Leen Kawas, the Seattle biotech exec who resigned as CEO of Athira Pharma after an investigation found she had altered doctoral research images that helped to form the initial basis for the company, re-emerged Friday as co-founder and managing general partner of a new investment firm called Propel Bio Partners LP.
Co-founded with Richard Kayne, a prominent Los Angeles-based asset manager who was an early Athira investor, Propel Bio Partners also has support from several other Athira investors. Among them: John Fluke Jr., who remains on Athira’s board as the publicly traded company pursues therapies for Alzheimer’s and Parkinson’s disease.
Propel Bio is seeking to raise a pooled investment fund of $150 million, according to a filing Friday morning with the Securities and Exchange Commission.
The investment firm’s team includes senior associate Dasom (Christine) Yoo, former Fred Hutchinson Cancer Research Center business development manager.
Propel says it plans to invest in life sciences companies at various stages of development, seeking “to help founders and management teams fulfill the urgent mission to advance human health with disruptive therapies and technologies.”
The firm’s advisory board includes Ronald Lee Krall, former GlaxoSmithKline chief medical officer and current NIH Foundation director, and other industry veterans.
“My involvement in Propel is a testament to my confidence in Leen,” Krall said in a statement. “I believe she has the skills and ability to help promising entrepreneurs commercialize groundbreaking new therapies and technologies, and look forward to working with her and the rest of the team in our shared pursuit of advancing human health.”
Kawas, a Jordanian immigrant, was inspired to pursue biomedical research after her grandmother died of cancer.
“I am looking forward to providing promising and passionate entrepreneurs the same opportunity that Ric Kayne and others gave to me when I started Athira,” Kawas said in a press release announcing Propel’s formation.
Kawas co-founded Athira (originally M3 Biotechnology) in 2011. Named Startup CEO of the Year at the 2019 GeekWire Awards, she took Athira public in 2020, as the first woman to lead a company to an IPO in Washington state in more than two decades.
Shares of Athira fell by more than 50% in June 2021 after Kawas was initially placed on leave from Athira as questions emerged about her research at Washington State University. Athira stock continues to trade at half its prior peak.
In findings released in October 2021, a special committee of Athira’s board determined that Kawas altered images in her 2011 dissertation and at least four scientific research papers. However, the company said the papers containing altered images were not cited in its patent filing for its lead development candidate, ATH-1017.
Athira Pharma CEO Leen Kawas accepts the award for Startup CEO of the Year at the 2019 GeekWire Awards.GeekWire Photo / Kevin Lisota
“I regret that mistakes I made as a graduate student many years ago caused any distraction to Athira today,” Kawas wrote in an internal memo at the time, obtained by GeekWire. “At the time, I was navigating an unfamiliar environment and did not fully comprehend the significance of my decision to enhance the images I used in my research. I want to make clear that the enhancement to images was not a change to or manipulation of the underlying data.”
The company investigators concluded that Kawas had “altered” — not enhanced — the data-containing images.
Papers with altered image were cited in an earlier patent licensed by the company from WSU. The university initiated an investigation into Kawas’ research in June 2021 but has yet to announce any findings.
Editorial “expressions of concern” have been registered about the data in four studies co-authored by Kawas, published in the Journal of Pharmacology and Experimental Therapeutics between 2011 and 2014. Editors of the journal have said they are waiting for WSU to complete its review.
GeekWire contacted WSU for comment Friday morning. A spokesperson responded, “Washington State University does not comment on pending research misconduct actions and has no further information to provide at this time.”
The WSU spokesperson added, “The university expects its researchers to adhere to the highest ethical standards in their conduct of research activities. WSU takes allegations of research misconduct very seriously. The process is being conducted in accordance with the university’s Executive Policy 33, which governs how the institution responds to allegations of research misconduct.”
Through a spokesperson, Athira declined to comment in response to GeekWire’s inquiry about Propel Bio.
A representative of Propel Bio said Kawas wasn’t conducting interviews in conjunction with the announcement.
In statements coinciding with the Propel Bio launch, several of those advising the firm or investing in the new fund made it clear that their involvement was an endorsement of Kawas as an entrepreneur, leader and scientist.
Fluke, the Athira board member, was effusive in response to GeekWire’s inquiry about his decision to invest.
“I am investing in Propel for the same reason I invested in Athira: I have the extensive tangible evidence that Leen will lead Propel to identify and fund the most promising medical technology enterprises that will, in turn, deliver astounding improvements in human healthcare — and deliver consistently superior returns to investors,” Fluke said via email.
The involvement of early Athira investors in Propel points to an undercurrent of dissatisfaction about the outcome of Kawas’ tenure as Athira CEO among her supporters, countered by a desire to see Athira reach its potential.
Mike Flynn Sr., former publisher of the Puget Sound Business Journal in Seattle, summed up the sentiment in his Flynn’s Harp newsletter in October, explaining that he and other supporters of Kawas “have decided together not to raise a fuss with the company lest any negative expressions from such prominent people toward the Athira board have an adverse effect on the company or its progress.”
Kayne, the Propel co-founder and general partner, is a former Cantor Fitzgerald principal who founded Kayne Anderson Venture Partners. He said in the announcement that he’s proud to be partnering with Kawas in the new firm.
“Leen is a visionary entrepreneur with a unique blend of drive, intelligence and demonstrated business acumen. In six short years, she built a company from the ground up, taking it through the early stages of drug development, through its public offering and into the final stages of developing its potentially game-changing therapy,” Kayne said.
He added, “Under Leen’s leadership, I believe Propel is uniquely positioned to identify excellent opportunities to assist entrepreneurs along the path to success.”
Strategy and operations expert Carol Criner, an early Athira investor who was introduced to Kawas by Flynn, is one of eight members of the Propel Bio medical and investment advisory board. Criner said she also plans to invest. Throughout the entire journey, Criner said, “I’ve only grown more confident in Leen.”
In addition to Krall and Criner, other members of the Propel Bio advisory board are:
- Ronald Farkas, a former FDA clinical team leader;
- Mike Gibbs, a former AstraZeneca executive;
- Suzanne Hendrix, CEO of Pentara Corp.;
- Erik D. Laursen, a pharmaceutical and biotechnology executive;
- Sylvia S. McBrinn, former Pfizer global vice president of marketing;
- and Richard Sudek, a tech entrepreneur and angel investor.
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At a time when the clinical health care workforce is suffering from burnout and attrition in the wake of the pandemic, Regard’s technology looks to alleviate some of the pressure on health care workers. The startup’s AI-enabled software is integrated directly into a provider’s system and uses an algorithm to analyze patients’ medical records, allowing physicians to more easily diagnose them.
Since launching its flagship product in 2020, Regard’s technology has been used on more than 30,000 patients, according to the company. The startup charges health care providers around $500 to $700 per month for access, co-founder and CEO Eli Ben-Joseph told dot.LA, with its customers including Torrance Memorial Medical Center, Cedars-Sinai Medical Center and roughly a dozen other hospitals across the U.S.
“We’re building something that’s a game-changer for doctors,” Ben-Joseph said. “It’s helping them catch medical conditions that they would have missed. So regardless of market conditions, we’re able to have value and I think investors saw that and got excited.”
Co-founders from left to right: CEO Eli Ben-Joseph, CTO Thomas Moulia, and COO Nate Wilson. Courtesy of Regard
Founded by pre-med students Ben-Joseph, Nate Wilson and Thomas Moulia in 2017, Regard got its start through Cedars Sinai’s Techstars-backed accelerator program. It was at the accelerator program that Ben-Joseph observed physicians’ workflows and saw the need for a product like Regard’s; he recalled noticing how doctors would constantly pop in and out of a patient’s room, shuttling between the patient and a computer where they could enter data and notes.
“I think that’s why so many doctors are burning out now, as they just don’t have software that really enables them,” Joseph said.
Ben-Joseph—who coupled a bachelor’s degree in bioengineering from MIT with a master’s in computer science from Stanford—noted that Regard’s technology can automatically detect up to 50 of the most common medical conditions, including heart failure, diabetes, obesity, depression and anxiety.
“We have a 90% accuracy rate at the minimum,” he said. “Physicians will look at our software and accept it, but it’s not perfect. We tell physicians to treat it like the relationship [with a] medical student.”
This year’s focus will be different from the typical accelerator: Startups in this group will test their products directly with companies active in the ocean economy for four months, collecting data on what works, what doesn’t and further developing proof of concept. Braid Theory will help these startups come up with their business plan and pitches, and connect them to investors and potential partners in the field. In return, it takes an equity warrant that can be converted after three years.
The startups joining Braid Theory typically span industries like port logistics, aquaculture and energy, all of them aiming to test their technologies and untapped opportunities of the burgeoning industry. The accelerator’s goal is to bring those companies from pre-revenue into commercialization.
And all of them are looking to solve challenges within the blue economy ecosystem, many of which have also been exacerbated by the COVID-19 pandemic. With 31% of all goods floating across the ocean to and from the U.S. pass through the Port of L.A. and the Port of Long Beach, COVID-19 strangled supply chains and increased the volume of goods handled at L.A. 's premiere dock by nearly 16% between 2020 and 2021. This created numerous logistical challenges for the dwindling workforce at the nation’s busiest ports while increasing emissions.
“The thing that we're trying to think about are ways in which we can leverage biological systems and software to make more immediate changes in markets that have a low barrier to entry,” Braid Theory co-founder Jim Cooper said of accelerator’s approach to addressing a wide range of climate and logistical issues.
Cooper founded Braid Theory with his colleague Ann Carpenter after the pair left PortTechLA, a maritime and logistics incubator that shuttered in 2016. The two wanted to create an accelerator for port and ocean startups that went beyond logistics and took into account other promising sectors of the ocean economy, including sustainable fish and plant cultivation as well as tools to make the shipping sector more efficient.
Jim Cooper co-founded Braid Theory with his former colleague from PortTechLA, Ann Carpenter.Image courtesy of Braid Theory
Accelerators like Braid Theory are attempting to fill a void in the blue economy ecosystem. Despite being home to several universities with robust maritime research centers and a giant port infrastructure that could be better optimized, few startups survive in Los Angeles due to a lack of early stage funding, according to a 2020 report from the Los Angeles Economic Development Corporation. The accelerator provides funds and lab space and investor connections to nascent startups tackling a wide range of ocean-related problems.
The same report found that ocean startups, particularly early-stage ones, have a difficult time getting funding to accommodate the need for expensive lab equipment like centrifuges, chillers and pipettes. Startups in the blue economy space are primarily funded through federal and state dollars, NGOs and philanthropies, and competitions. But while angel funding has historically been slow to trickle into blue economy startups, some are starting to take note of the size of the market. In the first cohort, eight out of 12 startups received federal funding and investor funding with the help of Braid Theory.
The accelerator’s first graduating class included Florida-based Tampa DeepSea Xplorers, which makes seafaring autonomous vehicles that can scrape the bottom of the ocean and collect data faster for researchers to use as they study climate change impact or source for different medicines. Irvine-based ReCreate Energy is another graduate, which sources algae to create a more sustainable bio-crude oil that can be used at gas and oil refineries. While FlashQ, a Canada-based AI platform, is trying to reduce truck congestion and the emissions caused by them at the port by creating a scheduling platform that optimizes waiting and shipment times.
“The key is the opportunity, the opportunity was there,” Mimi Carter, a biotech investor with the Pasadena Angels, said of the business opportunities in the ocean market. “We saw a market that was unaddressed and is still an emerging market.”
A cluster of cranes at the Port of Long Beach.Photo by DJANA 575/ Shutterstock
To Carter’s credit, L.A. County boasts 75 miles of coastline that the LAEDC expects by 2023 will produce more than $80 billion in regional output, make roughly $50 billion in gross county product, and create over 200,000 direct and indirect jobs, according to a 2020 report. And, according to the Los Angeles Economic Development Corporation, economic and job growth in this sector relies heavily on the creation and implementation of new technologies, making angel investors necessary players in bolstering the ocean economy.
“Not only do we want to be investing in a sustainable product, but someone we count as a first mover,” Carter said of her investment approach. Already, groups like the Pasadena Angels and Techstars L.A. have made investments in the space. Reece Pacheco, a blue economy angel investor, is quietly working on a new venture fund around the blue tech space that hasn’t been announced yet.
“What we're starting to see is there are entrepreneurs who are either coming up through these research firms, or there are entrepreneurs who have cut their teeth elsewhere but care about the ocean,” Pacheco said.
There’s also Braid Theory’s neighbor (and landlord), AltaSea, the nonprofit research hub that has facilitated a number of partnerships with companies across the world.
“We do want to become the leading destination for the blue economy in terms of technology, finance, the education pathways it takes for students to get into these jobs in the future, and then the actual workforce development for the jobs of the future,” said Terry Tamminen, the new CEO of AltaSea.
Braid Theory’s makeshift shipping container-turned-lab is next door to a slew of other startups and projects in the blue economy space. USC researchers are incubating bubbling cauldrons of kelp that could create biofuels and alternative food sources. While Oceanographer Robert Ballard, who found the Titanic wreckage in 1985, set up a sea exploration program a few doors down.
“The ocean is more than a destination for tourists and a place for Jacques Cousteau and David Attenborough to go diving,” Tamminen said. “It's actually something right at our doorstep that we need to protect for our own survival, but it’s also an economic opportunity.”
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