Akero Therapeutics, a clinical-stage biopharmaceutical company, has emerged as a frontrunner in the development of transformative treatments for patients suffering from serious metabolic diseases marked by high unmet medical needs. With a relentless focus on addressing the growing challenge of metabolic dysfunction-associated steatohepatitis (MASH), formerly known as non-alcoholic steatohepatitis (NASH), Akero is poised to make a significant impact in this rapidly evolving landscape.
Company Background
Founded in 2017, Akero Therapeutics has rapidly established itself as a prominent player in the field of metabolic disease research and development. The company's lead product candidate, efruxifermin (EFX), is a novel analog of fibroblast growth factor 21 (FGF21), a naturally occurring hormone that plays a crucial role in regulating metabolism and protecting against cellular stress. Akero's strategic decision to in-license the rights to EFX from Amgen in 2018 has proven to be a pivotal moment in the company's evolution, setting the stage for its ambitious clinical development program. As part of this agreement, Akero made an upfront payment of $5 million and issued 2.65 million shares of its Series A Preferred Stock to Amgen. In November 2018, the company further issued an additional 3.21 million shares of Series A Preferred Stock to Amgen to satisfy an anti-dilution obligation under the license agreement.
Clinical Development Program
Akero's commitment to tackling MASH is evidenced by the progress it has made with its Phase 3 SYNCHRONY program, which is comprised of three ongoing clinical trials: SYNCHRONY Outcomes, SYNCHRONY Histology, and SYNCHRONY Real-World. These trials are designed to evaluate the safety and efficacy of EFX in the treatment of patients with both pre-cirrhotic MASH (fibrosis stage 2 or 3) and compensated cirrhosis (fibrosis stage 4) due to MASH.
The first patients in the SYNCHRONY Outcomes study, which is evaluating EFX in patients with compensated cirrhosis, were dosed in the third quarter of 2024, marking a significant milestone for the company. This study is poised to provide crucial data on the potential of EFX to improve clinical outcomes in this advanced stage of MASH. Concurrently, the SYNCHRONY Histology and SYNCHRONY Real-World studies are progressing as planned, with the former expected to report primary endpoint results in the first half of 2027 and the latter anticipated to deliver results on the primary endpoint of safety and tolerability in 2026.
Akero's clinical development efforts are further bolstered by the positive results from its completed Phase 2b studies, HARMONY and SYMMETRY, which have demonstrated the potential of EFX to drive meaningful improvements in fibrosis regression and MASH resolution in patients with both pre-cirrhotic and cirrhotic MASH. These findings have instilled confidence in the company's ability to translate its scientific insights into tangible therapeutic advancements.
Financials
Financially, Akero Therapeutics has secured a strong capital position to support its ongoing and future clinical initiatives. As of September 30, 2024, the company reported cash, cash equivalents, and short- and long-term marketable securities of $787.1 million, which management believes will be sufficient to fund the Phase 3 SYNCHRONY Histology and SYNCHRONY Real-World studies through the readout of their respective primary endpoints and to fund the company's current operating plan into the second half of 2027.
For the most recent fiscal year (2023), Akero reported no revenue, as the company is still in the clinical stage and has not yet commercialized any products. The net loss for 2023 was $151,759,000, with an operating cash flow (OCF) and free cash flow (FCF) of -$145,367,000. In the most recent quarter (Q3 2024), the company continued to report no revenue, with a net loss of $72,705,000, OCF of -$70,424,000, and FCF of -$70,424,000.
The absence of revenue and the significant net losses reflect Akero's substantial investments in research and development for its lead product candidate, EFX, and other operating expenses associated with advancing its clinical programs. Despite these losses, the company's strong cash position provides a runway to support its ongoing clinical trials and operational needs.
Liquidity
Akero Therapeutics maintains a solid liquidity position, which is crucial for supporting its ongoing clinical development activities. The company's debt-to-equity ratio stands at 0.04757119154843734, indicating a low level of debt relative to equity. As of September 30, 2024, Akero reported $316,060,000 in cash and cash equivalents, providing a substantial buffer for its operations.
In addition to its cash reserves, Akero has access to a $150 million term loan facility with Hercules Capital, of which $35,000,000 was outstanding as of September 30, 2024. This available credit line offers additional financial flexibility if needed.
The company's current ratio and quick ratio both stand at an impressive 17.252731514633528, demonstrating Akero's strong ability to meet its short-term obligations and maintain financial stability. These robust liquidity metrics underscore the company's prudent financial management and its capacity to fund its clinical development programs.
Despite its strong cash position, Akero Therapeutics has incurred significant operating losses since its inception. The company reported net losses of $151.8 million and $112 million for the years ended December 31, 2023 and 2022, respectively. To support its operations, Akero has primarily relied on the sale of its redeemable convertible preferred stock and common stock in public offerings. Additionally, the company secured a $35 million term loan in 2022 to further bolster its financial position.
Challenges and Competition
However, Akero Therapeutics is not without its challenges. The competitive landscape in the MASH treatment space is intensifying, with numerous pharmaceutical and biotechnology companies vying to develop effective therapies. Additionally, the company's reliance on the success of its lead candidate, EFX, heightens the importance of the ongoing clinical trials and the ability to navigate potential regulatory hurdles.
Furthermore, Akero has encountered some setbacks, including the temporary suspension of patient enrollment in its SYMMETRY study in 2022 due to the COVID-19 pandemic. The company has demonstrated resilience in navigating these obstacles, but the potential for future disruptions, such as those arising from geopolitical tensions or public health crises, remains a concern.
Recognition and Future Outlook
Despite these risks, Akero Therapeutics' commitment to innovation and its focus on addressing the significant unmet need in the MASH treatment landscape have earned the company widespread recognition. The company's achievements have not gone unnoticed, with Akero receiving a Breakthrough Therapy designation from the U.S. Food and Drug Administration (FDA) for EFX in the treatment of MASH and a Fast Track designation for the same indication.
As Akero Therapeutics continues to advance its clinical pipeline and navigate the dynamic industry landscape, investors will be closely monitoring the company's ability to translate its scientific advancements into tangible commercial success. The upcoming readouts from the SYNCHRONY program and the potential regulatory approval of EFX will be pivotal in determining Akero's trajectory and its ability to cement its position as a leader in the treatment of MASH and other serious metabolic diseases.
Company History and Achievements
Since its inception, Akero has devoted substantial efforts to organizing and staffing the company, business planning, raising capital, research and development activities for EFX, building its intellectual property portfolio, and providing general and administrative support. The company has made significant progress in a relatively short time, reaching key milestones such as dosing the first patient in the BALANCED study of EFX in July 2019. Akero has also successfully completed major financial initiatives, including a $98 million initial public offering in June 2019 and a $203 million follow-on public offering in July 2020.
Geographic Focus and Market Presence
As a small-cap company, Akero Therapeutics currently operates exclusively in the United States. This focused geographic approach allows the company to concentrate its resources on navigating the U.S. regulatory landscape and addressing the significant MASH patient population in this market. However, the global nature of MASH as a health concern suggests potential for future expansion into international markets, should EFX prove successful in clinical trials and receive regulatory approvals.
Corporate Governance and Reputation
It is worth noting that Akero Therapeutics has maintained a clean corporate record, with no reported scandals, short seller reports, or CEO departures. This stability in leadership and absence of controversies provides a solid foundation for the company as it progresses through critical stages of clinical development and potential commercialization.
In conclusion, Akero Therapeutics stands at the forefront of MASH treatment development, with its lead candidate EFX showing promising results in clinical trials. The company's strong financial position, robust liquidity, and focused clinical development strategy position it well to potentially bring a transformative therapy to market. However, as with any clinical-stage biopharmaceutical company, success hinges on the outcomes of ongoing trials and regulatory approvals. Investors and stakeholders will be watching closely as Akero continues its journey toward potentially revolutionizing the treatment of MASH and other serious metabolic diseases.