Cell and Gene Therapy licensing: Complex regulatory pathways necessitate careful scrutiny of financial milestones

This article was first published in the Bio-science Law Review (Volume 19, Issue 6) by Lawtext Publishing.

Cell and Gene Therapies (‘CGTs’)¹ promise revolutionary and highly personalised treatment options for people living with rare and previously intractable diseases. Compared to traditional small molecule pharmaceuticals and even to other biological products such as antibodies, CGTs are newer and more complex products with regulatory pathways which are still evolving. In order to develop and commercialise CGTs, developers often need to enter into intellectual property (‘IP’) licences to secure rights to patents and know-how relating to CGTs (including IP in the various constituent elements of CGTs, such as viral vectors for delivery of a therapeutic gene into the body or promoters to control gene expression or lipid nanoparticle technology which is the subject of a number of ongoing patent disputes between Moderna and Pfizer/BioNTech). Those involved in drafting and negotiating CGT IP licences should be aware of how CGT products and their regulatory pathways differ from more traditional pharmaceutical products in order to ensure that their IP licences appropriately address the unique challenges of these cutting-edge technologies. One such challenge pertains to how nuances in CGT clinical and regulatory pathways and available regulatory exclusivities may impact the drafting of the financial terms of CGT IP licences, particularly the financial milestone provisions.

As with more traditional pharmaceutical products, the financial terms of CGT IP licences might typically include some combination of an upfront fee, royalties and/or milestone payments. Conventionally, milestone payments to the licensor are triggered upon the licensee’s successful achievement of a particular regulatory or commercial event, such as commencement of specific clinical trial phases, obtaining a marketing authorisation (‘MA’), first commercial sale, or hitting certain sales thresholds. It is crucial that the triggers for these milestone payments are clear.

However, as we explore in this article, when it comes to CGT products, the differences and uncertainties in regulatory pathways and blurring of boundaries between clinical trial phases means that achieving clarity regarding triggers for clinical and regulatory milestones can be challenging. In this article, we use examples of the clinical and regulatory pathways taken by certain CGT products in recent years to highlight key points that parties who are negotiating and drafting CGT IP licences should be aware of, and explore how such parties can consider addressing these challenges.

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^{1  For clarity, in Europe (including the UK), CGT medicinal products qualify as (and are regulated as) Advanced Therapy Medicinal Products and in the US , these are primarily regulated as Human Cellular & Gene Therapy Products and are the subject of a Biologics License Application.}