Keros Therapeutics, Inc. 10-K

ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures We maintain “disclosure controls and procedures,” as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2025. Based on the evaluation of our disclosure controls and procedures as of December 31, 2025, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level. Management’s Annual Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: • Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; • Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and • Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2025. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework (2013 framework) (COSO). Based on its assessment, management concludes that, as of December 31, 2025, our internal control over financial reporting is effective based on those criteria. Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, that occurred during the fiscal quarter ended December 31, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Inherent Limitations on Effectiveness of Controls Our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving the desired control objectives. Our management recognizes that any control system, no matter how well designed and operated, is based upon certain judgments and assumptions and cannot provide absolute assurance that its objectives will be met. Similarly, an evaluation of controls cannot provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. 98 ITEM 9B. OTHER INFORMATION During the three months ended December 31, 2025, the following directors and officers of the Company adopted a “Rule 10b5-1 trading arrangement” as that term is defined in Item 408(a) of Regulation S-K, all of which were entered into during an open trading window in accordance with the Company’s Insider Trading Policy and all of which were intended to satisfy Rule 10b5-1(c): • On December 11, 2025 , Keith Regnante , our Chief Financial Officer , adopted a Rule 10b5-1 trading plan that provides for the sale of up to 24,741 shares of our common stock to be acquired upon the settlement of restricted stock units, or RSUs, vesting on February 17, 2026 and August 15, 2026, owned by Mr. Regnante. The plan will expire on December 31, 2026 , subject to early termination for certain specified events set forth in the plan. • On December 10, 2025 , Lorena Lerner , our Chief Scientific Officer , adopted a Rule 10b5-1 trading plan that provides for the sale of up to 19,577 shares of our common stock to be acquired upon the settlement of RSUs vesting on February 17, 2026 and August 15, 2026, owned by Dr. Lerner. The plan will expire on December 31, 2026 , subject to early termination for certain specified events set forth in the plan. • On December 5, 2025 , Nima Farzan , a member of our board of directors , adopted a Rule 10b5-1 trading plan that provides for the sale of up to 7,875 shares of our common stock to be acquired upon the exercise of stock options or settlement of RSUs. The plan will expire on June 30, 2026 , subject to early termination for certain specified events set forth in the plan. • On December 5, 2025 , Julius Knowles , a member of our board of directors, adopted a Rule 10b5-1 trading plan that provides for the sale of up to 2,625 shares of our common stock to be acquired upon the settlement of RSUs. The plan will expire on June 30, 2026 , subject to early termination for certain specified events set forth in the plan. • On December 9, 2025 , Alpna Seth , a member of our board of directors , adopted a Rule 10b5-1 trading plan that provides for the sale of up to 2,625 shares of our common stock to be acquired upon the settlement of RSUs. The plan will expire on June 30, 2026 , subject to early termination for certain specified events set forth in the plan. • On December 5, 2025 , Jean-Jacques Bienaimé , a member of our board of directors , adopted a Rule 10b5-1 trading plan that provides for the purchase of up to 7,000 shares of our common stock. The plan will expire on August 31, 2026 , subject to early termination for certain specified events set forth in the plan . ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. PART III We will file a definitive Proxy Statement for our 2026 Annual Meeting of Stockholders, or our 2026 Proxy Statement, with the SEC, pursuant to Regulation 14A, not later than 120 days after the end of our fiscal year. Accordingly, certain information required by Part III has been omitted under General Instruction G(3) to Form 10-K. Only those sections of the 2026 Proxy Statement that specifically address the items set forth herein are incorporated by reference. ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE The information required by this Item 10 will be included under the headers “Proposal 1 - Election of Directors,” “Executive Officers” and “Information Regarding the Board of Directors and Corporate Governance” in our 2026 Proxy Statement and is incorporated herein by reference. We have adopted a written Code of Business Conduct and Ethics, or the Code of Conduct, applicable to all of our employees, executive officers and directors, including our principal executive officer, principal financial officer and principal accounting officer. 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. ITEM 11. EXECUTIVE COMPENSATION The information required by this Item 11 will be included under the header “Executive Compensation” in our 2026 Proxy Statement and is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND RELATED STOCKHOLDER MATTERS The information required by this Item 12 will be included under the header “Security Ownership of Certain Beneficial Owners and Management” in our 2026 Proxy Statement and is incorporated herein by reference. 99 ITEM 13. 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 and Indemnification” in our 2026 Proxy Statement and is incorporated herein by reference. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The information required by this Item 14 will be included under the header “Proposal 2 - Ratification of Selection of Independent Registered Public Accounting Firm” in our 2026 Proxy Statement and is incorporated herein by reference. 100 PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES (a) The following documents are filed as part of this Annual Report on Form 10-K: (1) The Consolidated Financial Statements required to be filed by Item 8 of this Annual Report on Form 10-K, and filed in this Item 15, are as follows: PAGE Report of Independent Registered Public Accounting Firm (PCAOB ID 34 ) F-2 Consolidated Balance Sheets F- 4 Consolidated Statements of Operations F- 5 Consolidated Statements of Stockholders’ Equity F- 6 Consolidated Statements of Cash Flows F- 7 Notes to Consolidated Financial Statements F- 9 (2) The Consolidated Financial Statement Schedule have been omitted because they are either not applicable or the required information is included in the Consolidated Financial Statements or notes thereto listed in (a)(1) above. (3) Exhibits are incorporated herein by reference or are filed with this Annual Report on Form 10-K as indicated below. (b) Exhibits EXHIBIT NO. DESCRIPTION FORM FILE NO. EXHIBIT FILING DATE 3.1 Amended and Restated Certificate of Incorporation of the Registrant. 8-K 001-39264 3.1 April 13, 2020 3.2 Amended and Restated Bylaws of the Registrant. 8-K 001-39264 3.1 March 6, 2025 3.3 Certificate of Designation of Series A Junior Participating Preferred Stock filed with the Secretary of State of the State of Delaware on April 9, 2025. 8-K 001-39264 3.1 April 10, 2025 4.1 Amended and Restated Investors’ Rights Agreement by and among the registrant and certain of its stockholders, dated as of March 2, 2020. S-1 333-237212 4.1 March 16, 2020 4.2 Form of Common Stock Certificate. S-1/A 333-237212 4.2 April 1, 2020 4.3^ Rights Agreement, dated as of April 9, 2025 between Registrant and Computershare Trust Company, N.A., which includes the form of Certificate of Designation as Exhibit A, the form of Right Certificate as Exhibit B. 8-K 001-39264 4.1 April 10, 2025 4.4* Description of the Registrant’s Securities. 10.1 Form of Indemnity Agreement between the registrant and its directors and officers. S-1/A 333-237212 10.1 April 1, 2020 10.2+ 2017 Stock Incentive Plan, as amended. S-1 333-237212 10.2 March 16, 2020 10.3+ Form of Stock Option Grant Notice and Option Agreement for the 2017 Stock Incentive Plan, as amended. S-1 333-237212 10.3 March 16, 2020 10.4+ 2020 Equity Incentive Plan. S-1/A 333-237212 10.4 April 1, 2020 10.5+ 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. 10-K 001-39264 10.5 February 26, 2025 10.6+ 2020 Employee Stock Purchase Plan. S-1/A 333-237212 10.6 April 1, 2020 10.7*+ Amended and Restated Non-Employee Director Compensation Policy 101 10.8+ Offer Letter Agreement by and between the registrant and Jasbir Seehra, dated as of December 14, 2015. S-1 333-237212 10.7 March 16, 2020 10.9# Exclusive Patent License Agreement by and between the registrant and The General Hospital Corporation, d/b/a Massachusetts General Hospital, or MGH, dated as of April 5, 2016, as amended by Amendment #1 by and between the registrant and The Brigham and Women’s Hospital, Inc. on May 12, 2017 and by Amendment #2 by and between the registrant and MGH on February 23, 2018. S-1 333-237212 10.10 March 16, 2020 10.10# License Agreement by and between the registrant and Hansoh (Shanghai) Healthtech Co., Ltd., dated as of December 12, 2021, as amended by Amendment No. 1 by and between the registrant and Hansoh (Shanghai) Healthtech Co., Ltd., dated as of February 10, 2022. 10-K 001-39264 10.10 March 9, 2022 10.11# Amendment No. 2, dated as of March 11, 2022, and Amendment No. 3, dated as of December 11, 2022, to License Agreement by and between the registrant and Hansoh (Shanghai) Healthtech Co., Ltd. 10-K 001-39264 10.11 March 9, 2023 10.12# Amendment No. 4 dated as of April 12, 2023, to License Agreement by and between the registrant and Hansoh (Shanghai) Healthtech Co., Ltd. 10-K 001-39264 10.12 February 28, 2024 10.13+ Offer Letter Agreement by and between the registrant and Keith Regnante, dated as of February 7, 2020. S-1 333-237212 10.13 March 16, 2020 10.14+ Employment Agreement by and between the registrant and Jasbir Seehra, dated as of March 31, 2020, effective as of April 13, 2020. S-1/A 333-237212 10.14 April 1, 2020 10.15+ Employment Agreement by and between the registrant and Keith Regnante, dated as of March 31, 2020, effective as of April 13, 2020. S-1/A 333-237212 10.17 April 1, 2020 10.16+ Employment Agreement by and between the registrant and Christopher Rovaldi, dated as of January 28, 2022 effective as of February 1, 2022. 8-K 001-39264 10.1 January 31, 2022 10.17+ Separation and Release Agreement by and between the r egistrant and Christopher Rovaldi, dated as of August 6, 2025. 8-K 001-39264 10.2 August 6, 2025 10.18+ First Amendment to the Employment Agreement by and between the registrant and Keith Regnante, dated as of January 1, 2022. 10-K 001-39264 10.21 March 9, 2022 10.19+ Employment Agreement by and between the registrant and Lorena Lerner, dated as of August 6, 2025. 8-K 001-39264 10.1 August 6, 2025 10.20+ Employment Agreement by and between Registrant and Esther Cho, dated as of August 6, 2025. 8-K 001-39264 10.3 August 6, 2025 10.21 Indenture of Lease by and between the registrant and Revolution Labs Owner, LLC, dated September 7, 2021. 10-Q 001-39264 10.1 November 4, 2021 10.22 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 10.23# Exclusive License Agreement by and between the registrant and Takeda Pharmaceuticals U.S.A., Inc., dated as of December 3, 2024. 10-K 001-39264 10.24 February 26, 2025 10.24*# Amendment No. 1, dated as of March 24, 2025, Amendment No. 2, dated as of April 23, 2025, Amendment No. 3, dated as of June 5, 2025 and Amendment No. 4, dated as of June 13, 2025 to Exclusive License Agreement by and between the registrant and Takeda Pharmaceuticals U.S.A., Inc. 102 10.25 Letter Agreement, dated April 17, 2025, by and between the registrant and Pontifax (Israel) IV, L.P., Pontifax (Cayman) IV, L.P., Pontifax (China) IV, L.P. and Pontifax Late Stage Fund L.P. 8-K 001-39264 10.1 April 18, 2025 10.26 Stock Purchase Agreement, dated as of October 15, 2025, by and between the Registrant and certain entities affiliated with ADAR1 Capital Management. 8-K 001-39264 2.1 October 15, 2025 10.27*+ First Amendment to the Employment Agreement by and between the registrant and Esther Cho , dated as of February 24, 2026 . 10.28 Stock Purchase Agreement, dated as of October 15, 2025, by and between the Registrant and certain entities affiliated with Pontifax Venture Capital. 8-K 001-39264 2.2 October 15, 2025 19 Insider Trading Policy. 10-K 001-39264 19 February 26, 2025 21.1* Subsidiaries of Keros Therapeutics, Inc. 23.1* Consent of Independent Registered Public Accounting Firm. 31.1* Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2* Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1** Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 97 Incentive Compensation Recoupment Policy. 10-K 001-39264 97 February 28, 2024 101.INS Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document 101.SCH* Inline XBRL Taxonomy Extension Schema Document 101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document 104* Cover Page Interactive Data File - the cover page interactive data is embedded within the Inline XBRL document or included within the Exhibit 101 attachments * Filed herewith ** Furnished herewith and not deemed to be “filed” for purposes of Section 18 of the Exchange Act, and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act (whether made before or after the date of the Form 10-K), irrespective of any general incorporation language contained in such filing. + Indicates management contract or compensatory plan. ^ Certain exhibits omitted pursuant to Item 601(b)(2) of Regulation S-K. The Registrant will furnish supplementally a copy of any omitted exhibit to the SEC upon request. The Registrant may request confidential treatment pursuant to Rule 24b-2 of the Exchange Act for any exhibits so furnished. 103 # Certain portions of this exhibit (indicated by asterisks) have been omitted because they are not material and would likely cause competitive harm to Keros Therapeutics, Inc. if publicly disclosed. The agreements and other documents filed as exhibits to this Annual Report on Form 10-K are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time. ITEM 16. FORM 10-K SUMMARY Not applicable. 104 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Keros Therapeutics, Inc. Date: March 4, 2026 By: /s/ Jasbir Seehra Jasbir Seehra, Ph.D. Chief Executive Officer (Principal Executive Officer) 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. 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. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. NAME TITLE DATE /s/ Jasbir Seehra Chief Executive Officer and Director (Principal Executive Officer) March 4, 2026 Jasbir Seehra, Ph.D. /s/ Keith Regnante Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) March 4, 2026 Keith Regnante /s/ Jean-Jacques Bienaimé Chair of the Board of Directors March 4, 2026 Jean-Jacques Bienaimé /s/ Nima Farzan Director March 4, 2026 Nima Farzan /s/ Carl Gordon Director March 4, 2026 Carl Gordon, Ph.D., C.F.A. /s/ Mary Ann Gray Director March 4, 2026 Mary Ann Gray, Ph.D. /s/ Julius Knowles Director March 4, 2026 Julius Knowles /s/ Alpna Seth Director March 4, 2026 Alpna Seth, Ph.D. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS PAGE Report of Independent Registered Public Accounting Firm (PCAOB ID: 34) F-2 Consolidated Balance Sheets F- 4 Consolidated Statements of Operations F- 5 Consolidated Statements of Stockholders’ Equity F- 6 Consolidated Statements of Cash Flows F- 7 Notes to Consolidated Financial Statements F- 9 F-1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the Board of Directors of Keros Therapeutics, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Keros Therapeutics, Inc. and subsidiaries (the "Company") as of December 31, 2025 and 2024, the related consolidated statements of operations, stockholders' equity, and cash flows, for each of the years then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Revenue Recognition — Takeda License Agreement – Refer to Notes 2 and 15 to the financial statements Critical Audit Matter Description The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). As described in Note 15 to the financial statements, the Company entered into a license agreement with Takeda (the “Takeda Agreement”), which became effective January 16, 2025, and concurrently entered into a separate transition services agreement with Takeda (the “TSA”), pursuant to which the Company will provide certain transitional services to Takeda, including, but not limited to, clinical trial and manufacturing services, during the term of the TSA (the "Transition Services"). Pursuant to the terms of the Takeda Agreement, the Company received a $200.0 million upfront payment in February 2025, which was included in the transaction price at inception. The transaction price also included estimated variable consideration of $51.4 million relating to Transition Services. The Company evaluated the Takeda Agreement and the TSA as a single contract under ASC 606 and identified two performance obligations, which included the license to the Company’s intellectual property (“License and Know-How”) and the Transition Services. The Company determined that the License and Know-How were distinct from the Transition Services. The Company allocated $195.4 million of the upfront payment to the License and Know-How, which was recognized as revenue at a point in time when control of the License and Know-How was transferred to Takeda. The remaining transaction price was allocated to the Transition Services, which was recognized over time as services were provided. As of December 31, 2025, the Company recognized $38.5 million of service revenue for the Transition Services and such services are substantially complete. F-2 We identified the revenue recognition for the Takeda Agreement and the TSA as a critical audit matter. Auditing the Company’s application of the relevant accounting guidance required significant auditor judgment, including the need to involve an internal subject matter expert. Our audit procedures related to the Company’s revenue recognition for the Takeda Agreement and the TSA included the following, among others: • Agreed the $200 million upfront payment to cash received and verified cash receipt for all payments received by the Company from Takeda for Transition Services performed during the year. • Obtained and read the Company’s accounting position paper assessing the accounting treatment for the Takeda Agreement and the TSA pursuant to ASC 606. • Utilized the assistance of our professionals with specialized knowledge and skills in the relevant technical accounting guidance, to evaluate (1) the Company’s determination of performance obligations, (2) the timing of revenue recognition for the License and Know-How and (3) the determination of the transaction price. /s/ Deloitte & Touche LLP Boston, MA March 4, 2026 We have served as the Company's auditor since 2019. F-3 KEROS THERAPEUTICS, INC. Consolidated Balance Sheets (In thousands, except share and per share data) DECEMBER 31, 2025 2024 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 287,415 $ 559,931 Accounts receivable 3,567 2,742 Prepaid expenses and other current assets 22,202 26,220 Current income tax receivable 2,250 — Total current assets 315,434 588,893 Operating lease right-of-use assets 16,841 19,251 Property and equipment, net 4,297 4,237 Restricted cash 1,449 1,449 Other long term assets — 2,056 TOTAL ASSETS $ 338,021 $ 615,886 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable $ 1,967 $ 4,602 Current portion of operating lease liabilities 2,408 1,978 Accrued expenses and other current liabilities 16,039 20,870 Total current liabilities 20,414 27,450 Operating lease liabilities, net of current portion 14,475 16,883 Total liabilities 34,889 44,333 COMMITMENTS AND CONTINGENCIES (Note 14) STOCKHOLDERS’ EQUITY: Preferred stock, par value of $ 0.0001 per share; 10,000,000 shares authorized as of December 31, 2025 and 2024; no shares issued and outstanding — — Series A junior participating preferred stock, par value of $ 0.0001 per share; 500,000 and no shares authorized as of December 31, 2025 and December 31, 2024, respectively; no shares issued and outstanding — — Common stock, par value of $ 0.0001 per share; 200,000,000 shares authorized as of December 31, 2025 and December 31, 2024; 40,670,466 shares issued and 19,543,706 shares outstanding as of December 31, 2025 and 40,554,705 shares issued and outstanding as of December 31, 2024 4 4 Treasury stock, at cost; 21,126,760 and no shares as of December 31, 2025 and December 31, 2024, respectively ( 384,558 ) — Additional paid-in capital 1,169,451 1,140,328 Accumulated deficit ( 481,765 ) ( 568,779 ) Total stockholders’ equity 303,132 571,553 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 338,021 $ 615,886 See notes to consolidated financial statements. F-4 KEROS THERAPEUTICS, INC. Consolidated Statements of Operations (In thousands, except share and per share data) YEAR ENDED DECEMBER 31, 2025 2024 REVENUE: Service and other revenue $ 38,706 $ 550 License revenue 205,355 3,000 Total revenue 244,061 3,550 OPERATING EXPENSES: Research and development ( 129,643 ) ( 173,629 ) General and administrative ( 46,849 ) ( 40,754 ) Total operating expenses ( 176,492 ) ( 214,383 ) INCOME (LOSS) FROM OPERATIONS 67,569 ( 210,833 ) OTHER INCOME (EXPENSE), NET: Research and development incentive income — 1,238 Dividend income 24,867 23,496 Other expense, net ( 539 ) ( 954 ) Total other income, net 24,328 23,780 Income (loss) before income taxes 91,897 ( 187,053 ) Income tax provision ( 4,883 ) ( 300 ) Net income (loss) $ 87,014 $ ( 187,353 ) Net income (loss) attributable to common stockholders — basic and diluted (Note 11) $ 87,014 $ ( 187,353 ) Weighted-average common stock outstanding—basic 37,221,211 37,437,652 Weighted-average common stock outstanding—diluted 37,859,106 37,437,652 Net income (loss) per share of common stock — basic $ 2.34 $ ( 5.00 ) Net income (loss) per share of common stock — diluted $ 2.30 $ ( 5.00 ) See notes to consolidated financial statements. F-5 KEROS THERAPEUTICS, INC. Consolidated Statements of Stockholders’ Equity (In thousands, except share and per share data) COMMON STOCK $ 0.0001 PAR VALUE TREASURY STOCK ADDITIONAL PAID-IN CAPITAL ACCUMULATED DEFICIT TOTAL STOCKHOLDERS’ EQUITY SHARES AMOUNT SHARES AMOUNT BALANCE, January 1, 2024 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 4,290,096 1 — — 228,622 — 228,623 Exercise of common stock options 398,525 — — — 12,141 — 12,141 Stock-based compensation — — — — 34,872 — 34,872 Net income (loss) — — — — — ( 187,353 ) ( 187,353 ) BALANCE, December 31, 2024 40,554,705 $ 4 — $ — $ 1,140,328 $ ( 568,779 ) $ 571,553 Issuance of common stock under the employee stock purchase plan 11,806 — — — 138 — 138 Repurchase of treasury stock, including excise tax, direct fees and expenses of $ 9,558 — — ( 21,126,760 ) ( 384,558 ) — — ( 384,558 ) Short-swing profit settlement — — — — 139 — 139 Exercise of common stock options 73,655 — — — 150 — 150 Vesting of restricted stock units 30,300 — — — — — — Stock-based compensation — — — — 28,696 — 28,696 Net income (loss) — — — — — 87,014 87,014 BALANCE, December 31, 2025 40,670,466 $ 4 ( 21,126,760 ) $ ( 384,558 ) $ 1,169,451 $ ( 481,765 ) $ 303,132 See notes to consolidated financial statements. F-6 KEROS THERAPEUTICS, INC. Consolidated Statements of Cash Flows (In thousands) YEAR ENDED DECEMBER 31, 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 87,014 $ ( 187,353 ) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation expense 1,509 1,229 Gain on disposal of fixed asset ( 13 ) — Stock-based compensation expense 28,696 34,872 Non-cash lease expense 2,410 1,820 Changes in operating assets and liabilities: Accounts receivable ( 825 ) ( 2,599 ) Prepaid expenses and other current assets 4,018 ( 10,217 ) Current income tax receivable ( 2,250 ) — Other assets 2,056 ( 4 ) Accounts payable ( 3,001 ) ( 249 ) Right-of-use assets and operating lease liabilities ( 1,978 ) ( 1,320 ) Accrued expenses and other current liabilities ( 10,131 ) 2,952 Net cash provided by (used in) operating activities 107,505 ( 160,869 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment ( 1,551 ) ( 1,931 ) Net cash used in investing activities ( 1,551 ) ( 1,931 ) CASH FLOWS FROM FINANCING ACTIVITIES: 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 Payment of issuance costs associated with issuance of common stock under the ATM agreement — ( 171 ) Proceeds from issuance of common stock under the employee stock purchase plan 138 — Repurchase of treasury stock ( 375,000 ) — Payment of direct expenses associated with the treasury stock repurchase ( 3,897 ) — Short-swing profit settlement 139 — Proceeds from exercise of stock options 150 12,141 Net cash provided by (used in) financing activities ( 378,470 ) 391,821 NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH ( 272,516 ) 229,021 Cash, cash equivalents and restricted cash at beginning of year 561,380 332,359 Cash, cash equivalents and restricted cash at end of year $ 288,864 $ 561,380 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for taxes $ 7,145 $ — Property and equipment purchases in accounts payable and accrued expenses $ 5 $ — Treasury stock repurchase costs in accounts payable and accrued expenses $ 5,661 $ — Right-of-use assets obtained in exchange for operating lease obligation $ — $ 5,737 The following table provides a reconciliation of the cash and cash equivalents and restricted cash as of each of the periods shown above: F-7 YEAR ENDED DECEMBER 31, 2025 2024 Cash and cash equivalents $ 287,415 $ 559,931 Restricted cash 1,449 1,449 Total cash, cash equivalents and restricted cash $ 288,864 $ 561,380 See notes to consolidated financial statements. F-8 KEROS THERAPEUTICS, INC. Notes to Consolidated Financial Statements 1. NATURE OF BUSINESS AND BASIS OF PRESENTATION Keros Therapeutics, Inc. (“Keros” or the “Company”) was incorporated in 2015 as a Delaware corporation. Its principal offices are in Lexington, Massachusetts. The Company is a clinical-stage biopharmaceutical company focused on developing and commercializing novel therapeutics to treat a wide range of patients with disorders that are linked to dysfunctional signaling of the transforming growth factor-beta (“TGF-ß”) family of proteins. The Company's lead product candidate, rinvatercept (KER-065), is being developed for the treatment of Duchenne muscular dystrophy and for the treatment of amyotrophic lateral sclerosis. The Company’s most advanced product candidate, elritercept (KER-050), is being developed for the treatment of low blood cell counts (“cytopenias”), including anemia and thrombocytopenia, in patients with myelodysplastic syndromes (“MDS”) and in patients with myelofibrosis. Since its inception in 2015, the Company has devoted the majority of its resources to business planning, research and development of its product candidates, including conducting clinical trials and preclinical studies, raising capital and recruiting management and technical staff to support these operations. To date, the Company has not generated any revenue from product sales as none of its product candidates have been approved for commercialization. Liquidity and Capital Resources The Company’s 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 $ 287.4 million cash and cash equivalents as of December 31, 2025 will allow the Company to continue its operations for at least the next 12 months from the date these consolidated financial statements are issued. In the absence of a significant source of recurring revenue, the continued viability of the Company is dependent on its ability to continue to raise additional capital to finance its operations. If the Company is unable to obtain additional funding, the Company may be forced to delay, reduce or eliminate some or all of its research and development programs, product portfolio expansion or commercialization efforts, which could adversely affect its business prospects, or the Company may be unable to continue operations. The accompanying consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the accounts of the Company and its wholly owned subsidiaries, Keros Therapeutics Australia Pty Ltd (“Keros Australia”) and Keros Security Corporation, a Massachusetts securities corporation. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company, Keros Australia and Keros Security Corporation. All intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses, and the disclosure of contingent assets and liabilities as of and during the reporting period. 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. Significant estimates and assumptions reflected in these consolidated financial statements include, but are not limited to, revenue recognition, useful lives assigned to property and equipment and accrued and prepaid research and development expenses. The Company assesses estimates on an ongoing basis; however, actual results could materially differ from those estimates. Fair Value Measurements Certain assets and liabilities are reported on a recurring basis at fair value. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable: Level 1—Quoted prices in active markets for identical assets or liabilities. F-9 Level 2—Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data. Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The Company had no financial instruments measured at level 3 as of December 31, 2025 or 2024. Cash, Cash Equivalents, and Restricted Cash Cash and cash equivalents consist of standard checking accounts and money market funds. The Company considers all highly liquid investments with an original maturity of 90 days or less at the date of purchase to be cash equivalents. The Company had restricted cash in the form of certificates of deposit related to its operating leases in Lexington, Massachusetts of $ 1.4 million as of December 31, 2025 and 2024. Concentrations of Credit Risk Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash and cash equivalents. The Company may maintain deposits in financial institutions in excess of government insured limits. The Company believes that it is not exposed to significant credit risk as its deposits are held at financial institutions that management believes to be of high credit quality and the Company has not experienced any losses on these deposits. As of December 31, 2025 and 2024, the Company’s cash and cash equivalents were held with three financial institutions. The Company believes that the market risk arising from its holdings of these financial instruments is mitigated based on the fact that many of these securities are either government-backed or of high credit rating. Property and Equipment Property and equipment are recorded at cost. Expenditures for repairs and maintenance are expensed as incurred. When assets are retired or disposed of, the assets and related accumulated depreciation are written off from the accounts, and any resulting gain or loss is included in the determination of net loss. Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets as follows: ESTIMATED USEFUL LIFE Computer equipment and software 3 years Laboratory equipment 5 years Office furniture 5 years Leasehold improvements lesser of useful life or remaining lease term Impairment of Long-Lived Assets The Company evaluates its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. 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. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. To date, no impairments have been recognized for these assets. Leases The Company accounts for its leases under Accounting Standards Codification (“ASC”) Topic 842, Leases (“ASC 842”). At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present in the arrangement. Leases with a term greater than 12 months are recognized on the balance sheet as right-of-use, or ROU, assets and current and non-current lease liabilities, as applicable. The Company has elected not to recognize on the balance sheet leases with terms of 12 months or less. The Company typically only includes an initial lease term in its assessment of a lease arrangement. Options to renew a lease are not included in the Company’s assessment unless there is reasonable certainty that the Company will renew. Operating lease liabilities and their corresponding ROU assets are recorded based on the present value of future lease payments over the expected remaining lease term. Lease cost for operating leases is recognized on a straight-line basis over the lease term as an operating expense. Certain adjustments to the ROU asset may be required for items such as lease prepayments or incentives received. The interest rate implicit in lease contracts is typically not readily determinable. As a F-10 result, the Company utilizes its incremental borrowing rate, which reflects the fixed rate at which the Company could borrow on a collateralized basis the amount of the lease payments in the same currency, for a similar term, in a similar economic environment. For all asset classes of its leases, the Company has elected to account for the lease and non-lease components together for existing classes of underlying assets. Guarantees and Indemnifications As permitted under Delaware law, the Company indemnifies its officers, directors, consultants and employees for certain events or occurrences that happen by reason of the relationship with, or position held at, the Company. Through December 31, 2025, the Company had not experienced any losses related to these indemnification obligations, and no claims were outstanding. The Company does not expect significant claims related to these indemnification obligations and, consequently, concluded that the fair value of these obligations is negligible, and no related liabilities have been established. Treasury Stock The Company records its repurchases of shares of common stock at cost. These shares are classified as treasury stock, which is a reduction of stockholders’ equity. Repurchased shares are held as treasury stock until they are retired or re-issued. Treasury stock is included in shares authorized and issued but excluded from shares outstanding. Research and Development Costs Research and development costs are charged to expense as incurred. Research and development costs consist of expenses incurred in performing research and development activities, including salaries and benefits, materials and supplies, preclinical expenses, stock-based compensation expense, depreciation of equipment, contract services with contract research organizations that conduct research, preclinical and clinical activities on the Company’s behalf, as well as contract manufacturing organizations that manufacture drug product for use in the Company’s preclinical studies and clinical trials, facilities, and other outside expenses. Costs for external development activities are recognized based on an evaluation of the progress to completion of specific tasks using information provided to the Company by its vendors. Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected in the consolidated financial statements as prepaid expense or accrued research and development expense. 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. Research and Development Incentive Research and development incentive income includes payments under the Research and Development Tax Incentive (the “R&D Incentive”) from the Australian government. The R&D Incentive is one of the key elements of the Australian government’s support for Australia’s innovation system and was developed to assist businesses recover some of the costs of undertaking research and development. Since July 1, 2021, the R&D Incentive has provided eligible companies that engage in research and development activities with either a refundable or non-refundable tax offset depending on a company’s aggregated revenue as follows: • Refundable tax offset of up to 18.5% above a company’s underlying tax rate where aggregated revenue is less than AUD$20.0 million per annum, or • Non-refundable tax offset of up to 16.5% above a company’s underlying tax rate where aggregated revenue is equal to or greater than AUD$20.0 million per annum. The Company has assessed its research and development (“R&D”) activities and expenditures to determine which activities and expenditures in Australia are likely to be eligible under the R&D Incentive. The Company estimates the refundable or non-refundable tax offset available to it based on available information at the time. 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 did not record other income from the R&D Incentive for the year ended December 31, 2025. The Company has received payments and has recorded other income from the R&D Incentive of $ 1.2 million for the year ended December 31, 2024 related to the R&D Incentive as defined above. Revenue Recognition The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). The Company enters into certain agreements that are within the scope of ASC 606, under which the Company licenses or grants an option to license rights to certain of the Company’s product candidates and may perform research and F-11 development services in connection with such arrangements. The terms of these arrangements typically include payment of one or more of the following: non-refundable, upfront fees; reimbursement of research and development costs; development, clinical, regulatory and commercial sales milestone payments, and royalties on net sales of licensed products. Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine the appropriate amount of revenue to be recognized for arrangements determined to be within the scope of ASC 606, the Company performs the following five steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations including whether they are distinct; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect consideration it is entitled to in exchange for the goods or services it transfers to the customer. The promised goods or services in the Company’s arrangements typically consist of a license, or option to license, rights to the Company’s intellectual property or research and development services. The Company provides options to additional items in such arrangements, which are accounted for as separate contracts when the customer elects to exercise such options, unless the option provides a material right to the customer. Performance obligations are promised goods or services in a contract to transfer a distinct good or service to the customer and are considered distinct when (i) the customer can benefit from the good or service on its own or together with other readily available resources and (ii) the promised good or service is separately identifiable from other promises in the contract. In assessing whether promised goods or services are distinct, the Company considers factors such as the stage of development of the underlying intellectual property, the capabilities of the customer to develop the intellectual property on its own or whether the required expertise is readily available and whether the goods or services are integral or dependent to other goods or services in the contract. The Company estimates the transaction price based on the amount expected to be received for transferring the promised goods or services in the contract. The consideration may include fixed consideration and variable consideration. At the inception of each arrangement that includes variable consideration, the Company evaluates the amount of potential payment and the likelihood that the payments will be received. The Company utilizes either the most likely amount method or expected value method to estimate the amount expected to be received based on which method best predicts the amount expected to be received. The amount of variable consideration that is included in the transaction price may be constrained and is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. The Company’s contracts often include development and regulatory milestone payments that are assessed under the most likely amount method and constrained if it is probable that a significant revenue reversal would occur. Milestone payments that are not within the Company’s control or the licensee’s control, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. At the end of each reporting period, the Company re-evaluates the probability of achievement of such development and clinical milestones and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenue in the period of adjustment. For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). To date, the Company has not recognized any royalty revenue resulting from any of the Company’s collaboration or strategic alliance arrangements. If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation on a relative stand-alone selling price basis. The Company must develop assumptions that require judgment to determine the stand-alone selling price for each performance obligation identified in the contract. The Company utilizes key assumptions to determine the stand-alone selling price, which may include other comparable transactions, pricing considered in negotiating the transaction and the estimated costs. Variable consideration is allocated specifically to one or more performance obligations in a contract when the terms of the variable consideration relate to the satisfaction of the performance obligation and the resulting amounts allocated are consistent with the amounts the Company would expect to receive for the satisfaction of each performance obligation. The consideration allocated to each performance obligation is recognized as revenue when control is transferred for the related goods or services. If the license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenue from consideration allocated to the license when the license is transferred to the customer and the customer can use and benefit from the license. For combined performance obligations which consist of licenses and other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue. F-12 If performance obligations are satisfied over time, the Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition. The Company generally recognizes revenue using the cost incurred to date as compared to the total estimated cost. Changes in estimates of total internal and external costs expected to be incurred and the timing of when those costs are expected to be incurred are recognized in the period of change as a cumulative catch-up adjustment. If estimates of the total estimated cost change, or if contract amendments change the scope of the performance obligations, the impacts could be material. The Company receives payments from its customers based on billing schedules established in each contract. Upfront payments and fees are recorded as deferred revenue upon receipt or when due until the Company performs its obligations under these arrangements. Amounts are recorded as accounts receivable when the Company’s right to consideration is unconditional. Foreign Currency Transactions The functional currency for the Company’s wholly owned foreign subsidiary, Keros Australia, is the United States dollar. All foreign currency transaction gains and losses are recognized in the consolidated statement of operations. Segment Information 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 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 novel therapeutics to treat a wide range of patients with disorders that are linked to dysfunctional signaling of the TGF-ß family of proteins. Stock-Based Compensation The Company accounts for all stock-based awards granted to employees and non-employees as stock-based compensation expense at fair value. The Company’s stock-based awards include stock options and restricted stock unit ("RSU") awards. The measurement date for employee and non-employee awards is the date of grant. For stock-based awards that vest based on service conditions, stock-based compensation costs are recognized as expense over the requisite service period, which is the vesting period, on a straight-line basis. For stock options and RSUs with performance conditions, stock-based compensation costs are recognized as expense using the accelerated attribution method when it is probable that the performance condition will be achieved. Stock-based compensation expense is classified in the accompanying consolidated statement of operations based on the function to which the related services are provided. Forfeitures are recorded as they occur. The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The Company lacks company-specific historical and implied volatility information. Therefore, it estimates its expected stock volatility based on the historical volatility of a publicly traded set of peer companies weighted with its own volatility for the period in which its stock has been publicly traded. The expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends on common stock and does not expect to pay any cash dividends in the foreseeable future. Income Taxes The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements. Under this method, the Company determines deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. The Company recognizes deferred tax assets to the extent that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies and results of recent operations. 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 F-13 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. As of December 31, 2025, there have been no interest or penalties recorded. Comprehensive Income (Loss) Comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. Comprehensive income (loss) is equal to net income (loss) for all periods presented. Net Income (Loss) Per Share 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. 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. The Company excluded the following from the computation of diluted net loss per share attributable to common stockholders as of December 31, 2025 and 2024 because including them would have had an anti-dilutive effect: DECEMBER 31, 2025 2024 Unvested RSU awards 41,207 — Options to purchase common stock 4,470,286 5,384,760 Employee stock purchase plan shares 8,549 47,694 Total 4,520,042 5,432,454 Recently Adopted Accounting Pronouncements In December 2023, the Financial Accounting Standards Board issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU No. 2023-09”). ASU No. 2023-09 requires a public business entity to disclose, on an annual basis, a tabular rate reconciliation using both percentages and currency amounts, broken out into specified categories with certain reconciling items further broken out by nature and jurisdiction to the extent those items exceed a specified threshold. In addition, all entities are required to disclose income taxes paid, net of refunds received disaggregated by federal, state/local and foreign and by jurisdiction if the amount is at least 5% of total income tax payments, net of refunds received. The new standard was effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company adopted ASU No. 2023-09 for its consolidated financial statements for the fiscal year ended December 31, 2025. Recently Issued Accounting Pronouncements In November 2024, the Financial Accounting Standards Board issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU No. 2024-03”), which intends to improve financial reporting by requiring disclosure of additional information about specific expense categories. This guidance is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Early adoption is permitted and the guidance is to be applied prospectively and may be applied retrospectively. The Company is currently evaluating the impact of this guidance on its consolidated financial statements and related disclosures. Risks and Uncertainties There have been significant disruptions to global financial markets that have contributed to a general global economic slowdown. While recent trends towards rising inflation have eased, prices continue to rise, which may materially affect the Company’s business and corresponding financial position and cash flows. Inflationary factors, such as increases in the cost of materials and supplies relating to the Company’s preclinical studies and clinical trials, interest rates and overhead costs may adversely affect its operating results. Implementation of tariffs present a recent challenge impacting the U.S. economy and could make it more difficult for the Company to obtain traditional financing on acceptable terms, if at all, in the future. Although the Company does not believe that inflation, higher interest rates or tariffs have had a material impact on its financial position or results of operations to date, the Company may experience increases in the near future (especially if inflation rates rise more quickly) on its operating costs, including its labor costs and research and development costs, due to supply chain constraints, consequences associated with public health crises and global geopolitical tensions, such as the ongoing war between Russia and Ukraine and the war in the Middle East, worsening global macroeconomic conditions and employee availability and wage increases, which may result in additional stress on the Company’s working capital resources. F-14 As of the date of issuance of these financial statements, the Company is not aware of any specific event or circumstance that would require the Company to update its estimates, assumptions and judgments or revise the carrying value of its assets or liabilities. Actual results could differ from those estimates, and any such differences may be material to the Company’s financial statements. In addition, the Company is subject to other challenges and risks specific to its business and its ability to execute on its business plan and strategy, as well as risks and uncertainties common to companies in the biopharmaceutical industry with research and development operations, including, without limitation, risks and uncertainties associated with: obtaining regulatory approval of its product candidates; delays or problems in obtaining clinical supply, loss of single source suppliers or failure to comply with manufacturing regulations; product development and the inherent uncertainty of clinical success; the challenges of protecting and enhancing its intellectual property rights; the challenges of complying with applicable regulatory requirements; and identifying, acquiring or in-licensing additional products or product candidates. 3. FAIR VALUE MEASUREMENTS The following table presents information about the Company’s financial assets and liabilities measured at fair value on a recurring basis and indicates the level of the fair value hierarchy utilized to determine such fair values (in thousands): DESCRIPTION DECEMBER 31, 2025 QUOTED PRICES ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1) SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2) SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 3) Asset Money market funds $ 270,713 $ 270,713 $ — $ — Total financial assets $ 270,713 $ 270,713 $ — $ — DESCRIPTION DECEMBER 31, 2024 QUOTED PRICES ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1) SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2) SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 3) Asset Money market funds $ 556,064 $ 556,064 $ — $ — Total financial assets $ 556,064 $ 556,064 $ — $ — There have been no transfers between fair value levels during the years ended December 31, 2025 and 2024. The carrying values of prepaid expenses, other current assets, accounts payable, and accrued expenses approximate their fair values due to the short-term nature of these assets and liabilities. F-15 4. PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid expenses and other current assets as of December 31, 2025 and 2024 consisted of the following (in thousands): DECEMBER 31, 2025 2024 Prepaid external R&D costs $ 1,609 $ 15,748 Prepaid external manufacturing costs 398 5,545 Prepaid sales tax — 121 Prepaid insurance 609 651 Prepaid subscriptions 947 960 Interest and dividend receivable 555 1,714 Prepaid legal and consultants 1,207 31 Refunds due from contract research organizations 14,480 — Other 2,397 1,450 Total prepaid expenses and other current assets $ 22,202 $ 26,220 5. PROPERTY AND EQUIPMENT, NET Property and equipment, net as of December 31, 2025 and 2024 consisted of the following (in thousands): DECEMBER 31, 2025 2024 Computer equipment and software $ 35 $ 35 Laboratory equipment 7,433 5,978 Office furniture 1,264 1,173 Total 8,732 7,186 Less: accumulated depreciation ( 4,435 ) ( 2,949 ) Property and equipment, net $ 4,297 $ 4,237 Depreciation expense was $ 1.5 million and $ 1.2 million for the years ended December 31, 2025 and 2024, respectively. 6. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities as of December 31, 2025 and 2024 consisted of the following (in thousands): DECEMBER 31, 2025 2024 Accrued external R&D costs $ 2,662 $ 5,139 Accrued external manufacturing costs 429 4,308 Accrued compensation and benefits 5,870 10,130 Accrued excise tax 3,377 — Accrued legal and consultants 3,484 877 Other 217 416 Total accrued expenses and other current liabilities $ 16,039 $ 20,870 7. LICENSE AGREEMENTS Massachusetts General Hospital On April 5, 2016, the Company entered into an exclusive patent license agreement with The General Hospital Corporation d/b/a Massachusetts General Hospital (“MGH”). Under the license agreement with MGH (as amended in May 2017 and February 2018, the “MGH Agreement”), the Company obtained an exclusive, worldwide license, with the right to sublicense, under certain patents and technical information of MGH, to make, have made, use, have used, sell, have sold, lease, have leased, import, have imported or otherwise transfer licensed products and processes for use in the treatment, diagnosis, palliation and prevention of diseases and disorders in humans and animals. The Company is required to use commercially reasonable efforts to develop and commercialize licensed products and processes and must achieve certain required diligence milestones. F-16 Under the terms of the MGH Agreement, the Company is required to pay a low-five digit to mid-five digit annual maintenance fee prior to the first commercial sale of its first product or process, a mid-five digit annual maintenance fee after the first commercial sale of its first product or process that is creditable against royalties, certain clinical and regulatory milestone payments for the first three products or indications to achieve such milestones, which milestone payments are $ 8.6 million in the aggregate, and certain commercial milestone payments for the first three products or indications to achieve such milestones, which milestone payments are $ 18.0 million in the aggregate. The Company made payments of $ 50,000 and $ 300,000 in 2020 and 2021, respectively, for the achievement of the clinical and regulatory milestones of (i) filing of an IND in the first country and (ii) the completion of a Phase 1 clinical trial, respectively. The Company is also obligated to pay tiered royalties on net sales of licensed products ranging in the low-single digits to mid-single digits. The royalty rates are subject to up to a maximum 50 % reduction for lack of a valid claim, in the event that it is necessary for the Company to obtain a license to any third-party intellectual property related to the licensed products, and generic competition. The obligation to pay royalties under the MGH Agreement expires on a licensed product-by-licensed product and country-by-country basis upon the later of expiry of the last valid claim of the licensed patents that cover such licensed product in such country or ten years from the first commercial sale of such product in such country. The Company is also obligated to pay a percentage of non-royalty-related payments received by it from sublicensees ranging in the low-double digits and a change of control fee equal to a low-single digit percentage of the payments received as part of any completed transaction up to a low seven-digit amount. The MGH Agreement expires upon expiry of the last remaining royalty obligation for a licensed product or process. Under the MGH Agreement, MGH may terminate the agreement upon the Company’s uncured material breach or insolvency, a challenge by the Company of the licensed patents and certain other specified breaches of the MGH Agreement. The Company may terminate the agreement for any reason upon specified prior written notice to MGH. Hansoh Agreement On December 12, 2021, the Company entered into a license agreement with Hansoh. Refer to Note 15, Revenue from Contracts with Customers, for more information regarding this agreement. Takeda Agreement On December 3, 2024, the Company entered into a license agreement with Takeda Pharmaceuticals U.S.A., Inc. (“Takeda”). Refer to Note 15, Revenue from Contracts with Customers, for more information regarding this agreement. 8. STOCKHOLDERS’ EQUITY As of December 31, 2025, the Company’s amended and restated certificate of incorporation authorized the Company to issue 200,000,000 shares of common stock at a par value of $ 0.0001 per share. For the year ended December 31, 2024, the Company raised gross proceeds of $ 232.3 million pursuant to the “at the market offering,” in connection with our Sales Agreement with Leerink Partners LLC, as agent (“ATM Offering”), pursuant to which we sold 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. 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 $ 151.1 million, after deducting underwriting discounts and commissions and offering expenses. Stockholder Rights Plan On April 9, 2025, the Company’s board of directors (the “Board”) declared a dividend of one right (“Right”) to purchase one-thousandth of one share of the Company’s newly designated Series A Junior Participating Preferred Stock, par value $ 0.0001 per share (each, a “Preferred Share” and collectively, the “Preferred Shares”), for each outstanding share of common stock to the stockholders of record as of the close of business on April 24, 2025. The Company also adopted a limited duration stockholder rights plan (the “Rights Plan”), effective immediately, as set forth in the Rights Agreement, dated as of April 9, 2025 (the “Rights Agreement”), by and between the Company and Computershare Trust Company, N.A., as Rights Agent. The Rights Agent currently serves as the Company’s transfer agent with respect to the common stock and also has been appointed transfer agent with respect to the Preferred Shares, if any, that may be issued pursuant to the exercise of rights under the Rights Agreement. The Rights will expire on April 9, 2026, unless the rights are earlier redeemed or exchanged by the Company. The Company does not have any obligation under the Rights Agreement to seek stockholder approval for the Rights Plan. In general terms, the Rights Plan is designed to impose a penalty upon any person or group that acquires beneficial ownership of 10 % ( 15 % in the case of a passive institutional investor) or more of the outstanding shares of Common Stock without the approval of the Board. The Board adopted the Rights Plan in response to significant and rapid accumulations of F-17 the common stock by a number of investors who have indicated a desire to influence the control of the Company. The Rights Plan is intended to protect the investment of the Company's stockholders during a period in which it believes shares of the Company do not reflect the Company’s intrinsic value. The Rights Plan will reduce the likelihood that any entity, person or group gains control of the Company through open-market accumulation without paying all stockholders an appropriate control premium. Common Stock The following is a summary of the rights and privileges of the holders of common stock as of December 31, 2025: Liquidation Preference: In the event of liquidation, dissolution or winding up, holders of common stock will be entitled to share ratably in the net assets legally available for distribution to stockholders after the payment of all debts and other liabilities and the satisfaction of any liquidation preference granted to the holders of any then-outstanding shares of preferred stock. Dividends: Subject to preferences that may be applicable to any then-outstanding preferred stock, holders of common stock are entitled to receive ratably those dividends, if any, as may be declared from time to time by the Board out of legally available funds. As of December 31, 2025, no cash dividends have been declared or paid. Voting Rights: Each holder of common stock is entitled to one vote for each share on all matters submitted to a vote of the stockholders, including the election of directors. Under the Company's amended and restated certificate of incorporation and amended and restated bylaws, stockholders will not have cumulative voting rights. Because of this, the holders of a majority of the shares of common stock entitled to vote in any election of directors can elect all of the directors standing for election, if they should so choose. Rights and Preferences : Holders of common stock have no preemptive, conversion or subscription rights and there are no redemption or sinking fund provisions applicable to the common stock. The rights, preferences and privileges of the holders of common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock that the Company may designate in the future. As of December 31, 2025 and 2024, the Company has reserved the following shares of common stock for future issuance: DECEMBER 31, 2025 2024 Unvested RSU awards 716,850 — Options to purchase common stock 3,901,706 5,384,760 Available under the ESPP Plan 1,641,602 1,247,861 Available under 2020 Plan 3,146,054 861,617 Total 9,406,212 7,494,238 9. TREASURY STOCK The Board may authorize the repurchase of shares of the Company’s common stock, in the open market or through negotiated transactions, at such times and at such prices as management deems appropriate. For the year ended December 31, 2024, the Company did not acquire any shares of its common stock. On October 15, 2025, the Company entered into stock purchase agreements with certain entities affiliated with ADAR1 Capital Management (collectively, the “ADAR1 Parties”) and certain entities affiliated with Pontifax Venture Capital (collectively, the “Pontifax Parties”). Such stock purchase agreements for each of the Pontifax and ADAR1 Parties are collectively referred to as “Repurchase Agreements”. Pursuant to the terms and conditions of the Repurchase Agreements, the ADAR1 Parties and the Pontifax Parties sold all of the shares of common stock beneficially owned by them, being an aggregate of 10,176,595 shares of common stock, to the Company at a price of $ 17.75 per share for an aggregate purchase price of $ 180.6 million, excluding excise tax, direct fees and expenses related to the repurchases. The total cost of the repurchase was recorded as treasury stock using the cost method and is included as treasury stock in the Company’s consolidated balance sheets. On October 20, 2025, the Company commenced a tender offer to repurchase shares of its common stock at a cash purchase price of $ 17.75 per share (the “Tender Offer”). The Tender Offer expired at 5:00 p.m. Eastern time on November 18, 2025, and following such expiration the Company accepted for purchase a total of 10,950,165 shares, for an aggregate purchase price of approximately $ 194.4 million, excluding excise tax, direct fees and expenses related to the Tender Offer. More than 10,950,165 shares were tendered in the Tender Offer, and as such, shares were accepted for purchase on a pro rata basis, except for conditional tenders that were automatically regarded as withdrawn if the condition was not satisfied. The total cost of the repurchase was recorded as treasury stock using the cost method and is included as treasury stock in the accompanying consolidated balance sheets. F-18 The completion of the Repurchase Agreements in October 2025 and the Tender Offer in November 2025 concluded the Company’s previously announced $ 375.0 million capital return program. In connection with the Repurchase Agreements and Tender Offer, the Company incurred $ 9.6 million in excise tax, direct fees and expenses that were included in the cost of treasury stock in the accompanying consolidated balance sheets as of December 31, 2025. 10. STOCK-BASED COMPENSATION 2017 Stock Incentive Plan The Board adopted the 2017 Stock Incentive Plan (the "2017 Plan") in February 2017, and the stockholders approved the 2017 Plan in March 2017. The 2017 Plan was most recently amended in March 2020. As of December 31, 2025, there were an aggregate of 412,099 shares of common stock issuable upon the exercise of outstanding options under the 2017 Plan. Any options or awards outstanding under the 2017 Plan remain outstanding and effective. 2020 Equity Incentive Plan In April 2020, the 2020 Equity Incentive Plan (the "2020 Plan") became effective, and, as a result, no further awards will be made under the 2017 Plan. The 2020 Plan provides for the grant of stock options qualifying as incentive stock options ("ISOs"), to employees and for the grant of nonstatutory stock options ("NSOs"), restricted stock awards, restricted stock unit awards, stock appreciation rights, performance stock awards and other forms of stock compensation to employees, consultants and directors. The 2020 Plan also provides for the grant of performance cash awards to employees, consultants and directors. Any previously granted awards under the 2017 Plan will remain outstanding in accordance with their respective terms. Under the 2020 Plan, there is an annual increase on January 1 of each year from January 1, 2021 continuing through January 1, 2030, by 4.0 % of the total number of shares of common stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares as may be determined by the Board. On January 1, 2024, the Company increased the number of shares available for future grant under the 2020 Plan by 1,273,643 shares. On January 1, 2025, the Company increased the number of shares available for future grant under the 2020 Plan by 1,622,188 shares. On January 1, 2026, the Company increased the number of shares available for future grant under the 2020 Plan by 781,748 shares. The awards granted under the 2020 Plan typically vest over a four-year period and have a 10-year contractual term. As of December 31, 2025, there were an aggregate of 3,489,607 shares of common stock issuable upon the exercise of outstanding options under the 2020 Plan. Additionally, there were an aggregate of 3,146,054 shares reserved for future issuance under the 2020 Plan, including shares forfeited from the 2017 Plan. Restricted Stock Units A summary of RSU award activity during the year ended December 31, 2025 is as follows: NUMBER OF UNITS WEIGHTED AVERAGE GRANT-DATE FAIR VALUE Outstanding RSU awards as of January 1, 2025 — $ — Granted 1,167,325 11.71 Vested ( 30,300 ) 12.04 Forfeited ( 420,175 ) 10.56 Outstanding RSU awards as of December 31, 2025 716,850 $ 12.37 The summary of RSU award activity includes 90,500 performance-based awards granted during the year ended December 31, 2025. The weighted-average grant date fair value of RSU awards granted during the years ended December 31, 2025 and 2024 was $ 11.71 and zero , respectively. The aggregate fair value of RSU awards that vested during the years ended December 31, 2025 and 2024 was $ 0.5 million and zero , respectively. As of December 31, 2025, there has been no expense recognized for the performance-based awards, for which the performance criteria was not deemed probable as of December 31, 2025. As of December 31, 2025, there was approximately $ 6.9 million of unrecognized stock-based compensation expense related to RSU awards that are expected to vest, including $ 1.4 million of unrecognized stock-based compensation expense related to performance-based awards for which the performance criteria is currently not deemed probable. These costs are expected to be recognized over a weighted-average remaining vesting period of approximately 1.71 years. F-19 Stock Option Valuation The weighted-average assumptions that the Company used in the Black-Scholes option-pricing model to determine the grant-date fair value of stock options granted for the years ended December 31, 2025 and 2024 were as follows: YEAR ENDED DECEMBER 31, 2025 2024 Risk-free interest rate 3.96 % 4.30 % Expected term (in years) 5.32 5.91 Expected volatility 83.59 % 81.92 % Expected dividend yield 0.00 % 0.00 % A summary of option activity during the year ended December 31, 2025 is as follows (in thousands except share and per share data): NUMBER OF OPTIONS WEIGHTED- AVERAGE EXERCISE PRICE WEIGHTED-AVERAGE REMAINING CONTRACTUAL TERM (IN YEARS) AGGREGATE INTRINSIC VALUE Outstanding as of January 1, 2025 5,384,760 $ 42.19 7.18 $ 7,395 Granted 84,000 14.82 Exercised ( 73,655 ) 2.05 $ 695 Cancelled or forfeited ( 783,495 ) 54.42 Expired ( 709,904 ) 49.82 Outstanding as of December 31, 2025 3,901,706 $ 38.52 5.59 $ 12,209 Options exercisable as of December 31, 2025 3,091,868 $ 34.77 5.16 $ 12,035 The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the Company’s common stock. The total intrinsic value of stock options exercised was $ 0.7 million and $ 10.1 million during the years ended December 31, 2025 and 2024, respectively. The weighted-average grant date fair value per share of options granted during each of the years ended December 31, 2025 and 2024 was $ 10.36 and $ 40.92 , respectively. As of December 31, 2025, there was $ 22.9 million of unrecognized stock-based compensation expense related to unvested service-based stock options and $ 2.9 million of unrecognized stock-based compensation expense related to performance-based stock options. The unrecognized stock-based compensation expense is estimated to be recognized over a period of 1.49 years. The summary of option activity includes 125,000 performance-based options granted during the year ended December 31, 2024. The options include performance-based and service-based vesting criteria. As of December 31, 2025, the performance criteria was deemed probable for 50% of the performance-based options. Accordingly, the Company recorded $ 2.0 million stock-based compensation expense during the year end December 31, 2025. Of the $ 2.9 million of unrecognized stock-based compensation expense, $ 0.4 million is related to service-based vesting criteria that the Company expects to recognize and $ 2.5 million is related to performance-based vesting criteria that are not considered probable as of December 31, 2025. 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. On January 1, 2026, the Company increased the number of shares available for future grant under the ESPP by 195,437 shares. F-20 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, 2025, 11,806 shares of common stock were purchased under the ESPP. As of December 31, 2025, there was an aggregate of 1,641,602 shares reserved for future issuance under the ESPP. Stock-Based Compensation Expense Total stock-based compensation expense recorded as research and development and general and administrative expenses, respectively, for employees, directors and non-employees during the years ended December 31, 2025 and 2024 is as follows (in thousands): YEAR ENDED DECEMBER 31, 2025 2024 Research and development $ 13,288 $ 18,294 General and administrative 15,408 16,578 Total stock-based compensation expense $ 28,696 $ 34,872 11. INCOME (LOSS) PER SHARE Basic and diluted income (loss) per share of common stock are calculated as follows (in thousands, except share and per share data): YEAR ENDED DECEMBER 31, 2025 2024 Numerator: Net income (loss) $ 87,014 $ ( 187,353 ) Denominator: Weighted-average shares of common stock outstanding - basic 37,221,211 37,437,652 Effect of potentially dilutive stock options 419,367 — Effect of potentially dilutive employee stock purchase plan shares — — Effect of potentially dilutive restricted stock units 218,528 — Total potentially dilutive securities 637,895 — Weighted-average shares of common stock outstanding used to compute diluted net income (loss) 1 37,859,106 37,437,652 Net income (loss) per share of common stock Basic $ 2.34 $ ( 5.00 ) Diluted $ 2.30 $ ( 5.00 ) The Company excluded the following from the computation of diluted net income (loss) per share attributable to common stockholders as of December 31, 2025 and 2024 because including them would have had an anti-dilutive effect: YEAR ENDED DECEMBER 31, 2025 2024 Unvested RSU awards 41,207 — Options to purchase common stock 4,470,286 5,384,760 Employee stock purchase plan shares 8,549 47,694 Total 4,520,042 5,432,454 1 In periods where there is a net loss, zero incremental shares are included as the effect would be antidilutive. F-21 12. INCOME TAXES Loss before income taxes for the years ended December 31, 2025 and 2024 consisted of the following (in thousands): YEAR ENDED DECEMBER 31, 2025 2024 United States $ 74,804 $ ( 189,315 ) Foreign 17,093 2,262 Income (loss) before income taxes $ 91,897 $ ( 187,053 ) The components of the provision for income taxes for the years ended December 31, 2025 and 2024 consisted of the following (in thousands): YEAR ENDED DECEMBER 31, 2025 2024 Current income tax provision: Federal $ — $ — State — — Foreign 4,883 300 Total current income tax provision $ 4,883 $ 300 Total deferred income tax provision $ — $ — Total income tax provision $ 4,883 $ 300 The following is a reconciliation of the Company’s U.S. federal statutory income tax rate to the Company’s effective income tax rate for the years ended December 31, 2025 in accordance with the guidance in the ASU No. 2023-09, which the Company has elected to prospectively adopt: YEAR ENDED DECEMBER 31, 2025 U.S Federal statutory tax rate $ 19,298 21.0 % State and local income tax, net of federal income tax effect 2 734 0.8 Foreign tax effects Australia Difference between local tax rare and U.S. federal statutory tax rate 1,538 1.7 Other ( 245 ) ( 0.3 ) Effect of changes in taw laws or rates enacted in the current period — — Effect of cross-border tax laws — — Tax credits Research and development tax credits 13,664 14.9 Changes in valuation allowances ( 33,331 ) ( 36.3 ) Nontaxable or nondeductible items Nondeductible executive compensation 5,048 5.5 Stock compensation 1,263 1.4 Other 6 — Changes in unrecognized tax benefits ( 2,784 ) ( 3.0 ) Other ( 308 ) ( 0.4 ) Effective tax rate $ 4,883 5.3 % 2 State and local income tax, net of federal income tax effect, are not material and Massachusetts is the most significant state that the Company operates in. F-22 The following is a reconciliation of the Company’s U.S. federal statutory income tax rate to the Company’s effective income tax rate for the year ended December 31, 2024 prior to adoption of ASU No. 2023-09: YEAR ENDED DECEMBER 31, 2024 Income at U.S. statutory rate 21.0 % State taxes 8.8 Stock compensation ( 0.6 ) Other permanent differences ( 1.3 ) Research and development credits 1.2 Impact of foreign operations ( 0.1 ) Foreign withholding taxes ( 0.2 ) Other ( 3.2 ) Tax credits 1.2 Change in valuation allowance ( 27.0 ) Effective tax rate ( 0.2 ) % The net deferred income tax asset balance as of December 31, 2025 and 2024 related to the following (in thousands): YEAR ENDED DECEMBER 31, 2025 2024 Net operating loss carryforwards $ 35,141 $ 45,084 Research and development tax credits 409 16,184 Capitalized research and development expenses 53,477 78,413 Stock-based compensation 7,667 7,558 Operating lease liability 4,620 5,068 Accrued expenses 1,447 2,626 Other 79 269 Total deferred tax assets $ 102,840 $ 155,202 Valuation allowance $ ( 97,991 ) $ ( 150,037 ) Net deferred tax assets $ 4,849 $ 5,165 Deferred tax liability Operating lease right-of-use asset ( 4,608 ) ( 5,165 ) Other ( 241 ) Net deferred tax assets $ — $ — As of December 31, 2025, the Company had U.S. federal and state net operating loss (“NOL”) carryforwards of $ 159.1 million and $ 27.9 million, respectively. The federal NOLs can be carried forward indefinitely. The state NOL carryforwards begin to expire in 2039. As of December 31, 2025, the Company had U.S. federal and state research and development tax credit carryforwards of $ 0.3 million and $ 0.1 million, respectively. The federal research and development tax credits expire in 2045. The state research and development tax credits expire in 2040. Under the provisions of the Internal Revenue Code of 1986, as amended (the “Code”), the NOL and tax credit carryforwards are subject to review and potential adjustments by the Internal Revenue Services and state tax authorities. 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. Based on a previous Section 382 analysis that the Company performed, the Company determined that on April 15, 2016 and April 13, 2020, Section 382 ownership changes and limitations had occurred. Based on such analysis, the Company determined that $ 0.3 million and $ 0.3 million of its federal and state NOL carryforwards, respectively, were limited by Section 382 and therefore were previously written off. The Company had updated its analyses under Section 382 through November 21, 2025, and determined that, in addition to the previous Section 382 ownership changes and limitations on April 15, 2016 and April 13, 2020, a Section 382 ownership change occurred on November 21, 2025. As a result of the November 21, 2025 Section 382 F-23 ownership change and limitation, $ 14.0 million of federal research and development tax credit carryforwards, $ 169.4 million of state NOL carryforwards and $ 5.9 million of state research and development tax credit carryforwards have been written off. Though subject to a Section 382 limitation, federal NOL carryforwards have not been written off since they can be carried forward indefinitely. The remaining unused carryforwards remain available for future periods. The Company may also experience ownership changes in the future as a result of subsequent shifts in the Company’s stock ownership, some of which may be outside the Company’s control. As a result, its ability to use its pre-change NOLs or tax credits to offset U.S. federal taxable income or tax may be subject to limitations, which could potentially result in increased future tax liability. 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 NOLs and research and development credits. 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, 2025 and 2024. A decrease in the Company’s valuation allowance was recorded in 2025 in the amount of $ 52.0 million primarily due to the reduction of net deferred tax assets related to capitalized research and development expenses, research and development tax credits and net operating loss carryforwards. An increase in the Company’s valuation allowance was recorded in 2024 in the amount of $ 50.6 million, primarily due to the generation of additional net deferred tax assets related to capitalized research and development expenses, net operating loss carryforwards and research and development tax credits. The Tax Cuts and Jobs Act resulted in significant changes to the treatment of research and development (“R&D”) expenditures under Section 174. For tax years beginning after December 31, 2021, taxpayers are required to capitalize and amortize all R&D expenditures that are paid or incurred in connection with their trade or business. 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. On July 4, 2025, President Trump signed H.R. 1, the One Big Beautiful Bill Act into law. The legislation included several changes to the Internal Revenue Code. These changes are generally effective for tax years beginning after December 31, 2025 except for changes related to the expensing of U.S.-based R&D expenditures which was retroactively effective and available for tax years beginning after December 31, 2024 and the reinstatement of 100% bonus depreciation for qualified assets/property placed in service after January 19, 2025. The changes that were retroactively effective were reflected in the year ended December 31, 2025. 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. The Company records uncertain tax positions as liabilities in accordance with ASC 740 and adjusts these liabilities when its judgment changes as a result of the evaluation of new information not previously available. Because of the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the Company’s current estimate of the unrecognized tax benefit liabilities. 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, 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. As of December 31, 2025, the Company had certain gross unrecognized tax benefits related to income tax reserves primarily related to federal research credit carryforwards of $ 0.1 million, which 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, 2025 and 2024, the Company had no interest or penalties related to unrecognized tax benefits. For the year ended December 31, 2025, the Company paid $ 7.2 million of total income taxes, $ 4.9 million related to Australia and $ 2.3 million related to U.S. federal income taxes. For the year ended December 31, 2024, the Company made zero payments for income taxes. 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. The Company recently closed an income tax examination with the state of Massachusetts for the tax years ended December 31, 2021 and 2022, with no material impact to the Company's financial statements. The Company’s tax years are still open under statute for income tax examination by the Internal Revenue Service (“IRS”) from December 31, 2022 to the present. There are currently no pending income tax examinations with the IRS. To the extent the Company has tax attribute F-24 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. 13. LEASES Operating Leases On September 7, 2021, the Company entered into an indenture of lease (the “1050 Waltham Lease”) with Revolution Labs Owner LLC (the “Landlord”), pursuant to which the Company is leasing approximately 35,662 square feet of office, laboratory and vivarium space located at 1050 Waltham Street, Lexington, Massachusetts (the “Premises”) for its new principal executive office. Base rent was initially fixed at $ 0.2 million per month and will increase by approximately 3 % per annum until the 1050 Waltham Lease expires on November 30, 2031. 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, 2025, 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, 2025 and 2024 consisted of the following (in thousands): YEAR ENDED DECEMBER 31, 2025 2024 Operating lease cost $ 4,231 $ 3,521 Short-term lease cost 281 — Variable payments 2,047 1,554 Total lease cost $ 6,559 $ 5,075 Other information as of December 31, 2025 and 2024 (in thousands): DECEMBER 31, 2025 2024 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 3,800 $ 3,026 Right-of-use assets obtained in exchange for new operating lease liabilities $ — $ 5,737 The weighted-average remaining lease term and discount rate for the leases as of December 31, 2025 and 2024 were as follows: DECEMBER 31, 2025 2024 Weighted-average remaining lease term — operating leases 5.3 6.3 Weighted-average discount rate — operating leases 10.3 % 10.3 % F-25 Maturities of operating lease liabilities at December 31, 2025 are as follows (in thousands): MATURITY OF LEASE LIABILITY 2026 $ 4,002 2027 4,125 2028 4,251 2029 3,983 2030 2,903 2031 2,734 Total lease payments 21,998 Less: imputed interest ( 5,115 ) Total operating lease liabilities $ 16,883 Included in the consolidated balance sheet: Current portion of lease liabilities $ 2,408 Lease liabilities 14,475 Total operating lease liabilities $ 16,883 14. COMMITMENTS AND CONTINGENCIES 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, 2025, the Company has committed up to approximately $ 1.6 million under these agreements which are expected to be paid through 2029. Distribution of Proceeds The Company plans to distribute 25 % of any net cash proceeds it receives on or before December 31, 2028 from the Takeda Agreement (as defined below) to its stockholders. Legal Proceedings The Company is not a party to any litigation and does not have contingency reserves established for any litigation liabilities. 15. REVENUE FROM CONTRACTS WITH CUSTOMERS Hansoh License Agreement 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 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. F-26 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. Hansoh may terminate the Agreement in its entirety for convenience, with notice. The Company may terminate the Hansoh Agreement in its entirety for a patent challenge brought by Hansoh or its affiliates or their sublicensees. Either party may terminate the Hansoh Agreement in its entirety (i) if the other party materially breaches the Hansoh Agreement and fails to cure such breach or (ii) upon the bankruptcy of the other party. 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 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. Under the Hansoh Agreement, Hansoh was obligated to pay a one-time, net $ 18.0 million payment to the Company, which was paid in the first quarter of 2022. The Company recognized a gross upfront fee of $ 20.0 million as revenue and $ 2.0 million in withholding tax on its consolidated statement of operations for the year ended December 31, 2021, and a receivable, net of withholding tax on its consolidated balance sheet as of December 31, 2021. The Company will recognize development milestone payments as revenue at the point in time when it is determined that it is probable such milestones will be achieved as all performance obligations will have been satisfied at the point which a milestone might occur (i.e., Hansoh will have assumed all responsibility for the activities under the Hansoh Agreement). 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. 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. Payment was received during the year ended December 31, 2025. No milestones were achieved during the year ended December 31, 2025. 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. The Tech Transfer Agreement governs the transfer to Hansoh, by the Company 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 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 Company recognized $ 0.1 million and $ 0.1 million of service and other revenue for the years ended December 31, 2025 and 2024, 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 recognizes 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. The Company recognized $ 0.1 million and $ 0.4 million of other revenue for the years ended December 31, 2025 and 2024, respectively. Takeda License Agreement On December 3, 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 (collectively, the "Takeda Territory"). Concurrent with the Takeda Agreement, the Company entered into a separate Transition Services Agreement with Takeda (“TSA”), pursuant to which the Company will provide certain transitional services to Takeda, including, but not limited to, clinical trial and manufacturing services, during the term of the TSA (the "Transition Services"). In January 2026, the initial fifteen month term of the TSA was extended for six months through October 2026. The Company will receive reimbursement of certain costs incurred by the Company in connection with providing the Transition Services. Pursuant to the terms of the Takeda Agreement, the Company received a $ 200.0 million upfront payment in February 2025. In July 2025, a one-time $ 10.0 million development milestone was achieved upon dosing of the first patient in the Phase 3 RENEW clinical trial of elritercept. In addition to the upfront and development milestone payments, the Company is 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 F-27 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. The Company recognized $ 10.0 million as revenue upon the achievement of this development milestone related to the Takeda Agreement on its consolidated statement of operations for the year ended December 31, 2025. Payment was received during the year ended December 31, 2025. Takeda’s obligation to pay royalties for a given licensed product in a given country in the Takeda Territory will begin on the date of the first commercial sale for such licensed product in such country 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, and (iii) expiration of regulatory exclusivity in such region. The Takeda Agreement will continue in force until the expiration of the royalty term. Takeda may terminate the Takeda Agreement (i) in its entirety or on a country-by-country basis for convenience, with notice or (ii) if Takeda reasonably determines that the development, manufacture, and commercialization of the licensed compound or licensed product pose a safety or public health risk. The Company may terminate the Takeda Agreement in its entirety in the event that Takeda or its affiliates bring a patent challenge. Either party may terminate the Takeda Agreement in its entirety (i) if the other party materially breaches the Takeda Agreement and fails to cure such breach; or (ii) upon the bankruptcy of the other party. The Company assessed this arrangement in accordance with ASC 606 and concluded it is a contract with a customer as defined in ASC 606. As the Company entered into the Takeda Agreement and the TSA concurrently, they were evaluated as a single contract under ASC 606. The Company identified two performance obligations in the Takeda Agreement and TSA including the license to its intellectual property (“License and Know-How”) and the Transition Services. The Company determined that the License and Know-How were distinct from the Transition Services as Takeda is able to derive benefit from the License and Know-How upon delivery and the Transition Services do not modify the License and Know-How. The transaction price at contract inception included fixed consideration consisting of the upfront fee of $ 200.0 million. The transaction price at inception also included estimated variable consideration of $ 51.4 million relating to the Transition Services revenue that was not constrained. The transaction price has been allocated to the License and Know-How and the Transition Services on a relative standalone selling price basis. The Company allocated $ 195.4 million of the transaction price to the License and Know-How, which was recognized at a point in time, when control of the License and Know-How was transferred to Takeda on the effective date of the Takeda Agreement. The remaining $ 56.1 million of the transaction price was allocated to the Transition Services, which will be recognized over time as services are provided using the input method, based on costs incurred to provide the Transition Services, as the level of costs incurred over-time best reflect the transfer of services. As of December 31, 2025, the Company recognized $ 38.5 million of service revenue for the Transition Services and such services are substantially complete. Any remaining services to be performed pursuant to the TSA will be recognized as performed and based on rates agreed to in the TSA. The $ 10.0 million development milestone was recognized as license revenue upon achievement in July 2025. The remaining $ 80.0 million of specified development milestones, $ 280.0 million of specified commercial milestones and $ 740.0 million of specified sales milestones were considered constrained at contract inception and excluded from the transaction price since the Company could not conclude it is probable that a significant revenue reversal in the amount recognized will not occur. The sales-based milestone payments and royalties will be recognized upon occurrence based on the sales and usage-based royalty exception. The Company will reevaluate the transaction price at the end of each reporting period and will adjust the estimate of the transaction price as uncertain events are resolved or other changes in circumstances occur. The Company determined that the Takeda Agreement and TSA did not contain a significant financing component. Accounts receivable were $ 3.6 million as of December 31, 2025 and zero as of December 31, 2024. Accounts receivable are amounts due from Takeda for the Transition Services. Revenue recognized from Takeda for the year ended December 31, 2025 and 2024 is as follows (in thousands): YEAR ENDED DECEMBER 31, 2025 2024 License revenue $ 205,355 $ — Service revenue 38,509 — Total revenue from Takeda $ 243,864 $ — F-28 16. SEGMENT REPORTING The following table presents segment revenue and significant segment expenses (in thousands) for the years ended December 31, 2025 and 2024: YEAR ENDED DECEMBER 31, 2025 2024 REVENUE: Total segment revenue $ 244,061 $ 3,550 LESS: Rinvatercept program expenses ( 7,081 ) ( 16,090 ) Elritercept program expenses ( 38,030 ) ( 44,319 ) Cibotercept program expenses ( 12,562 ) ( 29,777 ) Preclinical & development expenses ( 6,847 ) ( 12,008 ) Compensation costs (excluding stock based compensation) ( 45,331 ) ( 48,084 ) Other external costs ( 35,095 ) ( 26,708 ) Other segment items 3 ( 12,101 ) ( 13,917 ) Net income (loss) $ 87,014 $ ( 187,353 ) The Company manages operations on a consolidated basis as a single reportable and single operating segment focused on developing novel therapeutics. Segment revenue above is 100 percent attributed to the Company’s agreements with Takeda and 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 to achieve the approved 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, 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. 17. CORPORATE RESTRUCTURING In May 2025, the Board formally approved a plan to reduce the overall workforce by approximately 45 % (the "2025 Restructuring"). In connection with the 2025 Restructuring, the Company incurred one-time employee termination benefits, including severance, retention and benefits costs. The total costs associated with the 2025 Restructuring was $ 3.1 million, including severance, retention and benefits costs, of which $ 2.5 million and $ 0.5 million were recognized as part of total research and development and general and administrative expenses , respectively, during the year ended December 31, 2025. All costs have been incurred under the Company’s single reportable segment. The 2025 Restructuring was complete as of December 31, 2025. Accrued compensation and benefits costs as of December 31, 2025 is as follows (in thousands): RESTRUCTURING LIABILITY Balance as of January 1, 2025 $ — Expenses incurred 3,054 Cash payments ( 2,909 ) Balance as of December 31, 2025 $ 145 3 Other segment items include other expense, income tax provision, bank fees, research and development incentive income, depreciation expense, dividend income and stock-based compensation. F-29