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updated 2:54 PM UTC, Jul 28, 2018

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Leen Kawas' comeback: Managing General Partner of Propel Bio Partners, a new fund for life sciences start-ups

Propel-Life-Science-Fund
When I did a column five years ago citing a comment from Melinda Gates to a large audience of women that the technology industry was dominated by “a sea of white guys,” I noted that it was actually a woman, Leen Kawas, a then-32-year-old immigrant not yet a citizen, who was the dominant face of the biotech sector of technology in this state.
 
In recalling that column, I remembered making the point that Kawas was the beneficiary of a large group of investors who were believers in her, in her commitment and in her company, Athira Biotechnology, as she was at the leading edge of the emerging field of regenerative medicine, destined to halt or even reverse the progression of neurodegenerative diseases like Alzheimer’s and Parkinson’s.
 
I revisit the column here because of the corporate rollercoaster ride Kawas has been on over the past 18 months, first preparing for and taking Athira public in October of 2020. Then being placed on leave in June of 2021 for obscure allegations relating to her doctoral paper at Washington State University nearly a decade ago, then being forced by Athira’s board to resign her CEO role last September after an investigation of the doctoral paper allegations was completed, but results never announced.

Remember this is the young scientist who was co-inventor of Athira's lead drug candidate ATH-1017 and also invented several of the innovative drug candidates in Athira’s pipeline.
 
Dr. Leen Kawas co founder and managing general partner of new fund Dr. Leen Kawas,
Co-Founder, Managing General Partner - 
Propel Bio Partners LP
Now comes news of Kawas’ giant of all comebacks, easing the anger toward the board of Athira that has been the shared emotion for most of that large group of investors who never wavered in their support of Kawas. Now, in essence, she is past the pain of Athira, realizing that what she and her patents put in place there is still likely to become the vital drug she and those who invested in her anticipate.
 
So now rather than building one vital world-changing biotech company, her future will be in helping numerous entrepreneurs, including biotech ones, build important companies.

It was announced in no less than the Wall Street Journal that Kawas is co-founder and managing general partner of a new investment firm called Propel Bio Partners LP, which will seek to raise a pooled investment fund of $150 million, according to a filing with the Securities and Exchange Commission.

Of particular significance to the investor world, her co-founder is Richard Kayne, prominent Los Angeles-based asset manager, former Cantor Fitgerald principal, and founder of Kayne Anderson. He will be Propel’s general partner.
 
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.”

Propel Bio Partners has quickly attracted some who were early investors in Athira, originally named M3 Bio. Thus it was announced at almost the same time as news of Propel Bio’s formation that John Fluke Jr., who remains on Athira’s board, and Carol Criner, vice president of strategic accounts for the global enterprise solutions company HCL Technologies, were planning to invest.

“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.

“Under Leen’s leadership, I believe Propel is uniquely positioned to identify excellent opportunities to assist entrepreneurs along the path to success,” he added.

The investment firm’s team includes senior associate Dasom (Christine) Yoo, former Fred Hutchinson Cancer Research Center business development manager.

And its advisory board includes Ronald Lee Krall, former GlaxoSmithKline chief medical officer, and current NIH Foundation director,

“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 Bio's launch.

Richard Kayne prominent Los Angeles based asset manager will be new funds general partner Propel Bio Partners LPRichard Kayne -
prominent Los Angeles based asset manager will be New Funds General Partner Propel Bio Partners LP
In statements coinciding with the fund's announcement, several of those advising or investing in the new fund, including Fluke and Criner, who were early investors in Athira, made it clear that their involvement was an endorsement of Kawas as an entrepreneur, leader, and scientist.

Those who are longtime readers of The Harp may well recall that Kawas has been my focus on a half dozen occasions, dating back to when I met her in the fall of 2013 before she had been named M3 CEO.

Because her drug was initially focused on Parkinson’s and my wife, Betsy, has been suffering with Parkinson's since 1999. I took to helping Leen meet potential investors through the fall of 2013 and all of 2014.

I told her "You are my company."

She liked to chuckle when she would tell people that I introduced her to the first 200 people she met in Seattle, Spokane, and Southern California, beginning even before she was formally made CEO in January of 2014, Among the first in Seattle were Fluke and Criner. Carol was the first woman I introduced Leen to and she became the first female investor and a mentor.

As I watched Leen's presentation ability, I quickly became comfortable introducing the young Jordanian woman to friends I felt could, if they wished to, ante up the $50,000 that was then the ask.

One was Richard Sudek, then recent past chair of the five-county Tech Coast Angels, which was the largest angel investor group in the nation. Thus at that point, he was likely the best known angel-investment leader in Southern California.

Sudek, who had returned to academia at Chapman University in Orange County, agreed in spring of 2014 to sit for Leen’s computer slide presentation and when she finished, Sudek, leaving me stunned, said: “If you have an advisory board, I’d be happy to be on it.” Sudek has never wavered in his support of her since then.

An accidental introduction allowed me to advise Leen that fate had already determined she would be a success. That came about at Suncadia when Leen was preparing for a presentation I had arranged for a board I was on and I went into the lobby to get coffee. Jim Warjone then retired as CEO but still chairman of Port Blakely Companies, saw me and we caught up for a few minutes since I hadn't seen him in several years. Then he asked what I was doing there and I told him, he asked if he could sit in on the presentation.

So he did and before long he called me to tell me he had decided to invest. He has shared with me several times in recent years when Leen comes up in conversation: "She is the smartest person I've ever met!"

At one point, Kawas cautiously explained to me M3’s focus had to shift from Parkinson’s to Alzheimer’s because it was easier to raise money for a drug to reverse Alzheimer’s and the company was now in a multi-million dollar raise preceding its planned IPO. But she added that “as soon as we finish with approval for Alzheimer’s we'll be 60 percent of the way along when we shift our focus to Parkinson’s” and indeed the trials for Parkinson’s have already gotten underway.

As Leen and I became close friends because of our common goal, at one point she asked: “Can you invest?” So a couple of days later I wrote her a check. A few days after that she told me Fluke had agreed to invest and I asked her if she had deposited my check. She said she hadn’t and I said “if you don’t deposit my check as your first investor before you deposit Fluke’s then tear mine up.”

Now she was certainly aware that a guy with his own family venture fund was of greater long-term investment value than a retired newspaper publisher. Nevertheless, she deposited my check that afternoon, so I have been able to say I was her first investor. And as her image and impact become more far-reaching in the future with her new biotech fund, it becomes ever more satisfying to say that. Because we are close friends, Fluke has been okay but tends to look aside if he's around when I have occasion to tell someone that I am investor number 1.

By 2015, Leen was finding biotech executives and funders beating a path to her door so my introductions were no longer needed, but we remained friends as I was able to turn my attention to other things but watched as she continued to grow a cadre of followers, frequently those for whom Alzheimer's and Parkinson's had personally impacted their lives.

One was Michael Nassirian, a retired Microsoft key executive and an Iranian whose father, who had headed the Iranian oil company, had died of Alzheimer's.

When Nassirian heard Leen's presentation at a Bellevue Chamber event, he approached her after her talk and told her he wanted to be involved and asked how much she needed.

Because of the Leen connection, Nassirian and I have become close friends and meet regularly and I'm sure one of those future meetings will relate to Propel and the need for him to be involved.

When Leen was once asked at an event about what's the difference between the technology industry and biotech, the answer she gave may help guide the future conviction of entrepreneurs drawn to her industry and to her fund.

"Would you rather be part of the industry that will create new instruments that people will be able to hold in their hand or would you want to be part of an industry whose role will be to help create a new hand?"
 
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Is Delta's focus on Alaska 'just business' or something that has long been unacceptable?

As the awareness grows of Delta Airlines' increasingly obvious designs on the business of Alaska Air, it's intriguing to see that while a majority in the business community are quickly becoming protective of what they view as their hometown airline, there are some who have said to me: "it's just business."

When I did my first column on this issue in December, suggesting that the once beneficial relationship Delta and Alaska had was turning predatory, a number of proponents of the free-market system found themselves agonizing a bit before most sided with my viewpoint.  

John Fluke, an outspoken proponent of the notion of free markets and competition, was sophisticated enough to quickly distinguish between the concept of competing to win, necessary to the success of our economic system, and competition with the goal of driving out competitors.

Fluke, and others like him I have talked to over the weeks of seeking to test viewpoints and plumb attitudes, noted that the key to the acceptability of a competitive approach is the question: "Does it benefit the customers?"

Strategies aimed at driving out competitors have been unacceptable since the dawn of the last century when that great advocate of competition, President Theodore Roosevelt, took the Sherman Anti-trust Act as a bludgeon against corporations that sought to win by gobbling up or driving out competitors.

I decided to do a bit of research on that law that became Teddy Roosevelt's tool in busting trusts and learned that the law declared illegal "all combinations in restraint of trade."

As one explanation put it: "The law directs itself not against conduct which is competitive, even severely so, but against conduct which unfairly tends to destroy competition itself."

So is it in the spirit of competition that Delta would seek to extends its service to, for example, Alaska cities that offer one airline marginal income and offer two airlines only red ink?

Maybe, on the issue of Delta seeking to convince the University of Washington to take Delta's money in exchange for becoming Delta's travel partner. But that's a possible development that hopefully UW's regents would deem counterproductive for the university in the longer-term goal of building allegiances rather than divisiveness.

It has occurred to me that the quest by this community's leadership in seeking to determine whether the possible eventual demise of Alaska through takeover or acquisition would be good or bad for the community would be served by asking those who have been there.

Thus the idea I have been talking up is for a group of business and community leaders to set a meeting with their peers in Minneapolis-St. Paul, which once had its own hometown airline, Northwest, which was absorbed by Delta.

In fact, a city-to-city visit of Seattle-area leaders with their peers in Minneapolis-St.Paul could explore more issues than just air service, since the two regions have long shared economic roots and similarities.

It was almost exactly seven years ago, April 15, 2008, that Delta and Northwest merged to form the largest airline in the world. Has the merged airline that resulted benefitted the Twin Cities? Has it resulted in little change (other than the loss of jobs that Northwest represented to the region)? Or significant?

Might be worth finding out, guided by a recollection of philosopher-poet George Santayana's oft-recalled (and oft-misquoted): "Those who cannot remember the past are condemned to repeat it."

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Concern among Seattle business people that Delta turning from Alaska partner to predator

There's a growing concern among Seattle-area business leaders that they are seeing a once mutually beneficial partner relationship between Alaska Airlines and Delta Air Lines changing to one in which Delta seems to be moving from partner to predator.  

There is an obvious agreement within the business leadership that losing Alaska would be a significant blow to the economies of Seattle and the state. And that is leading many toward a conviction that the business community can't merely stand on the sidelines to watch to see what the outcome is of a battle between the world's second largest airline and hometown Alaska.  

Thus if those expressing such concerns are accurate, then Seattle will need to shed its "Seattle Nice" image for a time to forcefully take a position in support of Alaska.

"The business community must take sides in this and do so forcefully and visibly and an important part of its message is that Delta is actually not good for Seattle," suggests Joseph Schocken, president of Broadmark Capital, a successful Seattle boutique merchant bank that focuses on emerging companies.  

"Delta is anti-Boeing, and thus anti-Seattle, with both its dollars and its political clout," Schocken said. "With its dollars, it buys Airbus planes rather than Boeing's and with its political clout it opposes the Ex-Im bank that is important to Boeing's success," he added.

As I talked with various people in the business community, there was an expression of the need to have a pro-Alaska effort, even a forceful one, but not an Anti-Delta one, lest that generate sympathy for the Atlanta-based airline since it is a very successful airline that employs a large number of people and successfully serves parts of the region's air-carrier needs.

Yet as each got into the competitive aspects of the issue, comments frequently turned from support of Alaska to negative on Delta.

As business people discuss this Alaska-Delta struggle, there is a logical defense of free-markets competition but a dark view of competitors who turn predators. And I detected growing sense that predator is what Delta's competition with Alaska has devolved into.

One who best summed up the competition issue was John Fluke, whose family's business leadership, investment focus and philanthropic involvements are widely known and respected, who said: "The notion of free markets and competition are absolutely necessary to the success of our economic system and the effort to gain advantage over competitors, ethically pursued, benefits customers."

But Fluke suggested that the current competitive activities amount to Delta "abusing" the definition of competition, saying "its tactics with everything from current pricing to their philanthropic outreach with nonprofits here are likely to last only as long as it takes to drive Alaska into submission."

"If that happens, then airline tickets will eventually cost more, route structures will become less accommodating and Delta's support of important philanthropic causes will be lower and that would be abusing the real meaning of competition," he added.

Woody Howse, whose Cable & Howse Ventures basically launched the venture-capital industry in this region, exemplified the enthusiasm of Alaska supporters when he said "Alaska Airlines is one of the most community minded, customer serving and socially contributing corporations in our region."

But his comments also quickly turned against Alaska's challenger, noting his view that "Today Alaska Air is being attacked vigorously by the Carpet Bagger Delta Airlines, coming to town with Airbus (not Boeing) airplanes and viciously attacking the Alaska Air routes with competing schedules.  Our Northwest Community must band together and support the company that has so supported us through the good as well as difficult times."

    

"With Delta's current actions and apparent ulterior motive in Alaska's hometown hub, engaging in a process intended to squeeze Alaska Airlines with the objective of acquiring, we customers need to be very alert to the probable outcome if Delta is successful," Howse added.

Mike Kunath, principal and founder of Kunath, Karren, Rinne & Atkin LLC, a successful Seattle investment advisory firm, summed it up succinctly as: "Alaska has been a true supporter of the region. Delta never will be."

Herb Bridge, longtime Seattle civic leader and philanthropist as well as chairman and CEO of Ben Bridge Jeweler for several decades before guiding the company into acquisition by Warren Buffet, notes that corporate acquisitions themselves are not evil.

"It is possible for an important local company to be acquired in a way that allows it to retain local control and oversight, as happened with our acquisition by warren Buffet," Bridge said. "But when the acquisition is pursued in a predatory rather than a friendly manner, not only the shareholders of the pursued company but the community it serves are losers. There is nothing beneficial about Delta's pursuit of Alaska."

Alaska CEO Brad Tilden, retired CEO Bill Ayer and board members are reluctant to get into any Delta-bashing conversation, preferring to focus on Alaska positives.

Ayer, who as Alaska chairman and CEO for a decade before retiring in early 2012 guided the carrier through some of the industry's most tumultuous times, told me "The question of whether Alaska could remain independent has been raised for decades."   

"Our response was that a locally based, independent airline was better for customers, the community, employees, and investors. While there were no guarantees of remaining independent, all we could control was our own performance, and our chances were much better if we did a great job for each of those stakeholders," he said.

 

And as Tilden puts it, "The transformation over the last decade has been all about cost. We're trying to balance low fares and lots of service to the destinations (passengers) want, with a strong and successful company that can grow and buy new airplanes and has the capital to add new services."

 

The financial results are impressive as the parent company for Alaska Airlines and its regional sister carrier Horizon Air made a record $508 million profit in 2013, and the stock continued a steep ascent to five times its value from just five years ago.

 

What needs to happen is for Delta CEO Richard Anderson to be convinced by those who know him well, and that includes some in Seattle, that he is risking a serious downside in creating the potential for an in-your-face attitude among Seattle business people on behalf of Alaska.

For as Schocken summed it up: "There needs to be a real corporate campaign to encourage flying Alaska, discouraging flying Delta and make it unpleasant, hurting Delta's bottomline so Anderson decides that not only isn't it going to be as he thought, but shareholders and board members are getting unhappy.'"

     

Evidence that neither Fluke, Howse nor any of those who echo similar sentiments about Delta targeting Alaska are out of line is Delta's own home page where it headlines "Exclusively for Seattle, 2x miles all year long."  

But Delta's sharpest critics could suggest with a smile that what happens when you click on that link on Delta's home page might prophetically point to where Delta would be for Seattle if they were to push Alaska into a merger. The click leads to a page that says "the requested page could not be found."

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