SEC Filing - Akero Therapeutics, Inc.

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10-Q

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023



	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 001-38944

Akero Therapeutics, Inc.

(Exact name of registrant as specified in its charter)


Delaware		81-5266573
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

601 Gateway Boulevard, Suite 350

South San Francisco, CA 94080

(650) 487-6488

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	AKRO	The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer		Accelerated filer	
Non-accelerated filer		Smaller reporting company	
		Emerging growth company	

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). Yes ☐ No ☒

As of November 3, 2023, the registrant had 55,709,783 shares of common stock, $0.0001 par value per share, outstanding.

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SUMMARY OF THE MATERIAL RISKS ASSOCIATED WITH OUR BUSINESS

Our business is subject to numerous risks and uncertainties, including those described in Part II, Item 1A. “Risk Factors” in this Quarterly Report on Form 10-Q. The principal risks and uncertainties affecting our business includes:

•

Enrollment and retention of patients in clinical trials is an expensive and time-consuming process and could be made more difficult or rendered impossible by multiple factors outside our control, including difficulties in identifying patients with metabolic dysfunction-associated steatohepatitis (“NASH/MASH”), significant competition for recruiting such patients in clinical trials, and restrictions on patients and investigators related to outbreaks of infectious diseases or public health crises.

•

We face substantial competition, which may result in others discovering, developing or commercializing products before or more successfully than us.

•

Failures or delays in the commencement or completion of, or ambiguous or negative results from our planned clinical trials of our product candidates, could result in increased costs to us and could delay, prevent, or limit our ability to generate revenue and continue our business.

•

Clinical development is uncertain and our clinical trials for efruxifermin (“EFX”) and any future product candidates may experience delays, which would adversely affect our ability to obtain regulatory approvals or commercialize these programs on a timely basis or at all, which would have an adverse effect on our business.

•

We rely and will continue to rely on third parties to conduct our clinical trials. If these third parties do not successfully carry out their contractual duties or meet expected deadlines or comply with regulatory requirements, we may not be able to obtain regulatory approval of or commercialize any potential product candidates.

•

The manufacture of our product candidates is complex and we may encounter difficulties in production. If we or any of our third-party manufacturers encounter such difficulties, or fail to meet rigorously enforced regulatory standards, our ability to provide supply of our product candidates for clinical trials or our products for patients, if approved, could be delayed or stopped, or we may be unable to maintain a commercially viable cost structure.

•

We are heavily dependent on the success of EFX, our only product candidate.

•

If we fail to develop and successfully commercialize other product candidates, our business and future prospects may be harmed and our business will be more vulnerable to any problems that we encounter in developing and commercializing our product candidate.

•

We may develop EFX, and potentially future product candidates, in combination with other therapies, which exposes us to additional risks.

•

If we are not successful in discovering, developing, receiving regulatory approval for and commercializing EFX and any future product candidates, our ability to expand our business and achieve our strategic objectives would be impaired.

•

We may be required to make significant payments under our license agreement for EFX.

•

The regulatory approval processes of the U.S. Food and Drug Administration (the “FDA”) and comparable foreign regulatory authorities are lengthy, time-consuming and inherently unpredictable. Our inability to obtain regulatory approval for EFX or any future product candidate would substantially harm our business.

•

Even if we are able to obtain regulatory approvals for our product candidate or any future product candidates, if they exhibit harmful side effects after approval, our regulatory approvals could be revoked or otherwise negatively impacted, and we could be subject to costly and damaging product liability claims.

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•

Our relationships with customers and third-party payors will be subject to applicable anti-kickback, fraud and abuse, transparency and other healthcare laws and regulations, which, if violated, could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm, administrative burdens and diminished profits and future earnings.

•

We have incurred significant losses since our inception and we expect to incur losses for the foreseeable future.

•

We currently have a limited operating history, have not generated any revenue to date, and may never become profitable.

•

We will require additional capital to finance our operations, which may not be available to us on acceptable terms, or at all. As a result, we may not complete the development and commercialization of our product candidate or develop any future product candidates.

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		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements	7
	Condensed Consolidated Balance Sheets (Unaudited)	7
	Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)	8
	Condensed Consolidated Statements of Stockholders’ Equity (Deficit) (Unaudited)	9
	Condensed Consolidated Statements of Cash Flows (Unaudited)	10
	Notes to Unaudited Condensed Consolidated Financial Statements	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	42
Item 4.	Controls and Procedures	43
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	44
Item 1A.	Risk Factors	44
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	97
Item 3.	Defaults Upon Senior Securities	97
Item 4.	Mine Safety Disclosures	97
Item 5.	Other Information	97
Item 6.	Exhibits	98
Signatures		99

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements involve risks, uncertainties, and other factors that may cause actual results, levels of activity, performance, or achievements to be materially different from the information expressed or implied by these forward-looking statements. All statements, other than statements of historical facts, contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans and objectives of management and expected market growth are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

These forward-looking statements include, among other things, statements about:

•

the success, cost and timing of our product development activities and clinical trials, including statements regarding the timing of initiation and completion of studies or trials and related preparatory work, the period during which the results of the trials will become available, and our research and development programs;

•

our ability to successfully conduct and complete enrollment in two parallel, randomized, placebo-controlled clinical trials of our SYNCHRONY Phase 3 program for patients, our SYNCHRONY Histology and Real-World trials, subject to ongoing confirmation and feedback from FDA;

•

our ability to successfully conduct and complete our ongoing 96-week Phase 2b clinical trial of EFX in patients with NASH/MASH who have F2 or F3 fibrosis, known as the HARMONY study, including the ability to obtain data and maintain our expected timelines;

•

our ability to successfully conduct and complete our ongoing 96-week Phase 2b clinical trial of EFX in patients with NASH/MASH who have cirrhosis (F4 fibrosis, compensated), known as the SYMMETRY study, including the ability to obtain data and maintain our expected timelines;

•

our ability to successfully expand the clinical trials for our SYNCHRONY Phase 3 program globally, including the enrollment of patients and activation of the first clinical trial sites in Israel and Turkey amidst the ongoing armed conflict in Israel and the Gaza Strip;

•

our ability to reach agreement with FDA on the design of the third clinical trial in our SYNCHRONY Phase 3 program, SYNCHRONY Outcomes, and our ability to enroll patients and complete this trial;

•

the timing and outcome of any meetings with regulatory authorities;

•

our ability to meet the requirements of regulatory authorities to initiate and complete the SYNCHRONY Phase 3 studies of EFX in a timely manner;

•

the potential for another pandemic, epidemic or outbreak of an infectious disease, such as COVID-19, to disrupt our business plans, product development activities, ongoing clinical trials, including the timing and enrollment of patients, the health of our employees and the strength of our supply chain;

•

our ability to advance any product candidate into or successfully complete any clinical trial;

•

our ability to successfully manufacture our product candidates for future clinical trials or for commercial use, if approved;

•

the potential for our identified research priorities to advance our technologies;

•

our ability to obtain and maintain regulatory approval, if obtained, of EFX or any future product candidates, and any related restrictions, limitations and/or warnings in the label of an approved product candidate;

•

the ability to license additional intellectual property relating to any future product candidates and to comply with our existing license agreement;

•

our ability to commercialize our products in light of the intellectual property rights of others;

•

the success of competing therapies that are or become available;

•

our ability to obtain funding for our operations, including funding necessary to complete further development and commercialization of our product candidates;

•

the commercialization of our product candidates, if approved;

•

our plans to research, develop and commercialize our product candidates;

•

our ability to attract collaborators with development, regulatory and commercialization expertise;

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•

future agreements with third parties in connection with the commercialization of our product candidates and any other approved product;

•

the size and growth potential of the markets for our product candidates, and our ability to serve those markets;

•

the rate and degree of market acceptance of our product candidates, if approved;

•

regulatory developments in the United States and foreign countries;

•

our ability to contract with third-party suppliers and manufacturers and their ability to perform adequately;

•

our ability to attract and retain key scientific or management personnel;

•

the accuracy of our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;

•

the impact of laws and regulations; and

•

our expectations regarding our ability to obtain and maintain intellectual property protection for our product candidates.

We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included in this Quarterly Report on Form 10-Q, particularly in the “Risk Factors” section, that could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, collaborations, joint ventures or investments that we may make or into which we may enter.

You should read this Quarterly Report on Form 10-Q and the documents that we reference herein and have filed or incorporated by reference as exhibits hereto completely and with the understanding that our actual future results may be materially different from what we expect. We do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

NOTE REGARDING TRADEMARKS

Akero Therapeutics, Inc. is the owner of the AKERO trademark, as well as certain other trademarks, including design versions of some of these trademarks. The symbols ™ and ® are not used in connection with the presentation of these trademarks in this report and their absence does not indicate a lack of trademark rights. Certain other trademarks used in this report are the property of third-party trademark owners and may be presented with or without trademark references.

All brand names or trademarks appearing in this report are the property of their respective owners. Unless the context requires otherwise, references in this report to “Akero,” the “Company,” “we,” “us” and “our” refer to Akero Therapeutics, Inc. and its subsidiary.

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PART I—FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

Akero Therapeutics, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share amounts)

(Unaudited)


	September 30, 2023			December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	269,546		$	249,773
Short-term marketable securities		285,186			101,676
Prepaid expenses and other current assets		21,247			3,724
Total current assets		575,979			355,173
Long-term marketable securities		58,264			—
Property and equipment, net		20			47
Right of use asset		1,068			1,242
Other assets, noncurrent		—			108
Total assets	$	635,331		$	356,570
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	11,454		$	7,968
Accrued expenses and other current liabilities		14,917			11,115
Loan payable, current		2,076			—
Total current liabilities		28,447			19,083
Loan payable, noncurrent		22,768			9,541
Warrant liability		93			305
Operating lease liability, noncurrent		888			1,079
Total liabilities		52,196			30,008
Commitments and contingencies (Note 12)
Stockholders’ equity:
Common stock, $0.0001 par value, 150,000,000 shares authorized as of September 30, 2023 and December 31, 2022; 55,681,026 and 46,865,206 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively		6			5
Additional paid-in capital		1,102,545			748,857
Accumulated other comprehensive (loss) income		(506	)		37
Accumulated deficit		(518,910	)		(422,337	)
Total stockholders’ equity		583,135			326,562
Total liabilities and stockholders’ equity	$	635,331		$	356,570

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Akero Therapeutics, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except share and per share amounts)

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Operating expenses:
Research and development	$	38,634		$	25,087		$	88,406		$	66,964
General and administrative		7,981			11,004			22,591			22,772
Total operating expenses		46,615			36,091			110,997			89,736
Loss from operations		(46,615	)		(36,091	)		(110,997	)		(89,736	)
Interest expense		(888	)		(324	)		(2,202	)		(377	)
Other income, net		7,844			873			16,626			1,139
Net loss		(39,659	)		(35,542	)		(96,573	)		(88,974	)
Net unrealized (loss) gain on marketable securities		(255	)		3			(543	)		27
Comprehensive loss	$	(39,914	)	$	(35,539	)	$	(97,116	)	$	(88,947	)
Net loss per common share, basic and diluted	$	(0.71	)	$	(0.92	)	$	(1.87	)	$	(2.45	)
Weighted-average number of shares used in computing net loss per common share, basic and diluted		55,613,120			38,663,469			51,506,766			36,364,284

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Akero Therapeutics, Inc.

Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

(In thousands, except share amounts)

(Unaudited)


							Accumulated
					Additional		Other						Total
	Common Stock				Paid-In-		Comprehensive			Accumulated			Stockholders’
	Shares		Amount		Capital		Gain (Loss)			Deficit			Equity (Deficit)
Balances at December 31, 2022		46,865,206	$	5	$	748,857	$	37		$	(422,337	)	$	326,562
Exercise of stock options		105,783		—		456		—			—			456
Common stock issued for vested restricted stock units		8,067		—		—		—			—			—
Vested warrants issued pursuant to loan agreement		—		—		330		—			—			330
Stock-based compensation expense		—		—		4,844		—			—			4,844
Net unrealized loss on marketable securities		—		—		—		(16	)		—			(16	)
Net loss		—		—		—		—			(25,831	)		(25,831	)
Balances at March 31, 2023		46,979,056	$	5	$	754,487	$	21		$	(448,168	)	$	306,345
Exercise of stock options		306,510		—		1,556		—			—			1,556
Common stock issued for vested restricted stock units		9,956		—		—		—			—			—
Issuance of common stock pursuant to ESPP purchases		7,885		—		313		—			—			313
Issuance of common stock pursuant to At-The-Market ("ATM") offering, net of issuance costs		3,006,052		—		123,824		—			—			123,824
Issuance of common stock pursuant to a direct offering, net of issuance costs		5,238,500		1		210,955		—			—			210,956
Stock-based compensation expense		—		—		4,798		—			—			4,798
Net unrealized loss on marketable securities		—		—		—		(272	)		—			(272	)
Net loss		—		—		—		—			(31,083	)		(31,083	)
Balances at June 30, 2023		55,547,959	$	6	$	1,095,933	$	(251	)	$	(479,251	)	$	616,437
Exercise of stock options		123,094		—		873		—			—			873
Common stock issued for vested restricted stock units		9,973		—		—		—			—			—
Stock-based compensation expense		—		—		5,739		—			—			5,739
Net unrealized loss on marketable securities		—		—		—		(255	)		—			(255	)
Net loss		—		—		—		—			(39,659	)		(39,659	)
Balances at September 30, 2023		55,681,026	$	6	$	1,102,545	$	(506	)	$	(518,910	)	$	583,135

Balances at December 31, 2021		34,900,727	$	4	$	479,436	$	(27	)	$	(310,304	)	$	169,109
Exercise of stock options		122,208		—		147		—			—			147
Stock-based compensation expense		—		—		3,311		—			—			3,311
Net unrealized loss on marketable securities		—		—		—		(3	)		—			(3	)
Net loss		—		—		—		—			(26,029	)		(26,029	)
Balances at March 31, 2022		35,022,935	$	4	$	482,894	$	(30	)	$	(336,333	)	$	146,535
Issuance of common stock pursuant to ESPP purchases		22,139		—		178		—			—			178
Issuance of common stock pursuant to equity investment by Pfizer, net of issuance costs		2,525,252		—		24,647		—			—			24,647
Vested warrants issued pursuant to loan agreement		—		—		227		—			—			227
Stock-based compensation expense		—		—		4,161		—			—			4,161
Net unrealized gain on marketable securities		—		—		—		27			—			27
Net loss		—		—		—		—			(27,403	)		(27,403	)
Balances at June 30, 2022		37,570,326	$	4	$	512,107	$	(3	)	$	(363,736	)	$	148,372
Issuance of common stock upon closing of follow-on public offering, net of issuance costs		8,846,154		1		215,835		—			—			215,836
Exercise of stock options		240,998		—		3,108		—			—			3,108
Stock-based compensation expense		—		—		11,731		—			—			11,731
Net unrealized gain on marketable securities		—		—		—		3			—			3
Net loss		—		—		—