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Seattle-area biotech company Athira Pharma agreed to pay $4.07 million to settle allegations that it violated the False Claims Act by failing to disclose research misconduct to federal agencies in grant applications and reports.
The misconduct involved manipulated scientific images by the company’s former CEO, Leen Kawas, which were used 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,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division, in a press release.
Athira declined to comment on the settlement.
U.S. Attorney Tessa M. Gorman praised Athira’s board for promptly notifying the NIH upon learning of the misconduct, which involved research into neurological disorders like Alzheimer’s. “Athira’s transparency helped mitigate damages and showed its resolve to comply with regulations,” she said in a statement.
Kawas resigned as CEO of Athira Pharma in 2021 after an investigation found she had altered doctoral research images that helped to form the initial basis for the company, previously known as M3 Technology.
The company’s stock has fallen since 2021 and took another hit in June after Athira announced that results from a phase 2/3 study were not successful.
Athira said in September that it was laying off 49 people, or about 70% of its workforce, as part of cost-cutting measures and a restructuring.
Athira raised $204 million in its IPO and was valued at around $670 million when it went public in 2020. The company’s market capitalization is now less than $25 million.
Kawas is now managing general partner of an investment firm she co-founded in 2021 called Propel Bio Partners LP.
