Keros Therapeutics, Inc. — Q3 2021 Form 10-Q
Reporting period: Three and nine months ended September 30, 2021. Keros is a clinical-stage biotechnology company developing treatments for hematological and musculoskeletal disorders. It had no approved products and no product-sales revenue.
Financial performance and position
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0.1 million | $0 |
| Research and development | $14.8 million | $8.4 million | $36.3 million | $24.2 million |
| General and administrative | $5.4 million | $3.6 million | $15.3 million | $9.2 million |
| Net loss | $20.3 million | $12.0 million | $51.8 million | $34.7 million |
| Net loss per share, basic and diluted | $0.87 | $0.60 | $2.22 | $2.65 |
| Net cash used in operating activities | Not stated by quarter | $42.6 million | $28.9 million |
Revenue for the nine-month period was a one-time $0.1 million license fee from Neurona Therapeutics; there was no Q3 revenue. Operating and profit margins are not meaningful given the absence of product sales and continuing development-stage losses.
At September 30, 2021, cash and cash equivalents were $221.3 million, down from $265.9 million at December 31, 2020. Total assets were $230.0 million, total liabilities $11.5 million, and accumulated deficit $116.8 million. The filing reports no debt outstanding subject to variable interest rates; contractual obligations included $1.45 million for existing operating leases and a leasehold-improvement loan.
Changes versus prior comparable periods
- Q3 net loss increased to $20.3 million from $12.0 million, principally as R&D rose $6.4 million and G&A rose $1.8 million.
- Nine-month net loss increased to $51.8 million from $34.7 million. R&D increased $12.1 million, driven especially by KER-012 development and increased personnel costs; G&A increased $6.1 million.
- Nine-month operating cash use rose by $13.7 million to $42.6 million. Financing cash flow was only $0.1 million in 2021, versus $155.9 million in 2020, when IPO and preferred-stock proceeds were received.
- Loss per share improved year over year for the nine-month period, partly because the 2020 result included preferred-stock dividend accruals; Q3 loss per share worsened.
Outlook, programs, and key risks
- Runway: Management stated existing cash should fund operations for at least 12 months. Separately, the risk factors section estimated cash would fund operating expenses and capital needs into Q4 2023. Both estimates depend on assumptions and program spending; the filing says additional capital will be needed over time.
- Pipeline milestones: Keros expected additional KER-050 MDS data and initiation of the trial’s second part by year-end 2021; a KER-050 Phase 2 trial in myelofibrosis in Q4 2021, with initial data in 2022; KER-047 Phase 2 trials in IDA and IRIDA in Q1 2022, with initial data in 2022; and KER-012 Phase 1 data in the first half and second half of 2022 for Parts 1 and 2, respectively.
- KER-050 preliminary data: In a small, open-label MDS trial, as of the July 10, 2021 cutoff, 6 of 10 evaluable patients met at least one specified response endpoint. Among seven transfused evaluable patients, five had at least a 50% reduction in transfusion requirements and four achieved at least eight weeks of transfusion independence. Results were preliminary and subject to change. Keros reported no drug-related serious adverse events or dose-limiting toxicities at that cutoff; one moderate treatment-related rash resolved.
- Spending and financing: Keros expected R&D and G&A expenses to increase as trials, manufacturing, staffing, and public-company costs advance. It had an available $150 million at-the-market equity program but reported no sales under it through September 30, 2021. Future equity financing could dilute shareholders; funding may not be available on acceptable terms.
- Lease commitment: Keros signed a lease for approximately 35,662 square feet of new office and laboratory space, expected to commence in Q4 2022. The company expects $21.6 million of payments over the 8-year, 4-month term; base rent is initially $0.2 million per month after a four-month rent-free period.
- Principal risks: Clinical and regulatory uncertainty, early-stage evidence, trial enrollment and execution, reliance on single-source manufacturers and other third parties, intellectual-property protection, competition, and COVID-19-related delays or supply disruptions. Keros noted that open-label preliminary results may not predict controlled or later-stage outcomes.
- The company reported no material legal proceedings and stated disclosure controls were effective as of September 30, 2021.
Investor verification priorities
- Reconcile the stated cash-runway estimates: at least 12 months in the liquidity discussion versus into Q4 2023 in the risk factors, and assess the assumptions behind both.
- Review full and updated KER-050 results, including patient counts, durability, safety, and whether preliminary responses are confirmed in larger or controlled studies.
- Track actual trial starts, enrollment, data timing, and COVID-19 or manufacturing-related delays across KER-050, KER-047, and KER-012.
- Monitor quarterly operating cash use, planned spending, and any use of the ATM program or other financing, including potential dilution.
- Confirm the timing and financial impact of the new facilities lease and other future contractual commitments.