Keros Therapeutics, Inc. — Q2 2022 Form 10-Q
Reporting period: Three and six months ended June 30, 2022. Keros is a clinical-stage biopharmaceutical company developing therapies for hematological, pulmonary and musculoskeletal disorders. It has no approved products and has not generated product-sales revenue.
Financial performance and position
| Metric | Q2 2022 | Six months 2022 |
|---|---|---|
| Revenue | $0 | $0 |
| Research and development expense | $23.3 million | $41.4 million |
| General and administrative expense | $7.4 million | $13.5 million |
| Net loss | $27.3 million | $51.5 million |
| Net loss per share, basic and diluted | $1.13 | $2.14 |
| Operating cash used | Not stated for the quarter | $24.0 million |
- Q2 net loss widened from $15.6 million in Q2 2021; six-month net loss widened from $31.5 million. R&D expense rose 133% for the quarter and 93% for the half-year, principally reflecting KER-050 development and manufacturing, platform work and increased personnel. G&A increased 32% and 36%, respectively.
- Cash and cash equivalents were $215.6 million at June 30, 2022, down from $230.0 million at December 31, 2021. Cash, cash equivalents and restricted cash totaled $216.9 million. Six-month investing cash use was $0.7 million; financing provided $10.3 million, mainly ATM proceeds.
- Current assets were $222.4 million and current liabilities $15.5 million, implying substantial near-term balance-sheet liquidity. Total liabilities were $15.5 million, primarily current operating lease liabilities and other current obligations. The filing reports no debt subject to variable interest rates.
- Accumulated deficit was $175.2 million. The company sold 355,425 shares under its ATM program during the first half for approximately $9.7 million net; $111.6 million remained available under the program at June 30.
Development, outlook and risks
- KER-050: Phase 2 MDS trial dosing in Part 2 began at 3.75 mg/kg, with potential escalation to 5.0 mg/kg under individual titration rules. Additional MDS data and initial myelofibrosis-associated cytopenia data were expected by year-end 2022.
- KER-047: The Phase 2 IRIDA trial was ongoing, with initial data expected by year-end 2022. The company planned to start a Phase 2 iron-deficiency anemia trial in the second half of 2022 and expected initial data in the first half of 2023. Management disclosed enrollment difficulty in the small IRIDA patient population.
- KER-012: Following preliminary Phase 1 Part 1 results announced in May, Part 2 data were expected in the second half of 2022. The company expected to initiate a Phase 2 PAH trial after completing Phase 1 and to share its design in early 2023.
- Management stated that June 30 cash was expected to fund operations into the third quarter of 2024, subject to assumptions and potentially faster cash use. The financial-statement note separately says cash would support operations for at least the next 12 months. Keros expects continued operating losses and negative operating cash flows and may need additional financing; no external funding was committed.
- The $3.4 million of first-half R&D incentive income was an Australian government tax incentive. It was a key contributor to the year-over-year improvement in other income, not product revenue.
- COVID-19, patient enrollment, clinical-trial uncertainty, third-party CRO and single-source manufacturing reliance, regulatory approval, competition and intellectual-property protection remain material risks. The filing says pandemic-related disruptions may delay development timelines. Clinical updates include preliminary or interim data, which may change as trials continue.
- The Hansoh KER-050 license covers mainland China, Hong Kong and Macau. Its $18.0 million net upfront payment was received in January 2022 but recognized as revenue in 2021; no milestones had been received by June 30, 2022. Potential development milestones total up to $26.5 million, sales milestones up to $144.0 million, plus tiered royalties if products are approved and sold.
Important facts for investors to verify
- Whether clinical-trial timelines and announced data expectations were met, and how complete and durable the results are.
- Cash-burn trends, the assumptions behind the Q3 2024 runway estimate, and whether further capital or ATM issuance is needed.
- Progress and enrollment in the IRIDA trial, and planned initiation of the KER-047 iron-deficiency anemia trial.
- Manufacturing capacity and continuity given reliance on third parties and single-source manufacturers.
- Whether Australian R&D incentive income recurs, and the timing and likelihood of Hansoh milestones and any future royalties.