Keros Therapeutics, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022. Keros is a clinical-stage biopharmaceutical company developing treatments for hematological and musculoskeletal disorders. It has no approved products and reported no revenue for the quarter.
Financial results and liquidity
| Metric | Q1 2022 | Q1 2021 / comparison |
|---|---|---|
| Revenue | $0 | $0 |
| Research and development expense | $18.1 million | $11.5 million |
| General and administrative expense | $6.0 million | $4.3 million |
| Total operating expenses | $24.1 million | $15.8 million |
| Net loss | $24.2 million | $15.9 million |
| Basic and diluted loss per share | $1.01 | $0.68 |
| Net cash used in operating activities | $1.4 million | $10.5 million |
Cash and cash equivalents were $228.6 million at March 31, 2022, down from $230.0 million at December 31, 2021. Total current assets were $231.2 million and current liabilities were $11.6 million. Stockholders’ equity was $223.5 million; accumulated deficit was $147.9 million. The company reported no debt subject to variable interest rates; lease-related obligations were its principal disclosed liabilities. No operating margin is meaningful because the company had no quarterly revenue.
Quarterly operating cash use was comparatively low in part because Keros collected an $18.0 million Hansoh receivable. Cash flow should therefore not be read as equivalent to the quarter’s $24.2 million net loss or as a recurring burn rate.
Changes versus the prior-year quarter
- Net loss increased by about $8.3 million, while operating expenses increased by about $8.4 million.
- R&D expense rose by $6.6 million, primarily reflecting KER-050 trial and manufacturing activity, increased personnel costs, and earlier-stage pipeline work. KER-012 and KER-047 expenses declined year over year.
- G&A expense increased by about $1.8 million, mainly from personnel costs and organizational growth.
- Operating cash use decreased by about $9.1 million, largely reflecting collection of the prior-period Hansoh receivable and timing changes in operating assets and liabilities.
Outlook, risks, and notable items
- Management stated that $228.6 million of cash and cash equivalents was expected to fund operating expenses and capital requirements into the first quarter of 2024. This forecast depends on assumptions that may prove incorrect; the company expects continuing losses and will likely need additional capital over time.
- Planned development milestones included additional Phase 2 KER-050 MDS data in mid-2022; initial data from its myelofibrosis-associated cytopenias Phase 2 trial by year-end 2022; initiation of two KER-047 Phase 2 trials in the first half of 2022 and initial data by year-end; and KER-012 Phase 1 data in Q2 and the second half of 2022. These are forward-looking expectations, not reported outcomes.
- The December 2021 Hansoh KER-050 license generated a net $18.0 million upfront payment received in January 2022; the upfront revenue was recognized in 2021. Keros may also receive up to $26.5 million in development milestones, up to $144.0 million in sales milestones, and tiered royalties, all contingent on future events.
- Key risks include clinical-trial uncertainty and enrollment delays, COVID-19 effects on trials and supply chains, reliance on single-source contract manufacturers and other third parties, competition, intellectual-property and regulatory risks, and the need for future financing. Keros noted difficulty enrolling for its rare-disease KER-047 IRIDA trial.
- The company reported no material legal proceedings, no material changes in contractual obligations, and effective disclosure controls as of March 31, 2022.
Investor verification points
- Check subsequent filings and company updates for whether the stated Q1 2024 cash runway remains achievable and how actual cash use compares with the forecast.
- Verify timing, enrollment, safety, and complete results for the KER-050, KER-047, and KER-012 trials; preliminary or interim results may change.
- Track R&D spending and cash-flow working-capital effects, especially the nonrecurring collection of the Hansoh receivable.
- Confirm progress toward Hansoh development and commercial milestones; potential milestone and royalty amounts are not guaranteed revenue.
- Assess potential dilution from the remaining $121.4 million ATM capacity and equity compensation; no ATM shares were issued in Q1 2022.