To The Moon

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When it comes to mega-caps stocks in the healthcare industry in recent years, there's no way to avoid mentioning $Novo-Nordisk A/S(NVO)$, whose shares have soared over 200% in the past three years due to the popularity of its weight loss drug.

But there's another huge market, nonalcoholic steatohepatitis (NASH), that could also foster more than one mega-cap stock like NVO.

Some institutions predict that the global market for NASH will be worth about $2 billion in 2022 and will grow at a compound annual growth rate of about 25.2% between 2023 and 2033.

According to incomplete statistics, the number of people suffering from NASH worldwide has increased from 310 million in 2016 to 350 million in 2020, and it is expected to reach 490 million by 2030. Currently, there are about 1.5 million NASH patients in the United States.

In light of this, the following two biotechnology companies involved in this field could become the next mega-caps.

1. Madrigal Pharmaceuticals

$Madrigal Pharmaceuticals(MDGL)$ is close to bringing its NASH candidate, resmetirom, to market. The results of the recently completed Phase 3 clinical trial showed that about 30% of study participants benefited, and resmetirom also reduced their liver fibrosis and cholesterol levels.

The company has submitted marketing application materials, and the regulatory agencies and the US Food and Drug Administration (FDA) are expected to announce their approval decision on March 14th or before.

According to Madrigal's estimate, the target patient population for its products is 315,000 people. However, NASH is often associated with comorbidities such as type 2 diabetes, obesity, and other cardiovascular and metabolic diseases, so the potential of resmetirom's treatment is considerable.

However, Madrigal's financial position is noteworthy. If the drug is approved, the company will need to raise more funds, let alone further research and development expenses.

The company has cash and cash equivalents of $232 million on hand, but had operating expenses of $349 million over the past 12 months.

2.Viking Therapeutics

$Viking Therapeutics(VKTX)$ is a direct competitor to Madrigal, but has lagged behind in NASH development and is now in Phase 2b trials. Fortunately, the company is also developing drugs for obesity and other metabolic diseases. Viking will report data on its NASH and obesity projects later this year.

In the mid-term clinical trial, Viking's candidate product (currently known as VK2809) helped 85% of patients reduce their liver fat content by at least 30%, while also reducing cholesterol levels and other molecules associated with an increased risk of adverse cardiovascular outcomes.

Notably, the effectiveness of VK2809 does not appear to be affected by liver fibrosis or type 2 diabetes.

In terms of finances, Viking is clearly better off than Madrigal Pharmaceuticals. The company had operating expenses of $92 million over the past 12 months, and cash, cash equivalents and short-term investments of $376 million.

However, both biopharmaceutical companies are still in the pre-revenue stage, and there's still a long way to go in research and development, so there are significant risks involved.