SCHEDULE 13D: Activist Investor Van Herk Challenges ProQR Therapeutics Board Reappointments, Citing Governance Breaches and Underperformance

Van Herk Investments, a significant shareholder in ProQR Therapeutics N.V., has filed a Schedule 13D to publicly challenge the proposed reappointments of two key board members, citing breaches of corporate governance and disappointing company performance.

Summary

• Van Herk Investments B.V. and related entities (the "Reporting Persons") beneficially own 11,501,995 ordinary shares of ProQR Therapeutics N.V., representing 10.9% of the outstanding shares as of March 31, 2025.
• The Reporting Persons acquired their initial 5% stake in September 2023 and have since increased their holding to over 10%, viewing themselves as long-term investors in life sciences.
• On May 23, 2025, Van Herk Investments sent a letter to ProQR's board of directors, expressing concerns about the proposed reappointments of Mr. James Shannon (Chairman) and Mr. Daniel de Boer (CEO) at the upcoming June 3, 2025 Annual General Meeting (AGM).
• VHI alleges that these reappointments violate the Dutch Corporate Governance Code and ProQR's own Board Rules, specifically regarding term limits for Non-Executive Directors.
• VHI attributes ProQR's "disappointing performance" and repeated strategic reorientations to a "lack of quality in oversight and an unhealthy, complacent dynamic within the Board."
• The investor urges the Board to withdraw the agenda items for Shannon and De Boer's reappointments and reserves the right to take further steps if their requests are not met.

Sentiment

Score: 3

Explanation: The document expresses strong negative sentiment from a significant shareholder regarding the company's performance, board composition, and adherence to corporate governance standards. It highlights repeated failures, missed targets, and a perceived lack of effective oversight, leading to a demand for leadership change.

Positives

• Van Herk Investments sees opportunities for ProQR Therapeutics, particularly in its focus on RNA technology and its collaboration with Eli Lilly.
• VHI is a long-term investor with extensive experience in life sciences, suggesting a commitment to the company's potential.

Negatives

• ProQR has been forced to strategically reorient itself twice and is now on its third attempt, with progress remaining "discouraging" under largely the same leadership.
• Objectives set at the start of VHI's involvement have not been achieved, and promises have not been fulfilled.
• The option to expand the collaboration with Eli Lilly has not been exercised.
• Previously announced business development deals have not materialized.
• Clinical research is progressing more slowly than expected.
• VHI attributes disappointing performance to a "lack of quality in oversight and an unhealthy, complacent dynamic within the Board."
• The proposed reappointment of Mr. James Shannon for a four-year term is explicitly contrary to the Company's governance (Board Rules section 3.5) and the Dutch Corporate Governance Code, as it would exceed maximum term limits (13 years vs. 10-year cumulative maximum).
• The reappointment of Shannon also breaches a commitment made at the 2024 AGM that his and Mr. Dinko Valerio's two-year reappointments would be their last.
• The generic motivation for Shannon's reappointment is deemed insufficient.
• The Board's rationale for reappointing Shannon and De Boer during their current terms (which expire in 2026) for "continuity of leadership" is not adequately explained.
• Mr. Dinko Valerio and Ms. Alison Lawton, both Non-Executive Directors, have served longer than permitted by governance.

Risks

• Risk of continued disappointing company performance due to perceived lack of quality in oversight and complacent board dynamics.
• Risk of non-compliance with Dutch Corporate Governance Code and the Issuer's own Board Rules regarding director term limits, potentially leading to governance issues.
• Risk of shareholder activism and potential proxy contest if the Board does not accede to Van Herk Investments' demands.
• Risk of further delays in clinical research and failure to materialize business development deals.
• Risk of strained relations with a significant shareholder (Van Herk Investments, holding 10.9%).
• Financial risk associated with VHI's shares being pledged as security for margin loans.

Future Outlook

Van Herk Investments B.V. indicates that if the ProQR Therapeutics N.V. Board does not withdraw the agenda items for the reappointments of Mr. Shannon and Mr. De Boer, VHI will be forced to consider taking further steps, reserving all rights. VHI also requests that the Board exercises closer supervision of compliance with targets and provides more detailed information on this supervision in future reports.

Management Comments

• "We believe that the disappointing performance can be attributed to a lack of quality in oversight and an unhealthy, complacent dynamic within the Board, which on key positions consists of individuals who have been working together for a long time."
• "Not only do we see little reason or justification for these reappointments given the very much disappointing performance of the Company under the leadership of De Boer and Shannon, the proposal to again reappoint Shannon as a Non-Executive Director for a term of four years is also (i) in breach with the commitment made at the AGM in 2024, and (ii) explicitly contrary to the Company's governance, as this reappointment would exceed both the maximum term limit and the maximum cumulative term of office."
• "We are of the opinion that the generic motivation for the nomination of Shannon for reappointment, as included in the explanatory notes to the agenda for the AGM to be held on 3 June 2025, does not qualify."
• "We believe that the Board fails to fulfil its corporate governance duties towards the Company's stakeholders."
• "New leadership is warranted."
• "Therefore, we urge the Board to withdraw the agenda items to reappoint Shannon and De Boer for the upcoming AGM."

Industry Context

This filing highlights a specific corporate governance dispute within the biotechnology sector, where investor scrutiny over board composition and company performance is common, especially for companies undergoing strategic shifts or facing clinical development challenges. The mention of Eli Lilly collaboration indicates ProQR's engagement in significant pharmaceutical partnerships, a key trend in biotech.

Comparison to Industry Standards

• The document explicitly references the "Dutch Corporate Governance Code" and the Issuer's own "Board Rules" (section 3.5) as the standards against which ProQR's proposed reappointments are failing.
• The Dutch Corporate Governance Code typically recommends term limits for non-executive directors to ensure independence and fresh perspectives, with a maximum cumulative term often cited around 10 years, and reappointments beyond 8 years requiring specific substantiation. ProQR's Board Rules align with this, stating a Non-Executive Director may only be reappointed once for four years, and then for two-year terms up to a maximum cumulative term of ten years, with extensions beyond eight years requiring specific substantiation.
• Van Herk Investments argues that Mr. Shannon's proposed reappointment for four years would extend his cumulative term to thirteen years, directly conflicting with these established governance standards.
• The document also implies a comparison to industry best practices regarding board oversight and accountability, suggesting that ProQR's board has not demonstrated sufficiently rigorous and independent oversight given the company's repeated strategic reorientations and missed targets.

Management Changes

Corporate Governance

Stakeholder Impact

• Shareholders: Potential for increased shareholder activism and a proxy contest, which could create uncertainty but also potentially lead to improved governance and performance if VHI's demands are met. Risk of value erosion due to continued underperformance if current board composition persists.
• Management/Board: Direct challenge to the leadership of Mr. Shannon and Mr. De Boer, potentially leading to their removal or a significant shift in board dynamics. Increased pressure to demonstrate accountability and adherence to governance standards.
• Employees: Potential for strategic shifts or leadership changes could impact employee morale and job security, though not directly addressed.
• Customers/Partners (e.g., Eli Lilly): Continued underperformance or governance instability could affect confidence in ProQR's ability to execute on collaborations and product development, potentially impacting future partnerships.
• Creditors: VHI's shares are pledged as security for margin loans, indicating a potential risk for creditors if the share value declines significantly, though this is specific to VHI's financing, not ProQR's.

Next Steps

• ProQR Therapeutics N.V. Board to consider withdrawing agenda items for the reappointment of Mr. James Shannon and Mr. Daniel de Boer for the June 3, 2025 AGM.
• ProQR Therapeutics N.V. Board to exercise closer supervision of compliance with targets and provide more detailed information on this supervision in future reports.
• Van Herk Investments B.V. will consider taking further steps if their requests are not acceded to.

Key Dates

Recommendation

Keywords

ProQR Therapeutics, Van Herk Investments, Schedule 13D, Shareholder Activism, Corporate Governance, Board Composition, Director Reappointment, Dutch Corporate Governance Code, Biotech Investment, RNA Technology, Eli Lilly Collaboration, Shareholder Rights, Proxy Fight, Investment Management