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

I'm very pleased to have join me in our first slot of the afternoon session, Andrew Cheng, CEO of Akero. Thank you so much for joining us.

Thank you for having us, Jason.

Well, perfect. Maybe just to start broadly to provide a little context for those newer to the story, can you describe the role of FGF21 in the pathogenesis of liver fibrosis? Kind of acknowledging that it is somewhat early, but what are some of the advantages the mechanism here has in the space relative to maybe others that are either shown efficacy or late stage?

Yes. So I think when one thinks about efruxifermin is that it works really by 2 mechanisms. So it's not uncommon to have drugs that remove liver fat overall. And by being antisteatotic, then it allows the liver to heal via indirect mechanisms. And through our early-stage studies, EFX does that very, very well. Fat comes off very quickly and among the most effective agents to date, even more so than some of the GLP-1s. At the same time, it's also a direct-acting antifibrotic, which is unique. That is that EFX works directly on the hepatic stellate cells to inhibit new collagen synthesis, which is why you've seen in multiple mechanisms, whether it's our agent, other FGF21s like 89bio as well as Boston, you've seen impressive fibrosis responses in just 24 weeks. That's a time frame that you've not seen other mechanisms hit their endpoints. We've seen 1 year for both tirzepatide and the BI drug. And for semaglutide in their ESSENCE study, their endpoint was 72 weeks, so 18 months.

Got it. And then maybe looking more inwardly at efruxifermin, what differentiates this molecule versus other FGF21s, many of which have been discontinued?

Yes. So I think FGF21 because it acts in the 2 ways that I outlined had been really a desirable target for a number of years. But like all of drug development, it's one that the early-stage compounds don't always work. They don't hit the targets. We saw not that long ago a compound -- FGF21 from BMS was discontinued. But EFX in particular, Amgen, who developed and discovered this compound also made some important modifications to it at the C-terminus. And FGF21s in particular, rely on a trimeric interaction that is that the C-terminus must bind with a co-receptor called beta-Klotho on the cell surface, which helps to anchor it. And that binding is an obligate step. If that binding is abrogated, then the molecule is untethered from the cell surface and it cannot signal through the end terminus to the FGF receptor. And Amgen made some important modifications to enhance binding at that point. I think that's one of the differentiating points about EFX overall is that in addition to its 3- or 4-day half-life, it's been sort of engineered for longer activity.

Makes sense. And maybe just one last question on background dynamics here and tying your previous 2 answers together. I mean, if you think about NASH, NASH. It's been challenging to address until recently, there haven't been any approvals. At a high level, what do you think has shifted? Why should investors be confident we're kind of hitting our stride after years of setbacks?

Yes. So I think it's -- I've been at Akero 6.5 years. I was employee 3. It's been a bumpy course. I mean there have been failures. As we talked about earlier, drug development is not one that's generally littered with success after success. It's new fields and new mechanisms, it takes a while. I think the real change, the inflection point was the March '24 approval of Madrigal's Rezdiffra. And with that compound, it slid multiple bear thesis. Number one would be the FDA doesn't want to approve drugs. Number 2, approvals will require biopsy, not true. Number 3, that they wouldn't price well. They priced where they did. Number 4, they couldn't launch well. I think quarter after quarter, they've beaten expectations. So known as a SMID-cap company with a single asset launching a compound well. That's, I think, reset a lot of investor expectations and how they look at the field and it makes sense. Good compounds are the ones that make differences in our field. And hats off to the Madrigal team, they've done very, very well.

Got it. Let's dive into the Akero story a bit. I mean, obviously, the big focus, I think, for everyone is in January, you disclosed the 96-week Phase IIb SYMMETRY data. 39% of patients on efruxifermin versus 15% on placebo had one or more stage improvement in fibrosis with no NASH worsening. You talked to a lot of doctors, and they say this data is transformative. But for maybe somebody who isn't in the field, I mean, can you put this into context? What are the implications here? And why were they so surprising for many?

So we were talking about failure just a minute or so ago. And the F4 population, Madrigal's drug is approved in the pre-cirrhotic population. And there have been -- we were talking about earlier about the time frame and other agents. There have been multiple agents with multiple mechanisms being successful in the recent 2 to 3 years in the pre-cirrhotic population. There has never been an agent who's demonstrated statistically significant improvement in fibrosis due to NASH. And this is regardless of the company, regardless of the mechanism, regardless of the duration. And part of it goes to what we were caught in medical school, that is that cirrhosis is irreversible. That was one of those taglines. It was true for multiple generations of physicians and people learned that. And it was true until January 27, as you pointed out. And so drugs that change medical dogma are ones that make a difference for patients and physicians. And just -- I'll just highlight is the study you're referring to was just published Friday in the New England Journal of Medicine. And it's those kind of studies that get to publish in that kind of journal when you -- it's a significant medical advance.

Can you put this into context for patients? What's the danger of being a cirrhotic patient? And what could an improvement of close to 40% in fibrosis mean for someone with cirrhosis?

Yes. So unfortunately, for patients who have cirrhosis due to NASH or cirrhosis due to anything, but let's just focus on NASH, the 5-year mortality is 50% short of a liver transplant. So those aren't great circumstances. You can imagine you cover multiple companies, but in oncology, there are a number of diseases that have a better prognosis given the innovations in therapy. When one goes back and has when one thinks about, let's say, you were F3, one stage earlier non-cirrhotic, the duration to get to 15% mortality on a Kaplan-Meier curve that the FDA uses is 19 years. So going from F4 to F3, we haven't had drugs that do that, but one could perhaps interpret maybe not correctly, but that you gain 17 years of life. I mean it's -- or excuse me, 14, I did the math wrong, but it's substantial. And so drugs that potentially provide mortality benefits are very meaningful.

Is the implication do you think -- and granted it might be a little speculative at this point, but for an F2, F3 patient, is there also likely to be a mortality benefit if we kind of look longer term on that KM curve?

Sure. I think when you're pre-cirrhotic, especially if you're F2, the goal is to not progress to F3 or later further stages of cirrhosis. But the difference is if one looks at the FDA Kaplan-Meier curve that they often use in their deck, F2 and F3 are relatively close. The real challenge is when one progresses to F4 from F3 and then as we just talked about. So I think overall, halting the progression of cirrhosis and maintaining liver function is very valuable.

Makes sense. There was a profound difference between looking at the data at 36 weeks versus 96 weeks. I think the first question here is, has efruxifermin reached its maximal response? Or how far out do you think before we get to that plateau?

Yes. So that's a real good -- very good question. I think what the data showed from SYMMETRY is that longer dosing matters for this drug. You saw the response rate go from 24% to 39% between adding an extra 9 months from week 36 to -- or actually another 14 months, actual 60 weeks, that gained quite a bit of efficacy. And what you see is that, that's very consistent with what we saw in the pre-cirrhotic population. In the pre-cirrhotic time point when we first met the primary endpoint at week 24, we saw approximately a 40% one-stage improvement in fibrosis. By week 96, we saw a 75% one-stage improvement in fibrosis. So again, in both scenarios where this pre-cirrhotic cirrhotic, obviously, the magnitude of the pre-cirrhotic is greater because the fibrosis burden is lower. But in terms of your question, have we reached a plateau? I don't believe so. I think the longer that we dose the patient because the drug is effective at shutting down new collagen synthesis, but allowing resorption of the collagen burden, I think longer-term dosing will benefit patients.

Makes sense. And then I think one question about the data. Given what we know about cirrhosis, was the placebo rate high? I mean, did that surprise you?

Yes. So we saw 14% at week 36. And at week 96, we saw 15%. I lost the bet internally. I was hoping -- thinking that like you did that it would be 10% or lower because that's what was seen in large studies run by Intercept and Gilead that in these large Phase III studies for patients, 900 patients, the placebo rate was about 9% or 10%, but those are single reader and done at a different time. But I think at that same point, placebo increasing 1%, not much, but still increasing speaks to the fact that the efficacy rate on the EFX arm was strong, which is why we made statistical significance in both completed analysis as well as the ITT analysis where we treated missing data as failures.

Got it. So last weekend, you presented the full data set at the EASL conference. Curious, how was the data received? What was feedback like? What did you hear from the prescribers and the rest of the community on the ground there?

Yes. So while this audience is one that is obviously follows press releases and follows company releases quite closely, the scientific community, well, they treat patients. They're not so focused on what we say via press release. So for them, this was the first presentation of the data. And as you can imagine, the response was overwhelmingly positive. Keep in mind that for most of their careers, these physicians or nearly all of their careers, they unfortunately had to watch their patients succumb to the disease because there's been no effective treatment. I don't think anyone gets in the medicine to watch your patients pass. I think this is something that you want something for your patients and have a possibility of giving them a meaningful benefit is very encouraging and motivating to them.

Got it. What would you say is sort of the biggest question about the cirrhotic population at this point?

I think the question really is how much of an impact this could have for patients right now because although liver transplant saves people's lives, I'm not sure people are eager for liver transplants and there's, of course, too fewer organs to go around to begin with. So I think the idea that this could improve -- you asked earlier about 40% of fibrosis. Right now, the options are 0 for these patients outside of liver transplant. So we think a 40% one-stage improvement in fibrosis is very well received.

Got it. Well, you bring up a really good point, and I think that's a great segue to the next question here. But given that outcomes are so poor and there are limited current options, is there any sort of potential for regulators to be flexible here?

No, that's a very, very good question, Jason. And one question I receive a lot from investors nowadays. And I would say the answer is maybe. How is that for definitive? So the answer is that, obviously, providing this kind of benefit given the reception from physicians has been very encouraging. The challenge is that current regulatory guidance says that there really isn't an accelerated approval pathway for in cirrhotic patients. Now guidances are not permanent and they can change. We -- I won't give too much into upcoming discussions, but it's something we want to look into, but I certainly won't overpromise as to say or prejudge what the FDA may do.

Got it. All right. So we've seen some of the initial cuts of the Phase II data, but I'm curious, what do you think the implications of SYMMETRY are from the Phase II, Phase III patient population, especially as we think of kind of the early results from the Phase II HARMONY? Fundamentally, does it give you increased confidence around SYNCHRONY Histology?

Absolutely. So when you think about the F2, F3 population, recognize that we've chosen a primary endpoint, which is consistent with the European guidance, which is a combination of one-stage improvement in fibrosis and NASH resolution. And so in the United States, technically for the pre-cirrhotic population, it's or you can achieve one or the other. Obviously, for patients, fibrosis is much more important than resolution. But we've chosen that because we intend to file in Europe and the United States. That being said, when one looks at the ITT results of the 2-year data, we see 35% of patients where ITT is missing data or failure have a 1-stage improvement in fibrosis and NASH resolution compared to 7% on placebo. So when one thinks about that, that's 5x the placebo rate, that gives us a lot of confidence that, of course, F2 studies, sometimes they're smaller. There may be some differences in efficacy, but there's a wide margin for us to be successful. So we feel confident about SYNCHRONY Histology as we go forward.

Got it. Can you give us a sense though of time lines here? I mean, when do you think you'll have greater clarity into sort of the regulatory path forward, particularly as it's sort of the outlook for maybe a faster pathway?

Yes. So when it comes to the pre-cirrhotic population that we're just talking about, we have regulatory clarity. Right now that we've guided that we'll have the SYNCHRONY Histology results you were just asking about to file in the first half of '27. And given that would be the same pathway that Madrigal filed on, so I think we have a trailblazer there as we touched on earlier, we feel comfortable with that time line. And of course, a small company, we -- after we get the results, there's some window of time in between when we file. But I think that, that accelerated approval pathway is likely open to us, and it's something we'll pursue. The other pathway that for cirrhotics is a little more murkier and how we'll proceed. I think there are 2 companies, us and 89bio, who are -- have Phase III studies with 2-year histology endpoints. And so I think that's something that we'll be looking at as we get to that point that our studies have started about the same time, and we look forward to having those results.

Makes sense. Obviously, we've seen quite a bit of the efficacy data, but safety is coming into picture as well. Rates of decompensation were fairly low in the SYMMETRY data, but do you think we have enough of a sense there that it's not as big a risk as I think some might have initially feared?

I think it's hard to say that. So I'll give you an example. We had -- in the SYMMETRY population, we had 2 cases of ascites, one in 28-milligram dose and in the 50-milligram dose. Both of those cases were in patients who are discovered on incidental finding in the U.S., what does that mean? What it means is that when you're cirrhotic, you need to be checked for hepatocellular carcinoma every 6 months, that's standard of care. And you're being checked by an ultrasound. When an ultrasound was given, they sell some fluid in the stomach. And basically, then they call that ascites. Now technically, that is ascites, but when I -- you were asking why am I bringing this up? Because the FDA for Phase III has a different definition, incidental finding of ascites would not qualify as a clinical liver event. They would require something that requires clinical intervention in -- I guess it's after lunch, I can bring this up. The treatment for ascites is paracentesis, which means that you remove the excess fluid from the distended abdomen. And neither of these patients would qualify for paracentesis, so they wouldn't be -- have been clinical events. So one thinks about it, there is really one other event, which is hepatic encephalopathy. And that patient is also a little bit atypical in the sense that they had multiple strokes, small strokes prior to entering the study at baseline. And it's not clear at this period of confusion what it is the cause of because if one looks at their profile, it's not really consistent with someone having hepatic decompensation. So with our clinical events that have been recognized in the Phase II study, I think there's some question about whether they're really clinical events.

Makes sense. Maybe switching gears somewhat. Novo Nordisk is conducting a combination study of its FGF21 zalfermin with semaglutide. Obviously, there's not a lot that we know about zalfermin at this point. But maybe at a high level, does this combination make sense based on what we've seen from both mechanisms?

Absolutely. So remember that when one thinks about what GLP-1s do very well, GLP-1s remove liver fat, so do FGF21s and our data, in particular, I touched on earlier, we were very effective at that. At the same time, the indirect process of steatosis removing the fat from the liver takes time to heal, which is why their endpoints in ESSENCE was 72 weeks. On the other hand, FGF21s are direct acting antifibrotic. And so you can see the combination of those 2 mechanisms works well together once -- whether it's 89bio, our data or Boston Pharma, both all with FGF21 saw impressive antifibrotic results within 24 weeks. At the same time, one has to think about the patients who are receiving GLP-1s, many of whom are diabetic. GLP-1s are insulin secretagogues. What that means is it forces the pancreas to try to secrete more insulin. And why is that necessary? Because many diabetics, especially type 2 diabetics have a wall of insulin resistance, very high resistance, which prevents the insulin being secreted as working as effectively. Efruxifermin reduces. It's an insulin sensitizer. So for every molecule of insulin that's secreted, it doesn't have to work as hard. And in fact, in our clinical studies, we saw statistically significant reductions in C-peptide. C-peptide is the natural proteolytic byproduct of endogenous insulin secretion. So what that means is that when you lower resistance, the pancreas doesn't have to work as hard. So it doesn't have to submit as much or secrete as much insulin. So it's a nice sort of hand-in-glove thing, having a drug that helps the existing pancreas work better.

Got it. Could you remind us -- I mean, you looked at a similar sort of combination in Cohort D of the Phase IIb SYMMETRY. What did those patients experience appreciating that they had type 2 diabetes?

Yes. So we had this question because we wanted to know it's well known that the GLP-1 class has some GI side effects. And we do see and most FGF21 see some degree of nausea as well as diarrhea, some GI side effects as well. If you were to dose the 2 drugs together, what would be the effect on tolerability? So we ran a study of everyone receiving a GLP-1, whether it's sema or it's Trulicity or tirzepatide, and they added 50 milligrams of efruxifermin or placebo for 12 weeks. And what we saw on the tolerability side is really no additive tolerability. In fact, numerically, the combination arm had a little bit less diarrhea. We're not saying we're an anti-diarrheal, just it wasn't additive, and there was slightly more nausea. But at the same time, impressively, in just 12 weeks, 90% of patients on the combination arm normalized their liver fat. So that speaks to what we talked about earlier. That is that GLP-1s are good at reducing liver fat, but patients after being on GLP-1s for the average time was more than a year, they still had abnormal amounts of liver fat. But within 12 weeks of adding EFX, they all -- 90% of them normalized. That is they got to less than 5%. In addition, they had improvements in glycemic control, as we just talked about, because insulin resistance went down, and they had improvements to their lipids. So taken together, what that study Cohort D showed us is that the combination of GLP-1s and efruxifermin work very well together for multiple facets of the patient's illnesses.

When you think about NASH at a high level, the pathogenesis is driven by multiple pathways. So from a fundamental standpoint, is it your expectation that the treatment of NASH will be sort of a multimodal combination approach?

Absolutely. So these -- unfortunately, these patients, as you pointed out, have multiple medical problems. If you look at the SYMMETRY study, 80% of the patients were diabetic. Nearly 100% of them had -- were obese. They had dyslipidemia. So when one thinks about the challenges facing them, they were going to require multiple agents, and we would expect that, that will continue.

What does it take to get efruxifermin to a foundational part in this pathway?

I think in our studies, we're allowing patients to take whatever is approved for the therapy, existing drugs. They're not allowed to take Rezdiffra. But I think at this point, that we're excited that having multiple regimens in the therapy allows us to look at this kind of Cohort D like background therapy plus/minus efruxifermin and you could substitute multiple agents there. So there are a lot of built-in studies to allow us to look the benefit of efruxifermin in combination with other agents.

Got it. Again, kind of -- I know this is somewhat speculative, but if -- given the totality of evidence, I mean, what patient does it make sense to use an FGF21 and maybe what patient not so much?

So I think we have to look carefully and all the FGF21s are injectables. So I think for patients who are needle-phobes, I think that's obviously a challenge. But I think for many patients, FGF21 as a rapid-acting antifibrotic, I think is desirable at pretty much every stage of infection or disease. But I think the challenge is that given where other agents are, I imagine that it's going to be come after some of the agents that are already approved today just by virtue of not being approved at this time.

Makes sense. And then, of course, you did allude to the fact that there are rivals within the class. I'm curious, what factors do you think are going to be key in determining kind of the market split among the FGF21s?

I think this field is a data-driven field. I think as you accumulate more data to help inform how your drug will be used, the more data you have, the better your circumstance because you provide more information to physicians and patients. So I think that will be the distinction. But at the same time, sometimes we hear from investors who's going to be the winner, who's not going to be the winner. Likely -- I look to the diabetes field, where there are multiple agents for multiple mechanisms and doesn't prevent any individual drug from being successful. I look at the GLP-1 class between semaglutide versus tirzepatide, there's -- they're both doing very, very well.

Got it. Back on the subject of efruxifermin, when you think about kind of the treatment paradigm, what does it take to move an agent like efruxifermin into the hands of your average endocrinologists or even a GP and outside your average hepatologists?

Yes. So that's a really good question. And I think the challenge is that most newer drugs are used by sort of specialists, and that's generally how it will start. And I imagine that efruxifermin, given its activity in cirrhotic patients will probably start with hepatologists. Over time, as more and more data gets out, there'll be some degree of GI and/or endocrine who will use it probably in the pre-cirrhotic patients before it will get to sort of broader family practice or internal medicine folks.

Got it. And then maybe just one more on the commercial landscape. But as you think about payers, it's been interesting how welcoming they've been with the class in terms of not requiring biopsies. But I'm curious, is that going to change moving forward, especially as the overall treatment armamentarium grows? And how are payers going to be when a patient is on therapy for 2, 3, 4 more years?

Yes, I think that's a challenge as we see the therapy and standard of care evolving that overall, you really need to be providing value and payers are likely going to require patients to be followed noninvasively since that's pretty much standard of care. Now people don't use biopsies to follow patients given its morbidity and mortality. So I think 2 to 3 years from now, they will want to see progress on some of these noninvasives in order for them to continue and supporting them.

Got it. Makes sense. Well, in the few minutes that we have left, if you could please remind us where you are with the pivotal studies that you have, SYNCHRONY Histology, Outcomes, Real-World and then what the time lines of those look like and then how that compares to, as we talked about earlier, kind of a potential for a shortened improvement pathway?

So we fully enrolled the first of our Phase III studies, which we call SYNCHRONY Real-World. We announced that in January. So that we expect that a 52-week endpoint in a noninvasive study to read out in Q1 -- or excuse me, in H1 of '26. The SYNCHRONY Histology, which is the biopsy-driven F2, F3 study, we have not fully enrolled yet. It's still ongoing. That also has -- so we expect that the biopsy endpoint to read out 1 year in the first half of 2027. And then for SYNCHRONY Outcomes, the F4 compensated cirrhosis study that has a biopsy component, we just started enrolling that in the September of '24. We haven't given any guidance to that.

Got it. Makes sense. I guess as we kind of wind down here, as you think kind of the bigger picture, I mean, for you, I think, what is the overarching question that we think we need to understand about both the class and kind of the treatment of NASH?

I think the driving issue for us is to demonstrate clinical benefit in either histologic or clinical outcomes measures. And I think we're well on track with our ongoing studies that are enrolling to really hit that. And so I look forward to in the not-too-distant future to revealing some of those results.

Perfect. With that, I think we are done. Thank you so much, Andrew, for joining us on stage.

Thanks again. Take care.