1 Michael A. Swit, Esq. Vice President
Mar 30, 2015
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Michael A. Swit, Esq.Vice President
The Forgotten Keys to Bio-Pharma Transactions – Regulatory, Clinical &
Quality Challenges inDue Diligence and Contracting
CHI Bridging the Business Development/AllianceManagement Interface
November 2008Boston
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Standard Disclaimers
Views expressed here are solely my own and do not necessarily reflect those of my firm or any of our clients.
These slides support an oral briefing and may not be relied upon solely on their own to support any conclusion of law or fact.
Today’s Focus
Through the Regulatory, Preclinical, Clinical & Quality lenses, we will examine these keys to successful alliances: Due Diligence – what you need to do to make
sure you don’t have to rely on … Contract Clauses – language you need to
back up your due diligence A Couple Tales of Deals Gone Awry
Deal Drivers – drying pipelines lead to partnering in one form or another – from joint ventures to outright buys
DUE DILIGENCE –
What to Look At to Minimize FDA Regulatory, PreClinical, Clinical, and
Quality Challenges
Basics Impacting Product Selection
Regulatory environment Specific issues regarding guidance or other
precedence Regulatory history Understanding how similar products were
handled by regulatory bodies FDA Europe – may be different (e.g., medical device
regulatory hurdles generally lower)
Diligence: What’s “Due” Varies by Deal
Many types, many sizes Depth of diligence dependent on complexity of the
deal and stage of development – Key – your due diligence team must understand what
should have been done at the stage of development to which the product/company corresponds
Types of Alliances Co-promotion of a product Acquisition of a license Acquisition of all product rights Joint Venture Merger Acquisition of a business unit Complete company acquisition
Due Diligence Structure Focus on areas of greatest criticality –
each due diligence will be unique – vary per stage of development
Who will be involved -- will vary per product, but is essential to obtain qualified personnel Regulatory
U.S. FDA expertise E.U. and other foreign agencies, as applicable
Fallacy #1 – if it’s good enough for FDA, the rest of the world will accept it
Preclinical Clinical Quality Internal vs. External – skin in game vs. less
bias
Key FDA Diligence Issues Early Stage – still in the lab
Is product subject to a written regulatory strategy plan vetted by an outside expert? Is the current strategy sound or will changes be
required? What types of proof of concept/principle
studies have been done? Are they validated animal models?
Product approved abroad? If so, what learned from that?
Preclinical Stage How were the tox studies designed? Are they
appropriate for the intended population and dosing (e.g., chronic vs. acute)
Facility – reputable and GLP compliant? Studies – monitored?
Key FDA Diligence Issues …
IND Stage – gone from bench to bedside? Pre-IND meeting held?
Results View briefing packages, minutes, FDA
correspondence Actual filing
Review Clinical hold – verify
File being maintained properly? Compare protocols sent to investigators to those
sent FDA Did firm have and conduct robust program for
handling AE’s?
Key FDA Diligence Issues …
Pivotal Studies Stage Was there an End of Phase 2 meeting?
What was agreed? Was it followed?
Statistical power of studies -- sufficient Study design
Pressure vs. non-inferiority studies Appropriate arms and controls used?
Key FDA Diligence Issues …
Pivotal Studies Stage, con’d Did the CRO monitor studies correctly? GCP compliance IRB involvement correct Use of foreign data – acceptable, but … GMP compliance – appropriate to the clinical
phase? Scale-up validated Formulation changes documented and
validated – FDA won’t approve product if commercial scale does not relate to clinical study supply
Contract labs – did they meet GLP? Example: MDS Montreal
Key FDA Diligence Issues … NDA/BLA Stage
Pre-filing meeting held? Electronically filed
Who handled – company or contractor -- e.g., Neurocrine – severe problems in filing; had to be redone
Advisory Committee needed – all NCEs now must go to A.C.
Risk Management Does the product require a “R.E.M.S.”? Might it require a post-approval study
If so, how big? Has the firm tracked AE’s appropriately?
Financial bias – adequately addressed; rare, but is a powerful public issue today
Key FDA Diligence Issues
FDA Enforced Competitive Restrictions – aka “Exclusivity” Orphan – 7 years Waxman-Hatch
5-year -- NCE 3-year 180-day – ANDA
Marketed Products Changes handled via NDA/BLA supplements Quality – GMP – audits are the answer
Example – Ranbaxy Import Alert AE Monitoring – what did they know and when did
they know it? Example -- Vioxx
Unique FDA Diligence Challenges
Criminal investigations Fraud
Application Integrity Policy Debarment – using debarred persons Changing regulatory/legal milieu – e.g.,
BioSimilars – very difficult to predict right now
Examples of FDA Issues Impacting Deals
Alza/Abbott – the buyer’s (Abbott) regulatory issues, revealed after deal announced, cut share price, sinking deal based substantially on stock exchange
Guidant – while not explicitly stated, AE issues kept J&J bid down, allowing Boston Scientific to get firm (but, was it worth it remains to be seen)
Gliatech/Guilford – Guilford pulled out when FDA legal issues revealed
THE CONTRACT
Key Clauses – Beyond Reps & Warranties -- to Manage the Regulatory,
Preclinical, Clinical & Quality Challenges
Contract Clauses …
Buyer’s right to audit seller or contract partner (and seller’s key suppliers) without notice at any reasonable time during operations vendor to cooperate fully with audit access to records and personnel to be spelled
out Why audit?
Right is a check on partner sliding toward non-compliance
Good sense – and required by FDA regs (at least on devices)
Contract Clauses …
Advance notice of changes in seller’s processing – so … Buyer can assess what regulatory action it
must take to keep its approval/submission current
Buyer can assess if change might change nature of product e.g., carbamazepine – change in synthesis led to
different crystalline structure – met spec, but flunked dissolution – API maker did not tell company – massive recall
Contract Clauses … Seller to cooperate, at no [or $___] additional
expense, with Buyer’s needs to take action to continue to comply with FDA requirements (e.g., vendor to provide data to support filing of supplements to make changes to approved applications)
Contract Clauses …
Partner’s relations with FDA ... Provide copies of 483’s, EIRs Prompt notice to buyer of initiation of FDA
inspections Prompt transmission/notice to buyer of any FDA
regulatory correspondence or other regulatory action
Right of partner to have a representative at other partner during an FDA inspection
Contract Clauses …
Timely notice of other problems encountered by partner in its manufacturing process Example: problems in making similar
products for others – duty to notify you Timely notice of any adverse reactions or
complaints reported to vendor Caveat: define “timely”
Case study – Lilly/Icos Jt. Venture on Cialis – approval delayed about a year due to quality problems at Lilly plant
Contract Clauses …
Recalls -- duty of responsible partner to cooperate with recalls initiated by other partner (if applicable)
IDE/IND Related – if delegate to a CRO, must specify in contract what duties are delegated Problem – really doesn’t insulate sponsor
from liability on the business side
Contract Clauses … Active Pharmaceutical Ingredient (API)
Sourcing DMF Maintenance –
Notice of updates Duty to file at FDA
Specify GMP level compliance (U.S. v. EU v. WHO v. ??)
IP Compliance – that they are not violating any process patents
How DMF file will be updated and who bears the burden of cost to ensure done correctly
Contract Clauses … Pre-approval inspections
Notice to Buyer when scheduled Handling
Ownership of formulation Allocation of NDA related duties
Preparing batch records Preparing labeling
IND Formulations – type of equipment and extent of GMP controls applied (varies by phase)
Ensuring scale-up and validation done properly
Specific Problems … Two unique ones….
Back-up Manufacturing Plant When needed: whenever manufacturing is
contracted out for IND or approved Example: Lilly – 7/18/02 public announcement
on 2nd Quarter results and plant problems not being cured until 2003
What clause says: lets non-mfg. party seek a backup contractor under appropriate circumstances (e.g., Lilly had GMP problems holding up NDA approvals)
Specific Problems … Two unique ones….
Who Owns the Data? When needed: whenever studies of any sort
are farmed out Example: Client has major study done at
University; contract is ambiguous on who controls the data, although clear client can use in FDA product approval filing
What clause says: makes clear who owns both raw data and results and the right to authorize publications and references
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Call, e-mail, fax or write:
Michael A. Swit, Esq.Vice President
The Weinberg Group Inc.336 North Coast Hwy. 101
Suite CEncinitas, CA 92024
Phone 760.633.3343Fax 760.454.2979Cell 760.815.4762
Questions?
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About your speaker…Michael A. Swit, Esq., is a Vice President at THE WEINBERG GROUP, where he develops and ensures the execution of a broad array of regulatory and other services to drug, biologics and medical device/diagnostic clients seeking to market products in the United States. His expertise includes product development strategies, compliance and enforcement initiatives, recalls and crisis management, submissions and related traditional FDA regulatory activities, labeling and advertising, and clinical research efforts.
Mr. Swit has been addressing critical FDA legal and regulatory issues since 1984. His multi-faceted experience includes serving for three and a half years as corporate vice president, general counsel and secretary of Par Pharmaceutical, a prominent, publicly-traded, generic drug company and, thus, he brings an industry and commercial perspective to his work with FDA-regulated companies. Mr. Swit then served for over four years as CEO of FDANews.com, a premier publisher of FDA regulatory newsletters and other specialty information products for the FDA-regulated community. His private FDA regulatory law practice has included service as Special Counsel in the FDA Law Practice Group in the San Diego office of Heller Ehrman White & McAuliffe and with the Food & Drug Law practice at McKenna & Cuneo, both in the firm’s Washington office and later in San Diego. He first practiced FDA regulatory law with the D.C. office of Burditt & Radzius.
Mr. Swit has taught and written on a wide variety of subjects relating to FDA law, regulation and related commercial activities, including, since 1989, co-directing a three-day intensive course on the generic drug approval process and editing a guide to the generic drug approval process, Getting Your Generic Drug Approved. A former member of the Food & Drug Law Journal Editorial Board, he also has been a prominent speaker at numerous conferences sponsored by such organizations as RAPS, FDLI, and DIA. A magna cum laude graduate of Bowdoin College, he received his law degree from Emory University Law School and is a member of the California, D.C. and Virginia bars.
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