March 15 (Reuters) - Madrigal Pharmaceuticals (MDGL.O) , opens new tab shares jumped as much as 23% on Friday after its oral drug became the first approved treatment for a fatty liver disease known as non-alcoholic steatohepatitis (NASH).

The drug, Rezdiffra, was approved by the U.S. health regulator on Thursday without the need for a liver biopsy for diagnosis, paving the way for wider acceptance and creating a blockbuster opportunity.

"There is nothing in this approval or in the label that could have come out better than it did," said Piper Sandler analyst Yasmeen Rahimi.

The global market for NASH treatments is expected to surpass $16 billion by 2030, as per market research firm Vision Research Reports. Madrigal's drug is expected to generate about $5 billion in peak annual sales, at least two analysts estimated.

NASH, recently renamed metabolic dysfunction-associated steatohepatitis (MASH), causes an excess build-up of fat in the liver, leading to inflammation and fibrosis, or scarring, of the organ.

The drug has been approved for MASH patients with fibrosis that has progressed to stage 2 or 3 in severity.

The approval also allays some concerns around the impact from GLP-1 drugs, especially after strong data from Eli Lilly's (LLY.N) , opens new tab drug tirzepatide last month, at least two analysts said, adding it was still too early to make a definitive assessment.

The FDA nod should "supersede a lot of the excitement of the GLP-1 space," William Blair analyst Andy Hsieh said.

The approval also rekindled expectations of the company becoming a buyout target.

"We think MDGL becomes the source of M&A speculation again as we expect the NASH launch will be strong and Rezdiffra's first-to-market advantage will be meaningful," JMP Securities analyst Jonathan Wolleben said in a note.

Shares of the company were last up about 12% at $273.7 in a weak broader market.

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https://www.reuters.com/business/healthcare-pharmaceuticals/madrigal-pharma-surges-fda-nod-first-drug-fatty-liver-disease-nash-2024-03-15/