Lessons Learned from Company

Formation, Drug Development, Partnering,

and Due Diligence Nightmares

December 2, 2020

Life Sciences Webinar Series

Chad Shear

Principal

Teresa Lavoie

Principal

Meet The Speakers

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“Misery Loves Company, But Company Does Not Reciprocate.”

Addison Mizner

“The Story You Have Just Heard Is True. Only the Names Have Been Changed to Protect the Innocent”

Jack Webb

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The Case of the Convenient Memory

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The Case of the Convenient Memory

• Be consistent

• Wall off key internal functions

• Silo information

• Make sure the appropriate CDA is in place

• Use third party reviewers if possible (scientific, clinical, IP)

• Tier the diligence

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The Armchair Lawyer

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The Armchair Lawyer

• Expect, if not welcome, litigation

• Hire a lawyer

• Scientists rarely understand how to interpret patents

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The “Puffer”

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The “Puffer”

• Don’t rush into it

– Safe Harbor

– No one has a crystal ball

• Understand that any reputable investor will perform their own diligence

– Aid in that diligence but know that in the end, counsel will advice their client accordingly

• Savvy companies protect assets

• Phone calls or in person communication are the best ways to communicate

• Common interest agreement

– When and where they work

• Opinions of counsel

– Reliance must reasonable (willful, inducement)

– Number of positions

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The Tax Benefit

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The Tax Benefit

• All legal functions/firms need to communicate

• Understand the placement of assets and its impact

– Ownership

– Assignment

– Priority

– Lost profits/Plaintiff

• Fix what can be fixed . . . Not all things can

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The One Who Talks Too Much

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The One Who Talks Too Much

• Establish a pre-publishing clearance process

• Have a prosecution strategy

• Make sure everyone understands the risk of premature disclosure

• Understand the entity with whom you are dealing

– Some entities are encouraged to publish early and often

• Make sure those entities are clear on the process and the ramifications from failing to

follow that process

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The One Who Says Anything to Close the Deal

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The One Who Says Anything to Close the Deal

• Don’t commit too early

• Don’t put it in writing

• Caveat, caveat, caveat

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The Disgruntled “Ex”

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The Disgruntled “Ex”

• Make sure that your employment agreements:

– Correctly assign the invention

– Require post-employment assistance

– Require confidentiality

– Exit interview!!!

• Risk – Benefit analysis

• Understand the invention story

• Make sure that everyone’s rights are spelled out and clear from the outset

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Checklist of Considerations for Potential Trouble Spots

• Company formation

– Paperwork

• Is it all in place?

• Clear?

– Ownership

• Employment agreements

– Assignment language » Present language?

» Does it include right to claim priority?

» Are they actually executed?

» Can you find them?

• Consultant/CROs – ditto

• Collaborations – unclear terms re: joint ownership; overlapping fields of use

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Checklist of Considerations for Potential Trouble Spots

– Inventorship

• Prepare for uncooperative ex-employees

• Are your records clear and complete?

• Invention story?

– Does anyone know it in their rush to get a patent?

• Company structure – subs/licenses/exclusive licenses

– Is chain of title clear? (unwinding title, unwinding obligations, potential for issue in EP – right to

claim priority based on proper PCT applicant)

– Academic partners

• Is everyone on the same page about publication?

– Is there a process in place to review and approve?

• overlap in work (joint ownership), follow on applications (need to continually go back

and license?)

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Checklist of Considerations for Potential Trouble Spots

– Low budgets for IP, but big dreams

• Are you realistic in your needs and expectations?

• Is there a clear invention?

• Is leadership on the same page as legal? Science?

– Aggressive IP positioning –

• Are you out over your skis on filings, litigation/enforcement/threats

• Is there a strategy?

– What is the goal?

– How are you going to get there?

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Checklist of Considerations for Potential Trouble Spots

• Company growth

– Financing or partnering/diligence – exchange of information:

• Confidential disclosures (either before or after IP filing) –

– Contamination?

– Is a CDA in place?

– Are there disclosures prior to IP filings: press releases, JP Morgan presentations, CEO

discussion/analyst calls, clinical trials postings

• Growth – are there on sale bar concerns?

– Manufacturing

– Commercial

– IP alignment with evolving company “story” - prosecution history issues

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© Copyright 2020 Fish & Richardson P.C. The opinions expressed are those of the authors and do not necessarily reflect the views of Fish &

Richardson P.C., any other of its lawyers, its clients, or any of its or their respective affiliates. This presentation is for general information

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confidential information in this message. For more information about Fish & Richardson P.C. and our practices, please visit www.fr.com.

Please send your NY CLE forms to

mcleteam@fr.com.

Any questions about the webinar contact

Lauren McGovern at mcgovern@fr.com

A replay of the webinar will be available

for viewing at http://www.fr.com/webinars

Thank You!

Teresa Lavoie

Principal

lavoie@fr.com

Chad Shear

Principal

shear@fr.com

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