There's a growing epidemic in the U.S. and other developed nations, and there aren't any available treatments to tackle the problem. Right now, nonalcoholic steatohepatitis (NASH) is damaging around 20 million livers in the U.S., and it's quickly becoming the No. 1 reason to join a transplant waitlist.

Intercept Pharmaceuticals Inc. (ICPT)Madrigal Pharmaceuticals Inc. (MDGL 0.21%), and Gilead Sciences Inc. (GILD 3.62%) are three top stocks for investing in this arena, which could be worth as much as $35 billion annually by 2020. There are plenty of companies with NASH candidates, but these three biotechs rise to the top of the list for some very different reasons.

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Intercept Pharmaceuticals: First in line

This biotech's lead drug, Ocaliva, is already approved to treat one uncommon disorder, but it's also in a late-stage clinical trial that could expand its addressable patient population to include around 20 million NASH patients that lack treatment options.

Ocaliva probably won't be the only available NASH drug for long, but it is far enough ahead of the competition to raise this stock far above its peers. Ocaliva already earned approval in 2016 to treat an uncommon condition called primary biliary cholangitis, and we'll know if it has a chance to be the first available NASH treatment when the company reports results of the ongoing phase 3 Regenerate trial next year.

In a mid-stage NASH study, 18% of patients receiving Ocaliva achieved disease resolution versus 5% in the placebo group. Similar results from the ongoing, 2,370-patient Regenerate study would probably convince the U.S. Food and Drug Administration to make Ocaliva the first treatment for people with severely inflamed livers due to NASH. Since there are millions out there without any treatment options, the expansion could add several billion to Intercept's annual top line within a few short years.

The company expects to present data from Regenerate in the first half of 2019. Ocaliva sales are on the rise now, but at just $43 million during the second quarter, there's still a lot of room for the top line and the stock to explode upward.

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Madrigal Pharmaceuticals: Fast climber

This biotech came out of nowhere to take a leading position in the NASH dash with solid data for MGL-3196 late last year. The company followed up in May with results that suggest it will give Ocaliva a challenge. During a mid-stage study, 27% of patients treated with MGL-3196 achieved NASH resolution versus just 6% of those treated with a placebo.

Intercept is months away from wrapping up Ocaliva's pivotal NASH trial, but Madrigal hasn't even started one yet. When Madrigal checked in last, management was still waiting for the FDA to sign off on the company's pivotal trial design. 

At recent prices Madrigal sports a $3.5 billion market cap that could soar in the long run if MGL-3196 repeats previous observations without any safety issues, but investors need to understand that it could also come crashing down if there's any trouble with its lead candidate. There's nothing in the company's pipeline to fall back on.

Mid-stage results left no doubt that MGL-3196 lowers liver fat content for patients, but we still don't know a lot about the drug's safety profile. No troubling safety issues reared their ugly heads during the mid-stage study that propelled Madrigal into the spotlight, but there were only 107 patients in the trial.

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Gilead Sciences: A side project with upside

A $12 billion acquisition launched this biotech behemoth into the forefront of cellular cancer therapy development last year, but its NASH program could be a major growth driver in the years to come as well. With solid profits from established HIV and hepatitis antiviral treatments, investors can rest easy knowing this company's NASH side project can flop without any major consequences to their portfolio. The stock even offers a nice 3.1% dividend yield at recent prices.

Intercept isn't the only company here expecting important data in the first half of 2019. Earlier this year, Gilead completed enrollment of two phase 3 NASH studies for selonsertib that should have top-line data ready around the same time Ocaliva's big study wraps up. 

Gilead has the resources to combine approaches, and has a candidate that works like Ocaliva, called GS-9674, and a first-in-class ACC inhibitor called GS-0976 that significantly reduced liver fat in a mid-stage study. Gilead reported data from a 70-patient proof-of-concept study comparing combinations of selonsertib with GS-9674 and GS-0976 that warrant further study of a multipronged approach to treating NASH, and you'll want to keep an eye on this spot in the years to come.

Something for everyone

Given its lack of products or pipeline, Madrigal stock is only for investors at the far end of the risk-tolerance spectrum. Intercept is much safer because rising sales for Ocaliva in its already approved indication could work like a safety net if the company's NASH ambitions don't pan out.

For cautious investors who simply can't afford to see one of their stocks lose most of its value overnight, though, there's Gilead Sciences. The company's multipronged approach could pay off for investors, plus they'll receive their dividend even if it doesn't.