kros-20210331

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 March 31, 2021


☐			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)
99 Hayden Avenue, Suite 120, Building E Lexington, Massachusetts						02421
(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 April 29, 2021, there were 23,296,930 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 Convertible Preferred Stock and Stockholders’ Eq uity (Deficit)	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	25
Item 4.	Controls and Procedures	26

PART II.	OTHER INFORMATION	26
Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	76
Item 3.	Defaults Upon Senior Securities	77
Item 4.	Mine Safety Disclosures	77
Item 5.	Other Information	77
Item 6.	Exhibits	79
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 data for our Phase 2 clinical trial for our lead protein therapeutic product candidate, KER-050, in patients with myelodysplastic syndromes;

▪the timing of initiation of and announcement of data for our Phase 2 clinical trial for KER-050 in patients with myelofibrosis-associated cytopenias;

▪the timing of initiation of and announcement of data for our three Phase 2 clinical trials for our lead small molecule product candidate, KER-047;

▪the timing of initiation of and announcement of data for our Phase 1 clinical trial for our third product candidate, KER-012;

▪risks associated with the COVID-19 pandemic, 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 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 and other foreign countries;

▪our ability to attract and retain qualified employees;

▪our expectations regarding the period during which we qualify as an emerging growth company under the Jumpstart Our Business Startups Act of 2012;

▪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 subsidiary.

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 early 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 early 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 KER-050, KER-047, KER-012 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.

•The COVID-19 pandemic 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)


	MARCH 31, 2021		DECEMBER 31, 2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	255,203	$	265,876
Prepaid expenses and other current assets	779		1,850


Total current assets	255,982		267,726
Operating lease right-of-use assets	779		878
Property and equipment, net	854		724
Restricted cash	115		115
TOTAL ASSETS	$	257,730	$	269,443
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	3,008	$	2,149
Current portion of operating lease liabilities	436		423
Accrued expenses and other current liabilities	5,506		4,612
Total current liabilities	8,950		7,184
Operating lease liabilities, net of current portion	361		476

Other liabilities	47		62
Total liabilities	9,358		7,722

STOCKHOLDERS' EQUITY:
Common stock, par value of $0.0001 per share; 200,000,000 shares authorized as of March 31, 2021 and December 31, 2020, respectively; 23,271,494 and 23,192,866 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively	2		2
Additional paid-in capital	329,266		326,730
Accumulated deficit	(80,896)		(65,011)
Total stockholders' equity	248,372		261,721
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	257,730	$	269,443

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 MARCH 31,
	2021		2020
OPERATING EXPENSES:
Research and development	(11,495)		(8,527)
General and administrative	(4,274)		(1,977)
Total operating expenses	(15,769)		(10,504)
LOSS FROM OPERATIONS	(15,769)		(10,504)
OTHER EXPENSE, NET
Interest expense, net	(1)		(2)

Change in fair value of preferred stock tranche obligation	—		(1,490)
Other expense, net	(65)		(68)
Total other expense, net	(66)		(1,560)
Loss before income taxes	(15,835)		(12,064)
Income tax (provision) benefit	(50)		172
Net loss	$	(15,885)	$	(11,892)
Net loss attributable to common stockholders—basic and diluted (Note 10)	$	(15,885)	$	(12,698)
Net loss per share attributable to common stockholders—basic and diluted	$	(0.68)	$	(5.11)
Weighted-average common stock outstanding—basic and diluted	23,229,794		2,484,057

See notes to condensed consolidated financial statements.

KEROS THERAPEUTICS, INC.

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(In thousands, except share and per share data)

(Unaudited)



	CONVERTIBLE PREFERRED STOCK												COMMON STOCK $0.0001 PAR VALUE			ADDITIONAL PAID-IN CAPITAL		ACCUMULATED DEFICIT		TOTAL STOCKHOLDERS' EQUITY
	$0.0001 PAR VALUE SERIES A			$0.0001 PAR VALUE SERIES A-1			$0.0001 PAR VALUE SERIES B-1			$0.0001 PAR VALUE SERIES C
	SHARES	AMOUNT		SHARES	AMOUNT		SHARES	AMOUNT		SHARES	AMOUNT		SHARES	AMOUNT
As of December 31, 2020	—	$	—	—	$	—	—	$	—	—	$	—	23,192,866	$	2	$	326,730	$	(65,011)	$	261,721
Exercise of common stock options	—	—		—	—		—	—		—	—		78,628	—		42		—		42
Stock-based compensation	—	—		—	—		—	—		—	—		—	—		2,494		—		2,494
Net loss	—	—		—	—		—	—		—	—		—	—		—		(15,885)		(15,885)
March 31, 2021	—	$	—	—	$	—	—	$	—	—	$	—	23,271,494	$	2	$	329,266	$	(80,896)	$	248,372


	CONVERTIBLE PREFERRED STOCK												COMMON STOCK $0.0001 PAR VALUE			ADDITIONAL PAID-IN CAPITAL		ACCUMULATED DEFICIT		TOTAL STOCKHOLDERS' DEFICIT
	$0.0001 PAR VALUE SERIES A			$0.0001 PAR VALUE SERIES A-1			$0.0001 PAR VALUE SERIES B-1			$0.0001 PAR VALUE SERIES C
	SHARES	AMOUNT		SHARES	AMOUNT		SHARES	AMOUNT		SHARES	AMOUNT		SHARES	AMOUNT
As of December 31, 2019	4,607,652	$	9,891	368,612	$	944	1,579,043	$	9,106	—	$	—	2,429,705	$	1	$	203	$	(19,650)	$	(19,446)
Exercise of common stock options	—	—		—	—		—	—		—	—		44,686	—		13		—		13
Issuance of Series C convertible preferred stock, net of issuance costs of $219	—	—		—	—		—	—		4,169,822	55,781		—	—		—		—		—
Vesting of restricted stock	—	—		—	—		—	—		—	—		17,279	—		—		—		—
Stock-based compensation	—	—		—	—		—	—		—	—		—	—		12		—		12
Settlement of preferred stock tranche liability	—	—		—	—		—	—		—	—		—	—		6,446		—		6,446
Net loss	—	—		—	—		—	—		—	—		—	—		—		(11,892)		(11,892)
March 31, 2020	4,607,652	$	9,891	368,612	$	944	1,579,043	$	9,106	4,169,822	$	55,781	2,491,670	$	1	$	6,674	$	(31,542)	$	(24,867)

See notes to condensed consolidated financial statements.

KEROS THERAPEUTICS, INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


	THREE MONTHS ENDED MARCH 31,
	2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(15,885)	$	(11,892)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation expense	80		63
Stock-based compensation expense	2,494		12
Non-cash lease expense	99		89
Changes in fair value of preferred stock tranche obligation	—		1,490
Changes in operating assets and liabilities:
Research and development incentive receivable	—		117
Prepaid expenses and other current assets	1,071		(816)
Deferred IPO costs	—		(156)
Accounts payable	859		(193)
Operating lease liabilities	(102)		(90)
Deferred revenue	—		—
Accrued expenses and other current liabilities	894		3,271
Other liabilities	(15)		(15)
Net cash used in operating activities	(10,505)		(8,120)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(210)		(176)
Net cash used in investing activities	(210)		(176)
CASH FLOWS FROM FINANCING ACTIVITIES: