Memorandum

To:  OpenBiome Team
From:  Carolyn Edelstein, Executive Director
CC:     Finch Team
Date:   February 22, 2019


Subject:      Overview of collaboration with Finch Therapeutics

 

Dear Team:

In 2017, OpenBiome engaged Finch Therapeutics (“Finch”) to manufacture the treatments that OpenBiome provides under enforcement discretion and for clinical research. As part of a new agreement between Finch and OpenBiome, this month, OpenBiome acquired the manufacturing program used to produce treatments for these treatments. As we implement our revised agreement with 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  We expect that this policy will be repealed or revised when an FDA-approved product is available.  After an extensive review of our strategic options with our Board of Directors in 2016, we determined:

1.   The FDA will most likely require biologics license approval for all microbiome-based therapeutics 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.  Our longstanding collaboration with Finch, which has access to the capital required to pursue FDA approval, is in support of ensuring long-term and stable access for patients.

COLLABORATION OVERVIEW
Finch is a microbiome therapeutics company that aims to serve patients with serious and unmet medical needs. It has a clinical-stage program for an investigational microbiome-based therapy, CP101, which it is developing for FDA approval for prevention of recurrent C. difficile infection. In 2017, OpenBiome engaged Finch to manufacture the treatments that OpenBiome provides under enforcement discretion and for clinical research. As part of a new agreement between Finch and OpenBiome, this month, OpenBiome acquired the manufacturing program used to produce its products, formerly owned and operated by Finch, to provide treatments under enforcement discretion and for clinical research. Finch has provided a license to OpenBiome for use of intellectual property related to the manufacturing and program and OpenBiome products, which OpenBiome will use in conjunction with the know-how it has developed over the past six years to manufacture its products. Finch and OpenBiome will continue to collaborate on research in support of their shared mission to provide patients with access to revolutionary microbial therapies and advance research in this exciting field.

COLLABORATION DEVELOPMENT PROCESS
OpenBiome and Finch have a longstanding collaboration that has been designed and revised over a period of more than three years. Finch and OpenBiome are independent organizations, each with a separate Board of Directors. To ensure that any contracts and agreements to which OpenBiome committed were in the best interests of OpenBiome and our nonprofit mission, the process of developing the collaboration includes a number of precautionary steps:

Independent internal oversight: The OpenBiome Board of Directors created an Independent Subcommittee composed of members of the Board 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 evaluated the initial 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 and related agreements provide the legal infrastructure for the strategic affiliation. They were developed, reviewed and approved by the OpenBiome and Finch Independent Subcommittees, the OpenBiome and Finch Boards of Directors, legal counsel, and a valuation firm in 2017. On February 8, 2019, Finch licensed intellectual property related to FMT manufacturing and donor screening and management to OpenBiome in perpetuity. In exchange, OpenBiome will pay Finch a customary set of payments including an upfront sum to purchase assets and inventory, and royalties on sales of product covered by that intellectual property. In exchange for a license to certain know-how related to manufacturing, donor screening and management, Finch will pay OpenBiome milestone payments and royalties on CP101 and future products.  The agreements also provide a contractual framework for OpenBiome and Finch to follow to collaborate on clinical research, or exchange stool samples and data.