Athira Parma Faces Class Action Lawsuit Following Alleged Image Manipulation
Three class action lawsuits allege that Athira Pharma utilized invalid research done by the company’s CEO to develop intellectual property and products to treat Alzheimer’s and Parkinson’s diseases.
One is Enough; Two is Too Much
Athira Parma, which is in clinical development of a drug for Alzheimer’s and Parkinson’s disease Dementia, raised around $204 million in the IPO for $17.00 per share. Share prices have plunged around 40% after Leen Kawas—CEO of Athira Pharma—was placed on temporary leave on June 17 and traded at $10.37 on Tuesday.
Three class-action lawsuits alleging SEC violations have been filed on behalf of shareholders less than a week after Kawas was sent on leave following claims of changed photographs in scientific publications she wrote.
The several class action lawsuits filed on behalf of stockholders argue that the company violated the Securities Exchange Act by lying to the Securities and Exchange Commission in its 2020 “initial public offering” (IPO) filing, attempting to mislead investors about its research.
According to one of the lawsuits, Athira neglected to disclose in its SEC filing that Kawas had published research papers that contains improperly altered images while she was a graduate student.
As a result, Athira’s intellectual property and product development for Alzheimer’s disease was founded on invalid research.
All three lawsuits assert that Athira’s efforts to develop new treatments were founded on Kawas’ graduate research, which was questioned for the first time in 2016. Kawas conducted research for all of the papers in question when she was still a graduate student at Washington State University (WSU) and earned a Ph.D. degree in 2011.
On June 17, the news site STAT released an article examining claims of image manipulation in Kawas’ papers. The allegations first surfaced on PubPeer, a tool that allows academics to comment on the integrity of data in scientific studies.
The lawsuits seek monetary damages from the defendants—identified in one case as Athira Pharma and Kawas. The other two have included:
- CFO Glenna Mileson—CFO/Secretary, M3 Biotechnology Inc
- Joseph Edelman—CEO and portfolio manager of Perceptive Advisors
- Tadataka Yamada—EVP and a Board Member of Takeda Pharmaceuticals
Kawas claimed last summer that the potential for Athira’s technology is “huge.” She co-founded Athira—formerly M3 Biotechnology—alongside WSU researchers Joseph Harding and Jay Wright, with WSU highlighting the promise of initial studies in a 2012 article.
In August 2020, Harding announced his resignation from the company’s board of directors. Wright does not appear to be linked with the company or the IPO filings, as per the company’s website.
WSU is investigating the matter independently.
Editor’s Note on Athira Parma Class Action Lawsuit 2021:
This article is written to inform you of Athira Parma’s class action lawsuit alleging the company lied to SEC in its IPO filing, attempting to mislead investors about its research.
Case Name & No.: Jawandha v. Athira Pharma Inc et al., Wang et al. v. Athira Pharma Inc et al., Slyne et al. v. Athira Pharma Inc et al.
Jurisdiction: U.S. District Court – Western District of Washington
Products/Services: Athira Pharma violated the Securities Exchange Act
Allegations: The three class action lawsuits filed against Athira argue that the company violated the Securities Exchange Act by lying to the Securities and Exchange Commission in its 2020 IPO filing
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