Madrigal, 89Bio Surge as Novo's Semaglutide Shows Promise in MASH

In a significant development for the pharmaceutical industry, Novo Nordisk's semaglutide has demonstrated promising results in treating metabolic dysfunction-associated steatohepatitis (MASH), a liver disease affecting millions worldwide. The positive data from Novo's Phase 3 trial has sparked a rally in shares of Madrigal Pharmaceuticals (MDGL) and 89Bio (ETNB), as investors anticipate a shift in the competitive landscape. This article explores the implications of Novo's findings and the potential impact on the MASH drug market.

Novo Nordisk's semaglutide, a GLP-1 drug already approved for weight management, showed encouraging results in improving fibrosis and resolving MASH without worsening steatohepatitis. After 72 weeks, 37% of participants receiving semaglutide and standard therapy experienced an improvement in liver scarring, compared to 22.5% on placebo. Additionally, 63% saw their MASH resolve without worsening scarring, versus 34% on placebo. These results compare favorably to Madrigal's Rezdiffra, which showed a 12% placebo-adjusted improvement in fibrosis in its Phase 3 trial. However, analysts argue that semaglutide's effect size wasn't as large as Akero and 89bio's drugs, and Novo's results don't clearly separate it from other MASH drugs.
The approval and market launch of semaglutide for MASH could significantly impact the competitive landscape and stock performance of other MASH drug developers. Madrigal's Rezdiffra, the first approved MASH drug, has already seen strong sales. However, Novo's semaglutide may challenge Rezdiffra's market dominance due to its established brand and potential for broader use. The regulatory approval process will determine semaglutide's market position and competition, with a potential approval in the U.S. and Europe in the first half of 2025.
Investors should closely monitor the regulatory approval process and clinical data for semaglutide in MASH. While the drug's safety profile and efficacy data are encouraging, further analysis is needed to determine its long-term effects and potential market impact. As the MASH drug market continues to evolve, income-focused investors may find opportunities in stable, dividend-paying stocks, such as utilities, renewable energy, and REITs, which offer consistent, inflation-protected income. This approach, known as the Income Method, is particularly suited for retirement portfolios and can help investors capitalize on undervaluations created by market perceptions, such as high interest rates affecting REITs. By diversifying their portfolios and adapting to market opportunities, investors can secure steady returns and mitigate risks associated with speculative ventures like AI that lack profitability.