Shares of relatively small biotech companies often soar when they get positive news from regulators, and that's exactly what Madrigal Pharmaceuticals (NASDAQ: MDGL) and Bluebird Bio (NASDAQ: BLUE) are awaiting. Both companies expect to land major approvals in the coming months, which could jolt their share prices.

However, while short-term pops are great, investors will want to know whether these biotechs can perform well over the long run. So regardless of their near-term potential, are Madrigal Pharmaceuticals and Bluebird Bio likely to deliver outsized returns over the next five years and beyond?

Madrigal Pharmaceuticals is a clinical-stage biotech that may have made a significant breakthrough. It could beat much larger peers in the industry and become the first to launch an approved therapy for non-alcoholic steatohepatitis (NASH). This is a condition caused by the abnormal accumulation of fat in patients' livers, which leads to scarring and other problems.

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Source Fool.com