What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2025-02-26 compared with 2024-02-28 · 192 added, 75 removed, 819 unchanged (25% of the section changed)

64 unchanged sentences

A current copy of the Code of Conduct is available on the Investors section of our website, www.kerostx.com, under "Corporate Governance." We intend to disclose on our website any amendments to, or waivers from, our Code of Conduct that are required to be disclosed pursuant to SEC rules.

We have adopted insider trading policies and procedures governing the purchase, sale, and/or other dispositions of our securities by directors, officers and employees, a copy of which is attached as an exhibit to this Annual Report on Form 10-K.

In addition, it is our intent to comply with the applicable laws and regulations relating to insider trading.

EXECUTIVE COMPENSATION

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

The information required by this Item 13 will be included under the header “Transactions with Related Persons” in our 2024 Proxy Statement and is incorporated herein by reference.

The information required by this Item 13 will be included under the header “Transactions with Related Persons and Indemnification” in our 2025 Proxy Statement and is incorporated herein by reference.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

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Forms of Stock Option Grant Notice, Option Agreement, Notice of Exercise, Restricted Stock Unit Grant Notice and Restricted Stock Unit Award Agreement for the 2020 Equity Incentive Plan.

S-1/A 333-237212 10.5 April 1, 2020

10.6+ 2020 Employee Stock Purchase Plan.

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001-39264 10.1

August 7, 2024

Offer Letter Agreement by and between the registrant and Jasbir Seehra, dated as of December 14, 2015.

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4 dated as of April 12, 2023, to License Agreement by and between the registrant and Hansoh (Shanghai) Healthtech Co., Ltd.

001-39264 10.12

February 28, 2024

Lease Agreement by and between the registrant and 128 Spring Street Lexington, LLC, dated March 20, 2017, as amended by the First Amendment to Lease Agreement by and between the registrant and 128 Spring Street Lexington, LLC, dated July 1, 2019 and by the Second Amendment to Lease Agreement by and between the registrant and 128 Spring Street Lexington, LLC, dated August 8, 2019.

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10-Q 001-39264 10.1 November 4, 2021

First Amendment to Lease, by and between the r egistrant and Revolution Labs Owner, LLC, dated January 6, 2023.

First Amendment to Lease, by and between the registrant and Revolution Labs Owner, LLC, dated January 6, 2023.

10-Q 001-39264 10.1 May 4, 2023

E xclusive License Agreement by and between the registra nt and Takeda Pharmaceuticals U.S.A., Inc., dated as of December 3, 2024.

Employment Agreement by and between the registrant and Yung H.

Chyung , dated as of October 15, 2024 effective as of November 1, 202 4 .

001-39264 10.1

October 16, 2024

Insider Trading Policy.

21.1* Subsidiaries of Keros Therapeutics, Inc.

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POWER OF ATTORNEY AND SIGNATURES

KNOW ALL BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Jasbir Seehra, Ph.D.

and Keith Regnante, and each of them, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution for him or her, and in his or her name in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the U.S.

KNOW ALL BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Jasbir Seehra, Ph.D., and Keith Regnante, and each of them, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution for him or her, and in his or her name in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the U.S.

Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, and either of them, his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

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Keith Regnante

/s/ Jean-Jacques Bienaimé

Director February 26, 2025

Jean-Jacques Bienaimé

/s/ Nima Farzan Director February 26, 2025

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Director February 26, 2025

Alpna Seth, Ph.D.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

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As disclosed in Note 2 to the financial statements, the Company records accrued and prepaid research and development expenses for external clinical trial costs and manufacturing activities based on estimates of the progress to completion of specific tasks within individual contract research and contract manufacturing arrangements.

Estimates of expenses incurred are determined by reviewing information provided to the Company by its vendors and through discussions with both internal personnel and vendors as to the status of specific tasks within arrangements.

Estimates of expenses incurred are determined by reviewing information provided to the Company by its service providers and through discussions with both internal personnel and external service providers as to the status of specific tasks within arrangements.

Expenses incurred in excess of amounts invoiced are recorded as accrued expenses.

Payments made in excess of expenses incurred are recorded as prepaid costs.

As of December 31, 2023, the Company has recorded accrued external research, development, and manufacturing costs of $9.2 million and prepaid external research, development and manufacturing costs of $12.4 million.

We identified auditing the estimates of the progress to completion of specific tasks performed by contract research and contract manufacturing vendors as a critical audit matter due to the (i) the level of judgment required by management and the volume of such estimates made by management and (ii) the high degree of auditor judgment, subjectivity, and an increased extent of effort in performing procedures to evaluate the reasonableness of management’s estimates of progress to completion.

As of December 31, 2024, the Company has recorded accrued external research, development, and manufacturing costs of $9.4 million and prepaid research, development and manufacturing costs of $21.3 million.

We identified auditing the estimates of the progress to completion of specific tasks performed by contract research and contract manufacturing service providers as a critical audit matter due to the (i) the level of judgment required by management and the volume of such estimates made by management and (ii) the high degree of auditor judgment, subjectivity, and an increased extent of effort in performing procedures to evaluate the reasonableness of management’s estimates of progress to completion.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to accrued and prepaid external research and development expenses and manufacturing costs included the following, among others:

• We tested the effectiveness of relevant controls over the estimation of accrued and prepaid research and development expenses and manufacturing costs.

• For a sample of contracts with vendors performing research and development, and manufacturing activities, we performed the following:

• We tested the design and effectiveness of relevant controls over the estimation of accrued and prepaid research and development expenses and manufacturing costs.

• For a sample of contracts with service providers performing research and development, and manufacturing activities, we performed the following:

◦ Evaluated the appropriateness of the method used by management to develop its estimates of progress to completion of specific tasks.

◦ Tested the completeness and accuracy of the underlying data used in the estimates of progress to completion through inspection of the terms of contracts and statements of work between the Company and its vendors and testing of actual billed expenses under the contracts.

◦ Performed corroborating inquiries with Company personnel responsible for overseeing the activities performed by the Company’s contract research and contract manufacturing vendors, which may include the vendors’ estimate of completed tasks or progress of completion of certain tasks within the arrangement.

◦ Tested the completeness and accuracy of the underlying data used in the estimates of progress to completion through inspection of the terms of contracts and statements of work between the Company and its service providers and testing of actual billed expenses under the contracts.

◦ Performed corroborating inquiries with Company personnel responsible for overseeing the activities performed by the Company’s contract research and contract manufacturing service providers, which may include the service providers’ estimate of completed tasks or progress of completion of certain tasks within the arrangement.

/s/ Deloitte & Touche LLP

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Preferred stock, par value of $ 0.0001 per share;

10,000,000 shares authorized as of December 31, 2023 and December 31, 2022, respectively;

10,000,000 shares authorized as of December 31, 2024 and December 31, 2023;

no shares issued and outstanding

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Dividend income 23,496 14,755 3,644

Other income (expense), net ( 206 ) ( 613 ) ( 383 )

Other expense, net ( 954 ) ( 206 ) ( 613 )

Total other income (expense), net 23,780 16,949 10,111

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BALANCE, December 31, 2023 31,841,084 $ 3 $ 713,636 $ ( 381,426 ) $ 332,213

Issuance of common stock, net of underwriting discounts, commissions and offering costs of $ 9,943

4,025,000 — 151,057 — 151,057

Issuance of common stock under the ATM agreement, net of commissions and offering cost of $ 3,655

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Accrued expenses and other current liabilities 2,952 5,257 5,322

Other liabilities — — ( 62 )

Net cash used in operating activities ( 160,869 ) ( 124,508 ) ( 70,062 )

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CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of common stock, net of offering cost 175,825 119,578 28,171

Proceeds from issuance of common stock, net of underwriting discounts 151,340 — —

Payment of issuance costs ( 283 ) — —

Proceeds from issuance of common stock under the ATM agreement, net of commissions 228,794 175,825 119,578

Payment of issuance costs associated with issuance of common stock under the ATM agreement ( 171 ) ( 94 ) ( 87 )

Proceeds from exercise of stock options 12,141 3,225 818

Net cash provided by financing activities 391,821 178,956 120,309

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 51,984 49,006 ( 34,622 )

NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 229,021 51,984 49,006

Cash, cash equivalents and restricted cash at beginning of year 332,359 280,375 231,369

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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Property and equipment purchases still in accounts payable $ 599 $ 75 $ 11

Issuance cost still in accrued and accounts payable $ — $ 63 $ 75

Property and equipment purchases in accounts payable $ — $ 599 $ 75

Issuance costs in accrued and accounts payable

Right-of-use assets obtained in exchange for operating lease obligation $ 5,737 $ 1,338 $ 15,423

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The Company is a clinical-stage biopharmaceutical company focused on developing and commercializing novel therapeutics to treat a wide range of patients with disorders that are linked to dysfunctional signaling of the transforming growth factor-beta (“TGF-ß”) family of proteins.

The Company’s lead product candidate, KER-050 (elritercept), is being developed for the treatment of low blood cell counts (“cytopenias”), including anemia and thrombocytopenia, in patients with myelodysplastic syndromes (“MDS”) and in patients with myelofibrosis.

The Company’s second product candidate, KER-012, is being developed for the treatment of pulmonary arterial hypertension (“PAH”) and for the treatment of cardiovascular disorders.

The Company's third product candidate, KER-065, is being developed for the treatment of obesity and for the treatment of neuromuscular diseases.

One of the Company’s product candidates, cibotercept (KER-012), is being developed for the treatment of pulmonary arterial hypertension (“PAH”) and for the treatment of cardiovascular disorders.

The Company's second product candidate, KER-065, is being developed for the treatment of neuromuscular diseases.

The Company’s most advanced product candidate, elritercept (KER-050), is being developed for the treatment of low blood cell counts (“cytopenias”), including anemia and thrombocytopenia, in patients with myelodysplastic syndromes (“MDS”) and in patients with myelofibrosis.

Since its inception in 2015, the Company has devoted the majority of its resources to business planning, research and development of its product candidates, including conducting clinical trials and preclinical studies, raising capital and recruiting management and technical staff to support these operations.

To date, the Company has not generated any revenue from product sales as none of its product candidates have been approved for commercialization.

In May 2021, the Company filed a registration statement on Form S-3, which was automatically effective upon filing (the “Shelf Registration Statement”).

Pursuant to the Shelf Registration Statement, the Company could issue up to $ 150.0 million in common stock in sales deemed to be an “at the market offering,” as defined by the Securities Act, and, so long as the Company qualifies as a “well-known seasoned issuer” as defined in Rule 405 of the Securities Act, an unspecified amount of shares of the Company common stock, preferred stock, debt securities and warrants.

In December 2022, the Company filed a prospectus supplement to the Shelf Registration Statement for the issuance and sale, if any, of up to an additional $ 250.0 million in common stock in sales deemed to be an “at the market offering,” as defined by the Securities Act.

In December 2022, the Company filed a prospectus supplement to a registration statement on Form S-3ASR (the “Prior Shelf Registration Statement”) for the issuance and sale, if any, of up to $ 250.0 million in common stock in sales deemed to be an “at the market offering,” as defined by the Securities Act of 1933, as amended (“Securities Act”).

In May 2024, the Company filed a registration statement on Form S-3ASR to replace the Prior Shelf Registration Statement, which became effective immediately upon filing (the “New Shelf Registration Statement”).

The New Shelf Registration Statement included a base prospectus under which the Company could issu e, so long as the Company qualifies as a “well-known seasoned issuer” as defined in Rule 405 of the Securities Act, an unspecified amount of shares of the Company common stock, preferred stock, debt securities and warrants .

In June 2024, the Company 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 its common stock i n sales deemed to be an “at-the-market offering,” as defined by the Securities Act.

The Company anticipates that the filing of this Annual Report on Form 10-K will render it unable to use its currently effective New Shelf Registration Statement as the Company expects that, on the date of filing of this report, it will no longer meet the criteria of a well-known seasoned issuer.

Liquidity and Capital Resources

The Company’s consolidated financial statements have been prepared on the basis of the Company continuing as a going concern for the next 12 months.

Management believes that the Company’s existing cash and cash equivalents, which include the net proceeds of approximately $ 151.0 million from its public offering of common stock in January 2024, will allow the Company to continue its operations for at least the next 12 months.

In the absence of a significant source of recurring revenue, the continued viability of the Company beyond that point is dependent on its ability to continue to raise additional capital to finance its operations.

Management believes that the Company’s $ 559.9 million cash and cash equivalents as of December 31, 2024 will allow the Company to continue its operations for at least the next 12 months.

In the absence of a significant source of recurring revenue, the continued viability of the Company is dependent on its ability to continue to raise additional capital to finance its operations.

If the Company is unable to obtain additional funding, the Company may be forced to delay, reduce or eliminate some or all of its research and development programs, product portfolio expansion or commercialization efforts, which could adversely affect its business prospects, or the Company may be unable to continue operations.

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The Company bases its estimates and assumptions on historical experience when available and on various factors that it believes to be reasonable under the circumstances.

This process may result in actual results differing materially from those estimated amounts used in the preparation of the financial statements if these results differ from historical experience, or other assumptions do not turn out to be substantially accurate, even if such assumptions are reasonable when made.

even if such assumptions are reasonable when made.

Significant estimates and assumptions reflected in these consolidated financial statements include, but are not limited to, useful lives assigned to property and equipment and accrued and prepaid research and development expenses.

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The Company had restricted cash in the form of a certificate of deposit related to its operating lease in Lexington, Massachusetts of $ 1.4 million and $ 1.2 million as of December 31, 2024 and December 31, 2023, respectively.

The certificate of deposit related to the Company’s operating lease at 99 Hayden Avenue in Lexington, Massachusetts was returned in 2023 upon the lease termination.

The Company provided Accent Therapeutics, Inc.

("Accent Therapeutics") a letter of credit in the amount of approximately $ 0.2 million upon commencement of the sublease.

Concentrations of Credit Risk

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Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset.

If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceed the fair value of the assets.

If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the

carrying amount of the assets exceed the fair value of the assets.

Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

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This estimate is also reviewed by the Company’s external tax advisors on an annual basis.

The Company’s estimate of the cash refund it expects to receive related to the R&D Incentive is included in other assets in the accompanying consolidated balance sheet and such amounts are recorded as research and development incentive income in the statement of operations.

The Company recognizes research and development incentive income when there is reasonable assurance that the income will be received, the relevant expenditure has been incurred, and the consideration

can be reliably measured.

The Company has received payments and has recorded other income from the R&D Incentive of $ 2.4 million and $ 7.1 million for the year ended December 31, 2023 and December 31, 2022, respectively, related to the R&D Incentive as defined above.

The Company had no income from the R&D Incentive for the year ended December 31, 2021.

income in the statement of operations.

The Company recognizes research and development incentive income when there is reasonable assurance that the income will be received, the relevant expenditure has been incurred, and the consideration can be reliably measured.

The Company has received payments and has recorded other income from the R&D Incentive of $ 1.2 million, $ 2.4 million, and $ 7.1 million for the years ended December 31, 2024, 2023 and 2022, respectively, related to the R&D Incentive as defined above.

Revenue Recognition

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Operating segments are identified as components of an enterprise about which separate discrete financial information is made available for evaluation by the chief operating decision maker (“CODM”) in making decisions regarding resource allocation and assessing performance.

The CODM is the Company’s chief executive officer.

The Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions.

The Company’s CODM is its chief executive officer, who reviews financial information presented on a consolidated basis for the purposes of making operating decisions, assessing financial performance and allocating resources.

The Company has one reportable segment and manages its operations on a consolidated basis for the purposes of assessing performance and making operating decisions.

The Company’s singular concentration is focused on the discovery and development of breakthrough therapeutics for hematological, pulmonary and cardiovascular disorders with high unmet medical need.

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If the Company determines that it would be able to realize its deferred tax assets in the future in excess of its net recorded amount, an adjustment would be made to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.

The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) the Company determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

The Company accounts for interest and penalties related to uncertain tax positions within the provision for income taxes.

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Basic net loss per share is computed by dividing the net loss by the weighted- average number of common shares outstanding during the period, without consideration of potential dilutive securities.

Diluted net loss per share is computed using the weighted-average number of common shares outstanding during the period, and if dilutive, the weighted-average number of potential shares of common shares.The Company’s potentially dilutive securities, which include stock options, have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share.

The Company’s potentially dilutive securities, which include stock options, have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share.

Therefore, the weighted-average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same.

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Options to purchase common stock 5,384,760 4,394,807 3,533,169

Employee stock purchase plan shares 47,694 — —

Total 5,432,454 4,394,807 3,533,169

Recently Adopted Accounting Pronouncements

The Company has not recently adopted any accounting pronouncements.

In November 2023, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No.

2023-07, Segment Reporting (Topic 280) (“ASU No.

The amendments in this update expand segment disclosure requirements, including new segment disclosure requirements for entities with a single reportable segment among other disclosure requirements.

This update was effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

The Company adopted ASU No.

2023-07 for its consolidated financial statements for the fiscal year ended December 31, 2024 and included a new disclosure Note 13.

Segment Reporting in accordance with ASU No.

The adoption of the standard did not have a material impact on the Company’s consolidated financial statements.

Recently Issued Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board issued Accounting Standards Update No.

In December 2023, the Financial Accounting Standards Board issued ASU No.

2023-09, Income Taxes (Topic 740):

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The new standard is effective for annual periods beginning after December 15, 2024, with early adoption permitted.

An entity may apply the amendments in this ASU prospectively by providing the revised disclosures for the period ending December 31, 2025 and continuing to provide the pre-ASU disclosures for the prior periods, or may apply the amendments retrospectively by providing the revised disclosures for all period presented.

The Company is currently evaluating the impact of this ASU on its consolidated financial statements and related disclosures.

An entity may apply the amendments in ASU No.

2023-09 prospectively by providing the revised disclosures for the period ending December 31, 2025 and continuing to provide the pre-ASU No.

2023-09 disclosures for the prior periods, or may apply the amendments retrospectively by providing the revised disclosures for all period presented.

The Company is currently evaluating the impact of ASU No.

2023-09 on its consolidated financial statements and related disclosures.

In November 2024, the Financial Accounting Standards Board issued ASU No.

2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses (“ASU No.

2024-03”), which intends to improve financial reporting by requiring disclosure of additional information about specific expense categories.

This guidance is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027.

Early adoption is permitted and the guidance is to be

applied prospectively and may be applied retrospectively.

The Company is currently evaluating the impact of this guidance on its consolidated financial statements and related disclosures.

Risks and Uncertainties

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In addition, the Company is subject to other challenges and risks specific to its business and its ability to execute on its business plan and strategy, as well as risks and uncertainties common to companies in the biopharmaceutical industry with research and development operations, including, without limitation, risks and uncertainties associated with:

regulatory approval of its product candidates;

obtaining regulatory approval of its product candidates;

delays or problems in obtaining clinical supply, loss of single source suppliers or failure to comply with manufacturing regulations;

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Office furniture 1,173 540

Leasehold improvements — 213

Total 7,186 5,854

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As of December 31, 2024, the Company’s amended and restated certificate of incorporation authorized the Company to issue 200,000,000 shares of common stock at a par value of $ 0.0001 per share.

On May 3, 2021, the Company entered into a Sales Agreement (the “ATM Sales Agreement”) with Leerink Partners LLC (“Leerink”), as agent, pursuant to which the Company may offer and sell, from time to time, shares of its common stock through Leerink (the “ATM Offering”).

On May 3, 2021, the Company filed the Shelf Registration Statement, including a base prospectus and sales agreement prospectus, with the Securities and Exchange Commission (the “SEC”), which became effective immediately upon filing, for the issuance and sale of up to $ 150.0 million of shares of the Company’s common stock under the ATM Sales Agreement.

On December 12, 2022, the Company filed a prospectus supplement to the Shelf Registration Statement for the issuance and sale, if any, of up to an additional $ 250.0 million of shares of its common stock under the ATM Sales Agreement.

On December 12, 2022, the Company filed a prospectus supplement to its registration statement on Form S-3ASR for the issuance and sale, if any, of up to $ 250.0 million of shares of its common stock under a sales agreement with Leerink Partners LLC (the “ATM Sales Agreement”).The Company anticipates that the filing of this Annual Report on Form 10-K will render it unable to use its currently effective New Shelf Registration Statement as the Company expects that, on the date of filing of this report, it will no longer meet the criteria of a well-known seasoned issuer.

On May 3, 2024, the Company filed the New 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 the Company could issue an unspecified amount of shares of the Company common stock, preferred stock, debt securities and warrants.

On June 17, 2024, the Company 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 its common stock under the ATM Sales Agreement.

For the year ended December 31, 2022, the Company raised gross proceeds of $ 121.4 million pursuant to the ATM Offering through the sale of 3,410,384 shares of common stock at a weighted average price of $ 35.60 per share.

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The net proceeds from the ATM Offering for the year ended December 31, 2023 were approximately $ 175.8 million after deducting sales agent commissions of $ 2.7 million.

As of December 31, 2023, the Company was eligible to offer and sell, from time to time, shares of its common stock for an aggregate offering amount of up to $ 71.5 million available under the ATM Offering.

For the year ended December 31, 2024, the Company raised gross proceeds of $ 232.3 million pursuant to the ATM Offering through the sale of 4,290,096 shares of common stock at a weighted average price of $ 54.14 per share.

The net proceeds from the ATM Offering for the year ended December 31, 2024 were approximately $ 228.6 million after deducting sales agent commissions of $ 3.5 million and offering expenses of less than $ 0.2 million.

As of December 31, 2024, the Company was eligible to offer and sell, from time to time, shares of its common stock for an aggregate offering amount of up to $ 117.7 million (less any sales agent commissions) available under the ATM Offering.

On January 8, 2024, the Company closed an underwritten public offering in which 4,025,000 shares of common stock were issued and sold, which included 525,000 shares of common stock issued and sold pursuant to the exercise in full of the underwriters’ option to purchase additional shares, at a public offering price of $ 40.00 per share.

The aggregate net proceeds from the public offering were approximately $ 151.0 million, after deducting underwriting discounts and commissions and estimated offering expenses.

The aggregate net proceeds from the public offering were approximately $ 151.1 million, after deducting underwriting discounts and commissions and offering expenses.

The following is a summary of the rights and privileges of the holders of common stock as of December 31, 2024:

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Options to purchase common stock 5,384,760 4,394,807 3,533,169

Employee stock purchase plan shares 47,694 — —

Total 5,432,454 4,394,807 3,533,169

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Additionally, there were an aggregate of 861,617 shares reserved for future issuance under the 2020 Plan, including shares forfeited from the 2017 Plan.

2020 Employee Stock Purchase Plan

In March 2020, the Board adopted and the Company's stockholders approved the 2020 Employee Stock Purchase Plan ("ESPP").

The ESPP became effective on April 7, 2020.

Under the ESPP, eligible employees can purchase shares of the Company's common stock, based on a percentage of their compensation, subject to certain limits.

The purchase price per share is equal to the lower of 85 % of the fair market value of the Company's common stock on the first trading day of the twenty-four month offering period, or on the applicable purchase date.

Each offering under the ESPP consists of two twelve-month purchase periods.

Under the ESPP, there is an annual increase on January 1 of each year from January 1, 2021 continuing through January 1, 2030, by the lesser of (i) 1.0 % of the total number of shares of common stock outstanding on December 31 of the preceding calendar year, (ii) 455,852 shares or (iii) or a lesser number of shares as may be determined by the Board.

On January 1, 2025, the Company increased the number of shares available for future grant under the ESPP by 405,547 shares.

If purchase rights granted under the ESPP terminate without having been exercised, the shares of our common stock not purchased under such purchase rights will again become available for issuance under the ESPP.

As of December 31, 2024, no shares of common stock were purchased under the ESPP.

As of December 31, 2024, there was an aggregate of 1,247,861 shares reserved for future issuance under the ESPP.

Stock Option Valuation

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The weighted-average grant date fair value per share of options granted during each of the years ended December 31, 2024, 2023, and 2022 was $ 40.92 , $ 35.24 and $ 31.18 , respectively.

As of December 31, 2023, there was $ 57.8 million of unrecognized stock-based compensation expense related to unvested stock options.

As of December 31, 2024, there was $ 82.0 million of unrecognized stock-based compensation expense related to unvested stock options, including 4.9 million of unrecognized stock-based compensation expense related to unvested performance-based stock options.

The unrecognized stock-based compensation expense is estimated to be recognized over a period of 2.49 years.

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federal and state net operating loss (“NOL”) carryforwards of $ 160.3 million and $ 180.9 million, respectively.

Of the $ 135.2 million in federal NOLs, $ 0.2 million will expire in 2035 while the remaining $ 135.0 million can be carried forward indefinitely.

Of the $ 160.3 million in federal NOLs, $ 0.2 million will expire in 2035 and the remaining $ 160.1 million can be carried forward indefinitely.

The state NOL carryforwards begin to expire in 2039.

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federal and state research and development tax credit carryforwards of $ 11.9 million and $ 5.4 million, respectively.

As of December 31, 2023, the Company had U.S.

federal and state research and development tax credit carryforwards of $ 10.4 million and $ 4.8 million, respectively.

The tax credits begin to expire in 2035.

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Under Section 382 of the Code (“Section 382”), certain substantial changes in the Company’s ownership, including the sale of the Company or significant changes in ownership due to sales of equity, may have limited, or may limit in the future, the amount of NOL carryforwards or tax credits which could be used annually to offset future taxable income.

The Company completed analyses under Section 382 through December 31, 2022, and determined that on April 15, 2016 and April 13, 2020, ownership changes had occurred.

Based on the Company’s analysis, the Company has determined that $ 0.3 million and $ 0.3 million of its federal and state NOL carryforwards, respectively, are limited by Section 382 and have been written off.

The Company had updated its analyses under Section 382 through September 30, 2024, and determined that on April 15, 2016 and April 13, 2020, ownership changes had occurred.

The remaining unused carryforwards remain available for future periods.

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In addition, at the state level, there may be periods during which the use of NOLs is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed.

Management of the Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets, which are comprised principally of NOL, research and development tax credit carryforwards, and capitalized R&D.

Management of the Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets, which are comprised principally of research and development credits and NOLs.

Under the applicable accounting standards, management has considered the Company’s history of losses and concluded that it is more likely than not that the Company will not recognize the benefits of federal and state deferred tax assets.

Accordingly, a full valuation allowance was maintained as of December 31, 2024 and 2023.

The Company’s valuation allowance has increased by $ 38.7 million, $ 25.2 million and $ 17.5 million for the years ended December 31, 2023, 2022, and 2021, respectively, due primarily to the generation of additional NOLs and the associated gross deferred tax assets.

A change in the Company’s valuation allowance was recorded in 2024 and 2023 in the amount of $ 50.6 million and $ 38.7 million, respectively, due primarily to the generation of additional net deferred tax assets.

The Tax Cuts and Jobs Act resulted in significant changes to the treatment of research and development (“R&D”) expenditures under Section 174.

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Specifically, costs for U.S.-based R&D activities must be amortized over five years and costs for foreign R&D activities must be amortized over 15 years – both using a midyear convention.

The calculation of the Company's tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations for both federal taxes and in the various states in which it operates or does business in.

The calculation of the Company's tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations for both federal taxes and the many states in which it operates or does business in.

ASC 740 states that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical merits.

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These differences will be reflected as increases or decreases to income tax expense in the period in which new information is available.

As of December 31, 2023, 2022 and 2021, the Company has not recorded any uncertain tax positions in its consolidated financial statements.

As of December 31, 2023, the Company did no t have any gross unrecognized tax benefits related to income tax reserves.

As of December 31, 2024, the Company had certain gross unrecognized tax benefits related to income tax reserves primarily related to federal and state research credit carryforwards of $ 3.1 million, of which $ 2.0 million relate to positions taken in prior years and $ 1.1 million relate to current year positions.

The Company does not have any other material gross unrecognized tax benefits related to income tax reserves.

The Company does not expect any of its unrecognized tax benefits related to income tax reserves, if recognized, to impact its effective tax rate due to full valuation allowance in the United States.

The Company recognizes interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying consolidated statement of operations.

As of December 31, 2024 and 2023, the Company had no interest or penalties related to unrecognized tax benefits.

The Company files income tax returns as prescribed by the tax laws of the jurisdictions in which it operates.

In the normal course of business, the Company is subject to income tax examination by federal, state and foreign jurisdictions, where applicable.

There are currently no pending income tax examinations.

The Company’s tax years are still open under statute for income tax examination by the Internal Revenue Service from December 31, 2020 to the present.

There are currently no pending income tax examinations.

The Company is currently subject to an income tax examination with the state of Massachusetts for the tax years ended December 31, 2021 and 2022, and does not expect a material impact to the Company's financial statements as a result of such income tax examination.

The Company’s tax years are still open under statute for income tax examination by the Internal Revenue Service (“IRS”) from December 31, 2021 to the present.

There are currently no pending income tax examinations with the IRS.

To the extent the Company has tax attribute carryforwards, the tax years in which the tax attribute was generated may still be adjusted upon examination by the Internal Revenue Service, state and foreign tax authorities to the extent utilized in a future period.

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The Company is obligated to reimburse the Landlord for certain variable costs, including its proportional share of taxes and operating expenses which are not included in the measurement of the 1050 Waltham Lease liability.

In connection with its entry into the 1050 Waltham Lease, the Company has provided the Landlord a letter of credit in the amount of approximately $ 1.2 million, which is recognized as restricted cash within other assets on the consolidated

balance sheets.

The Company has the option to extend the term of the 1050 Waltham Lease for a period of an additional 5 years.

As of December 31, 2024, the Company has no reasonable certainty that this option to extend will be exercised.

In July 2024, the Company entered into a sublease (the “Sublease Agreement”) with Accent Therapeutics, pursuant to which the Company has sublet approximately 20,000 square feet of office and laboratory space located at 1050 Waltham Street, Lexington, Massachusetts, expanding the Company's existing headquarters.

Accordingly, the Sublease Agreement for the premises was determined to be classified as an operating lease.

Upon commencement of the sublease, the Company recorded an ROU asset of $ 5.7 million and a lease liability of $ 5.7 million.

The term of the sublease commenced on July 1,

2024 (the "Sublease Commencement Date").

The Sublease Agreement has a term of 5 years and 3 months , measured from the Sublease Commencement Date.

The Company’s obligation for the payment of base rent for the premises began on the Sublease Commencement Date.

Base rent was initially fixed at $ 71.00 per rentable square foot and the Company is only required to pay base rent on 17,500 square feet for the first year of the sublease.

The Sublease Agreement also provides for three months of free rent.

Base rent will increase by approximately 3 % per annum until the Sublease Agreement expires on September 30, 2029.

In connection with its entry into the Sublease Agreement and as a security deposit, the Company provided Accent Therapeutics a letter of credit in the amount of approximately $ 0.2 million on the Sublease Commencement Date.

The components of the lease cost as of December 31, 2024, 2023, and 2022 consisted of the following (in thousands):

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Total operating lease liabilities $ 18,861

Purchase Commitments

The Company enters 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 the Company upon written notice.

Payments due upon cancellation consist of payments for services provided or expenses incurred, including noncancellable obligations of the Company’s 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 the Company in the event of termination will be based on the timing of the termination and the exact terms of the agreement.

As of December 31, 2024, the Company has committed up to approximately $ 27.2 million under these agreements which are expected to be paid through 2029.

Legal Proceedings

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In December 2021, the Company entered into a license agreement with Hansoh (the “Hansoh Agreement”).

Under the Hansoh Agreement, the Company granted to Hansoh the exclusive right to develop, manufacture and commercialize KER-050 and licensed products containing KER-050 within the territories of mainland China, Hong Kong and Macau (the “Territory”).

In connection with the Hansoh Agreement, Hansoh will purchase clinical trial supply of KER-050 from the Company, and the parties will also negotiate in good faith to enter into an agreement for commercial supply prior to any anticipated commercialization in the Territory.

In addition, Hansoh will use commercially reasonable efforts to develop, obtain regulatory approval for, and commercialize licensed products in any region in the Territory.

Pursuant to the Hansoh Agreement, the Company received a net one-time $ 18.0 million upfront license payment and will also be eligible to receive up to an aggregate of (i) $ 26.5 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 Territory.

If a licensed product is approved for marketing in the Territory, the Company will be entitled to receive royalty payments based on a tiered percentage of annual net sales in each region within the Territory, with such percentage ranging from the low double digit to high teens, subject to specified potential royalty reductions.

Hansoh’s obligation to pay royalties for a given licensed product in a given region in the Territory will begin on the date of the first commercial sale for such licensed product in such region and continue until the latest of (i) 10 years from the date of the first commercial sale for such licensed product in such region, (ii) the expiration of the last valid claim of certain licensed patents or joint patents, and (iii) expiration of regulatory exclusivity in such region.

During the royalty term, neither party will directly or indirectly commercialize a competing product in the Territory.

Under the Hansoh Agreement, the Company granted to Hansoh the exclusive right to develop, manufacture and commercialize elritercept and licensed products containing elritercept within the territories of mainland China, Hong Kong and Macau (the “Hansoh Territory”).

In connection with the Hansoh Agreement, Hansoh will purchase clinical trial supply of elritercept from the Company, 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.

Pursuant to the Hansoh Agreement, the Company received a net one-time $ 18.0 million upfront license payment in January 2022.

In addition to the upfront payment and development milestones achieved to date, the Company will also be eligible 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, the Company 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.

Hansoh’s obligation to pay royalties for a given licensed product in a given region in the Hansoh Territory will begin on the date of the first commercial sale for such licensed product in such region and continue until the latest of (i) 10 years from the date of the first commercial sale for such licensed product in such region, (ii) the expiration of the last valid claim of certain licensed patents or joint patents, and (iii) expiration of regulatory exclusivity in such region.

During the royalty term, neither party will directly or indirectly commercialize a competing product in the Hansoh Territory.

The Hansoh Agreement will continue in force on a region-by-region basis until the expiration of the royalty term.

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The Company evaluated the Hansoh Agreement and concluded that it was subject to ASC 606, as the Company viewed the Hansoh Agreement as a contract with a customer.

As such, the Company assessed the terms of the Hansoh Agreement and identified a single performance obligation for the Company to provide Hansoh an exclusive license to develop, manufacture and commercialize KER-050 and licensed products containing KER-050 in the Territory, including the underlying know-how related to such licenses.

As such, the Company assessed the terms of the Hansoh Agreement and identified a single performance obligation for the Company to provide Hansoh an exclusive license to develop, manufacture and commercialize elritercept and licensed products containing elritercept in the Hansoh Territory, including the underlying know-how related to such licenses.

All other promised goods/services were deemed immaterial in the context of the Hansoh Agreement.

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The Company will recognize royalty payments and commercial milestone payments as the associated sales of licensed products are recorded by Hansoh, as they predominantly relate to the license granted with the Hansoh Agreement.

No milestones have been achieved as of December 31, 2023.

The Company recognized $ 3.0 million as revenue and $ 0.3 million in withholding tax upon the achievement of a development milestone

related to the Hansoh Agreement on its consolidated statement of operations for the year ended December 31, 2024, and a receivable, net of withholding tax, on its consolidated balance sheet as of December 31, 2024.

In connection with the Hansoh Agreement, the Company entered into a manufacturing technology transfer agreement (the “Tech Transfer Agreement”) with Hansoh, effective in June 2023.

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Under the Tech Transfer Agreement, Hansoh is obligated to make certain payments to the Company, 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.

The Tech Transfer Agreement is set to expire on December 30, 2024, unless extended pursuant to its terms.

As of December 31, 2023, work under the Tech Transfer Agreement has begun.

The Company recognized $ 0.2 million of service and other revenue for the year ended December 31, 2023.

The Company recognized $ 96.1 thousand and $ 150.8 thousand of service and other revenue for the years ended December 31, 2024 and 2023, respectively.

In connection with the Hansoh Agreement, the Company entered into a clinical product supply agreement (the “Supply Agreement”) with Hansoh, effective February 2024.

The Company evaluated the Supply Agreement and concluded that it was subject to ASC 606, as the Company viewed the Supply Agreement as a contract with a customer.

As such, the Company assessed the terms of the Supply Agreement and identified a single performance obligation for the Company to supply Hansoh with clinical product supply.

The Company will recognize revenue at a point in time when control transfers, which is deemed to be at the shipping point when the clinical product supply is ready for shipment.

As of December 31, 2024, the Company has commenced shipping clinical product supply under the Supply Agreement.

The Company recognized $ 421.1 thousand of other revenue for the year ended December 31, 2024.

Segment Reporting

The following table presents segment revenue and significant segment expenses (in thousands) for the years ended December 31, 2024, 2023 and 2022:

YEAR ENDED DECEMBER 31,

2024 2023 2022

Total segment revenue 3,550 151 —

Cibotercept program expenses ( 29,777 ) ( 20,931 ) ( 12,433 )

KER-065 program expenses ( 16,090 ) ( 5,962 ) ( 6,010 )

Elritercept program expenses ( 44,319 ) ( 41,249 ) ( 24,492 )

Preclinical & development expenses ( 12,008 ) ( 12,420 ) ( 9,221 )

Compensation costs (excluding stock based compensation) ( 48,084 ) ( 38,074 ) ( 26,476 )

Stock-based compensation ( 34,872 ) ( 28,763 ) ( 18,682 )

Depreciation expense ( 1,229 ) ( 815 ) ( 674 )

Other segment items 1 ( 27,720 ) ( 19,684 ) ( 10,334 )

Interest expense — — ( 1 )

Dividend income 23,496 14,755 3,644

Income tax provision $ ( 300 ) $ — $ —

Net loss $ ( 187,353 ) $ ( 152,992 ) $ ( 104,679 )

The Company manages its operations as a single reportable segment focused on developing novel therapeutics.

Segment revenue above is 100 percent attributed to the Company’s agreements with Hansoh and is equal to consolidated total revenue.

All revenues are derived in the United States where the agreements originated.

The Company manages expenses on a program level.

The significant expense categories outlined above align with the segment-level information that is regularly provided to the CODM to allocate resources, assess performance of the reportable segment, and make key operating decisions.

On a quarterly basis, the CODM reviews financial information, including consolidated net income, clinical expenses by program, other company expenses and a long-range cash flow projection, to make resource decisions for the Company’s programs and review and approve corporate goals.

No segment asset information is provided above as the CODM is focused on how expenses impact ending cash by period and overall cash runway.

Any review of segment assets,

1 Other segment items include professional fees, facilities and office expenses, marketing and travel expenses, research and development incentive income, and other income and expenses, primarily consisting of other taxes and fees and unrealized and realized gains and losses on foreign currency.

which would focus on cash and cash equivalents, would be at the same level as the consolidated balance sheet.

All long-lived assets are held in the United States.

Subsequent Events

In December 2024, the Company entered into a license agreement with Takeda, which became effective on January 16, 2025.

Under the terms of the license agreement with Takeda (the “Takeda Agreement”), the Company granted to Takeda the exclusive right to develop, manufacture and commercialize elritercept and certain derivative compounds globally, excluding the territories of mainland China, Hong Kong and Macau (the “Takeda Territory”).

Pursuant to the terms of the Takeda Agreement, the Company received a $ 200.0 million upfront payment in February 2025.

In addition to the upfront payment, the Company is entitled to receive up to an aggregate of (i) $ 370.0 million upon the achievement of specified development and commercial milestones and (ii) $ 740.0 million upon the achievement of specified sales milestones.

If a licensed product is approved for marketing in the Takeda Territory, the Company 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.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures