Keros Therapeutics Explores Strategic Options Amid Activist Investor Pressure

Keros Therapeutics, a Massachusetts-based biotech company, has announced it is considering strategic alternatives, including a potential sale, as it faces pressure from activist investors. This development comes in the wake of recent setbacks and successes for the company, highlighting the volatile nature of the pharmaceutical industry.

Strategic Review and Stockholder Rights Plan

Keros revealed on April 10, 2025, that it is evaluating all strategic options, which could include selling the company, pursuing further investment in its pipeline, or returning excess capital to stockholders. Simultaneously, the company has strengthened its defenses against potential takeover attempts by adjusting its stockholder rights plan.

The new plan imposes penalties on investors who accumulate more than 10% of Keros' outstanding shares without board approval. This move comes in response to what the company described as "significant and rapid accumulations" of its stock by investors seeking to influence control of Keros. Notably, one investor had already acquired 11.2% of the company's stock as of last week.

Recent Setbacks and Share Price Decline

Keros' share price has seen a dramatic decline, falling 85% from $69 in December to $10.33 as of April 9, 2025. This sharp drop followed the company's disclosure of safety concerns in a phase 2 trial of its TGF-β inhibitor, cibotercept, which led to the study being scrapped at the beginning of the year.

The trial's termination due to excessive buildup of fluid in patients' lungs represents a significant setback for Keros' hypertension program. However, the company maintains that its current stock price does not reflect its intrinsic value, which has prompted the implementation of the new stockholder rights plan.

Pipeline Progress and Financial Outlook

Despite recent challenges, Keros has seen some positive developments. In December, the company secured a $200 million upfront payment from Takeda for its activin inhibitor elritercept, which is being developed to treat anemia in blood cancers. This deal, combined with Keros' existing cash reserves of $560 million at the start of the year, is expected to fund the company's operations into 2029.

Furthermore, Keros announced plans in March to advance KER-065, a ligand trap candidate, into a phase 2 study for Duchenne muscular dystrophy. This decision follows the successful completion of an early-stage trial in healthy volunteers, demonstrating the company's ongoing efforts to diversify and strengthen its pipeline.

As Keros navigates this period of uncertainty and strategic reassessment, the pharmaceutical industry will be watching closely to see how the company balances investor pressures with its long-term development goals.