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

Okay. Thanks again for joining the 40th Annual JPMorgan Healthcare Conference. I'm Eric Joseph, senior biotech analyst at the firm. Our next presenting company is Akero Therapeutics, and it's my pleasure to welcome the company's CEO, Andrew Cheng, to talk to us a little about the company. There is a Q&A session after the presentation, just click the icon and I'll work in the questions where appropriate with that. Andrew, thanks again for sharing some of your time with us today.

Thank you, Eric. Thank you for having us. So why don't we go ahead and get started? And -- let's go to the first slide. And then here's our safe harbor statement. And I'm not going to read that, I'll just let that project. And -- so here's a snapshot of Akero. We have an FGF21 analog, which we call efruxifermin and based on our Phase IIa data, we feel that it has the potential to be a best-in-class NASH drug. Keeping in mind that the NASH patient growth is very substantial, it's on track to reach 30 million Americans by the end of this decade. Based on our Phase IIa data, we have initiated a Phase IIb program, which has 2 trials, the HARMONY study, which is a precirrhotic F2, F3 program, began enrollment about a year ago, and we're on track for results in the third quarter of this year. Based on some of the Phase IIa results, we also initiated an F4 study in compensated cirrhotics, which we call SYMMETRY, and that is screening and enrolling as we speak. The totality of the Phase IIa data has allowed us to earn regulatory designations of Fast Track and PRIME from the FDA and EMA, respectively. Taken together, these allow enhanced regulatory interactions for compounds with unmet medical needs. In the past year, we've made substantial progress on our commercial drug product device, which we plan on utilizing in Phase III. Financially, we reported at the end of last quarter that we have $215 million in cash and have reiterated that, that provides a cash runway through the third quarter of next year. Why don't I talk a little bit about NASH in general? As I mentioned that patient growth is -- in the United States is substantial, and this is true in most of the world. NASH is really the largest medical, for which there is no approved product. When one thinks about NASH as a liver disease, really the inciting event is excess liver fat. Fat that's deposited in the deliver beyond the normal limits leads to a cascade of pathogenesis. This pathogenesis results in the deposition -- ultimate deposition of collagen fibrils leading to cirrhosis. However, the question is what is the source of the liver fat? Well, some of it is the liver, but the majority of the liver fat comes external to liver that is peripheral adipose tissue is the largest source of liver fat. And as I touched on, the inflammatory cascade resulting in myofibroblast proliferation results in fibrosis. And ultimately, it leads to cirrhosis and unfortunately, potentially transplant in liver cancer. But NASH is much more than just a liver disease that these patients are also afflicted with other metabolic diseases. That is that nearly all of them are overweight in the United States, roughly 50% to 60% have type 2 diabetes with elevated levels of insulin resistance. And nearly all of them have dyslipidemia. And cardiovascular mortality is the #1 cause of death for NASH patients. Let's turn now to our Phase IIa program. So efruxifermin was studied in a Phase IIa study called the BALANCED trial, which is a randomized, double-blind, placebo-controlled study in precirrhotic patients with fibrosis stages, F1, F2 and F3. These all had biopsy-confirmed NASH at baseline, and they were dosed for 16 weeks in a dose-finding study with 3 doses of efruxifermin. For the purposes of this presentation, I'll only be focusing on the 28 and 50-milligram doses. Those are the doses that we are taking forward into Phase IIb. For the full details, we published the study last year in Nature Medicine and the references on the slide. We also created an additional cohort, which we call Cohort C. It was an expansion of the trial, which looked at compensated cirrhotics, F4, and they were also dosed for 16 weeks with just 1 dose, the 50-milligram dose, and we'll talk about that in the presentation. So why don't we turn now to some of the results? This shows liver fat as measured by MRI-PDFF and noninvasive measure after 12 weeks of dosing. And you can see that there are statistically significant decreases in liver fat. In fact, these responses are among the best in the field regardless of mechanism in terms of total reductions. So we clearly met our primary endpoint of demonstrating significant differences. And not only were the patients had -- did they have reductions of greater than 70% at the 50-milligram dose, but quite a number of them normalize their liver fat, that is they reduced their liver fat to less than 5% after just 16 weeks of dosing. Why don't we turn now to liver biopsies? So a subset of patients received liver biopsies. And what we saw is among those who did receive them, that roughly 60% of those on the 50-milligram dose had a 1-stage improvement of fibrosis without worsening of NASH. This is one of the FDA regulatory endpoints, the other being NASH resolution. And the 28 milligrams, you see, had a roughly 46% improvement in one stage. So one of the questions has been how does this compare with some of the other compounds in a similar stage of development? So on this slide, we take a look at some of the other drugs that are being studied for NASH. These are results from Phase IIb studies, whether it's for lanifibranor, resmetirom or semaglutide. You'll note that their dosing durations were all longer than the 16 weeks that efruxifermin was studied and yet our results compared favorably to theirs. And of course ours is a Phase IIa study, smaller patient numbers and shorter duration, but this really forms the basis of our enthusiasm for the HARMONY results, which we will reveal in the third quarter this year. One of the questions that has been asked, though, is that we allowed patients who had F1 through F3. Could it be that the results -- these results were driven largely by the F1 patients who are in early stage of disease and potentially easier to treat. But when we took a look at that, and these are the patients who had F2 or F3 at baseline, keep in mind that, that was roughly 66% of the patients in this study overall that we saw that on average, these F2, F3 patients had a -- 2/3 of them had a 1-stage improvement of fibrosis. And most remarkably, that roughly half of these patients had a 2-stage improvement of fibrosis. Very few companies report these data because it's quite uncommon to have a 2-stage improvement of fibrosis in a relatively short period of time. So we're quite encouraged by these results, demonstrating the potential benefit to patients when dosing with efruxifermin. Let's turn now to some of the other parameters. As I mentioned, dyslipidemia is a problem that afflicts nearly all NASH patients. And when one looks at the lipoprotein profile on this slide, taken together, we can see a rather heart-friendly approach, that is that the parameters are really going in the correct direction. We see statistically significant decreases in triglyceride as well as non-HDL cholesterol, which includes LDL, and importantly, increases in HDL, which were quite substantial. As we're all aware, finding a compound to increase HDL has been something that the industry has tried for a number of years without success. Let's turn now to glycemic control. We see after 16 weeks at the 50-milligram dose, still statistically significant decline in hemoglobin A1c. So glycosylated hemoglobin as a measure of glucose has declined after 16 weeks. And the mechanism by which this is achieved is a decrease in insulin resistance or an increase in sensitivity. Those measures are reported in the Nature Medicine article. As a result of the decrease in insulin resistance, the pancreas, specifically the beta islet cells have to produce less insulin. And this is evidenced in the C-peptide. C-peptide is a degradation product of endogenously synthesized insulin. So you see statistically significant declines at both the 20 and 50-milligram doses for C-peptide. Lastly, when we look at weight, we see a roughly 2-kilogram decrease over 16 weeks at the 50-milligram dose. Keep in mind that the baseline for these study patients is roughly 100 kilograms. So this is about a 2% decline. So this is while certainly beneficial for patients, this is not -- weight loss is not the mechanism by -- behind the improvements in histology. I think this is a -- it's helpful for patients but not explanatory in the way that weight loss is important for GLP-1 semaglutide. So taken together, you see a profile based on our Phase IIa data that's really helpful for patients. It clearly improves liver fat as well as improvements in liver fibrosis. But it also takes care of the -- some of the other challenges that these patients face, whether it's dyslipidemia or type 2 diabetes and obesity. Let's turn now to those patients who have greatest medical need that is those who have F4 cirrhosis. Whilst this slide really highlights the challenges these patients have once patients are F4 that over a 5-year period, their mortality is roughly 50% for those who don't seek liver transplant. And it's -- the curves are quite stark when one compares them to the earlier stages of disease. So as a reminder, we dosed patients with 50 milligrams of efruxifermin for 16 weeks in a small 30-patient cohort. And what we see is that we also see important improvements in fibrosis. Although numerically not as great as what we see in the precirrhotic population of 33% is quite a substantial number when one thinks about other compounds in the field. The next slide really highlights this. Regardless of mechanism regardless of duration, there hasn't been a lot of success in reversing fibrosis in F4 patients. And these studies have been conducted over a number of years. And unfortunately, there hasn't been much of a difference between placebo regardless of the company or mechanism. So these results were encouraging for us and helped us move forward and decide to advance into a Phase IIb program. But we also see when one looks at other parameters some similar results that is that for the lipoprotein profile, whether it's triglycerides, HDL cholesterol and non-HDL cholesterol, we see similar statistically significant declines in non-HDL cholesterol and triglycerides and increases in HDL cholesterol. While not numerically exactly the same, they're certainly in the same ballpark when one looks at them with relatively little difference. This is also true for glycemic control when one looks at hemoglobin A1c where the numbers are exactly the same or very, very similar when one looks at C-peptide. And the weight loss is also in the same zone, roughly about 2 kilograms, slightly more in the F4 patients. So the overall one sees a very consistent results in the efruxifermin profile, when one looks at histology changes as well as other parameters like lipoproteins and glycemic control. And when one takes this together, a very consistent response across all of these parameters from precirrhotic and cirrhotic patients really leads us to the conclusion that this worked really treating the whole patient, not just the liver, but certainly, the results in liver are the most important at this point since there are no approved therapies for NASH. And we feel that this efruxifermin has the foundation to be a very important monotherapy for patients with NASH. At the same time, if there were to be circumstances where efruxifermin were to be combined with other products, it would also add to that combination regimen, which we designate as the EFX category. So from the basis of these Phase IIa results that I touched on, we did advance into Phase IIb studies, which are on the right-hand side of the slide when one looks at HARMONY and SYMMETRY, both are 24-week. Both studies are ongoing, HARMONY being 24 weeks and SYMMETRY 36 weeks, both are powered for biopsy, which is different than the Phase IIa BALANCED study, which is really powered on a non-invasive measure of MRI-PDFF. Turning to HARMONY. This is the trial design. F2, F3 NASH, liver fat greater than 8%, 3 arms dosed for 24 weeks, and the primary endpoint is 1-stage improvement of fibrosis without worsening NASH, the FDA registration endpoint. The secondary efficacy endpoints are highlighted, NASH resolution as well as glycemic control, lipoproteins and weight change. This trial, although we're dosing for 24 weeks and the primary endpoint will continue for up to 2 years to provide long-term safety follow-up. You'll note that the schema highlights that there will be one dose in the follow-up, but that dose will be selected at Phase II meeting in consultation with the FDA, and that will also be the basis for the dose we hope to use in Phase III. Turning to the SYMMETRY study, which is still screening and enrolling, similar using 2 doses, we're hoping for cirrhosis reversal as the primary endpoint. After 36 weeks, we're dosing longer just because treating F4 patients is so challenging. So we're adding another 24 -- 12 weeks to what we did in HARMONY. And we'll have a similar consultation with the agency at that time point, hoping to select the dose for Phase III as well. I mentioned earlier in the presentation that we've made significant progress in the manufacturing side. And looking at our drug substance or active pharmaceutical ingredient, we've partnered with Boehringer Ingelheim and we've been able to transfer the process from Amgen to Boehringer, and we have made drug substance at commercial scale. It's released for Phase III. And most importantly, the comparability between the 2 products, the original Amgen product and the product that we've made in partnership with Boehringer Ingelheim has -- is very similar. In addition, we're also working on a Phase III drug product/device combination, which has been used in the past for other approved drugs, both in the United States and Europe. It will be 1 millimeter -- excuse me, 1 milliliter subcutaneous weekly injection, and it will be self-administered in stable refrigerated conditions. So we're very excited about the progress we've made here in the past year. Lastly, just to reiterate that we are in a strong cash position with greater than $200 million in cash as of the last quarter, and we expect to -- this cash to keep us our operating plan running into the third quarter of next year. So thank you for your attention. I'll turn it back to Eric.

Thanks, Andrew, for that presentation. You're advancing 2 doses in the Phase IIb -- or still evaluating 2 doses in the Phase IIb HARMONY trial, 28 milligrams and 50 milligrams. Can you speak to the rationale to keeping the lower dose of 28 milligrams and whether there's a meaningful difference in tolerability profiles that you think might emerge in the readout of that study that might have at least impact commercially?

Yes. Overall, I don't think we'll see that. I think we've -- if you poll the team, I would think that we're all believing the 50-milligram is the likely dose that we'll take forward for -- even with some of the differences or lack of differences that we've seen because we haven't seen much of a safety difference in Phase IIa, numerically slightly better, but efficacy-wise where the fibrosis improvement is better at the 50-milligram dose as well as you do lose a bit of glycemic control when you move to the 28 milligrams. And given that half the patients are -- NASH patients are diabetic, I think it's an important differentiator for EFX.

Okay. Okay. You made reference to some of the competitive landscape and with some programs you've seen really some surprises in the reproducibility of clinical data going from Phase IIa to Phase IIb. For potential skeptics out there, I guess how -- what gives you confidence in the strong signal demonstrated so far in BALANCED being recapitulated in the HARMONY study. And I guess as part of that, can you speak to how patients enter the study compare -- entering HARMONY compared with those evaluated in BALANCED?

Sure. So there's no question that NASH is -- for NASH companies were all in a little bit of a show-me stage right now, given some of the results that you talked about earlier. But I think when you look at our results, in particular, the 2-stage improvement in fibrosis after just 16 weeks and half of the F2, F3 patients having that really gives us confidence because that's a threshold that's not been seen by other companies. In addition, there have been -- one of the challenges that's been raised is some companies have reported high placebo rates. I think one of the things that we've focused on in partnering with the FDA, they've issued some new recommendations about that. And we have multiple readers reading our slides, and they have to come to consensus. So I think overall, we're confident that as we move forward with the dual reader process that we will have reproducibility of these results.

Okay. Okay. And then [indiscernible] asked a question about the baseline characteristics. Maybe, Kitty, do you just want to take that at a high level since we haven't really analyzed that?

Yes. So what I would say is that more or less the entry criteria that we're using in HARMONY is very similar to what we used in BALANCED. So you're really going to see a very similar demographic in terms of patients coming in. Of course, in HARMONY, we're only looking at F2, F3 patients, where in BALANCED, we look to F1 to F3. The one area we really changed was we were able, based on the BALANCED basis is of broadened the entry criteria and to allow a broader group of patients with type 2 diabetes and also include those patients taking -- or who were well controlled on insulin. So really, that's just one sort of subtle change, but really more or less the patient population is very similar.

Okay. Okay. Got it. I guess you sort of anticipated my next question, which is what allowances there are for concomitant therapies to manage what's likely to be a fair amount of underlying diabetes, similarly other allowances for lipid-lowering medications or other standard-of-care therapy. Any expectation that, that might have an impact on either tolerability or efficacy?

Yes. So we have a pretty standard requirement. I think you see across NASH study where patients who are on either antidiabetic, weight loss or lipid-lowering med, really have to be what we have defined as a stable dose, and that's really being on the same dose for 3 months prior to enrollment in this study. And then we do recommend that they stay on the same dose throughout the treatment period. And so I mean, these patients are on multiple medications. And so I do think when you see us moving forward into Phase III, I think that requirement would really remain the same to just make sure these patients are stable. And we really haven't seen a major difference looking at subgroups within those patient populations. So I don't think that really it's going to be a concern for us as we move forward into Phase III.

Okay. Okay. Given the standard of care in diabetes goes beyond insulin to include other class of compounds, the SGLT2s and GLP-1s, some of which have kind of shown some activity in NASH. Looking at the Phase III study, do you have any -- how do you think -- when thinking about what the comparator arm might comprise in terms of background therapy, how do you think about the role that antidiabetics might play? Do you anticipate sort of regulatory requirements for patients to be on antidiabetics beyond -- other than insulin?

So I would say we -- as Kitty highlighted, we always want the best therapy for our patients. So regardless whether it's -- since there's no -- nothing approved for NASH certainly for those diabetics as well as those patients with dyslipidemia, we want them to have -- we don't want to restrict their access to treatment. So one of the ways that we address that is that we stratify by those with type 2 diabetes. So we don't have an imbalance where all the diabetics are on one arm or the other. And while we don't stratify by background measurements, we're hopeful that by stratifying, we'll at least minimize the differences overall. So is it theoretically possible that all the GLP-1s could end up on 1 arm? Yes, it is but that's a low likelihood of that overall.

Okay. Okay. In terms of the powering of HARMONY, can you just speak to at the size, what the minimal difference in reduction of fibrosis without NASH worsening the trial is powered to detect?

Yes. So I would just say, overall, we're greater than 95% powered to develop to -- between active and placebo, assuming a 20% placebo response rate. So we're very comfortable when it comes to powering. This is not a underpowered study. So at the sample size that we have, we're well powered.

Okay. And with respect to SYMMETRY, just curious to get a sense of how that trial has been accruing and whether you might be able to either here or in the near-term guide when that 36-week readout might take place.

Kitty, do you want to comment?

Yes. Eric, we haven't said publicly when that data is going to be available. But what I can say is we started SYMMETRY last year. It's enrolling as we expected. And I mean overall, I think there is less competition in the -- in terms of the number of studies running on the F4 patient population, and I think we'll provide guidance shortly.

Okay. Okay. As part of the Phase III program -- well, actually, first, just thinking about the commercial opportunity here, it might be useful to have you sort of just put in context the F2, F3 population versus the F4 cirrhotics in terms of their relative market sizing. And just from a registration standpoint, whether you'd need to pursue these populations individually or there might be the potential to pursue kind of a comprehensive integrated Phase III plan that meets the whole fibrosis spectrum?

I'll let Kitty sort of touch on that just about our overall how we're approaching this.

So, Eric, yes, we are planning as of integrated Phase III program that really would encompass both the noncirrhotic and cirrhotic patient population. We're proposing currently 3 different studies. So the first study would have a histological endpoint after a year that would be predominantly F2, F3 patient population. And then you would combine that with the second study and the F4 patient population with long-term clinical outcomes. And then our third study would be using a noninvasive strategy for both diagnosing patients and then also using a noninvasive primary endpoint. And so mostly, this would follow the current of both FDA and EMA draft guidances. But there are some areas that we feel that with the data from either HARMONY or SYMMETRY where we could negotiate with the regulators to really come across with the broadest possible label, we could have based on that Subpart H accelerated approval.

Makes sense and -- given the phase that the Phase III will be the first evaluation of the commercially intended drug product, any -- you spoke to the demonstration of equivalency so far. I presume that's nonclinical. Any need to evaluate sort of -- or demonstrate clinical equivalents in a bridging-type study ahead of the start of the Phase III trial?

Tim, could you comment about our drug substance/product?

Yes. And so maybe just taking a step back from that, Eric. In terms of drug substance, we're manufacturing at commercial scale. We made 6 lots in the last year, 4 of those are clinical-grade material that will be the basis of the drug product for Phase III, 2 of those have already been released for conversion to drug product. In terms of the drug product, that will be based on lyophilization of efruxifermin and it will utilize an approved device in both Europe and the U.S.A. for patient self-administration and that's a Vetter large 3S dual-chamber syringe. It's a relatively straightforward concept. Do you freeze dry the efruxifermin in one of the changes and you add diluent to the other chamber, and that represents your drug product/device combination? And at the point of administration, it's a 2-step syringe plunger mechanism. The first step mixes the diluent with the lyophile, you leave it for 5 minutes, and then you complete the subcutaneous administration. As part of what we're required to do in terms of demonstrating the comparability of that material, we've already had scientific advice from the Europeans in respect to the drug substance and that guides just as to which tests we should be using. And we'll go through the same exercise in the next period with relation to drug product. So at the end of that, you're pretty confident that what you've got, hopefully, will be the same as what you've had in the past. So we then would do a modest clinical bioavailability study before Phase III to reassure ourselves the exposure in Phase 3 will look like that, which we're seeing in Phase IIa and Phase IIb. That's quite distinct from doing a bioequivalent bridging study at the end of Phase III, which is a regulatory requirement, if you change -- if your commercial presentation is different from the one you used in Phase III, but that's not our intent here. Our intent is to use our commercial presentation in Phase III.

Okay. That's very helpful. We've kind of spoken in the past about potential combination -- or the development -- formal development of combination approaches with EFX. Has the outlook changed of late? I know this is something that you have contemplated in the past. Should we anticipate collaborative studies in the near term that might look at companies with EFX with other agents.

I think now that we have a better idea of our profile after the Phase IIa study, while we don't think that EFX needs to be combined with other compounds, whereas we do think that there is a potential for some compounds that could benefit from a combination with EFX and something that we're looking at very closely and hope to announce in the not-too-distant future that we'll be starting probably a small clinical study.

Okay. Okay. Okay. Great. Well, I think that's the exit of my questions here this morning. So let me -- Andrew, Kitty and Tom, thank you for your time -- excuse me, Tim, thank you for your time this morning. We really appreciate it. And thanks, everybody, for tuning into the presentation.

Thanks again, Eric, for having us.