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 pre­cise­ly does all those 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.

Cyclerion Therapeutics may have the design of a Phase IIb study ready to go, but it’s scrambling for a way to fund it.

The company said in a press release that it’s “actively evaluating the best combination of capital, capabilities, and transactions available to it to advance the development of zagociguat,” its lead candidate for a rare, genetic mitochondrial disease known as MELAS.

In a separate SEC filing, Cyclerion once again flagged “substantial doubt about (its) ability to continue as a going concern.” As of the end of 2022, it had cash and cash equivalents of only $13.4 million.

A small, Santa Ana-based biotech created in 2017 is looking to enter a SPAC deal as it lays out plans to begin trials in its lead cell therapy candidates and bring on new executives.

Graf Acquisition Corp. IV and NKGen Biotech announced Thursday, with few other details, that the two companies signed a non-binding letter of intent to “pursue a business combination.” Graf Acquisition II and III withdrew their IPOs last year.

The FDA has rejected Incyte’s extended-release formulation of ruxolitinib tablets, in a surprise setback for the company’s plans to build on its blockbuster Jakafi franchise.

The ruxolitinib XR tablets are designed to be taken once a day, whereas Jakafi is indicated for twice daily dosage (although some patients can take it once daily).

According to Incyte, the FDA acknowledged in its complete response letter that the study submitted in the NDA “met its objective of bioequivalence based on area under the curve (AUC) parameters but identified additional requirements for approval.”