ADAR1 Issues Statement on Keros Therapeutics' Troubling 2025 Director Election Results and Insufficient Capital Return Proposal
- Company discontinued development of cibotercept in pulmonary arterial hypertension, reducing costs
- Implementation of headcount reduction to improve operational efficiency
- Company has proposed returning a portion of excess capital to stockholders
- Company has valuable Takeda partnership with potential cash flow
- Directors Mary Ann Gray and Alpna Seth received low shareholder support (34% and 37%)
- Board retaining approximately half of cash balance despite limited pipeline
- Lack of specific details on capital return terms, timing, and method
- CEO indicated excess capital may be used for high-risk, competitive indications
- Delayed implementation of cost-cutting measures
Insights
ADAR1's activist campaign against Keros intensifies with significant shareholder opposition to directors and demands for greater capital return.
The press release reveals a heightened activist investor conflict between ADAR1 Capital Management (Keros' largest shareholder) and the Keros Therapeutics board. The election results show troubling signs for Keros' leadership, with directors Dr. Mary Ann Gray and Dr. Alpna Seth receiving only 34% and 37% support from outstanding shares respectively - among the highest opposition levels for any directors in 2025 elections.
This shareholder rebellion demonstrates a major governance crisis for Keros. While the company has taken some actions - discontinuing cibotercept development in pulmonary arterial hypertension and implementing staff reductions - ADAR1 considers these steps "wholly insufficient." The investor's primary contention centers on capital allocation, with ADAR1 demanding the return of
ADAR1's threat to nominate new directors at the 2026 Annual Meeting signals a potential proxy contest if demands aren't met. The investor also seeks implementation of a contingent value right to capture potential cash flow from Keros' Takeda partnership. This confrontation represents a critical inflection point for Keros' governance, with ADAR1 effectively asserting that current directors lack majority shareholder support despite remaining in their positions.
Significant Withhold Votes from Directors Mary Ann Gray and Alpna Seth Underscores Need for Change and a More Disciplined Capital Allocation Strategy
"We believe the outcome of the Annual Meeting underscores what we have consistently conveyed to Keros' Board of Directors: there is broad and growing concern among stockholders regarding the Board's capital allocation decisions and fidelity to stockholder interests.
ADAR1 previously disclosed its intention to withhold votes from Dr. Mary Ann Gray and Dr. Alpna Seth at the Annual Meeting. These two directors received among the highest level of shareholder opposition of any directors standing for election in 2025. In our view, this result reflects a substantial loss of stockholder confidence in the Board and clear dissatisfaction with the status quo. With only approximately
We appreciate the Company's recent decision to discontinue development of cibotercept in pulmonary arterial hypertension and, finally, implement a reduction in headcount. While these delayed actions are directionally positive, they are wholly insufficient and, in our view, are overshadowed by the Board's baffling decision to return only a modest portion of the Company's excess capital to stockholders.
We can think of no credible justification for the Company to retain approximately half of its cash balance given its limited clinical pipeline and commercial prospects. In fact, at an investor conference today, CEO Jasbir Seehra acknowledged that the capital being held exceeds what is needed to fund the Company's current DMD program and may instead be used to pursue other high risk, hyper-competitive indications. Even more troubling is the lack of detail around the proposed capital return ― including the Board's failure to specify the terms, timing and method ― despite its claims to have completed a "thorough" and "comprehensive" review of strategic alternatives. In our view, this reflects a haphazard and incoherent approach to decision-making.
In order for the Board to follow through on its stated commitment to maximizing value, it must take immediate and concrete action to reduce costs more aggressively, commit to returning
ADAR1 continues to believe Keros possesses significant upside potential. But realizing that potential will require fresh perspectives in the boardroom and a disciplined, investor-focused approach to capital stewardship. Shareholders have spoken and the current directors do not have the support of a majority of shareholders.
If the Board nevertheless insists on clinging to a failed strategy, ADAR1 will not hesitate to hold it accountable, including by nominating new directors for election at the 2026 Annual Meeting. We are committed to ensuring that the will of investors is not ignored, and we will continue engaging with the Company and our fellow investors to see that the desires of stockholders are heard and respected."
About ADAR1 Capital Management
ADAR1 Capital Management is an SEC-registered investment manager based in
Contact:
info@adar1.com
512-254-3790
View original content:https://www.prnewswire.com/news-releases/adar1-issues-statement-on-keros-therapeutics-troubling-2025-director-election-results-and-insufficient-capital-return-proposal-302476774.html
SOURCE ADAR1 Capital Management, LLC
FAQ
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