Madrigal Pharmaceuticals (MDGL) appears to have a blockbuster on its hands in Rezdiffra™ (resmetirom), the metabolic dysfunction-associated steatohepatitis (MASH) treatment that won an historic FDA accelerated approval on Thursday—the first therapy to win agency authorization for a MASH drug.

Rezdiffra was approved for the treatment of adults with noncirrhotic MASH with moderate to advanced liver fibrosis (consistent with stages F2 to F3 fibrosis), in conjunction with diet and exercise. However, the FDA raised the possibility that its continued approval may hinge upon Madrigal showing continued clinical benefit in ongoing confirmatory trials.

Investors responded by sending Madrigal shares climbing 11% Friday, from $243.57 to $270.37.

Addressing analysts soon after the FDA approval, Madrigal CEO Bill Sibold said Rezdiffra can treat about one-third of the 1.5 million Americans diagnosed with MASH—about 525,000 patients with F2/F3 fibrosis. Of that 525,000, Madrigal will focus at the launch of Rezdiffra next month on 315,000 patients who are being seen by some 14,000 target specialists. Of those patients, 190,000 have F2 fibrosis and the other 125,000, F3 fibrosis.

Sibold disclosed another important number—the $47,400 wholesale acquisition cost of Rezdiffra, at which Madrigal is pricing the drug. He defended that price as one that reflected a balance between value and accessibility of the drug.

To support that argument, Sibold cited the range of $39,600 to $50,100 set for the drug last year as a cost-effectiveness range by the Institute for Clinical and Economic Review (ICER). That range dovetails closely with the $40,000 to $50,000 price range projected by several analysts over the past year.

Among analysts who projected at the low end were Edward Nash of Canaccord Genuity, who came in at an even $40,000 in January—when he nearly quadrupled his earlier projection of $11,000 a year. Because Rezdiffra will be priced higher, Nash has raised his projected sales for the drug to achieve billion-plus dollar “blockbuster” a year sooner, in 2026 rather than 2027.

New forecast

Nash’s new forecast over the next three years calls for Rezdiffra sales of $78.3 million this year, ballooning to $478.5 million in 2025, $1.245 billion in 2026, and $2.564 billion in 2027. In January, Nash projected sales of $77.3 million, $278.8 million, $808.8 million, and $1.905 billion. The sharp jump in sales estimates from 2025 onward reflects the expectation of European approval for the drug next year.

“We expect a quick adoption of Rezdiffra,” Nash wrote in a research note. “Our rationale of this assumption is supported by multiple factors.”

The most important of those, Nash explained, was the positive Phase III data generated from Madrigal’s pivotal MAESTRO-NASH trial (NCT03900429). The data, published in The New England Journal of Medicine (NEJM), showed that both evaluated doses of resmetirom (80 mg and 100 mg) were superior to placebo when it came to MASH resolution and improvement in liver fibrosis by at least one stage.

“The safety profile of Rezdiffra has been highly favorable with no significant red flags identified in past clinical trials, which enhances our confidence that the hepatologist community will have strong acceptance of the drug without much hesitation when using it for their patients,” Nash added.

Nash raised Canaccord Genuity’s 12-month price target on Madrigal shares 11.5%, from $338 to $377.

The closest Rezdiffra came to a safety issue occurred last month when a commentary published in NEJM recommended that patients taking resmetirom be monitored for their thyroid levels based on concerns about the long-term effects of hormonal changes tied to the drug. That news led to a 9% one-day drop in Madrigal shares, from $188.54 to $171.37.

Just as quickly, however, several analysts rejected that caution from Kenneth Cusi, MD, chief of the division of endocrinology, diabetes & metabolism in the department of medicine at the University of Florida—among them Akash Tewari, an equity research analyst with Jefferies, who dismissed Cusi’s concerns as “noise.”

Peak projection

On Thursday, Tewari also raised his sales forecast for Rezdiffra, projecting now that the drug will achieve peak annual sales of about $3.4 billion, some 31% above his previous estimate of about $2.6 billion.

Rezdiffra’s label does not require a liver biopsy or a noninvasive test (NIT)—though Tewari noted that Madrigal expects payers to require NITs, though the company does not expect that to be a hurdle to patient uptake of the drug.

“We think resmetirom will have first comer advantage in NASH specialty NASH treatment space for next few years and market leader position for additional years,” Tewari wrote. “Overall, we think MDGL is well-positioned within NASH treatment space.”

Tewari raised Jefferies’ price target on Madrigal 25%, from $321 to $400.

Also raising peak sales forecast was Thomas J. Smith, a senior research analyst at Leerink Partners covering immunology and metabolism. Smith lifted Rezdiffra’s peak sales projection—pegged for 2030—by $1 billion or 40%, to about $3.5 billion from about $2.5 billion, noting that while the annual price was within ICER’s range, it was at the upper end of that range, and above what most analysts had expected.

“We view Rezdiffra’s approved label, which does not contain a requirement for liver biopsy or onerous monitoring, as a near best-case for the compound and positions MDGL as a leader in building the market to address the significant unmet need in NASH,” Smith wrote in a research note.

Smith raised Leerink’s price target on Madrigal by 24%, from $315 to $390.

Mayank Mamtani, a managing director and group head of healthcare equity research with B. Riley Securities, upgraded Madrigal shares from “Sell” to “Neutral” on news of the Rezdiffra approval. He also hiked the firm’s price target 74%, from $155 to $270.

Also joining Mamtani, Tewari, and Nash in raising their price targets on Madrigal shares:

  • Eliana Merle (UBS): Up 22%, from $337 to $410; maintains “Buy” rating,
  • Jay Olson (Oppenheimer): Up 17%, from $320 to $375; maintains “Outperform” rating.
  • Jonathan Wolleben (JMP Securities): Up 13%, from $351 to $397; maintains “Outperform” rating.
  • Ritu Baral (TD Cowen): Up 12%, from $349 to $390; maintains “Outperform” rating.
  • Ed Arce (H.C. Wainwright): Up 5%, from $405 to $425; maintains “Buy” rating.
  • David Lebovitz (Citigroup): Up 2%, from $382 to $389; maintains “Buy” rating.

Illumina shares dip on Icahn proxy battle report

Illumina (ILMN) shares didn’t budge from their recent trading level after Reuters reported—based on unnamed sources—that activist investor Carl C. Icahn was ending his proxy battle to force changes to Illumina’s board and C-suite. Instead, shares slid nearly 5% on March 12, from $139.06 to $132.71, then plateaued Wednesday at $132.78 before falling another 3% Thursday to $128.10, then dipping 0.3% Friday at $127.73.

Both Illumina and Icahn’s publicly traded holding company Icahn Enterprises (IEP) declined comment to the wire service, which in its March 12 report contrasted what it called the end of Icahn’s proxy battle with comments he made in December about wanting to remove more members of Illumina’s board.

An apparent reason for the timing of the report emerged from Bloomberg News, which cited its own single unnamed source in reporting that Icahn did not nominate directors for seats on Illumina’s board before a deadline to do so had passed.

Last year, Icahn sparked convulsive and dramatic change at Illumina by launching a partially successful proxy campaign that nominated three allies to Illumina’s board—one of which was elected by shareholders in May 2023. In electing Andrew J. Teno, a portfolio manager at Icahn’s investment management firm Icahn Capital, shareholders also ousted board chairman John W. Thompson, an ally of Illumina’s then-CEO Francis deSouza—who abruptly resigned less than a month later.

deSouza has since been succeeded by Jacob Thaysen, PhD, previously a senior vp at Agilent Technologies. Thaysen pleased Icahn in December by setting into motion Illumina’s planned divestiture of cancer blood test developer Grail, whose losses sparked the shrinking of Illumina’s stick price since 2021—which Icahn calculated reduced its market capitalization by some $50 billion.

Illumina has said it hopes to finalize divestiture terms by the end of the second quarter of 2024 for Grail. Illumina disclosed its purchase price for Grail as $8 billion when it first announced acquiring the company in 2020, but still had a stake in Grail, reducing its value to $7.1 billion when the deal closed a year later.

The deal touched off three years of opposition from authorities in the United States and Europe on antitrust grounds. The U.S. Federal Trade Commission issued an Opinion and Order to divest itself of Grail, while the European Commission fined Illumina and Grail approximately €432 million (about $470.5 million), amounting to 10% of Illumina’s revenue—the largest fine ever imposed by the EC.

Illumina’s shrinking stock price since 2021, which he calculated reduced its market capitalization by some $50 billion; and the near-doubling last year of then-CEO Francis deSouza’s total compensation to almost $27 million were among issues Icahn raised in his proxy campaign, which involved several letters to shareholders and an exclusive GEN interview.

Leaders and laggards

  • Immuneering (IMRX) shares tumbled 34% Friday, from $2.90 to $1.91, after Yaron Werber, MD, a managing director and senior research analyst on TD Cowen’s biotechnology team, downgraded the company’s shares from “Outperform” to “Market Perform.” Werber wrote that results from the Phase I portion of Immuneering’s Phase I/IIa trial assessing IMM-1-104 in advanced RAS-mutant solid tumors were disappointing because although the drug showed a favorable tolerability profile, the RECIST data did not support the drug as a standout monotherapy option. Immuneering, however, cited positive data in treated patients showing 100% suppression of acquired RAS alterations in evaluable patients profiled for circulating tumor DNA (ctDNA)—as well as target lesion regression seen in over half of patients treated with IMM-1-104 at 320 mg or 240 mg once daily, with best individual lesion regression of -35.7% and best RECIST sum of longest diameters (SLD) of -18.9%, both at 320 mg.
  • Regulus Therapeutics (RGLS) shares zoomed 76% over two days after the microRNA therapy developer announced an oversubscribed $100 million private placement of equity to institutional investors and other accredited investors. The private placement attracted new and existing institutional investors include Adage Capital Partners L.P., Deep Track Capital, the Federated Hermes Kaufmann Funds, New Enterprise Associates (NEA), Octagon Capital, RA Capital Management, and Vivo Capital. Shares catapulted 71% from $1.38 to $2.36 on March 12, then rose another 2% to $2.43 on Wednesday—52% above the offering price of $1.60 a share. Leerink Partners is lead placement agent; H.C. Wainwright & Co., co-placement agent; and Canaccord Genuity, financial advisor.

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