Athira Pharma's CEO and President Leen Kawas, Ph.D., has been placed on leave amid reports that she altered images in academic research conducted at Washington State University.
The news, which dropped during aftermarket trading Thursday, sunk the company's shares 44% to $10.79 apiece as of 10:50 a.m. ET. Shares recovered about 7% as of 2:43 p.m. ET. Athira, which has an Alzheimer's disease therapy in development, went public just last year, becoming one of the top 30 biotech IPOs of 2020 with $204 million in proceeds.
Kawas will be replaced for the time being by COO Mark Litton, Ph.D. She will remain on the board, but an independent special committee has been formed to conduct a review of her research at WSU. The university said Friday afternoon it is reviewing claims of potential research misconduct and that WSU "takes allegations of research misconduct very seriously."
STAT reports that the Athira decision is the result of WSU investigating claims that Kawas published altered images in four separate papers on which she is the lead author.
An Athira spokesperson declined to comment beyond the press release, deferring to Jefferies and JMP Securities analysts for comment. One analyst declined to comment because of the "nature of this topic." As a result of the allegations, law firm Block & Leviton said it is investigating Athira for potential securities law violations.
Kawas was a research associate at WSU from January 2013 to February 2015, according to her LinkedIn bio, and received her Ph.D. in molecular pharmacology from the university in 2011. Kawas has been Athira CEO and a board member since January 2014 after serving as vice president, the company says on its website.
The executive also sits on many boards in the Alzheimer's space, including the Scientific Review Board for the Alzheimer's Drug Discovery Foundation, the Alzheimer's Association's Washington chapter and was previously a co-chair of the International Alzheimer's Association Business Consortium.
Litton is assuming day-to-day duties for Athira, the company said.
“Athira is committed to the integrity of scientific research in its mission to restore neuronal health for those suffering from neurological diseases, so that patients can regain their memories, lives, and family relationships," said Athira Board Chair Tachi Yamada, M.D.
Yamada said Athira is "confident in the therapeutic potential of ATH-1017 for treating dementia." The small molecule therapeutic is meant to increase the activity of hepatocyte growth factor and its receptor, MET, to restore brain tissue.
ATH-1017 is in multiple clinical trials. Last month, Athira said it was enrolling for a phase 2 clinical trial to evaluate ATH-1017 as a once-daily investigational drug for treating mild-to-moderate Alzheimer's disease, with top-line data slated for early next year. Enrollment is also proceeding for a phase 2/3 clinical trial evaluating the efficacy, safety and tolerability of ATH-1017 in mild-to-moderate Alzheimer's patients, with top-line data expected by the end of 2022.
The therapy will also be tested in patients with Parkinson's disease dementia in a phase 2 trial slated to begin by the end of this year.
Wednesday's leadership upheaval is a major snag for the newly-minted public company. Underwriters of the IPO purchased additional shares in January, which gave Athira another $103.5 million in gross proceeds.
The leadership shake-up comes three days after the company appointed Rachel Lenington as chief technology officer and head of product development strategy following roles at Seagen, the Bill & Melinda Gates Foundation and Amgen. Two weeks ago, Athira also hired a general counsel, Mark Worthington, who had been a partner at Summit Law Group for 24 years.
It's also been a rocky road for the Alzheimer's space the past two weeks. On Thursday, Biogen ended development of an Alzheimer's tau drug, but the week before nabbed a controversial FDA's approval for its other Alzheimer's treatment, Aduhelm.
Editor’s note: This story has been updated with a comment from Washington State University about the review and notice of Block & Leviton’s investigation into Arthira.