Viking Therapeutics (VKTX -1.62%) and Madrigal Pharmaceuticals (MDGL -2.08%) are highly prominent biotech companies that have a lot in common. Both focus on treating metabolic illnesses like liver disease and obesity, and, until recently, despite their promising pipeline programs, both were lacking any products on the market to generate revenue.
Now, the picture is shifting, and the odds are good that one of these players will pull ahead of the other, thereby becoming the better biotech-stock investment. The only questions are, which will it be, and for how long will it last? Let's dive in.
Madrigal's success is hard to dispute
Madrigal's claim to being the better biotech stock is its drug Rezdiffra, which is the first medicine approved to treat metabolic-associated steatohepatitis, (MASH, formerly known as NASH) a chronic and degenerative liver disease. There hasn't been enough time since Rezdiffra's approval on March 14 to know how well it will perform in terms of revenue. But as the only game in town for the moment, it'll have the best possible access to its target market.
So it is very close to guaranteed that this biotech will see its top line explode in the coming quarters, as it has no other medicines on the market and no other sources of potential revenue. On average, Wall Street analysts are anticipating it to bring in $82.2 million this year and then $364.8 million in 2025 -- not too bad of a run-up from its starting point of $0, to say the least.
Right now, the medicine is indicated for MASH patients with moderate-to-advanced fibrosis of the liver. That means of the 1.5 million people in the U.S with MASH, about 525,000 patients will be eligible for treatment, though management plans to focus on a subset of around 315,000 patients who are already in contact with certain specialized clinicians.
In the future, the company hopes to pick up an indication for more severe forms of fibrosis as well as cirrhosis, and it's currently pursuing clinical trials on that front. Being able to treat cirrhosis would expand its addressable market significantly, but investors will need to wait until late 2026 at the earliest to see how Madrigal's efforts are panning out.
Viking has the spotlight at the moment
Viking Therapeutics doesn't yet have any products on the market. But hopes are high that its lead program, a therapy for obesity called VK2735, will be able to seize a sizable portion of the market for weight loss drugs.
VK2735 just concluded its phase 2 clinical trials with good results, and phase 3 trials are expected to begin shortly. The company has about $963 million in cash and equivalents, which, when paired with its positive data, means that it shouldn't have any problem with paying for, or getting financing to help pay for, the remaining trials for its lead candidate.
Assuming that Viking makes it to the market with its therapy, it'll be battling against the likes of Eli Lilly and Novo Nordisk, so it won't have as easy of a time as Madrigal in taking and retaining market share. But the market for anti-obesity medicines is vastly larger than the market for MASH drugs. Some estimates from the National Institutes of Health (NIH) indicate that the prevalence of obesity in the U.S. is 42% of the population.
Viking's pipeline also has a few other programs of note, including a phase 2b program for MASH. It'll be a few years before that program has a chance of being approved, assuming the late-stage clinical data look decent. Nonetheless, it's clear that this company is aiming to compete in several metabolic-disease markets rather than just one, and that its pipeline is more diversified.
Probably better to shoot for the moon in this match up
Madrigal Pharmaceuticals is the safer choice of these two businesses. Profitability may be a couple of years off, but it has ample time to penetrate its market in the meantime, and clear avenues to expand its addressable market with further research and development (R&D) work.
Still, Madrigal could have competition in the MASH market soon enough from the same set of competitors facing Viking, and its tight focus on liver diseases means that it will have a harder time surviving if competitors produce superior medicines.
On the other hand, Viking may not ever succeed in getting its candidates approved for sale, and it will face stiff opposition from the incumbents, perhaps even Madrigal, if it does. Nonetheless, it's aiming to compete in a much larger pond, so there is a high probability that if its medicine for obesity is approved someday, the biotech will grow enormously.
Therefore, while both stocks are a good option for those seeking exposure to biotech, Viking is the better biotech stock today, even if it's riskier.
