What happened

Shares of the clinical-stage biotech Akero Therapeutics (AKRO -6.57%) were up by a staggering 110% on sky-high volume as of 9:56 a.m. ET Tuesday morning. The biotech's shares have more than doubled in price this morning in response to a positive phase 2b trial for the experimental nonalcoholic steatohepatitis (NASH) candidate known as efruxifermin (EFX).

Specifically, Akero announced ahead of the opening bell that EFX hit both the study's primary endpoint of at least a one-stage improvement in liver fibrosis with no worsening of NASH by week 24 as well as a key secondary endpoint consisting of NASH resolution without worsening of fibrosis. The drug reportedly beat out placebo on each of these endpoints across both the high dose (50mg) and the low dose arm (28mg) of the study.  

So what

NASH is easily the largest untapped drug market in existence today. Despite 12% of adults in the U.S. estimated to be afflicted with this serious liver disease, there are no drugs or therapies approved by the Food and Drug Administration (FDA) for this indication.

This gap in care for this growing epidemic isn't from a lack of effort on the part of big pharma, however. The long and short of it is that scores of once-promising NASH drugs have either missed the mark in late-stage testing or have run into serious safety issues in human trials. 

So, if Akero's drug can replicate these outstanding phase 2b results in a large randomized trial, the biotech could have a megablockbuster therapy on its hands.  

Now what

Is Akero's stock still a buy? From a deep-value standpoint, this tiny biotech company does come across as incredibly cheap. With a market cap hovering around $1 billion, Akero's shares might be trading at a mere fraction of EFX's commercial potential. All that being said, this drug will take a few more years to make its way through the lengthy clinical trials process. Meanwhile, there's no guarantee that this decisive clinical win will continue to hold Wall Street's attention over a multiyear period. In other words, investors might want to wait for a pullback before buying shares in this intriguing NASH stock.