kros-20260331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________________________

FORM 10-Q

________________________________________

(Mark One)


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

For the quarterly period ended March 31, 2026


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

For the transition period from to

Commission File Number: 001-39264

________________________________________

KEROS THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

________________________________________


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

Tel: (617) 314-6297

(Registrant's telephone number, including area code)

________________________________________

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

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, $0.0001 par value per share

KROS

The Nasdaq Stock Market LLC

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

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

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

Large Accelerated Filer

☐

Accelerated Filer

☐

Non-Accelerated Filer

☑

Smaller Reporting Company

☑

Emerging Growth Company

☐

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

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

As of May 8, 2026, there were 19,791,837 outstanding shares of the registrant's common stock, par value $0.0001 per share.

TABLE OF CONTENTS


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

PART I.	FINANCIAL INFORMATION	5
Item 1.	Financial Statements (Unaudited)	5
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Operations	6
	Condensed Consolidated Statements of Stockholders’ Equity	7
	Condensed Consolidated Statements of Cash Flows	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	29

PART II.	OTHER INFORMATION	30
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	84
Item 3.	Defaults Upon Senior Securities	85
Item 4.	Mine Safety Disclosures	85
Item 5.	Other Information	85
Item 6.	Exhibits	86
Signatures

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

▪the timing of initiation of and the timing of announcement of data from our Phase 2 clinical trial of our lead product candidate, rinvatercept (KER-065), in patients with Duchenne muscular dystrophy;

▪the timing of engagement with regulators on the planned Phase 2 clinical trial of rinvatercept in patients with amyotrophic lateral sclerosis;

▪plans of Takeda Pharmaceuticals U.S.A., Inc., or Takeda, to advance elritercept (KER-050) into a Phase 3 clinical trial in patients with myelodysplastic syndromes;

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

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

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

▪our ability to develop sales and marketing capabilities;

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

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

▪our ability to obtain funding for our operations;

▪the sufficiency of our existing capital resources;

▪our ability to establish and maintain collaborations;

▪our ability to effectively manage our anticipated growth;

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

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

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

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

▪our ability to attract and retain qualified employees;

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

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

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

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

You should read the section titled “Risk Factors” set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge

from time to time, and it is not possible for management to predict all risk factors and uncertainties. As a result of these factors, we cannot assure you that the forward-looking statements in this Quarterly Report on Form 10-Q will prove to be accurate. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

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

SPECIAL NOTE REGARDING COMPANY REFERENCES

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

SPECIAL NOTE REGARDING TRADEMARKS

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

SUMMARY OF SELECTED RISKS ASSOCIATED WITH OUR BUSINESS

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

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

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

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

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

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

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

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

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

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

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

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

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

PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS (unaudited)

KEROS THERAPEUTICS, INC.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)

(Unaudited)


	MARCH 31, 2026		DECEMBER 31, 2025
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	281,497	$	287,415
Accounts receivable	400		3,567

Prepaid expenses and other current assets	6,530		22,202


Current income tax receivable	2,250		2,250
Total current assets	290,677		315,434
Operating lease right-of-use assets	16,205		16,841
Property and equipment, net	3,962		4,297
Restricted cash	1,449		1,449

TOTAL ASSETS	$	312,293	$	338,021
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	1,493	$	1,967
Current portion of operating lease liabilities	2,501		2,408
Accrued expenses and other current liabilities	8,859		16,039


Total current liabilities	12,853		20,414
Operating lease liabilities, net of current portion	13,810		14,475


Total liabilities	26,663		34,889

STOCKHOLDERS' EQUITY:
Preferred stock, par value of $0.0001 per share; 10,000,000 shares authorized as of March 31, 2026 and December 31, 2025; no shares issued and outstanding	—		—
Series A junior participating preferred stock, par value of $0.0001 per share; 500,000 shares authorized as of March 31, 2026 and December 31, 2025; no shares issued and outstanding	—		—
Common stock, par value of $0.0001 per share; 200,000,000 shares authorized as of March 31, 2026 and December 31, 2025; 40,859,597 shares issued and 19,732,837 shares outstanding as of March 31, 2026 and 40,670,466 shares issued and 19,543,706 shares outstanding as of December 31, 2025	4		4
Treasury stock, at cost; 21,126,760 shares as of March 31, 2026 and December 31, 2025	(384,558)		(384,558)
Additional paid-in capital	1,175,657		1,169,451
Accumulated deficit	(505,473)		(481,765)
Total stockholders' equity	285,630		303,132
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	312,293	$	338,021

See notes to condensed consolidated financial statements.

KEROS THERAPEUTICS, INC.

Condensed Consolidated Statements of Operations

(In thousands, except share and per share data)

(Unaudited)


	THREE MONTHS ENDED MARCH 31,
	2026		2025
REVENUE:
Service and other revenue	$	367	$	15,891
License revenue	—		195,355
Total revenue	367		211,246
OPERATING EXPENSES:
Research and development	(16,097)		(48,709)
General and administrative	(10,147)		(10,497)
Total operating expenses	(26,244)		(59,206)
INCOME (LOSS) FROM OPERATIONS	(25,877)		152,040
OTHER INCOME (EXPENSE), NET



Dividend income	2,335		6,792
Other expense, net	(166)		(338)
Total other income, net	2,169		6,454
Income (loss) before income taxes	(23,708)		158,494
Income tax provision	—		(10,043)
Net income (loss)	$	(23,708)	$	148,451

Net income (loss) attributable to common stockholders — basic and diluted (Note 9)	$	(23,708)	$	148,451

Weighted-average shares of common stock outstanding — basic	19,629,906		40,559,355
Weighted-average shares of common stock outstanding — diluted	19,629,906		41,021,325

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

See notes to condensed consolidated financial statements.

KEROS THERAPEUTICS, INC.

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands, except share and per share data)

(Unaudited)



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

	SHARES	AMOUNT		SHARES	AMOUNT
As of December 31, 2025	40,670,466	$	4	(21,126,760)	$	(384,558)	$	1,169,451	$	(481,765)	$	303,132

Exercise of common stock options	15,304	—		—	—		7		—		7
Vesting of restricted stock	173,827	—		—	—		—		—		—
Stock-based compensation	—	—		—	—		6,199		—		6,199
Net income (loss)	—	—		—	—		—		(23,708)		(23,708)
As of March 31, 2026	40,859,597	$	4	(21,126,760)	$	(384,558)	$	1,175,657	$	(505,473)	$	285,630











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

	SHARES	AMOUNT		SHARES	AMOUNT
As of December 31, 2024	40,554,705	$	4	—	$	—	$	1,140,328	$	(568,779)	$	571,553
Exercise of common stock options	7,342	—		—	—		4		—		4
Stock-based compensation	—	—		—	—		8,863		—		8,863
Net income (loss)	—	—		—	—		—		148,451		148,451
As of March 31, 2025	40,562,047	$	4	—	$	—	$	1,149,195	$	(420,328)	$	728,871

See notes to condensed consolidated financial statements.

KEROS THERAPEUTICS, INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


	THREE MONTHS ENDED MARCH 31,
	2026		2025
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(23,708)	$	148,451
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation expense	403		344

Stock-based compensation expense	6,199		8,863

Non-cash lease expense	636		584
Changes in operating assets and liabilities:
Accounts receivable	3,167		(14,549)


Prepaid expenses and other current assets	15,672		4,543
Other assets	—		1,593
Accounts payable	(108)		2,019
Right-of-use assets and operating lease liabilities	(572)		(448)
Deferred revenue	—		3,308
Current tax liability	—		10,043
Accrued expenses and other current liabilities	(5,218)		(3,580)

Net cash provided by (used in) operating activities	(3,529)		161,171
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(73)		(565)
Net cash used in investing activities	(73)		(565)
CASH FLOWS FROM FINANCING ACTIVITIES:




Payment of direct expenses associated with the treasury stock repurchase	(2,323)		—
Proceeds from exercise of stock options	7		4
Net cash provided by (used in) financing activities	(2,316)		4

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	(5,918)		160,610
Cash, cash equivalents and restricted cash at beginning of period	288,864		561,380
Cash, cash equivalents and restricted cash at end of period	$	282,946	$	721,990

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:


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

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


	MARCH 31,
	2026		2025
Cash and cash equivalents	$	281,497	$	720,541
Restricted cash	1,449		1,449
Total cash, cash equivalents and restricted cash	$	282,946	$	721,990

See notes to condensed consolidated financial statements.

KEROS THERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. NATURE OF BUSINESS AND BASIS OF PRESENTATION

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

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 condensed consolidated financial statements have been prepared on the basis of the Company continuing as a going concern for the next 12 months. Management believes that the Company’s existing cash and cash equivalents as of March 31, 2026 will allow the Company to continue its operations for at least the next 12 months. In the absence of a significant source of recurring revenue, the continued viability of the Company is dependent on its ability to continue to raise additional capital to finance its operations. If the Company is unable to obtain additional funding, the Company may be forced to delay, reduce or eliminate some or all of its research and development programs, product portfolio expansion or commercialization efforts, which could adversely affect its business prospects, or the Company may be unable to continue operations.

The accompanying unaudited interim condensed consolidated financial statements as of March 31, 2026 and for the three months ended March 31, 2026 and 2025 have been prepared by the Company in conformity with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and, pursuant to the rules and regulations of Article 10 of Regulation S-X of the Securities Act published by the Securities and Exchange Commission (“SEC”) for interim financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. However, the Company believes the disclosures are adequate to make the information presented not misleading. These unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto for the year ended December 31, 2025 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on March 4, 2026 (the “Annual Report”).

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Significant Accounting Policies

The significant accounting policies and estimates used in preparation of the unaudited interim condensed consolidated financial statements are described in the Company’s audited consolidated financial statements as of and for the year ended December 31, 2025, and the notes thereto, which are included in the Annual Report. Except as detailed below, there have been no changes to the Company’s significant accounting policies during the three months ended March 31, 2026.

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. For stock options with market-based conditions, stock-based compensation costs are recognized ratably for each vesting tranche from the grant date through the requisite service period using the correlated grant date fair value, regardless of when and if ever the market condition is met. If there is a non-substantive explicit service condition, the total compensation expense is recognized upon the date of grant. 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 service-based and performance-based stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The Company calculates expected volatility based solely on the historical volatilities of the common stock of the Company. 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.

The fair value of the market-based awards is estimated using a Monte Carlo Simulation, incorporating various option pricing inputs. The effect of the market condition is reflected in the grant-date fair value with valuation techniques developed to value path-dependent options.

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

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

3. FAIR VALUE MEASUREMENTS

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


DESCRIPTION	MARCH 31, 2026		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)
Assets
Money market funds	$	275,105	$	275,105	$	—	$	—
Total financial assets	$	275,105	$	275,105	$	—	$	—


DESCRIPTION	DECEMBER 31, 2025		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)
Assets
Money market funds	$	270,713	$	270,713	$	—	$	—
Total financial assets	$	270,713	$	270,713	$	—	$	—

There have been no transfers between fair value levels during the three months ended March 31, 2026. The carrying values of other current assets, accounts payable and accrued expenses approximate their fair values due to the short-term nature of these assets and liabilities.

4. PREPAID EXPENSES AND OTHER CURRENT ASSETS

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


	MARCH 31, 2026		DECEMBER 31, 2025
Prepaid external R&D costs	$	2,251	$	1,609
Prepaid external manufacturing costs	647		398




Prepaid insurance	184		609
Prepaid subscriptions	1,261		947
Interest and dividend receivable	314		555
Prepaid consultants	294		1,207
Refunds due from contract research organizations	544		14,480
Other	1,035		2,397
Total prepaid expenses and other current assets	$	6,530	$	22,202

5. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

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


	MARCH 31, 2026		DECEMBER 31, 2025
Accrued external R&D costs	$	686	$	2,662
Accrued external manufacturing costs	305		429
Accrued compensation and benefits	3,369		5,870
Accrued excise tax	3,405		3,377
Accrued legal and consulting fees	1,006		3,484
Other	88		217
Total accrued expenses and other current liabilities	$	8,859	$	16,039

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

6. STOCKHOLDERS' EQUITY

As of March 31, 2026, 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.

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 expired on April 9, 2026.

7. 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.

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.

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. For the three months ended March 31, 2026, the Company did not acquire any shares of its common stock.

8. STOCK-BASED COMPENSATION

2017 Stock Incentive Plan

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

As of March 31, 2026, there was an aggregate of 396,795 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, to employees and for the grant of nonstatutory stock options, restricted stock awards, RSU awards, stock appreciation rights, performance stock awards and other forms of stock compensation to employees, consultants and directors. The 2020 Plan also provides for the grant of performance cash awards to employees, consultants and directors. Any previously granted awards under the 2017 Plan will remain outstanding in accordance with their respective terms.

Under the 2020 Plan, there is an annual increase on January 1 of each year from January 1, 2021 continuing through January 1, 2030, by 4.0% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares as may be determined by the Board. On January 1, 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 two- to four-year period and have a 10-year contractual term.

As of March 31, 2026, there was an aggregate of 4,139,737 shares of common stock issuable upon the exercise of outstanding options and 714,228 shares of common stock issuable upon the vesting of the outstanding RSU awards under the 2020 Plan. Additionally, there were an aggregate of 3,106,467 shares reserved for future issuance under the 2020 Plan, including shares forfeited from the 2017 Plan.

Restricted Stock Units

A summary of RSU award activity during the three months ended March 31, 2026 is as follows (in thousands except share and per share data):


	Number of Units	Weighted Average Grant-Date Fair Value
Outstanding RSU awards as of December 31, 2025	716,850	$	12.37
Granted	176,455	15.62
Vested	(173,827)	11.24
Forfeited	(5,250)	14.82
Outstanding RSU awards as of March 31, 2026	714,228	$	13.43

The summary of RSU award activity includes 90,500 performance-based awards granted during the year ended December 31, 2025. As of March 31, 2026, there has been no expense recognized for the performance-based awards, for which the performance criteria was not deemed probable as of March 31, 2026. As of March 31, 2026, there was approximately $8.7 million of unrecognized stock-based compensation expense related to RSU awards that is expected to vest, including $1.4 million unrecognized stock-based compensation expense related to performance-based awards. These costs are expected to be recognized over a weighted-average remaining vesting period of approximately 2.18 years.

The aggregate fair value of RSU awards that vested during the three months ended March 31, 2026 and 2025 was $2.9 million and zero, respectively.

Stock Options

A summary of option activity during the three months ended March 31, 2026 is as follows (in thousands except share and per share data):


	NUMBER OF OPTIONS	WEIGHTED-AVERAGE EXERCISE PRICE
Outstanding as of December 31, 2025	3,901,706	$	38.52
Granted	824,938

SEC Form 10-Q filed by Keros Therapeutics Inc.