Drug could treat obesity side effect

The race is on to identify the wonder drug that will treat an increasingly common consequence of obesity: the fatty liver disease known as nonalcoholic steatohepatitis.

Madrigal Pharmaceuticals Inc. is expected to report results from a midstage study in treatment of the disease by Thursday. The drug developer is racing against peers like Intercept Pharmaceuticals Inc. to get its experimental therapy, known as MGL-3196, to the market.

Once closely held, Madrigal became a public company after combining forces with oncology company Synta Pharmaceuticals Corp. in 2016, after the failure of Synta’s lead cancer-fighting drug. Madrigal shares have more than doubled in value since Dec. 5, when the company reported initial results from the MGL-3196 study. The stock closed Tuesday at $110.27 per share.

The study met its main goals in results recorded using a metric known as magnetic resonance imaging-estimated proton density fat fraction after three months. Now investors await results from patients treated for over eight months.

If Madrigal’s results are good, the small-cap company could get snapped up by a large-cap pharmaceutical peer like Foster City’s Gilead Sciences, Wall Street analysts have suggested. While Intercept is in the lead among pharmaceutical companies, with its nonalcoholic steatohepatitis treatment Ocaliva is already in late-stage testing, safety concerns have caused the value of its shares to fall as investors await the results of those trials, which aren’t expected until next year. Madrigal’s drug has not had any safety issues.

Madrigal has a 50/50 shot at showing a significant change in fibrosis, according to RBC analyst Brian Abrahams. If that happens, he expects that Intercept shares may slip about 5 percent. If Madrigal’s drug fails on fibrosis, Intercept shares could jump 10 percent, he said.

Viking Therapeutics, whose drug works similarly to MGL-3196, might see its stock move after Madrigal’s data is released.