kros-20240930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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, 2024


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

For the transition period from to

Commission File Number: 001-39264

________________________________________

KEROS THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

________________________________________


Delaware		81-1173868
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)
1050 Waltham Street,	Suite 302	02421
Lexington,	Massachusetts
(Address of principal executive offices)		(Zip Code)

Tel: (617) 314-6297

(Registrant's telephone number, including area code)

________________________________________

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

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, $0.0001 par value per share

KROS

The Nasdaq Stock Market LLC

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, a 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 October 31, 2024, there were 40,507,409 outstanding shares of the registrant's common stock, par value $0.0001 per share.

TABLE OF CONTENTS


		Page
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS		2
SPECIAL NOTE REGARDING COMPANY REFERENCES		3
SPECIAL NOTE REGARDING TRADEMARKS		3
SUMMARY OF SELECTED RISKS ASSOCIATED WITH OUR BUSINESS		4

PART I.	FINANCIAL INFORMATION	5
Item 1.	Financial Statements (Unaudited)	5
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Operations	6
	Condensed Consolidated Statements of Stockholders’ Equity	7
	Condensed Consolidated Statements of Cash Flows	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	27

PART II.	OTHER INFORMATION	28
Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	81
Item 3.	Defaults Upon Senior Securities	82
Item 4.	Mine Safety Disclosures	82
Item 5.	Other Information	82
Item 6.	Exhibits	83
Signatures

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q are forward-looking statements, including statements about:

▪the timing of announcement of additional data for our ongoing Phase 2 clinical trial for our lead product candidate, elritercept (KER-050), in patients with myelodysplastic syndromes, or MDS;

▪the timing of announcement of additional details on the planned pivotal, placebo-controlled Phase 3 clinical trial of elritercept in patients with lower-risk MDS;

▪the timing of announcement of additional data from our ongoing Phase 2 clinical trial for elritercept in patients with myelofibrosis-associated cytopenias;

▪the timing of announcement of data from our ongoing Phase 2 clinical trial for our second product candidate, cibotercept (KER-012), in patients with pulmonary arterial hypertension;

▪the timing of announcement of data from our ongoing Phase 1 clinical trial of our third product candidate, KER-065, in healthy volunteers;

▪risks associated with public health crises, which may adversely impact our business, preclinical studies and clinical trials;

▪our ability to receive the required regulatory approvals and clearances to successfully market and sell our products, if approved in the United States and certain other countries;

▪our ability to successfully advance our pipeline of additional product candidates;

▪our ability to develop sales and marketing capabilities;

▪the rate and degree of market acceptance of any products we are able to commercialize;

▪the effects of increased competition as well as innovations by new and existing competitors in our market;

▪our ability to obtain funding for our operations;

▪our ability to establish and maintain collaborations;

▪our ability to effectively manage our anticipated growth;

▪our ability to maintain, protect and enhance our intellectual property rights and proprietary technologies;

▪our ability to operate our business without infringing the intellectual property rights and proprietary technology of third parties;

▪costs associated with defending intellectual property infringement, product liability and other claims;

▪regulatory developments in the United States, Australia, New Zealand, Europe, the United Kingdom and other foreign countries;

▪our ability to attract and retain qualified employees;

▪statements regarding future revenue, hiring plans, expenses, capital expenditures, capital requirements and stock performance; and

▪the future trading prices of our common stock and the impact of securities analysts’ reports on these prices.

In some cases, you can identify forward-looking statements by the words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “objective,” “ongoing,” “plan,” “predict,” “project,” “potential,” “should,” “will,” or “would,” or the negative of these terms, or other comparable terminology intended to identify statements about the future. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

You should read the section titled “Risk Factors” set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. As a result of these factors, we cannot assure you that the forward-looking statements in this Quarterly Report on Form 10-Q will prove to be accurate. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

You should read this Quarterly Report on Form 10-Q, completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

SPECIAL NOTE REGARDING COMPANY REFERENCES

Throughout this Quarterly Report on Form 10-Q, “Keros,” the “Company,” “we,” “us” and “our” refer to Keros Therapeutics, Inc. and its subsidiaries.

SPECIAL NOTE REGARDING TRADEMARKS

All trademarks, trade names and service marks appearing in this Quarterly Report on Form 10-Q are the property of their respective owners.

SUMMARY OF SELECTED RISKS ASSOCIATED WITH OUR BUSINESS

Our business faces significant risks and uncertainties. If any of the following risks are realized, our business, financial condition and results of operations could be materially and adversely affected. You should carefully review and consider the full discussion of our risk factors in the section titled “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q. Some of the more significant risks include the following:

•We have a limited operating history, have incurred net losses in every year since our inception and anticipate that we will continue to incur net losses in the future.

•We will need substantial additional funding in order to complete the development and commence commercialization of our product candidates. Failure to obtain this necessary capital when needed may force us to delay, reduce or eliminate certain of our product development or research operations.

•We are heavily dependent on the success of our product candidates, which are in clinical development. If we are unable to advance our current or future product candidates through clinical trials, obtain marketing approval and ultimately commercialize any product candidates we develop, or experience significant delays in doing so, our business will be materially harmed.

•All of our product candidates are in preclinical or clinical development stages. Clinical trials are difficult to design and implement, and they involve a lengthy and expensive process with uncertain outcomes. We may experience delays in completing, or ultimately be unable to complete, the development and commercialization of elritercept, cibotercept, KER-065 or any future product candidates.

•If we are unable to successfully commercialize any product candidate for which we receive regulatory approval, or experience significant delays in doing so, our business will be materially harmed.

•We face significant competition from other biotechnology and pharmaceutical companies, and our operating results will suffer if we fail to compete effectively.

•Our success depends in part on our ability to protect our intellectual property. It is difficult and costly to protect our proprietary rights and technology, and we may not be able to ensure their protection.

•We rely, and expect to continue to rely, on third parties, including independent clinical investigators, contracted laboratories and contract research organizations, to conduct our preclinical studies and clinical trials. If these third parties do not successfully carry out their contractual duties or meet expected deadlines, we may not be able to obtain regulatory approval for or commercialize our product candidates and our business could be substantially harmed.

•We rely on third parties to supply and manufacture our product candidates, and we expect to continue to rely on third parties to manufacture our products, if approved. The development of such product candidates and the commercialization of any products, if approved, could be stopped, delayed or made less profitable if any such third party fails to provide us with sufficient quantities of product candidates or products or fails to do so at acceptable quality levels or prices or fails to maintain or achieve satisfactory regulatory compliance.

•Our future collaborations will be important to our business. If we are unable to enter into new collaborations, or if these collaborations are not successful, our business could be adversely affected.

•Public health crises could adversely impact our business, including the timing or results of our preclinical studies and clinical trials.

PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS (unaudited)

KEROS THERAPEUTICS, INC.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)

(Unaudited)


	SEPTEMBER 30, 2024		DECEMBER 31, 2023
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	530,684	$	331,147
Accounts receivable	388		143
Prepaid expenses and other current assets	20,974		16,003


Total current assets	552,046		347,293
Operating lease right-of-use assets	19,823		15,334
Property and equipment, net	4,366		4,134
Restricted cash	1,449		1,212
Other long-term assets	1,587		2,052
TOTAL ASSETS	$	579,271	$	370,025
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	4,981	$	5,450
Current portion of operating lease liabilities	1,857		1,005
Accrued expenses and other current liabilities	22,169		17,918
Total current liabilities	29,007		24,373
Operating lease liabilities, net of current portion	17,429		13,439


Total liabilities	46,436		37,812

STOCKHOLDERS' EQUITY:
Preferred stock, par value of $0.0001 per share; 10,000,000 shares authorized as of September 30, 2024 and December 31, 2023, respectively; no shares issued and outstanding	—		—
Common stock, par value of $0.0001 per share; 200,000,000 shares authorized as of September 30, 2024 and December 31, 2023; 39,258,476 and 31,841,084 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively	4		3
Additional paid-in capital	1,055,584		713,636
Accumulated deficit	(522,753)		(381,426)
Total stockholders' equity	532,835		332,213
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	579,271	$	370,025

See notes to condensed consolidated financial statements.

KEROS THERAPEUTICS, INC.

Condensed Consolidated Statements of Operations

(In thousands, except share and per share data)

(Unaudited)


	THREE MONTHS ENDED SEPTEMBER 30,				NINE MONTHS ENDED SEPTEMBER 30,
	2024		2023		2024		2023
REVENUE:
Service and other revenue	$	388	$	8	$	508	$	8

Total revenue	388		8		508		8
OPERATING EXPENSES:
Research and development	(49,225)		(34,140)		(127,998)		(97,765)
General and administrative	(9,820)		(9,148)		(30,089)		(25,729)
Total operating expenses	(59,045)		(43,288)		(158,087)		(123,494)
LOSS FROM OPERATIONS	(58,657)		(43,280)		(157,579)		(123,486)
OTHER INCOME (EXPENSE), NET



Dividend income	5,793		3,907		16,977		10,999
Other expense, net	(92)		(67)		(725)		(262)
Total other income, net	5,701		3,840		16,252		10,737


Net loss	$	(52,956)	$	(39,440)	$	(141,327)	$	(112,749)
Net loss attributable to common stockholders—basic and diluted (Note 8)	$	(52,956)	$	(39,440)	$	(141,327)	$	(112,749)
Net loss per share attributable to common stockholders—basic and diluted	$	(1.41)	$	(1.33)	$	(3.88)	$	(3.86)


Weighted-average common stock outstanding—basic and diluted	37,590,727		29,668,247		36,463,906		29,218,143

See notes to condensed consolidated financial statements.

KEROS THERAPEUTICS, INC.

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands, except share and per share data)

(Unaudited)



	COMMON STOCK $0.0001 PAR VALUE			ADDITIONAL PAID-IN CAPITAL		ACCUMULATED DEFICIT		TOTAL STOCKHOLDERS’ EQUITY

	SHARES	AMOUNT
As of December 31, 2023	31,841,084	$	3	$	713,636	$	(381,426)	$	332,213
Issuance of common stock, net of underwriting discounts, commissions and offering costs of $9,943	4,025,000	—		151,057		—		151,057
Exercise of common stock options	201,702	—		5,721		—		5,721
Stock-based compensation	—	—		8,070		—		8,070
Net loss	—	—		—		(43,114)		(43,114)
As of March 31, 2024	36,067,786	$	3	$	878,484	$	(424,540)	$	453,947
Issuance of common stock under the ATM agreement, net of commissions and offering costs of $164	14,068	$	—	$	474	—		$	474
Exercise of common stock options	87,704	—		2,967		—		2,967
Stock-based compensation	—	—		8,785		—		8,785
Net loss	—	—		—		(45,257)		(45,257)
As of June 30, 2024	36,169,558	$	3	$	890,710	$	(469,797)	$	420,916
Issuance of common stock under the ATM agreement, net of commissions and offering cost of $2,377	3,045,762	1		155,049		—		155,050
Exercise of common stock options	43,156	—		1,008		—		1,008
Stock-based compensation	—	—		8,817		—		8,817
Net loss	—	—		—		(52,956)		(52,956)
As of September 30, 2024	39,258,476	$	4	$	1,055,584	$	(522,753)	$	532,835

	COMMON STOCK $0.0001 PAR VALUE			ADDITIONAL PAID-IN CAPITAL		ACCUMULATED DEFICIT		TOTAL STOCKHOLDERS’ EQUITY

	SHARES	AMOUNT
As of December 31, 2022	27,543,453	$	2	$	505,855	$	(228,434)	$	277,423
Issuance of common stock under the ATM agreement, net of commissions and offering costs of $1,665	1,990,927	1		107,307		—		107,308
Exercise of common stock options	14,269	—		370		—		370
Stock-based compensation	—	—		5,687		—		5,687
Net loss	—	—		—		(35,804)		(35,804)
As of March 31, 2023	29,548,649	$	3	$	619,219	$	(264,238)	$	354,984

Exercise of common stock options	112,356	$	—	1,740		$	—	1,740
Stock-based compensation	—	$	—	7,041		$	—	7,041
Net loss	—	$	—	—		(37,505)		$	(37,505)
As of June 30, 2023	29,661,005	$	3	$	628,000	$	(301,743)	$	326,260

Exercise of common stock options	18,138	—		311		—		311
Stock-based compensation	—	—		8,711		—		8,711
Net loss	—	—		—		(39,440)		(39,440)
As of September 30, 2023	29,679,143	$	3	$	637,022	$	(341,183)	$	295,842

See notes to condensed consolidated financial statements.

KEROS THERAPEUTICS, INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


	NINE MONTHS ENDED SEPTEMBER 30,
	2024		2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(141,327)	$	(112,749)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense	897		568
Loss on disposal of fixed asset	—		4
Stock-based compensation expense	25,672		21,439

Non-cash lease expense	1,248		1,217
Changes in operating assets and liabilities:
Accounts receivable	(245)		—

Prepaid expenses and other current assets	(4,971)		(9,823)
Other assets	465		—
Accounts payable	44		570
Right-to-use assets and operating lease liabilities	(895)		255

Accrued expenses and other current liabilities	4,251		(530)

Net cash used in operating activities	(114,861)		(99,049)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(1,642)		(1,923)
Net cash used in investing activities	(1,642)		(1,923)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock, net of underwriting discounts	151,340		—
Payment of issuance costs	(283)		—
Proceeds from issuance of common stock under the ATM agreement, net of commissions	155,695		107,308
Payment of issuance costs associated with issuance of common stock under the ATM agreement	(171)		(27)
Proceeds from exercise of stock options	9,696		2,421
Net cash provided by financing activities	316,277		109,702

NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	199,774		8,730
Cash, cash equivalents and restricted cash at beginning of period	332,359		280,375
Cash, cash equivalents and restricted cash at end of period	$	532,133	$	289,105

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Right-of-use assets obtained in exchange for operating lease obligation	$	5,737	$	1,338
Property and equipment purchases in accounts payable and accrued expenses	$	86	$	60

The following table provides a reconciliation of the ending cash, cash equivalents and restricted cash as of each of the periods shown above:


	SEPTEMBER 30,
	2024		2023
Cash and cash equivalents	$	530,684	$	287,893
Restricted cash	1,449		1,212
Total cash, cash equivalents and restricted cash	$	532,133	$	289,105

See notes to condensed consolidated financial statements.

KEROS THERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. NATURE OF BUSINESS AND BASIS OF PRESENTATION

Keros Therapeutics, Inc. (“Keros” or the “Company”) was incorporated in 2015 as a Delaware corporation. Its principal offices are in Lexington, Massachusetts. The Company is a clinical-stage biopharmaceutical company focused on developing and commercializing novel therapeutics to treat a wide range of patients with disorders that are linked to dysfunctional signaling of the transforming growth factor-beta (“TGF-ß”) family of proteins.

The Company’s lead product candidate, elritercept (KER-050), is being developed for the treatment of low blood cell counts (“cytopenias”), including anemia and thrombocytopenia, in patients with myelodysplastic syndromes (“MDS”) and in patients with myelofibrosis. The Company’s second product candidate, cibotercept (KER-012), is being developed for the treatment of pulmonary arterial hypertension (“PAH”) and for the treatment of cardiovascular disorders. The Company's third product candidate, KER-065, is being developed for the treatment of obesity and for the treatment of neuromuscular diseases.

Since its inception in 2015, the Company has devoted the majority of its resources to business planning, research and development of its product candidates, including conducting clinical trials and preclinical studies, raising capital and recruiting management and technical staff to support these operations. To date, the Company has not generated any revenue from product sales as none of its product candidates have been approved for commercialization.

In May 2021, the Company filed a registration statement on Form S-3, which was automatically effective upon filing (the “Prior Shelf Registration Statement”). Pursuant to the Prior Shelf Registration Statement, the Company could issue up to $150.0 million in common stock in sales deemed to be an “at-the-market offering,” as defined by the Securities Act of 1933, as amended (“Securities Act”), and, so long as the Company qualifies as a “well-known seasoned issuer” as defined in Rule 405 of the Securities Act, an unspecified amount of shares of the Company common stock, preferred stock, debt securities and warrants. In December 2022, the Company filed a prospectus supplement to the Prior Shelf Registration Statement for the issuance and sale, if any, of up to an additional $250.0 million in common stock in sales deemed to be an “at-the-market offering,” as defined by the Securities Act.

In May 2024, the Company filed a registration statement on Form S-3 to replace the Prior Shelf Registration Statement, which became effective immediately upon filing (the “New Shelf Registration Statement”). The New Shelf Registration Statement included a base prospectus under which the Company could issue, so long as the Company qualifies as a “well-known seasoned issuer” as defined in Rule 405 of the Securities Act, an unspecified amount of shares of the Company common stock, preferred stock, debt securities and warrants. In June 2024, the Company filed a prospectus supplement to the New Shelf Registration Statement for the issuance and sale, if any, of up to an additional $350.0 million of shares of its common stock in sales deemed to be an “at-the-market offering,” as defined by the Securities Act.

Liquidity and Capital Resources

The Company’s condensed consolidated financial statements have been prepared on the basis of the Company continuing as a going concern for the next 12 months. Management believes that the Company’s existing $530.7 million in cash and cash equivalents will allow the Company to continue its operations for at least the next 12 months. In the absence of a significant source of recurring revenue, the continued viability of the Company is dependent on its ability to continue to raise additional capital to finance its operations. If the Company is unable to obtain additional funding, the Company may be forced to delay, reduce or eliminate some or all of its research and development programs, product portfolio expansion or commercialization efforts, which could adversely affect its business prospects, or the Company may be unable to continue operations.

The accompanying unaudited interim condensed consolidated financial statements as of September 30, 2024 and for the three and nine months ended September 30, 2024 and 2023 have been prepared by the Company in conformity with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and, pursuant to the rules and regulations of Article 10 of Regulation S-X of the Securities Act published by the Securities and Exchange Commission (“SEC”) for interim financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. However, the Company believes the disclosures are adequate to make the information presented not misleading. These unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 28, 2024 (the “Annual Report”).

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Significant Accounting Policies