Slide 1: Proxy Contest for Board Change at Athira Pharma: Immediate Change is Necessary
Proxy Contest for Board Change at Athira Pharma, Inc. (NASDAQ: ATHA) Immediate Change is Necessary
Slide 2: Disclaimer
DISCLAIMER The views expressed herein and in any other solicitation materials referenced herein and/or attached hereto represent the opinions of Richard A. Kayne and certain of his affiliates (collectively, the “Kayne Entities”) that hold shares of Athira Pharma, Inc. (“Athira” or the “Company”) and
Slide 3: Executive Summary
3 Executive Summary Need for Immediate Change Case Study in Poor Oversight More Governance Red Flags Nominees Best Suited to Effect Change Shareholder Call to Action Immediate Change is Necessary
Slide 4: Kayne is a long-term investor and one of the largest shareholders in Athira
Ric Kayne and his affiliated entities are long-term investors and one of the largest shareholders in Athira Pharma, Inc. (NASDAQ: ATHA) (“Athira” or the “Company”), owning almost 5% of the outstanding stock. We began investing in Athira over six years ago, well prior to its initial public offering i
Slide 5: Legacy directors and management lack skill and expertise for FDA approval
We believe that Athira’s legacy directors and management lack the skill and expertise required to successfully achieve FDA approval for ATH-1017.The Board mishandled an investigation into the former CEO’s graduate research – the second such investigation that yielded no new results.Director Edelman
Slide 6: Directors Edelman and Fluke bear significant blame for Board failures
Directors Joseph Edelman and John Fluke are two of the longest tenured members of the Board, and each are on the Nominating and Governance Committee. Messrs. Edelman and Fluke bear significant blame for the Board’s failures.Mr. Edelman is the only member of the Board with significant ownership throu
Slide 7: Nominees with Relevant Credentials and Expertise
Nominees Richard A. Kayne George W. Bickerstaff, III Relevant Experience Other Professional Experience Accomplished Investor Nominees with Relevant Credentials and Expertise 7
Slide 8: Richard Kayne: Solid Track Record of Building Successful Businesses
Richard Kayne: Solid Track Record of Building Successful Businesses 8 Richard Kayne is the founder and co-chair of Kayne Anderson Capital AdvisorsFounded in 1984Manages $34 billion in assets under management with five different investment companiesA leading alternative investment management firm foc
Slide 9: George Bickerstaff: Extensive Leadership and Expertise in Biotech and Healthcare
Nonprofits, Charities & Foundations Mr. Bickerstaff serves on the Board of Directors of:International Vaccine Institute (currently serves as Chairperson of the board)International Centre for Missing and Exploited Childrenand the Center for Disease Dynamics, Economics & Policy(currently serves as Vic
Slide 10: About Athira (ATHA)
About Athira (ATHA) 10 Founded in 2011, Athira is a late clinical-stage biopharmaceutical company focused on developing small molecules to restore neuronal health and stop neurodegeneration.Potentially pivotal program in Alzheimer's with a growing pipeline to address neurogenerative and neuropsychia
Slide 11: Market Opportunity
Market Opportunity 11 Source: Athira Corporate Presentation April 2022https://www.who.int/news-room/fact-sheets/detail/dementiahttps://www.alz.org/media/documents/alzheimers-facts-and-figures.pdfGlobalData AD prevalence data access and analysishttps://www.nia.nih.gov/news/half-alzheimers-disease-cas
Slide 12: Current Status and Expected Milestones
Current Status and Expected Milestones 12 Source: Athira Corporate Presentation April 2022 (ATH-1017)
Slide 13: Timeline
Timeline “anounoad the ‘appointment of Kelly A. Romano, Founder| ‘and CEO of BlueRipple Cepita,t| the Board Reported fourth querer ‘nancial resus; Phaze 2 Parkinson's disease ‘dementia tl to bagin by the end of2021 JAnnounced the appointment fof Rachel Laningion a2 (Chiat Technology Offeer, Head of
Slide 14: Kayne's push for change resulted in appointment of Pickering and Panzara
Kayne’s push for change resulted in appointment of Grant Pickering and Dr. Michael Panzara to the Board 14
Slide 15: Executive Summary
15 Executive Summary Need for Immediate Change Case Study in Poor Oversight More Governance Red Flags Nominees Best Suited to Effect Change Shareholder Call to Action Immediate Change is Necessary
Slide 16: Need For Immediate Change - TSR Underperformance
16 Need For Immediate Change - TSR Underperformance Immediate Change is Necessary
Slide 17: Since IPO, the Board has overseen destruction of shareholder value
Since Athira’s IPO, the Board has overseen destruction of shareholder value 17 Source: Factset Total Shareholder ReturnIPO to March 25, 2022 (1-day prior to Kayne nomination becoming public) The market had confidence in Dr. Kawas. The stock price plummeted 39% when Dr. Litton assumed day to day cont
Slide 18: Board failed to communicate Kawas investigation, causing loss of value
The Board failed to properly communicate investigation of Athira’s Co-Founder, Dr. Leen Kawas, and its potential impact on clinical trials, resulting in significant loss of shareholder value 18 Source: Factset Total Shareholder ReturnJune 16, 2021 to Oct 21, 2021 (Board investigation concluded)
Slide 19: Stock Partially Rebounded When the Investigation Concluded
Stock Partially Rebounded When the Investigation Concluded 19 Total Shareholder ReturnOctober 18, 2021 (announcement of Dr. Litton’s appointment as CEO) to Feb. 24, 2022 (one day prior to Kayne’s nomination notice) “Athira stock has traded range-bound over the past few months, as the CEO situation h
Slide 20: Stock performance since Litton's appointment has nothing to do with his stewardship
Performance of Athira’s stock price since Dr. Mark Litton’s appointment as CEO has NOTHING to do with his stewardship or decision-making 20 “Beyond matters of management personnel, more importantly, in our view, Athira also re-confirmed its position that ATH-1017, the Company’s lead candidate for tr
Slide 21: Stock declined 19% under Litton's tenure until Kayne nomination
Following the partial rebound, under Dr. Mark Litton’s tenure as President & CEO and until the public disclosure of the Kayne’s nomination, the stock price declined 19% 21 Term of Former CEO (Dr. Leen Kawas) ATHA share price fell 47% from announcement of investigation into Dr. Kawas’ research until
Slide 22: Executive Summary
22 Executive Summary Need for Immediate Change Case Study in Poor Oversight More Governance Red Flags Nominees Best Suited to Effect Change Shareholder Call to Action Immediate Change is Necessary
Slide 23: A Case Study in Poor Oversight
A Case Study in Poor Oversight Leen Kawas conducts doctoral research as a graduate student at Washington State UniversityAthira attempts to develop Dihexa licensed exclusively from Washington State UniversityDr. Kawas appointed CEO of Athira on a non-compensatory basis Allegations were raised with t
Slide 24: Open Questions for Athira's Board
Open Questions for Athira’s Board that Led to Destruction of Shareholder Value when John Fluke was Chairman The identical allegations were raised in 2015 at the board and no action was taken because no data was altered and the enhancements were purely cosmetic. Why did the same actions in 2021 warra
Slide 25: Significant Value Destruction
Significant Value Destruction After months of uncertainty regarding the science behind Athira’s clinical trials, the Board and the Special Committee conclued:Our lead drug candidate, ATH-1017, is an investigational therapeutic with robust clinical and preclinical data...neither this patent, nor the
Slide 26: The Board is Guilty of Promoting a Classic Double-Standard
Position Athira Co-Founder, CEO and President, January 2014 -October 2021 Athira COO, July 2019 – October 2021Athira CEO, October 2021 – Present Age 36 54 Credentials Ph.D. in molecular pharmacology, Washington State University (2011)Pharmacy degree, University of Jordan (2008) Ph.D. in immunology,
Slide 27: The Board is Guilty of Promoting a Classic Double-Standard (cont'd)
Board Action Placed on administrative leave pending reviewLaunched a Special Committee investigation that lasted four monthsEngaged law firm Morrison & Foerster to assist with the investigation (none) Result Determined that there were altered images in 2011 dissertation and other research papers as
Slide 28: A Friend in Need is a Friend Indeed
A Friend in Need is a Friend Indeed 28 https://www.sec.gov/Archives/edgar/data/0001620463/000119312522101009/d340906ddefc14a.htm Barbara Kosacz, Chair of Nomination and Governance Committee, bears significant responsibility for the hasty promotion of her friend Mark LittonBarbara Kosacz, a former la
Slide 29: Why Dr. Litton is Not the Right Candidate
Why Dr. Litton is Not the Right Candidate 29 Tenure: Only 2 years at Athira prior to becoming CEO.Inconsistency between bio in 2020 and 2022, mistaking academic credentials.Lacks applicable experience to lead the Company through clinical trial process and open label extension. Previous experience co
Slide 30: Why Dr. Litton is Not the Right Candidate (cont'd)
Why Dr. Litton is Not the Right Candidate (cont’d.) 30 Company Position Tenure Publicly Traded Company (At time of employment) Market Cap Industry Clinical Trial Experience Prior Experience President & COO Less than 1 year 235.4M Biotechnology Chief Business Officer, Treasurer & Secretary 14 yea
Slide 31: Experienced and Active Management is Critical to Clinical Trials
Experienced and Active Management is Critical to Clinical Trials, Which Need “Science” and “Operations” 31 Lead Trial Clinician at Athira who was instrumental in success of Phase 1B trialsHas recently left, frustrated with Litton, leaving a critical void at the worst possible timeRemote work taken t
Slide 32: Expert View by Athira Co-founder Joe Harding
Expert View by Athira Co-founder 32 Joe Harding (wsu.edu)https://www.sec.gov/Archives/edgar/data/884413/000089914022000464/a041322b.htm “In 2015, I received notice from the editor of The Journal of Pharmacology and Therapeutics (JPET) that there were questions regarding published Western blots in tw
Slide 33: Expert View by Athira Co-founder (cont'd)
Expert View by Athira Co-founder (cont'd.) 33 Joe Harding (wsu.edu)https://www.sec.gov/Archives/edgar/data/884413/000089914022000464/a041322b.htm “For many reasons, Leen’s embellishments of blot pictures, although totally inappropriate, were completely immaterial to the conclusions of any of the pap
Slide 34: Expert View by Athira Co-founder (cont'd)
Expert View by Athira Co-founder (cont'd.) 34 Joe Harding (wsu.edu)https://www.sec.gov/Archives/edgar/data/884413/000089914022000464/a041322b.htm “ConclusionLeen’s gel picture embellishments have been blown way out of proportion to their significance and in no way discount the scientific validity of
Slide 35: Executive Summary
35 Executive Summary Need for Immediate Change Case Study in Poor Oversight More Governance Red Flags Nominees Best Suited to Effect Change Shareholder Call to Action Immediate Change is Necessary
Slide 36: Governance Practices are Not Aligned with the Broader Market
Governance Practices are Not Aligned with the Broader Market 36 Athira’s Alignment with Majority of Companies1 Negative Governance Provisions in Place Russell 3000 S&P 500 Classified Board 43.5% 13.4% Directors Removed Only for Cause 46.9% 24.7% Supermajority Vote Requirement to Remove Directors 33.
Slide 37: Proxy Advisors are Unanimous in their Negative View of Governance
Proxy Advisors are Unanimous in their Negative View of Athira’s Governance Practices 37 Key TakeawaysAt the time of its IPO in September 2020, the company had in place a classified board and supermajority vote requirements to enact changes to the governing documents. These provisions adversely impac
Slide 38: Board Ethnic Diversity Has Been Eliminated
2020 2020 2021 2022 Ethnic Directors New Directors (Departed in 2021) No New Ethnically Diverse Nominees Board Ethnic Diversity Has Been Eliminated Under this Nominating/Governance Committee 38 Tadataka Yamada1 Leen Kawas Kelly Romano Barbara Kosacz Grant Pickering Michael Panzara Mark Litton Nomina
Slide 39: Using Non-Disclosure to Coverup a Poor Track Record on Board Diversity
Using Non-Disclosure to Coverup a Poor Track Record on Board Diversity 39 Is the Board hiding behind Non-Disclosure to make its lack of diversity more palatable to investors?Despite the Non-Disclosure of Demographic Background, which Board member can be considered Non-White? Grant Pickering Michael
Slide 40: The 'Evolution' of the Nominating and Corporate Governance Committee
The ‘Evolution’ of the Nominating and Corporate Governance Committee 40 2020 2021 2022 Directors Edelman and Fluke have been the mainstays of the Nominating and Corporate Governance Committee since inceptionAccordingly, Directors Edelman and Fluke bear the majority of responsibility for Athira’s Poo
Slide 41: Shareholders Have a Rare Opportunity to Drive Governance Changes
Shareholders Have a Rare Opportunity to Drive Governance Changes at Athira 41 Athira has several governance practices that are not aligned with the market and are considered to be poor and high riskThe poor governance has been recognized by proxy advisors ISS and Glass Lewis and have led to both adv
Slide 42: Executive Summary
42 Executive Summary Need for Immediate Change Case Study in Poor Oversight More Governance Red Flags Nominees Best Suited to Effect Change Shareholder Call to Action Immediate Change is Necessary
Slide 43: Athira Failures are the Direct Result of a Poorly Constituted Board
Board Members, Roles, and Key Committees Professional Experience Prior Public Board Experience Joseph E. EdelmanPerceptive Advisors, Founder, CEO, and Portfolio Manager John M. Fluke, Jr. Fluke Capital Management, Chairman and Co-Founder Grant PickeringVaxcyte, Inc., Co-Founder and CEO Directo
Slide 44: Our Nominees have the Experience and Expertise Athira Needs
Our Nominees have the Experience and Expertise Athira Needs 44 1 John Fluke served as Director and Principal Executive Officer of CellCyte Genetics Corporation, for which the SEC revoked its registration in June 2019 Our Nominees Legacy Incumbents Nominees, Roles, and Key Committees Nominees, Roles,
Slide 45: Why Joseph Edelman is Not the Right Fit for Athira Board
Why Joseph Edelman is Not the Right Fit for Athira Board *Source: Factset “Perceptive Advisors, a prominent biotech hedge fund that manages about $9 billion, lost about 30% this year through November [2021] in its main fund, investors say.” – WSJ article Dec.6, 2021“Joseph Edelman’s biotech hedge fu
Slide 46: Why John Fluke is Not the Right Fit for Athira Board
Why John Fluke is Not the Right Fit for Athira Board Lack of Relevant Experience Served as a director of PACCAR Inc. (a manufacturer of trucks) for almost 30 years (1984 to 2015) before retiring in April 2015Served as a director and Interim Principal Executive Officer of CellCyte Genetics Corporatio
Slide 47: Why John Fluke is Not the Right Fit (contd.)
Why John Fluke is Not the Right Fit for Athira Board (contd.) Lack of Relevant Experience Served as a director of CTI Biopharma Corp . (Cell Therapeutics Inc.) from Nov. 2002 to Aug. 2005CTI focused on the development, acquisition and commercialization of drugs for the treatment of cancerAs of 30 Ju
Slide 48: Why John Fluke is Not the Right Fit (contd.): He Knew of the Allegations
Why John Fluke is Not the Right Fit for Athira Board (contd.) He Knew of the Allegations and Dismissed them Earlier But Did Nothing to Protect Shareholders from a Second and More Costly Investigation Served on the Athira Board since December 2014, prior to the Company becoming publicWas Chair of the
Slide 49: Richard A. Kayne
Richard A. Kayne 49 Mr. Kayne currently serves as Co-Chairman of Kayne Anderson Capital Advisors, L.P., an investment firm with over $34 billion in assets under management, which Mr. Kayne founded in 1984.Mr. Kayne also currently serves as a Principal of Propel Bio Partners, LP, a private equity fun
Slide 50: George W. Bickerstaff, III
George W. Bickerstaff, III currently serves as a Managing Director of M.M. Dillon & Co., LLC, an investment banking firm, which he joined in 2005. Prior to joining M.M. Dillon & Co., LLC, Mr. Bickerstaff held various positions with Novartis International AG, a global leader in pharmaceuticals and co
Slide 51: Executive Summary
51 Executive Summary Need for Immediate Change Case Study in Poor Oversight More Governance Red Flags Nominees Best Suited to Effect Change Shareholder Call to Action Immediate Change is Necessary
Slide 52: Conclusion
Conclusion 52 We began investing in Athira over six years ago before the Company went public because we wanted to end the despair of patients and families struggling with Alzheimer’s disease.ATH-1017 is one of the leading pharmaceuticals currently in development that could potentially relieve the su
Slide 53: Change: Action - Proxy Card Details
Change: Action Proxy Card Details THE PARTICIPANTS RECOMMEND A VOTE “FOR” THE ELECTION OF THE N MINEES LISTED IN PROPOSAL 1 BELOW. 1. Election of directors — Nominees: Me 4 {] (01) Mr. Kayne FORALL WITHHELD FOR ALL (02) Mr. Bickerstaff NOMINEES FROMALL EXCEPT PLUS the person who has been nominated b