Athira board spares no punches to fend off proxy fight from ally of ousted CEO

The battle over board seats for Alzheimer’s-focused Athira Pharma is reaching a boiling point, with the current board of directors sparing no punches in a letter to shareholders as it fends off a proxy fight from an ally of the former CEO ousted last year. 

In a letter released after market close on Tuesday, the board urged shareholders to nominate existing members Joseph Edelman, John Fluke Jr. and Grant Pickering to counter shareholder Ric Kayne’s nomination of himself and former Novartis Chief Financial Offocier George Bickerstaff.

Kayne’s move is “misguided and unnecessarily disruptive” and one that would not add value, according to the board. Further in the letter, the board writes in all-caps “MR. KAYNE IS STUCK IN THE PAST.” The board’s letter comes a week after Kayne, who owns 4.8% of the company, nominated himself and Bickerstaff. 

The letter is the latest in an almost six-month saga that kicked off after then-CEO Leen Kawas, Ph.D., resigned in October 2021 following an investigation by the company that found she altered images in her research while a graduate student at Washington State. The board then tapped COO Mark Litton, Ph.D, to fill the CEO role after he had been in the position on an interim basis during the investigation.

Clearly, Litton did not satisfy Kayne, who wrote in his letter last week that Litton has “little to no operational, clinical trial or scientific experience.” 

In a clear tit for tat over falsifying information, Kayne contends that Litton lied about his own degree, writing on his LinkedIn page that he had received a Bachelor of Applied Science in molecular biology from the University of California, Santa Cruz, when in fact he received a Bachelor of Arts. Litton’s page now reads Bachelor of Arts, although Fierce Biotech was unable to confirm what was previously listed. 

Kayne also contends that the board’s removal of Kawas spurred a 49% freefall of the biotech's share price, from June 17, 2021, to the end of February of this year. That’s not wrong, but it’s misleading, given that the bulk of that plummet came the day Kawas was placed on leave. The board, however, noted that shares have increased since the permanent installation of Litton. 

Athira’s board contends in the letter that it’s tried working with Kayne on “common ground” to avoid the proxy battle, but to no avail. The board added that “Kayne and Bickerstaff would not add additional skills or diversity to our board.”

The company’s top asset, fosgonimeton (ATH-1017), is currently in a phase 2 trial for patients with mild-to-moderate Alzheimer’s disease. So far 77 patients have been enrolled and topline data is expected in the second quarter of 2022, according to the board.

“We are confident that we have the right strategy and leadership team to position fosgonimeton for success,” the board wrote. 

Kayne’s support comes after he and Kawas launched a new business, creating the equity investment firm Propel Bio Partners in mid-March to support life science companies. Kayne also is co-founder of Kayne Anderson Capital Advisors, L.P., which has more than $34 billion in assets. 

The showdown will come to a head at the company’s shareholder meeting May 19 when shareholders will be able to elect the new board.