Biotech counsel on the cutting edge

“For us, one of the major challenges we have is determining when a particular event or a piece of information is material and when it must be disclosed, and we often find that there’s sort of an interesting intersection between the approach of the regulator and our needs as a publicly traded company to disclose information,” she says.
In many cases, she says, the regulators consider these negotiations to be confidential and that, as no formal decision has been rendered, the information is not material.

In a small company, there is a high shareholder focus on what the company is doing, and the definition of what might be material may be different than to a large company.

“We find that we’re often challenged to disclose things that other companies wouldn’t be in the position of having to consider at all, so we have to kind of find that balance between adhering to our obligations as a publicly traded company — which we must do of course — and trying to respect the decisions of the regulators and the request to keep things confidential,” Dunlop says.

The continually changing environment in securities regulation itself and the new rules constantly coming into force require a lot of attention, she says.

These include new rules relating to forward-looking information and increasing public disclosure in corporate documents.

“Just staying on top of all of those rules, as a small publicly traded biotech company, we don’t have a large legal department and so the system and the controls that we have to manage to ensure that we’re compliant with those regulations requires a high degree . . . a lot of resources have to be put to that,” Dunlop says.

Bill Stanger, senior corporate counsel at Vancouver-based specialty pharmaceutical and medical device company Angiotech Pharmaceuticals Inc. says that the difficulties of being a public company, including disclosure requirements and shareholder issues, are something that are taking up an increasing amount of time.
“Just the fact that securities regulators in Canada and the United States [are] just kind of raising the bar, and more and more information has to be made available, so those kind of issues are something that I’m dealing with,” he says.

However, in-house lawyers in this sector don’t spend all their time working on regulatory matters. At Bioniche, for example, the animal health part of the company’s business is a mature business that generates revenue. This brings with it legal issues that relate to an ongoing mature business, such as those with suppliers and customers, and, at the moment, Dunlop says she spends a lot of time negotiating agreements.

The firm is also involved in a large number of research projects, which call for partnerships with researchers, and negotiating agreements, as well as intellectual property issues. Working on transactions for raising equity- or debt-financing is another part of Dunlop’s job, and she also often works with outside counsel on equity-financing transactions and in patent law.

“As a single lawyer in a company like this, you have to be a generalist and understand how the business interacts with its partners and the relationships with its lenders and the relationships with the key investors, but you also find yourself having to have quite a high level of specialized knowledge in IP and in securities law and in general commercial law and then having the understanding of when you need to bring in expert legal support,” she says.

In addition to regulatory law, the biotech world also extends into immigration law, customs law, privacy, and employment, says Craig Sherburne, director of business development and legal affairs for BioMS Medical in Edmonton, a biotechnology company involved in the development and commercialization of therapeutic technologies, focusing on the treatment of multiple sclerosis.

“You can’t be all things to all people in all countries. It’s almost impossible. So the key thing is just to have a good support network across the world to be able to rely upon for some of these things,” he says.

Day to day, Sherburne also deals with a ton of contracts from all over Europe, North America, and Australia.

BioMS is in a clinical development phase with a phase-two and a couple of phase-three clinical trials going on, which means that there are clinical-trial agreements, indemnification agreements, budget-amendment agreements, as well as research and development contracts with outside agencies and those with outside consultants.

While he doesn’t have to deal with securities law, as the company uses outside securities counsel, Sherburne does work closely with the investor-relations side of the business and spends about 25 to 30 per cent of his time working with the clinical development team, assisting them and finding out where he can help.

One of the key things as a biotech in-house counsel, says Sherburne, is to have an understanding of IP regimes. One hot topic at the moment is patent and generic law reform, he says.

“One of the concerns that I have is the law is changing, or the society’s opinion’s shifting, which has a huge impact that reverberates throughout the system, even down here,” he says.

A drug or biotech company’s value is based upon its potential for revenue when it starts to commercialize multiplied by the number of years it has exclusivity, says Sherburne. If you change any of those variables by allowing generics to enter in faster or through the Patented Medicine Price Review Board (PMPRB), they affect the ability of any company in the sector to receive financing, he says.

“That’s the issue that I find . . . keeping me up at night. I find myself becoming involved. I’m involved with the PMPRB here in Canada, keeping up to the developments, participating to whatever extent I can in the various meetings or feedback sessions that they have,” he says.

In Vancouver, Stanger is Angiotech’s only in-house counsel, although the company does have other corporate counsel working on IP and commercial law outside of Seattle.

Because his company has recently gone from being a research and development firm to having products and a sales force, and because it has also acquired a company that had a lot of those products, Stanger is doing a lot of contract work in terms of getting the sales infrastructure in place, which involves the distributors and independent representatives that sell the products all over the world.

“I think there’s going to be a lot of that going forward. The nature of what our company is has changed quite a bit,” he says.

A typical day in his position can involve anything from a looking at a commercial lease to securities issues, licensing agreements, and employment issues, he says.

One challenge, says Stanger, is that the company is so spread out, geographically.

“Even though I’m a Canadian lawyer and qualified here, probably most of my work is U.S. and . . . we’re setting up a lot of sales structure all over the world, so international as well, so the difficulty of working across distances and the difficulty of working in jurisdictions where, as you can imagine, just the different laws in the different jurisdictions and we can’t always have local counsel review everything,” he says.

In terms of keeping on top of the U.S. law, Stanger says the company uses a couple of big U.S. law firms with offices in a number of jurisdictions for information and education.

He adds that he expects the U.S. component of his work to increase and the Canadian component to decrease, as the firm’s presence is growing in the U.S. and the majority of the company’s shareholders are in that country.
Another issue, he says, is that when he first arrived in Vancouver four-and-a-half years ago to work at Angiotech, there was a “healthy burgeoning” biotech industry in the city, which has been set back over the last few years.

This is a worry, he says, as it is hard to recruit people, as you have to move them to the area, and there isn’t a workforce there that can move from company to company.

While the city did achieve a lot of success in biotech for being a smaller centre, Stanger says that for it to continue and become a self-sustaining industry, there has to be more of a critical mass.

Working closely with teams in different sectors as well as being involved in the business are some of the bonuses of working in biotech, say in-house lawyers, as is the knowledge that the company is working towards making a difference for many individuals.

The environment is ever-changing and moves quickly, says Dunlop, in terms of regulatory developments, and the huge variety of work is interesting and provides a constant learning mode as well as a challenge, she adds. Recently, Bioniche announced that it had entered into three financing transactions to support the expansion of its manufacturing capability in Belleville for one of its vaccines.

For Dunlop, this involved three loan transactions that had to be closed within a short period of time, she says.
Working in a small company and being intimately involved in the business decisions and on a close level with the scientists is rewarding, says Dunlop.

“Also, just working for a company where you believe that the technologies will someday make a meaningful difference to people’s health, that’s very satisfying,” she says.

Stanger shares a similar sentiment that, as the company is smaller, decisions are being made by people you deal with on a day-to-day basis, and as in-house counsel you get to be a trusted adviser and part of the decision-making process.

 Working with professionals from so many different disciplines is also a plus.

One of the rewards of the job, says Sherburne, is that you are not just making a difference for the company, but “you’re going to work everyday with the possibility of, in BioMS’s case, of playing some not insignificant role in helping hundreds of thousands of people all across the world,” he says.

“It puts a little spring in your step to know that you actually are making a difference and you’re all working together to make a difference to an awful lot of people who certainly need it,” he adds.