8/21/2036
Kaos Capital Demands Board Overhaul at Capricor Ahead of FDA Decision on DMD Therapy
BigGo Finance (08/21/36)
Capricor Therapeutics Inc. (CAPR) is facing an activist campaign from shareholder Kaos Capital, which is demanding immediate board changes, a cash-preservation plan, and the creation of an M&A committee just one day before the U.S. Food and Drug Administration (FDA) is scheduled to act on the company's experimental Duchenne muscular dystrophy therapy. Kaos Capital, a Miami-based investment firm that describes itself as a "significant and growing shareholder," issued a letter to fellow shareholders on August 21 calling for a meeting with the board within 15 business days. The firm said it intends to nominate two independent directors and push for a board-led M&A and Strategic Alternatives Committee chaired by a shareholder-backed director. The activist campaign lands at a precarious moment for Capricor. The FDA's action date on deramiocel, the company's cell therapy for DMD-related cardiomyopathy, is August 22. In June, an FDA advisory panel voted 9-3 against the drug's use for that indication, casting significant doubt over its approval prospects. Capricor shares were down approximately 2% at the time of the letter's release. In the letter signed by CEO Adam Arviv, Kaos argued that Capricor has become overly dependent on a single regulatory outcome and must take immediate steps to preserve capital while exploring acquisitions, licensing deals, and partnerships that could broaden its pipeline. The company reported $237.9 million in cash, cash equivalents, and marketable securities as of June 30, down roughly $80.2 million from year-end 2025. First-half 2026 operating expenses totaled $79.7 million, including $23.5 million in general and administrative costs — approximately double the comparable 2025 figure, according to the letter. Kaos called for a formal Cash Preservation Plan that would include: a near-term freeze on nonessential spending; a zero-based review of G&A expenses; enhanced approval requirements for material commitments; and quarterly reporting on cost reductions, cash runway, and capital use. The firm also urged the board to retain independent legal advisers and commission a review of oversight, disclosure controls, contracting, compensation, and capital-allocation processes. Kaos cited "numerous legal matters and shareholder demands" disclosed in Capricor's public filings, including securities and derivative actions, a Section 220 books-and-records demand, a patent action, a distribution dispute, and employment-related claims. A further securities class action was filed against the company and certain officers in 2026. "This legal overhang carries cost, distraction, reputational risk, and governance consequences," the letter stated. Kaos emphasized it is not asking Capricor to abandon deramiocel, which it believes "may still have meaningful value for patients." Instead, the firm wants the company to use its cash and public-company platform to build a broader, multi-modality biotechnology enterprise. The proposed M&A committee should evaluate assets in inflammation, fibrosis, tissue repair, targeted delivery, and regenerative medicine, the letter said. Kaos specifically pointed to advanced small-molecule pharmacology targeting the NLRP3/inflammasome signaling pathway as one area of interest. "Conviction in a lead program is not a license for a Board to concentrate all of a public company's capital, risk, and future in a single regulatory outcome," Arviv wrote. The activist push comes as Capricor awaits the FDA's decision on deramiocel. The agency's action date is August 22, though the timeline has grown complicated. After the advisory committee's negative vote in June, Capricor said the FDA was willing to review an amendment containing 24-month Hope-3 data focused on upper-limb function. A new target date has not been formally announced. Roth Capital expects the FDA review could be extended by approximately three months to accommodate the additional data. Kaos said it is prepared to work constructively with the board but warned of escalation if its demands are not met. If the board does not confirm and convene the requested meeting within the specified timeframe, Kaos said it will begin seeking shareholder support to elect its two independent nominees, replace directors, and potentially pursue removal of senior management. "We do not take that step lightly, but continued inaction would leave shareholders no reasonable alternative," the letter read.
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