Athira drama not over yet, as investor and ally of former CEO calls for another C-suite change

If you thought the battle for leadership of Alzheimer’s disease biotech Athira Pharma was settled after the company switched CEOs last year, you’re in for a bit of whiplash today.

Ric Kayne, an investor who owns 4.8% of the company and an ally of ousted CEO Leen Kawas, has nominated himself and former Novartis CFO George Bickerstaff as directors to the biotech’s board. But that’s not all. Kayne is looking to now ditch the CEO who replaced Kawas, arguing that Mark Litton, Ph.D., was appointed hastily, lacks experience, falsified his credentials and has “overseen significant destruction of shareholder value” since taking the helm, according to a letter to shareholders.

“Given my strong belief in ATH-1017 and its potential, I cannot sit idle and allow this inexperienced board and management team to destroy the value of the company,” Kayne wrote.

Just to back up: Kawas was relieved of her role in October 2021 after an investigation confirmed that she altered images in her 2011 doctoral dissertation and in at least four co-authored research papers in the early 2010s during her graduate studies at Washington State University.

Litton, who had been serving as interim CEO while the investigation was underway, was then picked to fill the role permanently.

Now, Kayne wants to shake things up once more, arguing Kawas was removed without an adequate succession plan in place.

“Simply put, Dr. Litton is not the right CEO for Athira, and I believe the board erred in hastily replacing Dr. Kawas,” Kayne wrote.

He said that Litton has no operational, clinical trial or scientific experience and has instead spent much of his career in business development roles. That experience could be helpful later on as Athira gets closer to commercialization, Kayne said. But for now, Athira needs new leadership.

“It is unfathomable to me that Athira’s board forced the resignation of Dr. Kawas, a highly respected biotech entrepreneur who oversaw the development of ATH-1017 and Athira’s highly successful capital-raising activities and IPO, and replaced her with an unqualified, unproven executive with no clinical trial expertise, all without even conducting a proper search process for a permanent CEO during the four-month investigation that it purportedly undertook regarding Dr. Kawas,” Kayne said.

In the letter, Kayne went on to note that he and Kawas have started Propel Bio Partners LP, a life sciences investment company that launched last week to support disruptive therapies and technologies. Kayne is also founder and co-chairman of Kayne Anderson Capital Advisors, L.P., which has more than $34 billion in assets under management.

Kayne also took issue with the fact that Litton’s salary has been steadily increasing—approved by the board—even though Athira’s share price has plummeted 25% since he took over. The stock is trading around $13.61 today, compared to $18.24 on June 17, the day before Kawas was placed on leave.

After criticizing the board’s experience and calling for renewed leadership and governance policies, Kayne lobbied for his own nomination to the board: “Adding me and George Bickerstaff will help the board restore credibility and refocus on what really matters: attracting the best management team and giving ATH‑1017 the best chance of success.”

Athira responded to the letter by touting the advancement of ATH-1017, also known as fosgonimeton, through clinical trials. The company is expecting top-line results from a phase 2 study in the second quarter of this year.

“The board of directors is confident Athira has the right strategy and the right team to lead the company through this pivotal chapter,” the response said.

The company has already added three independent board members this year, including one suggested by Kayne himself. Despite discussions with Kayne to try to resolve concerns about the company’s leadership, “Mr. Kayne has rejected our attempts to find common ground.”

“Mr. Kayne has pushed Athira to resume a formal relationship with his current business partner and the company’s former CEO” Kawas, Athira said.

“The board believes that ending Dr. Kawas’s relationship with Athira was and remains in the best interests of Athira and our shareholders,” the company said.