A class action lawsuit was filed against Akero Therapeutics, Inc. (NASDAQ:AKRO) on April 26, 2024. The plaintiffs (shareholders) alleged that they bought AKRO stock at artificially inflated prices between September 13, 2022 and October 9, 2023 (Class Period) and are now seeking compensation for their financial losses. Investors who bought Akero Therapeutics stock during that period can click here to learn about joining the lawsuit.
Akero is a clinical-stage biopharmaceutical company with a focus on developing novel treatments for patients with serious metabolic diseases. Its lead candidate is efruxifermin (EFX), which the company is developing to treat metabolic dysfunction-associated steatohepatitis (MASH), a type of liver disease. Akero’s claims about EFX’s results from two Phase 2 clinical trials are at the heart of the lawsuit.
The plaintiffs maintain that Akero and three of its senior officers (Individual Defendants) deceived investors by lying and withholding vital information about the company’s business practices and financial condition during the Class Period. Specifically, the Defendants are accused of omitting truthful information about the patients in one of the clinical trials from SEC filings and related material.
The information became clear on October 10, 2023, before the markets opened when the company’s regulatory filing with the SEC provided details on the results from the Phase 2b SYMMETRY trial of EFX. The company noted that for EFX-treated groups, the primary endpoint of fibrosis improvement came in much higher compared to the placebo group. The treatment showed at least a one-stage improvement in liver fibrosis and no worsening of NASH (nonalcoholic steatohepatitis).
While the trial results in the SEC filing looked favorable, the disclosure made by the CEO during a conference call on the same day raised concerns about the subjects of the trial. The CEO (individual defendant) stated that “All patients had biopsy-proven compensated cirrhosis fibrosis Stage 4 due to definitive NASH or cryptogenic cirrhosis, presumed secondary to NASH.” The trials included roughly 20% of patients with cryptogenic cirrhosis. Accordingly, analysts cut the price target on Akero stock, with some of them citing “previously undisclosed inclusion of cryptogenic cirrhotics in the trial.”
Interestingly, during the Class Period, the Defendants consistently hailed EFX and the strength of the histology results and the importance of these results for the ongoing Phase 2b SYMMETRY study in patients with cirrhotic NASH. Moreover, the CEO stated that the study involved only patients with biopsy-proven NASH F4. Furthermore, the company stated that it was conducting a second EFX program for patients with cirrhotic NASH (F4, compensated) and that both programs aligned with U.S. FDA (Food and Drug Administration) guidelines.
As per the class action lawsuit, Akero Therapeutics caused its shares to trade at artificially inflated prices by knowingly and recklessly misleading investors about the company’s business practices during the Class Period.
Notably, AKRO stock cratered over 62% on October 10, 2023. It has lost more than 48% in the past year, massively impacting shareholders’ returns.
