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What changed in Keros Therapeutics, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Keros Therapeutics, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+660 added−608 removedSource: 10-K (2024-02-28) vs 10-K (2023-03-03)

Top changes in Keros Therapeutics, Inc.'s 2023 10-K

660 paragraphs added · 608 removed · 420 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

128 edited+153 added−107 removed284 unchanged
Biggest changeAdditional data from the evaluable RP2D patients, as of the data cut-off date, include: • 51.7% (n=15/29) of the evaluable RP2D population achieved HI-E over an eight-week period. • 50.0% (n=9/18) of the transfused RP2D patients receiving ≥ two red blood cell units at baseline achieved TI for at least eight weeks.
Biggest changeAdditional data from the mITT 24 patients, as of the data cut-off date, include: 9 • 39.1% (n=18/46) of the TI-evaluable patients achieved TI for at least eight weeks over the first 24 weeks of treatment. 13 of those 18 patients (72.2%) achieved TI for at least 24 weeks over the first 48 weeks of treatment. • Of the patients with HTB, 33.3% (n=11/33) achieved TI for at least eight weeks during the first 24 weeks of treatment. 7 of those 11 patients (63.6%) achieved TI for at least 24 weeks over the first 48 weeks of treatment.
The 8 primary objective of this trial is to assess the safety and tolerability of KER-050 in patients with MDS that either have ring sideroblasts, or RS positive, or do not have ring sideroblasts, or non-RS. The primary objective of Part 2 of this trial is confirmation of the safety and tolerability of the selected dose levels.
The primary objective of this trial is to assess the safety and tolerability of KER-050 in patients with MDS that either have ring sideroblasts, or RS positive, or do not have ring sideroblasts, or non-RS. The primary objective of Part 2 of this trial is 8 confirmation of the safety and tolerability of the selected dose levels.
For example, FibroGen Inc. and Astellas Pharma Inc. are developing product candidates for the treatment of anemia, and Acceleron Pharma Inc. (which was acquired by Merck & Co. Inc. in November 2021), or Acceleron, Bristol-Myers Squibb Company and Disc Medicine are developing product candidates targeting diseases associated with MDS and myelofibrosis, including chronic anemia.
For example, FibroGen Inc. and Astellas Pharma Inc. are developing product candidates for the treatment of anemia, and Acceleron Pharma Inc. (which was acquired by Merck & Co. Inc. in November 2021), or Merck, Bristol-Myers Squibb Company and Disc Medicine are developing product candidates targeting diseases associated with MDS and myelofibrosis, including chronic anemia.
Other potential consequences include, among other things: ▪ restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls; ▪ fines, warning or untitled letters or holds on post-approval clinical studies; 38 ▪ refusal of the FDA to approve pending applications or supplements to approved applications, or suspension or revocation of existing product approvals; ▪ product seizure or detention, or refusal of the FDA to permit the import or export of products; ▪ consent decrees, corporate integrity agreements, debarment or exclusion from federal healthcare programs; ▪ mandated modification of promotional materials and labeling and the issuance of corrective information; ▪ the issuance of safety alerts, Dear Healthcare Provider letters, press releases and other communications containing warnings or other safety information about the product; or ▪ injunctions or the imposition of civil or criminal penalties.
Other potential consequences include, among other things: ▪ restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls; ▪ fines, warning or untitled letters or holds on post-approval clinical studies; ▪ refusal of the FDA to approve pending applications or supplements to approved applications, or suspension or revocation of existing product approvals; ▪ product seizure or detention, or refusal of the FDA to permit the import or export of products; ▪ consent decrees, corporate integrity agreements, debarment or exclusion from federal healthcare programs; ▪ mandated modification of promotional materials and labeling and the issuance of corrective information; ▪ the issuance of safety alerts, Dear Healthcare Provider letters, press releases and other communications containing warnings or other safety information about the product; or ▪ injunctions or the imposition of civil or criminal penalties.
Further corporate governance information, including our corporate governance guidelines and board committee charters, is also available on our investor relations website under the heading "Corporate Governance." The contents of our websites are not intended to be incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only.
Further corporate governance information, including our corporate governance guidelines and board committee charters, is also available on our investor relations website under the heading "Corporate Governance." The contents of our websites are not intended to be incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only. 44
Decisions regarding whether to cover any of our product candidates, if approved, the extent of coverage and amount of reimbursement to be provided are made on a plan-by-plan basis Third-party payors often rely upon Medicare coverage policy and payment limitations in setting their own reimbursement rates, but also have their own methods and approval process apart from Medicare determinations.
Decisions regarding whether to cover any of our product candidates, if approved, the extent of coverage and amount of reimbursement to be provided are made on a plan-by-plan basis Third-party payors often 41 rely upon Medicare coverage policy and payment limitations in setting their own reimbursement rates, but also have their own methods and approval process apart from Medicare determinations.
The BPCIA also created certain exclusivity periods for biosimilars approved as interchangeable products. At this juncture, it is unclear whether products deemed “interchangeable” by the FDA will, in fact, be readily substituted by pharmacies, which are governed by state pharmacy law. A biological product can also obtain pediatric market exclusivity in the United States.
The BPCIA also created certain exclusivity periods for biosimilars approved as interchangeable products. At this juncture, it is unclear whether products deemed “interchangeable” by the FDA will, in fact, be readily substituted by pharmacies, which are governed by state pharmacy law. 36 A biological product can also obtain pediatric market exclusivity in the United States.
Each of these individual therapies may modestly improve a patient’s functional status and in some cases survival, but is limited by systemic hypotension, systemic side effects and tachyphylaxis, which is an acute, sudden decrease in response to a product after its administration. Additionally, combination therapy is 22 limited by the combined side effect profiles.
Each of these individual therapies may modestly improve a patient’s functional status and in some cases survival, but is limited by systemic hypotension, systemic side effects and tachyphylaxis, which is an acute, sudden decrease in response to a product after its administration. Additionally, combination therapy is limited by the combined side effect profiles.
Hansoh’s obligation to pay royalties for a given licensed product in a given region in the Territory will begin on the date of the first commercial sale for such licensed product in such region and continue until the latest of (i) ten 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.
Hansoh’s obligation to pay royalties for a given licensed product in a given region in the Territory will begin on the date of the first commercial sale for such licensed product in such region and continue until the latest of (i) ten 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 29 patents or joint patents, and (iii) expiration of regulatory exclusivity in such region.
We plan to independently advance our product candidates in indications and regions that we believe have clearly defined regulatory paths and commercialization strategies. We intend to opportunistically evaluate strategic collaborations to maximize the potential commercial value of our product candidates and discovery programs. ▪ Leverage our proprietary discovery approach and knowledge base to develop new therapeutics.
We plan to independently advance our product candidates in indications and regions that we believe have clearly defined regulatory paths and 2 commercialization strategies. We intend to opportunistically evaluate strategic collaborations to maximize the potential commercial value of our product candidates and discovery programs. ▪ Leverage our proprietary discovery approach and knowledge base to develop new therapeutics.
Bone Mineral Density in Mice and Representative Microct Scans 26 *** P value In a separate preclinical study, we observed that treatment with KER-012 increased the ratio of osteoblasts, which are bone forming cells, to osteoclasts, which are bone resorbing cells, which further supports that KER-012 acts via an anabolic effect on bone.
Bone Mineral Density in Mice and Representative Microct Scans *** P value In a separate preclinical study, we observed that treatment with KER-012 increased the ratio of osteoblasts, which are bone forming cells, to osteoclasts, which are bone resorbing cells, which further supports that KER-012 acts via an anabolic effect on bone.
Additionally, appropriate packaging must be selected and tested and stability studies must be conducted to demonstrate that the product candidate does not undergo unacceptable deterioration over its shelf life. During all phases of clinical development, regulatory agencies require extensive monitoring and auditing of all clinical activities, clinical data, and clinical study investigators.
Additionally, appropriate 33 packaging must be selected and tested and stability studies must be conducted to demonstrate that the product candidate does not undergo unacceptable deterioration over its shelf life. During all phases of clinical development, regulatory agencies require extensive monitoring and auditing of all clinical activities, clinical data, and clinical study investigators.
The executive order also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the ACA.
The executive order also instructed certain governmental agencies to review and reconsider their existing policies 42 and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the ACA.
We are required to use commercially reasonable efforts to develop and commercialize licensed products and processes, and must achieve certain required diligence milestones. 32 Under the terms of the MGH Agreement, we made an initial license payment of $100,000 and reimbursed MGH approximately $280,000 of prior patent prosecution expenses related to the licensed patents.
We are required to use commercially reasonable efforts to develop and commercialize licensed products and processes, and must achieve certain required diligence milestones. Under the terms of the MGH Agreement, we made an initial license payment of $100,000 and reimbursed MGH approximately $280,000 of prior patent prosecution expenses related to the licensed patents.
In addition, our trade secrets may otherwise become known or be independently discovered by competitors. To the extent that our collaborators, employees and consultants use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions.
In addition, our trade secrets may otherwise become known or be independently discovered by competitors. To the extent that our collaborators, employees and consultants use intellectual 31 property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions.
The application must include all relevant data 36 available from pertinent preclinical studies and clinical trials, including negative or ambiguous results of preclinical studies and clinical trials, as well as positive findings, together with detailed information relating to the product’s chemistry, manufacturing, controls, and proposed labeling, among other things.
The application must include all relevant data available from pertinent preclinical studies and clinical trials, including negative or ambiguous results of preclinical studies and clinical trials, as well as positive findings, together with detailed information relating to the product’s chemistry, manufacturing, controls, and proposed labeling, among other things.
Retention, Training and Development 42 The development, attraction and retention of our employees is a critical success factor for Keros. We cultivate a culture of learning and offer formal and informal training and development opportunities for employees at all levels. We actively promote from within and continue to fill our team with strong and experienced management talent.
Retention, Training and Development The development, attraction and retention of our employees is a critical success factor for Keros. We cultivate a culture of learning and offer formal and informal training and development opportunities for employees at all levels. We actively promote from within and continue to fill our team with strong and experienced management talent.
The FDA is not bound by recommendations of the advisory committee, but it considers such recommendations when making decisions on approval. Additionally, before approving an NDA or BLA, the FDA will typically inspect one or more clinical sites to assure compliance with GCPs.
The FDA is not bound by recommendations of the advisory committee, but it considers such 34 recommendations when making decisions on approval. Additionally, before approving an NDA or BLA, the FDA will typically inspect one or more clinical sites to assure compliance with GCPs.
In a third-party Phase 3 clinical trial of Jakafi and a third-party Phase 3 clinical trial of Inrebic, treatment led to significant reductions in spleen volume and improvement in total symptom scores. However, JAK inhibitors interfere with normal hematopoiesis and treatment with Jakafi and Inrebic also resulted in clinically significant anemia and thrombocytopenia in these Phase 3 trials.
In a third-party Phase 3 clinical trial of Jakafi and a third-party Phase 3 clinical trial of Inrebic, treatment led to significant reductions in spleen volume 6 and improvement in total symptom scores. However, JAK inhibitors interfere with normal hematopoiesis and treatment with Jakafi and Inrebic also resulted in clinically significant anemia and thrombocytopenia in these Phase 3 trials.
Sales of any product, if approved, depend, in part, on the extent to which such product 40 will be covered by third-party payors, such as federal, state, and foreign government healthcare programs, commercial insurance and managed healthcare organizations, and the level of reimbursement, if any, for such product by third-party payors.
Sales of any product, if approved, depend, in part, on the extent to which such product will be covered by third-party payors, such as federal, state, and foreign government healthcare programs, commercial insurance and managed healthcare organizations, and the level of reimbursement, if any, for such product by third-party payors.
The failure of progenitor cells to differentiate can also lead to a build-up of these cells, resulting in bone marrow failure and fibrotic disease. The graphic below provides an illustration of the difference in the number of progenitor cells and mature bloods cells that are produced in normal hematopoiesis and in ineffective hematopoiesis.
The failure 3 of progenitor cells to differentiate can also lead to a build-up of these cells, resulting in bone marrow failure and fibrotic disease. The graphic below provides an illustration of the difference in the number of progenitor cells and mature bloods cells that are produced in normal hematopoiesis and in ineffective hematopoiesis.
Accordingly, we believe that additional treatment options will be needed to address anemia in the heterogeneous non-ring sideroblast MDS population, to provide clinical benefit to the RS positive population regardless of transfusion burden and to address other cytopenias, such as thrombocytopenia.
We believe that additional treatment options will be needed to address anemia in the heterogeneous non-ring sideroblast MDS population, to provide clinical benefit to the RS positive population regardless of transfusion burden and to address other cytopenias, such as thrombocytopenia.
The term remuneration has been interpreted broadly to include anything of value, including stock options. The U.S. federal Anti-Kickback Statute has been interpreted to apply to arrangements between pharmaceutical manufacturers on one hand and prescribers, purchasers, and others on the other hand.
The term remuneration has been interpreted broadly to include anything of value, including stock options. The U.S. federal Anti-Kickback Statute has been interpreted to apply to arrangements between pharmaceutical manufacturers on one hand 40 and prescribers, purchasers, and others on the other hand.
The FDA will not approve the NDA or BLA without an approved REMS, if required. The FDA also may condition approval on, among other things, changes to proposed labeling or the development of adequate controls and specifications.
The FDA will not approve the NDA or BLA without an approved 35 REMS, if required. The FDA also may condition approval on, among other things, changes to proposed labeling or the development of adequate controls and specifications.
These reductions went into effect in April 2013 and, due to subsequent legislative amendments to the statute, including the 41 Infrastructure Investment and Jobs Act, will remain in effect through 2031, unless additional action is taken by Congress.
These reductions went into effect in April 2013 and, due to subsequent legislative amendments to the statute, including the Infrastructure Investment and Jobs Act, will remain in effect through 2031, unless additional action is taken by Congress.
Additionally, we observed that treatment with KER-012 statistically significantly increased trabecular bone formation and mineral apposition rate, which we believe is consistent with an anabolic effect on bone.
Additionally, we observed that treatment with 19 KER-012 statistically significantly increased trabecular bone formation and mineral apposition rate, which we believe is consistent with an anabolic effect on bone.
The IRB also 35 approves the informed consent form that must be provided to each clinical trial subject or his or her legal representative, and must monitor the study until completed.
The IRB also approves the informed consent form that must be provided to each clinical trial subject or his or her legal representative, and must monitor the study until completed.
In a preclinical study evaluating the binding activity of KER-012, KER-012 was observed to inhibit ligands associated with endothelial dysfunction, including activins A and B, whereas KER-012 exhibited low affinity for BMP-9. 28 Treatment with RKER-012 prevented cardiac dysfunction and remodeling in a mouse PAB model We used mechanical restriction of the pulmonary artery in mice to increase pressure in the right ventricular of the heart.
In a preclinical study evaluating the binding activity of KER-012, KER-012 was observed to inhibit ligands associated with endothelial dysfunction, including activins A and B, whereas KER-012 exhibited low affinity for BMP-9. 21 Treatment with RKER-012 prevented cardiac dysfunction and remodeling in a mouse PAB model We used mechanical restriction of the pulmonary artery in mice to increase pressure in the right ventricular of the heart.
In Part 2, maximal target engagement was observed in the 4.5 mg/kg dose cohort, with five out of six volunteers who received a 4.5 mg/kg dose of KER-012 achieving a >40% reduction in serum FSH levels from baseline. 23 Part 2 of the Trial: FSH Percent Change from Baseline The magnitude of FSH reduction in the highest doses tested suggest that KER-012 treatment maximally inhibited activin signaling.
In Part 2, maximal target engagement was observed in the 4.5 mg/kg dose cohort, with five out of six volunteers who received a 4.5 mg/kg dose of KER-012 achieving a >40% reduction in serum FSH levels from baseline. 16 Part 2 of the Trial: FSH Percent Change from Baseline The magnitude of FSH reduction in the highest doses tested suggest that KER-012 treatment maximally inhibited activin signaling.
Our Strategy Our mission is to deliver significant clinical benefit to patients suffering from hematological, pulmonary and cardiovascular disorders. With a focus on developing differentiated product candidates that are designed to alter TGF-β signaling, we aim to target the pathways critical for the growth, repair and maintenance of a number of tissue and organ systems.
Our Strategy Our mission is to deliver significant clinical benefit to patients suffering from hematological, pulmonary, cardiovascular, obesity and neuromuscular disorders. With a focus on developing differentiated product candidates that are designed to alter TGF-β signaling, we aim to target the pathways critical for the growth, repair and maintenance of a number of tissue and organ systems.
These non-RS patients have differentiation and maturation defects occurring across the spectrum from early through terminal stages of hematopoiesis. Limitations of Current Treatment Options for Cytopenias in Patients with MDS Patients with MDS-associated anemia are generally treated with red blood cell transfusions and erythropoises-stimulating agents, or ESAs, which are not approved for such treatment.
These non-RS patients have differentiation and maturation defects occurring across the spectrum from early through terminal stages of hematopoiesis. Limitations of Current Treatment Options for Cytopenias in Patients with MDS Patients with MDS-associated anemia are generally treated with red blood cell transfusions and erythropoiesis-stimulating agents, or ESAs, which are not approved for such treatment.
Hoffman-La Roche Ltd (Roche), Novartis International AG, AbbVie Inc., Human Genome Sciences (with was acquired by GlaxoSmithKline plc in July 2012), Seres Therapeutics, Inc., Kadmon Holdings, Inc., Anokion SA and Sanofi S.A. Our Pipeline The following table sets forth our product candidates and their current development stages.
Hoffman-La Roche Ltd (Roche), Novartis International AG, AbbVie Inc., Human Genome Sciences (with was acquired by GlaxoSmithKline plc in July 2012), Kadmon Holdings, Inc., Anokion SA and Sanofi S.A. Our Pipeline The following table sets forth our product candidates and their current development stages.
We estimate that there are approximately 40,000 addressable patients in the United States living with this condition. Despite current treatment options, survival with PAH remains only slightly above 50% at five years, with mortality typically resulting from right ventricle failure.
We estimate that there are approximately 40,000 addressable patients in the United States living with this condition. Despite current treatment options, survival with PAH remains only slightly above 60% at five years, with mortality typically resulting from right ventricle failure.
We believe that we are well positioned to advance our product candidates and realize the commercial opportunities in diseases where muscle and bone loss result in a debilitating impact on survival and quality of life, if our product candidates are successfully developed and approved.
We believe that we are well positioned to advance our product candidates and pursue the commercial opportunities in diseases where muscle and bone loss result in a debilitating impact on survival and quality of life, if our product candidates are successfully developed and approved.
An IND is a request for authorization from the FDA to administer an investigational new drug product to humans.
An IND is a request for authorization from the FDA to administer an investigational new drug product 32 to humans.
In June 2020, Acceleron further announced that the European Commission approved Reblozyl for the treatment of transfusion-dependent anemia in adult patients with MDS or beta thalassemia and in September 2020, Acceleron announced that Health Canada approved Reblozyl for the treatment of adult patients with red blood cell transfusion-dependent anemia associated with beta thalassemia.
In June 2020, Merck further announced that the European Commission approved Reblozyl for the treatment of transfusion-dependent anemia in adult patients with MDS or beta thalassemia and in September 2020, Merck announced that Health Canada approved Reblozyl for the treatment of adult patients with red blood cell transfusion-dependent anemia associated with beta thalassemia.
KER-050: For the Treatment of Ineffective Hematopoiesis to Address Cytopenias We are developing KER-050, our lead protein therapeutic product candidate, for the treatment of cytopenias that occur due to ineffective hematopoiesis, including anemia and thrombocytopenia, in patients with MDS and in patients with myelofibrosis.
KER-050: For the Treatment of Ineffective Hematopoiesis to Address Cytopenias We are developing KER-050, our lead product candidate, for the treatment of cytopenias that occur due to ineffective hematopoiesis, including anemia and thrombocytopenia, in patients with MDS and in patients with myelofibrosis.
We seek to address the limitations of current therapeutic approaches to treating diseases whose manifestations are linked to dysfunction of TGF-ß signaling pathways by: 1 ▪ Leveraging our comprehensive insights into the TGF-ß signaling pathways to discover therapeutics to treat hematological, pulmonary and cardiovascular disorders. ▪ Expanding our library of proprietary molecules that are engineered to induce desired biological effects, such as increased blood cell production and increased muscle mass and strength. ▪ Engineering proprietary molecules to selectively target specific proteins in the TGF-ß signaling pathways to provide therapeutic benefit while potentially minimizing safety risks. ▪ Developing product candidates for the treatment of diseases where targeting the TGF-ß signaling pathways has clinical validation or biological rationale to improve our probability of success in the clinic. ▪ Targeting the TGF-ß family of proteins, which are highly conserved throughout evolution, permitting the use of animal models to potentially predict with high confidence the therapeutic benefit in patients.
We seek to address the limitations of current therapeutic approaches to treating diseases whose manifestations are linked to dysfunction of TGF-ß signaling pathways by: 1 ▪ leveraging our comprehensive insights into the TGF-ß signaling pathways to discover therapeutics to treat disorders that are linked to dysfunctional TGF-ß signaling; ▪ expanding our library of proprietary molecules that are engineered to induce desired biological effects, such as increased blood cell production, reduced body fat and increased muscle mass and strength; ▪ engineering proprietary molecules to selectively target specific proteins in the TGF-ß signaling pathways to provide therapeutic benefit while potentially minimizing safety risks; ▪ developing product candidates for the treatment of diseases where targeting the TGF-ß signaling pathways has clinical validation or biological rationale to improve our probability of success in the clinic; and ▪ targeting the TGF-ß family of proteins, which are highly conserved throughout evolution, permitting the use of animal models to potentially predict with high confidence the therapeutic benefit in patients.
We have also observed an increase in erythropoietin in healthy mice in preclinical studies of RKER-050, which we believe could contribute to the durability in red blood cell production and is supportive of the durability of the red blood cell increase we observed in our Phase 1 clinical trial of KER-050 in healthy post-menopausal women.
We have also observed an increase in erythropoietin in healthy mice in preclinical studies of RKER-050, which we believe could contribute to the durability in red blood cell production and is supportive of the durability of the red blood cell increase we observed in our Phase 1 clinical trial of KER-050 in healthy post-menopausal women. • Increased platelet counts in blood.
By acting on cell types throughout the erythropoiesis pathway, KER-050 may lead to robust responses in RS positive patients who have a characteristic defect in terminal maturation, and may also address anemia in the broader MDS population, including non-RS patients, that has defects in earlier-stage erythroid cell development. • Increased platelet counts in blood.
By acting on cell types throughout the erythropoiesis pathway, KER-050 may lead to robust responses in RS positive patients who have a characteristic defect in terminal maturation, and may also address anemia in the broader MDS population, including non-RS patients, that has defects in earlier-stage erythroid cell development.
Phase 1 Clinical Trial Design Observed tolerability data KER-012 was generally well tolerated in Part 1 of this trial at dose levels up to 5 mg/kg, the highest dose level tested, when administered as a single dose, and multiple doses of 0.75 mg/kg, 1.5 mg/kg and 4.5 mg/kg.
The trial design is summarized in the figure below. Phase 1 Clinical Trial Design Observed tolerability data KER-012 was generally well tolerated in Part 1 of this trial at dose levels up to 5 mg/kg, the highest dose level tested, when administered as a single dose, and multiple doses of 0.75 mg/kg, 1.5 mg/kg and 4.5 mg/kg.
We believe that potent therapies that do not exhibit tachyphylaxis, are orally bioavailable or do not require continuous infusion therapy would have advantages over the currently available treatments for PAH. Therapies that arrest pulmonary vascular remodeling could have a long-term clinical stabilizing effect in PAH, or reverse vascular obliteration.
We believe that potent therapies that do not exhibit tachyphylaxis, are orally bioavailable or do not require continuous infusion therapy would have advantages over the currently available treatments for PAH. Therapies that delay or reverse the obliterative pulmonary vascular remodeling could have a long-term clinical stabilizing effect in PAH.
To date, only a handful of biosimilars have been licensed under the BPCIA, although numerous biosimilars have been approved in Europe. The FDA has issued several guidance documents outlining an approach to review and approval of biosimilars.
To date, only a handful of biosimilars have been licensed under the BPCIA, although numerous biosimilars have been approved in the European Union. The FDA has issued several guidance documents outlining an approach to review and approval of biosimilars.
The secondary objectives of this trial are to evaluate the pharmacokinetics, pharmacodynamics and efficacy of KER-050. The trial design is summarized in the figure below. Phase 2 Clinical Trial Design KER-050 is being administered to patients subcutaneously once every four weeks.
The secondary objectives of this trial are to evaluate the pharmacokinetics, pharmacodynamics and efficacy of KER-050. The trial design is summarized in the figure below. Phase 2 Clinical Trial Design CMML: chronic myelomonocytic leukemia KER-050 is being administered to patients subcutaneously once every four weeks.
Additionally, in April 2020, Acceleron received FDA approval of its product, Reblozyl, for the treatment of anemia failing an erythropoiesis stimulating agent and requiring two or more red blood cell units over eight weeks in adult patients with very low- to intermediate-risk MDS with ring sideroblasts or with myelodysplastic/myeloproliferative neoplasm with ring sideroblasts and thrombocytosis.
Additionally, in April 2020, Merck and Bristol-Myers Squibb Company received FDA approval of its product, Reblozyl, for the treatment of anemia failing an erythropoiesis stimulating agent and requiring two or more red blood cell units over eight weeks in adult patients with very low- to intermediate-risk MDS with ring sideroblasts or with myelodysplastic/myeloproliferative neoplasm with ring sideroblasts and thrombocytosis.
Additionally, bone marrow analysis performed 24 hours post-dose demonstrated that administration of RKER-050 increased the megakaryocyte precursor population, and that these cells had increased ploidy compared to vehicle-treated mice. These data suggest that RKER-050 promoted the maturation of early megakaryocyte populations and primed megakaryocytes for proplatelet production.
Additionally, bone marrow analysis performed 24 hours post-dose demonstrated that administration of RKER-050 increased the megakaryocyte precursor population, and that these cells had increased ploidy, compared to vehicle. These data suggest that RKER-050 promoted the maturation of early megakaryocyte populations and primed megakaryocytes for proplatelet production. • Reduced accumulation of progenitor cells.
KER-012 is designed to normalize blood vessel thickness and heart function by binding to and inhibiting the signaling of select TGF-ß ligands, including activin A, activin B and myostatin (GDF8), that stimulate smooth muscle hypertrophy and fibrosis, without a dose-limiting increase in red blood cells.
KER-012 is designed to normalize blood vessel thickness and heart function by binding to and inhibiting the signaling of select TGF-ß ligands, including activin A, activin B and myostatin (GDF8), that stimulate the proliferation of vascular endothelial and smooth muscle cells and fibroblasts, without a dose-limiting increase in red blood cells.
The scope of the FCPA includes interactions with certain healthcare professionals in many countries. Equivalent laws have been adopted in other foreign countries that impose similar obligations. Employees and Human Capital Resources As of December 31, 2022, we had 105 full-time employees, including 22 who hold Ph.D. or M.D. degrees.
The scope of the FCPA includes interactions with certain healthcare professionals in many countries. Equivalent laws have been adopted in other foreign countries that impose similar obligations. 43 Employees and Human Capital Resources As of December 31, 2023, we had 136 full-time employees, including 44 who hold Ph.D. or M.D. degrees.
Specifically related to red blood cells, we have demonstrated in multiple preclinical studies that administration of a mouse version of KER-050, or RKER-050, elicited increases in red blood cell production in healthy mice by stimulating multiple stages in the maturation of erythroid precursors.
Specifically related to red blood cells, we have demonstrated in multiple preclinical studies that administration of RKER-050 elicited increases in red blood cell production in healthy mice by stimulating multiple stages in the maturation of erythroid precursors.
We own ten pending U.S. patent applications and 12 pending ex-U.S. applications that contain claims or supporting disclosure directed to ActRIIB ligand traps and use thereof to treat muscle disease, bone disease, anemia, fibrosis, pulmonary hypertension, metabolic disease, thrombocytopenia, and neutropenia, among others.
We own one issued U.S. patent, 15 pending U.S. patent applications and 23 pending ex-U.S. applications that contain claims or supporting disclosure directed to ActRIIB ligand traps and use thereof to treat muscle disease, bone disease, anemia, fibrosis, pulmonary hypertension, metabolic disease, thrombocytopenia, and neutropenia, among others.
We compete in the segments of the biotechnology, pharmaceutical and other related industries that develop and market therapies for the treatment of hematological, pulmonary and cardiovascular disorders. There are many other companies, including large biotechnology and pharmaceutical companies, that have commercialized and/or are developing therapies for the same therapeutic areas that our product candidates target.
We compete in the segments of the biotechnology, pharmaceutical and other related industries that develop and market therapies in our target indications. There are many other companies, including large biotechnology and pharmaceutical companies, that have commercialized and/or are developing therapies for the same therapeutic areas that our product candidates target.
In December 2022, we presented additional data from this ongoing trial at the 64th American Society of Hematology, or ASH, Annual Meeting and Exposition.
In December 2023, we presented additional data from this ongoing trial at the 65th American Society of Hematology, or ASH, Annual Meeting and Exposition.
Our Pulmonary and Cardiovascular Franchise KER-012 KER-012 is a ligand trap comprised of a modified ligand-binding domain of ActRIIB that is fused to the portion of the human antibody known as the Fc domain.
Our Pulmonary and Cardiovascular Franchise KER-012 KER-012 is a ligand trap comprised of a modified ligand-binding domain of activin receptor type IIB, or ActRIIB, that is fused to the portion of the human antibody known as the Fc domain.
We own three issued U.S. patents, three issued ex-U.S. patents, 11 pending U.S. patent applications and 39 pending ex-U.S. applications that contain claims or supporting disclosure directed to ActRIIA ligand traps and use thereof to treat muscle disease, bone disease, metabolic disease, anemia, fibrosis, pulmonary hypertension, thrombocytopenia, and neutropenia, among others.
We own four issued U.S. patents, six issued ex-U.S. patents, 14 pending U.S. patent applications and 49 pending ex-U.S. applications that contain claims or supporting disclosure directed to ActRIIA ligand traps and use thereof to treat muscle disease, bone disease, metabolic disease, anemia, fibrosis, pulmonary hypertension, thrombocytopenia, and neutropenia, among others.
In addition, Hansoh will use commercially reasonable efforts to develop, obtain regulatory approval for, and commercialize licensed products in any region in the Territory. Pursuant to the terms of the Hansoh Agreement, we received a net $18.0 million upfront payment in 2022.
In addition, Hansoh will use commercially reasonable efforts to develop, obtain regulatory approval for, and commercialize licensed products in any region in the Territory. Pursuant to the terms of the Hansoh Agreement, we received an upfront payment in 2022.
As of the data cut-off date, 51.7% (n=15/29) of the evaluable RP2D patients achieved an overall erythroid response, which is defined as meeting one of the following two endpoints: • IWG 2006 Hematological improvement-erythroid, or HI-E, which is defined as either: ◦ a ≥ 1.5 g/dL increase in hemoglobin for eight weeks in LTB and NT patients; or ◦ a reduction by ≥ 4 red blood cell units transfused during any eight-week period during the trial, compared with the eight-week period prior to cycle 1, Day 1 in HTB patients. • Transfusion independence, or TI, for at least eight weeks in transfusion-dependent patients who required ≥ 2 red blood cell units transfused at baseline.
As of the data cut-off date, 50% (n=30/60) of the mITT 24 patients achieved an overall erythroid response over the first 24 weeks of treatment, which is defined as meeting at least one of the following two endpoints: • Modified IWG 2006 Hematological improvement-erythroid, or HI-E, which is defined as either: ◦ a ≥ 1.5 g/dL increase in hemoglobin for at least eight weeks in LTB and NT patients; or ◦ a reduction by ≥ 4 red blood cell units transfused during any eight-week period during the trial, compared with the eight-week period prior to cycle 1, Day 1 in HTB patients. • Transfusion independence, or TI, for at least eight weeks in transfusion-dependent patients who required ≥ 2 red blood cell units transfused at baseline.
Additionally, to further assist our employees, we also offer all full-time employees the option to participate in our education assistance program, where we reimburse employees for a portion of tuition fees and eligible expenses.
Additionally, to continually develop and facilitate the growth of our employees, we also offer all full-time employees the option to participate in our education assistance program, where we reimburse employees for a portion of tuition fees and eligible expenses.
For more information, please see “Risk Factors—Risks Related to Intellectual Property.” Government Regulation The FDA and other regulatory authorities at federal, state and local levels, as well as in foreign countries, extensively regulate, among other things, the research, development, testing, manufacture, quality control, import, export, labeling, packaging, storage, distribution, record keeping, approval, advertising, promotion, marketing, post-approval monitoring and post-approval reporting of drug and biological products such as those we are developing. 34 Our product candidates are subject to regulation under the Food, Drug, and Cosmetic Act and the Public Health Service Act, and other federal, state, local and foreign statutes and regulations.
For more information, please see “Risk Factors—Risks Related to Intellectual Property.” Government Regulation The FDA and other regulatory authorities at federal, state and local levels, as well as in foreign countries, extensively regulate, among other things, the research, development, testing, manufacture, quality control, import, export, labeling, packaging, storage, distribution, record keeping, approval, advertising, promotion, marketing, post-approval monitoring and post-approval reporting of drug and biological products such as those we are developing.
We are continuing to progress our ongoing Phase 2 clinical trial evaluating KER-050 for the treatment of anemia and thrombocytopenia in patients with very low-, low-, or intermediate-risk MDS who either have or have not previously received treatment with an erythropoiesis-stimulating agent.
The key elements of our strategy include: ▪ Rapidly advance the clinical development of KER-050, KER-012 and KER-065. We are continuing to progress our ongoing Phase 2 clinical trial evaluating KER-050 for the treatment of anemia and thrombocytopenia in patients with very low-, low-, or intermediate-risk MDS who either have or have not previously received treatment with an erythropoiesis-stimulating agent.
Our third product candidate, KER-012, is being developed for the treatment of pulmonary arterial hypertension, or PAH, and for the treatment of cardiovascular disorders .
Our second product candidate, KER-012, is being developed for the treatment of pulmonary arterial hypertension, or PAH, and for the treatment of cardiovascular disorders . Our third product candidate, KER-065, is being developed for the treatment of obesity and for the treatment of neuromuscular diseases.
However, ActRIIB-Fc was also observed to cause nose and gum bleeding, which we believe is due to its effect of disrupting normal vascular remodeling. BMP9 signaling is required for normal vascular remodeling, but is not involved in regulation of muscle or bone tissues. ActRIIB-Fc potently inhibits BMP9 signaling, which is the mechanism behind the bleeding events observed with ActRIIB-Fc treatment.
However, ActRIIB-Fc was also observed to cause nose and gum bleeding, which we believe is due to its effect of disrupting normal vascular remodeling. BMP9 signaling is required for normal vascular remodeling, but is not involved in regulation of 27 muscle or bone tissues.
Diversity and Inclusion At Keros, diversity means making a conscious effort to reflect the many experiences and identities of the world outside, while treating each other with fairness and without bias.
We consider our relationship with our employees to be good. Diversity and Inclusion At Keros, diversity means making a conscious effort to reflect the many experiences and identities of the world outside, while treating each other with fairness and without bias.
Of these, nine issued patents and 81 patent applications relate to KER-050, KER-047 and KER-012, and eight issued patents and 34 patent applications relate to other technologies, in each case as described in more detail below. Each of our pending international patent applications has been filed under the Patent Cooperation Treaty and has not yet entered any national jurisdictions.
Of these, 11 issued patents and 94 patent applications relate to KER-050, KER-012 and KER-065, and 13 issued patents and 37 patent applications relate to other technologies, in each case as described in more detail below. Each of our pending international patent applications has been filed under the Patent Cooperation Treaty and has not yet entered any national jurisdictions.
Bone Volume Changes as a Result of Hypoxia in the Rat Model of PAH 27 * P value Treatment with RKER-012 prevented cardiac hypertrophy in a rat model of PAH We combined administration of SUGEN5416, a tyrosine kinase inhibitor of vascular endothelial growth factor receptors 1/2, with exposure to chronic hypoxia to recapitulate the biology in PAH.
Treatment with a subcutaneous 10 mg/kg dose of RKER-012 was observed to prevent bone loss in the rat model of PAH. 20 Bone Volume Changes as a Result of Hypoxia in the Rat Model of PAH * P value Treatment with RKER-012 prevented cardiac hypertrophy in a rat model of PAH We combined administration of SUGEN5416, a tyrosine kinase inhibitor of vascular endothelial growth factor receptors 1/2, with exposure to chronic hypoxia to recapitulate the biology in PAH.
Part 2 of the Trial: BSAP Percent Change from Baseline 24 Multiple doses of KER-012 did not elicit changes in erythropoiesis Administration of KER-012 did not elicit clinically meaningful changes in hemoglobin or red blood cells in this trial, and no changes in red blood cells were observed after the second or third dose.
In Part 2 of this trial, we observed increases in BSAP after each dose, which is supportive of activation of osteoblasts after each dose. 17 Part 2 of the Trial: BSAP Percent Change from Baseline Multiple doses of KER-012 did not elicit changes in erythropoiesis Administration of KER-012 did not elicit clinically meaningful changes in hemoglobin or red blood cells in this trial, and no changes in red blood cells were observed after the second or third dose.
Administration of RKER-050 reversed the observed ruxolitinib-associated reductions in the red blood cell parameters, which we believe supports the potential of KER-050 to mitigate the dose-limiting effects of ruxolitinib and enhance the duration of therapy in myelofibrosis patients.
Administration of RKER-050, a mouse version of KER-050, reversed the observed ruxolitinib-associated reductions in the red blood cell parameters, which we believe supports the potential of KER-050 to mitigate the dose-limiting effects of ruxolitinib and enhance the duration of therapy in myelofibrosis patients. We intend to develop KER-050 for the treatment of both MDS- and myelofibrosis-associated cytopenias.
We believe KER-050 has the potential to ameliorate myelofibrosis-associated cytopenias. Our Solution: KER-050 KER-050 is a ligand trap comprised of a modified ligand-binding domain of ActRIIA that is fused to the portion of the human antibody known as the Fc domain.
Our Solution: KER-050 KER-050 is a ligand trap comprised of a modified ligand-binding domain of ActRIIA that is fused to the portion of the human antibody known as the Fc domain.
Our discovery efforts are focused on expanding our pipeline of wholly-owned assets for the treatment of hematological, pulmonary and cardiovascular disorders. Accordingly, we intend to identify and develop product candidates to treat diseases where targeting the TGF-ß signaling pathways has clinical validation or biological rationale.
Our discovery efforts are focused on expanding our pipeline of wholly-owned assets for the treatment of disorders that are linked to dysfunctional TGF-ß signaling . Accordingly, we intend to identify and develop product candidates to treat diseases where targeting the TGF-ß signaling pathways has clinical validation or biological rationale. ▪ Maintain a dynamic, data-driven operating model .
Completed Phase 1 Clinical Trial in Healthy Volunteers In September 2022, we completed a randomized, double-blind, placebo-controlled, two-part Phase 1 clinical trial to evaluate single and multiple ascending doses of KER-012 in healthy volunteers. The primary objectives of this trial were safety, tolerability and pharmacokinetics. The trial design is summarized in the figure below.
We expect to announce initial data from this trial in the second half of 2024. Completed Phase 1 Clinical Trial in Healthy Volunteers In September 2022, we completed a randomized, double-blind, placebo-controlled, two-part Phase 1 clinical trial to evaluate single and multiple ascending doses of KER-012 in healthy volunteers. The primary objectives of this trial were safety, tolerability and pharmacokinetics.
We have developed a proprietary library of ActRII ligand traps by combining sequences from ActRIIA and ActRIIB. We have engineered molecules that are designed to have the therapeutic properties of either or both parent molecules without the dose-limiting effect on red blood cells observed with ActRIIA-Fc or the negative effect on blood vessels observed with wild-type ActRIIB-Fc.
We have engineered molecules that are designed to have the therapeutic properties of either or both parent molecules without the dose-limiting effect on red blood cells observed with ActRIIA-Fc or the negative effect on blood vessels observed with wild-type ActRIIB-Fc.
Any patents issuing from these applications will have expiration dates between January 11, 2039 and September 9, 2043, absent any patent term adjustments or extensions. Other We plan to seek United States and international patent protection for a variety of additional technologies.
Any patents issuing from these applications will have expiration dates between March 19, 2041 and February 13, 2045, absent any patent term adjustments or extensions. Other We plan to seek United States and international patent protection for a variety of additional technologies.
These cells progress through a series of intermediate stages before becoming a mature cell with a specialized function. At any given time, pools of each progenitor cell are maintained and primed to rapidly respond to a reduction of red blood cells, white blood cells and platelets. The graphic below depicts the stages of hematopoiesis for red blood cells and platelets.
At any given time, pools of each progenitor cell are maintained and primed to rapidly respond to a reduction of red blood cells, white blood cells and platelets. The graphic below depicts the stages of hematopoiesis for red blood cells and platelets.
Based on data from our completed Phase 1 clinical trial of KER-050 in healthy volunteers and from multiple preclinical studies, we believe KER-050 has a differentiated pharmacologic effect on red blood cells and platelets and has the potential to treat multiple cytopenias in diseases of ineffective hematopoiesis while also improving bone health and altering the bone marrow microenvironment to slow down disease progression.
Based on data from our ongoing Phase 2 clinical trial evaluating KER-050 for the treatment of anemia and thrombocytopenia in patients with very low-, low-, or intermediate-risk MDS and from multiple preclinical studies, we believe KER-050 has a differentiated pharmacologic effect on red blood cells and platelets and has the potential to treat multiple cytopenias in diseases of ineffective hematopoiesis while also improving bone health and altering the bone marrow microenvironment to slow down disease progression.
Intellectual property rights may not address all potential threats to our competitive advantage As of February 28, 2023, our patent portfolio consisted of nine issued U.S. patents, 27 pending U.S. patent applications, eight issued ex-U.S. patents and 88 pending ex-U.S. applications, with expected expiry dates not earlier than between March 13, 2029 and November 10, 2043.
Intellectual property rights may not address all potential threats to our competitive advantage As of February 23, 2024, our patent portfolio consisted of 12 issued U.S. patents, 32 pending U.S. patent applications, 12 issued ex-U.S. patents and 99 pending ex-U.S. applications, with expected expiry dates not earlier than between March 13, 2029 and February 13, 2045.
Specifically: ▪ Wild-type ActRIIA-Fc was associated with increased bone growth and red blood cell production in rodents and non-human primates. In a third-party clinical trial of ActRIIA-Fc, increased bone mineral density and red blood cell production was reported in healthy post-menopausal women.
In a third-party clinical trial of ActRIIA-Fc, increased bone mineral density and red blood cell production was reported in healthy post-menopausal women.
We also expect to announce additional data from our ongoing open-label Phase 2 clinical trial evaluating the treatment of patients with myelofibrosis-associated cytopenias in the second half of 2023. ▪ Advance the clinical development of KER-047 for the treatment of functional iron deficiency.
We also expect to announce additional data from our ongoing open-label Phase 2 clinical trial evaluating KER-050 for the treatment of patients with myelofibrosis-associated cytopenias in the second and fourth quarters of 2024.
We seek U.S. and international patent protection for a variety of technologies, and own patent applications with claims directed to ActRIIA ligand traps, ActRIIB ligand traps, ActRII chimera ligand traps, GDNF fusion polypeptides, ALK2 antibodies, crystal forms of an ALK2 inhibitor, and uses thereof.
Our policy is to file patent applications to protect technology, inventions and improvements to inventions that may be commercially important to the development of our business. 30 We seek U.S. and international patent protection for a variety of technologies, and own patent applications with claims directed to ActRIIA ligand traps, ActRIIB ligand traps, ActRII chimera ligand traps, GDNF fusion polypeptides, ALK2 antibodies, crystal forms of an ALK2 inhibitor, and uses thereof.
However, we could be unable to find alternative suppliers of acceptable quality, in the appropriate volumes and at an acceptable cost, if needed.
We do not currently have arrangements in place for redundant supply. We could be unable to find alternative suppliers of acceptable quality, in the appropriate volumes and at an acceptable cost, if needed.
KER-012 is designed to bind to and inhibit the signaling of TGF-ß ligands that stimulate smooth muscle hypertrophy and fibrosis, including activin A, activin B and myostatin (GDF8).
Our second product candidate, KER-012, is designed to bind to and inhibit the signaling of TGF-ß ligands that stimulate the proliferation of vascular endothelial and smooth muscle cells and fibroblasts, including activin A, activin B and myostatin (GDF8).
We are a leader in understanding the role of the transforming growth factor-beta, or TGF-ß, family of proteins, which are master regulators of red blood cell and platelet production as well as of the growth, repair and maintenance of a number of tissues, including blood vessels, skeletal muscle and heart tissue.
We are a leader in understanding the role of the TGF-ß family of proteins, which are master regulators of the growth, repair and maintenance of a number of tissues, including blood, bone, skeletal muscle, adipose and heart tissue.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe expect to continue to incur significant losses for the foreseeable future, and we expect these losses to increase as we continue our research and development of, and seek regulatory approvals for, our lead protein therapeutic product candidate, KER-050, our lead small molecule product candidate, KER-047, our third product candidate, KER-012, and any future product candidates we may develop. 44 We anticipate that our expenses will increase substantially if, and as, we: ▪ progress and complete our two ongoing Phase 2 clinical trials of KER-050, one evaluating the treatment of cytopenias, including anemia and thrombocytopenia, in patients with myelodysplastic syndrome, or MDS, and one evaluating the treatment of cytopenias, including anemia and thrombocytopenia, in patients with myelofibrosis; ▪ progress our ongoing Phase 2 clinical trial of KER-047 in patients with iron-refractory iron deficiency anemia, or IRIDA; ▪ commence an open-label Phase 2 clinical trial of KER-047 in MDS and myelofibrosis patients with functional iron deficiency in the first half of 2023; ▪ commence a Phase 2 clinical trial of KER-012 in patients with pulmonary arterial hypertension, or PAH; ▪ continue the research and development of our other clinical- and preclinical-stage product candidates and discovery-stage programs; ▪ increase the amount of research and development activities to identify and develop product candidates using our proprietary discovery approach; ▪ make milestone, royalty or other payments under in-license or collaboration agreements; ▪ maintain, expand and protect our intellectual property portfolio; ▪ expand our operational, financial and management systems and increase personnel, including personnel to support our clinical development, manufacturing and commercialization efforts and our operations as a public company; ▪ establish a sales, marketing, medical affairs and distribution infrastructure to commercialize any products for which we may obtain marketing approval and intend to commercialize on our own or jointly with third parties; ▪ invest in or in-license other technologies; and ▪ experience any delays or encounter any issues with any of the above, including but not limited to failed studies, complex results, manufacturing challenges, safety issues or other regulatory challenges.
Biggest changeWe anticipate that our expenses will increase substantially if, and as, we: ▪ progress and complete our two ongoing Phase 2 clinical trials of KER-050, one evaluating the treatment of cytopenias, including anemia and thrombocytopenia, in patients with myelodysplastic syndrome, or MDS, and one evaluating the treatment of cytopenias, including anemia and thrombocytopenia, in patients with myelofibrosis; ▪ progress and complete our two ongoing Phase 2 clinical trials of KER-012, one in patients with pulmonary arterial hypertension, or PAH, and one in patients with chronic heart failure with preserved ejection fraction and in such patients with reduced ejection fraction; ▪ progress and complete our ongoing Phase 1 clinical trial of KER-065 in healthy volunteers; ▪ continue the research and development of our other clinical- and preclinical-stage product candidates and discovery-stage programs; ▪ increase the amount of research and development activities to identify and develop product candidates using our proprietary discovery approach; ▪ make milestone, royalty or other payments under in-license or collaboration agreements; ▪ maintain, expand and protect our intellectual property portfolio; ▪ expand our operational, financial and management systems and increase personnel, including personnel to support our clinical development, manufacturing and commercialization efforts and our operations as a public company; ▪ establish a sales, marketing, medical affairs and distribution infrastructure to commercialize any products for which we may obtain marketing approval and intend to commercialize on our own or jointly with third parties; ▪ invest in or in-license other technologies; and ▪ experience any delays or encounter any issues with any of the above, including but not limited to failed studies, complex results, manufacturing challenges, safety issues or other regulatory challenges.
We may rely on third-party service providers and technologies to operate critical business systems to process sensitive information in a variety of contexts, including, without limitation, cloud-based infrastructure, encryption and authentication technology, employee email and other functions. We may also rely on third-party service providers to provide other products, services, parts or otherwise to operate our business.
We rely on third-party service providers and technologies to operate critical business systems to process sensitive information in a variety of contexts, including, without limitation, cloud-based infrastructure, encryption and authentication technology, employee email and other functions. We may also rely on third-party service providers to provide other products, services, parts or otherwise to operate our business.
Our product candidates could fail to receive regulatory approval for many reasons, including the following: ▪ the FDA or comparable foreign regulatory authorities may disagree with the design or implementation of our clinical trials; ▪ we may be unable to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that a product candidate is safe and effective as a treatment for our targeted indications, or, in the case of a product candidate regulated as a biological product, that the product candidate is safe, pure and potent for its proposed indication; 52 ▪ the population studied may not be sufficiently broad or representative to assure safety or efficacy in the population for which we seek approval; ▪ the results of clinical trials may not meet the level of statistical significance required by the FDA or comparable foreign regulatory authorities for approval; ▪ we may be unable to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks; ▪ the FDA or comparable foreign regulatory authorities may disagree with our interpretation of data from preclinical studies or clinical trials; ▪ the FDA or comparable foreign regulatory authorities may require additional preclinical studies or clinical trials beyond those that we currently anticipate; ▪ the data collected from clinical trials of our product candidates may not be sufficient to support the submission of a New Drug Application, or NDA, or a Biologics License Application, or BLA, as applicable, to the FDA or other submission or to obtain regulatory approval in the United States or elsewhere; ▪ the FDA or comparable foreign regulatory authorities may find deficiencies with or fail to approve the manufacturing processes or facilities of third-party manufacturers with which we contract for clinical and commercial supplies; and ▪ the approval policies or regulations of the FDA or any comparable foreign regulatory authorities or the laws they enforce may significantly change in a manner rendering our clinical data insufficient for approval.
Our product candidates could fail to receive regulatory approval for many reasons, including the following: ▪ the FDA or comparable foreign regulatory authorities may disagree with the design or implementation of our clinical trials; ▪ we may be unable to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that a product candidate is safe and effective as a treatment for our targeted indications, or, in the case of a product candidate regulated as a biological product, that the product candidate is safe, pure and potent for its proposed indication; ▪ the population studied may not be sufficiently broad or representative to assure safety or efficacy in the population for which we seek approval; ▪ the results of clinical trials may not meet the level of statistical significance required by the FDA or comparable foreign regulatory authorities for approval; ▪ we may be unable to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks; ▪ the FDA or comparable foreign regulatory authorities may disagree with our interpretation of data from preclinical studies or clinical trials; ▪ the FDA or comparable foreign regulatory authorities may require additional preclinical studies or clinical trials beyond those that we currently anticipate; ▪ the data collected from clinical trials of our product candidates may not be sufficient to support the submission of a New Drug Application, or NDA, or a Biologics License Application, or BLA, as applicable, to the FDA or other submission or to obtain regulatory approval in the United States or elsewhere; ▪ the FDA or comparable foreign regulatory authorities may find deficiencies with or fail to approve the manufacturing processes or facilities of third-party manufacturers with which we contract for clinical and commercial supplies; and ▪ the approval policies or regulations of the FDA or any comparable foreign regulatory authorities or the laws they enforce may significantly change in a manner rendering our clinical data insufficient for approval.
The degree of market acceptance of any product for which we receive marketing approval will depend on a number of factors, including: ▪ the clinical indications for which our product candidates are approved; ▪ physicians, hospitals and patients considering our product candidates as a safe and effective treatment; ▪ the potential and perceived advantages of our product candidates over alternative treatments; ▪ the prevalence and severity of any side effects; ▪ product labeling or product insert requirements of the FDA or comparable foreign regulatory authorities; ▪ limitations or warnings contained in the labeling approved by the FDA or comparable foreign regulatory authorities; ▪ the timing of market introduction of our product candidates in relation to other potentially competitive products; ▪ the cost of our product candidates in relation to alternative treatments; ▪ the amount of upfront costs or training required for physicians to administer our product candidates; ▪ the availability of coverage and adequate reimbursement from third-party payors and government authorities; ▪ the willingness of patients to pay out-of-pocket in the absence of comprehensive coverage and reimbursement by third-party payors and government authorities; ▪ the relative convenience and ease of administration, including as compared to alternative treatments and competitive therapies; ▪ the effectiveness of our sales and marketing efforts and distribution support; and 58 ▪ the presence or perceived risk of potential product liability claims.
The degree of market acceptance of any product for which we receive marketing approval will depend on a number of factors, including: ▪ the clinical indications for which our product candidates are approved; ▪ physicians, hospitals and patients considering our product candidates as a safe and effective treatment; ▪ the potential and perceived advantages of our product candidates over alternative treatments; ▪ the prevalence and severity of any side effects; ▪ product labeling or product insert requirements of the FDA or comparable foreign regulatory authorities; ▪ limitations or warnings contained in the labeling approved by the FDA or comparable foreign regulatory authorities; ▪ the timing of market introduction of our product candidates in relation to other potentially competitive products; ▪ the cost of our product candidates in relation to alternative treatments; ▪ the amount of upfront costs or training required for physicians to administer our product candidates; ▪ the availability of coverage and adequate reimbursement from third-party payors and government authorities; ▪ the willingness of patients to pay out-of-pocket in the absence of comprehensive coverage and reimbursement by third-party payors and government authorities; ▪ the relative convenience and ease of administration, including as compared to alternative treatments and competitive therapies; ▪ the effectiveness of our sales and marketing efforts and distribution support; and ▪ the presence or perceived risk of potential product liability claims.
Any future collaborations we enter into may pose a number of risks, including, but not limited to, the following: ▪ collaborators have significant discretion in determining the efforts and resources that they will apply; ▪ collaborators may not perform their obligations as expected; ▪ collaborators may not pursue development and commercialization of any product candidates that achieve regulatory approval or may elect not to continue or renew development or commercialization programs or license arrangements based on clinical trial results, changes in the collaborators’ strategic focus or available funding, or external factors, such as a strategic transaction that may divert resources or create competing priorities; ▪ collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing; ▪ collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our products, if approved, and product candidates if the collaborators believe that the competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours; ▪ product candidates discovered in collaboration with us may be viewed by our collaborators as competitive with their own product candidates or products, which may cause collaborators to cease to devote resources to the commercialization of our product candidates; ▪ collaborators may fail to comply with applicable regulatory requirements regarding the development, manufacture, distribution or marketing of a product candidate or product; ▪ collaborators with marketing and distribution rights to one or more of our product candidates that achieve regulatory approval may not commit sufficient resources to the marketing and distribution of such product or products; ▪ disagreements with collaborators, including disagreements over proprietary rights, contract interpretation or the preferred course of development, might cause delays or terminations of the research, development or commercialization of product candidates, might lead to additional responsibilities for us with respect to product candidates, or might result in litigation or arbitration, any of which would be time-consuming and expensive; 74 ▪ collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential litigation; ▪ collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability; ▪ if a collaborator of ours is involved in a business combination, the collaborator might de-emphasize or terminate the development or commercialization of any product candidate licensed to it by us; and ▪ collaborations may be terminated by the collaborator, and, if terminated, we could be required to raise additional capital to pursue further development or commercialization of the applicable product candidates.
Any future collaborations we enter into may pose a number of risks, including, but not limited to, the following: ▪ collaborators have significant discretion in determining the efforts and resources that they will apply; ▪ collaborators may not perform their obligations as expected; ▪ collaborators may not pursue development and commercialization of any product candidates that achieve regulatory approval or may elect not to continue or renew development or commercialization programs or license arrangements based on clinical trial results, changes in the collaborators’ strategic focus or available funding, or external factors, such as a strategic transaction that may divert resources or create competing priorities; ▪ collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing; ▪ collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our products, if approved, and product candidates if the collaborators believe that the competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours; ▪ product candidates discovered in collaboration with us may be viewed by our collaborators as competitive with their own product candidates or products, which may cause collaborators to cease to devote resources to the commercialization of our product candidates; ▪ collaborators may fail to comply with applicable regulatory requirements regarding the development, manufacture, distribution or marketing of a product candidate or product; ▪ collaborators with marketing and distribution rights to one or more of our product candidates that achieve regulatory approval may not commit sufficient resources to the marketing and distribution of such product or products; ▪ disagreements with collaborators, including disagreements over proprietary rights, contract interpretation or the preferred course of development, might cause delays or terminations of the research, development or commercialization of product candidates, might lead to additional responsibilities for us with respect to product candidates, or might result in litigation or arbitration, any of which would be time-consuming and expensive; ▪ collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential litigation; ▪ collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability; 77 ▪ if a collaborator of ours is involved in a business combination, the collaborator might de-emphasize or terminate the development or commercialization of any product candidate licensed to it by us; and ▪ collaborations may be terminated by the collaborator, and, if terminated, we could be required to raise additional capital to pursue further development or commercialization of the applicable product candidates.
A person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation; ▪ the U.S. federal civil and criminal false claims laws, including the civil False Claims Act, which can be enforced by private individuals on behalf of the government through civil whistleblower or qui tam actions, and civil monetary penalties laws prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, to the U.S. federal government, claims for payment or approval that are false or fraudulent, knowingly making, using or causing to be made or used, a false record or statement material to a false or fraudulent claim, or from knowingly making a false statement to avoid, decrease or conceal an obligation to pay money to the U.S. federal government.
A person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation; 63 ▪ the U.S. federal civil and criminal false claims laws, including the civil False Claims Act, which can be enforced by private individuals on behalf of the government through civil whistleblower or qui tam actions, and civil monetary penalties laws prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, to the U.S. federal government, claims for payment or approval that are false or fraudulent, knowingly making, using or causing to be made or used, a false record or statement material to a false or fraudulent claim, or from knowingly making a false statement to avoid, decrease or conceal an obligation to pay money to the U.S. federal government.
Disputes may also arise between us and our licensors regarding intellectual property subject to a license agreement, including: ▪ the scope of rights granted under the license agreement and other interpretation-related issues; whether and the extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement; ▪ our right to sublicense patent and other rights to third parties under collaborative development relationships; ▪ our diligence obligations with respect to the use of the licensed technology in relation to our development and commercialization of our product candidates, and what activities satisfy those diligence obligations; and ▪ the inventorship or ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our partners.
Disputes may also arise between us and our licensors regarding intellectual property subject to a license agreement, including: ▪ the scope of rights granted under the license agreement and other interpretation-related issues; whether and the extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement; 67 ▪ our right to sublicense patent and other rights to third parties under collaborative development relationships; ▪ our diligence obligations with respect to the use of the licensed technology in relation to our development and commercialization of our product candidates, and what activities satisfy those diligence obligations; and ▪ the inventorship or ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our partners.
A suspension or termination may be imposed due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA or comparable foreign regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a product or treatment, failure to establish or achieve clinically meaningful trial endpoints, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial.
A suspension or termination may be imposed due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA or comparable foreign regulatory authorities resulting in the 49 imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a product or treatment, failure to establish or achieve clinically meaningful trial endpoints, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial.
In addition, recently there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several U.S. presidential executive orders, Congressional inquiries and proposed and enacted federal legislation designed to, among other things, bring more transparency to drug pricing, reduce the cost of prescription drugs 59 under Medicare and review the relationship between pricing and manufacturer patient programs.
In addition, recently there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several U.S. presidential executive orders, Congressional inquiries and proposed and enacted federal legislation designed to, among other things, bring more transparency to drug pricing, reduce the cost of prescription drugs under Medicare and review the relationship between pricing and manufacturer patient programs.
If any third-party patents were held by a court of competent jurisdiction to cover the manufacturing process of our product candidates, constructs or molecules used in or formed during the manufacturing process, or any final product itself, the holders of any such patents may be able to block our ability to commercialize the product candidate unless we obtained a license under the applicable patents, or until such patents expire or they are finally determined to be held invalid or unenforceable.
If any third-party patents were held by a court of competent jurisdiction to cover the manufacturing process of our product candidates, constructs or molecules used in or formed during the manufacturing process, or any final product itself, the holders of any such patents may be able to block our ability to commercialize the product candidate unless we obtained a 69 license under the applicable patents, or until such patents expire or they are finally determined to be held invalid or unenforceable.
In addition, if any of our product candidates receives marketing approval and we or others later identify undesirable or unacceptable side effects caused by such products, a number of potentially significant negative consequences could result, including: ▪ regulatory authorities may withdraw approvals of such product and require us to take our approved product off the market; ▪ regulatory authorities may require the addition of labeling statements, specific warnings, a contraindication or field alerts to physicians and pharmacies; ▪ regulatory authorities may require a medication guide outlining the risks of such side effects for distribution to patients, or that we implement a risk evaluation and mitigation strategy, or REMS, plan to ensure that the benefits of the product outweigh its risks; ▪ we may be required to conduct additional clinical trials, which may lead to additional interactions with regulatory authorities; ▪ we may be required to change the way the product is administered, conduct additional clinical trials or change the labeling of the product; ▪ we may be subject to limitations on how we may promote the product; ▪ sales of the product may decrease significantly; 50 ▪ we may be subject to litigation or product liability claims; and ▪ our reputation may suffer.
In addition, if any of our product candidates receives marketing approval and we or others later identify undesirable or unacceptable side effects caused by such products, a number of potentially significant negative consequences could result, including: ▪ regulatory authorities may withdraw approvals of such product and require us to take our approved product off the market; 51 ▪ regulatory authorities may require the addition of labeling statements, specific warnings, a contraindication or field alerts to physicians and pharmacies; ▪ regulatory authorities may require a medication guide outlining the risks of such side effects for distribution to patients, or that we implement a risk evaluation and mitigation strategy, or REMS, plan to ensure that the benefits of the product outweigh its risks; ▪ we may be required to conduct additional clinical trials, which may lead to additional interactions with regulatory authorities; ▪ we may be required to change the way the product is administered, conduct additional clinical trials or change the labeling of the product; ▪ we may be subject to limitations on how we may promote the product; ▪ sales of the product may decrease significantly; ▪ we may be subject to litigation or product liability claims; and ▪ our reputation may suffer.
Such collaborators may develop adjacent or competing products to ours that are outside the scope of our patents; ▪ we may not develop additional proprietary technologies for which we can obtain patent protection; ▪ it is possible that product candidates or diagnostic tests we develop may be covered by third parties’ patents or other exclusive rights; or 64 ▪ the patents of others may have an adverse effect on our business.
Such collaborators may develop adjacent or competing products to ours that are outside the scope of our patents; ▪ we may not develop additional proprietary technologies for which we can obtain patent protection; ▪ it is possible that product candidates or diagnostic tests we develop may be covered by third parties’ patents or other exclusive rights; or ▪ the patents of others may have an adverse effect on our business.
Food and Drug Administration, or the FDA, or any comparable foreign regulatory authority agree with the design, endpoints or implementation; ▪ sufficiency of our financial and other resources to complete the necessary preclinical studies and clinical trials; ▪ receiving regulatory approvals or authorizations for conducting our planned clinical trials or future clinical trials; ▪ initiation and successful patient enrollment in, and completion of, additional clinical trials on a timely basis; ▪ our ability to demonstrate to the satisfaction of the FDA or any comparable foreign regulatory authority that the applicable product candidate is safe and effective as a treatment for our targeted indications or, in the case of an applicable product candidate which is regulated as a biological product, that the applicable product candidate is safe, pure, and potent for our targeted indications; ▪ our ability to demonstrate to the satisfaction of the FDA or any comparable foreign regulatory authority that the applicable product candidate’s risk-benefit ratio for its proposed indication is acceptable; ▪ timely receipt of marketing approvals for our product candidates from applicable regulatory authorities; ▪ the extent of any required post-marketing approval commitments to applicable regulatory authorities; ▪ establishing and scaling up, either alone or with third-party manufacturers, manufacturing capabilities of clinical supply for our clinical trials and commercial manufacturing, if any of our product candidates are approved; ▪ obtaining and maintaining patent and trade secret protection or regulatory exclusivity for our product candidates, both in the United States and internationally; ▪ successfully scaling a sales and marketing organization and launching commercial sales of our product candidates, if approved; ▪ acceptance of our product candidates’ benefits and uses, if approved, by patients, the medical community and third-party payors; ▪ maintaining a continued acceptable safety profile of our product candidates following approval; ▪ effectively competing with companies developing and commercializing other therapies in the indications which our product candidates target; ▪ obtaining and maintaining healthcare coverage and adequate reimbursement from third-party payors; and ▪ enforcing and defending intellectual property rights and claims.
Food and Drug Administration, or the FDA, or any comparable foreign regulatory authority agree with the design, endpoints or implementation; ▪ sufficiency of our financial and other resources to complete the necessary preclinical studies and clinical trials; ▪ receiving regulatory approvals or authorizations for conducting our planned clinical trials or future clinical trials; ▪ commencement of and successful patient enrollment in, and completion of, additional clinical trials on a timely basis; ▪ our ability to demonstrate to the satisfaction of the FDA or any comparable foreign regulatory authority that the applicable product candidate is safe and effective as a treatment for our targeted indications or, in the case of an applicable product candidate which is regulated as a biological product, that the applicable product candidate is safe, pure, and potent for our targeted indications; ▪ our ability to demonstrate to the satisfaction of the FDA or any comparable foreign regulatory authority that the applicable product candidate’s risk-benefit ratio for its proposed indication is acceptable; ▪ timely receipt of marketing approvals for our product candidates from applicable regulatory authorities; ▪ the extent of any required post-marketing approval commitments to applicable regulatory authorities; ▪ establishing and scaling up, either alone or with third-party manufacturers, manufacturing capabilities of clinical supply for our clinical trials and commercial manufacturing, if any of our product candidates are approved; ▪ obtaining and maintaining patent and trade secret protection or regulatory exclusivity for our product candidates, both in the United States and internationally; ▪ successfully scaling a sales and marketing organization and launching commercial sales of our product candidates, if approved; 48 ▪ acceptance of our product candidates’ benefits and uses, if approved, by patients, the medical community and third-party payors; ▪ maintaining a continued acceptable safety profile of our product candidates following approval; ▪ effectively competing with companies developing and commercializing other therapies in the indications which our product candidates target; ▪ obtaining and maintaining healthcare coverage and adequate reimbursement from third-party payors; and ▪ enforcing and defending intellectual property rights and claims.
For example, physicians are often reluctant to switch their patients and patients may be reluctant to switch from existing therapies even when new and potentially more effective or safer treatments enter the market. Efforts to educate the medical community and third-party payors on the benefits of our product candidates may require significant resources and may not be successful.
For example, physicians are often reluctant to switch their patients and patients may be reluctant to switch from existing therapies even when new and potentially more effective or safer treatments enter the market. 60 Efforts to educate the medical community and third-party payors on the benefits of our product candidates may require significant resources and may not be successful.
The IRA also eliminates the “donut hole” under the Medicare Part D program beginning in 2025 by significantly lowering the beneficiary maximum out-of-pocket cost and through a newly established manufacturer discount program. It is unclear how any additional healthcare reform measures of the Biden administration will impact the ACA and our business.
The IRA also eliminates the “donut hole” under the Medicare Part D program beginning in 2025 by significantly lowering the beneficiary maximum out-of-pocket cost and through 61 a newly established manufacturer discount program. It is unclear how any additional healthcare reform measures of the Biden administration will impact the ACA and our business.
We are highly dependent on our management and particularly on the services of our scientific personnel including Jasbir Seehra, Ph.D., our Chief Executive Officer, Simon Cooper, M.B.B.S., our Chief Medical Officer, and Christopher Rovaldi, our Chief Operating Officer. We believe that their drug discovery and development experience and overall biopharmaceutical company management experience would be difficult to replace.
We are highly dependent on our 78 management and particularly on the services of our scientific personnel including Jasbir Seehra, Ph.D., our Chief Executive Officer, Simon Cooper, M.B.B.S., our Chief Medical Officer, and Christopher Rovaldi, our Chief Operating Officer. We believe that their drug discovery and development experience and overall biopharmaceutical company management experience would be difficult to replace.
Additionally, companies that transfer personal data out of the EEA and UK to other jurisdictions, particularly to the United States, are subject to increased scrutiny from regulators, individual litigants, and activist groups. Some European regulators have ordered certain companies to suspend or permanently cease certain transfers out of Europe for allegedly violating the GDPR’s cross-border data transfer limitations.
Additionally, companies that transfer personal data out of the EEA and UK to other jurisdictions, particularly to the United States, are subject to increased scrutiny from regulators, individual litigants, and activist groups. Some European regulators have ordered certain companies to suspend or permanently cease certain transfers out of Europe for allegedly violating the EU GDPR’s cross-border data transfer limitations.
If we are successful in obtaining marketing approval from applicable regulatory authorities for KER-050, KER-047, KER-012 or any other product candidate, our ability to generate revenues from any such products will depend on our success in: ▪ launching commercial sales of such products, whether alone or in collaboration with others; ▪ receiving approved labels with claims that are necessary or desirable for successful marketing, and that do not contain safety or other limitations that would impede our ability to market such products; ▪ creating market demand for such products through marketing, sales and promotion activities; ▪ hiring, training, and deploying a sales force or contracting with third parties to commercialize such products in the United States; ▪ creating strategic collaborations with, or offering licenses to, third parties to promote and sell such products in foreign markets where we receive marketing approval; ▪ manufacturing such products in sufficient quantities and at acceptable quality and cost to meet commercial demand at launch and thereafter; ▪ establishing and maintaining agreements with wholesalers, distributors, and group purchasing organizations on commercially reasonable terms; ▪ maintaining patent and trade secret protection and regulatory exclusivity for such products; ▪ achieving market acceptance of such products by patients, the medical community, and third-party payors; ▪ achieving coverage and adequate reimbursement from third-party payors for such products; ▪ patients’ willingness to pay out-of-pocket in the absence of such coverage and adequate reimbursement from third-party payors; ▪ effectively competing with other therapies; and ▪ maintaining a continued acceptable safety profile of such products following launch.
If we are successful in obtaining marketing approval from applicable regulatory authorities for KER-050, KER-012, KER-065 or any other product candidate, our ability to generate revenues from any such products will depend on our success in: ▪ launching commercial sales of such products, whether alone or in collaboration with others; ▪ receiving approved labels with claims that are necessary or desirable for successful marketing, and that do not contain safety or other limitations that would impede our ability to market such products; ▪ creating market demand for such products through marketing, sales and promotion activities; ▪ hiring, training, and deploying a sales force or contracting with third parties to commercialize such products in the United States; ▪ creating strategic collaborations with, or offering licenses to, third parties to promote and sell such products in foreign markets where we receive marketing approval; ▪ manufacturing such products in sufficient quantities and at acceptable quality and cost to meet commercial demand at launch and thereafter; ▪ establishing and maintaining agreements with wholesalers, distributors, and group purchasing organizations on commercially reasonable terms; ▪ maintaining patent and trade secret protection and regulatory exclusivity for such products; ▪ achieving market acceptance of such products by patients, the medical community, and third-party payors; ▪ achieving coverage and adequate reimbursement from third-party payors for such products; 58 ▪ patients’ willingness to pay out-of-pocket in the absence of such coverage and adequate reimbursement from third-party payors; ▪ effectively competing with other therapies; and ▪ maintaining a continued acceptable safety profile of such products following launch.
The failure of our manufacturers to comply with regulatory requirements could also result in an enforcement action against us, including the seizure of products and shutting down of production. If any of our third-party suppliers fails to comply with cGMP or other applicable manufacturing regulations, our ability to develop and commercialize the products could suffer significant interruptions.
The failure of our manufacturers to comply with regulatory requirements could also result in an enforcement action against us, including the seizure of products and shutting down of production. If any of our third-party suppliers fails to comply with cGMP 76 or other applicable manufacturing regulations, our ability to develop and commercialize the products could suffer significant interruptions.
In addition, we take other appropriate precautions, such as physical and technological security measures, to guard against misappropriation of our proprietary technology by third parties. We have also adopted policies and conduct training that provides guidance on our expectations, and our advice for best practices, in protecting our trade secrets.
In addition, we take other appropriate precautions, such 68 as physical and technological security measures, to guard against misappropriation of our proprietary technology by third parties. We have also adopted policies and conduct training that provides guidance on our expectations, and our advice for best practices, in protecting our trade secrets.
Laws such as these give rise to an increasingly complex set of compliance obligations on us. These data protection rules continue to evolve and may result in ever-increasing regulatory and public scrutiny and escalating levels of enforcement and sanctions and increased costs of compliance. We strive to comply with these rules and obligations to the extent possible.
Laws such as these give rise to an increasingly complex set of compliance obligations on us. These data protection rules continue to evolve and may result in ever-increasing regulatory and public scrutiny and escalating levels of enforcement and 82 sanctions and increased costs of compliance. We strive to comply with these rules and obligations to the extent possible.
Some of the more significant risks include the following: • We have a limited operating history, have incurred net losses in every year since our inception and anticipate that we will continue to incur net losses in the future. 43 • We will need substantial additional funding in order to complete the development and commence commercialization of our product candidates.
Some of the more significant risks include the following: • We have a limited operating history, have incurred net losses in 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.
If we do not receive marketing approvals for our current and future product candidates, we may not be able to continue our operations. 47 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.
If we do not receive marketing approvals for our current and future product candidates, we may not be able to continue our operations. 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.
There is a high failure rate for product candidates proceeding through clinical trials. Many companies in the biotechnology and pharmaceutical industries have suffered significant setbacks in late-stage clinical trials after achieving positive results in early-stage development and we cannot be certain that we will not face similar setbacks.
There is a high 50 failure rate for product candidates proceeding through clinical trials. Many companies in the biotechnology and pharmaceutical industries have suffered significant setbacks in late-stage clinical trials after achieving positive results in early-stage development and we cannot be certain that we will not face similar setbacks.
Moreover, the extent to which a biosimilar, once licensed, will be substituted for any one of our reference products in a way that is similar to traditional generic substitution for non-biological products is not yet clear, and will depend on a number of marketplace and regulatory factors that are still developing.
Moreover, the extent to which a biosimilar, once licensed, will be substituted for any one of our reference products in a way that is similar to traditional generic 56 substitution for non-biological products is not yet clear, and will depend on a number of marketplace and regulatory factors that are still developing.
During times of war and other major conflicts, we, the third parties upon which we rely, may be vulnerable to a heightened risk of these attacks, including retaliatory cyber-attacks, that could materially disrupt our systems and operations, supply chain, and ability to produce, sell 77 and distribute our goods and services.
During times of war and other major conflicts, we, the third parties upon which we rely, may be vulnerable to a heightened risk of these attacks, including retaliatory cyber-attacks, that could materially disrupt our systems and operations, supply chain, and ability to produce, sell and distribute our goods and services.
Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs 70 and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing and could provoke third parties to assert claims against us.
Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing and could provoke third parties to assert claims against us.
Before we can commence clinical trials for any product candidate, we must complete extensive preclinical studies that support any future Investigational New Drug, or IND, applications in the United States, or similar applications in other jurisdictions. All of our clinical trials have, to date, been conducted outside of the United States.
Before we can commence clinical trials for any product candidate, we must complete extensive preclinical studies that support any future Investigational New Drug, or IND, applications in the United States, or similar applications in other jurisdictions. All of our completed clinical trials have, to date, been conducted outside of the United States.
If we or one of our licensors is a 68 party to an interference proceeding involving a U.S. patent application on inventions owned by or in-licensed to us, we may incur substantial costs, divert management’s time and expend other resources, even if we are successful.
If we or one of our licensors is a party to an interference proceeding involving a U.S. patent application on inventions owned by or in-licensed to us, we may incur substantial costs, divert management’s time and expend other resources, even if we are successful.
In order to further advance development of our product candidates, discover additional product candidates and pursue our other business objectives, we will need to seek additional funds. We cannot guarantee that future financing will be available in sufficient amounts or on commercially reasonable terms, if at all.
In order to further advance development of our product candidates, discover additional product candidates and pursue our other business objectives, we will need to seek additional funds. 47 We cannot guarantee that future financing will be available in sufficient amounts or on commercially reasonable terms, if at all.
Moreover, even if these trials are initiated or conducted on a timely basis, issues may arise that could result in the suspension or termination of such clinical trials. To date, we have not completed any clinical trials required for the approval of any of our product candidates.
Moreover, even if these trials are initiated or conducted on a timely basis, issues may arise that could result in the suspension or termination of such clinical trials. To date, we have not completed any pivotal clinical trials required for the approval of any of our product candidates.
Significant clinical trial delays also could shorten any periods during which we may have the exclusive right to 48 commercialize our product candidates and may allow our competitors to bring products to market before we do, potentially impairing our ability to successfully commercialize our product candidates and harming our business and results of operations.
Significant clinical trial delays also could shorten any periods during which we may have the exclusive right to commercialize our product candidates and may allow our competitors to bring products to market before we do, potentially impairing our ability to successfully commercialize our product candidates and harming our business and results of operations.
To the extent we are not able to do any of the foregoing, our business, financial condition, results of operations, stock price and prospects will be materially harmed. 56 We face significant competition from other biotechnology and pharmaceutical companies, and our operating results will suffer if we fail to compete effectively.
To the extent we are not able to do any of the foregoing, our business, financial condition, results of operations, stock price and prospects 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.
If any of our confidential or proprietary information, such as our trade secrets, were to be disclosed or misappropriated, or if any such information was independently developed by a competitor, our competitive position could be harmed. 65 In addition, courts outside the United States are sometimes less willing to protect trade secrets.
If any of our confidential or proprietary information, such as our trade secrets, were to be disclosed or misappropriated, or if any such information was independently developed by a competitor, our competitive position could be harmed. In addition, courts outside the United States are sometimes less willing to protect trade secrets.
These diagnostic test or tests may be covered by intellectual property rights held by others. We may be unable to acquire or in-license any compositions, methods of use, processes or other third-party intellectual property rights from third parties that we identify as necessary or important to our business operations.
These diagnostic test or tests may be covered by intellectual property rights held by others. We may be unable to acquire or in-license any compositions, methods of use, processes or other third-party intellectual property rights 70 from third parties that we identify as necessary or important to our business operations.
Changes in either the patent laws or interpretation of the 69 patent laws in the United States or in ex-U.S. jurisdictions could increase the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or defense of issued patents. In addition, the United States has recently enacted and is currently implementing wide-ranging patent reform legislation. Recent U.S.
Changes in either the patent laws or interpretation of the patent laws in the United States or in ex-U.S. jurisdictions could increase the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or defense of issued patents. In addition, the United States has recently enacted and is currently implementing wide-ranging patent reform legislation. Recent U.S.
Physician Payments Sunshine Act and its implementing regulations, which require certain manufacturers of drugs, devices, biologics and medical supplies that are reimbursable under Medicare, Medicaid, or the Children’s Health Insurance Program, with specific exceptions, to report annually to CMS information related to certain payments and other transfers of value made in the prior year to physicians (defined to include doctors, dentists, optometrists, podiatrists, and chiropractors), other healthcare professionals (such as physician assistants and nurse practitioners), and teaching hospitals, as well as ownership and investment interests held by such physicians and their immediate family members; and ▪ analogous U.S. state laws and regulations, including: state anti-kickback and false claims laws, which may apply to our business practices, including but not limited to, research, distribution, sales and marketing arrangements and claims involving healthcare items or services reimbursed by any third-party payor, including private insurers; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the U.S. federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state and local laws and regulations that require drug manufacturers to file reports relating to drug pricing and marketing information, which requires tracking gifts and other remuneration and items of value provided to healthcare professionals and entities; state and local laws that require the registration of pharmaceutical sales representatives; and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.
Physician Payments Sunshine Act and its implementing regulations, which require certain manufacturers of drugs, devices, biologics and medical supplies that are reimbursable under Medicare, Medicaid, or the Children’s Health Insurance Program, with specific exceptions, to report annually to CMS information related to certain payments and other transfers of value made in the prior year to physicians (defined to include doctors, dentists, optometrists, podiatrists, and chiropractors), other healthcare professionals (such as physician assistants and nurse practitioners), and teaching hospitals, as well as ownership and investment interests held by such physicians and their immediate family members; and ▪ analogous U.S. state and foreign laws and regulations, including: anti-kickback and false claims laws, which may apply to our business practices, including but not limited to, research, distribution, sales and marketing arrangements and claims involving healthcare items or services reimbursed by any third-party payor, including private insurers; laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the U.S. federal government or foreign regulatory authorities, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; laws and regulations that require drug manufacturers to file reports relating to drug pricing and marketing information, which requires tracking gifts and other remuneration and items of value provided to healthcare professionals and entities; laws that require the registration of pharmaceutical sales representatives; and laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.
Consequently, we have no meaningful operations upon which to evaluate our business and predictions about our future success or viability may not be as accurate as they could be if we had a longer operating history or a history of successfully developing and commercializing drug products.
Consequently, we have no meaningful operations upon which to evaluate our business and predictions about our 45 future success or viability may not be as accurate as they could be if we had a longer operating history or a history of successfully developing and commercializing drug products.
As a result, our results of operations and the commercial prospects for our product candidates would be harmed, our costs could increase and our ability to generate revenues could be delayed. Switching or adding additional laboratories or CROs (or investigators) involves additional cost and requires management time and focus.
As a result, our results of operations and the commercial prospects for our product candidates would be harmed, our costs could increase and our ability to generate revenues could be delayed. 75 Switching or adding additional laboratories or CROs (or investigators) involves additional cost and requires management time and focus.
Additionally, separate reimbursement for the product itself or the treatment or procedure in which the product is used may not be available, which may impact physician utilization. In addition, companion diagnostic tests require coverage and reimbursement separate and 62 apart from the coverage and reimbursement for their companion pharmaceutical or biological products.
Additionally, separate reimbursement for the product itself or the treatment or procedure in which the product is used may not be available, which may impact physician utilization. In addition, companion diagnostic tests require coverage and reimbursement separate and apart from the coverage and reimbursement for their companion pharmaceutical or biological products.
Supreme Court held that certain claims to DNA molecules are not patentable. We cannot predict how these decisions or any future decisions by the courts, the U.S. Congress or the USPTO may impact the value of our patents.
Supreme Court held that certain claims to DNA molecules are not patentable. We cannot predict how these decisions or any future 72 decisions by the courts, the U.S. Congress or the USPTO may impact the value of our patents.
A patent term extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval, only one patent may be extended and only those claims covering the approved drug, a method for using it, or a method for 71 manufacturing it may be extended.
A patent term extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval, only one patent may be extended and only those claims covering the approved drug, a method for using it, or a method for manufacturing it may be extended.
As such, we and our contract manufacturers will be subject to continual review and inspections to assess compliance with cGMP and adherence to commitments made in any NDA or BLA, other marketing application, and previous responses to inspection 53 observations.
As such, we and our contract manufacturers will be subject to continual review and inspections to assess compliance with cGMP and adherence to commitments made in any NDA or BLA, other marketing application, and previous responses to inspection observations.
The time required to obtain approval by the FDA and comparable foreign regulatory authorities is unpredictable but typically takes many years following the commencement of clinical trials and depends upon numerous factors, including the substantial discretion of the regulatory authorities.
The time required to obtain approval by the FDA and comparable foreign regulatory authorities is unpredictable but typically takes many years following the commencement of clinical trials and depends upon numerous factors, including the 53 substantial discretion of the regulatory authorities.
We may experience delays in completing, or ultimately be unable to complete, the development and commercialization of KER-050, KER-047, KER-012 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.
We may experience delays in completing, or ultimately be unable to complete, the development and commercialization of KER-050, KER-012, KER-065 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.
Neither the principal stockholders nor the representatives of the principal stockholders on our board of directors, by the terms of our amended and restated certificate of incorporation, are required to offer us any transaction opportunity of which they become aware and could take any such opportunity for themselves or offer it their other affiliates, unless such opportunity is expressly offered to them solely in their capacity as members of our board of directors. 85 Sales of a substantial number of shares of our common stock in the public market could cause our stock price to fall.
Neither the principal stockholders nor the representatives of the principal stockholders on our board of directors, by the terms of our amended and restated certificate of incorporation, are required to offer us any transaction opportunity of which they become aware and could take any such opportunity for themselves or offer it their other affiliates, unless such opportunity is expressly offered to them solely in their capacity as members of our board of directors. 88 Sales of a substantial number of shares of our common stock in the public market could cause our stock price to fall.
Preliminary and interim data are subject to the risk that one or more of the clinical outcomes may materially 51 change as enrollment continues, more trial data become available and we issue our final clinical trial report.
Preliminary and interim data are subject to the risk that one or more of the clinical outcomes may materially change as enrollment continues, more trial data become available and we issue our final clinical trial report.
In this regard, patents issued in the United States by law enjoy a presumption of validity that can be rebutted only 66 with evidence that is “clear and convincing,” a heightened standard of proof.
In this regard, patents issued in the United States by law enjoy a presumption of validity that can be rebutted only with evidence that is “clear and convincing,” a heightened standard of proof.
The loss of the services of our key personnel and any of our other executive officers, key employees, 76 and scientific and medical advisors, and our inability to find suitable replacements, could result in delays in our research and development objectives and harm our business.
The loss of the services of our key personnel and any of our other executive officers, key employees, and scientific and medical advisors, and our inability to find suitable replacements, could result in delays in our research and development objectives and harm our business.
KER-050, KER-047, KER-012 and any future product candidates we develop will require additional preclinical and clinical development, management of clinical, preclinical and manufacturing activities, marketing approval in the United States and other jurisdictions for specific indications for use, demonstrating effectiveness to pricing and reimbursement authorities, obtaining sufficient manufacturing supply for both clinical development and commercial production, building of a commercial organization and substantial investment and significant marketing efforts before we generate any revenues from product sales.
KER-050, KER-012, KER-065 and any future product candidates we develop will require additional preclinical and clinical development, management of clinical, preclinical and manufacturing activities, marketing approval in the United States and other jurisdictions for specific indications for use, demonstrating effectiveness to pricing and reimbursement authorities, obtaining sufficient manufacturing supply for both clinical development and commercial production, building of a commercial organization and substantial investment and significant marketing efforts before we generate any revenues from product sales.
If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant civil, criminal and administrative penalties, damages, monetary fines, imprisonment, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, contractual damages, reputational harm, diminished profits and future earnings, and curtailment of our operations, any of which could adversely affect our ability to operate our business, financial condition and results of operations.
If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant civil, criminal and administrative penalties, damages, monetary fines, imprisonment, possible exclusion from participation in Medicare, Medicaid and other federal or comparable foreign healthcare programs, additional reporting 83 requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, contractual damages, reputational harm, diminished profits and future earnings, and curtailment of our operations, any of which could adversely affect our ability to operate our business, financial condition and results of operations.
These lawsuits are expensive and would consume time and other resources even if we or they, as the case may be, were successful in stopping the infringement of these patents.
These lawsuits are expensive and would consume time and other resources even if we or they, as the case may be, 73 were successful in stopping the infringement of these patents.
Future growth would impose significant added responsibilities on members of management, including: ▪ identifying, recruiting, integrating, maintaining and motivating additional employees; ▪ managing our development efforts effectively, including the clinical and FDA review process for KER-050, KER-047, KER-012 and any future product candidates, while complying with our contractual obligations to contractors and other third parties; and ▪ improving our operational, financial and management controls, reporting systems and procedures.
Future growth would impose significant added responsibilities on members of management, including: ▪ identifying, recruiting, integrating, maintaining and motivating additional employees; ▪ managing our development efforts effectively, including the clinical and FDA review process for KER-050, KER-012, KER-065 and any future product candidates, while complying with our contractual obligations to contractors and other third parties; and ▪ improving our operational, financial and management controls, reporting systems and procedures.
Our data processing activities may subject us to numerous data privacy and security obligations, such as various laws, regulations, guidance, industry standards, external and internal privacy and security policies, contractual requirements and other obligations relating to data privacy and security.
Our data processing activities subject us to numerous data privacy and security obligations, such as various laws, regulations, guidance, industry standards, external and internal privacy and security policies, contractual requirements and other obligations relating to data privacy and security.
Later discovery of previously unknown problems with our product candidates, including adverse events of unanticipated severity or frequency, or with our third-party manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new safety information; imposition of post-market studies or clinical trials to assess new safety risks; or imposition of distribution restrictions or other restrictions under a REMS program.
Later discovery of previously unknown problems with our product candidates, including adverse events of unanticipated severity or frequency, or with our third-party manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new safety information; imposition of post-market studies or clinical trials to assess new safety risks; or imposition of distribution restrictions or other restrictions under a REMS program, or comparable foreign program.
To obtain the requisite regulatory approvals to market and sell any of our product candidates, including KER-050, KER-047, KER-012 and any other future product candidates, we must demonstrate through extensive preclinical studies and clinical trials that our investigational drug products, such as KER-047, are safe and effective for use in each targeted indication, and in the case of our product candidates regulated as biological products, such as KER-050 and KER-012, that the product candidate is safe, pure and potent for use in its targeted indication.
To obtain the requisite regulatory approvals to market and sell any of our product candidates, including KER-050, KER-012, KER-065 and any other future product candidates, we must demonstrate through extensive preclinical studies and clinical trials that our investigational drug products are safe and effective for use in each targeted indication, and in the case of our product candidates regulated as biological products, such as KER-050, KER-012 and KER-065, that the product candidate is safe, pure and potent for use in its targeted indication.
Under the BPCIA, an application 54 for a biosimilar product may not be submitted to the FDA until four years following the date that the reference product was first licensed by the FDA.
Under the BPCIA, an application for a biosimilar product may not be submitted to the FDA until four years following the date that the reference product was first licensed by the FDA.
Accordingly, in markets outside the United States, the reimbursement for our products, if approved, may be reduced compared with the United States and may be insufficient to generate commercially reasonable revenue and profits.
Accordingly, in markets outside the United States, the reimbursement for our products, if approved, may 65 be reduced compared with the United States and may be insufficient to generate commercially reasonable revenue and profits.
Some actors now engage and are expected to continue to engage in cyber-attacks, including without limitation nation-state actors for geopolitical reasons and in conjunction with military conflicts and defense activities.
Some 79 actors now engage and are expected to continue to engage in cyber-attacks, including without limitation nation-state actors for geopolitical reasons and in conjunction with military conflicts and defense activities.
Our future capital requirements for KER-050, KER-047, KER-012 or our other preclinical programs will depend on many factors, including: ▪ the progress, timing and completion of preclinical studies and clinical trials for our current or any future product candidates, as well as the associated costs, including any unforeseen costs we may incur as a result of preclinical study or clinical trial delays due to public health crises, such as the COVID-19 pandemic, or other causes; ▪ the timing and amount of milestone and royalty payments we are required to make or are eligible to receive under our license agreements with each of The General Hospital Corporation and Hansoh (Shanghai) Healthtech Co., Ltd., or Hansoh; ▪ the number of potential new product candidates we identify and decide to develop; ▪ the need for additional or expanded preclinical studies and clinical trials beyond those that we plan to conduct with respect to our current and future product candidates; ▪ the costs involved in growing our organization to the size needed to allow for the research, development and potential commercialization of our current or any future product candidates; ▪ the costs involved in filing patent applications, maintaining and enforcing patents or defending against infringement or other claims raised by third parties; ▪ the maintenance of our existing license and collaboration agreements and the entry into new license and collaboration agreements; ▪ the time and costs involved in obtaining regulatory approval for our product candidates and any delays we may encounter as a result of evolving regulatory requirements or adverse results with respect to any of our product candidates; ▪ the effect of competing technological and market developments; ▪ the cost of manufacturing KER-050, KER-047, KER-012 and future product candidates for clinical trials in preparation for marketing approval and in preparation for commercialization; ▪ the cost of establishing sales, marketing and distribution capabilities for any product candidates for which we may receive regulatory approval in regions where we choose to commercialize our products, if approved, on our own; ▪ the amount of revenues, if any, we may derive either directly or in the form of royalty payments from future sales of our product candidates, if approved; and ▪ market acceptance of any approved product candidates.
Our future capital requirements for KER-050, KER-012, KER-065 or our other preclinical programs will depend on many factors, including: ▪ the progress, timing and completion of preclinical studies and clinical trials for our current or any future product candidates, as well as the associated costs, including any unforeseen costs we may incur as a result of preclinical study or clinical trial delays due to public health crises or other causes; ▪ the timing and amount of milestone and royalty payments we are required to make or are eligible to receive under our license agreements with each of The General Hospital Corporation and Hansoh (Shanghai) Healthtech Co., Ltd., or Hansoh; ▪ the number of potential new product candidates we identify and decide to develop; ▪ the need for additional or expanded preclinical studies and clinical trials beyond those that we plan to conduct with respect to our current and future product candidates; ▪ the costs involved in growing our organization to the size needed to allow for the research, development and potential commercialization of our current or any future product candidates; ▪ the costs involved in filing patent applications, maintaining and enforcing patents or defending against infringement or other claims raised by third parties; ▪ the maintenance of our existing license and collaboration agreements and the entry into new license and collaboration agreements; ▪ the time and costs involved in obtaining regulatory approval for our product candidates and any delays we may encounter as a result of evolving regulatory requirements or adverse results with respect to any of our product candidates; ▪ the effect of competing technological and market developments; ▪ the cost of manufacturing KER-050, KER-012, KER-065 and future product candidates for clinical trials in preparation for marketing approval applications and in preparation for commercialization; ▪ the cost of establishing sales, marketing and distribution capabilities for any product candidates for which we may receive regulatory approval in regions where we choose to commercialize our products, if approved, on our own; ▪ the amount of revenues, if any, we may derive either directly or in the form of royalty payments from future sales of our product candidates, if approved; and ▪ market acceptance of any approved product candidates.
Prior to obtaining approval to commercialize KER-050, KER-047, KER-012 and any future product candidates in the United States or abroad, we, our collaborators or our potential future collaborators must demonstrate with substantial evidence from adequate and well-controlled clinical trials, and to the satisfaction of the FDA or comparable foreign regulatory authorities, that such product candidates are safe and effective for their intended uses.
Prior to obtaining approval to commercialize KER-050, KER-012, KER-065 and any future product candidates in the United States or abroad, we, our collaborators or our potential future collaborators must demonstrate with substantial evidence from adequate and well-controlled clinical trials, and to the satisfaction of the FDA or comparable foreign regulatory authorities, that such product candidates are safe and effective for their intended uses.
We also may experience numerous unforeseen events during our clinical trials that could delay or prevent our ability to receive marketing approval or commercialize KER-050, KER-047, KER-012 or any future product candidates, including: ▪ delays in or failure to obtain regulatory authorizations to commence a trial; ▪ delays in reaching a consensus with regulatory agencies as to the design or implementation of our clinical trials; ▪ delays in or failure to reach agreement on acceptable terms with prospective contract research organizations, or CROs, and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; ▪ delays in or failure to obtain institutional review board, or IRB, or ethics committee approval at each site; ▪ delays in or failure to recruit a sufficient number of suitable patients to participate in a trial; ▪ failure to have patients complete a trial or return for post-treatment follow-up, including disruptions in our ability to treat patients or conduct post-treatment follow-up due to public health crises, such as the COVID-19 pandemic; ▪ clinical sites deviating from trial protocol, missing data or dropping out of a trial; ▪ delays in adding new clinical trial sites; ▪ failure to manufacture sufficient quantities of our product candidates for use in clinical trials in a timely manner; ▪ occurrence of adverse events associated with the product candidate that are viewed to outweigh its potential benefits, or safety or tolerability concerns that could cause us or our collaborators, as applicable, to suspend or terminate a trial if we or our collaborators find that the participants are being exposed to unacceptable health risks; ▪ failure to perform clinical trials in accordance with the FDA’s or any other regulatory authority’s good clinical practices, or GCP, requirements, or regulatory guidelines in other countries; ▪ changes in regulatory requirements, policies and guidelines; ▪ failure of our third-party research contractors to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; ▪ delays in establishing the appropriate dosage levels and frequency of dosing in clinical trials; ▪ the quality or stability of our product candidates falling below acceptable standards; and ▪ business interruptions resulting from geopolitical actions, including war, such as the current Russia-Ukraine war, and terrorism or the perception that such hostilities may be imminent, another outbreak of a contagious disease, or natural disasters including earthquakes, typhoons, floods and fires.
We also may experience numerous unforeseen events during our clinical trials that could delay or prevent our ability to receive marketing approval or commercialize KER-050, KER-012, KER-065 or any future product candidates, including: ▪ delays in or failure to obtain regulatory authorizations to commence a trial; ▪ delays in reaching a consensus with regulatory agencies as to the design or implementation of our clinical trials; ▪ delays in or failure to reach agreement on acceptable terms with prospective contract research organizations, or CROs, and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; ▪ delays in or failure to obtain institutional review board, or IRB, or positive ethics committee opinions at each site; ▪ delays in or failure to recruit a sufficient number of suitable patients to participate in a trial; ▪ failure to have patients complete a trial or return for post-treatment follow-up, including disruptions in our ability to treat patients or conduct post-treatment follow-up due to public health crises; ▪ clinical sites deviating from trial protocol, missing data or dropping out of a trial; ▪ delays in adding new clinical trial sites; ▪ failure to manufacture sufficient quantities of our product candidates for use in clinical trials in a timely manner; ▪ occurrence of adverse events associated with the product candidate that are viewed to outweigh its potential benefits, or safety or tolerability concerns that could cause us or our collaborators, as applicable, to suspend or terminate a trial if we or our collaborators find that the participants are being exposed to unacceptable health risks; ▪ failure to perform clinical trials in accordance with the FDA’s or any other regulatory authority’s good clinical practices, or GCP, requirements, or regulatory guidelines in other countries; ▪ changes in regulatory requirements, policies and guidelines; ▪ failure of our third-party research contractors to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; ▪ delays in establishing the appropriate dosage levels and frequency of dosing in clinical trials; ▪ the quality or stability of our product candidates falling below acceptable standards; and ▪ business interruptions resulting from geopolitical actions, including war, such as the current Russia-Ukraine war and the war in Israel, and terrorism or the perception that such hostilities may be imminent, another outbreak of a contagious disease, or natural disasters including earthquakes, typhoons, floods and fires.
An inactive trading market may also impair our ability to raise capital to continue to fund operations by selling shares and may impair our ability to enter into collaborations or acquire other companies or technologies using our shares as consideration. 83 Our quarterly operating results may fluctuate significantly or may fall below the expectations of investors or securities analysts, each of which may cause our stock price to fluctuate or decline.
An inactive trading market may also impair our ability to raise capital to continue to fund operations by selling shares and may impair our ability to enter into collaborations or acquire other companies or technologies using our shares as consideration. 86 Our quarterly operating results may fluctuate significantly or may fall below the expectations of investors or securities analysts, each of which may cause our stock price to fluctuate or decline.
In addition, if we are unable to effectively manage our outsourced activities or if the quality or accuracy of the services provided by consultants is compromised for any reason, our clinical trials may be extended, delayed or terminated, and we may not be able to obtain marketing approval of KER-050, KER-047, KER-012 and our other product candidates or otherwise advance our business.
In addition, if we are unable to effectively manage our outsourced activities or if the quality or accuracy of the services provided by consultants is compromised for any reason, our clinical trials may be extended, delayed or terminated, and we may not be able to obtain marketing approval of KER-050, KER-012, KER-065 and our other product candidates or otherwise advance our business.
To the extent that the results of the trials are not satisfactory to the FDA or comparable foreign regulatory authorities for support of a marketing application, approval of KER-050, KER-047, KER-012 and any future product candidates may be significantly delayed, or we may be required to expend significant additional resources, which may not be available to us, to conduct additional trials in support of potential approval of our product candidates.
To the extent that the results of the trials are not satisfactory to the FDA or comparable foreign regulatory authorities for support of a marketing application, approval of KER-050, KER-012, KER-065 and any future product candidates may be significantly delayed, or we may be required to expend significant additional resources, which may not be available to us, to conduct additional trials in support of potential approval of our product candidates.
We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently 45 expect.
We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect.
If approved, our investigational products regulated as biologics, including KER-050 and KER-012, may face competition from biosimilars approved through an abbreviated regulatory pathway.
If approved, our investigational products regulated as biologics, including KER-050, KER-012 and KER-065, may face competition from biosimilars approved through an abbreviated regulatory pathway.
We own pending patent applications covering our proprietary technologies or our product candidates that if issued as patents are expected to expire from 2037 through 2043, without taking into account any possible patent term adjustments or extensions. However, we cannot be assured that the USPTO or relevant foreign patent offices will grant any of these patent applications.
We own pending patent applications covering our proprietary technologies or our product candidates that if issued as patents are expected to expire from 2037 through 2045, without taking into account any possible patent term adjustments or extensions. However, we cannot be assured that the USPTO or relevant foreign patent offices will grant any of these patent applications.
Our future financial performance and our ability to commercialize KER-050, KER-047, KER-012 and any other product candidates we develop will depend, in part, on our ability to effectively manage any future growth, and our management may also have to divert a disproportionate amount of its attention away from day-to-day activities in order to devote a substantial amount of time to managing these growth activities.
Our future financial performance and our ability to commercialize KER-050, KER-012, KER-065 and any other product candidates we develop will depend, in part, on our ability to effectively manage any future growth, and our management may also have to divert a disproportionate amount of its attention away from day-to-day activities in order to devote a substantial amount of time to managing these growth activities.
If there is no lawful manner for us to transfer personal data from the EEA, the UK or other jurisdictions to the United States, or if the requirements for a legally-compliant transfer are too onerous, we could face significant adverse consequences, including the interruption or degradation of our operations, the need to relocate part of or all of our business or data processing activities to other jurisdictions at significant expense, increased exposure to regulatory actions, substantial fines and penalties, the inability to transfer data and work with partners, vendors and other third parties, and injunctions against our processing or transferring of personal data necessary to operate our business.
If there is no lawful manner for us to transfer personal data from the EEA, the UK or other jurisdictions to the United States, or if the requirements for a legally-compliant transfer are too onerous, we could face significant adverse consequences, including the interruption or degradation of our operations, the need to relocate part of or all of our business or data processing activities to other jurisdictions (such as Europe) at significant expense, increased exposure to regulatory actions, substantial fines and penalties, the inability to transfer data and work with partners, vendors and other third parties, and injunctions against our processing or transferring of personal data necessary to operate our business.
If a court were to find the exclusive-forum provision contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business. 88 ITEM 1B. UNRESOLVED STAFF COMMENTS None.
If a court were to find the exclusive-forum provision contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business. 91 ITEM 1B. UNRESOLVED STAFF COMMENTS None.
If a prolonged government shutdown occurs, or if global health concerns prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews, or other regulatory activities, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business.
If a prolonged government shutdown occurs, or if global health concerns prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews, or other regulatory activities, it could significantly impact the ability of the FDA or comparable foreign regulatory authorities to timely review and process our regulatory submissions, which could have a material adverse effect on our business.
If the FDA or a comparable foreign regulatory agency does not approve these facilities for the manufacture of our product candidates or if any agency withdraws its approval in the future, we and they may need to find alternative manufacturing facilities, which would negatively impact the ability to develop, obtain regulatory approval for or market our product candidates, if approved.
If the FDA or a comparable foreign regulatory authority does not approve these facilities for the manufacture of our product candidates or if any regulatory authority withdraws its approval in the future, we and they may need to find alternative manufacturing facilities, which would negatively impact the ability to develop, obtain regulatory approval for or market our product candidates, if approved.
If we are not able to effectively expand our organization by hiring qualified new employees and expanding our groups of consultants and contractors, we may not be able to successfully implement the tasks necessary to further develop and commercialize KER-050, KER-047, KER-012 and our other product candidates and, accordingly, may not achieve our research, development and commercialization goals.
If we are not able to effectively expand our organization by hiring qualified new employees and expanding our groups of consultants and contractors, we may not be able to successfully implement the tasks necessary to further develop and commercialize KER-050, KER-012, KER-065 and our other product candidates and, accordingly, may not achieve our research, development and commercialization goals.
If we are not successful with respect to one or more of these factors in a timely manner or at all, we could experience significant delays or an inability to successfully commercialize KER-050, KER-047, KER-012 or any future product candidates we develop, which would materially harm our business.
If we are not successful with respect to one or more of these factors in a timely manner or at all, we could experience significant delays or an inability to successfully commercialize KER-050, KER-012, KER-065 or any future product candidates we develop, which would materially harm our business.
If global health concerns such as a pandemic prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews or other regulatory activities, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business.
If global health concerns such as a pandemic prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews or other regulatory activities, it could significantly impact the ability of the FDA or comparable foreign regulatory authorities to timely review and process our regulatory submissions, which could have a material adverse effect on our business.
In addition, our activities are also subject to certain federal and state consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers. 61 Ensuring that our internal operations and future business arrangements with third parties comply with applicable healthcare laws and regulations will involve substantial costs.
In addition, our activities are also subject to certain federal, state consumer and foreign protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers. Ensuring that our internal operations and future business arrangements with third parties comply with applicable healthcare laws and regulations will involve substantial costs.
In that event, we would be unable to further develop and commercialize our product candidates, which could harm our business significantly. Lastly, we may need to indemnify our customers and distributors against claims relating to the infringement of intellectual property rights of third parties related to our product candidates, including KER-050, KER-047 and KER-012.
In that event, we would be unable to further develop and commercialize our product candidates, which could harm our business significantly. Lastly, we may need to indemnify our customers and distributors against claims relating to the infringement of intellectual property rights of third parties related to our product candidates, including KER-050, KER-012 and KER-065.
Any replacement of our CMOs could require significant effort and expertise because there may be a limited number of qualified CMOs. This could be particularly problematic where we rely on a single-source supplier, as is currently the case for the manufacture of each of KER-050, KER-047 and KER-012.
Any replacement of our CMOs could require significant effort and expertise because there may be a limited number of qualified CMOs. This could be particularly problematic where we rely on a single-source supplier, as is currently the case for the manufacture of each of KER-050, KER-012 and KER-065.
If we or the third parties on which we rely fail, or are perceived to have failed, to address or comply with applicable data privacy and security obligations, we could face significant consequences, including but not limited to: government enforcement actions (e.g., investigations, fines, penalties, audits and inspections); litigation (including class action claims); additional reporting requirements and/or oversight; bans on processing personal data; orders to destroy or not use personal data; and imprisonment of company officials.
If we or the third parties on which we rely fail, or are perceived to have failed, to address or comply with applicable data privacy and security obligations, we could face significant consequences, including but not limited to: government enforcement actions (e.g., investigations, fines, penalties, audits and inspections); litigation (including class action claims) and mass arbitration demands; additional reporting requirements and/or oversight; bans on processing personal data; orders to destroy or not use personal data; and imprisonment of company officials.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changePrior to that date, our principal office was located at 99 Hayden Avenue, Suite 120, Building E, Lexington, Massachusetts 02421, which provided approximately 15,622 square feet of office and laboratory space. The lease for the prior principal office will expire on March 31, 2023. We believe that these facilities will be adequate for our near-term needs.
Biggest changePrior to that date, our principal office was located at 99 Hayden Avenue, Suite 120, Building E, Lexington, Massachusetts 02421, which provided approximately 15,622 square feet of office and laboratory space. The lease for the prior principal office expired on March 31, 2023. We believe that these facilities will be adequate for our near-term needs.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe results of any future claims or proceedings cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and litigation costs, diversion of management resources, and other factors. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 89 PART II
Biggest changeThe results of any future claims or proceedings cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and litigation costs, diversion of management resources, and other factors. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 93 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeWe caution that the stock price performance shown in the graph below is not necessarily indicative of, nor is it intended to forecast, the potential future performance of our common stock. 90 Recent Sales of Unregistered Securities None.
Biggest changeWe caution that the stock price performance shown in the graph below is not necessarily indicative of, nor is it intended to forecast, the potential future performance of our common stock. 94 Recent Sales of Unregistered Securities None. Use of Proceeds None. Purchase of Equity Securities by the Issuer and Affiliated Purchasers None. ITEM 6. [Reserved]
The graph set forth below compares the cumulative total stockholder return on our common stock between April 8, 2020 (the date our common stock commenced trading on the Nasdaq Global Market) and December 31, 2022, with the cumulative total return of (a) the Nasdaq Composite Index and (b) the Nasdaq Biotechnology Index, over the same period.
The graph set forth below compares the cumulative total stockholder return on our common stock between April 8, 2020 (the date our common stock commenced trading on the Nasdaq Global Market) and December 31, 2023, with the cumulative total return of (a) the Nasdaq Composite Index and (b) the Nasdaq Biotechnology Index, over the same period.
Holders As of February 28, 2023, there were 18 stockholders of record of our common stock, one of which is Cede & Co., a nominee for Depository Trust Company, or DTC.
Holders As of February 22, 2024, there were 15 stockholders of record of our common stock, one of which is Cede & Co., a nominee for Depository Trust Company, or DTC.
Removed
Use of Proceeds November 2020 Public Offering of Common Stock On November 17, 2020, we closed a public offering in which we issued and sold an aggregate of 2,990,000 shares of common stock at a public offering price of $50.00 per share.
Removed
All of the shares of common stock issued and sold in this public offering were registered under the Securities Act pursuant to a registration statement on Form S-1 (Registration No. 333-250010), which was declared effective by the SEC on November 12, 2020.
Removed
Jefferies LLC, SVB Securities LLC (formerly SVB Leerink LLC) and Piper Sandler & Co. acted as joint book-running managers for the offering. H.C. Wainwright & Co., LLC acted as co-manager for the offering. The offering commenced on November 12, 2020, and, following the sale of the shares upon the closing of the offering, the offer terminated.
Removed
The aggregate net proceeds to us from the public offering were approximately $140.1 million, after deducting underwriting discounts and commissions and offering expenses payable by us of approximately $9.4 million.
Removed
No offering expenses were paid directly or indirectly to any of our directors or officers (or their associates) or persons owning 10% or more of any class of our equity securities or to any other affiliates.
Removed
There has been no material change in the use of proceeds from our public offering from those disclosed in the final prospectus for our public offering dated November 12, 2020 and filed with the SEC pursuant to Rule 424(b)(4) of the Securities Act on November 13, 2020. Purchase of Equity Securities by the Issuer and Affiliated Purchasers None.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeWe account for interest and penalties related to uncertain tax positions as part of its provision for income taxes. 96 Results of Operations Comparison for the years ended December 31, 2022 and 2021 The following table summarizes our results of operations for the years ended December 31, 2022 and 2021 (in thousands): YEAR ENDED DECEMBER 31, 2022 2021 REVENUE: Research collaboration revenue $ — $ 20,100 Total revenue — 20,100 OPERATING EXPENSES: Research and development (87,265) (55,143) General and administrative (27,525) (21,330) Total operating expenses (114,790) (76,473) LOSS FROM OPERATIONS (114,790) (56,373) OTHER INCOME (EXPENSE), NET: Interest expense, net (1) (4) Research and development incentive income 7,081 — Other income (expense), net 3,031 (356) Total other income (expense), net 10,111 (360) Loss before income taxes (104,679) (56,733) Income tax provision — (2,011) Net loss $ (104,679) $ (58,744) Revenue We did not recognize any revenue for the year ended December 31, 2022.
Biggest changeThe tax provision recorded for the year ended December 31, 2021 resulted from taxable income generated from the Hansoh Agreement. 99 Results of Operations Comparison for the years ended December 31, 2023, 2022, and 2021 The following table summarizes our results of operations for the years ended December 31, 2023, 2022, and 2021 (in thousands): YEAR ENDED DECEMBER 31, 2023 2022 2021 REVENUE: Service and other revenue $ 151 $ — $ — License revenue $ — $ — $ 20,100 Total revenue 151 — 20,100 OPERATING EXPENSES: Research and development (135,258) (87,265) (55,143) General and administrative (34,834) (27,525) (21,330) Total operating expenses (170,092) (114,790) (76,473) LOSS FROM OPERATIONS (169,941) (114,790) (56,373) OTHER INCOME (EXPENSE), NET: Interest expense, net — (1) (4) Research and development incentive income 2,400 7,081 — Dividend income 14,755 3,644 27 Other income (expense), net (206) (613) (383) Total other income (expense), net 16,949 10,111 (360) Loss before income taxes (152,992) (104,679) (56,733) Income tax provision — — (2,011) Net loss $ (152,992) $ (104,679) $ (58,744) Revenue Our revenue for the year ended December 31, 2023 consisted of service and other revenue related to the Tech Transfer Agreement.
Operating Expenses Research and Development Expenses Research and development expenses consist primarily of costs incurred for our research activities, including our discovery efforts and the preclinical and clinical development of our current and potential future product candidates, and include: ▪ salaries, benefits and other related costs, including stock-based compensation expense, for personnel engaged in research and development functions; ▪ expenses incurred under agreements with third parties, including CROs that conduct research, preclinical and clinical activities on our behalf, as well as contract manufacturing organizations, or CMOs, that manufacture drug product for use in our preclinical studies and clinical trials; ▪ license fees incurred in connection with license agreements; ▪ research and development supplies and services expenses; ▪ facility-related expenses, which include direct depreciation costs and allocated expenses for rent and maintenance of facilities and other operating costs; ▪ cost of outside consultants, including their fees and related travel expenses, engaged in research and development functions; ▪ expenses related to regulatory affairs; and ▪ fees related to our scientific advisory board.
Operating Expenses Research and Development Expenses Research and development expenses consist primarily of costs incurred for our research activities, including our discovery efforts and the preclinical and clinical development of our current and potential future product candidates, and include: ▪ salaries, benefits and other related costs, including stock-based compensation expense, for personnel engaged in research and development functions; ▪ expenses incurred under agreements with third parties, including contract research organizations, or CROs, that conduct research, preclinical and clinical activities on our behalf, as well as contract manufacturing organizations, or CMOs, that manufacture drug product for use in our preclinical studies and clinical trials; ▪ license fees incurred in connection with license agreements; ▪ research and development supplies and services expenses; ▪ facility-related expenses, which include direct depreciation costs and allocated expenses for rent and maintenance of facilities and other operating costs; ▪ cost of outside consultants, including their fees and related travel expenses, engaged in research and development functions; ▪ expenses related to regulatory affairs; and ▪ fees related to our scientific advisory board.
Cash Provided by Financing Activities Net cash provided by financing activities was $120.3 million for the year ended December 31, 2022, which was primarily related to (i) net proceeds of $119.5 million received from sales of our common stock under the ATM Program, after deducting sales agent commissions and offering expenses; and (ii) proceeds of $0.8 million related to exercises of options to purchase common stock.
Net cash provided by financing activities was $120.3 million for the year ended December 31, 2022, which was primarily related to (i) net proceeds of $119.5 million received from sales of our common stock under the ATM Program, after deducting sales agent commissions and offering expenses; and (ii) proceeds of $0.8 million related to exercises of options to purchase common stock.
The $16.1 million of cash used in operating assets and liabilities was primarily comprised of (i) an 18.0 million increase in accounts receivable from the $20.0 million upfront payment pursuant to the Hansoh Agreement, net of $2.0 million in withholding tax; and (ii) a $1.5 million increase in prepaid expenses and other assets due to timing of expense recognition for our research and development costs, 99 which was partially offset by a $4.1 million increase in accounts payable and accrued expenses to support the advancement of our programs.
The $16.1 million of cash used in operating assets and liabilities was primarily comprised of (i) an $18.0 million increase in accounts receivable from the $20.0 million upfront payment pursuant to the Hansoh Agreement, net of $2.0 million in withholding tax; and (ii) a $1.5 million increase in prepaid expenses and other assets due to timing of expense recognition for our research and development costs, which was partially offset by a $4.1 million increase in accounts payable and accrued expenses to support the advancement of our programs.
The increase of $6.2 million was primarily due to (i) a $5.2 million increase in personnel expenses, which includes additional stock-based compensation costs, to support our organizational growth and achievement of our corporate goals; (ii) a $0.7 million increase in facilities, supplies and other office expenses due to growth of our organization; and (iii) a $0.3 million increase in professional fees and director and officer insurance premiums.
The increase of $6.2 million was primarily due to (i) a $5.2 million increase in personnel expenses, which includes an increase of $3.0 million of additional stock-based compensation costs, to support our organizational growth and achievement of our corporate goals; (ii) a $0.7 million increase in facilities, supplies and other office expenses due to growth of our organization; and (iii) a $0.3 million increase in professional fees and director and officer insurance premiums.
If a licensed product is approved for marketing in the Territory, we will be entitled to receive 94 royalty payments based on a tiered percentage of annual net sales in each region within the Territory, with such percentage ranging from the low double digit to high teens, subject to specified potential royalty reductions.
If a licensed product is approved for marketing in the Territory, we will be entitled to receive royalty payments based on a tiered percentage of annual net sales in each region within the Territory, with such percentage ranging from the low double digit to high teens, subject to specified potential royalty reductions.
If we are unable to obtain funding, we will be forced to delay, reduce or eliminate some or all of our research and development programs, product portfolio expansion or commercialization efforts, which could adversely affect our business 92 prospects, or we may be unable to continue operations.
If we are unable to obtain funding, we will be forced to delay, reduce or eliminate some or all of our research and development programs, product portfolio expansion or commercialization efforts, which could adversely affect our business prospects, or we may be unable to continue operations.
These increases were offset by a net decrease of $0.6 million of KER-012-related expenses, which was driven by a $2.3 million decrease in manufacturing costs and preclinical activities, partially offset by a 97 $1.6 million increase in activities to support the clinical advancement of the program.
These increases were partially offset by a net decrease of $0.6 million of KER-012-related expenses, which was driven by a $2.3 million decrease in manufacturing costs and preclinical activities, partially offset by a $1.6 million increase in activities to support the clinical advancement of the program.
(1) Recently Issued Accounting Pronouncements A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2 to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K.
(1) Recently Issued Accounting Pronouncements A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2 to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K. 105
Rising interest rates also present a recent challenge impacting the U.S. economy and could make it more difficult for us to obtain traditional financing on acceptable terms, if at all, in the future.
Rising interest rates also present a recent challenge impacting the U.S. economy and could make it more difficult for 96 us to obtain traditional financing on acceptable terms, if at all, in the future.
The $14.3 million of cash provided by operating assets and liabilities was primarily comprised of (i) an $18.0 million decrease in accounts receivable and (ii) a $4.9 million increase in accounts payable and accrued expenses to support the advancement of our programs, which was partially offset by (a) a $4.9 million increase in prepaid expenses and other assets due to timing of expense recognition for our research and development costs and (b) $3.7 million change in our operating lease liabilities.
The $14.3 million of cash used in operating assets and liabilities was primarily comprised of (i) an $18.0 million decrease in accounts receivable and (ii) a $4.9 million increase in accounts payable and accrued expenses to support the advancement of our programs, which was partially offset by (a) a $4.9 million increase in prepaid expenses and other assets due to timing of expense recognition for our research and development costs and (b) a $3.7 million change in our operating lease liabilities.
The increase of $32.1 million was primarily due to an increase in program-related costs, including (i) a net increase of $8.0 million of KER-050-related expenses, primarily driven by (a) a $5.0 million increase in clinical and preclinical program activities due to the progression of our two Phase 2 clinical trials of KER-050, one in patients with MDS and one in patients with myelofibrosis and (b) an increase of $3.0 million in manufacturing activities; (ii) a $6.8 million increase in preclinical pipeline and development activities; (iii) a $14.4 million increase in personnel costs, including additional stock-based compensation costs driven by the increase in headcount to support the advancement of our pipeline; (iv) a $1.2 million increase in professional fees to support our organizational growth and the continued advancements in our pipeline; and (v) a $2.5 million increase in facilities and supplies and other expenses due to the continued growth of our organization.
The increase of $32.1 million was primarily due to an increase in program-related costs, including (i) a net increase of $8.0 million of KER-050-related expenses, primarily driven by (a) a $5.0 million increase in clinical and preclinical program activities due to the progression of our two Phase 2 clinical trials of KER-050, one in patients with MDS and one in patients with myelofibrosis and (b) an increase of $3.0 million in manufacturing activities; (ii) a $3.8 million increase in KER-065-related expenses, primarily driven by (a) $3.6 million increase in manufacturing costs and preclinical activities and (b) a $0.2 million increase in clinical trial activities; (iii) a $3.0 million increase in preclinical pipeline and development activities; (iv) a $14.4 million increase in personnel costs, including an increase of $3.9 million of additional stock-based compensation costs, driven by the increase in headcount to support the advancement of our pipeline; (v) a $1.2 million increase in professional fees to support our organizational growth and the continued advancements in our pipeline; and (vi) a $2.5 million increase in facilities and supplies and other expenses due to the continued growth of our organization.
Under the ATM Sales Agreement, SVB Securities may sell the ATM Shares by methods deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Exchange Act of 1934, as amended.
Under the ATM Sales Agreement, Leerink may sell the ATM Shares by methods deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Exchange Act of 1934, as amended.
Due to the uncertainty of the achievement and timing of the events requiring payment under these agreements, the amounts to be paid by us are not fixed or determinable at this time and are excluded from the table above.
Due to the uncertainty of the achievement and timing of the events requiring payment under these agreements, the amounts to be paid by us are not fixed or determinable at this time and are excluded from the table below.
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.
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 in Australia.
We simultaneously entered into the ATM Sales Agreement with SVB Securities, as agent, to provide for the issuance and sale by us of the ATM Shares from time to time in “at the market” offerings under the Shelf Registration Statement, which we refer to as the ATM Program.
We simultaneously entered into the ATM Sales Agreement with Leerink, as agent, to provide for the issuance and sale by us of the ATM Shares from time to time in “at the market” offerings under the Shelf Registration Statement, which we refer to as the ATM Program.
We have historically financed our operations primarily through the sale of convertible preferred stock and common stock and cash received from licensing agreements. 2021 ATM Sales Agreement In May 2021, we entered into a Sales Agreement with SVB Securities LLC (formerly SVB Leerink LLC), or SVB Securities, as sales agent, which we refer to as the ATM Sales Agreement, under which we may offer and sell, from time to time, shares of our common stock, or the ATM Shares, through SVB Securities, which we refer to as the ATM Offering.
We have historically financed our operations primarily through the sale of convertible preferred stock and common stock and cash received from licensing agreements. 2021 ATM Sales Agreement In May 2021, we entered into a Sales Agreement with Leerink Partners LLC, or Leerink, as sales agent, which we refer to as the ATM Sales Agreement, under which we may offer and sell, from time to time, shares of our common stock, or the ATM Shares, through Leerink, which we refer to as the ATM Offering.
Our third product candidate, KER-012, is being developed for the treatment of pulmonary arterial hypertension, or PAH, and for the treatment of cardiovascular disorders.
Our second product candidate, KER-012, is being developed for the treatment of pulmonary arterial hypertension, or PAH, and for the treatment of cardiovascular disorders.
We have assessed our research and development activities and expenditures to determine which activities and expenditures are likely to be eligible under the R&D Incentive. We estimate the non-refundable tax offset available to us based on available information at the time. This estimate is also reviewed by our external tax advisors on an annual basis.
We have assessed our R&D activities and expenditures to determine which activities and expenditures in Australia are likely to be eligible under the R&D Incentive. We estimate the refundable or non-refundable tax offset available to us based on available information at the time. This estimate is also reviewed by our external tax advisors on an annual basis.
Although we continue to pursue these plans, there is no assurance that we will be successful in obtaining sufficient funding on terms acceptable to us to fund continuing operations, if at all. As of December 31, 2022, we had cash and cash equivalents of $279.0 million.
Although we continue to pursue these plans, there is no assurance that we will be successful in obtaining sufficient funding on terms acceptable to us to fund continuing operations, if at all. As of December 31, 2023, we had cash and cash equivalents of $331.1 million.
To date, there have not been any material adjustments to our prior estimates of accrued research and development expenses. Stock-Based Compensation We account for all stock-based compensation awards granted to employees and non-employees as stock-based compensation expense at fair value. Our stock-based payments include stock options and grants of common stock, including common stock subject to vesting.
To date, there have not been any material adjustments to our prior estimates of accrued and prepaid research and development expenses. Stock-Based Compensation We account for all stock-based compensation awards granted to employees and non-employees as stock-based compensation expense at fair value. Our stock-based payments include stock options.
We expect research and development expenses to fluctuate from quarter to quarter depending on the timing of clinical trial activities, clinical manufacturing and other development activities. General and Administrative Expenses General and administrative expenses were $27.5 million for the year ended December 31, 2022, compared to $21.3 million for the year ended December 31, 2021.
We expect research and development expenses to fluctuate from quarter to quarter depending on the timing of clinical trial activities, clinical manufacturing and other development activities. General and Administrative Expenses General and administrative expenses were $34.8 million for the year ended December 31, 2023, compared to $27.5 million for the year ended December 31, 2022.
Our future funding requirements, both near and long-term, will depend on many factors, including: ▪ the progress, timing and completion of preclinical studies and clinical trials for our current or any future product candidates, as well as the associated costs, including any unforeseen costs we may incur as a result of preclinical study or clinical trial delays due to the COVID-19 pandemic or other causes; ▪ the timing and amount of milestone and royalty payments we are required to make or are eligible to receive under our license agreements with each of The General Hospital Corporation and Hansoh; 98 ▪ the number of potential new product candidates we identify and decide to develop; ▪ the need for additional or expanded preclinical studies and clinical trials beyond those that we plan to conduct with respect to our current and future product candidates; ▪ the costs involved in growing our organization to the size needed to allow for the research, development and potential commercialization of our current or any future product candidates; ▪ the costs involved in filing patent applications, maintaining and enforcing patents or defending against infringement or other claims raised by third parties; ▪ the maintenance of our existing license and collaboration agreements and the entry into new license and collaboration agreements; ▪ the time and costs involved in obtaining regulatory approval for our product candidates and any delays we may encounter as a result of evolving regulatory requirements or adverse results with respect to any of our product candidates; ▪ the effect of competing technological and market developments; ▪ the costs of operating as a public company; ▪ the cost of manufacturing KER-050, KER-047, KER-012 and future product candidates for clinical trials in preparation for marketing approval and in preparation for commercialization; ▪ the cost of establishing sales, marketing and distribution capabilities for any product candidates for which we may receive regulatory approval in regions where we choose to commercialize our products, if approved, on our own; ▪ the amount of revenues, if any, we may derive either directly or in the form of royalty payments from future sales of our product candidates, if approved; and ▪ market acceptance of any approved product candidates.
Our future funding requirements, both near and long-term, will depend on many factors, including: ▪ the progress, timing and completion of preclinical studies and clinical trials for our current or any future product candidates, as well as the associated costs, including any unforeseen costs we may incur as a result of preclinical study or clinical trial delays due to public health crises or other causes; ▪ the timing and amount of milestone and royalty payments we are required to make or are eligible to receive under our license agreements with each of The General Hospital Corporation and Hansoh; ▪ the number of potential new product candidates we identify and decide to develop; ▪ the need for additional or expanded preclinical studies and clinical trials beyond those that we plan to conduct with respect to our current and future product candidates; ▪ the costs involved in growing our organization to the size needed to allow for the research, development and potential commercialization of our current or any future product candidates; ▪ the costs involved in filing patent applications, maintaining and enforcing patents or defending against infringement or other claims raised by third parties; ▪ the maintenance of our existing license and collaboration agreements and the entry into new license and collaboration agreements; ▪ the time and costs involved in obtaining regulatory approval for our product candidates and any delays we may encounter as a result of evolving regulatory requirements or adverse results with respect to any of our product candidates; ▪ the effect of competing technological and market developments; ▪ the costs of operating as a public company; ▪ the cost of manufacturing KER-050, KER-012, KER-065 and future product candidates for clinical trials in preparation for marketing approval and in preparation for commercialization; ▪ the cost of establishing sales, marketing and distribution capabilities for any product candidates for which we may receive regulatory approval in regions where we choose to commercialize our products, if approved, on our own; ▪ the amount of revenues, if any, we may derive either directly or in the form of royalty payments from future sales of our product candidates, if approved; and ▪ market acceptance of any approved product candidates. 102 In addition, public health crises, bank failures, geopolitical tensions and resulting global slowdown of economic activity continue to rapidly evolve and have already resulted in a significant disruption of global financial markets.
Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, we may experience increases in the near future (especially if inflation rates continue to rise) on our operating costs, including our labor costs and research and development costs, due to supply chain constraints, consequences associated with public health crises, such as the COVID-19 pandemic, and global geopolitical tension as a result of the ongoing war between Russia and Ukraine, worsening global macroeconomic conditions and employee availability and wage increases, which may result in additional stress on our working capital resources.
Although we do not believe that inflation or higher interest rates have had a material impact on our financial position or results of operations to date, we may experience increases in the near future (especially if inflation rates rise more quickly) on our operating costs, including our labor costs and research and development costs, due to supply chain constraints, consequences associated with public health crises and global geopolitical tensions, such as the ongoing war between Russia and Ukraine and the war in Israel, worsening global macroeconomic conditions, including as a result of bank failures, and employee availability and wage increases, which may result in additional stress on our working capital resources.
We are also obligated to pay a percentage of non-royalty-related payments received by us from sublicensees ranging in the sub-teen 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.
We are also obligated to pay a percentage of non-royalty-related payments received by us from sublicensees ranging in the sub-teen 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. 2021 License Agreement with Hansoh (Shanghai) Healthtech Co., Ltd.
Cash Used in Investing Activities Net cash used in investing activities was $1.2 million and $1.0 million for the years ended December 31, 2022 and 2021, respectively. The cash used in investing activities in both periods was due to purchases of property and equipment.
Cash Used in Investing Activities Net cash used in investing activities was $2.5 million, $1.2 million, and $1.0 million for the years ended December 31, 2023, 2022, and 2021, respectively. The cash used in investing activities in each period was due to purchases of property and equipment.
As of December 31, 2022, we were eligible to offer and sell, from time to time, shares of our common stock for an aggregate offering amount of up to the remaining $250.0 million available under the ATM Program. As of December 31, 2022, we had cash and cash equivalents of $279.0 million.
As of December 31, 2023, we were eligible to offer and sell, from time to time, shares of our common stock for an aggregate offering amount of up to the remaining $71.5 million available under the ATM Program. As of December 31, 2023, we had cash and cash equivalents of $331.1 million.
Cash Flows The following table summarizes our cash flows for each of the periods presented (in thousands): YEAR ENDED DECEMBER 31, 2022 2021 Net cash used in operating activities $ (70,062) $ (62,148) Net cash used in investing activities (1,241) (1,024) Net cash provided by financing activities 120,309 28,550 Net increase (decrease) in cash and cash equivalents, and restricted cash $ 49,006 $ (34,622) Cash Used in Operating Activities Net cash used in operating activities was $70.1 million for the year ended December 31, 2022, which was driven by a net loss of $104.7 million, partially offset by a $14.3 million increase in net cash provided by operating assets and liabilities and non-cash charges, $18.7 million of stock-based compensation expense, $0.9 million in lease expenses and $0.7 million in depreciation.
Cash Flows The following table summarizes our cash flows for each of the periods presented (in thousands): YEAR ENDED DECEMBER 31, 2023 2022 2021 Net cash used in operating activities $ (124,508) $ (70,062) $ (62,148) Net cash used in investing activities (2,464) (1,241) (1,024) Net cash provided by financing activities 178,956 120,309 28,550 Net increase (decrease) in cash and cash equivalents, and restricted cash $ 51,984 $ 49,006 $ (34,622) Cash Used in Operating Activities Net cash used in operating activities was $124.5 million for the year ended December 31, 2023, which was driven by a net loss of $153.0 million and $2.7 million net cash used by operating assets and liabilities, partially offset by non-cash charges including $28.8 million of stock-based compensation expense, $1.6 million in lease expenses and $0.8 million in depreciation.
As of December 31, 2022, we have sold a total of 3,930,384 shares of our common stock pursuant to the ATM Offering for aggregate net proceeds of approximately $147.5 million after deducting sales agent commissions and estimated offering expenses.
As of December 31, 2023, we have sold a total of 7,991,990 shares of our common stock pursuant to the ATM Offering for aggregate net proceeds of approximately $323.3 million after deducting sales agent commissions and estimated offering expenses.
During the year ended December 31, 2022, we sold a total of 3,410,384 shares of our common stock pursuant to the ATM Offering for aggregate net proceeds of $119.4 million after deducting sales agent commissions and estimated offering expenses.
During the year ended December 31, 2023, we sold a total of 4,061,606 shares of our common stock pursuant to the ATM Offering for aggregate net proceeds of $175.8 million after deducting sales agent commissions and estimated offering expenses.
Total Other Income (Expense), Net Total other income (expense), net was $10.1 million for the year ended December 31, 2022, compared to $(0.4) million for the year ended December 31, 2021.
Total Other Income (Expense), Net Total other income (expense), net was $16.9 million for the year ended December 31, 2023, compared to $10.1 million for the year ended December 31, 2022.
Since our inception in 2015, we have devoted the majority of our efforts into business planning, research and development of our product candidates, including by conducting clinical trials and preclinical studies, raising capital and recruiting management and technical staff to support these operations.
Our third product candidate, KER-065, is being developed for the treatment of obesity and for the treatment of neuromuscular diseases. 95 Since our inception in 2015, we have devoted the majority of our efforts into business planning, research and development of our product candidates, including by conducting clinical trials and preclinical studies, raising capital and recruiting management and technical staff to support these operations.
Our revenue for the year ended December 31, 2021 consisted of (i) a one-time license fee of $0.1 million under the Neurona Agreement and (ii) an upfront fee of $20.0 million under the Hansoh Agreement, whereby we granted to Hansoh the exclusive right to develop, manufacture and commercialize KER-050 and licensed products containing KER-050 within the Territory.
We did not recognize any revenue for the year ended December 31, 2022. Our revenue for the year ended December 31, 2021 consisted primarily of an upfront fee of $20.0 million under the Hansoh Agreement, whereby we granted to Hansoh the exclusive right to develop, manufacture and commercialize KER-050 and licensed products containing KER-050 within the Territory.
While our significant accounting policies are described in greater detail in Note 2 to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our consolidated financial statements.
While our significant accounting policies are described in greater detail in Note 2 to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our consolidated financial statements. 104 Revenue Recognition To date, our revenues have consisted solely of payments received related to research collaborations and licensing of intellectual property.
The Vivarium Premises component of the 1050 Waltham Lease is currently expected to commence in the first half of 2023. 100 Critical Accounting Policies and Estimates This management’s discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States.
Critical Accounting Estimates This management’s discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States.
We do not expect to generate any revenue from product sales unless and until we successfully complete development and obtain regulatory approval for one or more of our product candidates, which we expect will take a number of years. Since our inception, we have funded our operations primarily through equity financings and through research collaborations or licensing of intellectual property.
We do not have any products approved for sale. We do not expect to generate any revenue from product sales unless and until we successfully complete development and obtain regulatory approval for one or more of our product candidates, which we expect will take a number of years.
We are a leader in understanding the role of the transforming growth factor-beta, or TGF-ß, family of proteins, which are master regulators of red blood cell and platelet production as well as of the growth, repair and maintenance of a number of tissues, including blood vessels, skeletal muscle and heart tissue.
We are a leader in understanding the role of the TGF-ß family of proteins, which are master regulators of the growth, repair and maintenance of a number of tissues, including blood, bone, skeletal muscle, adipose and heart tissue.
During the royalty term, neither party will directly or indirectly commercialize a competing product in the Territory. Components of Our Results of Operations Revenue To date, we have not generated any revenue, and do not expect to generate any revenue in the foreseeable future, from product sales. We have generated revenue solely from research collaborations or licensing of intellectual property.
Components of Our Results of Operations Revenue To date, we have not generated any revenue, and do not expect to generate any revenue in the foreseeable future, from product sales. We have generated revenue solely from research collaborations or licensing of intellectual property. We may in the future generate revenue from other strategic collaborations.
Research and Development Expenses The following table summarizes our research and development expenses for the years ended December 31, 2022 and 2021 (in thousands): YEAR ENDED DECEMBER 31, INCREASE/ (DECREASE) 2022 2021 KER-050 $ 24,492 $ 16,515 $ 7,977 KER-047 3,101 3,135 (34) KER-012 12,433 13,072 (639) Preclinical and development fees 12,130 5,360 6,770 Personnel expenses (including stock-based compensation) 27,683 13,275 14,408 Professional fees 3,844 2,671 1,173 Facilities and supplies 2,546 741 1,805 Other expenses 1,036 374 662 $ 87,265 $ 55,143 $ 32,122 Research and development expenses were $87.3 million for the year ended December 31, 2022, compared to $55.1 million for the year ended December 31, 2021.
Research and Development Expenses The following table summarizes our research and development expenses for the years ended December 31, 2023, 2022, and 2021 (in thousands): YEAR ENDED DECEMBER 31, $ CHANGE 2023 2022 2021 2023 vs 2022 2022 vs 2021 KER-050 $ 41,249 $ 24,492 $ 16,515 $ 16,757 $ 7,977 KER-047 2,704 3,101 3,135 (397) (34) KER-012 20,931 12,433 13,072 8,498 (639) KER-065 5,962 6,010 2,241 (48) 3,769 Preclinical and development fees 9,716 6,120 3,119 3,596 3,001 Personnel expenses (including stock-based compensation) 43,408 27,683 13,275 15,725 14,408 Professional fees 3,298 3,844 2,671 (546) 1,173 Facilities and supplies 6,135 2,546 741 3,589 1,805 Other expenses 1,855 1,036 374 819 662 $ 135,258 $ 87,265 $ 55,143 $ 47,993 $ 32,122 Research and development expenses were $135.3 million for the year ended December 31, 2023, compared to $87.3 million for the year ended December 31, 2022.
Revenue Recognition To date, our revenues have consisted solely of payments received related to research collaborations or licensing of intellectual property. We apply the revenue recognition guidance in accordance with Financial Accounting Standards Board, Accounting Standards Codification, or ASC, Subtopic 606, Revenue from Contracts with Customers, or ASC 606, which was adopted January 1, 2018 using the full retrospective method.
We apply the revenue recognition guidance in accordance with Financial Accounting Standards Board, Accounting Standards Codification, or ASC, Subtopic 606, Revenue from Contracts with Customers, or ASC 606, which was adopted January 1, 2018 using the full retrospective method.
The measurement date for awards is the date of grant, and stock-based compensation costs are recognized as expense over the requisite service period, which is generally the vesting period, on a straight-line basis.
The measurement date for awards is the date of grant, and stock-based compensation costs are recognized as expense over the requisite service period, which is generally the vesting period, on a straight-line basis. Our Black-Scholes option-pricing model requires the input of subjective assumptions, including the expected volatility of the price of our common stock.
If we obtain regulatory approval for any of our product candidates, we expect to incur significant expenses related to developing our internal commercialization capability to support product sales, marketing and distribution.
We will not generate any revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for one or more of our product candidates. If we obtain regulatory approval for any of our product candidates, we expect to incur significant expenses related to developing our internal commercialization capability to support product sales, marketing and distribution.
Liquidity and Capital Resources Since our inception, we have incurred significant operating losses. Our net losses were $104.7 million and $58.7 million for the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022 and December 31, 2021, we had an accumulated deficit of $228.4 million and $123.8 million, respectively.
Our net losses were $153.0 million, $104.7 million, and $58.7 million for the years ended December 31, 2023, 2022, and 2021, respectively. As of December 31, 2023 and December 31, 2022, we had an accumulated deficit of $381.4 million and $228.4 million, respectively.
On May 3, 2021, we filed the Shelf Registration Statement, which permits us to offer, from time to time, an unspecified amount of common stock, preferred stock, debt securities and warrants.
Since our inception, we have funded our operations primarily through equity financings and through research collaborations or licensing of intellectual property. On May 3, 2021, we filed the Shelf Registration Statement, which permits us to offer, from time to time, an unspecified amount of common stock, preferred stock, debt securities and warrants.
We expect that our existing cash and cash equivalents as of December 31, 2022, together with the net proceeds from the ATM Offering through February 28, 2023, will enable us to fund our operating expenses and capital expenditure requirements into the third quarter of 2025.
We expect that our existing cash and cash equivalents as of December 31, 2023, together with the net proceeds of approximately $151.0 million from our public offering of common stock in January 2024, will enable us to fund our operating expenses and capital expenditure requirements into 2027.
Additionally, the recent trends towards rising inflation may also materially affect our business and corresponding financial position and cash flows. Inflationary factors, such as increases in the cost of materials and supplies relating to our clinical trials, interest rates and overhead costs may adversely affect our operating results.
Inflationary factors, such as increases in the cost of materials and supplies relating to our preclinical studies, clinical trials, interest rates and overhead costs may adversely affect our operating results.
Since July 1, 2021, the R&D Incentive has provided a non-refundable tax offset up to 16.5% above our underlying income tax rate, as we qualified as an eligible company with an aggregated turnover of more than $20.0 million per annum that engages in research and development activities.
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.
As of December 31, 2022, we may offer and sell ATM shares at an aggregate offering price of up to the remaining $250.0 million available under the ATM Offering. We have incurred recurring operating losses since inception in 2015.
As of December 31, 2023, we may offer and sell ATM shares at an aggregate offering price of up to the remaining $71.5 million available under the ATM Offering.
Research and Development Incentive Income Research and development incentive income includes payments under the Research and Development Tax Incentive, or the R&D Incentive, from the Australian government.
Our interest expense, net has not been significant to date. Research and Development Incentive Income Research and development incentive income includes payments received under the Research and Development Tax Incentive, or the R&D Incentive, from the Australian government.
As a result of many factors, including those factors set forth in the “Risk Factors” section of this Annual Report on Form 10-K, our actual results could differ materially from the results described in, or implied by, these forward-looking statements. 91 Overview We are a clinical-stage biopharmaceutical company focused on the discovery, development and commercialization of novel treatments for patients suffering from hematological, pulmonary and cardiovascular disorders with high unmet medical need.
As a result of many factors, including those factors set forth in the “Risk Factors” section of this Annual Report on Form 10-K, our actual results could differ materially from the results described in, or implied by, these forward-looking statements.
We believe that our existing cash and cash equivalents will be sufficient to fund our projected liquidity requirements for at least the next 12 months. We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect.
We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect.
If the actual timing of the performance of services or the level of effort varies from the estimate, we adjust the accrual or the amount of prepaid expenses accordingly.
In accruing research and development expenses, we estimate the time period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from the estimate, we adjust the accrual or the amount of prepaid expenses accordingly.
As a result of our initial public offering, or IPO, we have incurred and expect to continue to incur increased expenses associated with being a public 95 company, including costs of accounting, audit, legal, regulatory and tax compliance services, director and officer insurance costs, and investor and public relations costs.
We have incurred and expect to continue to incur increased expenses associated with being a public company, including costs of accounting, audit, legal, regulatory and tax compliance services, director and officer insurance costs, and investor and public relations costs. 98 Other Income (Expense), Net Interest Expense, Net Interest expense, net primarily consists of interest earned on money market accounts and interest expense related to leasehold improvement debt amortization.
Income Tax (Provision) Benefit Income tax provision was zero for the year ended December 31, 2022, compared to $2.0 million tax provision for the year ended December 31, 2021. The decrease of $2.0 million in income tax provision is attributed to withholding taxes related to the taxable income generated in 2021 from the Hansoh Agreement.
Income Tax (Provision) Benefit Income tax provision was zero for the years ended December 31, 2023 and December 31, 2022. Income tax provision was zero for the year ended December 31, 2022, compared to $2.0 million tax provision for the year ended December 31, 2021.
We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we advance the preclinical activities and clinical trials of our product candidates.
We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we advance the preclinical activities and clinical trials of our product candidates. Furthermore, we expect to incur additional costs associated with operating as a public company, including significant legal, accounting, investor relations, director and officer insurance premiums and other expenses.
Our lead protein therapeutic product candidate, KER-050, is being developed for the treatment of low blood cell counts, or cytopenias, including anemia and thrombocytopenia, in patients with myelodysplastic syndromes, or MDS, and in patients with myelofibrosis. Our lead small molecule product candidate, KER-047, is being developed for the treatment of functional iron deficiency.
By leveraging this understanding, we have discovered and are developing protein therapeutics that have the potential to provide meaningful and potentially disease-modifying benefit to patients. Our lead product candidate, KER-050 (elritercept), is being developed for the treatment of low blood cell counts, or cytopenias, including anemia and thrombocytopenia, in patients with myelodysplastic syndromes, or MDS, and in patients with myelofibrosis.
Under the Neurona Agreement, we received a one-time, upfront license fee of $0.1 million from Neurona in July 2021. 2021 License Agreement with Hansoh (Shanghai) Healthtech Co., Ltd. On December 12, 2021, we entered into a license agreement with Hansoh (Shanghai) Healthtech Co., Ltd., or Hansoh.
On December 12, 2021, we entered into a license agreement with Hansoh (Shanghai) Healthtech Co., Ltd., or Hansoh.
Accrued Research and Development Expenses As part of the process of preparing our consolidated financial statements, we are required to estimate our accrued research and development expenses. We make estimates of our accrued expenses as of each balance sheet date in the consolidated financial statements based on facts and circumstances known to us at that time.
We make estimates of our accrued expenses as of each balance sheet date in the consolidated financial statements based on facts and circumstances known to us at that time. There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the expense.
On September 7, 2021, we entered into an indenture of lease, or the 1050 Waltham Lease, with Revolution Labs Owner, LLC, or the Landlord, pursuant to which we are leasing approximately 35,662 square feet of office, laboratory and vivarium space located at 1050 Waltham Street, Lexington, Massachusetts, or the Premises, for our new principal executive office.
The following table summarizes our contractual obligations as of December 31, 2023 and the effects such obligations are expected to have on our liquidity and cash flow in future periods (in thousands): PAYMENTS DUE BY PERIOD TOTAL LESS THAN 1 YEAR 1 TO 3 YEARS 4 TO 5 YEARS MORE THAN 5 YEARS Operating lease commitments $ 21,361 $ 2,431 $ 7,739 $ 5,554 $ 5,637 Total $ 21,361 $ 2,431 $ 7,739 $ 5,554 $ 5,637 On September 7, 2021, we entered into an indenture of lease, or the 1050 Waltham Lease, with Revolution Labs Owner, LLC, or the Landlord, pursuant to which we are leasing approximately 35,662 square feet of office, laboratory and vivarium space located at 1050 Waltham Street, Lexington, Massachusetts, or the Premises, for our new principal executive office.
We evaluate the measure of progress each reporting period and, if necessary, adjust the measure of performance and related revenue recognition. We currently measure progress according to the expenditure of research and development efforts, based on costs incurred, as this is the best indicator of performance. We receive payments from our customers based on billing schedules established in each contract.
We evaluate the measure of progress each reporting period and, if necessary, adjust the measure of performance and related revenue recognition. We receive payments from our customers based on billing schedules established in each contract. Upfront payments and fees are recorded as deferred revenue upon receipt or when due until we satisfy our obligations under these arrangements.
Our Black-Scholes option-pricing model requires the input of subjective assumptions, including the expected volatility of the price of our common stock and the expected term of the award. These estimates involve inherent uncertainties and the 101 application of management’s judgment. If factors change and these assumptions either increase or decrease, our stock-based compensation expense could materially differ in the future.
These estimates involve inherent uncertainties and the application of management’s judgment. If factors change and these assumptions either increase or decrease, our stock-based compensation expense could materially differ in the future. Stock-based compensation expense is classified in the accompanying statements of operations based on the function to which the related services are provided.
The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model.
We recognize stock-based compensation expense for the portion of awards that have vested. 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.
Our ability to generate product revenue sufficient to achieve profitability will depend on the successful development and commercialization of one or more of our product candidates. Our net loss was $104.7 million and $58.7 million for the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022, we had an accumulated deficit of $228.4 million.
Our net loss was $153.0 million, $104.7 million, and $58.7 million for the years ended December 31, 2023, 2022, and 2021, respectively. As of December 31, 2023, we had an accumulated deficit of $381.4 million. We expect to continue to generate operating losses and negative operating cash flows for the foreseeable future in connection with our ongoing activities.
In December 2022, we received access to a portion of the Premises pertaining to the office and laboratory space, or the Initial Premises, which is considered a distinct lease component. The portion of the Premises pertaining to the vivarium space, or the Vivarium Premises, was not made available for use by the Landlord as improvement work was still in progress.
In December 2022, we received access to 31,991 square feet of office and laboratory space, or the Phase A Premises, which is considered a distinct lease component. In January 2023, we entered into a first amendment to the 1050 Waltham Lease, or the Lease Amendment.
The net proceeds from the ATM Offering for the year ended December 31, 2022 were approximately $119.4 million after deducting sales agent commissions of $1.8 million and offering expenses of $0.2 million.
Cash Provided by Financing Activities Net cash provided by financing activities was $179.0 million for the year ended December 31, 2023, which was primarily related to (i) net proceeds of $175.7 million received from sales of our common stock under the ATM Program, after 103 deducting sales agent commissions and offering expenses; and (ii) proceeds of $3.2 million related to exercises of options to purchase common stock.
The net proceeds from the ATM Offering were approximately $28.1 million after deducting sales agent commissions of $0.4 million and offering expenses of $0.1 million, for the year ended December 31, 2021.
As of December 31, 2023, we have sold a total of 7,991,990 shares of our common stock pursuant to the ATM Offering for aggregate net proceeds of approximately $323.3 million after deducting sales agent commissions and estimated offering expenses.
In addition, public health crises, such as the COVID-19 pandemic, geopolitical tensions and resulting global slowdown of economic activity continue to rapidly evolve and have already resulted in a significant disruption of global financial markets. If the disruption persists and deepens, we could experience an inability to access additional capital when and if needed.
If the disruption persists and deepens, we could experience an inability to access additional capital when and if needed.
Other Income (Expense), Net Other income (expense), net primarily consists of unrealized gains on foreign currency and dividend income earned on money market fund accounts. Income Tax (Provision) Benefit We recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been included in our consolidated financial statements and tax returns.
Dividend Income Dividend income consists of income earned on our money market funds that are recorded as cash equivalents on our consolidated balance sheets. Other Income (Expense), Net Other income (expense), net primarily consists of unrealized and realized gains and losses on foreign currency.
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We are leveraging this understanding to develop large and small molecules that have the potential to provide meaningful and potentially disease-modifying benefit to patients. Targeting TGF-ß signaling pathways has been clinically proven to elicit robust changes in blood cells, blood vessels , skeletal muscle and heart tissue, which we believe provides a precedent and strong rationale for our strategy.
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Overview We are a clinical-stage biopharmaceutical company focused on developing and commercializing novel therapeutics to treat a wide range of patients with disorders that are linked to dysfunctional signaling of the transforming growth factor-beta, or TGF-ß, family of proteins.
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In December 2021, we raised gross proceeds of $28.6 million pursuant to the ATM Offering through the sale of 520,000 shares of common stock at a weighted average price of $55.00 per share.
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January 2024 Public Offering of Common Stock On January 8, 2024, we closed an underwritten public offering in which we issued and sold 4,025,000 shares of common stock, which included 525,000 shares of common stock issued and sold pursuant to the full exercise of the underwriters’ option to purchase additional shares, at a public offering price of $40.00 per share.
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During the year ended December 31, 2022, we raised additional gross proceeds of $121.4 million pursuant to the ATM Offering through the sale of 3,410,384 shares of common stock at a weighted average price of $35.60 per share.
Added
The aggregate net proceeds to us from the public offering were approximately $151.0 million, after deducting underwriting discounts and commissions and estimated offering expenses. We have incurred recurring operating losses since inception in 2015. Our ability to generate product revenue sufficient to achieve profitability will depend on the successful development and commercialization of one or more of our product candidates.
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We expect to continue to generate operating losses and negative operating cash flows for the foreseeable future in connection with our ongoing activities. We will not generate any revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for one or more of our product candidates.
Added
See “—Liquidity and Capital Resources.” Known Trends, Events and Uncertainties While recent trends towards rising inflation have eased, prices continue to rise, which may also materially affect our business and corresponding financial position and cash flows.
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See “—Liquidity and Capital Resources.” Known Trends, Events and Uncertainties We have implemented business continuity plans designed to address and mitigate the impact of the COVID-19 pandemic and other public health crises on our employees and our business operations, including our preclinical studies and clinical trials, supply chains and third-party providers.
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During the royalty term, neither party will directly or indirectly commercialize a competing product in the Territory. 97 Effective in June 2023, in connection with the Hansoh Agreement, we entered into a manufacturing technology transfer agreement, or the Tech Transfer Agreement, with Hansoh.
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The COVID-19 situation and government measures taken in response have also had a significant impact, both direct and indirect, on third-party businesses and commerce, as worker shortages have occurred; supply chains have been disrupted; and facilities and production have been delayed or suspended.
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The Tech Transfer Agreement governs the transfer to Hansoh of all documents and information required to complete the manufacturing technology transfer. Under the Tech Transfer Agreement, Hansoh is obligated to make certain payments to us, at the rates set forth in the Tech Transfer Agreement, as manufacturing technology transfer services are provided over the term of the Tech Transfer Agreement.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAs of December 31, 2022 and 2021, we had no debt outstanding that is subject to interest rate variability, as our only debt is related to our lease incentive allowance. Therefore, we are not subject to interest rate risk related to debt. 102 ITEM 8.
Biggest changeAs of December 31, 2023 and 2022, we had no debt outstanding that is subject to interest rate variability. Therefore, we are not subject to interest rate risk related to debt. 106 ITEM 8.
Interest Rate Sensitivity As of December 31, 2022 and December 31, 2021, we had cash and cash equivalents of $279.0 million and $230.0 million, respectively. Our exposure to interest rate sensitivity is impacted by changes in the underlying U.S. bank interest rates.
Interest Rate Sensitivity As of December 31, 2023 and December 31, 2022, we had cash and cash equivalents of $331.1 million and $279.0 million, respectively. Our exposure to interest rate sensitivity is impacted by changes in the underlying U.S. bank interest rates.

Other KROS 10-K year-over-year comparisons