Foley Hoag LLP

SUMMARY

On July 15, 2008, the Securities and Exchange Commission (“SEC” or the “Commission”) issued an emergency order (the “Order”) to enhance investor protections against “naked” short selling in the securities of Fannie Mae, Freddie Mac and primary dealers at commercial and investment banks (the “Securities”), which are identified in Exhibit A (.pdf). The Order was issued pursuant to the Commission’s authority under Section 12(k)(2) of the Securities Exchange Act of 1934. In addition, the SEC will undertake rulemaking to address these issues across the entire market.

Under the Order, anyone effecting a short sale in the Securities must arrange beforehand to borrow the Securities and deliver them at settlement. The Order took effect at 12:01 a.m. ET on Monday, July 21, 2008 and will terminate at 11:59 p.m. ET on Tuesday, July 29, 2008. The SEC may extend the Order if the SEC determines that the continuation of the Order is necessary in the public interest and for the protection of investors, but not for more than 30 calendar days in total duration.

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Understanding Medicare coverage and payment policy is critical to the successful launch of any new life sciences technology. Foley Hoag’s Medicare Coverage & Payment Practice provides regulatory and legislative advice to a broad array of leading life sciences companies, including:

• global pharmaceutical and biotechnology firms,
• trade associations,
• venture capital and investment funds,
• patient associations and advocacy groups, and
• early-stage companies.

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Three recent Massachusetts Supreme Judicial Court (“SJC”) decisions have clarified two areas of uncertainty relative to the Massachusetts Comprehensive Permit Statute, Mass. Gen. Laws Chapter 40B. The SJC has provided much-needed guidance as to (1) when municipalities can challenge Subsidized Housing Inventory (SHI) calculations, and (2) when developers are entitled to challenge comprehensive permit conditions. These decisions are of importance to anyone involved in the development, financing, or permitting of affordable housing projects in Massachusetts.

In two related cases decided on May 27, 2008, the SJC ruled that a municipality must exhaust its administrative remedies before bringing a court action contesting the Department of Housing and Community Development (DHCD)’s calculation of the municipality’s SHI. In the third case, decided on June 10, 2008, the SJC ruled that developers cannot successfully challenge conditions attached by local zoning boards to comprehensive permits unless they can demonstrate that those conditions render the proposed project uneconomic.

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According to a study by PricewaterhouseCoopers and the National Venture Capital Association, venture capital (VC) investing hit a five-year high in 2006, with $25.5 billion invested. Notably, the Life Sciences sector, which includes biotechnology and medical devices, accounted for 28% of VC money invested, the largest investment sector in 2006.

As Life Sciences venture capital investing has risen, the biotechnology industry has become increasingly dependent on such funding. This is particularly true for start-up companies that cannot rely on revenue from marketed biologics to fund their research and development pipeline. To cover the nearly $1 billion capital investment required to bring a biologic drug to market (from discovery through clinical trials and FDA approval), early-stage companies rely on VC investing. Investing in emerging companies, however, is risky for a venture capitalist: only 1 in 10 drugs discovered actually makes it to market, and despite the more than $50 billion spent on biotech drugs in 2006, the great majority of early-stage companies never reach the point of net profitability.

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Legislative and regulatory matters are critically important for life sciences companies. The lawyers in Foley Hoag’s Government Strategies Practice have extensive experience in the development and implementation of legislation and regulations affecting the biotechnology, pharmaceutical, medical device, and health care provider industries. The regulatory environment can pose significant burdens to life sciences companies, but intelligent strategic advocacy in Congress and before federal regulatory agencies can also open up new markets and opportunities for innovative products. Lawyers at Foley Hoag work directly with Congressional staff and federal agencies, including the Food and Drug Administration (FDA) and the Centers for Medicare & Medicaid Services (CMS), on a variety of matters relating to the life sciences.

Focuses include:

• Biotechnology, Pharmaceuticals and Medical Devices
• Legislative
• Coverage and Reimbursement
• Food and Drug
• Bioterrorism and Pandemic Preparedness

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Established in December 1980 by the partners of law firm Foley Hoag, The Foley Hoag Foundation is a private foundation that seeks to combat racism, especially among youth, in the City of Boston. The Foundation awards grants to organizations working to improve the racial climate in Boston by addressing issues of diversity and racism. Grantee organizations achieve their goals through a variety of means, including arts and cultural activities, youth leadership and recreational programs. Other grantees provide advocacy assistance, enabling individuals to confront racism through legal or political action. Some grantee organizations work to prepare young children to live in the reality of a multicultural society, others engage teens, and a few target a primarily adult constituency.

The Foley Hoag Foundation was the first—and remains the only— foundation to focus exclusively on the improvement of race relations in Boston. The trustees are fortunate to have the unqualified endorsement of Foley Hoag, which has provided an enormous amount of financial, administrative and moral support.

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Until now, most small tax-exempt organizations, defined as those with gross receipts of $25,000 or less per year, have not been required to file an annual information return with the Internal Revenue Service (the “IRS”). 

However, small tax-exempt organizations must now file an annual electronic information return – the Form 990-N, also known as the e-Postcard. This requirement covers all tax periods beginning after December 31, 2006. The e-Postcard must be filed no later than the 15th day of the 5th month following the end of the organization’s tax year. For example, an organization whose tax year ends December 31 must submit the e-Postcard by the following May 15.

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The Prescription Drug Marketing Act was enacted in 1988 to establish, among other things, a system for tracking drugs through the manufacturing and marketing processes. implementing regulations regarding these pedigree provisions for prescription drugs have been delayed for years. The Food and Drug Administration has issued it’s own stay on implementation, and a recent lawsuit by prescription drug distributors over the scope of the pedigree requirements has contributed to the delay as well.

The resulting lack of clear of federal criteria for prescription drug pedigrees has created an opportunity for states to pass their own pedigree laws, leading to a patchwork of diverse, often conflicting, state standards. Prescription drug distributors find it increasingly difficult to comply with the multitude of state laws, thus the time is ripe for federal action to create uniform pedigree requirements.

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Health Canada released a draft guidance this week which would allow approval of “subsequent entry biologics” (SEB) based on an abbreviated complement of clinical data, provided the SEB is shown to be “similar” to a reference, approved biologic product.[1] While the U.S. continues to heatedly debate legislation which would create a pathway for abbreviated approval of biosimilars, or follow-on biologics, by the U.S. Food and Drug Administration (FDA), Canada is advancing its implementation of such a pathway with the release of the SEB draft guidance. The European Union has permitted approval of biosimilar products since 2005.

Like FDA guidance documents in the U.S., Health Canada guidance documents do not have the force of law in Canada. However, the draft guidance indicates that the Canadian Food and Drug Regulations will be amended to provide “a comprehensive legal basis” for the regulation of SEBs and that in the interim, the draft guidance will provide a flexible SEB regulatory framework. The Canadian Minister of Health also plans to publish additional guidance documents that will further elaborate information and data requirements for specific classes of SEBs. Public comments on the SEB draft guidance are due April 16. 

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• In Stoneridge, the Supreme Court ruled that businesses may not be sued in private securities fraud lawsuits unless they themselves make deceptive statements or acts directly relied on by investors.

• The Court sought to shield parties in "the realm of ordinary business operations" who do not attempt to "affect securities markets" from the risks and costs associated with private shareholder litigation.

• The SEC and Justice Department may still proceed against businesses that participate in fraudulent schemes or otherwise "aid and abet" fraud.

SUMMARY

Organizations succeeding in today’s global life sciences marketplacework hard to develop and introduce new products andtechnologies. Competitive, regulatory and litigation challengescan arise at any point and Foley Hoag lawyers are ready to guidecompanies in overcoming these obstacles. From initial conceptionto commercial viability, from market success to expansion, weprovide our clients with strategic and practical legal advice.

We are former scientists, engineers, researchers, physicians, andpolitical advisors. We bring a diversity and depth of knowledgeto clients ranging from manufacturers of medical devices andbiotech or pharmaceutical products to leading research institutionsand major industry advocacy organizations. We can help youfocus on your priorities including:

• Protection and Enforcement of Intellectual Property
• Corporate Finance and Partnering Arrangements
• Regulatory and Government Strategies
• Product Liability Defense