SCHEDULE: Activist Investor Challenges ProQR Board Governance

Van Herk Investments, holding 11.6% of ProQR Therapeutics, escalated its corporate governance concerns, demanding board changes and adherence to Dutch corporate governance standards.

Summary

• Van Herk Investments B.V. (VHI) and related entities, collectively holding 11.6% of ProQR Therapeutics N.V.'s ordinary shares (12,202,190 shares), filed an amendment to their Schedule 13D.
• The filing details a follow-up letter sent by VHI to ProQR's board on August 19, 2025, reiterating concerns regarding the reappointments of Mr. James Shannon and Mr. Daniel de Boer to the board at the June 3, 2025, annual general meeting.
• VHI alleges that these reappointments contradict the Dutch Corporate Governance Code (CGC) and ProQR's own Board Rules, specifically citing Mr. Shannon's extended tenure of thirteen years which exceeds the ten-year limit.
• VHI acquired an additional 700,195 ordinary shares between June 12, 2025, and July 21, 2025, for an aggregate net amount of $1,319,201.27, funded by general working capital.
• The letter serves as a formal letter of objection (bezwarenbrief) under Dutch Civil Code Article 2:349, section 1, and VHI reserves all rights to take further action if its demands are not met.

Sentiment

Score: 3

Explanation: The filing indicates significant shareholder dissatisfaction with the company's corporate governance, board composition, and historical underperformance. The activist investor is escalating demands and threatening further action, suggesting a negative outlook on current management and board effectiveness.

Positives

• Reporting persons acquired additional shares, indicating continued investment interest and belief in potential value if governance improves.
• The activist investor is pushing for improved corporate governance and board accountability, which could benefit long-term shareholder value if successful.

Negatives

• ProQR's board allegedly failed to adhere to its own governance framework and the Dutch Corporate Governance Code regarding director reappointments.
• The reappointment of Mr. James Shannon contradicts a prior assurance from the 2024 AGM that his term would not be extended beyond 2026.
• Mr. Shannon's extended tenure (thirteen years) directly contravenes Board Rules and CGC, which limit terms to ten years, without sufficient justification.
• There is a lack of a credible plan for leadership transition or board rotation, with several non-executive directors serving since 2012-2014.
• The company has a history of underperformance, with three major strategic reorientations since its IPO failing to deliver promised results, including stagnant key partnerships, unmaterialized business development deals, and slow clinical progress.
• Senior management continues to receive maximum short and long-term incentive bonuses despite the company's disappointing performance, raising concerns about the effectiveness and independence of the compensation committee.

Risks

• Potential for ongoing corporate governance disputes between the company and significant shareholders, leading to instability.
• Risk of further legal action by Van Herk Investments if demands are not met, which could incur legal costs and distract management.
• Continued board composition and governance practices may hinder strategic execution and overall company performance.
• Lack of board rotation and leadership transition could lead to stagnation and insufficient oversight, impacting innovation and responsiveness.
• Shareholder dissatisfaction could escalate, potentially impacting investor confidence and the company's share price.

Future Outlook

The reporting persons intend to continuously review their investment in ProQR Therapeutics and may take various actions, including engaging with management and the board, discussing with other stockholders, making proposals regarding capitalization or board structure, or adjusting their shareholdings. Van Herk Investments is open to considering an extension for Daniel de Boer beyond the 2026 AGM, provided his performance and adherence to governance expectations improve.

Industry Context

This filing highlights a growing trend of shareholder activism in the biotechnology and pharmaceutical sectors, where investors are increasingly scrutinizing corporate governance, board effectiveness, and strategic execution, especially in companies with a history of underperforming clinical pipelines or business development efforts. The emphasis on adherence to corporate governance codes, such as the Dutch Corporate Governance Code, reflects a broader push for transparency and accountability from institutional investors.

Comparison to Industry Standards

• The concerns raised by Van Herk Investments regarding board tenure (Mr. Shannon's 13-year cumulative tenure exceeding the 10-year limit in the Dutch Corporate Governance Code) are a common point of contention in corporate governance, with many global benchmarks recommending regular board refreshment and limits on independent director tenure to ensure fresh perspectives and independence. For example, the UK Corporate Governance Code suggests that a director serving more than nine years may no longer be considered independent.
• The criticism of the company's repeated strategic reorientations without delivering promised results and the continued awarding of maximum bonuses to senior management despite underperformance are issues frequently highlighted by activist investors across industries, including biotech. This contrasts with best practices seen in successful biotech firms like Regeneron or Vertex Pharmaceuticals, where executive compensation is often more closely tied to tangible clinical milestones and sustained shareholder value creation.
• The lack of a clear board rotation plan is a governance weakness compared to leading companies that proactively manage board succession and diversity, ensuring a mix of skills and experiences. Companies like Johnson & Johnson or Pfizer, while much larger, demonstrate robust governance frameworks that include structured board evaluation and refreshment processes.

Corporate Governance

Legal Proceedings

• The follow-up letter serves as a formal "letter of objection (bezwarenbrief)" as prescribed by Article 2:349, section 1, of the Dutch Civil Code.
• Van Herk Investments reserves all rights to take further legal action if the board fails to meet its demands.

Stakeholder Impact

• Shareholders: Potential for increased shareholder value if governance improvements lead to better performance; conversely, ongoing disputes could create uncertainty and negatively impact share price. The activist stance aims to protect shareholder interests by demanding accountability.
• Management/Board: Faces pressure to address governance concerns and potentially make changes to board composition and compensation practices.
• Employees: Indirect impact from strategic shifts or changes in company direction resulting from governance changes.
• Creditors: Indirect impact from potential changes in financial health or strategic stability.

Next Steps

• ProQR's board is called upon to publicly announce that Mr. Shannon and Mr. De Boer will serve only until the 2026 AGM, with reappointments considered in consultation with shareholders.
• ProQR's board is called upon to publicly provide a clear explanation for Mr. De Boer's reappointment rationale.
• ProQR's board is called upon to publicly commit to presenting a structured and transparent plan for board rotation in advance of the 2026 AGM.
• ProQR's board is called upon to publicly commit to future compliance with Board Rules, the Dutch Corporate Governance Code, and high standards of Dutch and U.S. corporate governance.
• Van Herk Investments reserves all rights to take further steps, including legal action, if the board fails to meet its demands.
• Reporting persons may engage in further communications with management and the board, discussions with other stockholders, make recommendations on capitalization or board structure, or adjust their shareholdings.

Key Dates

Recommendation

The filing reveals significant and escalating corporate governance issues, including alleged non-compliance with governance codes, excessive board tenure, lack of board refreshment, and misaligned executive compensation despite a history of strategic failures and underperformance. The activist investor's formal letter of objection and threat of further legal action indicate deep-seated problems that could lead to prolonged uncertainty and negatively impact the company's operational focus and share price. The current leadership's apparent unwillingness to address these concerns suggests a high risk of continued underperformance and potential value destruction for shareholders.

Keywords

ProQR Therapeutics, Van Herk Investments, Corporate Governance, Shareholder Activism, Board Composition, Dutch Corporate Governance Code, Biotechnology, Pharmaceuticals, Investor Relations, SEC Filing