Biotech Briefings

Delaware Court of Chancery Opines on the Meaning of “Commercially Reasonable Efforts” in a Pharmaceutical Earn-Out Provision

| Posted by Ryan A. Murr; Karen A. Spindler; Todd J. Trattner; Topic(s): Delaware Law; M&A

Observations and drafting suggestions for CRE terms in merger agreements, licenses, and royalty purchase agreements.

On April 30, 2024, the Delaware Court of Chancery held that the buyer in a life sciences merger and its successor had not breached their contractual obligations under an earn-out provision to use commercially reasonable efforts (“CRE”) to achieve regulatory approvals for a pharmaceutical product. In Himawan, et al. v. Cephalon, Inc., et al., Vice Chancellor Glasscock found that the merger agreement’s definition of CRE for purposes of the earn-out provision, which referred to the efforts of a company with substantially the same resources and expertise as the buyer, required the Court to analyze whether a reasonable actor faced with the circumstances would continue to pursue the development of a drug that had failed to meet one of its co-primary endpoints in an earlier clinical trial.[1]

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Webcast: Preparing for Stronger Markets: Considerations for IPO Readiness

| Posted by Melanie E. Neary; Topic(s): Capital Markets; IPOs; Trends and Insights

As more private companies begin to explore IPOs again after a difficult period in the markets, strong pre-IPO readiness can position companies to more swiftly access IPO market windows when they open. This presentation explores preliminary IPO planning considerations and key issues for private companies thinking about an IPO.

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Life Sciences Review and Outlook – 2024

| Posted by Ryan A. Murr; Branden C. Berns; Todd J. Trattner; Karen A. Spindler; Melanie E. Neary; Topic(s): Trends and Insights

This update provides a recap of 2023 highlights for capital markets, M&A activity, royalty finance transactions and clinical funding arrangements, along with expectations for 2024.

The past five years have been particularly tumultuous in the biopharma sector. Strong capital markets and M&A activity into early 2020 were whipsawed during the pandemic, with equity valuations climbing significantly through early 2021 before dropping dramatically through the fourth quarter of 2023.

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Webcast: M&A Insights – How to Use CVRs to Bridge Valuation Gaps, DOJ Self-Disclosure Guidelines for M&A, and Shareholder Activism Update

| Posted by Branden C. Berns; Topic(s): CVRs; Shareholder Activism

Join us for a 30-minute briefing covering several M&A practice topics. The program is the fourth in a series of quarterly webcasts designed to provide quick insights into emerging issues and practical advice on how to manage common M&A problems. Stephen Glover, co-chair of the firm’s Global Mergers and Acquisitions Practice, acts as moderator.

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False Claims Act Risks for Cyber Device Manufacturers Arising under New Requirements Subject to FDA Enforcement Beginning October 1, 2023

| Posted by Gustav W. Eyler; John D.W. Partridge; Topic(s): False Claims Act; FDA Guidance

The False Claims Act (FCA) is one of the government’s chief tools to address false claims involving government funds, imposing liability on “any person who… knowingly presents, or causes to be presented, a false or fraudulent claim for payment” to the federal government or who “knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim.”[1] Through its qui tam provisions, the FCA also allows private citizens to file suit on behalf of the government for  statutory violations.[2]

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FDA Publishes Proposed Rule Asserting Medical-Device Jurisdiction over Laboratory-Developed Tests

| Posted by Gustav W. Eyler; John D.W. Partridge; Topic(s): FDA Guidance

On September 29, 2023, the U.S. Food and Drug Administration (FDA) released its highly anticipated proposed rule on laboratory-developed tests (LDTs) (“LDT Proposed Rule”), which was officially published in the Federal Register on Tuesday, October 3, 2023.[1] In the LDT Proposed Rule, FDA announced plans to formally classify LDTs as medical devices under its regulations, subjecting these tests to extensive premarket review and postmarket compliance requirements. If finalized, the LDT Proposed Rule would result in a significant impact to the growing laboratory testing industry.

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FDA Draft Guidance Sheds Light on Agency’s Evaluation of Prescription Drug Use-Related Software

| Posted by Gustav W. Eyler; John D.W. Partridge; Topic(s): FDA Guidance

The U.S. Food and Drug Administration (FDA) recently published a draft guidance document proposing to regulate end-user output of prescription drug use-related software (PDURS) as labeling.[1] The draft guidance sets forth review pathways that could benefit prescription drug application sponsors, including by allowing sponsors to incorporate information about PDURS in the FDA-approved labeling and to seek premarket review for certain PDURS functions that meet the definition of a medical device. But by proposing to regulate PDURS-related information as labeling, the draft guidance poses potential enforcement risks for sponsors under the Federal Food, Drug, and Cosmetic Act (FDCA), the False Claims Act (FCA), and other laws, including through possible off-label promotion claims. Interested parties should consider submitting comments to FDA on the draft guidance. FDA has invited comments through December 18, 2023.

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