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It is an ugly ailment with an ugly name. But after years of trying, the pharmaceuticals industry is getting to grips with the multibillion-dollar problem of fatty liver disease.
This month Pennsylvania-based biotech Madrigal became the first to win approval for a treatment for metabolic dysfunction-associated steatohepatitis (MASH). The breakthrough is badly needed. This liver disease already affects one in 20 of the world’s adults and its prevalence is rising with obesity.
Madrigal will make the most of its head start. It is now raising $600mn to launch its pioneering drug Rezdiffra in the US. Madrigal’s market value is about $5.1bn. But Bloomberg data for analysts’ 12-month price targets would lift that by more than a third.
That can be justified. Assume that the drug, which is set to sell for $47,400 a year, makes $4.5bn of sales in 2030. Then apply the 2.7 times 2030 EV-to-sales multiple of a group of similar biotechs listed by Visible Alpha. Discounted and adjusted for cash, that implies a Madrigal market capitalisation of about $7bn.
Yet even after it won the green light from US regulators, Madrigal’s shares are a tenth lower than they were last April. That reflects the growing excitement over the potentially wide-ranging benefits of obesity treatments, which would reduce the need for dedicated drugs. About one in five of the 105 obesity treatments being developed are also being tested for MASH, according to the Stat obesity drug tracker.
The debate over the role of obesity drugs has not yet been settled. In February’s mid-stage trials, Eli Lilly’s weight loss drug tirzepatide showed promise against MASH. Impressive results also emerged for German pharma group Boehringer Ingelheim and Zealand Pharma’s survodutide.
But MASH (which confusingly is also known as Nash or non-alcoholic steatohepatitis) is a complex disease. Often asymptomatic in its early stages, it is called a silent killer. A build-up of fatty molecules in the liver can lead to inflammation, the accumulation of scar tissues — a process called fibrosis — and potentially liver failure.
MASH has been a hard nut to crack. A phase II trial for Novo Nordisk’s semaglutide was effective at resolving inflammation but did not improve fibrosis. It is possible it requires longer treatment time. Investors are waiting for phase 3 trial results to be released later this year.
Some drugs might be effective in the early, but not the late stages of the disease. As with cancer, MASH may require combinations of drugs tailored to different patient’s needs. Despite the frenzy over weight-loss medications, those drugs shouldn’t squeeze out alternatives for tackling this nasty disease.
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