Gursharan Moonga

By Sharan Moonga Ph.D

(The author is a member of BIRA and his company Cintas Pharma provides Due Diligence consultancy for In-licensing opportunities)

The search for new drugs, emergence of drug delivery technologies and biotechnology has led to the development of the Licensing role. In addition, key factors such as internationalisation of patent and regulatory procedures coupled with the growth of emerging markets/competitiveness, and rise of mega mergers, have all led to the growing importance of licensing.

Although the level of preparation depends upon the amount of time available and on the importance of a particular project, all licensing activity benefits from a well thought-out, systematic approach, even when opportunities arise serendipitously.

The successful licensing manager will use his or her skills to ensure that any available opportunity is fully exploited.

The Licensing requires a range of activities, including strategic planning, targeting of potential opportunities, preparation of supporting material, contact with potential partners, negotiation, and management of post-completion deals.

This article seeks to provide a comprehensive overview of all the regulatory activities involved in the late-stage out-licensing, highlighting ways in which each stage can be undertaken, with advice based on direct industry experience. The article contains several checklists, and advice in the negotiation of agreements.

Furthermore, the article is structured to take the reader through the various processes involved in outward licensing regulatory activities.

Pre Due Diligence

The technical development and manufacturing data sheets should be prepared prior to a licensee being identified as the lead contender for the product. These details are made available to the interested parties. All companies, having expressed an interest, would be provided the basic information package, allowing a top-level decision as to whether the product would fit into their own product portfolio.

The number of concerned companies is reduced to approximately three to four during early stages of the process. The meetings and presentations are held with representatives from these companies to address questions and concerns with the opportunity. A further data package would then be made available to each company to allow a detailed assessment of the opportunity, including the feasibility of manufacture in their own facility. The agreement with the licensee would then require the compilation of Process Technology (PTT) documentation, containing detailed manufacturing/development information over and above the information, which would be required for MAA/NDA. This package is made available to only the acquiring Licensor.

Due Diligence

The lead potential licensee would visit the licensor premises to review the hard (current and archived file) copy. It is appropriate that the lead potential licensee teams are communicating very closely with the licensor, as issues raised are rapidly followed up. The lead potential licensee’s regulatory team would be required to list the entire documents/memos etc. that are copied and this is signed by both potential licensee and the licensor regulatory Executive. A regulatory licensor Executive with knowledge of the product should also be made available during this period to answer licensee questions.

Regulatory Schedule for Divestment Agreement

A licensor regulatory Executive should be nominated to act as representative of the licensor during negotiations with the licensee’s regulatory executive, legal, project leader and licensing manager.

The issues listed in Table X1below, form the basis of the regulatory schedule of the Divestment Agreement, and should be agreed between the parties.

Table X1.

1.	Arrange joint meetings with Regulatory authorities. Consider the importance of such meetings. Who will attend? How will this be decided, if two parties do not agree?
2.	Who takes responsibility for CTX renewals, CTA variations, IND amendments, and IND safety update if tasks fall prior to signing the Closing Memorandum.
3.	Will the licensee be taking over manufacture of the product? If so consider implications for any imminent submissions.
4.	Who completes ongoing studies? Who drafts signs-off final study reports?
5.	Who drafts Expert Reports and Written Summaries?
6.	Who signs-off Expert Reports and Written Summaries? If considering external consultant who chooses them and who pays their fees?
7.	Who is responsible for determining submission strategy?
8.	Who compiles and files the dossiers? If the Licensee compiles, how will study reports be transferred i.e. electronic copy, hardcopy or both?
9.	Who writes PIL, Product Profile and completes application forms.
10.	Consider additional formulations in development. Will these be transferred? If being transferred, consider what needs to be in the divestment agreement to ensure the Licensor’s position is clear.
11.	Who takes responsibility for finalising labelling and secondary packaging?
12.	Is the licensor to be involved in answering regulatory questions?
13.	Consider how long the licensor would be expected to provide regulatory support after signing the Closing Memorandum.

It is important to involve regulatory executive at an early stage in drafting the regulatory schedule. This ensures that positions regarding regulatory issues are fully captured in the document and avoids misunderstanding at a later stage when ambiguous wording is interpreted differently by either party.

It is essential to plan and agree with all relevant regulatory personnel the Licensor’s preferred position in advance of meeting with the acquirer.

Regulatory Processes leading to the Divestment of a Product

In general, where the licensor’s regulatory team had formulated processes prior to discussing with the potential licensee, the licensor processes are considered. The processes that the licensor regulatory team are involved in setting up are described below. These have been separated into those processes which occur following signing of the Divestment Memorandum (Table X2) and those following signing of the Closing Memorandum (Table X3).

Table X2

Post Signing of the Divestment Memorandum (PSDM).

1.

Reviewing Draft Study Reports etc.

2.

Creating Draft and Finalized Labels

3.

Electronic and Hardcopy Transfer of Final Study Reports

4.

Obtaining Regulatory Approval for Phase III Study

5.

Meetings with Regulatory Authorities

Table X3.

Post Signing of the Closing Memorandum (PSCM)

1.	CTA and Asset Transfer
2.	Answering Regulatory Questions

Post Signing of the Divestment Memorandum

Creating and reviewing Draft Study Reports etc.

It is necessary to set up a process to allow the licensee to review study reports and resolve differences if a licensee does not agree with the licensor regulatory documentation.

The licensor sends the final draft study report (1 copy) to the licensee regulatory team at the same time as the report is distributed to the licensor reviewers. The Licensee regulatory executive is responsible for forwarding the report to the appropriate licensee line functions and for collating all licensee comments. Comments from licensee should be collated as ‘mandatory’ and ‘other comments’.

The author should be required to advise the licensee, if the mandatory comments from the licensee are not incorporated into the revised document why the comment has not been included. The licensor author should also request that licensor reviewers should list their comments in the same formats. The licensee regulatory team are responsible for ensuring any licensee differences are resolved prior to dispatching the comments to licensor author, in practice this does not always happen. The licensee should be advised in advance of when reports are due to be dispatched and when comments are expected. This is very helpful as timelines are very tight.

It is important to plan and agree the licensor’s preferred processes in advance of meetings with acquirer. This ensures in the majority of cases licensor processes are taken on board.

Electronic and Hardcopy Transfer of Final Study Reports etc.

The licensee would then request both electronic and hardcopies of all final study reports. The hardcopy is required firstly to validate the electronic version and secondly as a backup for compilation purposes.

It is extremely important to maintain current records of what was sent where and when. A number of times this list is valuable in advising the licensee that documents had been sent and were somewhere in their own buildings!

Obtaining Regulatory Approval for Phase III Study

A Phase III clinical study may be set-up using a CRO for all the clinical aspects and where necessary to undertake regulatory approval. As the licensor is still the owner of the product at the start of this process; CTA and Ethic Committee applications in most cases are made in the name of the licensor. The Trade Regulatory Body (TRB) approval could be obtained for the divestment during the setting up the trial and the ownership of product is transferred to the licensee. The CRO may request as a result that, for simplification purposes, to wait until regulatory and Ethics Committee approval is obtained for each country before transferring the CTA applications to the licensee for that country. The Licensor and Licensee should normally agree to this request. As a result, The completion of CTA transfer may take a lot longer as a result than originally anticipated.

It may be possible to transfer CTAs to the acquirer before making clinical trial applications for Ethic Committee approval and regulatory approval. This is due to transferring CTAs in general quicker than obtaining Ethics Committee and regulatory approval.

It is important to have one point of contact in each company for regulatory executive through which all information is directed.

Meetings with Regulatory Authorities

The licensee may insist that it is necessary to discuss certain issues with regulatory authorities, including filing strategies. It is specified in the Divestment Agreement that a licensor regulatory representative has to attend the meeting. The licensor regulatory executive would hold a meeting with licensor experts, licensee regulatory and licensee experts to discuss the content and general format of the briefing document.

The agreements that are reached at this stage should be noted in the minutes of the meeting. The licensor drafts the document and dispatches to licensee for review. The licensee’s review is critical and many of their comments may often contradict the original agreements.

A second meeting is held with the above participants to discuss and agree how to re-write the document. The licensor and licensee regulatory co-sign the covering letter once finalized and send this together with the briefing document to the relevant licensor. The licensor arranges the meetings following the usual process. The flow of information is via the licensor who is still the owner of product.

The licensee may request that their local representative attends the regulatory authority meetings rather than the licensee’s original contact to which the licensor may agree.

It is agreed that the attendees would include licensor experts to present the data, licensee experts, licensee regulatory (group plus operating licensor) and licensor regulatory who would record the meeting minutes. The meetings are split into two parts; the first part discusses the issues relating to the product, whilst the second part deals with possible filing strategies.

At the end of the first part, licensor representatives would not take part in discussions relating to the filing strategy. The licensor regulatory Executive after the meeting should verbally summarize the meeting so as to ensure the notes reflect everyone understands of the meeting.

The licensor regulatory executive should then draft the minutes within three days of the meeting and send to the licensee for comment. The licensor regulatory executive where appropriate dispatches the finalized minutes to the licensor for submission to the Authority.

Post Signing of the Closing Memorandum (PSCM)

CTA and Asset Transfer

The asset transfer begins after signing of the Closing Memorandum. This involves transferring responsibilities for all CTAs/INDs and all product files held by the licensor worldwide.

The authorities also have to be advised, as there may be clinical trial ongoing, that ADR reporting responsibilities are to be transferred to the licensee. A list of the country specific requirements for transferring CTAs/INDs is then compiled. In the majority of cases the licensor may write to the authorities advising that they are no longer the owners of the CTA documentation nor responsible for ADR reporting, whilst the licensee operating licensor would write to advise they accept these responsibilities.

The licensor’s regulatory executive is to be advised when the CTA letters have been submitted and when acknowledgement received. The licensor’s regulatory executive should maintain a list of these dates. The licensor’s regulatory files are transferred to the licensee operating licensor following acknowledgement from the authorities of these letters. The regulatory files are transferred after the CTA transfer letters have been submitted to the Authorities for countries where the authority does not acknowledge the CTA transfer letters,

In both scenarios the licensor prepares a brief inventory of their records and requests the licensee contact to sign, date and return the inventory record. A copy of the signed inventory is sent to licensor regulatory.

The licensor’s regulatory executive maintains a status for transfer of assets. A letter is sent to the licensor, for Countries not involved in clinical trials, requesting a basic inventory of their regulatory files. The licensor may not hold any regulatory files for the majority of international markets in which case no further action would be required. The files should be sent back and forwarded to the licensee where the international markets hold information

It is important to maintain a list of the status of asset transfer particularly when so many countries are involved.

The process can be a complex one for many licensors, especially when no CTA approval was required and a third party was involved (CRO) in setting up clinical trials. Therefore where possible it would be advantageous to transfer the CTA prior to setting up a new clinical trial.

It may be more appropriate to speed up asset transfer to arrange for all licensor regulatory files to be sent to group regulatory in advance of asset transfer. The Group regulatory can then forward all files to the acquiring licensor.

Answering Regulatory Questions

A procedure should be agreed between licensor and licensee for regulatory questions. A proposal should be put forward by the licensor for the licensee agreement.

The article gives in depth information regarding the process involved in out-licensing. However the process can be a complex one if not handled properly with planning at the right time.

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