The lawsuits have begun.
Barely a week after the CEO of Athira Pharma was placed on temporary leave after allegations of altered images in scientific papers she authored, three class action suits alleging SEC violations have been filed on the behalf of shareholders.
All three lawsuits were filed on Friday and allege that the Bothell, Wash.-based company made false and misleading statements to the Securities and Exchange Commission in its filings in preparation for its IPO in September of last year, ultimately misleading investors about “invalid research.”
The company, in clinical-stage development of a compound for Alzheimer’s and Parkinson’s disease dementia, raised about $204 million in the IPO, at a share price of $17.00. Share prices have fallen by about 40% since the CEO, Leen Kawas, was put on leave on June 17, and were trading at $10.37 on Tuesday.
On June 17 the news site STAT published a story examining the claims of image manipulation in Kawas’ papers, which first emerged on PubPeer, a service where scientists can comment on the integrity of data in scientific papers.
A comment first appeared in 2016 on one paper, and more recently on three other studies. They concern papers Kawas researched while a graduate student at Washington State University, where she received a doctorate degree in 2011.
According to one of the lawsuits, Athira’s SEC filing failed to state that Kawas “had published research papers containing improperly altered images while she was a graduate student,” and that “as a result, Athira’s intellectual property and product development for the treatment of Alzheimer’s were based on invalid research.”
The lawsuits maintain that Kawas’ graduate research laid the groundwork for Athira’s efforts to develop new treatments. One suit notes that Kawas is put forward in a key SEC document as “essential in creating our innovating translational development strategy.”
The suits seek compensatory damages from the defendants, named as Athira Pharma and Kawas in one lawsuit. The other two also name company CFO Glenna Mileson and the company directors, including Joseph Edelman, founder and CEO of Perceptive Advisors, which led a Series B round for the company, and Tadataka Yamada, board chair and a partner at the venture firm Frazier Healthcare Partners. Yamada is also the former president of the Bill and Melinda Gates Foundation global health program.
Athira had no comment on the lawsuits, according to a spokesperson contacted by GeekWire.
In a June 17 press release Yamada said, “Athira is committed to the integrity of scientific research in its mission.” He also said that the company’s lead compound, ATH-1017, “was discovered, developed, and patented by Athira on the basis of novel data generated within the Company. The Company is confident in the therapeutic potential of ATH-1017 for treating dementia.”
Last summer, Kawas told GeekWire that the potential of Athira’s technology is “huge.” She co-founded Athira — formerly known as M3 Biotechnology — with WSU researchers Joseph Harding, her graduate advisor, and Jay Wright, with WSU noting the promise of initial studies in a 2012 article.
Harding resigned from the company’s board of directors in August of 2020. Wright also does not appear to be affiliated with the company per its website and is not associated with the IPO filings.
WSU is conducting its own investigation into the matter.
The suits were filed in the U.S. District Court for the Western District of Washington by Seattle law firms Tousley Brain Stephens, Rossi Vucinovich, and Keller Rohrback. Two of the suits also name as defendants the underwriters of the IPO: Goldman Sachs and Co., Stifel Nicolaus & Company, Jefferies, and JMP Securities.
Editor’s note: This story was updated with details about Harding’s board departure.