ADAR1 Announces ISS Recommends Keros Therapeutics Stockholders WITHHOLD Votes from Directors Dr. Mary Ann Gray and Dr. Alpna Seth

Rhea-AI Summary

ISS, a leading proxy advisory firm, has recommended that Keros Therapeutics (KROS) stockholders withhold votes from directors Dr. Mary Ann Gray and Dr. Alpna Seth at the upcoming June 4, 2025 Annual Meeting. ADAR1 Capital Management, Keros's largest stockholder with a 13.3% stake, supports this recommendation, citing concerns about corporate governance. The company plans to disclose its strategic review results five days after the Annual Meeting, a timing that ADAR1 criticizes. Dr. Daniel Schneeberger, ADAR1's Managing Partner, argues that Keros's cash balance is excessive compared to its clinical opportunities and calls for a significant return of capital to shareholders.

Positive

• ADAR1 Capital Management holds a significant 13.3% ownership stake, showing strong investor interest
• ISS's recommendation validates concerns about governance, potentially leading to improved oversight

Negative

• Company's decision to delay strategic review results until after Annual Meeting raises transparency concerns
• Excessive cash balance relative to clinical opportunities suggests inefficient capital allocation
• Governance issues identified by major proxy advisory firm ISS

Insights

Corporate Governance Expert

ISS recommending withholding votes from two Keros directors signals serious governance concerns amid strategic review timing controversy.

The ISS recommendation to withhold votes from Dr. Gray and Dr. Seth represents a significant governance challenge for Keros Therapeutics. When a leading proxy advisory firm makes such recommendations, institutional investors typically pay close attention, potentially affecting 13-33% of the vote outcome based on historical precedents.

The timing controversy is particularly noteworthy - Keros plans to disclose its strategic review results five days after the Annual Meeting on June 4, effectively asking shareholders to vote without knowing the outcome of a process that could fundamentally affect company value. This sequencing raises legitimate capital allocation and transparency concerns.

ADAR1's 13.3% ownership stake gives substantial weight to their criticism of Keros's cash management. Their public campaign targeting specific directors rather than launching a full proxy contest suggests a calculated approach to achieve board accountability without the expense of seeking control.

The withhold campaign targets long-tenured directors - selecting Dr. Gray and Dr. Seth likely aims to refresh oversight while preserving operational continuity. This strategic approach often proves more effective than targeting the CEO or Chair directly.

The ISS recommendation indicates the governance issues have objective merit beyond the activist's claims. For biotech companies, cash deployment strategy is critical given lengthy development timelines, making this dispute centered on Keros's cash balance particularly consequential for shareholder value.

ADAR1 Urges Board to Release Strategic Review Results Before, Not After, Annual Meeting

AUSTIN, Texas, May 21, 2025 /PRNewswire/ -- ADAR1 Capital Management, LLC (together with its affiliates, "ADAR1" or "We"), the largest stockholder of Keros Therapeutics (Nasdaq: KROS) ("Keros" or the "Company") with approximately 13.3% of the Company's outstanding shares, today announced that leading independent proxy advisory firm Institutional Shareholder Services Inc. ("ISS") has recommended that Keros stockholders WITHHOLD votes from incumbent directors Dr. Mary Ann Gray and Dr. Alpna Seth at the Company's upcoming Annual Meeting of Stockholders (the "Annual Meeting"), scheduled for June 4, 2025.

In its report, ISS raised serious concerns regarding the Company's governance and concluded that greater accountability at Keros is needed.

"We are pleased that ISS has recognized the need for improved governance and oversight at Keros," said Dr. Daniel Schneeberger, Managing Partner of ADAR1. "We believe this recommendation validates the concerns we have raised regarding the Company's Board and supports our view that stockholders would benefit from fresh, independent directors."

ADAR1 also noted that the Company announced that it intends to disclose the outcome of its strategic review process five days after the Annual Meeting. Stockholders are being asked to cast critical votes without knowing whether the Board's strategic process has produced a result that is in the best interests of stockholders. ADAR1 calls on the Company to disclose the results of its strategic review before the Annual Meeting so that stockholders can evaluate whether the outcome is satisfactory before deciding how to vote.

Dr. Schneeberger continued, "In our view, the Company's cash balance is grossly excessive relative to its clinical opportunities and any credible strategic use. There is no reason this Board cannot commit to a significant return of capital now. Its decision to delay announcing a plan until after the annual meeting raises additional concerns about the Board's stewardship and reinforces the need for accountability."

Stockholders can review ADAR1's investor presentation outlining the rationale for why ADAR1 is withholding support from Dr. Gray and Dr. Seth, which is available here.

About ADAR1 Capital Management
ADAR1 Capital Management is an SEC-registered investment manager based in Austin, Texas, focused on public and private equity investments in the life sciences and biotechnology sectors. The firm was founded in October 2018 by Dr. Daniel Schneeberger, who brings over 20 years of experience spanning scientific research, healthcare consulting, institutional investing, and executive leadership in the healthcare industry. He is supported by a team of experienced professionals with deep medical and scientific expertise and a strong track record of biopharmaceutical investing.

Forward-Looking Statements
Certain financial projections and statements made in this press release and accompanying materials have been derived or obtained from filings made with the Securities and Exchange Commission ("SEC") or other regulatory authorities and from other third-party reports. Neither ADAR1 nor any of its affiliates shall be responsible or have any liability for any misinformation contained in any third-party SEC or other regulatory filing or third-party report. Select figures presented in this press release and accompanying materials have not been calculated using generally accepted accounting principles ("GAAP") and have not been audited by independent accountants. Such figures may vary from GAAP accounting in material respects and there can be no assurance that the unrealized values reflected within such materials will be realized. Nothing in this press release and accompanying materials is intended to be a prediction of the future trading price or market value of securities of the Company. Words such as "anticipate", "believe", "could", "estimate", "expect", "may", "ought to", "plan", "project", "seek", "should", "will", "would" and similar expressions, as they relate to the Company, are intended to identify forward-looking statements. Reliance on any forward-looking statements involves known and unknown risks and uncertainties and there is no assurance or guarantee that actual results or performance of the Company will not differ, and such differences may be material.  In addition, there can be no assurance or guarantee with respect to the prices at which any securities of the Company will trade, and such securities may not trade at prices that may be implied herein. The estimates, projections and potential impact of the opportunities identified by ADAR1 herein are based on assumptions that ADAR1 believes to be reasonable as of the date of this press release.

Contact:
info@adar1.com
512-254-3790

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SOURCE ADAR1 Capital Management LLC

FAQ

What did ISS recommend regarding Keros Therapeutics (KROS) directors?

ISS recommended that stockholders WITHHOLD votes from directors Dr. Mary Ann Gray and Dr. Alpna Seth at the June 4, 2025 Annual Meeting, citing concerns about governance and the need for greater accountability.

What is ADAR1's ownership stake in Keros Therapeutics (KROS)?

ADAR1 Capital Management is Keros Therapeutics' largest stockholder with approximately 13.3% of the company's outstanding shares.

When will Keros Therapeutics (KROS) release its strategic review results?

Keros plans to disclose the outcome of its strategic review process five days after the Annual Meeting, which is scheduled for June 4, 2025.

What are ADAR1's main concerns about Keros Therapeutics (KROS)?

ADAR1 is concerned about the company's excessive cash balance relative to clinical opportunities, delayed disclosure of strategic review results, and governance issues requiring improved oversight.