| Item 1.01. | Entry into a Material Definitive Agreement. |
On January 28, 2025, Akero Therapeutics, Inc. (the “Company”) entered into an underwriting agreement (the “Underwriting Agreement”) with J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC and Jefferies LLC, as representatives of the several underwriters named therein (the “Underwriters”) pursuant to which the Company agreed to issue and sell (i) 5,333,420 shares (the “Common Shares”) of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), to the Underwriters at a public offering price of $48.00 per share and (ii) pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to 1,958,247 shares of Common Stock (such shares of Common Stock issuable upon exercise of the Pre-Funded Warrants, the “Pre-Funded Warrant Shares”), to the Underwriters at a public offering price of $47.9999 per Pre-Funded Warrant (the “Offering”). Under the terms of the Underwriting Agreement, the Company also granted the Underwriters an option (the “Option”) exercisable for 30 days to purchase up to an additional 1,093,750 shares of Common Stock at $48.00 per share, less underwriting discounts and commissions and offering expenses (the “Option Shares,” and together with the Common Shares and the Pre-Funded Warrant Shares, the “Shares”). On January 29, 2025, the Underwriters exercised the Option in full. The Offering is expected to close on or about January 30, 2025, subject to customary closing conditions. All the Shares and Pre-Funded Warrants in the Offering are being sold by the Company.
The net proceeds to the Company from the Offering are expected to be approximately $377.8 million after deducting the underwriting discounts and commissions and estimated offering expenses payable by the Company. The Company intends to use the net proceeds from the Offering, together with its existing cash, cash equivalents and marketable securities and committed capital assuming the closing of the Offering, to continue to advance the clinical development of efruxifermin (“EFX”), including the Company’s ongoing Phase 3 SYNCHRONY Histology, Phase 3 SYNCHRONY Real-World and Phase 3 SYNCHRONY Outcome studies, manufacture drug product, and prepare for a potential commercial launch, with the remainder for working capital and other general corporate purposes. The Company may also use a portion of its net proceeds, together with its existing cash, cash equivalents and marketable securities and committed capital assuming the closing of the Offering, to develop, co-develop, acquire or invest in products, that are complementary to EFX to expand its pipeline. However, the Company currently does not have any agreements or commitments to complete any such transaction. The Company believes that the net proceeds from this offering, together with its cash, cash equivalents and marketable securities and committed capital assuming the closing of the Offering will be sufficient to fund its current operating plan into 2028.
Each Pre-Funded Warrant will be exercisable for one share of Common Stock at an exercise price of $0.0001 per share, or alternatively, at the election of each holder, shares of Common Stock may be issued through a cashless exercise, with the net number of shares of Common Stock determined according to the formula set forth in each Pre-Funded Warrant. The Pre-Funded Warrants will be immediately exercisable and may be exercised at any time until all of the Pre-Funded Warrants are exercised in full. A holder (together with its “attribution parties,” as defined in the Pre-Funded Warrant) may not exercise any portion of the Pre-Funded Warrants if immediately after exercise, the holder (together with its attribution parties), would beneficially own in excess of 24.99% of the number of shares of Common Stock outstanding immediately after giving effect to the exercise (the “Ownership Limit”). Purchasers of the Pre-Funded Warrants may also elect to set the initial Ownership Limit at 4.99%, 9.99%, 19.99% or 24.99%. Upon at least 61 days’ prior notice from the holder to the Company, the holder may increase or decrease the Ownership Limit to any other percentage (not in excess of 24.99%).
In addition, if the exercise of a Pre-Funded Warrant would result in a holder of Pre-Funded Warrants (together with its attribution parties) acquiring beneficial ownership of Common Stock (together with all other equity owned by such holder at such time) equal to or in excess of the notification threshold applicable to such holder (the “HSR Threshold”) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), as of the date of delivery of the applicable exercise notice, and no exemption to filing a notice and report form under the HSR Act is applicable, then only such portion of the Pre-Funded Warrants held by such holder, which when exercised does not exceed the HSR Threshold, shall be exercisable and the applicable exercise notice shall be deemed to relate only to such portion of the Pre-Funded Warrants, and the remaining portion of the Pre-Funded Warrants in excess of the HSR Threshold shall not be exercisable until the expiration or early termination of the applicable waiting period under the HSR Act or receipt of applicable approval. For certain holders of Pre-Funded Warrants, upon expiration or early termination of the applicable waiting period under the HSR Act or receipt of applicable approval, such holder shall no longer be subject to either the HSR Threshold or the Ownership Limit. The Company does not intend to list the Pre-Funded Warrants on the Nasdaq Global Select Market, any other national securities
