Expanding Biotech Investment Opportunity: Select a Profitable Option with a $1,000 Initial Investment, Maintain for Over Five Years
If you're up for some patience, biotech stocks can deliver notable returns, even if you're investing a modest amount, like $1,000. In this light, Madrigal Therapeutics (MDGL 5.12%) deserves your attention. Its recent product launch and first-mover advantage in the market offer promising prospects for expansion. Here's why you might want to consider investing today, given your readiness to keep your shares for a few years.
This debut is a resounding success
Madrigal produces a medication called Mogadifenatide, which is the sole authorized treatment for metabolic-associated steatohepatitis (MASH, previously known as NASH) in patients with moderate to advanced fibrosis (liver scarring) as of now. Presently, its intended market includes the approximately 315,000 U.S. patients with MASH who have been diagnosed and are under the care of specialists. However, its potential market could one day encompass the entire population of 1.5 million Americans with some form of MASH.
Since its approval in mid-March 2024, Mogadifenatide sales have been rising rapidly, reaching $62.2 million in Q3, its first complete quarter on the market. Notably, Madrigal was generating no revenue at all a year prior, and its revenue is likely to keep growing for at least a couple of years as its commercial launch continues.
Currently, over 6,800 patients are using the treatment. Madrigal plans to get the drug cleared for sale in the E.U. in the second half of 2025, which will serve as a significant catalyst for further growth.
The primary challenge ahead is to transform the company into profitability as its growth accelerates. In Q3, its operating expenses were $178.5 million, while it reported cash, equivalents, restricted cash, and short-term investments worth $1 billion. In essence, it has sufficient time to achieve profitability before it would need to secure additional funding. And thus, these are compelling reasons to think about investing $1,000 in the stock.
A significant competitor might not pose as large a threat as anticipated
Madrigal may not remain the sole competitor in the MASH drug market. Nevertheless, one of the most formidable contenders, Novo Nordisk, might not pose as substantial a threat to the biotech as it once did. Novo's drug semaglutide (widely recognized by trade names Ozempic and Wegovy) is already marketed to manage cardiometabolic conditions like type 2 diabetes and obesity, which are common in patients with MASH.
As per recently published phase 3 clinical trial results, semaglutide's effectiveness in treating MASH is somewhat comparable to Mogadifenatide, although possibly slightly superior. However, Madrigal's management emphasizes that semaglutide is not exactly user-friendly, so Mogadifenatide may have an edge in terms of patient compliance over the long run.
Novo will face delays in getting its treatment approved for MASH and even longer to secure approval for key expanded indications like cirrhosis with MASH that Madrigal could potentially achieve relatively soon. Therefore, there's no sign that semaglutide will cannibalize so much market share as to significantly slow Mogadifenatide's growth, at least for the time being.
In addition, it's not guaranteed that other aspiring competitors like Eli Lilly will fare significantly better. Instead, it appears that Madrigal will find a niche in the market even amongst giants.
Consequently, it's highly probable that as it continues to expand its market presence, this biotech stock will continue to show robust growth rates. And that's another reason to buy its stock and hold it for the next five years or more.
Given Madrigal's robust sales of Mogadifenatide and its potential market expansion, investing in the company's stock could yield substantial returns. With a promising future and competitors facing challenges in gaining market share, this investment could be a wise choice for those with a long-term financial strategy in the field of finance and investing.
As Madrigal and its competitors navigate the market, their financial strategies will play a crucial role in shaping the future of the MASH drug market. Investing in such biotech stocks can offer diversification in a portfolio, potentially providing strong gains over the course of several years.
