Keros Therapeutics, Inc. — FY 2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. This is an annual report, not a standalone fourth-quarter report. Keros is a clinical-stage biopharmaceutical company and has no approved products.
Business context
Keros develops therapies targeting TGF-β signaling for hematological, pulmonary and cardiovascular disorders. Its main candidates are KER-050 for MDS- and myelofibrosis-associated cytopenias, KER-047 for functional iron deficiency, and KER-012 for pulmonary arterial hypertension (PAH) and cardiovascular disorders. All remain in clinical development.
Financial performance and liquidity
| Metric | FY 2022 | FY 2021 |
|---|---|---|
| Revenue | $0 | $20.1 million |
| Research and development expense | $87.3 million | $55.1 million |
| General and administrative expense | $27.5 million | $21.3 million |
| Operating loss | $114.8 million | $56.4 million |
| Net loss | $104.7 million | $58.7 million |
| Net loss per share, basic and diluted | $4.15 | $2.52 |
| Net cash used in operating activities | $70.1 million | $62.1 million |
Revenue in 2021 included the $20.0 million gross upfront payment under the Hansoh KER-050 license and a $0.1 million Neurona license fee; no revenue was recognized in 2022. The 2022 net loss includes $7.1 million of Australian R&D incentive income and $3.0 million of other income, principally dividend income. The company remains loss-making, so conventional profit margins are not meaningful.
At year-end, cash and cash equivalents were $279.0 million, versus $230.0 million a year earlier; restricted cash was an additional $1.3 million. Current assets were $285.8 million and current liabilities $16.5 million. Total liabilities were $29.4 million, principally including $13.3 million of operating lease liabilities; the filing reports no variable-rate debt outstanding. Management estimated that year-end cash plus ATM proceeds through February 28, 2023 would fund operating expenses and capital expenditures into Q3 2025, subject to assumptions that could prove incorrect.
Cash provided by financing was $120.3 million in 2022, primarily from $119.4 million net proceeds from ATM share sales. Keros sold 3.41 million shares under the ATM at a weighted-average $35.60 per share. It reported 27.54 million shares outstanding at year-end and 28.54 million as of February 23, 2023. The ATM had up to $250.0 million of additional capacity at December 31, 2022.
Material changes versus FY 2021
- Net loss increased by $46.0 million, while operating expenses rose by $38.3 million. R&D spending increased $32.1 million, reflecting pipeline advancement, manufacturing and higher personnel costs; G&A increased $6.2 million.
- Revenue fell from $20.1 million to zero because the 2021 period included the Hansoh and Neurona license payments.
- Operating cash use increased $7.9 million. Cash and cash equivalents nevertheless increased, primarily due to ATM financing.
- Year-end cash increased by $49.0 million; common shares outstanding increased from 23.97 million to 27.54 million, reflecting ATM sales and option exercises.
Pipeline, outlook and key risks
- KER-050: In the open-label Phase 2 MDS trial, 15 of 29 evaluable patients at the recommended Part 2 dose achieved an overall erythroid response as of the October 1, 2022 data cutoff. Among 18 transfused patients receiving at least two red blood cell units at baseline, 9 achieved transfusion independence for at least eight weeks. The company reported generally good tolerability in 36 patients in the safety population, with no dose-limiting toxicities; one fatal treatment-emergent event was assessed as unrelated. These are interim results from a small, uncontrolled study, not confirmatory evidence. Initial myelofibrosis Phase 2 data involved 12 patients at the lowest tested dose and showed aggregate increases in reticulocytes and platelets, with variability.
- KER-047: December 2022 data from one IRIDA patient showed decreases in hepcidin and ferritin and an increase in reticulocyte hemoglobin during treatment. The company expected additional IRIDA data in the second half of 2023 and planned a Phase 2 trial in MDS and myelofibrosis patients with functional iron deficiency in the first half of 2023.
- KER-012: The Phase 1 trial in healthy volunteers was completed in 2022. The company reported target-engagement and bone biomarker changes, with no clinically meaningful changes in hemoglobin or red blood cells. It expected to start a PAH Phase 2 trial in the first half of 2023 and a Phase 2 biomarker trial in the second half of 2023.
- Management expected additional KER-050 MDS data during both halves of 2023, myelofibrosis dose-escalation data and Part 2 initiation in the second half of 2023, and to expand the MDS trial to patients with iron overload in the second half of 2023. These are forward-looking plans, not guaranteed milestones.
- Keros expects continued losses and negative operating cash flows and will need substantial additional funding. It has no product-sales revenue and cannot assure future financing on acceptable terms. Additional equity financing could dilute shareholders.
- Material execution risks include clinical-trial uncertainty, open-label and limited-patient data, enrollment challenges (particularly for rare IRIDA), regulatory approval, competition, reliance on third parties, and single-source manufacturing with no redundant supply arrangements. Management also cited possible trial and supply-chain disruption, inflation, economic volatility and geopolitical risks.
- The Hansoh agreement licenses KER-050 in mainland China, Hong Kong and Macau. It provides potential development milestones up to $26.5 million, sales milestones up to $144.0 million and tiered royalties, but these payments depend on future development, approval and sales. Hansoh may terminate for convenience.
Investor facts to verify
- Review the complete KER-050, KER-047 and KER-012 clinical datasets, trial sizes, endpoints, follow-up, adverse events and subsequent updates; distinguish interim, company-reported results from controlled or confirmatory evidence.
- Track actual trial enrollment, data-release dates and progress against management’s 2023 timelines, which may have changed since the filing.
- Reassess the cash runway using subsequent cash use, ATM sales, share count and updated development spending; the runway estimate depends on management assumptions.
- Check the terms and status of the remaining ATM capacity and the resulting potential dilution.
- Monitor Hansoh’s development progress, any milestone achievement, and the terms or status of commercial-supply arrangements.
- Assess manufacturing continuity, given the reliance on single-source CMOs and lack of redundant supply arrangements, as well as the effect of the new laboratory and vivarium lease commitments.
The consolidated financial statements received an unqualified independent auditor’s opinion. Management concluded internal control over financial reporting was effective as of December 31, 2022; the auditor did not provide an internal-control attestation because Keros qualified for the emerging-growth-company transition period. The company reported no material legal proceedings.