Argyle Conversations

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1 by Argyle Executive Forum SM Argyle Conversation: Formulating legal policy, while juggling numerous other duties as part of the management team at a small, growing biotech firm, was the topic of December conversation between Brad Middlekauff, Chief Legal Officer, General Counsel and Secretary at Kolltan Pharmaceuticals, and Stephen Stewart, Chief Technology Officer at Nuix.

2 Page 2 Argyle Conversation: Formulating legal policy, while juggling numerous other duties as part of the management team at a small, growing biotech firm, was the topic of December conversation between Brad Middlekauff, Chief Legal Officer, General Counsel and Secretary at Kolltan Pharmaceuticals, and Stephen Stewart, Chief Technology Officer at Nuix. by AEF - Thursday, STEPHEN STEWART: What have been your varied experiences as corporate general counsel, and how did you arrive at Kolltan? BRAD MIDDLEKAUFF: I ve been general counsel at a series of biotech companies; this one is my third. I started out in 1993 at Cooley Godward, a Palo Alto, California law firm, where I spent five years before deciding to go in-house at a biotech firm. Within a few months of starting my job hunt, I became general counsel at a company that ended up getting a non-approval letter from the Food and Drug Administration and putting itself up for sale. From there, I spent eight years as general counsel for Medarex, Inc. And, in 2008, I joined Kolltan, which was still in its infancy, and began building a legal department. The two previous companies I d been with were publically traded. Kolltan was, and continues to be, privately owned and headed by a CEO who saw great value in bringing a general counsel aboard almost from day one. So, I was Kolltan s fifth employee. Has the CEO s support for a strong general counsel eased the process of developing policies and practices from the ground up? The management team not just our CEO but also the head of science, who came from ImClone, and the head of finance, who came from Pfizer has really appreciated the value of having the right policies, procedures and ways of doing things in place from the get-go. Since the beginning, we ve been building what our CEO likes to refer to as industrial-strength programs, policies and procedures. As a company of only about 30 employees, we try to approach things with the sophistication of a larger, mature company. In what areas, and how, are you growing as a company through research and technology and internal processes? We re technology focused. We were spun out from Yale University and are developing multiple products, all in parallel. We know that there are many more failures than successes in the biotech industry, and that too many young and even mid-stage biotech companies are resting, in essence, on a binary outcome. If their product works, there s great rejoicing. But, more often than not, their one product or one technology doesn t work. That s the end of that company. We want to avoid that binary outcome. All the multiple products that we re developing in parallel are based on the same category of receptor, the tyrosine kinase receptor. Mostly, our products are being developed for the treatment of cancer. In some cases, our products may compete directly with products currently on the market and widely used; in other cases, our products may become orphan drugs for treating extremely rare diseases. So, for some of the products we re developing, we may be able to get them into the clinic and to the market by expending a relatively small amount of resources. For other products in a more crowded product sector, for example it wouldn t make any sense for a company like Kolltan to develop those on our own. So, we re much more likely to out-license that development or enter into some sort of strategic partnership with a bigger pharmaceutical company.

3 Page 3 Though your staff has gone from five people in 2008 to the current 30, people probably are wearing lots of hats at work. As you re growing the company and facing a changing landscape of regulations and policies how do you effectively assign and balance staffing to ensure your drugs get to market as smoothly as possible? You look at your in-house capacity and from there you determine what you need in the way of outside resources, like consultants. What I gained from being general counsel previously was experience with complex, IP-based transactions. So, there s a fair amount of that sort of stuff that I can do on my own. But there are areas where we really want the specialization and the cost-effectiveness of contracting with an outside counsel who brings to the table a cutting-edge expertise that s not available in-house. For example, in patent work, I ve got a fair amount of experience in terms of managing a patent counsel and helping to think strategically about patents. But, right now, we have some terrific outside patent lawyers who we re leveraging to do the actual patent work; in the not-too-distant future we may think about hiring a full-time patent agent to do the drafting of patent applications. As another example, the specifics of employment law vary state by state. On that front, you want the support of outside counsel. Knowing when to get outside support is the philosophy throughout the company, not just the legal department. We also have what we call a kitchen cabinet of outside business development advisors who each bring a different perspective to the table and help keep us on target. As you outsource, what are the intellectual property challenges of making sure your secret sauce doesn t escape? How do you know if you ve got the right controls in place? A few things: we have regular conversations with our outside patent counsel and our head of research and, often, his lieutenants; the senior scientists often participate in briefing our outside patent counsel. We determine whether the intellectual property we re developing is patentable or not, and, if it is, we want to be very aggressive about patenting our developments. When it doesn t make sense to seek a patent, we rely on trade secrets. To achieve all of this, obviously, we have employees enter into the appropriate agreements binding them to protect what we develop. We also have periodic seminars for the entire company; the focus there is on making sure the scientists are keeping what belongs to and is created by Kolltan within the four walls of Kolltan. Are you outsourcing your technology as a means of maintaining controls and governance of what the scientists are creating within the four walls? And do you have an IT security officer or other person who helps manage and minimize risk of and other very low-level leakage of information? We re not large enough yet to have an electronic security officer, but the officers of the company think about this collectively. Our head of finance makes sure that we ve got the right security from a couple of perspectives, and we ve got offsite IT back up. We do allow people to do their work when they re offsite, and if they come up with a great idea at 11 o clock at night, we want them to be able to somehow capture that while, at the same time, protecting our intellectual property. What upcoming regulatory or other changes potentially could impact your business? There are some significant changes in the patent law that were enacted by Congress and signed by the president earlier this year. Also, we ve got to keep an eye out for competition from companies making biosimilars, which are copycat versions of existing drugs. We re watching how that unfolds, including how difficult or easy the FDA is going to make it to manufacture biosimilars. And because Kolltan is years away from having much product on the market whether we re developing products on our own or by collaborating with big pharmaceutical companies we ll be watching how the landscape shifts and what kinds of deals we ll be able to make with those larger drug companies. While Kolltan is in the early stages of product development, how and from whom are you drawing perspectives and advice? Who s on your board of directors? Our business development kitchen cabinet is comprised of people with work experience at large and small life

4 Page 4 science companies and with expertise in buying and selling, out-licensing and partnering with big pharmaceutical companies. We also have a very strong and insightful scientific advisory board, as well as a board of directors comprised of individuals with deep knowledge and expertise in industry-academia collaborations, as well as funding and running privately-held biotech companies. Are you finding opportunities to create and innovate, not only with the scientists, but also, as the general? counsel, in areas of legal corporate policy Yes, absolutely. In a sense, I m drawing on a blank slate, without the structures and strictures like those that were necessary at the last two public companies for which I worked. As public companies, they fell under the accounting and investor protection reforms of the Sarbanes-Oxley Act. I m still mindful of complying with all the regulations but, as a small private company, I do have more flexibility to be creative in implementing legal policy. Is creative a little loaded in this context? Not at all. There are not as many rules and regulations for private companies as there are for public, well-established companies. So, as a whole management team, we re being quite creative in a number of ways that I cannot mention right now. We ll see if those innovations work, and innovation is part of what makes this job fun. We re not necessarily taking a cookie-cutter approach. That said, as I mentioned at the top, we are looking to establish industrial-grade policies and procedures, so we are always careful to insure that our creative approaches are fully compliant with the law and meet or exceed best practices in the industry. What advice would you give to someone who wants to move, as you did, from a large organization to a small one? You ve got to really roll up the sleeves and do a lot more stuff yourself. You can t have the level of specialization you had at a larger company. My current budget for legal expenses is a lot smaller than legal budgets at my last company. So, doing this job requires a combination of self-confidence and wisdom to know when I can really do something on my own and when I should be relying on an outside expert. Doing many more things is fun and rewarding but it s risky if you don t make the right decisions about which tasks you should be carrying out on your own. We re here at an Argyle Chief Legal Officer summit. And I m curious about whom you look to, in the biotech space, to model innovation leadership? Whose work and leadership make you say, Wow, that s a good idea and a good plan? Let me see if I can take that back to Kolltan and make something happen. That s a good question. One of my main resources is the industry organization BIO, which has a general counsels committee comprised of general counsels from its member companies. We have a one- or two-day meeting three times a year. There are presentations from law firms and several keynote lecturers focusing on such subjects as compliance, patent law, financing. And then we kick the law firms out of the room and just have a discussion among the general counsels. We re all around a big table and raising our hands to ask questions: You know, I m dealing with this problem in my company. Any suggestions? And five people have an answer for you. The one-on-one conversations with fellow GCs also are of great value. Those kinds of conferences let you hear how others are doing it. I also rely on my outside law firms for certain things that come up a change in law, a court ruling and they bring important issues to my attention. You ve got a lot of experience in the industry and it s clear that you re excited about where you re at. Kolltan is three years old and has moved quickly from its infancy to its teenage years, if you will. There s a level of promise and excitement associated with that growth and with being part of a small company like this. The real opportunity is that I m a general counsel in every sense of that word. And, like everyone on our management team, I m working outside the constraints of being highly specialized. I m not in a silo. All of us are covering a lot more areas than you would think we d cover, based upon our resumes. And that s also a lot of fun. **********************************************************

5 Powered by TCPDF ( Argyle Conversations Page 5 BIOS: Brad Middlekauff Since 2008, Brad Middlekauff has been chief legal officer, general counsel and secretary of Kolltan Pharmaceuticals Inc. Prior to joining Kolltan, Middlekauff was an officer of Medarex Inc. where he was senior vice president, general counsel and secretary from 2000 to 2007 and senior vice president for strategic planning from 2007 to Before joining Medarex, Middlekauff was an associate with the law firm of Cooley Godward LLP, where he advised life science companies on the business and legal aspects of research and development, corporate partnering and licensing, product commercialization and corporate financing. Following graduation from law school, Middlekauff served as a law clerk for Judge Robert J. Ward of the U.S. District Court for the Southern District of New York. Middlekauff has served as Chairman of the Biotechnology Industry Organization (BIO) General Counsels Committee and vice president of the Yale Law School Executive Committee and has spoken at numerous conferences on legal and business issues relating to biotechnology. Mr. Middlekauff received a bachelor s degree from Brown University and a J.D. degree from Yale Law School. Steven Stewart With more than 12 years of experience, Stewart has worked with numerous enterprise customers to design, deploy, and support and file archiving solutions for regulatory compliance and ediscovery objectives. As the chief technology officer at Nuix, Stewart is responsible for evolving Nuix s forensic technologies into a leading solution in the ediscovery and corporate investigation markets. Stewart previously worked at ESI Strategies, the consulting division of RVM; was the subject matter expert for discovery and archiving at CommVault; and spent seven years at EMC enabling customers to build processes to effectively respond to electronic discovery requests. Stewart is a frequent speaker in both the legal and IT communities regarding the challenges of archiving, discovery and data management.