Athira Pharma is circling the wagons and urging shareholders to reject investor Richard Kayne’s calls for a management change.
Athira President and CEO Mark Litton/Courtesy of Athira Pharma
Athira Pharma is circling the wagons and urging shareholders to reject calls for management change. This comes one week after investor Richard Kayne called for a leadership change in order to drive the development and commercialization of the company’s lead Alzheimer’s disease asset, ATH-1017 (fosgonimeton).
Last week, Kayne, who owns 4.8% of the company, issued a letter to shareholders imploring they support his bid for a seat on the company board of directors, along with George W. Bickerstaff, III, the former chief financial officer of Novartis Pharma AG, and also support a change in leadership of the company. Mark Litton was tapped to serve as CEO of Athira last fall following the ouster of Leen Kawas after an investigation revealed that she altered images in her 2011 doctoral dissertation and in at least four research papers that she co-authored while a graduate student at Washington State University. In the letter, Kayne said Litton is not fit for the job.
Kayne, who recently launched Propel Bio Partners alongside Kawas, said Litton spent the majority of his career in business development and has little to no clinical or scientific experience, which is something the leadership of Athira needs. Kayne also raised questions about Litton’s academic background and claimed that some members of the company’s management team have left due to the “hasty appointment” of Litton as CEO.
On Tuesday, the board of Bothell, Washington-based Athira issued its response to Kayne’s letter, saying that Kayne’s platform is “misguided and unnecessarily disruptive.” The board said the appointment of Kayne and Bickerstaff would not add any skills or expertise to the board that are not already well-represented by current directors. The board said Athira is focused on the future with its current slate of board candidates, while Kayne is “stuck in the past.”
“Instead of looking forward, Mr. Kayne has pushed Athira to resume a formal relationship with his current business partner and the company’s former CEO, Leen Kawas. The board believes that ending Dr. Kawas’s relationship with Athira was and remains in the best interests of Athira and our shareholders,” the board said in its letter. “The board of directors is confident that Athira has the right strategy and the right leadership team to continue positioning the company for success.”
In its response to Kayne, Athira said the company’s leadership team is effectively executing its strategic priorities and will soon report positive topline results from a Phase II study of ATH-1017 at the end of the second quarter.
The board is fielding its own slate of candidates, which includes Joseph Edelman, the founder, CEO and portfolio manager of Perceptive Advisors; John M. Fluke, Jr., the head of the investment firm Fluke Capital Management; and Grant Pickering, CEO of Vaxcyte, Inc.
“The company’s director nominees have the right skills and experience needed to support Athira at this critical time,” the board said. “Our highest priority is advancing our lead drug candidate, fosgonimeton, through clinical trials and securing regulatory approval for the treatment of Alzheimer’s disease (AD), which impacts as many as 35 million people worldwide. Under the current leadership team, Athira is executing well and delivering against our target milestones.”
In addition to the slate of new board candidates, over the past year, Athira tapped two experienced independent directors who it said provided the necessary experience the company needs. Those directors are Michael Panzara, who has held leadership roles at Sanofi Genzyme and Biogen, and Barbara Kosacz, the chief operating officer of Kronos Bio.
The company also noted that it is well-capitalized and is expanding its clinical pipeline with the initiation of a Phase I study of ATH-1020, a novel, orally available, brain-penetrant small molecule in development for neuropsychiatric conditions. Preclinical data showed that ATH-1020 demonstrated neuroprotective effects, mitigated depression-like behaviors and rescued mismatch negativity response in translatable measure in both rodent models and schizophrenia patients, the company said.
