All posts by DuaneMorris3

Protecting the Company’s Crown Jewels: Best Practices for Growth Stage Biotechnology Companies Using Contract Vendors in Support of Basic Research Activities

By Patrick C. Gallagher, Ph.D. and Sandra G. Stoneman

Emerging growth biotechnology companies often need to rely on third-party vendors and collaborators to fuel their research and development efforts.  These vendors and collaborators may perform crucial aspects of the R&D process, such as candidate screening, assay development and validation, and lead generation. To enable this work, biotechnology companies may be required to share their “secret sauce” (or the building blocks to an eventual secret sauce), like antibodies and their targets.  The following recommendations should be taken to account when working with third parties to balance the need to advance R&D with limited internal capacity and the need to maintain confidentiality of trade secrets and other proprietary information:

  • Strong work-product language—Ensure the contract has strong invention assignment and “work-for-hire” language.  Consider calling out specific antibodies and their targets as your “background intellectual property” or your materials. 
  • Confidentiality—Confidentiality obligations in the contract for trade secrets should survive for so long as the information qualifies as a trade secret under applicable law.
  • Subcontracting—Limit the ability of the vendor or collaborator to use subcontractors.  Understand the full supply chain and work flow, and the companies involved in each step.  For example, often vendors and collaborators want the ability to assign/subcontract to affiliates.  If that affiliate not qualified, this could present regulatory and IP protection issues.  Make sure you know who will actually have access to your confidential information and proprietary biological material.
  • Material transfer—If biological material is being transferred, consider entering into a separate “material transfer agreement” because most contract service agreements may not adequately address protections around sharing of material, and each time biological material is shared there likely will be specific limitations that will be appropriate to specify for the vendor.  At a minimum, ensure the contract limits the scope and nature of what the vendor is allowed to do with the biological material.  Also ensure that the contract requires return of all physical materials (often, the return obligations only apply to confidential information), and prohibits copying or replication except to the extent necessary for the contracted work.
  • Diligence your vendor or collaborator—ask for references, visit their location, periodically exercise audit and inspection rights under the contract.

It almost goes without saying that if a company is going to outsource R&D functions, there is some inherent risk that cannot be eliminated, but a good deal of the risk can be mitigated.

FDA Guidance Aims to Accelerate Availability of COVID-19 Tests

On March 16, 2020, the U.S. Food & Drug Administration (FDA) issued new guidance aimed at accelerating the availability of COVID-19 diagnostic tests developed by laboratories and commercial manufacturers. The guidance, which took immediate effect upon release, contains recommendations for clinical laboratories and commercial manufacturers regarding development of diagnostic tests for COVID-19 during the current public health emergency.

As the guidance recognizes, there is currently an outbreak of a respiratory virus named SARS-CoV-2, which causes a disease named Coronavirus Disease 2019 (hence COVID-19). The guidance also acknowledges that COVID-19 poses a high potential public health threat “both globally and to the United States.” Effectively responding to the COVID-19 outbreak requires “rapid detection of cases and contacts, appropriate clinical management and infection control, and implementation of community mitigation efforts.”

To that end, the guidance describes a number of important policies concerning the circumstances under which certain entities may perform laboratory testing or distribute test kits on a more expedient timeline than would normally be permitted under FDA regulations and policies.

View the full Alert on the Duane Morris LLP website.

Declaration Provides Immunity for Certain COVID-19 Pandemic Medical Countermeasure Activities

In an effort to encourage development of drugs, devices and biologics useful for the treatment, diagnosis, and prevention of COVID-19 respiratory illness, the Secretary of Health and Human Services has issued a declaration providing statutory immunity under the Public Readiness and Emergency Preparedness (PREP) Act. This declaration is separate from the Public Health Emergency declared under Section 319 of the Public Health Service Act on January 31, 2020, and is a part of the continued effort by the federal government to expedite development and distribution of medical products that can address the COVID-19 pandemic.

Declaring a public health emergency under the PREP Act provides covered persons with immunity from liability under federal or state law for all claims arising from administration to or use by an individual of a Covered Countermeasure. Under the statute, 42 U.S.C. § 247d-6d, immunity applies if the medical countermeasure:

View the full Alert on the Duane Morris LLP website.

FDA’s Report on CBD Reaffirms Status Quo

Consumers want answers from FDA on how it plans to regulate the multibillion dollar market for CBD-related products—and they’re not alone. Under the Further Consolidated Appropriations Act, 2020 (P.L. 116-94), Congress directed FDA to provide a report concerning the agency’s progress in receiving and evaluating data to help inform a policy of enforcement discretion and a process by which FDA will evaluate cannabidiol (meeting the definition of hemp) in FDA-regulated products.

On March 5, 2020, FDA submitted the requested report, painting a more detailed view of its CBD-related activities than the public has seen to date. From a high level, FDA noted that it remains concerned about the potential safety risks posed by mislabeled or contaminated CBD-infused products. At the same time, FDA stated that it “is actively working to evaluate potential lawful pathways for the marketing of CBD.”

View the full Alert on the Duane Morris LLP website.

U.S. Trade Rep. Implements New Section 301 Exclusions for Certain Medical Products in Wake of Coronavirus (COVID-19)

As concerns surrounding coronavirus (COVID-19) escalate, U.S. trade policy is aligning with the country’s medical needs. On March 10, 2020, the United States Trade Representative (USTR) announced new Section 301 exclusions for certain kinds of Chinese-origin medical products. Although the USTR previously levied Section 301 duties as high as 15 percent against these products, the announced exclusions exempt them from Section 301 duties until September 1, 2020. Significantly, the new exclusions are retroactive in nature so that entities can seek refunds of the Section 301 duties that they have paid on the excluded products dating back to September 1, 2019. Assuming the USTR continues prior procedures, it is expected that the importing community will be allowed to submit written comments to support extensions of the exclusions.

This round of exclusions follows previous rounds granted by the USTR, but it represents the first since the coronavirus has taken center stage for the Trump administration. Although the USTR did not identify the coronavirus or the nation’s healthcare infrastructure as a factor in deciding to grant certain exclusions, these most recent exclusions may have been influenced by the current medical emergency. Additionally, a prime consideration was whether a particular product is only available from China, among other reasons.

View the full Alert on the Duane Morris LLP website.

FDA Postpones Foreign Inspections Through April in Response to COVID-19

FDA announced on March 10, 2020, that the agency is postponing most foreign inspections through April, effective immediately. FDA will consider whether to conduct inspections outside the U.S. deemed mission-critical on a case-by-case basis.

Postponing foreign inspection will likely delay product application reviews that require facility inspections. FDA has committed to trying to mitigate any potential impact that the COVID-19 outbreak and suspension of foreign inspections may have regarding FDA action on product applications. The extent of that impact will likely depend on how soon foreign inspections can resume and the resources, including personnel, available to FDA once they resume.

View the full Alert on the Duane Morris LLP website.

Numerical Ranges: More Than Just Endpoints in Patent Process

On February 11 and 12, 2020, the United States Patent and Trademark Office held a series of webinars covering the interpretation of ranges during the prosecution of patent applications. The following is a brief report and summary of the covered material.

Numerical ranges provide more than just two particular endpoints for a set of data within patent applications. The interpretation of a claimed numerical range when compared with disclosed numerical ranges in the prior art, assuming the claimed invention recites the other limitations of the prior art, can form the basis for an anticipation rejection based on 35 U.S.C. § 102, an obviousness rejection under 35 U.S.C. § 103, or an alternative grounds rejection under both 35 U.S.C. §§ 102/103.

View the full Alert on the Duane Morris LLP website.

FDA Revises Policies and Procedures for Prioritization of ANDAs in New MAPP

On January 30, 2020, the U.S. Food & Drug Administration (FDA) issued a new Manual of Policies & Procedures (MAPP) concerning how it will prioritize internal review of abbreviated new drug applications (ANDAs), amendments and supplements.

Whether a submission qualifies for priority designation can mean a substantial difference in approval time. As the FDA explains, it “may grant an ANDA submission either a shorter review goal date or an expedited review” if the submission satisfies a public health priority (or prioritization factor) described in the MAPP.

View the full Alert on the Duane Morris LLP website.

Spate of FDA and FTC Warning Letters Sets Stage for Wave of False Advertising Consumer Class Action Lawsuits

Since the 2018 Farm Bill passed in December 2018, removing hemp from the Controlled Substances Act and thus legalizing it under federal law, consumer goods containing the hemp-derivative cannabidiol (CBD) have become exceptionally popular. With that growing popularity among consumers has come increased scrutiny by federal regulators whose mission is consumer safety and protection, such as the Food and Drug Administration and Federal Trade Commission, and now by the plaintiffs’ bar, which files consumer class actions based on advertising. As the recent spate of warning letters and consumer class actions demonstrate, hemp-derived CBD product manufacturers and others in the supply chain for those products have to be mindful of the claims they make to consumers about their products.

View the full Alert on the Duane Morris LLP website.

With a Flurry of Warning Letters and a Consumer Update, FDA Signals Commitment to CBD Enforcement Policy

On November 25, 2019, the U.S. Food & Drug Administration (FDA) announced that it had issued warning letters to 15 U.S. businesses engaged in the sale of products containing cannabidiol (CBD); that it had published a revised Consumer Update detailing safety concerns about CBD products; and that it “cannot conclude that CBD is generally recognized as safe (GRAS)” for use in human or animal food. These actions and statements by FDA cut against industrywide hopes that FDA might soon realign its enforcement policy in light of market realities.

View the full Alert on the Duane Morris LLP website.