Keros Therapeutics, Inc.

Previous wording

Our second product candidate, KER-065, is designed to bind to and inhibit TGF-ß ligands, including myostatin (GDF8) and activin A, which are negative regulators of muscle and bone mass and strength. Through inhibition of these TGF-ß ligands, we believe that KER-065 has the potential to increase skeletal muscle regeneration, increase muscle size and strength, reduce body fat, reduce fibrosis of the skeletal muscle and increase bone strength. We are developing KER-065 for the treatment of neuromuscular disorders, with an initial focus on Duchenne muscular dystrophy, or DMD. Glucocorticoids, the standard of care in DMD, can have significant side effects when used long-term, including catabolism of muscle, increased fat and accelerated bone loss. In March 2025, we announced initial topline results from the Phase 1 clinical trial of KER-065 in healthy volunteers. We plan on engaging with regulatory authorities on the KER-065 program, starting in the third quarter of 2025. Subject to the outcome of these regulatory interactions, we expect to initiate a Phase 2 clinical trial of KER-065 in patients with DMD in the first quarter of 2026.

Current wording

Our lead product candidate, KER-065, is designed to bind to and inhibit TGF-ß ligands, including myostatin (GDF8) and activin A, which are negative regulators of muscle and bone mass and strength. Through inhibition of these TGF-ß ligands, we believe that KER-065 has the potential to increase skeletal muscle regeneration, increase muscle size and strength, reduce body fat, reduce fibrosis of the skeletal muscle and increase bone strength. We are developing KER-065 for the treatment of neuromuscular disorders, with an initial focus on Duchenne muscular dystrophy, or DMD. Glucocorticoids, the standard of care in DMD, can have significant side effects when used long-term, including catabolism of muscle, increased fat and accelerated bone loss. In March 2025, we announced initial topline results from the Phase 1 clinical trial of KER-065 in healthy volunteers. We plan on engaging with regulatory authorities on the KER-065 program, starting in the third quarter of 2025. Subject to the outcome of these regulatory interactions, we expect to initiate a Phase 2 clinical trial of KER-065 in patients with DMD in the first quarter of 2026. We also intend to pursue additional indications where we believe the mechanism of action of KER-065 has high likelihood of clinical translation.

Previous wording

Our most advanced product candidate, elritercept (KER-050), is an engineered ligand trap comprised of a modified ligand-binding domain of the TGF-ß receptor known as activin receptor type IIA, or ActRIIA, that is fused to the portion of the human antibody known as the Fc domain. In December 2024, we entered into an exclusive license agreement with Takeda Pharmaceuticals U.S.A., Inc., or Takeda, to further develop, manufacture and commercialize elritercept worldwide outside of mainland China, Hong Kong and Macau, which became effective on January 16, 2025. Elritercept is designed to increase red blood cell and platelet production by inhibiting the signaling of a subset of the TGF-ß family of proteins to promote hematopoiesis. We believe elritercept has the potential to provide benefit to patients suffering from red blood cell and platelet differentiation and maturation defects occurring across the spectrum from early through terminal stages of hematopoiesis, and consequently may be effective for many patients that have limited treatment options or are refractory to available therapies. In December 2024, we announced additional data from our ongoing Phase 2 clinical trial evaluating elritercept for the treatment of anemia and thrombocytopenia in patients with very low-, low-, or intermediate-risk MDS, which we refer to as lower-risk MDS, and initiated our placebo-controlled Phase 3 clinical trial in patients with lower-risk MDS. Additionally, in December 2024, we announced additional data from our ongoing Phase 2 clinical trial evaluating elritercept for the treatment of patients with myelofibrosis-associated cytopenias, which we refer to as the RESTORE trial.

Current wording

Our most advanced product candidate, elritercept (KER-050), is an engineered ligand trap comprised of a modified ligand-binding domain of the TGF-ß receptor known as activin receptor type IIA, or ActRIIA, that is fused to the portion of the human antibody known as the Fc domain. In December 2024, we entered into an exclusive license agreement with Takeda Pharmaceuticals U.S.A., Inc., or Takeda, to further develop, manufacture and commercialize elritercept worldwide outside of mainland China, Hong Kong and Macau, which became effective on January 16, 2025. Elritercept is designed to increase red blood cell and platelet production by inhibiting the signaling of a subset of the TGF-ß family of proteins to promote hematopoiesis. We believe elritercept has the potential to provide benefit to patients suffering from red blood cell and platelet differentiation and maturation defects occurring across the spectrum from early through terminal stages of hematopoiesis, and consequently may be effective for many patients that have limited treatment options or are refractory to available therapies. In December 2024, we announced additional data from our ongoing Phase 2 clinical trial evaluating elritercept for the treatment of anemia and thrombocytopenia in patients with very low-, low-, or intermediate-risk MDS, which we refer to as lower-risk MDS, and initiated our placebo-controlled Phase 3 RENEW clinical trial in patients with lower-risk MDS. In July 2025, we announced that the first patient was dosed in the Phase 3 RENEW clinical trial. The dosing of the first patient triggers a $10 million milestone payment to us under the global license agreement with Takeda. Additionally, in December 2024, we announced additional data from our ongoing Phase 2 clinical trial evaluating elritercept for the treatment of patients with myelofibrosis-associated cytopenias, which we refer to as the RESTORE trial.

Previous wording

In December 2022, we filed a prospectus supplementto our registration statement on Form S-3ASR with the Securities and Exchange Commission, or the SEC, for the issuance and sale, if any, of up to $250.0 million of shares of our common stock pursuant to a sales agreement with Leerink Partners LLC, or Leerink, as sales agent, which we refer to as the ATM Sales Agreement, under which we may offer and sell, from time to time, shares of our common stock, or the ATM Shares, through Leerink, which we refer to as the ATM Offering. In May 2024, we filed a new registration statement on Form S-3ASR, which we refer to as the New Shelf Registration Statement, to replace the prior shelf registration statement that was set to expire, including a base prospectus, which became effective immediately upon filing, under which we could issue an unspecified amount of shares of our common stock, preferred stock, debt securities and warrants. In June 2024, we filed a prospectus supplement to the New Shelf Registration Statement for the issuance and sale, if any, of up to an additional$350.0 million of shares of our common stock under the ATM Sales Agreement. As of the filing of the Annual Report, we were not able to use the New Shelf Registration Statement, as we no longer met the criteria of a well-known seasoned issuer.

Current wording

In December 2022, we filed a prospectus supplementto our registration statement on Form S-3ASR with the SEC for the issuance and sale, if any, of up to $250.0 million of shares of our common stock pursuant to a sales agreement with Leerink Partners LLC, or Leerink, as sales agent, which we refer to as the ATM Sales Agreement, under which we may offer and sell, from time to time, shares of our common stock, or the ATM Shares, through Leerink, which we refer to as the ATM Offering. In May 2024, we filed a new registration statement on Form S-3ASR, which we refer to as the New Shelf Registration Statement, to replace the prior shelf registration statement that was set to expire, including a base prospectus, which became effective immediately upon filing, under which we could issue an unspecified amount of shares of our common stock, preferred stock, debt securities and warrants. In June 2024, we filed a prospectus supplement to the New Shelf Registration Statement for the issuance and sale, if any, of up to an additional$350.0 million of shares of our common stock under the ATM Sales Agreement. As of the filing of the Annual Report, we were not able to use the New Shelf Registration Statement, as we no longer met the criteria of a well-known seasoned issuer.

Previous wording

We have incurred recurring operating losses each fiscal year since inception in 2015. Our ability to generate product revenue sufficient to achieve profitability will depend on the successful development and commercialization of one or more of our product candidates. Our net income, which was primarily driven by revenue related to our license agreement with Takeda, was $148.5 million for thethree months ended March 31, 2025. As of March 31, 2025, we had an accumulated deficit of $420.3 million. We expect to continue to generate operating losses and negative operating cash flows for the foreseeable future in connection with our ongoing activities. As of March 31, 2025, we had cash and cash equivalents of$720.5 million.

Current wording

We have incurred recurring operating losses each fiscal year since inception in 2015. Our ability to generate product revenue sufficient to achieve profitability will depend on the successful development and commercialization of one or more of our product candidates. Our net loss was $30.7 million for thethree months ended June 30, 2025. Our net income, which was primarily driven by revenue related to our license agreement with Takeda, was$117.8 millionfor thesix months ended June 30, 2025. As of June 30, 2025, we had an accumulated deficit of $451.0 million. We expect to continue to generate operating losses and negative operating cash flows for the foreseeable future in connection with our ongoing activities. As of June 30, 2025, we had cash and cash equivalents of$690.2 million.

Previous wording

While recent trends towards rising inflation have eased, prices continue to rise, which may also materially affect our business and corresponding financial position and cash flows. Inflationary factors, such as increases in the cost of materials and supplies relating to our preclinical studies, clinical trials, interest rates and overhead costs may adversely affect our operating results. Rising interest rates and implementation of tariffs also present a recent challenge impacting the U.S. economy and could make it more difficult for us to obtain traditional financing on acceptable terms, if at all, in the future. Additionally, the general consensus among economists suggests that we should expect a higher recession risk to continue over the next year due in part to ongoing tariff and trade issues, which, together with the foregoing, could result in further economic uncertainty and volatility in the capital markets in the near term, and could negatively affect our operations. Furthermore, such economic conditions have produced downward pressure on share prices. Although we do not believe that inflation, higher interest rates or tariffs have had a material impact on our financial position or results of operations to date, we may experience increases in the near future (especially if inflation rates rise more quickly) on our operating costs, including our 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, including as a result of bank failures, and employee availability and wage increases, which may result in additional stress on our working capital resources.

Current wording

While recent trends towards rising inflation have eased, prices continue to rise, which may also materially affect our business and corresponding financial position and cash flows. Inflationary factors, such as increases in the cost of materials and supplies relating to our preclinical studies, clinical trials, interest rates and overhead costs may adversely affect our operating results. Rising interest rates and implementation of tariffs also present a recent challenge impacting the U.S. economy and could make it more difficult for us to obtain traditional financing on acceptable terms, if at all, in the future. Additionally, the general consensus among economists suggests that we should expect a higher recession risk to continue over the next year due in part to ongoing tariff and trade issues, which, together with the foregoing, could result in further economic uncertainty and volatility in the capital markets in the near term, and could negatively affect our operations. Furthermore, such economic conditions have produced downward pressure on share prices. Although we do not believe that inflation, higher interest rates or tariffs have had a material impact on our financial position or results of operations to date, we may experience increases in the near future (especially if inflation rates rise more quickly) on our operating costs, including our 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 the Middle East, worsening global macroeconomic conditions, including as a result of bank failures, and employee availability and wage increases, which may result in additional stress on our working capital resources.

Previous wording

The Takeda Agreement will continue in force until the expiration of the royalty term. Takeda may terminate the Takeda Agreement (i) in its entirety or on a country-by-country basis for convenience, with notice or (ii) if Takeda reasonably determines that the development, manufacture, and commercialization of the licensed compound or licensed product pose a safety or public health risk. We may terminate the Takeda Agreement in its entirety in the event that Takeda or its affiliates bring a patent challenge. Either party may terminate the Agreement in its entirety (i) if the other party materially breaches the Takeda Agreement and fails to cure such breach; or (ii) upon the bankruptcy of the other party.

Current wording

The Takeda Agreement will continue in force until the expiration of the royalty term. Takeda may terminate the Takeda Agreement (i) in its entirety or on a country-by-country basis for convenience, with notice or (ii) if Takeda reasonably determines that the development, manufacture, and commercialization of the licensed compound or licensed product pose a safety or public health risk. We may terminate the Takeda Agreement in its entirety in the event that Takeda or its affiliates bring a patent challenge. Either party may terminate the Takeda Agreement in its entirety (i) if the other party materially breaches the Takeda Agreement and fails to cure such breach; or (ii) upon the bankruptcy of the other party.

Previous wording

In connection with the Hansoh Agreement, Hansoh will purchase clinical trial supply of elritercept from us, and the parties will also negotiate in good faith to enter into an agreement for commercial supply prior to any anticipated commercialization in the

Current wording

In connection with the Hansoh Agreement, Hansoh will purchase clinical trial supply of elritercept from us, and the parties will also negotiate in good faith to enter into an agreement for commercial supply prior to any anticipated commercialization in the Hansoh Territory. In addition, Hansoh will use commercially reasonable efforts to develop, obtain regulatory approval for, and commercialize licensed products in any region in the Hansoh Territory.

Previous wording

Pursuant to the terms of the Hansoh Agreement, we received a net $18.0 million upfront payment in January 2022. In addition to the upfront payment and development milestones achieved to date, we are entitled to receive up to an aggregate of (i) $23.5 million upon the achievement of specified development milestones and (ii) $144.0 million upon the achievement of specified net sales thresholds for all licensed products in the Hansoh Territory. If a licensed product is approved for marketing in the Hansoh Territory, we will be entitled to receive royalty payments based on a tiered percentage of annual net sales in each region within the Hansoh Territory, with such percentage ranging from the low double digit to high teens, subject to specified potential royalty reductions. We did not recognize any revenue related to milestones for the three months ended March 31, 2025 or 2024.

Current wording

Pursuant to the terms of the Hansoh Agreement, we received a net $18.0 million upfront payment in January 2022. In addition to the upfront payment and development milestones achieved to date, we are entitled to receive up to an aggregate of (i) $23.5 million upon the achievement of specified development milestones and (ii) $144.0 million upon the achievement of specified net sales thresholds for all licensed products in the Hansoh Territory. If a licensed product is approved for marketing in the Hansoh Territory, we will be entitled to receive royalty payments based on a tiered percentage of annual net sales in each region within the Hansoh Territory, with such percentage ranging from the low double digit to high teens, subject to specified potential royalty reductions. We did not recognize any revenue related to milestones for the three and six months ended June 30, 2025 or 2024.

Previous wording

Effective in June 2023, in connection with the Hansoh Agreement, we entered into a manufacturing technology transfer agreement, or the Tech Transfer Agreement, with Hansoh. The Tech Transfer Agreement governs the transfer to Hansoh of all documents and information required to complete the manufacturing technology transfer. Under the Tech Transfer Agreement, Hansoh is obligated to make certain payments to us, at the rates set forth in the Tech Transfer Agreement, as manufacturing technology transfer services are provided over the term of the Tech Transfer Agreement. We recognized $0.1 million and $0.1 million of service and other revenue for the during the three months ended March 31, 2025 and 2024, respectively.

Current wording

Effective in June 2023, in connection with the Hansoh Agreement, we entered into a manufacturing technology transfer agreement, or the Tech Transfer Agreement, with Hansoh. The Tech Transfer Agreement governs the transfer to Hansoh of all documents and information required to complete the manufacturing technology transfer. Under the Tech Transfer Agreement, Hansoh is obligated to make certain payments to us, at the rates set forth in the Tech Transfer Agreement, as manufacturing technology transfer services are provided over the term of the Tech Transfer Agreement. We recognized zero and $3.8 thousand of service revenue during the three months ended June 30, 2025 and 2024, respectively. We recognized $0.1 million and $0.1 million of service revenue during the six months ended June 30, 2025 and 2024, respectively.

Previous wording

Effective in February 2024, in connection with the Hansoh Agreement, we entered into a clinical product supply agreement with Hansoh, or the Supply Agreement. We did not recognize any revenue during the three months ended March 31, 2025 and 2024.

Current wording

Effective in February 2024, in connection with the Hansoh Agreement, we entered into a clinical product supply agreement with Hansoh, or the Supply Agreement. We did not recognize any revenue during the three and six months ended June 30, 2025 and recognized $32.3 thousand of revenue during the three and six months ended June 30, 2024.

Previous wording

The tax provision recorded for the three months ended March 31, 2025 resulted from income tax related to taxable income generated from the Takeda Agreement. We have not recorded any income tax benefits for the losses incurred to date as it is more likely than not that these benefits will not be realized based on our history of losses and expected future losses.

Current wording

The tax (provision) benefit recorded for the three and six months ended June 30, 2025 resulted from income tax related to taxable income generated from the Takeda Agreement. We have not recorded any income tax benefits for the losses incurred to date as it is more likely than not that these benefits will not be realized based on our history of losses and expected future losses.

Previous wording

Income tax provision was $10.0 million for thethree months ended March 31, 2025, compared to zero for thethree months ended March 31, 2024. The increase of $10.0 million in income tax provision is attributed to taxable income generated from the Takeda Agreement.

Current wording

Income tax benefit was $2.2 million for thethree months ended June 30, 2025, compared to zero for thethree months ended June 30, 2024. The increase of $2.2 million in income tax benefit is attributed to taxable income generated from the Takeda Agreement.

Previous wording

We recognized$195.4 million of license revenue and $15.8 million of service and other revenue related to the Takeda Agreement for the three months ended March 31, 2025, compared to zero for thethree months ended March 31, 2024. We recognized $0.1 million of service and other revenue related to the Hansoh Agreement for thethree months ended March 31, 2025, compared to $0.1 million for thethree months ended March 31, 2024. The increase in total revenue of $211.2 million was primarily due to the Takeda Agreement.

Current wording

We recognized$195.4 million of license revenue and $34.0 million of service and other revenue related to the Takeda Agreement for the six months ended June 30, 2025, compared to zero for thesix months ended June 30, 2024. We recognized $0.1 million of service and other revenue related to the Hansoh Agreement for thesix months ended June 30, 2025, compared to $0.1 million for thesix months ended June 30, 2024. The increase in total revenue of $229.3 million was primarily due to the Takeda Agreement.

Previous wording

Research and development expenses were $48.7 million for the three months ended March 31, 2025, compared to $38.3 million for the three months ended March 31, 2024. The increase of $10.5 million was primarily due to (i) an increase of $0.4 million of cibotercept-related expenses, primarily driven by a net increase of $0.8 million in preclinical activities and partially offset by a decrease of $0.4 million in clinical spend associated with our Phase 2 clinical trial; (ii) an increase of $10.3 million of elritercept-related expenses, primarily driven by an increase of $5.9 million in manufacturing activities and an increase of $4.4 million in clinical spend associated with our ongoing Phase 2 clinical trials, one in patients with MDS and one in patients with myelofibrosis, and the advancement of a Phase 3 clinical trial in patients with MDS; (iii) an increase of $3.1 million related to personnel expenses, including an increase of $1.4 million of additional stock-based compensation costs, driven by increased headcount to support the advancement of our pipeline; and (iv) a net increase of $1.1 million in facilities, supplies, professional fees and other expenses due to the growth of our organization. These increases were partially offset by (a) a decrease of $2.8 million of KER-065-related expenses, primarily driven by a net decrease of $2.9 million in manufacturing and preclinical activities, offset by an increase of $0.1 million in clinical spend associated with our ongoing Phase 1 clinical trial; and (b) a decrease of $1.6 million in preclinical pipeline and development activities. We expect research and development expenses to fluctuate from quarter to quarter depending on the timing of clinical trial activities, clinical manufacturing and other development activities. We expect that elritercept-related expenses will decrease once transitioned to Takeda.

Current wording

Research and development expenses were $92.2 million for the six months ended June 30, 2025, compared to $78.8 million for the six months ended June 30, 2024. The increase of $13.4 million was primarily due to (i) an increase of $14.9 million in elritercept-related expenses, primarily driven by an increase of $8.7 million in clinical spend associated with our ongoing Phase 2 clinical trials, one in patients with MDS and one in patients with myelofibrosis, and the advancement of a Phase 3 clinical trial in patients with MDS, and an increase of $6.2 million in manufacturing activities; (ii) an increase of $5.0 million related to personnel expenses, which includes an increase of $1.7 million of additional stock-based compensation costs, primarily driven by increased severance costs; and (iii) a net increase of $2.4 million in facilities, supplies, professional fees and other expenses. These increases were partially offset by (a) a decrease of $4.3 million of KER-065-related expenses, primarily driven by a net decrease of $3.6 million in manufacturing and preclinical activities and a decrease of $0.8 million in clinical spend associated with our Phase 1 clinical trial; (b) a decrease of $2.2 million of cibotercept-related expenses, primarily driven by a decrease of $2.4 million in clinical spend associated with our Phase 2 clinical trial, partially offset by an increase of $0.2 million in manufacturing and preclinical activities; and (c) a decrease of $2.4 million in preclinical and development fees related to general pipeline development.

Previous wording

General and administrative expenses were $10.5 million for the three months ended March 31, 2025, compared to $10.3 million for the three months ended March 31, 2024. The increase of approximately $0.2 million was primarily due to (i) a net increase of $0.5 million in professional fees, insurance, facilities, supplies and other expenses to support the growth of our business, partially offset by a decrease of $0.3 million in personnel expenses, which includes a decrease of$0.6 million of stock-based compensation costs.

Current wording

General and administrative expenses were $25.0 million for the six months ended June 30, 2025, compared to $20.3 million for the six months ended June 30, 2024. The increase of approximately $4.7 million was primarily due to a net increase of $4.9 million in professional fees, insurance, facilities, supplies and other expenses to support the growth of our business, partially offset by a decrease of $0.2 million in personnel expenses, which includes a decrease of $1.2 million additional stock-based compensation costs, partially offset by a net increase of $1.0 million in salaries and bonus, severance, benefits and other payroll costs.

Previous wording

Total other income, net was $6.5 million for the three months ended March 31, 2025, comparedto $5.4 million for the three months ended March 31, 2024. The increase of $1.1 million was driven by an increase of $1.0 million in dividend income and a decrease of $0.1 million in other expense, net.

Current wording

Total other income, net was$13.4 million for thesix months ended June 30, 2025, comparedto $10.6 million for the six months ended June 30, 2024. The increase of approximately $2.8 million was driven by an increase of $2.7 million in dividend income and a decrease of $0.1 million in other expense, net.

Previous wording

Since our inception, we have incurred significant operating losses each fiscal year. Our net income, which was primarily driven by revenue related to the Takeda Agreement, was $148.5 million for the three months ended March 31, 2025 compared to net loss of $43.1 million for the three months ended March 31, 2024. As of March 31, 2025 and December 31, 2024, we had an accumulated deficit of $420.3 million and $568.8 million, respectively. To date, we have devoted the majority of our efforts into business planning, research and development of our product candidates, including by conducting clinical trials and preclinical studies, raising capital and recruiting management and technical staff to support these operations. Our primary uses of cash are to fund operating expenses, which are primarily research and development expenditures. We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we advance the preclinical studies and clinical trials of our product candidates. Furthermore, we expect to incur additional costs associated with operating as a public company, including significant legal, accounting, investor relations, director and officer insurance premiums and other expenses. In addition, if we obtain marketing approval for any of our product candidates, we expect to incur significant commercialization expenses related to establishing sales, marketing, distribution and other commercial infrastructure to commercialize such products.

Current wording

Since our inception, we have incurred significant operating losses each fiscal year. Our net income, which was primarily driven by revenue related to the Takeda Agreement, was $117.8 million for the six months ended June 30, 2025, compared to net loss of $88.4 million for the six months ended June 30, 2024. As of June 30, 2025 and December 31, 2024, we had an accumulated deficit of $451.0 million and $568.8 million, respectively. To date, we have devoted the majority of our efforts into business planning, research and development of our product candidates, including by conducting clinical trials and preclinical studies, raising capital and recruiting management and technical staff to support these operations. Our primary uses of cash are to fund operating expenses, which are primarily research and development expenditures. We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we advance the preclinical studies and clinical trials of our product candidates. Furthermore, we expect to incur additional costs associated with operating as a public company, including significant legal, accounting, investor relations, director and officer insurance premiums and other expenses. In addition, if we obtain marketing approval for any of our product candidates, we expect to incur significant commercialization expenses related to establishing sales, marketing, distribution and other commercial infrastructure to commercialize such products.

Previous wording

As of March 31, 2025, we had cash and cash equivalents of $720.5 million. Based on our current operating assumptions, we believe that our existing cash and cash equivalents will be sufficient to fund our projected liquidity requirements into 2029. We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect. Due to the numerous risks and uncertainties associated with the development of our product candidates and programs, and because the extent to which we may enter into collaborations with third parties for development of our product candidates is unknown, we are unable to estimate the timing and amounts of increased capital outlays and operating expenses associated with completing the research and development of our product candidates. Our future funding requirements, both near and long-term, will depend on many factors, including:

Current wording

As of June 30, 2025, we had cash and cash equivalents of $690.2 million. Based on our current operating assumptions, we believe that our existing cash and cash equivalents, less $375.0 million of excess capital that our board of directors has determined to return to stockholders, will enable us to fund our operating expenses and capital expenditure requirements into the first half of 2028. We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect. Due to the numerous risks and uncertainties associated with the development of our product candidates and programs, and because the extent to which we may enter into collaborations with third parties for development of our product candidates is unknown, we are unable to estimate the timing and amounts of increased capital outlays and operating expenses associated with completing the research and development of our product candidates. Our future funding requirements, both near and long-term, will depend on many factors, including:

Previous wording

•the cost of manufacturing cibotercept, KER-065, elritercept and future product candidates for clinical trials in preparation for marketing approval and in preparation for commercialization;

Current wording

•the cost of manufacturing KER-065 and future product candidates for clinical trials in preparation for marketing approval and in preparation for commercialization;

Previous wording

•the amount of revenues, if any, we may derive either directly or in the form of royalty payments from future sales of our product candidates, if approved;

Current wording

•the amount of revenues, if any, we may derive either directly or in the form of royalty payments from future sales of our product candidates, if approved; and

Previous wording

The following table summarizes our cash flows for the three months ended March 31, 2025 and 2024 (in thousands):

Current wording

The following table summarizes our cash flows for the six months ended June 30, 2025 and 2024 (in thousands):

Previous wording

Net cash provided by operating activities was $161.2 million for the three months ended March 31, 2025, which was driven by a (i) net income of $148.5 million; (ii) $2.9 million in net cash provided by operating assets and liabilities; and (iii) non-cash charges including $8.9 million of stock-based compensation expense, $0.6 million in lease expenses and $0.3 million in depreciation. The $2.9 million of net cash provided by operating assets and liabilities was comprised of (i) a $4.5 million decrease in prepaid expenses and other current assets due to timing of expense recognition for our research and development costs; (ii) a $3.3 million increase in deferred revenue; (iii) a $10.0 million increase in current tax liability; and (iv) a $1.6 million decrease in other long-term assets, which was partially offset by (a) a $14.5 million increase in accounts receivable related to the Takeda Agreement; (b) a $1.6 million decrease in accounts payable and accrued expenses to support the advancement of our programs; and (c) a $0.4 million change in operating lease liabilities.

Current wording

Net cash provided by operating activities was $131.5 million for the six months ended June 30, 2025, which was driven by a (i) net income of $117.8 million and (ii) non-cash charges, including $17.4 million of stock-based compensation expense, $1.2 million in lease expenses and $0.7 million in depreciation; partially offset by $5.5 million in net cash used in operating assets and liabilities. The $5.5 million of net cash used in operating assets and liabilities was comprised of (i) a $13.1 million increase in accounts receivable related to the Takeda Agreement; (ii) a $0.6 million increase in prepaid expenses and other current assets due to timing of expense recognition for our research and development costs; (iii) a $0.3 million decrease in accounts payable and accrued expenses to support the advancement of our programs; and (iv) a $0.9 million change in operating lease liabilities, which was partially offset by; (a) a $0.9 million increase in deferred revenue; (b) a $6.3 million increase in current tax liability; and (c) a $2.1 million decrease in other long-term assets.

Previous wording

Net cash used in operating activities was $44.6 million for the three months ended March 31, 2024, which was driven by a net loss of $43.1 million and $10.1 million in net cash used in operating assets and liabilities, partially offset by non-cash charges including $8.1 million of stock-based compensation expense, $0.3 million in lease expenses and $0.3 million in depreciation. The $10.1 million of net cash used by operating assets and liabilities was comprised of (i) $5.3 million used in accounts payable and accrued expenses to support the advancement of our programs; (ii) $4.5 million used in prepaid expenses and other assets due to timing of expense recognition for our research and development costs; (iii) $0.2 million used in our operating lease liabilities; and (iv) $0.1 million used in accounts receivable.

Current wording

Net cash used in operating activities was $84.4 million for the six months ended June 30, 2024, which was driven by a net loss of $88.4 million and $14.1 million in net cash used in operating assets and liabilities, partially offset by non-cash charges including $16.9 million of stock-based compensation expense, $0.7 million in lease expenses and $0.6 million in depreciation. The $14.1 million of net cash used by operating assets and liabilities was comprised of (i) $10.8 million used in prepaid expenses and other assets due to timing of expense recognition for our research and development costs; (ii) $2.8 million used in accounts payable and accrued expenses to support the advancement of our programs; and (iii) $0.6 million used in our operating lease liabilities, which was partially offset by a $0.1 million decrease in accounts receivable.

Previous wording

Net cash used in investing activities was $0.6 million for the three months ended March 31, 2025 and $0.9 million for the three months ended March 31, 2024. The cash used in investing activities in both periods was due to purchases of property and equipment.

Current wording

Net cash used in investing activities was $1.3 million for the six months ended June 30, 2025 and $1.3 million for the six months ended June 30, 2024. The cash used in investing activities in both periods was due to purchases of property and equipment.

Previous wording

Net cash provided by financing activities was nominal for the three months ended March 31, 2025, and was related to exercises of options to purchase common stock.

Current wording

Net cash provided by financing activities was nominal for the six months ended June 30, 2025, and was related to exercises of options to purchase common stock.

Previous wording

Net cash provided by financing activities was $156.8 million for the three months ended March 31, 2024, which was primarily related to (i) net proceeds of $151.1 million received from our public offering of common stock in January 2024, after deducting underwriting discounts, commissions and offering expenses; and (ii) proceeds of $5.7 million related to exercises of options to purchase common stock.

Current wording

Net cash provided by financing activities was $160.3 million for the six months ended June 30, 2024, which was primarily related to (i) net proceeds of $151.1 million received from our public offering of common stock in January 2024, after deducting underwriting discounts, commissions and offering expenses; (ii) net proceeds of $0.6 million received from sale of our common stock under the ATM Program, after deducting sales agent commissions and offering expenses; and (iii) proceeds of $8.7 million related to exercises of options to purchase common stock.

Previous wording

We enter into agreements in the normal course of business with contract manufacturing organizations for process development, raw material purchases and manufacturing services. These contracts typically do not contain minimum purchase commitments and are generally cancellable by us upon written notice. Payments due upon cancellation consist of payments for services provided or expenses incurred, including noncancellable obligations of our service providers, up to the date of cancellation and, in the case of certain arrangements with contract manufacturing organizations, may include noncancellable fees. Under such agreements, the exact amounts owed by us in the event of termination will be based on the timing of the termination and the exact terms of the agreement. As of March 31, 2025, we have committed up to approximately $52.3 million under these agreements which are expected to be paid through 2029.

Current wording

We enter into agreements in the normal course of business with contract manufacturing organizations for process development, raw material purchases and manufacturing services. These contracts typically do not contain minimum purchase commitments and are generally cancellable by us upon written notice. Payments due upon cancellation consist of payments for services provided or expenses incurred, including noncancellable obligations of our service providers, up to the date of cancellation and, in the case of certain arrangements with contract manufacturing organizations, may include noncancellable fees. Under such agreements, the exact amounts owed by us in the event of termination will be based on the timing of the termination and the exact terms of the agreement. As of June 30, 2025, we have committed up to approximately $23.1 million under these agreements which are expected to be paid through 2029.

Previous wording

Refer to Note 2 in the accompanying notes to our unaudited interim condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q for a discussion of recent accounting pronouncements. In the three months ended March 31, 2025, there were no newly applicable recently issued accounting pronouncements.

Current wording

Refer to Note 2 in the accompanying notes to our unaudited interim condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q for a discussion of recent accounting pronouncements. In the six months ended June 30, 2025, there were no newly applicable recently issued accounting pronouncements.