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Keros Therapeutics, Inc. (KROS)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered a transformational print driven by licensing revenue recognition: total revenue $211.246M and diluted EPS $3.62, versus Wall Street consensus of $56.645M revenue and $0.01 EPS, a significant beat primarily due to $195.355M license revenue recognized from the Takeda agreement . Estimates from S&P Global: $56.645M revenue*, $0.0075 EPS*.
  • Net income was $148.451M and income from operations was $152.040M, with operating expenses $59.206M; cash and cash equivalents increased to $720.541M, and management reiterated expected cash runway into 2029 .
  • Management reported Phase 1 topline data for KER-065 meeting key objectives and outlined plans to engage regulators with the aim of advancing to a Phase 2 trial in Q1 2026; TROPOS (KER-012 in PAH) data expected in Q2 2025 with development strategy to be evaluated post-readout .
  • Near-term stock reaction catalysts: magnitude and quality of beats (license recognition), TROPOS Phase 2 data in Q2 2025, and regulatory engagement for KER-065; ongoing Board-led strategic alternatives process could also influence sentiment .

What Went Well and What Went Wrong

What Went Well

  • Massive top-line and EPS beats versus consensus driven by $195.355M license revenue recognized, yielding net income of $148.451M and diluted EPS $3.62 .
  • Liquidity strengthened: cash and cash equivalents rose to $720.541M; runway guided into 2029, providing strategic flexibility .
  • Pipeline execution: “initial topline results from the Phase 1 clinical trial of KER-065 … met key objectives and yielded valuable insights,” positioning the asset for Phase 2 in Q1 2026 . Management: “We expect to report data in the second quarter of 2025 from the Phase 2 TROPOS trial … and we plan to evaluate the appropriate development strategy for cibotercept following that data readout.”

What Went Wrong

  • OpEx elevated: R&D expenses increased to $48.709M (+$10.451M YoY), reflecting manufacturing and personnel investments; G&A modestly up to $10.497M .
  • Quality-of-revenue mix skewed to non-recurring licensing, raising questions about sustainability of top-line momentum absent milestones; service and other revenue was $15.891M in Q1 2025 .
  • No quantitative revenue/OpEx guidance; forward-looking catalysts are clinical readouts and regulatory steps rather than operational metrics, limiting near-term visibility .

Financial Results

P&L and Margins vs Prior Periods

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$0.388 $3.042 $211.246
Net Income ($USD Millions)$(52.956) $(46.026) $148.451
Diluted EPS ($USD)$(1.41) $(1.14) $3.62
Income from Operations ($USD Millions)$(58.657) $(53.254) $152.040
Total Operating Expenses ($USD Millions)$59.045 $56.296 $59.206
Operating Margin (%)(15112.7%) (1751.0%) 72.0%
Net Income Margin (%)(13640.2%) (1513.9%) 70.3%

Actuals vs S&P Global Consensus

MetricQ3 2024Q4 2024Q1 2025
Revenue Actual ($USD Millions)$0.388 $3.042 $211.246
Revenue Consensus Mean ($USD Millions)$0.000*$37.318*$56.645*
Diluted EPS Actual ($USD)$(1.41) $(1.14) $3.62
Primary EPS Consensus Mean ($USD)$(1.276)*$(0.427)*$0.01*

Values retrieved from S&P Global.*

Revenue Composition

Component ($USD Millions)Q3 2024Q4 2024Q1 2025
Service and Other Revenue$0.388 $0.042 $15.891
License Revenue$0.000 $3.000 $195.355
Total Revenue$0.388 $3.042 $211.246

KPIs

KPIQ3 2024Q4 2024Q1 2025
R&D Expenses ($USD Millions)$49.225 $45.631 $48.709
G&A Expenses ($USD Millions)$9.820 $10.665 $10.497
Cash & Cash Equivalents ($USD Millions)$530.684 $559.931 $720.541
Weighted-Average Diluted Shares37,590,727 40,337,720 41,021,325
Income Tax Provision ($USD Millions)—$0.300 $10.043

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Cash RunwayMulti-yearInto 2029 (post $200M Takeda upfront received Feb 2025) Into 2029 (as of Mar 31, 2025) Maintained
KER-065 Phase 1 toplineQ1 2025“Expect initial data in Q1 2025” “Reported initial topline results; aim to advance to Phase 2 in Q1 2026; engage regulators” Achieved/Timing specified
TROPOS (KER-012) Phase 2 dataQ2 2025“Expect Phase 2 data; strategy to be evaluated after” “Expect data in Q2 2025; plan to evaluate development strategy post-readout” Maintained
Quantitative Revenue/OpEx Guidance2025Not provided Not provided Maintained

Earnings Call Themes & Trends

Note: A Q1 2025 earnings call transcript was not found; themes reflect Q3/Q4 press releases and subsequent investor conference remarks.

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
Strategic AlternativesNot highlighted in Q3; cash strengthened via ATM . In Q4, Takeda $200M upfront strengthened cash .Board continues review process to enhance stockholder value .Intensifying; culminated in planned $375M capital return announced at GS conference (post-quarter) .
Partnership Economics (Takeda – elritercept)Upfront expected, deal effective Jan 16, 2025 .License revenue recognized ($195.355M) drove Q1 results .Monetization realized; future milestones/royalties noted at conference .
KER-065 ExecutionExpect Phase 1 data in Q1 2025 .Topline met key objectives; plan for Phase 2 in Q1 2026 .Positive momentum; detailed efficacy/safety narrative at GS conference .
TROPOS (KER-012 in PAH)Completed enrollment; data anticipated .Data expected Q2 2025; strategy to be evaluated afterward .Pending critical readout; class-level safety considerations discussed later at GS conference .
Liquidity/RunwayInto Q3 2027 (Q3) ; Into 2029 (Q4) .Into 2029 reaffirmed .Improving; potential capital return adjusts runway (post-quarter) .

Management Commentary

  • “In the first quarter, we reported initial topline results from the Phase 1 clinical trial of KER-065 that met key objectives and yielded valuable insights… advancing KER-065 to a Phase 2 clinical trial in the first quarter of 2026.” — Jasbir S. Seehra, Ph.D., CEO
  • “We expect to report data in the second quarter of 2025 from the Phase 2 TROPOS trial evaluating cibotercept (KER-012)… and we plan to evaluate the appropriate development strategy for cibotercept following that data readout.”
  • On capital allocation and pipeline focus: “We would return some capital, $375 million, back to shareholders and use the rest of the capital to build value for shareholders.” (GS conference, post-quarter)
  • On KER-065 Phase 1: “We saw increases in lean mass… reductions in fat mass… improvements in bone mineral density… drug was well tolerated… no safety signals associated with three months of treatment.”

Q&A Highlights

  • PAH program class effect risk: CEO described pericardial effusions observed and suggested it may be a class effect in PH, not molecule-specific; implications for future PH development strategies .
  • KER-065 safety signal clarification: Isolated Grade 4 CK elevation attributed to recent strenuous exercise; no recurrence on re-dosing .
  • Dose selection and trial design: Target engagement near maximal at 2 mg/kg guided lower starting doses (1.25 mg/kg); Phase 2 aims for late ambulatory/non-ambulatory DMD cohorts, possible ~30 patients subject to regulatory dialogue .
  • Regulatory path and endpoints: Potential to pursue accelerated pathways with biomarker changes (dystrophin/utrophin) and functional endpoints; biopsies at baseline and six months typical in field .
  • Capital return and cost normalization: Expense base expected to normalize by Q3, with reductions from program shifts and workforce changes; runway recalibration post-return of capital (post-quarter) .

Estimates Context

  • Q1 2025 actual vs consensus: Revenue $211.246M vs $56.645M*, EPS $3.62 vs $0.01* — a significant beat; the delta was driven by license revenue recognition under the Takeda agreement . Values retrieved from S&P Global.*
  • Trajectory vs prior quarters: Q4 2024 missed consensus materially (revenue $3.042M vs $37.318M*, EPS -$1.14 vs -$0.427*), while Q3 2024 slightly beat on revenue ($0.388M vs $0.000M*) but missed EPS (−$1.41 vs −$1.276*) . Values retrieved from S&P Global.*
MetricQ3 2024Q4 2024Q1 2025
Revenue Actual ($USD Millions)$0.388 $3.042 $211.246
Revenue Consensus Mean ($USD Millions)$0.000*$37.318*$56.645*
EPS Diluted Actual ($USD)$(1.41) $(1.14) $3.62
Primary EPS Consensus Mean ($USD)$(1.276)*$(0.427)*$0.01*

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • The Q1 beat was largely non-recurring license revenue ($195.355M) recognition; core service/other revenue was $15.891M — expect volatile top-line tied to milestones near-term .
  • Liquidity is robust ($720.541M) with runway into 2029; management is actively optimizing capital allocation, including a post-quarter announced $375M capital return, implying a recalibrated runway and leaner OpEx by Q3 .
  • Pipeline execution is the primary driver: KER-065 advanced with supportive Phase 1 data and regulatory engagement toward Phase 2 in Q1 2026; look for detailed Phase 2 design and endpoints in upcoming interactions .
  • TROPOS Phase 2 data in Q2 2025 is a pivotal catalyst; subsequent strategy will hinge on efficacy/safety profile and broader class considerations in PAH (pericardial effusion risk discussed at GS) .
  • Near-term estimate revisions should reflect Q1’s outsized license-driven upside and potential for future milestone timing; absent recurring product revenue, consensus may revert toward OpEx/cash focus.
  • Trading setup: Watch for pre-data positioning into TROPOS readout and any disclosures on KER-065 Phase 2 trial design/regulatory feedback; strategic alternatives/capital return mechanics could add event-driven volatility .
  • Medium-term thesis: Value realization tied to KER-065’s efficacy in DMD and potential neuromuscular expansion, while partnership economics on elritercept (Takeda milestones/royalties) provide optionality (outlined at GS) .

Sources

  • Q1 2025 8-K earnings press release and financial statements
  • Q4 2024 8-K earnings press release and financials
  • Q3 2024 8-K earnings press release and financials
  • Goldman Sachs Global Healthcare Conference transcript (June 2025)