Kaos Pushes Capricor Deals as FDA Decision Looms (The Deal)

Kaos Capital is urging Capricor Therapeutics Inc. (CAPR) to refresh its board and establish an M&A and strategic alternatives committee, but company followers suggest the muscular dystrophy and infectious disease biotechnology company should focus on its core cell therapy as it undergoes a regulatory review. Capricor shares dropped more than 60% July 27 after the U.S. Food and Drug Administration raised doubts about whether the biotech company’s Phase 3 HOPE-3 trial provided sufficient evidence of deramiocel’s effectiveness. The treatment for Duchenne muscular dystrophy is Capricor’s lead cell-therapy candidate.

Leonard Wood, Goodwin’s Shareholder Activism and Takeover Defense Chair, cited Capricor’s July share price drop and said it’s common for biotechs to encounter challenges as they develop pipelines. “When those challenges arise, the best path forward is frequently no clearer to an activist investor than it already is to the board,” he said. “This is often where opportunism enters the picture. The activist and the board may agree in principle on several advisable actions, but the activist presses for a timeline and conditions that serve its own objectives and strengthen its case for direct influence.”

Read The Deal article for more.