Slides from my talk at the SMI Conference on Biosimilars, Woodbridge NJ, November 14-15, 2018

1. IN-LICENSING BIOSIMILARS: BEST PRACTICES
FOR COMPLETING DILIGENCE AND EXECUTING
THE CONTRACT SUCCESSFULLY
ARUN NATARAJ
NOVEMBER 15, 2018

2. What I will be covering
 The in-licensing process
 Critical things during technical diligence to pay attention too
 Structuring a deal to de-risk your investment until there is
confidence in the program
 Legal agreement - top clauses that need to be negotiated in a
favorable manner (to you)

3. A Case Scenario
 You are in-charge of in-licensing a bio-similar going into Phase 3 clinical studies
 All commercial scale batches have been manufactured by licensor
 Pre BLA meeting is complete. FDA controlled correspondence is present
 Analytical similarity data have been generated including all characterization
 Animal studies and clinical Phase 1 PK/PD studies have been completed
 Phase 3 to be done

4. Meanwhile at the CEO level….

5. Basic Licensing process
Internal
consensus
IP Diligence
Non Binding
Term sheet
External
Consultant
Site visit
Contract
negotiations
Data Room
Scientific
Diligence
License &
Supply
agreement
Broad
terms
The
Opportunity

6. It takes a team ...
 Hire an outside expert but manage the process
 Legal counsel
 Technical head and analytical head (scientific team)
 In house IP counsel and third party for IP review
 QA and compliance head

7. The importance of outside consultants…
 The ability to provide an unbiased opinion on the data and highlight all
the gaps is unparalleled
 They often lead discussion with licensors on the scientific due diligence
and cover all aspects
 Given their vast experience with many similar data packages they are a
excellent sounding board on which issues can be resolved and which can
be problematic
 Please make sure you select a consultancy that can deep dive into the
Analytical, CMC and Clinical data

8. How do you really know you have a good program?
 Is the analytical similarity package complete and includes all structural
and functional characterization?
 Have all CQA been identified and tiered appropriately in the studies?
 Has the licensor addressed all of FDA concerns in the pre-IND or pre-BLA
meeting?
 Are there documented commitments made to the FDA in controlled
correspondence that that company has not yet addressed?
 Has the immunogenicity concern been fully addressed by in vitro testing
and with a planned clinical trial (ADA response)?

9. How do you really know you have a good program?
 Were there any FDA issued 483’s related to manufacturing and testing that
the FDA has issued and have they been adequately addressed by the
company?
 Were all pre-clinical work outside been conducted in labs that were GLP
compliant?
 Have they successfully made (and fully characterized) consecutive
commercial scale batches from the site that will supply the commercial
product?
 IP Estate: Is there freedom to operate?

10. Analytical Data-the Foundation of Biosimilar
Development
 Gene Expression system
 Structural & Functional properties (CQA)
 Receptor binding
 Immunogenicity
 Impurity levels
 Reference products and standards
 Manufacturing process
 Stability

11. Manufacturing Checklist
 Difference between originator cell line and biosimilar cell line
 Final process yield (g/l) has direct impact on cost of goods
 Site should have commercial capacity to meet commercial demand. Moving
manufacturing later is not advisable
 Check to see that media, feeds and other components are not from a single source
supplier who could have a market monopoly
 If licensor has a manufacturing partner (CMO), request to have have direct
oversight to prevent supply issues

12. Structuring a risk mitigated deal
 Back-end the payments as much as possible
 4 to 5 milestone payments are optimal
 Larger milestone payments only after analytical similarity,
immunogenicity, safety and GMP batches have been
established
 Final milestone payments after successful Phase 3 studies,
BLA filing and Approval
 Favor Net Profit Share versus Royalties on Net Sales

13. Milestone Payments
Acceptable Milestone Payments All Others
Agreement Execution Tem Sheet Execution
Successfully addressed all FDA concerns Completion of commercial scale batches
with similarity established
Recruitment of first patient for clinical
trials
Completion of Phase 1 PK and Safety
studies
Completion of clinical trials with positive
outcomes
Bridging studies completed for non US
reference product
BLA filing Post launch milestone payments on
reaching x or y millions in cumulative
sales
FDA approval
Commercial launch

14. Contract Negotiations (or how not to)

15. Top items to protect at agreement stage
 Change of control
 Third party IP litigation
 Liabilities, reps and warranties
 Termination rights
 Irrevocable fully paid license
 Failure to Supply
 Product Recalls
 Indemnity
 Non-compete

16. Stay firm on
 Change of Control: Licensee cannot be prevented by licensor from assigning rights to
a third party
 General Indemnity: Licensor should indemnify licensee against damages caused by
third party lawsuits related to product defects
 Failure to Supply: Licensor (supplier) must pay for any late penalties imposed by your
customers for delays in supplying product
 Product Recalls: Licensor (supplier) must take full responsibility for any defect
resulting in recalls
 Termination Rights: Licensor (supplier) should not have the right to terminate the
license or supply during the term except for cause (uncured breach or bankruptcy)

17. Other Considerations
 Background IP Royalties: Licensed gene expression technologies are generally
royalty bearing. This should be paid by licensor
 IP Related Lawsuits: Licensee must have the right to participate in IP litigation and
make decisions which potentially affect licensees rights to commercialize the
product. Three possibilities:
1. Absolute indemnity
2. To our knowledge, there is no infringement
3. Licensor is responsible for IP diligence and FTO
 Exclusivity or Non-Compete: Licensor cannot license or supply the same molecule
or a competing molecule to another third party
 General and Product Liability Insurance: Licensor should have a high level as a
precautionary measure

18. Thank you

19. BACK UP

20. BIOSIMILAR DEVELOPMENT
PROCESS