Thanks for joining us here at the Goldman Sachs Global Healthcare Conference. We are joined today on stage by Jas from Keros, and maybe we will get off with just kind of an overview. I would love if you could provide kind of an overview of Keros as it stands today, recognizing there was some news as well this morning. Can you focus also on what you see as sort of the value drivers of the company over the next, let's say, 12 to 24 months?
Keros is a clinical stage company focused on the TGF-β pathway. We have advanced one asset through phase II into phase III, and we partnered that with Decada, and that's Aritrecept at the end of last year. Our second product candidate was Subotrecept in PH, where we saw some safety signals and we discontinued its development. Our third product candidate is KER-065, which increases skeletal muscle, reduces fat mass, improves bone mineral density, and it's going into boys with DMD as the next study. As a consequence of the capital that we raised in 2024, as well as the partnership, we evaluated where we are today with the focused pipeline and looked at all strategic options, and in the end came to the conclusion that we would return some capital, $375 million, back to shareholders and use the rest of the capital to build value for shareholders.
Right. Maybe we can run through a couple of the points you noted on Aritrecept and Subotrecept, and then I'd love to spend most of the time on 065, recognizing that's kind of the lead program now. On the Aritrecept piece, last year you said you executed a licensing agreement. Can you just walk through the key terms of the agreement with Decada and why you thought that was an attractive way to pursue development for that asset?
Yeah. I think, first of all, whenever you're doing a partnership, you want to find a partner that shares your vision for the product. I think that's what we saw in Decada. They saw the opportunity in MDS and myelofibrosis, which is what they're pursuing, but they also saw the potential opportunity in other indications. The deal, as it was struck, is that it's an out-license to Decada, whereby we got $200 million upfront, and then milestones, including development milestones and registration and commercialization of $1.1 billion, and then royalties in the low double digit to high double digit.
Perfect. In terms of the development now, Decada took over that process, but can you share anything on the company's development plans for Aritrecept and what kind of the current status is?
Yeah. They are committed to developing it in MDS, and they've outlined that. Keros initiated the phase III second line, and they've actually indicated that they want to move into front line. That is now clearly in their hands. Beyond that, they haven't guided anything further. The program is still also continuing to move in myelofibrosis, and depending upon the data, they will make a decision on that.
You mentioned this, but towards the end of last year, you halted the phase II study of Subotrecept in PH. With more data in hand, can you expand on kind of what you saw in the study in terms of safety signals, and can you talk about what we understand about the mechanism driving those?
Yeah. I think if I step back and look at what our thesis was, our thesis was that we have a molecule that's been designed so that it was devoid of an increase in red blood cells, which was the dose-limiting pharmacology of the approved product, Soterasept Winrevair. We also believe that as a consequence of not increasing red blood cells, you wouldn't have thrombocytopenia, and because of the BMP's bone morphogenetic protein sparing activity of the molecule, you wouldn't have bleeding events. What did we see in terms of safety? We saw no increase in red blood cells, no thrombocytopenia, nor any bleeding events compared to the placebo. I think the thesis on that was correct.
Now, what we did not appreciate, and I think this is true for the entire field, was that there is a background of pericardial effusions flowing around the heart, and that is there in PH patients. In the literature, numbers range from 10%-40%, depending upon the study. Really, there isn't a good number to know, but all previous clinical studies had not identified pericardial effusion. Now, because we were able to dose higher, it was observed in our study, and initially it was observed as pericardial effusion, which is symptomatic at the higher doses, and as a consequence, the DMC recommended implementation of echoes, which is much more sensitive. What we saw was pericardial effusion in the placebo patients, but in a dose-dependent manner, we were increasing the pericardial effusion.
Not been observed, as I said, in clinical studies prior, but clearly it's there as a background in the patients.
Okay. So it sounds like you do think of that as being sort of an on-target effect of the, or maybe not, but maybe can you talk about why you think that drug increases pericardial effusions?
Yeah. I think when you think about pericardial effusion, okay, it's basically a sac around the heart with fluid in it, and the fluid that's coming in is coming from the capillary bed, and it goes out through the lymphatic system. These molecules are designed to actually alter the vasculature. Therefore, okay, right, somehow that vasculature is being altered, and we're seeing this with Subotrecept. Since we reported pericardial effusion back in December with the halting of the mid and high dose, it's also been noted with Sotatercept. Right. I think this may be a class effect rather than a molecule effect, simply.
Okay. With that in mind, I guess, do you have any, do you see any read-through to the other pipeline assets that you guys have?
No, I don't, because I want to back off, okay, right, what did we see preclinically? Preclinically, we saw absolutely nothing to indicate that you were going to have alterations in fluid retention. Other molecules I've worked on have shown that, so there was no evidence of that. We also went into a phase I healthy volunteer study with three months of dosing, and again, absolutely nothing was observed there. I just want to say that there are other molecules like Luspatercept that have been around for quite a while, many patients treated, so nothing observed there. Similarly, with our own Aritrecept, we have dosed at 3.75 and 5 mg per kg, high doses where you got maximum target engagement, and in MDS and myelofibrosis, nothing.
Sotatercept went into half a dozen to a dozen different indications, never observations of bleeding events, and yet in PH patients, you saw that. I think this is unique to PH patients where the vasculature has been altered, and we don't fully understand how and what those alterations are.
Okay. I guess then final question on this point, we can move on. Do you see PH as an attractive indication still for this kind of mechanism, or is that not something you would consider again?
I do see it as an attractive opportunity. However, I think I need to understand today how it is that these molecules are able to increase the pericardial effusion, because that's going to be a liability for any molecule. I need to understand that, and the only way of doing that is to understand it preclinically. Unfortunately, there aren't any good preclinical models of pericardial effusion, so we need to develop one. Once we do that, then we can screen other molecules to find one that is devoid of this liability, just like we did with Subotrecept, where it was devoid of the known AEs associated with the previous molecules.
Okay. Maybe moving on to 065, you did have an update earlier this year, primarily focused on safety and tolerability. Can you just remind us some of the highlights for that data?
Yeah. In the phase I safety study, we saw increases in lean mass shown by DEXA scan indicating that we were increasing skeletal muscle, as well as by MRI looking at thigh. We saw reductions in fat mass, improvements in bone mineral density. These were all observed with three months of treatment. The drug was well tolerated. There were no safety signals associated with three months of treatment. We did see increases in red blood cells with the molecule, but that's something that we can deal with by titrating to a hemoglobin change.
Okay. I think there was one grade four increase in CK, but it was disclosed not related to study drug. So maybe you can just talk about the patient history there.
Yeah. That patient or that subject had a very high increase in CK that was observed, and it was on one dose that they had that. Just prior to coming into the center to get their dose, that subject had done 45 minutes of curls, and the CK declined as would after any exercise activity. That participant got another dose at a later date, and there was no increase in creatine kinase. It really is because that person did a high level of activity, okay, right, that resulted in muscle damage, which then results in the release of CK.
Yeah, 45 minutes of curls, I think I heard it the same way. Okay. You also, I mean, you mentioned this, but there have been some increases in hemoglobin observed with the agent. Maybe you could contextualize that, given you've seen this across the class before. How do you think about monitoring that in terms of clinical manifestations on the forward?
Yeah. So one of the things, okay, that has been observed with this family of molecules is an increase in hemoglobin. The increase in red blood cells occurs from the first and usually from the second dose, but then further doses do not increase it. It is a matter of closely monitoring from the first dose and the second dose, and you can titrate to an effect. What we know is that in the healthy volunteer study in the single ascending dose, we had increases that were dose-dependent, so we can manage that by just titrating. Now, in a previous life at Acceleron, we had seen the activity of a molecule H31 in boys with DMD, where we saw improvements in lean mass, decreases in fat mass, improvements in bone mineral density, as well as stabilization of muscle function as low as 0.5.
We think just titrating, starting low, then getting to the right hemoglobin increase, which is going to be limited to 1.5 grams, we can see activity with this molecule.
Okay. Some of the changes you reported were not necessarily dose-dependent, at least in my read of the data, things like bone mineral density, fat mass, increases in muscle mass. I guess, how did you take a look at the set of data that you guys produced and think about dose selection on the forward?
Yeah. For the multiple ascending dose, we selected 2 mg per kg, or the DMC did, based upon the dose escalation in the SAD. The SAD dose escalation resulted in going to the 3 and 5 mg per kg. This was before we had a significant amount of PK data. The 2 mg actually started dosing simultaneously to the 5 mg SAD. When we got the PK data, we knew that we were getting to levels of target engagement that were close to maximal at 2 mg per kg. Therefore, we wanted to go to a lower dose because regulators will always want you to start at a lower dose, and that's why the 1.25 mg per kg dose was selected.
Okay. This asset's now in development for muscular dystrophies. It used to be considered for obesity, and now you're talking about DMD. Maybe you can talk about the evolution and strategy for this particular program?
Yeah. I think we always said the opportunity is there in obesity. That opportunity has not gone away, but when we knew that we were going to partner Aritrecept in November, December timeframe, then the question for us was a strategic question. Do we become a single asset company with Subotrecept and continue to develop 065 for a partnership? My vision for the company is a company that commercializes its own products, and therefore we decided at that point to pivot to neuromuscular indication for 065 because those are indications that we can commercialize. Obesity, we would have to partner after phase II. We cannot afford to conduct the phase III studies. Now, there's also been a certain amount of evolution in thinking in the last 18 months or so.
The FDA has come out and said that the loss of lean is consistent with the loss of weight in these patients, and therefore the FDA doesn't see that as a liability. I think once again, to in obesity, it's not just going to be weight loss, it's going to be the outcomes thereafter, and those are big studies that take a lot of capital.
Sure. Why did you select Duchenne relative to other potential muscular dystrophies?
That's a very good question. When you think about neuromuscular indications, you can sort of think of the diseases where there are genetic mutations in the machinery of the muscle that lead to muscle that is weak, and then upon repetitive use, it breaks down, leads to inflammation, and that inflammation in turn reduces the regenerative capacity of that muscle, and eventually that muscle wastes. Similarly, when you think about the neuromuscular diseases where there are alterations, mutations in the motor neuron and the neuromuscular junction, again, you get muscle, okay, that starts wasting, leads to inflammation, and the full cascade. Regardless of what the underlying cause is, the cascade of biology and pathophysiology is the same.
Now it comes down to, do you have a disease that is rapid enough that you can get to an endpoint, but not so rapid that death or survival becomes the endpoint? That's a challenging one. So when we think about indications such as myotonic dystrophy, those kids are born with the disease and often don't survive the first year of their life. Not the right indication to start with. On the other hand, when you look at Becker's muscular dystrophy or facioscapulohumeral muscular dystrophy, these are so slow progressing, your studies are going to be multi-year long. Duchenne's progresses rapidly enough whereby boys with DMD lose about 85 meters of ambulation in a 12-month period. So that's something that's measurable. Therefore, you know, when you look at the total function, you can measure that in a relatively short study, i.e., 12 months.
I think that's the reason for selecting it. And then the other was that I was involved with moving Acceleron's H31 into the clinic in boys with DMD, and I think that study showed proof of principle. However, that program was terminated because of nosebleeds and gum bleeds due to binding of a different ligand, BMP9, that we have dialed out of this molecule.
Okay. It is kind of a crowded landscape in DMD, so how do you think about the unmet need and the profile that would be competitive in Duchenne's? And then also, how do you think about patient selection within that?
Yeah. I think when you look at DMD, there's been a lot of progress with a lot of different molecules. However, they don't really provide significant benefit. That's because when you're trying to express dystrophin, it's still very low levels that it's not bringing about the benefit to the patients. With 012, what we've seen is that regardless of whether in preclinical studies, whether there is background therapy or not, we provide benefit by increasing the muscle and thereby its strength. Similarly, and it's partly, I believe, due to the increased expression of utrophin, which is the homolog of dystrophin. In boys with DMD that are not on any other therapy, we believe that there is a potential to increase that muscle, increase the strength, perhaps, okay, even increase the expression of utrophin.
In boys that would be on Exon Skippers, preclinical studies show that in combination with 065, you get even greater increase in expression of the truncated dystrophin. I think it's going to be all population of patients, regardless of what the other background therapies they're on, whether it's glucocorticoids, Exon Skippers, or even gene therapy. We can provide additional benefit there.
How do you go about studying and developing that with that hypothesis in mind? Are you planning to open a proof of concept study or a proof of concept study that shows across all patient populations? Will you select? How do you think about that?
Yeah. I think it is actually across all patient populations. It will be late ambulatory patients where they show a decline in muscle function. It's non-ambulatory, and it could be patients on glucocorticoids, but also on combination with other therapies. If you do biopsies at baseline and at six months, which is now standard in this field, you can see, look for changes in utrophin, dystrophin, but you're also looking at functional benefit, okay, right, as measured by the various scoring systems.
What are the right endpoints in a study in DMD for this mechanism to show efficacy?
Yeah. I think the first thing, okay, right, is to actually be able to show in short-term studies the increases in lean mass and fat mass, the reductions in fat mass, and improvements in bone mineral density because these boys, they're all on glucocorticoids, and therefore they have accelerated bone loss, and therefore they're all becoming osteoporotic. That's a big deal for these kids because once they get a vertebral fracture, that changes the entire course of their life at that point.
Okay. In terms of kind of like if you could fast forward, how do you envision the treatment landscape will shape up in DMD? Is it going to be a sequential treatment, a polypharmacy sort of market? How are physicians going to be using this drug?
I think you just got to look at it today. It's already polypharmacy. You got glucocorticoids, you got the Exon Skippers and gene therapy, and I think this will be just one more on top of that.
Okay. You do plan to meet with regulators in the third quarter. I guess as you see guidance on a phase II trial design, what are some of your key priorities in terms of how you think about that study?
I think we already have ideas about what the population is going to be. It's going to be, as I said, late ambulatory as well as non-ambulatory. I think the question for the regulators will be what's the starting dose and how young are the patients that you can go into.
Okay. How many patients do you think you would seek to enroll?
We haven't guided us yet on that. It's going to be dependent upon those discussions, but it's not going to be a very large study. Okay, I think it could be 30 patients in that order. Again, it's going to be very much dependent upon the interactions with the regulator.
Right. Understood. Do you envision an accelerated path to approval in this indication?
You know, I think we are going to be looking for changes that allow us to engage with the regulators to seek accelerated approval. So I think when you look at historically with the Exon Skippers, it was an increase in dystrophin. If we can show increase in dystrophin and increase in utrophin in the background of those patients that are not getting Exon Skippers, that's pretty exciting. Right. With that exciting news, we're certainly going to engage with the regulators. Is that sufficient? Maybe, maybe not.
As you think about that change in dystrophin, it's kind of like the specific mechanism by which some of these other drugs work. What you're saying here is that it would be a benefit of the mechanism, but it's not like specifically what they're designed to do in the same way, at least. How do you think about the amount of time it'll take to see increases of dystrophin using this particular mechanism of action, and how does that inform your study?
I think this is where, you know, for years, I was perplexed about the biology of boys with DMD. They get diagnosed between the ages of 18 months and three years. Why? Because they're slow to start walking, right? And then the neurologist looks at them and diagnoses them to have DMD. Yet they all eventually walk. They have an altered gait, but they all eventually walk. They all run. Towards the end of their first decade of life, they start losing ambulation. Why is this? You know, that muscle doesn't contain any dystrophin whatsoever, and yet they have muscle that's functional. It's that their muscles are growing and they're getting bigger. They do have a low level of the homolog utrophin. We all express utrophin during embryogenesis. There is no dystrophin. It's after birth that you start expressing dystrophin.
As an adult, you still continue to express utrophin, but it's localized to a particular part of the muscle, the neuromuscular junction. In boys with DMD, it's throughout the muscle, and it's continued to function as it was during embryogenesis, right? I believe that it's really that in that first decade of life, those muscles are getting bigger and stronger. With time and age, that muscle breaks down, leads to inflammation, which then hampers regeneration of the muscle. What we've seen with 065 is that it actually increases regeneration. That increased regenerative capacity is why you get more utrophin, but why you also get dystrophin, because muscle is impermeable to these drugs. However, the way it gets new nuclear material is from a stem cell that differentiates into myoblasts, and the myoblast fuses with the muscle fiber, giving it the new nuclear material.
Those cells actually are the root or the vehicles for delivery of these drugs, right, into the muscle. I think if you increase the population of satellite cells, increase the population of myoblasts, you actually increase the number of cells that can deliver the drug. Therefore, it should be fairly rapidly, and we see that very rapidly in preclinical studies.
Okay. Are there other indications? Obviously, you mentioned Acceleron. They looked at FSHD. They looked at Charcot-Marie-Tooth syndrome. Are there other indications that you think would be exciting to pursue with 065?
Yeah. I think those are indications that are very interesting. I think the other ones are indications such as ALS, SMA, as well as myasthenia gravis, okay, because these are all indications where there's a dysfunction of the neuromuscular junction. The muscle's okay, but it's the neuromuscular junction. There is a lot of crosstalk between the muscle and the motor neuron. A healthy muscle can actually promote a more healthy motor neuron.
Okay. In terms of just kind of the ability to pursue those different indications, how would you think about sequencing your development given kind of existing capital availability and the capacity to run multiple proof of concept studies?
I think we've demonstrated as a small organization with a retrospect that we can run multiple trials, and we'll be able to do that. I think in terms of sequencing, it's really important for us to get the DMD trial going as quickly as possible and then focus on the next neuromuscular indication thereafter. I think we, even with the return of $375 million, I think we will have the capacity to be able to move 065 into multiple neuromuscular indications.
Okay. Okay. In terms of discovery pipeline and efforts there, you've long had a pretty robust discovery effort. Where are you spending your time from a discovery perspective these days?
I think our focus really has been to streamline the organization in the last few months, which we have done so. In terms of the discovery effort, I think the opportunities are still there in PH, as we discussed, but we need to understand the root cause of pericardial effusion and how these molecules can enhance that pericardial effusion. I think there's opportunities in obesity, as we discussed, and a preclinical molecule in obesity could be partnered or certainly developed through phase I. You know, this biology of TGF-β plays a role in every single tissue: kidney disease, in liver disease. I think there's lots of opportunities.
Okay. You mentioned obviously the $375 million. I guess how does that get kind of executed from here? You announced it today, but.
Yeah. We started the process two months ago. What we did was we actually said that we would provide an update in 60 days. I think that was against the advice of many counselors, okay, right? We really wanted to show to shareholders that this was serious and urgent for us. We have got to that. We have not quite agreed upon how we are going to return the capital and the timeframe for that.
In terms of the strategic review, are we now kind of, is this the completion of the strategic review, or are there still things that are ongoing that you need to make decisions about?
No, this is the strategic review that we set out to do. Of course, in any organization, you're constantly evaluating everything. We'll continue to do that. That's a normal part of the job of management and the board. You know, looking at all alternatives, we did that, and there wasn't anything that would build greater value than by returning some capital and continuing to invest in our pipeline.
After the $375 million is deployed, what will be the kind of cash position, and what's the pro forma cash position, and what's the cash runway?
We had $720 million at the end of third quarter. I think you can do the arithmetic. We have not guided on what the runway is as yet, but it will be a significantly reduced runway. As you will note from our quarterly filing, we had $48 million of expenses in Q1. Almost $19 million of those were related to Aritrecept. Takeda will reimburse those subsequently. In addition, there was about $6 million in Subotrecept that goes away. We just two weeks ago announced that reduction in force, where we've gone down to 85 employees, which equates to about $17 million a year in savings. I think you can do the arithmetic.
Sure. Obviously, some of those things do take a little while to kind of play out or work their way through the system. At what point do you think you'll reach sort of like a normalized expense level?
Probably in Q3.
Okay. In terms of activities that you wanted to make sure you could preserve with the cash, it sounds like 065 at least through DMD, but any other activities that you wanted to ensure you could get through?
I think the neuromuscular indications with 065 are really important because that's going to build the value. Also, being able to bring along additional assets is important. Preserving some research efforts was important.
Okay. Perfect. Any additional questions we should be asking about the company?
I think you've asked pretty much the full gamut of questions.
Perfect. Wonderful. Thank you then, Jas. Great to see you. Thanks to everyone who joined us here and online.
Thank you for having us here today.