Akero Therapeutics, Inc. (AKRO) Earnings Call Transcript & Summary

All right. Good morning, and thanks again for joining us at the JPMorgan Healthcare Conference. I'm Eric Joseph, senior biotech analyst, and our next presenting company is Akero Therapeutics. And with us to talk to us a little bit about the company is CEO, Andrew Cheng. Before I hand over the presentation, I just want to remind folks that there is a Q&A after the presentation. Please do feel free to submit a question, And I will be happy to ask them on your behalf. Just click the Ask the Question icon. With that, Andrew, take it away.

Thank you, Eric. So it's my pleasure to present again this year at JPMorgan. I think we should go ahead and advance the slide, and we'll be going to, not only to the title slide, but then on to the safe harbor, which I will not read. And then we'll go to Slide 3, which is entitled consistent record of milestone delivery and really speaks to the fact that when I was presenting last year, we talked about how, even during the time of pandemic, we would be achieving our milestones of a primary endpoint in Q1 and secondary histology endpoints in Q2, and that's pretty much what happened. For this year, as you see on the slide in the green bubbles, we'll be having 2 first half of the year milestones that is that we'll be initiating our Phase IIb study called the HARMONY trial in F2, F3 patients, and it will be followed by readout from that cohort seed that is the F4 cirrhotic cohort liver biopsy readouts in the BALANCED study that we initiated last summer or in May of last year and completed enrollment in September. Why don't we move on to the next slide, Slide 4? Our corporate highlights. Really what -- for those of you who are new to Akero, we have -- our lead asset is a in-licensed human FGF21 analog. This is in-licensed from Amgen and designed by them and really speaks to the core aspects of NASH pathology. It's engineered for optimal activity and half-life, and I'll talk about that momentarily in the next slide. We've utilized that in 2019 and read out last year in '21 in our Phase IIa BALANCED study, look at NASH patients, and we'll go through the data momentarily. But we received -- really revealed very strong results for the compound overall. In terms of recent highlights, we received last week key support from the FDA and our safe to proceed letter for Phase IIb protocol, and we'll detail that at -- near the end of the presentation. And also, in Q3 last year, we received our prime designation from the EMA, recognizing the strength of the Phase IIa data and its importance in NASH. And in terms of this year, I've already touched on the highlights, and the team, I think you've -- we've touched on before. This is one with extensive drug development experience. Let's move on to Slide 5, and this is really a schema looking at the asset itself that is that this is an FC fusion protein that has important modifications at the C-terminus. You see them as P171G as well as A180E. These are compounds that enhance the binding as well as the activity, specifically by making the mutation 171 to a glycine from proline that allows us to inactivate or be resistant to fibroblast activated protein, which is the enzymatic cleavage at that residue that untethers FGF21 from its binding to its coreceptor. You can see in the cartoon ß-klotho, which is an obligate step prior to binding at the N-terminus to the FGFR receptors. In addition, this compound has a half-life of in between 3 and 4 days, making it ideally a once-weekly compound. And it's inactive at FGF receptor 4, but does have balanced potency FGF receptors 1, 2 and 3, or 1C, 2C and 3C, and you'll see why that's important on the next slide. On Slide 6, we can see that FGF receptors are asymmetrically distributed, and if one wants to target the sources of liver fat, whether it's adipose tissue or intrahepatic sources that is de novo lipogenesis, one needs to have balanced agonism across that to best reduce the amount of liver fat. Keeping in mind that as liver fat is reduced, it leads to decreased hepatic stress and also decreased inflammation, thereby decreasing the amount of fibrosis that's laid down in an indirect manner. But on the Slide 7, you can also see that FGF21 and EFX in general has also a direct mechanism that is that it interacts with hepatic stellate cell, decreasing its transformation to myofibroblast fiberglass, which is laid down collagen. So both the -- not only metabolic but also direct anti-fibrotic benefits of FGF21 are critical, and we'll see how we -- that data gets visualized when we look at the BALANCED study, which I'll turn to now. So on Slide 8 is the BALANCED trial design. And you can see that this is a randomized, double-blind, placebo-controlled study in patients with F1 to F3 NASH. They're biopsy confirmed at the screening and the primary endpoint is at week 12, which is an MRI-PDFF endpoint, and there are post-treatment biopsies that were collected in those patients who were in our responder group. There are secondary endpoints that are -- involve relative reduction as well as ALT reduction. And efficacy endpoints are also highlighted in the box on the right. Why don't we go ahead and go on to Slide 9 and just look at the primary endpoint? That is that as you see the liver fat reduction, the endpoint was absolute liver fat reduction. You can see it's 12%, 13% and 14% across the doses, relatively flat. And this translates anywhere from 63% to 72% relative reduction in liver fat. These are among the top results in the field, very few compounds that I'm aware of have hit that 70% mark. And we've done it at 2 doses. How that translates when one looks at various thresholds is on the right-hand side of the chart. You can see on Slide 9 that all the patients that received a biopsy on the EFX arm had achieved greater than 30% relative reduction in liver fat, which has been associated with histological improvement. But when one looks what -- in the higher thresholds, but some have termed super responders, you can see that the numbers remain very strong, particularly at the 70 and 50-milligram doses. Importantly, in just 12 weeks of dosing, a significant portion of patients have normalized their liver fat, that is regardless where they started from, they ended up at less than 5% of liver fat, which is they no longer have -- within the normal limits for liver fat. Let's turn to some of the histologic data on Slide 10. And so this is looking at NASH resolution that is patients with who their NAS score, when one focuses on their ballooning and inflammation scores achieved with predetermined and FDA endpoints. That you could see across the EFX, roughly half the patient stood at 48%, and rates vary from 43% to 54% depending on dose. Turning to fibrosis next. You can see that high rates of fibrosis improvement we're seeing on Slide 11, that is that, again, about half the patients across the EFX arm achieve that, but the rates vary anywhere from 36% to about 62% at the high and the 50-milligram dose. So one of the questions that's come up in the past is, are these results driven by F1? And the answer is no. And we presented some of these data at AASLD, and you can see that on Slide 12. That is if one looks at the response rates in F2, F3 patients, you can see on the right-hand side that the F2, F3 patients had -- the majority of the patients who had improvement in F2, F3, excuse me, but among the F2, F3 patients, roughly 50% of them had a 2-stage improvement overall. So really, the patients who had the -- F2, F3 patients had the greatest improvement in fibrosis overall. Why don't we turn on to the next slide, and we'll look at weight loss? Recognizing that nearly all patients who have NASH have weight loss, we do see that the weight -- it was largely weight neutral to 28-milligram dose, but has one increased dose to 50 and 70 milligrams, you're losing it between 2.3 and 3.7 kilos. It's been known that weight loss in itself improves -- influences histology, specifically when one exceeds more than 10% of weight loss, one can see improvements in histology. In this case, we don't achieve that because these patients are right around 100 kilos at baseline, 100 to 110 kilos. So it's roughly about 2% to 3% weight loss. So this is just a beneficial improvement, but not one that is responsible for the histologic change that we've seen to date. On Slide 14, we'll talk a little bit about the improved lipoprotein profile, and it's important to see that when one looks at beginning on the left with triglycerides, you see roughly 50% reductions in baseline from -- in triglycerides, which are very strong when one looks at other compounds that reduce triglycerides. One sees equally strong improvements in HDL. We see increases as high as 41% on the 70-milligram dose. When one looks at either non-HDL cholesterol or LDL cholesterol, one sees decreases, which are largely -- and that's the -- for us when we look at LDL, it's important that we don't see any increases in that given its risk factors related to cardiovascular mortality, which are the #1 cause of mortality for these patients. Let's turn now to Slide 15. And when one looks at components of glycemic control, you can see that overall, we -- all the patients had about 0.4%, 0.5% improvement in hemoglobin A1c after just 16 weeks of dosing, but importantly, when one focuses on the patients who were diabetic, those numbers increased to 0.6% to 0.9% at the higher doses. And that's paralleled with decreases in C-peptide, which makes sense as one improves hemoglobin A1c, the insulin needed to be produced by the pancreas decreases overall. Moving to overall safety. We can see on Slide 16 that drug-related treatment adverse events are largely fairly what one would expect with an FGF compound. They're mostly gastrointestinal. The most common is diarrhea. Importantly, there are no patients that discontinued the study for diarrhea, and the discontinuations were relatively few. In fact, there were no discontinuations at the middle dose at the 50-milligram dose. Why don't we turn now to the NASH development landscape? This is one where we often get asked. When one looks at the histology results, how do they compare against some of our other compounds that are in development? Most of these compounds are in Phase II. These are 2 -- Phase IIb results with the exception of the Intercept study, which are on the far right, which, of course, is a Phase III trial. And one thing to notice, as you look at these, most of these compounds were dosed for anywhere from 24 to 72 weeks over time. Yet our EFX was dosed for 16 weeks, yet it compares very favorably, especially at the 62% at the 50-milligram dose overall. So when one thinks about our upcoming milestones, we've talked a little bit about Cohort C at the beginning of the presentation, but this is a cirrhotic F4 cohort that we initiated prior to release of the BALANCED main study results. We began screening in May of last year, but this is a randomized, double-blind, placebo-controlled trial, looking at 50 milligrams compared to placebo in patients with Child-Pugh class A stable cirrhosis. They have a biopsy-confirmed F4 at baseline, and they dosed for 16 weeks. This is prior to our availability of chronic tox, and we'll be -- we initially designed this study as one that was looking at noninvasive markers, such as ELF and Pro-C3 as well as FibroScan, and it was designed to help us understand the safety profile on PK for cirrhotic patients. However, during the conduct of study, the F4 patients are -- with the most advanced disease are concerned about their health. In particular, they requested that we consider allowing an end-of-study biopsy, and we have subsequently amended the protocol to have end-of-treatment biopsies, which will be compared to their pretreatment biopsies. Of note, this is a voluntary result as we consented all patients to screening in the trial without having a prepared biopsy at the end of the study. So we're not completely sure of the last -- the full number of biopsies that we will receive, but we're hopeful that it will be around 2/3. And these results are -- we are expecting sometime in the first half of this year. When I turn now to our Phase IIb study, which we're calling the HARMONY trial. So this is a randomized, double-blind, placebo-controlled trial of F2 and F3 patients. The other entry criteria are shown on the slide, and they'll be randomized in 1 of 3 arms, and this is a 24-week study, and the primary endpoint is fibrosis improvement, one-stage improvement of fibrosis without worsening of NASH, and there will be the secondary markers or endpoints, which involve NASH resolution as well as some of the things we've seen in the BALANCED study that is glycemic control, fibrosis marker, weight change as well as lipid proteins. This trial is slated to begin in the first half of this year. We plan our initiation in the first half of this year. We have recent correspondence with the FDA that we have a safe to proceed, and the trial will dose for 24 weeks and will conclude with an end of Phase IIb meeting, formal end of Phase IIb meeting, which will gate the initiation of Phase III. So lastly, let me just finish up with our finances. We reported at the end of Q3 that we have roughly $292 million in cash, so we're well capitalized, and we look forward to putting that to use in clinical development in the coming year. So perhaps, at this point, I'll stop here and turn it back over to Eric.

Great. Thanks, Andrew, for that presentation and overview, very informative. I guess to start the Q&A, I would want to pick up from some of the data that was presented at AASLD that focuses on the -- sort of at high level of -- that greater proportion of fibrosis reduction that you're seeing in the patients with the baseline of 2 and 3. I guess the corollary to that data is that a smaller proportion of patients with F1 fibrosis saw an improvement -- or a decline in their fibrosis over the treatment period. I guess, is that -- I mean is that sort of surprising to what extent is there a mechanistic basis for EFX, the treatment effect with EFX kind of being determined by baseline fibrosis severity?

Tim, do you want to comment on that?

Yes, I can take that one. So I think what we know, Eric, from work that was done around the impact of lifestyle on NASH is that if you lose more than 10% of your body weight in the course of a year then you'll see resolution of NASH. There is a threshold. You need to get to 10% or more. And resolution of NASH occurs not only in like F1s and F2s, but it also occurs in F4 subjects. So there is no reason to believe you can't reverse F4 subjects out of that late-stage fibrosis, and that has been seen with people who have been -- had viral suppression with HCV.

Okay. All right. I guess, just generally, would be curious to get a sense of just what the physician feedback has been like sort of with greater time since the BALANCED Phase IIa data has read out and just a number of data readouts that we've had from the competitive landscape, I guess, what are the incremental user enthusiasm about efruxifermin for the NASH study -- sorry, for NASH?

Yes. I would say that as we've continued to develop efruxifermin, specifically in Cohort C that having -- our sites having had the experience out of the BALANCED study has led to a considerable enthusiasm for the compound. Then our screening enrollment rates for our cohort C exceeded our expectations. So I think seeing the potency of the compound and the generally well-tolerated nature of the compound have allowed us to advance -- enroll these advanced patients more rapidly than we expected.

I guess, if we're looking at the Phase IIb HARMONY study, a fair number of updates -- a fair amount of information that desire to provide here, right? The doses that you're selecting, and the endpoints and time frames being assessed. One locking item here is sort of patient numbers. So I'm curious to get a sense of how we should be thinking about the sizing of that trial and whether on that size, how you might be thinking about enrollment timelines? Yes, that study.

The -- we didn't put in the patient numbers primarily because we just received feedback on Friday on this, and this is something that we're continuing to integrate overall. I think that when one thinks about some of the other F3 studies that have -- F2, F3 studies that have been done, given our effect size, probably a little bit on the smaller side compared to some of the other trials, but the final sample size, we haven't quite settled on yet.

Okay. And I guess from a registration standpoint, I mean, how should we be thinking about the -- what the bar is ultimately for registration? Is there -- is -- I guess, does the results of the Phase IIb potentially present a path for a Subpart H or accelerated approval avenue? Or is it really going to be defined by the data in Phase III?

So in terms of the efficacy, we certainly think that the data from Phase III really will be driving the Subpart H approval. However, the IIb data will contribute to the overall safety database, which in this indication is quite sizable. So our Phase IIb trial, the HARMONY trial will not go unused.

Okay. Yes.

I think the main other difference is the formulation in Phase III will be different than what's being used in IIb. So that's probably the main -- another factor.

I got it. Right, right. Okay. Okay. That's a key point. The -- can you talk a little about some of the -- what allowances there are for complement treatment in the Phase IIb or the Phase III study, right? You presume that patients here might be on -- might be presenting with -- also present with diabetes and maybe on sort of complementing the other polypharmacy. Can you kind of speak to the allowances there? Is there anything sort of that is excluded -- any treatment backgrounds that are excluded in the patient eligibility criteria.

Kitty, do you want to take that one?

So -- yes. Eric, we are allowing diabetic patients into the study, but there are a few caveats. We're not including type 1 diabetic patients or patients with type 2 that have unstable diabetes, but we are allowing both GLP-1s and SGLT-2 and patients taking those medications on study. We just required that they've been on a stable dose for the 6 months prior to the -- and pretreatment biopsy, but we're pretty flexible there.

Okay. Got it. Got it. Given the favorable impact that you're seeing on glycemic control, other liquid biomarkers, and these are things that you plan to assess in HARMONY as well, are there other sort of longer-term endpoints either on -- I guess, pivotal endpoints that you might think about in either CV disease or diabetes that you're assessing in HARMONY where you might be able to think about having an impact or you might be able to contemplate an impact beyond just NASH markers, just given the overlapping epidemiology between NASH and diabetes.

I'll let Kitty talk about that, but we certainly are. As I mentioned earlier, these HARMONY patients count towards the overall long-term safety database, and in particular, clinical outcomes. But Kitty, do you want to touch on what we're looking at in terms of clinical outcomes?

Yes. So I mean, we have a number of secondary endpoints. So I think they're kind of what you would expect, Eric, in terms of what we presented from the BALANCED study, but we are looking closely at the lipoprotein. So triglycerides, HDL, non-HDL, LDL cholesterol. We also are looking at glycemic control, again, focusing in -- having seen the sort of significant change in hemoglobin A1c and C-peptide we'll focus in on those. We're looking at weight change as well. We do have some exploratory analysis that we are doing. We have Cardiovascular Adjudication Committee coming in. I think in order to have that as a secondary endpoint, you would really need to power around that. So we're not powering for cardiovascular outcomes, but we are really closely going to look at them because, as Andrew mentioned, we are seeing a really robust change in these patients' cardiovascular risk profile, and it is the highest cause of mortality in these patients. So we -- I think we are expecting that there could be some benefit there, but it will be an exploratory analysis as well as sort of looking at overall metabolic status in these patients' onset of diabetes. So there is a lot that we are going to be trying to measure, and we have long-term follow-up for these patients. So it will be a nice data set that we could generate with long-term treatment effects.

Got it. I guess on the safety profile of efruxifermin, previously, there's been a discussion about CNS impact. I think you guys have -- your annual data set kind of speak to none of that. Those endpoints being an issue here. We have come into -- run into skeptics that have highlighted the potential for bone reabsorption. I guess to what extent is that AE a real -- or potential for bone reabsorption or bone effects a real long-term concern? And I guess, is there anything in your GLP tox analysis that would speak to as the potential for that adverse event.

Tim, if we -- you wouldn't mind?

Yes. Just on the preclinical, Eric. Because of the very substantial weight loss you see in preclinical species, changes in bone turnover not really likely to translate to humans. The mechanism does cause very substantial weight loss in those species, 20%, 30%. So the real focus has to be on what's happening in humans. And for all the FGF21s, we've had to follow bone mineral density and markers of both bone resorption and bone deposition. We did the same in the BALANCED study. We didn't see any significant trends during the 16 weeks of treatment. We just -- now we'll take that into a longer period of treatment and continue to derisk on that basis.

Okay. Okay. All right. The -- maybe just pivoting to Cohort C. I was going to ask a number of questions about sort of how the imaging endpoints can inform histology and reduction in fibrosis. Now you're actually collecting biopsies here to kind of look at that directly. It's still kind of a useful question like how -- given that we would be looking at a sort of less than an ideal data set when it comes to histology with kind of paired biopsy -- paired biopsies, I guess, how -- can you just speak to sort of how predicted some of the non-inpatient invasive measures, FibroScan and ELF are towards fibrosis? And sort of what -- whether it's either in those analyses that were looking at fibrotic change you think would be a compelling result to explore further development in the F4 population?

So let me ask Kitty to take that on. Before I turn to her, I just want to clarify, we will be having paired biopsies in the study that is that because they had to have a screening biopsy, mostly historic. We'll be using that as the pre-dosing biopsy, and then we'll be collecting the second biopsy, the post-treatment biopsy in these patients. So the -- although the historic biopsies were not read to come into the study, we are having them read by the central reader. So in that way, we will be having pre and post in this trial. But I think your question is about noninvasive measure is all relevant, and perhaps I'll turn it over to Kitty.

Yes. Thanks, Eric. I think we will be looking at the totality of the data from Cohort C. I think you've probably seen, when we look across the competitive landscape, there really hasn't been really any really robust data in this patient population. And biopsy response rates have been very minimal, sort of in the 10s of percent rate. When we look at the noninvasive markers, I think there isn't a kind of complete direct corollary or a cutoff. I think when we look at FibroScan and liver stiffness, there are nice gradations there that are correlated to fibrosis stage. So like a greater than 14 kilopascal is seen as an F4 fibrotic patient. If you look at F3, is a 10 to 14. So I think we will be able to look at the FibroScan data and see if the patients are -- liver stiffness is improving in terms of where that would be predictive in terms of a fibrosis score. Gilead presented some nice data around ELF score, and they have shown a 0.5 reduction in ELF score seems to be associated with a one-stage improvement in histology, fibrosis score. So again, you have a kind of target to aim for. Again, the Pro-C3, I think there isn't a direct cutoff. We saw about a 30% reduction in Pro-C3 in the main BALANCED study, where we did seen nice response, 48% of the patients had fibrosis improvement. So I think we will aim towards where we are compared to the main BALANCED study. And there are data out there, again really showing that serum Pro-C3 levels correlating with to the grade of histological improvement, but it's not still like clear-cut in terms of a definite cutoff. So I think when we look at the totality of the data, we're really going to be able to see a further -- as kind of expected with a mechanism that's both anti-metabolic, but also directly antifibrotic, that EFX is having a -- sort of an efficacious effect in this patient population.

Just trying to think through some of the next steps on the heels of these data, I'm sure whatever the answer will be, will be very much data dependent. But maybe you can just sort of forecast what a registration type of study would look like in an F4 for population. And if the data do support the type of trial that might sort of intercede the Cohort C study and a potentially registration directed. I mean now having some histology data that might shorten the path a little bit here, I guess, how much is that the case?

I think your comment in the beginning is completely correct. It will be data dependent, but what -- having the histology data does create advantages in terms of like future development program, in terms of being able to adequately power future studies. I think we are thinking about it as a kind of Phase IIb study. I think we would probably treat patients for longer. You would need a 48-week endpoint. I think once you have that data in hand, then really will allow you to then negotiate what the future sort of regulatory path we would be for that F4 population. If you -- there really hasn't been really anything that has demonstrated benefit in this F4 patient population. And as those patients are the sickest with the most unmet medical need, I think it makes a common sense that it would be -- there could be a possibility to accelerate with really good data. And so that would just be something that once the data is in hand, you would take it to the regulators and try and push. I mean the best case scenario, could it be a pivotal study, would certainly be a goal to try and achieve, but I think until you've got the data, the development pathway would need to be sort of determined.

Eric, just a comment. Of course, this is all being said under the understanding that right now, there is no Subpart H approval for these patients. But as Kitty said, this is -- and you mentioned, it's, of course, data-driven, very strong data. Could things be different? Potentially.

Got it. We've chatted previously about potential combination strategies with efruxifermin and kind of shared some thoughts there. I wonder whether -- I guess, how those thoughts have evolved? And whether we might start to see the combination sort of explored clinically with HARMONY getting underway, and sort of how strategically you might pursue those, right, from a use of capital standpoint?

Yes. So I certainly think that we're interested in combination therapies. I think as we've -- you and I have touched on in the past, the challenge has been finding the right partner. I think we entered BALANCED with one set of ideas, but the data drove us in a different direction that is that given the combination of really substantial NASH reduction as well as one-stage improvement in fibrosis, coupled with the weight loss, lipid improvements and most surprisingly hemoglobin A1c changes, we -- with the existing compounds in development, we look pretty closely. We're not sure what the best partner is right now. I think there are some other mechanisms that are not in the clinic that we're more interested in. I think a lot of the work that Tim's group is doing on to look at potential partners is still ongoing. And so I think we've had a little bit of recalibration after last summer when we saw the breadth of the results. So at this point, we're not planning on initiating anything. I think we're planning on HARMONY going forward and the potential looking at the results from the cohort C to understand the best pathway forward, but I think the combination therapies maybe taking a step back in light of the BALANCED study results.

Okay. All right. Well, we're going to wrap it there. Thanks so much, Andrew and team, for joining us this afternoon. Really appreciate it. And thanks, everybody, for tuning in to the webcast. Have a great afternoon.

Thank you, Eric.

Thank you.