Athira Pharma Inc. (Nasdaq: ATHA) shareholder Ric Kayne, who earlier this month launched an investment firm, has called for the resignation of current CEO Mark Litton in a scathing letter.
Kayne's letter, which was addressed to company shareholders and served as his self-nomination to the biotech's board of directors, makes various claims about Litton's credentials and management of Athira. Litton became interim CEO last June when former CEO Leen Kawas was put on leave after questions surfaced around her doctoral work at Washington State University.
Kawas ultimately resigned in October after an investigation found she had altered images in her doctoral dissertation and at least four papers she co-authored at WSU that were published between 2011 and 2014. Earlier this month, Kawas launched Propel Bio Partners with Kayne.
"Dr. Litton is not the right CEO for Athira, and I believe the board erred in hastily replacing Dr. Kawas," Kayne wrote in the letter. "Considering that Dr. Litton has little to no operational, clinical trial or scientific experience, having spent substantially all of his career in business development roles, I question the board’s decision-making in appointing him CEO."
Litton had served as Athira's chief operating officer since July 2019 before taking over the Bothell-based biotech after Kawas' departure. Before Athira, Litton held roles at Alpine Immune Sciences and Alder Biopharmaceutical.
In its response to Kayne's letter, Athira stressed its commitment to its current leadership.
"Mr. Kayne has pushed Athira to resume a formal relationship with his current business partner and the company’s former CEO, Dr. Leen Kawas," the company said in a statement. "The board believes that ending Dr. Kawas’s relationship with Athira was and remains in the best interests of Athira and our shareholders."
Athira, originally called M3 Biotechnology, was founded in 2011. The company's lead drug, ATH-1017, is aimed at treating Alzheimer's and Parkinson's dementia. The biotech went public in 2020 and expects to report Phase 2 results in the second quarter.
In a proxy statement filed with the SEC, Athira said Kayne disclosed in February he is affiliated with a hedge fund that has a short position in Athira. Kayne says he and his associates own roughly 4.8% of Athira's shares.
In an emailed statement to the Business Journal, Kawas wrote:
"As Athira’s founder and former CEO, I care deeply about the company and its mission. I remain a significant passive investor in Athira and wish it every success in improving the quality of life of people suffering from neurodegenerative disorders. With that being said my future is Propel Bio Partners. ... I feel privileged to be partnered with Ric (Kayne) on Propel, someone that brings deep expertise and significant network in a wide range of industries including life sciences."
Propel Bio Partners focuses on life sciences companies and has a total offering amount of $150 million.
