Days after Intercept rejection, Akero surges on ‘unprecedented‘ NASH data

A year and a half after scoring a $70 million Series B and a top Gilead executive as CEO, Akero Therapeutics has announced new data on their NASH drug. And with the field still reeling from a surprise FDA rejection this week, the news was enough to send their stock surging.

Akero had already said in March that its lead drug had beaten placebo in its Phase II trial, reducing liver fat by 14% in the highest dose group compared to 0.3% in placebo, according to MRI scans. But although NASH is an obesity-related condition and results from fatty buildup in the liver, the real immediate question for any therapy is whether it can resolve the fibrosis and inflammation that results from that buildup. Those data require biopsying the patients, a longer and more invasive process that was further complicated by a pandemic.

Now the biopsies are in: Of the 40 patients in the trial who responded to treatment — an old Amgen drug known as efruxifermin — and were biopsied, 48% saw at least a one-stage improvement in fibrosis without any worsening on NAS, a score that measures inflammation and other biological markers of disease. Additionally, 48% of patients saw their NASH resolve without fibrosis worsening. Nearly a third saw a 2-stage improvement in fibrosis without NAS worsening. There was also a statistically significant improvement in weight loss for the high treatment arm.

Now what does precisely does all that data mean?

Investors appeared to take it as a clear positive, particularly after the FDA rejected what would have been the first specifically approved NASH drug on Monday, and its developer, Intercept, saw its stock crash. Akero’s stock was up nearly 40% pre-market Wednesday, from $24.92 to $34.42 per share.

Analysts, too were bullish. Pegging a target price at $48, Jefferies’ Michael Yee called it “best-in-class NASH data so far,” with “the best fibrosis results and strong benefits across metabolic and diabetes components.” Evercore ISI’s Josh Schimmer said it was “an unprecedented effect on fibrosis improvement and NASH resolution.” He pegged the stock at $80.

The tone from the company was similarly upbeat. Andrew Cheng, the ex-Gilead executive who came over as CEO, said the data “exceeded our expectations.”

Still, the central question raised by Intercept’s surprise rejection remains unanswered: What, precisely, does the FDA consider to be a good bar for effectiveness in NASH?

In lieu of stronger but necessarily longer term goals such as survival or the number of patients who reach cirrhosis, companies, with FDA guidance, have so far focused on two endpoints: improving fibrosis without NASH worsening or resolving NASH without fibrosis worsening.

Intercept was the first company to hit on one of those in a Phase III trial, although they missed on the other. Their rejection means that just hitting one endpoint won’t be enough.

Additionally, today’s data are only a secondary analysis of responders, and don’t prove a statistically significant improvement in those endpoints compared to placebo. Akero will need a larger pivotal trial for that, one that could be the next big study for the field.