Life Sciences IP Due Diligence

Wednesday, January 20, 2010

8:30 Registration and Continental Breakfast

9:15 Chairs’ Opening Remarks

Len Smith
Senior Intellectual Property Counsel
Novo Nordisk Inc. (Princeton, NJ)

Renee M. Kosslak, Ph.D.
General Patent Counsel
Facet Biotech (Redwood City, CA)

9:30 Factoring Recent Developments in Life Sciences IP Case Law, Pending Patent Reform and Follow-On Biologics Legislation Into Your Due Diligence Analysis

Mercedes K. Meyer, Ph.D.
Partner
Drinker Biddle & Reath LLP (Washington, DC)

John T. Li
Head, Intellectual Property
Novartis Biologics (Cambridge, MA)

Paul Carango
Senior Patent Attorney
Law Dept. – Patent Sect.
Wyeth (Collegeville, PA)

This session will provide you with insights into how recent court decisions and legislative proposals relating to patent law and follow-on biologics will affect analyses undertaken during the IP due diligence, particularly within pharmaceutical, biotechnology and medical device companies.

As patent and IP caselaw continues to evolve and Congress ponders what the regulatory structure applicable to follow-on biologics should look like, now is an important time to take inventory of your company’s current diligence review process to ensure that you are up-to-speed on what the current status of the law is on these important issues.

Take note during this session as our panel provides you with a comprehensive overview of the most-impacting changes that have taken place over the past year in the area of developing case law, regulatory and patent reform which will have an impact on the manner in which your company conducts a diligence review.

Points of discussion during this session will include:

• The continuing lineage of Medimmune (standing to sue)
• Quanta (patent exhaustion)
• Bilski (patentable subject matter) and the USPTO’s interim guidelines on examining statutory subject matter
• Seagate (willfulness and opinions of counsel)
• McKesson/Larson/Exergen (inequitable conduct issues relating to the reporting of art and their potential impact on patent portfolios)
• Unique issues relating to the regulation of and patent exclusivity allowed for follow-on biologics
• Patent reform – an overview of the key provisions
• PTO rules (Tafas v. Doll)
• first to invent/first to file
• continuations
• limits on claim filing

10:45 Morning Refreshment Break

11:00 Balancing Competing Interests in a Changed Economy: Crafting a Diligence Review Process That Incorporates Both the Business Objectives of the Deal and a Comprehensive IP Assessment

Thomas E. Duley
Of Counsel
Morgan Lewis & Bockius LLP (San Francisco, CA)

Renee M. Kosslak, Ph.D.
General Patent Counsel
Facet Biotech (Redwood City, CA)

Darryl L. Webster
Senior Patent Counsel
Wyeth (Madison, NJ)

• Defining the business and IP goals of the transaction early on in order to prevent surprises during the diligence review process
• identifying what the driving force is behind the deal – is it the IP or something else?
• ascertaining whether or not there are other objectives of the diligence review evaluating long term strategies
• best practices for scrutinizing the information the seller presents
• knowing what the deal makers are looking for and what “IP due diligence” means to the parties
• avoiding runaway patent diligence disconnected from the strategy of the deal
• Evaluating the maturity of the target
• Understanding the company’s needs and financial limitations in order to create a diligence review process that is most cost-effective
• Identifying what should or should not be in writing in the due diligence process
• Determining the appropriate scope and depth of IP due diligence necessary for:
• internal IP assessment
• auctions
• venture based financing/start up investment
• strict licensing deals
• strategic alliances – collaboration/in-license/co-development/ co-promotion
• divestiture/spin outs
• mergers and acquisitions
• subsequent private placement
• public offering
• Adjusting due diligence strategies according to the size of the transaction
• Deciding whether the diligence analysis warrants the use of an electronic data room
• benefits and dangers associated with online reviews: cost effectiveness, confidentiality and behavior tracking
• Issues unique to conducting a diligence review as the target
• evaluating what is being sold and why it is being sold
• ensuring that the “house is in order”
  • identifying the weak spots and questions in advance
  • fixing what can be fixed before any offers
• presenting the strengths and weaknesses of your IP portfolio
• deciphering what litigation risks need to be disclosed

12:00 Networking Luncheon

1:15 Creating a Practical and Useful Checklist: A Guide to Obtaining the Information You Need In the Most Cost-Effective Manner By Utilizing the Right Team

W. Bradford Middlekauff
Chief Legal Officer, General Counsel & Secretary
Kolltan (New Haven, CT)

Jane M. Love, Ph.D.
Partner
WilmerHale (New York, NY)

• Updating the checklist based on the type of the transaction
• patent life cycle issues
• violative marketing or pricing concerns
• fraud and abuse or anti-kickback issues
• OIG guidelines and PhRMA Code developments
• clinical trials
• FDA enforcement of cGMP
• the documents to request and review with respect to progress within the FDA and through clinical trials
• product supply and manufacture issues
• trade secrets and other proprietary information
• what is in the pipeline
• EPO database searches in other countries
• Deciding what not to include in the checklist
• Knowing when to go outside of the checklist when appropriate during due diligence review
• Examples of different types of checklists
• Choosing the right counsel for the deal
• knowing when to get outside counsel involved and determining the role of outside counsel
• accurately communicating the company’s needs accurately to your counsel
• considering when to consult experts in the field
• Assigning roles for senior management and involving the supporting players
• Discussing new and evolving methods for conducting the review process while also mitigating your risk and exposure

2:30 Afternoon Coffee Break

2:45 Evaluating the Scope, Breadth, Validity and Enforceability of the Target’s Patents Under Evolving Patent Standards and Regulatory Protocols

Bruce A. Pokras
Senior Corporate Counsel
Pfizer Inc (New York, NY)

Wendy A. Choi
Partner
Woodcock Washburn LLP (Atlanta, GA)

Loree J. Kim, Ph.D., J.D.
Vice President and Chief Intellectual Property Officer
CeloNova BioSciences, Inc. (Newnan, GA)

• Assessing and predicting the strength of the target company’s IP
• ensuring that granted patents or pending applications are non-obvious
• determining the likelihood that a valuable patent position on the end product will be established from the early stage data
• impact of uncertainty on risk assessment and valuation

Patent Considerations

• Predicting the strength of a pending patent especially considering evolving standards and case law
• Including an analysis of competition in the patent review
• Determining the scope of the patent portfolio
• claim coverage
• geographic
• Analyzing the validity of the patent and knowing what grounds exist for finding invalidity
• claim construction requirements
• written description and enablement standards
• prior art searches
• Examining the enforceability of the target’s patent
• pending litigation, including in related U.S. and foreign cases
  • overcoming the challenges of evaluating an IP portfolio with international components
• Concluding whether any of these issues, if found, are correctable

Regulatory Considerations

• Understanding how Orange Book listings affect your diligence analysis
• taking inventory of what patents have yet to be listed
  • patent status/listing status of products in development for acquirer and target
• assessing which patents need to be de-listed, not listed, or held in reserve
• evaluating the similarity of Orange Book listed products of both acquirer and target
  • screening for potential antitrust concerns
• review of Orange Book patents on the verge of expiration for both acquirer and target
  • potential exclusivity issues, including generics
• Accounting for the impact an abbreviated approval pathway for biologics will have on your diligence assessment
• Medical device clearance – reviewing the status of 510(k) submissions for patented products
• inventorying the target patents in order to determine the true value of the IP portfolio based on an assessment of what devices have been cleared, are pending clearance or have not been submitted for approval

4:00 Incorporating a Valuation Calculation into Your Life Sciences Diligence Review: Considering Criteria That Can Impact the Overall Value of the Deal

A critical component of the due diligence review is translating the value of the IP at stake in the deal into a quantifiable asset that will become a positive addition to or otherwise complement your company’s existing or developing patent portfolio. A complicated evaluation of various factors, including patent breadth, validity and prior art, valuation calculations can be one of the most complex aspects of an IP deal, while simultaneously being the most important. Coming to an agreement on what the actual value of the IP is that is being negotiated during the deal is no easy task.

Join us during this session as our panel explores with you the nuances of working through valuation calculations, providing you with best practices for correctly evaluating the IP at stake during a deal.

Topics of discussion will include: Making the valuation calculation

Beth E. Arnold
Partner
Foley Hoag LLP (Boston, MA)

Meg Snowden
VP, Intellectual Property
Impax Laboratories, Inc. (Hayward, CA)

• Appreciating the critical nature of proper valuation for patent-protected products
• Knowing the assumptions that drive the value estimate and the methodology used to balance anticipated investments, risks, and rewards and adjusting diligence review accordingly
• Understanding the risks related to the regulatory process and to product development generally
• Allocating value for tangible assets vs. intangible assets
• Methodologies used when evaluating proprietary biopharmaceutical products
• Latest approaches for developing valuation and valuation assumptions for in-licensing, M&A, IPO, and R&D
• revenue forecasting
• cost assumptions
• risk evaluation
• Identifying the factors that business executives use to arrive at a starting value, and then quantifying the deductions depending on the results of the IP due diligence
• Valuing the securitization/monetization of royalty streams: using the product as leverage to finance a second product
• Valuation methodologies used for early-stage vs. late-stage products
• Evaluating the usefulness of valuation studies in M&A discussions

Evaluating the impact of key items when reviewing a biotech IP portfolio

David C. Goldberg
Vice President, Corporate Development
Enzo Biochem, Inc. (New York, NY)

• Patent’s life and patent potential
• Analyzing whether copyrights and trademarks have real recognition
• Knowing how well-protected a trade secret is
• Placing a dollar value on trade secrets and patent applications
• Addressing Paragraph IV filings
• Calculating the market value of the portfolio
• Cost accounting for prosecuting a portfolio
• FDA and clinical trials

5:00 Conference Adjourns to Day Two

Thursday, January 21, 2010

9:00 Continental Breakfast

9:30 Chairs’ Remarks

9:45 Resolving Ownership Rights and Inventorship Issues Arising Under the Target’s Prior Contractual, Third Party and Licensing Obligations Which Could Impact Your Deal

Veronica Mullally
Partner
Lovells LLP (New York, NY)

Len Smith
Senior Intellectual Property Counsel
Novo Nordisk Inc. (Princeton, NJ)

Richard B. Murphy
Vice President, Intellectual Property
sanofi pasteur (Swiftwater, PA)

• Identifying the IP and patents at issue and projecting how the target’s prior agreements can affect the value and terms of the transaction
• determining what prior licenses or other rights have been granted to third parties
• dealing with sublicenses that have no direct relationship to the IP owner
• addressing concerns related to collaborative, contract, and sponsored research agreements
• special issues arising under consultancy and employee agreements
• Determining whether or not the target owns or has adequate rights in the patent estate and proprietary technology
• who is the owner of record?
• doing a title search – are there any existing liens on the target’s IP
• making certain that the target company can convey clear title
• Uncovering whether the target’s patents have been properly maintained in compliance with statutory requirements
• Establishing whether timely payment has been made of maintenance fees

10:45 Morning Refreshment Break

11:00 Freedom to Operate: Overcoming Obstacles by Ensuring that the Purchaser/Licensee Has the Right to Commercialize the IP at Issue

Anita Varma
Partner
Ropes & Gray LLP (Boston, MA)

Scott B. Familant
Partner
Baker Botts L.L.P. (New York, NY)

Jeffrey C. Pepe, Ph.D.
Associate General Counsel, Intellectual Property
TRUBION Pharmaceuticals Inc. (Seattle, WA)

Requesting the necessary materials and information from the target

• If FTO analysis was previously performed, what are the risks and benefits from opinion sharing?
• critically reviewing the target’s FTO opinion
• situations when the buyer must have its own opinion
• Has there been an appropriate FTO analysis relating to the source and production of underlying tangible materials?
• Has IP been encumbered through material transfers with third parties?

Designing an appropriate search

• Conducting the search
• Timing concerns
• Keeping costs under control
• Useful tools and sources of information
• Triaging search results

Assessing infringement risks

• Threshold considerations (the minimum data)
• Strategies for getting necessary information from the target company
• Commonly overlooked sources of other key information
• Likely posture of third party patent holders

Identifying and analyzing potential blocking patents

• Monitoring activity in pending third-party applications
• Evaluating patent issues outside the U.S.

Addressing other FTO concerns

• Critically reviewing asserted Orphan Drug status
• Taking into consideration the unique challenges associated with pending patents in FTO searches
• Analyzing current case law that can affect the FTO analysis
• Evaluating whether “Safe Harbor” (or EU Bolar) provisions have kicked in
• Keeping in mind potential follow-on biologics legislation
• Identifying potential distribution concerns
• Weighing options when an issue has been identified

12:15 Networking Luncheon

1:30 Protecting Confidentiality, Trade Secrets and Attorney Client Privilege during a Diligence Review

David P. Frazier, Ph.D.
Partner
Finnegan, Henderson, Farabow, Garrett & Dunner LLP (Washington, DC)

Kelly L. McDow
Associate General Counsel, Associate Director
The Proctor & Gamble Company (Cincinnati, OH)

• Weighing the risk of what privileged information should be disclosed and when
• Determining who will have access to privileged documents
• Under what circumstances is privilege considered waived when the documents are shared?
• assessing the risk versus the need to share documents to complete the deal
• Utilizing established methods for protecting privilege during the process
• confidentiality agreements
• common-interest agreements
• conducting privileged conversations verbally
• giving documents to a third-party to pass off to suitor
• handling privileged communication – what to put in writing?
• Preserving confidential information in the event the deal falls through
• controlled release of information
• partitioning information on a need to know basis
• Evaluating the duty to investigate and report potential patent prosecution defects
• Considering the attorney’s ethical duties to disclose
• Determining what to do with information obtained through dubious means
• Avoiding the temptation to use due diligence in litigation or deals with third parties
• Complying with obligations to protect confidential personally identifiable private information
• Shielding trade secrets during diligence
• identifying whether there are trade secrets involved
• balancing protection of trade secrets with the need to know
• looking at trade secret compliance and potential violations

2:45 Afternoon Coffee Break

3:00 Academic vs. Commercial: Handling Unique Issues that Arise in the Context of Industry/University Collaborations and Intellectual Property Licenses

Tena Z. Herlihy
Counsel
Office of the General Counsel
Massachusetts Institute of Technology (Cambridge, MA)

John Todaro
Assistant Counsel, Merck Patent Department
Merck & Co., Inc. (Rahway, NJ)

Sadhana Chitale, Ph.D., MBA
Associate Director, Life Sciences/Technology Transfer
NYU School of Medicine (New York, NY)

• Establishing what makes the academic perspective different from the commercial perspective:
• missions and objectives
• organizational structure and culture
• applicable laws
• Tailoring your due diligence to the type of collaboration
• Identifying the practices of a potential partner that are likely to violate regulations
• Demonstrating respect for the university’s perspective while still managing the company’s business needs
• Knowing what universities can and cannot do with regards to their IP
• NIH Guidelines – the impact of federal funding
• commercial research restrictions (Tax Act of 1986)
• Bayh-Dole act
• contract requirements (indemnification, no representations and warranties)
• publishing rights
• Avoiding conflict of interest, IP ownership issues, and record keeping issues with regard to collaborations and licenses
• Tackling the specific challenges regarding ownership and inventorship concerns associated with academia
• Incorporating the latest on universities and research tools into the IP assessment

4:00 Conference Concludes

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