Madrigal Pharmaceuticals (MDGL) Stock Analysis—The Solution to a $35 Billion Health Crisis (NASH)?

0:02 Hello my name is Blake and welcome to my youtube channel it's nine to five investing today I want to talk about a public company that you can buy shares in that is working to solve a problem that affects thirty four million people in the United States alone this very same company has actually seen a 30% decrease in their share price since December 10th 2019 with almost no change in the underlying fundamentals as of January 31st 2020 this company has a

0:37 Market capitalization of 1.28 billion but they might actually have the solution to a thirty-five billion dollar problem the company that I'm talking about is magical pharmaceuticals be sure to watch all the way until the end of the video because if you do I will share with you one invaluable tip that will be extremely useful if you're looking to invest in biotech companies 9 to 5 investing enjoy videos like this one please subscribe because I'll be

1:14 Releasing new videos about investments I think are interesting in the market Mondays at 5:09 so stay tuned guys magical pharmaceutical stock has been absolutely destroyed ever since Bay City Capital a major shareholder in the company announced that they were selling 1.2 million of their shares on December 10th 2019 at first this news might seem really bad but base city capital actually only sold out of 1/4 of their total position and on top of that they

1:49 Are a venture capital firm so they have a lot of pressure to make consistent annual returns for their investors that being said they might just see magical pharmaceuticals as a company that has major catalyst coming in the coming years but not as much in the short term and they might have some better short-term investment opportunities the news of Bay city capital selling one for for their position and magical has sent the stock cratering all the way from a hundred and

2:21 Twenty dollars on December 10th 2019 282 dollars as of January 31st 2020 this is about a 30% decline Wow all because one investor sold a fourth of their position that just seems a little ridiculous to me I think that this could be a great buying opportunity or stand why I think magical pharmaceuticals could be an ideal investment for the next three to five years we must discuss non-alcoholic fatty liver disease and its older ugly stepsister non-alcoholic steatohepatitis or short

3:02 Nash if you are enjoying this video so far please smash the like button just like i smash this broken TV that i got off of craigslist for $10 it really helps the channel because it plays in the YouTube algorithm and I really appreciate it so what is non-alcoholic fatty liver disease well it's basically a buildup of fat in the liver and normally fatty liver disease is brought on by excessive drinking but obviously non alcoholic liver disease is not

3:32 Caused by alcohol it has actually caused more by a bad diet and lack of exercise on alcoholic fatty liver disease is actually the most common chronic liver disease in the United States and I think that a lot of this comes down to horrible eating habits you know it's so much easier to just go to McDonald's go for the drive for real quick get a couple of dollar menu items young and just call it a day instead of cooking something healthy at home and I think this trend combined

4:06 With and you know when I say this trend I mean obesity combined with a lack of exercise combined with type-2 diabetes you really see non-alcoholic fatty liver disease be on the upturn unfortunately United States so even if it does make magical a better investment it is kind of sad that that's the reality we live in so unfortunately this disease is not just isolated to the United States this disease affects about one in four people worldwide according to the National

4:37 White on average one in four people that you meet are affected by this horrible disease so now we're going to be moving on to that ugly stepsister that I had mentioned earlier non-alcoholic steatohepatitis so I'm going to leave a more drawn-out scientific definition of what Nashes for those that are interested but from an investment standpoint the main thing you need to know is that gnash is the most severe form of non-alcoholic fatty liver syndrome and it has some pretty horrible

5:09 Symptoms like inflammation and something called hepatocellular ballooning help us understand the trends with non-alcoholic fatty liver syndromes ugly stepsister nash we're gonna do a lightning round what percentage of the worldwide population does nash effect so it is very hard to get an exact number on this one but the nash education project basically using a variety of methodologies has determined that between 1.5 and 6.45 percent of the worldwide population suffers from

5:45 Non-alcoholic fatty liver syndromes ugly stepsister now how much is Nash supposed to grow in the near future let's say maybe the next ten years so according to the Nash education project natural growth 63 percent between 2015 and 2030 because Nash caused a lot of people to get liver transplants so another unfortunate truth that the Nash education project reports on is that Nashville most likely become the most common reason to get a liver transplant by 2030

6:20 So Nash is kind of like heart disease in the sense that it is a silent killer I mean really the symptoms for Nash do not come up until it is really too late most of the time now with all the relevant trends that we have talked about in mind consider this one very relevant fact there is no drug currently on the market that can eliminate the fat build-up so that's where magical pharmaceuticals the company that I mentioned near the beginning of this video comes into play

6:50 There is no drug that can effectively treat nash yet on the market and really the whole point of magical pharmaceuticals as a company is they're looking to develop breast marriage from their liver directed at once daily pill that basically aims to treat nash by increasing hepatic fat metabolism and reducing lipo toxicity magical pharmaceuticals actually published a phase two study that showed wrist marriage from reducing liver fat with no severe side effects this was actually

7:23 Published in The Lancet which is a very prestigious peer-reviewed medical journal late last year the Food and Drug Administration approved magical pharmaceuticals fast track designation requests for rest merit ROM for nash if you combine the fact that magical pharmaceuticals had their phase two study published in the lancet with the FDA's fast track designation it can be reasonably assumed that there is a lot of promise behind resume from for treating nash patients and as

7:58 We had talked about earlier in the video there is a lot of need so what is next for magical pharmaceuticals and they're very promising drug resume Ron well they are already enrolling for to phase three studies these phase three studies are called my Astro national and my Astro nash and basically they're doing these studies on a much wider scale in the phase 2 studies and they're trying to see if this drug works with patients that have much more advanced symptoms of

8:31 Naphthyl and nash these trials are on a much bigger scale than the phase 2 trials so top line results would be a very big deal according to CNBC the global market for nash is about 35 billion according to industry experts as of January 31st 2020 magical pharmaceuticals only has a market capitalisation of one point two eight billion just think about that for a minute the company that has potentially the best compound for treating nash is worth only a fraction of the market that

9:07 A one day could corner and typically guys biotech companies will trade it 15 times profits or so will magical pharmaceuticals ever be able to bring resveratrol to the open market without having some sort of a secondary offering or even worse going bankrupt and leaving us shareholders with nothing if the science holds up then absolutely because magical Pharmaceuticals has a uniquely high amount of cash and short-term investments and no debt so magical

9:41 Pharmaceuticals has about four hundred and fifty three million dollars in cash and short-term investments as of their last quarterly filing which was as of September 30th 2019 and this should last them about eleven years at a current cash burn rate of ten million per quarter this major pile of cash is a huge advantage to magical pharmaceuticals and it is a huge advantage to the holder's why is it a huge advantage of the shareholders because we don't have

10:09 To worry about any secondary offerings so why do companies do this secondary dilutive offering well it's basically because a lot of times biotech companies do not have any products on the market they are just trying to get their product to the market so therefore they do not have the revenues and profits to sustain themselves and basically the last resort thing that they can do a lot of times they can't get dedi ever they'll go and they'll dilute the

10:34 Current ownership in the company by offering more shares and because this move dilutes the current shareholders ten times out of ten it'll make the stock price creator just this last week on February 5th I saw as IO farm oncology which I think also has two pretty promising science but they actually had a secondary offering and it sent their shares crater so if you are looking to invest in magical pharmaceuticals if you're looking to invest in rest merit Ron you

11:04 Do not have to worry about secondary offerings most likely it would make no sense for the company Dewar right now there's no reason to dilute the current investors because they have plenty of cash so that is a huge advantage and a huge thing that I look for in biotech companies in general I'm looking to invest I asked myself do they have cash because I like to avoid those secondary offerings at any cost well congratulations you mids the end of the

11:28 Video thank you so much for watching and just as promised I will reveal my invaluable tip number three so my invaluable tip for you is do not invest in biotechnology companies that do not have a proven product on the market if you are looking for lower risk investments guys this type of investing is not for the faint of heart and I should also probably have mentioned at the beginning of the video but I am NOT an investment advisor you should talk to a professional about

11:55 That this is just for entertainment purposes only but at the end of the day I'm 25 if I were to lose you know a couple grand investing in this kind of a company it's not going to destroy me if I'm like 60 looking to retire soon I would not be putting money into a company like this the thing is about being 25 is if this this stock works out and I triple my money then I'll be able to compound that for like 40 years before I retired something like that I mean I hope I've

12:28 Been able to work that long because I love working but I'll be able to compound that for a very long time and if I end up losing my money let's say ERISA merit rom is a total flop and it doesn't make it to the open market and magical pharmaceuticals loses eighty percent of its value well that hurts me but it's not the end of my world now on the other hand guys I do think that positive base your results could easily triple the stock overnight but again it

12:57 Just all comes down to personal risk tolerance do not invest in something like this if you're not willing to lose money potentially the thing is for me with my personal risk tolerance I'm ok with it thank you for watching guys I really appreciate it please hit that subscribe button and maybe even the notification bell if you're feeling really crazy because I will be coming out with tons of videos about biotech stocks technology stocks Pinterest is a

13:24 Video idea how soon there are so many stocks that I'm gonna be making analysis on I mean just a little bit busy with my normal job right now because we are in busy season until March but as soon as that's over I'm gonna roll out tons of videos there any that you want to request me doing an analysis on just let me know I will do it and yeah have a great day