What happened

Shares of the clinical-stage biotech Viking Therapeutics (NASDAQ:VKTX) are soaring this morning following positive mid-stage trial results for Madrigal Pharmaceuticals' (NASDAQ:MDGL) nonalcoholic steatohepatitis (NASH) candidate MGL-3196.

The reason? Viking's experimental NASH drug, VK2809, reportedly has a similar mechanism of action as MGL-3196. Investors are apparently bidding up Viking's shares on the belief that VK2809's mid-stage results will ultimately mirror those of MGL-3196. 

A rocket taking off.

Image source: Getty Images.

As of 10:32 a.m. EDT, Viking shares are up 87.2% and Madrigal's are up by a whopping 128% in the wake of these positive NASH results.

However, shares in Intercept Pharmaceuticals (NASDAQ:ICPT), which sports the most advanced NASH candidate, Ocaliva, are down 10.3% at the time of writing. While Ocaliva is well ahead of both MGL-3196 and VK2809 in terms of clinical development, the drug does have some serious safety issues that could negatively impact its commercial uptake if approved.  

So what

NASH is widely expected to be the next multibillion-dollar drug market, thanks to the rising rates of obesity worldwide and the fact that there are no approved therapies for this condition. Intercept, Madrigal, and Viking are thus all hoping to beat out far larger competitors, like Allergan, Pfizer, and Gilead Sciences, in this emerging space and gain an all-important first-mover advantage.   

Now what

Viking's mid-stage NASH study is set to wrap up next month, according to ClinicalTrials.gov. A top-line data release should thus occur within the next four to six weeks. So, in light of this upcoming clinical catalyst, Viking's stock appears primed to continue its upward trajectory, even after today's monstrous move higher.

The long and short of it is that VK2809 should garner significant interest from multiple big pharmas currently vying for a piece of this enormous NASH market. As proof, Madrigal has already bubbled to the top of the buyout-rumor mill after MGL-3196's breakout success due to the tremendous demand for these drugs. Put simply, it might be a good idea to grab at least a few shares of this promising biotech ahead of this upcoming clinical catalyst. 

George Budwell owns shares of Pfizer. The Motley Fool owns shares of and recommends Gilead Sciences. The Motley Fool has a disclosure policy.