Keros upsizes IPO, raising $96M for midphase trials

Keros Therapeutics has braved a turbulent market to pull off an IPO, hitting the top end of its price range and selling 20% more shares than originally planned. The upsized IPO gives Keros the firepower to take two drugs into phase 2 in a clutch of hematological and musculoskeletal indications.

Massachusetts-based Keros has raised $96 million, comfortably above its $80 million target, to fund development of drugs that act on the transforming growth factor-beta family of proteins. In light of the role the proteins play in production of blood cells and growth of muscle and bone, Keros thinks it can develop large and small molecules that improve outcomes in hematological and musculoskeletal disorders.

KER-050 is the most advanced manifestation of Keros’ approach. A phase 1 trial recently linked the engineered ligand trap to sustained increases in red blood cells and hemoglobin, leading Keros to plan to start a phase 2 trial in cytopenias, including anemia and thrombocytopenia, later this year. A phase 2 trial in myelofibrosis-associated cytopenias is scheduled for next year.

While KER-050 is Keros’ most advanced asset, the biotech has earmarked the lion’s share of its IPO haul for ALK2 inhibitor KER-047. Keros thinks KER-047 can counter the excessive signaling that drives genetically defined anemias and musculoskeletal disorders. To test that hypothesis, Keros plans to start two phase 2 trials, one in anemias and another in fibrodysplasia ossificans progressiva (FOP), after it wraps up a study in healthy volunteers.

The indications targeted by Keros potentially put it in competition with a clutch of companies. Keros cites Acceleron, Astellas, Bristol Myers Squibb, FibroGen and Sierra Oncology among the companies it may go up against as it pursues the anemia and myelofibrosis markets. In FOP, Ipsen is the most prominent player, although its stumbles have left the door open for companies including Regeneron.

Keros has now persuaded public and private investors that it has a shot at carving out a space among those competitors. At the start of March, Keros raised a $56 million series C round led by new investors Foresite Capital, OrbiMed, Cowen Healthcare Investments and Venrock. After the series C, Foresite owned 10% of Keros, but entities affiliated with Pontifax Venture Capital remained the big player with a 33% stake. 

All the key players are set to dilute their stakes through the IPO, showing Keros has got the offering away without leaning heavily on inside support. Keros has achieved that despite making its pitch to public investors in an unusually turbulent time for financial markets and the wider world. 

In some regards, Keros is the first U.S. biotech IPO of the pandemic. Imara and Zentalis both began trading after the World Health Organization (WHO) declared a pandemic, but they filed to go public before that milestone was passed. In contrast, Keros completed the whole process after the WHO’s March 11 declaration. 

By the time Keros filed its IPO paperwork on March 16, there were more than 167,000 confirmed cases of COVID-19 globally. The Nasdaq biotech index fell more than 20% in the month leading up to Keros’ initial filing, although it recovered some of those losses over the following weeks. Despite the inauspicious signs, Keros got its IPO away, adding to the impression that the window remains ajar for now. 

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