Author Archives: Dennis McCarthy

AACC 2016, Diagnostics Industry Event

IMG-20160802-00714 IMG-20160802-00715

In my opinion, this year’s AACC Conference, one of the major international gatherings of the medical diagnostic industry, was notable for two elements.

First, finally this year, molecular diagnostics seemed to be a mainstream methodology given the prominence and exhibition floorspace dedicated to molecular diagnostic companies.

Representatives of clinical labs with which I spoke, expressed concern about adding the new technology with new demands on lab staff in light of budget pressures. These representatives, however, seemed resigned to the inevitable and curious to learn what’s now available.

Second, the bifurcation of the industry into whales and minnows is increasing. I base this observation on my perceptions versus actual exhibition floorspace statistics.

This year, several small diagnostic companies which have been regular exhibitors in prior years opted to not host a booth or avoid the conference altogether. Giant companies still seem to have the budget while smaller companies weigh every cost. For some, the AACC is simply not essential.

I will continue to attend because the AACC is a great event to see colleagues and meet new friends. As in past years, some of my most rewarding meetings were from chance encounters.

IMG-20160803-00728Also, on the topic of serendipity, one of my favorite discoveries was the Reading Market food court below the conference hall. In that warren of food stalls, there’s something for everyone.

Philadelphia was a good host city. Philadelphians lived up to their reputation, guiding this lost traveler when needed with a generous spirit.

I look forward to following up on conversations and planning for next year in San Diego.

Medical Centers Pivot as Cyberattacks Proliferate

cryptolocker screenshotThe daily announcement of the latest cyberattack on a US medical center confirms that this is not a random, infrequent event.

Medical centers which, up until now, have focused all the IT attention on making data readily available to all parties are now quickly pivoting 180 degrees to protecting their data from aggressive hacking attempts.

Those of you who deal with websites know that the pace of penetration attacks across the web have increased dramatically.  You too likely spend proportionately more time on defense now than before.

Why has this pace of attack quickened now?

There is speculation that hackers previously supported by various governments such as China, are now supporting themselves by mercenary hacking which is proving profitable.  The hackers’ success, no doubt, prompts more hackers into the business.

Medical centers are easy prey to hackers because of the decentralized and vulnerable systems which comprise their networks.

One of my prior articles, for example, highlighted the vulnerabilities of internet enabled but undefended medical devices (click here).

On a recent project involving software for making medical information available to any and all (legitimate) parties including medical staff as well as patients, not once in my hundreds of conversations with the major systems vendors did anyone mention security.

This is not to say that the systems didn’t have security features but security was apparently not deemed important enough to mention.

Well, that was last month.  My guess is that now, security is a topic of discussion.

Amid the daily articles announcing the latest hacks, there are helpful articles, such as this one carried on HealthcareITNews (click here) to help your organization address security vulnerabilities.

I suspect this is just the first of a major wave of cyberattacks.  HIT security will likely now get the attention is should have gotten.  But how many more medical centers will fall prey before there’s a widespread and effective solution?

Social Media Mistake

KKImagewDrugI usually skip over the Kim Kardashian (KK) articles in the press but this one caught my eye because it mentioned the FDA.

It turns out the well-known celebrity had taken to social media in a sponsored Instagram post about the morning sickness drug Diclegis made by Duchesney. For those of you not up on tabloid news, KK is pregnant with her second child.

Because the Instragram post was the result of a formal partnership with the drugmaker, Duchesnay, the post should have met the requirements of drug marketing which requires substantial additional information and warnings about use.

The FDA notified Duchesnay of the violation of its online advertising rules. In response, Duchesnay promptly organized a second Instagram post from KK with lengthy disclaimers attached.

This incident highlights drugmakers’ emerging awareness of the value of social media especially using such powerhouses as KK but also the rules which must be followed.

The FDA has been proactive in issuing guidance for companies and products under its supervision as to the use of any online media, as described in a prior article (click here)

As this prior article notes, much of the information available online is not directly produced by or even under any control by the product’s maker.

If KK’s Instagram post had been a spontaneous expression of KK’s opinion of Diclegis and not a formal promotional campaign, there’s little that the FDA could have done.

Online information about medical devices and drugs remains a “wild west” running the gamut of disciplined FDA-guided marketing and completely unsupported opinions masquerading as medical information.

To read the article about KK’s Instagram adventure, click here.

Please contact us to discuss your company’s capital market goals and projects.



Marketing Off-label Drug Use

RedWrenchA Federal District Judge in Manhattan just threw another wrench in the Food and Drug Administration’s (FDA) enforcement mechanism.

The court decision said the FDA could not prohibit the truthful promotion of a drug for unapproved uses because doing so would violate the protection of free speech.

This decision is the second in a string of cases chipping away at a powerful weapon wielded by the FDA which requires drug companies to obtain FDA approval before promoting a specific use of a drug.

Physicians commonly prescribe drugs for uses other than for which drugmakers have obtained FDA approval, but the FDA has taken the position that it is illegal for drugmakers to actively promote that “off label” use.

This recent decision and the prior decision squarely challenge the FDA’s position.

Drugmakers are likely to proceed cautiously. No doubt the industry will be watching for additional challenges by drugmakers to further define the groundrules.

To read an article in the New York Times on the issue and this recent case, click here.

China’s Growing Presence In The Life Science Industry

LifeSciPlantWith the key diagnostics industry conference, the AACC, coming soon at the end of July in Atlanta, I recall notable items from last year’s event.

Certainly, one item is the increasing presence of Chinese companies, which I highlighted last year by noting, as example, the addition of AACC website pages in Chinese.

I believe the level of interest in the life science industry by Chinese investors and companies is growing. The special Chinese investor days at the January life science conference and Wilson Sonsini life science event are new additions to their agendas which reflect the growth of Chinese interest.

There are mixed emotions about the increasing Chinese presence.

For some companies, the availability of capital from China, provides a valuable supplement to or replacement for Western investment. Yes, the conventional wisdom is that there’s more talk than action but there are success stories, as previously reported (Click here).

As an example in diagnostics, one emerging company, Enigma Diagnostics, has been a recent beneficiary of investment from China (Click here).

For other diagnostic companies, the entrance of Chinese funded competitors signals greater competition in an already intense global battle. It’s the last thing needed.

Barring some dramatic reversal in the Chinese economy, however, the trend is likely to continue. I, for one, will continue to practice my Mandarin. Zàijiàn.

Upcoming AACC Conference in Atlanta

PeachTreeThis year’s major diagnostics conference, the AACC, will be in Atlanta from July 26-30.

Industry participants from around the world will gather at this event which seems to get bigger each year presumably reflecting the growing role of diagnostics in medical care.

If you plan to attend this year’s AACC, please let me know and we’ll find a time to meet.

Antitrust Issues in Life Science

LathamStackedLogoRecent court cases dealing with antitrust issues in both the US and international markets provide valuable guidance.

Latham and Watkins, the law firm, provides a very content-rich webinar on this topic.

Please click here to go to the webinar signup page (registration required).

Webinar Introduction by Latham & Watkins

In this 60-minute complimentary webcast, a team of Latham & Watkins antitrust partners with experience at the FTC, DOJ and litigating novel and complex nationwide cases at the intersection of Antitrust and IP will discuss the key takeaways from these and other recent important events in the US and in Europe and what to look out for going forward.

Over the last month, there have been several significant developments relating to antitrust enforcement in the pharmaceutical and biotech sectors, including the $1.2 billion settlement of the FTC’s Cephalon pay-for-delay case, the California Supreme Court’s revival of the pay-for-delay litigation in In re Cipro I & II and the Second Circuit’s decision upholding the preliminary injunction the New York v. Actavis product hopping litigation. These events, plus the DOJ’s ongoing criminal investigation into the pharma sector and the other post-Actavis cases that address the interplay between antitrust law, IP rights, the Hatch-Waxman Act, and the FDA process, underscore the importance of staying on top of antitrust issues in the life sciences industry.

SF Life Science Week Recap

IMG-20140112-00087Life science week in San Francisco this year, as every year, was a whirlwind of meetings, presentations and receptions.

Attendance this year, judged anecdotally by the crowds at events and the price and availability of hotel rooms, was larger than last year.

Weather in San Francisco was great, not too hot or too cold and no rain.

I was able to get meetings with most of the companies I had identified to meet for the first time or to simply catch up.

What was especially rewarding for me were the serendipitous (if that’s a word) meetings and presentations. I stumbled upon some great companies and people by accident by attending some presentations when I had a break in my schedule of meetings or by chatting with people I met in the hallways and on the street between events.

It makes sense that the event grows each year if other attendees find the same value in the week that I did.

I look forward to following up on my meetings this year and planning ahead for next year.

Chinese Investors in Life Science

GoodLuckMany US-based life science companies react to investment interest from China with trepidation.

Many US executives have heard horror stories of endless delays, outright fraud or patent infringement involving Chinese investors.

Whether there’s a kernel of truth in these stories or they’re simply urban legend, the fear prevents some potentially productive investment deals.

We’d like to report on one deal involving a former client, which has gone well for both the US-based life science company and the Chinese venture capital firm.

The US-based life science company is Cerevast, a private company based in the Pacific Northwest, which is in its pivotal clinical trial for a stroke treatment device.  The company hopes to show in this clinical trial that its device enhances the effectiveness of tPA, a drug which is widely administered by hospital emergency rooms to stroke patients.

Cerevast was completing its Series C round of financing when Haiyin Venture Partners expressed interest in the company.

In contrast to common notions among US life science companies, Cerevast and Haiyin proceeded to rapidly strike a deal which enabled Cerevast to raise capital that was important for its trial.

For Haiyin, the Chinese market presents a large potential market where incidence of stroke is common.

The horror stories about Chinese investment in US life science companies get most of the attention but this example reveals that there are good experiences as well.

Forbes Magazine Asia recently ran a story about the Cerevast and Haiyin deal and the potential for more of these cross border investments in the future (click here).

Please contact us to discuss raising capital or pursuing any other capital market transaction for your company.

Another Foreign Corrupt Practices Act Prosecution in Life Sciences

StuffingCashinPocketThe life science industry has been a frequent target of prosecution of Foreign Corrupt Practices Act (FCPA) violations.

Another company, Bio-Rad, just settled with both the Department of Justice (DoJ) and Securities Exchange Commission (SEC), which involved a payment of $55 million.

Life science pharmaceutical and medical device companies have been the target of government scrutiny because in most foreign countries, the purchase of these products is controlled by a “foreign official” as defined in FCPA.

Paul Hastings, the law firm, prepared a helpful article on this recent case and the derivative regulatory and legal actions typically resulting from a settlement.


“As of last year, approximately one out of every four FCPA investigations involved a life sciences company.”

“Given the U.S. government’s continued FCPA enforcement efforts, as well as the ongoing risk of related shareholder litigation and rapidly evolving threat of so-called “carbon copy” foreign prosecutions, it remains imperative that pharmaceutical, medical device, and biotechnology companies be even more proactive in ensuring compliance with the FCPA and other anti-corruption laws.”

This is a challenging issue for companies who use independent distributors in international markets but merits careful management attention to avoid being another example.

Click here to read the Paul Hastings article.

For those who would like more on this topic, I recommend a series of articles, so far, Parts I though III, by Thomas Fox in his “FCPA Compliance and Ethics Updates” on JDSupra, the online legal source (Click here for Part I).