June 16, 2022 Akero Therapeutics, Inc. (Nasdaq: AKRO), a clinical-stage company developing transformational treatments for patients with serious metabolic diseases marked by high unmet medical need, reported two financing transactions (Press release, Akero Therapeutics, JUN 16, 2022, View Source [SID1234616039]). The first is a $25 million equity investment by Pfizer Inc. (NYSE: PFE) at $9.90 per share. The second is a term loan facility providing Akero with access to up to $100 million from Hercules Capital, Inc. (NYSE: HTGC), of which $10 million will be drawn at transaction close. Together with existing cash, proceeds will support Akero’s continued development of efruxifermin (EFX), a long-acting analog of fibroblast growth factor 21 (FGF21), including two ongoing Phase 2b clinical trials in patients with pre-cirrhotic and cirrhotic nonalcoholic steatohepatitis (NASH); manufacture of a drug product-device combination for use in Phase 3 clinical trials; and starting a Phase 3 clinical trial program. If the term loan is fully drawn, proceeds from these two transactions together with budget optimization efforts are expected to fund Akero’s current operating plan until the third quarter of 2024. This extends Akero’s previously announced cash guidance by a full year (from the third quarter of 2023 to the third quarter of 2024), two years beyond the anticipated readout of the HARMONY study in the third quarter of this year.

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"Pfizer has deep expertise and history in addressing health challenges that affect millions of patients around the world, including cardiometabolic diseases. We are honored and excited to have their confidence, collaboration and support," said Andrew Cheng, M.D. Ph.D., president and chief executive officer of Akero. "In addition, Hercules Capital has a rich history of investing in innovative biotechnology companies. We are very grateful for their significant partnership and support. With our existing cash on hand, we expect these two financings will extend our cash runway a full two years beyond our upcoming HARMONY readout, providing us the flexibility to optimize our capital structure to support the continued development of EFX."

Pfizer is investing in Akero through the Pfizer Breakthrough Growth Initiative (PBGI), which seeks to support biotechnology companies that share its commitment to delivering transformative therapies for patients in therapeutic areas consistent with Pfizer’s core areas of focus. Under the terms of the agreement, Akero has agreed to sell 2,525,252 shares to Pfizer at a price of $9.90 per share, for gross proceeds of $25 million. The shares of common stock were offered and sold to Pfizer in a registered direct offering conducted without an underwriter or placement agent. The offering is expected to close on or about June 17, 2022. Following the transaction, Pfizer will own approximately 6.7% of Akero’s outstanding common stock. As part of the transaction, Akero will establish a Scientific Advisory Board, with Pfizer appointing one member. Akero will maintain ownership and control of EFX, the rest of its pipeline, and Akero’s operations.

"EFX has quickly emerged as a promising potential NASH therapy, with a strong record of clinical trial data," said Jeff Pfefferkorn, Ph.D., Vice President of Discovery & Development, Internal Medicine Research Unit, Pfizer, who is expected to join Akero’s newly formed Scientific Advisory Board. "NASH is a priority therapeutic area for Pfizer due to the substantial global unmet medical need it represents, and we are excited to support Akero as it advances EFX towards a potential Phase 3 study."

The $100 million term loan facility is being provided by Hercules Capital, a leader in customized specialty financing for life science companies. Under the terms of the loan agreement, $10 million will be drawn at closing. An additional $10 million is immediately available to Akero at its sole discretion. Akero may draw an additional $35 million in two separate tranches upon achievement of near-term clinical and financial milestones. An additional $45 million may be drawn in a third tranche, subject to the approval of Hercules Capital. The loan bears an initial interest rate of 7.65% and adjusts with future changes in the prime rate. Akero will pay interest only for the first 24 months, extendable to 36 months on achievement of certain milestones. The loan matures 54 months from closing in December 2026. "We believe there is tremendous patient and clinical value in financing the development of potentially innovative treatments for NASH," said Cristy Barnes, Managing Director at Hercules Capital. "We’re excited to support Akero – both now and in the future – in its continued clinical development of EFX for the treatment of advanced NASH."