KROS

Business Context and Reporting Period

Keros Therapeutics, Inc. is a clinical-stage biopharmaceutical company focused on developing therapeutics targeting the transforming growth factor-beta (TGF-β) family of proteins. The company's lead product candidate is rinvatercept (KER-065) for Duchenne muscular dystrophy (DMD) and amyotrophic lateral sclerosis (ALS). Its most advanced candidate, elritercept (KER-050), is being developed for myelodysplastic syndromes (MDS) and myelofibrosis, with global rights (excluding China) licensed to Takeda Pharmaceuticals. This filing covers the quarterly period ended June 30, 2026.

Key Financial Metrics

Material Changes Versus Prior Period

• Revenue Decline: Total revenue dropped to zero for the three months ended June 30, 2026, compared to $18.2 million in the same period in 2025. This decrease is primarily due to the cessation of service revenue recognition under the Takeda Transition Services Agreement, which was substantially complete by the end of 2025. For the six months ended June 30, 2026, revenue was $0.4 million compared to $229.4 million in the prior year, driven by the one-time $195.4 million license revenue recognized from Takeda in 2025.
• Expense Reduction: Operating expenses decreased significantly year-over-year. Research and development expenses fell by $21.2 million for the quarter and $53.8 million for the six-month period. This reduction was driven by the transition of elritercept development activities to Takeda, the termination of the cibotercept Phase 2 trial, and a reduction in headcount following a 2025 restructuring.
• Net Loss vs. Net Income: The company reported a net loss of $28.7 million for the quarter and $52.4 million for the six months ended June 30, 2026. This contrasts with a net loss of $30.7 million for the quarter and net income of $117.8 million for the six months ended June 30, 2025, which was heavily influenced by the Takeda license revenue.

Guidance, Outlook, and Risks

• Clinical Milestones: In July 2026 (subsequent to the reporting period), the company achieved a $20.0 million development milestone upon dosing the first patient in the Phase 3 ELRiSE MDS clinical trial for elritercept. The company expects to distribute 25% of the net cash proceeds from this milestone to stockholders.
• Liquidity: Management believes existing cash and cash equivalents of $257.6 million are sufficient to fund operations into the first half of 2028. The company does not expect to generate product revenue in the foreseeable future and will require additional capital to advance its pipeline.
• Key Risks:
  • Development Uncertainty: All product candidates are in clinical development; failure to demonstrate safety or efficacy could halt operations.
  • Capital Needs: Continued losses and the need for substantial additional funding pose a risk to future operations if capital cannot be raised.
  • Collaboration Dependence: Future revenue is heavily dependent on the success of Takeda and Hansoh in commercializing elritercept.
  • Regulatory and Market Risks: Potential changes in healthcare legislation, pricing regulations, and the competitive landscape in DMD, ALS, and MDS.

Investor Verification Checklist

• Verify the receipt and timing of the $20.0 million milestone payment from Takeda for the ELRiSE MDS trial and the subsequent 25% distribution to stockholders.
• Monitor the progress and data readouts of the Phase 2 clinical trial for rinvatercept in DMD, with initial data expected in the first half of 2027.
• Assess the company's cash burn rate relative to the projected runway into the first half of 2028 and the potential need for future equity or debt financing.
• Review the status of the Takeda Transition Services Agreement to confirm no further service revenue is expected.
• Track the development of elritercept by Takeda in the global territory and Hansoh in the China territory, as these are the primary sources of potential future revenue.