避开 Keros $KROS 的僵尸生物医药陷阱

I'm your host, Andrew Walker. With me today, I'm happy to have on myself. I'll talk about why in a second, but before we get there, a quick disclaimer: Nothing on this podcast is investing advice. That's always true, but it's particularly true today. Obviously, I am quite long the stock that I'm going to mention, so I'll just remind everyone of that disclosure.

Nothing on this podcast is financial advice or investing advice. Consult a financial adviser, do your own work, all that jazz. I just don't know why anyone would listen to anything I have to say.

I am coming to you today for another single-stock discussion. I've done 2 of these so far this year, and the one that's really relevant to this discussion is the last one I did. It was on Sage; the ticker there is SAGE. For people who don't remember, you should go listen to that podcast. I think it's a great idea. I'm still long it, and I hope and expect they will do the right thing and sell themselves.

The basics of that were that Sage was trading for well below cash. Biogen, which owns about 10% of them and is partnered with them on an asset, made an offer to buy them at around cash. Obviously, that offer is a nonstarter, but I said, "Hey, Sage, when you look at this, you are now a 1-drug company. The market was valuing you below cash. It is time to wrap this up and sell yourselves."

I really believe in shareholder engagement. If somebody can point me to a better risk-adjusted means of creating value for Sage shareholders, of which, again, I am one, I am open-minded. I am very willing to listen, and I am very willing to discuss it, but I don't see a better risk-adjusted option than that.

Unless someone can point me to one, Sage board, I think you should sell. Shareholders, I believe in engagement. I'm not trying to form a group with anyone, but I think you should communicate to the Sage board what your views are. If you agree with me, you should let them know that, and if you don't agree with me, you should tell them a different reason why you don't agree with me and why you think they should pursue a different path.

You should really let them know that you expect them to maximize shareholder value, and whatever that is, you will be holding them accountable for maximizing shareholder value.

I give you that background because—one other thing: Most of the viewership of this podcast is audio, not video. Because it is just me, I'm going to be sharing a slide deck. If you want to switch over to YouTube and watch this on video, you will be able to view that deck. However, I will try to say everything out loud, so if you're listening on audio, you'll get 99% of the experience, is my hope.

That all out of the way, let's hop into it. The company I'm going to talk about today is KROS. Let's see if I can get my screen share working here. We're going to get the screen share in 1 second, but the company we're talking about today is KROS.

Again, disclosure: I am long, and I am titling this presentation "Escaping the Zombie Biotech Problem." So let's dive in. If you're watching on YouTube, there's the disclaimer slide, but I already did the disclaimer. I'm not a financial adviser. Please consult a financial adviser and do your work.

Why am I talking about this? If you follow the blog, anothervalueblog.com, recently I've been obsessed with biotech companies trading below cash. There are a lot of what I really like this term—it's called "zombie biotech." It was coined by a writer at STAT Plus, I believe, Adam Feuerstein.

A zombie biotech is a company that is trading for well below net cash. There's a company that has $300 million in net cash, and it trades for $150 million. At that point, when a biotech trades below net cash, it's actually not about the science anymore. In my opinion, it is about corporate governance.

The market is signaling to the company, "You are worth less than your cash because we believe every dollar that you spend will effectively be lit on fire. You're taking a dollar and turning it into $0.50. We think you are spending it on needless R&D. We think you're spending it on needless corporate overhead." All that sort of stuff, right? That's what the market is saying.

It is incumbent on the company, in my opinion, to either prove the market wrong or return the capital to shareholders. Now, the issue is that Adam coined it the "zombie biotech problem." A lot of these small biotechs go out and raise $500 million on 1 drug. The drug's going to be a blockbuster. Everybody's hoping for the best. Everybody thinks it's going to literally cure cancer, right? That's what some of these drugs are doing.

The drug comes up snake eyes. The drug is a failure. What happens? The company now has $500 million of cash in the bank, and the market cap changes down to $250 million. Insiders and directors say, "Hey, we're all really smart. Why don't we just go buy another drug and try to turn that drug into the cure for cancer, and then we'll be worth $5 billion again? Isn't that a great idea?"

The answer is actually no. From a shareholder perspective, that's a terrible idea. If shareholders want to bet on this company, this management team, and this board of directors going and finding a new drug, they should do it in a completely new shell. Sunk cost: Go to a new shell.

This management team should go out and raise the money from investors and say, "Hey, I'd like to invest in this drug. I want you to back me again." They should not have the God-given right to go and invest that $500 million. Capital allocation efficiency says that $500 million would be better distributed to investors.

Then that management team, if they can raise the money from investors, can go get them—or new investors—or maybe investors say, "Hey, I don't want to invest in you at $500 million. I want to invest in you at $250 million." They can go raise whatever it is, but that's what capital efficiency says.

However, the insiders and directors often own no stock, or they own a bunch of stock that was priced at, you know, $3 billion at the IPO, and a bunch of options that were priced at $3 billion at the IPO. Now we're way, way out of the money.

So they have a little bit of a heads-I-win, tails-I-don't-lose scenario. If they go out and try to buy a drug and turn it into a $5 billion drug, and they're successful, then cool: All their options go in the money. They're going to get big bonuses for discovering this hidden gem. They've got job security for decades. All this sort of stuff, right? Hence, they win.

Tails, the drug fails. Because they spent 5 years investigating this drug, they got 5 more years of bonuses, salaries, and being a publicly traded CEO or board member. All those are valuable. They got 5 more years of that.

Did they light the $500 million on fire? Yes. But again, they weren't shareholders. They don't care that the stock is down another 90%. They got 5 more years of salaries and 5 more years of importance. They got a free lottery ticket. The only people who lose are shareholders.

So that's a zombie biotech. It's a company that's trading below net cash, and often the most important thing is that there's not a lot of insider alignment.

The STAT Plus article that I mentioned, which kind of coined the "zombie biotech" phrase—which, again, I love—mentioned Sutro Biopharma. I have no opinion on this company and no position in this company, but it got really popular because it was specifically called out as a zombie biotech.

If you look, I've included on the slides the insider ownership table from Sutro Biopharma's last proxy.

And if you look, you can see insider ownership among the directors and executive officers is extremely limited. A lot of them have way-out-of-the-money stock options, but there’s very little actual ownership. So I think one of the reasons Sutro Biopharma joins that biotech zombie army is because there’s very little insider ownership. Again, I don’t know anything about it, but it’s become very popular because of that article. So that’s an example of a biotech zombie.

And if you’ve been listening to my writings or following along with me, you know that right now I think there is a borderline generational opportunity in these biotech zombies. There are 2 reasons for this. First, biotech is just so washed out right now. The biotech zombies used to trade for 60% of net cash. Today, a lot of them are trading for 20%, 30%, or 40% of net cash, so the discounts are much larger.

It’s so washed out that I think there are companies trading for 50% of net cash. The previous biotech zombies had no assets outside of their cash. I think there are several companies that have crown-jewel assets over and above the net cash they’re trading for. One that I would mention is Sage, the company I talked about last time. They trade below net cash, and they have a partnership and a drug that I think is going to be a blockbuster drug.

Another one is the company I’m going to talk about today, KROS. I wrote a Weekend Thoughts piece, “Why This Time Is Different for Busted Biotech.” I’ll include a link to Part 1, “History and Hypotheticals,” which dove more into this, in the show notes, and I plan on posting Part 2 probably next week. That’s the history and overview of the biotech zombies.

Let’s turn to the company that I want to discuss today: Keros, or KROS. Keros has 3 main assets. If you read their most recent investor deck, those main assets are cibotercept, KER-012. I only read stuff; I don’t really listen to stuff. I have listened to these guys talk, but I’m really bad at pronunciation. You can tell me it’s wrong. I call it “Cybo.” It’s KER-012. I also call it 012 for the most part.

That’s asset number 1. Asset number 2 is a neuromuscular drug in Phase 1, which actually just completed Phase 1: KER-065. They haven’t named it yet, so I don’t have to struggle through pronunciation. Asset number 3 is KER-050, which they partnered with Takeda in December of last year. Those are the 3 main assets if you read the company’s investor deck.

If you’re watching the slides, this is a slide taken from January of this year. This is what they say: “Hey, here are our main assets.” Then they dive into each of them. If I had been recording this podcast 6 months ago, the only asset we would really have been talking about would have been the partnered asset. But the big asset people were talking about was cibotercept.

I’ve got a clip here from Jefferies’ research in early November. I don’t like to read a lot of sell-side research, but I do think it can be useful for getting some history. They initiated Keros at a buy. The stock was at $60, and they had a price target of $107. The thing they were mentioning was cibotercept and its opportunity in PAH. That’s really what was driving the stock price.

Here’s another sell-side report. On December 11, and that date will be very funny in a second, Wells Fargo said, “Hey, we’re increasing our price target on Keros from $88 to $111.” The stock was at $66. Why were they doing it? Because cibotercept’s Phase 2 trial was probably going to read out in 2025. They thought it was a huge catalyst, a game changer, and a blockbuster. You wanted to be involved ahead of that because the stock would go up when they announced successful data.

You can probably guess where this is going, given that I said the date was going to be funny. On December 12, 1 day after that research report came out, KROS announced that it was stopping the cibotercept trials because it had encountered some safety issues. They stopped the trials and eventually shut them down in January. The stock price went from the mid- to high-$60s to opening the next day at $18.

Here we are a few months later, and the stock has dripped down. We’re talking about under $10 per share today. Cibotercept was the story here. Cibotercept is off the table. Again, we’ll talk later—it might not be completely off the table—but cibotercept was the story, and it’s destroyed. The stock is destroyed. Shareholders are devastated.

With that in mind, let’s revisit Keros’s 3 key assets. You’ve got KER-012, which was in Phase 2 and shut down the trials. You’ve got KER-065, for which they reported Phase 1 results a week or 2 ago. We’ll talk about that. Then you’ve got the partnership with Takeda.

Those are your 3 key assets, and I think the crown jewel here is the Takeda partnership. About a week before they announced that the cibotercept trial was getting stopped, they announced that elritercept, KER-050, was being partnered with Takeda. Actually, it’s a license agreement, not a partnership—I keep saying partnership. They licensed the drug to Takeda. Takeda basically takes over 100% ownership of this drug and will cover all costs going forward.

In return, Takeda gives Keros $200 million upfront. In addition, they give them more than $1 billion in potential milestone payments, plus royalty payments that range from the low double digits to the high teens, depending on how much it sells for and everything. These are enormously valuable. Obviously, the $200 million is great, but the real value here is the NPV—the risk-adjusted NPV—of the milestones and royalties.

Takeda is a publicly traded company. It’s a real pharmaceutical company, publicly traded in Japan. If you’re watching on YouTube, I’ve got a clip from one of Takeda’s investor-relations decks that they published right after they entered this license agreement. They say, “Hey, why did we license this? We think that it has the potential to be a best-in-class treatment. We think the peak revenue of this drug is $2 billion to $3 billion per year.”

Again, I just told you that Keros will get low-double-digit to high-teen royalties. Imagine $2.5 billion with a 15% blended royalty rate. You’re talking about $300 million-plus of annual royalties if this is successful. Will it be successful? Look, I don’t know. They’re about to start Phase 3.

You’ll probably know whether this is getting approved in 2028-ish. I think if you look at the history of Phase 3 trials in this indication, it’s roughly 50/50—maybe a little bit better than 50/50. Maybe you start by saying, “Hey, that’s the base case.” But you’ve got Takeda writing a really big check, and they obviously researched it. The Phase 2 results were really good. Maybe it’s materially better than 50/50. I don’t know.

I think the risk-adjusted NPV here is probably in the $400 million to $600 million range. That’s the risk-adjusted value of the milestones and royalty payments. That’s discounting for time and saying, “Hey, there’s a 50% chance of zero and a 50% chance of success,” all that sort of stuff. Obviously, if it’s successful, this will be worth substantially more than $500 million. But you have to risk-adjust it, time-weight it, and account for all of that.

Anyway, I think this is the key asset for the company. I estimated it at—let’s just call it—$500 million to make the math easy. As we are talking, KROS is trading for $10 per share. That’s about a $400 million market cap. But I think this royalty and milestone payment alone, on a risk-adjusted basis, is worth more than the market cap.

If it is successful, it will be worth multiples more than the market cap because of how that risk adjustment and time-weighting works. So that’s the key asset for the company.

There are 2 other assets. There’s KER-065, for which they just announced Phase 1 results. They’re targeting it at DMD. The company thinks KER-065 has significant upside potential. I’ve got some quotes on the left-hand side of this chart from the company’s call after they announced the results.

They say, “Hey, we’ve got a robust preclinical package demonstrating the potential benefits of this drug. We believe that from the Phase 1 trial, we’re well equipped to go to Phase 2.” They sound pretty gung-ho about going into Phase 2 and about the upside here.

I’ll admit I’m skeptical, and you don’t have to believe me. I would just point you to what sell-side analysts said on the heels of this trial. I’ve got 2 quotes. One of them says, “At the current stage, we leave KER-065 for future upside.” Then they go on to say, “We’re not including KER-065 in our sum-of-the-parts valuation. We’re waiting for more clinical data to assign a valuation.”

If you read what the sell side is saying there, it’s, “We don’t believe this drug has any value, but we don’t want to piss off the company by saying this, so we’re saying it in a really nice way.” That’s what the sell-side analyst is saying.

I thought the data was a little meh. I think the sell side and the buy side analysts I talked to agree that this drug doesn’t seem to have crazy value. But it’s early. The company hasn’t reported the full results yet, so maybe I’m missing something. It’s entirely possible. I’ll just say I’m skeptical.

We’ll talk about why this matters more in a second. Actually, let’s talk about why this matters more. Why does this matter? No, we’ll talk about it in a second. Let’s go to the last asset.

The last asset is that the company believes KER-012, the cibotercept—the drug that had safety issues and that they had to shut down—could have value as well. They’re going to unblind all the results and then say, “Hey, maybe it doesn’t work in PAH, but maybe it works in different indications, or maybe there’s a way to dose this so that it works in PAH.” I’m really skeptical here.

I’ll tell you. I’ve got a clip here from Seeking Alpha, a clip of a Cantor Fitzgerald article where they downgraded Keros on the heels of this trial, and they said, “Look, it’s really hard to see a path forward here. These safety events were pretty bad, unless you can say, ‘Hey, it’s just a subset or something else.’” I’m really skeptical, but if they prove to be right, that would be a huge amount of upside.

So, those are your 3 assets. You’ve got the Takeda partnership, KER-012, and KER-065. But there’s 1 asset I haven’t mentioned, and you probably can guess where I’m going because we’re talking about zombie biotech: Keros has a whole bunch of cash.

Again, as we’re talking, the stock price of Keros is around $10 per share, with a $400 million market cap. At the end of the year, they had $560 million in cash, and that doesn’t include the $200 million they got from Takeda. That came in February 2025, so it came after the balance sheet was published. Toss that on, and they’ve got $750 million-ish in cash.

That’s about $18 per share in cash, and their market cap is $400 million. So, again, I’m looking at this company and saying, “Hey, you’ve got a company that’s trading for just over 50% of net cash. They’ve got a very valuable potential royalty and milestone deal from Takeda. And then they’ve got the 2 other assets that I’m very skeptical of and that the company thinks are worth quite a bit.”

This is where I start worrying. You’ve got a company—I have a clip from their 2024 10-K—that spent $175 million. That’s fine: they were running the KER-012 trial, they were running the KER-065 trial, and they were running the trial for elritercept, which eventually got to Takeda, who partnered with them. You would expect a company to spend that much.

Most of that spending was going toward the trials, as it should. The issue is they spent about $55 million in personnel expenses. That’s your SG&A, your overhead, all that sort of stuff, and another $10 million on professional fees, facilities, supplies, and all this sort of stuff. So, the overhead is really high here, and that matters for 2 reasons.

Number 1, last year they could run high overhead. They were running big trials on 3 drugs that had blockbuster upside. You cannot say the same thing today. KER-012’s trials have been halted. I think that drug is a zero, but at minimum, they need a lot of rebooting.

Elritercept has gone over to Takeda. The company needs to support Takeda. Right now, Keros is still handling the drug, but it’s going to transition to Takeda. Takeda will pay them for ongoing support during the transition period. They do need to support that, but they don’t have to spend anything out of their own pocket on that drug anymore.

You used to have 3 big assets. One of them is partnered—that’s out the door. One of them has basically been stopped. And then you’ve got KER-065. The reason I talk about KER-065 is, number 1, they need to bring the cost down immensely.

You were spending $55 million per year when you thought you had 3 blockbuster drugs that you were doing in-house. Today, as we sit here, you maybe have 1 if you believe in the potential of KER-065. And again, I’m skeptical. So, you need to bring that way down.

The second reason I mention it is that this is now a company that has gone from, “Hey, we’ve got 3 big Phase 3 trials to support our overhead,” to, “Hey, we’ve got a pile of cash, a royalty and milestone deal that requires basically no management on our part, and 1 drug.” The company needs to do right by shareholders, and shareholders need to really think, “Hey, does it make sense for this to be a standalone company?”

A 1-drug company that’s about to go into Phase 2 is a very tricky thing. Why shouldn’t that drug be part of a bigger company where they can leverage their SG&A, where they can releverage their R&D function, and all that sort of stuff? It doesn’t make a lot of sense unless you think this drug has enormous blockbuster potential for us to be managing all that in-house, right?

I say that because the status quo can’t hold. This company needs to be looking at cost cuts and bringing its overhead down materially. The reason I’m worried about zombie biotech here is, number 1, the company seems much more bullish on KER-065 and restarting KER-012 than I personally am, and I think most analysts are.

Number 2, it has now been 4 or 5 months since KER-012 blew up, and 4 or 5 months since the Sobi deal. I haven’t seen anything about bringing costs down. I haven’t seen anything about right-sizing the company’s cost structure. This should be a panic. This should be a priority. This should be urgent for the company.

They spent $55 million per year in overhead last year. Maybe they’re just not publishing it. Maybe they’re just waiting. But $55 million is an enormous number for a company with $750 million in cash and a $400 million market cap. It should be a pants-on-fire, all-hands-on-deck mission to get that number right-sized, because every dollar out the door needs to be weighed against the opportunity cost of everything.

Particularly for this company, they need to reassess and say, “Hey, we’re trading at half of cash value, ignoring the license and royalty deal. Every dollar we’re spending on SG&A is a dollar that could be returned to shareholders, a dollar that could buy back our stock at half of value.” I haven’t seen that yet. So, that’s why I think the status quo can’t hold. And that’s why I’m publishing this podcast.

One of the things I like about Keros here is that the board should be more aligned than a lot of zombie biotech companies. I told you to look at the Sutro board. If you were watching the YouTube, I showed you the Sutro board, and they had almost no stock ownership. The nice thing I like about Keros is that you should have more alignment here.

There are 8 or 9 directors here. I thought it was 8, but it looks like it’s 9, if I’m reading it correctly. Two of the directors come from the largest shareholder, which owns 13.3%, and I just love that there’s financial alignment here. A third director comes from OrbiMed, which is a 13D filer and owns about 4% at this point, if the proxy numbers can be believed.

A fourth director is the CEO, who owns about 4%. A lot of that is in options, but a lot of that is also in stock. So, you should have decent alignment here. However, I do have some concerns. That’s less than half the board. Half the board consists of people who don’t own a lot of stock.

What I worry about here is that you have a lot of board members who have great backgrounds. They know much more about science and drug trials and all this sort of stuff than I will ever know. They’ve got great backgrounds there, but last year, that’s what you needed. You were running 3 trials.

This year, I think 1 of the drugs has no path forward. You’re trading for half of net cash, and you’ve only got 1 drug that just went through Phase 1 trials. I don’t know if this company needs 4 or 5 board members with a lot of pharma expertise. This company is screaming out to me, “We are a capital-allocation story. We are an M&A story. We’re a corporate-governance story.”

I know a lot of fund managers and investors think every board needs more investors and more people with financial expertise. I think they sometimes forget that this is a company doing complex science. They need people who understand science or engineering or whatever it is. In this case, I don’t think that’s true.

Again, the company has a $400 million market cap, $750 million in cash, and royalty and milestone payments that they’re going to get if the drug is approved—and they’re not going to get if the drug isn’t approved. I don’t think you need a board with a lot of drug experience or anything. I think this is a board that’s screaming out, “We need people with more financial expertise. We need more shareholders. We need people who are fully aligned with us.”

That’s why I’m making this podcast. I think Keros is a really interesting idea. It’s 1 of my favorite ideas out there. You have a company trading for almost 50% of net cash, with a royalty and milestone deal that I think is also worth the stock price. I think that gives you an enormous margin of safety.

But I am worried that this could go the zombie biotech route. So, I’ll leave you with this: if you listen to my Sage podcast, you know that I said I’m a big believer in shareholder engagement and shareholder alignment. I think Keros is another example of what I call the Penny example.

For those of you watching the YouTube, I’ve got my dog, Penny, and I’ll just use any excuse I can to get Penny on the podcast. You’ll know the story if you listen to the Sage podcast, but I use it like this: when you have a dog, there are 2 types of “leave it.”

When you’re walking a good girl like Penny and you see a chicken wing on the street, if she’s a good girl, you can tell her to leave it, and she will leave it. She wants that chicken bone. Dogs love chicken bones, even if chicken bones don’t love them. But if you tell a good girl to leave it, they’re not going to go. They’re going to forget that bone ever existed.

They know you’re paying attention, and they know that they can’t have that chicken bone. But even a good girl like Penny, if you’re walking her and she sees a chicken wing and you’re not paying attention—you’re on your headphones, you’re talking on a call, and the chicken wing’s at a corner, so you walk right next to the chicken wing—and then it’s a red light, so you stop, and she sits right next to that chicken wing for 30 seconds.

Well, eventually Penny's probably going to put that chicken wing in her mouth. And that's where you come into the second type of “leave it,” where you've got to go and grab her mouth, put your hand in, and start pulling out the chicken bone while you're screaming, “Leave it. Leave it, leave it, leave it.” So, I think there are 2 routes that zombie biotech companies go. The really small ones are too small for shareholders to really get engaged, for one reason or another. Those are the ones where shareholders are just screaming, “Leave it. Leave it, leave it.” And they're kind of protected by their size, right?

My hope and expectation is Keros is one of the good girls. You can tell them to leave it. I have communicated to the management team and the board and everything that I am a concerned shareholder, and I own a lot, and I want the stock price to go up, and I want the company to work. I think the best way for not just the stock price to work, but for patients to be served here, is for them to go and take their drugs and say, “Hey, we're going to sell these things, right? We're going to sell them to someone who's better equipped to develop them, commercialize them, support them, and all that.”

Again, Keros is a company that has $750 million in cash, and that's it. They don't have a salesforce. It makes no sense for a company like this to go on a quixotic quest to develop these drugs because, on the back end, even if they're successful, they're going to have to cut corners. They don't have a commercialization team. It makes no sense on any level for this company to develop these drugs at this point in time. They should go sell them to people who can better support them, better commercialize them, and all this type of stuff.

And I think the company might say, “Well, yeah, but if we're bad girls, we might say, ‘Well, yeah, we could try to sell them, but nobody wants to buy these drugs from us.’” And I would say, “That's your answer. If you're developing this drug and you're spending—remember, you're spending $55 million per year in overhead, plus you're developing these drugs, $10–20 million for trials, all this sort of stuff—and you say, ‘Hey, nobody else would spend the money to develop this,’ that's your answer.”

Everything else is a sunk cost. You have $750 million in cash. If no one else would develop these drugs, then these drugs should not be developed. Return the money to shareholders and, unfortunately, wrap the programs up.

If you said, “Hey, we would sell them, but we think these drugs are worth $1 billion, and the top dollar we can get from everyone else is $750 million,” I would say, “Hey, guess what? You're going to burn more than that. That's a $250 million valuation difference. You're going to burn more than that in SG&A and overhead and everything developing the drugs because you're a one-asset company.” Unfortunately, even though you think you're getting shortchanged by $250 million, the NPV of selling for $750 million now versus developing and getting to that $1 billion valuation makes more sense. Just hit the bid and sell for $750 million now, to say nothing of all the other things—risk-adjusted opportunity cost and everything I'm talking about. Just sell the drug.

So, I think it's pretty clear to me that if you're an engaged shareholder, if you're an engaged board, if you're looking to maximize value, the path is straightforward. You need to wrap this up. You need to drastically reduce costs. You need to sell KER-012. You need to sell KER-065 to the highest bidder. If no one will bid for them, then the market is telling you that it's as skeptical of these drugs as I am. And guess what? This is shareholders' money.

If no one else will develop these drugs, then you need to wrap it up. And management, if you think the market is wrong, if you think every other adviser is wrong and you want to develop these drugs, you should buy these drugs and go develop them on your own. But just because $750 million has been put into this company in the past, that does not give you the God-given right to spend all $750 million chasing windmills and developing fruitless programs.

So again, why am I saying this? Because that's the bad-girl route, right? The bad-girl route is, “We're going to spend the $750 million, come hell or high water.” The good route is, “We're going to maximize shareholder value, and shareholders are just reminding us to maximize shareholder value and that they're watching.” I'm publishing this because I'm an engaged shareholder. I think this is a fantastic opportunity.

My hope and expectation is that they will go the good-girl Penny route, that they will maximize shareholder value, that they will maximize risk-adjusted value, and that is the route they will go. I'm publishing this because I believe in shareholder engagement. Whichever route you think management should go, you can do lots of research on this company. You can research each individual drug.

If you research each individual drug and you're like, “Andrew, I think KER-065 is going to cure every disease known to mankind, and I think it's worth $1 trillion, and we can't give up a penny of that,” if you truly believe that, you should go let management know that, right? You should tell them, “Hey, accelerate the R&D,” all that sort of stuff, if that's what you truly believe. But I just think this is a company trading for 50% of net cash. Shareholders should let the board know what needs to be done to maximize shareholder alignment here, to maximize shareholder value here. And I don't want this to go the zombie biotech route.

So that's why I'm publishing this article. Again, I am very much talking my own book. I am long KROS. I hope you agree with me, and you'll communicate to the board, to the management team, and to investor relations. You can go on the company's website and find all that contact information. If you agree with me, do it.

Again, this is a situation where if 50 shareholders email them and the board kind of starts counting noses and says, “Oh my God, we've got 50 shareholders who are emailing us saying they're going to hold us accountable. We need to maximize shareholder value. They don't want us to spend this cash. They think it's NPV-negative,” it's incumbent on the board and management team to do one of 2 things.

Number 1: prove shareholders wrong. Go release more data. Get shareholders talking. Have shareholders come and buy the stock on the hope and expectation that these drugs are NPV-positive. And then, when the market price reflects that, you can go do that. And number 2: if you can't do that, you've got to wind it up.

Okay, I've rambled. I've left you with a picture of my good girl Penny. Again, I am long KROS. I hope and expect my fellow shareholders will communicate to the board whatever their views are and what they think the board should do.

I think pharma overall is a really interesting opportunity right now. I think this is right at the top of the most interesting opportunities I see out there. It is Monday, April 7th. I am wrapping up, and I thank you for your time. We'll chat later this week.