Keros Therapeutics, Inc. — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 2023; filed May 4, 2023. Keros is a clinical-stage biopharmaceutical company developing treatments for hematological, pulmonary and cardiovascular disorders. It has no approved products and reported no revenue in the quarter.
Financial results and position
| Metric | Q1 2023 | Q1 2022 / comparison |
|---|---|---|
| Revenue | $0 | $0 |
| Research and development expense | $31.1 million | $18.1 million |
| General and administrative expense | $7.8 million | $6.0 million |
| Total operating expenses / operating loss | $38.9 million | $24.1 million |
| Other income, net | $3.1 million | Expense of $0.1 million |
| Net loss | $35.8 million | $24.2 million |
| Net loss per share, basic and diluted | $1.26 | $1.01 |
| Cash and cash equivalents at period-end | $351.4 million | $279.0 million at Dec. 31, 2022 |
| Net cash used in operating activities | $34.2 million | $1.4 million |
| Net cash used in investing activities | $1.1 million | $0.1 million |
| Net cash provided by financing activities | $107.7 million | $0.1 million |
R&D expense increased $13.0 million year over year, mainly from KER-050 and KER-012 manufacturing and development, increased personnel costs, and platform and facility spending. G&A rose about $1.7 million, primarily due to personnel and professional costs. Other income increased chiefly because of dividend income. Operating and profit margins are not meaningful given the absence of revenue.
At March 31, 2023, total assets were $384.4 million, current assets $362.2 million, current liabilities $15.5 million, total liabilities $29.5 million, and stockholders’ equity $355.0 million. The company reported no conventional debt subject to variable interest rates; liabilities primarily include operating leases. Operating lease liabilities were $14.0 million, with total undiscounted lease payments of $22.0 million. Accumulated deficit was $264.2 million.
Material changes and financing
- Operating cash use rose substantially from Q1 2022, when cash flows benefited from collection of an $18.0 million receivable related to the Hansoh upfront payment.
- Keros raised $107.3 million net through its at-the-market offering, selling 1,990,927 shares at a weighted-average price of $54.74. Shares outstanding increased to 29.55 million from 27.54 million at year-end 2022. Up to $141.0 million remained available under the ATM program at quarter-end.
- Cash, cash equivalents and restricted cash totaled $352.8 million at quarter-end. Money market funds accounted for $346.7 million of cash and cash equivalents.
Outlook, risks and notable items
- Management stated that $351.4 million in cash and cash equivalents was expected to fund operations for at least 12 months. Elsewhere in the risk-factor discussion, the filing estimates funding into the fourth quarter of 2025. These statements use different horizons; the runway is dependent on assumptions and spending and should not be treated as assured.
- Management expects operating losses and negative operating cash flows to continue, with R&D spending likely to rise as trials advance. No product revenue or profitability guidance was provided.
- As of the filing, expected development milestones included completing enrollment in transfusion-dependent KER-050 MDS cohorts in the second half of 2023; additional KER-050 MDS data in the first and second halves of 2023; KER-050 myelofibrosis dose-escalation data and Part 2 initiation in the second half of 2023; additional KER-047 IRIDA data in the second half of 2023; and planned KER-047 functional-iron-deficiency trial initiation in the first half of 2023, with initial data expected in the second half. KER-012 PAH Phase 2 initiation was expected in the first half of 2023, with a biomarker trial expected in the second half. These were forward-looking expectations, not reported outcomes.
- Key risks include clinical-trial failure or delays, difficulty enrolling patients (particularly in rare IRIDA), safety and regulatory uncertainty, reliance on single-source contract manufacturers and other third parties, need for future capital, potential dilution, competition, intellectual-property risks, and inflation, supply-chain and broader market disruptions.
- The new Lexington facility’s rent was scheduled to begin in November 2023, initially at approximately $0.2 million per month, with the lease running through November 2031. Management reported effective disclosure controls and no material legal proceedings.
Investor verification priorities
- Reconcile the filing’s stated cash-runway estimates: at least 12 months in the liquidity discussion versus into Q4 2025 in the risk factors, and assess the assumptions behind each.
- Check subsequent clinical-trial enrollment, data releases and initiation dates against the expectations stated in this filing.
- Track R&D spending, operating cash burn and remaining ATM capacity; assess dilution from the quarter’s equity issuance and future financing needs.
- Monitor manufacturing capacity and vendor concentration, trial enrollment and safety updates, and whether inflation or supply constraints affect timelines or costs.