Merriam-Webster defines “madrigal” as a form of song meant for several voices unaccompanied by instruments, popular during the Renaissance and early Baroque eras. This week, after Madrigal Therapeutics (MDGL) aced a pivotal trial for its lead candidate resmetirom in the tough-to-drug indication of nonalcoholic steatohepatitis (NASH), it was investors who were left singing a happy tune as the stock quadrupled in price.

Mardigal shares rocketed 268% on Monday, from $63.80 to $234.83, then climbed 6.5% on Tuesday, to an even $250, and jumped another 16% on Wednesday, to $289.43, all after the company announced strongly positive topline results from its Phase III MAESTRO-NASH trial (NCT03900429). The results showed resmetirom to have met both of the study’s primary endpoints, two liver histological improvement endpoints proposed by the FDA as reasonably likely to predict clinical benefit.

Resmetirom is a once daily oral, liver-directed thyroid hormone receptor (THR) β-selective agonist designed to treat underlying causes of NASH in the liver, while improving multiple atherogenic lipid profiles. MAESTRO-NASH evaluated two dosages of resmetirom compared to placebo in a 52-week serial liver biopsy Phase III study that recruited more than 950 patients.

According to Madrigal, 26% of patients receiving the 80 mg dose of resmetirom, and 30% receiving the 100 mg, met the endpoint of NASH resolution by showing a ≥2-point reduction in NAS (Non Alcoholic Fatty Liver Disease [NAFLD] Activity Score), with no worsening of fibrosis, compared with 10% of patients randomized to placebo. Also, 24% of 80 mg patients and 26% of 100 mg patients achieved the study’s other endpoint—a decrease of at least 1 point in fibrosis with no worsening of NAS, compared with 14% of placebo patients.

Resmetirom also met the trial’s key secondary endpoint of lowering LDL-C by demonstrating reductions of 12% and 16% in 80 mg and 100 mg patients, respectively, vs 1% for placebo.

These pivotal Phase III results demonstrate the potential for resmetirom to help patients achieve improvement in both the underlying steatohepatitis that drives this disease and the resulting fibrosis that is associated with progression to cirrhosis and its complications,” Becky Taub, MD, Madrigal’s chief medical officer and president of research & development, said in a statement. “The topline data also reinforce our confidence in the safety and tolerability profile of resmetirom.”

As a result, said Madrigal CEO Paul Friedman, MD, Madrigal intends to file a new drug application (NDA) seeking accelerated approval of resmetirom for the treatment of non-cirrhotic NASH with liver fibrosis in the first half of 2023. The NDA will be based on data from MAESTRO-NASH, as well as a second Phase III trial assessing the drug in in NAFLD patients, MAESTRO-NAFLD-1 (NCT04197479) and an open-label extension study, MAESTRO-NAFLD-OLE (NCT04951219).

Confident analysts

Madrigal’s confidence in resmetirom was shared by several analysts in research notes published this week.

“In achieving both clinical endpoints with high statistical significance, we believe the probability of receiving approval in both the US and Europe has increased significantly, especially given that Europe requires a positive outcome on both primary endpoints,” wrote Edward Nash, Managing Director and Senior Biotechnology Analyst with Canaccord Genuity. “We believe the positive data announced today is a significant win for the company and could benefit at least 1.5 million NASH patients each year in the U.S.”

Nash raised the firm’s 12-month price target for Madrigal shares 79%, from $151 to $270 a share. Canaccord Genuity has projected resmetirom will generate peak product sales of $2.5 billion in 2029.

Jefferies equity analyst Akash Tewari foresees even higher peak-year sales for resmetirom of $2.9 billion—of which about ~$1.8 billion is expected to come from the U.S. and about ~$1.1 billion from the European Union. Tewari has also more than tripled his firm’s price target for Madrigal stock, from $92 to $285 a share.

“This exceeded our expectations + hit our bull case scenario,” Tewari enthused. “This is now [one] of the most strategically interesting assets in our coverage.”

Thomas J. Smith, senior managing director, Immunology and Metabolism, and a senior research analyst with SVB Securities, went beyond the Phase III data, declaring Madrigal the winner in the longtime scramble by drug developers to develop NASH treatments.

“We believe these data establish MDGL as the clear leader in NASH therapeutics, with resmetirom exhibiting the best balance to date of efficacy, safety/tolerability, and convenient once-daily oral administration that should establish the drug as a mainstay/backbone therapy,” Smith concluded.

Smith has more than doubled SVB’s price target, from $145 to $315 a share, and nearly doubled its peak-year sales estimate for resmetirom from about $1.3 billion to about $2.5 billion.

With resmetirom generating blockbuster-sized peak sales, Smith is among Wall Street watchers of biotech who have also concluded that Madrigal represents an ideal takeover target.

“While we see a clear scenario where MDGL opts to continue to scale its commercial infrastructure and launch resmetirom on its own in the U.S.,” Smith wrote, “we also believe MDGL could provide significant strategic value to an acquirer looking to bolster their pipeline with what we expect to be a multi-blockbuster therapy.”

JMP Securities analyst Jonathan Wolleben has identified several potential buyers for Madrigal, all of them also working to develop drugs for NASH. These would-be buyers include AstraZeneca, Eli Lilly, Gilead Sciences, Merck & Co., Novartis, Novo Nordisk, and Pfizer, according to a research note as reported by Benzinga.

The attractive commercial potential of resmetirom (formerly MGL-3196) attracted Synta Pharmaceuticals to complete a merger with Madrigal in 2016, after Synta the previous year lost nearly 87% of its stock value—placing it at number five on GEN’s List of Top 10 Wall Street Losers of 2015. Much of that value was lost after Synta’s lead oncology drug candidate ganetespib and docetaxel failed a Phase III trial in second-line treatment of patients with advanced non-small-cell lung adenocarcinoma.

Indictments sink CytoDyn shares

CytoDyn (CYDY) shares tumbled 34% early this week, from $0.3162 at the start of trading Monday to $0.2099 on Wednesday, following a federal indictment Tuesday of the company’s former President and CEO Nader Z. Pourhassan, PhD, 59, of Lake Oswego, OR—and Kazem Kazempour, 69, of Potomac, MD, co-founder, president, and CEO of CytoDyn’s clinical trials manager Amarex Clinical Research—on charges that they defrauded investors.

Pourhassan and Kazempour face charges in U.S. District Court for the District of Maryland accusing them of artificially inflating and maintaining the price of CytoDyn’s stock and attracting new investors by deceiving them about the timeline and status of CytoDyn’s regulatory submissions to the FDA, then selling their personal shares of CytoDyn stock at prices inflated by the hype for personal gain.

CytoDyn drew public attention in recent years for touting its drug candidate leronlimab as a potential treatment for diseases ranging from cancer to HIV to COVID-19 (under the name Vyrologix™). In May 2021, the FDA issued a rare public rebuke of some claims made by CytoDyn about its Vyrologix program after the company said results of two trials showed clinical benefits for the COVID-19 treatment.

CytoDyn’s board dismissed Pourhassan in January, about six months after the company acknowledged that it received subpoenas from the U.S. Securities and Exchange Commission and U.S. Department of Justice “requesting documents and information concerning, among other matters, leronlimab, the Company’s public statements regarding the use of leronlimab as a potential treatment for COVID-19 and related communications with the FDA, investors, and others, and trading in the securities of CytoDyn.”

Pourhassan and Kazempour were each charged with one count of conspiracy to commit securities fraud and wire fraud, three counts of securities fraud, and two counts of wire fraud. Pourhassan was also charged individually with an additional count of securities fraud, an additional count of wire fraud, and three counts of insider trading. Kazempour was also charged individually with one count of making false statements to federal law enforcement agents.

The docket of the court case, (8:22-cv-03284-PX) had not been updated at deadline to include pleas from Pourhassan and Kazempour in response to the charges. Pourhassan has denied wrongdoing in the past.

Leaders and laggards

  • Magenta Therapeutics (MGTA) shares plummeted 53% on Tuesday, from $0.83 to $0.39, after it halted dosing participants at the Cohort 4 dosing level (0.13 mg/kg) of a Phase I/II dose escalation trial (NCT05223699) of its most advanced targeted conditioning product candidate MGTA-117 in relapsed/refractory acute myeloid leukemia (AML). The company acknowledged that it observed dose-limiting toxicities (DLTs) in the cohort’s second and third dosed participants, with the second experiencing a Grade 4 Serious Adverse Event (SAE) (respiratory) considered possibly related to MGTA-117.
  • Otonomy (OTIC) shares fell 18% on Tuesday, from $0.115 to $0.094, a day after the company said its board approved a Plan of Liquidation and Dissolution that will distribute remaining cash to shareholders after an “orderly wind down” of operations to include the sale of pipeline assets. Otonomy terminated all employees and officers, including ex-CEO David A. Weber, PhD, who is still a director. Paul E. Cayer continues as chief financial and business officer on a consulting basis, and was appointed president. Trading of Otonomy’s shares will shift to the OTC Pink Market from Nasdaq shares as of Friday.
  • Soleno Therapeutics (SLNO) shares doubled on Tuesday, from $0.908 to $1.85, after the company announced it had entered into an up-to-$60 million securities purchase agreement, through which new investor Vivo Capital joined existing investors Nantahala Capital Management, and Abingworth. Soleno will receive $10 million upon closing of the agreement, $15 million upon positive data to support a New Drug Application (NDA) submission for DCCR (Diazoxide Choline) Extended-Release Tablets, and the remaining $35 million upon FDA approval of DCCR.