Biotech Stock Soars on FDA Drug Approval

The FDA approved Madrigal Pharmaceutical's fatty liver disease treatment

Laura McCandless

Deputy Editor

Mar 15, 2024 at 11:04 AM

MDGL

Madrigal Pharmaceuticals Inc (NASDAQ:MDGL) stock is taking off today, after the U.S. Food & Drug Administration (FDA) approved the biotech company's drug for the treatment of non-alcoholic steatohepatitis (NASH), a fatty liver disease. The oral drug, Rezdiffra, is the first treatment to get approval for the condition.

At last glance, Madrigal Pharmaceuticals stock was up 15.5% at $281.23, and earlier was high as $299.98 -- its highest levels since May 2023. Looking to close its fifth-straight week of gains, the equity is up 23.8% since the start of the year.

Options traders are targeting the stock's surge. So far, 4,951 calls and 3,534 puts have been exchanged, which is already seven times the average daily options volume. The January 2025 210-strike call is the most popular, followed by the March 260 call.

A bout of short covering could also be providing tailwinds, as short interest represents 19.7% of the security's available float. It would take shorts over seven days to buy back their bearish bets, at MDGL's average pace of trading.

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