In a significant blow to Akero Therapeutics (NASDAQ:AKRO), the biopharmaceutical company's stock value plummeted by 62% on Tuesday. This drastic drop followed the failure of its lead drug, efruxifermin, to meet its primary objective in a Phase 2b trial for nonalcoholic steatohepatitis (NASH), a chronic liver disease affecting approximately 17 million Americans.
The trial focused on patients suffering from compensated cirrhosis due to NASH. While some fibrosis improvement was noted, it failed to achieve statistical significance, leading to the sharp decline in Akero's stock value. The disappointing outcome also had a ripple effect on 89bio (NASDAQ:ETNB) shares, a company that is developing a similar therapy for NASH.
According to InvestingPro data, Akero's market cap stands at 1070.0M USD and its P/E ratio is -7.29. Despite the current setback, the company has seen a large price uptick over the last six months, with the 6 Month Price Total Return standing at 31.05%, contributing to the company's strong return over the last five years as per InvestingPro Tips.
Despite the setback, Akero's CEO Andrew Cheng remains positive about efruxifermin's potential. He expressed optimism about the drug's prospects following a 96-week follow-up period.
Analysts from SVB Leerink have suggested that the market may have overreacted to the trial results. They cited the robust efficacy data in a challenging patient population as grounds for their argument. They believe that despite falling short in this trial, efruxifermin still holds promise given the complexity of treating NASH and the difficulty in achieving statistically significant results.
InvestingPro Tips also highlight that Akero holds more cash than debt on its balance sheet and its liquid assets exceed short term obligations. This could be a positive sign for the company's financial stability despite the current stock price volatility. However, it's worth noting that the company has not been profitable over the last twelve months and analysts do not anticipate it will be profitable this year.
For more detailed insights and additional tips, readers can visit InvestingPro, which currently lists eight more tips for Akero.
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