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AUSTIN, Texas - ADAR1 Capital Management, LLC, the largest shareholder of Keros Therapeutics, has highlighted substantial shareholder opposition to two of the company’s directors following the recent Annual Meeting. The investment firm, which had previously announced its intention to withhold votes from directors Dr. Mary Ann Gray and Dr. Alpna Seth, cited the election results as evidence of a broader dissatisfaction with the board’s capital allocation strategy and its alignment with shareholder interests.
Dr. Gray and Dr. Seth received notably low levels of shareholder support, with only about 34% and 37% of the votes, respectively. This outcome, according to ADAR1, signifies a significant loss of confidence in the board’s stewardship of the company. ADAR1 has criticized the board’s decision to retain approximately half of the company’s cash balance despite limited clinical pipeline and commercial prospects, calling the move unjustifiable. InvestingPro analysis shows the company holds more cash than debt and maintains a healthy current ratio of 19.29, suggesting strong liquidity position. Based on InvestingPro’s Fair Value analysis, the stock appears undervalued at current levels.
At an investor conference today, Keros CEO Jasbir Seehra acknowledged that the retained capital exceeds the company’s current funding needs, hinting at potential use for other high-risk ventures. ADAR1 has demanded more aggressive cost reductions and a commitment to return an additional $100 million to shareholders through a special dividend by the end of Q3 2025. The firm also insists on implementing a mechanism to allow shareholders to benefit directly from the cash flow from the Takeda partnership by year-end. With revenue expected to grow by 58.55% in FY2025 and analysts projecting profitability, these demands come at a crucial time for the company. Get deeper insights into Keros’s financial health and growth prospects with InvestingPro, which offers 12 additional investment tips for this stock.
ADAR1 maintains that Keros has significant upside potential but emphasizes that realizing this potential requires new board perspectives and a disciplined approach to capital allocation. The firm warns that if the board continues with its current strategy, it is prepared to nominate new directors for election at the 2026 Annual Meeting.
Based in Austin, Texas, ADAR1 Capital Management is an investment manager specializing in life sciences and biotechnology investments. Founded in October 2018, the firm leverages a team with extensive experience in medical, scientific, and biopharmaceutical investing.
This report is based on a press release statement from ADAR1 Capital Management.
In other recent news, Keros Therapeutics has announced its plan to return $375 million to shareholders, following a comprehensive strategic review. This decision reflects the company’s confidence in its financial position while continuing the development of its lead product candidate, KER-065. Additionally, Keros has halted the development of cibotercept for pulmonary arterial hypertension after safety concerns arose during the TROPOS trial. The company is also implementing a significant restructuring, which includes a 45% reduction in its workforce, resulting in an estimated $17 million in annual cost savings. Meanwhile, Keros has secured support from Glass Lewis & Co. for its director nominees amidst a strategic review process challenged by ADAR1 Capital Management. ADAR1, a major shareholder, has urged Keros to disclose the results of this review before the upcoming Annual Meeting. The investment firm has expressed concerns about Keros’s governance and is advocating for a return of excess capital to shareholders. Keros plans to reveal the outcome of its strategic review shortly after the Annual Meeting.
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