News 
Market Data 
Discover
Replies to post #181037 on Avid Bioservices Inc (CDMO)
06/24/14 9:44 PM
I. Jeffrey Masten, declare:
1. I am competent to and would testify to the following if called upon to do so as a witness.
2, My professional career has primarily been devoted to quality assurance in the pharmaceutical industry. My career began in quality assurance with EH Lilly & Company where I worked from April 1980 to November 1997. After that, I worked for Avcntis Behring until March 2002, where I held the title of Director,
Quality Assurance upon my departure. I next worked for Genentech from April 2002 until April 2010, where I held the position of Sr. Director, Quality. While working, I studied for and received my M.B.A. from the University of Notre Dame, Mendoza College of Business in 2002. After my departure from Genentech, I joined Peregrine Pharmaceuticals, lac. ("Peregrine"), where I worked from May 2011 through February 2014, holding the title of Vice-President, Quality.
3. When I joined Peregrine, the Phase II bavituximab trial (the "trial") at issue in this case was already underway. I was assigned the quality assurance responsibilities for the trial when I joined Peregrine. The trial is discussed in the accompanying Declaration of Joseph Shan.
The Audit
4. Because of concerns about how the trial may have been administered, I and others at my direction, on behalf of Peregrine, audited the performance of all of the contractors in the study. The audit team ultimately concluded that CSM was the sole cause for errors we observed in the trial. Indeed, I was advised by CSM management that there was an intentional action taken by CSM to switch the vial labeling for the "A" and "B" treatment arms. All other parties we spoke with agreed that the Perceptive Clinphone specifications were supposed to be followed by all vendors, yet upon review and discussion with all the other vendors, none were aware that CSM took this action to switch the labeling. CSM informed me that they switched the labeling to protect the blinded nature of the trial design.
5. As part of the audit, I flew to F argo, North Dakota to get to the bottom of the problem and visited CSM on September 19,2012. I initially met with Angela Buchanan, the Director of QA at CSM, on September 20,20i2. Buchanan admitted to me that Project Manager, Jeanette Bleecker ("Bleecker"), had switched the treatment code assignments for the control (placebo) and 1 mg/kg arms in violation of the Project Requirements Specification document and CSM Standard Operating Procedures ("SOP") and apparently did not mfoim any other management employee in the company. Initially, Buchanan said to me that she had no idea why this was done. Buchanan indicated that she was still a friend of Bleecker's and volunteered to me that Bloccker had taken a one week bereavement leave in late February 2011, and then terminated her employment on August 5,2011. She also explained that later, Gerald Finken, CEO, took over Bleecker's role while she took her leave, and apparently continued to approve the same switching of labeling for the two treatment groups without QA knowledge.
6. Under my direction, of the 8,000 vials manufactured for the study, approximately 7500 vials were retrieved from sites around the world, and of those, 99% contained enough volume to determine their contents. Our audit confirmed that all C group patients were correctly treated with 3 mg/kg bavituximab doses. However, we found 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 its own SOPs, it is inconceivable that the original labels could have been misapplied. And so the inference is that some labels were swapped. Additionally, some of the type of labels used by CSM allowed them to be removed without leaving a trace of residue to evidence such potential tampering; whereas proper labeling under cGMP regulations would not have permitted this. The industry standard, within the applicable FDA regulations (including those noted in 21 CFR Parts 211.125 and 211.130), is to use labels that' cannot be removed, thereby preventing any possibility of label tampering. The number of mislabeled vials is small but, by extrapolation the mislabeling problem potentially implicated mathematically up to 25% of the total vials labeled for placebo and up to 25% of the total vials labeled for 1 mg/kg treatments.
7. In carrying out its tasks, CSM was obligated and contracted as a Contract Research Organization ("CRO") to comply with industry standard good clinical practices ("cGCP") established by the 'international Conference on Harmonization ("ICH") Guidelines, and to comply with various Food and Drug Administration ("FDA") mandated good manufaeiiiring practices (ncGMP") regulations including, without limitation, those set forth in 21 CFR Parts 210 (Current Good Manufacturing Practice in Manufacturing. Processing, Packaging, or Holding of Drugs, General), and 211 (Current Good Manufacturing Practice for Finished Pharmaceuticals),
8. Under proper cGMP labeling, there should have been no possibility any product mislabeling could occur at the inception of the study, or anytime labeling of investigational product was required. Further, the only judgment Ms. Bleecker had to exercise 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. However, when the approximately 7500 vials were recovered, some appeared to have their label removed and a few had no label at ail.
9, The audit also revealed that Bleecker took other bizarre actions that she did not apparently do for other similar client trials. She did not inform any other vendor and did not disclose that she had made any deviation to the Perceptive Clinphone protocol. Significantly, she didnt advise her Director of QA, Angela Buchanan, that she had taken this step. Had Ms. Bleecker been authorized to make such a change, she was required to notify certain of the vendors; most notably, Perceptive, Upon such a change, Perceptive would have been required 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. She and CSM did not do that. And so these unilateral steps by CSM are not explainable or defendable from an industry practice and regulatory standpoint. Additionally, she maintained her own tracking of product inventory to and from the clinical trial sites, as some sites returned their unused product vials as well as some used product vials. We were informed by Ms, Buchanan (QA) thai this practice was not according to CSM SOP and not performed for any other client's trial.
10. Based on our audit, CSM violated 21 CFRPart 210 (Current Good Manufacturing Practice in Manufacturing, Processing, Packaging, ocr Holding of Drugs, General) and 21 CFR Part 211 (Current Good Manufacturing Practice for Finished Pharmaceuticals). CSM violated 21 CFR 211.125 (labeling issuance) by using labels that could be removed and reapplied, and by switching the label assignments to the treatment groups. Based on our audit, CSM also violated 21 CFR 211.130 (packaging and labeling operations) by not labeling the vials in a manner that potentially allowed them to be accurately tracked later. CSM also violated 21 CFR 211.142 (warehousing procedures) by not ensuring the vials were stored in a manner ensuring the identity of the contents, strength, quality and purity could be determined later. Based on our audit, CSM also violated 21 CFR 211.150 (distribution procedures) based on the various examples in which supposed placebo patients (according to CSM based on the swap of the "A" and T,B" arms), actually showed indications they did receive some levels of bavituximab.
11, Additionally these violations also transgress corresponding industry standard practices set forth by the ICH.
I, Joseph S. Shan, M.P.H,, declare:
1. I am competent to and would testify to the following if called upon to do so as a witness.
Background
2. I received my Bachelor of Science degree in Physiological Sciences from the University of California, Los Angeles and my Master's Degree in Public Health ("M.P.H.") from the George Washington University in Washington, D.C. I am a member of the American Society of Clinical Oncology, the Association of Clinical Research Professionals and the Regulatory Affairs Professionals Society.
3. I have served as Vice President, Clinical & Regulatory Affairs of Plaintiff Peregrine Pharmaceuticals, Inc. ("Peregrine") since March 2009. I also served as its head of Clinical and Regulatory Affairs from January 2003 to March 2009. In my current capacity, I have been responsible for the design and execution of our clinical trials and overseeing regulatory submissions.
4. Prior to joining Peregrine, I held positions of increasing responsibility in clinical and regulatory affairs at Edwards Lifesciences (formerly Baxter Healthcare Corporation), an international pharmaceutical company, and at Sulzer Medical, a healthcare division of another international organization.
5. I executed on Peregrine's behalf the Master Services Agreement ("MSA") with Defendant Clinical Supplies Management, Inc ("CSM") dated March 16, 2010 that is at issue in this case. I was one of the members of the Peregrine management team primarily responsible for carrying out Peregrine's role in the Phase II bavituximab clinical trial at issue in this case.
Overview of the Phase IINSCLC Double-Blind Trial
6. Peregrine's lead product candidate, bavituximab, is a first-in-class phosphatidylserine (PS)-targeting monoclonal antibody that represents a new approach to treating cancer. PS is a highly immunosuppressive molecule usually located inside the membrane of healthy cells, that "flips" and becomes exposed on the outside of cells that line tumor blood vessels, causing the tumor to evade immune detection. Bavituximab targets PS and blocks this immunosuppressive signal, resulting in the maturation of dendritic cells and cancer-fighting (Ml) macrophages leading to the development of cytotoxic T-cells that fight solid tumors. Bavituximab is the lead drug candidate from Peregrine's PS-targeting technology platform.
7. The subject clinical trial involving CSM 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 been 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 (shrinking of tumors, delay of disease progression or extension of life) for the non-placebo patients through the addition of bavituximab, as had been experienced in prior similar clinical trials.
8. The study was designed by Peregrine representatives, including me, as a double-blind study, meaning the various patients, treating physicians, the Contract Research Organizations ("CROs") 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. I designed the study to contain three treatment arms. One group of patients, the control or "A" arm, would receive docetaxel plus placebo treatments to serve as a baseline to compare the responses of the other two arms. The second or "B" arm would receive 1 mg/kg doses of bavituximab plus docetaxel. The third or "C" arm patients would receive 3 mg/kg doses of bavituximab plus docetaxel. The trial evaluated 121 patients randomized into the three treatment arms in 40 sites around the world. Patient enrollment was completed in October 2011.
9. This trial was Peregrine's most important clinical trial to date. The trial was designed as a registration study, such that if the trial results showed a statistical significance in median overall survival, Peregrine would have had the ability to seek FDA approval to immediately proceed into a Phase III trial or even potentially seek accelerated approval based on the results. Bavituximab had already demonstrated great promise in treatment of other forms of cancer in earlier clinical studies. The
PARTIAL SUMMARY JUDGMENT
success of the Phase lib NSCLC study also likely would have propelled Peregrine into a late-stage development company about to embark on commercialization.
10. Peregrine utilized an experienced clinical trial consultant to coordinate experienced vendors to perform the work needed (which Peregrine could not directly perform or even oversee due to the double-blind nature of the trial). Eight main vendors and other vendors, were assembled to perform the trial. Perceptive Informatics ("Perceptive") was contracted to provide randomization services for assignment of patients to treatment groups through a detailed proprietary product called "Clinphone Compact" ("Clinphone") developed by Perceptive. The project specifications were set forth in great detail with the Clinphone Project Requirements Specification document (PPHM 0902) ("Project Requirements Specification") which allocated responsibilities to all contractors and restated them in flow charts. CSM was designated to perform cGMP ("current good manufacturing practices") labeling, packaging, and distribution/reconciliation of the clinical product. Other vendors were designated to perform data management and statistical analysis, to manufacture lab kits, perform immunology testing and monitor blood work.
The CSM Contract
11. The CSM Master Services Agreement ("MSA") contains a number of provisions pertinent to its services in the trial including the following:
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 ana good manufacturing practice, with the terms of the Work Orders, and with all applicable local,
state and federal laws and regulations governing the performance of clinical investigations...
Attend Peregrine... project meetings to communicate current activities and planning for clinical supply needs
Based on the packaging and labeling instructions, procure components and labels required for packaging and labeling.
Obtain approved randomization schedule from Peregrine...or designee
Print required labels from approved label proof for all supplies to be packaged and labeled
Conduct packaging and labeling in accordance with Good Manufacturing Practices (cGMP)
Prepare a Distribution Processing Protocol and Clinical Supplies Shipment Request and Confirmation (CSSRC)
form for distributing drug supplies.
Prepare materials for presentation at Kick Off Meeting
Attend Kick Off Meeting and participate in training sessions
Present the role of CSM in the clinical supplies process for the study
The Kick-Off Meeting
12. On February 25-26, 2010, Peregrine hosted a kick-off meeting for the trial in Doheny Beach for a day and a half to discuss the roles of each vendor, including the eight vendors referred to above, and to make sure their efforts were properly coordinated. I attended this kick-off meeting. Importantly, although Peregrine was the "client" and the "Sponsor," it's 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 based on Perceptive's Project Requirements Specification document.
13. During the kick-off meeting, those in attendance included Jeanette Bleecker from CSM. It was determined through discussion among the group, that CSM would receive shipments of placebo, 1 mg/kg Bavituximab and 3 mg/kg Bavituximab in separate lots from Avid Bioservices 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. CSM shared marketing slide charts at the kick-off meeting confirming that it had the capability to perform these tasks. CSM therefore was responsible for supply chain activity, ensuring proper labeling and distribution to sites, and product vial reconciliation to inventory.
14. 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 set forth in the Project Requirements Specification document.
15. Interim data from the trial in September 2012, showed a statistically significant improvement in overall survival and a doubling of the median overall survival in lung cancer patients treated in the bavituximab-containing arms compared to those patients treated in the placebo arm. These were very positive
developments for Peregrine because bavituximab was demonstrating a significant extension of life for very ill patients.
16. After the announcement, as Peregrine planned for an end-of Phase II meeting with the FDA to discuss proceeding into a Phase III study or potentially seeking marketing authorization with the phase II results, I was informed of the pharmacokinetic ("PK") results from the testing laboratory which evaluated blood supplies from a subset of 18 patients who participated in the PK "substudy" of the trial. Those 18 patients were evaluated for potential drug-drug interaction between bavituximab and docetaxel. With that information, and a drug coding memo from CSM in September 2012, there were indications that the A and B treatment assignments may have been switched during the trial by a vendor, Clinical Supplies Management ("CSM"). Based on this, Peregrine initiated a "for cause" audit of CSM's performance under the study.
Financial Impacts of CSM's Errors
17. As explained below, the ensuing damage to Peregrine is many times the amount paid to CSM for its services, and CSM's errors could not have been more inopportune. With the anticipated success of this trial, Peregrine expected to promptly partner with or be acquired by a global pharmaceutical company and move into a Phase III trial for NSCLC patients and commence other trials. Bavituximab could be potentially developed for or as a cancer vaccine. Bavituximab also has indications of benefit for other diseases such as Hepatitis C and HTV.
18. The Phase II study at issue cost in excess of $12,000,000 in direct third party costs alone, not to mention the significant internal man-hours and associated costs. The results of the 3 mg/kg arm of the study have value in that Peregrine was able to combine the "A" and "B" arm results and compare them to the "C" arm results. (The "A" and "B" groups collectively can be assumed to have received some bavituximab at the 1 mg/kg level, and Peregrine can compare their survival data to that of the 3 mg/kg patients.)
19. Had the study, which was initially reported as demonstrating statistically meaningful overall survival benefits, been confirmed, Peregrine could potentially have sought early approval and sales of the product. This likely would have shaved at least 3 to 4 years from the program and resulted in early commercial sales. While a confirmatory Phase III trial would still need to be done, the FDA's practices and guidances indicate that it would have required only 300-400 patients in our ensuing Phase HI study based on the hazard ratio determined in the Phase II study.
20. However, once the regulatory violations were confirmed (as discussed in the Masten Declaration), the value of the Phase II study as a registration study was so severely compromised that any option for an early FDA approval was eliminated. Thus, Peregrine was forced to conduct a larger than anticipated Phase III trial of approximately 600 patients based on an increased hazard ratio estimate.
21. Stated differently, the Hazard Ratio ("HR") is used to determine the overall reduction in risk (1 minus the HR = % reduction) in a time-to-event endpoint such as overall survival. The Phase II results prior to the discovery of the CSM labeling issue was estimated to be ~0.5 which means those receiving bavituximab and chemotherapy had almost a 50% reduction in risk of death. This result was statistically significant (p < 0.05) and based on those results, Peregrine was planning to conduct a Phase m trial to target a 0.6 HR which would have required only approximately 300-400 patients in the ensuing Phase III study. Due to the errors by CSM, the data had to be reanalyzed by pooling the two study arms that CSM swapped and the HR increased to 0.662. Thus, Peregrine had to re-power the present Phase III study for a higher HR, requiring that the present Phase III study enroll -600 patients instead of 300-400 patients,
22. The estimated clinical trial external cost for our present Phase III trial per patient is $100,000, which is consistent with the per patient cost of the damaged Phase II trial. Due to CSM's errors described in the accompanying Masten Declaration, requiring an additional 200 patients or more in the present trial as explained above, the extra costs of the current trial will total approximately $20 million.
23. Additionally, Peregrine will suffer at least a six month loss in time to market. These events will also hamper bavituximab's procession into the broader cancer indications and new trials related to viral infections discussed above.
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.
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.
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.
However, there was serious evidence of vial mislabelling between the placebo and 1 mg/kg groups. In light of the labelling 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 mislabelled vials is small but the mislabelling problem implicates mathematically up to 25% of the total vials labelled for placebo doses and up to 25% of the total vials labelled for 1 mg/kg treatments.
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.
06/25/14 9:20 AM
AI
