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`Case 2:21-cv-00864 Document 1 Filed 06/25/21 Page 1 of 17
`
`The Honorable
`
`UNITED STATES DISTRICT COURT
`WESTERN DISTRICT OF WASHINGTON AT SEATTLE
`
`TIMOTHY SLYNE and TAI SLYNE,
`
`Plaintiffs,
`
` vs.
`
`Case No.
`
`ATHIRA PHARMA, INC.; LEEN KAWAS,
`Ph.D.; GLENNA MILESON; TADATAKA
`YAMADA, M.D.; JOSEPH EDELMAN;
`JOHN M. FLUKE, JR.; JAMES A.
`JOHNSON; GOLDMAN SACHS & CO.
`LLC; JEFFERIES LLC; STIFEL, NICOLAUS
`& COMPANY, INCORPORATED; and JMP
`SECURITIES LLC,
`
`Defendants.
`
`COMPLAINT—CLASS ACTION
`
`FOR VIOLATION OF SECTIONS 11 and
`15 OF THE SECURITIES ACT OF 1933
`
`JURY TRIAL DEMANDED
`
`Plaintiffs Timothy Slyne and Tai Slyne, on behalf of themselves and all others similarly
`situated, allege the following based upon personal knowledge as to their own acts and upon
`information and belief as to all other matters in reliance upon the investigation conducted by and
`through counsel, which included, among other things, a review of filings by Athira Pharma, Inc.,
`(“Athira” or the “Company”) with the U.S. Securities and Exchange Commission (“SEC”),
`publicly available news and security analyst reports concerning Athira and the historic market
`
`COMPLAINT - 1
`No.
`
`KELLER ROH RBAC K L.L.P.
`1201 Third Avenue, Suite 3200
`Seattle, WA 98101-3052
`T E L E P H O N E : ( 2 0 6 ) 6 2 3 - 1 9 0 0
`F A C S I M I L E : ( 2 0 6 ) 6 2 3 - 3 3 8 4
`
`

`

`Case 2:21-cv-00864 Document 1 Filed 06/25/21 Page 2 of 17
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`prices of Athira common stock. Plaintiffs believe substantial additional evidentiary support exists
`for the allegations set forth herein and can be obtained after reasonable opportunity for discovery.
`I.
`NATURE OF THE ACTION
`Plaintiffs bring this securities class action on behalf of all persons who purchased
`1.
`common stock of Athira in or traceable to the Company’s registration statement issued in
`connection with the Company’s September 2020 initial public offering priced at $17.00 per share
`(the “IPO”), seeking to pursue remedies under the Securities Act of 1933, 15 U.S.C. §§ 77a –
`77bbbb (the “Securities Act”) against Athira, certain of Athira’s officers and directors, and the
`underwriters of the IPO.
`2.
`Athira describes itself as a late clinical-stage biopharmaceutical company focused
`on developing potential treatments for patients with Alzheimer’s disease (“AD”), Parkinson’s
`disease dementia (“PDD”) and other central nervous system disorders.
`3.
`The Company’s lead product candidate, ATH-1017, is in clinical development for
`the potential treatment of AD and PDD. The Company’s remaining product candidates, including
`ATH-1018 and ATH-1019, are in nonclinical development. The Company acknowledged that it is
`impossible to predict when or if any of Athira’s product candidates will prove to be effective and
`safe in humans or will receive regulatory approval.
`4.
`As of the IPO, the Company had not generated any revenue from product sales and
`the Company’s product candidates required substantial additional investment before any product
`could provide the Company with any revenue.
`5.
`On August 26, 2020, the Defendants caused Athira to file a Form S-1 for
`registration of securities under the Securities Act. The Athira Form S-1 was thereafter amended
`on September 8, 14 and 17, 2020. The Registration Statement became effective September 17,
`2020 at 4:00 P.M.
`6.
`On June 17, 2021, Athira disclosed in a press release that Athira placed the
`Company’s Chief Executive Officer, President and Board member, Leen Kawas, on leave pending
`
`COMPLAINT - 2
`No.
`
`KELLER ROH RBAC K L.L.P.
`1201 Third Avenue, Suite 3200
`Seattle, WA 98101-3052
`T E L E P H O N E : ( 2 0 6 ) 6 2 3 - 1 9 0 0
`F A C S I M I L E : ( 2 0 6 ) 6 2 3 - 3 3 8 4
`
`

`

`Case 2:21-cv-00864 Document 1 Filed 06/25/21 Page 3 of 17
`
`a review of actions stemming from Kawas’ doctoral research at Washington State University and
`that Chief Operating Officer, Dr. Mark Litton, would assume day-to-day
`leadership
`responsibilities for the Company. The press release further stated that Athira formed an
`independent special committee of the Board to undertake the review and that the Company did not
`intend to comment further until the special committee completed its review.
`7.
`According to the scientific publication STAT, Dr. Kawas was placed on leave amid
`allegations of altered images in her research papers while she was a Ph.D. student at Washington
`State University. STAT reported on June 17, 2021, that the investigation involves alleged altered
`images in four separate papers on which Dr. Kawas was lead author. Images of Western blots,
`used to determine the presence of specific proteins in biological samples, look as though they have
`been altered from their original state according to two image experts who spoke with STAT.
`8.
`On June 18, 2021, Dow Jones reported that Washington State University said it has
`undertaken a review of claims of potential research misconduct involving research conducted by
`Kawas. Washington State said it is conducting its inquiry into the issue in accordance with
`executive policy that governs how the institution responds to allegations of research misconduct.
`9.
`On June 20, 2021, Puget Sound Business Journal reported that Elisabeth Bik, an
`independent consultant with a doctorate in microbiology, who specializes in finding potential
`errors in images from published research, found that the same image results seem to be used in
`different experiments in Kawas' research. At least one of them is wrong,” Bik said. “Maybe they
`ran the experiment and the results were not as expected, or maybe they didn't run the experiment
`at all.”
`
`On June 18, 2021, Athira shares plummeted 39% to $11.15, well below the $17.00
`10.
`IPO price, after the Company disclosed that its Board decided to place Chief Executive Kawas on
`leave pending a review of actions stemming from research Dr. Kawas conducted while at
`Washington State University.
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`COMPLAINT - 3
`No.
`
`KELLER ROH RBAC K L.L.P.
`1201 Third Avenue, Suite 3200
`Seattle, WA 98101-3052
`T E L E P H O N E : ( 2 0 6 ) 6 2 3 - 1 9 0 0
`F A C S I M I L E : ( 2 0 6 ) 6 2 3 - 3 3 8 4
`
`

`

`Case 2:21-cv-00864 Document 1 Filed 06/25/21 Page 4 of 17
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`As a clinical-stage biopharmaceutical company yet to bring a product to market,
`11.
`trust in Athira management is imperative.
`12.
`None of the problematic issues with Kawas’ research were disclosed in the Athira
`Registration Statement or Prospectus.
`II.
`JURISDICTION AND VENUE
`The claims asserted herein arise under and pursuant to §§ 11 and 15 of the Securities
`13.
`Act [15 U.S.C. §§77k, 77l(a)(2) and 77o].
`14.
`This Court has jurisdiction over this action pursuant to § 22 of the Securities Act,
`[15 U.S.C. §77v], and 28 U.S.C. § 1331.
`15.
`Venue is properly laid in this District pursuant to § 22 of the Securities Act, and 28
`U.S.C. § 1391(b) and (c). The acts and conduct complained of herein occurred in substantial part
`in this District.
`16.
`In connection with the acts and conduct alleged in this Complaint, Defendants,
`directly or indirectly, used the means and instrumentalities of interstate commerce, including the
`mails and telephonic communications and the facilities of the NASDAQ.
`III.
`PARTIES
`
`A.
`
`The Plaintiffs
`17.
`Plaintiff Timothy Slyne purchased Athira common stock in or traceable to the IPO
`as set forth in his certification attached hereto as Exhibit A and was damaged thereby.
`18.
` Plaintiff Tai Slyne purchased Athira common stock in or traceable to the IPO as
`set forth in her certification attached hereto as Exhibit B and was damaged thereby.
`B.
`The Company Defendant
`19.
`Defendant Athira Pharma, Inc. is incorporated under the law of the state of
`Delaware and maintains its principal executive office at 18706 North Creek Parkway, Suite 104,
`Bothell Washington 98011. After its IPO, shares of Athira common stock trade on the Nasdaq
`Global Select Market under the trading symbol “ATHA.”
`
`COMPLAINT - 4
`No.
`
`KELLER ROH RBAC K L.L.P.
`1201 Third Avenue, Suite 3200
`Seattle, WA 98101-3052
`T E L E P H O N E : ( 2 0 6 ) 6 2 3 - 1 9 0 0
`F A C S I M I L E : ( 2 0 6 ) 6 2 3 - 3 3 8 4
`
`

`

`Case 2:21-cv-00864 Document 1 Filed 06/25/21 Page 5 of 17
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`C.
`
`The Director and Officer Defendants
`20.
`Defendant Leen Kawas, Ph.D. (“Kawas”) has served as the Company’s chief
`executive officer and as a member of its board of directors since January 2014. Prior to 2014,
`Kawas served as the Company’s vice president. According to Athira’s Registration Statement,
`Kawas earned a Ph.D. in molecular pharmacology from Washington State University in 2011 and
`a pharmacy degree from the University of Jordan in 2008.
`21.
`Defendant Glenna Mileson (“Mileson”) has served as the Company’s chief
`financial officer since October 2015. Before she served as the Company’s chief financial officer,
`Mileson provided outsourced financial management services to Athira as a partner at B2B CFO
`Partners LLC.
`Defendant Tadataka Yamada, M.D., (“Yamada”) has served on the Company’s
`22.
`board of directors since June 2019 and as the chair of the Company’s board of directors since
`January 2020. Yamada is also a venture partner at Frazier Healthcare and co-founder of, and
`currently serves on the board of directors for, Phathom Pharmaceuticals, Passage Bio, Scout Bio,
`and Outpost Medicine. Yamada also serves on the board of directors of Agilent Technologies, Inc.,
`as board of directors’ chair at the Clinton Health Access Initiative and is a member of the Council
`of the National Academy of Medicine. Yamada is also a fellow of the Imperial College of
`Medicine, a master of the American College of Physicians, a fellow of the Royal College of
`Physicians, a member of the American Academy of Arts and Sciences and a past-president of the
`American Gastroenterological Association and the Association of American Physicians.
`Previously, Yamada held executive leadership roles at Takeda Pharmaceuticals, the Bill and
`Melinda Gates Foundation, GlaxoSmithKline, and at the University of Michigan in Ann Arbor.
`Yamada received his M.D. from New York University School of Medicine in 1971.
`23.
`Defendant Joseph Edelman (“Edelman”) has served on the Company’s board of
`directors since May 2020. Edelman is founder, chief executive officer, and portfolio manager of
`Perceptive Advisors. Prior to founding Perceptive Advisors, Edelman was a senior analyst at Aries
`
`COMPLAINT - 5
`No.
`
`KELLER ROH RBAC K L.L.P.
`1201 Third Avenue, Suite 3200
`Seattle, WA 98101-3052
`T E L E P H O N E : ( 2 0 6 ) 6 2 3 - 1 9 0 0
`F A C S I M I L E : ( 2 0 6 ) 6 2 3 - 3 3 8 4
`
`

`

`Case 2:21-cv-00864 Document 1 Filed 06/25/21 Page 6 of 17
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`Fund, a Paramount Capital Asset Management biotechnology hedge fund, from 1994 through
`1998. Prior to that position, Edelman was a senior biotechnology analyst at Prudential Securities
`from 1990 to 1994. Edelman started his career in the healthcare sector of the securities industry as
`a biotechnology analyst at Labe, Simpson from 1987 to 1990. Mr. Edelman earned an M.B.A.
`from New York University in 1986 and a B.A., magna cum laude, in psychology from the
`University of California San Diego in 1978.
`24.
`Defendant John M. Fluke, Jr. (“Fluke”) has served on the Company’s board of
`directors since December 2014. Fluke is chairman of Fluke Capital Management, L.P., which he
`founded in 1976, and was chairman and chief executive officer of the John Fluke Manufacturing
`Co. until 1990. Fluke previously served on the boards of PACCAR Inc., CellCyte Genetics
`Corporation, Cell Therapeutics, Primus International, and American Seafoods Group. Fluke is a
`current trustee of the Greater Seattle Chamber of Commerce (formerly serving as its chairman)
`and previously served as chairman of the Washington State China Relations Council and a trustee
`emeritus of the Museum of Flight. Fluke also previously served as chairman of the Washington
`Technology Center at the University of Washington, an organization responsible for managing
`technology transfers from public universities in Washington state to the private sector for
`commercialization. Fluke earned an M.S. in electrical engineering from Stanford University in
`1966 and a B.S. in electrical engineering from the University of Washington in 1964.
`25.
`Defendant James A. Johnson (“Johnson”) has served on the Company’s board of
`directors since August 2020. Johnson previously served as the chief financial officer of Nohla
`Therapeutics, a cell therapy company. Prior to Nohla, Johnson served for five years as the chief
`financial officer of NanoString Technologies, a publicly held provider of life science tools for
`translational research and molecular diagnostics. During his tenure as chief financial officer at
`NanoString, Johnson oversaw strategic and corporate finance activities from private stage through
`the company’s initial public offering and additional rounds of financing, marking the third initial
`public offering in his career as a chief financial officer. Prior to joining NanoString, Johnson served
`
`COMPLAINT - 6
`No.
`
`KELLER ROH RBAC K L.L.P.
`1201 Third Avenue, Suite 3200
`Seattle, WA 98101-3052
`T E L E P H O N E : ( 2 0 6 ) 6 2 3 - 1 9 0 0
`F A C S I M I L E : ( 2 0 6 ) 6 2 3 - 3 3 8 4
`
`

`

`Case 2:21-cv-00864 Document 1 Filed 06/25/21 Page 7 of 17
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`as chief financial officer of Relypsa, Inc., a clinical-stage biopharmaceutical company. Prior to
`Relypsa, Johnson served for nearly 10 years as chief financial officer of ZymoGenetics, Inc., until
`the company was acquired by Bristol-Myers Squibb in October 2010. Previously, Johnson served
`for seven years as chief financial officer of Targeted Genetics Corporation (now Armata
`Pharmaceuticals) and as Vice President of Finance at Immunex Corporation during its evolution
`from product development to commercial operations. Johnson received a B.A. in business
`administration from the University of Washington in 1979.
`26.
`Defendants Kawas, Mileson, Yamada, Edelman, Fluke, and Johnson are signers of
`the Registration Statement pursuant to the Securities Act and are referred to collectively as the
`Director and Officer Defendants.
`D.
`The Underwriter Defendants
`27.
`Defendant Goldman Sachs & Co. L.L.C. (“Goldman”) maintains its principal
`executive offices at 200 West Street New York, NY 10282 and offers investment banking,
`securities, asset management, capital market, valuation, bonds, funds, financial analysis,
`investment strategies, and advisory services. Defendant Goldman agreed to purchase 5,100,000
`shares in the IPO. Defendant Goldman agreed to purchase 5,100,00 shares in the IPO.
`28.
`Defendant Jefferies L.L.C. (“Jefferies”) is a wholly owned subsidiary of Jefferies
`Group L.L.C. Jefferies provides investment banking services including securities underwriting.
`Jefferies maintains its principal executive offices at 520 Madison Avenue, 11th Floor, New York,
`NY 10022. Defendant Jeffries agreed to purchase 3,960,000 shares in the IPO.
`29.
`Defendant Stifel, Nicolaus & Company, Incorporated (“Stifel”) is a wholly owned
`subsidiary of Stifel Financial Corp. and maintains its principal executive offices at 501 N
`Broadway, Saint Louis, MO, 63102. Stifel provides services such as investment banking and
`securities underwriting. Defendant Stifel agreed to purchase 1,980,000 shares in the IPO.
`30.
`Defendant JMP Securities L.L.C (“JMP”) is a wholly owned, indirect subsidiary of
`JMP Group L.L.C. and maintains its principal executive offices at 600 Montgomery Street, Suite
`
`COMPLAINT - 7
`No.
`
`KELLER ROH RBAC K L.L.P.
`1201 Third Avenue, Suite 3200
`Seattle, WA 98101-3052
`T E L E P H O N E : ( 2 0 6 ) 6 2 3 - 1 9 0 0
`F A C S I M I L E : ( 2 0 6 ) 6 2 3 - 3 3 8 4
`
`

`

`Case 2:21-cv-00864 Document 1 Filed 06/25/21 Page 8 of 17
`
`1100, San Francisco 94111. JMP is a middle-market investment bank and provides an array of
`financial services including securities underwriting. Defendant JMP agreed to purchase 960,000
`shares in the IPO.
`31.
`Goldman, Jefferies, Stifel and JMP are referred to collectively as the Underwriter
`Defendants. The Underwriter Defendants’ failure to conduct adequate due diligence in connection
`with the IPO and the preparation of the Registration Statement was a substantial factor leading to
`the harm complained of herein.
`
`THE IPO
`IV.
`In September 2020, Athira completed an initial public offering of its common stock.
`32.
`As part of the IPO, Athira issued and sold 12,000,000 shares of its common stock at a public
`offering price of $17.00 per share. The Company received net proceeds of approximately $186.4
`million from the IPO, after deducting underwriting discounts and commissions of $14.3 million
`and offering costs of approximately $3.3 million. In October 2020, Athira sold an additional
`1,397,712 shares of common stock to the Underwriter Defendants upon partial exercise of the
`underwriters’ option to purchase additional shares at the initial public offering price of $17.00 per
`share, less underwriting discounts and commissions, and offering costs of approximately $1.7
`million resulting in net proceeds to the Company of approximately $22.1 million.
`V.
`SUBSTANTIVE ALLEGATIONS
`On June 17, 2021, after the close of the markets, the Company announced via Globe
`33.
`Newswire, that Athira’s President and CEO, Dr. Leen Kawas, would be placed on temporary leave
`and her executive duties would be assumed by Chief Operating Office Dr. Mark Litton. The reason
`given by the Company for this rash move was to provide time for an “independent” Special
`Committee of the Board to undertake a review of allegations related to the accuracy and
`truthfulness of Dr. Kawas’ reporting on both her research performed in connection with her PhD
`
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`COMPLAINT - 8
`No.
`
`KELLER ROH RBAC K L.L.P.
`1201 Third Avenue, Suite 3200
`Seattle, WA 98101-3052
`T E L E P H O N E : ( 2 0 6 ) 6 2 3 - 1 9 0 0
`F A C S I M I L E : ( 2 0 6 ) 6 2 3 - 3 3 8 4
`
`

`

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`Case 2:21-cv-00864 Document 1 Filed 06/25/21 Page 9 of 17
`
`dissertation that she presented, as well as related to other academic papers that she authored or co-
`authored, while at Washington State University.1
`34.
`According to an article dated June 17, 2021 in the scientific news publication STAT,
`posted after the above announcement, the allegations against Dr. Kawas center around “altered
`images in four separate papers” on which Dr. Kawas was the lead author: “Images of Western
`blots, used to determine the presence of specific proteins in biological samples, look as though
`they’ve been altered from their original state, according to two image experts who spoke with
`STAT.” Olivia Goldhill, Athira Pharma CEO Placed on Leave Amid Allegations of Altered Images
`in Her Research Papers, STAT (June 17, 2021) (attached as Exhibit C)
`35.
`As early as June of 2016, a comment had been posted on the academic article
`website PubPeer regarding one of Kawas’s academic papers. The comment questions an anomaly
`in an image related to Kawas’ results which appears to have been modified:2
`
`1 Press Release, Athira Pharma, Athira Pharma Chief Operating Officer, Mark Litton, Assumes Day-to-Day
`Leadership Responsibilities of Company (June 17, 2021), https://www.globenewswire.com/news-
`release/2021/06/17/2249351/0/en/Athira-Pharma-Chief-Operating-Officer-Mark-Litton-Assumes-Day-to-Day-
`Leadership-Responsibilities-of-Company.html
`2 PubPeer, Comment #1 Peer 1, https://pubpeer.com/publications/22129598 (last visited June 25, 2021)
`
`COMPLAINT - 9
`No.
`
`KELLER ROH RBAC K L.L.P.
`1201 Third Avenue, Suite 3200
`Seattle, WA 98101-3052
`T E L E P H O N E : ( 2 0 6 ) 6 2 3 - 1 9 0 0
`F A C S I M I L E : ( 2 0 6 ) 6 2 3 - 3 3 8 4
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`

`

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`Case 2:21-cv-00864 Document 1 Filed 06/25/21 Page 10 of 17
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`A subsequent commentor agreed, that the image appears to have been modified and
`36.
`pointed out that the image was from Dr. Kawas’ PhD dissertation.
`37.
`Subsequently, as found on PubPeer3, Dr. Elisabeth Bik, an independent consultant
`who specializes in finding potential errors in images from published research, also addressed Dr.
`Kawas’ work. Dr. Bik pointed out another anomalous image that appears to be a result of bad
`experimentation practice:
`
`In an interview with the Puget Sound Business Journal following Dr. Kawas’s
`38.
`suspension, Dr. Bik noted other problematic practices employed by Dr. Kawas, including using
`the same image results for different experiments. “At least one of them is wrong… Maybe they
`
`3 Id. at Comment #4
`
`COMPLAINT - 10
`No.
`
`KELLER ROH RBAC K L.L.P.
`1201 Third Avenue, Suite 3200
`Seattle, WA 98101-3052
`T E L E P H O N E : ( 2 0 6 ) 6 2 3 - 1 9 0 0
`F A C S I M I L E : ( 2 0 6 ) 6 2 3 - 3 3 8 4
`
`

`

`Case 2:21-cv-00864 Document 1 Filed 06/25/21 Page 11 of 17
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`ran the experiment and the results were not as expected, or maybe they didn’t run the experiment
`at all.”4
`
`On June 18, 2021, in an article in online news publication “The Fly:” “Stifel analyst
`39.
`Paul Matteis said the news ‘comes as a big surprise’ and that he doesn't ‘really know how to process
`this development,’ which is an ‘impossible situation to really vet.’ While he is refraining from
`drawing any firm conclusions for now and has a Buy rating on Athira shares, Matteis
`acknowledges that the investigation ‘could have clear negative implications’ for how he and
`investors view ATH-1017 and/or management credibility.”5
`40.
`Despite the above disclosures, only coming to light in the investor community now,
`Defendant Kawas is touted repeatedly in the Registration Statement, as “our founder and chief
`executive officer, [who] has been essential in creating our innovating translational development
`strategy.” (See Athira Pharma, Inc., Registration Statement 8 (Form S-1/A) (Sept. 17, 2020). and
`further “We believe Dr. Kawas’s scientific and professional training, her instrumental role in
`building Athira Pharma, Inc., and her extensive understanding of our business, operations and
`strategy qualify her to serve on our board of directors.” Id at page 152.
`41.
`The above statements regarding Dr. Kawas casting her only in a positive light, are
`materially false and misleading, Most significantly, the Defendants in the Registration Statement
`completely conceal and materially omit any mention of the truth, namely that Dr. Kawas repeatedly
`falsified images in her scientific research or at best had been accused of falsifying her research as
`early as June 2016. In fact, the Registration Statement and Prospectus lists “risk factors” for
`investors in a substantial section containing over thirty pages of risks to business success and
`investor revenue, but omits the critical risk stemming from Dr. Kawas’s alleged falsifications. See
`Registration Statement & Prospectus at p.17–75.
`
`4 Rick Morgan, Questions Around Athira CEO’s Research Began to Surface in 2016, Puget Sound Business Journal
`(June 20, 2021), https://www.bizjournals.com/seattle/news/2021/06/20/athira-ceo-2016-research.html
`5 The Fly, Athira Pharma CEO Leave Situation ‘Impossible to Really Vet,’ Says Stifel (June 18, 2021),
`https://thefly.com/landingPageNews.php?id=3322878&headline=ATHA-Athira-Pharma-CEO-leave-situation-
`impossible-to-really-vet-says-Stifel (last visited June 25, 2021)
`
`COMPLAINT - 11
`No.
`
`KELLER ROH RBAC K L.L.P.
`1201 Third Avenue, Suite 3200
`Seattle, WA 98101-3052
`T E L E P H O N E : ( 2 0 6 ) 6 2 3 - 1 9 0 0
`F A C S I M I L E : ( 2 0 6 ) 6 2 3 - 3 3 8 4
`
`

`

`Case 2:21-cv-00864 Document 1 Filed 06/25/21 Page 12 of 17
`
`As stated in the STAT article, “the papers [containing the altered images] are
`42.
`foundational to Athira’s efforts to treat Alzheimer’s and are cited in a patent licensed by Athira.
`Kawas, who co-founded Athira, is described as a co-inventor in the patent.” Further, according to
`STAT, “Kawas’ doctoral work laid the biological groundwork that Athira continues to use in its
`approach to treating Alzheimer’s, neuroscientist George Perry of the University of Texas at San
`Antonio, told STAT: ‘They are foundational basic science.’” See Goldhill, supra.
`43. Washington State University, where Kawas conducted her research, has begun an
`inquiry into the images. Spokesperson Phil Weiler, in an email to STAT prior to the publication of
`the article stated, “Washington State University takes claims of research misconduct very
`seriously.” Washington State University owns the intellectual property for discoveries that are
`based on research conducted at the university. The university therefore owns equity in the company
`and stands to profit from Athira’s work. Id.
`44.
`Further, according to the STAT article, several Alzheimer’s experts have stated that
`the allegedly altered images call into question the validity of the entire studies Dr. Kawas
`conducted at Washington State University. Dr. Perry, quoted above in paragraph 42, said that if
`the Western blots are inaccurate, then the whole study must be redone. “If there is a question about
`key data, all must be questioned,” he said. Id.
`45.
`The defendants’ omission to disclose the existence of the facts alleged above
`pertaining to Dr. Kawas rendered the Registration Statement Prospectus materially false and
`misleading.
`
`CLASS ACTION ALLEGATIONS
`VI.
`Plaintiffs bring this action as a class action pursuant to Federal Rule of Civil
`46.
`Procedure 23(a) and (b)(3) on behalf of the Class defined as:
`
`All persons or entities who purchased Athira common stock pursuant or traceable
`to the IPO and were damaged thereby.
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`COMPLAINT - 12
`No.
`
`KELLER ROH RBAC K L.L.P.
`1201 Third Avenue, Suite 3200
`Seattle, WA 98101-3052
`T E L E P H O N E : ( 2 0 6 ) 6 2 3 - 1 9 0 0
`F A C S I M I L E : ( 2 0 6 ) 6 2 3 - 3 3 8 4
`
`

`

`Case 2:21-cv-00864 Document 1 Filed 06/25/21 Page 13 of 17
`
`Excluded from the Class are defendants herein, members of the immediate families of each of the
`defendants, any person, firm, trust, corporation, officer, director, or other individual or entity in
`which any defendant has a controlling interest or which is related to or affiliated with any
`defendant, and the legal representatives, agents, affiliates, heirs, successors-in-interest or assigns
`of any such excluded party.
`47.
`The members of the Class are so numerous that joinder of all members is
`impracticable. Athira stock was extensively traded following the September IPO. The precise
`number of Class members is unknown to plaintiffs at this time but upon information and belief
`number at least one hundred. In addition, the names and addresses of the Class members can be
`ascertained from the books and records of Athira or its transfer agent. Notice can be provided to
`such record owners by a combination of published notice and first-class mail, using techniques
`and a form of notice similar to those customarily used in class actions arising under the federal
`securities laws.
`48.
`Plaintiffs will fairly and adequately represent and protect the interests of the
`members of the Class. Plaintiffs have retained competent counsel experienced in class action
`litigation under the federal securities laws to further ensure such protection and intend to prosecute
`this action vigorously.
`49.
`Plaintiffs’ claims are typical of the claims of the other members of the Class
`because plaintiffs’ and all the Class members’ damages arise from and were caused by the same
`false and misleading representations made by or chargeable to defendants. Plaintiffs do not have
`any interests antagonistic to, or in conflict with, the Class.
`50.
`A class action is superior to other available methods for the fair and efficient
`adjudication of this controversy. Since the damages suffered by individual Class members may be
`relatively small, the expense and burden of individual litigation make it virtually impossible for
`the Class members to seek redress for the wrongful conduct alleged. Plaintiffs know of no
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`COMPLAINT - 13
`No.
`
`KELLER ROH RBAC K L.L.P.
`1201 Third Avenue, Suite 3200
`Seattle, WA 98101-3052
`T E L E P H O N E : ( 2 0 6 ) 6 2 3 - 1 9 0 0
`F A C S I M I L E : ( 2 0 6 ) 6 2 3 - 3 3 8 4
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`

`

`Case 2:21-cv-00864 Document 1 Filed 06/25/21 Page 14 of 17
`
`difficulty that will be encountered in the management of this litigation that would preclude its
`maintenance as a class action.
`51.
`Common questions of law and fact exist as to all members of the Class and
`predominate over any questions solely affecting individual members of the Class. Among the
`questions of law and fact common to the Class are:
`a)
`whether the federal securities laws were violated by defendants’ acts as
`alleged herein;
`whether statements made by defendants in the prospectus prior to Athira’s
`b)
`public offerings of stock were materially false and misleading;
`c)
`whether the price of Athira common stock was artificially inflated as a result
`of the false and misleading statements; and
`d)
`the extent of injuries sustained by members of the Class and the appropriate
`measure of damages.
`
`FIRST CLAIM FOR RELIEF
`
`For Violation of § 11 of the Securities Act Against the Office and Director Defendants and
`the Underwriter Defendants
`
`Plaintiffs incorporates the allegations set forth in ¶¶ 1–51above as though fully set
`52.
`forth herein. For purposes of this Claim, plaintiffs exclude allegations that could be construed as
`alleging fraud or intentional misconduct, as this Claim is based solely on claims of strict liability
`and/or negligence.
`53.
`This Claim is brought pursuant to § 11 of the 1933 Act, 15 U.S.C. § 77k, against
`all defendants.
`54.
`The Athira Registration Statement was materially false and misleading in that it
`omitted to state material facts required to be stated therein, contained untrue statements of material
`facts, and/or omitted to state facts necessary to make the statements made therein not misleading.
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`COMPLAINT - 14
`No.
`
`KELLER ROH RBAC K L.L.P.
`1201 Third Avenue, Suite 3200
`Seattle, WA 98101-3052
`T E L E P H O N E : ( 2 0 6 ) 6 2 3 - 1 9 0 0
`F A C S I M I L E : ( 2 0 6 ) 6 2 3 - 3 3 8 4
`
`

`

`Case 2:21-cv-00864 Document 1 Filed 06/25/21 Page 15 of 17
`
`The Defendants named herein owed to the Class members who acquired Athira
`55.
`common stock pursuant and/or traceable to the public offerings the duty to make a reasonable and
`diligent investigation of the statements contained in the Registration Statement. The defendants
`named herein did not conduct a reasonable investigation and did not possess reasonable grounds
`for believing that the statements made in the prospectus were not false and/or misleading. Had
`defendants exercised reasonable care, they would have known of the material misstatements and
`omissions alleged herein.
`56.
`Plaintiffs and members of the Class acquired the securities issued in connection
`with the public offerings and/or traceable to the public offerings. As a direct and proximate result
`of the misrepresentations and/or omissions described in this claim, plaintiffs and members of the
`Class suffered substantial damage in connection with their acquisition of the securities described
`in herein. As a result of the conduct herein alleged, each defendant named above violated § 11 of
`the 1933 Ac