Dew...
so you get your anti-pphm info from a newspaper article? how about reading this court filing?
What happened at pphm's vendor is nothing short of 'almost beyond belief'.
get your facts straight before you decide what a jury will decide.
enjoy the stuff in bold about 3/4 of the way down...
From: PEREGRINE'S OPPOSITION TO DEFENDANT CLINICAL SUPPLIES MANAGEMENT, INC.'S MOTION FOR PARTIAL SUMMARY JUDGMENT
Quote:
A. INTRODUCTION
Clinical Supplies Management, Inc.'s ("CSM") Motion completely misses its mark. It seeks to limit its liability to Peregrine Pharmaceuticals, Inc. ("Peregrine") to the amounts it was paid for its services through exculpatory clauses that run afoul of California Code of Civil Procedure § 1668 ("section 1688") and rail against established California public policy. CSM does not even cite section 1688 in its papers and erects strawman arguments that fail to reach the applicable legal analysis. The Court should deny the Motion.
B. FACTUAL BACKGROUND
1. The Parties
Peregrine is a clinical-stage biopharmaceutical company developing first-in- class monoclonal antibodies focused on the treatment and diagnosis of cancer. Peregrine is a publicly-traded company based in Tustin, California. CSM provides clinical trial services to pharmaceutical companies. It is located in Fargo, North Dakota.
2. Overview Of The Phase IINSCLC Double-Blind Trial
A discussion about the trial and CSM's critical role (explained in the accompanying Declaration of Joseph Shan ("Shan Decl.")) may help the Court consider the legal issues presented by CSM's Motion.
The trial was a randomized, double-blind, placebo-controlled Phase lib trial in which bavituximab doses were combined with either docetaxel (chemotherapy) or placebo in patients who had previously treated unsuccessfully for locally advanced or metastatic non-squamous non-small cell lung cancer ("NSCLC"). The goal was to demonstrate increased anti-tumor activity for the non-placebo patients through the addition of bavituximab as had been experienced in prior similar clinical trials.
These late stage lung cancer patients would hopefully display tumor shrinkage and enjoy extension of life through the treatments. (Shan Decl. 6-7.)
The study was designed by Peregrine representatives as a double-blind study,
meaning the various patients, treating physicians, the organizations hired to collect and verify trial data and Peregrine itself would not know the dosage assignments given to the patients in order to avoid any potential bias in patient outcome. Peregrine designed the study to contain three treatment arms. One group of patients, the control or "A" arm, was supposed to receive docetaxel plus placebo treatments to serve as a baseline to compare the responses of the other two arms. The second or "B" arm patients were supposed to receive 1 mg/kg doses of bavituximab plus docetaxel. The third or "C" arm patients were supposed to receive 3 mg/kg doses of bavituximab plus docetaxel. Candidates for the study were hard to identify. The trial ultimately evaluated 121 late-stage NSCLC patients randomized into the three treatment arms in 40 sites around the world. Patient enrollment was completed in October 2011.
This trial was Peregrine's most important clinical trial to date. The trial was designed as a registration study, such that if the results demonstrated statistical significance in median overall survival, Peregrine would seek FDA approval based on the results of the trial. Bavituximab had already demonstrated great promise in treatment of other forms of cancer in earlier clinical studies and the success of the NSCLC study would have propelled Peregrine into a late-stage development company about to embark on commercialization. This trial was also expected to enable Peregrine to partner with a large global pharmaceutical company to fund a Phase III trial to leverage the global pharmaceutical company's commercial sales and marketing expertise and fund future advanced clinical trials in other indications. (Shan Decl. If 9.)
Peregrine had not previously performed a double-blind trial, and so it utilized an experienced clinical trial consultant to coordinate experienced vendors to perform the work needed (which Peregrine could not perform due to the double-blind nature of the trial). Based on the consultant's recommendations and experience, eight main vendors, along with other vendors, were assembled to perform the trial. Perceptive
Informatics ("Perceptive") provided randomization services for assignment of patients to treatment groups through a detailed proprietary protocol called "Clinphone Compact" ("Clinphone"), which set forth the project specifications and allocated responsibilities to all vendors and restated them in flow charts. (Shan Decl. 110.)
The delegation of CSM's responsibilities in the trial was also clearly specified in a group meeting of vendors before the trial began. On February 25-26, 2010, Peregrine hosted a kick-off meeting for the trial to discuss the roles of each of the eight vendors so their efforts were properly coordinated among them. Importantly, although Peregrine was the "Sponsor," its role was necessarily limited in light of the double-blind aspect of the trial, and so the kick-off meeting was intended to hand off the coordinated vendor efforts among the vendors based on Perceptive's documents. (Shan Decl. f 12.)
CSM was specified to be responsible for supply chain activity, ensuring proper labeling and distribution to sites, and product vial reconciliation to inventory. It would receive shipments of placebo, 1 mg/kg bavituximab and 3 mg/kg bavituximab in separate lots ultimately totaling approximately 8,000 vials. It was supposed to label the 8,000 vials as instructed by Perceptive using a form of label agreed to with Peregrine. In accordance with cGMP labeling, there was no possibility any product mislabeling could occur at the inception of the study. (Shan Decl. If 13.) The only judgment Jeanette Bleecker, the CSM Project Manager for this clinical trial ("Bleecker"), had to use was to anticipate adequate amounts of doses to be shipped to the treatment sites so that inventory was not wasted and vials were always available to the patients when needed. (Jeffrey Masten Decl. f 8 ("Masten Decl.")) CSM shared marketing slide charts at the kick-off meeting confirming that it had the capability to perform these tasks. (Shan Decl. If 13.)
As explained in the kick off meeting by Peter Jalen of Perceptive, pursuant to the Project Requirements Specification, his company would apply the Clinphone
patient randomization program and direct CSM to distribute placebo, 1 mg/kg or 3 mg/kg doses accordingly to the trial sites, to thereafter be processed by pharmacists and distributed to physicians to administer to the patients in the study. Thereafter, CSM would keep track of the administration of the doses and which patients fell into which treatment arm until the study was unblinded. Due to the blinded nature of the study, Peregrine, as well as many of the other vendors participating in the trial, was dependent on CSM to strictly follow the protocol developed by Perceptive. (Shan Decl. ^14.)
3. MSA Provisions
There can be no doubt from an examination of the Master Services Agreement between CSM and Peregrine ("MSA") that CSM was expected to comply with industry regulations in providing its designated services. These MSA provisions include:
3. SERVICES
A. CSM hereby agrees to provide CLIENT the Services described in each Work Order. In performing the Services, CSM will comply with any applicable study protocol which will be identified by name and number therein, this Agreement, the applicable Work Order, the written instructions of CLIENT, relevant professional standards and all applicable laws, rules and regulations including., but not limited to. the Federal Food. Drug and Cosmetic Act and the regulations promulgated pursuant thereto, and with any other applicable laws including, without limitation, the Hazardous Materials Transportation Act.
B. CSM's tasks specified in the Work Order, including any Change Order(s), will constitute the sole tasks assigned by CLIENT to CSM pursuant to 21 CFR 312.52.
15. CONFORMANCE WITH LAW AND ACCEPTED PRACTICE
CSM will perform its obligations under this Agreement in conformance with generally accepted standards of good clinical practice and, good manufacturing practice, with the terms of the Work Orders, and with all applicable local, state and federal laws and reflations governing the performance of clinical investigations... (emphasis added.) (Shan Decl. 111.)
As set forth in those provisions and by established industry practices, in carrying out these tasks, CSM was obligated as a Contract Research Organization
("CRO") to comply with good clinical practices established by the International Conference on Harmonization ("ICH") Guidelines and to comply with various Food and Drug Administration ("FDA") regulations setting forth good manufacturing practices ("cGMP"). These included the good manufacturing practices established by and set forth in 21 CFR Part 210 (Current Good Manufacturing Practice in Manufacturing, Processing, Packaging, or Holding of Drugs, General), and Part 211 (Current Good Manufacturing Practice for Finished Pharmaceuticals). These obligations also included the specific requirements of many subparts of 211, including (i) 211.125 labeling issuance, subparts (a-f); (ii) 211.130 Packaging and labeling operations, subparts (a-e); (iii) 211.142 Warehousing procedures, subparts (a-b); and (iv) 211.150 Distribution procedures, subparts (a-b). As explained in the accompanying Masten Declaration, CSM did not comply with these regulations in profound ways. (Masten Decl. 6-12.) CSM's actions preclude it from relying on the exculpatory clauses to limit its liability as attempted by this Motion.
The decision to unblind such a study is made by an independent scientific body, the Independent Data Monitoring Committee. Data from the trial announced in May 2012 showed a doubling of overall response rates and an improvement in progression-free survival in patients treated in the bavituximab-containing arms when compared to those treated with placebo. Interim data publicly announced on September 7, 2012, showed a statistically significant improvement in overall survival and a doubling of the median overall survival in patients treated in the bavituximab-containing arms compared to those patients treated in the placebo arm. (Shan Decl. f 15.) These were very positive developments for very ill patients, and were quite exciting for Peregrine.
4. The Audit and CSM's Errors
In September 2012, Peregrine received pharmakinetic ("pk") results from the testing laboratory which evaluated blood supplies from a subset of 18 patients who participated in the pk "substudy." Those 18 patients were evaluated for potential
drug-drug interaction between bavituximab and docetaxel. With that information, and a drug coding memo from CSM, there were indications that the "A" and "B" treatment assignments may have been switched, but CSM provided no explanation or elaboration. Based on this, Peregrine initiated a "for cause" audit of CSM's performance under the study. (Shan Decl. If 16.)
Peregrine Vice President QA, Jeff Masten, flew to North Dakota to get to the bottom of the problem and visited CSM on September 20, 2012. Masten initially met with Angela Buchanan, the Director of QA at CSM. Buchanan admitted to Masten that Bleecker had switched the control and 1 mg/kg arms in violation of the Project Requirements Specification document and CSM Standard Operating Procedures ("SOP"), didn't tell anyone, and Buchanan had no idea why. These were clear violations of 21 CFR Part 211.150 and 312.52. Later, when Gerald Finken took over Bleecker's role, Buchanan admitted no one went back to check the Perceptive Project Requirements Specification document to make sure it was being followed by CSM. Buchanan indicated that she was still a friend of Bleecker's and volunteered to Masten that Bleecker went on leave in February 2011 and terminated her employment with CSM in August 2011. (Masten Decl. If 5.)
Bleecker's decision to secretly swap the "A" and "B" arms of the study so that patients that should have received 1 mg/kg treatments received the placebo treatments, and vice-versa, was inexplicable. Bleecker did not inform any other vendor that she had made any sort of change at all. She did not even advise her Director of QA, Angela Buchanan, that she had done so. And so her activities violated many ICH rules and FDA regulations, including those contained in 21 CFR Parts 211.125, 211.130, 211.142 and 211.150. (Masten Decl. flf 5, 11, 12.)
Whatever her motivation, if Bleecker been authorized to make such a change, she would have needed to notify certain of the vendors, including Perceptive. Upon such a change, Perceptive would have needed to redo its validated Clinphone and the Project Requirements Specification, which would have taken a significant
amount of time and money to revise, revalidate and obtain approval prior to the trial commencing. (Masten Decl. Tf 9.) Instead, she proceeded unilaterally after expressly confirming, falsely, that she was following the Clinphone protocol.
In connection with the audit, approximately 7500 vials were retrieved from sites around the world, and of those, 99% contained enough volume to determine their contents. The audit confirmed that all C group patients were correctly treated with 3 mg/kg bavituximab doses. However, there was serious evidence of vial mislabeling between the placebo and 1 mg/kg groups. In light of the labeling process that CSM should have employed in accordance with cGMP regulations and CSM SOPs, it is inconceivable that the original labels could have been misapplied. And so the inference is that some labels were swapped. (Masten Decl. 16.) Additionally, the type of labels used by CSM allowed them to be removed and swapped without leaving a trace of residue to evidence such tampering; whereas proper labeling under cGMP regulations would not have permitted this. (Masten Decl. Tf 6.) The industry standard, within the applicable FDA regulations (including those noted above, such as 211.125 and 211.130), is to use labels that cannot be removed thereby preventing the issues which CSM caused. The number of mislabeled vials is small but the mislabeling problem implicates mathematically up to 25% of the total vials labeled for placebo doses and up to 25% of the total vials labeled for 1 mg/kg treatments. (Masten Decl. f 6.)
These discoveries indicated that CSM didn't even follow the labeling protocol by using cGMP labels, as is the industry standard, on a majority of the vials CSM labeled. (Masten Decl. If 8.) Further, the problems turned out to be even more serious as there was no apparent rhyme or reason to the distribution of placebo and 1 mg/kg treatments by CSM, even assuming Bleecker had just swapped the "A" and "B" treatment arms. Again, these were clear violations of 21 CFR Parts 210 and 211 including, but not limited to, 211.125,211.130, 211.142 and 211.150. (Masten Decl. Tflf 11-12.)
5. Fallout And Damages
The Phase II study at issue cost Peregrine well in excess of $12,000,000 in direct third party costs alone, not to mention the significant internal man-hours and associated costs. Due to CSM's errors with respect to the placebo and 1 mg/kg arms, the trial could not serve as a registration trial, thereby eliminating Peregrine's opportunity to obtain FDA approval based on the results of the trial alone, nor could the data be part of the registration package when Peregrine sought approval following its planned Phase III trial. (Shan Decl. 118.) At a minimum, due to CSM's errors, what would have been a 400 patient Phase III trial needed to become a 600 patient trial since the data from the 121 patients in the Phase lib trial could not be used as part of Peregrine's registration package. At an average trial cost of $100,000 per patient, CSM has caused Peregrine additional direct damages of $20,000,000. (Shan Decl. 19-22.)
This setback was devastating for Peregrine. Bavituximab's long term benefits may include treating early stage cancers and preventing cancer. Bavituximab also has indications of benefit for many other diseases such as herpes, Hepatitis C and HTV. Peregrine has suffered at least a substantial loss in time to market and is in the process of the larger and more expensive Phase 331 trial. (Shan Decl. 17, 23.)
The nature and magnitude of CSMs errors resulted in Peregrine filing its First Amended Complaint in this matter, alleging claims for breach of contract, negligence, negligence per se, gross negligence, misrepresentation/concealment, and constructive fraud. The exculpatory clauses do not limit Peregrine's recoveries on its claims for relief.
