Whether it’s drug developers being pressured to wind down or investors accused of trying to “strip mine” a company, shareholder meetings are increasingly becoming battlegrounds for the future of beleaguered biotechs.
This year has already seen Elevation Oncology and Essa Pharma come under sustained fire from activist investors—in the form of BML Capital Management and Soleus Capital Management, respectively—to persuade them to close their businesses and hand the proceeds over to shareholders.
Meanwhile, investor Trium Capital tried unsuccessfully to derail Acelyrin’s merger with immune-mediated disease specialist Alumis, and shareholder Deep Track Capital didn’t hold back in its criticism of Dynavax’s “misguided empire-building exercise” of pursuing external asset acquisitions.
Even the CEOs of Big Pharmas have come under fire. Activist investor Starboard Value has made no secret of its criticism of Pfizer CEO Albert Bourla’s track record, while GSK CEO Emma Walmsley fought off attempts by Elliott Management in previous years to undermine her position.
Johnson & Johnson’s consumer health spinout Kenvue has become the latest magnet for activist investors, with both Starboard and TOMS Capital Investment Management looking to alter the company’s plans.
The story behind these disputes is often very similar. Activist investors grow a stake in a biotech or pharma until they feel they have the power to start influencing the company’s strategy—often with an eye to return as much cash to shareholders as quickly as possible.
The recent step-up in skirmishes between drug developers and their most vocal investors is reflected in the data—biotech was the most active sub-industry for activist investors in the first quarter of 2025, according to a recent report (PDF) by Sodali. The corporate advisory firm monitors 40 of the top activist investors and noted that 31 of these entities had a stake in the biotech sector, compared to 27 that had a foothold in the application software space and 16 that were dabbling in pharmaceuticals.
In fact, Sodali has seen a “general increase” in activists acquiring stakes in various healthcare-focused companies, including biotechs and pharmas, according to Jason Black, head of analytics international at the firm.
“Out of all the industries, it seems like healthcare has generally been on an upward trend over the last 12 months or so,” Black told Fierce.
He suggested this uptick in activist investor interest in healthcare companies could be driven by “a sense that it's an undervalued sector in general.”
Black pointed to the D. E. Shaw Group, the biggest single activist investor in biotech, which has accrued stakes in more than 140 companies.
“That doesn't mean they're taking activist positions in 140 companies, but it's a pretty significant portfolio to have in that sector,” Black said. “To me, it looks like it's a sector decision to be investing there for whatever reason it might be. And if they can influence share price in some way—then they will.”
Tom Quincey, a partner in the corporate department of law firm Baker McKenzie, said investor activism across the world has “been on the rise in recent years,” with 2024 seeing the most engagement from activist investors since 2018 and the trend continuing into this year.
“Healthcare, which captures biotech and other healthcare companies, is in the top three sectors being targeted in Q1,” he told Fierce in an interview.
Quincey suggested that one of the reasons activists appear “more emboldened” at the moment could be “the lack of, or at least the reduction in, M&A activity.”
Looking to "extract or increase value"
So what’s in it for activist investors? Unfortunately, none of the five investors Fierce reached out to for this article were available to talk, but Black explained that the principle is “just trying to drive the share price to something that you think the company should be valued at.”
“Some will want a seat on a board,” he said. “Others will not necessarily be looking for a seat, but they might want a change of direction or change of strategy. The best way to do that is at a general meeting … to get the support of other shareholders for whatever you're trying to do.”
Activists “are looking to how companies [could] extract or increase value,” according to Quincey. “Pushing for things like separations in divestments through the activist route is one of the ways that they're seeking to achieve that.”
These moves can have consequences on how companies operate. In PwC's 2025 midyear outlook on the pharma and life sciences sectors, the firm's analysts described how the activist investor trend has “intensified pressures on companies to improve asset portfolios.”
“This has led to increased divestiture activities, driven by the need to streamline operations and realign assets more closely with strategic growth areas amid the ongoing uncertainty,” the analysts added in the report.
Sodali’s Black said biotechs targeted by activist investors will try to get their other shareholders onside in advance of any conflict.
“Generally for any company, when an activist comes on board it is about engaging with all your shareholders and mobilizing as many as you can to support you,” he said.
A key preparation is for biotechs to make sure they have a good story to tell, according to Quincey.
“I think every company, particularly listed companies, will be aware of the increase in activist activity and starting to ask themselves: Have we got a clear story as to what we're seeking to achieve?” he said.
“Because ultimately, having a defensible strategy out in the market they can point to in an activist situation is going to be one of the best defenses,” Quincey added.
One aspect that makes it trickier to navigate these situations is that activist investors may not be looking to get involved in every company they take a stake in.
“We sometimes see an activist come on with 100 shares or something,” Black explained. “When we see that, we always warn clients: They've done this on purpose; the tiny stake is to warn you that they're here.”
“So taking a big stake potentially means that they are gearing up for something,” he continued. “But sometimes it doesn't. Sometimes it's just an investment that they're making.”
Even if biotechs do make concessions to activist investors, it’s not always enough. In June, Keros Therapeutics reaffirmed a pledge to return $375 million of “excess capital” to stockholders. The hematological- and cardiovascular-focused biotech made the call in the wake of a stakeholder meeting during which activist investor ADAR1 Capital Management, which owns 13.3% of Keros’ stock, led a rebellion against the reappointment of two members of the biotech’s board.
But this wasn’t enough to appease ADAR1, which pointed to the fact that only about a third of shareholders voted for the two board members as evidence of “widespread dissatisfaction” with the company’s direction. Instead, the investor demanded that Keros “take immediate and concrete action to reduce costs more aggressively” as well as to raise the amount being handed to shareholders by a further $100 million to $475 million.
So, will biotechs have to adjust to activist investors demands like this as the new normal? Black said it depends whether these investors continue to see an opportunity to raise the value of drug developers.
“If investors feel like biotech is fairly valued, then you're probably going to see a lot less of it,” he said.
With 2024 being a “very busy year” for activist investors, according to Baker McKenzie's Quincey, it would probably be a safe bet for biotechs to brace themselves for some interest from energetic investors in the meantime.
“The Q1 statistics show that it's continued to it looks as if activists and activism is here to stay,” he said. “For the time being, at least.”