Fraudulent Academic Research Sinks Company; is it another Theranos?
(Thursday, June 24, 2021)
A few years back, Theranos became a harsh example of a Founder/CEO scamming gullible investors with false and misleading science, only to be publicly discredited and gutting of the company. This week we found another company, Athira Pharma, that may have raised almost $300 million based on fraudulent research by its Founder and CEO. Aside from a few semantics, there are stark similarities in the two cases. Athira Pharma is working on a treatment for Alzheimer’s disease based on the patent protected research done by its CEO and Founder, Leen Kawas. Questions had been raised about the integrity of the research since at least 2016 but were apparently missed during the due diligence by its investors and even the underwriters for the company’s IPO last year. The company is now under investigation by law firms hired by its investors, and other investigations might be coming if it is found that the CEO deliberately lied. But it is not that simple. Unlike Theranos, Athira is a much smaller company, with about 15 full time employees and few clinical trials. The company has no sales, and its valuation is entirely based on speculations about its ongoing clinical trials. The basic research in question, was conducted almost 10 years ago at the Washington State University; it will not be surprising if most of the raw data from that research is no longer available. Unlike Theranos, we don’t know if additional fabrications of data were done at the Athira since its founding in 2011. So, it may be much harder to make the case for fraud. The saving grace could be the clinical trial data generated by Athira. If the trial data is credible and promising, the dark clouds over Athira will dissipate. Even if the fraud is not proven, the allegation would assure that the company is under a microscope with the regulators and public, so anything that comes out going forward would be thoroughly accredited independently. Unlike the Theranos case, Athira’s board made the smart move of immediately isolating the CEO to save the company’s name. This would lead to better outcome for Athira. But the fact that all due diligence for the company so far missed major questions about the key research on which the entire company is based, is still an eye opener.
Dr. Mukesh Kumar
Founder & CEO, FDAMap
Linkedin: Mukesh Kumar, PhD, RAC