kros-20250331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________________________

FORM 10-Q

________________________________________

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-39264

________________________________________

KEROS THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

________________________________________


Delaware		81-1173868
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)
1050 Waltham Street,	Suite 302	02421
Lexington,	Massachusetts
(Address of principal executive offices)		(Zip Code)

Tel: (617) 314-6297

(Registrant's telephone number, including area code)

________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, $0.0001 par value per share

KROS

The Nasdaq Stock Market LLC

Preferred Share Purchase Rights

N/A

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☑ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☑ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☑

Accelerated Filer

☐

Non-Accelerated Filer

☐

Smaller Reporting Company

☐

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☑ No

As of May 1, 2025, there were 40,615,414 outstanding shares of the registrant's common stock, par value $0.0001 per share.

TABLE OF CONTENTS


		Page
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS		2
SPECIAL NOTE REGARDING COMPANY REFERENCES		3
SPECIAL NOTE REGARDING TRADEMARKS		3
SUMMARY OF SELECTED RISKS ASSOCIATED WITH OUR BUSINESS		4

PART I.	FINANCIAL INFORMATION	5
Item 1.	Financial Statements (Unaudited)	5
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Operations	6
	Condensed Consolidated Statements of Stockholders’ Equity	7
	Condensed Consolidated Statements of Cash Flows	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	30

PART II.	OTHER INFORMATION	30
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	85
Item 3.	Defaults Upon Senior Securities	85
Item 4.	Mine Safety Disclosures	85
Item 5.	Other Information	85
Item 6.	Exhibits	87
Signatures

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q are forward-looking statements, including statements about:

▪the timing of announcement of data from our Phase 2 clinical trial for our product candidate, cibotercept (KER-012), in patients with pulmonary arterial hypertension;

▪the timing of engagement with regulatory authorities and initiation of a Phase 2 clinical trial of our second product candidate, KER-065, in patients with Duchenne muscular dystrophy;

▪risks associated with public health crises, which may adversely impact our business, preclinical studies and clinical trials;

▪our ability to receive the required regulatory approvals and clearances to successfully market and sell our products, if approved in the United States and certain other countries;

▪our ability to successfully advance our pipeline of additional product candidates;

▪our ability to develop sales and marketing capabilities;

▪the rate and degree of market acceptance of any products we are able to commercialize;

▪the effects of increased competition as well as innovations by new and existing competitors in our market;

▪our ability to obtain funding for our operations;

▪our ability to establish and maintain collaborations;

▪our ability to effectively manage our anticipated growth;

▪our ability to maintain, protect and enhance our intellectual property rights and proprietary technologies;

▪our ability to operate our business without infringing the intellectual property rights and proprietary technology of third parties;

▪costs associated with defending intellectual property infringement, product liability and other claims;

▪regulatory developments in the United States, Australia, New Zealand, Europe, the United Kingdom and other foreign countries;

▪our ability to attract and retain qualified employees;

▪statements regarding future revenue, hiring plans, expenses, capital expenditures, capital requirements and stock performance;

▪our review of strategic alternatives, the timing for providing a preliminary update regarding the status of this process and the outcome of such review; and

▪the future trading prices of our common stock and the impact of securities analysts’ reports on these prices.

In some cases, you can identify forward-looking statements by the words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “objective,” “ongoing,” “plan,” “predict,” “project,” “potential,” “should,” “will,” or “would,” or the negative of these terms, or other comparable terminology intended to identify statements about the future. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

You should read the section titled “Risk Factors” set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. As a result of these factors, we cannot assure you that the forward-looking statements in this Quarterly Report on Form 10-Q will prove to be

accurate. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

You should read this Quarterly Report on Form 10-Q, completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

SPECIAL NOTE REGARDING COMPANY REFERENCES

Throughout this Quarterly Report on Form 10-Q, “Keros,” the “Company,” “we,” “us” and “our” refer to Keros Therapeutics, Inc. and its subsidiaries.

SPECIAL NOTE REGARDING TRADEMARKS

All trademarks, trade names and service marks appearing in this Quarterly Report on Form 10-Q are the property of their respective owners.

SUMMARY OF SELECTED RISKS ASSOCIATED WITH OUR BUSINESS

Our business faces significant risks and uncertainties. If any of the following risks are realized, our business, financial condition and results of operations could be materially and adversely affected. You should carefully review and consider the full discussion of our risk factors in the section titled “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q. Some of the more significant risks include the following:

•We have a limited operating history, have incurred net losses in every year since our inception and anticipate that we will continue to incur net losses in the future.

•We will need substantial additional funding in order to complete the development and commence commercialization of our product candidates. Failure to obtain this necessary capital when needed may force us to delay, reduce or eliminate certain of our product development or research operations.

•We are heavily dependent on the success of our product candidates, which are in clinical development. If we are unable to advance our current or future product candidates through clinical trials, obtain marketing approval and ultimately commercialize any product candidates we develop, or experience significant delays in doing so, our business will be materially harmed.

•All of our product candidates are in preclinical or clinical development stages. Clinical trials are difficult to design and implement, and they involve a lengthy and expensive process with uncertain outcomes. We may experience delays in completing, or ultimately be unable to complete, the development and commercialization of cibotercept (KER-012), KER-065, elritercept (KER-050) or any future product candidates.

•If we are unable to successfully commercialize any product candidate for which we receive regulatory approval, or experience significant delays in doing so, our business will be materially harmed.

•We face significant competition from other biotechnology and pharmaceutical companies, and our operating results will suffer if we fail to compete effectively.

•Our success depends in part on our ability to protect our intellectual property. It is difficult and costly to protect our proprietary rights and technology, and we may not be able to ensure their protection.

•We rely, and expect to continue to rely, on third parties, including independent clinical investigators, contracted laboratories and contract research organizations, to conduct our preclinical studies and clinical trials. If these third parties do not successfully carry out their contractual duties or meet expected deadlines, we may not be able to obtain regulatory approval for or commercialize our product candidates and our business could be substantially harmed.

•We rely on third parties to supply and manufacture our product candidates, and we expect to continue to rely on third parties to manufacture our products, if approved. The development of such product candidates and the commercialization of any products, if approved, could be stopped, delayed or made less profitable if any such third party fails to provide us with sufficient quantities of product candidates or products or fails to do so at acceptable quality levels or prices or fails to maintain or achieve satisfactory regulatory compliance.

•We are dependent on our existing third-party collaborations with Takeda Pharmaceuticals U.S.A., Inc., or Takeda, and Hansoh (Shanghai) Healthtech Co., Ltd., or Hansoh, to commercialize elritercept, and if Takeda and Hansoh are not successful in commercializing elritercept in their respective licensed territories, we will lose a significant source of potential revenue.

•Our current and future collaborations are and will be important to our business. If we are unable to enter into new collaborations, or if these or our current collaborations are not successful, our business could be adversely affected.

•Public health crises could adversely impact our business, including the timing or results of our preclinical studies and clinical trials.

•Our strategic alternatives review process may not result in an executed or consummated transaction or other strategic alternative, and the process of reviewing strategic alternatives or its conclusion could adversely affect our business and our stockholders.

PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS (unaudited)

KEROS THERAPEUTICS, INC.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)

(Unaudited)


	MARCH 31, 2025		DECEMBER 31, 2024
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	720,541	$	559,931
Accounts receivable	17,291		2,742

Prepaid expenses and other current assets	21,677		26,220


Total current assets	759,509		588,893
Operating lease right-of-use assets	18,667		19,251
Property and equipment, net	4,473		4,237
Restricted cash	1,449		1,449
Other long-term assets	463		2,056
TOTAL ASSETS	$	784,561	$	615,886
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	6,636	$	4,602
Current portion of operating lease liabilities	2,102		1,978
Accrued expenses and other current liabilities	17,290		20,870
Deferred revenue	3,308		—
Current tax liability	10,043		—
Total current liabilities	39,379		27,450
Operating lease liabilities, net of current portion	16,311		16,883


Total liabilities	55,690		44,333

STOCKHOLDERS' EQUITY:
Preferred stock, par value of $0.0001 per share; 10,000,000 shares authorized as of March 31, 2025 and December 31, 2024; no shares issued and outstanding	—		—
Common stock, par value of $0.0001 per share; 200,000,000 shares authorized as of March 31, 2025 and December 31, 2024; 40,562,047 and 40,554,705 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively	4		4
Additional paid-in capital	1,149,195		1,140,328
Accumulated deficit	(420,328)		(568,779)
Total stockholders' equity	728,871		571,553
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	784,561	$	615,886

See notes to condensed consolidated financial statements.

KEROS THERAPEUTICS, INC.

Condensed Consolidated Statements of Operations

(In thousands, except share and per share data)

(Unaudited)


	THREE MONTHS ENDED MARCH 31,
	2025		2024
REVENUE:
Service and other revenue	$	15,891	$	83
License revenue	195,355		—
Total revenue	211,246		83
OPERATING EXPENSES:
Research and development	(48,709)		(38,258)
General and administrative	(10,497)		(10,308)
Total operating expenses	(59,206)		(48,566)
INCOME (LOSS) FROM OPERATIONS	152,040		(48,483)
OTHER INCOME (EXPENSE), NET



Dividend income	6,792		5,806
Other expense, net	(338)		(437)
Total other income, net	6,454		5,369
Income (loss) before income taxes	158,494		(43,114)
Income tax provision	(10,043)		—
Net income (loss)	$	148,451	$	(43,114)

Net income (loss) attributable to common stockholders — basic and diluted (Note 8)	$	148,451	$	(43,114)

Weighted-average shares of common stock outstanding — basic	40,559,355		35,685,422
Weighted-average shares of common stock outstanding — diluted	41,021,325		35,685,422

Net income (loss) per share of common stock — basic	$	3.66	$	(1.21)
Net income (loss) per share of common stock — diluted	$	3.62	$	(1.21)

See notes to condensed consolidated financial statements.

KEROS THERAPEUTICS, INC.

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands, except share and per share data)

(Unaudited)



	COMMON STOCK $0.0001 PAR VALUE			ADDITIONAL PAID-IN CAPITAL		ACCUMULATED DEFICIT		TOTAL STOCKHOLDERS’ EQUITY

	SHARES	AMOUNT
As of December 31, 2024	40,554,705	$	4	$	1,140,328	$	(568,779)	$	571,553

Exercise of common stock options	7,342	—		4		—		4
Stock-based compensation	—	—		8,863		—		8,863
Net income (loss)	—	—		—		148,451		148,451
As of March 31, 2025	40,562,047	$	4	$	1,149,195	$	(420,328)	$	728,871











	COMMON STOCK $0.0001 PAR VALUE			ADDITIONAL PAID-IN CAPITAL		ACCUMULATED DEFICIT		TOTAL STOCKHOLDERS’ EQUITY

	SHARES	AMOUNT
As of December 31, 2023	31,841,084	$	3	$	713,636	$	(381,426)	$	332,213
Issuance of common stock, net of underwriting discounts, commissions, and offering costs of $9,943	4,025,000	—		151,057		—		151,057
Exercise of common stock options	201,702	—		5,721		—		5,721
Stock-based compensation	—	—		8,070		—		8,070
Net income (loss)	—	—		—		(43,114)		(43,114)
As of March 31, 2024	36,067,786	$	3	$	878,484	$	(424,540)	$	453,947

See notes to condensed consolidated financial statements.

KEROS THERAPEUTICS, INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


	THREE MONTHS ENDED MARCH 31,
	2025		2024
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	148,451	$	(43,114)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation expense	344		277

Stock-based compensation expense	8,863		8,070

Non-cash lease expense	584		339
Changes in operating assets and liabilities:
Accounts receivable	(14,549)		(83)


Prepaid expenses and other current assets	4,543		(4,478)
Other assets	1,593		—
Accounts payable	2,019		23
Right-of-use assets and operating lease liabilities	(448)		(240)
Deferred revenue	3,308		—
Current tax liability	10,043		—
Accrued expenses and other current liabilities	(3,580)		(5,354)

Net cash provided by (used in) operating activities	161,171		(44,560)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(565)		(946)
Net cash used in investing activities	(565)		(946)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock, net of underwriting discounts	—		151,340
Payment of issuance costs	—		(259)


Proceeds from exercise of stock options	4		5,721
Net cash provided by financing activities	4		156,802

NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	160,610		111,296
Cash, cash equivalents and restricted cash at beginning of period	561,380		332,359
Cash, cash equivalents and restricted cash at end of period	$	721,990	$	443,655

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:


Property and equipment purchases in accounts payable and accrued expenses	$	15	$	230

The following table provides a reconciliation of the ending cash, cash equivalents and restricted cash as of each of the periods shown above:


	MARCH 31,
	2025		2024
Cash and cash equivalents	$	720,541	$	442,443
Restricted cash	1,449		1,212
Total cash, cash equivalents and restricted cash	$	721,990	$	443,655

See notes to condensed consolidated financial statements.

KEROS THERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. NATURE OF BUSINESS AND BASIS OF PRESENTATION

Keros Therapeutics, Inc. (“Keros” or the “Company”) was incorporated in 2015 as a Delaware corporation. Its principal offices are in Lexington, Massachusetts. The Company is a clinical-stage biopharmaceutical company focused on developing and commercializing novel therapeutics to treat a wide range of patients with disorders that are linked to dysfunctional signaling of the transforming growth factor-beta (“TGF-ß”) family of proteins.

One of the Company’s product candidates, cibotercept (KER-012), is being developed for the treatment of pulmonary arterial hypertension (“PAH”) and for the treatment of cardiovascular disorders. The Company's second product candidate, KER-065, is being developed for the treatment of neuromuscular diseases. The Company’s most advanced product candidate, elritercept (KER-050), is being developed for the treatment of low blood cell counts (“cytopenias”), including anemia and thrombocytopenia, in patients with myelodysplastic syndromes (“MDS”) and in patients with myelofibrosis.

Since its inception in 2015, the Company has devoted the majority of its resources to business planning, research and development of its product candidates, including conducting clinical trials and preclinical studies, raising capital and recruiting management and technical staff to support these operations. To date, the Company has not generated any revenue from product sales as none of its product candidates have been approved for commercialization.

Liquidity and Capital Resources

The Company’s condensed consolidated financial statements have been prepared on the basis of the Company continuing as a going concern for the next 12 months. Management believes that the Company’s existing cash and cash equivalents as of March 31, 2025 will allow the Company to continue its operations for at least the next 12 months. In the absence of a significant source of recurring revenue, the continued viability of the Company is dependent on its ability to continue to raise additional capital to finance its operations. If the Company is unable to obtain additional funding, the Company may be forced to delay, reduce or eliminate some or all of its research and development programs, product portfolio expansion or commercialization efforts, which could adversely affect its business prospects, or the Company may be unable to continue operations.

The accompanying unaudited interim condensed consolidated financial statements as of March 31, 2025 and for the three months ended March 31, 2025 and 2024 have been prepared by the Company in conformity with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and, pursuant to the rules and regulations of Article 10 of Regulation S-X of the Securities Act published by the Securities and Exchange Commission (“SEC”) for interim financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. However, the Company believes the disclosures are adequate to make the information presented not misleading. These unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto for the year ended December 31, 2024 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on February 26, 2025 (the “Annual Report”).

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Significant Accounting Policies

The significant accounting policies and estimates used in preparation of the unaudited interim condensed consolidated financial statements are described in the Company’s audited consolidated financial statements as of and for the year ended December 31, 2024, and the notes thereto, which are included in the Annual Report. Except as detailed below, there have been no changes to the Company’s significant accounting policies during the three months ended March 31, 2025.

Stock-Based Compensation

The Company accounts for all stock-based awards granted to employees and non-employees as stock-based compensation expense at fair value. The Company’s stock-based awards include stock options, restricted stock unit ("RSU") awards and performance-based stock options. The measurement date for employee and non-employee awards is the date of grant. For stock-based awards that vest based on service conditions, stock-based compensation costs are recognized as expense over the requisite service period, which is the vesting period, on a straight-line basis. For stock options with performance

conditions, stock-based compensation costs are recognized as expense using the accelerated attribution method when it is probable that the performance condition will be achieved. Stock-based compensation expense is classified in the accompanying consolidated statement of operations based on the function to which the related services are provided. Forfeitures are recorded as they occur.

The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The Company lacks company-specific historical and implied volatility information. Therefore, it estimates its expected stock volatility based on the historical volatility of a publicly traded set of peer companies weighted with its own volatility for the period in which its stock has been publicly traded. The expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends on common stock and does not expect to pay any cash dividends in the foreseeable future.

Recently Issued Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU No. 2023-09”). ASU No. 2023-09 requires a public business entity to disclose, on an annual basis, a tabular rate reconciliation using both percentages and currency amounts, broken out into specified categories with certain reconciling items further broken out by nature and jurisdiction to the extent those items exceed a specified threshold. In addition, all entities are required to disclose income taxes paid, net of refunds received disaggregated by federal, state/local and foreign and by jurisdiction if the amount is at least 5% of total income tax payments, net of refunds received. The new standard is effective for annual periods beginning after December 15, 2024, with early adoption permitted. An entity may apply the amendments in ASU No. 2023-09 prospectively by providing the revised disclosures for the period ending December 31, 2025 and continuing to provide the pre-ASU No. 2023-09 disclosures for the prior periods, or may apply the amendments retrospectively by providing the revised disclosures for all period presented. The Company is currently evaluating the impact of ASU No. 2023-09 on its consolidated financial statements and related disclosures.

In November 2024, the Financial Accounting Standards Board issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU No. 2024-03”), which intends to improve financial reporting by requiring disclosure of additional information about specific expense categories. This guidance is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Early adoption is permitted and the guidance is to be applied prospectively and may be applied retrospectively. The Company is currently evaluating the impact of this guidance on its consolidated financial statements and related disclosures.

Risks and Uncertainties

There have been significant disruptions to global financial markets that have contributed to a general global economic slowdown. While recent trends towards rising inflation have eased, prices continue to rise, which may materially affect the Company’s business and corresponding financial position and cash flows. Inflationary factors, such as increases in the cost of materials and supplies relating to the Company’s preclinical studies and clinical trials, interest rates and overhead costs may adversely affect its operating results. Rising interest rates and implementation of tariffs present a recent challenge impacting the U.S. economy and could make it more difficult for the Company to obtain traditional financing on acceptable terms, if at all, in the future. Although the Company does not believe that inflation, higher interest rates or tariffs have had a material impact on its financial position or results of operations to date, the Company may experience increases in the near future (especially if inflation rates rise more quickly) on its operating costs, including its labor costs and research and development costs, due to supply chain constraints, consequences associated with public health crises and global geopolitical tensions, such as the ongoing war between Russia and Ukraine and the war in Israel, worsening global macroeconomic conditions and employee availability and wage increases, which may result in additional stress on the Company’s working capital resources. As of the date of issuance of these financial statements, the Company is not aware of any specific event or circumstance that would require the Company to update its estimates, assumptions and judgments or revise the carrying value of its assets or liabilities. Actual results could differ from those estimates, and any such differences may be material to the Company’s financial statements.

In addition, the Company is subject to other challenges and risks specific to its business and its ability to execute on its business plan and strategy, as well as risks and uncertainties common to companies in the biopharmaceutical industry with research and development operations, including, without limitation, risks and uncertainties associated with: obtaining regulatory approval of its product candidates; delays or problems in obtaining clinical supply, loss of single source suppliers or failure to comply with manufacturing regulations; product development and the inherent uncertainty of clinical success; the

challenges of protecting and enhancing its intellectual property rights; the challenges of complying with applicable regulatory requirements; and identifying, acquiring or in-licensing additional products or product candidates.

3. FAIR VALUE MEASUREMENTS

The following table presents information about the Company’s financial assets and liabilities measured at fair value on a recurring basis and indicates the level of the fair value hierarchy utilized to determine such fair values (in thousands):


DESCRIPTION	MARCH 31, 2025		QUOTED PRICES ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 3)
Assets
Money market funds	$	713,936	$	713,936	$	—	$	—
Total financial assets	$	713,936	$	713,936	$	—	$	—


DESCRIPTION	DECEMBER 31, 2024		QUOTED PRICES ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 3)
Assets
Money market funds	$	556,064	$	556,064	$	—	$	—
Total financial assets	$	556,064	$	556,064	$	—	$	—

There have been no transfers between fair value levels during the three months ended March 31, 2025. The carrying values of other current assets, accounts payable and accrued expenses approximate their fair values due to the short-term nature of these assets and liabilities.

4. PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consisted of the following (in thousands):


	MARCH 31, 2025		DECEMBER 31, 2024
Prepaid external R&D costs	$	14,587	$	15,748
Prepaid external manufacturing costs	449		5,545

Prepaid sales tax	275		121


Prepaid insurance	210		651
Prepaid subscriptions	1,134		960
Interest and dividend receivable	2,083		1,714
Other	2,939		1,481
Total prepaid expenses and other current assets	$	21,677	$	26,220

5. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consisted of the following (in thousands):


	MARCH 31, 2025		DECEMBER 31, 2024
Accrued external R&D costs	$	6,605	$	5,139
Accrued external manufacturing costs	3,402		4,308
Accrued compensation and benefits	5,292		10,130

Accrued legal and consulting fees	1,459		877
Other	532		416
Total accrued expenses and other current liabilities	$	17,290	$	20,870

Accrued compensation and benefits consisted primarily of accrued payroll and accrued vacation.

6. COMMON STOCK

As of March 31, 2025, the Company’s amended and restated certificate of incorporation authorized the Company to issue 200,000,000 shares of common stock at a par value of $0.0001 per share.

On January 8, 2024, the Company closed an underwritten public offering in which 4,025,000 shares of common stock were issued and sold, which included 525,000 shares of common stock issued and sold pursuant to the full exercise of the underwriters’ option to purchase additional shares, at a public offering price of $40.00 per share. The aggregate net proceeds to the Company from the public offering were approximately $151.1 million, after deducting underwriting discount, commissions and offering expenses.

7. STOCK-BASED COMPENSATION

2017 Stock Incentive Plan

The Board adopted the 2017 Stock Incentive Plan (the "2017 Plan") in February 2017, and the stockholders approved the 2017 Plan in March 2017. The 2017 Plan was most recently amended in March 2020.

As of March 31, 2025, there was an aggregate of 470,410 shares of common stock issuable upon the exercise of outstanding options under the 2017 Plan. Any options or awards outstanding under the 2017 Plan remain outstanding and effective.

2020 Equity Incentive Plan

In April 2020, the 2020 Equity Incentive Plan (the "2020 Plan") became effective, and, as a result, no further awards will be made under the 2017 Plan. The 2020 Plan provides for the grant of stock options qualifying as incentive stock options ("ISOs"), to employees and for the grant of nonstatutory stock options ("NSOs"), restricted stock awards, RSU awards, stock appreciation rights, performance stock awards and other forms of stock compensation to employees, consultants and directors. The 2020 Plan also provides for the grant of performance cash awards to employees, consultants and directors. Any previously granted awards under the 2017 Plan will remain outstanding in accordance with their respective terms.

Under the 2020 Plan, there is an annual increase on January 1 of each year from January 1, 2021 continuing through January 1, 2030, by 4.0% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares as may be determined by the Board. On January 1, 2025, the Company increased the number of shares available for future grant under the 2020 Plan by 1,622,188 shares. The awards granted under the 2020 Plan typically vest over a two- to four-year period and have a 10-year contractual term.

As of March 31, 2025, there was an aggregate of 4,869,232 shares of common stock issuable upon the exercise of outstanding options and 882,775 shares of common stock issuable upon the vesting of the outstanding RSU awards under the 2020 Plan. Additionally, there were an aggregate of 1,638,806 shares reserved for future issuance under the 2020 Plan, including shares forfeited from the 2017 Plan.

Restricted Stock Units

A summary of RSU award activity during the three months ended March 31, 2025 is as follows (in thousands except share and per share data):


	Number of Units	Weighted Average Grant-Date Fair Value
Outstanding RSU awards as of December 31, 2024	—	$	—
Granted	898,175	10.56
Vested	—	—
Forfeited	(15,400)	10.56
Outstanding RSU awards as of March 31, 2025	882,775	$	10.56

As of March 31, 2025, there was approximately $9.0 million of unrecognized stock-based compensation expense related to RSU awards that is expected to vest. These costs are expected to be recognized over a weighted-average remaining vesting period of approximately 1.93 years.

The aggregate fair value of RSU awards that vested during the three months ended March 31, 2025 and 2024 was zero and zero, respectively.

Stock Options

A summary of option activity during the three months ended March 31, 2025 is as follows (in thousands except share and per share data):


	NUMBER OF OPTIONS	WEIGHTED-AVERAGE EXERCISE PRICE
Outstanding as of December 31, 2024	5,384,760	$	42.19
Granted	—	—
Exercised	(7,342)	0.48
Cancelled or Forfeited	(37,776)	58.67
Expired	—	$	—
Outstanding as of March 31, 2025	5,339,642	$	42.13

Options exercisable as of March 31, 2025	3,309,432	$	35.27

The summary of option activity includes performance-based stock options granted during 2024. As of March 31, 2025, there has been no expense recognized for the performance-based stock options. The weighted-average grant date fair value price per share of options granted during the three months ended March 31, 2025 and 2024 was $0.00 and $40.72, respectively. As of March 31, 2025, there was $72.0 million of unrecognized stock-based compensation expense related to unvested stock options, including $4.9 million of unrecognized stock-based compensation expense related to unvested performance-based stock options. The unrecognized stock-based compensation expense is estimated to be recognized over a period of 2.27 years.

The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the Company’s common stock. The aggregate intrinsic value of the stock options outstanding and stock options exercisable was $4.6 million and $4.6 million as of March 31, 2025, respectively. The aggregate intrinsic value of stock options exercised was $0.1 million and $5.7 million during the three months ended March 31, 2025 and 2024, respectively.

2020 Employee Stock Purchase Plan

In March 2020, the Board adopted and the Company's stockholders approved the 2020 Employee Stock Purchase Plan ("ESPP"). The ESPP became effective on April 7, 2020. Under the ESPP, eligible employees can purchase shares of the Company's common stock, based on a percentage of their compensation, subject to certain limits. The purchase price per

share is equal to the lower of 85% of the fair market value of the Company's common stock on the first trading day of the twenty-four month offering period, or on the applicable purchase date. Each offering under the ESPP consists of two twelve-month purchase periods.

Under the ESPP, there is an annual increase on January 1 of each year from January 1, 2021 continuing through January 1, 2030, by the lesser of (i) 1.0% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year, (ii) 455,852 shares or (iii) or a lesser number of shares as may be determined by the Board. On January 1, 2025, the Company increased the number of shares available for future grant under the ESPP by 405,547 shares. If purchase rights granted under the ESPP terminate without having been exercised, the shares of our common stock not purchased under such purchase rights will again become available for issuance under the ESPP.

As of March 31, 2025, no shares of common stock were purchased under the ESPP. As of March 31, 2025, there was an aggregate of 1,653,408 shares reserved for future issuance under the ESPP.

Stock-Based Compensation Expense

Total stock-based compensation expense recorded for employees, directors and non-employees during the three months ended March 31, 2025 and 2024 was as follows (in thousands):


	THREE MONTHS ENDED MARCH 31,
	2025		2024
Research and development	$	5,265	$	3,902
General and administrative	3,598		4,168
Total stock-based compensation expense	$	8,863	$	8,070

8. INCOME (LOSS) PER SHARE

Basic and diluted income (loss) per share of common stock are calculated as follows (in thousands, except share and per share data):


	THREE MONTHS ENDED MARCH 31,
	2025		2024
Numerator:


Net income (loss) attributable to common stockholders - basic and diluted	$	148,451	$	(43,114)
Denominator:
Weighted-average shares of common stock outstanding - basic	40,559,355		35,685,422
Effect of potentially dilutive stock options	460,730		—
Effect of potentially dilutive employee stock purchase plan shares	914		—
Effect of potentially dilutive restricted stock units	326		—
Total potentially dilutive securities	461,970		—
Weighted-average shares of common stock outstanding used to compute diluted net loss	41,021,325		35,685,422
Net income (loss) per share of common stock
Basic	$	3.66	$	(1.21)
Diluted	$	3.62	$	(1.21)

The Company excluded the following from the computation of diluted net income (loss) per share attributable to common stockholders as of March 31, 2025 and 2024 because including them would have had an anti-dilutive effect:


	MARCH 31, 2025	MARCH 31, 2024
Restricted stock unit awards

SEC Form 10-Q filed by Keros Therapeutics Inc.