Keros Therapeutics, Inc. — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. Keros is a clinical-stage biopharmaceutical company with no approved products and no product-sales revenue. Its pipeline targets hematological and musculoskeletal diseases through TGF-β signaling pathways.
Financial performance and position
| Metric | FY2021 / Dec. 31, 2021 | FY2020 / Dec. 31, 2020 |
|---|---|---|
| Revenue | $20.1 million, entirely collaboration and licensing revenue | None |
| Research and development expense | $55.1 million | $33.9 million |
| General and administrative expense | $21.3 million | $12.8 million |
| Loss from operations | $56.4 million | $46.7 million |
| Net loss | $58.7 million | $45.4 million |
| Net loss per share, basic and diluted | $2.52 | $2.93 |
| Cash and cash equivalents | $230.0 million | $265.9 million |
| Net cash used in operating activities | $62.1 million | $36.9 million |
Cash, cash equivalents and restricted cash totaled $231.4 million at year-end. Current assets were $251.4 million versus current liabilities of $11.8 million. Total liabilities were $12.1 million; the filing reports no variable-rate debt outstanding. The company reported $243.2 million of stockholders’ equity and a $123.8 million accumulated deficit. Management expects year-end cash plus the $18.0 million net Hansoh payment received in January 2022 to fund operations and capital expenditures into the first quarter of 2024; this estimate depends on assumptions and spending may exceed expectations.
Changes versus 2020
- Revenue increased to $20.1 million, principally from recognizing a $20.0 million upfront KER-050 license payment from Hansoh; the remaining $0.1 million came from Neurona. The Hansoh payment was received in January 2022 and recorded as an $18.0 million receivable at year-end after $2.0 million withholding tax.
- Net loss rose by $13.4 million as operating expenses grew, partly offset by the one-time license revenue. R&D spending increased $21.3 million, led by KER-012, preclinical development and personnel; KER-047 spending declined following completion of its Phase 1 trial.
- G&A increased $8.5 million, including higher personnel, insurance and professional costs. Operating cash use increased $25.3 million year over year.
- Cash declined $35.8 million from year-end 2020. FY2021 financing provided $28.6 million, mainly from ATM share sales; FY2020 had raised $296.0 million through preferred stock, the IPO and a follow-on offering.
Pipeline, outlook and principal risks
- KER-050: Phase 2 trials for MDS and myelofibrosis-associated cytopenias. In an open-label MDS trial, preliminary data at the October 25, 2021 cutoff showed an overall erythroid response in 8 of 16 evaluable patients; 5 of 11 transfused patients achieved at least eight weeks of transfusion independence. The company reported no drug-related serious adverse events or dose-limiting toxicities among 24 treated patients at that cutoff. Results are preliminary and require confirmation.
- KER-047: Phase 1 in healthy volunteers completed. The company expected to start open-label Phase 2 trials for iron deficiency anemia and IRIDA in the first half of 2022, with initial data expected by year-end 2022. IRIDA is rare and may pose enrollment challenges.
- KER-012: Phase 1 in healthy volunteers began in September 2021. Initial Part 1 data were expected in the second quarter of 2022, with additional Part 2 data expected in the second half. Proposed uses include PAH and bone-loss disorders; supporting evidence described in the filing is preclinical.
- Hansoh agreement: Exclusive KER-050 rights in mainland China, Hong Kong and Macau. In addition to the upfront payment, Keros may receive up to $26.5 million in development milestones, up to $144.0 million in sales milestones, and tiered royalties in the low-double-digit to high-teens range, subject to reductions. These amounts are contingent, not guaranteed.
- Management cited rising development costs and ongoing operating losses; further funding may be needed if programs, timing or spending diverge from plan. The company had $121.4 million remaining under its $150.0 million ATM facility at year-end, but future equity issuance could dilute shareholders.
- Clinical, regulatory and manufacturing execution remain significant risks. COVID-19 could affect trial enrollment, sites, supply and timelines. Keros relies on third parties, including single-source manufacturers for its candidates, and had no redundant supply arrangements. Competition, intellectual-property protection, reimbursement and the ability to obtain regulatory approval are additional material risks.
- A new 35,662-square-foot lease was signed for the planned headquarters and laboratory space. Management expected occupancy in late 2022; the filing estimates $21.6 million of rent over the eight-year-and-four-month lease term, with base rent beginning four months after commencement.
Key facts for investors to verify
- Reconcile the $20.0 million Hansoh upfront revenue recognition, $2.0 million withholding tax and $18.0 million receivable/payment timing in the audited statements.
- Review the full MDS trial dataset, patient counts, response definitions, durability and safety; do not treat preliminary open-label results as confirmatory evidence.
- Track trial starts, enrollment and reported data for KER-050, KER-047 and KER-012 against the stated 2022 timelines.
- Assess the assumptions behind the first-quarter 2024 cash runway, quarterly cash burn, remaining ATM capacity and potential dilution.
- Monitor Hansoh’s development progress and contingent milestones, and verify the new lease commencement and resulting cash commitments.