, what is more, 2018 looks to be equally transforming. The stock has reacted in kind, moving from the mid-teens to $150 in a few months. However, it looks like the Street is using any, and we mean ANY excuse it can to sell the stock. At the time of this writing, shares are down 7%. The news? The company lost LESS money than expected in the most recent quarter. It is our opinion that this selloff is an opportunity to get long, because a lot of data reads are coming due in 2018.

Overall, the news from the company has been strong. Today’s selling? It is good ole fashion profit taking. The biggest takeaway we had from the quarter? The company is in good standing financially.

If we look at the quarter and the year, make no mistake, the company is burning cash. At the end of the year, the company had $191.5 million in cash and equivalents. As we look to 2018, we expect phase 2 trial data to be strong, given prior data reads. The run up in the stock has been data driven. Madrigal may have treatments that are effective. All eyes will be on the NASH study with MGL-3196. This year, both the full 12-week Phase 2 results as well as the top-line 36-week data, including liver biopsy results, are expected. We believe the company is adequately funded for this year and next, as such, the future of this stock depends on upcoming data reads.

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