Keros Therapeutics, Inc. — Q1 2021 Form 10-Q
Reporting period: Three months ended March 31, 2021; comparisons are with Q1 2020 unless otherwise noted. Keros is a clinical-stage biopharmaceutical company developing treatments for hematological and musculoskeletal disorders. It has no approved products and reported no product revenue.
Financial performance and position
| Metric | Q1 2021 / March 31, 2021 | Q1 2020 / December 31, 2020 |
|---|---|---|
| Revenue | No product revenue | No product revenue |
| Research and development expense | $11.5 million | $8.5 million |
| General and administrative expense | $4.3 million | $2.0 million |
| Total operating expenses / operating loss | $15.8 million | $10.5 million |
| Net loss | $15.9 million | $11.9 million |
| Net loss per share, basic and diluted | $0.68 | $5.11 |
| Operating cash used | $10.5 million | $8.1 million |
| Cash and cash equivalents | $255.2 million | $265.9 million |
| Total assets / total liabilities | $257.7 million / $9.4 million | $269.4 million / $7.7 million |
As a pre-commercial company, gross margin is not applicable. Working capital was approximately $247.0 million at March 31. Keros reported no debt outstanding subject to variable interest rates; its reported obligations principally include operating lease liabilities. Accumulated deficit was $80.9 million.
Changes versus the prior comparable period
- Net loss increased by $4.0 million. R&D expense rose $3.0 million, including $4.3 million of increased KER-012 manufacturing and preclinical activity and higher personnel costs; lower KER-050 and KER-047 costs partly offset the increases.
- G&A expense increased $2.3 million, principally from higher personnel and stock-based compensation costs and public-company insurance expense.
- Q1 2020 included $1.5 million of expense from remeasurement of the preferred-stock tranche obligation; this did not recur in Q1 2021. The large difference in loss per share also reflects the substantially higher weighted-average share count after the 2020 IPO and preferred-stock conversion.
- Cash and cash equivalents declined $10.7 million from December 31, 2020. Financing cash flow was only $42,000 in Q1 2021, compared with $55.8 million in Q1 2020, primarily from the Series C preferred-stock financing.
Outlook, commentary and risks
- Management expects continued operating losses and negative operating cash flows as it advances its pipeline. The filing says cash was expected to fund operations for at least 12 months; a risk-factor passage separately projects funding into Q4 2023. These are estimates dependent on assumptions, not assurances.
- Pipeline milestones stated by management: initial KER-050 MDS Phase 2 data expected mid-2021; a KER-050 myelofibrosis Phase 2 trial planned for Q3 2021, with initial data expected in 2022; two KER-047 Phase 2 trials in IDA and IRIDA planned for the second half of 2021, with initial data expected in 2022; and KER-012 Phase 1 planned for the second half of 2021, with initial data expected in the first half of 2022. These are forward-looking targets.
- COVID-19 was causing or expected to cause disruption or delay to trial-site initiation, enrollment, assessments, supply, and development timelines. Keros relied on third parties, including single-source manufacturers for each of its three lead candidates.
- Key risks include clinical and regulatory uncertainty, the need for substantial additional capital, manufacturing and supplier dependence, competition, intellectual-property protection, and the possibility that trial delays or results differ from expectations. The company reported no material legal proceedings and stated that disclosure controls were effective.
- After quarter-end, Keros established an at-the-market offering allowing up to $150 million of common stock sales. The company is not obligated to sell shares; any issuance could dilute existing shareholders.
Important facts for investors to verify
- Whether trial initiation, enrollment, and data-readout timelines remain on track, particularly for KER-050, KER-047, and KER-012.
- How COVID-19, clinical supply, and reliance on single-source manufacturers affect development schedules and costs.
- The assumptions behind management’s cash-runway estimates, including the different “at least 12 months” and “into Q4 2023” statements.
- Whether the $150 million ATM facility is used, and the resulting financing proceeds, share dilution, and updated cash runway.
- Whether future clinical evidence supports safety and efficacy; all lead candidates remained in early clinical development or preclinical development at the reporting date.