Memorandum

 

To: OpenBiome Team
From: James Burgess, Executive Director
CC: Finch Team
Date: February 22, 2017
Subject: Overview of collaboration with Finch Therapeutics

Dear Team:
As we launch our collaboration with Finch Therapeutics (“Finch”), I wanted to provide some additional context on the process we followed to establish the structures and principles that support it.

BACKGROUND
As you know, OpenBiome provides its treatments for recurrent C. difficile infection under the FDA’s interim policy of enforcement discretion.  We expect that this policy will be repealed when an FDA-approved product can replace unapproved alternatives.  After an extensive review of our strategic options with our Board of Directors, we determined:

  1. The FDA will require formal approval for all microbial therapies in the long term   
  2. As a nonprofit, we will not have access to the significant financial and technical resources required for successful drug development and FDA approval

From the perspective of the patients we serve and the clinicians and researchers who enable their care, it’s important to validate this treatment through adequate and well-controlled trials (for more on why, see our other communications tomorrow).  As a result, we have decided to partner with Finch, which has access to the significant risk capital required to pursue FDA approval.

COLLABORATION OVERVIEW
Finch is a microbiome therapeutics company that aims to serve patients with serious and unmet medical needs. OpenBiome will license its stool banking technology to Finch, for use by its team of microbiologists, data scientists, and drug delivery experts. Finch will become the licensed manufacturer of the treatments that OpenBiome supplies to clinicians and researchers in support of its mission to expand safe access to FMT and catalyze research in the human microbiome. Finch will invest significantly in upgrading the quality systems used for this manufacturing process and incorporate its novel drug delivery system to enable targeted release of the microbes at the site of infection in the colon.

COLLABORATION DEVELOPMENT PROCESS
Over two years of planning and negotiation have gone into designing this collaboration. Finch and OpenBiome are independent organizations, each with a separate Board of Directors, and they will remain so. However, the two organizations share members of their leadership teams, a situation that creates the risk of a conflict of interest. So, we followed a process that involved a number of precautionary steps to ensure that any contracts and agreements to which OpenBiome committed were in the best interests of OpenBiome and our nonprofit mission.

Independent internal oversight: The OpenBiome Board of Directors created an Independent Subcommittee composed of Directors with no financial, managerial, or familial ties to Finch. The Independent Subcommittee oversaw development of and gave final review to all contracts between the two organizations.

Independent external oversight: The Independent Subcommittee received support from external legal counsel, who were hired to ensure that the agreements were fair and truly in support of OpenBiome’s mission and goals. An external valuation firm was hired to evaluate the royalty agreements between the two companies and to ensure that they were fair and in line with market comparables. 

FRAMEWORK
With these governance protections in place, OpenBiome and Finch worked together to establish a series of contracts that would form a broad-based strategic affiliation between the two entities.

The Master Strategic Affiliation Agreement, Quality Systems License, and related documents provide the legal infrastructure for the strategic affiliation. They were developed, reviewed and approved by the Independent Subcommittee, the Finch Board of Directors, legal counsel, and valuation firm. OpenBiome is licensing to Finch its intellectual property and know-how related to FMT manufacturing and donor screening and management. In exchange, Finch will pay OpenBiome a customary set of payments including an upfront sum, milestone payments, and royalties on FIN-403 and future products along with providing a guaranteed supply of FMT material to OpenBiome.  The agreements also provide a contractual framework for OpenBiome and Finch to follow should they collaborate on clinical research, or exchange stool samples and data.

INTERNAL CONTROLS
In addition to the governance protections outlined above, effective March 1st, Mark Smith will no longer be an employee or Officer of OpenBiome, and will serve as CEO of Finch. Mark will remain on the OpenBiome Board of Directors, and serve as an advisor to the OpenBiome Scientific Review Board. Zain Kassam, OpenBiome's Chief Medical Officer and a member of the OpenBiome Scientific Review Board, will serve as a Research Consultant for Finch.  All current and potential OpenBiome research collaborators will be briefed on the organizational overlap and given the option to request Mark and/or Zain’s recusal from study involvement.