Keros Therapeutics, Inc.

Previous wording

You should read the following discussion and analysis of our financial condition and results of operations together with (1) our condensed consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q and (2) the audited consolidated financial statements and the related notes and management’s discussion and analysis of financial condition and results of operations for the fiscal year ended December 31, 2024 included in our Annual Report on Form 10-K for the year ended December 31, 2024, and filed with the Securities and Exchange Commission, or SEC, on February 26, 2025, which we refer to as the Annual Report.

Current wording

You should read the following discussion and analysis of our financial condition and results of operations together with (1) our unaudited interim condensed consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q and (2) the audited consolidated financial statements and the related notes and management’s discussion and analysis of financial condition and results of operations for the fiscal year ended December 31, 2025 included in our Annual Report on Form 10-K for the year ended December 31, 2025, and filed with the Securities and Exchange Commission, or SEC, on March 4, 2026, which we refer to as the Annual Report.

Previous wording

We are 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, or TGF-ß, family of proteins. We are a leader in understanding the role of the TGF-ß family of proteins, which are master regulators of the growth, repair and maintenance of a number of tissues, including blood, bone, skeletal muscle, adipose and heart tissue. By leveraging this understanding, we have discovered and are developing protein therapeutics that have the potential to provide meaningful and potentially disease-modifying benefit to patients.

Current wording

We are 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, or TGF-ß, family of proteins. We are a leader in understanding the role of the TGF-ß family of proteins, which are master regulators of the growth, repair and maintenance of a number of tissues, including skeletal muscle, bone, adipose, heart tissue and blood. By leveraging this understanding, we have discovered and are developing protein therapeutics that have the potential to provide meaningful and potentially disease-modifying benefit to patients.

Previous 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 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.

Current wording

Our lead product candidate, rinvatercept (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 rinvatercept 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 rinvatercept for the treatment of Duchenne muscular dystrophy, or DMD, and for the treatment of amyotrophic lateral sclerosis, or ALS. 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 rinvatercept in healthy adult male volunteers. We expect to initiate a Phase 2 clinical trial of rinvatercept in patients with DMD in the third quarter of 2026, and expect to announce initial data from this trial in the first half of 2027. We also plan to engage regulators on the design of a Phase 2 clinical trial of rinvatercept in patients with ALS in the second half of 2026.

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 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.

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. Elritercept is being developed for the treatment of low blood cell counts, or cytopenias, including anemia and thrombocytopenia, in patients with myelodysplastic syndromes, or MDS, and in patients with myelofibrosis. 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 July 2025, we announced that the first patient was dosed in the placebo-controlled Phase 3 RENEW clinical trial in patients with very low-, low-, or intermediate-risk MDS, which we refer to as lower-risk MDS. The dosing of the first patient triggered a $10 million milestone payment to us under the license agreement with Takeda.

Previous 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.

Current 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 our Annual Report on Form 10-K for the year ended December 31, 2024, we no longer qualified as a well-known seasoned issuer and therefore were not eligible to use the New Shelf Registration Statement as an automatic shelf registration statement, and no shares were sold during the three months ended March 31, 2026.

Previous wording

Pursuant to the terms and conditions of the stock purchase agreement with the ADAR1 Parties, or the ADAR1 Repurchase Agreement, and the stock purchase agreement with the Pontifax Parties, or the Pontifax Repurchase Agreement, the ADAR1 Parties and the Pontifax Parties sold all of the shares of our common stock beneficially owned by them, being an aggregate of 10,176,595 shares of common stock, to us at a per share purchase price of $17.75 per share, for an aggregate purchase price of $180.6 million. In addition, concurrently with the execution of the Pontifax Repurchase Agreement, each of Tomer Kariv and Ran Nussbaum resigned from our board of directors and all committees thereof.

Current wording

On October 15, 2025, we entered into the Repurchase Agreements with the ADAR1 Parties and the Pontifax Parties. Pursuant to the terms and conditions of the Repurchase Agreements, the ADAR1 Parties and the Pontifax Parties sold all of the shares of our common stock beneficially owned by them, being an aggregate of 10,176,595 shares of common stock, to us at a per share purchase price of $17.75 per share, for an aggregate purchase price of $180.6 million. In addition, concurrently with the execution of the Pontifax Repurchase Agreement, each of Tomer Kariv and Ran Nussbaum resigned from our board of directors and all committees thereof.

Previous wording

Pursuant to the ADAR1 Repurchase Agreement and the Pontfiax Repurchase Agreement, the ADAR1 Parties and the Pontifax Parties each agreed to customary standstill restrictions and voting commitments, which will remain in effect until immediately following the final certification of the voting results for our 2028 annual stockholder meeting. We and each of the ADAR1 Parties and the Pontifax Parties also agreed to customary mutual non-disparagement obligations to remain in effect during the same period.

Current wording

Pursuant to the Repurchase Agreements, each of the ADAR1 Parties and the Pontifax Parties agreed to customary standstill restrictions and voting commitments, which will remain in effect until immediately following the final certification of the voting results for our 2028 annual stockholder meeting. We and each of the ADAR1 Parties and the Pontifax Parties also agreed to customary mutual non-disparagement obligations to remain in effect during the same period.

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 loss was $7.3 million for thethree months ended September 30, 2025. Our net income, which was primarily driven by revenue related to our license agreement with Takeda, was$110.5 millionfor thenine months ended September 30, 2025. As of September 30, 2025, we had an accumulated deficit of $458.3 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 September 30, 2025, we had cash and cash equivalents of$693.5 million.

Current wording

We have incurred recurring operating losses each fiscal year through December 31, 2024. Our net income for the year ended December 31, 2025 was primarily driven by revenue related to the Takeda Agreement. 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 $23.7 million for thethree months ended March 31, 2026. As of March 31, 2026, we had an accumulated deficit of $505.5 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, 2026, we had cash and cash equivalents of$281.5 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 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.

Current wording

Recent trends towards rising inflation and prices may 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 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 wars in the Middle East, worsening global macroeconomic conditions and employee availability and wage increases, which may result in additional stress on our working capital resources.

Previous wording

Pursuant to the terms of the Takeda Agreement, we received a $200.0 million upfront payment in February 2025. In July 2025, we announced that the first patient was dosed in the Phase 3 RENEW clinical trial of elritercept, which triggered a $10 million milestone payment to us under the Takeda Agreement. We received the $10.0 million payment for the achievement of this development milestone in August 2025. In addition to the upfront payment and milestone payment, we are entitled to receive up to an aggregate of (i) $80.0 million upon the achievement of specified development milestones, (ii) $280.0 million upon the achievement of specified commercial milestone and (iii) $740.0 million upon the achievement of specified sales milestones. If a licensed product is approved for marketing in the Takeda Territory, we will be entitled to receive royalty payments based on tiered increments of annual net sales in the Takeda Territory, with such percentage ranging from the low double-digits to high teens, subject to specified potential royalty reductions.

Current wording

Pursuant to the terms of the Takeda Agreement, we received a $200.0 million upfront payment in February 2025. In July 2025, we announced that the first patient was dosed in the Phase 3 RENEW clinical trial of elritercept, which triggered a $10 million milestone payment to us under the Takeda Agreement. We received the $10.0 million payment for the achievement of this development milestone in August 2025. In addition to the upfront payment and milestone payment, we are entitled to receive up to an aggregate of (i) $80.0 million upon the achievement of specified development milestones, (ii) $280.0 million upon the achievement of specified commercial milestones and (iii) $740.0 million upon the achievement of specified sales milestones. If a licensed product is approved for marketing in the Takeda Territory, we will be entitled to receive royalty payments based on tiered increments of annual net sales in the Takeda Territory, with such percentage ranging from the low double-digits to high teens, subject to specified potential royalty reductions.

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 and nine months ended September 30, 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 months ended March 31, 2026 or 2025.

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 zero and $3.5 thousand of service revenue during the three months ended September 30, 2025 and 2024, respectively. We recognized $0.1 million and $0.1 million of service revenue during the nine months ended September 30, 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 did not recognize any revenue during the three months ended March 31, 2026 and recognized $0.1 million of service and other revenue for the three months ended March 31, 2025.

Previous wording

Effective in February 2024, in connection with the Hansoh Agreement, we entered into a clinical product supply agreement with Hansoh, or the Hansoh Supply Agreement. We recognized $0.1 millon and $0.4 million of other revenue during the three and nine months ended September 30, 2025 and 2024, respectively.

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 recognized $0.3 million of service and other revenue during the three months ended March 31, 2026 compared to zero during the three months ended March 31, 2025.

Previous wording

We expense research and development costs as incurred. Costs for external development activities are recognized based on an evaluation of the progress to completion of specific tasks using information provided to us by our vendors. Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in our condensed consolidated financial statements as prepaid or accrued research and development expenses. Nonrefundable advance payments for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses and expensed as the related goods are delivered or the services are performed.

Current wording

We expense research and development costs as incurred. Costs for external development activities are recognized based on an evaluation of the progress to completion of specific tasks using information provided to us by our vendors. Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in our unaudited interim condensed consolidated financial statements as prepaid or accrued research and development expenses. Nonrefundable advance payments for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses and expensed as the related goods are delivered or the services are performed.

Previous wording

The tax (provision) benefit recorded for the three and nine months ended September 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.

Current wording

The tax provision has historically 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

Research and development expenses were $111.7 million for the nine months ended September 30, 2025, compared to $128.0 million for the nine months ended September 30, 2024. The decrease of $16.3 million was primarily due to (i) a decrease of $7.9 million of KER-065-related expenses, primarily driven by a net decrease of $5.9 million in manufacturing and preclinical activities and a decrease of $2.0 million in clinical spend associated with our Phase 1 clinical trial; (ii) a decrease of $9.6 million of cibotercept-related expenses, primarily driven by a decrease of $6.1 million in clinical spend associated with our Phase 2 clinical trial and a net decrease of $3.5 million in manufacturing and preclinical activities; (iii) a decrease of $4.9 million in preclinical and development fees related to general pipeline development; (iv) a decrease of $1.0 million related to personnel expenses, which includes a decrease of $2.0 million of stock-based compensation costs, partially offset by increased severance costs. These decreases were partially offset by (a) an increase of $4.7 million in elritercept-related expenses, primarily driven by an increase of $5.3 million in manufacturing activities, partially offset by a decrease of $0.6 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, as clinical activities transition to Takeda; and (b) a net increase of $2.5 million in facilities, supplies, professional fees and other expenses. 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 be eliminated once transitioned to Takeda.

Current wording

Research and development expenses were $16.1 million for the three months ended March 31, 2026, compared to $48.7 million for the three months ended March 31, 2025. The decrease of $32.6 million was primarily due to (i) a decrease of $18.9 million of elritercept-related expenses, primarily driven by a decrease of $10.0 million in clinical spend and a decrease of $8.9 million in manufacturing activities as activities transitioned to Takeda during 2025; (ii) a decrease of $6.2 million of cibotercept-related expenses, primarily driven by a decrease of $4.1 million in clinical spend associated with our terminated Phase 2 clinical trial and a decrease of $2.2 million in manufacturing and preclinical activities; (iii) a decrease of $7.9 million related to personnel expenses, including a decrease of $3.0 million of stock-based compensation costs, driven by a reduction in headcount; and (iv) a net decrease of $0.9 million in facilities, supplies, professional fees and other expenses. These decreases were partially offset by (a) an increase of $1.1 million of rinvatercept-related expenses, primarily driven by a net increase of $1.5 million in clinical spend associated with our planned Phase 2 clinical trials, one in patients with DMD and one in patients with ALS, partially offset by a net decrease of $0.4 million in manufacturing and preclinical activities; and (b) an increase of $0.3 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.

Previous wording

General and administrative expenses were $10.1 million for the three months ended September 30, 2025, compared to $9.8 million for the three months ended September 30, 2024. The increase of approximately $0.3 million was primarily due to a net increase of $1.3 million in professional fees, insurance, facilities, supplies and other expenses, partially offset by a decreaseof $1.0 million in personnel expenses, which includes a decrease of$1.1 million of stock-based compensation costs, partially offset by a net increase of $0.1 million in salaries and bonus, severance, benefits and other payroll costs.

Current wording

General and administrative expenses were $10.1 million for the three months ended March 31, 2026, compared to $10.5 million for the three months ended March 31, 2025. The decrease of approximately $0.4 million was primarily due to a netdecrease of $0.3 million in personnel expenses, which includes a decrease of $0.6 million insalaries and bonus, benefits and other payroll costs, partially offset by an increase of$0.3 million of stock-based compensation costs.

Previous wording

Total other income, net was $6.7 million for the three months ended September 30, 2025, comparedto $5.7 million for the three months ended September 30, 2024. The increase of $1.0 million was primarily driven by an increase of $1.1 million in dividend income, partially offset by an increase of $0.2 million of other expenses, net.

Current wording

Total other income, net was $2.2 million for the three months ended March 31, 2026, comparedto $6.5 million for the three months ended March 31, 2025. The decrease of $4.3 million was driven by a decrease of $4.5 million in dividend income, partially offset by a decrease of $0.2 million in other expense, net.

Previous wording

Income tax benefit was $1.4 million for thethree months ended September 30, 2025, compared to zero for thethree months ended September 30, 2024. The increase of $1.4 million in income tax benefit is attributed to taxable income generated from the Takeda Agreement.

Current wording

Income tax provision was zero for thethree months ended March 31, 2026, compared to $10.0 million for thethree months ended March 31, 2025. The income tax provision in 2025 is attributed to taxable income generated from the Takeda Agreement.

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 $110.5 million for the nine months ended September 30, 2025, compared to net loss of $141.3 million for the nine months ended September 30, 2024. As of September 30, 2025 and December 31, 2024, we had an accumulated deficit of $458.3 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 to continue to incur substantial expenses 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 through December 31, 2024. Our net loss was $23.7 million for the three months ended March 31, 2026 compared to net income of $148.5 million for the three months ended March 31, 2025, which was primarily driven by the one-time upfront fee related to the Takeda Agreement. As of March 31, 2026 and December 31, 2025, we had an accumulated deficit of $505.5 million and $481.8 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 to continue to incur substantial expenses 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 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

In December 2022, we filed a prospectus supplement to a registration statement on Form S-3ASR, including a base prospectus and sales agreement prospectus, or the Prior Shelf Registration Statement, for the issuance and sale of up to $250.0 million of shares of our common stock. On May 3, 2024, we filed a new registration statement on Form S-3ASR, or the New Shelf Registration Statement, to replace the Prior Shelf Registration Statement that was set to expire, which became automatically effective upon filing, and which permitted us to offer, from time to time, an unspecified amount of common stock, preferred stock, debt securities and warrants, including through an “at the market” program with Leerink, as sales agent, or the ATM Program. 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. As of September 30, 2025, we sold 4,290,096 shares of our common stock pursuant to the ATM Program. As of September 30, 2025, we were not eligible to offer and sell any shares of our common stock under the ATM Program.

Current wording

In December 2022, we filed a prospectus supplement to a registration statement on Form S-3ASR, including a base prospectus and sales agreement prospectus, or the Prior Shelf Registration Statement, for the issuance and sale of up to $250.0 million of shares of our common stock. On May 3, 2024, we filed a new registration statement on Form S-3ASR, or the New Shelf Registration Statement, to replace the Prior Shelf Registration Statement that was set to expire, which became automatically effective upon filing, and which permitted us to offer, from time to time, an unspecified amount of common stock, preferred stock, debt securities and warrants, including through an “at the market” program with Leerink, as sales agent, or the ATM Program. As of the filing of our Annual Report on Form 10-K for the year ended December 31, 2024, we were no longer qualified as a well-known seasoned issuer and therefore were not eligible to use the New Shelf Registration Statement as an automatic shelf registration statement. As of March 31, 2026, we have sold a total of 4,290,096 shares of our common stock pursuant to the ATM Program. As of March 31, 2026, we were not eligible to offer and sell any shares of our common stock under the ATM Program and did not sell any shares during the three months ended March 31, 2026.

Previous wording

In October 2025, we entered into the ADAR1 Repurchase Agreement and the Pontifax Repurchase Agreement to repurchase the shares of our common stock held by the ADAR1 Parties and the Pontifax Parties, respectively, at a price of $17.75 per share. Pursuant to the terms and conditions of the ADAR1 Repurchase Agreement and the Pontifax Repurchase Agreement, the ADAR1 Parties and the Pontifax Parties sold all of the shares of our common stock beneficially owned by them, being an aggregate of 10,176,595 shares of common stock, to us at a per share purchase price of $17.75 per share, for an aggregate purchase price of $180.6 million.

Current wording

In October 2025, we entered into the Repurchase Agreements, pursuant to which the ADAR1 Parties and the Pontifax Parties sold all of the shares of our common stock beneficially owned by them, being an aggregate of 10,176,595 shares of common stock, to us at a per share purchase price of $17.75 per share, for an aggregate purchase price of $180.6 million.

Previous wording

As of September 30, 2025, we had cash and cash equivalents of $693.5 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 via the ADAR1 Repurchase Agreement, the Pontifax Repurchase Agreement and the ongoing issuer tender offer, 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:

Current wording

As of March 31, 2026, we had cash and cash equivalents of $281.5 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 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 KER-065 and future product candidates for clinical trials in preparation for marketing approval and in preparation for commercialization;

Current wording

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

Previous wording

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

Current wording

The following table summarizes our cash flows for the three months ended March 31, 2026 and 2025 (in thousands):

Previous wording

Net cash used in operating activities was $114.9 million for the nine months ended September 30, 2024, which was driven by a net loss of $141.3 million and $1.4 million in net cash used in operating assets and liabilities, partially offset by non-cash charges including $25.7 million of stock-based compensation expense, $1.2 million in lease expenses and $0.9 million in depreciation. The $1.4 million of net cash used by operating assets and liabilities was comprised of (i) $5.0 million used in prepaid expenses and other assets due to timing of expense recognition for our research and development costs; (ii) a $0.9 million used in our operating lease liabilities,(iii) a $0.2 million increase in accounts receivable; offset by (a) a $4.3 million increase in accounts payable and accrued expenses to support the advancement of our programs; and (b) a $0.5 million decrease in other long-term assets.

Current wording

Net cash used in operating activities was $3.5 million for the three months ended March 31, 2026, which was driven by a net loss of $23.7 million and partially offset by (i) $12.9 million in net cash provided by operating assets and liabilities; and (ii) non-cash charges including $6.2 million of stock-based compensation expense, $0.6 million in lease expenses and $0.4 million in depreciation. The $12.9 million of net cash provided by operating assets and liabilities was comprised of (i) a $15.7 million decrease in prepaid expenses and other current assets due to timing of expense recognition for our research and development costs; and (ii) a $3.2 million decrease in accounts receivable related to the Takeda Agreement, which was partially offset by (a) a $5.3 million decrease in accounts payable and accrued expenses; and (b) a $0.6 million change in operating lease liabilities.

Previous wording

Net cash provided by operating activities was $134.8 million for the nine months ended September 30, 2025, which was driven by a (i) net income of $110.5 million; (ii) $48.0 thousand in net cash provided by operating assets and liabilities; and (iii) non-cash charges, including $21.4 million of stock-based compensation expense, $1.8 million in lease expenses and $1.1 million in depreciation. The $48.0 thousand of net cash provided by operating assets and liabilities was comprised of (i) a $4.1 million increase in current tax liability; (ii) a $3.9 million decrease in prepaid expenses and other current assets due to timing of expense recognition for our research and development costs; (iii) a $2.1 million decrease in other long-term assets; and (iv) a $0.2 million increase in deferred revenue; offset by (a) a $8.0 million decrease in accounts payable and accrued expenses, primarily driven by the transition of elritercept-related expenses to Takeda and the deprioritization of cibotercept, (b) a $1.4 million change in operating lease liabilities, and (c) a $0.8 million increase in accounts receivable related to the Takeda Agreement.

Current 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.

Previous wording

Net cash used in investing activities was $1.4 million for the nine months ended September 30, 2025 and $1.6 million for the nine months ended September 30, 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 nominal for the three months ended March 31, 2026 and $0.6 million for the three months ended March 31, 2025. 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 $0.2 million for the nine months ended September 30, 2025, and was primarily related to issuances of common stock under the 2020 Employee Stock Purchase Plan and exercises of options to purchase common stock.

Current 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.

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 September 30, 2025, we have committed up to approximately $4.2 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 March 31, 2026, we have committed up to approximately $6.5 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 nine months ended September 30, 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 three months ended March 31, 2026, there were no newly applicable recently issued accounting pronouncements.