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Seattle-area biotech company Athira Pharma has agreed to a $4.07 million settlement to address allegations of violating the False Claims Act by failing to reveal research misconduct in federal grant applications and reports.
The alleged misconduct involved scientific images manipulated by the company’s former CEO, Leen Kawas, in grant materials submitted to the National Institutes of Health (NIH).
“This settlement underscores our commitment to safeguarding the integrity of taxpayer-funded scientific work,” stated Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division, in a press release.
Athira chose not to comment on the settlement.
U.S. Attorney Tessa M. Gorman lauded Athira’s board for quickly informing the NIH upon discovering the misconduct, which pertained to research on neurological disorders like Alzheimer’s. “Athira’s transparency helped mitigate damages and showed its resolve to comply with regulations,” she commented in a statement.
Kawas resigned as CEO of Athira Pharma in 2021 after an investigation revealed she had altered doctoral research images, forming the initial foundation for the company, previously known as M3 Technology.
The company’s stock has been on the decline since 2021 and faced another setback in June after announcing unsuccessful results from a phase 2/3 study.
In September, Athira announced plans to lay off 49 employees, approximately 70% of its workforce, as part of cost-cutting and restructuring efforts.
Athira raised $204 million in its IPO and was valued at about $670 million when it went public in 2020. Its market capitalization has now dropped below $25 million.
Kawas is now the managing general partner of an investment firm she co-founded in 2021, called Propel Bio Partners LP.
