January 11

Due Diligence

Insight

Due Diligence is the process in which the value of data is evaluated in the context of a potential investment. The process is therefore multi-disciplinary and covers all aspects of the business or asset under review such as legal, financial, commercial etc, however this Insight focuses on technical due diligence, which in this context is the review of Regulatory, Clinical, Non-Clinical and CMC data associated with a medicinal product. The objective of technical due diligence is to ensure that all data expected at the current stage of development is present and has been generated in a manner that is likely to meet current regulatory expectations. Whilst a recent regulatory approval (e.g. IND, CTA, ODD, PRIME) can be reassuring, not all data is submitted for regulatory review and as such, a deeper dive by a multi-disciplinary team of experienced Experts is critical in identifying any gaps in the current data and looking forward to identify potential risks in future data generation.

Regardless of whether we are on the buy or sell side, preparation for due diligence is key. All documents and data should be highly organised so that Dataroom updates can be performed promptly, and questions addressed fully within tight timeframes.

Know the product: From the buyer’s perspective, a team of Experts in the product type or indication under review is invaluable. They bring not only the technical expertise but also the landscape knowledge. A real Expert in the field will read between the lines, using their experience to go straight to the risks even if initially unseen, formulating clear and concise questions to quickly tease out additional relevant information. A clear picture of the real situation usually emerges very quickly. On the sell side, it is possible that some development activities may not have been active for a while. This is normal and can be addressed with some preparation meetings to question spot and align on strategies for addressing any questions that may be asked. A high level regulatory landscaping exercise could be beneficial to evaluate any recent trends, precedence or new products that

have come to market or had clinical trial approvals, to ensure the team are up to date.

Cross check everything: A smooth due diligence process is one where the team is tight and communicate well across disciplines, each team member aware of the focus of the others. A key example is cost of treatment per annum and manufacturing demand forecast. At Phase 3/pre-MAA stage, you should already have your commercial demand forecast, and have planned batch numbers and sizes accordingly. Ensure this is realistic from manufacturing perspective and that sufficient slots and contractual arrangements are in place with the CDMO selected.

Proactively manage risks: All questions raised should be specific, precise and well considered to ensure they focus on topics that will impact the value of the deal e.g. missing data, need for additional trials/lab work, deviation from Scientific Advice or regulatory precedence, potential Major Objections. It can be helpful to rank questions in order of priority, with “nice to knows” being low and optional for the seller to address. Even if the questions are well worded, they are not necessarily easy for the seller to answer, particularly in the R&D stages. Incomplete answers or datasets could be viewed as a risk, so it can be helpful during preparation stages for the seller to develop a storyboard or clear, detailed, comprehensive risk analysis so that the buyer can see the asset as they do and make an informed decision. It is better to be completely transparent to instil confidence in the buyer, than to try and navigate around a key issue.

Insights

· Know the product—real Experts in the field will identify critical issues rapidly

· Prepare thoroughly and align within the due diligence teams. Hold regular meetings to ensure all findings are discussed in a cross-functional manner

· Prioritise questions and pro-actively manage risks

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Switzerland
Head Office
InsideReg Sàrl
rue du Château 4
1350 Orbe
Switzerland

United Kingdom
Summit House
10 Waterside Court
Albany Street

Newport
NP20 5NT

Ireland - EU
22 Northumberland Road
Ballsbridge
Dublin 4
Ireland
D04 ED73

www.insidereg.com contact@insidereg.com
+41 21 802 17 88