Company: KROS
Filing Date: 2025-08-06
Form Type: 10-Q
Source: 0001664710-25-000070
Chunk: 284

Company: Keros Therapeutics, Inc.
Filing Date: 2025-08-06
Form: 10-Q
Item: Item 8
Chunk 284
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 last valid claim of certain licensed patents, and (iii) expiration of regulatory exclusivity in such region.The Takeda Agreement will continue in force until the expiration of the royalty term. Takeda may terminate the Takeda Agreement (i) in its entirety or on a country-by-country basis for convenience, with notice or (ii) if Takeda reasonably determines that the development, manufacture, and commercialization of the licensed compound or licensed product pose a safety or public health risk. The Company may terminate the Takeda Agreement in its entirety in the event that Takeda or its 

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affiliates bring a patent challenge. Either party may terminate the Takeda Agreement in its entirety (i) if the other party materially breaches the Takeda Agreement and fails to cure such breach; or (ii) upon the bankruptcy of the other party.The Company assessed this arrangement in accordance with ASC 606 and concluded it is a contract with a customer as defined in ASC 606. As the Company entered into the Takeda Agreement and the TSA concurrently, they were evaluated as a single contract under ASC 606. The Company identified two performance obligations in the Takeda Agreement and TSA including the license to its intellectual property (“License and Know-How”) and the Transition Services. The Company determined that the License and Know-How were distinct from the Transition Services as Takeda is able to derive benefit from the License and Know-How upon delivery and the Transition Services do not modify the License and Know-How.The transaction price at inception included fixed consideration consisting of the upfront fee of $200.0 million. It also included variable consideration of $51.4 million relating to the estimated reimbursement of Transition Services costs to be incurred that were not constrained. During the three months ending June 30, 2025, the variable consideration decreased by $13.7 million to $37.7 million due to a decrease in the estimated reimbursement of Transition Services costs expected to be incurred through the end of the transition period. The amount of variable consideration was estimated using the expected value method. The remaining $90.0 million of specified development milestones, $280.0 million of specified commercial milestones and $740.0 million of specified sales milestones were considered constrained at contract inception and excluded from the transaction price since the Company could not conclude it is probable that a significant revenue reversal in the amount recognized will not occur. The sales-based milestone payments and royalties will be recognized upon occurrence based on the sales and usage-based royalty exception. The Company