Athira CEO Leen Kawas.
Courtesy Athira Pharma
Just a bit more than a week ago, the small, Alzheimers-focused biotech Athira Pharma was a high flier, shooting up 13% in the first few hours of trading on June 7 after the U.S. Food and Drug Administration’s controversial approval of Biogen’s Alzheimer’s therapy.
Now, the stock is tumbling, and investors are facing a situation that is befuddling analysts, and creating uncertainty about the future of the firm.
In a brief press release late Thursday, Athira (ticker: ATHA) said that the company’s board had placed its president and CEO, Leen Kawas, on temporary leave. The statement said that the company was reviewing “actions stemming from doctoral research Dr. Kawas conducted while at Washington State University.”
Formerly known as M3 Biotechnology, Athira was founded by Kawas and colleagues from Washington State University based on the research she and others did there. Kawas didn’t immediately respond to a request for comment sent to her Athira email address.
Athira shares were down 43.5% in premarket trading on Friday. As of the close of business Thursday, Athira’s market value was $690.5 million.
“We don’t really know how to process this development,” Stifel analyst Paul Matteis wrote in a note. “The scientific hypothesis behind Athira came out of the work [that] Dr. Kawas did in graduate school so there is risk here that whatever comes out of this investigation could have clear negative implications for how we/investors view the asset, and/or management credibility.”
The healthcare news websites Stat and Endpoints both reported that scientific papers from 2011 through 2015 on which Kawas was lead author have recently been posted on PubPeers, a website where researchers flag issues in published papers. Posters on the site, and experts consulted by Stat, suggested that images in the papers could have been manipulated.
In its statement, Athira emphasized that it had run clinical and preclinical trials that had validated its approach to treating Alzheimer’s.
Jefferies analyst Andrew Tsai wrote that he had spoken with the company’s chief operating officer, Mark Litton, who has assumed day-to-day leadership of the company. “All preclinical and clinical work around [the company’s Alzheimer’s drug, ATH-1017] is completely separate from the doctoral research, as the drug was developed in-house while the preclinical (e.g. in-vitro, animal models) and Phase I data was generated either internally or through a third-party,” Tsai wrote, based on his call with Litton.
Tsai wrote that he was reserving judgement until more details became available. He maintained his Buy rating on the stock.
Stifel’s Matteis took a similar approach. “At this stage we think all we can really do is wait and see,” he wrote, maintaining his Buy rating.
Write to Josh Nathan-Kazis at [email protected]
