Gene therapies and regulatory milestone triggers: Licensors and Licensees beware

As briefly mentioned in our article last week on Priority Review Vouchers, the financial terms of a biopharma patent licence agreement typically include some combination of an upfront fee, royalties and/or milestone payments. Conventionally, milestone payments are triggered upon successful achievement of a regulatory or commercial event (e.g. commencement of specific clinical trial phases, obtaining a marketing authorisation (“MA”) or hitting certain sales thresholds). 

However, with the push towards precision medicines and advanced therapies, more complex biotechnology products, the blurring of boundaries between clinical trial phases and myriad regulatory decisions to make, we often come across triggers in patent licences which are not appropriate for the type of product licensed. The recent announcement of the advancement of Regenxbio’s Duchenne muscular dystrophy (“Duchenne”) gene therapy to pivotal trial stage serves as a useful reminder of such issues and we explore how parties should address these challenges in their licence agreements below.

Duchenne 

Duchenne is an inherited genetic condition that predominantly affects boys (with symptoms typically presenting in children around 2 to 3 years old) and is characterised by progressive and severe wasting-away of skeletal muscle. Whilst this muscle degradation initially causes ambulation difficulties, with time, the condition advances to affect the heart and/or lungs, such that most people living with Duchenne: (i) become wheelchair dependent at around 10 years of age; (ii) require assisted ventilation at around 20 years of age; and (iii) die between 20 and 40 years of age (from respiratory and/or cardiac failure).

Duchenne is caused by mutations in the dystrophin gene which means that individuals living with Duchenne cannot make the dystrophin protein. Dystrophin plays a crucial role in protecting the membrane surrounding muscle fibres during muscle contraction. Without dystrophin, the structural integrity of the membrane becomes compromised, leading to muscle cell necrosis. 

While there is currently no cure for Duchenne, there are several (although limited) treatment options that can slow the progression of associated symptoms. Such treatment options include corticosteroid medicine, creatine supplementation and physiotherapy. However, there have been several potentially promising developments in gene therapies for the treatment of Duchenne, including Sarepta Therapeutics’ Elevidys (the only approved gene therapy for Duchenne), which received accelerated FDA approval in June 2023 and expanded approval in June 2024.

Regenxbio: RGX-202

Like Elevidys, Regenxbio’s RGX-202 (an adeno-associated virus gene therapy) is a one-time treatment designed to produce microdystrophin, a smaller version of the protein that is absent in people living with Duchenne. The hope is that the microdystrophin produced by individuals after receiving the gene therapy could restore muscle function and prevent progression of the disease.

Following Regenxbio’s announcement of positive functional results from the first 5 participants in the Phase I/II portion of its ongoing AFFINITY DUCHENNE trial – with all 5 participants demonstrating stable or improved function in a commonly used ambulatory assessment rating scale – the company further announced that it achieved “alignment” with the FDA to expand the existing Phase I/II AFFINITY DUCHENNE trial into a Phase I/II/III pivotal trial that can support an accelerated approval. 

The Phase I/II/III pivotal trial is expected to support a Biologics Licence Application submission using the accelerated approval pathway in 2026. 

Glybera: another example

The recent Regenxbio clinical trial is just one example of a gene therapy product not following the traditional pathway of separate Phase I, Phase II and Phase III clinical trials. Another example which is helpful to consider in the context of licence agreements for gene therapies is the development and approval of Glybera. Glybera was a gene therapy for hereditary lipoprotein lipase deficiency first approved in 2012. Glybera was: (i) only ever the subject of open-label studies (i.e. no placebo or blinding) in a very small number of patients; (ii) subject to annual safety updates for 15 years post-administration; and (iii) only ever granted an MA under “exceptional circumstances” meaning that the MA was vulnerable to annual review by the European Medicines Agency. 

Relevance to IP licensing deals 

The expansion of the Regenxbio Phase I/II trial to a Phase I/II/III pivotal trial demonstrates a blurring of boundaries between clinical trial phases and, for anyone involved in drafting and negotiating licence agreements for gene therapy products, highlights the importance of careful milestone drafting. 

It's possible that, in the worst case, a licensor could, as a consequence of a technical mismatch between the regulatory pathway taken by the licenced product and the milestone drafting in the licence agreement, find itself in a situation where the licensee successfully gets a licensed product to market, but the licensor has not been paid a regulatory milestone that it was expecting. 

Science moves fast and regulatory pathways can and do change but whilst none of us can pre-empt every eventuality, there are still several things that can be considered upfront in the licence negotiation process. 

For example, it may be useful to consider the following:

• What clinical trials are likely to be relevant?
   
  
  • Unlike traditional small molecule drugs, advanced therapies (such as cell and gene) generally cannot be tested in healthy human volunteers (as would be the case for a traditional Phase I trial). Instead, advanced therapy trials usually involve sick patients and combine Phase I/IIa. 
     
  • Examples like the Regenxbio product mentioned above, where an existing clinical trial is extended to include later phases, give rise to questions relevant to drafting milestone triggers. For example, milestones triggered by events such as “successful completion of a Phase I Clinical Study” or “initiation of a Phase III Clinical Study” or “first dosing of a patient in a Pivotal Study” are common but each may present difficulties in an example like the Regenxbio product. 
     
  • Glybera is another good example here. In the context of drafting milestone triggers it is not clear whether the very small open label studies for Glybera before its approval would have been considered Phase I, Phase IIa or Phase III studies (or something else). As a further point, given that Glybera was subject to annual safety updates for 15 years post-administration, when did the trial “complete” or “conclude”?
     
  • These two examples clearly demonstrate how uncertainties can arise where a licensed product follows a less traditional clinical or regulatory pathway.
     
• What type of approvals is the licensed product likely to get?
   
  • For example, consider whether the relevant licensed product might be granted a conditional MA. If that’s a possibility, the definition of Marketing Approval should be scrutinised to check whether it would be covered. Licensors may expect to get paid a milestone upon the grant of a conditional MA but licensees should consider if this is appropriate, or if any distinction should be made from a full MA. 
     
  • This consideration would also apply to an Emergency Use Authorisation in the United States (provided, of course, that the licensed product may be marketed in the United States). For milestone purposes, parties should consider whether, for the purpose of milestone triggers, this should be treated as more akin to a conditional MA or a full MA.
     
  • Due regard should also be given to pricing approvals to consider the possibility of a licensed product obtaining an MA but not pricing approval (which we have seen happen in Europe).
     
• What about medicines launched under the Early Access to Medicines Scheme (“EAMS”)? 
  
  
  • Medicines that become available to people living with life threatening or seriously debilitating conditions under the EAMS do not yet have an MA; however, real patients will be treated with such medicines. Nevertheless, EAMS medicines have to be provided to the NHS free of charge by the company in the period between a positive EAMS Scientific Opinion and the granting of an MA, so inclusion of any EAMS provisions in the milestone provision of a licence agreement should be scrutinised.  

One final point to consider is that, if there is a waterfall of milestone trigger events, it would be prudent to think about including a milestone sweeper provision so that earlier regulatory milestones still become payable later (e.g. on first commercial sale), even if such trigger events weren't technically achieved. Taken together, these points could help licensors avoid the worst case scenario mentioned above.