Madrigal Pharmaceuticals (MDGL) PT Raised to $178 at H.C. Wainwright

H.C. Wainwright raised its price target on Madrigal Pharmaceuticals (NASDAQ: MDGL) to $178.00 (from $156.00) while maintaining a Buy rating.

Analyst Ed Arce commented, "Following the highly successful interim 12-week readout on December 6, 2017 of Madrigal's lead drug MGL-3196 in reducing hepatic fat fraction (MRI-PDFF) in patients with non-alcoholic steatohepatitis (NASH; Exhibits 2, 3), management has guided to top-line results for the full 36-week study at the end of this month (May 2018). Recall, in 125 patients (mean NAS 4.9; 43% F2-F3) randomized 2:1 vs. placebo, MGL-3196 achieved highly statistically significant absolute reductions in MRI-PDFF of 7.8 to 8.8 (relative reductions of 36.3% to 42.0%). Importantly, these results correspond to ≥30% liver fat reduction of 60.3% and 75.0% of patients in the same two MGL-3196 patient groups (overall [n=78] and high-dose [n=44]), respectively. We know from the ongoing work of Professor Rohit Loomba (UCSD) and others that surpassing the 30% fat reduction threshold is strongly correlated with a histologic response in NASH, defined as ≥2 point reduction in the NASH CRN NAFLD Activity Score (NAS). (Ther Adv Gastroenterol 2016, Vol. 9(5) 692-701). In our view, the most important endpoint for Madrigal to hit at the biopsy-assessed 36-week time point is resolution of NASH (ballooning = 0; inflammation = 0 to 1), given that it is one of two currently acceptable registrational surrogate endpoints for (pre-cirrhotic) NASH. We have reviewed supportive data presented by Madrigal and others last month at EASL 2018 (see Exhibits 4-9 below) and have concluded that the majority of patients on study drug [n≥40] are highly likely to have resolved NASH by the end of treatment. Given our increased confidence in a strongly positive readout, perhaps more so than some may expect, we view the imminent data release to be another major catalyst for the shares, and as such, raise our price target to $178 from $156 previously. Post-readout, we also anticipate increased focus and urgency regarding ongoing discussions around a potential strategic transaction. Affirm Buy."

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