On Monday, BofA Securities reinstated coverage on Akero Therapeutics (NASDAQ:AKRO), assigning the stock a Neutral rating with a price target set at $30.00. The biotechnology company, which is currently developing efruxifermin for the treatment of late-stage fatty liver disease, also known as NASH, has been observed with renewed interest by investors. This shift in sentiment comes after the FDA's approval of the first NASH treatment, Madrigal Pharmaceuticals (NASDAQ:MDGL)' Rezdiffra.
According to BofA Securities, although Akero Therapeutics' efruxifermin shows promise due to a significant potential patient population and its impressive anti-fibrotic activity, there are several challenges ahead. Industry experts consulted by the firm highlighted concerns regarding the safety and tolerability of the drug. Specifically, gastrointestinal side effects and bone density loss could limit its use to patients with more advanced stages of the disease.
Moreover, the competitive landscape in the NASH treatment market is intensifying, particularly with the presence of GLP-1 therapies. The analyst pointed out that despite the projected launch of efruxifermin in 2027, the market dynamics and limited near-term commercial certainty contribute to a balanced risk/reward profile for Akero Therapeutics' shares. The firm suggests that there may be more favorable investment opportunities within the biotech sector.
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