TD Cowen Sees Greater Upside in Madrigal (MDGL) Following Recent Rezdiffra Approval

Madrigal Pharmaceuticals Inc. (NASDAQ:MDGL) is one of the most shorted stocks right now. On August 25, TD Cowen analyst Ritu Baral raised her price target on Madrigal Pharmaceuticals (NASDAQ:MDGL) to $554 from $390, while maintaining a Buy rating.

The revision by the analyst followed the European Commission’s approval of Rezdiffra, making it the first and only authorized therapy in the European Union for metabolic dysfunction-associated steatohepatitis (MASH). MASH is a serious liver condition that can progress to cirrhosis, liver failure, liver cancer, and premature mortality.

During its approval announcement on August 19, Bill Sibold, Chief Executive Officer of Madrigal Pharmaceuticals Inc. (NASDAQ:MDGL), stated:

“This approval of Rezdiffra marks a historic breakthrough for patients in Europe living with MASH, a serious and progressive liver disease. MASH is the fastest-growing indication for liver transplantation in Europe, but until now, had no approved treatment. The European labelling for Rezdiffra will set an important precedent for the entire field, with no biopsy required to qualify for treatment with Rezdiffra and a clear focus on a distinct MASH patient population with high unmet need: those with moderate to advanced fibrosis (F2-F3).”

Baral incorporated the EU approval into her discounted cash flow model, adding Europe as a new revenue driver. As the regulatory risks have decreased after approval, she also lowered the discount rate applied to Madrigal Pharmaceuticals Inc.’s (NASDAQ:MDGL) valuation, resulting in a higher price target. Rezdiffra’s first-mover advantage in MASH is expected to support a strong commercial rollout and reinforce Madrigal’s long-term growth profile.

Madrigal Pharmaceuticals Inc. (NASDAQ:MDGL) is a clinical-stage biopharmaceutical company focused on developing therapies for serious liver diseases.

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Disclosure: None. This article is originally published at Insider Monkey.