Akebia Therapeutics (NASDAQ:AKBA) stock got off to a resounding start today, at one point seeing a 45% jump from yesterday’s close. Akebia specializes in treatments for complications associated with chronic kidney disease (CKD). However, up 18% as of this writing, investors may be wondering why shares are relevant right now.
Apparently, AKBA stock is taking off on no news. Because of that, it’s possible Akebia could be the subject of a pump-and-dump scheme, although this is only speculation. Since late March, shares have traded below $1, making them ideal for manipulation.
To be fair, though, Akebia does have some significant relevance on paper. Its late-stage flagship product, vadadustat, is designed to address anemia associated with CKD. According to a 2014 study, roughly 15% of U.S. CKD patients encounter anemia, or approximately 4.8 million people. Factor in the global patient base and Akebia seems to have a large total addressable market.
AKBA Stock Is Up Today, But What About Tomorrow?
Akebia is up today, but there’s also a bigger picture. On a year-to-date (YTD) basis, AKBA stock is down roughly 80%.
That disappointing performance stems largely from the U.S. Food and Drug Administration (FDA), which rejected vadadustat in March. The regulator cited safety concerns, including “higher risks of thromboembolic events and liver injury.”
AKBA stock plummeted on the news; previously, shares had traded in the low single-digit territory. In addition to vadadustat, the FDA also rejected roxadustat in August 2021. FibroGen (NASDAQ:FGEN) and AstraZeneca (NASDAQ:AZN) developed the competitor drug.
Still, projections call for Akebia to generate roughly $170 million in revenue this year. Meanwhile, its market capitalization lies at less than $80 million. Because of that, some investors may consider AKBA stock undervalued.
Piper Sandler analyst Chris Raymond offered his own take on shares after the FDA news. In a letter to clients, Raymond wrote that the FDA rejection was “likely the end of the road” for the drug in the United States. Essentially, the analyst believes the FDA will want to see more data before an approval. Considering that the regulator also rejected a similar therapeutic, Akebia seems unusually risky moving forward.
On Penny Stocks and Low-Volume Stocks: With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. If we ever do publish commentary on a low-volume stock that may be affected by our commentary, we demand that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.
On the date of publication, Josh Enomoto did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.