12. Commitments and contingencies

Operating lease

In February 2020, the Company entered into a seven-year agreement to occupy 6,647 square feet of office space in South San Francisco, California. The lease commenced on July 10, 2020 when the Company took occupancy of the leased space and the lease was determined to be operating classified. Under the agreement, the Company is required to make approximately $2,300 in total minimum payments during the term. The Company is also required to pay its proportionate share of building operating and tax costs after the first year under lease which are not included in the measurement of the lease and treated as variable lease cost and expensed when incurred.

As of March 31, 2025, maturities of the Company’s operating lease liability was as follows:


2025	$	257
2026		351
2027		208
Total future minimum lease payments		816
Less imputed interest		(66	)
Present value of operating lease liabilities	$	750

As of March 31, 2025, the total lease liability was $750, of which $451 was noncurrent and $299 was short-term and classified within “Accrued expenses and other current liabilities” on the condensed consolidated balance sheet.

For the three months ended March 31, 2025 and 2024, the components of operating lease cost were as follows:


	Three Months Ended March 31,
		2025				2024
Lease cost:
Operating lease cost (1)	$		81		$		81
Short-term lease cost (1)			36				54
Variable operating lease cost (1)			19				26
Total operating lease cost	$		136		$		161

Other information:
Cash paid for amounts included in the measurement of operating lease liability	$		84		$		82
Weighted average remaining lease term (years)			2.3				3.3
Weighted average discount rate			7.6	%			7.6	%

(1)

Amounts classified as General and Administrative expense on the Condensed Consolidated Statements of Operations and Comprehensive Loss.

Research and manufacturing and other commitments

The Company has entered into agreements with contract research organizations and contract manufacturing organizations to provide services in connection with its nonclinical studies and clinical trials and to manufacture clinical development materials. As of March 31, 2025, the Company had non-cancelable purchase and other commitments under these agreements totaling $34,167.

Indemnification agreements

In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, business partners and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with members of its board of directors and its executive officers that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. To date, the Company has not incurred any material costs as a result of such indemnifications. The Company is not currently aware of any indemnification claims and has not accrued any liabilities related to such obligations in its condensed consolidated financial statements as of March 31, 2025.

Legal proceedings

The Company does not have contingency reserves established for any litigation liabilities. At each reporting date, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies. The Company expenses costs related to such legal proceedings as they are incurred.

On April 26, 2024, a purported stockholder of the Company filed a lawsuit, captioned Klobus v. Akero Therapeutics, Inc., No. 3:24-cv-02534 (N.D. Cal.), in the U.S. District Court for the Northern District of California against the Company and three of its officers. The suit purports to be filed on behalf of a class of stockholders who purchased or otherwise acquired Company common stock between September 13, 2022, and October 9, 2023. The suit asserts claims under the Exchange Act for alleged misstatements and omissions regarding the Company’s Phase 2b SYMMETRY study. The complaint seeks damages in an unspecified amount. The court appointed lead plaintiffs and lead counsel on August 2, 2024. Lead Plaintiffs filed an amended complaint on September 24, 2024. On November 18, 2024, Defendants filed a motion to dismiss, Lead Plaintiffs filed an Opposition on January 13, 2025, and Defendants filed a Reply on February 21, 2025. A hearing on Defendants’ motion to dismiss was held on April 15, 2025. On May 5, 2025, the Court issued an order dismissing the suit in its entirety, without prejudice. Lead Plaintiffs have 21 days from the date of the order to file an amended complaint attempting to cure the deficiencies. Due to the early stage of this matter, it is not possible to determine the probability or amount of potential related costs. The Company intends to vigorously defend against the lawsuit.

Akero Therapeutics, Inc. 10-Q