DUE DILIGENCE in PHARMA and BIOTECH in view

DUE DILIGENCE in PHARMA and BIOTECH in view of INLICENSING a DRUG in DEVELOPMENT Gilles DELLA CORTE, MD DELLMED Consulting

Content • • • • Background Expertise need The 3 “ABC” recommendations Components of a scientific due diligence Topics to be addressed Key questions to be asked Regulatory CMC Preclinical Clinical Quality Intellectual Property Marketing Conclusion DELLMED Consulting 2

Background • Due diligence is a process during which the developer of a drug (licensor) makes its technology available to a collaboration partner (licensee) who will take on the further development Due diligence is the art of making sure that you get what you think you pay for • It can result in: • • An exclusive license A Co-development agreement / strategic alliance Co-marketing/co-promotion collaboration An acquisition • The deal can include: • • • Upfront payment Milestone payments Royalties • DELLMED The use of a Virtual Data Room is preferable to that of a Physical Consulting Data Room 3

Expertise need • • Operations Technical and Scientific Legal and Patent Market analysis, Business development and Strategy The set-up of an accurate Due Diligence Team is key DELLMED Consulting 4

The 3 “ABC” recommendations • Check everything (Confidentiality Agreement to be signed) • What is not documented does not exist • Accept nothing • Always control the source • Believe no-one • Control all statements independently DELLMED Consulting 5

Components of a scientific due diligence • Organize a kick-off meeting and a Q&A process • Define the licensee goal and analyze the licensor • • motivations Critical review of the Development Plan (timelines) Assessment of the underlaying scientific rational Review and Authentication of all existing data Analysis of the state-of-art in the area Comparison to competitors Evaluation of Intellectual Property Evaluation of the Traget Market DELLMED Consulting 6

Topics to be addressed • • Regulatory Chemistry, Manufacturing and Control (CMC) Preclinical Clinical • Phase III • Quality • Intellectual Property • Marketing DELLMED Consulting 7

Key questions to be asked • Is this Development scientifically sound and compatible with current regulation ? • What are the strengths and weaknesses of the Plan ? • Are the results in favor of an improvement over existing therapies or what will come soon ? • How strong is the Intellectual Property (IP) coverage and how long is the protection ? • What is the market potential ? DELLMED Consulting 8

Regulatory • Is this a New Chemical entity (NCE), New Biological entity (NBE) or a generic or an hybrid ? • Is the Development Plan realistic is term of Regulatory timelines ? • What is the Regulatory strategy ? (e. g. in EU Mutual Recognition Procedure or centralized procedure. Normal or Conditional Approval or Approvals under Exceptional Circumstances). Is it realistic and does it take into account differences between countries ? • Is the company subject to apply for Regulatory costs reduction ? (e. g. Small and Medium-Sized Enterprise (SME) Status in EU) • Were the existing guidelines from EMA or FDA, globally and in this specific field followed (e. g. 21 CFR for FDA …) ? If not what are the justifications ? • Assess similar drugs approval (see European Public Assessment Reports (EPAR) or Summary basis of Approval (SBA) DELLMED Consulting 9

Regulatory (cont) • Review all submitted Investigational New Drug Dossier (IND for US) or Clinical Trial Exemption (CTX for UK) or Investigational Medicinal Product Documentation (IMPD for EU) and Review Regulatory Authorities (RAs) responses (e. g. Deficiency letter from FDA…) • Have Annual Reports been filed (e. g. in connection with an IND) ? • Review all summary documents like Investigator Brochure (IB) and verify all studies with available data are reported • Review the Core Company Data Sheet • Review RAs interactions and meetings minutes (e. g. pre-IND or IND meetings with FDA, end-of-Phase 2 …) and if the issues raised have been addressed • Is this drug qualified for Orphan Drug Designation (threshold /10, 000 varies : US 7. 5 (or less than 200, 000), EU 5, Japan 4, Australia 1) or for Accelerated Review ? (Accelerated Assessment in EU, Fast Track/Rolling NDA or Breakthrough Therapy or Accelerated Approval or Priority Review/Designation in US) DELLMED Consulting 10

CMC • Regarding CMC, must be checked : • Compliance with Quality Guidelines from ICH, US and EU Pharmacopoeia for the overall quality of the manufacturing process, the Drug Substance (DS), the final Drug Product (DP) and its appropriateness for the use in humans, reproducibility • Compound quantity available and Cost of Goods • That analytical results and methods are acceptable for RAs (chirality, stereoisomerism, isomorphism, hygroscopy, light or T° sensitivity …) • That Drug Master File (DMF) includes information about chemical structure, molecular weight, identity of drug product batches, reference samples, IP, purity, stability, synthesis, scale-up process (validation, robustness, control), excipients (and their toxicology), dosage and formulation leading to a 11 DELLMED Consulting Quality Target Product Profile (QTPP)

CMC (cont) • Regarding CMC, must be checked : • The Investigational Medicinal Product Dossier (IMPD) which is part of the CTA in Europe or the IND dossier in US with particular insights on the relevance of the strength and route of administration chosen • The platform or technology used in case specific tools have been developed • If any change in Manufacturer / Contract Manufacturing Organization (CMO) / Contract Lab needs a technology transfer and a bioequivalence study • Available last Audit/Inspection Reports about contractors and existing Corrective and Preventive Actions (CAPA) are planned • Availability of batches for Clinical Trials and expiration dates DELLMED Consulting 12

Preclinical • Review In Vitro data • Check compliance with Safety Guidelines from ICH and adequacy of • • • safety pharmacology studies, • other preclinical studies on a case-by-case basis repeated dose toxicity studies, toxicokinetic, preclinical pharmacokinetic studies reproduction toxicity studies, genotoxicity studies, for drugs that have special cause for concerns or are intended for a long duration of use, an assessment of carcinogenic potential, • Check that Good Laboratory Practice (GLP) were followed • • 21 CFR Part 58 for US Directive 2004/10/EC for EU • And the Animal Laboratory Accreditation by the Association for Assessment and Accreditation of Laboratory Animal Care International (AAALAC International) DELLMED Consulting 13

Preclinical (cont 1) • Particularly for Pharmacokinetics (PK) data in animal check info on ADME • Absorption (route of administration) • Distribution (target tissue), • Metabolism (enzymes involved) • Excretion/Elimination (clearance in case of impaired organic function) • What about half-life (dosing frequency), dose linearity, relevant drug-drug or food interactions ? • Is there a validated methods for PK depending on compound (e. g. High Performance Liquid Chromatography (HPLC) for small molecules or immuno-assays for biologics …) ? • Review Pharmacokinetic-Pharmacodynamic (PK-PD) relationship data DELLMED Consulting 14

Preclinical (cont 2) • Particularly for Safety in animal check : • Animal species chosen • Animal models existence and relevance versus target patient population • Does animal studies duration support human planned dose regimen (e. g. EU 6 months versus US 9 -12 months) ? • No Observed Adverse Effect Level (NOAEL) • Single and repeated dose toxicity (accumulation) • Linearity of dose-toxicity • Dose limiting toxicity (DLT), Maximum tolerated dose DELLMED Consulting (MTD) 15

Preclinical (cont 3) • Particularly for Safety in animal check : • • • Toxic metabolites Reversibility of toxic effects, accommodation Target organs for toxicity (liver, kidney …) Embryo toxicity data Mutagenic effect, Oncogenic evaluation Consider approved drugs of the same class if available • Inclusion of all studies in the IB DELLMED Consulting 16

Clinical • General principles : • All protocols (and amendments) must be reviewed whether they were appropriate to achieve the intended goal • Compliance with Efficacy Guideline from ICH must be checked but also additional guidelines depending on the specific field concerned either for EU (http: //www. ema. europa. eu/ema/index. jsp? curl=pages/regulation/gen eral/general_content_001768. jsp&mid=WC 0 b 01 ac 0580 b 18 a 3 a) or for US (https: //www. fda. gov/Drugs/Guidance. Compliance. Regulatory. Informati on/Guidances/default. htm) • Particularly Trial Master Files (TMFs) must be complete (e. g. Case Report Forms (CRF), Informed Consent forms (ICF) …) and in line with regulation (e. g. form 1572 filled in by investigators in US , , , ) • And IB must be up to date • Proper documentation available (IND/IMPD, Ethics Committee (IC)/Institutional Review Board (IRB), CRF) must be reviewed DELLMED Consulting 17

Clinical (cont 1) • General principles : • Are Audit Reports available for pivotal trials ? • Was a Data Safety Monitoring Board (DSMB) set up ? • Was the initial Clinical Development Plan (CDP) followed ? • Is there a Pediatric investigational Plan (PIP) for EU or a Pediatric Study Plan (PSP) for US available ? • Are HAs (EMA/FDA) Meetings Reports available ? • All Clinical Study Reports (CSR) must be reviewed • Were applicable clinical studies posted at https: //clinicaltrials. gov/ ? DELLMED Consulting 18

Clinical (cont 2) • Phase I • • Are studies in Healthy Volunteers (HV) or patients ? What is the Minimal effective dose (MED) ? Do we know the DLT and MTD ? What are the difference with animal with regards to ADME, PK/PD ? (cf. preclinical) • Do biomarkers for efficacy/safety exist ? • Was a clinical Proof of Concept (POC) achieved ? • In which extend the dose choice for Phase II is supported ? • Were possible safety concerns detected during preclinical assessment explored ? DELLMED Consulting 19

Clinical (cont 3) • Phase II • Was the efficacy confirmed ? • Was the optimal dose define ? • Wasn’t the population too selective compared to the target population ? • In which extend the design choice for Phase III is supported ? DELLMED Consulting 20

Clinical (cont 4) • Phase III • Is the drug actually better (or equivalent) than the comparator (statistically and clinically significant difference) in term of efficacy or safety ? • Was the comparator choice relevant (active, placebo) ? • Do we have 2 confirmatory trials ? • If surrogate endpoints were used, are they validated ? • Are there potential competitors in clinical development ? • Are pharmaco-economic data available ? • Was a Risk Management Plan (RMP) prepared ? DELLMED Consulting 21

Quality • Check the existing Standard Operation Procedures (SOPs) • Were Audit or Inspections performed with Reports available ? (not only of the licensor but also of the CMOs/CROs involved) • Check the Service Agreements with CROs DELLMED Consulting 22

Intellectual Property • What are the Patent coverage and expiration date (initially 20 years from the filing date of the patent application) compared to planned date for approval • Is there a chance for a Patent-like Supplementary Protection Certificate (SPC) in EU or for a Patent Term Restoration in US ? (maximum 5 years after the corresponding patent has expired) • Is there an Exclusivity in place ? (8 years in EU, 5 years in US, 10 years if Orphan in EU, 7 years in US) • Is there a chance for an extension ? (1 year if new innovative therapeutic indications in EU, 3 years in US, 4 years if use in the pediatric population) • Was a “Freedom to operate” given ? • Which IP will be transferred ? (Any other license Agreement ? ) DELLMED Consulting 23

Marketing • What will be the competitive environment at the time of the launch ? • Including similar compounds still under development • Leading to forecast expected market share • And explore potential new indications • Are the planned Summary of Product Characteristics (Sm. PC) and Target Product Profile (TPP) relevant ? • What is finally the Net Present Value (NPV) of DELLMED Consulting the drug ? 24

Conclusion • An accurate due diligence is always the result of a Team effort, involving several specialists to cover all the aspects of the Drug Development. Thus a coordinating leader is necessary • Important is to provide a highquality written and accurate Due Diligence Report prepared by the Team. • The final decision must result from a very analytical process which highlights all benefits, risks, gaps in the data, mitigation strategy and takes their respective ranking order into account. 25 DELLMED Consulting