Asset Value Investors Urges Rohto Pharmaceutical to Focus on Core Businesses and Engage With Shareholders More Constructively

LONDON--(BUSINESS WIRE)--Asset Value Investors Limited (‘AVI’) launches a campaign calling for Rohto Pharmaceutical (‘Rohto’) to focus on its core businesses rather than allocating resources to the unsuccessful regenerative medicine business, and to engage with shareholders more constructively to comply with the Tokyo Stock Exchange’s (‘TSE’) request for management that is conscious of the cost of capital and stock price. A detailed presentation can be found here.

Since AVI started investing in Rohto in June 2024, AVI has sought to engage in dialogue with the company, sending letters and presentations, with the aim of improving corporate value in a sustainable manner. However, AVI is deeply concerned by the company continuing to invest in regenerative medicine, a business with no clear path to success, announcing M&A deals at high valuations, and the sudden issuance of potentially dilutive convertible bonds despite the low share price, resulting in a stagnant share price.

AVI has sought to engage constructively in private dialogue with the board of directors, however, to date, AVI has been able to meet with just one board member, repeatedly citing scheduling challenges. It is clear to AVI that the company continues to neglect engaging in constructive dialogue with investors, which is not in line with the TSE’s request to listed companies in Japan for “management that is conscious of the cost of capital and stock price”

Joe Bauernfreund, CIO and CEO of AVI: “Rohto Pharmaceutical remains undervalued relative to its peers. As shareholders, we have sought to engage constructively with management on multiple occasions to focus on its profitable skincare and eye drops businesses. Unfortunately, our attempts to engage with the Board of Rohto have not been successful and as such we have made our campaign public.”

Kazunari Sakai, AVI Japan’s Head of Research: “The potential value of Rohto’s core businesses, cosmetics and eye care, is significant. However, the continued blind investment in its regenerative medicine business is weighing on shareholder value and is restricting the company’s potential to realise its intrinsic value. AVI is confident Rohto’s full valuation potential will be realised by refocusing management’s strategy and communicating this clearly to investors, while urgently ending its disregard for the cost of capital and share price conscious management requested by the TSE.”