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

Hi. My name is Dan Lundquist. Thank you very much for joining the Wednesday events. I'm the healthcare specialist here at BofA, and very pleased to welcome with me today, Kitty Yale from Akero. She's the Chief Development Officer. She does have some presentation slides, so she'll go through those. And then if we have some time, we have some Q&A as well. All right. Thank you. Kitty?

Thank you. So good morning, everybody. As Dan said, I'm Kitty Yale. I'm the Chief Development Officer at Akero. And Akero is developing efruxifermin or for short we describe it as EFX, as a potential best-in-class NASH therapy. And EFX is a differentiated Fc-FGF21 fusion protein that's been engineered to mimic the balanced biological activity of native FGF21. The data I'm going to share with you today is from our Phase 2a program, and we are pleased that some of the data that we generated in our Phase 2 program is some of the strongest of efficacy data we've seen today in a short-term NASH study. And the data from those studies have allowed us to go forward and gain Fast Track designation from the FDA, and then PRIME designation from the European agency. We're currently conducting 2 Phase 2b clinical studies. The first study is HARMONY. It's in fibrosis Stage 2/3 patient population. And the second study, SYMMETRY, is in a more advanced compensated cirrhotic and fibrosis Stage 4 patient population. And both of those studies are well powered for histology endpoint of fibrosis improvement, no worsening of NASH. And the HARMONY study is actually fully enrolled, and we remain on track to actually report data in Q3 of this year. The team Akero is experienced. We've been involved with multiple global drug approvals in various therapeutic areas, and we have cash runway through 2023 -- Q3 of 2023. So just to highlight the molecule. So EFX, as I said, was -- it's a differentiated Fc-FGF21 fusion protein. And what we have is, there's 3 point mutations on the C-terminus of the FGF21. And what those mutations do are actually increase the binding affinity to the co-receptor ?-Klotho, and as well as prevent degradation. So ultimately what this does is it increase the half-life to 3 to 4 days and allows us to support once weekly subcutaneous dosing. We have balanced potency across the FGFR receptors. So we have agonism against FGF receptor 1c in the adipose tissue, and then the 2c and 3c that are present in the liver. And what this allows us to do is actually affect the liver fat in both the liver itself, but also in those peripheral tissues. So just as a reminder, this is our Phase 2a BALANCED study. The design is pretty straightforward. It was a randomized placebo-controlled study where we compared 3 different doses of efruxifermin compared to placebo and patients were randomized to receive once-weekly subcutaneous injections of either a 28 milligram, 50 milligram or 70 milligram dose of EFX for 16 weeks. All of the patients in this study were biopsy confirmed NASH with fibrosis Stage 1 through 3. They had a NAFLD activity score greater than 4 and MRI-PDFF liver fat content higher than 10%. The primary endpoint was absolute reduction in liver fat at week 12. And the unique component of the study design was that we actually defined subjects who achieved a greater than 30% reduction in liver fat as responders, and then the responders went on and had end-of-treatment liver biopsies. The endpoints are all there on the right-hand side of the slide. So you can see, we had a number of secondary endpoints in terms of looking at reductions in liver injury, ALT. And then all of our biopsy data and endpoints were all exploratory. So jumping straight into the data. Here I'm presenting the primary endpoint of absolute reduction in liver fat along with the secondary endpoint of relative reduction in liver fat, both of which were highly statistically significant. And what you can see is reductions in absolute liver fat ranging between 12% and 14%, and the relative reductions ranging from 63% to 72%. And these were some of the highest liver fat reductions releasing to date in a short-term NASH study across all of the competitive landscape. If you look over at the tables, I think what's maybe more important is, when we look at the proportion of patients achieving the fat reduction threshold defined, 100% of the patients that were on EFX achieved the 30% liver fat reduction. But actually when you look at the higher thresholds, it was almost half of the EFX patients reached that higher threshold of greater than 70%. And then when we start to look at actual normalization of liver fat, and that's what we define as when the patients have their liver fat reductions go less than 5%. Again when we look at the 2 highest doses, approximately 50% of the patients reached that definition of liver fat normalization. And when we look truly across the board, what was driving liver fat normalization? What you can actually see, it was often influenced by the patient's baseline liver fat. So some of the patients that didn't reach the definition of normalization were those that came into the study with the highest fat levels and just didn't reach that less than 5% in the 16 weeks of treatment duration. What was also interesting is, when we correlated normalization of liver fat, it correlates very strongly with NASH resolution. And so there was a 4-fold probability of NASH resolution in the patients whose liver fat had normalized over the treatment time. And as a result we saw about 50% of the EFX patients also were achieving NASH resolution in this study. But if we jump forward and look at the other histological endpoint that is part of the FDA acceptable endpoints for histology in a Phase 3 clinical study, which is a proportion of subjects who achieved a 1-stage improvement in fibrosis and no worsening of NASH. And here you can see that we are presenting the EFX data on the left with the shorter treatment duration of 16 weeks. And as you move across the slide, the treatment durations increase up to 72 weeks with semaglutide. And what you can see really is that the EFX data stands pretty favorably across the competitive landscape here, even with the short treatment duration of 16 weeks with 46% and 62% of patients achieving the endpoint just after 16 weeks of therapy with EFX. We went and did a subset analysis looking at patients who came into the study that were fibrosis Stage 2 and 3, and looked again at the same endpoint fibrosis improvement. And what you can actually see here is that the response rate actually increases when we look at the more advanced patient population, with 68% of patients achieving this 1-stage improvement in fibrosis. But I think the more important point of this slide is, when we look at the patients who actually had a 2-stage improvement in fibrosis. And you can see here, 50% of these patients achieved a 2-stage improvement in fibrosis after just 16 weeks of treatment. And this is really a metric that you don't see in many NASH studies is, they just don't see this level of fibrosis improvement, especially not in such a short treatment time. If we look at other non-invasive markers of fibrosis, we see again statistically significant improvements. So here we're looking at the enhanced liver fibrosis score or the ELF score as well as Pro-C3, which is a marker of collagen synthesis. And what you can see, if you look at the Pro-C3, we see very rapid reductions and Pro-C3 really is early as week 4 on study that basically are maintained throughout our treatment course. And we also see significant reductions in the ELF score at the end of the study. And these are at levels that have been correlated in other data sets to a 1-stage improvement in fibrosis. So really sort of supporting the histology data that I just presented. If we move on and look, and think more about treating the NASH population as a sort of holistic treatment, I think you have to look at the other comorbidities in NASH. And so when you think about your average NASH patient, 50% of the population are diabetic. Most of these patients are overweight and have dyslipidemia. And so when you look at the slide here, if you start in the middle, looking firstly at the hemoglobin A1c and the C-peptide, we see statistically and clinically relevant reductions in markers of glycemic control. And you can see here with the -- with the 50 milligram dose group that we're seeing of 0.4 reduction in hemoglobin A1c. If we actually do a subset analysis of this dataset and just look at the patients who were diagnosed with type 2 diabetes at entry into the study, these levels actually almost double. And so you can see the most benefit in terms of the glycemic control in the patients that are the most uncontrolled in terms of their hemoglobin A1c. We also see nice reductions in C-peptide, which is a marker for insulin sensitization. And so you can see this sensitization effect of efruxifermin. If you go down to the middle bottom panel, what you can see here is, overall, we see really nice reductions in the overall lipoprotein profile with efruxifermin as well, with almost 50% reduction in triglycerides and nice increases in HDL cholesterol and decreases in non-HDL cholesterol. And then really, lastly, what's also kind of encouraging is that we're seeing a trend towards weight loss in this patient population that are generally overweight. We added an expansion cohort to BALANCED, and this was an expansion into the more advanced compensated cirrhotic fibrosis stage 4 patient population, and they were all Child-Pugh A. And just to kind of give you an overview of the study design here. Again, these were all biopsy-proven F4 patients. This was done by a local pathology read. It was a randomized placebo-controlled study where patients were randomized in a 2:1 ratio between placebo and our 50 milligram dose group of efruxifermin. The primary endpoint in this study was actually safety and efficacy, and we were looking originally at FibroScan or transient elastography, and then the fibrosis biomarkers, ELF and Pro-C3 as our markers of efficacy. But we actually amended the study while it was ongoing, based on requests from physicians and actually a patient, and added histology to the study after study -- after it started. And so we have histology data in a subset of patients. And just jumping directly to that data, again, in the same format as I provided before. This is a fibrosis improvement of 1-stage, no worsening of NASH, with the efruxifermin data on the left, the current competitive landscape and the increasing treatment duration as you move from left to right. You can see that, again, the EFX data, although a small proof-of-concept cohort that we see a nice level of -- 1/3 of the patients saw fibrosis reversal in this patient population, really in an area where we haven't seen much success across the competitive landscape. And so, for us, we feel this data, although small and like I say, proof-of-concept, really encouraging and is what really drove us to move forward with our ongoing Phase 2b study SYMMETRY that's in this compensated cirrhotic patient population. We also, in this study, I don't have the slides here today, but the fibrosis biomarkers that we evaluated, again, statistically significant changes in both Pro-C3 and ELF, as well as when you look at transient elastography and the FibroScan. And so really, what does this data really present? Well, what we can see is that we're really seeing early and rapid reversal of fibrosis across all of the NASH patient population. And what this has really led us to believe is what we think is that this is a 2-pronged mechanism of action happening with efruxifermin. Starting in the blue, what we really describe is of the metabolic effect, and we believe this is an indirect anti-fibrotic mechanism where you're actually reducing the liver fat content, you're reducing the overall hepatocyte stress. And really sort of what you're doing here is removing the drivers of NASH in these patients. And then with time, what you really are going to see is this indirect fibrosis improvement. In the orange, we're more focused on what we believe is a direct antifibrotic component of this mechanism. And this is where we're seeing decreases in inflammation, decreases in the collagen synthesis. And this is really supported, I think, just by the data I highlighted earlier, the reversal of fibrosis in the F4 patient population, the 2-stage improvement and fibrosis that we see in the F2, F3 patient population, and the fibrosis biomarkers that we're seeing these rapid and sustained responses. And then really just to wrap up, just where we are today, the data we presented is that the 2a data, we have the 2 ongoing Phase 2b studies that I mentioned earlier, and we are excited to present the HARMONY data in Q3 of this year, which feels like it's just right in the corner. So thank you.

Great. Thank you very much, Kitty. So maybe just to dig in a little bit on HARMONY, so since it is a near-term readout. Can you maybe just discuss a little bit more the study design and powering? Can you speak to the size of the minimal difference in production, fibrosis without NASH worsening that the trial is powered to detect? Maybe just some color there.

So yes, the HARMONY study is -- it's very similar in terms of the design to balance in terms of it's a randomized placebo-controlled study. We're looking at 2 different doses of efruxifermin, the 28 milligram and the 50 milligram. And we're looking at fibrosis improvement, no worsening of NASH, primary end point at week 24. And then the study actually continues out until week 96 for a long-term safety follow-up. We haven't actually fully disclosed the full powering publicly. What I can say is the study is very well powered to hit that end point. And we have taken into account what I think is probably a pretty realistic placebo response rate of around 20%. And so it's -- we feel that we should be able to see statistical difference from there. And the study was originally designed to be 40 patients per treatment group and we over enrolled slightly. So I think we have 128 patients enrolled in that study.

And maybe just switching to kind of the commercial opportunity. Can you walk us through the F2, F3 population versus F4 in terms of relative market size, kind of how to think about the stratification there?

So I think I am not -- I'm the Chief Development Officer, so I'm going to not give you the best financial forecast. But I think that, obviously, the F2 patient population is substantially larger than the F4 patient population. But I think when we really look at efruxifermin and the data that we've generated to date, I do think that we believe that especially with a subcutaneous injection that we're more suited to that later stage of the disease, definitely the F3, F4 patient population. And clearly that's where there is the highest unmet medical need. I think when we also look at the size of the NASH market in general, there also is some concerns of, I guess it's; 1, getting the drug approved for NASH, but 2, it's about being reimbursed. And so when we think about payers and insurance, the F4 patient population, we believe, will definitely be prioritized in terms of the market and reimburse them appropriately so.

And if you think about conversation, I mean it's obviously early to have conversations with payers. But when you have conversations with KOLs and regulators, what have they talked about is kind of the degree of benefit that they view to be clinically meaningful? I feel like in the current environment, not just in NASH, it's all oftentimes a question of what is deemed to be clinically relevant, which -- versus what might be statistically significant. So maybe just help us frame that up.

Well, I think that's where, I mean, and when I look at the design of our trials, we've been very focused on this fibrosis endpoint. So there's 2 FDA acceptable histology endpoints for NASH currently. So you can either aim for a NASH resolution with no worsening of fibrosis or you could focus on fibrosis improvement, no worsening of NASH. And we are obviously focused on the latter. And the reason really for that is we really believe that that's where the payers are really focused. And there's data really correlating that 1-stage improvement with fibrosis with long-term clinical outcomes. And I think that's where you're going to get the payers to buy in and really look at reimbursement based on the long-term clinical outcome improvements, which is just not so clear whether if you just achieved a NASH resolution endpoint.

And you had a good slide up earlier in terms of the other kind of metabolic improvements that you see across the board. Are there complementary mechanisms of action that you think that you would pair well with considering that a lot of these patients are on background therapy for diabetes, et cetera?

When we initially started our development program, and I think we were, like everybody else, very focused on looking for potential combinations. I think the data that we've seen to date with efruxifermin actually leads us to believe that it really could be a monotherapy on its own. That said, we have talked about looking at complementary mechanisms. I think the one area that we're trending toward weight loss, but we're not sure with longer treatment, it may become statistically significant. But partnering with another mechanism that is driving weight loss, I think would make the most sense for us as we were looking forward. And then that's something that we are considering evaluating.

Yes. It's been pretty eye-opening to see some of the obesity trials recently reading out, getting on par with bariatric surgery in terms of weight loss reduction. So hence the question. So one of the other things to think about is just the broader opportunity even in ex-U.S. Can you maybe discuss with us kind of whether you would look to partner in certain regions, maybe if there's a combination therapy that wants to be brought forward in some of those regions? Just talk about any kind of business development conversations you've had along those lines?

I think as an organization, we are very open to numerous different ways of developing EFX. I think in our past lives, we have run very large global studies where we've really brought the products to the market across U.S., Europe and Asia. We do have continuing conversations though with potential partners in various different regions. And I think it's just really, as we look forward and think of just the complexity of running a large global Phase 3 program for a small biotech, that there are some advantages if we could find the right partner for certain regions in the world. So we are continuing those conversations.

And if I look at the competitive landscape of NASH, right, it's been, at various different times, a lot of companies with late-stage trials, they maybe haven't panned out. Can you maybe talk us through the market development that's needed on the physician and patient side really to continue building out awareness of NASH as a disease?

Yes. I think it's interesting. You're absolutely right. When you come into an area where there is this unmet medical need and no current products in the market, there really is going to need to be a big build-out. Having spent the majority of my career at Gilead, it is interesting. I think Gilead really did start leading the way in terms of building that market when they were running their studies with selonsertib. I do think that the market will need to be built, and globally, I think the U.S. is probably further along than maybe certain other parts of the world where I think, in Europe, there's still concerns about whether diet and exercise should really be the formation of the treatment for NASH. I think in the U.S. now where people are really seeing the challenges with the overall metabolic dysfunction and realizing that these patients probably have spent maybe 20 years of their life with excess calories leading to a broader metabolic dysfunction that just prescribing the same advice that these patients have had for 20 years, it's really not going to move forward. And so I think for us, we do realize that the market will need to be built. I think in that regard, I think we're very excited for Madrigal to readout hopefully at the end of the year. I think it would be good for the NASH market to see success and start to build out that -- the market in general. I think it would always be easier not to be the first. And Madrigal, I know, are doing a lot of work and also looking at partnering in terms of building the market out again as a small biochem.

Yes, it would make sense just to kind of broaden out the further awareness. So in terms of kind of how to think about the regulatory process, I mean, there have been some moving goalposts in the past. It feels like the FDA has at least narrowed down to 2 end points to go after. Maybe kind of talk about the evolution of your conversations with the FDA, what gives you comfort that having chosen the endpoint that you're pursuing is the right one? Maybe just kind of give us some color there?

Yes. I think the regulatory landscape has been complicated for NASH. And I do think that really from the Intercept perspective, there's this sense that the goalposts have moved. But when you actually look at the NASH regulatory guidances, so there's 2 different guidances, there's 1 in the non-cirrhotic patient population and then a separate guidance for patients with compensated cirrhosis. Those guidances really haven't been updated, and they've basically stayed constant, where you're -- the guidance allow for an accelerated subpart each approval using histology in the F2/F3 patient population. But then you need to follow the patients out for long-term clinical outcomes. But in the F4 patient population, the guidance really is that you need to just evaluate those patients for long-term clinical outcomes. I think what's changed really is in the -- since the Intercept situation, really is the guidance that the agency have given people about how to actually do that biopsy analysis. I think there were some concerns about how those reads were done. And so, as we've been working with the regulators, we're now getting very clear guidance on exactly how that endpoint should be read. And I think all companies are writing very detailed, what we call, biopsy analysis plans. And in those plans, really, you have to talk about how you're going to use multiple histology readers. You have to bring the readers together. They're all NASH CRN trained. You train them on your protocol, you train them on how to read to consensus. And then all of our screening and end-of-treatment biopsies are read to consensus by 2 separate readers. And if those 2 readers can't come to consensus, you bring in a third. And those biopsies are read in a random fashion. So you're intermingling screening and on-treatment biopsies throughout that process. And I think the goal really of that process is to reduce some of the variability that we've seen in the biopsy read and [indiscernible] drives that process really across companies.

Okay. With that, I think it's all the time we have. Thank you very much, Kitty.

Thank you.

Thank you, everybody, for attending.