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UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
IN RE: BIOPURE SECURITIES
LITIGATION
Civil Action No. 03-12628-NG
JURY TRIAL DEMANDED
[Leave to file granted, Docket # 109]
SECOND CONSOLIDATED AMENDED COMPLAINT
Lead Plaintiff Ronald Erickson and Plaintiffs Stuart Gottlieb, John G. Esposito, Jr.,
and Emily A. Bittman (collectively referred to herein as “Plaintiffs”), through their attorneys,
allege the following upon information and belief, except as to the allegations which pertain
to the Plaintiffs and their counsel, which are alleged upon personal knowledge. Plaintiffs’
information and belief are based, inter alia, on the investigation made by and through his
attorneys and on the publicly available information relating to the investigation by the
Securities and Exchange Commission (“SEC”), including in particular the SEC’s civil fraud
complaint (the “SEC Complaint”) that was filed in this judicial district on September 14,
2005 in Securities and Exchange Commission v. Biopure Corporation, Inc., et als., No. 05CA-11853-PBS (the “SEC Action”). A copy of the SEC Complaint is attached hereto as
Exhibit A and is incorporated herein, in full, by reference.
INTRODUCTION
1.
This is a federal securities class action which is brought by the Plaintiffs
against the Defendants, Biopure Corporation (“Biopure” or the “Company”) and Biopure’s
past or present officers and directors, Thomas A. Moore, Carl W. Rausch, Ronald Richards
and Howard P. Richman, on behalf of a class (the “Class”) consisting of all persons or
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entities who acquired the common stock of Biopure during the period April 9, 2003 through
December 24, 2003, inclusive (the “Class Period”). Plaintiffs seek to recover damages
caused to the Class by Defendants’ violations of Sec. 10(b) of the Securities Exchange Act
of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder. This action is also
brought under Section 20A of the Exchange Act on behalf of all persons who purchased
Biopure common stock contemporaneously with the sales of Biopure’s stock by the
Defendants Biopure and Rausch (the “Sub-Class”) during the Class Period.
2.
Biopure develops, manufactures and markets oxygen therapeutics, for both
human and veterinary use, designed to serve as an alternative to red blood cell
transfusions and for use in the treatment of other critical care conditions. The Company
has developed and manufactures two biologic products: Hemopure – 250 (bovine), or
HBOC-201 – for human use, and Oxyglobin – hemoglobin glutamer – 200 (bovine), or
HBOC-301 – for veterinary use. Oxyglobin is approved for use in the United States for
administration to dogs. Hemopure is not approved for any human use in the United States;
aside from being approved in South Africa for use only in severely anemic surgery patients,
it is not approved for human use in any other country.
3.
On July 31, 2002, Biopure submitted a biologic license application (“BLA”) to
the U.S. Food and Drug Administration (“FDA”) seeking regulatory approval to market
Hemopure in the United States for patients undergoing orthopedic surgery (the “Hemopure
BLA”). In March 2003, Biopure notified the FDA of its intent to perform Phase III clinical
trials of Hemopure on human trauma victims in hospitals.
4.
This action arises as a result of the Defendants’ issuance of and making of
numerous public statements during the Class Period regarding Biopure, Hemopure, the
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Hemopure BLA, and Biopure’s proposed clinical trials for use of Hemopure for trauma
victims (the “Trauma Clinical Trials”).
As detailed herein, those statements by the
Defendants were false or materially misleading because of the omission therefrom, and
because of Defendants’ failure to publicly disclose, communications to Biopure from the
FDA beginning in April 2003, in which the FDA expressed safety concerns about
Hemopure.
5.
The FDA’s safety concerns arose from adverse event data from Biopure’s
Phase III orthopedic surgery trial for Hemopure, which adverse event data had been
submitted by Biopure to the FDA as part of the Hemopure BLA. As a result of these safety
concerns, the FDA placed a clinical hold on the Trauma Clinical Trials on or about April 9,
2003. This action constituted a refusal by the FDA to permit Biopure to conduct its
proposed clinical trials for use of Hemopure for trauma victims.
6.
In or about May 2003, Biopure’s request for the FDA to lift its clinical hold was
denied by the FDA.
7.
On or about July 30, 2003, the FDA transmitted two long, detailed letters to
Biopure conveying still further negative developments with respect to Biopure’s efforts at
gaining regulatory approval of Hemopure.
One letter refused once again to permit
Biopure’s clinical trials to proceed because of “an unreasonable and significant risk of
illness or injury” to human subjects. The other letter constituted FDA’s complete response
letter to the Hemopure BLA (the “Complete Response Letter”).
8.
The Complete Response Letter, attached hereto as Exhibit B, informed
Biopure that the FDA was not approving the Hemopure BLA due to extensive, significant
deficiencies in Biopure’s BLA and due to the FDA’s persistent, unmitigated concerns about
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the lack of safety and efficacy of Hemopure. In the Complete Response Letter, the FDA
posed over 200 questions to Biopure. Transmission of the Complete Response Letter
signified formally that FDA had completed its review of the Hemopure BLA and that Biopure
had a six-month period within which it could resubmit the BLA in a form that addressed all
of FDA’s concerns.
9.
Biopure was never able to address all of the deficiencies, problems, and
concerns set forth by the FDA in the Complete Response Letter. Instead, Biopure shifted
its focus to developing Hemopure for an entirely different application.
10.
The Class Period begins on April 9, 2003, when Biopure first learned of FDA’s
clinical hold on the Trauma Clinical Trials, due to the FDA’s safety concerns about
Hemopure, arising from data submitted with the Hemopure BLA. The Class Period ends
on December 24, 2003, when Biopure issued a Press Release disclosing the clinical hold
and the Defendants’ receipt of Wells Notices from the SEC.
11.
During all of part of the Class Period, the Defendants concealed from
investors the FDA’s clinical hold on Hemopure trials, due to the FDA’s safety concerns
about Hemopure, arising from data submitted with the Hemopure BLA; the FDA’s Complete
Response Letter; and the true extent and nature of the Hemopure BLA’s deficiencies as
outlined by the FDA in the Complete Response Letter. Throughout the Class Period, the
Defendants spoke optimistically about the prospects for FDA approval of the BLA and
falsely and deceptively continued to tout the potential use of Hemopure in the treatment of
trauma victims in multiple securities offerings, public filings, press releases, and conference
calls for investors. Particularly egregious was Biopure’s August 1, 2003 press release,
which, just two days after Biopure received the Complete Response Letter, sought to
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create the false impression that Biopure had received positive news from the FDA
regarding its pending Hemopure BLA. That day, Biopure’s publicly traded stock closed at
seven dollars and thirty cents ($7.30) per share, a twenty-two percent (22%) increase over
its previous day close.
12.
The Class Period ends on December 24, 2003. As detailed below, on that
date, after the close of trading, Biopure issued a press release (the “December 24, 2003
Press Release”) in which it disclosed to the investing public, for the first time, the FDA’s
communication to Biopure, in April 2003, of the FDA’s safety concerns regarding Hemopure
and the FDA’s imposition of a clinical hold barring the Company from conducting the
Trauma Clinical Trials because of those safety concerns.
Significantly, in that
December 24, 2003 Press Release, it was also disclosed that the Defendants Biopure,
Moore and Richman had received a “Wells Notice” from the staff of the SEC which advised
those Defendants that the staff of the SEC had preliminarily determined to recommend to
the SEC that it bring civil proceedings against them, because, during the time period
relevant to this litigation, they had made deceptive statements regarding Biopure,
Hemopure, the Hemopure BLA, and the Trauma Clinical Trials and they had not disclosed
that in April 2003, the FDA had expressed safety concerns about Biopure which led to the
imposition by FDA of a clinical hold on the Trauma Clinical Trials.
13.
As demonstrated herein, the Defendants’ false, misleading and deceptive
public statements regarding Biopure, Hemopure, the Hemopure BLA, and the Trauma
Clinical Trials throughout the Class Period significantly and artificially inflated the price of
Biopure stock throughout the Class Period and caused the Plaintiffs and the members of
the Class to be damaged.
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JURISDICTION AND VENUE
14.
This Court has jurisdiction of this action pursuant to Section 27 of the
Exchange Act (15 U.S.C. §78aa), and 28 U.S.C. §§1331 and 1337.
15.
This action arises under and pursuant to Section 10(b) of the Exchange Act
(15 U.S.C. §78j(b)), Rule 10b-5 promulgated thereunder by the SEC (17 C.F.R.
§240.10b-5) and Section 20A of the Exchange Act (15 U.S.C. §78t-1).
16.
Venue is proper in this District pursuant to Section 27 of the Exchange Act
and 28 U.S.C. §1391(b). Lead Plaintiff resides in this District, Biopure’s principal place of
business is located in this District and most of the acts complained of herein occurred in
this District.
17.
In connection with the acts alleged in this Complaint, Defendants, directly or
indirectly, used the means and instrumentalities of interstate commerce, including, but not
limited to, the mails, interstate telephonic communications and the facilities of the
NASDAQ, a national securities exchange.
PARTIES
18.
Lead Plaintiff Ronald Erickson (“Lead Plaintiff”) resides in Massachusetts.
As detailed in the Certification of the Lead Plaintiff, previously filed in this action (and
incorporated herein by reference), the Lead Plaintiff purchased 75,000 shares of Biopure
common stock during the Class Period. The Lead Plaintiff did not sell any Biopure common
stock during the Class Period.
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19.
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Plaintiff Stuart Gottlieb, as detailed in his Certification previously filed in this
action (and incorporated herein by reference) and as detailed herein, purchased shares of
Biopure common stock contemporaneously with the sales of Biopure stock by defendants
during the Class Period.
20.
Plaintiff John G. Esposito, Jr., as detailed in his Certification, previously filed
in this action (and incorporated herein by reference) and as detailed herein, purchased
shares of Biopure common stock contemporaneously with the sales of Biopure stock by
defendants during the Class Period.
21.
Plaintiff Emily A. Bittman, as detailed in her Certification previously filed in this
action (and incorporated herein by reference) and as detailed herein, purchased shares of
Biopure common stock contemporaneously with the sales of Biopure stock by defendants
during the Class Period.
22.
Defendant Biopure is a Delaware corporation, with its headquarters in
Cambridge, Massachusetts.
23.
The Defendant Thomas A. Moore (“Moore”) was, at all relevant times,
Biopure’s President and Chief Executive Officer, and a director of Biopure.
24.
The Defendant Carl W. Rausch (“Rausch”) was, at all relevant times,
Biopure’s Vice Chairman and Chief Technical Officer, and a director of Biopure.
25.
The Defendant Ronald F. Richards (“Richards”) was, at all relevant times,
Biopure’s Chief Financial Officer and Senior Vice President - Business Development.
26.
The Defendant Howard P. Richman (“Richman”) was, during some of the
relevant time period, Biopure’s Senior Vice President of Regulatory Affairs and Operations.
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27.
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The Defendant Charles A. Sanders (“Sanders”) was, at all relevant times, a
director of and Chairman of the Board of Directors of Biopure.
28.
The Defendant J. Richard Crout (“Crout”) was, at all relevant times, a director
of Biopure. Previously, he was a division chief for the FDA.
29.
The Defendants Moore, Rausch, Richards, Richman, Sanders and Crout are
hereinafter sometimes collectively referred to as the “Individual Defendants.”
30.
The Defendants Biopure, Moore, Rausch, Richards, Richman, Sanders and
Crout are hereinafter sometimes collectively referred to as the “Defendants.”
BACKGROUND
Background Information Regarding the FDA
31.
The FDA is an agency within the United States Department of Health and
Human Services (“HHS”) and is responsible for promoting public health by promptly and
efficiently reviewing drug approval applications and clinical research, by taking appropriate
regulatory action on the marketing of regulated products in a timely manner, and by
ensuring that human drugs and devices are safe and effective.
32.
The Center for Biologics Evaluation and Research (“CBER”) is a center within
the FDA that is charged with regulation of biologics (like Hemopure) intended for human
use. Biologics are products derived from living sources (in the case of Hemopure, from
cows). By contrast, drugs typically are chemically synthesized.
33.
The FDA relies on CBER to issue the licenses it requires of companies which
manufacture biologics for introduction into interstate commerce. The process for obtaining
such a license involves several steps: (1) the manufacturer conducts initial laboratory and
animal testing, which do not require prior FDA approval; (2) the manufacturer submits an
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investigational new drug application (“INDA”) to the FDA seeking permission to conduct
human clinical trials concerning a particular indication; (3) after conducting clinical trials, the
manufacturer submits the BLA to FDA seeking approval of the biologic; and (4) the FDA
reviews the BLA, evaluating the manufacturer’s scientific and clinical data and determining
whether the biologic meets FDA standards.
34.
At all times relevant, the FDA’s performance goals and procedures, which
were adopted in connection with the Prescription Drug User Fee Act of 1992 (“PDUFA”)
provided the FDA with ten months in which to review a BLA, subject only to a 90-day
extension if the BLA applicant submitted a major amendment within the last three months
of the review period. At the expiration of this review period, the FDA must either approve
the biologic product for marketing (if it met the FDA’s approval standards) or issue a
complete response letter which specified the problems with, or deficiencies in, the
application.
35.
Generally speaking, the issuance of a complete response letter is a significant
negative development with respect to the chances of approval for any BLA. The BLA
applicant is able to make a further submission in an effort to address the FDA’s concerns
by answering all questions and addressing all deficiencies set forth in the complete
response letter. However, for all non-minor resubmissions, the PDUFA performance goals
and procedures specify that FDA has an additional six months within which to reply.
Background Information Regarding Biopure
36.
Biopure manufactures only two products.
One is Hemopure, which is
Biopure’s brand name for hemoglobin glutamer - 250 (bovine), an oxygen therapeutic
product that is derived from cow’s blood and that is intended to act as a substitute to red
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blood cells in delivering oxygen to tissues in human beings. The other is Oxyglobin, an
oxygen therapeutic created solely for veterinary use.
37.
To date, the FDA has not approved the use of Hemopure in human beings
for any indication. The only country in the world that has approved Hemopure for use in
human beings is South Africa, which has only approved it for use in extremely anemic
surgery patients.
38.
From Biopure’s perspective, gaining FDA approval of Hemopure is absolutely
crucial to the continued viability of the Company. Since its founding in 1984, Biopure has
devoted substantially all of its resources to the research, development, and manufacturing
of Hemopure. Biopure has never been profitable and had an accumulated deficit of over
$380 million as of October 2002 and over $425 million in October 2003.
39.
The following statements, from Management’s Discussion and Analysis of
Financial Condition and Results of Operations, January 31, 2003, filed by Biopure with the
SEC on March 17, 2003 in its quarterly report on Form 10-Q for the Quarterly Period ended
January 31, 2003 (the “January 2003 10-Q”), summarize Biopure’s history as follows:
Since its founding in 1984, Biopure has been primarily a
research and development company focused on developing
Hemopure, our oxygen therapeutic for human use, and
obtaining regulatory approval in the United States. Our
research and development expenses have been devoted to
basic research, product development, process development,
pre-clinical studies, clinical trials and filing a BLA with the
FDA....
***
Biopure is a leading developer, manufacturer and supplier of
pharmaceuticals called oxygen therapeutics. Using our
patented and proprietary technology, we have developed and
manufacture two products. Hemopure is a first-in-class
product for human use that is approved in South Africa for the
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treatment of acutely anemic surgical patients as an alternative
to red blood cell transfusion. On July 31, 2002, we submitted
a biologic license application (BLA) to the FDA seeking
regulatory approval to market Hemopure in the United States
for a similar indication in patients undergoing orthopedic
surgery....
***
Since inception, we have devoted substantially all of our
resources to our research and development programs and
manufacturing. We have been dependent upon funding from
debt and equity financing, strategic alliances and interest
income. We have not been profitable since inception and had
an accumulated deficit of $392,713,000 as of January 31,
2003. We expect to incur additional operating losses over the
next several years in connection with clinical trials, preparation
of a marketing application for Hemopure in Europe and other
markets and pre-marketing expenditures for Hemopure....
***
The completed Phase III orthopedic surgery trial cost
approximately $37,000,000 over the four years from protocol
development to final report. These trial costs include costs
incurred at nearly 50 hospitals, trial site monitoring, data
management, regulatory consulting, statistical analysis,
medical writing and clinical materials and supplies as well as
Company personnel engaged in these activities. Costs
incurred in filing the BLA include Company personnel and
payments to third parties for manufacturing process
documentation, medical consultants, regulatory consultants,
integrating the safety and efficacy data bases for all clinical
trials and pre-clinical studies. Research and development
expenses continue to include amounts for support of the BLA
review process including responding to FDA inquiries,
preparing for and participating in FDA inspections of facilities
and documentation and preparing for a possible FDA Advisory
Panel presentation....
January 2003 10-Q, at 8, 10 - 11.
Background Information Regarding the Hemopure BLA
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40.
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On July 31, 2002, Biopure submitted the Hemopure BLA to the FDA, seeking
regulatory approval for the use and sale of Hemopure in the United States for anemic
patients undergoing orthopedic surgery. For Hemopure to receive such approval, Biopure
was required to demonstrate to the FDA that clinical trials of Hemopure had established
both its safety and its efficacy. Under the PDUFA goals and procedures, the FDA had until
approximately the end of May 2003 in which to complete its review of the Hemopure BLA
and either issue an approval letter or a complete response letter.
41.
As part of the Hemopure BLA, Biopure submitted to the FDA data from the
Phase III clinical trials which it had conducted for the use of Hemopure for patients
undergoing orthopedic surgery, including adverse event data.
42.
In a letter to Company shareholders dated February 4, 2003, which was
included within Biopure’s fiscal 2002 Annual Report, Defendant Moore discussed Biopure’s
priorities while touting the filing of the Hemopure BLA. Declaring that the Company
“realized a tremendous achievement” by filing the Hemopure BLA, Defendant Moore stated
that Biopure “anticipate[s] that the [FDA] will complete its review of our BLA by mid 2003.”
The letter also sets forth the Company’s “Business Strategy,” which included bullet points
concerning the Hemopure BLA (“[s]uccessfully launch Hemopure under an orthopedic
surgery indication in the United States”) and the Trauma Clinical Trials (“[c]linically develop
Hemopure for trauma, ischemia, and adjunctive cancer therapy indications”). Beneath the
heading “Changing Gears for the Future,” Defendant Moore wrote about Biopure’s
development of Hemopure for use in trauma victims, stating, “Our first clinical priority is to
demonstrate the product’s utility in stabilizing trauma patients in the emergency room and
pre-hospital, or ambulance, setting.”
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In September, 2002, Biopure received a grant from the United States
Department of the Army for the purpose of conducting clinical trials of Hemopure for the
treatment of certain trauma patients. In Biopure’s Annual Report for its fiscal year 2002,
filed with the SEC on Form 10-K on January 29, 2003, the Defendants said: “The
Company has identified trauma as its next clinical development priority and is
working with a committee of independent civilian and military trauma experts to
broaden its trauma program.” (Emphasis added.)
44.
In light of the history and the nature of Biopure’s business, the most critical
and material information about Biopure during the Class Period was the status of the
Hemopure BLA, including all facts which bore on when the FDA would rule on the
Hemopure BLA and the likelihood that the FDA would (or would not) approve the BLA,
thereby approving (or not approving) Biopure’s sale of Hemopure in the United States for
use with orthopedic surgery patients. Accordingly, information regarding the Trauma
Clinical Trials, and particularly the FDA’s views and position that the Trauma Clinical Trials
would not be allowed to go forward due to the FDA’s safety concerns about Hemopure
arising from data submitted with the Hemopure BLA, was highly material information
regarding Biopure throughout the Class Period.
SUBSTANTIVE ALLEGATIONS
FDA Communicates to Biopure on April 9, 2003 that
It Had Imposed A Clinical Hold on Biopure’s Trauma Clinical Trials
45.
On or about March 7, 2003, Biopure submitted an INDA to the FDA seeking
permission to conduct the Trauma Clinical Trials. Biopure supported this submission by
relying upon, and referring to, clinical trial data previously submitted in support of its thenpending Hemopure BLA.
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On or about April 9, 2003, FDA staff members contacted Defendant Richman,
Biopure’s primary contact person with the FDA, by telephone concerning the INDA. They
informed him that FDA was imposing a clinical hold, barring Biopure from initiating any
clinical trials connected with the trauma INDA, due to the “safety concerns” arising from
data related to the BLA clinical trials and based upon “a preliminary assessment of the
BLA.” In particular, the FDA staff members expressly referred to data concerning serious
adverse events that were experienced by BLA clinical trial participants, and stated that “the
trial was on hold for safety and that in FDA’s judgment it is unsafe to put this
product in this patient population at this time.”
47.
Thus, as of April 9, 2003, the FDA had advised Biopure that it had placed
a clinical hold on their proposed clinical trial of Hemopure for the treatment of
trauma patients due to safety concerns arising from the FDA’s review of adverse
event data from the Company’s orthopedic surgery clinical trial, which had been
submitted as part of the Hemopure BLA.
48.
Although not on the April 9, 2003 telephone call with the FDA, Defendant
Moore learned of the clinical hold the next day, April 10, 2003.
49.
These communications in April 2003 from the FDA to the Defendants, were
highly material adverse information about Biopure, which would have significantly affected
the total mix of information available to an investor in Biopure common stock and which any
reasonable investor would have wanted to know in making an investment decision
regarding the Company.
50.
The FDA’s safety concerns, as expressed on April 9, 2003, put Defendants
on notice that FDA approval of the Hemopure BLA, a prerequisite to the first commercial
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distribution of Hemopure in the United States, was in jeopardy and serious doubt and that
the FDA’s decision would, unquestionably, be delayed beyond the time frames previously
communicated by Defendants to the investing public. Nevertheless, over the next nine
months, throughout the Class Period, Defendants intentionally failed to disclose any of
these adverse material facts to the investing public - despite numerous opportunities to do
so in press releases, analyst conferences and conference calls, and SEC filings. Instead,
as detailed below, the Company’s periodic statements during the Class Period regarding
the Hemopure BLA and the Trauma Clinical Trials were false, deceptive, and fraudulent,
and they materially misled investors concerning the status of the Hemopure BLA and the
status of the Trauma Clinical Trials.
Biopure Issued Materially False and Misleading Statements
to Class Members during the Class Period which Failed to Disclose
the Clinical Hold or Its Effect on the Hemopure BLA
51.
Throughout the Class Period, the Defendants repeatedly issued and made
statements to the investing public and to Class Members about Biopure, Hemopure, the
Hemopure BLA, and the Trauma Clinical Trials. These statements were contained in
Biopure’s filings with the SEC; in press releases issued by Biopure (some of which
contained direct statements by the Defendant Moore); and in presentations and telephone
conferences by Moore and other Individual Defendants to securities analysts, investment
advisors and other members of the investing public.
52.
As demonstrated and detailed below, the Defendants’ statements to Class
Members regarding Biopure, Hemopure, the Hemopure BLA, and the Trauma Clinical Trials
were false, deceptive and misleading because of the Defendants’ fraudulent failure to
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disclose the FDA’s safety concerns. Some of the Defendants’ false, deceptive and
misleading statements are detailed below.
Biopure Knowingly and Repeatedly Made False and Deceptive Statements
in Its SEC Filings and Registration Statements which followed
the FDA’s April 9, 2003 Communication to Biopure
of the Clinical Hold on the Trauma Clinical Trials
53.
In numerous SEC filings which followed the April 9, 2003 disclosure to
Biopure of the FDA’s clinical hold, the Defendants, while purporting to disclose risks faced
by Biopure and its shareholders, knowingly and repeatedly made false and deceptive
statements regarding its Phase III Hemopure clinical trial. For example, in the PostEffective Amendment No. 2 to Form S-3 registration statement filed with the SEC on April
11, 2003 (the “April 11, 2003 Registration Statement Amendment”), the Company stated
as follows:
If We Fail to Obtain FDA Approval We Cannot Market
Hemopure in the United States
We will not be able to market Hemopure in the United States
until we receive FDA approval. We have filed an application
for approval with the FDA, and the application was accepted
for review on October 1, 2002. We believe that our
completed pivotal Phase III clinical trials are consistent
with the FDA’s most recent guidance on the design and
efficacy and safety endpoints required for approval of
products such as Hemopure for use in surgical
indications.1 (Emphasis added.)
1
After making that false and misleading statement, the Defendants added this “proviso:”
However, the FDA could change its view, require a change in study design
or require additional data or even further clinical trials, including trials for
indications other than those for which the pending applications seeks
approval, prior to approval of Hemopure. The FDA could refuse to grant a
marketing authorization. Trials are expensive and time-consuming.
Obtaining FDA approval generally takes years and consumes substantial
capital resources with no assurance of ultimate success.
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The statement quoted in the preceding paragraph, from the April 11, 2003
Registration Statement Amendment, including the portion of the quotation in the footnote,
is hereinafter referred to as the “False and Deceptive Statement Regarding ‘If We Fail to
Obtain FDA Approval.’”
55.
The False and Deceptive Statement Regarding ‘If We Fail to Obtain FDA
Approval’ was false, deceptive and misleading in light of the FDA’s safety concerns
regarding Hemopure, which the Defendants failed to disclose to Class Members.
56.
During the Class Period, the Defendants filed several registration statements
with the SEC, in each of which the Defendants repeated the False and Deceptive
Statement Regarding “If We Fail to Obtain FDA Approval,” nearly or fully verbatim, and
each of which contained the specific false statement emphasized in the above quoted False
and Deceptive Statement Regarding “If We Fail to Obtain FDA Approval.”
Those
registration statements were false, deceptive and misleading because of the Defendants’
failure to amend this statement, to disclose the FDA’s safety concerns, and to disclose the
fact that FDA had as of April 9, 2003 communicated to Biopure that those safety concerns
resulted in FDA’s placing a clinical hold on the Trauma Clinical Trials. Those registration
statements filed within the Class Period, all of which were signed by all of the Individual
Defendants (except Richman), included the following:
a.
April 11, 2003 Registration Statement Amendment;
b.
Post-Effective Amendment No. 1 to Form S-3 registration statement filed with
the SEC on April 16 2003;
c.
Form S-3 Registration Statement filed with the SEC on June 19, 2003; and
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Amendment No. 1 to Form S-3 registration statement filed with the SEC on
July 2, 2003.
57.
The April 11, 2003 Registration Statement Amendment also contained the
following misleading and deceptive statements concerning the Company’s Hemopure BLA:
Research and development expenses continue to include
amounts for support of the BLA review process including
responding to FDA inquiries, preparing for and participating in
FDA inspections of facilities and documentation and preparing
for a possible FDA Advisory Panel presentation. These BLA
support costs were $2,232,000 for the first fiscal quarter of
2003 and are expected to continue at approximately the same
level until the middle of this calendar year, when the
Company is hopeful that it will receive action by the FDA
on the BLA.
***
If the FDA were to grant marketing approval for Hemopure
this calendar year, we anticipate that we would have
material revenues from this project in fiscal 2004. We do
not anticipate that we will attain profitability, however, until we
are able to increase our manufacturing capacity. There are
substantial risks and uncertainties relating to whether and
when we will obtain FDA approval for Hemopure... . (Emphasis
added.)
58.
The April 11, 2003 Registration Statement Amendment was signed by
Defendants Richards, Moore, Sanders, Rausch, Crout, and Biopure.
Biopure Begins Raising Money Through Stock Sales to Class Members
Without Disclosing the FDA’s Clinical Hold
59.
On or about April 16 - 17, 2003, after being informed by FDA of the clinical
hold on the Trauma Clinical Trials, Biopure filed with the SEC a Post-Effective Amendment
No. 1 to a Form S-3 Registration Statement that had been filed in March 2003 and Rule
424(b)(3) prospectus supplements (together, the “April 2003 Offering Documents”) for the
sale of up to 1 million shares of common stock and warrants for the purchase of up to
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500,000 shares of common stock. Defendant Moore substantially participated in the
drafting of the April 2003 Offering Documents, which he signed. Defendant Richman
reviewed the disclosures contained therein regarding the status of Biopure’s FDA
submissions, including the Hemopure BLA.
60.
In the April 2003 Offering Documents, Biopure stated, inter alia:
We Cannot Expand Indications for Our Products Unless We
Receive FDA Approval for Each Proposed Indication
The FDA requires a separate approval for each
proposed indication for the use of Hemopure in the United
States. We have applied for an indication for Hemopure that
will only involve its periopoerative use in patients undergoing
orthopedic surgery. Subsequently, we expect to expand
Hemopure’s indications. To do so, we will have to design
additional clinical trials, submit the trial designs to FDA for
review and complete those trials successfully....
***
The Company expects to initiate additional pre-clinical and
clinical trials this year to expand the indications for Hemopure
beyond surgery.
***
We are also developing Hemopure for potential use in trauma
and other medical applications.
61.
Biopure’s April 2003 Offering Documents were false and misleading because
they misled investors about the true status of the Hemopure BLA and the Trauma Clinical
Trials, given the fact that FDA had by that point in time instituted a clinical hold on the
Trauma Clinical Trials. In particular, the April 2003 Offering Documents were false and
misleading to investors in four key respects. First, the April 2003 Offering Documents
falsely stated that Biopure had only applied for an indication involving Hemopure’s
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perioperative use in orthopedic surgery patients, when in actuality Biopure had also sought
permission to conduct the Trauma Clinical Trials. Second, though they discussed the
potential use of Hemopure in trauma victims, the April 2003 Offering Documents failed to
disclose that the FDA had instituted its clinical hold on the Trauma Clinical Trials due to
safety concerns which arose from the FDA’s preliminary assessment of the Hemopure
BLA. Third, the April 2003 Offering Documents disclosed a future “expectation” to expand
Hemopure’s indications and to design and submit additional trials for FDA review at a time
when Biopure had already designed additional clinical trials (the Trauma Clinical Trials),
submitted the trial designs for FDA review, and been notified that FDA instituted a clinical
hold. Fourth, the April 2003 Offering Documents referred to development plans for the
trauma indication without disclosing the clinical hold placed on the Trauma Clinical Trials
due to the FDA’s safety concerns.
62.
On April 24, 2003, Biopure and Moore issued a press release which stated,
inter alia:
CAMBRIDGE, Mass., April 24/PRNewswire-FirstCall/ – Biopure
Corporation (Nasdaq: BPUR) has appointed Ketchum to
provide public relations support and LifeBrands to provide
medical education support for Biopure’s investigational oxygen
therapeutic, Hemopure®...
The U.S. Food and Drug Administration is currently reviewing
Biopure’s biologic license application “BLA” to market
Hemopure in the United States. Ketchum and LifeBrands will
provide communications support for Hemopure and handle
educational activities surrounding the anticipated product
introduction in orthopedic surgery and the clinical development
of other potential indications in trauma, ischemia and cancer.
“We look forward to successful partnerships with Ketchum and
LifeBrands as we prepare to commercialize this first-in-class
product,” said Thomas A. Moore, President and Chief
Executive Officer of Biopure. “Based on our interactions
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with the FDA and the guidelines in the Prescription Drug
Users Fee Act, we’re hopeful the agency will complete its
review of our marketing application mid-year.”
Biopure is seeking FDA approval to market Hemopure for the
treatment of acutely anemic adult patients undergoing
orthopedic surgery, and for the purpose of eliminating or
reducing the need for red blood cell transfusions in these
patients. As part of the BLA review process, the FDA has
completed its inspections of Biopure’s manufacturing and datahandling facilities and has audited its contract research
partners and several clinical sites in the United States and
South Africa. Biopure has responded to all questions raised by
the FDA during the inspections and has resolved all previous
manufacturing documentation issues with the FDA. Hemopure
continues to be manufactured and is available for shipment.
(Emphasis added.)
63.
The April 24, 2003 Press Release was false and misleading due to
Defendants’ failure to disclose in it the FDA’s clinical hold on the Trauma Clinical Trials and
the FDA’s reasons therefore.
FDA Confirms The Clinical Hold in Writing and Informs Biopure of
Serious Safety Concerns Arising from the Pending Hemopure BLA
64.
On or about April 25, 2003, the FDA sent a letter (the “April 25, 2003 FDA
Letter”) to Biopure that was addressed to Defendant Richman, in which it confirmed that
a clinical hold had been placed on the Trauma Clinical Trials sought by Biopure’s INDA
because “subjects would be exposed to an unreasonable and significant risk of injury.” The
April 25, 2003 FDA Letter reiterated that the clinical hold was predicated on safety concerns
which arose from the FDA’s preliminary assessment of the Hemopure BLA. Specifically,
the FDA stated, “[R]esults of a pivotal human trial, used in support of the Hemopure BLA,
and referred to in the IND[A], indicated that use of Hemopure, compared to human blood,
was associated with a higher incidence of life-threatening SAE’s [Serious Adverse Events],
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including death and cardiac arrest.” Defendants Moore and Richman received a copy of
the April 25, 2003 FDA Letter at the latest by April 30, 2003.
Biopure Continues to Raise Money from Stock Sales
Without Disclosing the Clinical Hold or FDA’s Serious Safety Concerns
Arising from the Pending Hemopure BLA
65.
On or about May 6, 2003, Biopure filed with the SEC two documents
(together the “May 2003 Prospectus Supplements”): (1) a Rule 424(b)(3) prospectus
supplement to the April 2003 Offering Documents dated May 2, 2003 and (2) a Rule
424(b)(3) prospectus supplement to the April 2003 Offering Documents dated May 5, 2003.
The May 2003 Prospectus Supplements incorporated by reference certain of Biopure’s
prior public filings (including prior offering documents and periodic reports) and, taken
together, provided for the sale of up to 1,715,687 shares of common stock and warrants
to purchase up to 343,138 shares of common stock. Defendant Moore substantially
participated in the drafting, review, and/or approval of the May 2003 Prospectus
Supplements. Defendant Richman reviewed the disclosures contained therein regarding
the regulatory status of Biopure’s FDA submissions, including the Hemopure BLA.
66.
The May 2003 Prospectus Supplements were false and misleading because
they failed to disclose that FDA had implemented a clinical hold barring the Trauma Clinical
Trials from proceeding due to safety concerns which arose out of FDA’s preliminary
assessment of the Hemopure BLA.
They were further misleading insofar as they
incorporated by reference, rather than amending, the false and misleading statements and
omissions contained in the April 2003 Offering Documents.
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Biopure Unsuccessfully Petitions the FDA to Lift the Clinical Hold
While Continuing to Raise Money from Stock Sales
Without Disclosing the Clinical Hold or FDA’s Serious Safety Concerns
Arising from the Pending Hemopure BLA
67.
On May 12, 2003, in response to the FDA’s clinical hold on the Trauma
Clinical Trials, Biopure made an extensive submission to the FDA requesting that the hold
be lifted. Termed a “complete response” to the FDA’s April 25, 2003 FDA Letter, the
submission was signed by Defendant Richman, who, along with Defendant Moore,
participated in its drafting and review.
68.
On or about May 14, 2003, Biopure filed a Form 8-K with the SEC (“May 2003
Form 8-K”), which Defendant Moore reviewed and approved before filing. It attached as
an exhibit a Standby Equity Distribution Agreement dated April 16, 2003 between Biopure
and BNY Capital Markets, Inc. (“BNYCMI”), under which Biopure could issue and sell up
to $10 million of class A common stock periodically through BNYCMI, as Biopure’s
exclusive agent for the offer and sale of the shares. The May 2003 Form 8-K disclosed
certain of the agreement’s terms, including Biopure’s representation and warranty that the
Company’s registration statements and prospectuses:
...conformed and will conform in all material respects to the
requirements of the Exchange Act and the rules and
regulations of the [Securities and Exchange] Commission
promulgated thereunder, and none of such documents
contained or will contain at such time an untrue statement of a
material fact or omitted or will omit to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
69.
The May 14, 2003 May 2003 Form 8-K was false and misleading because,
as discussed herein, both the April 2003 Offering Documents and the May 2003 Prospectus
Supplements contained untrue statements of material fact and/or omitted to state material
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facts necessary to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
70.
On May 22, 2003, Biopure issued a press release announcing its Q2 results
for fiscal 2003 (“May 22, 2003 Press Release”) and included the text of the release in a
Form 8-K filed with the SEC (“May 2003 Form 8-K”). Defendants Moore and Richman each
substantially participated in the drafting, review, and/or approval of the May 22, 2003 Press
Release.
71.
The May 22, 2003 Press Release contained a section entitled “Recent
Corporate Events” which listed, inter alia, a statement referring to the Trauma Clinical Trials
(“Biopure is preparing for a Phase 2a in-hospital trauma trial.”). This was misleading
because Biopure omitted to state that the FDA had instituted a clinical hold on the Trauma
Clinical Trials due to safety concerns that arose from its preliminary assessment of the
Hemopure BLA.
In addition, the May 22, 2003 Press Release made the following
misleading and deceptive statements regarding the Hemopure BLA and the Trauma
Clinical Trials:
Based upon FDA performance goals and guidelines in the
Prescription Drug User Fee Act (PUDFA), Biopure is hopeful
that in mid 2003 the FDA will complete its review and act
on Biopure’s biologic license application (BLA) to market
Hemopure in the United States for the treatment of acutely
anemic adult patients undergoing orthopedic surgery. As
part of this review, the agency has inspected the company’s
manufacturing and data-handling facilities and has audited its
contract research partners and several clinical sites in the
United States and South Africa. Biopure has responded to
all questions raised by the FDA to date. (Emphasis added).
The U.S. Army has notified Biopure that the company will
receive approximately $4 million in FY03 Congressional
funding, in addition to a $908,900 grant previously awarded in
FY02 [footnote omitted], designated to fund trauma trials of
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Hemopure in emergency rooms and ambulances. In addition,
in March 2003 Biopure and the Naval Medical Research
Center (NMRC) signed a collaborative research and
development agreement (CRADA) to help fund and conduct a
pivotal trauma trial of Hemopure. Participation in this
collaborative effort is estimated to cost the NMRC at least $4
million. Biopure will contribute an estimated $8.7 million, of
which at least $643,000 will be provided during the first year.
Biopure is preparing for a Phase IIa in-hospital trauma trial,
and the study protocols for Phase Iib/pivotal pre-hospital trial
are currently under scientific review by the NMRC.
72.
On May 22, 2003, the Defendants Biopure, Moore, Richards and Richman
participated in a telephonic conference call for analysts and institutional investors (the “May
22, 2003 Investor Call”). As described below, a live audio webcast of the conference call
was available to all members of the investing public. A copy of the transcript of that
conference call, prepared by CCBN StreetEvents, for Biopure, is attached hereto as Exhibit
C, and incorporated herein by reference.
73.
During the May 22, 2003 Investor Call, the Defendants made statements and
answered questions from public participants, about Biopure, the Hemopure BLA and the
Trauma Clinical Trials, which were false, deceptive and misleading. For example, the
Defendant Moore made the following false, deceptive and misleading statements during
the May 22 Conference Call:
a. “...we continue to be very hopeful of an [FDA] response on
our [biologic] license application by mid-year or sooner, and we
continue to not be aware of any major issues with that
application at this time....”
b. “On FDA I’ll just reiterate, I guess, at our last quarter we ...
had answered all FDA questions and we were unaware of
any major issues. Fundamentally we’re in the same place
now.”
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c. “We continue to say we are not aware of anything that
would cause undue delay [in receiving a response from the
FDA to the Hemopure BLA]...”
d. “Our aim will be to have the product, again, assuming
we get approved, on or about June 1st to the end business
[sic] and moving product no later than October 1st.”
e. “Parkman Hospital is going to be our initial clinical
center to conduct the already announced in-hospital
trauma trials that will set us up for the subsequent preHospital trials to establish an additional trauma indication for
Hemopure.”
(Exhibit C at 1 and 2, emphasis added).
74.
The May 22, 2003 Investor Call was false and misleading because
Defendants Moore and Richman misrepresented the true information that Biopure had
received from the FDA in several ways. First, the statement that “we continue to not be
aware of any major issues with that application at this time” was false and misleading
because the FDA had already informed Biopure about serious safety concerns from the
clinical trial information submitted in support of the Hemopure BLA, which had resulted in
the FDA’s imposing a clinical hold on the Trauma Clinical Trials. Second, the reference to
Parkman Hospital as being Biopure’s “initial clinical center to conduct the already
announced in-hospital trauma trials” was misleading because it failed to disclose that the
FDA’s clinical hold barred those trials from taking place. Third, it was misleading to tout the
potential for using Hemopure in trauma victims at all because doing so failed to disclose
that FDA had instituted a clinical hold based upon safety concerns which arose based on
FDA’s preliminary assessment of the Hemopure BLA.
75.
Those statements were made directly by the Defendants Moore, Richman,
and Biopure, but they also constituted statements by Defendant Richards, in light of the fact
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that, while participating in the May 22, 2003 Investor Call, he acquiesced in and did not, in
any way, correct those statements which he knew to be false, deceptive and misleading.
76.
All of the statements made by the Defendants during the May 22, 2003
Investor Call were available to all members of the investing public. Specifically, as stated
in the May 23, 2003 Press Release:
Biopure President and CEO Thomas A. Moore will host a
conference call at 4:30 p.m. EDT on Thursday, May 22, 2003,
to briefly review the company’s activities and financial position.
The dial-in numbers for analysts and institutional investors are
1-800-387-5428 (US/Canada) and 1-706-634-1328
(International).
A live webcast of the conference call will be available from the
investors section of Biopure’s web site at www.biopure.com
and will be archived for 30 days. The webcast can also be
heard by individual investors at www.companyboardroom.com
and by institutional investors who subscribe to StreetEvents at
www.streetevents.com. An audio replay of the conference call
will be available from approximately 7:30 p.m. EDT, May 22,
2003, until midnight May 30, 2003. To access the replay, dial
1-800-642-1687 (US/Canada) or 1-706-645-9291
(International/Local) and Reference Conference ID number
438897.
Biopure’s Submission Fails to Persuade the FDA to Lift the
Clinical Hold on the Trauma Clinical Trials
77.
On or about May 30, 2003, the FDA sent two letters to Biopure (“May 30,
2003 FDA Letters”), addressed to Defendant Richman, in response to Biopure’s May 12,
2003 request that the clinical hold on the Trauma Clinical Trials be lifted. In one letter, the
FDA stated that Biopure’s request contained serious inconsistencies and failed to address
any of FDA’s safety concerns which prompted the clinical hold. Also, the FDA informed
Biopure that, with respect to Hemopure, its “conclusions about product safety
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remain unchanged.” Further, the FDA required Biopure to conduct “at least three
additional studies in conscious swine” to address particular concerns before any human
testing could occur. In the other letter, the FDA told Biopure that it was extending the
deadline to complete its review of the Hemopure BLA for 90 days - until August 29, 2003 because Biopure’s May 12, 2003 request to lift the clinical hold contained significant new
analyses of the Hemopure clinical data and therefore constituted a “major amendment” to
the Hemopure BLA.
78.
Defendants Moore and Richman received copies of both of the May 30, 2003
FDA Letters on our about May 30, 2003.
Biopure Disseminated False Reasons for the FDA’s 90-Day Extension, which It
Misleadingly Characterizes as Positive News for the Hemopure BLA
79.
On May 30, 2003, after receiving both of the May 30, 2003 FDA Letters,
Biopure issued a press release (the “May 30, 2003 Press Release”) announcing that the
FDA had notified Biopure that it had extended the time for it to act on the Hemopure BLA
for an additional 90 days, until August 29, 2003.
Defendants Moore and Richman
substantially participated in the drafting, review and approval of the May 30, 2003 Press
Release. In it, Biopure explained the FDA’s action as follows:
Biopure submitted its BLA on July 31, 2002. Under FDA
performance goals in the Prescription Drug User Fee Act
(PDUFA III), the agency has up to 10 months from the
submission date to review and act on the BLA, making the
original action due date June 1, 2003. As part of the normal
review process, Biopure has responded to FDA questions
regarding the application. The agency has classified the latest
responses submitted in mid-May 2003 as additional analyses
of previously submitted data, which under FDA standard
operating procedures automatically provides the agency up to
three months beyond the original action due date to review the
data. This type of action is not unusual–the last 11 standard
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BLAs accepted for review by the FDA have undergone a 13month review.
80.
In the May 30, 2003 Press Release, the Defendant Moore made the following
statement regarding the FDA’s action:
“We’re very pleased with the FDA’s progress in reviewing our
application,” said Biopure President and CEO Thomas A.
Moore. “We continue to work closely with the agency toward
a final decision that will allow us to make Hemopure available
as an alternative to red blood cell transfusion. We’re also
continuing our preparations to roll out the product to leading
orthopedic surgery centers following approval.”
81.
The May 30, 2003 Press Release was false and misleading in several ways
about the true information that Biopure had received from the FDA. First, it falsely stated
that Biopure had responded to the FDA regarding the Hemopure BLA, when in actuality the
Company had responded to questions about the trauma INDA and the clinical hold, which
it had still not disclosed. Second, it falsely stated that Biopure’s submission was “part of
the normal review process” of the Hemopure BLA and constituted Biopure’s “latest
responses” to FDA questions about the Hemopure BLA when in actuality the submission
was the Company’s “complete response” to the April 25, 2003 FDA Letter and was
submitted for the sole purpose of trying to persuade the FDA to lift the clinical hold. Third,
the May 30, 2003 Press Release failed to disclose, inter alia, that the FDA had placed the
trauma INDA on clinical hold due to safety concerns over the data submitted in support of
the Hemopure BLA, that the 90-day extension imposed by FDA was the result of Biopure’s
request to lift the clinical hold, and that the FDA had refused to lift the clinical hold even
after the Company had made a substantial submission to FDA requesting that the hold be
lifted.
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82.
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In the May 30, 2003 Press Release, Biopure also announced that it would
hold a conference call on May 30, 2003 at 3 pm ET, at which it “will discuss the regulatory
status of Hemopure...” (hereinafter, the “May 30, 2003 Investor Call”). Like the May 22,
2003 Investor Call, analysts and institutional investors could participate and all members
of the investing public could hear the call live and access it thereafter for a period of time.
A copy of the transcript of the May 30 Conference Call, entitled Biopure Corporation
Conference Call to Discuss the Regulatory Status of Hemopure, prepared by CCBN
StreetEvents, for Biopure, is attached hereto as Exhibit D, and incorporated herein by
reference.
83.
The Defendants Moore, Richman and Richards participated in the May 30,
2003 Investor Call on behalf of Biopure. Defendant Moore made the following false,
deceptive, and misleading statements which were intended to falsely characterize the 90day extension imposed by the FDA as a positive development:
We view this notification [of the 90-day extension] as a very
positive development for Hemopure. First of all, we have a
date which the agency has indicated their intent to give us an
action letter. Second, it confirms what we already knew, that
is, that the agency has devoted considerable effort to this
application. And third, as we also already knew, that now our
investor community knows, there is nothing in our application
which is warranted a denial of that application at the three key
decision points we’ve passed so far in the PDUFA process. By
that, I mean our BLA was accepted, it was also continued
through the mid-cycle review conducted by the agency, and
now, at the PDUFA guideline date for a first response, we’ve
not had a denial, but rather a going forward to additional
consideration. The added time we’re going to get over the next
three months will not only allow us to insure we can fully
answer additional questions the FDA might choose to send our
way, but also allow us to complete legal negotiations and to
continue forward with the commercial preparations we are
making against a hopeful approval on August 29th for the
name of introducing this product on or about the October
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introductory guideline we mentioned in our conference call last
week. So we feel very positive about this....
(Exhibit D at 1-2).
84.
As reflected in the transcript, the analysts participating in the May 30, 2003
Investor Call expressed concern about the fact that the FDA had extended the time for it
to act on the Hemopure BLA for an additional 90 days, until August 29, 2003. They asked
pointed questions regarding the reasons for that delay by the FDA, to which the Defendants
gave false, deceptive and misleading responses. Some of that colloquy was as follows:
Sapna Srivastava - Think Equity - Analyst
[D]id the FDA request any additional data to be submitted, or
why do you think that basically the FDA extended the time line
for the review process?
Thomas A. Moore – Biopure - CEO and President
The FDA did not request any additional data. . . .
Howard P. Richman - Biopure - SVP Regulatory Affairs &
Operations
. . . This is what normally happens with any submission. As
Tom has told the public over the past many months, is that we
are in continued dialogue with the agency and during that
period of time, they have requested information which we have
sent back to them. It’s a normal process with any application.
Be that as it may, the agency, during the course of reviewing
the information has the opportunity to take additional time to
allow them to give a complete and additional thorough review
of all information to make a thorough conclusion on application.
This type of response from the FDA is very common with
biologic licensing applications. ...
***
Richard Adams - Bennett Lawrence - Analyst
...why are you still having to provide information to the FDA?
You said mid-May there was a resubmission of some sort.
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Why nine and a half months after the original BLA was
submitted are you still having to provide information?
Thomas A. Moore – Biopure - CEO and President
...This mid-May submission was some additional analysis
which we provided on data that was already in the BLA. At the
time, we didn’t consider it a major amendment to the BLA but
the FDA looked at that as a reason to extend it...
Howard P. Richman - Biopure - SVP Regulatory Affairs &
Operations
. . . Just as a point of clarification this is a normal occurrence.
I’ve been lucky to be involved with 12 other approval processes
outside of Biopure and this is a normal thing that happens.
We’re, in fact, in constant contact with the agency when they’re
requesting information in real time. So this is not anything new
that can happen. And what we have done is supply responses
back to their continual questions to allow them, again, as I
mentioned earlier, to give complete and thorough response to
this first in class application.
Richard Adams – Bennet Lawrence - Analyst
...but it would seem that for there to be some sort of
submission that would extend the PDUFA date another two
months, it would have to be something material. And I guess
I’m just surprised that nothing was disclosed in mid-May when
this additional submission was made.
Thomas A. Moore – Biopure - CEO and President
To be clear, we were simply responding to a new set of
questions from FDA. It did not involve any new data. And so
frankly, it was well within the range of other questions we’ve
answered in the past. When we made that response, we didn’t
characterize it as a major amendment to the BLA...
***
Gabe Hoffman - Occipital Capital - Analyst
...Could you please be a little more specific in terms of – the
company has submitted additional analyses of previously
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submitted data. Could you be a little more specific as to what
elements of the clinical data that that refers to?
Thomas A. Moore – Biopure - CEO and President
I can’t be a lot more specific.
Gabe Hoffman – Occipital Capital - Analyst
I mean, is it safety, is it statistical procedure, is it some
auditing of patient records? I mean, could you just be
somewhat more specific?
Thomas A. Moore – Biopure - CEO and President
Well, all patient records have been audited and so all that’s
been done, so that’s not at issue as far as I know anyway.
Gabe Hoffman – Occipital Capital - Analyst
Or merely is it formatting or you know?
Thomas A. Moore – Biopure - CEO and President
It’s actually – it was a dialogue really about how to look at the
clinical data. As you know, there are various analyses used to
look at our efficacy and safety data and we just had a dialogue
about the different ways you could look at the analyses that are
performed on the data. And that’s really as far as I want to
characterize it.
Gabe Hoffman - Occipital Capital - Analyst
But could you just give us maybe a broader ballpark sense as
to – you know, just a broad area that it is – is there a specific
area that it’s in that’s a broad area that maybe you could
characterize it? That’s more specific than just it’s the clinical
data?
Thomas A. Moore – Biopure - CEO and President
Well, I mean, all the clinical data has to do with safety and
efficacy. That’s the only thing in measure in these clinicals.
And so, the dialogue is over those clinical and safety and
efficacy data. And again, we have answered some questions
on a pretty broad basis. When I talk about it as how to look at
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the clinical analysis, it’s exactly what it was. So I think that’s as
far and as specific as I really want to be at this point.
***
Roberto McNuln - Bridger Capital - Analyst
To get some more information about the additional data asked
for – given your assessment that the questions asked were
very broad, I’m still unclear as to why then at this late in the
date it would require a three month delay. I would understand
if the questions were very detailed that the FDA would ask for
– would take that additional time. But your assessment of the
questions being very broad makes me want to get some more
detail about that.
Thomas A. Moore – Biopure - CEO and President
...the FDA chose to look at this as a major amendment to the
BLA...if we submit new information about any aspect of the
product or new analysis about any aspect of the product,
whether it’s pivotal to their decision or not, they can decide that
that’s a reason to go for the extension. So I’m not sure
whether or not the data we submitted, we did not submit any
new data, whether that was a reason for the extension of
whether the echo simply needed an extension, period.
(Exhibit D at 2-5 and 7).
85.
The May 30, 2003 Investor Call, including those statements, was false,
deceptive and misleading in light of the FDA’s safety concerns, the clinical hold imposed
on the Trauma Clinical Trials after a preliminary assessment of the Hemopure BLA, and
the impact of both on the Hemopure BLA - all of which the Defendants failed to disclose.
Further, Defendants falsely optimistically characterized the 90-day extension as part of a
normal, ongoing dialogue with FDA about the Hemopure BLA when in actuality it was
necessitated by Biopure’s submission seeking to address the FDA’s safety concerns and
lift the clinical hold. Those statements were made directly by the Defendants Moore,
Richman, and Biopure, and they also constituted statements by Defendant Richards, in
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light of the fact that, while participating in the May 30, 2003 Investor Call, he acquiesced
in and did not, in any way, correct those statements which he knew to be false, deceptive
and misleading.
Biopure Continues to Conceal the Clinical Hold from the Public
in Periodic Reports and Offering Documents Filed with the SEC
86.
On or about June 16, 2003, Biopure filed its quarterly report on Form 10-Q
with the SEC for the quarter end April 30, 2003 (the “April 2003 10-Q”). Defendant Moore
substantially participated in the drafting, review and/or approval of the non-financial
reporting sections, and Defendant Richman reviewed disclosures regarding the regulatory
status of Biopure’s submissions to the FDA. The April 2003 10-Q contained the False and
Deceptive Statement Regarding “If We Fail to Obtain FDA Approval” and the following false
and deceptive statement:
If the FDA grants marketing approval for Hemopure this
calendar year, we anticipate that we would have material
revenues from this project in fiscal 2004. We do not
anticipate that we will attain profitability, however, until we are
able to increase our manufacturing capacity. There are
substantial risks and uncertainties relating to whether and
when we will obtain FDA approval for Hemopure... . (Emphasis
added.)
April 2003 10-Q, at 16.
87.
The April 2003 10-Q was signed by the Defendant Richards. Furthermore,
as required by SEC Rules 13a-14(a) and (b) and 15d-14(a) and (b), promulgated pursuant
to the Exchange Act, the April 2003 10-Q contained certifications by the Defendant Moore,
as the Chief Executive Officer of Biopure and the Defendant Richards, as the Chief
Financial Officer of Biopure, in which they each certified:
1.
I have reviewed this quarterly report on Form 10-Q of
Biopure Corporation;
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and in which they then falsely certified:
2.
Based on my knowledge, this quarterly report does
not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the
statements made, in light of the circumstances
under which such statements were made, not
misleading with respect to the period covered by this
quarterly report; [emphasis added]
Id., at 35 - 36.
88.
The Defendants Moore and Richards also certified that Biopure and they had
designed “disclosure controls and procedures” which would have ensured that they would
have learned of any FDA safety concerns, so they could have been timely and properly
disclosed to the investing public in the April 2003 10-Q. Specifically, Moore and Richards
certified that:
4.
The registrant’s other certifying officers and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act
Rules 13a - 14 and 15d -14)2 for the registrant and we
have:
a) designed such disclosure controls and
procedures to ensure that material information
relating to the registrant, including its
consolidated subsidiaries, is made known to us
by others within those entities, particularly during
2
Exchange Act Rules 13a - 14(c) and 15d -14(c) define “disclosure controls and
procedures” as follows:
...controls and other procedures of an issuer that are designed to ensure
that information required to be disclosed by the issuer in the reports that it
files or submits under the Act is recorded, processed, summarized and
reported, within the time periods specified in the Commission’s rules and
forms. Disclosure controls and procedures include, without limitation,
controls and procedures designed to ensure that information required
to be disclosed by an issuer in the reports that it files or submits under
the Act is accumulated and communicated to the issuer’s
management, including its principal executive officer or officers and
principal financial officer or officers... (Emphasis added.)
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the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant’s
disclosure controls and procedures as of a date
within 90 days prior to the filing date of this
quarterly report (the “Evaluation Date”); and
c) presented in this quarterly report our
conclusions about the effectiveness of the
disclosure controls and procedures based on our
evaluation as of the Evaluation Date...
Id., at 35-36.
89.
The “conclusions about the effectiveness of the disclosure controls and
procedures” referenced in the above quoted certification by Moore and Richards, set forth
in the April 2003 10-Q, were as follows:
(a) Under the supervision and with the participation of our
management, including our Chief Executive Officer and Chief
Financial Officer, we conducted an evaluation of the
effectiveness of the design and operation of our disclosure
controls and procedures (as defined in Rules 13a-14(c) and
15d-14(c) under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”)) within 90 days of the filing date
of this Quarterly Report on Form 10-Q (the “Evaluation Date”).
Based on this evaluation, our Chief Executive Officer and Chief
Financial Officer concluded as of the Evaluation Date that our
disclosure controls and procedures were effective to ensure
that information required to be disclosed by us in our Exchange
Act reports is recorded, processed, summarized and reported
within the time periods specified in Securities and Exchange
Commission rules and forms.
Id., at 22.
90.
On or about June 19, 2003, Biopure filed a Form S-3 registration statement
and prospectus and on or about July 2, 2003, Biopure filed a Pre-effective Amendment No.
1 for Form S-3 registration statement and prospectus with the SEC for the sale of common
stock and warrants for the purchase of common stock (together, the “Summer 2003
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Registration”). On or about July 3, 2003, Biopure filed a Rule 424(b)(3) prospectus with the
SEC for the sale of common stock and warrants for the purchase of common stock (“July
2003 Prospectus”).
Defendant Moore signed the Summer 2003 Registration and
substantially participated in the drafting, review and approval of both it and the July 2003
Prospectus. Defendant Richman reviewed the disclosures concerning the regulatory status
of the Company’s FDA submissions.
91.
The April 2003 10-Q, the Summer 2003 Registration, and the July 2003
Prospectus were all false and misleading with respect to the true status of Biopure’s
Trauma Clinical Trials. These documents failed to disclose the FDA clinical hold which
barred Biopure from conducting the Trauma Clinical Trials due to safety concerns identified
after a preliminary assessment of the Hemopure BLA. They were misleading in stating that
the “only” application applied for was an indication involving Hemopure’s perioperative use
in orthopedic surgery when in actuality Biopure had also applied for permission to conduct
the Trauma Clinical Trials. They were also misleading by discussing a future “expectation”
to expand Hemopure’s indications and to design additional trials and to submit them to FDA
for review when in actuality Biopure had already designed additional trials (the Trauma
Clinical Trials), submitted their designs to FDA, and received a clinical hold due to safety
concerns.
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Biopure Unsuccessfully Petitions the FDA Again to Lift the Clinical Hold on
the Trauma Clinical Trials While Continuing to Raise Money from Stock Sales
Without Disclosing the Clinical Hold or FDA’s Serious Safety Concerns
Arising from the Pending Hemopure BLA
92.
On or about July 2, 2003, Biopure made a submission to the FDA, in
response to the May 30, 2003 FDA Letters, in yet another attempt at having the clinical
hold lifted. Defendant Richman prepared and signed this submission at the direction of
Defendant Moore, who reviewed it before it was sent to the FDA.
93.
On or about July 17, 2003, Biopure filed a Form 8-K with the SEC (“July 2003
Form 8-K”), which was reviewed and approved by Defendant Moore prior to filing. The July
2003 Form 8-K attached as an exhibit a “Placement Agency Agreement,” dated July 17,
2003, between Biopure and ThinkEquity Partners, LLC (“TEP”), pursuant to which TEP was
to act as exclusive placement agent for the Company in its sale of up to $17.22 million of
class A common stock. Among the terms of the agreement with TEP that were disclosed
in the July 2003 Form 8-K was Biopure’s representation and warranty that its registration
statements and prospectuses:
...conformed and will conform in all material respects to the
requirements of the Exchange Act and the rules and
regulations of the [Securities and Exchange] Commission
promulgated thereunder, and none of such documents
contained or will contain at such time an untrue statement of a
material fact or omitted or will omit to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
94.
The July 2003 Form 8-K was false and misleading because, inter alia,
Biopure’s prior SEC filings themselves contained untrue statements of material fact or
omitted to state material facts necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
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95.
Document 110-1
Filed 03/28/2006
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On or about July 18, 2003, Biopure filed a Rule 424(b)(5) prospectus
supplement to the July 2003 Prospectus for the sale of up to 3,083,000 common stock
shares to institutional investors (the “July 2003 Offering Document”). It incorporated by
reference certain of the Company’s prior public filings, including offering documents and
periodic reports. Defendant Moore substantially participated in the drafting, review, and/or
approval of the July 2003 Offering Document. Defendant Richman reviewed disclosures
concerning the regulatory status of Biopure’s FDA submissions.
96.
The July 2003 Offering Document was false and misleading because, inter
alia, it failed to disclose the FDA’s clinical hold on the Trauma Clinical Trials due to safety
concerns that had arisen during the preliminary review of the Hemopure BLA and because
it incorporated by reference prior filings (discussed herein) which likewise contained false
statements and omissions.
97.
On July 23, 2003, Biopure issued a press release announcing that it had
raised $17.2 million in gross proceeds through the sale of 3,083,000 shares of its common
stock at $5.58 per share.
The FDA Refuses to Approve Hemopure, Issues Biopure a Complete Response
Letter to the Hemopure BLA, and Refuses to Lift the Clinical Hold
on the Trauma Clinical Trials
98.
On July 30, 2003, Biopure received two highly significant letters from the
FDA. One was a letter once again refusing to lift the clinical hold on the Trauma Clinical
Trials (the “July 30, 2003 Trauma Clinical Trials Letter”). It was received by Defendants
Moore and Richman on or about July 30, 2003 and about which Biopure’s General Counsel
was made aware no later than July 31, 2003. The other was FDA’s Complete Response
Letter (the “Complete Response Letter”), Exhibit B hereto, in which FDA informed Biopure
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that its Hemopure BLA was not approved due to the FDA’s safety concerns about
Hemopure arising from data submitted with the Hemopure BLA. Defendants Moore and
Richman and Biopure’s General Counsel all received copies of the Complete Response
Letter on or about July 30, 2003.
99.
From July 30, 2003 until December 11, 2003, Defendants continued to
mislead investors through numerous public filings, press releases, and statements, by
failing to disclose Biopure’s receipt of the FDA’s Complete Response Letter (despite the
fact that FDA staff and Biopure’s own outside regulatory counsel repeatedly and
consistently identified the letter to Defendants as being a “complete response letter”), by
misrepresenting the nature and extent of the deficiencies in the Hemopure BLA raised by
the FDA, and by failing to disclose the continued existence of the FDA’s clinical hold on the
Trauma Clinical Trials, as well as FDA’s refusal to lift the hold despite repeated requests
by Biopure that it do so.
100.
The Complete Response Letter’s opening sentences set forth the FDA’s
unambiguous rejection of the Hemopure BLA, stating:
The Center for Biologics Evaluation and Research (CBER) has
completed the review of all submissions made relating to your
Biologics License Application. Our review finds that the
information and data submitted are inadequate for final
approval action at this time because on the deficiencies
outlined below.
Exhibit B at 1 (emphasis added).
101.
The Complete Response letter also summarized the numerous deficiencies
which the FDA found in Biopure’s Hemopure BLA - a process which took the FDA 34
single-spaced pages to accomplish. See Exhibit B. Altogether, the Complete Response
Letter contained over 220 individual deficiencies and questions concerning Biopure’s
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clinical trials and data submitted in support of the Hemopure BLA and concerning the safety
and efficacy of Hemopure. Id.
102.
The most significant deficiencies and questions raised in the FDA’s Complete
Response Letter concerned the conduct of Biopure’s clinical trials and the integrity of the
data, in particular the following: (1) whether adequate controls had been used to ensure
that the data underlying Biopure’s Hemopure BLA was sufficiently accurate and reliable to
form the basis for conclusions by the FDA about Hemopure’s safety and efficacy, and (2)
why Biopure had failed to perform certain analyses that the FDA had expected and
recommended be performed. In addition, the FDA expressly reserved the right to reevaluate Hemopure’s safety and efficacy pending the resolution, if any, of the data integrity
issues it brought to Biopure’s attention in the Complete Response Letter.
103.
The Complete Response Letter also stated that the review clock regarding
Hemopure was suspended as of its issuance. In essence, the FDA informed Biopure via
the Complete Response Letter that it was taking no further action on the Hemopure BLA
unless and until Biopure could resolve to its satisfaction all of the 220 deficiencies that FDA
raised concerning the Hemopure BLA.
104.
In the July 30, 2003 Trauma Clinical Trials Letter, the FDA once again refused
to lift the clinical hold it had placed on the Trauma Clinical Trials because, in the FDA’s
words, “human subjects are or would be exposed to an unreasonable and significant
risk of illness or injury.” In support of that conclusion, the FDA cited many of the same
deficiencies, questions, and concerns raised in the Complete Response Letter regarding
the Hemopure BLA, the adequacy of controls concerning Biopure’s prior Hemopure clinical
trials and the analysis of the resulting data, and the safety of Hemopure.
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105.
Document 110-1
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The importance of Biopure’s receipt, on July 30, 2003, of the Complete
Response Letter and the July 30, 2003 Trauma Clinical Trials Letter cannot be overstated.
The letters were lengthy, detailed, and together spelled out an insurmountable array of
deficiencies in the Hemopure BLA which essentially signaled the death knell for Biopure’s
chances of ever gaining FDA approval for Hemopure.
This defeat was especially
pronounced given that as of July 30, 2003, Biopure had made two substantial submissions
to the FDA requesting that it lift the clinical hold on the Trauma Clinical Trials, each of which
failed to adequately address the FDA’s safety concerns.
106.
On or about the morning of July 31, 2003, Defendant Richman telephoned
an FDA staff member working on the Hemopure BLA and the INDA for the Trauma Clinical
Trials to discuss what steps Biopure should take following receipt of the Complete
Response Letter. That staff member identified the letter as in fact being a “complete
response letter” and told Defendant Richman that Biopure could, within 10 days of its
receipt, take one of four possible actions: (1) amend the Hemopure BLA, (2) notify the FDA
of its intent to amend the Hemopure BLA, (3) withdraw the Hemopure BLA, or (4) request
a hearing. Defendant Richman asked whether Biopure could take 30 days to respond to
the Complete Response letter, since it had been issued 30 days before its due date. The
FDA staff member responded by saying that the Complete Response Letter stopped the
review clock, no further FDA review would occur until Biopure responded to all 220
deficiencies outlined in the Complete Response Letter, that a partial response would not
be considered, and that once FDA received Biopure’s response to the Complete Response
Letter, the FDA would have a new review cycle of six months to review it.
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107.
Document 110-1
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On or about July 31, 2003, Biopure, through its General Counsel, contacted
outside legal counsel specializing in FDA regulatory matters to discuss the Complete
Response Letter and a press release Biopure intended to issue. The draft press release
stated that Biopure had received correspondence from the FDA, but did not identify it as
being a “complete response letter.” Outside counsel orally advised Biopure’s General
Counsel that he “didn’t have time to read letter but looked like complete response [sic],”
that the draft press release looked “unduly optimistic,” and that issuance of the Complete
Response Letter “30 days early in this context while true isn’t great cause optimism [sic].”
Biopure’s General Counsel informed Defendants Moore and Richman of the substance of
these comments by outside counsel.
Biopure Misleads the Public About the FDA’s Complete Response Letter
and the July 30, 2003 Trauma Clinical Trials Letter
108.
On August 1, 2003, Biopure issued a press release (the “August 1, 2003
Press Release”) in which it disclosed that the FDA was seeking additional information in
connection with the Hemopure BLA and that the FDA had suspended its review clock on
the Hemopure BLA. Defendants Moore and Richman substantially participated in the
drafting, review and/or approval of the August 1, 2003 Press Release.
109.
Specifically, the August 1 Press Release said:
CAMBRIDGE, Mass., Aug. 1, 2003 /PRNewswire-FirstCall via
COMTEX/ – Biopure Corporation (BPUR) announced today
that the U.S. Food and Drug Administration (FDA) has
completed its review of the company’s biologic license
application (BLA) for Hemopure® [hemoglobin Glutamer - 250
(bovine)] and issued a letter requesting additional information.
The letter focuses primarily on clarification of clinical and
preclinical data and includes some comments on labeling. It
does not request additional clinical trials. Biopure has applied
to market Hemopure in the United States for the treatment of
acutely anemic adult patients undergoing orthopedic surgery
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and for the elimination or reduction of red blood cell
transfusions in these patients.
With 30 days remaining in the original BLA review cycle, the
issuance of the letter has suspended the FDA review clock
until Biopure submits a complete response.
“We’re encouraged that the FDA has finished its review and
provided comprehensive feedback in advance of the formal
action due date. By maintaining thirty days on the review
clock, the FDA is encouraging us to work with them to
complete the approval process as quickly as possible,” said
Biopure President and CEO Thomas A. Moore. “We’ll work
with the Agency to address the remaining questions and will
provide our answers as expeditiously as possible.”
110.
The August 1, 2003 Press Release was false, deceptive and misleading to
investors in its portrayal of the information that Biopure had received from the FDA. First,
the August 1, 2003 Press Release failed to disclose altogether Biopure’s receipt of the
Complete Response Letter from the FDA.
Second, its tone was deceptively and
inaccurately optimistic, notwithstanding the fact that Biopure had just received two detailed
letters from the FDA that together constituted a tremendous, if not insurmountable, setback
in the Company’s efforts at ever gaining FDA approval of Hemopure. Defendant Moore’s
statement that the FDA’s letter was “encouraging” Biopure to “complete the approval
process as quickly as possible” was misleading insofar as it had no basis in fact and was
inconsistent both with the gravity and number (220) of deficiencies outlined in the Complete
Response Letter and with the time it would take the Company to respond. Third, the
August 1, 2003 Press Release’s reference to the 30 days remaining in the review cycle was
misleading, because the FDA had a six-month time frame within which to respond, if and
when the Company actually responded to all of the deficiencies outlined in the Complete
Response Letter. Fourth, the August 1, 2003 Press Release was misleading by stating that
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FDA had not requested additional clinical trials when in actuality FDA had questioned the
integrity of the Company’s submitted data (a preliminary step in determining whether new
clinical trials were necessary) and implemented a clinical hold, which it refused to lift,
barring the Trauma Clinical Trials from occurring. In fact, the August 1, 2003 Press
Release failed to disclose any information about the clinical hold, including that it had been
implemented; that the Company had twice tried and twice failed to persuade FDA to lift it;
and that the FDA, on July 30, 2003, had sent the detailed July 30, 2003 Clinical Trials
Letter refusing (again) to lift it and identifying many of the same deficiencies, concerns, and
questions outlined in the Complete Response Letter.
111.
The text of the August 1, 2003 Press Release was included in a Form 8-K that
Biopure filed with the SEC (the “August 1, 2003 Form 8-K”), which was therefore false and
misleading for the same reasons. The August 1, 2003 Press Release, by itself and through
its inclusion within the August 1, 2003 Form 8-K, artificially inflated the price of Biopure’s
common stock.
112.
The August 1, 2003 Press Release was issued on the morning of August 1,
2003. The marketplace, not knowing of its false and misleading nature, strongly and
positively responded to the August 1, 2003 Press Release. On August 1, 2003, the price
of Biopure common stock closed at $7.30 per share, up $1.33 per share, or 22.27%, over
its close at $5.97 per share on July 31, 2003. Biopure’s stock traded as high as $9.03 per
share on August 1, 2003, on volume of almost 7 million shares.
113.
On or about August 5, 2003 Biopure’s General Counsel sent an e-mail
message to outside counsel specializing in FDA regulatory matters requesting help in
formulating a strategy for responding to the Complete Response Letter. In a reply e-mail
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sent the same day, the Company’s outside counsel identified the July 30, 2003 letter as
being a “complete response letter.”
114.
Thereafter, the price of Biopure stock continued to rise, closing on August 20,
2003 at $8.12 per share.
Biopure Continues to Misrepresent the Complete Response Letter and
to Conceal the Existence of the Clinical Hold on the Trauma Clinical Trials
115.
On August 31, 2003, Biopure issued a press release announcing its Q3
financial results for fiscal year 2003 (“August 21, 2003 Press Release”). Defendants Moore
and Richman participated in the drafting, review, and/or approval of the August 21, 2003
Press Release.
116.
The August 21, 2003 Press Release included the following statements
concerning the FDA’s review of Biopure’s Hemopure BLA:
On July 30th, the FDA sent Biopure a letter stating that the
agency has completed its review of the company’s BLA to
market Hemopure in the United States for the treatment of
acutely anemic adult patients undergoing orthopedic surgery
and for the elimination or reduction of red blood cell
transfusions in these patients. The letter requests additional
information and suspends the BLA review clock with 30 days
remaining in the original review cycle. It does not request
additional clinical trials. Biopure is preparing its response,
which, when submitted, will restart the review clock. “We’ve
developed many of our initial responses and so far we feel we
will be prepared to answer FDA’s questions,” said Moore. “We
have an opportunity to answer all of the Agency’s remaining
questions before it acts on our application, so we want to be
sure we’re fully meeting the FDA’s needs. Therefore, we are
requesting a meeting with the FDA in September. The Agency
is allowing Biopure to set the agenda for this meeting, which
will enable us to request any clarifications we need to complete
our responses. The timing for when we’ll submit our complete
response to the FDA will be driven by the guidance we receive
during this meeting.”
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117.
Document 110-1
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The August 21, 2003 Press Release was false and misleading to investors
about the true information that Biopure had received from the FDA. First, it failed to
disclose that the Company had received a Complete Response Letter from the FDA.
Second, its references to 30 days remaining in the review cycle were misleading about the
true six-month time frame within which the FDA could respond to Biopure, if and when the
Company first responded to all 220 deficiencies outlined in the Complete Response Letter.
Third, the August 21, 2003 Press Release was misleading by stating that the FDA had not
requested additional clinical trials, when in actuality the FDA was questioning the integrity
of the Company’s clinical data previously submitted in support of the Hemopure BLA (a
preliminary step to determining whether additional clinical trials were necessary) and was
refusing to lift the clinical hold barring conduct of the Trauma Clinical Trials. Fourth, the
August 21, 2003 Press Release failed to disclose any information whatsoever about the
clinical hold, including that it had been implemented; that the Company had twice tried and
twice failed to persuade FDA to lift it; and that the FDA on July 30, 2003 had sent the
detailed July 30, 2003 Clinical Trials Letter refusing (again) to lift it and identifying many of
the same deficiencies, concerns, and questions outlined in the Complete Response Letter.
118.
The text of the August 21, 2003 Press Release was included in a Form 8-K
that was dated September 15, 2003 and filed with the SEC (“September 15, 2003 Form 8K”). By including without amendment the text of the August 21, 2003 Press Release, the
September 15, 2003 Form 8-K was false and misleading for the same reasons as
articulated above.
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119.
Document 110-1
Filed 03/28/2006
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Also on August 21, 2003, the Defendants Biopure, Moore, Richards, and
Richman participated in a telephonic conference call for analysts and institutional investors
(the “August 21, 2003 Investor Call”). Like the May 22, 2003 Investor Call, analysts and
institutional investors could participate in the August 21, 2003 Investor Call and all
members of the investing public could hear the call live and access it thereafter for a period
of time. A copy of the transcript of that conference call, prepared by CCBN StreetEvents,
for Biopure, is attached hereto as Exhibit E and incorporated herein by reference.
120.
During the August 21, 2003 Investor Call, Defendants made statements and
answered questions from public participants, about Biopure, the Hemopure BLA and the
Trauma Clinical Trials, which were false, deceptive and misleading.
For example,
Defendants made the following statements:
Thomas A. Moore – Biopure - CEO
The agency has done us a big favor by providing what
amounts to a complete detailed response and set of questions
to Biopure prior to the end of the review cycle, and then
stopping the review clock with 30 days remaining in the PDUFA
cycle. They have thereby made a commitment to give us an
action letter 30 days after we provide our response to their
questions. They could just as easily have announced an end
to the review cycle with their response, in which case they
would have had two to six months to respond to our answers
instead of the 30 day period.
***
Our efforts to date suggest that we’re in good shape so far to
be able to answer FDA’s questions.
***
Jason Colbert - Susquehanna Capital - Analyst
. . . A couple of questions on the letter from the FDA. You
used the term complete response a couple of times. But, this
isn’t a complete response letter. What is it exactly?
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Thomas A. Moore – Biopure - CEO
It’s, and I’ll ask Howard Richman to comment on this in just a
second. It is – I think Howard will call it a hybrid, and by that I
mean it genuinely represents all the questions that FDA would
like to have us answer, and so in that sense it’s like a complete
response. But normally a complete response letter brings an
end to the review cycle. And the agency has elected not to do
that, offering us this precious opportunity to get a response 30
days after we submit the answers to those questions. And so,
that’s what it is.
Jason Colbert - Susquehanna Capital - Analyst
It sounds like the response is going to take some time. Can
you tell me about how many questions are involved? And the
followup question is, depending on the length of your response,
is it reasonable to expect that the FDA is going to be able to
respond back within that 30 day timeline? If you give them a
very exhaustive detailed response back, as I know you will,
isn’t it going to take the FDA longer than 30 days to respond
back?
Thomas A. Moore – Biopure - CEO
I think that’s a very fair question, and that’s one of the
motivations we have for having a meeting with FDA simply so
we can agree on how we’re going to order this data and maybe
how we can share some of the data as we go so that it makes
it easier for them to meet that guideline.
Howard P. Richman - Biopure - SVP Regulatory Affairs &
Operations
I’ll share this with yourself and for the other people listening.
This type of letter is very unique. As Tom clearly stated for
everyone, it is a hybrid, it’s something that was done from the
(indiscernible) perspective to work with Biopure in this aspect
because you’re right in stating that people have (indiscernible),
this does not follow the area that we’ve seen where you look
on FDA sites or in other complete responses. This was done
with the specific intent to work with us. With that being said, it
counts in such a way that they want us to be able to get back
to them vis-a-vis this meeting and in our answers. Many of our
answers will not be that detailed in response, some in
clarification, which will only meet the FDA with some points
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we’re going to discuss with them. Other ones will just provide
them information they requested in terms of clarification and
follow-up source documents and other information they’ve
asked about. So when you say about a detailed (indiscernible)
response, in many ways it will not be. But it’s also clear that
the formation that they have for us with FDA which will be
clarified on a meeting in September will clearly enlighten us
and them and give a clear pathway to the response in a correct
time frame.
***
Richard Adams - Bennett Lawrence - Analyst
Just to repeat a question from earlier that I didn’t hear an
answer to which was the number of questions in the FDA letter.
Can you tell us that?
Thomas A. Moore – Biopure - CEO
We probably aren’t going to disclose that. I guess I shouldn’t
say probably. The number of questions isn’t going to do very
helpful to people to understand what’s really in the letter. ...
What I will say is there’s probably about 50 substantive
questions which we have - - which we’re working on which are
really the core of the efforts that we’re doing now. So, I think
the number 50 is more useful to bear in mind that the list... .
***
Alan Ferguson – 3i Technology Partners - Analyst
Is there anything on the work the trials that the military is doing
in trauma yet?
Thomas A. Moore – Biopure - CEO
We’ve not initiated human clinical trials in trauma with the
military or for that matter on the civilian side as yet. So, we
hope to get started on that ASAP. I think probably those trials
will begin, however, at least after we have – no sooner than
after we filed our responses with FDA on the BLA questions.
As I mentioned earlier in my flurry of discussions about
meetings, Naval medical research has been very active in
doing preclinical work on trauma with our product, and then
sharing those results in several different forms actually. So,
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work is going on very actively on the trauma side, but I don’t
believe human trials will begin until after we have completed
our answers to the BLA. Part of this is related to the fact that
we already are engaged in FDA in a dialogue on a total clinical
development program in trauma with FDA. And so we expect
the final discussion on that with FDA will ensue after we’ve
addressed the questions they’ve asked for us on the use in
anemia from surgery indications.
***
Richard Aussie - Nation Direct - Analyst
. . . My question is, what will you do if Biopure doesn’t get FDA
approval?
Thomas A. Moore – Biopure - CEO
. . . While we are continuing to be cautiously optimistic, we’re
on the approval track. If you ask us to specifically address this
question, which you have, I guess what I’d say is the FDA
doesn’t really just say no. At least not in a situation like this
where an application has been accepted and taken this far
down the review track. What the FDA says is here’s what
you’ve got to do, guys, if you want to persuade us to say yes.
And generally what they’d say is you need more information.
I’m going to take a big leap here, Howard [Richman] may hit
me. But if the information we’ve given them so far led them to
say we can’t approve it then they would’ve already said we
can’t approve it. Okay? You don’t go back and forth like this
because the product is not approvable. The question for the
agency is the process of putting together the adequacy of the
total data set.
(Exhibit E at 3, 5, 6, 10).
121.
During the August 21, 2003 Investor Call, Defendants also made statements
specifically admitting that their prior statements about Biopure, the Hemopure BLA and the
Trauma Clinical Trials were being believed by the marketplace and were causing the price
of Biopure stock to increase. For example, the Defendant Moore made the following
statements during the August 21, 2003 Investor Call:
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Thomas A. Moore - Biopure - CEO
In July we completed a public offering raising $17.2 million...In
conducting this raise, Chief Financial Officers Ron Richards
and I presented to 62 funds in person over a three-week
period. This is the most extensive presentation of the company
ever, surpassing even the effort behind the IPO launch.
Subsequent share price performance suggests we’re
beginning to establish an understanding of the exciting
future potential for Hemopure as both a treatment for anemia
associated with surgery, and an oxygen therapeutic for use in
trauma, surgical ischemias and cancer therapy.
(Exhibit E at 2, emphasis added).
122.
Biopure’s August 21, 2003 Investor Call was false and misleading to investors
about the true information the Company had received from the FDA. First, Defendants
misleadingly characterized the Complete Response Letter as a “hybrid” letter when in
actuality it was a complete response letter, a fact which had been confirmed by the FDA
to Defendant Richman at least twice previously. Second, Defendants falsely stated that
the FDA would have 30 days to review a submission from Biopure when in actuality it would
have six months to do so, if and when the Company first addressed all 220 deficiencies set
forth in the Complete Response Letter. Third, Defendant Moore’s statements that the FDA
had done Biopure a “big favor” and had “made a commitment to give us an action letter 30
days after we provide our response to their questions” had no basis in fact, were
inconsistent with the FDA’s prior communications to the Company, and contradicted the
six month period to which the FDA was actually entitled in reviewing any future
resubmission. Fourth, Defendants falsely stated that Biopure was “in good shape” to
address the deficiencies, questions, and concerns in the Complete Response Letter when
in actuality they were so numerous and substantial that the Company could not possibly
respond to them for years, if ever. In fact, Defendants refused to provide the actual number
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of questions in the Complete Response Letter - - 220 in total - - and misleadingly
represented as being “substantive” the far lesser number of “50" questions.
Fifth,
Defendants further misled investors by optimistically describing the likelihood of FDA
approval for Hemopure when in actuality there were major obstacles preventing such
approval, including the deficiencies, concerns, and questions set forth in both July 30, 2003
letters (including the Complete Response Letter); the clinical hold which FDA had twice
refused to lift, and concerns that FDA had discussed with the Company during telephone
calls. Finally, Defendants misleadingly discussed the Trauma Clinical Trials while failing
to disclose the FDA clinical hold.
123.
On August 21, 2003, Biopure’s stock closed at $8.25 per share.
124.
On or about August 22, 2003, Biopure filed a Form S-3 registration statement
and prospectus with the SEC for the sale of common stock and warrants for the purchase
of common stock by selling security holders (“August 2003 Offering Documents”).
Defendant Moore substantially participated in the drafting, review, and/or approval of the
August 2003 Offering Documents, which he signed, and Defendant Richman reviewed their
disclosures concerning the regulatory status of Biopure’s FDA submissions.
125.
In the August 2003 Offering Documents, Biopure did not state that the letter
it had received on July 30, 2003 was a “complete response letter.” Additionally, the
Company made, inter alia, the following statement:
We Cannot Expand Indications for Our Products Unless We
Receive FDA Approval for Each Proposed Indication
The FDA requires a separate approval for each proposed
indication for the use of Hemopure in the United States. We
have applied for an indication for Hemopure that will only
involve its perioperative use in patients undergoing orthopedic
surgery. Subsequently, we expect to expand Hemopure’s
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indications. To do so, we will have to design additional clinical
trials, submit the trial designs to the FDA for review and
complete those trials successfully. ...
126.
Biopure’s August 2003 Offering Documents were false and misleading to
investors about the true information the Company had received from the FDA. First, the
August 2003 Offering Documents failed to disclose, among other things, that the July 30,
2003 letter the Company received from the FDA was a “complete response letter.”
Second, the August 2003 Offering Documents failed to disclose the clinical hold on the
Trauma Clinical Trials, that the hold was put in place due to safety concerns, and that the
FDA had twice refused to lift the hold. Third, the August 2003 Offering Documents misled
investors by falsely stating that the indication for Hemopure’s perioperative use in
orthopedic surgery patients was the “only” indication applied for when in actuality the
Company had also sought permission to conduct the Trauma Clinical Trials. Finally, the
August 2003 Offering Documents disclosed a future “expectation” to expand Hemopure’s
indications, design additional trials, and submit those trials for FDA review when, in truth,
the Company had already designed additional clinical trials (the Trauma Clinical Trials),
submitted their designs to the FDA for review, and received a clinical hold imposed by the
FDA.
Biopure’s Outside Counsel Confirms the Nature
of the Complete Response Letter and that a Six Month Period
Would Apply to Any Resubmission by the Company
127.
On or about August 26, 2003, at the request of Biopure management, the
Company’s outside counsel contacted FDA staff members to determine whether the FDA
planned to issue a second response letter by August 29, 2003. After that conversation,
Biopure’s outside counsel informed the Company’s General Counsel, as well as
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Defendants Moore and Richman, in discussions and via e-mails, that despite the use of
some non-standard language and the issuance of the letter 30 days prior to the due date,
the letter that Biopure received on July 30, 2003 regarding the Hemopure BLA (the
Complete Response Letter) was in fact a “complete response letter” for the Hemopure BLA.
Biopure’s outside counsel further confirmed to the Company’s General Counsel, Defendant
Moore, and Defendant Richman that the review cycle had been completed without any
approval of Hemopure by the FDA and that the FDA would have six months to review any
resubmission by Biopure.
Biopure Continues to Misrepresent the Complete Response Letter,
to Withhold Information on the True Status of the Hemopure BLA,
and to Conceal the Clinical Hold on the Trauma Clinical Trials In
Public Statements and Periodic Reports Filed with the SEC,
While Selling Biopure Stock
128.
On September 12, 2003, Biopure filed with the SEC a Form 424(b)(3)
prospectus (the “September 12, 2003 Prospectus”). In the “Risk Factors” section of the
September 2003 Prospectus, the Company stated that the letter it received from the FDA
on July 30, 2003 was a “complete response letter.” On the next trading day, September
15, 2003, the Company’s stock dropped by 6.5% on heavy trading. When asked about this
trading activity, Biopure’s Director of Corporate Communications attributed the stock
movement that day to the disclosure that the Company had received a “complete response
letter.” In e-mail messages sent to investors, he stated that the reference to the FDA’s July
30, 2003 correspondence as a “complete response letter” had been a “mistake” by a “junior
lawyer at a law firm” used by the Company.
129.
On September 15, 2003 (the next trading day following the filing of the
September 12, 2003 Prospectus), Biopure filed with the SEC an amended Form 424(b)(3)
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prospectus (“September 15, 2003 Prospectus”). The September 15, 2003 Prospectus
omitted the reference to the FDA’s July 30, 2003 correspondence being a “complete
response letter.” Defendant Moore substantially participated in the drafting, review, and/or
approval of the September 15, 2003 Prospectus. Defendant Richman reviewed the
disclosures contained therein concerning the regulatory status of Biopure’s FDA
submissions.
130.
On or about September 15, 2003, Biopure filed with the SEC a Form 10-Q
for the quarter ended July 31, 2003 (“July 2003 10-Q”). Defendant Moore substantially
participated in the drafting, review, and/or approval of the July 2003 10-Q, which he signed
and with respect to which he certified that the document did not “contain any untrue
statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made,
not misleading.” Defendant Richman reviewed the non-financial reporting sections of the
July 2003 10-Q.
131.
In the July 2003 10-Q, Biopure did not disclose the nature of the Complete
Response Letter. In addition, the Company made the following statement:
We Cannot Expand Indications for Our Products Unless We
Receive FDA Approval for Each Proposed Indication
The FDA requires a separate approval for each
proposed indication for the use of Hemopure in the United
States. We have applied for an indication for Hemopure that
will only involve its periopoerative use in patients undergoing
orthopedic surgery. Subsequently, we expect to expand
Hemopure’s indications. To do so, we will have to design
additional clinical trials, submit the trial designs to FDA for
review and complete those trials successfully....
***
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We also plan to develop Hemopure for potential use in trauma
and other medical applications.
132.
Biopure’s July 2003 10-Q was false and misleading to investors in several
ways about the true information that the Company had received from the FDA. First, the
July 2003 10-Q failed to disclose, inter alia, that the FDA correspondence received by the
Company on July 30, 2003 was in fact a “complete response letter” and that the FDA had
instituted a clinical hold barring the Company from conducting the Trauma Clinical Trials.
Second, the July 2003 10-Q falsely stated that an indication for Hemopure’s perioperative
use in orthopedic surgery patients was the “only” indication applied for when in actuality the
Company had also sought permission to conduct the Trauma Clinical Trials. Third, the July
2003 10-Q disclosed a future “expectation” to expand Hemopure’s indications, design
additional trials, and submit those trials for FDA review when, in truth, the Company had
already designed additional clinical trials (the Trauma Clinical Trials), submitted their
designs to the FDA for review, and received a clinical hold imposed by the FDA.
133.
On September 10, 2003 Biopure issued a press release announcing that the
Defendant Moore would be making a presentation at the ThinkEquity Partners Growth
Conference on September 17, 2003. As reflected in the press release, Defendant Moore’s
statements at that conference were made available to the investing public. The press
release, in relevant part, stated as follows:
...Biopure Corporation (BPUR) today announced that company
President and CEO Thomas A. Moore will present at the
ThinkEquity Partners Growth Conference on Wednesday,
September 17, 2003, at 9:30 p.m. PT. The investor conference
is being held at The OMNI San Francisco from September 1617, 2003. A live webcast of the 25-minute presentation will be
available online via the Investor Relations section of Biopure’s
web site at www.biopure.com...An archive of the webcast will
be available for at least 4 days following the event.
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On September 17, 2003, the Defendant Moore, gave a presentation about
Biopure, Hemopure, and the Hemopure BLA at the ThinkEquity Partners Growth
Conference at the Omni Hotel in San Francisco, California. That conference was attended
by securities analysts, investment advisors and other members of the investing public.
Attached hereto as Exhibit F is a transcript of Defendant Moore’s statements at that
conference, which are incorporated herein by reference. This transcript was transcribed
by Plaintiffs’ counsel’s personnel, from an audio tape of the Defendant Moore’s
presentation, which audio tape is in the possession of Plaintiffs’ counsel.
135.
As reflected in Exhibit F hereto, at the ThinkEquity Growth Partners
Conference, the Defendant Moore said:
...From a safety standpoint, our agreement with FDA was that
the primary safety endpoint would be based on a peak analysis
which was a separate analysis of the data done by an
independent and blinded medical panel. That panel concluded
that our product was not inferior to red blood cells in respect to
overall medical risk. This is not the only way the agency looks
at safety but it is the primary safety endpoint.
(Exhibit F at 8).
136.
That statement was false, deceptive and misleading in light of the FDA’s
safety concerns, the clinical hold barring the conduct of the Trauma Clinical Trials, and the
Complete Response Letter, all of which Biopure and Defendant Moore failed to disclose
to Conference attendees.
137.
As reflected in Exhibit F hereto, at the ThinkEquity Growth Partners
Conference, the Defendant Moore described in detail the history of Biopure, the status of
the Hemopure BLA, the anticipated uses for and market for Hemopure, and the economics
for Biopure of producing and selling Hemopure. Defendant Moore’s entire presentation at
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that conference was false, deceptive and misleading in light of the FDA’s safety concerns,
the clinical hold barring the conduct of the Trauma Clinical Trials, and the Complete
Response Letter, all of which Biopure and Moore failed to disclose at the Conference.
138.
On September 18, 2003 Biopure issued a press release announcing that
Defendant Moore would be making a presentation at the UBS Global Life Sciences
Conference on September 25, 2003. As reflected in the press release, Defendant Moore’s
statements at that conference were made available to the investing public. The press
release, in relevant part, stated as follows:
...Biopure Corporation (BPUR) today announced that company
President and CEO Thomas A. Moore will present at the UBS
Global Life Sciences Conference on Thursday, September 25,
2003, at 12:30 p.m. EDT. The investor conference is being
held at The Plaza in New York from September 22-25, 2003.
A live webcast of the 25-minute presentation will be available
online via the Investor Relations section of Biopure’s web site
at www.biopure.com...An archive of the webcast will be
available for at least 4 days following the event.
139.
On September 25, 2003, the Defendant Moore made a presentation before
the UBS Global Life Sciences Conference in New York, New York. That conference was
attended by securities analysts, investment advisors and other members of the investing
public. Attached hereto as Exhibit G is a transcript of Defendant Moore’s statements at that
conference. This transcript was transcribed by Plaintiffs’ counsel’s personnel, from an
audio tape of the Defendant Moore’s presentation, which audio tape is in the possession
of Plaintiffs’ counsel.
140.
As reflected in Exhibit G hereto, at the UBS Global Life Sciences Conference,
the Defendant Moore said:
From a safety standpoint, in our pivotal trial, we agreed before
the trial began with the FDA to use as our primary safety
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endpoint something called a [Seep?] study. Which is basically
a blinded analysis of all the case report forms by a panel of
doctors who would examine each patient, create their own
score of adverse events and then rank the product use again
on a blinded basis in terms of how safe it was for the patient.
After all the patients were rated by at least two blinded doctors,
we broke the blind, and compared the accumulative scores
between our products and red blood cells and achieved a
safety objective which was to confirm that our product was not
inferior to red blood cells with respect to overall medical risks.
(Exhibit G at 8).
141.
That statement was false, deceptive and misleading in light of the FDA’s
safety concerns, the clinical hold barring the conduct of the Trauma Clinical Trials, and the
Complete Response Letter, all of which Biopure and Moore failed to disclose to Conference
attendees.
142.
As reflected in Exhibit G hereto, at the UBS Global Life Sciences Conference,
the Defendant Moore described in detail the history of Biopure, the status of the Hemopure
BLA, the anticipated uses for and market for Hemopure, and the economics for Biopure of
producing and selling Hemopure. Moore’s entire presentation at that conference was false,
deceptive and misleading in light of the FDA’s safety concerns, the clinical hold barring the
conduct of the Trauma Clinical Trials, and the Complete Response Letter, all of which
Biopure and Moore failed to disclose to Conference attendees.
Though Biopure Continued to Withhold the Truth about the Hemopure BLA,
the FDA’s Safety Concerns about Hemopure, the Clinical Hold on the
Trauma Clinical Trials, and the Complete Response Letter,
the Effects of the Company’s Fraud Begin Affecting Its Stock Price
143.
On October 30, 2003, before the stock markets opened, Biopure issued a
press release (the “October 30, 2003 Press Release”), the text of which was included in a
Form 8-K filed with the SEC (“October 30, 2003 Form 8-K”). Defendant Moore substantially
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participated in the drafting, review, and/or approval of the October 30, 2003 Press Release,
a copy of which is attached hereto as Exhibit H and incorporated herein by reference.
144.
The October 30, 2003 Press Release - while still not disclosing to the
marketplace the truth about the status of the Hemopure BLA, the FDA’s safety concerns
about Hemopure, the clinical hold on the Trauma Clinical Trials, and the existence and
significance of the Complete Response Letter - disclosed some of their consequences,
particularly that the FDA would not be acting on the Hemopure BLA until sometime after
June 30, 2004. The October 30, 2003 Press Release also disclosed that the Defendant
Richman had left Biopure, though it falsely stated that he “...has left Biopure to pursue other
interests.” In actuality, he had been terminated.
145.
The consequences of the still-undisclosed, adverse, material facts had
significant, negative financial implications for Biopure, some of which were disclosed in the
October 30, 2003 Press Release itself. Among other things, the October 30, 2003 Press
Release stated:
Biopure Corporation (Nasdaq: BPUR) today announced its plan
to respond by June 30, 2004 to the Food and Drug
Administration’s (FDA) questions regarding its biologic license
application (BLA) for Hemopure ® [hemoblogin glutamer - 250
(bovine)]. The company has adjusted its operating plan to
reduce expenses and conserve cash while it completes its
written response to the FDA.
Biopure applied for FDA approval to market the company’s
oxygen therapeutic, Hemopure, in the United States for the
treatment of acutely anemic adult patients undergoing
orthopedic surgery and for the elimination or reduction of red
blood cell transfusions in these patients.
During the past two months the company has had several
substantive interactions with the FDA to clarify the agency’s
questions.
Many of Biopure’s responses have been
completed. However, some require the retrieval of source
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medical documents and/or historical blood transfusion data
from clinical trial sites in various countries, which will take
several months to complete.
146.
In addition, the October 30, 2003 Press Release quotes the Defendant Moore
as follows:
“In the best interests of our shareholders, today we’ve taken
the steps necessary to more efficiently run our business while
we complete our comprehensive response to all of the FDA’s
questions,” said Biopure President and CEO Thomas A.
Moore. “We view the agency’s questions as a ‘roadmap’ to
approval and have set a conservative, achievable target date
for our response. We remain enthusiastically committed to
commercializing Hemopure in the United States as
expeditiously as possible.”
147.
The October 30, 2003 Press Release, and Moore’s above quoted statement
in the October 30, 2003 Press Release, were false, deceptive and misleading to investors
in numerous ways about the true status of Biopure’s continuing, but failing, efforts to gain
FDA approval for Hemopure. First, in the October 30, 2003 Press Release, the Defendants
continued to conceal from investors that the FDA correspondence which Biopure received
on July 30, 2003 was a “complete response letter.” Second, the October 30, 2003 Press
Release failed to disclose that the June 30, 2004 planned response date was dependent
upon the Company’s pursuing a much narrower indication than that described in the
original Hemopure BLA. In fact, prior to issuing the October 30, 2003 Press Release, the
Defendants ignored the advice of outside counsel, who, after reviewing a draft of the
release, recommended the inclusion of a disclosure that “[i]n its planned response to FDA,
Biopure intends to narrow its focus and seek approval only for anemia in those surgical
settings where blood transfusion is not an option.” Third, the October 30, 2003 Press
Release failed to disclose the FDA’s safety concerns, as well as the existence and
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significance of the clinical hold imposed by FDA which barred conduct of the Trauma
Clinical Trials.
148.
The October 30, 2003 Press Release also announced that Biopure would be
holding a conference call and webcast on October 30, 2003, at 11:30 am, at which
“...Moore will discuss the company’s regulatory and operating plans...”
149.
On October 30, 2003, the Defendants Biopure, Moore and Richards
participated in a telephonic conference call for analysts and institutional investors (“October
30, 2003 Investor Call”). Like the May 22, 2003 Investor Call, analysts and institutional
investors could participate in the October 30, 2003 Investor Call, and all members of the
investing public could hear the call live and access it thereafter for a period of time. A copy
of the transcript of that conference call, prepared by CCBN StreetEvents, for Biopure, is
attached hereto as Exhibit I, and incorporated herein by reference.
150.
During the October 30, 2003 Investor Call, the Defendants made statements
and provided answers to questions about Biopure, the Hemopure BLA, and the Trauma
Clinical Trials, which were false, deceptive and misleading because, inter alia, they omitted
and did not disclose the FDA’s safety concerns, the existence and significance of the
clinical hold on the Trauma Clinical Trials, and Biopure’s receipt of the Complete Response
Letter. For example, in the October 30, 2003 Investor Call, Defendant Moore was asked
about the use of Hemopure in South Africa and responded as follows:
Our stretch in South Africa has been very positive from the
standpoint that we have had good experience with the patients
and developed what we consider a very good safety record
with the product.
(Exhibit I at 3, emphasis added).
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As described above, the October 30, 2003 Press Release and the
Defendants’ statements in the October 30, 2003 Investor Call were false and misleading
insofar as, inter alia, they did not disclose the FDA’s safety concerns, the existence and
significance of the clinical hold on the Trauma Clinical Trials, and Biopure’s receipt of the
Complete Response Letter.
However, as also described above, they did disclose
significant, material adverse consequences being caused by these things to Biopure and
the Hemopure BLA, such as Defendant Richman’s departure from the Company and the
fact that it would take eight additional months to respond to the FDA’s July 30, 2003
correspondence.
152.
The market’s reaction to the negative - though incomplete - disclosures of the
consequences of the still-undisclosed, adverse material facts, in the October 30, 2003
Press Release, was immediate and dramatic. On October 29, 2003, the market price of
Biopure stock had closed at $6.05 per share, on trading volume of 250,000 shares. On
October 30, 2003, the market price of Biopure stock began trading at $5.00 per share; it
traded as low as $2.80 per share; and it closed at $3.68 per share on heavy trading volume
of 6,910,000 shares. Hence, the market price of Biopure stock experienced a single-day
drop of over 39% on October 30, 2003, in reaction to the October 30, 2003 Press Release.
153.
The extremely negative reaction to the disclosures in the October 30, 2003
Press Release is also demonstrated in the October 30, 2003 article in TheStreet.com,
attached hereto as Exhibit J.
154.
The price of Biopure stock continued to decline after October 30, 2003. On
October 31, 2003, Biopure stock closed at $3.46 per share; and on the next trading day,
November 3, 2003, Biopure stock closed at $3.20 per share. Hence, in the three trading
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days after the October 30, 2003 Press Release, the market price of Biopure declined over
47%, from its close at $6.05 per share on October 29 to its close at $3.20 per share on
November 3, 2003. Thereafter, the price of Biopure stock continued to decline. On
December 24, 2003, prior to the issuance of a December 24, 2003 press release (which
was issued after the close of the stock market on December 24, 2003) that is described
below, Biopure’s stock closed at $2.82 per share. December 24, 2003 is the end of the
Class Period.
155.
The drop in the price of Biopure’s stock which occurred on October 30, 2003,
and which continued in the days and weeks following, was caused by the effects of the
Defendants’ undisclosed fraud taking root in the marketplace. Although Defendants still
had not disclosed the truth about Biopure, Hemopure, the Hemopure BLA, the FDA’s safety
concerns about Hemopure, the clinical hold on the Trauma Clinical Trials, and Biopure’s
receipt of the Complete Response letter, some of the consequences of these undisclosed
circumstances were made known to the market beginning on October 30, 2003. For
example, Defendants publicly stated on October 30, 2003 that Defendant Richman had left
the company; that the FDA would not take action on the Hemopure BLA until June 20,
3004; and that the Company had “adjusted its operating plan to reduce expenses and
conserve cash” as worked on responses to the FDA.
Biopure Finally Discloses Publicly, For the First Time,
the FDA’s Safety Concerns, the Clinical Hold on the Trauma
Clinical Trials, the Complete Response Letter, the True Status
of the Hemopure BLA, and the Ongoing SEC Investigation
156.
On or about December 11, 2003, Biopure issued a press release announcing
its financial results for the fiscal year ending October 31, 2003 (“December 11, 2003 Press
Release”), the text of which was included in a Form 8-K filed with the SEC (“December 11,
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2003 Form 8-K”). Defendant Moore substantially participated in the drafting, review, and/or
approval of the December 11, 2003 Press Release. In the December 11, 2003 Press
Release, Biopure disclosed for the first time that the correspondence it had received from
the FDA on July 30, 2003 (over four months prior) was a “complete response letter.” The
December 11, 2003 Press Release, however, did not disclose the clinical hold on the
Trauma Clinical Trials.
157.
The market reacted swiftly to the negative - though still incomplete -
disclosures in the December 11, 2003 Press Release and December 11, 2003 Form 10-K.
On December 11, 2003, the market price of Biopure stock had closed at $2.89 per share,
on trading volume of 68,600 shares. On December 12, 2003 (the next trading day following
the December 11, 2003 Press Release and the December 11, 2003 Form 8-K), the market
price of Biopure stock began trading at $2.52 per share; it traded as low as $2.50 per share
before closing at $2.60 per share on heavy trading volume of 218,600 shares. Hence, the
market price of Biopure stock experienced a single-day drop of about 10% on December
12, 2003, in reaction to the December 11, 2003 Press Release and the December 11,
2003.
158.
The next trading day, December 15, 2003, began a steady week of additional
declines in Biopure’s closing stock price, from $2.64 (on December 15, 2003) to $2.51 (on
December 16, 2003) to $2.49 (on December 17, 2003) to $2.36 (on December 18, 2003)
to $2.34 (on December 19, 2003). Thus, just one week after the December 11, 2003 Press
Release and December 11, 2003 Form 8-K, Biopure’s stock was down just over 19%.
159.
The drop in the price of Biopure’s stock which occurred on December 12,
2003, and which continued in the days following, was caused by the disclosures in the
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December 11, 2003 Press Release and the effects of the Defendants’ still-undisclosed
fraud taking root in the marketplace. Although Defendants had finally disclosed that the
correspondence the Company received from the FDA on July 30, 2003 was a “complete
response letter,” they still had not disclosed the complete truth about Biopure, Hemopure,
the Hemopure BLA, the FDA’s safety concerns about Hemopure, and the clinical hold on
the Trauma Clinical Trials.
160.
On December 24, 2003, after the close of the stock markets, Biopure issued
a press release (the “December 24, 2003 Press Release”), the text of which was included
in a Form 8-K filed with the SEC (“December 24, 2003 Form 8-K”) and a copy of which is
attached hereto as Exhibit K and incorporated herein by reference.
161.
In the December 24, 2003 Press Release Biopure publicly revealed, for the
first time ever, the existence of the FDA’s clinical hold on the Trauma Clinical Trials, which
had been imposed over eight months before. Biopure also disclosed that the Defendants
Biopure, Moore and Richman had each received a “Wells Notice” from the SEC, advising
that the SEC staff had made a preliminary determination to recommend the filing of a civil
enforcement staff action against them.
162.
In particular, the December 24, 2003 Press Release stated, in part, as
follows:
CAMBRIDGE, Mass., Dec 24, 2003 ... Biopure Corporation
(BLUR) reported that on December 22, 2003, it received a
“Wells Notice” from the staff of the Securities and Exchange
Commission (SEC) indicating the staff’s preliminary decision to
recommend that the SEC bring a civil injunctive proceeding
against the company.... The company’s chief executive officer
[the Defendant Moore] and its former senior vice president of
Regulatory and Operations [the Defendant Richman] also
received Wells Notices.
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... the notices relate to the company’s disclosures concerning
its communications with the Food and Drug Administration
(FDA) about a trauma study protocol the company submitted
to the Agency in March 2003 and about the company’s
biologics license application (BLA) for Hemopure ®
[hemoglobin glutamer - 250 (bovine)]....
Biopure submitted the trauma protocol for a Phase II clinical
trial of Hemopure for the treatment of hemorrhagic shock
casualties in the hospital setting, where red blood cell
transfusions are available....
After the in-hospital trauma protocol was submitted to the
FDA...the Agency placed a clinical hold on the proposed
trauma trial due to safety concerns. The FDA referred to
a review of adverse event data from the company’s Phase
III orthopedic surgery trial, which was submitted in the
BLA....(emphasis added)
In May 2003, Biopure responded to the FDA’s clinical hold and
also filed the response as a BLA amendment because it
discussed data previously submitted with the BLA. That
amendment resulted in the FDA extending its BLA review
period up to 90 days, as previously announced on May 30,
2003.... After the company’s responses, the FDA has twice
declined to lift the clinical hold, most recently in a letter dated
July 30, 2003. This letter is separate from the FDA complete
response letter Biopure received on that date in response to its
BLA for orthopedic surgery. The questions in the FDA’s
trauma letter were the same as some of the questions in the
BLA complete response letter....
(emphasis added)
163.
The December 24, 2003 Press Release informed the investing public, for the
first time, about the FDA’s safety concerns regarding Hemopure as a result of adverse
event data from Biopure’s Phase III clinical trial for its Hemopure BLA; the fact that, in light
of those safety concerns, the FDA had placed a clinical hold on the Trauma Clinical Trials,
which had first been communicated to the Defendants by the FDA on April 9, 2003; the
serious impact those safety concerns had and were continuing to have on the prospects
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of the Hemopure BLA being approved by the FDA; and the delays those safety concerns
would cause in the FDA’s decision regarding the Hemopure BLA.
164.
The December 24, 2003 Press Release informed the investing public, for the
first time, that due to the FDA’s safety concerns regarding Hemopure as a result of adverse
event data from Biopure’s Phase III clinical trial for its Hemopure BLA, the FDA had, on
April 9, 2003, placed a clinical hold on the Trauma Clinical Trials.
165.
The December 24, 2003 Press Release also informed the investing public,
for the first time, that the Defendants’ public statements during the Class Period regarding
Biopure, the Hemopure BLA, and the Trauma Clinical Trials had been false, deceptive and
misleading; that the SEC was investigating those false and deceptive statements and that
the SEC staff had decided to recommend that the SEC bring an enforcement action against
the Defendants Biopure, Moore and Richman.
166.
These first-time disclosures had a significant negative effect on the
Company’s stock price. On the very next trading day, Friday, December 26, 2003,
Biopure’s stock closed down 13.83% at $2.43. On Monday, December 29, 2003, Biopure’s
stock closed down again at $2.33, which represented a 17.38% decrease from the closing
price on December 24, 2003.
167.
The drop in Biopure’s stock price from December 11, 2003 to December 24,
2003 and then from December 26, 2003 to December 29, 2003 was caused by the partial
disclosures of the fraud alleged herein on December 11, 2003 and December 24, 2003.
The price drops in Biopure’s stock from October 30, 2003 to December 10, 2003, were
caused by the market’s reaction to the effects on the Company of the then-still-undisclosed
fraud.
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168.
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On January 29, 2004, Biopure filed its Annual Report for its fiscal year ended
October 31, 2003 with the SEC on Form 10-K/A (hereinafter the “2003 10-K”). The 2003
10-K was signed by all of the Individual Defendants except Richman. In the 2003 10-K, the
Defendants disclosed some additional adverse material information concerning the SEC’s
investigation and Biopure’s communications with the FDA during the Class Period.
Specifically, the Defendants disclosed the following in the 2003 10-K:
13. Litigation and Subsequent Events
SEC Investigation. During the fourth quarter of fiscal
2003, the Company was notified of a confidential investigation
by the Securities and Exchange Commission (SEC). On
December 22, 2003, the Company, its Chief Executive Officer
and its former Senior Vice President, Regulatory and
Operations received “Wells Notices” from the staff of the SEC
stating the staff’s preliminary determination to recommend that
the SEC bring a civil injunctive proceeding against the
Company and the individuals. Biopure and the individuals
responded in writing to the notices on January 9, 2004. The
staff is continuing to gather information.
Biopure believes the notices relate to Company
disclosures concerning communications with the FDA about a
clinical hold imposed on a clinical study protocol the Company
submitted to the agency in March 2003 and the status of the
Company’s BLA. In March 2003, the Company filed a
proposed protocol for a Phase II clinical trial in trauma patients
in a hospital setting. The FDA put the protocol and its related
investigational new drug application (IND) on “clinical hold,”
meaning the trial could not begin as proposed. The FDA cited
safety concerns based on a preliminary review of data from the
Company’s trial in patients undergoing orthopedic surgery.
After the Company responded in two written submissions, the
clinical hold was reasserted twice in writing, most recently on
July 30, 2003. The Company did not disclose the clinical hold
because the Company did not consider correspondence with
the agency about data interpretation in the development of a
protocol to be material, notwithstanding the references to data
in the BLA. The staff’s investigation also concerns the
Company’s disclosures concerning the FDA’s review of the
BLA, after receipt of the complete response letter dated July
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30, 2003. The Company has been cooperating throughout the
investigation with the SEC staff. At this time, the Company
cannot estimate what impact, if any, this inquiry may have on
its financial position or results of operations.
169.
On April 30, 2004, Biopure issued a press release (“April 30, 2004 Press
Release”) in which it disclosed that on April 29, 2004, the SEC staff had issued four
additional Wells Notices, indicating that the SEC staff was considering recommending that
the SEC also bring civil actions against the Defendants Sanders, Crout and Rausch, and
Biopure General Counsel, Jane Kober, for violations of the federal securities laws. The
April 30, 2004 Press Release read, in part, as follows:
CAMBRIDGE, Mass., Apr 30, 2004...Biopure Corporation
(BPUR) reported today that on April 29, 2004, the U.S.
Securities and Exchange Commission (SEC) issued additional
“Wells Notices” to four individuals concerning matters disclosed
in Biopure’s press release dated December 24, 2003. The
notices indicate that the SEC staff may recommend that the
Commission bring a civil action against Biopure’s nonexecutive Chairman Dr. Charles A. Sanders, former Board
Member Dr. J. Richard Crout, Chief Technology Officer and
Board Member Carl W. Rausch, and General Counsel Jane
Kober for possible violations of federal securities laws. The
notices afford the individuals an opportunity to respond in
writing before the SEC staff formally decides what action, if
any, to recommend.
Biopure will continue to cooperate with the SEC staff in the
matters investigated.
As previously disclosed, Biopure
believes that the SEC investigation relates to the company’s
disclosures concerning its communications with the U.S. Food
and Drug Administration (FDA) about a proposed trauma study
protocol the company submitted to the FDA in March 2003 and
about the company’s biologics license application (BLA) for
Hemopure®...
The Defendants Biopure and Rausch Sold Millions of Dollars of
Biopure Stock During the Class Period, While In Possession of
Material, Adverse, Non-Public Information Regarding Biopure
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170.
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While Defendants engaged in the fraudulent and unlawful conduct described
herein, and while in possession of material, adverse, nonpublic information regarding the
Company described herein, Defendants Biopure and Rausch made millions of dollars
through transactions involving Biopure stock during the Class Period.
171.
On or about April 16, 2003, while in possession of the nonpublic material
adverse information regarding the Company, Biopure realized $3,032,000 in net proceeds
from the sale of shares and warrants.
172.
On May 2, 2003, while in possession of the nonpublic material adverse
information regarding the Company, Biopure sold 882,353 shares of Biopure common
stock for $3.57 per share, for a total of $3,150,000. Those shares were registered with the
SEC under a shelf registration.
173.
On May 6, 2003, while in possession of the nonpublic material adverse
information regarding the Company, Biopure sold 833,334 shares of Biopure common
stock for $3.60 per share, for a total of $3,000,000. Those shares were registered with the
SEC under a shelf registration.
174.
In May and June 2003, while in possession of the nonpublic material adverse
information regarding the Company, Biopure sold 707,060 shares of Biopure common stock
at an average price of $5.56 per share, for a total of $3,839,000. Those shares were
registered with the SEC under a shelf registration.
175.
On or about July 23, 2003, while in possession of the nonpublic material
adverse information regarding the Company, Biopure sold 3,083,000 shares of Biopure
common stock for $5.58 per share, for a total of $17,203,140. Those shares were
registered with the SEC under a shelf registration.
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176.
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Between August 1, 2003 and September 15, 2003, while in possession of
the nonpublic material adverse information regarding the Company, Biopure sold 802,188
shares of Biopure common stock at an average price of $7.55 per share, for a total of
$6,003,000.
177.
In September 2003, while in possession of the nonpublic material adverse
information regarding the Company, Biopure sold 522,193 shares of Biopure common stock
at a price of $4.84 per share, for a total of $2,527,000.
178.
Throughout the Class Period, Biopure had sales of up to $10,000,000 of
common stock issued from time to time by the standby equity distribution agreement with
CMI.
179.
During the fiscal year ended October 31, 2003, approximately eight months
of which falls within the Class Period, warrants to purchase 712,141 shares of Biopure’s
common stock were exercised at an average exercise price of $4.52 per share, generating
$3,200,000 in net proceeds in the process.
180.
During the Class Period, while in possession of the non-public material
adverse information regarding the Company, the Defendant Rausch sold a total of 276,574
shares of Biopure, for approximately $1,596,000. Those shares constituted 33.7% of the
Biopure shares owned by Rausch at the beginning of the Class Period. Specifically,
Rausch sold the following numbers of Biopure shares on the following dates:
DATE BIOPURE
SHARES SOLD
BY RAUSCH
NUMBER OF
SHARES SOLD
BY RAUSCH
PRICE PER
SHARE
TOTAL RECEIVED
BY RAUSCH
4/15/03
30,000
$3.13
$93,900
6/5/03
2,000
$6.06 - $6.07
$12,000
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DATE BIOPURE
SHARES SOLD
BY RAUSCH
Document 110-1
NUMBER OF
SHARES SOLD
BY RAUSCH
Filed 03/28/2006
PRICE PER
SHARE
Page 75 of 92
TOTAL RECEIVED
BY RAUSCH
6/24/03
3,000
$5.58 - $5.698
$17,000
6/25/03
2,700
$5.80 - $5.97
$16,000
6/26/03
34,374
$5.80 - $5.90
$201,000
6/27/03
20,000
$5.95 - $6.00
$120,000
6/30/03
5,000
$6.14 - $6.16
$31,000
8/5/03
10,000
$7.50 - $7.53
$75,000
8/6/03
2,000
$7.50 - $7.54
$15,000
8/7/03
8,000
$7.00
$56,000
8/8/03
10,000
$7.05 - $7.28
$72,000
8/12/03
10,000
$7.00 - $7.15
$71,000
8/13/03
9,500
$7.02 - $7.15
$67,000
8/28/03
100,000
$7.50
$750,000
TOTALS
246,574
75
$1,596,900
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Plaintiffs’ Purchases of Biopure Stock During the Class Period
181.
Plaintiff Erickson purchased a total of 75,000 shares of Biopure common
stock during the Class Period, on the following dates:
DATE BIOPURE SHARES PURCHASED
182.
NUMBER OF SHARES PURCHASED
05/16/03
11,600
05/16/03
500
05/16/03
300
05/16/03
2,500
05/16/03
100
05/16/03
100
05/16/03
1,000
05/16/03
5,000
05/16/03
100
05/16/03
200
05/16/03
2,700
05/16/03
100
05/16/03
800
05/29/03
5,000
05/29/03
5,000
05/29/03
5,000
05/29/03
10,000
05/29/03
10,000
05/29/03
10,000
05/30/03
5,000
TOTAL
75,000
Plaintiff Gottlieb purchased the following number of shares of Biopure
common stock on the following dates:
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DATE BIOPURE SHARES PURCHASED
183.
Filed 03/28/2006
Page 77 of 92
NUMBER OF SHARES PURCHASED
4/17/03
3,000
4/29/03
2,500
5/19/03
2,000
5/20/03
1,400
6/23/03
1,000
8/22/03
3,000
8/25/03
1,000
8/26/03
500
TOTAL
14,400
Plaintiff Bittman purchased 100 shares of Biopure common stock on June
5, 2003 and 420 shares of Biopure common stock on August 26, 2003.
184.
Plaintiff Esposito purchased 600 shares of Biopure common stock on
August 12, 2003 and 600 shares of Biopure common stock on August 21, 2003.
SCIENTER ALLEGATIONS
185.
The Defendants’ conduct, as detailed herein, in issuing false, deceptive
and misleading statements to the investing public about Biopure, Hemopure, the
Hemopure BLA, the Trauma Clinical Trials, the FDA’s safety concerns about Hemopure,
the clinical hold, and the Complete Response Letter, was conducted by the Defendants
knowingly, purposely, intentionally and recklessly, with the full knowledge that their
conduct would, and with the full intention that their conduct would, mislead, deceive and
act as a fraud upon the investing public.
186.
In 2002, the Defendants Biopure and Rausch were named as defendants
in a federal securities fraud class action entitled, Thomas H. Meyer, et als. v. Biopure
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Corporation and Carl W. Rausch, in the United States District Court for the District of
Massachusetts (Civil Action No. 02-10194-EFH). In that action the Plaintiffs alleged that
the Defendants had committed securities fraud by failing to disclose defects and
deficiencies in the clinical trials conducted for Hemopure. Judge Harrington of this
Court, in an Opinion reported at 221 F.Supp. 2d 195 (D. Mass. 2002), dismissed that
complaint. In so doing, Judge Harrington, in language extraordinarily relevant to, and
indeed, ironic in light of, the facts in this action, said:
Plaintiffs also plead no basis for inferring that it is
highly likely that these alleged omissions were either
intentional or highly reckless...this is not a situation where
the facts omitted from the press release are so clearly
important that the fact of non-disclosure alone gives
rise to a strong inference of scienter, since plaintiffs do
not suggest that the “missing” data would show that
Hemopure was unsafe...
222 F. Supp. 2d at 207 (emphasis added).
187.
Hence we see that even beyond the obvious materiality of the FDA’s
safety concerns and the Complete Response Letter, the Defendants knew full well, from
Judge Harrington’s decision in the Meyer v. Biopure case, that facts which “...would
show that Hemopure was unsafe...” Id., were not only material but “...so clearly
important that the fact of non-disclosure alone gives rise to a strong inference of
scienter...” Id. The Defendants’ failure to disclose the FDA’s safety concerns, the
clinical hold on the Trauma Clinical Trials prompted by those safety concerns and the
Complete Response Letter, under these circumstances, creates the strongest possible
inference of scienter.
188.
Scienter is also apparent here from the fact that the SEC reached the
conclusion, based upon the facts alleged in this Complaint and the SEC Complaint,
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incorporated herein by reference, that the Defendants Biopure, Moore and Richman
acted with scienter in violation of the federal securities laws due to their false and
misleading statements regarding, and their failure to disclose the truth about, Biopure,
Hemopure, the Hemopure BLA, the Trauma Clinical Trials, the FDA’s safety concerns
about Hemopure, the clinical hold, and the Complete Response Letter during the Class
Period. In light of that conclusion by the SEC, the SEC filed the SEC Action on
September 14, 2005.
189.
Scienter is also apparent here from the fact that after the SEC staff’s
receipt of the responses by the Defendants Biopure, Moore and Richman to the SEC
staff’s Wells Notices, the SEC staff responded on April 29, 2004 by issuing additional
Wells Notices (advising that the SEC staff may recommend to the SEC that it also bring
action against the Defendants Sanders, Rausch and Crout, as well as Biopure’s general
counsel, Jane Kober, for violations of the federal securities laws due to their failure to
disclose the FDA’s Safety Concerns during the Class Period).
190.
The Defendants’ scienter is also apparent from the highly significant and
material changes which the Defendants made to the False and Deceptive Statement
Regarding “If We Fail To Obtain FDA Approval,” after the SEC began its investigation of
the Defendants during Biopure’s fiscal quarter ended October 31, 2003. Specifically, in
the Form S-3 registration statement filed with the SEC on August 22, 2003, which was
signed by all of the Individual Defendants, except Richman, the Defendants replaced
the False and Deceptive Statement Regarding “If We Fail To Obtain FDA Approval,”
with the following statement:
If We Fail to Obtain FDA Approval, We Cannot Market
Hemopure in the United States
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We will not be able to market Hemopure in the United States
unless and until we receive FDA approval. We filed an
application for approval with the FDA, and the application
was accepted for review on October 1, 2002. The FDA
advised us that it would complete its review and take action
on the application by August 29, 2003. By letter dated July
30, 2003, the FDA gave us comments on the application,
stating that it had completed its review. We are working on
our responses. However, the FDA could find that our
responses do not address its issues adequately and could
require additional data or even further clinical trials ...prior to
approval of Hemopure. Trials are expensive and timeconsuming and we may not have the financial resources to
fund such trials. Despite all of our efforts, the FDA could
refuse to grant a marketing authorization.
191.
Significantly, this new version of this “risk disclosure,” while still false,
deceptive and misleading because the Defendants continued to fail to disclose in it the
FDA’s safety concerns, the clinical hold and the Complete Response Letter, no longer
contained the Defendants’ false and deceptive statement: “We believe that our
completed pivotal Phase III clinical trials are consistent with the FDA’s most
recent guidance on...safety endpoints required for approval of products such as
Hemopure for use in surgical indications...” which the Defendants had repeatedly,
falsely stated prior to August 22, 2003.
192.
Another indicia of the Defendants’ scienter is seen from the disparity
between the Defendants’ evasive description of the status of the Trauma Clinical Trials,
and their straightforward description of the status of clinical trials of one of their potential
competitors. As detailed herein, due to the FDA’s safety concerns, the FDA placed the
Trauma Clinical Trials on clinical hold on April 9, 2003, immediately after Biopure
submitted a Phase II protocol for those trials. Thereafter, the FDA twice refused to lift
that clinical hold, the last such action having occurred on July 30, 2003 via the July 30,
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2003 Clinical Trials Letter. Nevertheless, throughout the Class Period, the Defendants,
while repeatedly discussing the Trauma Clinical Trials, fastidiously avoided disclosing
the fact that the FDA had placed the Trauma Clinical Trials on a clinical hold. In
contrast, at his presentation at the above described ThinkEquity Conference on
September 17, 2003, when describing the research efforts of one of Biopure’s potential
competitors, the Defendant Moore had no hesitation in saying:
“Hemosol is now on a clinical hold. It is not clear
whether it will be able to resume.”
That exact same statement would have fully, accurately and non-deceptively described
the status of the Hemopure Trauma Clinical Trials throughout the Class Period, and the
Defendants could have, and should have, so disclosed the status of the Hemopure
Trauma Clinical Trials, during the Class Period. The fact that the Defendants made this
straightforward statement regarding the status of the clinical trials for their competitor’s
product, but did not do so regarding the Hemopure Trauma Clinical Trials, demonstrates
the Defendants’ scienter in purposely and intentionally failing to do so.
193.
The Defendants’ scienter is also seen from their extraordinary motive to
deceive the investing public regarding the prospects of Biopure, Hemopure, the
Hemopure BLA, and the Trauma Clinical Trials. As the Defendants repeatedly
disclosed in their SEC filings, Biopure was dependent for its continued operations and
financial survival on its ability to periodically raise money from the investing public,
through the sale of shares of Biopure and warrants to buy shares of Biopure. As
detailed above, Biopure raised millions of dollars during the Class Period by selling its
shares to investors. Biopure’s ability to continue to sell its shares would have been
severely compromised by the Defendants’ disclosure of the FDA’s safety concerns, the
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clinical hold in place on the Hemopure BLA, and the FDA’s transmission of the
Complete Response Letter.
194.
The Defendants’ scienter is also evidenced by the fact that when the
September 12, 2003 Prospectus correctly identified the correspondence Biopure
received from the FDA on July 30, 2003 as being a “complete response letter,” and
when the Company’s stock then dropped 6.5% the next trading day on heavy trading
volume, Biopure’s Director of Corporate Communications intentionally, falsely, and
deceptively said that the reference to the July 30, 2003 correspondence as a “complete
response letter” had been a “mistake” by a “junior lawyer at a law firm” used by the
Company. The Defendants’ scienter is further demonstrated by the filing, on the next
trading day, of the September 15, 2003 Prospectus, which omitted the reference to the
FDA’s July 30, 2003 correspondence being a “complete response letter.”
195.
The Defendants’ scienter is also seen by the sales by Biopure and Rausch
of hundreds of thousands of shares of Biopure stock during the Class Period, as
detailed herein.
INAPPLICABILITY OF THE EXCHANGE ACT’S THE SAFE HARBOR PROVISIONS
FOR FORWARD-LOOKING STATEMENTS
196.
The provisions of Section 21E of the Exchange Act, which provide, under
specified circumstances, a safe harbor from liability under the Exchange Act for “forwardlooking statements,” are not applicable to the claims asserted herein against the
Defendants.
197.
Section 21E(c)(1)(B) provides that the safe harbor provisions of Section 21E
do not apply if the plaintiffs prove that the forward-looking statement:
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(i) if made by a natural person, was made with
actual knowledge by that person that the
statement was false or misleading; or
(ii) if made by a business entity; was
(I) made by or with the approval of
an executive officer of that entity;
and
(II) made or approved by such
officer with actual knowledge by
that officer that the statement was
false or misleading.
198.
As demonstrated in detail herein, the Individual Defendants and Biopure had
actual knowledge of the FDA’s safety concerns and the clinical hold on the Trauma Clinical
Trials throughout the Class Period and actual knowledge of the Complete Response Letter
as of July 30, 2003. Hence, the false, misleading and deceptive statements of the
Individual Defendants were made by those Individual Defendants “with actual knowledge
by [those] person[s] that the statement[s were] false or misleading.” Likewise, the false,
misleading and deceptive statements by Biopure were “made by or with the approval of
[one or more] executive officer[s] of...” Biopure, and that the executive officers of Biopure
who made or approved those statements had actual knowledge “that the statement[s were]
false or misleading.”
199.
Accordingly, the exemption provisions of Section 21E do not apply to and will
not exempt the Defendants from liability for the securities fraud claims asserted against
them in this action.
200.
Furthermore the Defendants’ statements of their opinions, projections and
forecasts concerning Biopure, Hemopure, the Hemopure BLA, and the Trauma Clinical
Trials, during the Class Period, as detailed herein, were lacking in a reasonable basis at
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all times and did not, in fact, constitute their truly believed opinions, projections and
forecasts concerning Biopure, Hemopure, the Hemopure BLA, and the Trauma Clinical
Trials, during the Class Period.
201.
Furthermore, a significant number of the Defendants’ false, deceptive and
misleading statements, as detailed herein, were not “ forward looking statements,” but in
fact were statements (or misstatements) of existing fact and hence the exemption
provisions of Section 21E do not apply to and will not exempt the Defendants from liability
for the securities fraud claims asserted against them in this action.
CLASS ACTION ALLEGATIONS
202.
The Lead Plaintiff brings this action as a class action pursuant to Federal Rule
of Civil Procedure 23(a) and (b)(3) on behalf of a Class (the “Class”) consisting of all
persons or entities (“Class Members”) who acquired shares of Biopure common stock from
April 9, 2003 through December 24, 2003, (the “Class Period”) and who were damaged
thereby. Excluded from the Class are Defendants; members of the individual defendant’s
immediate family; any past or present director, officer, subsidiary, or affiliate of Biopure; any
entity in which any excluded person or entity has a controlling interest; and their legal
representatives, heirs, successors and assigns.
203.
The Plaintiffs also bring this action on behalf of a subset of the Class (the
“Sub-Class”) consisting of all persons or entities who acquired shares of Biopure common
stock contemporaneously with the sales of Biopure stock by the Defendants Biopure and
Rausch during the Class Period and who were damaged thereby. Excluded from the SubClass are Defendants; members of the individual defendant’s immediate family; any past
or present director, officer, subsidiary, or affiliate of Biopure; any entity in which any
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excluded person or entity has a controlling interest; and their legal representatives, heirs,
successors and assigns.
204.
The members of the Class and Sub-Class are so numerous that joinder of all
members is impracticable. While the exact number of Class members is unknown to
Plaintiffs at this time and can only be ascertained through appropriate discovery, Plaintiffs
believe that there are thousands of members of the Class and Sub-Class located
throughout the United States. Throughout the Class Period, Biopure common stock was
actively traded in an efficient market on the NASDAQ. Record owners and other members
of the Class may be identified from records maintained by Biopure and/or its transfer agent
and may be notified of the pendency of this action by mail and publication, using forms of
notice similar to those customarily used in securities class actions.
205.
Plaintiffs’ claims are typical of the claims of other members of the Class as
all members of the Class were similarly affected by Defendants' wrongful conduct in
violation of federal law that is complained of herein.
206.
Plaintiffs will fairly and adequately protect the interests of the members of the
Class and have retained counsel competent and experienced in class and securities
litigation.
207.
Common questions of law and fact exist as to all members of the Class and
predominate over any questions solely affecting individual members of the Class. Among
the questions of law and fact common to the Class are:
a.
Whether the federal securities laws were violated by Defendants’ acts
and omissions as alleged herein;
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b.
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Whether Defendants participated in and pursued the illegal course of
conduct complained of herein;
c.
Whether statements disseminated to the investing public during the
Class Period were misrepresentations and/or suffered from omissions
of material information as alleged herein;
d.
Whether, when defendants Biopure and Rausch sold shares of
Biopure during the Class Period, they were in possession of material,
adverse, non-public information regarding Biopure, including in
particular, inter alia, information regarding the FDA’s safety concerns,
the clinical hold on the Trauma Clinical Trials, and Biopure’s receipt
of the Complete Response Letter;
e.
Whether the market price of Biopure common stock during the Class
Period was artificially inflated due to the material misrepresentations
and omissions complained of herein; and
f.
The extent to which the members of the Class have sustained
damages and the proper measure of damages.
208.
A class action is superior to all other available methods for the fair and
efficient adjudication of this controversy since joinder of all members is impracticable. As
the damages suffered by individual Class members may be relatively small, the expense
and burden of individual litigations make it impossible for members of the Class individually
to seek redress for the wrongs done to them. There will be no difficulty in the management
of this suit as a class action.
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COUNT I
AGAINST ALL DEFENDANTS FOR VIOLATIONS OF SECTION 10(b) OF
THE EXCHANGE ACT AND RULE10b-5 PROMULGATED THEREUNDER
209.
Plaintiffs repeat and reallege each and every paragraph set forth above.
210.
During the Class Period, Defendants, and each of them, carried out a plan,
scheme and course of conduct that was intended to and/or did: (i) deceive the investing
public, including Plaintiffs and other Class members, as alleged herein; (ii) artificially inflate
the market price of Biopure common stock; and (iii) cause Plaintiffs and other members of
the Class to buy Biopure stock at artificially inflated prices. In furtherance of this unlawful
scheme, plan, and course of conduct, Defendants, and each of them, took the actions set
forth herein.
211.
These Defendants: (a) employed devices, schemes and artifices to defraud;
(b) made untrue statements of material fact and/or omitted to state material facts necessary
to make the statements not misleading; and (c) engaged in acts, practices and a course
of business which operated as a fraud and deceit upon the buyers of Biopure common
stock in violation of Section 10(b) of the Exchange Act and Rule 10b-5 promulgated
thereunder.
212.
Defendants' material misrepresentations and/or omissions were done
knowingly or recklessly.
213.
As a result of the Defendants’ dissemination of the deceptive and misleading
information regarding Biopure, Hemopure, the Hemopure BLA, and the Trauma Clinical
Trials, and their failure to disclose the FDA’s safety concerns regarding Hemopure, the
clinical hold on the Trauma Clinical Trials, and the Complete Response Letter, as set forth
above, the market price of Biopure’s common stock was artificially inflated during the Class
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Period. In ignorance of the fact that the market price of Biopure’s shares were artificially
inflated, and relying upon the integrity of the efficient market in which Biopure common
stock trades, and/or on the absence of material information that was known to and/or
recklessly disregarded by Defendants but not disclosed in public statements by Defendants
during the Class Period, Plaintiffs and the other members of the Class bought Biopure
common stock during the Class Period at artificially inflated prices and were damaged
thereby when the price of Biopure stock thereafter declined due to the Defendants’
fraudulent conduct.
214.
At the time of said misrepresentations and omissions, Plaintiffs and the other
members of the Class were ignorant of the omitted material facts and believed Defendants’
statements regarding Biopure to be completely truthful, candid and not deceptive or
misleading or suffering from omissions of material facts. Had Plaintiffs and the other
members of the Class known of the omitted material facts, Plaintiffs and the other members
of the Class would not have bought their Biopure common stock during the Class Period,
or, if they had bought such stock during the Class Period, they would not have done so at
the artificially inflated prices which they paid for their Biopure common stock which they
bought during the Class Period and they would not have suffered losses when the price of
Biopure stock thereafter declined due to the Defendants’ fraudulent conduct.
215.
By virtue of the foregoing, each of the Defendants violated Section 10(b) of
the Exchange Act and Rule 10b-5 promulgated thereunder.
216.
As a direct and proximate result of Defendants' wrongful conduct, Plaintiffs
and the other members of the Class suffered damages in connection with their purchases
of Biopure common stock during the Class Period.
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COUNT II
AGAINST THE INDIVIDUAL DEFENDANTS PURSUANT TO
SECTION 20(a) OF THE EXCHANGE ACT
217.
Plaintiffs repeat and reallege each and every paragraph set forth above.
218.
This claim is asserted against the Individual Defendants pursuant to Section
20(a) of the Exchange Act, 15 U.S.C. §78t(a).
219.
During the entire Class Period, the Defendants Moore, Rausch, Richards,
Sanders and Crout were “controlling persons” of Defendant Biopure, within the meaning
of Section 20(a) of the Exchange Act.
220.
During the portion of the Class Period from April 9, 2003, to the date he
resigned or was terminated as Biopure’s Senior Vice President of Regulatory Affairs and
Operations, which was sometime prior to October 30, 2003, the Defendant Richman was
a “controlling person” of Defendant Biopure, within the meaning of Section 20(a) of the
Exchange Act.
221.
The Individual Defendants were “controlling persons” of Biopure because, due
to the officer and/or director positions they held with Biopure, they had the influence and
power over Biopure to cause, and they did cause, Biopure to engage in the wrongful
conduct complained of herein, and because they had the power to have prevented Biopure
from engaging in the unlawful conduct alleged herein, but they purposely, intentionally and
recklessly did not use that power to do so.
222.
As set forth above in Count I, Biopure violated Section 10(b) of the Exchange
Act and Rule 10b-5 promulgated thereunder by its acts and omissions as alleged in this
Complaint. By virtue of their status as “controlling persons” of Biopure, the Individual
Defendants are liable, to the same extent as is Biopure, for Biopure's violations of Section
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10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder, pursuant to Section
20(a) of the Exchange Act.
COUNT III
AGAINST THE DEFENDANTS BIOPURE AND RAUSCH PURSUANT TO
SECTION 20A OF THE EXCHANGE ACT
223.
Plaintiffs repeat and reallege each and every paragraph set forth above.
224.
This claim is asserted against the Defendants Biopure and Rausch pursuant
to Section 20A of the Exchange Act. The Defendants Biopure and Rausch are hereinafter
sometimes referred to collectively as the “Section 20A Defendants.”
225.
During the Class Period, the Defendants Biopure and Rausch, while in
possession of the non-public material adverse information regarding the Company, sold
millions of dollars of shares of the Company. Because the Section 20A Defendants
possessed material adverse information about the Company which was not known to the
investing public, including the members of the Sub-Class, Section 20A Defendants sold
their shares of the Company at artificially inflated prices and the members of the SubClass, who purchased shares of the Company contemporaneously with the sales by the
Section 20A Defendants, paid artificially inflated prices for those shares of the Company,
and were damaged thereby.
226.
Pursuant to Section 20A of the Exchange Act, the Defendants Biopure and
Rausch are liable to the members of the Sub-Class for the difference between the inflated
prices at which they sold their shares of the Company during the Class Period, and the
prices at which those shares would have sold had the investing public known the material
adverse information about Biopure which was known to the Section 20A Defendants.
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PRAYERS FOR RELIEF
WHEREFORE, Plaintiffs, on behalf of themselves and the Class, pray for judgment
as follows:
A.
Declaring this action to be a class action properly maintained pursuant to Rule
23(a) and (b)(3) of the Federal Rules of Civil Procedure;
B.
Finding that the Defendants violated Section 10(b) of the Exchange Act and
Rule 10b-5 promulgated thereunder by their acts and omissions as alleged in this
Complaint;
C.
Finding that the Defendants Biopure and Rausch violated Section 20A of the
Exchange Act by their acts and omissions as alleged in this Complaint;
D.
Awarding Plaintiffs and the members of the Class and the Sub-Class
damages, together with interest thereon;
E.
Awarding Plaintiffs and other members of the Class and the Sub-Class their
costs and expenses of this litigation, including reasonable attorneys' fees and experts' fees
and other costs and disbursements; and
F.
Awarding Plaintiffs and other members of the Class and the Sub-Class such
other and further relief as may be just and proper under the circumstances.
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JURY TRIAL DEMAND
Plaintiffs demand a trial by jury.
By the attorneys for the Plaintiffs and the Class
and the Sub-Class,
SHAPIRO HABER & URMY LLP
By:
/s/ Edward F. Haber
Edward F. Haber BBO No. 215620
Matthew L. Tuccillo BBO No. 643336
Shapiro Haber & Urmy LLP
53 State Street, 37th Fl.
Boston, MA 02109
(617) 439-3939
Jules Brody
Howard T. Longman
Stull Stull & Brody
6 East 45th Street
New York, NY 10017
(212) 687-7230
Dated:
March 28, 2006
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Exhibit A
to PROPOSED SECOND CONSOLIDATED AMENDED COMPLAINT
r_
C(op'y
UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
SECURITIES AND EXCHANGE COMMISSION, ;
Plaintiff,
Civil Action No'.
v.
JURY TRIAL DEMANDED
BIOPURE CORPORATION ,
THOMAS MOORE, HOWARD RICHMAN,
and JANE KOBER
Defendants .
:
05 CA 11853 WGY
COMPLAIN T
Plaintiff Securities and Exchange Commission (the "Commission") alleges :
Summary
1 . In 2003, Biopure Corporation ("Biopure"), and its chief executive officer, head o f
regulatory affairs and general counsel engaged in a fraudulent scheme to misrepresent an d
conceal from investors the truth about its applications for Food and Drug Administratio n
("FDA") approval of Hemopure .
2. Hemopure is a biotechnology product that is designed to deliver oxygen to tissue s
as a substitute for red blood cells . To date, Hemopure has not been approved by the FDA for us e
in humans . Since its founding in 1984, defendant Biopure has devoted substantially all of it s
resources toward developing Hemopure for human use . In July 2002, Biopure submitted a
biologics license application ("BLA") to the FDA for approval to use Hemopure for the treatment
of acutely anemic patients undergoing orthopedic surgery . In March 2003, the company als o
applied for FDA approval to perform clinical trials of Hemopure on human trauma victims i n
hospitals.
3 . In April 2003, Biopure beg an receiving negative information from the FDA. On
or about April 9, 2003, the FDA imposed a clinical hold barring the company from conductin g
clinical trials of Hemopure on trauma victims because of "safety concerns" arising out of th e
FDA's preliminary assessment of Biopure's BLA . In or about May 2003, the FDA denied
Biopure's request to lift the clinical hold. Then, on or about July 30, 2003, Biopure received tw o
lengthy and detailed letters from the FDA . In one letter, the FDA again refused to allow th e
clinical trials because of "an unreasonable and significant risk of illness or injury" to huma n
subjects. The other letter was the FDA's complete response letter to the BLA, in which the FDA
informed Biopure that it was not approving Biopure's BLA at that time because of extensive an d
significant deficiencies in Biopure ' s application and because of concerns about the lack of safety
and efficacy of Hemopure. Receipt of the complete response letter meant that the FDA had
completed its review of the BLA and would have an additional six months to review a
resubmission by the company, if and when the company addressed all deficiencies identified b y
the FDA . One year later, the company still had not addressed all deficiencies raised in the
complete response letter and decided instead to shift its focus to developing Hemopure for a
different application .
4 . Throughout 2003, Biopure was also in need of additional capital to satisfy it s
continuing financial needs . Biopure had not been profitable at any point since its founding .
Several times during 2003, as it had done previously and since, Biopure was seeking to rais e
money by accessing public and private capital markets through the sale of additional shares o f
stock .
2
5 . For more than eight months from April 9 until December 24, 2003, Biopur e
concealed the clinical hold from investors while touting a potential use of Hemopure by traum a
victims in multiple securities offerings, public filings, press releases and investor conferenc e
calls . Moreover , on August 1, 2003, two days after receiving the complete response le tter from
the FDA, Biopure issued a fr audulent and misleading press release that gave the false impressio n
the company had received positive news from the FDA . That day, Biopure's stock closed at
$7.30 per share, a 22% increase over its previous day close . For four additional months from
August until December 11, 2003, Biopure continued to conceal from investors that it ha d
received a complete response letter from the FDA, continued to make false statements about it s
dealings with the FDA and failed to disclose the true scope and nature of the deficiencies wit h
the BLA identified by the FDA . Indeed, on one occasion in September 2003, Biopure disclose d
in a prospectus filed with the Commission that the July 30 letter it received was a complete
response letter . When Biopure's stock price dropped on heavy trading, the company tol d
investors that the reference to the letter as a complete response letter was a "mistake" by a
"junior lawyer at a law firm" retained by the company . The disclosure was quickly "fixed" with
the filing of an amended prospectus that omitted the reference to the letter as a "complet e
response letter ."
6. As the truth about Biopure 's applications for FDA approval gradually becam e
public, through a series of incomplete disclosures, the market reacted . As of year-end 2003 ,
Biopure stock was trading below $3 .00 per share .
7. By engaging in the scheme set forth in this Complaint, Biopure engaged in acts ,
practices and courses of business that constitute violations of Section 17(a) of the Securities Ac t
3
of 1933 ("Securities Act") and Sections 10(b) and 13(a) of the Securities Exchange Act of 193 4
("Exchange Act") and Rules l Ob-5, 12b-20, 13a-11 and 13a-13 thereunder . Additionally, by
engaging in the scheme set forth in this Complaint, each of individual defendants Moore ,
Richman, and Kober violated Section 17(a) of the Securities Act, Section 10(b) of the Exchang e
Act and Rule I Ob-5 thereunder and aided and abetted Biopure's violations of Section 13(a) of th e
Exchange Act and Rules 12b-20, 13a-11, 13a-13 thereunder, and defendant Moore furthe r
violated Rule 13a-14 of the Securities Act.
8. Unless restrained and enjoined, defendants will continue to engage in acts ,
practices, and courses of business as set forth in this Complaint or in acts, practices, and course s
of business of similar object and purpose . Accordingly, the Commission seeks : (i) entry of a
permanent injunction prohibiting each defendant from further violations of the relevan t
provisions of the federal securities laws ; (ii) orders barring each of defendants Moore, Richman ,
and Kober from serving as an officer or director of a public company ; (iii) the imposition of a
civil monetary penalty in light of the egregious nature of defendants violations ; and (iv) other
equitable relief as the Court in its discretion deems just .
Jurisdictio n
9. The Commission brings this action pursuant to Section 20 of the Securities Ac t
[15 U.S.C. §§ 77t], an d Sections 20(e) and 21 (d) of the Exchange Act [15 U . S .C. §§ 78t(e) and
78u(d)] .
10. This Court has jurisdiction over this action pursuant to Sections 20 and 22(a) o f
the Securities Act [15 U .S .C. §§ 77t and 77v(a)] and pursuant to Sections 21 and 27 of th e
Exchange Act [15 U .S .C . §§ 78u and 78aa] . Additionally, . defendant Biopure's principal place o f
4
business is in this District and many of the acts and practices set forth in this Complaint occurre d
in this District.
11 . In connection with the conduct described in this Complaint, each of defendants
directly and indirectly made use of the mails or the means or instruments of transportation o r
communication in interstate commerce .
The Defendants
12.
Biopure , a Delaware corporation, is a biopharmaceutical company wit h
headquarters in Cambridge, Massachusetts . Biopure's common stock is registered under Sectio n
12(g) of the Exchange Act and trades on the NASDAQ Stock Exchange under the symbo l
"SPUR." Biopure has essentially one product, an oxygen therapeutic derived from bovin e
hemoglobin, which Biopure developed for use as a blood substitute . The form of the produc t
intended for hum an use, called Hemopure , has not been approved by the FDA .
13 .
Thomas Moore, 54, served as President, Chief Executive Officer and a directo r
of Biopure from July 2002 until the Board of Directors requested his resignation in Februar y
2004 . Prior to joining Biopure, defendant Moore held various positions at Proctor and Gambl e
Company from 1973-1996, including President of Global Healthcare . From 1996-2002 ,
defendant Moore was President and Chief Executive officer of a medical communications an d
marketing company which provided consulting services to Biopure . Defendant Moore is a
resident of Boston, Massachusetts .
14.
Howard Richman, 53, was Biopure's Senior Vice President of Regulatory
Affairs and Operations from spring 2003 until October 2003, when Biopure terminated hi s
employment. He previously served as Biopure's Vice President of Regulatory Affairs and
Compliance from 2001 through the spring of 2003 . Prior to joining Biopure, defendant Richman
was a director of regulatory affairs at several biotech companies . Defendant Richman was a
practicing doctor of podiatric medicine from 1978-1992 . Defendant Richman is a resident o f
Houston, Texas .
15.
Jane Kober , 62, is currently Senior Vice President, General Counsel, an d
Secretary of Biopure. Defendant Kober joined Biopure in May 1998, after serving as outsid e
corporate counsel to the company from 1985-1986 and from 1990 until 1998 . Defendant Kober
is a resident of Bellport, New York.
BACKGROUND
16. The FDA , an agency within the U . S . Department of Health and Human Services ,
is responsible for promoting the public health by promptly and efficiently reviewing clinica l
research and taking appropriate action on the marketing of regulated products in a timely manner .
Specifically, the FDA is responsible for protecting the public health by ensuring that foods are
safe, wholesome, sanitary, and properly labeled ; human and veterinary drugs are safe and
effective ; there is reasonable assurance of the safety and effectiveness of devices intended fo r
hum an use; cosmetics are safe and properly labeled ; and the public health and safety are
protected from electronic product radiation :
17. The Center for Biologics Evaluation and Research ("CBER") is a center within
the FDA that regulates biologics , such as Hemopure , for human use. Biologics , which are als o
called biologic products or biological products, are products that generally are derived from
living sources, in contrast to drugs, which generally are chemically synthesized .
6
18. Companies that manufacture biologics for introduction into interstate commerc e
are required to hold a license for the products . These licenses are issued by the FDA, through
CBER . Licensing of biologics is similar to the new drug approval process for hum an drugs, and
generally proceeds as follows : First, a manufacturer conducts initial laboratory and anima l
testing of the biologic , which does not require prior FDA approval. Next, a manufacturer
submits an investigational new drug ("IND") application to the FDA for permission to conduct
clinical trials in humans for a particular indication . Following clinical trials, the manufacturer
will submit a biologics license application ("BLA") to the FDA for approval . The FDA 's revie w
of new BLAs, and for new indications for already approved products, requires evaluating th e
scientific and clinical data submitted by manufacturers to determine whether the product meet s
the FDA's standards for approval .
19. During the relevant period, the FDA' s performance goals an d procedures , adopted
in connection with the Prescription Drug User Fee Act of 1992, as periodically reauthorize d
("PDUFA"), provided that the FDA had ten months to review a BLA. The FDA was als o
entitled to a 90-day extension if an applicant were to submit a major amendment to it s
application during the final three months of the review period . Once the FDA completed it s
review of a BLA, if a product met the standards for approval, the FDA would approve th e
product for marketing. If the product did not meet the standards for approval, the FDA woul d
issue a "complete response letter" (sometimes referred to as an "action letter") setting forth th e
deficiencies of the application .
20. After the FDA issues a complete response letter for a BLA, the applicant coul d
make a further submission. For non-minor resubmissions , PDUFA performance goals and
7
procedures provided the agency with an additional six months to reply to the applicant' s
response, once the applicant had answered all questions and addressed all deficiencies set forth i n
the complete response letter.
Hemopure and its Significance to Biopure
21 . Hemopure is Biopure's brand name for hemoglobin glutamer - 250 (bovine), a n
oxygen therapeutic derived from cow's blood that is designed to deliver oxygen to tissues as a
substitute for red blood cells. Hemopure is one of only two products manufactured by Biopure .
Oxyglobin, Biopure's other product, is an oxygen therapeutic created for veterinary use .
22. To date, the FDA has not approved the use of Hemopure in humans for an y
indication .
23 . The development, approval by the FDA and ultimate success of Hemopure ar e
highly material to Biopure . Since its inception in 1984, Biopure has devoted substantially all o f
its resources to the research, development and manufacturing of its oxygen therapeutic products .
Although the company began generating revenue from the sale of Oxyglobin in 1998, Biopur e
has never been profitable . As of October 2002, the company had an accumulated deficit of mor e
than $380 million . As of October 2003, the company's accumulated deficit had grown to mor e
than $425 million .
24. Biopure's long-term prospects, even survival, are dependent upon receiving FD A
approval for Hemopure. Biopure's short-term prospects during the relevant period depended als o
on obtaining the funding necessary to maintain the company's operations . As the compan y
disclosed to investors in its Form 10-K filed with the Commission for fiscal year 2002, date d
January 29, 2003, "[i]n order for us to remain a going concern we will require significan t
8
funding ."
Biopure 's Biologics License Application (BLA)
25 . On or about July 31, 2002, Biopure submitted a BLA to the FDA seekin g
approval to use Hemopure in the treatment of acutely anemic patients undergoing orthopedi c
surgery . For Hemopure to receive FDA approval for that indication, Biopure had to demonstrate
that human clinical trials had established both the safety and efficacy of Hemopure . Under
PDUFA goals and procedures, the FDA's target date for completing review of Biopure's BL A
and sending the company either an approval letter or a complete response letter was at the end o f
May 2003 .
26 . In a letter to shareholders dated February 4, 2003, which was contained i n
Biopure's fiscal 2002 Annual Report, defendant Moore touted the filing of Biopure's BLA and
described the company's priorities . The letter begins by declaring that Biopure "realized a
tremendous achievement" by filing its BLA for use of Hemopure in an orthopedic surger y
setting . Defendant Moore further stated that Biopure "anticipate[s] that the [FDA] will complete
its review of our BLA by mid 2003 ." The letter described Biopure' s "Business Strategy" with
four bullet points . The first bullet referred to Biopure 's BLA: "[s]uccessfully launch Hemopur e
under an orthopedic surgery indication in the United States ." The second bullet referred to it s
trauma trials : "[c]linically develop Hemopure for trauma, ischemia, and adjunctive cance r
therapy indications ."
27. Under the heading, "Changing Gears for the Future," defendant Moore tol d
investors that Biopure was developing Hemopure for use by trauma victims : "Our first clinical
priority is to demonstrate the product's utility in stabilizing trauma patients in the emergenc y
9
room and pre-hospital, or ambulance, setting ."
Biopure Submits a Trauma IND and the FDA Imposes a Clinical Hol d
28. On or about March 7, 2003, Biopure ostensibly took a step toward achieving it s
"first clinical priority" by submitting an IND application to the FDA seeking permission t o
conduct clinical trials of Hemopure on human trauma victims in hospitals . In support of its
submission , Biopure relied upon and referred the FDA to data from the pivotal clinical tria l
previously submitted in support of its pending BLA .
29 . On or about April 9, 2003, members of the FDA staff telephoned defendan t
Richman, Biopure's primary contact with the FDA, to inform Biopure that the agency wa s
imposing a clinical hold barring the company from initiating any clinical trials in connection wit h
the trauma IND . The FDA staff stated that the clinical hold was imposed because of "safety
concerns" arising out of data relating to the BLA clinical trials and because of "a preliminar y
assessment of the BLA ." Specifically, the FDA staff expressly referred to data relating to seriou s
adverse events suffered by participants in the BLA clinical trials, and stated that "the trial was on
hold for safety and that in FDA's judgment it is unsafe to put this product in this patien t
population at this time."
30. Although he was not on the April 9 telephone call with the FDA, defendan t
Moore learned of the clinical hold by April 10, 2003, the next day. Defendant Kober was mad e
aware, at least , that the FDA had questions about Biopure ' s trauma IND by early May and
learned of the clinical hold no later than June 17, 2003 .
10
Biopure Begins Raising Money from Investors
Without Disclosing the Clinical Hold
31 . On or about April 16 and April 17, 2003, after learning of the clinical hold,
Biopure filed with the Commission a Post-Effective Amendment No . 1 to a Form S- 3
Registration Statement that had been filed in March 2003 and Rule 424(b)(3) prospectus
supplements ("April Offering Documents ") for the sale of up to 1, 000,000 shares of common
stock and warrants for the purchase of up to 500,000 shares of common stock . The April
Offering Documents were signed by defendant Moore . Defendants Moore and Kobe r
substantially participated in drafting, reviewing and/or approving the April Offering Documents ,
and defendant Richman reviewed disclosures regarding the regulatory status of Biopure's FD A
submissions.
32 . In the April Offering Documents, Biopure made the following statements, among
others :
We Cannot Expand Indications for Our Products Unless We Receive FDA
Approval for Each Proposed Indication
The FDA requires a separate approval for each proposed indication
for the use of Hemopure in the United States . We have applied for an
indication for Hemopure that will only involve its perioperative use in
patients undergoing orthopedic surgery . Subsequently, we expect to
expand Hemopure's indications . To do so, we will have to design
additional clinical trials, submit the trial designs to the FDA for review
and complete those trials successfully . . . .
The Company expects to initiate additional pre-clinical and clinical tri als
this year to exp and the indications for Hemopure beyond surgery.
11
We are also developing Hemopure for potential use in trauma and other
medical applications .
33 . Biopure's April Offering Documents were false and misleading because the y
misled investors about the true status of Biopure's clinical trials for the trauma indication . For
example, although they discussed the potential use of Hemopure for trauma victims, the Apri l
Offering Documents misled investors by failing to disclose that the FDA had barred Biopure
from conducting clinical trials on trauma victims for safety reasons . The April Offerin g
Documents further misled investors by falsely stating that an indication involving Hemopure' s
perioperative use in orthopedic surgery was the "only" indication applied for, when, in truth ,
Biopure had also sought permission to conduct trials for the trauma indication . The Apri l
Offering Documents further misled investors by disclosing a future "expectation" to expand
Hemopure's indications, design additional trials and submit them to the FDA for review, when ,
in truth, Biopure already had designed additional clinical trials, submitted the trial designs to th e
FDA for review, and received a clinical hold from the FDA. The April Offering Documents
further misled investors by referring to development plans for the trauma indication without
disclosing that the FDA placed the trauma indication on clinical hold for safety reasons arising
out of the FDA's preliminary assessment of Biopure's BLA .
The FDA Confirms the Clinical Hold in Writing and
Informs Biopure of Serious Concerns Relating to its Pending BL A
34. On or about April 25, 2003 , the FDA sent Biopure a le tter, addressed to defendant
Richman, confirming that it had imposed a hold on clinical trials of the trauma IND becaus e
"subjects would be exposed to an unreasonable and significant risk of injury" ("April 25 Letter" )
The April 25 Letter reiterated that the safety concerns that compelled the imposition of a clinical
12
hold arose out of a preliminary assessment of the company's BLA . The FDA stated that " results
of a pivotal human trial, used in support of the Hemopure BLA, and referred to in the IND ,
indicated that use of Hemopure, compared to human blood was associated with a highe r
incidence of life-threatening SAEs [ Serious Adverse Events] , including death and cardiac arrest."
Defendants Moore and Richman received a copy of the April 25 Letter by no later than April 30 ,
2003 .
Biopure Continues to Raise Money from Investors Without Disclosing'
the Clinical Hold or the FDA's Serious Concerns Relating to its Pending BL A
35 . On or about May 6, 2003, Biopure filed with the Commission a Rule 424(b)(3 )
prospectus supplement to the April Offering Documents, dated May 2, 2003, and a Rule
424(b)(3) prospectus supplement to the April Offering Documents, dated May 5, 200 3
(collectively, the "May Prospectus Supplements") . The May Prospectus Supplements, in the
aggregate, provided for the sale of up to 1,715,687 shares of common stock and warrants t o
purchase up to 343,138 shares of common stock . The May Prospectus Supplements incorporate d
by reference certain of Biopure prior public filings, including prior offering documents an d
periodic reports . Defendants Moore and Kober substantially participated in drafting, reviewin g
and/or approving the May Prospectus Supplements, and defendant Richman reviewed disclosure s
regarding the regulatory status of Biopure's FDA submissions .
36 . Biopure's May Prospectus Supplements were false and misleading because they
failed to disclose that the FDA had barred Biopure from conducting clinical trials of Hemopur e
on trauma victims for safety reasons arising out of a preliminary assessment of Biopure's BLA.
The May Prospectus Supplements further misled investors by incorporating by reference the fals e
13
and misleading statements and omissions contained in the April Offering Documents .
Biopure Unsuccessfully Petitions the FDA to Lift the Clinical Hold and
Continues to Raise Money from Investors Without Disclosin g
the Clinical Hold or the FDA' s Serious Concerns Relating to its Pending BLA
37 . On May 12, 2003, in response to the FDA' s clinical hold, Biopure made an
extensive submission to the FDA to request that the FDA lift its clinical hold . The submission ,
termed a "complete response" to the FDA's April 25 Letter, was signed by defendant Richman,
defendants Moore and Richman participated in drafting and reviewing it, and defendant Kobe r
was aware of the submission when it was made .
38. On or about May 14, 2003, Biopure filed a Form 8-K with the Commissio n
("May 14 Form 8-K") . Defendants Moore and Kober reviewed and approved the May 14 For m
8-K prior to its filing.
39. The May 14 Form 8-K attached as an exhibit a Standby Equity Distributio n
Agreement, dated April 16, 2003, between Biopure and BNY Capital Markets, Inc . ("CMI")
pursuant to which Biopure could issue and sell up to $10,000,000 of shares of its class A
common stock from time to time through CMI, as Biopure's exclusive agent for the offer an d
sale of the shares . Among the terms of the agreement that disclosed in the May 14 Form 8-K wa s
Biopure's representation and warranty that the company's registrations statements and
prospectuses :
. . . conformed and will conform in all material respects to the
requirements of the Exchange Act and the rules and regulations of the
Commission promulgated thereunder, and none of such documents
contained or will contain at such time an untrue statement of a material
fact or omitted or will omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading .
14
40. The May 14 Form 8-K was false and misleading to investors because, as describe d
herein, the April Offering Documents and May Prospectus Supplements contained untrue
statements of material fact or omitted to state material facts necessary to make the statement s
therein, in the light of the circumstances under which they were made, not misleading .
41 . On May 22, 2003, Biopure issued a press release announcing its results for th e
second quarter of fiscal year 2003 ("May 22 Press Release") and included the text of the releas e
in a Form 8-K filed with the Commission ("May 22 Form 8-K") . Defendants Moore, Richman ,
and Kober each substantially participated in drafting , reviewing and/or approving the May 22
Press Release .
42. The May 22 Press Release contained a section entitled , "Recent Corporate
Events ." Among the "Recent Corporate Events" listed was a statement referring to clinical trial s
for a trauma indication : "Biopure is preparing for a Phase 2a in-hospital trauma trial ."
43. The May 22 Press Release was misleading to investors because , among other
things, although the May 22 Press Release described planned clinical trials for a traum a
indication , Biopure concealed the truth from investors, that the FDA had placed the in-hospita l
trauma trial on clinical hold due to safety concerns arising out of its preliminary assessment o f
the BLA .
44. That same day, May 22, 2003, defendants Moore and Richman participated in a
conference call with analysts and investors regarding the earnings release for the second quarte r
("May 22 Investor Call") . During the May 22 Investor Call, defendant Moore stated, among
other things :
15
[W]e continue to be very hopeful of an [FDA] response on our [biologics]
license application by mid-year or sooner, and we continue to not be aware
of any major issues with that application at this time .
Our aim will be to have the product, again, assuming we get approved, on
or about June 1st to the end business [sic] and moving product no later
than October 1st.
Parkman Hospital is going to be our initial clinical center to conduct the
already announced in-hospital trauma trials that will set us up for
subsequent pre-Hospital trials to establish an additional trauma indication
for Hemopure .
45 . The May 22 Investor Call was false and misleading because defendants Moore
and Richman misled investors about the true information the company had received from th e
FDA . For example, the statement that "we continue to not be aware of any major issues with tha t
application at this time " was false and misleading because the FDA had already informe d
defendants of serious conce rn s about data from the pivotal BLA clinical trial , which necessitated
imposing a bar on clinical trials on trauma victims for safety reasons . Moreover, the clinical hold
was imposed based on the FDA's preliminary assessment of the BLA . In addition, the referenc e
to a particular hospital as Biopure's "initial clinical center to conduct the already announce d
in-hospital trauma trials" misled investors because defendants failed to disclose that the clinica l
hold barred Biopure from initiating the "already announced in-hospital trauma trials ." The May
22 Investor Call was further misleading because although defendants touted the potential use o f
Hemopure for trauma victims, they failed to disclose that the FDA had barred Biopure fro m
conducting clinical trials on trauma victims for safety reasons based on the FDA' s preliminary
16
assessment of the BLA.
Biopure 's Submission Fails to Persuade
the FDA to Lift the Clinical Hol d
46 . On or about May 30, 2003, the FDA sent two letters to Biopure , addressed to
defendant Richman, in response to Biopure's May 12 request to lift the clinical hold . In one May
30 letter, the FDA informed Biopure that the clinical hold would not be lifted . The FDA stated
that Biopure ' s request contained se rious inconsistencies and failed to address the FDA's safety
concerns . In addition, the FDA informed Biopure that its "conclusions about product safet y
remain unchanged," and the FDA required the company to conduct " at least three additional
studies in conscious swine" to address particular concerns prior to any testing in humans .
47. In the other May 30 letter to Biopure, the FDA informed Biopure that it wa s
extending the deadline to complete its review of Biopure's BLA for 90 days, until August 29 ,
2003 . The FDA expressly stated that the extension was taken because information submitted by
Biopure in its May 12 request to lift the clinical hold on the trauma indication containe d
significant new analyses of the BLA clinical data and therefore was a "major amendment" to
Biopure's BLA .
48. Defendants Moore and Richman received copies of both May 30 letters on o r
about May 30, 2003, and defendant Kober received a copy of, at least, the May 30 lette r
extending the deadline for the FDA to complete its review of the BLA on or about May 30, 2003 .
Biopure Discloses False Reasons for the 90-day Extension and
Misleadingly Characterizes the Extension as Positive News for the Compan y
49. On May 30, 2003, after receiving both May 30 letters from the FDA, Biopure
issued a press release ("May 30 Press Release") and held a conference call with investors an d
17
analysts ("May 30 Investor Call") . Defendants Moore, Richman, and Kober each substantiall y
participated in drafting, reviewing and/or approving the May 30 Press Release .
50. The May 30 Press Release stated, among other things, that :
Biopure submitted its BLA on July 31, 2002 . Under FDA performance
goals . . ., the agency has up to 10 months from the submission date to
review and act on the BLA, making the original action due date June 1,
2003 . As part of the normal review process, Biopure has responded to
FDA questions regarding the application . The agency has classified the
latest responses submitted in mid-May 2003 as additional analyses of
previously submitted data, which under FDA standard operatin g
procedures automatically provides the agency up to three months beyond
the original action due date to review the data .
51 . Biopure's May 30 Press Release was false and misleading because it misle d
investors about the true information the company had received from the FDA . For example, th e
May 30 Press Release falsely stated that Biopure had responded to FDA questions regarding th e
BLA, when, in truth, the company had responded to questions relating to the trauma IND and th e
clinical hold, which the company had never disclosed . The May 30 Press Release further falsely
stated that Biopure 's submission was "part of the normal review process" of the BLA and wa s
Biopure' s "latest responses" to FDA questions on the BLA, when, in truth, the submission wa s
the comp any's complete response to the FDA's April 25 clinical hold letter and was expressly
made in an effort to persuade the FDA to lift the clinical hold .
52. In addition, the May 30 Press Release failed to disclose, among other things, tha t
the 90-day extension resulted from Biopure's request to lift the clinical hold . The May 30 Press
Release failed to disclose that the FDA had placed the trauma IND on clinical hold. The May 3 0
Press Release further failed to disclose that the FDA had refused to li ft the clinical hold eve n
after Biopure had made a subst antial submission to the agency . The May 30 Press Release
18
further failed to disclose that the clinical hold was imposed based on the FDA's concerns abou t
the safety of Hemopure arising out of the same data that was submitted in support of the BLA .
53. Later that same day, defendants Moore and Richman participated in the May 3 0
Investor Call with investors and analysts . During the May 30 Investor Call, defendant Moor e
stated, among other things :
We view this notification [of the 90-day extension] as a very positive
development for Hemopure . First of all, we have a date which the agency
has indicated their intent to give us an action letter . Second, it confirms
what we already knew, that is, that the agency has devoted considerable
effort to this application . And third, as we also already knew, that now our
investor community knows, there is nothing in our application which is
warranted a denial of that application at the three key decision points
we've passed so far in the PDUFA process . By that, I mean our BLA was
accepted, it was also continued through the mid-cycle review conducted by
the agency, and now, at the PDUFA guideline date for a first response,
we've not had a denial, but rather a going forward to additional
consideration . The added time we're going to get over the next three
months will not only allow us to insure we can fully answer any additional
questions the FDA might choose to send our way, but also allow us to
complete legal negotiations and to continue forward with the commercial
preparations we are making against a hopeful approval on August 29th for
the name of introducing this product on or about the October introductory
guideline we mentioned in our conference call last week . So we feel very
positive about this . . . .
54. Also during the May 30 Investor Call, defendants Moore and Richman engaged i n
colloquies with stock analysts who participated in the call :
Analyst 1 : [D]id the FDA request any additional data to be submitted, or why do you think
that basically the FDA extended the timeline for the review process ?
Moore : The FDA did not request any additional data . . . .
Richman :
. . . This is what normally happens with any submission . As Tom has told the
public over the past many months, is that we are in continued dialogue with the
agency and during that period of time, they have requested information which we
have sent back to them . It's a normal process with any application . Be that as i t
19
may, the agency, during the course of reviewing the information has the
opportunity to take additional time to allow them to give a complete and
additional thorough review of all information to make a thorough conclusion o n
application. This type of response from the FDA is very common with biologic
licensing applications . Most recently, in 2001 and 2002, of the 11 BLAB that were
submitted to the Food and Drug Administration, all 11 of them went on to the
extended period of time for review which was outside the normal PDUFA 10
months . It is within the PDUFA guidelines to allow them to do that and they still
meet their matrix for approval for their guidance acumen.
Analyst 2 :
. . . I guess I'm a little bit confused on the timing of the submission of whatever it
is you did submit to the FDA given that your original BLA was submitted in July
31st of last year. I guess my question is why are you still having to provid e
information to the FDA? You said mid-May there was a resubmission of some
sort. Why nine and a half months after the original BLA was submitted are you
still having to provide information ?
Moore : It's actually . . . it's a continual process of providing information . I'm going to
let Howard comment on this specifically, but it would be difficult to categorize
how many hundreds of questions we've answered in the review of this BLA to
date. This mid-May submission was some additional analysis which we provided
on data that was already in the BLA . At the time, we didn't consider it a major
amendment to the BLA but the FDA looked at that as a reason to extend it . But
I'll let Howard comment on that.
Richman :
. . . Just as a point of clarification this is a normal occurrence . I've been lucky to
be involved with 12 other approval processes outside of Biopure,and this is a
normal thing that happens . We're, in fact, in constant contact with the agency
when they're requesting information in real time . So this is not anything new that
can happen . And what we have done is supply responses back to their continual
questions to allow them, again, as I mentioned earlier, to give complete and
thorough response to this first in class application .
Analyst 2 :
I understand there was a continuing dialogue and questions and answers, but it
would seem that for there to be some so rt of submission that would extend the
PDUFA date another two months, it would have to be something mate rial. And I
guess I'm just surprised that nothing was disclosed in mid-May when this
additional submission was made .
Moore : To be clear, we were simply responding to a new set of questions from FDA . It
did not involve any new data. And so frankly, it was well within the range of
20
other questions we've answered in the past. When we made that response, we
didn't characterize it as a major amendment to the BLA. I think the FDA chose to
do that and I think that really, how do I phrase this diplomatically , I think that's a
way for them to get this additional consideration time as opposed to some startling
new insight on the application . But that ' s not my role to call I would say, as
Howard has already said , so far the FDA's extended on 11 straight BLAs, so
we're number 12 .
Analyst 3 :
. . . Could you please be a little more specific in terms of -- the company has
submitted additional analyses of previously submitted data . Could you be a little
more specific as to what elements of the clinical data that that refers to ?
Moore : I can't be a lot more specific .
Analyst 3 : I mean, is it safety, is it statistical procedure, is it some auditing of patient
records? I mean, could you just be somewhat more specific ?
Moore : Well, all patient records have been audited and so all that's been done, so that's
not at issue as far as I know anyway .
Analyst 3 : Or merely is it formatting or you know ?
Moore : It's actually - - it was a dialogue really about how to look at the clinical data . As
you know, there are various analyses used to look at our efficacy and safety data
and we just had a dialogue about the different ways you could look at the analyses
that are performed on the data. And that's really as far as I want to characterize it .
Analyst 3 : But could you just give us maybe a broader ballpark sense as to - - you know, just
a broad area that it is -- is there a specific area that it's in that's a broad area that
maybe you could characterize it? That's more specific than just it's the clinical
data?
Moore : Well, I mean, all the clinical data has to do with safety and efficacy . That's the
only thing in measure in these clinicals . And so, the dialogue is over those
clinical and safety and efficacy data . And again, we have answered some
questions on a pretty broad basis . When I talk about it as how to look at the
clinical analysis, it's exactly what it was . So I think that's as far and as specific as
I really want to be at this point.
55. The May 30 Investor Call was false and misleading because defendants Moor e
21
and Richman misled investors about the true information that the company had received from the
FDA . For example, defendants misled investors by falsely characterizing the 90-day extensio n
as merely part of a normal, continuing dialogue with the FDA about the pending BLA, when, i n
truth, it arose out of Biopure's submission to lift the clinical hold on the trauma IND . In
addition, defendants' optimistic statements about the 90-day extension misled investors becaus e
they were contrary to the express reasons for the extension given by the FDA staff. In answering
direct questions from analysts, defendants further misled investors by providing false informatio n
about the true reason for the 90-day extension . Defendants further failed to disclose that th e
FDA had placed the trauma IND on clinical hold due to safety concerns and that the clinical hol d
was imposed based on the FDA's preliminary assessment of the BLA .
Biopure Continues to Conceal the Clinical Hold from Investor s
in Periodic Reports and Offering Documents Filed with the Commission
56. On or about June 16, 2003, Biopure filed with the Commission a Form 10-Q
quarterly report for the quarter ended April 30, 2003 ("June 16 Form 10-Q") . The June 16 Form
10-Q was signed by defendant Moore, who certified that it did not "contain any untrue statement
of a material fact or omit to state a material fact necessary to make the statements made, in light
of the circumstances under which such statements were made, not misleading ." Defendant s
Moore and Kober substantially participated in drafting, reviewing and/or approving the nonfinancial reporting sections of the June 16 Form 10-Q, and defendant Richman reviewe d
disclosures regarding the regulatory status of Biopure's FDA submissions .
57. On or about June 19, 2003, Biopure filed a Form S-3 registration statement an d
prospectus with the Commission an d on or about July 2, 2003, Biopure filed a Pre-Effective
22
Amendment No . 1 for Form S-3 registration statement and prospectus with the Commission fo r
the sale of common stock and warrants for the purchase of common stock (collectively, th e
"Summer 2003 Shelf Registration") . On or about July 3, 2003, Biopure filed a Rule 424(b)(3 )
prospectus with the Commission for the sale of common stock and warrants for the purchase o f
common stock ("July 3 Prospectus")
58. Defendant Moore signed the Summer 2003 Shelf Registration . Defendants Moore
and Kober substantially participated in drafting, reviewing and/or approving the Summer 200 3
Shelf Registration and July 3 Prospectus, and defendant Richman reviewed disclosures regarding
the regulatory status of Biopure's FDA submissions .
59. In each of the June 16 Form 10-Q, Summer 2003 Shelf Registration , and July 3
Prospectus, Biopure made the following statements, among others :
We Cannot Expand Indications for Our Products Unless We
Receive FDA Approval for Each Proposed Indicatio n
The FDA requires a separate approval for each proposed indication
for the use of Hemopure in the United States. We have applied for an
indication for Hemopure that will only involve its perioperative use in
patients undergoing orthopedic surgery . Subsequently, we expect to
expand Hemopure's indications . To do so, we will have to design
additional clinical trials, submit the trial designs to the FDA for review
and complete those trials successfully . . . .
60. Biopure's June 16 Form 10-Q, Summer 2003 Shelf Registration, and July 3
Prospectus were false and misleading because they misled investors about the true status o f
Biopure's clinical trials for the trauma indication. For example, the June 16 Form 10-Q, Summe r
2003 Shelf Registration, and . July 3 Prospectus misled investors by failing to disclose that th e
FDA had barred Biopure from conducting clinical trials of Hemopure on trauma victims fo r
23
safety reasons . The June 16 Form 10-Q, Summer 2003 Shelf Registration, and July 3 Prospectu s
further misled investors by falsely stating that an indication involving Hemopure's perioperative
use in orthopedic surgery was the "only" indication applied for, when, in truth, Biopure had als o
sought permission to conduct trials for the trauma indication . The June 16 Form 10-Q, Summe r
2003 Shelf Registration, and July 3 Prospectus further misled investors by disclosing a futur e
"expectation" to expand Hemopure's indications, design additional trials and submit them to th e
FDA for review, when, in truth, Biopure already had designed additional clinical trials , submitt ed
the trial designs to the FDA for review, and received a clinical hold from the FDA .
Biopure Again Unsuccessfully Petitions the FDA to Lift the
Clinical Hold and Continues to Raise Money from Investors Withou t
Disclosing the Clinical Hold or the FDA's Serious Concerns Relating to its Pending BL A
61 . On or about July 2, 2003, Biopure made a submission to the FDA in response to
the FDA's May 30 letters in a further attempt to have the clinical hold lifted . Defendant
Richman prepared and signed this submission at defendant Moore's direction, and defendant
Moore received and reviewed it prior to submission to the FDA .
62. On or about July 17, 2003, Biopure filed a Form 8-K with the Commission ("Jul y
17 Form 8-K") . Defendants Moore and Kober reviewed and approved the July 17 Form 8- K
prior to its filing .
63 . The July 17 Form 8-K attached as an exhibit a Placement Agency Agreement ,
dated July 17, 2003, between Biopure and ThinkEquity Partners, LLC pursuant to whic h
ThinkEquity Partners , LLC would act as exclusive placement agent for Biopure for the sale by
Biopure of up to $17,250,000 of shares of its class A common stock . Among the terms of th e
agreement that was disclosed in the July 17 Form 8-K was Biopure' s representation and warranty
24
that the company's registrations statements and prospectuses :
. . . conformed and will conform in all material respects to the
requirements of the Exchange Act and the rules and regulations of the
Commission promulgated thereunder, and none of such documents
contained or will contain at such time an untrue statement of a material
fact or omitted or will omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading .
64. The July 17 Form 8-K was false and misleading to investors because, among othe r
things, the company's prior filings with the Commission contained untrue statements of materia l
fact or omitted to state material facts necessary to make the statements therein, in the light of th e
circumstances under which they were made, not misleading .
65 . On or about July 18, 2003, Biopure filed a Rule 424(b)(5) prospectus supplemen t
to the July 3 Prospectus for the sale of up to 3,083,000 shares of common stock to institutional
investors ("July 18 Offering Document") . The July 18 Offering Document incorporated by
reference certain of Biopure prior public filings, including prior offering documents and periodi c
reports . Defendants Moore and Kober substantially participated in drafting, reviewing and/o r
approving the July 18 Offering Document, and defendant Richman reviewed disclosures
regarding the regulatory status of Biopure's FDA submissions .
66. Biopure's July 18 Offering Document was false and misleading because, amon g
other things , it failed to disclose that the FDA had barred Biopure from conducting clinical tri als
of Hemopure on trauma victims for safety reasons . The July 18 Offering Document furthe r
misled investors by incorporating by reference prior public filings, discussed herein, that
contained false statements and omissions regarding the clinical hold imposed by the FDA based
on safety concerns arising from a preliminary assessment of Biopure's BLA .
25
The FDA Declines to Approve Hemopure, Issues a
Complete Response Letter to the BLA and Refuses to Lift The Clinical Hol d
67. On July 30, 2003, Biopure received two letters from the FDA : a complet e
response letter in which the FDA informed Biopure that its BLA was not approved, and a lette r
in which the FDA again declined to lift the clinical hold on the trauma IND .
68. From July 30, 2003 until December 11, 2003, in multiple public filings, pres s
releases and statements, defendants misled investors by failing to disclose that they had receive d
a complete response letter from the FDA, despite the fact that others, including FDA staff and
Biopure's own outside regulatory counsel, repeatedly and consistently identified the letter t o
defendants as a complete response letter . From July 30 until December 11, defendants furthe r
misled investors in multiple public filings, press releases and statements by misrepresenting th e
nature and scope of the deficiencies in the BLA raised by the FDA and by failing to disclose th e
continuing clinical hold on the trauma indication .
69. The July 30 complete response letter began by stating that :
The Center for Biologics Evaluation and Research (CBER) has completed
the review of all submissions made relating to your Biologics License
Application . Our review finds that the information and data submitted are
inadequate for final approval action at this time based on the deficiencies
outlined below .
70. The July 30 complete response letter also summarized the deficiencies of
Biopure 's BLA in 34 single-spaced pages . In total, the letter contained more-than 220
deficiencies and questions regarding Biopure's clinical trials, its data and the safety and efficac y
of Hemopure . Chief among these were questions about the conduct of Biopure's clinical trial s
and the integrity of its data, in particular whether controls were sufficient to ensure that the dat a
26
in Biopure's BLA submission was accurate and reliable enough to form the basis for conclusion s
about safety and efficacy, and about why Biopure failed to perform certain analyses as the FD A
had expected and recommended . The FDA further expressly reserved its right to re-evaluat e
safety and efficacy data pending resolution, if possible, of data integrity issues . The complete
response letter stated that the review clock was suspended with its issuance .
71 . In the FDA's other July 30 letter, the FDA again refused to lift the clinical hold o n
the trauma IND "because human subjects are or would be exposed to an unreasonable an d
significant risk of illness or injury ." In support of that conclusion, the FDA cited many of th e
same deficiencies and questions raised in its complete response le tter to Biopure 's BLA. As in
the complete response letter, the clinical hold letter also questioned the controls of the clinica l
trials and the analysis of the resulting data, and raised concerns about the safety of Hemopure .
72 . Defendants Moore, Richman, and Kober each received a copy of the July 3 0
complete response letter on or about July 30, 2003 . Defendants Moore and Richman receive d
copies of the July 30 clinical hold letter on or about July 30, 2003, and defendant Kober wa s
made aware of the letter and its contents in discussions with other Biopure management no late r
than July 31, 2003 .
73 . Given the length , detail and substance of the deficiencies identified by the FDA,
the July 30 complete response letter and the July 30 clinical hold letter were a major setback i n
Biopure's effort to gain FDA approval for Hemopure . This was especially so because as of Jul y
30, 2003, Biopure had made two substantial submissions to the FDA seeking to lift the clinical
hold, but had been unable to adequately address the FDA's concerns .
27
74 . On or about the mo rning of July 31 , 2003 , defendant Richman telephoned a
member of the FDA staff working on Biopure's BLA and trauma IND applications to discus s
Biopure's next step after receipt of the complete response letter. The FDA staff member
identified the letter as a complete response letter and told defendant Richman that within 10 day s
of its receipt, Biopure should take one of the following actions : amend the application ; notify th e
FDA of its intent to amend the application; withdraw the application ; or request a hearing .
Defendant Richman asked whether because the complete response letter was issued 30 day s
before the due date, if Biopure were able to respond to the complete response letter within the 3 0
days, would it receive approval . The FDA staff member responded that with the issuance of a
complete response letter, the review clock had stopped and no further review would b e
considered until Biopure responded to all deficiencies listed in the letter. The FDA staff member
further told defendant Richman that a partial response would not be considered for review, a
response to all listed deficiencies was required in order to re-sta rt the clock . The FDA staff
member further told defendant Richman that once the FDA received Biopure's response to th e
complete response letter, the agency gets a new review cycle of six months to review thos e
responses .
75 . On or about July 31, 2003, Biopure, acting through defendant Kober, contacted
outside counsel that specialized in FDA regulatory matters concerning the complete respons e
letter and a draft of a press release that the company intended to issue . The draft press release
stated that Biopure had received a letter from the FDA, but did not identify it as a complet e
response letter. Biopure's outside counsel orally advised defendant Kober that he "didn't have
time to read letter but looked like complete response ." Outside counsel further advised
28
defendant Kober that a draft release disclosing receipt of the letter looked "unduly optimistic ."
Outside counsel further advised defendant Kober that issuance of the letter "30 days early in thi s
context while true isn't great cause optimism [sic] ." Defendant Kober informed defendant s
Moore and Richman of the substance of outside counsel's comments .
Biopure Misleads Investors About the July 30 Letters
76 . On August 1, 2003, Biopure issued a press release ("August 1 Press Release") an d
included the text of the release in a Form 8-K filed with the Commission ("August 1 Form 8-K") .
Defendants Moore, Richman, and Kober each substantially participated in drafting, reviewin g
and/or approving the August 1 Press Release .
77. The August 1 Press Release stated, among other things :
Biopure Corporation (Nasdaq : BPUR) announced today that the U.S. Food
and Drug Administration (FDA) has completed its review of the
company's biologic license application (BLA) for Hemopure(R)
[hemoglobin glutamer - 250 (bovine)] and issued a letter requesting
additional information. The letter focuses primarily on clarification of
clinical and preclinical data and includes some comments on labeling . It
does not request additional clinical trials . Biopure has applied to market
Hemopure in the United States for the treatment of acutely anemic adult
patients undergoing orthopedic surgery and for the elimination or
reduction of red blood cell transfusions in these patients .
With 30 days remaining in the original BLA review cycle , the issuance of
the letter has suspended the FDA review clock until Biopure submits a
complete response.
"We're encouraged that the FDA has finished its review and provided
comprehensive feedback in advance of the formal action due date . By
maintaining thirty days on the review clock, the FDA is encouraging us to
work with them to complete the approval process as quickly as possible,"
said Biopure President and CEO Thomas A . Moore. "We'll work with the
Agency to address the remaining questions and will provide our answers
as expeditiously as possible ."
29
78 . After the August 1 Press Release was issued on the morning of August 1, 2003 ,
Biopure's stock price rose 22 .27%, from a closing price of $5 .97 on July 31, 2003 to a closing
price of $7 .30 on August 1, 2003 .
79. Biopure's August 1 Press Release was false and misleading because it misle d
investors about the true information that the company had received from the FDA . For example ,
the August 1 Press Release failed to disclose that Biopure had received a complete response lette r
from the FDA. In addition, the August 1 Press Release was misleadingly optimistic despite th e
fact that Biopure had received two detailed letters from the FDA that constituted a major setback
in its effort to gain FDA approval for Hemopure . Defendants Moore' s statement in the August 1
Press Release that the FDA was "encouraging " Biopure to "complete the approval process a s
quickly as possible" further misled investors because it had no basis in fact and was inconsisten t
with the seriousness and number of deficiencies identified by the FDA and the amount of time it
would take Biopure to respond . References in the August 1 Press Release to 30 days remainin g
in the review cycle further misled investors about the amount of time that the FDA would have to
respond -- six months -- once Biopure responded to all deficiencies in the letter . The. August 1
Press Release further misled investors by stating that the FDA had not requested additiona l
clinical trials when, in truth, the FDA was questioning the integrity of Biopure 's data, a
preliminary step prior to determination of whether new trials would be necessary and was furthe r
refusing to lift the hold barring clinical trials on trauma victims . The August 1 Press Release
further failed to disclose anything about the clinical hold, including that the FDA had impose d
one, that Biopure had received a lengthy and detailed letter refusing to lift the clinical hold whic h
identified many of the same deficiencies and raised many of the same questions as the complet e
30
response letter, or that Biopure had twice unsuccessfully a ttempted to persuade the FDA to lif
t
the clinical hold .
80. On or about August 5, 2003, defendant Kober sent an e-mail to outside counse l
specializing in FDA regulatory matter to request assistance with developing a strategy fo r
responding to the FDA' s complete response le tter. In a response sent that same day , Biopure' s
outside counsel sent an e-mail to defendant Kober that identified the July 30 letter as a complet e
response letter.
Biopure Continues To Misrepresent the Complete Response Letter
and To Conceal the Existence of the Clinical Hol d
81 . On August 21, 2003, Biopure issued a press release announcing its financia l
results for the 3rd quarter of fiscal year 2003 ("August 21 Press Release") and included the tex t
of the press release in a Form 8-K filed with the Commission, dated September 15, 200 3
("September 15 Form 8-K") . Defendants Moore, Richman, and Kober each participated in
drafting, reviewing and/or approving the August 21 Press Release .
82. The August 21 Press Release stated , among other things :
On July 30th, the FDA sent Biopure a letter stating that the agency has
completed its review of the company's BLA to market Hemopure in the
United States for the treatment of acutely anemic adult patients undergoing
orthopedic surgery and for the elimination or reduction of red blood cell
transfusions in these patients . The letter requests additional information
and suspends the BLA review clock with 30 days remaining in the original
review cycle . It does not request additional clinical trials . Biopure is
preparing its response, which, when submitted, will restart the review
clock.
83 . Biopure's August 21 Press Release was false and misleading because it misled
investors about the true information that the company had received from the FDA. For example,
31
the August 21 Press Release failed to disclose that Biopure had received a complete response
letter from the FDA . References in the August 21 Press Release to 30 days remaining in th e
review cycle further misled investors about the amount of time that the FDA would have t o
respond -- six months -- once Biopure responded to all deficiencies in the letter . The August 2 1
Press Release further misled investors by stating that the FDA had not requested additional
clinical trials when, in truth, the FDA was questioning the integrity of Biopure' s data, a
preliminary step prior to determination of whether new trials would be necessary and was furthe r
refusing to lift the hold barring clinical trials on trauma victims . The August 21 Press Releas e
further failed to disclose anything about the clinical hold, including that the FDA had impose d
one, that Biopure had received a lengthy and detailed letter refusing to lift the clinical hold whic h
identified many of the same deficiencies and raised many of the same questions as the complet e
t
response letter, or that Biopure had twice unsuccessfully a ttempted to persuade the FDA to lif
the clinical hold .
84. That same day, August 21, 2003, defendants Moore and Richman participated in a
conference call with investors and analysts ("August 21 Investor Call") . During the August 2 1
Investor Call, defendant Moore stated, among other things :
The agency has done us a big favor by providing what amounts to a
complete detailed response and set of questions to Biopure prior to the end
of the review cycle, and then stopping the review clock with 30 days
remaining in the PDUFA cycle. They have thereby made a commitment to
give us an action letter 30 days after we provide our response to their
questions . They could just as easily have announced an end to the review
cycle with their response, in which case they would have had two to six
months to respond to our answers instead of the 30 day period .
32
Our efforts to date suggest that we're in good shape so far to be able to
answer FDA's questions .
85 . During the August 21 Investor Call, defendants Moore and Richman engaged i n
colloquies with a stock analyst who participated in the call :
Analyst 1 :
. . . A couple of questions on the letter from the FDA . You used
the term complete response a couple of times . But, this isn't a
complete response letter. What is it exactly?
Moore : It's, and I'll ask Howard Richman to comment on this in just a second . It is -- I
think Howard will call it a hybrid, and by that I mean it genuinely represents all
the questions that FDA would like to have us answer, and so in that sense it's like
a complete response . But normally a complete response letter brings an end to the
review cycle . And the agency has elected not to do that, offering us this precious
opportunity to get a response 30 days after we submit the answers to those
questions . And so, that's what it is .
Analyst 1 : It sounds like the response is going to take some time . Can you tell me about how
many questions are involved? And the followup question is, depending on the
length of your response, is it reasonable to expect that the FDA is going to be able
to respond back within that 30 day timeline? If you give them a very exhaustive
detailed response back, as I know you will, isn't it going to take the FDA longer
than 30 days to respond back ?
Moore : I think that's a very fair question, and that's one of the motivations we have for
having a meeting with FDA simply so we can agree on how we're going to order
this data and maybe how we can share some of the data as we go so that it makes
it easier for them to meet that guideline .
Richman: I'll share this with yourself and for the other people listening . This type of letter
is very unique. As Tom clearly stated for everyone, it is a hybrid, it's something
that was done from the (indiscernible) perspective to work with Biopure in this
aspect because you're right in stating that people have (indiscernible), this does
not follow the area that we've seen where you look on FDA sites or in other
complete responses . This was done with the specific intent to work with us . With
that being said, it counts in such a way that they want us to be able to get back to
them vis-a-vis this meeting and in our answers . Many of our answers will not be
that detailed in response, some are in clarification, which will only meet the FDA
with some points we're going to discuss with them . Other ones will just provide
them information they requested in terms of clarification and follow-up source
documents and other information they've asked about. So, when you say about a
33
detailed (indiscernible) response, in many ways it will not be . But it's also clear
that the format that they have for us with FDA which will be clarified on a
meeting in September will clearly enlighten us and them and give a clear pathway
to the response in a correct time frame .
Analyst 2 :
. . . My question is, what will you do if Biopure doesn't get FDA approval ?
Moore :
. . . While we are continuing to be cautiously optimistic, we're on the approval
track . If you ask us to specifically address this question, which you have, I guess
what I'd say is the FDA doesn't really just say no . At least not in a situation like
this where an application has been accepted and taken this far down the review
track. What the FDA says is here's what you've got to do, guys, if you want to
persuade us to say yes . And generally what they'd say is you need more
information . I'm going to take a big leap here, Howard [Richman] may hit me .
But if the information we've given them so far led them to say we can't approve it
then they would've already said we can't approve it . Okay? You don't go back
and forth like this because the product is not approvable . The question for the
agency is the process of putting together the adequacy of the total data set .
Analyst 3 : Is there anything on the work the trials that the military is doing in trauma yet ?
Moore : We've not initiated human clinical trials in trauma with the military or for that
matter on the civilian side as yet . So, we hope to get started on that ASAP . I
think probably those trials will begin, however, at least after we have -- no sooner
than after we filed our responses with FDA on the BLA questions. As I
mentioned earlier in my flurry of discussions about meetings, Naval medical
research has been very active in doing preclinical work on trauma with our
product, and then sharing those results in several different forms actually . So,
work is going on very actively on the trauma side, but I don't believe human trials
will begin until after we have completed our answers to the BLA. Part of this is
related to the fact that we already are engaged in FDA in a dialogue on a total
clinical development program in trauma with FDA. And so we expect the final
discussion on that with FDA will ensue after we've addressed the questions
they've asked for us on the use in anemia from surgery indication .
86. Biopure's August 21 Investor Call was false and misleading because defendants
misled investors about the true information that the company had received from the FDA . For
34
example, defendants misled investors by falsely characterizing the July 30 letter- as a "hybrid "
letter, when, in truth, it was a "complete response letter," and that fact had been confirmed by the
FDA to defendant Richman at least two times by August 21, 2003 . Defendants further misle d
investors by falsely stating that the FDA would have 30 days to review a submission fro m
Biopure, when, in truth, the agency would have six months to review a submission once Biopur e
had addressed all deficiencies in the complete response letter . Defendant Moore's statement s
that the FDA did a "big favor" for Biopure and had "made a commitment to give us an action
letter 30 days after we provide our response to their questions" further misled investors because ,
among, other things, these statements had no basis in fact, were inconsistent with statement s
made by the FDA to Biopure and were contrary to the six month period the FDA would have t o
review a resubmission . Defendants further misled investors by stating that the company was "i n
good shape" to address the deficiencies and questions in the complete response letter, when, i n
truth, the deficiencies and questions were of such a substantial nature that Biopure would not be
able to respond to them for years . Defendants further misled investors in the August 21 Investo r
Call by making optimistic statements about the likelihood of FDA approval, when, in truth, th e
deficiencies and questions in the two July 30 letters from the FDA, as well as concerns discusse d
by the FDA during telephone calls, were major obstacles to obtaining FDA approval . Defendant s
further misled investors during the August 21 Investor Call by discussing clinical trials of a
trauma indication but concealing from investors that the FDA had barred Biopure from
conducting clinical trials on trauma victims for safety reasons .
87. On or about August 22, 2003, Biopure filed a Form S-3 registration statement and
prospectus with the Commission for the sale of common stock and warrants for the purchase o f
35
common stock by selling security holders ("August Secondary Offering Documents") .
Defendant Moore signed the August Secondary Offering Documents . Defendants Moore and
Kober substantially participated in drafting, reviewing and/or approving the August Secondar y
Offering Documents, and defendant Richman reviewed disclosures regarding the regulator y
status of Biopure's FDA submissions .
88 . In the August Secondary Offering Documents, Biopure did not state that the July
30 letter it had received from the FDA was a complete response le tter. In addition, Biopure made
the following statement, among others :
We Cannot Expand Indications for Our Products Unless We Receive FDA
Approval for Each Proposed Indicatio n
The FDA requires a separate approval for each proposed indication
for the use of Hemopure in the United States . We have applied for an
indication for Hemopure that will only involve its perioperative use in
patients undergoing orthopedic surgery . Subsequently, we expect to
expand Hemopure's indications . To do so, we will have to design
additional clinical trials, submit the trial designs to the FDA for review
and complete those trials successfully . . . .
89. Biopure's August Secondary Offering Documents were false and misleadin g
because they misled investors about the true information that the company had received from th e
FDA. For example, Biopure 's August Secondary Offering Documents failed to disclose, amon g
other things, that the July 30 letter from the FDA was a complete response letter . The August
Secondary Offering Documents further misled investors by failing to disclose that the FDA ha d
barred Biopure from conducting clinical trials of Hemopure on trauma victims for safety reason s
and that Biopure had twice unsuccessfully petitioned the FDA to lift the hold . The August
Secondary Offering Documents further misled investors by falsely stating that an indicatio n
36
involving Hemopure's perioperative use in orthopedic surgery was the "only" indication applie d
for, when, in truth, Biopure had also sought permission to conduct trials for the traum a
indication. The August Secondary Offering Documents further misled investors by disclosing a
future "expectation" to expand Hemopure's indications, design additional trials and submit the m
to the FDA for review, when, in truth, Biopure already had designed additional clinical trials ,
submitted the trial designs to the FDA for review, an d received a clinical hold from the FDA .
Biopure 's Outside Counsel Confirms th e
July 30 Letter was a Complete Response Letter an d
a Six Month Review Period Would Apply to a Resubmission
90. On or about August 26, 2003 , acting at the request of Biopure management ,
Biopure 's outside counsel contacted FDA staff to determine whether the FDA planned to issue a
second response letter by August 29 . Following that conversation , Biopure 's outside counse l
informed defendants Moore, Richman and Kober in e-mails and discussions that despite the us e
of some non-standard language and the issuance of the letter 30 days prior to the due date, th e
July 30 letter that Biopure received was a complete response letter for the BLA . Biopure' s
outside counsel further confirmed to defendants Moore, Richman and Kober that the revie w
cycle had been completed without approval by the FDA and that the FDA would have six months
to review any resubmission from Biopure .
Biopure Continues To Misrepresent the Complete Response Letter and
To Conceal the Existence of the Clinical Hold While Raising Money from
Investors, Making Public Statements and Filing Periodic Reports with the Commissio n
91 . On September 12, 2003, Biopure filed a Form 424(b)(3) prospectus ("Septembe r
12 Prospectus") with the Commission . In the "Risk Factors" section of the September 1 2
Prospectus, Biopure stated that the July 30 FDA letter was a complete response letter.
37
92 . On September 15, 2003, the following trading day, Biopure's stock price droppe d
by 6 .5% on heavy trading . When asked about this trading activity, Biopure's Director o f
Corporate Communications attributed the stock movement to the disclosure that Biopure ha d
received a complete response letter . In e-mail messages to investors, the Director of Corporat e
Communications stated that the reference to the letter as a "complete response letter" had been a
"mistake" by a "junior lawyer at a law firm" used by the company .
93. On September 15, 2003, Biopure filed an amended Form 424(b)(3) prospectu s
("September 15 Prospectus") with the Commission . The September 15 Prospectus omitted the
reference to the July 30 letter as a "complete response letter ." Defendants Moore and Kobe r
substantially participated in drafting, reviewing and/or approving the September 15 Prospectus ,
and defendant Richman reviewed disclosures regarding the regulatory status of Biopure's FDA
submissions .
94. Also on or about September 15, 2003, Biopure filed with the Commission a Form
10-Q quarterly report for the quarter ended July 31, 2003 ("September 15 Form 10-Q") .
95 . The September 15 Form 10-Q was signed by defendant Moore, who certified tha t
it did not "contain any untrue statement of a material fact or omit to state a material fac t
necessary to make the statements made, in light of the circumstances under which suc h
statements were made, not misleading ." Defendants Moore and Kober substantially participate d
in drafting, reviewing and/or approving, and defendant Richman reviewed, the non-financia l
reporting sections of the September 15 Form 10-Q .
96 . In the September 15 Form 10-Q, Biopure did not state that the July 30 letter it ha d
received from the FDA was a complete response letter . In addition, Biopure made the followin g
38
statement, among others :
We Cannot Expand Indications for Our Products Unless We Receive FDA
Approval for Each Proposed Indicatio n
The FDA requires a separate approval for each proposed indication
for the use of Hemopure in the United States . We have applied for an
indication for Hemopure that will only involve its perioperative use in
patients undergoing orthopedic surgery . Subsequently, we expect to
expand Hemopure's indications . To do so, we will have to design
additional clinical trials, submit the trial designs to the FDA for review
and complete those trials successfully . . . .
We also plan to develop Hemopure for potential use in trauma and other
medical applications .
97. Biopure's September 15 Form 10-Q was false and misleading because it misled
investors about the true information that the company had received from the FDA . For example,
Biopure's September 15 Form 10-Q failed to disclose, among other things, that the July 30 lette r
from the FDA was a complete response letter . The September 15 Form 10-Q was further false
and misleading because it failed to disclose that the FDA had barred Biopure from conductin g
clinical trials of Hemopure on trauma victims for safety reasons . The September 15 Form 10- Q
further misled investors by falsely stating that an indication involving Hemopure's perioperativ e
use in orthopedic surgery was the "only" indication applied for, when, in truth, Biopure had als o
sought permission to conduct trials for the trauma indication . The September 15 Form 10-Q
further misled investors by disclosing a future "expectation" to expand Hemopure's indications,
design additional trials and submit them to the FDA for review, when, in truth, Biopure alread y
had designed additional clinical trials, submi tt ed the trial designs to the FDA for review, and
received a clinical hold from the FDA . The September 10 Form 10-Q further misled investors b y
39
referring to development plans for the trauma indication without disclosing that the FDA place d
the trauma indication on clinical hold for safety reasons arising out of the same data submitted i n
support of Biopure's BLA .
98. On October 30, 2003, Biopure issued another press release ("October 30 Pres s
Release") and included the text of the release in a Form 8-K filed with the Commissio n
("October 30 Form 8-K") . Defendants Moore and Kober each substantially participated i n
drafting, reviewing and/or approving the October 30 Press Release .
99 . The October 30 Press Release announced that defendant Richman, who had bee n
terminated, had left Biopure . The October 30 Press Release further stated, among other things :
Biopure Corporation (Nasdaq : BPUR) today announced its plan to respond
by June 30, 2004, to the Food and Drug Administration's (FDA) questions
regarding its biologic license application (BLA) for Hemopure(R )
[hemoglobin glutamer - 250 (bovine)] . The company has adjusted its
operating plan to reduce expenses and conserve cash while it completes its
written response to the FDA .
Biopure applied for FDA approval to market the company's oxygen
therapeutic, Hemopure, in the United States for the treatment of acutely
anemic adult patients undergoing orthopedic surgery and for the
elimination or reduction of red blood cell transfusions in these patients .
During the past two months the company has had several substantive
interactions with the FDA to clarify the Agency's questions . Many of
Biopure's responses have been completed . However, some require the
retrieval of source medical documents and/or historical blood transfusion
data from clinical trial sites in various countries, which will take severa l
months to complete .
"In the best interests of our shareholders, today we've taken the steps
necessary to more efficiently run our business while we complete our
comprehensive response to all of the FDA's questions," said Biopure
President and CEO Thomas A . Moore . "We view the Agency's question s
40
as a `roadmap' to approval and have set a conservative, achievable target
date for our response . We remain enthusiastically committed to
commercializing Hemopure in the United States as expeditiously as
possible."
100 . The October 30 Press Release was false and misleading because it misle d
investors about the true status of Biopure's continued efforts to seek FDA approval fo r
Hemopure . For example, in the October 30 Press Release, defendants continued to conceal fro m
investors that the July 30 letter was a complete response letter. The October 30 Press Releas e
was further misleading to investors because Biopure failed to disclose to investors that th e
June 30, 2004 planned response date was dependent upon Biopure pursuing a much narrowe r
indication than in the original BLA . Indeed, prior to issuance of the October 30 Press Release ,
Biopure ignored advice from the company's outside counsel, who after reviewing a draft of th e
release recommended that company disclose that, "[i]n its planned response to FDA, Biopure
intends to narrow its focus and seek approval only for anemia in those surgical settings wher e
blood transfusion is not an option ." The October 30 Press Release was further misleading to
investors because the clinical hold on the trauma IND remained undisclosed .
101 . Even though the October 30 Press Release misled investors by containing fals e
statements and failing to disclose material facts, the market reacted to the negative -- albei t
incomplete -- news that was contained in the release, including that defendant Richman had left
the company and that it would take eight additional months to response to the complete respons e
letter. On October 30, 2003, on heavy trading volume, Biopure's stock price closed at $3 .68, a
39% decrease from the prior day's closing price of $6 .05 .
41
Biopure Discloses the Complete Response Letter and the Clinical Hol d
102 . On or about December 11, 2003, Biopure issued a press release ("December 1 1
Press Release") announcing its financial results for the fiscal year ending October 31, 2003 an d
included the text of the release in a Form 8-K filed with the Commission ("December 11 Form 8K") . In the December 11 Press Release, Biopure disclosed for the first time -- and more tha n
four months after it was issued -- that the July 30 letter from the FDA was a complete respons e
letter. The December I 1 Press Release, however, did not disclose the clinical hold on the traum a
trials .
103 . Defendants Moore, Richman, and Kober each substantially participated i n
drafting, reviewing and/or approving the December 11 Press Release .
104 . On Christmas Eve, December 24, 2003, after the close of the stock markets ,
Biopure issued a press release ("December 24 Press Release") and included the text of the releas e
on a Form 8-K filed with the Commission ("December 24 Form 8-K") . In the December 24 ,
2003 Press Release, Biopure publicly revealed for the first time the trauma clinical hold impose d
by the FDA more than eight months earlier. Biopure also disclosed that the company had
received a "Wells Notice" that the Commission staff had made a preliminary determination t o
recommend filing a civil injunctive action against the company . On the next trading day,
December 26, 2003, Biopure's stock price closed down 13 .83% at $2.43 . On Monday ,
December 29, 2003, the first trading day after the Christmas holiday weekend, Biopure's stoc k
closed at $2.33, which represented a 17 .3 8% decrease from the closing price on December 24 ,
2003 .
42
Biopure Raised a Significant Amount of Capital from Investors
105 . While defendants were engaged in the fraudulent scheme described herein ,
Biopure raised a significant amount of capital in connection with the several offerings of stoc k
during the relevant period . For example, on April 16, 2003, Biopure realized $3,032,000 in net
proceeds from sale of shares and warrants . On May 2, 2003 and May 6, 2003, Biopure realized
$3,134,000 and $2,935,000, respectively, in net proceeds from sales of shares and warrants . On
July 23, 2003, Biopure realized $ 16,138,000 in net proceeds from the sale of 3,083 , 000 shares of
common stock . Biopure also had sales of $10,000,000 of common stock issued from time t o
time through the standby equity distribution agreement with CMI . Biopure also received $3.2
million in net proceeds from the exercise of warrants to purchase 712,141 shares of its commo n
stock at an average exercise price of $4 .52 per share during the fiscal year ended October 31 ,
2003 .
Remedies
106 . The violations set forth in this Complaint involve fraud, deceit, manipulation, or
deliberate or reckless disregard of a regulatory requirement and such violations directly o r
indirectly resulted in substantial losses or created a significant risk of substantial losses to othe r
persons.
FIRST CLAI M
(Violation of Exchange Act Section 10(b) and
Exchange Act Rule I Ob-5 Against All Defendants )
107 . The Commission repeats and incorporates by reference the allegations in
paragraphs 1- .106 of the Complaint as if set forth fully herein .
43
108 . As set forth more fully herein, each of defendants, directly or indirectly, by use o f
the means or instruments of interstate commerce, or of the mails, or of a facility of a nationa l
securities exchange, knowingly or recklessly (a) employed devices, schemes and artifices t o
defraud; (b) made untrue statements of material fact or omitted to state material facts necessar y
in order to make the statements made, in light of the circumstances under which they were made ,
not misleading ; and (c) engaged in acts, transactions, practices, and courses of business whic h
operated or would operate as a fraud or deceit upon the purchasers of securities and upon othe r
persons, in connection with the purchase or sale of a security .
109 . In connection with the acts and omissions described herein, each of defendants ,
acted knowingly or recklessly . Each knew, or was reckless in not knowing, that one of more o f
the April Offering Documents , May Prospectus Supplements, May 14 Form 8-K, May 22 For m
8-K, June 16 Form 10-Q, Summer 2003 Shelf Registration, July 3 Prospectus, July 18 Offerin g
Document, July 17 Form 8-K, August 1 Form 8-K, August Secondary Offering Documents ,
September 15 Form .S-K, September 15 Prospectus, September 15 Form 10-Q, and October 3 0
Form 8-K (collectively, "Biopure's SEC Filings") and May 22 Press Release, May 22 Investor
Call, May 30 Press Release , May 30 Investor Call, August 1 Press Release , August 21 Pres s
Release, August 21 Investor Call, October 30 Press Release, and December 11 Press Releas e
(collectively, "Biopure's Public Statements") employed devices, schemes and artifices t o
defraud, contained material misstatements and omissions, or operated or would operate as a frau d
or deceit in connection with the purchasers or sale of a security .
110 . By reason of the foregoing, each of defendants violated Section 10(b) of th e
Exchange Act and Exchange Act Rule I Ob-5 .
44
SECOND CLAIM
(Violation of Securities Act Section 17(a) Against All Defendants )
111 . The Commission repeats and incorporates by reference the allegations in
paragraphs 1-106 of the Complaint as if set forth fully herein .
112 . As set forth more fully herein , each of defendants in the offer or sale of securities,
by the use of means or instruments of transportation or communication in interstate commerce, o r
by the use of the mails, directly or indirectly : (a) employed devices, schemes or artifices to
defraud; (b) obtained money or property by means of untrue statements of material facts o r
omissions to state material facts necessary in order to make the statements made, in the light o f
the circumstances under which they were made, not misleading ; or (c) engaged in transactions ,
practices or courses of business which operated or would operate as a fraud or deceit upo n
purchasers of securities .
113 . In connection with the acts and omissions described herein, each of defendants
acted knowingly, recklessly, or negligently . Each knew, or was reckless in not knowing, or
should have known, that one or more of Biopure's SEC Filings and Biopure's Public Statement s
employed devices, schemes or artifices to defraud, contained material misstatements an d
omissions, or operated or would operate as a fraud or deceit upon purchasers of securities .
114 . By reason of the foregoing, each of defendants violated Section 17(a) of the
Securities Act.
45
THIRD CLAI M
(Violation of Exchange Act Section 13(a) an d
Exchange Act Rules 12b-20, 13 a-11 and 13 a-13 Against Defendant Biopure )
115 . The Commission repeats and incorporates by reference the allegations i n
paragraphs 1-106 of the Complaint as if set forth fully herein .
116. Section 13(a) of the Exchange Act and Rules 13a-11 and 13a-13 thereunde r
require issuers of registered securities to file with the Commission factually accurate current an d
quarterly reports . Exchange Act Rule 12b-20 provides that in addition to the informatio n
expressly required to be included in a statement or report, there shall be added such further
material information, if any, as may be necessary to make the required statements, in the light o f
the circumstances under which they are made, not misleading .
117 . As a result of the conduct set forth herein, Biopure violated Section 13(a) of th e
Exchange Act and Rules 12b-20, 13a-11 and 13a-13 thereunder .
FOURTH CLAIM
(Aiding and Abetting Biopure's Violations o f
Exchange Act Section 13(a) and Exchange Act Rules 12b-20, 13a-11 and 13a-13
Against Defendants Moore, Richman, and Kober )
118 . The Commission repeats and incorporates by reference the allegations i n
paragraphs 1-106 of the Complaint as if set forth fully herein .
119 . Section 13(a) of the Exch ange Act and Rules 13a-11 and 13a-13 thereunde r
require issuers of registered securities to file with the Commission factually accurate current an d
quarterly reports . Exchange Act Rule 12b-20 provides that in addition to the informatio n
expressly required to be included in a statement or report, there shall be added such furthe r
46
material information, if any, as may be necessary to make the required statements, in the light o f
the circumstances under which they are made, not misleading .
120 . As set forth herein, one or more of Biopure 's SEC Filings fr audulently misle d
investors about the truth regarding Biopure's efforts to gain FDA approval of Hemopure i n
connection with the company's trauma IND and its BLA in violation of Section 13(a) of th e
Exchange Act and Rules 12b-20, 13a-11, and 13a-13 thereunder .
121 . By knowingly rendering substantial assistance to one or more of Biopure' s
violations, each of defendants Moore, Richman, and Kober aided and abetted Biopure' s
violations of Section 13(a) of the Exchange Act, and Rules 12b-20, 13a-11, and 13a-1 3
thereunder .
FIFTH CLAIM
(Violation of Exchange Act Rule 13a-14 Against Defendant Moore )
122 . The Commission repeats and incorporates by reference the allegations i n
paragraphs 1-106 of the Complaint as if set forth fully herein .
123 . Section 13(a) of the Exchange Act [15 U .S .C. § 78m(a)] requires that current and
periodic reports filed with the Commission do not contain untrue statements of material fact o r
omit to state material facts necessary to make the statements made, in light of the circumstances
in which they were made, not misleading . Rule 13a-14 thereunder [17 C .F.R. 240.13a-14],
requires the principal executive officer and principal financial officer of the company to sign a
certification that the report does not contain any untrue statement of material fact or omit to stat e
a material fact necessary to make the statements made, in light of the circumstances in whic h
such statements were made, not misleading .
47
124 . By reason of the foregoing, defendant Moore violated Exchange Act Rule 13a-1 4
[17 C .F .R. 240.13a-14] in certifying each of Biopure's June 16 Form 10-Q and September 1 5
Form 10-Q .
PRAYER FOR RELIEF
WHEREFORE, the Commission respectfully requests that this Court :
1.
Issue a Final Judgment of Permanent Injunction permanently restraining and enjoining
each of defendants Biopure, Moore, Richman, and Kober and their officers, agents , servants ,
employees, and attorneys, and all persons in active concert or participation, and each of the m
who receive actual notice of the Final Judgement by personal service or otherwise, from violatin g
or aiding and abetting violations of Section 17(a) of the Securities Act [15 U .S .C . § 77q(a)] ,
Sections 10(b) and 13 (a) of the Exch ange Act [15 U . S .C . §§ 78j (b) an d 78m(a)] and Rules 1Ob-5 ,
12b-20, 13a-11 and 13a-13 promulgated thereunder [17 C .F.R §§ 240 .10b-5, 240 .12b-20 ,
240.13a-11 and 240 .13a-13], and, as to defendant Moore only, Rule 13a-14 thereunder [1 7
C.F.R. § 240 .13a-14] .
II.
Issue an Order requiring each of defendants Biopure, Moore, Richman, and Kober to pay
a civil penalty in an appropriate amount pursuant to Section 20(d) of the Securities Act an d
Section 21(d)(3) [15 U .S .C. §§ 77t(d) and 78u(d)(3)] .
III.
Issue an Order barring defendants Moore, Richman, and Kober from serving as officers o r
directors of any publicly-traded issuer pursuant to Section 20(e) of the Securities Act and Sectio n
48
21(d)(2) of the Exchange Act [15 U .S.C. §§ 77t(e) and 78u(d)(2)] .
IV .
Grant such other relief as this Court deems just and appropriate under the circumstances .
Respectfully submitted,
By:
Dated : September 14, 2005
49
4.,.
Ian . Roffman (
ss. Bar No . 637564)
El en Bob 6r Mo i an (Mass . Bar No . 567598)
ATTORNEYS FOR PLAINTIF F
SECURITIES AND EXCHANGE COMMISSION
73 Tremont Street, 6th Floor
Boston, Massachusetts 0210 8
(617) 573-8900, ext. 8987 (Roffman)
Case 1:03-cv-12628-NG
Document 110-3
Filed 03/28/2006
Page 1 of 35
Exhibit B
to PROPOSED SECOND CONSOLIDATED AMENDED COMPLAINT
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J001
DEPARTMENT OF HEALTH & . HUMAN SERVICES
Food end Drug Administration
1401 RoalMife Pike
Rookvpie MD 20852-144 8
Jul, 3 0 200 3
Our Reference STN: 125066/0
Howard P. Richman , D.P.M.
Biopure Corporation
11 Hurley Street
Cambridge, Massachusetts 0214 1
Dear Dr. Richman :
This letter is in regard to your Biologics License Application (BLA) for Hemoglobin Glutamer250 (Bovine), also known as HBOC-201 submitted under section 351 of the Public Health
Service Act.
The Center for Biologics Evaluation and Research (CBER) has completed the review of all
submissions made relating to your Biologics License Application . Our review finds that the
information and data submitted are inadequate for final approval action at this time based on the
deficiencies outlined below.
The deficiencies may be summarized as follows :
Mpnito r,~ing of studyHEM-11115
Bioreeearch Monitoring Inspections :
FDA inspections of fourteen clinical investigator sites at which subjects had been
enrolled and treated under the HEM-0115 clinical study revealed that in addition to
internal monitors, Biopure had engaged the services of several contract research
organizations (CROs) and private consultants who conducted multiple monitoring visits
at these clinical sites . It was also noted that these CROs and private consultants were
monitoring the same sites during the same study period concurrently with internal
Biopure monitors.
Please provide a detailed list of.
a. All CROs and private consultants used to monitor the HEM-0115 study .
b . The site(s) and time period(s) during which the internal Biopure monitors, CROs and
private consultants performed specific monitoring activities.
c . The specific obligations and responsibilities for the monitoring of clinical
investigators performed by internal Biopure monitors, each CRO, and each private
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consultant including , but not limited to: completing and mating changes to the case
report forms (CRFs), the handling of data clari fication requests, and the reporting of
serious adverse events (SAEs) and adverse events (AEs) .
2. FDA's November 1999 inspection of Biopure reve aled there was no documentation to
substantiate that the firm' s internal Monitors. CROs, and private consultants we re trained
as required by Biopure SOP CN-0029 . The exte rnal contract monitors ' training
documentation forms (QA-0078 ) were found to be incomplete, and did not identify the
SOPs reviewed or the trainer . There was also no documentation to ensu re that external
contract monitors were lmowledgeable and profi cient in current Biopure SOPs .
a. Please provide a detailed explanation as to how Biopure ensured the consistency
of the monitoring activi ties performed by the internal Biopure monitors , the CROs
and the private consultants who were monitoring the study at the various sites,
especially at sites that hadmultiple monitors during the course of the study.
b. Please provide a detailed description of how Biopure instructed the internal monitors,
each of the CROs and private consultants to report the results of their monitoring
activities, such as the frequency and content of reports . For example (but not limited
to this example), did Biopure expect the monitors to submit reports for each
monitoring visit, or to submit integrated reports explaining findings during a defined
time period?
Review of monitoring reports during FDA's November 1999 inspection of Biopure
revealed the following :
a . Eight of ten pre-study monitoring reports covering s ix sites were not finalized and
reviewed in accordance with Biopure's SOPs .
b. Five of eight initiation monitoring reports covering six sites were not finalized and
reviewed in accordance with Biopure's SOPs .
c. Four of 28 monitoring reports covering six clinical sites were not finalized per SOPs;
the date that each report was finalized was unknown for 22 out of 28 monitoring
reports, and zero of 28 monitoring reports were reviewed in accordance with
Biopure's SOPs .
d. FDA's November 2002 inspection of Biopure revealed that the internal Biopure
monitors, the CROs, and the private consultants were still not submitting monitoring
reports within the specified time frames , and Biopure was still not reviewing the
monitoring reports in accordance with their own SOPs .
Please provide a detailed explanation or answer for the following :
i. How Biopure ensured that the clinical investigators were conducting the
HEM-0115 clinical study in accordance with the protocol requirements whe n
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the internal Biopure monitors, the CROs, and the private consultants were not
submitting the monitoring reports as required, and Biopure was not reviewing
the monitoring reports in accordance with their own SOPs .
ii . Why BioPure failed to initiate appropriate corrective action after the
November 1999 inspection to ensure that all monitoring reports were
submitted and reviewed within the specified time frames .
4. Please provide a detailed explanation of the activities of GloboMax of Hanover,
Maryland, in regards to data management and statistical analysis on the HEM-0115
study.
Clinical investigator issues
The FDA inspections of fourteen clinical investigator sites revealed significant deficiencies to
include, but not limited to the fo llowing: (1) many SAES and AEs not reported; (2) ineligible
subjects enrolled, including subjects with known excludable medical risks ; (3) not all subjects
properly consented ; and (4) numerous protocol required assessments either not performed or not
performed within the timeframes specified by the protocol, including vital signs, hematology
tests, clinical chemist ry tests, urinalysis , ECGs, neuro logic assessments, and physical
examinations. Questions 7, 8 and 10 are examples of the significant deficiencies noted during
the FDA inspections.
5. The samples for laboratory assessments for hematocrit, hemoglobin, and plasma
hemoglobin were either not drawn, or were not consistently drawn immediately prior to
subsequent transfusions. This deficiency was observed at numerous sites .
Please explain how Biopure can assure, without these required assessments, that
additional transfusions were based on the individual needs of the subject.
6. During the inspections, a review of CRFs revealed that at least seven subjects presented
with abnormal ECGs during the perioperative period. There was no record in their CRFs
to document they were evaluated just prior to randomization/infusion to confirm that their
abnormal ECGs did not meet the definition of acute life-treating or significant
destabilizing event .
Please explain how Biopure can ensure that these subjects were qualified or remained
qualified to participate in the study without documentation of evaluation by a
cardiologist that the abnormal ECG s were not clinically significant, and the subjects
were cleared to participate in the study.
7. Please describe in detail how Biopurc trained each of the clinical investigator sites,
including the principal investigator, all sub-investigators, and study coordinators, before
the sites began enrolling subjects and using the investigational product to ensure that the
principal investigators, sub-investigators, and study coordinators fully understood the
HEM-0115 protocol and all study requirements .
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8. The FDA inspections, and monitoring repo rts submitted by the internal Biopure monitors,
CROs, and private consultants revealed: (1) missing source documents, (2) incomplete
CRFs, (3) unsupported changes to data on the CRFs, and (4) discrepancies between the
CRFs, hospital blood bank records , and drug accountability records regarding the date,
number of units and volume of the investigational product that was dispensed , transfused,
and returned, and (5) discrepancies regarding the date, volume, type and number of units
of the control product (red blood cells, packed cells, whole blood, etc.) that wa s
dispensed and transfused .
Please provide a detailed explanation as to how Biopurc can ensure that the data in
the BLA •submission, in regards to the use of the investigational and/or control
product, is accurate and reliable in light of the noted discrep ancies .
9. As described above, FDA inspections of the clinical sites revealed significant deficiencies
throughout the course of the study . Several sites had patterns of protocol violations that
continued unabated despite repeated monitoring visits that disclosed the on-goin g
problems.
a. Who was responsible for correcting problems and resolving the issues that were
observed by the internal Biopure monitors, CROs, and consultants during the
monitoring visits at the various clinical sites?
b . In response to the problems observed by the internal Biopure monitors, CROs, and
consultants, were any of the principal investigators, sub-investigators and study
coordinators re-trained? If so, what type of training was given? Who was responsible
for the re-training?
c . Please explain in detail why Biopure failed to initiate appropriate corrective action,
such as suspending enrollment of subjects at sites where serious deficiencies were
noted, or terminating the study at sites where continued non-compliance to the
protocol was observed during the multiple monitoring visits by the internal Biopure
monitors, CROs, and private consultants .
10. Please provide a detailed explanation as to how Biopure can ensure that the safety and
efficacy endpoints were met in light of the many protocol deficiencies including, but not
limited to the examples described above, which were noted during the FDA inspections
of these fourteen clinical sites .
How can BioPure ensure that the remaining thir ty-two sites that were not inspected
do not have the same types of deficiencies , and the data from these sites are reliable
and accurate?
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Study Conduct ;
In the various submissions from Biopure related to BLA 125066 for HBOC-201, Biopure has
used the term "softlock" to denote a number of different data management actions . In the BLA
itself; submitted July 31, 2002, the teen "softlock" appears in section 16 .1 .14 and in the
description of the historical chain of events for the SEEC process . Similarly, the term "CEVA"
(Clinical Event Validation and Adjudication) appears to have been used to denote different
groups of people or different activities by a Data Coordinating Group .
Under section 16.1 .14, on page 12 of the SEEC charter, "softlock" is described as the "resolution
of all site queries for certain c ritical fields." This activi ty was supposed to occur before patient
records were submitted to the SEEC for adjudication for the prima ry safety endpoint. CEVA
Data Coordination Services were to be provided by Quintiles , Inc. The CEVA Team was to be
responsible for collecting and evaluating patient safety documentation provided by investigative
sites. CEVA was to be responsible for assembling safety assessment patient dossiers for all
patients from all regions and for proofing each file for completeness prior to submission to the
SEEC.
In the Historical Chain of Events : SEEC Process, there is an entry dated June 26, 2000 stating,
"Softlock Criteria Approved (J. Burke) ."
The letter dated September 24, 2002, contains following statements about "so ftlocking"
databases and about CEVA and the Quintiles Data Management group:
• "The adjudication forms for each AE were prepared by CEVA based on the AEs in the
softlocked AE database managed by the Quintiles Data Management group."
• '"The first sof lock of the database was completed on 22 February 2001 and the last 1"
level patient dossier was submitted to adjudicators on 30 March 2001 ."
• "Data Management activities continued after the first database softlock and patients with
changes in the database that would require resubmission of the dossiers to the SEEC were
identified."
• "The final sofllock of the database was completed on 29 June 2001 and the last 1`t level
patient dossier was resubmitted to adjudicators at that time ."
• "1'his [final database as of June 29, 2001) softlocked database was also transferred to
RRS ."
1 . Please answer the following questions:
a . What is meant by the phrase, "softlocked database? "
b. The abbreviation "CEVA" appears to be used in several different ways in the various
submissions . What activities were encompassed by the term CEVA?
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c. What was the relationship between the CEVA Data Coordinating Center and the
Quintiles Data Management group? Did the Quintiles Data Management group
provide the services collectively called CEVA?
d. Who performed the evaluation of the source documents that were provided to the
SEEC?
e. What adjudication forms were prepared by CEVA based on the AEs in the soi}locked
AE database managed by Quintiles Data Management group ?
f. What were the "softlock" criteria that were approved by J . Burke on June 26, 2000?
g. For each individual patient, what critical fields were to be resolved p rior to "softlock"
of the file and submission to SEEC?
h. What role did Quintiles Data Management g roup play in managing the various
softlocked databases and softlocked patient data?
i. What data management activities continued a fter the first database softlock? Why
were these activities not completed befo re submitting the first patient dossiers to the
SBEC in November 2000 ?
j . Please explain what is meant by "All post-softlock changes identified" for the June 8,
2001 entry in the historical chain of events timeline .
k. Please explain the role and training of CEVA in co ll ecting, assembling, and proofing
patient safety documentation provided by investigative sites given that these functions
had already been performed beginning in July, 2000 by a "new monitoring team."
1. Please identify the members of the "new monitoring team " and their affi liations.
i. What was re-monitored by this team?
ii. How were the findings by this team reconciled with the later work
performed by CEVA?
iii. How long did the re-monitoring by the new team take and when were
these activities completed?
m. What or who is AACT? What was the role of AAM.
n. Please describe in detail the SAS listing that was approved by M. Grawryl on October
6, 2000 .
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o. Please explain how patient listings that were blinded for patient identifiers and certain
information related to investigator determination of severity, seriousness, and drugrelatedness of adverse events were transferred to Red River Statistics for analysis .
What analyses were performed on such listings that lacked any investigator
information about adverse event severity or seriousness ?
p. Please provide a flow diagram and the tames of all individuals who handled source
documents from the time they were completed by the investigative site to the time
they were reviewed by the SBBC for the final adjudication .
q. Please document all transactions, including all involved personnel with their
affiliations, which occurred after the review process was reopened in February 2001 .
The flow diagram provided in the SEEC charter does not appear to document this
process completely.
2. In the letter of September 24, 2002, you stated that : "the documents upon which the
Biopure medical review was based were the same as those provided to the SEEC."" You
also stated that "at no time did Biopure have access to, nor responsibility for maintaining
the database." In the BLA submission, under section 16.1.14, however, you stated,
"Quintiles will ensure that the following data is (sic) blinded to the SEEC, prior to
submission of each dossier ." This list included patient identifiers, and certain aspects of
patient treatment to include bematocrit, total and plasma hemoglobin, methemoglobin
levels, etc.
a. Please clarify who performed the `Biopure medical review" and whether the Biopure
medical review referred to was for the safety endpoint .
b_ Please clarify whether the safety data provided for the' BioPure medical review" was
also cleared of the same entries and that the documents provided for the "Biopure
medical review" were identical to the documents provided to the SEEC .
c. Please also clarify whether the documents submitted for the Biopure medical review
corresponded to the first patient dossiers submitted to SEEC or to the second set of
files.
3 . Please explain why CEVA was instructed by M . Hensley to stop collection of source
documents for the week between February 13-20, 2001 .
4. Please explain why Biopure requested re-copying of all source documents from dossier
files (via J . Cermak) on February 23, 2041 . For what purpose were these files recopied?
What files were recopied? To whom were the fi les provided?
5 . Please explain why the SEEC was asked to re-review patient records for a new
adjudication for the primary safety endpoint . What ,postsoftlock" changes were reviewed
by the SPEC during the second review cycle?
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6 . When 506 files were re-reviewed, did the original reviewers perform the second review?
If not, why not?
7 . Please explain who attended the adjudication meetings documented in the historical chain
of events document and what was the purpose of the meetings .
8. In the chronology of major project developments for SEEC, you state that the first three
submissions for 1' level SPEC review were submitted to SEEC before CEVA initiated
site contacts for collection of source documents (November-December, 2000) . The role
of CEVA was to provide case report form and source documentation, which wa s
"accurate, focused, and relevant" CEVA was also charged with resolving all site queries
for certain critical fields BEFORE submission of any documents to SEEC . Please explain
how the first three submissions were provided to SEEC before CEVA had contacted any
sites.
How was the toxicity grading scale used by the investigator? Was the toxicity grading
scale used during any remonitoring of the clinical data or the clinical sites ?
10. Between February 26, 2001 and April 16, 2001 , Biopure reviewed all source documents
from the dossier file and submitted new AEs (N=1443 ) to CEVA for review by the
SEEC . However, in the September 24, 2002 letter, you stated that Biopure did not have a
direct role in providing information to the SEEC . Please explain the relationship and
provide the identities of the clinical personnel contracted by Biopure to review and
provide new source documents to the SEEC adjudicators for re-review . Were these
personnel completely independent of Biopure ? Why was this function not performed
directly by CEVA, to whom this function was assigned by SEEC charter?
a. Please provide a detailed summary of the contractual obligations assumed by
Quintiles and other data management services with regard to the "cleaning" of data
for study HEM-0115 .
b. Was the February 26, 2001 to April 16, 2001 review of all source documents the
result of the July, 2000 remonitoring effort undertaken by the "new monitoring
team?„
c. Were these adverse events also incorporated into the documentation upon which the
Biopure medical review was based?
11 . In the historical chain of events, three transfers of the SEEC database to Diopu are
documented . The last transfer occurred on August 9, 2001, and the notation "complete
data, locked" is recorded . On September 24, 2002, you stated that, "at no time did
Biopurc have access to nor responsibility for maintaining the database ." However, in the
text of the original BLA submitted July 31, 2002, on page 65 of the report of study HEM0115, you stated that, "The database was subsequently transferred to Rod River Statistics
(RRS), Shreveport, LA. RRS and Biopure jointly completed data cleaning activities ."
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These statements would appear to be contradictory . Please clarify and answer the
following questions.
a. Who prepared the database from the output of the SEEC deliberations ?
b . Did Biopurc have access to the databases constructed from the SAP-1 and SAF-2
forms ?
c. Who provided the analysis datasets to Red River Statistics ?
d . You stated that Quintiles completed data management activities for and hardlocked
the CEVA database on 8/9/01 and that the hard)
CEVA database was
transferred to both Red River Statistics and Biopure on August 9, 2001 . However, the
historical chronology provided in the BLA indicates that two transfers of incomplete
data from the SEEC database to Biopurc occurred on July 12 and July 20, 2001 . How
were these databases used by Biopure?
e. In the September 17, 2002 letter submitted from Red River Statistics, it is noted that
changes to an interim dataset dated June 29, 2001 were made by Red River Statistics
and that these changes are memorialized in a SAS program module named
ERRATA.SAS . This file contains additional raw data for adverse events and
concomitant medications received after the June 29, 2001 cutoff date , Please clarify
whether the second SEEC review contained the information that is contained in
ERRATA.SAS .
12. In the letter of May 12, 2003, you stated that "it was always Biopure 's intention to derive
the secondary safety endpoints for the HEM-0115 study from the Investigator Database,
not the internal scoring of the SEEC ." Please note that it was always FDA's intent that
AU of the analyses, including the seconda ry analyses, be performed using the database
constructed from the blinded review by the SEEC. Please note that the FDA letter to you,
dated September 15, 1999, explicitly stated that:
`The review of data by the Independent Data Monitoring Committee (N .B . later renamed
the SEEC) at these various time points (including at the conclusion of the study) was to
have been blinded to treatment allocation . The determination of severity and seriousness
of adverse events by unblindcd investigators on-site was to be masked from th e
Independent Data Monitoring Committee. The Independent Data Monitoring Committee
was to evaluate all adverse events and make an independent determination of intensity
and seriousness of the adverse events, all in blinded fashion ."
That letter went on to state that all serious adverse events, as determined in blinded
fashion by the IDMC, would be categorized and evaluated according to the proposed
statistical analysis plan . This statement did not distinguish between the primary safety
analysis and the secondary safety endpoints, and the FDA letter of December 10, 1999
simply summarized the secondary safety endpoints that would be evaluated . In the
September 15 and December 10, 1999 letters, FDA provided adequate documentation o f
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what was expected for a regulatory submission . Omission of the recommended design
features did not constitute g rounds for imposing a clinical hold . On March 27, 2000 and
July 7, 2000, you received letters from FDA that stated, "The statistical plan described
notwithstanding, ultimate approval of yourproduct depends on the totality of the
evidence submitted from appropriately designed and conducted clinical studies including
satisfactory rislc benefit outcomes." Biopure acknowledged these statements.
Since Biopure did not perform the secondary safety analyses as expected and in the
manner recommended by FDA, please cla rify the fo llowing points :
a. Who performed the medical evaluation of the secondary safety endpoints for the
purpose of reporting in the BLA?
b. Who generated the, safety database for the secondary endpoints of study HEM-0115?
c. Who audited the safety database against source records and who monitored and
reconciled the data. When was the database audited and when we re the data
reconciled?
d. What is the nature of affiliation and financial relationship to Biopure if the medical
reviewers were not Biopurc personnel ?
e. Were the medical reviewers blinded to treatment assignment?
13 . It is FDA's understanding that site-identified adverse events and source documents were
provided to SEEC for determination of seriousness, intensity, and causality of the events,
and that these, together with additional adverse events identified by each SEEC reviewer,
were used to generate the SAP-1 dossier for each patient . This SAF-1 dossier was then
used by each SEEC reviewer to assign a medical risk score that was recorded on SAF-2 .
Further, the SEEC charter stated that,
"SEEC identified adverse events : The SEEC is not charged with the task of identifying
all potentially un-reported adverse events ; however, if during the course of reviewing a
case for adjudication, a SEEC reviewer notes an unreported adverse event, this data (sic)
should be captured." The charter further states that the CEVA Data Coordinating Center
will review all completed adjudication CRFs for potential adjudication dat a
discrepancies . If discrepancies are identified, a query will be issued to the reviewer who
supplied the data ."
"In order to proactively prevent the need to issue queries, the CEVA Data Coordinating
Center has prepared a guideline for the completion of the adjudication CRFs which will
be utilized by the SEEC. " (This guideline included information about both the SAP-1
and SAF-2 forms.)
If it is the case that the SEEC reviewers used adverse events recorded on the SAP-1
forms in order to generate the adjudication recorded on the SAF-2 forms, and that the
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adverse events recorded on the SAF-1 form :
investigator or the SEEC reviewer, and it is
completely monitored and/or reconciled aga
concluded that the medical assessment of rii
conform with cGCPs . Your letter of May 12
imposed on IND 10792 and also submitted i
database was not designed or chartered to bi
(GCP)". Please clarify how a database that
primary safety analysis was not designed or
Practice.
could originate either from the on-sit e
lso the case that the SAP-1 entries were not
nst source documents, then it may b e
was based on a data set that did not
2003 in response to the clinical hold
the BLA states that, "SEEC AE/SAE
consistent with Good Clinical Practice
ras generated for the purpose of at least the
;bartered to be consistent with Good Clinical
a . If SEEC members found additional ad,
from the clinical sites, how was the val
determined, and were the additional, v
which the Biopure medical assessment
c events over and above those reported
y of the findings by the SEEC members
adverse events added to the database upon
s made?
14.
In the May 12, 2003 letter, you stated that th
against source documents nor was (sic) data
statements, it would appear that the informs'
endpoints may have differed substantially ft
clarify. Please explain why the SEEC AE/S)
material .
SBEC AE/SAE database was not audited
Lonitored or reconciled. Based on these
>n reviewed for the seconda ry safety
n the data reviewed by the SEEC. Please
database was not audited against source
15 .
In the May 12, 20031e!, you stated tha t
reviewers w ere not
ven s c assified as non-serious . Please note
clearly stated that it was FDA's intent that
ly those deemed serious by the on-site
['he role of .IDMC-2 is to review all adverse
subject and to perform a separate
the adverse events. The IDMC was to be
sity and seriousness when making thi s
that the December 10,1999 letter from FDA
the IDMC evaluate all adverse events, not c
investigators . The specific language states,
events in blinded fashion for each individw
determination of intensity and seriousness c
blinded to investigator determination of int'
determination." Further, Biopure itself state
conclusion of the study, in blinded fashion,
whether serious or not, by individual subjec
Please comment .
16.
that the function of the IDMC-2 was "at the
review listings of all adverse events ,
for all subjects enrolled in the study ."
In the letter of Septembe r 24, 2002, you stated that :
"In July of 2000, it was learned by Biopure 1 egulatory Management that clinical sites
had inconsistently interpreted the type of ad% arse events that were to be recorded in the
CRFs . In order to ensure the accuracy of the data, it would be necessary to re-monitor a ll
clinical data submitted by the Investigators ."
"In December of 2001 , after a review of the lata listings, it was discovered that not all of
the Investigators had consistently applied tin SAE definitions when recording data . A
specially designated Biopure team conducted a complete Medical Review of all Serious
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Adverse Event (SAE) listings against the o anal CRFs and source documents submitted
to Biopure to assure consistent classi ficatia processing, and reporting of Serious
Adverse Events . . ..As a result of the audits, CFs were written and signed by the
Investigators to correct any data discrepanc s discovered."
In the letter of May 12, 2003, you state d
"SEEC reviewers did not always apply serif
known side effects of HBOCs (e .g., elevate
and conservatively. This is particularly true
pcrsistent/significant disability/incapacity a
There was a high degree of disparity amoi
difference in the number of SAES for any
is criteria consistently and tended to classify
liver function tests, jaundice) more seriously
br the serious criteria pertaining to
I important medical events . ..
idividual SEEC reviewers : e.g., the
subject was frequently between 10 and 20 ."
A number of comments pertain:
a. These various statements, taken tol
be incomplete and at worst not con
determination of safety or efficacy
suggest that the data recorded may at best
an adequate basis upon which to make a
b. What criteria were applied to the
Please provide the Monitoring (
,ring efforts that occurred after July . 2000?
that were used for this effort .
c. Why did the remonitoring actions that (
inconsistencies in the classifications o f
d. Please provide the names and aff
monitoring teams that visited the
e. The comments suggest that corrections,
been made to the databases after the so-i
Specifically, the letter of September 24,
documents in December 2001, and corn
investigators. Please comment.
after July, 2000 not capture th e
of all members of all monitoring and resites.
;es, additions, or subtractions may have
hardlock of August 9, 2001 .
documents re-review of source
that were signed by the on-site
L Why did the remonitoring that occurred
be reviewed by the SEEC? Were any of
not recorded by the on-site investigators
adverse events were not also captured b :
teams sent by Biopurc .
got clarify all the adverse events that were to
he adverse events recorded by the SEEC, but
valid? If so, please explain why thes e
the investigators and/or the monitoring
Please provide a fully detailed flow diagran
all source documents, including but not lim
etc . from the time of completion at the inve
ultimately submitted to the BLA. (see item
and narrative description of the handling of
ed to case report forms, patient chart records,
igative site to the generation of the databases
above)
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Please provide a fully detailed flow diagram and narrative description of the generation
of each database that was developed, to include, but not limited to, additions,
subtractions, corrections, etc .
Please provide a fully detailed flow diagram and narrative description of all of the
remonitoring efforts that occurred between the conclusion of the study and the
submission of the BLA .
Please provide a detailed list of all the individuals, including affiliation and financial
relationship to Biopure, who were involved in data management and database
management activities for HEM-0115 .
FDA reserves the right to re-evaluate the output of the SEEC adjudication and the
determination that the primary safety endpoint was in fact met in ITEM-0115 pending
receipt of your answers to the above questions regarding study conduct and integrity of
the data.
Clinical Trials
HEM-0115 (Efficacy) :
The case report forms provided and the case tabulations and patient summaries contain
numerous discrepancies, cross-outs, and unexplained deletions with regard to allogeneic
transfusions given. It will be necessary for you to reconcile the case report for m
information against blood bank records and the patient charts in order to ensure the
accuracy of these data that contribute to the assessment of the efficacy endpoints of the
trial
a. Please provide blood bank records, physician orders, and patient chart data to confirm
all transfusions and infusions given.
b. Please cross-check these source documents and provide an accounting of all
transfusion requests, transfusions administered, used and unused bags returned to the
blood bank, etc. to ensure the accuracy of the data entered into the case tabulations
and the case report forms .
c. Please provide complete and accurate summary data for all transfusions administered
including, but not limited to the type and volume of product administered etc .
FDA reserves the right to re-evaluate the efficacy data pending receipt of this
information.
2. Please provide the efficacy data for test and control groups in tabular format with each
row of the table devoted to each individual patient . Each patient should have data entered
on a single row and each row should contain all the information related to transfusion
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decisions and transfusion outcomes (relationship to prior trauma event, volume of blood
lost, volume of fluids administered, volume of autologous blood collected and
administered, time of randomization, baseline hemoglobin and hematocrit, etc .). The
database should be constructed such that chronological events related to the e fficacy
endpoints can be read from left to right across the table . Each laboratory test entered into
a column of the table should have the same unit of measure so that data analysis may be
accomplished readily. The column headings should include, but are not limited to, date
and type of surgery, time of surgery start and stop, total hemoglobin and hematocrit at
randomization, reticuloeyte counts at various time points, etc. The table should be
constructed such that running time analyses may be performed The data points entered
into the table should refer to the source laboratory document, and the laboratory site
(central, local, point of care) should be documented in the table .
FDA reserves the right to re-evaluate the efficacy data pending receipt of a table
constructed in this manner.
3. Please provide all missing data for pre- and post infusion total hemoglobin so that
incremental increase in total hemoglobin due to administration of the product may be
calculated. Signifi cant numbers of data points appear to be missing from the case report
forms. Based on the available data, the median increase in total hemoglobin following the
loading dose of 60 g HBOC-201 would appear to be 0 .3 g/dL rather than the expected 1 .0
g/dL. Subsequent doses of 30 g BBOC-201 also appear to have increased the total
hemoglobin concentration by approximately 0 .2 to 0.3 g/dL . Please comment.
4 . The BLA text states that dosing of HBOC-201 by 30 g dose intervals was intended to
maintain plasma hemoglobin levels at safe and physiologically appropriate ranges . The
clinical trial, however, did not specify what the target plasma hemoglobin level should
be, and dosing decisions were based on the total hemoglobin concentration rather than a
combination of RBC hemoglobin levels plus plasma hemoglobin levels or the plasma
hemoglobin levels alone.- Of the 317 patients treated with less than the full 300 g dose of
HBOC-201, approximately 30% ultimately were transfused with allogencic rod blood
cells. Most of these patients were transfused because clinicians did not appear to be able
to manage their patients based on assessment of total hemoglobin levels, because the total
hemoglobin levels did not increase as expected .
The dosing recommendations provided in Table 1 of the proposed package insert are not
supported by clinical data from HEM-0115 or HEM-0114 . Any dosing guidelines based
on plasma hemoglobin levels would require confirmation in an adequately sized and
adequately powered phase 3 clinical trial . In turn, support for dosing based on plasma
hemoglobin levels would require sufficient phase 2 data to suggest that dosing based on
such a measure is safe and likely to be efficacious . Please comment .
Given the information from the clinical trial, it is not possible to write adequate and safe
dosing guidelines, and the utility of the dosing guidelines in Table I (using plasma
hemoglobin levels ) of the proposed package insert cannot be confirmed . Please comment.
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5 . Many transfusions in the control red blood cell group were given back-to-back . This is
particularly true for those patients who received only two units of blood . It is not clear
whether this phenomenon also occurred for patients randomized to I-BOC-201 who also
received allogneic red blood cells .
a. Please provide the records for each hospital transfusion oversight committee together
with the records for each site for transfusion practices for the specific surgical
procedures performed What measures are in place at each of the study sites for
control of transfusion decisions ?
b. Please include information on allogencic transfusion from each site for patients
treated for the one year prior to initiation of the study and for concurrent patients who
were not enrolled in the clinical trial. The report should include information about
patients who underwent the specified orthopedic procedures and who did not
predonate autologous red blood cells or use opoietin .
6. It would appear that transfusion avoidance for study HEM-0115 was largely driven by
avoidance of allogeneic transfusion among those subjects who received only 60-90 g of
HBOC-201 . In this group, the median time to transfusion was 2 .5 days. At 91-180 g of
product, only 50% of subjects avoided transfusion and the median time from
randomization to transfusion was approximately 4 .5 days. Between 181 and 270 g of
product, only 32% of subjects avoided transfusion, and the median time to transfusion
was 3.3 days. At 300 g of product, 75% of patients received allogeneic red blood cells .
The median time to transfusion was approximately 3 days . Patients who received
EBOC-201 in any dose and who also received allogeneic red blood cells, received a
median dose of 2 units (mean approximately 3 units) of red blood cells . This dose of red
blood cells was comparable to or slightly higher than the dose received by patients
randomized to the control group . Thus, at doses above 90 g of HBOC-201, not only we
many patients exposed to the dose of HBOC-201, they also were also exposed to
allogeneic blood in the amounts received by the control group . Please comment .
7. Patients in the test arm had, on average, approximately 1 g/dL lower total hemoglobin
levels than did patients in the control arm for treatment days 2-6 . At discharge, patients
treated with HBOC-201 had hcmatocrits of 28 as compared to patients treated with
allogeneic red blood cells who had discharge hematocrits of 31 . Thus, patients treated
with HBOC-201 were discharged from the hospital significantly more anemic than
patients in the control group. Please comment .
Please re-analyze your efficacy database that FDA has asked you to construct and report
your conclusions in your response to this letter . Your analyses might include, but should
not be limited to, comparison of incremental increase in total hemoglobin levels as a
result of administration of each unit of product or control, comparison of total
hemoglobin- levels on treatment days 2 through 6 for each group, a comparison of
discharge hematocrits, review of changes in reticulocyte levels and other measures of
oxygen delivery by the product, and an analysis of transfusions administered at each dose
cohort of HBOC-201 .
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REM-0115 (Safety) :
Many of the CRF Adverse Experience pages have cross-outs , deletions, additions,
missing dates and/or times , or arc marked "re-monitored". It will be necessary to
reconcile the CRF information against hospital records in order to ensure the accuracy o f
data that contribute to the safety profile.
a. Please provide copies of source documents to substantiate all CRF Adverse
Experience changes as enumerated above.
b. Please provide the names and affiliations of at individuals who entered or modified
data entries on a CRF-by-CRF basis, and the dates and times when these changes
were made.
FDA reserves the right to re-evaluate the safety data pending receipt of this information.
2 . Please provide the safety data for test and control groups in tabular format . Each row
should contain all the information related to the adverse event (please request a sample
copy from FDA). The database should be constructed in such a way that the chronology
of the adverse event can be read from left to right and that can be readily analyzed using
statistical software . The column headings should include, but are not limited to, age,
gender, CTM dose, time of surgery, time of treatment-emergent AE, time of first CTM
infusion, time of last CTM infusion, time from 1" CTM infusion to time of treatmentemergent AE, time from last CTM infusion to time of treatment-emergent AE, total
amount of CTM administered at time of treatment- emergent AE, official time/date of
premature discontinuation of CTM, official reason for premature discontinuation of
CTM, and time/date of l' non-CTM transfusion.
FDA reserves the right to re-evaluate the safety data pending receipt of tables constructed
in this manner.
3 . The incidence of acute myocardial infarction is different between the SEEC and FDA
(based on entries by investigators in the Adverse Events pages of the CRF) databases .
a. Please provide FDA with copies of all source documents supplied to the SEEC
regarding this issue .
b. Please provide copies of all source documents for all subjects with respect to
troponin and CK-MB values .
c . Please supply tables for all CK-MB and troponin values, as outlined in question 2
(above) . Note that each laboratory test entered into a column of the table should have
the same unit of measure so that data analysis maybe readily accomplished using
statistical software .
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d. There are numerous instances where datasets for the same subject report iden tical
values on the same CRF page for bg 1h troponin I and T . Please explain how this
occurred , which valuelparameter is correct , and supply the correct CRF page for each
value reported in these datasets,
e. Subjects 0915 and 1113 had tropo 4 values entered by hand on the CRF page, yet
the data printout with troponin values for this day is missing . Please explain the origin
of these troponin values.
4.
The incidence of acute renal failure (p +specificd as dialysis-dependency) is different
between the SEEC (7 vs . 2) and FDA ( vs . 1) databases.
Please provide PDA with all source
issue and explain why there is a disc
SEEC adjudication of the same eve
5.
Laboratory measurements of amylase,
HBOC-201 subjects.
its provided to the SEEC regarding this
between the investigator information and
, and ALT are deleted (or missing) for many
a. Please explain why these values are issing or deleted, provide raw data for these
missing data, identify the particular analyzer used to make the measurement, and the
methodology used to obtain correct values that reflect the presence of HBOC-201
at each corresponding study site .
b. Please explain why the amount of
and 3 is much greater in the HBOC
perioperative period.
6.
ng data for AST and ALT at treatment days 2
arm than in the control arm .during the
Progress notes for subject 2513
entries on or around 9/16/1999 .
the possible necessity for renal dialysis, but omi t
a. Please provide source documents
(if applicable) dialysis nursing no
all consultations and Al progress, nursing, and
for this subject.
b . Similar requests pertain to subjects
, 4820, and 5405 .
7 . In your table, "Summary of Data tan es Concerning Serious Adverse Events Generated
from the HEM-0115 Medical Review", 'ch was sent to FDA after BLA submission,
you list changes in adjudication and/or severity made by Biopure to the SAES . Please
provide copies of all source documents substantiate each change .
8 . Regarding product immunogenicity, pl a provide details of the antibody may
methodologies, including the definition of the IgG antibody unit, and the sensitivity and
specificity used for positive and negati controls .
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9. Please evaluate the cross reactivity of these antibodies to human hemoglobin and describe
a plan to assess the risks to patients who develop antibodies to HBOC-201 of repeat
exposure to the drug.
10. Please provide an analysis of drug-drug interactions including interactions of HBOC-201
with anti-hypertensives, vasodilators, diuretics, cardiac glycosides, and colloid solutions,
etc.
11 . Please provide a list of, and analyze the data from, patients who received product near the
end of the expiration period.
HEM-0114 :
1. Please provide analyses on safety and efficacy data for patients who underwent
orthopedic surgery in HEM-0114 .
2. Please clarify what sponsor responsibilities were transferred to CRO(s) for HEM-0114 .
3. The clinical protocol for HEM- 0114 states that there is an Appendix G, "Clinical Safety
Data Management: Definitions and Standards for Expedited Reporting; ICH $2A, March
1995", but only Appendices A and B are present in the BLA. Please include all
appendices for this protocol in your submission .
4 . Here were patients in the red blood cell treatment group who had neither completed six
CTM infusions, nor reached the time limit for receiving CTM, but were transfused with
allogeneic red blood cells considered as non-CTM . Please provide the reasons these
transfusions were considered non-CTM.
5. Please provide explanations for withholding CTM infusion(s) when such infusions are
"permitted"
6. Please detail the information on the patients not discharged from hospital, including their
ultimate disposition.
7. Please address the issue of interference of laboratory tests in HEM-0114 (see below,
clinical laboratory).
8. In the BLA, the normal ranges of the chemistry laboratory tests are given in a distinct
tabulation . As the normal ranges might vary widely depending on the testing laboratory,
the data in the listings for chemistry laboratory tests become incomprehensible in the
absence of the normal range for each listing . Please provide the normal values for each
laboratory test in the patient data listings adjacent to the test results . If central laboratory
results arc available, please provide . this information as well .
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9. Please provide all post-baseline clinical hematology and chemist ry data listings;
including CPK, CK-MB and troponin , regardless of whether such data were from the
treatment period or not .
10. Please provide complete information on the assays for antibodies to HBOC-201 and the
data obtained,
11 . Please provide an analysis of drug-drug interactions, including interactions of antihypertensives, vasodilators, diuretics, cardiac glycosides and colloid solutions with your
product in HEM-0114 .
12 . Please provide all CRFs for HEM-0 114, including laboratory printouts. In addition,
please also.providc:
a. Copies of source documents to substantiate jU CRP' Adverse Experience changes as
enumerated elaborated in question 1 a (above) under HEM-0115 (Safety)b. Names and affiliations of gill individuals who entered or modi fi ed data entries on a
CRF-by-CRP basis, and the dates and times when these changes were made .
13. Please provide tables for all treatment-emergent adverse events, as outlined in question 2
(above) under HEM-0115 (Safety) .
14 . Please provide a list of the subjects who were administered product near the end of the
expiration peri od of the lot.
15. Please provide a copy of all training materials supplied to investigators, a check-off list to
verify their attendance at all training sessions, and results of tests you administered to
verify their understanding of GCP .
Other Clinical Studies
General Comments about the phase 2 studies :
1. Please provide all case report forms, individual patient data, laboratory printouts, and
source documents to support claims of safety and efficacy for all phase 2 studies .
2 . The case report forms that were provided for the phase II studies contain numerous
discrepancies, cross-outs and unexplained alterations with regard to transfusions given .
Accordingly, please provide explanations for missing and crossed-out data in the case
reports a.) originally submitted with the phase 2 studies in this B LA and b .) all additional
requested case report forms for the phase 2 studies .
3 . Please provide the anesthesia records for all surgical patients in all of the phase 2 studies .
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4. For all phase 2 studies in which hemodynamic monitoring was performed using a PA
catheter, please present a table that includes individual patient data listings for the
following calculated hetnodynamic parameters : systemic vascular resistance, oxygen
delivery, oxygen consumption, and oxygen extraction ratio .
5. Please provide final study reports for all phase 2 studies conducted to support claims of
efficacy and safety for your product .
6 . Please provide the efficacy data for the test and control groups for all phase 2 studies in a
tabular format with each row of the table devoted to each individual patient . Each patient
should have data entered on a single row and each row should contain all the information
related to transfusion decisions and transfusion outcomes (relationship to prior event,
volume of blood lost volume of fluids administered, volume of autologous blood
collected and administered, time of randomization, baseline hemoglobin and hematocrit,
etc .) The database should be constructed such that chronological events related to the
efficacy endpoints can be read from left to right across the table . Each laboratory test
entered into a column of the table should have the same unit of measure so that data
analysis may be accomplished readily. The column headings should include, but are not
limited to, data and type of surgery, time of surgery, total hemoglobin at baseline and
then at randomization, etc . The data points entered into the table should refer to the
source laboratory document, and the laboratory site (local or central) should be
documented in the table .
7 . Please address the issue of laboratory interferences-on laboratory tests in the phase 2
clinical trials .
Study M9990-0075 :
8 . Please provide the reasons for CTM transfusion and the data to support the decision to
transfuse for each patient and each transfusion in this clinical trial .
9 . You state the following conclusion for the above referenced study :
" In summary, in the present study, HBOC-201 was used to treat post-operative anemia in
cardiovascular surgery patients in the intensive care unit. We found that : HBOC -201
eliminated the need for postoperative allogeneic transfusion ." (Page 106). The statement
is misleading . Only 34% of the patients who were randomized to the HBOC -201 group
required no postoperative allogeneic RBC's . Please provide information on the number of
patients who avoided allogeneic transfusion po rt operatively but who had been transfused
intraoperatively..
10. The conclusions on page 106 also state that HBOC-201 was safe and well tolerated ;
however, the following adverse events were seen in this clinical trial :
a. Se rious adverse events in HBOC-201 group had more SAB's than the RBC group: 19
vs. 4 . Of the HBOC-201 SAE' s, 11/19 were cardiovascular events such as ventricular
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tachycardia, atrial fibrillation, arterial desaturation, pericardial effusions, CHF,
respiratory distress and dysrbythmias . In the RBC group, the SAE's consisted
primarily of infections/ cellulitis (3/4) and small bowel obstruction (1/4). Please
comment.
11 . FDA notes that the only death in this study, patient 310, was infused with CT'M#2
without having met the post- operative transfusion trigger criterion . According to ,
protocol, the patient could be transfused with CTM if the hemoglobin was between 6 .5
and 9 g/dl . In the case of patient 310, the pre-CTM #2 hemoglobin level was 9 .5. Please
provide an explanation for why this patient was given additional CTM for a low
hemoglobin, when in fact the patient's recorded hemoglobin was above the level required
for CTM infusion.
12 . FDA notes that for subjects who discontinued CTM (section 12 .2), most were stopped
due to investigator concerns about safety (cardiorespiratory or neurological deterioration)
and subjects experiencing adverse events . Please commen t
Study BR-0049-0144 :
13 . Study BR-0049-0144 references the following publication : "The Effects of Increased
Doses of Bovine Hemoglobin on Hemodynamics and Oxygen Transport in Patients
Undergoing Preoperative Hemodilution for Elective Abdominal Aortic Surgery", Kasper,
ct at. Anesth Analg 1998 ; 87: 284-291 . The author of the publication concludes that
Bovine hemoglobin in doses ranging between 55 and 97 grams of hemoglobin increased
vascular resistance and decreased cardiac output in anesthetized surgical patients .
Furthermore, he states that hemodilution with bovine hemoglobin in those doses ranges
provided no apparent benefit over hemodilution with hydroxyethyl starch : Given the data
that you provided for this study, please comment on the validity of the above statements .
14 . In addition to intraoperative anesthesia records, please provide individual patient data
listings for the following hemodynamic parameters : oxygen extraction ratio, systemic
vascular resistance, oxygen consumption and oxygen delivery.
15 . Please provide the DSMB members and charter for this study .
FDA reserves the right to review the clinical data of all phase 2 studies pending the
receipt of all requested information .
General Comments on Clinical Studie s
Please provide hospital records for AU patients who received HBOC-201 on the basis of
compassionate use.
2. Please provide data, which show that HBOC-201 can be administered safely at clinically
relevant rates in the setting of uncontrolled surgical bleeding .
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3. Please submit Full Study Reports for studies where there are only abstracts and/or
manuscripts in the BLA.
Statistics
It is not clear why the sample size was amended shortly before completion of study
HEM 0115 . Please explain whether the sample size was amended because of
observations about the data collected to the point of sample size increase, if not, please
explain why the sample size was increased.
2. An annual report was submitted on June 6, 2002 under BB-IND 2935 for the reporting
period from February 1, 2000 through January 31, 2001 . Study HEM-0115 was
completed two and a half months before the end of the reporting period . TIowever,'the
numbers of deaths reported in the annual report in the HBOC and RBC arms were 6 and
I respectively, compared with 10 and 6, respectively, in the BLA submissions . Please
explain the discrepancy in reporting and account for the under-reporting of deaths,
considered to be serious adverse events, in the annual report.
3 . In the HBOC-201 group, 5 deaths occurred among 31 patients who were older than 80
years compared to 1 death out of 26 in the RBC group . The difference is marginally
significant (p = 0.074; one-sided Fisher's exact test). Please comment .
4. Although there is no significant difference between the two arms (10/350 vs 6/338 ; p =
0.45), the number of deaths observed in the study seems a little too high in consideration
that these are elective surgeries (16/688 = 2 .3% ; 95% confidence interval is (1 .3% .
3.7%)) . Please comment on this observation in light of the mortality rate of a similar
patient population with similar types of surgery from historical data .
5 . Please provide the randomization code with detailed description of the randomization
scheme and patient ID . Please also identify those who died .
6. Table 14 .5 .1 of BLA Amendment 2 also shows that there is a highly significant
difference between the two arms (HBOC vs RBC : 81/350 vs 46/338 ; p < 0.001) in
proportions of patients experiencing at least one SAE that resulted in death or persistent
disability. Furthermore, there are 23 .7% (83/350) of patients in the HBOC group who
prematurely discontinued from CTM compared with 2 .4% (8/338) in the RBC group.
a. Please justify the benefit of avoidance of allogeneic blood transfusion by
administration of HBOC in light of higher proportions of patients experiencing at
least one SAE that resulted in death or persistent disability and higher rate of
prematurely discontinuation from CTM.
b. In connection with (a) above, please provide a 2 by 2 table defined by avoidance and
SAE that resulted in death or persistent disability for the HBOC group .
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Clinical Laboratory Measurements
1 . Although the BLA text states that in situations where the central laboratory(ies) was or
were used, data management rules dictated use of the central laboratory data ; however, it
is not clear from the BLA text, the case report forms, the case tabulations, or the
individual patient summaries which clinical laboratory results, i.., local, central
laboratory, or point-of-care, were captured in the clinical database . In addition, the
hypertext links from the patient summaries take the reader to one of several different
reportings of individual patient laboratory results . In some instances, the link takes the
reader to the central laboratory result, In other instances, the link takes the reader to the
case report forms. Some case report forms are associated with clinical laboratory
printouts while many others are not . Thus, it is not possible to be sure whether the data
reported in the case report forms represent local laboratory results or central laboratory
results .
a. Please provide clear documentation for each clinical laboratory result for each site
about what laboratory results have been submitted to the BLA for review,
b . The BLA text states that three different'central laboratories, one each in the United
States, Europe, and South Africa, were used for reporting of the clinical laboratory
data. Since the data from these various sources are to be combined for study HEM0115, please provide information about the clinical laboratory reference ranges,
documentation of your efforts to assure that clinical data reported from each of the
central laboratories were comparable such that the data could be combined for
reporting purposes, the results of such studies, and a description of the
instrumentation used for each laboratory assay at each of the three central laboratory
sites.
2. Each hospital's laboratory was supposed to have been evaluated, and an assay limitation
sheet listing all parameters available for patient management and for the study, was to
have been provided to the hospital's laboratory and the investigator . In regard to these
preconditions, please provide the followin g
a . Documentation that this evaluation was performed at each site and that each
investigator and each hospital .laborator,' was provided with the appropriate assay
limitation sheet .
b . The assay limitation sheet for each site listing all parameters available for patient
management .
c. The data from each clinical site and for each central laboratory regarding colorimetric
and other potential interferences in assay results due to the presence of HBOC-201 in
the plasma or serum samples .
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d. The information about what backup fa
required for patient management and s
studies to evaluate these back-up sites .
ss were available to ensure that parameters
conduct were available; and the results of
e. The information about the . training of i
local laboratory and central laboratory
clinical studies reported in the BLA . °
the specific procedures followed by both
sonnel for the conduct of the various
f. The information about the training, the
methods used for all assays performed
clinical studies.
ecific procedures used, and quality control
point-of-care instruments used in the
g. Clarify if clinical results repo rted in tH BLA were corrected for assay interference by
HBOC-201 . Absent such information, is not possible to review clinical laboratory
data sufficiently to make accurate coni usions about the effect of the drug on patient
care or patient safety.
3.
In the tabulations and case report
other laboratory data have been d
you report that various clinical chemistry and
Why were these data deleted?
The BLA contains articles and abstracts
interference by HBOC-201 in clinical la
documenting the interferences for conut
laboratory instrumentation, and commo i
narizing data regarding potential
ury assays but does not contain any raw data
used laboratory assays, commonly use d
ed point-of-care instrumentation .
a. Please provide for review the data frot studies to assess the degree of interference by
HBOC-201 for commonly used clinico assays . These studies should provide
information about interferences over tl full range of concentrations of HBOC 201 to
which patients will be exposed and sb old assess interference over the full range o f
likely analyte concentrations .
If HBOC-201 interferes with clinical x
characterizing the direction and ma911i
levels.
b. Please provide information about
system), which you have tested.
irements , please provide informatio n
of the bias associated with varying drug
assays (including the name of the test
used, for which
c. Please provide a list of all analytes, by
ii. there is no interference
iii. interfemce can be corrected
iv, no results can be obtained v lie HBOC-201 is still present in the
circulation, above a specific t reshold .
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d. Please provide validation data supporting the use of commonly used clinical
laboratory and point-of-care instruments for analyzing patient samples containing
HBOC-201 .
e. Additional interference studies should be ongoing with samples drawn from study
patients. The purpose of these studies is to validate other methods and analytes using
real patients samples by using established methods as comparators . Patient samples
should be banked for future use. Please commen t
Ph armacolofv/toxicology
Study (NC101) :
1 . Based on results from NC101 it appears that HBOC-201 delivers excessive amounts of
oxygen to the tissue evaluated (left quadriceps muscle) and results in equally excessive
global oxygenation and tissue oxygen extraction . Conversely, both stored and fresh
blood normalizes tissue oxygenation parameters relative to pro-hemodilution values .
Please comment on the performance of stored and fresh whole blood in this model and
provide a rationale for why apparent tissue over oxygenation by HBOC-201 is
appropriate.
2. Under conditions of bypoxia, excess oxygen delivery inevitably will lead to oxidative
cascades and tissue injury.
a. Please comment on the potential longer-term effects of excessive oxygen delivery
apparently mediated by HBOC-201 .
b . Please comment on the study duration and why a short-term evaluation was chosen to
address a pivotal question (i .e. does HBOC-201 provide optimal tissue oxygenation?)
most appropriately determined over a minimum of 24 hours . .
c. Please provide metHb concentrations for at least 24 hours following the final infusion
of HBOC-201, tissue oxygenation parameters for at least 24 hours following the final
infusion of HBOC-201 and an assessment of any tissue oxidative damage.
3 . Study NC101 models a severe situation of isovolemic anemia and is intended to mimic
the expected scenario for HBOC-201 utilization in clinical situations of surgical anemia
related to blood loss . However, an important clinical parameter is volume status and
patients generally don't require blood unless Hb falls below 6-7 g/dL. In study NC101
HES maintains the intra-vascular volume of swine .
Please comment on and provide evidence that clinically relevant HBOC-201
administration volumes provide adequate volume expansion in a clinically relevant large
animal model.
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4. Measurements of tissue oxygen debt such as arterial acid base balance are progressively
worsened in all groups following transfusion . This has been associated with poor
prognosis in clinical cases of hemorrhagic shock and is difficult to explain in this model
given the improvements in other parameters of oxygenation .
Please provide an explanation for this paradox .
5. The model presented in study NC101 and other subsequent canine models presented in
the submission involves anesthetized animals . Inclusion of a conscious animal model
would have been useful to assess oxygenation parameters in the absence of mechanical .
ventilation and anesthetic agents.
Please comment on why a conscious animal model was not used in any evaluation of
tissuelglobal oxygenation .
Study. (NC093):
6. The fact that continuous infusion of pentobarbital was used as the anesthetic may present
a problem. Typically if an anesthetic is to be used in a study assessing hemodynamics
one would specifically avoid pentobarbital . Pentobarbital may blunt the vasoreactivity
caused by infusion of HBOC-201 . Without a positive hypertensive control it would be
difficult to assess the effects of the anesthetic.
a . Please comment on why pentobarbital was used and any affect the choice of
anesthetic may have had on the study outcome as related to bemodynamies and tissue
oxygenation . Previous publications by your group (e .g . L.ee, et al., J. AppL PhyJiol_
79(1): 236-242, 1995 .) demonstrate hypertension following Oxyglobin (earlier
version of HBOC-1) administration ,
b . While, it is understood that Oxyglobin and HBOC-201 different it is unclear from the
data provided how HBOC-201 affects hemodynamics in a conscious animal model .
Subsequently HBOC-201 may alter hemodynamic parameters (i .e. vasoconstriction)
in conscious animals, which may go on to negatively influence tissue oxygenation .
Please provide evidence from a conscious large animal model that vasoconstriction
does not adversely influence tissue oxygenation following infusion of clinically
relevant volumes of HBOC-201 .
c. Also, please comment on the re levance of reporting oxygen delivery determined from
cardiac output without knowing organ blood flow . Can you please confum that the
distribution of cardiac output or blood flow is optimal to specific organs following
HBOC-201 infusion? If not, oxygen delivery and the values of oxygenation
calculated from it become less meaningful .
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Tumor oxygenation studies :
All studies provided addressing tumor oxygenation by HBOC-201 are not relevant to the
application and should not be considered in support of the concept of adequate tissue oxygen
delivery in anemia . Please comment on tumor vascular similarities to that of essentially normal
tissue, which would allow for a correlation of oxygen delivery within a tumor to that of normal
tissue.
Population pharmacokinetic analyses
Under the pharmacokinetics portion of the label, you indicated that a weight -based dosing
app roach would yield a more consistent systemic exposure to HBOC-201 . This approach may be
anticipated to yield safer and equally efficacious clinical outcomes . However, your proposed
dosing regimen is not wei t b ased. In your popula tion pharmaeolahehcs ysis, c earanc e
dTo increase with increasing body weight, which vari ed over the range of 23 .4 kg
to170 . 1 kg (age: 8-90 years). HBOC-201 clearance as predicted by the model was 81% higher
over the weight range of patients studied. Since the impact of body weight on HBOC-201
clearance maybe different between pediatric and adult populations, please perform a separate
analysis using pharmacokinetic data in adult population to examine the effect of body weight on
HBOC-201 clearance . Furthermore, please determine whether weight-based dosing for HBOC201 should be adopted . These determinations notwithstanding, as noted in question 4 under
HEM-0115 (Efficacy), any dosing guidelines based on plasma hemoglobin levels would requi re
confirmation in an adequately sized and adequately powered phase 3 clinical trial. In turn,
support for dosing based on plasma hemoglobin levels ould require sufficient phase 2 data to
suggest that dosing based on such a measure is safe and c y to c e cacious . Please comment.
1. Your phase I studies indicated the dependence of elimina tion half-life of H,BOC-201 on
dose, but your population PK analysis did not include dose as a covariate .
Please include dose as a covariate in your population PK model to investigate the effect
of dose on HBOC-201 clearance.
2. Your population pharmacokinetic analysis report is incomplete . It did not include the
final model equation and examples of its application .
Please submit the complete study report with the results of the newly requested analyses .
Phase I pharmacokinetics studies :
1 . You claim that the plasma concentration of and plasma exposure to HBOC-201
(hemoglobin) are approximately proportional to dose, but no formal proportionality
analysis has been done on your phannacokinetics data .
Please perform such an analysis using AUC vs. Dose and C,,,. vs. Dose.
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Dosing in patients with hepatic and renal impairment :
1 Your proposed indication for HBOC-201 is for the treatment of the signs and symptoms
of acute anemia in adult patients undergoing orthopedic surgery . This patient population
includes patients with hepatic and/or renal impairment, Elevations of serum creatinine
and blood urea nitrogen were observed in patients administered HBOC-201 . However,
the impact of renal and hepatic impairment on HBOC-201 clearance has not been studied
and the routes and mechanisms for clearance of HBOC-201 are not clearly described .
Please address these issues.
Repeat dose pharmacokinetics :
. Yo l `l am
1 . You have not conducted repeated dose phirmacokinetic studies using HBOC-201
population pharmacolinetic analysis indicated that patients who received HBOC-201
pre-operatively had, on average, a 61 % lower clearance and 29% lower volume tha n
those who did not receive HBOC-201 pre-operatively . These findings indicate that
HBOC-201 involves a saturable elimination process . However, your proposed dosing
regimen for HBOC-201 is up to 5 doses in 6 days, and has not characterized for its
pharmacoldnetics as repeated dose may lead to unanticipated accumulation of HBOC201, it is necessary to characterize repeated dose hannacokineties by conducting a
multiple dose;
;-par-m
okinetic study .~,~p, ~
Please submit study protocol for our comments .
`} ► ~
Change in mean plasma hemoglobin following infusion of HBOC-201 :
1 . You have provided a table with change in mean plasma hemoglobin following infusion of
HBOC-201 .
Please also provide median with range for change in plasma hemoglobin following
infusion ofHBOC-201 .
Otber .PharmacologylTozicologY studie s
1 . The first section of your proposed label (Section 2, Dosage and Administration) describes
human dosing in the context of both preclinical and clinical pharmacoldnetic studies . In
Section 2 .2, "Additional Dose," the sentence in lines 35-37 reads that an initial dose of 60
grams of HBOC-201 will result in a plasma hemoglobin concentration of approximately
1 .4 g/dL, based on data from pharmacokinctic studies in animals and humans ." Please
delete the word "preclinical" from this language since human dosing guidance in product
labeling is not predicated on animal phannacokinetic data . Language regarding plasma
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hemoglobin levels achieved after administration of 60 g of HBOC-201 must be based on
clinical data. (Please see question 4 in the review of efficacy of Study ITEM-0115) .
2 . In Section 2.2 of the label, Table I entitled, "Extrapolated Dosage Guideline" is not
informative because human dosing and administration needs to be based solely on human
clinical data . As noted in question 4 under HEM-0115 (Efficacy), any dosing guidelines
based on plasma hemoglobin levels require confirmation in an adequately sized and
adequately powered phase 3 clinical trial . Human dosing based on plasma hemoglobin
levels requires phase 2 data demonstrating that this approach is safe and efficacious .
Please comment
3 . The language of lines 236-263 of the proposed package insert imply that the rat
reproductive toxicity studies are less informative than the dog reproductive toxicity
studies for predicting human developmental toxicities because of the lack of an inverted
yolk sac structure in the human fetus and a longer time interval of histiotrophic nutrition
in the rat compared to the dog. Although humans do not have an inverted yolk sac, and
depend quite early in development on hemotrophic nutrition compared to other species,
the histiotrophic process may supply the fetus with nutrients throughout gestation . Thus,
FDA recommends that lines 257-263 of the proposed label be deleted and that more
details are provided on the teratogenicity findings in the rat model_ We also recommend
that the rat teratogenicity results precede the language describing the dog reproductive
toxicity studies in the label.
4. Instead of Pregnancy Category "C," FDA recommends that the product be labeled as
Pregnancy Category "X" because:
a. The product is teratogenic in the rat
b . FDA does not envision a situation where use of HBOC-201 is less of a risk to a
pregnant woman than red blood cells . Accordingly, please change the language of this
section of the label to that stated in 21 CFR 201 .57 for drugs with a pregnancy
category of "X ." Please comment .
5. Please refer to lines 416-421 of the proposed label . Your contention that preclinical
studies suggest that Hemopure transports oxygen more effectively than red blood cells is
not supported by the preclinical studies you submitted because most of the predinical
studies do not directly compare RBOC-201 treatment(s) with autologous or homologous
red blood cell treatment(s) . Please comment.
6. Preclinical studies with HBOC-201 in the cynoznalgus model provide evidence of
cardiotoxicity . The pathologic review of the studies noted that there was "a fairly strong
association of HBOC-201 with heart lesions consisting of interstitial fibrosis
accompanied by myocyte hypertrophy ." The findings of cardiac toxicity in the
Cynomolgus monkey studies should be described in detail in the HBOC- label . Please
comment .
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Chemistry, Manufactur' and Controls
Herd Management Program :
1 . Please explain how Animal husbandry'practices (vaccines used, vaccination schedules-,
anthelm inthic treatments, veterinary evaluation, and quarantine of new or sick animals
and effective housing facilities) are being ensured and documented in the housing
facilities that are providing the source herds for your product .
2 . Please describe the health-screening program of source herds, including a list of agents
that are screened, the frequency of testing, the proximity of test date to the slaughter
date and the methodologies used for testing including positive and negative controls . In
your response, please indicate whether necropsies are performed on animals that . die
unexpectedly at source herd farms . If so, how arc results of these necropsies included
in herd health assessment?
3 . Please provide a description of the method for the assessment of "fallen stock" as well
as for any other clinical signs of disease in animals that are presented at the abattoir for
blood collection. Please explain any exception with regard to the exclusion of "fallen
stock" and animals with clinical signs of diseases as source animals.
Blood Collection :
Please provide information on the type of dissection equipment that is used to isolate the
jugular, its method of sanitization, and whether such equipment is single use or shared
use among animals- Furthermore, please describe procedures used in dealing with
accidental contamination by brain matter during the captive bolt process, and accidental l
contamination by the contents of the rumen following the hoisting of the animal .
2. For general guidance, we have previously provided you with a list of Core Cattle
Diseases that the Agency uses as species-specific agents of concern when bovine-derived
materials are used for human biologicals p ro duction.
Transmissible spongiform encephalopthfes (TSE) :
1 . The performance of your TSE clearance studies provides some assurance of safety,
however if TSE agents were discovered in source cattle for this product, these studies
would not necessarily support release of the product . Additional studies may be
requested by FDA in the future, as improved models for blood TSE infectivity are
defined, when more is known about blood infectivity in bovines, and as assays are
improved. Any safety claim with regard to TSE's in the package insert, must note the
limitations inherent in the current validation studios including potential differences
between TSE infectivity in blood of an infected animal and that of brain homogenates .
Please comment.
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Process Validation :
Please explain the discrepancies with regard to the concentration of IgG after
ultrafiltration stage I and II and that ofpost-final filtration (Tables 2 .5.4.1.2.6 and
2.5 .4.1.2.7, Page 3150) of C-500 intermediate . The data show an increased concentration
of IgO after second filtration, whereas a decrease in the concentration is expecte d
2. Please explain the rationale for the change in IgG specification for C-800 from <15.6
ng/ml in 1997 to 525 ng/ml in 2002 (Page 3153) as an indicator or parameter for
purification.
3. Please explain how the deviation with regard to elevated OxyHb was resolved in C-800
PQ studies (Table 2.5 .4.1 .4 .5, and Table,2 .5.4.1 .4 .6, Page 3161-2) . Please provide
complete deviation investigation reports with supporting data. It appears that increase in
the % oxyHb has been a frequent occurrence, as demonstrated in the course of process
validation. Please explain .
4. Please explain how the deviation with regard to low total Hb concentration was resolved
(Table 2.5.4.1.4.11, Page 3164).
5. Please note that specification level for Boron concentration indicated for diafiltration step
(DFA), as "post-diafiltration less than pre-diafiltration result' is unacceptable,
considering that the limit of this compound may range from 600 ppm to 2 .9 ppm. Please
specify a numerical value for an upper acceptable limit of Boron, following diafiltration,
and explain the rationale for choosing the specified limit .
6 . Following diafiltrat ion against DFC and concentration of hemoglobin, you have specified
the pH of the final solution as < 9 .0 at 20°C (Table 2 .5.4.1.4.12, Page 3165). Please
explain what would be the acceptable lower limit for pH at this stage . In your response,
please provide data supporting your rationale for the specification .
7 . You have indicated that the bands that arc detected between 66 and 22kD in SDS-PAGE
analysis of Hemopurc arc likely to be stabilized hemoglobin subunits and not plasma
protein impurities . Please provide characterization data to support your conclusion
regarding the identity of these bands .
8. Your viral validation studies of the ultrafiltration step used in purification of C-500
compound was performed prior to recent changes in your process . Please provide
validation data to establish the relevancy of the scaled-down model, used in this
validation, to the current purification conditions indicated for this step . In addition, you
have indicated that you could not successfully produce three batches of C-500 for the
validation of the scaled-down ultrafiltration step . In your response please provide
completed validation data for this step .
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91
Please provide validation data demonstrating that the of the lOOkD Fractionation
Ultrafilter from Pall Filtron Centrasette open channel filter to pall Filtron Maxisette
Filter, would not alter viral clearance capacity of the filtration step . In your evaluation
please consider the following parameters : changes in flow rate, filter conditioning step
and change from constant diafiltration volume process to constant retentate hemoglobin
concentration process .
Product Characterization :
1 . Your current measurements of oxygen dissociation equilibrium (i .e., Pso values) of the
final product, using the Hemox-Analyzer are not based on complete oxygen saturation of
hemoglobin, but rather are derived at approximately . 80% saturation. Therefore these
values do not reflect the actual Pso of the test article . Please provide corrected Pso values,
taking into account the level of oxygen saturation in the test article. Both the corrected
value of Pso as well as the calculated oxygen binding cooperativity (Hill coefficient)
should be included in the final product specifications.
Please note that we reserve comments on "mechanism of action " of this product as
described in your label until these issues are resolved.
2. The functional assays, used for the characterization of your product, arc limited to
measuring oxygen dissociation equilibrium parameters mentioned above. Please expand
on these functional characteristics of HBOC-201 by determining the dependence of
oxygen binding on pH (Bohr effect), chloride (Ct) and temperature .
3. Since HBOC-201 is composed of several molecular weight species, some understanding
of the contributions of individual molecular species to the overall oxygen affinity (Pso)
and cooperativity of the product should be established. Accordingly, please evaluate the
contributions of individual molecular species to the overall oxygen affinity an d
cooperativity of the product and report these results to the BLA.
4. Your data indicated that Lot H6C014 had low total hemoglobin concentration and high
P50 value . Please explain these results, and comment on a possible relationship between
P$0 measurement and hemoglobin concentration, including the effect of total hemoglobin
and hemoglobin species such as methemoglobin (MetHb) .
5. Carbonic anhydrase (CA) is the only impurity found in the C-500 and C-800
intermediates as detected by SDS-PAGE, immunoblotting and isoelcctric focusing
techniques. Other possible impurities, speci fically rod cell enzymes (i.e., superoxide
dismutase and catalase) or'their fractions should be detected by mo re sensitive methods .
Accordingly, please present data about impurities from more sensitive assays such as, but
not limited to immunoaffinity chromatography (see for example, P rivalle et al., Free
Rradic Biol Med 28 : 1507, 2000)
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Stability:
Final product stability data indicate an apparent temperature-dependent increase in the
high molecular weight fraction over time (>500 kD) . As a case in point, it appears that at
the 25 °C storage condition the high molecular weight fraction (>500 kD ) will exceed its
specification limit (<15%) prior to the proposed 3-yr expiration (Page 6697-6705, Lots
H01C03 - HO1C11) .
a. Please explain the apparent temperahua-dependent increase in the high molecular
weight fraction (>500 kD) over time, and its potential impact on your proposed shelf
life for the product at 25 T.
b. Please provide updated stability data for final product lots manufactured in .2002 and
2001 .2. You have indicated that a two-column high performance size exclusion chromatography
(HP-SEC) system (YMC-S, QT-0541) will be used to determine the molecular weight
size distribution of final product instead of the one-column system (BioRad BioSil, QT
0394) . Used in previous analysis.
a. Please provide complete validation studies for the newly developed HP-SEC method,
and explain the rationale for implementing this new methodology.
b . You have indicated that the high molecular weight species (>500 kD) are not resolved
using the newly developed two-column UP-SEC system (YMC-S) . Please explain
how the high molecular weight species will be measured in the final product .
c. Please provide data to demonstrate the comparability of molecular size
determinations obtained using the one-column HP-SEC system (BioRad BioSil, QT0394) with those obtained using the two-column HP-SEC system (YMC-S, QT0541). In your response please indicate how the use of two different systems, over
time, will effect the interpretation of the stability data with regard to the molecular
size dete mination .
3. The final product release specification for N-acetylcysteine (0 .13 - 0 .22%) differs from
its specification for the stability of the final product (0 .02 - 0.22%) . Please explain why
is stability specification lower than release specification for -N aeetyleysteine .
4. Please measure the degree of autoxidation (i .e., methemoglobin formation) of final
product at different temperatures (i .e., 5, 25, and 37 0C) once it is removed from the inner
pouch . For a given lot of the product, please compare these measurements at the
beginning and at the end of the product shelf life .
Confidential Treatsent
requested by Biopur e
flP 00116
Q01 1
07/30/03 WED 16 :35 FAX 9 301 827 3524 CBER/OBRR/DBA
STN: 125066/0, Page 34
5 . Please include the measurement of free iron/chelatable iron in the final product as an
additional product release specification and as a stability-indicating test, to assess and
monitor potential product degradation .
6 . In- process testing of phospholipid content was conducted in the m anufacturing of C-500
qualification lots . However, this measurement was discontinued in lots that have been
manufactured subsequently . Pease note that phospholipid content is considered a critical
measure of purity for this intermediate , and therefore its determination should be
included as a final release test for the C-500 intermediate
Package Inserts :
&4v
We reserve comments on the labeling issues for the package insert until the BLA is
otherwise acceptable .
e Ste'
~~ .. ""'''`i
Preapproval Inspection :
1. Inspectional issues from the February 3 through 7, 2003 and March 17 th rough 27, 2003
pre-approval inspection have not been resolved.
W- '- -9
~-A
You may uest a meetin 'th CBER to discuss the above s s for royal . Please request e •
p
them at east 15 days prior to e propose meeting date. . Alternatively, you may choose
to discuss this xna er via a to ephone call . Should you wish this meeting or a telephone
discussion please ca ll Mr . Franklin T. Stephenson in the Division of Blood
Applications at 301 - 827-3524.
Within 10 days after the date of this letter, you are requested to take one of the following actions:
(1) amend the app lication; (2) notify us of your intent to file an amendment or a new submission ;
(3) withdraw the application; or (4) request an opportunity for a hearing on the question o f
whether there are grounds for denying app roval of the application. In the absence of any of the
above responses, CBBR may initiate action to deny the app lication.
Please note our reviewclock has been suspended with. the issuance of this letter. Note also that
any amendment should respond to all deficiencies listed and that a partial reply will not be
considered for review nor will t ie review c oc c e reactivated until all deficiencies have been
addressed . Wglt
Sincerely yours ,
1
BTolding, M.D.
Director,
Division of Hematolog y
Office of Blood Research and Review
Center for Biologics
Evaluation and Research
Confidential Treatient
Requested by Biopur e
BP 00177
Case 1:03-cv-12628-NG
Document 110-4
Filed 03/28/2006
Page 1 of 14
Exhibit C
to PROPOSED SECOND CONSOLIDATED AMENDED COMPLAINT
Case 1:03-cv-12628-NG
Document 110-4
Filed 03/28/2006
Page 2 of 14
FINAL TRANSCRIPT
Event Transcript
BPUR - Q2 2003 Biopure Corporation Earnings Conference Call
Event Date/Time: May. 22. 2003 / 4:30PM ET
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Case 1:03-cv-12628-NG
Document 110-4
Filed 03/28/2006
Page 3 of 14
FINAL TRANSCRIPT
BPUR - Q2 2003 Biopure Corporation Earnings Conference Call
CORPORATE PARTICIPANTS
Doug Sales
Biopure Corporation - Director of Corporate Communication
to Doug Sales (ph), Director of Corporate Communication go
ahead, sir.
Tom Moore
Biopure Corporation - CEO
Doug Sales - Biopure Corporation - Director of Corporate
Communication
Ronald Richards
Biopure Corporation - CFO
Good afternoon, everyone, and welcome to our second quarter
2003 conference call for the period ending April 30th. Today
we'll report our financial results for this period and briefly discuss
some of the company's accomplishments and activities after
which we'll answer a few questions. Before we begin, I'd look
to point out that during this call we'll make projections and
other forward looking statements which involve risks and
uncertainties that could cause the company's actual results or
performance to differ materially from those projected. The
condensed list of these respective factors appears at the end of
today's financial results press release which you can access on
the internet. In a more comprehensive discussion occurs on our
SEC filings and Biopure.com. At this time I'll turn the call over
to our CEO Tom Moore.
CONFERENCE CALL PARTICIPANTS
Dr. McNeal
Yates Capital Management - Analyst
Safna
Think Equity - Analyst
Richard Kemp
Salomon, Smith Barney - Analyst
Gab Hoffman
Capital Management - Analyst
Hugh Bradford
Investment Corporation - Analyst
Tom Moore - Biopure Corporation - CEO
Steven Max
Bleuridge Capital - Analyst
Good afternoon, everybody. I'm joined this afternoon around
the table here besides Doug by Howard P. Richman our Senior
Vice President of Regulatory and Operations. And Ronald
Richards our Chief Financial Officer and Business Development.
As we have in our past two quarterly calls I'll simply touch on
some of the key point that are raised in the press release we set
out about half an hour ago, and then throw it open to your
questions. Overall we feel we have had a very satisfactory second
quarter, very satisfactory because it was a strong revenue quarter.
We saw a significant drop in operating loss compared to a year
ago. The company has achieved a much stronger cash position
than we were at the end of last quarter.
Thomas Feliba
Northeast Industries - Analyst
Richard Adams
Bennett Moran - Analyst
Robin Brooks
MRA - Analyst
Kurt Wayne
West Broadway Partners - Analyst
Dr. Figman
Private Investor - Analyst
PRESENTATION
Operator
Good evening. My name is Denise and I will be your conference
facilitator today. At this time I would like to welcome everyone
to the Biopure second quarter 2003 conference call. All lines
have been lids on mute to prevent any background noise. After
the speakers remarks there will be a question and answer period.
If you'd like the ask a question during this time, simply press
star, then the number 1 on your telephone keypad. If you'd like
to withdraw your question, press star, then the number 2 on
your telephone keypad. I would now like to turn the call over
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We're seeing continued growth in military support for our
trauma development activities, and we continue to be very
hopeful of an DFA response on our by oh logic license
application by mid-year or sooner, and we continue to not be
aware of any major issues with that application at this time. To
the details in the second quarter we showed a net loss of $11.7
million. That was down 8% from $12.7 million a year ago. On
an EPS basis we showed a loss of 35 cents per share. That is
modestly below the analysts' projections and compares to a loss
last year of 49 cents per share. Revenue is a very strong $2
million compared to $928,000 year ago, and this was entirely
on our Oxyglobin (ph) product.
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Case 1:03-cv-12628-NG
Document 110-4
Filed 03/28/2006
Page 4 of 14
FINAL TRANSCRIPT
BPUR - Q2 2003 Biopure Corporation Earnings Conference Call
We'll -- at the call last quarter I was asked to give a rough
estimate of how much we would ship is this quarter and I
estimated between one and eight quarters and two and a quarter
million and we came in smack dab in the middle of that range.
We're looking for continued growth on Oxyglobin based on
strong orders now into this quarter and we in toned introduce
a new 16 millimeters smaller size which will make our product
easier to use with smaller docks and we show that will favorably
on our shipment results for Q3. From a cash standpoint, at the
end of Q2 we had $15.1 million in the bank. That compares
favorably with $9.5 million at the end of Q1. Since the end of
the second quarter the company has raised an additional $7.3
million, and so that has strengthen considerably our cash position
versus the Q2 final number.
Touching on other points, in our last quarterly call I said that
while we are continuing to negotiate with our far eastern
potential joint venture partners, that those negotiations, while
still active, had slowed down. They continue now, and they
are, in fact, still active, but we have not yet achieved a final
agreement, but those discussions are, in fact, still active.
Last quarter I also indicated that we anticipated additional
military support beyond the then $4.9 million that have been
appropriated so far in the past quarter we in fact concluded
cooperative research and development agreement with the U.S.
navy which has enabled another $4 million to go and is in
support of our trauma trials. I'm also making a point that we
have already seen the beginning of the appropriation process for
the coming federal fiscal year. I'll point out that the house armed
services committee reported an authorization of $10 million for
additional Humiglobin (ph) research split between Army and
Navy researchers. The authorizes process is only the first step
of a very long process of giving a final federal appropriation,
buts it nevertheless is a good start, from our perspective, at least.
In our call last quarter we indicated we were hopeful we would
have a Sumter agreement in hand or be still closer. As yet, we
are still working to conclude the financing on that agreement,
and while it's -- those are very active discussions, it still slightly
now that we won't get that all done until probably when we
hear back from FDA. On FDA, I'll just reiterate, I guess, at our
last quarter we said we were hopeful we would hear by mid-year
that we had gone through an extraordinarily extensive set of
inspections and had answered all FDA questions and we were
unaware of any major issues. Fundamentally we're in the same
place now.
As many of you know, under Produfa(ph) the objective, not
the obligation of the agency would be a response within ten
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months from our initial submission in eight months of
acceptance. That would lead to a potential timing in early June.
We continue to say we are not aware of anything that would
cause undue delay, but we're saying we're hopeful we'll hear by
mid-year. So that's sort of a broad overview. A couple of other
important additional points, over the last few days there has been
a considerable consumer concern and general concern about
the discovery of an infected cow in Canada, infected with BSE.
It seems reasonable to think that for some at least that are not
familiar with very high quality and purity standards applied to
our product, that there might be some concern that that might
relate to our product in one way or another.
I'll reiterate what we shared with investors repeatedly in the
past. Our pure buy case process has been extensively reviewed
by regulatory authorities both here in the U.S. and in Europe
and we have been repeatedly certified as being capable of
removing a wide range of pathogens, including those which
cause BSE. At this point we're not aware that that is any issue
with any regulatory body worldwide. And we are now shipping
products in three continents and none of them have ever raised
an issue about this following certification. Most recently the
European director for the quality of medicines granted Biopure
a certification of suitability for Europe for both Oxyglobin in
July 2001 and Hemopure in February 2003. That followed an
independent analysis by experts which we provided technical
information about our manufacturing process, our raw material
origins, palo-traceability (ph) auditing and risk analysis and after
reviewing all this and our process don't colluded that we have
more than adequate safety with regard to TSE agents and met
all the standards that are required in Europe for new and
approved human and veterinary medical products.
For those of you who want to learn more about this we've put
additional information on our website I would encourage you
to access it at Biopure.com, and I think you'll find yourself fully
stead by the additional technical detail we provide there. One
other business note, in South Africa we've made some progress
but not progress consistent with what I would have hoped for.
On the plus side, we have succeeded in getting reimbursement
from three additional insurance companies getting ourselves to
the marketing platform where we can indeed do business;
however, after what all investors will sympathize about a hard
time getting that commercial operation to get to the sales point,
albeit with a late start, we've concluded that our partner in South
Africa is not one with which we wish to continue, and we have
notified them that we are dissolving that business partnership
and henceforth will cop operate it through our fully owned
company which has already been set up, is staffed, and is
operating in South Africa. We expect that handover to come
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Case 1:03-cv-12628-NG
Document 110-4
Filed 03/28/2006
Page 5 of 14
FINAL TRANSCRIPT
BPUR - Q2 2003 Biopure Corporation Earnings Conference Call
in the next 30 to 65 days, and in that, during that interim time
it will be unlikely we'll realize any additional South African sales,
but after that we we look forward to at last getting into the
revenue column.
Finally, I draw your attention to a conference that we're going
to be holding on Friday, June 6, through Sunday, June 8. This
is a symposium that will be held at Turnbery(ph) Island in
Florida entitled Clinical Experience with Hemopure(ph) new
therapeutic approach to tissue oxygenation. We will be bringing
together over 40 attendees drawn from the United Kingdom,
United States and South Africa, including the President of
America's blood senators and the senior medical officer of the
American Red Cross, representative from the Navy and the
Army, a cross-section of thought leaders in anesthesia, orthopedic
surgery, trauma surgery, hospital, pharmacy, and critical care,
all to review the clinical trial results with Hemopure as well as
the complete safety record of our clinical program, to look
forward as to how our product could be applied in use with
orthopedic surgery but also looking forward to update these
critical thought leaders on our clinical plans and trauma and
other future indications for the product. That's going to represent
a major coming-out party for the product, and will represent
the kick-off of a consider reply strengthened medical education
and communication program for the product.
These meetings will be followed one a presentation on June
13th at the American society for artificial internal organs and
on June 14th with an open symposium at the network for
advancement of transfusion alternatives. In short, our profile is
going to go up considerably beginning in early June. That's my
summary of where we stand. Now I would welcome your
questions.
States, what about some of these other countries that have more
rampant AIDS situations, potential India, China, Russia? Can
Hemopure, even if it is not set up to be used in the U.S., can
it be used in these other countries? Are there any thoughts about
this?
Tom Moore - Biopure Corporation - CEO
We are working on additional international filings. We are in
conversation with thought leaders located both as individual
doctors but also members of transfusion services and the military
of several different countries, and we believe long-term there
is a very substantial market for our product worldwide. We have
said that we intend to make additional international filings this
year, and we will. Does that answer your question, sir?
Dr. McNeal - Yates Capital Management - Analyst
Yes. Thank you very much.
Operator
Your next question comes from of Safna(ph) of Think Equity.
Safna - Think Equity - Analyst
Hi, Tom, how are you?
Tom Moore - Biopure Corporation - CEO
I'm well, thank you.
Safna - Think Equity - Analyst
QUESTIONS AND ANSWERS
Operator
At this time, if you'd like to ask a question please press star, then
the number 1 on your telephone keypad. We'll pause for just a
moment to compile the Q&A roster. Your first question comes
from Dr. Wall as.
Dr. McNeal - Yates Capital Management - Analyst
This is Dr. McNeal. I'm a private investor. I'm working through
Yates Capital Management. My question is if the FDA sets a
level that doesn't permit Hemopure to be used in the United
streetevents@ccbn.com
You know, just a couple of questions, if approved on June 1st
I just wanted to get an overview of what do you people plan to
do next and how do you people plan to rule out the product?
Tom Moore - Biopure Corporation - CEO
Well, we intend to first resume breathing. This is a top corporate
priority. We will fix our tissue profusion which comes from
holding our breath for at least two weeks. Having finished that,
from an investor standpoint, we will be holding for our investor
meetings and then for analysts full R&D updates in the few days
following this hoped-for happy event, and designed to get a lot
of people haven't been quite in sink with the story up to speed.
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Case 1:03-cv-12628-NG
Document 110-4
Filed 03/28/2006
Page 6 of 14
FINAL TRANSCRIPT
BPUR - Q2 2003 Biopure Corporation Earnings Conference Call
From a commercial standpoint, we have already drawn up an
introductory plan which will be based on careful targeting of
thought leaders in orthopedic surgery and anesthesia in general
but especially those who are leaders in the practice of blood
avoidance and blood avoidance surgery, as we believe the initial
most attractive application of our product from both an
economic standpoint but also patient comfort standpoint is in
this particular segment of the field. Our estimates suggest that
it's in the U.S., it's a market in excess of $300 million and for
the limited capacity we will have for the first two for three years,
that represents an attractive way for us to introduce the product,
so you will see us begin literally, our thought leader work will
begin the end of that week.
Safna - Think Equity - Analyst
August '04?
Tom Moore - Biopure Corporation - CEO
'03.
Safna - Think Equity - Analyst
August '03. Okay. Thank you.
Tom Moore - Biopure Corporation - CEO
We hope that will have a tremendously enthusiastic kick-off to
that meeting and move from there, and as I've already shared
we'll have very aggressive thought leader contacts throughout
the month of June, more specifically, though, on a triple handful
of targeted hospitals where we aim to get accepted first, work
with the thought leaders there to begin what we call seeding
trials, and then follow up with a combination of medical science
liaison and sales support to basically make ourselves part of the
fundamental practice within these key hospitals, and then expand
out from there. Our aim will be to have the product, again,
assuming we get approved, on or about June 1st to the end
business and moving product no later than October 1st.
Thank you, Safna.
Operator
Your next question comes from Richard Kemp of Salomon,
Smith Barney.
Richard Kemp - Salomon, Smith Barney - Analyst
Good afternoon, gentlemen.
Safna - Think Equity - Analyst
Tom Moore - Biopure Corporation - CEO
And just an update on South Africa, when can you expect to
see revenues there?
Good afternoon.
Richard Kemp - Salomon, Smith Barney - Analyst
Tom Moore - Biopure Corporation - CEO
Given the changes we've decided to make in our partnership, I
think now it's realistic the think that we won't be able to do
that until probably the tail end of Q3 or more likely early Q4.
By that I'm saying basically August.
I represent several investors, and one question is can you
comment on any recent inquiries by the FDA. And second
question would be where are we in future production capacity?
There was some discussion --
Tom Moore - Biopure Corporation - CEO
Safna - Think Equity - Analyst
August?
Tom Moore - Biopure Corporation - CEO
Yes.
streetevents@ccbn.com
In terms of your first question, we're in dialogue with FDA
literally two for three times a week, and so they are reasonably
constantly asking questions, asking for additional information,
so I'd say the commentary, we've been in fairly constant
communication with them. In terms of added capacity, our
facility in Cambridge, Massachusetts currently has a rated capacity
of 70 to 75,000 units annually. As we've announced previously,
our aim is later this year, is to expand that capacity to, in the
ballpark of 90 to 100,000 units maximum capacity.
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Document 110-4
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Page 7 of 14
FINAL TRANSCRIPT
BPUR - Q2 2003 Biopure Corporation Earnings Conference Call
Under our current plans that's all the capacity we would have
until likely now earlier 2006 when this new facility in Sumter
for which we've already done the site acquisition and the
engineering ought to be complete, validated, inspected by FDA
and then up and running.
Richard Kemp - Salomon, Smith Barney - Analyst
And how large is that capacity?
Tom Moore - Biopure Corporation - CEO
Good question. I'm sorry. I didn't say that. 500,000 units per
year. I'll note that the site is also designed to be able to mirror
over a plant, and so we can put basically a million units annually
of capacity out at the Sumter facility once we other the
construction of the mirror plant which will be less expensive
than the original facility.
Richard Kemp - Salomon, Smith Barney - Analyst
And the expected revenues per unit is $800? Is that what I
understand?
Tom Moore - Biopure Corporation - CEO
I don't think we've ever given more than general guidance in
that area but I won't discourage you from thinking about that
number.
Richard Kemp - Salomon, Smith Barney - Analyst
Thank you very much.
Tom Moore - Biopure Corporation - CEO
You're welcome.
Operator
Your next question comes from Gab Hoffman of Capital
Management.
Operator
I do apologize for that. Mr. Hoffman, if you would please press
star 1 again. Please hold for Mr. Hoffman. Go ahead. Sir.
Gab Hoffman - Capital Management - Analyst
Hi. Thank you for taking the question. I was curious, would
you mind telling us who the three insurance companies that
have, in South Africa that have, you know, started
reimbursement for Hemopure?
Tom Moore - Biopure Corporation - CEO
I wouldn't mind at all, but I don't have their names in front of
me. I would be happy to contact you separately with that
information, in any way you like. I'd be happy to send you that
information.
Gab Hoffman - Capital Management - Analyst
Okay. Sure. I'll take that off line. Other question regarding the,
you know, capital raising. It's certainly impressive that the
company has been able to strengthen the cash balance over the
last quarter and I was just won regular a little bit about the
method with respect to how it's done. Some companies, as
you're probably aware, put specific provisions in these, you
know, in their agreements with the investors that specifically
prohibit these investors from shorting the stock first and there
by getting an arbitrage from the discount to which, you know,
to the market at which they buy the securities, and I was
wondering, has Biopure specifically done that, you know, to
protect the common, you know, the current shareholders.
Tom Moore - Biopure Corporation - CEO
Yes. We have not done that with the fund raising that we've
done in this calendar year. What we have been able to do is as
the company has strengthened its finance position, is to
progressively reduce the discount at which the stock is sold, and
so a significant amount of the money raised since the end of the
quarter has actually been through sale of the stock directly into
the market for which we're basically only paying a 1% handling
fee, so -- so at this point we're now raising money at a very
minimal discount.
Gab Hoffman - Capital Management - Analyst
I will say that if you look at all the money raised from -- since
the beginning of the year, I'd say the average discount that we
Just think about it.
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Document 110-4
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Page 8 of 14
FINAL TRANSCRIPT
BPUR - Q2 2003 Biopure Corporation Earnings Conference Call
have been forced to provide in order to conclude a transaction
has probably been on the order of 15%, but the more recent
transactions have been for significantly less than that, and frankly
so long as we can continue our financial health and obviously
in the context where if we get positive news from the Food and
Drug Administration, I think we will be able to avoid those
kind of activities which certainly can go on.
investors was you typically don't in ah public offering however
we've worked very hard to try to find in investors that we
believe do have a long-term interest in the story. We can't always
guarantee that and as you well know sometimes you think people
will hold don't and people you don't think will hold do. I think
we have a good group of investors to the most part and if you
look at the way the volume it I had that, it suggests that a good
amount of the stock did hold.
Gab Hoffman - Capital Management - Analyst
So in the future you haven't , at present but in future if the
company is in sponger financial shape you anticipate butting
Lang Kang ever Wang specifically that prevents arbitrage from
coming in and shorting the stock first and profiting in that way.
You know, instead you'll be able to ensure that the people
subscribing to the agreements are real investors, as it were.
Gab Hoffman - Capital Management - Analyst
But you can't actually say who those investors are.
Ronald Richards - Biopure Corporation - CFO
No, no, we can't in this particular case because in a public
offering it generally doesn't get disclosed. Right.
Tom Moore - Biopure Corporation - CEO
Yes. Though I have to say it depends, of course, on the structure
of the particular financing. The financing we've done of late has
all been with shelf stock, fully registered stock, and it's very
difficult to put those kinds of provisions on shelf stock
transactions but I agree totally with the spirit of what you're
saying, namely, going forward from here we ought to be in a
position where we minimize that kind of activity. If we can do
that contractually, we will attempt to do that. I'm happy that at
this point we're not rally selling stock at a discount anymore.
Gab Hoffman - Capital Management - Analyst
Okay. Great. Thank you very much.
Tom Moore - Biopure Corporation - CEO
You're welcome. Or not again, if you'd like to ask a question,
please press stash then the number 1 on your telephone keypad.
Operator
Gab Hoffman - Capital Management - Analyst
Sure. So the most recent investors, has that been disclosed, who
they are? Sometimes companies issue press releases, you know,
when the financings are done and specified who the in investors
are at that time. Do we need to wait for the registration
statements to see that?
Your next question comes from Hugh Bradford of Bradford
Investment Corporation.
Hugh Bradford - Investment Corporation - Analyst
Good afternoon.
Tom Moore - Biopure Corporation - CEO
Tom Moore - Biopure Corporation - CEO
I'll let Mr. Richards address that question.
Good afternoon.
Ronald Richards - Biopure Corporation - CFO
Hugh Bradford - Investment Corporation - Analyst
Yes. In this case what we would do is if we did a pipe transaction
we would definitely disclose all the investors because there is a
subsequent statement for them but since these were all done
public offers, they were and you take downs off of a shelf those
I have two questions. Two of our associates are surgeons, and
in their recent conversations with Parkman medical center here,
which is a trauma hospital, as you are aware, the tests that they
have been using the product have been all satisfactory. I don't
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Case 1:03-cv-12628-NG
Document 110-4
Filed 03/28/2006
Page 9 of 14
FINAL TRANSCRIPT
BPUR - Q2 2003 Biopure Corporation Earnings Conference Call
know how many other trauma hospitals are using, but have you
experienced any negative reports? The second question is has
the product been tried in a recent war overseas?
Tom Moore - Biopure Corporation - CEO
Very good. Let me answer both questions. Parkman Hospital is
going to be our initial clinical center to conduct the already
announced in-hospital trauma trials that will set us up for
subsequent pre-Hospital trials to establish an additional trauma
indication for Hemopure. And much of the military, all the
military support that we've received to date has been design to
help finance those trials.
Tom Moore - Biopure Corporation - CEO
Hello, Steven.
Steven Max - Bleuridge Capital - Analyst
Hey, Tom, how you doing.
Tom Moore - Biopure Corporation - CEO
I haven't seen you in the longest time.
So park land is an important partner for us in that. To the best
of my knowledge, and I think my knowledge is pretty darn
good, they're not currently using that product, and it may be in
your conversations you talked to surgeons who have
experienced, participated in earlier orthopedic surgery trial or
in some other way have some experience with the product,
duty I but I have to say for the record and also for the sake of
our regulatory friends, we have not initiated that trial in parkland
Hospital.
Steven Max - Bleuridge Capital - Analyst
But I'm glad the surgeons feel comfortable about the product
regardless of how they got that experience with it. When we
get the trial underway, we'll be using a number of clinical centers
in the U.S. and expanding them aggressively as well as using,
running the trial else where around the world. But that trial has
not yet begun. In terms of overseas usage, Biopure has not sold
product to the U.S. military for the purposes of having it used
overseas, and so we are not aware of specific military usage of
the product, and so as far as -- we've never been formally
informed of our product being used.
Tom Moore - Biopure Corporation - CEO
Hugh Bradford - Investment Corporation - Analyst
Tom Moore - Biopure Corporation - CEO
Thank you.
But we intend to continue to make the product available on
that free basis. We simply have to create this new commercial
arrangement before we can go back, go into revenue-generating
operations.
Tom Moore - Biopure Corporation - CEO
I've been hiding, I guess. Question for you on South Africa.
How many units were left out of the, I think it was thousand
that you got or 1,000 or 2,000 that you guys shipped over, how
many units were left when you terminated the contract? And
can you just give us -- I jumped on the call late. I don't know
if you spoke about any more details on what transpired to the
arrangement being terminated.
So we terminated the arrangement. We're actually continuing
to make free product available out of those 2,000th store that
we've put over there. And my understanding is roughly 1,000
units have been consumed to this point.
Steven Max - Bleuridge Capital - Analyst
Okay.
You are welcome.
Steven Max - Bleuridge Capital - Analyst
Operator
Your next question comes from Steven Max of Bleuridge (ph)
Capital.
streetevents@ccbn.com
And then what was the reason that the agreement was
terminated?
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Case 1:03-cv-12628-NG
Document 110-4
Filed 03/28/2006
Page 10 of 14
FINAL TRANSCRIPT
BPUR - Q2 2003 Biopure Corporation Earnings Conference Call
Tom Moore - Biopure Corporation - CEO
I think it's probably self-evident.
Steven Max - Bleuridge Capital - Analyst
the 500,000-unit capacity at Sumter. Is there a substantial
difference between the two?
Tom Moore - Biopure Corporation - CEO
Yes, this will there will be a substantial difference. The
relationship will be roughly three to one.
Okay. Thanks very much.
Tom Moore - Biopure Corporation - CEO
You're welcome.
Thomas Feliba - Northeast Industries - Analyst
And is the manufacturing costs in Cambridge such that you can
sell profitably?
Operator
Your next question comes from Thomas Feliba(ph) of Northeast
Industries.
Thomas Feliba - Northeast Industries - Analyst
Afternoon.
Tom Moore - Biopure Corporation - CEO
Yes.
Thomas Feliba - Northeast Industries - Analyst
Thank you very much.
Tom Moore - Biopure Corporation - CEO
Good afternoon.
Operator
Your next question is from Richard Adams of Bennett Moran
(ph).
Thomas Feliba - Northeast Industries - Analyst
(No audible response.)
Richard Adams - Bennett Moran - Analyst
Tom Moore - Biopure Corporation - CEO
I am terribly sorry, but I can't -- you're not coming through.
Hi. as I was hoping you could just maybe give us a little more
detail to some of your more recent conversations with the FDA.
I think you stated there were no major issues that have arisen
and that you've answered the questions they have had, but does
that imply that there have been minor issues and can you talk
about what those are?
Thomas Feliba - Northeast Industries - Analyst
I've taken it off the speaker. I apologize.
Tom Moore - Biopure Corporation - CEO
Great.
Thomas Feliba - Northeast Industries - Analyst
The questions about your actual manufacturing costs per unit
at the Cambridge plant versus the pro forma expected costs with
streetevents@ccbn.com
Tom Moore - Biopure Corporation - CEO
We have -- in the course of the examination of our application
we've gotten questions about basically every part of it, so it's fair
to say that if you're looking at all the issues that can get discussed,
we get questions about everything from our manufacturing
process to the way we manage our herds, to the standard clinical
questions, requests for reanalysis of data and all the rest, and so
there's a pretty, you know, a pretty broad range. We even get
questions about how we're going to market the product.
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Case 1:03-cv-12628-NG
Document 110-4
Filed 03/28/2006
Page 11 of 14
FINAL TRANSCRIPT
BPUR - Q2 2003 Biopure Corporation Earnings Conference Call
We're in negotiations over brand names and everything. So I
don't mean -- I guess I mean to convey accurately to you the
dialogue is very broad and very intense. It's hardly cursory. It's
fair to say that we've been asked about everything.
Operator
Your next question is from Robin Brooks of MRA.
Robin Brooks - MRA - Analyst
Richard Adams - Bennett Moran - Analyst
Have you received complete clearance on the manufacturing
yet?
Tom Moore - Biopure Corporation - CEO
We have -- we have in a sense that all the inspections are
complete. We have responded to all the questions and all the
issues we raised. The inspectors who send us those key questions
represented to us that the questions raised were ones which with
satisfactory verbal answers, were adequate to have our facilities
approved for manufacture of the product, and so it is our -- I
won't be definitive about when FDA is going to give us an
answer to B 11A. I won't be definitive about what I think the
answer will be. But I will be definitive and say we are quite
confident with the FDA is satisfied with our ability to produce
the product.
Richard Adams - Bennett Moran - Analyst
And sorry if I missed this, but did you say that you would expect
to launch roughly four months after approval assuming you were
to get approval in mid-year?
Tom Moore - Biopure Corporation - CEO
Yes. So I'll be honest with you. Because of our long-term
reimbursement strategy, assuming we got approval, we would
do everything we can to be in business on June 21st. When you
look at drown the road. That factors in a very significant date
to hit.
Richard Adams - Bennett Moran - Analyst
Hello. I have a comment and a question. The comment is could
you put the names of the South African insurance companies
that are reimbursing on the website so all of we investors could
find out who those are.
Tom Moore - Biopure Corporation - CEO
I'd be happy to do that.
Robin Brooks - MRA - Analyst
Good. And my second question is has to do with how do the
Red Cross and blood banks view Hemopure? Is it
complimentary to what they do or a competitor?
Tom Moore - Biopure Corporation - CEO
I'm happy to say that, while I don't want to put any words in
their mouths, per se, we have met with very high level people,
in both organizations. It's fair to say that they feel we are
complimentary. It's even fair to say the down -- there are many
there who feel strongly that down the road, if and when we get
approval to our trauma indication, that we in fact will
significantly build demand for red cells because they believe we
can contribute to the survival rate of those who actually get to
the hospital in order to get their transfusions, so I'm happy to
say that at this point the, as you know, the blood banking
community has two very large organizations which together
account for roughly 90% of all transfused blood, American Red
Cross and America's blood centers. I think it's far to say that we
are having good communications with both and our aim is to
work well with both, both because we think we are, in fact,
complimentary and besides that, until we get to capacity of 6
or 7 million units we're not exactly the world's most fierce
competitor for if wiping out the red blood cell bank anyway.
Okay. Thanks.
Robin Brooks - MRA - Analyst
Tom Moore - Biopure Corporation - CEO
Thank you very much.
You're welcome.
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© 2003 CCBN.com, Inc. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior
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Case 1:03-cv-12628-NG
Document 110-4
Filed 03/28/2006
Page 12 of 14
FINAL TRANSCRIPT
BPUR - Q2 2003 Biopure Corporation Earnings Conference Call
Tom Moore - Biopure Corporation - CEO
You are welcome.
Operator
Your next question is from Kurt Wayne of West Broadway
Partners.
Tom Moore - Biopure Corporation - CEO
How are you today?
-- on the standards of how we manufacture the product, wasn't
justified.
I'd add to that also we haven't heard from any governmental
agency or health agency of any kind, either, so in point of fact,
a confession here for you, we made this release even though
there was no internal issue. We made the release based on the
fact that when we observed the changes in our stock price, it is
seemed reasonable to conclude that for one reason or another
investors were associating our product with this issue. For those
of you who enjoy thinking about how stock moves, I'll point
out that within 45 minutes after we issued the press release, the
stock had recovered by about 40 to 45 cents.
Kurt Wayne - West Broadway Partners - Analyst
Kurt Wayne - West Broadway Partners - Analyst
I'm a little surprised at the press release you all put out today.
(Inaudible)
Tom Moore - Biopure Corporation - CEO
I am sorry, but you're not coming through. Maybe that
speakerphone problem again.
Okay. You know, I think I know enough about the product
where I didn't even really associated the two, so it was surprising
to me, but I think it was a good idea, in retrospect. Is there a
way that you could put out maybe a more educational release
or section on your web site that would somehow go into more
detail?
Tom Moore - Biopure Corporation - CEO
Kurt Wayne - West Broadway Partners - Analyst
Okay. Is this better?
Tom Moore - Biopure Corporation - CEO
Yes, much better. Thank you.
Kurt Wayne - West Broadway Partners - Analyst
I was a little surprised at the press release you put out on
Oxyglobin. I was kind of wondering why you felt the need to
do that. Did you receive a number of calls regard than mad cow
or was it just a maneuver?
That's an excellent idea, and in point of fact, we have done that.
So if you go to our web site, you'll see a more detailed technical
discussion, and I think we also have posted the actual certificates
from the folks in Europe who are known as EDQM. We have
actually posted EDQM certificates on the web site just to
reassure everybody that not only are we good, we're certified .
We have some of the scientific background on this as well. For
those that are into log reductions and thing like that, as always,
we're willing to respond to public demand. If you want the see
more information on that, we can post that as well. Hopefully
what you find there is adequate.
Kurt Wayne - West Broadway Partners - Analyst
I'll take a look at is that.
Tom Moore - Biopure Corporation - CEO
Actually, we have not received a single call from either a
veterinarian or from an investor concerning this issue. But we
made the press release because, as we observed how the stock
was performing over the last two days, it seemed -- it seemed
possible, particularly that investors who are not particularly
familiar with our company might be somehow reacting to that
news and making an association with us which, based on our
streetevents@ccbn.com
Tom Moore - Biopure Corporation - CEO
We can go into it much deeper if you're prepared to stay awake
that long.
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Case 1:03-cv-12628-NG
Document 110-4
Filed 03/28/2006
Page 13 of 14
FINAL TRANSCRIPT
BPUR - Q2 2003 Biopure Corporation Earnings Conference Call
Kurt Wayne - West Broadway Partners - Analyst
Thank you very much.
Operator
Your next question comes from Dr. Figman (ph) .
Dr. Figman - Private Investor - Analyst
I think that's me. It's Dr. Figuman, private investor, my question
relates to your south African market and approval for orthopedic
surgery. Did you at any time apply for the trauma indication? I
would have thought that because of the urgency of treatment
of trauma patients and the absence of need for any kind of
matching of blood type, that that would be a very natural
market. Could you comment on that, please?
Tom Moore - Biopure Corporation - CEO
Doctor, your observation is a good one. First of all, for those
who don't know the distinction, we have a general surgery
indication in South Africa as opposed to simply orthopedic. The
good doctor is quite right, there is a tremendous interest in the
use of our product for trauma in South Africa, and South Africa
will participate in the clinical program that we are preparing to
achieve that indication in the U.S., and we have already, in fact,
met with the medicines control council, which is the South
African FDA, to secure the approval for initiating those trials in
South Africa. And that's where we stand.
we they have insisted that we do a separate clinical program to
demonstrate our efficacy and safety in that indication.
However, because general surgery is a pretty broad base, we do
end up getting used in situations which are clearly surgical but
are, one would classify as traumatic as well. The most dramatic
one that's occurred in this quarter occurred in South Africa. A
man working in a factory, in a pretty remote portion of South
Africa unfortunately got his hand caught in a machine and the
had an was severed. And left literally on the floor. He was rushed
to a hospital. Which unfortunately was over 100-mile away and
they later picked up the hand which had been left at room
temperature for an extended period of time and reunited them
at the hospital I guess it was two or three hours later am during
a large part of that time the hand will had been un-refrigerated
which in limb attachment usually means the probable of success
in reattaching that limb goes way down.
The hand, however, was in fused with Hemopure as was the
patient prior to the attempt to reattach and, in fact, they did
successfully reattach it and it was back to close to normal usage
within a few days. We weren't there, but the doctors associated
with the surgery attributed the ability to successfully reattach
this hand to the oxygenation benefits of the Hemopure product.
That's created a bit of a stir down in South Africa. In point of
fact, the surgeon who did this was reported in the Hanesburg
(ph)Star, is the surgeon who did this was giving a brief talk at a
medical meeting the following weekend and he had 20 minutes
to do his talk and they held it over an additional 90 minutes so
he could answer all the questions from the doctors at that
conference, so that's one of several encouraging anecdotes we
get from the use of this product on a day-to-day basis in South
Africa . I hope that wasn't too long-winded.
Dr. Figman - Private Investor - Analyst
Would it be useful for the purposes of this conference call to
comment on why you went for the surgical, whether it be
orthopedic or general indication, prior to the trauma indication?
Tom Moore - Biopure Corporation - CEO
I'd be happy to do that and then I'll try to finish it off with a
trauma story just to amuse, hopefully amuse our callers. The
reason we went for general surgery was that was the indication
justified by our clinical program conducted at that time. The
regulatory organizations of the world seem to be pretty
unanimous on one point. They view trauma as a separate and
distinct indication from surgery, and so as the U.S. FDA does,
the medicines control council in South Africa, we're willing to
accept surgical data as being translated over to use in trauma, so
streetevents@ccbn.com
Dr. Figman - Private Investor - Analyst
It's a remarkable story and I wouldn't be surprised actually if
your product served his severed hand better than whole blood
might have. But I won't go into my thoughts about that think
at this time.
Tom Moore - Biopure Corporation - CEO
I'd hate to discourage you. I'd be interested in that. Nevertheless,
I appreciate your question and the opportunity to talk a little
bit about what's really going on down in South Africa.
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11
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Case 1:03-cv-12628-NG
Document 110-4
Filed 03/28/2006
Page 14 of 14
FINAL TRANSCRIPT
BPUR - Q2 2003 Biopure Corporation Earnings Conference Call
Dr. Figman - Private Investor - Analyst
DISCLAIMER
Thank you very much.
CCBN reserves the right to make changes to documents, content, or other information
on this web site without obligation to notify any person of such changes.
Tom Moore - Biopure Corporation - CEO
Thank you.
Operator
Gentlemen, there are no further questions at this time. Will
there be any closing remarks?
Tom Moore - Biopure Corporation - CEO
Only a bit of whimsy. As a company, you know, we've been
at this for 19 years, and in the next few weeks will be citing one
for us no matter what. In a since we're like, I'd say we're like
sinned all. We spent 19 years the ashes of preclinical research
and moving the furniture of getting our clinical trials underway
and dealing with whatever you choose to call it, the regulatory
preparation, and now, now we hope we're going to be invited
to the ball. We've got the dress on, the glass slippers are by the
door, the pump kin and white mice have been picked out, and
so we're ready to go, and if and when we get there, I think a
lot of folks will be surprised, but we won't be. That's it. I look
forward to talking to you sooner rather than later.
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Operator
This concludes today's Biopure conference call. You may now
disconnect.
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Case 1:03-cv-12628-NG
Document 110-5
Filed 03/28/2006
Page 1 of 14
Exhibit D
to PROPOSED SECOND CONSOLIDATED AMENDED COMPLAINT
Case 1:03-cv-12628-NG
Document 110-5
Filed 03/28/2006
Page 2 of 14
FINAL TRANSCRIPT
Event Transcript
BPUR - Biopure Corporation Conference Call To Discuss the Regulatory
Status of Hemopure
Event Date/Time: May. 30. 2003 / 3:00PM ET
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Case 1:03-cv-12628-NG
Document 110-5
Filed 03/28/2006
Page 3 of 14
FINAL TRANSCRIPT
BPUR - Biopure Corporation Conference Call To Discuss the Regulatory Status of Hemopure
CORPORATE PARTICIPANTS
Thomas A. Moore
Biopure - CEO and President
Howard P. Richman
Biopure - SVP Regulatory Affairs and Operations
Ronald F. Richards
Biopure - CFO and SVP Business Development
Doug Sayles
Biopure - Director of Corporate Communications
Good afternoon. My name is Melissa and I will be your
conference facilitator today. At this time, I would like to
welcome everyone to the Biopure Special Announcement
Conference Call. All lines have been placed on mute to prevent
any background noise. After the speakers’ remarks, there will
be a question and answer period. If you would like to ask a
question during this time, simply press star then the number one
on your telephone keypad. If you would like to withdraw your
question, press star then the number two on your telephone
keypad. Thank you. I will now turn the conference over to
Douglas Sayles, Director of Corporate Communications. Mr.
Sayles, you may begin your conference.
CONFERENCE CALL PARTICIPANTS
Sapna Srivastava
ThinkEquity Partners - Analyst
Douglas Sayles
Good afternoon, everyone, and thank you for joining us on
short notice. Before we talk about the progress that we’re making
in the FDA regulatory process, I need to point out that during
the call we’ll make projections and other forward-looking
statements which involve risks and uncertainties that can cause
the company’s actual results or performance to differ materially
from those projected. The condensed list of these respective
factors appears at the end of today’s press release which you can
access on our website on the Internet at Biopure.com or you
can reference these risk factors in our SEC filings on our website.
Right now I’d like to turn the call over to Tom Moore, who
is going to discuss today’s news. Thank you.
Kirk Lang
Gwitt Broadway Partners - Analyst
Richard Adams
Bennett Lawrence - Analyst
Gabe Hoffman
Occipital Capital - Analyst
Stan Setlock
Silver Syndicate - Analyst
Dexter Bland
private investor
Roberto McNuln
Bridger Capital - Analyst
Thomas A. Moore - Biopure - CEO and President
Michael Wood
Fonstock Oppenheimer - Analyst
Good afternoon, everybody. I’m joined this afternoon, in
addition to Doug, by Howard P. Richman, our SVP of
Regulatory Affairs and Operations, and Ronald Richards, our
CFO and SVP of Business Development. As most of you
probably know, less than two hours ago, we received written
notification from the Food and Drug Administration of their
intention to complete the review of our biologic license
application for Hemopure by August 29th. This notification is
consistent with PDUFA guidelines which provide that the
agency will attempt to get a response to us of some kind to our
application filed on July 31, 2002 by June 1st . The same
PDUFA regulations allow for a one-time 90-day extension based
on the agency’s judgment of what’s appropriate in the review
of our application.
Tag Vichu
Moores Tabot - Analyst
Todd Sidwell
private investor
Steve Happas
Dakota Investments - Analyst
Ronald Risotto
West Rock Investors - Analyst
Ken Martin Halpine
Emerald Asset Management - Analyst
Douglas Sayles
Kate Winkler
We view this notification as a very position development for
Hemopure. First of all, we have a date which the agency has
indicated their intent to give us an action letter. Second, it
confirms what we already knew, that is, that the agency has
PRESENTATION
Operator
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Case 1:03-cv-12628-NG
Document 110-5
Filed 03/28/2006
Page 4 of 14
FINAL TRANSCRIPT
BPUR - Biopure Corporation Conference Call To Discuss the Regulatory Status of Hemopure
devoted considerable effort to this application. And third, as we
also already knew, that now our investor community knows,
there is nothing in our application which is warranted a denial
of that application at the three key decisions points we’ve passed
so far in the PDUFA process. By that, I mean our BLA was
accepted, it was also continued through the mid-cycle review
conducted by the agency, and now, at the PDUFA guideline
date for a first response, we’ve not had a denial, but rather a
going forward to additional consideration. The added time we’re
going to get over the next three months will not only allow us
to insure we can fully answer any additional questions the FDA
might choose to send our way, but also allow us to complete
legal negotiations and to continue forward with the commercial
preparations we are making against a hopeful approval on August
29th for the name of introducing this product on or about the
October introductory guideline we mentioned in our conference
call last week.
So we feel very positive about this, but quite understandably,
we want to be in touch with our investor public and give them
an opportunity to answer questions as well, ask questions as well,
so we’re going to answer them. And to help me do that, I’m
going to turn to Howard Richman to answer many of these
questions. As some of you can tell, I’m suffering from a severe
cold coming from the non-existent strain we have in Boston
this year. And so we’ll be sharing question and answering duties
with Howard this afternoon. Those are our comments. We’ll
now be happy to answer any questions.
Thomas A. Moore - Biopure - CEO and President
The FDA did not request any additional data and I’ll let Howard
comment on the extension of the review process.
Howard P. Richman - Biopure - SVP Regulatory Affairs and
Operations
Hi, Sapna, this is Howard. This is what normally happens with
any submission. As Tom has told the public over the past many
months, is that we are in continued dialogue with the agency
and during that period of time, they have requested information
which we have sent back to them. It’s a normal process with
any application. Be that as it may, the agency, during the course
of reviewing the information has the opportunity to take
additional time to allow them to give a complete and additional
thorough review of all information to make a thorough
conclusion on application. This type of response from the FDA
is very common with biologic licensing applications. Most
recently, in 2001 and 2002, of the 11 BLAs that were submitted
to the Food and Drug Administration, all 11 of them went on
to the extended period of time for review which was outside
the normal PDUFA 10 months. It is within the PDUFA
guidelines to allow them to do that and they still meet their
matrix for approval for their guidance acumen.
Sapna Srivastava - ThinkEquity Partners - Analyst
Can you give us any indication as to which data subset the FDA
is looking at? Is it clinical, manufacturing or is it just a
combination of the whole thing?
Operator
At this time, I would like to remind everyone, in order to ask
a question, please press star then the number one on your
telephone keypad. We’ll pause for a moment to compile the
Q&A roster. Your first question comes from Sapna Srivastava
with ThinkEquity Partners.
QUESTIONS AND ANSWERS
Sapna Srivastava - ThinkEquity Partners - Analyst
Hi, guys. Congratulations on the new progress. A quick question
- - did the FDA request any additional data to be submitted, or
why do you think that basically the FDA extended the timeline
for the review process?
streetevents@ccbn.com
Howard P. Richman - Biopure - SVP Regulatory Affairs and
Operations
It’s really clinical data as far as we know. As we’ve shared
previously with the public, we believe that the CMC portion
of the BLA has basically been covered. Now we could get a
question tomorrow which would make that statement no longer
accurate but based on everything we’ve seen the CMC work is
completed.
Sapna Srivastava - ThinkEquity Partners - Analyst
Okay, thank you.
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Case 1:03-cv-12628-NG
Document 110-5
Filed 03/28/2006
Page 5 of 14
FINAL TRANSCRIPT
BPUR - Biopure Corporation Conference Call To Discuss the Regulatory Status of Hemopure
Howard P. Richman - Biopure - SVP Regulatory Affairs and
Operations
Thank you, Sapna.
Operator
Our next question comes from Kirk Lang with Gwitt Broadway
Partners.
Kirk Lang - Gwitt Broadway Partners - Analyst
Hey, Tom, great news.
Thomas A. Moore - Biopure - CEO and President
Thank you, Kirk.
Kirk Lang - Gwitt Broadway Partners - Analyst
In your Q2 release that we just talked about, you indicated that
Biopure believes it has sufficient cash to fund operations through
November of 2003. Was that cash on hand or was that all for
you having to utilize as standby equity agreements with the
megastore capital markets?
Thomas A. Moore - Biopure - CEO and President
It’s cash on hand.
Kirk Lang - Gwitt Broadway Partners - Analyst
Very good, thank you.
Richard Adams - Bennett Lawrence - Analyst
Hi, thanks. I guess I’m a little bit confused on the timing of the
submission of whatever it is you did submit to the FDA given
that your original BLA was submitted in July 31st of last year.
I guess my question is why are you still having to provide
information to the FDA? You said mid-May there was a
resubmission of some sort. Why nine and a half months after
the original BLA was submitted are you still having to provide
information?
Thomas A. Moore - Biopure - CEO and President
It’s actually, Richard, it’s a continual process of providing
information. I’m going to let Howard comment on this
specifically, but it would be difficult to categorize how many
hundreds of questions we’ve answered in the review of this BLA
to date. This mid-May submission was some additional analysis
which we provided on data that was already in the BLA. At the
time, we didn’t consider it a major amendment to the BLA but
the FDA looked at that as a reason to extend it. But I’ll let
Howard comment on that.
Howard P. Richman - Biopure - SVP Regulatory Affairs and
Operations
Good afternoon, Sir. How are you? Just as a point of
clarification, this is a normal occurrence. I’ve been lucky to be
involved with 12 other approval processes outside of Biopure
and this is a normal thing that happens. We’re, in fact, in
constant contact with the agency when they’re requesting
information in real time. So this is not anything new that can
happen. And what we have done is supply responses back to
their continual questions to allow them, again, as I mentioned
earlier, to give complete and thorough response to this first in
class application.
Thomas A. Moore - Biopure - CEO and President
Richard Adams - Bennett Lawrence - Analyst
You’re welcome.
Operator
Our next question comes from Richard Adams with Bennett
Lawrence.
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I understand there was a continuing dialogue and questions and
answers, but it would seem that for there to be some sort of
submission that would extend the PDUFA date another two
months, it would have to be something material. And I guess
I’m just surprised that nothing was disclosed in mid-May when
this additional submission was made.
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Case 1:03-cv-12628-NG
Document 110-5
Filed 03/28/2006
Page 6 of 14
FINAL TRANSCRIPT
BPUR - Biopure Corporation Conference Call To Discuss the Regulatory Status of Hemopure
Thomas A. Moore - Biopure - CEO and President
Thomas A. Moore - Biopure - CEO and President
To be clear, we were simply responding to a new set of questions
from FDA. It did not involve any new data. And so frankly, it
was well within the range of other questions we’ve answered
in the past. When we made that response, we didn’t characterize
it as a major amendment to the BLA. I think the FDA chose to
do that and I think that really, how do I phrase this
diplomatically, I think that’s a way for them to get this additional
consideration time as opposed to some startling new insight on
the application. But that’s not my role to call. I would say, as
Howard has already said, so far the FDA’s extended on 11
straight BLAs, so we’re number 12.
We’re referring to standard BLAs. That is, those that are not
submitted for accelerated approval but are normal standard
timing and we’re referring to 11 BLAs submitted in 2001 and
2002. And those were 11 different biologic products.
Gabe Hoffman - Occipital Capital - Analyst
So the last 11 BLAs to be reviewed, the FDA has extended on
all of them?
Thomas A. Moore - Biopure - CEO and President
Richard Adams - Bennett Lawrence - Analyst
Was there any discussion about whether you’ll need an FDA
panel?
Thomas A. Moore - Biopure - CEO and President
No. All I’d say is, by the agency’s making their intention to give
an answer by August 29th, that rules out a panel given that the
next panel scheduled, I believe, is in September. I think the
decision the FDA made not to use a panel appears to still hold.
That is correct. Standard BLAs.
Gabe Hoffman - Occipital Capital - Analyst
Oh, I wasn’t -- standard BLAs, okay, I wasn’t aware of that.
Could you please be a little more specific in terms of - - the
company has submitted additional analyses of previously
submitted data. Could you be a little more specific as to what
elements of the clinical data that that refers to?
Thomas A. Moore - Biopure - CEO and President
Richard Adams - Bennett Lawrence - Analyst
I can’t be a lot more specific.
Okay, thank you.
Gabe Hoffman - Occipital Capital - Analyst
Thomas A. Moore - Biopure - CEO and President
You’re welcome.
Operator
I mean, is it safety, is it statistical procedure, is it some auditing
of patient records? I mean, could you just be somewhat more
specific?
Thomas A. Moore - Biopure - CEO and President
Your next question comes from Gabe Hoffman with Occipital
Capital Management.
Gabe Hoffman - Occipital Capital - Analyst
Good afternoon, gentlemen. Thank you for hosting the call. I
was just curious - - one comment that you just made that FDA
has extended on 11 straight BLAs. Whose BLAs? I’m not sure.
Can you tell me exactly what you’re referring to there?
Well, all patient records have been audited and so all that’s been
done, so that’s not at issue as far as I know anyway.
Gabe Hoffman - Occipital Capital - Analyst
Or merely is it formatting or you know?
Thomas A. Moore - Biopure - CEO and President
It’s actually - - it was a dialogue really about how to look at the
clinical data. As you know, there are various analyses used to
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Case 1:03-cv-12628-NG
Document 110-5
Filed 03/28/2006
Page 7 of 14
FINAL TRANSCRIPT
BPUR - Biopure Corporation Conference Call To Discuss the Regulatory Status of Hemopure
look at our efficacy and safety data and we just had a dialogue
about the different ways you could look at the analyses that are
performed on the data. And that’s really as far as I want to
characterize it.
think we’ll be able to reach that profit until we can upgrade our
capacity further with the new installation we intend to open in
2006.
Stan Setlock - Silver Syndicate - Analyst
Gabe Hoffman - Occipital Capital - Analyst
But could you just give us maybe a broader ballpark sense as to
- - you know, just a broad area that it is - - is there a specific
area that it’s in that’s a broad area that maybe you could
characterize it? That’s more specific than just it’s the clinical
data?
Thomas A. Moore - Biopure - CEO and President
Well, I mean, all the clinical data has to do with safety and
efficacy. That’s the only thing in measure in these clinicals. And
so, the dialogue is over those clinical and safety and efficacy data.
And again, we have answered some questions on a pretty broad
basis. When I talk about it as how to look at the clinical analysis,
it’s exactly what it was. So I think that’s as far and as specific as
I really want to be at this point.
Thank you very much.
Thomas A. Moore - Biopure - CEO and President
You’re welcome.
Operator
Your next question comes from Kate Winkler with Shoreline
Pacific.
Kate Winkler
Oh, hi, sorry. Not necessarily slow line, but shoreline. Hi guys.
I just wanted to ask the next logical question about the previous
11 BLAs and what proportion of those were approved?
Gabe Hoffman - Occipital Capital - Analyst
Okay. Thank you very much.
Howard P. Richman - Biopure - SVP Regulatory Affairs and
Operations
Operator
The - - at this point, and remember, some of this is pretty recent
stuff, like 2002, which means they were submitted in 2002, of
those 11, 4 have been approved, none have been rejected. Some
are still in dialogue. Some are doing additional clinical research.
Your next question comes from Stan Setlock with Silver
Syndicate.
Stan Setlock - Silver Syndicate - Analyst
Yes. Assuming that you get the normal approval that’s expected,
what quarter would you be looking to make a profit in?
Thomas A. Moore - Biopure - CEO and President
Well, what we have shared with the investing public in the past
has been that with the capacity we have on hand in our
Cambridge, Massachusetts facility, which currently is in the
ballpark of 70,000 to 75,000 units per year, while we can
upgrade that to the 90,000 to 100,000 units a year, even at that
capacity, we don’t believe we will be able to register a total
company profit where the revenue from these sales offsets all
the fixed costs and research costs that we have planned, we don’t
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Kate Winkler
But has the response time passed for all of those in the sense that
this 90 day, or are we amidst 90 days for some of those?
Howard P. Richman - Biopure - SVP Regulatory Affairs and
Operations
I believe all of those have reached the full 13 months, if you
will, of standard review period.
Kate Winkler. Okay. And so what that means now in terms of
future options based on previous precedent for you guys is
outright approval obviously still. But we’ve still got some of this
similar potential outcomes being extending the trials or
extending the review further, right?
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Case 1:03-cv-12628-NG
Document 110-5
Filed 03/28/2006
Page 8 of 14
FINAL TRANSCRIPT
BPUR - Biopure Corporation Conference Call To Discuss the Regulatory Status of Hemopure
Thomas A. Moore - Biopure - CEO and President
Dexter Bland - private investor
That’s certainly possible. It’s, I think, it’s our belief that we will
get a full action letter which will be more definitive than that.
But that’s our belief, it’s not a commitment made.
Thanks a lot.
Thomas A. Moore - Biopure - CEO and President
You’re welcome.
Kate Winkler
Is there any reason why you believe that in light of the fact that
only four have actually had that happen?
Thomas A. Moore - Biopure - CEO and President
Well, that’s what be believe, so I guess we have - - we don’t
base that belief on nothing.
Operator
You have a follow-up question from Richard Adams with
Bennett Lawrence.
Richard Adams - Bennett Lawrence - Analyst
Hi, sorry. Just one more quick one. Are you now confident that
you’ve given the FDA all of the information it needs to make
a decision?
Kate Winkler
All right, well thanks.
Thomas A. Moore - Biopure - CEO and President
Thomas A. Moore - Biopure - CEO and President
You’re welcome, Kate.
Operator
Your next question comes from Dexter Bland, private investor.
Dexter, your line is open.
Dexter Bland - private investor
Thomas, I was reading your statement that you submitted that
you were pleased with the FDA’s progress and I would have
put that I was disappointed because it should have been
approved. I mean, either it works or it don’t work and three
months ain’t gonna change anything. So I’ve been invested a
long time and I was just very disappointed and I’m sure you
fellas are too. .I just wanted to make that comment.
I guess it depends on whether the FDA should choose to ask us
any further questions. And so, I feel confident that all the data
required to make a decision is there. We may yet have some
more dialogue about that data, but we do think we have a full
and complete application.
Richard Adams - Bennett Lawrence - Analyst
One last thing. On the last conference call, you all mentioned
three new insurers in South Africa that were covering
Chemopure. I haven’t seen that disclosure on the website. I
think you guys said that you had posted that.
Thomas A. Moore - Biopure - CEO and President
Very shortly. I’m sorry for the delay on that, but there will be
no problem getting all three up there.
Thomas A. Moore - Biopure - CEO and President
Richard Adams - Bennett Lawrence - Analyst
I understand. You’re absolutely right to say I would have
preferred outright approval and perhaps an investment in our
stock. Just kidding about that, FDA. But I guess as we look at
the total picture, we feel like we’re continuing to make progress
on this.
Can you tell us - -
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Case 1:03-cv-12628-NG
Document 110-5
Filed 03/28/2006
Page 9 of 14
FINAL TRANSCRIPT
BPUR - Biopure Corporation Conference Call To Discuss the Regulatory Status of Hemopure
Howard P. Richman - Biopure - SVP Regulatory Affairs and
Operations
We’re just back checking a couple of those things and it will be
up next week.
Gabe Hoffman - Occipital Capital - Analyst
Okay, great. Thank you very much.
Operator
Richard Adams - Bennett Lawrence - Analyst
Okay, thank you.
Your next question comes from Roberto McNuln with Bridger
Capital.
Thomas A. Moore - Biopure - CEO and President
Roberto McNuln - Bridger Capital - Analyst
You’re welcome.
Is there any possibility that there could be an additional extension
past the August 29th?
Operator
Again, if you would like to ask a question, please press star then
the number one on your telephone keypad. You do have a
follow up question from Gabe Hoffman with Occipital Capital
Management.
Thomas A. Moore - Biopure - CEO and President
Fundamentally, no. Under PDUFA guidelines, the FDA is
allowed one 90 day extension. But beyond that, I mean, it is
possible but at that point they break away from PDUFA
guidelines and the agency these days is not supposed to do that.
Gabe Hoffman - Occipital Capital - Analyst
Thank you, gentlemen. Actually, that was the question that you
may recall that I had asked on the previous conference call is
who the three South African insurance companies are. Just to
expand on the previous question about that, what is it exactly
that needs to be back checked? I mean, the company said that
there are three insurers. That was said a week and a half ago.
Why - - I mean, it’s the only market in which the product is
approved. One would think that you would have that at your
fingertips or within a near immediate period of time.
Thomas A. Moore - Biopure - CEO and President
Everything you say is perfectly reasonable. I frankly was not
aware that it was not yet on the site and we’ll have it on the site
absolutely ASAP.
Gabe Hoffman - Occipital Capital - Analyst
Okay. Could you define ASAP?
Thomas A. Moore - Biopure - CEO and President
Roberto McNuln - Bridger Capital - Analyst
Given the fact that there’s a September 19th tentative B-Pak
committee meeting, I just was interested in knowing whether
that could be a possibility with say a one month extension to
be included on that panel?
Thomas A. Moore - Biopure - CEO and President
We don’t think so. Based on the agency’s reaffirmation of the
August 29th date, we think obviously what they’re saying is
that’s not in our plan.
Roberto McNuln - Bridger Capital - Analyst
To get some more information about the additional data asked
for - - given your assessment that the questions asked were very
broad, I’m still unclear as to why then at this late in the date it
would require a three month delay. I would understand if the
questions were very detailed that the FDA would ask for - would take that additional time. But your assessment of the
questions being very broad makes me want to get some more
detail about that.
Gosh, here it is - - we’ll have it on Monday.
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Case 1:03-cv-12628-NG
Document 110-5
Filed 03/28/2006
Page 10 of 14
FINAL TRANSCRIPT
BPUR - Biopure Corporation Conference Call To Discuss the Regulatory Status of Hemopure
Thomas A. Moore - Biopure - CEO and President
I think - - well, I guess the question is, the FDA chose to look
at this as a major amendment to the BLA. That’s sort of a
decision they make which allows them those three months of
extra time. I don’t know whether or not - - and it’s also standard
procedure that they - - if we submit new information about any
aspect of the product or new analysis about any aspect of the
product, whether it’s pivotal to their decision or not, they can
decide that that’s a reason to go for the extension. So I’m not
sure whether or not the data we submitted, we did not submit
any new data, whether that was a reason for the extension of
whether the echo simply needed an extension, period.
Roberto McNuln - Bridger Capital - Analyst
When did the FDA make that request for the information that
resulted in the extension?
Thomas A. Moore - Biopure - CEO and President
and outside. My question is this - - out of the people that are
in the room on your side that are listening, how many people
expected them to pull the extension for three more months? Is
there anyone on the management team that thought that might
happen?
Thomas A. Moore - Biopure - CEO and President
I think, first off, I haven’t polled the room, so we may go around
right now and do it. I think Mr. Sayles, who is always a
pessimist, probably would have bet on the extension. I think
it’s fair to say we knew that was a possibility. The FDA, as we
shared, the FDA sort of indicated to us that they were aiming
to give us a full and complete review within the PDUFA
guidelines, but at no point does that obligate them. Howard,
do you want to give me your point of view?
Howard P. Richman - Biopure - SVP Regulatory Affairs and
Operations
About May 1st. Okay, thank you.
Yeah. It’s not surprising, basically, because the information had
been colleted over the past year since the submission and
something of an understandable lull. This is the first electronic
BLA Sever has ever received and quite high in volume and the
data is in many places to review and it does take a lot of work
to get it done. Because our most recent submission to them
from the beginning of May, as Tom mentioned, it provided
them with some new analyses that they had requested to help
in their review cycle.
Operator
Michael Wood - Fonstock Oppenheimer - Analyst
Your next question comes from Michael Wood with Fonstock
Oppenheimer.
Okay. It seems to me that if they wanted to reject the product
at this point in time, it would have been easy for them to have
just done it toady or Monday. Is that true?
Well, again, you’re making the connection that the information
was the reason for the extension. I’m not sure whether that’s
the case. But the request for that information was about May
1st.
Roberto McNuln - Bridger Capital - Analyst
Michael Wood - Fonstock Oppenheimer - Analyst
Gentlemen, good job. This is Michael Wood. How are you?
Thomas A. Moore - Biopure - CEO and President
Yes.
Thomas A. Moore - Biopure - CEO and President
Thank you, Michael. We are well and we hope you’re well.
Michael Wood - Fonstock Oppenheimer - Analyst
Okay. Well, thank you very much. I look forward to seeing the
product progress over the next three months. Good luck.
Michael Wood - Fonstock Oppenheimer - Analyst
Well, I am, and I’ve just got to know your company over the
last 6 or 8 months or so and I’ve been talking to people inside
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Case 1:03-cv-12628-NG
Document 110-5
Filed 03/28/2006
Page 11 of 14
FINAL TRANSCRIPT
BPUR - Biopure Corporation Conference Call To Discuss the Regulatory Status of Hemopure
Thomas A. Moore - Biopure - CEO and President
Tag Vichu - Moores Tabot - Analyst
Thank you, Michael.
Michael Wood - Fonstock Oppenheimer - Analyst
Thank you.
Operator
Sure. I realize it’s somewhat of an unfair question given the
timeliness of the announcement. The - - I had another question.
I’m not sure I can remember what it was. Well, I’ll have to call
Doug at some other time. Thanks very much and good luck
with the next 90 days.
Thomas A. Moore - Biopure - CEO and President
Your next question comes from Tag Vichu with Moores Tabot.
Tag Vichu - Moores Tabot - Analyst
Thank you very much.
Operator
Good afternoon, everybody there. I have been traveling the
same road you have for about 4 years, watching your company
as it’s progressed. I’m particularly interested in simply one aspect
of the FDA’s review period going now to August 29th. Is it
conceivable or possible that the FDA could complete the review
in a shorter period of time than August 29th?
Your next question comes from Todd Sidwell, private investor.
Todd Sidwell - private investor
Hello.
Thomas A. Moore - Biopure - CEO and President
Thomas A. Moore - Biopure - CEO and President
No, Sir. Because under the guidelines, when they are granting
a extension which we agreed to, it has to be the full 90 days.
Good afternoon, Todd.
Todd Sidwell - private investor
Tag Vichu - Moores Tabot - Analyst
I see. Does this delay affect the progress that’s going on in South
Carolina?
My question is about the new facility you mentioned opening
in 2006. If I understand from the last question, that is going
ahead or has always been planned for, regardless of what the
FDA does at this point?
Thomas A. Moore - Biopure - CEO and President
Because we haven’t completed the negotiation on the financing,
it’s hard to say for sure. And point of fact is we’ve been trying
to be very prompt in getting out to the public with this
information. They haven ’t checked in with the financial folks
to see whether or not that changes their perspective. On the
whole, our partners, the Sumter Realty Group, are the folks
who actually do the money raising, so we don’t talk directly to
the financiers. Rather, we talk to them who in turn do that
negotiation. Because these negotiations are all conducted in the
context of, if you will, we approach where if we - - which was
going to get us financing regardless of the date of approval, I
don’t think it’s going to make a whole lot of difference. But
we’ll have to talk to our pals at the Sumter Realty Group to see
what the latest is and where they stand.
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Thomas A. Moore - Biopure - CEO and President
Yes.
Todd Sidwell - private investor
And how will that increase some options for you?
Thomas A. Moore - Biopure - CEO and President
That will provide us with an incremental 500,000 units per year
of production. In other words, take our capacity from just under
100,00 to just under 600,000 units per year. It also will generate
a significant improvement in the cost of making the products
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Case 1:03-cv-12628-NG
Document 110-5
Filed 03/28/2006
Page 12 of 14
FINAL TRANSCRIPT
BPUR - Biopure Corporation Conference Call To Discuss the Regulatory Status of Hemopure
which will contribute almost as much to the profitability as the
additional volume.
Todd Sidwell - private investor
Steve Happas - Dakota Investments - Analyst
Would it be safe to say that, and as mentioned before on the
previous conference call that you did not get denied, but said
maybe around the $800 per unit that would be in the ballpark
of what each unit would cost? I mean would sell for?
And you feel this will put the company then well on the road
to profitability I assume?
Thomas A. Moore - Biopure - CEO and President
Thomas A. Moore - Biopure - CEO and President
Yes. With that facility, we’ll have all we need to begin to give
our shareholders a long-awaited and much deserved good return
on their investment.
Todd Sidwell - private investor
I stand by what I said then. It’s in the ballpark.
Steve Happas - Dakota Investments - Analyst
So can I make the assumption that to produce anywhere between
75,000 and 100,000 units, let’s say from a top standpoint, that
it could mean about $80 million in top line the first 12 months
that you ship the product?
Great. Thank you very much. Good luck.
Thomas A. Moore - Biopure - CEO and President
Operator
Your next question comes from Steve Happas, Dakota
Investments.
Steve Happas - Dakota Investments - Analyst
I can’t argue with your math, but I would also say that it would
probably be unlikely that we would be able to ship full capacity
from the first day it’s available as there is a considerable
marketing and selling job that needs to be done with physicians
with any new product, particularly one like this which is totally
first in class.
Good afternoon, guys.
Steve Happas - Dakota Investments - Analyst
Thomas A. Moore - Biopure - CEO and President
Good afternoon, Steve.
Steve Happas. A couple of things as I’m relatively new to
Biopure over the last 3 to 6 months. Have you before given - upon FDA approval, crossing the fingers of you guys, looks
like you’re going to get it, but after you do get it - - have you
guys discussed publicly of any type what it’s going to mean
revenue torque for the company going forward here in the first
12 months and then out?
Right. And would that target still be October 1st even though
the August 29th now decision will be made?
Thomas A. Moore - Biopure - CEO and President
Our objective is going to be to use this time well so that we
experience minimum delay in launching commercially. So yes,
our target still will be to be in business in October.
Steve Happas - Dakota Investments - Analyst
Thomas A. Moore - Biopure - CEO and President
We’ve not provided any revenue guidance.
October 1st, and then would you say maybe 25 to 50% then,
of those 75,000 units at least would be able to be shipped in the
first 6 to 12 months?
Thomas A. Moore - Biopure - CEO and President
Steve, now you’re trying to trap me into giving guidance.
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Case 1:03-cv-12628-NG
Document 110-5
Filed 03/28/2006
Page 13 of 14
FINAL TRANSCRIPT
BPUR - Biopure Corporation Conference Call To Discuss the Regulatory Status of Hemopure
Steve Happas - Dakota Investments - Analyst
Well, I’m just trying to get - -
Thomas A. Moore - Biopure - CEO and President
will make it much more economical as well as easier to use this
product on smaller dogs and the like. So you will find, as a
hallmark of what we try to do over the next few months, will
be to drive the Oxyglobin business and preliminarily at least,
we’re encouraged by what we’re seeing. Orders have held up
very well after the huge volume we shipped after we took the
product off shipment hold.
It’s like a sharp object and you should never carry them unless
it’s pointing at me. So I can’t reaffirm that for you today at least.
Ronald Risotto - West Rock Investors - Analyst
Steve Happas - Dakota Investments - Analyst
Okay. I appreciate it and great job, guys, and I hope all goes
well.
Terrific. Great job, guys. Thank you so much.
Thomas A. Moore - Biopure - CEO and President
Thank you, Ronald.
Thomas A. Moore - Biopure - CEO and President
Thank you, Steve.
Operator
Your next question comes from Ken Martin Halpine with
Emerald Asset Management.
Operator
Your next question comes from Ronald Risotto with West
Rock Investors.
Ronald Risotto - West Rock Investors - Analyst
Ken Martin Halpine - Emerald Asset Management - Analyst
Good afternoon and congratulations. When do you expect to
release your next earnings for this quarter?
Good afternoon, gentlemen. How are you?
Thomas A. Moore - Biopure - CEO and President
Thomas A. Moore - Biopure - CEO and President
Well, having just done a quarterly, it will be roughly in three
months minus one week. Let me see - -
Hi, Ronald.
Doug Sayles - Biopure - Director of Corporate Communications
Ronald Risotto - West Rock Investors - Analyst
I guess my question is going to be pertaining to Oxyglobin and
do you have plans to more aggressively go after the veterinary
market?
I believe it’s August 22nd or whatever that Thursday is, our
quarter close is at the end of July.
Ken Martin Halpine - Emerald Asset Management - Analyst
Thomas A. Moore - Biopure - CEO and President
Absolutely. In the month of, in the last month, we have
introduced the new peer to peer marketing program which has
already engaged 175 veterinarians in conference call discussions
about the product where there is considerable peer to peer
selling. Further, we have filed with the FDA the necessary
material to allow us to launch a new 60 ml bag format this
summer which is roughly half the size of the current bag which
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Very good. Thank you.
Thomas A. Moore - Biopure - CEO and President
You’re welcome.
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Case 1:03-cv-12628-NG
Document 110-5
Filed 03/28/2006
Page 14 of 14
FINAL TRANSCRIPT
BPUR - Biopure Corporation Conference Call To Discuss the Regulatory Status of Hemopure
Operator
At this time there are no further questions.
Thomas A. Moore - Biopure - CEO and President
I’d like to thank everybody for getting together with us here at
short notice. We feel very positive about this latest
announcement and rest assured we’ll be working very hard over
the next 3 months to answer any other questions the FDA has
and also to make ready for what we hope for will be a very
successful introduction.
Operator
Thank you for participating in today’s conference. You may
now disconnect.
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Case 1:03-cv-12628-NG
Document 110-6
Filed 03/28/2006
Page 1 of 14
Exhibit E
to PROPOSED SECOND CONSOLIDATED AMENDED COMPLAINT
Case 1:03-cv-12628-NG
Document 110-6
Filed 03/28/2006
Page 2 of 14
FINAL TRANSCRIPT
Event Transcript
BPUR - Q3 2003 Biopure Corporation Earnings Conference Call
Event Date/Time: Aug. 21. 2003 / 4:30PM ET
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Case 1:03-cv-12628-NG
Document 110-6
Filed 03/28/2006
Page 3 of 14
FINAL TRANSCRIPT
BPUR - Q3 2003 Biopure Corporation Earnings Conference Call
CORPORATE PARTICIPANTS
Doug Sayles
Biopure Corporation - Corporate Communications
Thomas Moore
Biopure Corporation - Chief Executive Officer
Howard Richman
Biopure Corporation - Senior VP, Regulatory and Operations
CONFERENCE CALL PARTICIPANTS
Jason Colbert
Susquehanna Capital - Analyst
which we'll answer a few questions. Before we begin, I'd like
to point out that during this call we'll make projections and
other forward-looking statements which involve risks and
uncertainties that could cause the company's actual results or
performance to differ materially from those projected. The
condensed list of these respective factors appears at the end of
today's financial results press release which you can access on
the Internet. A more comprehensive discussion occurs on our
SEC filings and at Biopure.com. Now I'd like to turn the call
over to our CEO and President, Tom Moore.
Thomas Moore - Biopure Corporation - Chief Executive Officer
Sapna Srivastava
ThinkEquity Partners - Analyst
Good afternoon everybody and thanks for joining us. I'm joined
around this table, in addition to Doug, by Ron Richards, our
Chief Financial Officer and Senior Vice President of Business
Development; and Dr. Howard Richman, who is, as you know,
our Senior Vice President of Regulatory Affairs and Operations.
We feel very positive about our third quarter results from both
a financial and general business standpoint. Our loss was $11.3
million compared to $12.6 million in the same period last year.
This translates to a loss of 28 cents per share compared to 43
cents a share a year-ago. With Oxyglobin revenues of $885,000,
up significantly from $260,000 a year-ago, we clearly are
revitalizing this business after paralyzing product shortages in
2002. We also introduced our first new Oxyglobin SKU, the
60 millimeter size bag, which is off to a strong start with
$200,000 sales in just its first three weeks of availability. This
smaller size is more convenient and offers better economics to
our veterinarian customers, but is also a higher profitability SKU
for us.
Alan Ferguson
3i Technology Partners - Analyst
Richard Adams
Bennett Lawrence - Analyst
Adnan Butt
J.P. Morgan Chase - Analyst
John Cort
Monarch Financial - Analyst
Richard Aussie
Nation Direct - Analyst
Jonathan Lui
Desto - Analyst
PRESENTATION
Operator
Good afternoon. My name is Jeff and I will be your conference
facilitator today. At this time, I would like to welcome everyone
to the Biopure third quarter fiscal 2003 earnings conference call.
All lines have been placed on mute to prevent any background
noise. After the speakers' remarks, there will be a
question-and-answer
period.
(OPERATOR
INSTRUCTIONS) I would now like to turn the conference
over to Douglas Sayles, Director of Corporate Communications.
Please go ahead, sir.
Doug Sayles - Biopure Corporation - Corporate Communications
Good afternoon everyone and welcome to our third quarter
2003 conference call for the period ending July 31st. Today
we'll report our financial results for this period and briefly discuss
some of the company's accomplishments and activities after
streetevents@ccbn.com
Most importantly, we've made another big step forward on our
regulatory review of Hemopure by FDA. On July 30th, the
agency informed us they had completed review of our
application and sent us all the questions that need to be answered
for them to progress to an action letter. The agency has done
us a big favor by providing what amounts to a complete detailed
response and set of questions to Biopure prior to the end of the
review cycle, and then stopping the review clock with 30 days
remaining in the PDUFA cycle. They have thereby made a
commitment to give us an action letter 30 days after we provide
our response to their questions. They could have just as easily
announced an end to the review cycle with their response, in
which case they would've had two to six months to respond to
our answers instead of the 30 day period.
We've completed our initial response preparations and will now
formally request a meeting with FDA. Both Biopure and the
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Case 1:03-cv-12628-NG
Document 110-6
Filed 03/28/2006
Page 4 of 14
FINAL TRANSCRIPT
BPUR - Q3 2003 Biopure Corporation Earnings Conference Call
FDA have been informally clearing our calendars for this meeting
over the past week in order to expedite our get-together. This
meeting will allow us to request any clarification we need to
ensure that our complete response fully meets the agency's needs.
We went to make the most of this opportunity to work with
the agency towards early action. Our efforts to date suggest that
we're in good shape so far to be able to answer FDA's questions.
However, we're still collecting some data, so the job is not yet
complete. We are well down the preparation track on questions
related to our trials, Pharmokinetics (ph), immunology, labeling
and the like. However, there are some questions, such as
questions related to historical data from our clinical sites, that
precedes the actual running of our trials which could take some
time to collect. We hope the FDA will agree to reduce the scope
of some of these requests. In the end, the exact timing of our
FDA response will be driven by our interaction with FDA in
this meeting which we expect to have occur in September.
In a separate area, we're pleased by investor response to the
company over the past three months. In July we completed a
public offering raising $17.2 million on what we believe are
very attractive terms, namely only a 5 percent discount to the
market with no warrant coverage. These terms are the best terms
for a public offering for any biotech company with a market
cap of $1 billion or less this year as of two weeks ago. We believe
this also shows that we've achieved a degree of financial maturity
as a potential investment opportunity. In conducting this raise,
Chief Financial Officer Ron Richards and I presented to 62
funds in person over a three-week period. This is the most
extensive presentation of the company ever, surpassing even the
effort behind the IPO launch. Subsequent share price
performance suggests we're beginning to establish an
understanding of the exciting future potential for Hemopure as
both a treatment for anemia associated with surgery, and an
oxygen therapeutic for use in trauma, surgical ischemias and
cancer therapy.
Finally, while we're discussing the stock, we have received
numerous calls concerning insider trading activity over the past
few days. Because of the flood of forms that are being filed are
confusing, I do want to take this opportunity to clarify just
exactly what's going on. Our co-founder and Chief Technology
Officer, Carl Rausch, is continuing to sell a relatively small
portion of his Biopure holdings in order to meet his personal
financial needs. He publicly announced his intent to do so, in
fact, some time ago. While about 350,000 shares have been sold
over the last year, Carl is still the direct or indirect holder of
more than 1,600,000 Biopure shares.
streetevents@ccbn.com
Two other factors have made insider reporting a little confusing.
First we've had to update an error in Form 4 reporting on shares
indirectly controlled by Mr. Rausch dating back to the year
2000. Unfortunately, each Form 4 since then has had to be
revised separately, so this has led to a proliferation of
amendments. And finally, there have been some small inter
director sales -- shares exchanged with no net selling of shares.
In fact, the company has locked up these shares until September
-- I'm sorry, until spring 2004. Of all the company's officers and
directors, only Carl Rausch has sold Biopure shares to outsiders
over the past several months.
I want to update you briefly on our medical communications
campaign as well which we touched in our last call. Briefly, in
early June, Hemopure investigator Dr. Jonathan Yar (ph), who
is a Professor of Clinical Anesthesiology and Director of Clinical
Research at the Department of Anesthesiology at UCLA, and
Doug Hansell, our Vice President of Medical Affairs, gave
separate Hemopure related presentation to the regional medical
directors of the American Red Cross. On June 6th, Biopure
sponsored an investigator and thought leader meeting entitled
clinical experience with Biopure which was chaired by Colin
McKenzie, Vice Chair of Anesthesiology at the Adams Shock
Trauma Center in Baltimore, Maryland. On June 13th, our
Senior Vice President, Maria Gawryl, discussed the status of
Hemopure during a blood substitutes workshop at a joint
conference of the American Society for Artificial Internal Organs
and the International Society for Artificial Organs in Washington
D.C.
And the next day, on the 14th, Biopure sponsored an open
symposium on the clinical experience with Hemopure at the
Network for Advancement of Transfusion Alternatives in San
Francisco moderated by Dr. Lawrence T. Goodnough, Professor
of Medicine Pathology and Immunology at Washington
University in St. Louis. On July 26th, Dr. Hansell also presented
a Hemopure overview to the regional medical directors of
America's Blood Centers at their Scientific, Medical and
Technical Forum in Spokane, Washington. And then earlier
this week, Nora Philbin (ph) an investigator at the Naval Medical
Research Center in Bethesda, Maryland, presented results of an
NMRC preclinical study of Hemopure entitled Improved Tissue
Oxygenation After Bovine Prelimerized Hemoglobin
Resuscitation in a Slide Hemorrhagic Shock at the annual
meeting of the International Society on Oxygen Transport to
Tissue at the University of Rochester in New York.
And then in early September, Dr. Ian DeVosse, a South African
orthopedic surgeon and Hemopure clinical investigator, will
present data from the Hemopure Phase III trial at the annual
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Case 1:03-cv-12628-NG
Document 110-6
Filed 03/28/2006
Page 5 of 14
FINAL TRANSCRIPT
BPUR - Q3 2003 Biopure Corporation Earnings Conference Call
South Africa Orthopedic Surgical Congress in Cape Town,
South America -- South Africa, excuse me. We also have
recently had a new publication on our product on expert opinion
on biological therapy concerning the use of our product as an
Oxygen Bridge in patients with acute anemia associated with
surgical blood loss penned by Dr. Leavy (ph). Other study articles
are being submitted by numerous Hemopure investigators, and
so you can expect a strong level of scientific exchange activity
in the months ahead. Those are my overview comments. We
would now welcome your questions.
QUESTIONS AND ANSWERS
Operator
(OPERATOR INSTRUCTIONS)
Susquehanna Capital.
Jason
Colbert
of
Jason Colbert - Susquehanna Capital - Analyst
Hi, Tom. Very exciting company in recent events at Biopure.
A couple of questions on the letter from the FDA. You used
the term complete response a couple of times. But, this isn't a
complete response letter. What is it exactly?
Thomas Moore - Biopure Corporation - Chief Executive Officer
It's, and I'll ask Howard Richman to comment on this in just a
second. It is -- I think Howard will call it a hybrid, and by that
I mean it genuinely represents all the questions that FDA would
like to have us answer, and so in that sense it's like a complete
response. But normally a complete response letter brings an end
to the review cycle. And the agency has elected not to do that,
offering us this precious opportunity to get a response 30 days
after we submit the answers to those questions. And so, that's
what it is.
Thomas Moore - Biopure Corporation - Chief Executive Officer
I think that's a very fair question, and that's one of the
motivations we have for having a meeting with FDA simply so
we can agree on how we're going to order this data and maybe
how we can share some of the data as we go so that it makes it
easier for them to meet that guideline.
Howard Richman - Biopure Corporation - Senior VP, Regulatory
and Operations
I'll share this with yourself and for the other people listening.
This type of letter is very unique. As Tom clearly stated for
everyone, it is a hybrid, it's something that was done from the
(indiscernible) perspective to work with Biopure in this aspect
because you're right in stating that people have (indiscernible),
this does not follow the area that we've seen where you look
on FDA sites or in other complete responses. This was done
with the specific intent to work with us. With that being said,
it counts in such a way that they want us to be able to get back
to them vis-a-vis this meeting and in our answers. Many of our
answers will not be that detailed in response, some are in
clarification, which will only meet the FDA with some points
we're going to discuss with them. Other ones will just provide
them information they requested in terms of clarification and
follow-up source documents and other information they've
asked about. So, when you say about a detailed (indiscernible)
response, in many ways it will not be. But it's also clear that the
format that they have for us with FDA which will be clarified
on a meeting in September will clearly enlighten us and them
and give a clear pathway to the response in a correct time frame.
Jason Colbert - Susquehanna Capital - Analyst
Okay. Thanks, guys.
Operator
Jason Colbert - Susquehanna Capital - Analyst
It sounds like the response is going to take some time. Can you
tell me about how many questions are involved? And the
follow-up question is, depending on the length of your response,
is it reasonable to expect that the FDA is going to be able to
respond back within that 30 day timeline? If you give them a
very exhaustive detailed response back, as I know you will, isn't
it going to take the FDA longer than 30 days to respond back?
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Sapna Srivastava of ThinkEquity Partners.
Sapna Srivastava - ThinkEquity Partners - Analyst
Hi, Tom, how are you? A couple of questions. I guess I'm just
expected -- you mentioned some of the historical data may take
more time to collect, could you just give us some color on what
historical data is being asked for, and what is your best guess of
the time that you can put forward for these responses? Best case
scenario, worst-case scenario?
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Case 1:03-cv-12628-NG
Document 110-6
Filed 03/28/2006
Page 6 of 14
FINAL TRANSCRIPT
BPUR - Q3 2003 Biopure Corporation Earnings Conference Call
Thomas Moore - Biopure Corporation - Chief Executive Officer
Sure. I'll give you an example. The FDA requested blood
transfusion records from our clinical sites which would extend
back a year prior to when our study began. An example of sort
of the background nature of many of these questions which
actually don't relate to the specific clinical data we collected.
Collecting historical transfusion records from that many sites is
a bit of an intimidating task, and so we actually don't know how
long it would take, but we know it's going to take more than
an afternoon of phone calls to bring all those records safely back
in. That's one particular area we want to dialogue with FDA to
see if there isn't a way we can meet their needs without literally
fulfilling the terms of this particular request.
Your backup question of that was so what does that mean in
terms of the duration of getting all of this to happen? And I
guess I have to frankly say I just don't know because I don't
know how long it actually would take to hire four or five
people, train them, and then get them on the planes with
suitcases to actually go off and retrieve these records. That's one
of the unknowable things that came out as we looked more and
more closely at the nature of FDA's request and the mechanics
of what it would take to really get that request fulfilled.
Howard Richman - Biopure Corporation - Senior VP, Regulatory
and Operations
Just one (indiscernible) quite clearly. But just one thing for
information. It's (indiscernible) of the uniqueness of this product
that will set the standard for other products coming behind it,
the FDA has asked for this information so they'll be able to help
Biopure in this approval process and other companies that will
come down the same path as to what really are the transfusion
requirements as they see in the orthopedic and/or surgical
indications that will put the patients in the best possible place
in terms of unit dosing. It's not an unreasonable request, it's just
something that needs clarification. Does that help you?
Operator
Alan Ferguson of 3i Technology Partners.
Alan Ferguson - 3i Technology Partners - Analyst
Hi, Tom. I'd like to get some understanding of where Biopure
stands in terms of approval in other countries?
Thomas Moore - Biopure Corporation - Chief Executive Officer
Sapna Srivastava - ThinkEquity Partners - Analyst
Can you help me understand, what do they do with blood
transfusion records at clinical sites?
Thomas Moore - Biopure Corporation - Chief Executive Officer
I'm sorry, Sapna, I didn't quite understand your question.
Good afternoon, Alan. We -- as we talked in our last quarterly,
we are exploring doing filings elsewhere around the world. We
have had discussions with regulatory agencies to line up on what
their requirements would be for a submission to check that
datafile that we've collected, working with FDA will be sufficient
for approval in other areas. And I think we indicated that we
would be sharing more news about international filings before
year end. So that's an active area. We don't currently have an
application pending anywhere else in the world.
Sapna Srivastava - ThinkEquity Partners - Analyst
I just -- what does the FDA -- why do they require data
(indiscernible) -- historical data from these clinical sites like
blood transfusion records? What does it go towards?
Thomas Moore - Biopure Corporation - Chief Executive Officer
I think they're looking to see what the pattern is of the decisions
to transfuse. And I think they're interested in getting some
background data on how medicine is being practiced in various
places. I don't know if Howard would alter or add to that
response.
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Operator
Sapna Srivastava.
Sapna Srivastava - ThinkEquity Partners - Analyst
Sorry, I think we got disconnected. I still wasn't done.
Thomas Moore - Biopure Corporation - Chief Executive Officer
Don't worry about that. We're very happy to have you
reconnected.
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Case 1:03-cv-12628-NG
Document 110-6
Filed 03/28/2006
Page 7 of 14
FINAL TRANSCRIPT
BPUR - Q3 2003 Biopure Corporation Earnings Conference Call
Sapna Srivastava - ThinkEquity Partners - Analyst
Sapna Srivastava - ThinkEquity Partners - Analyst
Actually I just still wanted to get a better understanding about
the focus. So the blood transfusion record, is that the largest part
of the questions that the FDA has given to you or the most
time-consuming?
Okay. And the last question is just, how is the use in South
Africa going, what's the update there?
Thomas Moore - Biopure Corporation - Chief Executive Officer
Thomas Moore - Biopure Corporation - Chief Executive Officer
It's the most time-consuming question because it requires going
off and getting data significantly. Frankly, like many of the
questions that the FDA asks, it doesn't require any reanalysis of
our data, it's more documentation, more information gathering
of a background nature than anything else.
Product continues to the used off the amount that we put in to
be used on a more or less of a donated basis. In our press release
we mention the fact that, thanks to Howard's efforts, we have
gotten the product in hand and have extended expiration date,
so we're able to work -- continue to work off that initial donated
amount of product. We are working to unwind our business
relationship with our previous partner there and start a new one.
And that process is in the lawyer to lawyer discussion phase.
Sapna Srivastava - ThinkEquity Partners - Analyst
Is it something that you can (indiscernible) postmarketing
registry, is that something you can do rather than having to delay
it for approval?
Sapna Srivastava - ThinkEquity Partners - Analyst
Okay. Thank you so much.
Operator
Thomas Moore - Biopure Corporation - Chief Executive Officer
It's the kind of thing that at least you can discuss with the agency,
and that's why we think this meeting -- it's one of the aspects
of the meeting we think could be very helpful in terms of
streamlining the actual action process.
Sapna Srivastava - ThinkEquity Partners - Analyst
And this meeting is going to be sometime in September, you
don't have a date yet?
Thomas Moore - Biopure Corporation - Chief Executive Officer
That's correct.
Sapna Srivastava - ThinkEquity Partners - Analyst
Just on a little different topic, a couple more questions. You
mentioned some new data on Hemopure coming up or did I
misunderstand that?
Thomas Moore - Biopure Corporation - Chief Executive Officer
Richard Adams of Bennett Lawrence.
Richard Adams - Bennett Lawrence - Analyst
Just to repeat a question from earlier that I didn't hear an answer
to which was the number of questions in the FDA letter. Can
you tell us that?
Thomas Moore - Biopure Corporation - Chief Executive Officer
We probably aren't going to disclose that. I guess I shouldn't say
probably. The number of questions isn't going to do very helpful
to people to understand what's really in the letter. As Howard
indicated earlier, some of the questions are as simple as send us
a list of this or send us the name of that. Things like that. So, as
we look at it, there are a number of questions involved. What
I will say is there's probably about 50 substantive questions which
we have -- which we're working on which are really the core
of the efforts that we're doing now. So, I think the number 50
is more useful to bear in mind than the list of a lot of the stuff
they have we've just run to the copier, copy it and throw it in
the stack. But there are 50 things that we've got to work on to
give them what we think will be a complete response.
We're going to the new publication on Hemopure.
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Case 1:03-cv-12628-NG
Document 110-6
Filed 03/28/2006
Page 8 of 14
FINAL TRANSCRIPT
BPUR - Q3 2003 Biopure Corporation Earnings Conference Call
Richard Adams - Bennett Lawrence - Analyst
Richard Adams - Bennett Lawrence - Analyst
Have you been assured by the FDA that once you answer the
50 questions that they can issue an action letter or is the potential
that you satisfactorily answer let's say 40 of them and you have
to go back and the process extends indefinitely?
Okay. Thanks.
Operator
Alan Ferguson of 3i Technology Partners.
Thomas Moore - Biopure Corporation - Chief Executive Officer
That's impossible to say. The FDA doesn't give us that kind of
hand holding. Their approach is here are the questions, answer
them as best you can, and based on that we will give you our
answer. Obviously one of the advantages of having a meeting
with the FDA is you can kind of reaffirm with them what are
pivotal questions and what are nice-to-knows, what could be
prioritized in what way, and that's one of our objectives in the
discussion coming up in September.
Richard Adams - Bennett Lawrence - Analyst
And the September meeting, did the FDA request a meeting or
did Biopure?
Thomas Moore - Biopure Corporation - Chief Executive Officer
Biopure requested the meeting, FDA agreed that we could set
the agenda for the meeting, and then further that they didn't
need to ask us any additional questions so that basically the
discussion will revolve entirely around the clarifications that
Biopure is going to request.
Richard Adams - Bennett Lawrence - Analyst
Okay. One last quick one. Do you expect to need to raise capital
again before getting a definitive answer from the FDA?
Thomas Moore - Biopure Corporation - Chief Executive Officer
I think the answer is, in my opinion I don't think we'll need to
do any kind of significant raise before we get an answer from
FDA, that's my opinion. But because I can't -- one can never
be entirely sure of the timeline, at least until we have the
discussion with the FDA, I can't issue a guarantee on that,
Richard. I just think -- I think we're in decent shape given the
frame that I'm thinking of.
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Alan Ferguson - 3i Technology Partners - Analyst
Tom, can you comment in terms of where you are relative to
the pricing strategy? Is this product going to be priced more like
a Procrit or is it going to be priced more like a unit of pack
sales?
Thomas Moore - Biopure Corporation - Chief Executive Officer
As you would expect, Alan, the answer is no. Meaning, I think
we will be priced between -- I guess a does of Procrit is about
-- Procrit is about $400 a shot, would you agree? So we'll be
priced above Procrit, we'll be priced above packed red blood
cells, but we'll be priced within a range of those prices that from
a pharmacoeconomic standpoint as well as a therapeutic
standpoint we represent an attractive alternative.
Alan Ferguson - 3i Technology Partners - Analyst
Okay. Is there anything on the work the trials that the military
is doing in trauma yet?
Thomas Moore - Biopure Corporation - Chief Executive Officer
We've not initiated human clinical trials in trauma with the
military or for that matter on the civilian side as yet. So, we
hope to get started on that ASAP. I think probably those trials
will begin, however, at least after we have -- no sooner than
after we filed our responses with FDA on the BLA questions.
As I mentioned earlier in my flurry of discussions about meetings,
Naval medical research has been very active in doing preclinical
work on trauma with our product, and then sharing those results
in several different forms actually. So, work is going on very
actively on the trauma side, but I don't believe human trials will
begin until after we have completed our answers to the BLA.
Part of this is related to the fact that we already are engaged in
FDA in a dialogue on a total clinical development program in
trauma with FDA. And so we expect the final discussion on that
with FDA will ensue after we've addressed the questions they've
asked for us on the use in anemia from surgery indication.
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Case 1:03-cv-12628-NG
Document 110-6
Filed 03/28/2006
Page 9 of 14
FINAL TRANSCRIPT
BPUR - Q3 2003 Biopure Corporation Earnings Conference Call
Thomas Moore - Biopure Corporation - Chief Executive Officer
Operator
Jason Colbert of Susquehanna Capital.
Jason Colbert - Susquehanna Capital - Analyst
Hi, Tom, me again. A couple more questions I'd like to explore
with you. What's the manufacturing plan and the status of
Sumter Realty? I wonder if you could touch on that? And kind
of in sync with that, what are you thinking in terms of a partner
strategy and how are those discussions going?
Thomas Moore - Biopure Corporation - Chief Executive Officer
From a manufacturing standpoint, as you know, our Cambridge
facility here has a capacity for about 75,000 units per year. We
already know how we can upgrade that capacity to a range
between 90,000 and 100,000 units a year. It will require the
implementation of a variety of process upgrades while most of
the capital is in place there's still a little bit of work here and
there that needs to be done, and our aim is to get that
accomplished some time over the next six to nine months. The
next step, as you know, is the construction of our Sumter facility
in Sumter, South Carolina which will have a capacity of 500,000
units a year. We have -- we continue to be in negotiations for
the financing for that facility. We're looking to get financing of
$120 million on terms which would basically not require a net
capital outflow from Biopure until the plan -- the plant is
substantially complete, or i.e. in at least two years from now.
So, we're looking for very attractive financing terms. We don't
negotiate directly for the financing, rather it's conducted through
an LLC, it's called the Sumter Realty group. The Sumter Realty
group has informed us that they're in negotiations with two
different groups. They feel they're making progress, but as yet
they have not set a date where we actually could sit down and
sign the papers. And realistically, until we sign the papers, Jason,
I don't think I can tell you the deal is done. But we are going
to inform our investors when we feel that we're in fact moving
in on a closing. But, it seems premature to make an
announcement in that regard at this time.
Jason Colbert - Susquehanna Capital - Analyst
Here's our thinking on partnership. We have had very
preliminary hi, how are you kind of discussions with some other
companies. We have not pursued any partnership negotiation
with, at least domestically, with any major pharmaceutical entity.
Principal reason for that is for our initial indication in orthopedic
surgery, and with our initial marketing plan which we've shared
in the past where we'll be focused initially on bloodless surgery,
we don't really need the kind of scope and experience that a
pharmaceutical company would bring us, rather we need a
tremendous focus on that indication and the ability to train
deeply and vertically within the hospital medical center
environment, that's something you don't get when you borrow
a salesforce from another pharmaceutical company.
So, for the initial indication, we don't think there's going to be
a great deal of synergy in working with another pharmaceutical
firm at the initial launch step. On the other hand, as we look
down the road for major additional indications for the product,
I'll pick one entirely at random, Jason. Our use as a tissue
sensitizer in the radiation and chemotherapy of solid cancer
tumors like lioblastoma, liver cancer, pancreatic cancer and non
small cell lung cancer, there it's not hard to see that potentially
a partnership with a major cancer company could significantly
accelerate the clinical development program and the introduction
of our product as an additional tool in the war against cancer.
So, what I'd say is, Jason, we're developing sort of a differentiated
strategy of how we would partner with this product in a way
that we think is going to maximize shareholder value and not
give away partial ownership in the company or rather on the
product on a premature basis before we're able to fully show
what the value of the product really is.
Jason Colbert - Susquehanna Capital - Analyst
Thanks, Tom. One last question, and this is on a completely
different tact. It has to do with the Pivotal Phase III study, the
published paper that Sar Stewart McKenzie Burke Williams did.
In that study there's a section on serious adverse events,
particularly respiratory failure where it shows four serious events
in the HBOC-201 group versus zero in the RBC group. And
I just wondered if there was any explanation? Is the explanation
related to data slicing and age cohorts in the different arms?
Is there a strategy, Tom, as you progress with the FDA towards
partnership?
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Case 1:03-cv-12628-NG
Document 110-6
Filed 03/28/2006
Page 10 of 14
FINAL TRANSCRIPT
BPUR - Q3 2003 Biopure Corporation Earnings Conference Call
Thomas Moore - Biopure Corporation - Chief Executive Officer
Just a second, I'm getting advice on this one. Our analysis of
that study shows that the four patients involved already had
underlying respiratory disease. So, I think at this point at least,
my response to your question is we think it has to do with
pre-existing conditions. I can say for sure that when you look
across the total body of clinical data on our product, there was
no indication whatsoever of any association of our product with
respiratory collapse of any kind.
and the like. Since the Section 21 provision lapsed, we're now
basically just a free sale product in South Africa, but we have
our own special safety monitoring program so that we can share
more or less of a Phase IV kind of fashion with both the
Medicines Control Counsel in South Africa as well as FDA as
well as any other regulatory agency that cares to know. But the
actual experience has been the use of the product in general.
And I can tell you, it's a very positive picture.
Adnan Butt - J.P. Morgan Chase - Analyst
Jason Colbert - Susquehanna Capital - Analyst
And does the FDA take that approach where they go into an
individual patient record when there's a statistical anomaly and
try to explain it in that format?
Thomas Moore - Biopure Corporation - Chief Executive Officer
Yes.
But they are no plans to present it formally anywhere once
you've started selling it?
Thomas Moore - Biopure Corporation - Chief Executive Officer
Actually I can't tell you there is a plan to do so. We're -- or
more accurately, what we're exploring is how we can publish
this through a peer review journal so it will have the scientific
standing that it deserves. And so that's what we're looking at
doing right now.
Jason Colbert - Susquehanna Capital - Analyst
Thank you very much, Tom.
Adnan Butt - J.P. Morgan Chase - Analyst
And any timing on that or just still in the planning stages?
Operator
Adnan Butt of ThinkEquity Partners.
Thomas Moore - Biopure Corporation - Chief Executive Officer
Adnan Butt - J.P. Morgan Chase - Analyst
Congratulations first of all on all the positive headway you've
been making. I just had a question about use in South Africa.
I'm wondering how closely you're tracking use whether it's in
terms of safety or efficacy? And if it is being tracked will that be
presented any time anywhere even if it's in the form of a case
report or a letter to the editor or something like that?
It's sort of in the advanced planning stages, but unfortunately I
can't give you a commitment at this time as to when it will
occur.
Adnan Butt - J.P. Morgan Chase - Analyst
Thank you, that's very helpful.
Operator
Thomas Moore - Biopure Corporation - Chief Executive Officer
We are tracking it very closely. We tracked it initially, the way
the product was initially introduced in the country was under
what's called a Section 21 provision. And under the rules of
Section 21 we actually present a report to the South African
government on how the product was used, what its effectiveness
was and what its safety was. And we've completed and filed that
report. And frankly I would love to share that report more
broadly, it paints I think a very positive picture of this product
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Gabe Hoffman (ph) of Accipiter (ph) Capital Management.
Gabe, your line is open. Please go ahead with your question.
That question has been withdrawn. Your next question comes
from Richard Adams of Bennett Lawrence.
Richard Adams - Bennett Lawrence - Analyst
I'm just curious as to whether you're planning to present the
full Phase III data set at a medical meeting sometime in the
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Case 1:03-cv-12628-NG
Document 110-6
Filed 03/28/2006
Page 11 of 14
FINAL TRANSCRIPT
BPUR - Q3 2003 Biopure Corporation Earnings Conference Call
future? I would think that that could help you Hemopure gain
traction in the U.S.
various hospitals around the country and specifically our sites.
So, it's historical -- it's simply historical data.
Thomas Moore - Biopure Corporation - Chief Executive Officer
Richard Adams - Bennett Lawrence - Analyst
We are actually working to put a complete report on the 115
trial. The 115 trial. We're aiming to publish that in a major
medical journal. We're in the process of submitting that article
now. We also are looking for an opportunity to publish a
complete data set for the product in the next year or so, but as
yet we haven't identified the publication for that.
But you do think you can supply that or you're not sure at this
point?
Thomas Moore - Biopure Corporation - Chief Executive Officer
We think we can, we just think it's a lot of work. Not that we
mind working hard.
Doug Sayles - Biopure Corporation - Corporate Communications
There have been presentations of the Phase III orthopedic
surgery trial in 2002 at a couple of different meetings. And if
you contact me, Doug Sayles, I can give you what's already
public. The actual publication of -- in a peer review journal has
been in the process of being submitted by investigators now,
but there are some abstracts and posters that are available.
Richard Adams - Bennett Lawrence - Analyst
Thanks.
Operator
John Cort (ph) of Monarch Financial.
Richard Adams - Bennett Lawrence - Analyst
Right. I've seen the abstracts that are public, I was just curious
about the full comprehensive data set.
Doug Sayles - Biopure Corporation - Corporate Communications
It isn't really like a chemical drug, there's an awful lot of data
from this trial, and it's a first in class and the only trial of its kind.
And part of the issues with the peer review journals is how to
get all the information into the word limits. But we're trying to
see if whether it can all be fit within the word limits or cut up
into multiple publications, and there are various investigators
working on that right now.
John Cort - Monarch Financial - Analyst
Thank you for taking the call. You pointed out in -- of the
Section 21 information related to the South African use of the
product, and I think we all would like to see. But that aside,
how long has -- it's Hemopure that has been actively used in
South Africa now? Is that correct?
Thomas Moore - Biopure Corporation - Chief Executive Officer
It has been actually used, yes? And how long -- we actually
began making it broadly available in mid 2002.
John Cort - Monarch Financial - Analyst
Richard Adams - Bennett Lawrence - Analyst
Just one other. I missed the explanation on the blood transfusion
records from the clinical sites. Why the FDA would -- why you
thought they were requesting that information?
So let's say a year or so? How many units to your knowledge
have actually been dispensed or used by patients?
Thomas Moore - Biopure Corporation - Chief Executive Officer
Thomas Moore - Biopure Corporation - Chief Executive Officer
A little over 1000 units.
Remember, this is the first clinical trial ever conducted against
blood. So, I think the FDA is interested in getting more
information about what the normal transfusion patterns are for
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Case 1:03-cv-12628-NG
Document 110-6
Filed 03/28/2006
Page 12 of 14
FINAL TRANSCRIPT
BPUR - Q3 2003 Biopure Corporation Earnings Conference Call
John Cort - Monarch Financial - Analyst
So enough to get some semblance of its success as I think you
alluded to?
Thomas Moore - Biopure Corporation - Chief Executive Officer
Exactly.
John Cort - Monarch Financial - Analyst
Great. I was curious as to -- for obvious reasons now that you've
stated it's been very quiet. We know it's in South Africa but we
really didn't know exactly what was going on and now we know
why. So I thank you very much and continued success.
Thomas Moore - Biopure Corporation - Chief Executive Officer
Thank you, John.
Operator
(OPERATOR INSTRUCTIONS) Richard Aussie of Nation
Direct.
Richard Aussie - Nation Direct - Analyst
Good afternoon, gentlemen. My question is, what will you do
if Biopure doesn't get FDA approval? And if you do get FDA
approval, what will be your three and five-year plan? Merge or
get more approvals from different countries?
question for the agency is the process of putting together the
adequacy of the total data set.
So, while we think we will have a more than adequate data set,
again your question is what if they say no it ain't adequate. If
they said that, they would then tell us what we need to do to
be able to get back in front of them to get them to consider it
once more. So, what we would do after an event like that is
directly related to what the FDA requests. If they requested for
instance a new round of animal trials, those can generally be
conducted in under six months and so we would say, okay, we'll
see you again in April. If on the other hand they say we need a
new round of Phase III style human trials, then that would be
a much longer duration proposition. We would have to share
with our investing public very clearly where we stand so our
investors can gauge what the probability is now, the ultimate
approval of the product. We need to raise the money necessary
to continue to do those trials and to continue to operate, or to
pursue an indication -- a different indication for the product
based on the other indications we have under development.
But either way, it would take some time to do that. Obviously,
we would need to reduce our burn rate so that the amount of
money we raised would be no more than what's minimally
needed in order to meet the clinical trial needs and other basic
needs of the company. And that's something -- while we don't
expect that to happen, that's something we fully engaged with
in our own internal planning because we're prudent business
managers, or at least we like to think we are.
Richard Aussie - Nation Direct - Analyst
Sure.
Thomas Moore - Biopure Corporation - Chief Executive Officer
Sure. I'll address your first question first. While we are
continuing to be cautiously optimistic, we're on the approval
track. If you ask us to specifically address this question, which
you have, I guess what I'd say is the FDA doesn't really just say
no. At least not in a situation like this where an application has
been accepted and taken this far down the review track. What
the FDA says is here's what you've got to do, guys, if you want
to persuade us to say yes. And generally what they'd say is you
need more information. I'm going to take a big leap here,
Howard may hit me. But if the information we've given them
so far led them to say we can't approve it then they would've
already said we can't approve it. Okay? You don't go back and
forth like this because the product is not approvable. The
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Thomas Moore - Biopure Corporation - Chief Executive Officer
The second question you asked is, okay, if they say yes what's
the plan from there? In broad terms, here's what we would do.
One, we would focus on a very successful launch in the U.S.
designed to utilize all of our Cambridge, Massachusetts
manufacturing capacity as soon as possible. It would be directed
towards orthopedic surgery consistent with the indication for
which we expect and hope to get approval. It would initially
focus on bloodless surgery where the decision has already been
made that people will go to extra lengths to avoid getting a
blood transfusion from a stranger. But would be designed to
branch out pretty quickly across orthopedic surgery in general.
Second, we would negotiate with FDA on what it would take
to broaden the indication to general surgery. Our belief is that
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Case 1:03-cv-12628-NG
Document 110-6
Filed 03/28/2006
Page 13 of 14
FINAL TRANSCRIPT
BPUR - Q3 2003 Biopure Corporation Earnings Conference Call
Phase IV studies and the like should be adequate, but the FDA
has not told us it would be, but should be adequate to get us
extended to general surgery which would increase the size of
our potential market by a high multiple.
Second, we would go-forward with clinical trials which frankly
we already have in the planning stage to explore cardiac
ischemia, trauma and cancer therapy both in the U.S. and
Europe. Which together would increase the size of our market
by several times further. We would proceed with getting
regulatory approvals -- applications at least in in Europe and
probably in the Far East, and seek to create some geographic
based licensing situations fairly quickly in areas where we know
we would never be able -- capable of marketing the product
directly ourselves. And then secondarily, embark on a business
development plan where we would selectively evaluate certain
indications and determine from the standpoint of maximizing
shareholder value whether or not we should choose to partner
out for specific indications.
Hemopure we have not set a selling price yet, either in South
Africa or in the U.S. So, at this point in time I don't have an
average selling price to give you in that area. When we do we'll
release that. Question number two. Helpers? Helpers? The
number of units to achieve breakeven on our manufacturing
operations, i.e. who have a plant operating at a profit, is about
40,500 units per year. Total corporate basis, that is handling the
costs of clinical research, the well-deserved salaries of our key
employees and the like, the figure would be higher but that'll
be based on how we choose to control those highly variable
costs. What we've said publicly is while we can breakeven off
the production of our Cambridge facility, with the type of
clinical development programs we have in mind, we think it
will take the added capacity of the Sumter facility to be in a
position as a company where we're turning in a very
(indiscernible) profitable performance. Your third question,
Jonathan, I apologize, was?
Jonathan Lui - Desto - Analyst
Richard Aussie - Nation Direct - Analyst
What percentage of the orthopedic market do you have to
capture in order to achieve your breakeven target?
Well, that's an elaborate plan. I appreciate it, and best of luck
with the new product.
Thomas Moore - Biopure Corporation - Chief Executive Officer
Thomas Moore - Biopure Corporation - Chief Executive Officer
Thank you, Richard.
Operator
Jonathan Lui (ph) of Desto (ph).
Jonathan Lui - Desto - Analyst
Hi. Congratulations on your quarter and I guess my question
is, what has been the average selling price of Hemopure and
Oxyglobin? And kind of a related question is, how many units
do you need to ship to breakeven? And third of all, what
percentage of the orthopedic market do you need to capture to
break even?
The orthopedic market in total is 450,000 units. That is total
transfused units in orthopedic surgery per annum. I apologize,
that is wrong. It's 1.5 million units in total in orthopedic surgery;
450,000 are used in the bloodless surgery area which is our
original initial marketing target. So, of the orthopedic surgery
market, which was your original question, Jonathan, we need
basically to achieve a stunning and highly aggressive 2.5 percent
market share in order to break even on our manufacturing
facility. That is the 40,000 units. If we wanted to break even as
a company, we probably would have to get up to around a 7
percent market share that is around 100,000 units to be able to
do that.
Within this bloodless surgery target of 450,000 units, there we
need to achieve something like an 8 or 9 percent share to break
even on our manufactured operations, and realistically around
a 20 percent share in order to break even as a total company.
Thomas Moore - Biopure Corporation - Chief Executive Officer
Jonathan Lui - Desto - Analyst
Okay. Speaking quickly on that, Oxyglobin has an average
selling price of $125 for the 125 milliliter bag. And on a going
basis we have a bit of an introductory discount going on now.
We'll have an $85 average selling price for the 60 milliliter bag.
Just to follow up on that, what would be your roadmap to cash
flow positive?
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Case 1:03-cv-12628-NG
Document 110-6
Filed 03/28/2006
Page 14 of 14
FINAL TRANSCRIPT
BPUR - Q3 2003 Biopure Corporation Earnings Conference Call
Thomas Moore - Biopure Corporation - Chief Executive Officer
Thomas Moore - Biopure Corporation - Chief Executive Officer
The roadmap would be successful introduction within
orthopedic surgery. Opening of our Sumter facility, which gives
us the added capacity to break through this 100,000 unit level.
And then frankly once we do that, we can get to a cash positive
position reasonably quickly. Our target right now is to be able
to do so basically by the end of 2006 if FDA approval is
reasonably prompt, or in 2007 if it takes some time for us to
finish the discussions with FDA.
We do feel very positive about the progress we've made in the
last three months. As perhaps you can tell from some of the
answers we've given to the questions asked, we're actually pretty
far down the track in fleshing out our introductory program,
following hopefully FDA approval. But for now our focus is on
working with FDA to get to the action letter phase as quickly
as possible. We continue to be cautiously optimistic that as soon
as we get all our answers back in that we'll be in a very good
position. Beyond that, we will continue to work to build our
Oxyglobin business. We'll be working on international
opportunities. I hope we'll be able to close our financing on
Sumter sooner rather than later given the critical role that has
in the long-term profitability of the company. But in general,
we feel like we're making good progress at this time. It's the
most exciting time for your company, and everyone here is
frankly just plain very turned on and working extremely hard
to make this period as productive as possible. Thank you for
your support and I look forward to talking again with you all
soon.
Jonathan Lui - Desto - Analyst
How do you plan to kind of maintain your funding in the
meantime? Because I understand -- I think you're funded
through 2004, April?
Thomas Moore - Biopure Corporation - Chief Executive Officer
That is correct. That, of course, assumes no revenue beyond a
flat Oxyglobin picture. So the building blocks from here would
include, number one, with approval we will start getting revenue
from Hemopure sales, and while they are not enough to get us
to breakeven, if you cut your burn rate from, let's say, currently
$11.5 million per quarter down to one or $2 million a quarter,
you are not yet breakeven but you're in a much more
manageable financial situation.
Two, we do aim to do these regional licensing deals, which will
bring in additional revenue both in some cases in upfront
payments, in other cases in additional revenue as the product
gets introduced. Third, we will probably go into the market for
some additional money as well.
Jonathan Lui - Desto - Analyst
Okay. Thank you.
Thomas Moore - Biopure Corporation - Chief Executive Officer
You're welcome.
Operator
Operator
This concludes today's conference call. You may now
disconnect.
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Ladies and gentlemen, we have reached the allotted time for
question-and-answers. I would now like to turn the conference
back over to management for closing remarks.
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Case 1:03-cv-12628-NG
Document 110-7
Filed 03/28/2006
Page 1 of 10
Exhibit F
to PROPOSED SECOND CONSOLIDATED AMENDED COMPLAINT
Case 1:03-cv-12628-NG
Document 110-7
Filed 03/28/2006
Page 2 of 10
Biopure Presentation by Thomas Moore, CEO
ThinkEquity Partners Growth Conference
San Francisco, CA at the Omni Hotel
Wednesday, September 17, 2003 12:30 PM ET / 9:30 AM PT
Sapna Shirasava:
Good morning, and thank you for joining us. I’m Sapna Shirasava
Biotechnology Analyst at ThinkEquity Partners and today it’s my pleasure to
introduce Tom Moore who is the CEO of Biopure. Biopure is one the companies
we have closest relationship with and have followed for a long time. We are very
excited about the company. It is the leader in [the field of Oxygen therapeutics.
It is the first company which has filed a BLA with the FDA in the field of Oxygen
therapeutics after over 40 years of work in that field and I’ll let Tom tell us this
very exciting story.
Thomas Moore:
Thank you very much, Sapna. Good morning everybody. Let’s start off
on a high note please with the, always popular, disclaimer. I’ll give you a couple
of seconds to look at that while I reattach my microphone. The unusual part
about that disclaimer is that among other things, it says that anything we say
here is not necessarily policy of the US Government. I’m told that Colin Powell
now has to show a similar disclaimer before he makes his talks.
So, Biopure is a company that’s devoted 19 years of its life to developing
a totally new concept in therapeutics and pharmaceuticals. The first in class
oxygen therapeutic. Our product for humans called, Hemopure, is a new class of
pharmaceutical which is intravenously administered to deliver oxygen to tissues.
While it was developed initially to provide an oxygen bridge for the immediate
treatment of the signs and symptoms of acute surgical anemia, we’re working on
subsequent potential indications which include use in trauma, ischemia
associated with surgery and other situations and in cancer treatment. In my talk
this morning I will touch on how we are going to develop that, as well. Our
product is a true biologic. It comes from biology. That is it comes from cows. In
this case, red blood cells that we harvest from cows in sequestered herds we
keep in Michigan. These red blood cells are then lodged open so that we can
extract the hemoglobin within which is the core of our product. That hemoglobin
is purified through a proprietary process which includes our own highperformance [lipid chromatography ?] process developed by our founder, Karl
Rausch. This purified hemoglobin is then stabilized and [polymerized?] in order
Case 1:03-cv-12628-NG
Document 110-7
Filed 03/28/2006
Page 3 of 10
Biopure Presentation by Thomas Moore, CEO
Wednesday, September 17, 2003
Page 2
to form the ideal or what we believe is the ideal, particle size for safely
distributing oxygen around the body. This polymer has an average weight in our
human product of 250 kilo-Daltons, and in our veterinary product of 200 kiloDaltons, and that is the only difference between the two products. This resulting
product has many advantages versus red blood cells which we fondly refer to as
RBCs.
First of all, because its pure hemoglobin, and because we have purified it
to the point where it is stripped out of almost all other allergenic material, this
product is compatible with all blood types. There’s no tissue matching required
to be administered to anybody. Second, it’s a highly stable product and that is
part of the choice in using bovine red blood cells to start this process. Our
product has a shelve life of three years, and it’s not three years under
refrigeration or under special conditions, it’s three years at room temperature or
temperature as you would consider considerably above room temperature up to
about 80-85 degrees Fahrenheit. Because it is a manufactured pharmaceutical
that offers consistent potency and stability and purity, something which frankly, is
hard to guarantee with red blood cells donated by human beings, and unlike
human red blood cells, our product delivers oxygen immediately upon
transfusion. Human red blood cells, once they have been stored for up to 5-8
days, begin to lose their immediate potency and distributing oxygen – it actually
takes several hours for them to regain that potency in the human body. And so,
for someone in need of added oxygen distribution in their body, our product is a
real godsend. Finally, of course, we have an abundant and well controlled raw
material source where as, as we’ll talk about a little more later, human red blood
cells are becoming increasingly scarce supply for any number of broad based
reasons which we will touch on in just a minute.
So, that is what the product is. How does it work? Well, in the human
body as you can see on this hemo on the left, under normal circumstances, red
blood cells distribute oxygen throughout the body going through both the artery
which you see is the larger tube on the left, and into the smaller arteries and
capillaries which branch off to the right. When that situation happens, everything
is doing great. However, when for reasons related to trauma or anemia, or
surgery, the number of red blood cells get reduced, several things change. First
of all, there are fewer red blood cells so there is obviously less oxygen being
distributed as you can see in the center photo here. Secondly, the body
automatically compensates for the reduced number of red blood cells by
constricting arteries that serve various tissues in the body, in fact, ultimately, in
the case of shock, basically shuts off all arteries except for those that serve the
brain and the heart. The two most important organs. So, when Hemopure gets
added to the body, other things begin to happen. Hemopure is represented by
these orange dots that are flowing in the plasma around the red blood cells. First
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of all, as you can see in this schematic here, a great deal of more oxygen gets
distributed thanks to the addition of Hemopure. In fact, Hemopure is two - three
times more efficient at distributing oxygen around the body pound for pound than
red blood cells and that stems from the fact that it is more aggressive about
grabbing and giving up oxygen as it goes through the system. In fact, red blood
cells only give out a third to a half of the oxygen that they’re carrying in a pass
through the body, while Hemopure gives out all the oxygen that’s turning plus
grabs some oxygen off the red blood cells and redistributes that as well. So, the
addition of our product to the human body is very significantly and
disproportionately increases the total oxygen getting distributed to the body. The
second interesting thing that happens is because our product is one-one
thousandth the size of a red blood cell, it really gets distributed to oxygen
wherever the plasma itself gets distributed. In this case you can see the
constricted artery to the right is where the Hemopure is able to penetrate and in
fact distribute oxygen to places where the body itself is constricting the circulation
of red blood cells. This has an important implication in other areas which we call
ischemia where there is a blockage of red blood cells. That can happen as a byproduct of cardiac surgery where debris coming from breaking up a clot can stop
circulation temporarily in various parts of the heart or sometimes the brain. It
also happens in situations more commonly called heart attack and stroke, where
we believe our product ultimately could have some application, as well.
So, you’ve seen the product, you’ve seen a little bit about how it works.
We ought to, I guess, eventually get around to talking about Biopure the
company. From an investor prospective, I think we offer some very interesting
opportunities. First of all, we are the leading developer of oxygen therapeutics.
We have two products that have been developed and approved, a veterinary
product and a human product. We offer a multi-billion dollar market opportunity
which I will outline for you in just a minute. There is clearly a global need for a
blood substitute based on supply shortages in developed countries and ongoing
safety concerns in lesser developed countries and there are multiple applications
for this product, a couple of which I just described to you before.
As a company, we are truly poised for commercialization. We own all the
rights to our product, the technology and the patents. We have largest validated
manufacturing capacity within this field of products. Lastly, we brought in new
senior management over the past year which is leading the transition in this
company from a research and development oriented firm to a true
commercialization company. A word briefly about that. In the past year, and four
months, we have brought in the five people you see highlighted in yellow here.
Our strategy in all of this was to strengthen the company in three important
areas: marketing, manufacturing and process capability and finally, finance, and
we think we’ve done that. My background with 23 years with Proctor & Gamble,
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including running a world wide healthcare products business, as well as running
Nelson Communications one of the largest pharmaceuticals sales and marketing
services company [solidly ?] in the pharmaceutical marketing area as well as in
general management. I joined the company a little over a year ago to shore up
specifically in that area. Bob Richards has joined us as Chief Finance Officer.
He’s a San Francisco boy so he’s sure happy to be back here. Many of you may
know him from his work with Van Casper and other firms in investment banking,
and he is shoring up our ability to work with the street and to chart our long-term
financial future. Doug [Hansel ?] is our relatively new medical director. A
experience in practicing clinical anesthetist. Barry Scott was vice president of
international businesses [ ?] for Bristol Myers Squibb. He has joined us in a
similar capacity. Donna Wolfe ran her own medical education company and is
now running our long-term scientific exchange and medical education programs.
In addition, we shifted Karl Rausch, the founder of the company, to Chief
Technology Officer; Frank Murphy who has done an excellent job as CFO to a
new position as Senior Vice President of Engineering Process technology in both
cases to improve focus in improving our manufacturing efficiency and making
ready for the introduction of our new manufacturing facilities in the next couple of
years which will expand both capacity but also our ability to manufacture those
products at the lowest possible cost. Our board of directors is a distinguished
one. Charles Sanders, Dr. Sanders, is first former chief executive officer of
[Praxcel ?] as well as former president of Massachusetts General Hospital. Jim
[Dittleson ?] is the co-founder of the company and previously a co-founder as
well of Midwestern Corp. Dick Cloud is a former division chief of the FDA,
extraordinarily insightful and a regulatory expert and C. Everett Coop is, what can
I say, he’s C. Everett Coop. But he’s also spent four years on the development
of blood substitutes, so he has a huge personal interest in this category.
So what about these products, a little more detail please. We have two
products: Hemopure, which is our human product, which was approved for the
treatment of acutely anemic surgery of patients in South Africa in 2001. As many
of you know, we filed our biologic license application for treatment in acutely
anemic orthopedic surgery patients with the FDA in the US in July 2002. They
have since given us a complete review and has sent us some questions, and we
will talk about where we stand on that process in just a moment. Oxyglobin is
our veterinary product. It was approved for treatment in [anemia ?] dogs in 1998
in the US and 1999 in the European Union. We sold now, over 137,000 units.
We recently introduced the new size to drive this business upwards. Both
products have something important called the EDQM Certificate of Suitability.
What that means is that we have passed the stringent requirements of the
European regulatory authorities concerning our ability to remove all pathogens
from our product and specifically the pathogens everybody thinks about when
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they think about cow blood, namely BFE. And we demonstrate that to the
satisfaction of both the European Authorities, who are very picky about this one,
as well as the FDA.
So where do we stand with our BLA at this point? As I mentioned, we
submitted or BLA back in July of 2002, it was accepted in October of 2002. It
was the first the BLA ever accepted by the FDA for a hemoglobin based oxygen
carrier. The FDA in May indicated that it wanted to expand their action due date
to the end of August and instead, they sent us a complete list of questions at the
end of July. In the letter they sent us, they indicated the following:
First, they’d completed their review of our application. That there aren’t
going to be any more questions after the ones that they sent us, and that’s a
good thing, because they sent us a lot of questions. In fact, there are about 50
that are pretty substantial that are going to require a significant effort on our part
to answer - and additional questions beyond that.
The agency has informally, since then, referred us to this letter as our road
map and it is a road map we intend to follow and we are working very hard to get
all these questions answered as quickly as possible.
After careful review of this letter in August, we decided we wanted to ask
the agency for a meeting to both clarify the questions they asked and also to find,
in a couple of cases, a mutually agreed upon range of data we are going to look
at in order to give them their answers. Some of the questions are pretty broad
reaching and we assumed that we would need a meeting in fact to get the
answers to those questions. Since then, the agency has been extraordinarily
responsive to our information requests. We have had six major contacts with
them since we received the letter.
Four in response to questions or
correspondence sent to us. The turn out at these meetings have been
unbelievable, frankly, in the four instances where we sent correspondence to the
agency - in every case they responded in less than a day and in two cases, less
than two hours. So, there is an extraordinarily close collaboration going on here,
which is great. In that, we are getting the guidance that we expected we would
have to have a meeting for back in August, considerably ahead of schedule. So,
at this point, I’m not sure if a meeting is going to be necessary to round it off or
not. At this point, there are just a couple of more questions to go through.
In the meantime, we’re busy answering all the questions where we don’t
need any guidance, as well as reviewing the input we have had from the agency
on some of these bigger questions in order to get our answer back ASAP.
Everybody wants to know, when are you going to get your answer back? And,
we want to be able to give you good guidance on that and we said we would get
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the meeting done in September and then we would know roughly where we
stand. It’s the middle of September so I think we have a week or two yet to sort
of get our act together and take a look at what it’s going to take to finish our
response and after that is done, we will be able to provide some better guidance
from that point. In the interim, we are busy answering questions as fast as we
can.
What about the market opportunity? [ While our initial indication process,
file was for surgery ?]. Within that, because we are marketers now, we are
focusing on the area that is going to be easiest to penetrate, and that is the area
where people are practicing blood avoidance, and blood avoidance surgery. And
the orthopedic surgery in the area in the US alone, has a potential market at
about $300,000,000. If you look at blood avoidance as practiced across the
entire field of surgery in the US adds an additional $450,000,000 market
potential. We have applied some arbitrarily chosen and I think quite conservative
penetration numbers to those markets to yield some early revenue projections for
what we could do out of those indications. If we could move more broadly in the
general surgery and get only 10% of general surgery use of blood at our planned
marketing price of about $700 per unit, that would add up to about a
$700,000,000 revenue opportunity. The three other areas we are working on are
trauma, where we are working towards beginning trials later this year, this is for
use in ambulances, secondly surgical ischemia where the product could be used
in order to counteract the side effects that patients experience from the shortterm ischemia as I mentioned early that were off on a by-product of surgery such
as cardiac surgery and finally in the area of cancer therapy which is rather a
counter intuitive indication for us, but basically there are a class of tumors called
solid tumors, [in the ? ] of the brain, mild small cell lung cancer, liver cancer,
pancreas cancer and like, which are called solid tumors. These tumors are
extraordinarily hard to kill and unfortunately, that’s one reason why they are so
extraordinarily lethal to patients, because in part, the way these tumors develop,
there is a layer of tissue within these tumors which becomes [an-oxic ?], that is
there is virtually no oxygen in that layer of tissue and because all of our treatment
strategies for cancer, whether it is ionizing radiation or chemotherapy, depends
on highly oxygenated active tissue to be effective, these tumors become
extremely difficult to kill.
The application of our product in both animal testing and a very small
phase I human trial, appears to have in fact sensitized these tumors to radiation,
and offers the opportunity to be confirmed in the future human clinical trial to
improve the kilo weight on these tumors per treatment, hopefully improve patient
mortality as well. So those are the four key indication areas we are working on.
The total potential, obviously, is huge. But we think it is realistically [able?] to be
achieved by the company in years ahead.
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Use of this product in surgery. How urgent is that really? While there are
many people who prefer not to get a blood transfusion from a stranger under any
circumstances, there are also underlying demographic reasons, if you will, why
this product would be important here. The rate of growth in our blood supply is
now declining. It’s declining for many reasons. First of all, as we place more and
more restrictions on who’s allowed to donate blood, the number of people who
are eligible to do that is in fact declining. And secondly, the need for blood has
gone up. As the baby boomers reach the ages of 55+, they are looking for new
knees, new elbows, new hips, all of which are highly blood consumptive surgery.
So, as the demand for blood over the past five years has been going 5%, the
blood supply has only been going 3%. It is projected that demand is going to
grow +7% pace, and that the supply of blood may actually drop to about flat. If
you talk to physicians around the country today, they say, “well, for the last few
years, we’ve seen shortages in January and in July, basically because people
are on vacation and either on holiday or vacation, so they are not donating blood,
but now shortages are almost constant.” And unfortunately, that is projected to
continue for sometime. So, we think there is a huge need for a good red blood
cell substitute and that’s one of the things this product can do. I mentioned early
from a marketing standpoint initially, we are going to go after the target market of
those who practice blood avoidance. Why? Because people have already made
a commitment with time and effort and money to avoid getting red blood cells
from a stranger. So, we can meet their need by giving them a pure
pharmaceutical style product. The strategies they use are basically three fold.
One is to pre-donate their own blood, called an Autologous donation, the second
is to use a product called Erythropoeitin, which you’ve probably heard of, which
stimulates red blood cells direction, both of which require office visits prior to
surgery in order to set it up, two office visits to pre-donate two units of blood for
Autologous and four office visits to receive four shots for EPO. Unfortunately,
this is a highly wasteful approach. Half of the pre-donated blood or half of the
Erythropoeitin use for orthopedic surgery is in fact not needed. Because half of
orthopedic surgery patients don’t end up needing a transfusion. So, all of this
effort is in fact, well, at least 50% wasted. The other sad fact is that of those who
do need the transfusion, half of them require more than two units, so at least in
the case of those who pre-donated two units, they end up getting blood from a
stranger, anyway. So if you look at pre-autologous donation as part of this
market, 75% of time, it actually doesn’t succeed in its principal objective.
Here’s a financial spread of how that might look from an economic
standpoint of our product. In this chart, each one of these cases is two patients
each and basically was pre-autologous donation. The cost of two units each for
two patients is $350.00 leading to a $1,400 total cost, in the case of in-hospital
transfusion, there’s an extra fee of $200, which comes to a total cost of $1,600
for two patients, or $800 per patient. Erythropoeitin at $400 a shot is twice as
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expensive. Hemopure, given to only one of the two patients who actually ends
up needing blood comes in at about the same as pre-autologous donation, but
significantly cheaper than EPO. Of course, cheaper also in terms of the time and
effort and risk associated with it as well. So we think we have a good [?]. Our
clinical experience with this product was quite extensive, over 200 clinical trials,
pre-clinical studies, 22 human clinical trials, and a great deal of experience in
both the veterinary and human market in general. This is an overview of the
number of trials we’ve done and the people involved. Basically, it totals 806
people taken Hemopure under highly controlled clinical circumstances.
The efficacy standard the FDA set for our product was that we needed to
demonstrate 35% replacement of red blood cells with our product. That is, 35%
of patients who took our product did not need to switch to red blood cells at any
time. And we significantly exceeded that in both our phase III trial in general
surgery and orthopedic surgery at 43% and 59%. In fact, within that, if you look
at the trial over time, in the first week, 70% of patients in our clinical trial, avoided
taking red blood cells, only because by protocol, they are not allowed to get
Hemopure after day 7, but the number ultimately dropped as low as 59%. From
a safety standpoint, our agreement with FDA was that the primary safety
endpoint would be based on a peak analysis which was a separate analysis of
the data done by an independent and blinded medical panel. That panel
concluded that our product was not inferior to red blood cells in respect to overall
medical risk. This is not the only way the agency looks at safety but it is the
primary safety endpoint.
We have very strong intellectual property. A great deal of patents. I’m
going to give you eye strain for at least half a second. There they all are. But, if
you just look at the date line on the right hand side, you’ll see how the vast
majority don’t expire until 2014, or later. And frankly, most of the intellectual
property in the more recent ones get carried over to the later patents. Currently,
we have a 75,000 facility unit in Cambridge, Massachusetts, which we are
expanding to 100,000 units within the next year. We are working on financing for
a 500,000 unit Sumter facility in Sumter South Carolina, which would obviously
vastly increase our capacity, drive down unit cost, and basically would be the
pivotal advance we need to do in order to get this company to profitability.
From a competitive standpoint, Hemosol is now on a clinical hold. It is not
clear whether it will be able to resume. Northfield has developed a product
strictly for trauma use, they are hoping to begin enrollment in their clinical trial for
Phase III by the end of the year. Their product is vastly different in its storage
and shelf life and characteristics. We think our product represents a more
attractive and option for use in trauma because of it’s ability to be stored at room
temperature rather than in refrigeration, and the market will tell us. Our strategy
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from here is to prepare for the US launch in orthopedic surgery. We are
developing a strategy in using a highly experienced medical device, an
orthopedic medical device, sales force to do the principal selling job against our
surgeon primary client, and then create medical science liaison teams who will
train the balance of hospital staff so they’ll know how to use our product both
safely and effectively. Otherwise, we are going to roll revenues by building our
South Africa sales. We are negotiating strategic alliances designed to allow our
product to be introduced into other geographic areas and we’re taking initiative to
expand our veterinary business, most recently with the introduction of a new
smaller bag size, which is also more profitable for us.
Clinically, we are working on getting the approval and the introduction to
begin our orthopedic indication. We aim to begin our trauma studies later this
year. Ischemia later this year as well. Cancer will be our 2004 project. We have
worked hard to keep our balance sheet strong. Point in fact, our cash on hand
has steadily improved in the past year and has correlated nicely with the status of
our stock price.
That’s our story. I appreciate your attention and I will begin your break out
across the hall in the Nob Hill room. I look forward to talking with many of you
there. Thank you very much.
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Exhibit G
to PROPOSED SECOND CONSOLIDATED AMENDED COMPLAINT
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Biopure Presentation by Thomas Moore, CEO
UBS Global Life Sciences Conference
New York, NY
September 25, 2003 12:30 PM EST
Jeff Meecham:
Good afternoon. My name is Jeff Meecham, I’m one of Biotech’s research
team here at UBS. It’s my pleasure to introduce Thomas Moore, CEO of Biopure
Corporation.
Thomas Moore:
Thank you very much. Good afternoon everybody. Thank you for joining
us today. We’ll start off with the always popular disclaimer side, which none of
you have ever seen before. I will point out thought that this one is slightly
different from the other ones because it does say that the content of this
presentation does not necessarily reflect the position or the policy of the
government or department of defense. We have to say that because so much of
our trauma research is being overwritten by the US Military. I’m told that Colin
Powell is also obligated to put this disclaimer in front of any speech he makes.
So, like I said, on to talking about BioPure and in particular our product
Hemopure, which is a first in class oxygen therapeutic in a whole new class of
pharmaceuticals designed to be intravenously administered to deliver oxygen to
tissues. We initially developed this product to provide an oxygen bridge to the
treatment of the immediate signs and symptoms of acute surgical anemia, but we
have been working very hard over the last few years to also develop initial
indications including use in trauma, ischemia, particularly associated with surgery
and in use with cancer. And I’ll talk about more of that as we go forward.
How do we make our product? Our product is a biologic by the definition,
that is it is a highly refined form of hemoglobin drawn from an animal source,
specifically from the red blood cells of cows, certainly a plentiful source. We
have special herds in central Michigan that are sequestered from other animals
and whose feeding and other care is carefully monitored by folks contracted by
the company. Periodically, through these cows are invited to take a trip to
Pennsylvania. There, somewhat reluctantly they give up 50 - 22 liters of their
blood, prior to being slaughtered for meat. That blood is held until the cows are
cleared for human consumption and then the blood is sent across town to our
initial processing facility where the red blood cells are taken out of the plasma
and then broke open and the hemoglobin extracted. That is the biologic product
that’s the core of our products. That product is then purified through several
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steps, including a proprietary high performance liquid chromatography step, so it
really gets down to just the pure hemoglobin itself, in it’s so-called native
hemoglobin form. We then stabilize that hemoglobin and use a polymerization
process to create an elected size for this hemoglobin which is ideal for its primary
job for transporting oxygen through the blood stream and for doing so as safely
as possible. The resulting product offers several advantages compared to
human red blood cells.
First of all, because it’s pure hemoglobin with no other allergenic material,
it’s compatible with all blood types. In fact, it’s compatible with all species that
use hemoglobin to carry oxygen around their systems. Our veterinarians who
use our veterinary product has transfused this product into over 37 species, from
alligators, to birds. It’s worked with all of them. Second, it’s a highly stable
product. In fact, the shelf life of this product is three years. And that three years
stability is importantly at room temperature, which we define as up to 80 degrees
Fahrenheit. Unlike human blood, which once it is extracted from the body, has a
life time of only 42 days and only then if it is kept refrigerated through that period
of time. And because we are a carefully manufactured pharmaceutical quality
product, we offer consistency potency, purity and stability, something which can’t
be guaranteed with a product derived from directly from a human source of red
blood cells, particularly because the potency of red blood cells decline sharply
after the initial donation occurs. In fact, after roughly 8 days, the capacity of red
blood cells to carry oxygen around the system immediately upon transfusion
declines by over 50%. In fact, it takes several hours before human red blood cells
that are transfused to fully regain their oxygen carrying capacity. So, we deliver
oxygen immediately upon transfusion which red blood cells cannot. And of
course, finally, we have an abundant and a well controlled raw material source,
something which can’t be said for the human population. So, that’s the nature of
our product and it is a breakthrough characteristics in terms of how it’s been
compared to red blood cells, but its breakthrough in other ways as well, and that
is in the way it actually works within the human body.
Here you see a representation of a situation where the patient which
initially has normal concentration of red blood cells and as you can see, the red
blood cells are carrying oxygen, those little bubbles that come off through both
major arteries and then the finer capillaries that branch off to the side. In the
center of these three graphic representations, you see the situation where that
patient becomes anemic due to sudden blood loss from surgery or from trauma
or some other source. And a couple of things happen. First of all the fewer red
blood cells distribute less oxygen which you can see here, but secondly the body
closes off the smaller arteries and capillaries to conserve these red blood cells
for the major organs of the body, ultimately the brain and the heart and does not
let these red blood cells distribute oxygen through the rest of the body. In the
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third picture you can see what happens when Hemopure is added to the system.
First of all, the total distribution of oxygen goes way up. In part, that’s because
our product is three to four times more efficient than human red blood cells in
actually delivering oxygen to the body. Human red blood cells give out only a
third to a half of the oxygen they have per pass through the body, while our
product gives off all of the oxygen it carries. The second important difference
you can see in this as well though, is our product, because it is particle size, is
one one-thousandth the size of a red blood cell, can bypass the restrictions that
the body has put in place when it feels it’s short of red blood cells. In this case,
you can see our product is going down that constricted artery on the right and
distributing oxygen to tissues which otherwise would get no oxygen whatsoever.
This capacity and capability is important for the other indications we have under
development such as use in surgical ischemia to bypass the short term ischemia
which sometimes results from cardiac surgery, once the clots are being broken
up, and also in cancer where we can oxygenate any anoxic cancer tissue which
otherwise would be extremely resistant to radiation or chemotherapy and make
that tissue 30-50 times more responsive to both radiation and chemotherapy.
So, that’s our technology and our product, and some of what it can do.
Now, not so reluctantly, I’d like to talk about our company. Our company
BioPure is the leading developer of oxygen therapeutics. We define leading as,
we are the only company that has had actually two different products in this
category actually approved by regulatory authorities. We believe we are faced
with a multi billion dollar market opportunity based on a growing global need for a
blood substitute, but also these additional applications would stem from the
unique physical structure of the product that we created, and third, as a company
we are really poised for commercialization. We own all the rights to our patented
products and technology with very strong and long-lasting patent rights. And we
have the largest validated manufacturing capacity to produce these products.
Finally, we have made significant changes in our senior management in order to
lead us on the transition of being a fully commercialized firm. Let me talk about
that just briefly.
Over the past year, we have made several changes designed to
strengthen the company in three key areas. Marketing, manufacturing, and
finance. In the marketing area, the first thing the board did was bring me on
board. I’ve been working in the pharmaceutical industry for over 15 years.
Initially with a small product company called Procter & Gamble where I ran the
worldwide pharmaceuticals and the over-the-counter drug business for 4 years
including roughly $850,000,000 of prescription drug business. I then spent 7
years running Nelson Communications, one of the leading sales and marketing
services providers for the pharmaceutical industry, participating in dozens of
product launches and working with over 200 prescription drug company clients.
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And so, I come in to really help with the transition of this company building a boat
by general management as well as pharmaceutical marketing experience.
Beyond that, we have added individuals like Donald Wolf on the bottom there,
who is a very experienced medical education person to improve the quality of our
scientific exchange. On the manufacturing side, we reassigned individuals from
within the company Karl Rausch and Rick White to focus on a area we call
process technology, designed to improve the reliability, stability and the
expandability of our national manufacturing process both to increase the capacity
of our Cambridge facility to its maximum amount, but also to pave the way for the
construction for our new planned facilities. And finally, we added Ron Richards
who has extensive investment banking experience with VanCasper and Security
Pacific to come in as CFO to improve our ability to work with the street and to lay
the groundwork for the financing work we need to do in the years ahead upon the
expansion of the company.
Our board of directors is listed on the right. It’s a very distinguished one.
Lead by Dr. Charles Sanders who is previously chairman and CEO of Glaxo as
well as President of Massachusetts General Hospital, Jim Jellison who is part cofounder of the company as well as co-founder of Gulf and Western. Karl Rausch,
who is also co-founder of the company, C. Everett Coop who of course is C.
Everett Coop, but he’s also been working with blood substitutes for a number of
years.
More details then about our products. We have two products, hemopure,
the human version and Oxyglobin the veterinary version. Hemopure has been
approved for the treatment of acute surgical anemia in South Africa since 2001.
We applied for approval in the US in 2002, the US FDA responded to us in the
end of July this year, and we are in the process of recurring answers to the many
questions they asked of us, and I’m going to give you more details on that in just
a minute. Our veterinarian product was approved for use in the US in 1998 and
in Europe in 1999, and more importantly, both our products have earned
something called the EDQM Certificate of Suitability. This is a certificate issued
by the EMEA, the European Medicine Agency and it’s a requirement for the
distribution and sale of any product in Europe based on bovine products, based
on any kind of biological material related to cows based on the well-known
European concern about BSE. This certificate certifies that we demonstrate to
their satisfaction that our manufacturing process can eliminate the viral and
whatever you chose to call the [prions ?] associated with BSE, as well as six
other key pathogens that can be transmitted through cows, and that’s the
fundamental basis for the overall safety pitch of the product from the standpoint
of viral infection. On our veterinary size business we sold over 137,000 units so
far and as I mentioned before, our veterinarians have been very aggressive in
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September 25, 2003
Page 5
using that on dogs, yes, but on a wide variety of other species as well and quite
successfully.
As I mentioned earlier, we submitted our BLA in July 2002. The FDA got
back to us at the end of July 2003, somewhat ahead of the regulatory schedule
that had been set up which would have ordinarily been required a response by
the end of August. The letter they sent us indicated the following: First, that they
had completed their review of our application and second, that they are not going
to ask us anymore questions, these are all the questions they have to ask. And
that’s a good thing for us too, because they asked a lot of questions. With about
50 representing substantial BioPure effort in order to fully respond. Since then in
our dialogue with the agency, the agency has referred to these questions
repeatedly as our roadmap and that’s a roadmap we intend to follow. After
careful review of the letter, we knew that we needed to ask the agency some
questions to both clarify what they meant in their questions, but also to find
mutually agreed upon ways to narrow the scope of the data they’d been asking
for in order to get the answers back to them as expeditiously as possible. We
announced in August we would seek a meeting with FD in September to get
some of these questions answered. Since then, the agency has been
extraordinarily responsive to our questions. In fact, of the six major interactions
we had with the agency about this letter, they have come back to us with
responses to the questions and issues we raised in general in less than a day. In
some cases less than an hour. And as such, we’ve been in a happy position of
seeing most of our questions getting answered without the need for a meeting
and by now, most of them, in fact, have been resolved with one or two still
outstanding. So, as we get this guidance back, we are simultaneously
developing our own internal time line for when we are going to complete our
response back to the FDA. We promised our investors that we would try to get
all of our answers back from FDA in September and then come back to them with
a specific information about the time line for a response, and we are right on
track to do that. We expect to be able to do so in the month of October. In the
meantime, we are busy answering questions, and in fact, preparing our
response. We’ll simply be able to provide a better guidance as to when that
response will be completed by the end of October. In large part, that’ll be
dependant on how much effort and time is required. For some of the questions
which the agency asked which require us to go back to our investigator sites and
get more raw information from them. In some cases about our product, and in
other cases about historical data on issues like transfusions and like of those
sites. So, that’s where we stand there.
What’s this about market opportunity? Well we show here a quick
summary of the opportunity we see for this product based on the US market
alone. And I’ll run through it for you very quickly. Our initial marketing strategy of
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Biopure Presentation by Thomas Moore, CEO
September 25, 2003
Page 6
filing for approval of this product for use in orthopedic surgery is to go after the
part of the orthopedic surgery market that is most receptive to the opportunity to
use an alternative to [alogenic ?] blood and that is the population that has already
decided they want to participate in bloodless or blood avoidance surgery
programs. Within the US in orthopedic surgery alone, that represents a potential
market of $300,000,000 for us which assuming only 30% market penetration is
roughly a $90,000,000 revenue opportunity short-term. Assuming we can
expand that to use on all other bloodless surgery that would increase the - more
than double the total size of that total market opportunity from our standpoint.
Again, assuming relatively conservative penetration of that market. Longer term
as we can expand our generation to general surgery, that would open up a huge
market of $700,000,000 to us in addition to those earlier smaller markets. Our
second key priority is to use this product in trauma. In ambulances and in the
military applications where blood would not otherwise be available. Here in the
US alone, we see the total market of about $250,000,000. The opportunity for us
at about $130,000,000. We expect to begin the clinical trials leading to establish
that indication in the next 3-6 months.
The next opportunity is in surgical ischemia. That is the use of this
product can [combinative ?] with procedures such as stint placement and
angioplasty where it’s already been well established that 20-30% of patients can
suffer from side effects associated with this surgery related to other ischemic
events which occur as a result of that surgery. Namely, when a clot gets
displaced, the fragments of that clot can lodge further down the blood stream, in
the heart or the brain, creating other short term and sometimes long term side
effects. Assuming only 50% of penetration of that market in the US alone, that
would represent about a $350,000,000 opportunity. Again, assuming the cost to
unify our product at around $700. And finally in cancer therapies as I have
already indicated. We see a huge opportunity in improving the quality of
treatment for solid tumors like [leopastoma ?] the brain, non-small cell lung
cancer, pancreatic cancer, and the like - where solid tumors are created that are
so aggressive that the interior actually becomes anoxic, that is that tissue moreor-less goes to sleep from lack of oxygen, but therefore, becomes incredibly
resistant to treatment by radiation or chemotherapy. We believe we can undo
that with the application of our product. So, that’s the opportunities we see it
today.
Is there potential even beyond that? We think there is. One key area is
based on the potential large scale shortages in the supply of blood itself. Quite
simply, the relationship of blood supply and demand is changing rapidly and its
changing in the direction of creating broad scale shortages in this critical area.
The reasons are simple. In order to insure the safety of the blood supply, we are
increasingly restricting whose allowed to give and therefore the donors pool is
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actually contracting. Meanwhile, as baby boomers approach the age of 55+,
they’re out to get replacement parts: new elbows, new knees, new hips, all of
which are highly blood intensive surgeries. As a result, in the last 5 years, the
rate of growth in the blood supply has dropped only 3%. But the demand has
grown to +5%. Those numbers are projected to go further in each direction over
the next few years and in fact, short term blood shortages are now becoming
routine across the country.
Alright. What about the other aspect of this tolerability to get into the
bloodless surgery market? I’ll go through this very briefly, but quite simply, there
are two broad scale techniques that are used to avoid blood from a stranger
today. Predonation of your own blood, or the use of Erythropoeitin to increase
your blood count before surgery. Both are supplemented in most cases by the
use of cell salvage, where a certain portion of your bleed out in a surgery can be
recaptured and recirculated to your body.
From a pharma-economical
perspective, this process is incredibly wasteful. Half of pre-donated blood and
half of the Erythropoeitin use is in fact not needed, because half of the people
end up not needing a transfusion and so all that gets thrown away. Beyond that,
half of the people who do need a transfusion use three units instead of the two
that is generally pre-donated, and as a result they actually end up getting blood
from a stranger anyway. So, 75% of blood avoidance techniques are “a failure”
either because they are unnecessary or because they do not succeed in the
primary objective, to avoid getting blood from a stranger. From a cost standpoint,
this puts us in a very strong position. If you looked at it from the position of two
patients going through each of these procedures, someone who pre-donates
blood, generates their blood at a cost of $350 a unit. For two patients, that’s a
total of 4 units. Two of which get transfused, for a total cost of $1,600. From an
insurer’s standpoint or a hospital’s standpoint, that means this program costs
$800 a patient.
Erythropoeitin costs twice as much, $1,600 a patient.
Hemopure, because you don’t use it unless you need it, only one of the two
patients will actually require the product and there is the reward of the savings
from the perspective of both the hospital and the payer because on that basis the
cost per patient is only $800. Of course, cost isn’t this whole picture. On the left
hand side, pre-donation, you’re dealing with two visits to the dr.’s office, the
discomfort of two extractions for the blood as well as the cost internal to the
hospital in handling that blood. So in both cases, we think we represent an
attractive pharma-economical alternative within this market.
Many of you have seen a summary of clinical experience which is about
the same as before, so I’m going to run through it quickly here. We have an
impressive overall clinical track record. Over 200 pre-clinical studies, 22 human
clinical trials, over 800 patients exposed to the product in a clinical setting, a lot
of compassionate use experience, a lot of veterinary experience in the open-
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Biopure Presentation by Thomas Moore, CEO
September 25, 2003
Page 8
market and some good patent protection behind that. Our studies on all kinds of
surgeries and represents a broad experience for the product and again with over
800 patients using the product in a clinical setting. From the standpoint of
efficacy, the agreed upon standard with the FDA for the efficacy of the product
was the 35% of patients in our trials, on a trial where they could switch the red
blood cells at any time, that within the seven day period of the trial, excuse me,
six day period of trial, that less than 35% or more would be able to stay on
Hemopure throughout the course of the trial. In our two phase III trials, in
general surgery and orthopedic surgery, we easily surpassed that standard with
43% and 59% respectively. When you look at the internals, it’s even more
impressive. Within the first day, 96% of Hemopure patients stayed on
Hemopure, after seven days 70% were on Hemopure. Unfortunately under the
protocol of the trial no patients were allowed to get any Hemopure after day six,
so by the time the full monitoring period was over, only 59% were still on
hemopure only, but again that easily surpassed 35% standard set by FDA.
From a safety standpoint, in our pivotal trial, we agreed before the trial
began with the FDA to use as our primary safety endpoint something called a
[Seep?] study. Which is basically a blinded analysis of all the case report forms
by a panel of doctors who would examine each patient, create their own score of
adverse events and then rank the product use again on a blinded basis in terms
of how safe it was for the patient. After all the patients were rated by at least two
blinded doctors, we broke the blind, and compared the accumulative scores
between our products and red blood cells and achieved a safety objective which
was to confirm that our product was not inferior to red blood cells with respect to
overall medical risks.
As I say, we have a strong group of intellectual property. 24 U.S. patents
and over 60 international patents. The majority extend to 2014 or later. For
those of you with exceptionally high corrective power on your glasses, you’ll see
that basically, there are only six patents between now and 2014 that expire. The
majority of that intellectual property is recovered in later patents and we are
issuing new patents all the time. From a manufacturing standpoint, we currently
have a capacity of 75,000 units at our Cambridge, Massachusetts facility. We’re
in the process of expanding that to roughly 100,000 units, and we expect that
process to be complete by the middle of next year. We are still in active
negotiation for the financing necessary to construct a 500,000 unit facility in
Sumter South Carolina. Which could be up and operating basically roughly three
years after the shovel first hits the ground, and frankly, based on the units
produced and the significantly superior cost structure units produced there, really
is going to be the pivotal point to getting this company to full profitability. From a
competitive standpoint, we are the only company using bovine hemoglobin that
confers unusual stability and characteristics for our product compared to our
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Biopure Presentation by Thomas Moore, CEO
September 25, 2003
Page 9
competition. As probably many of you know, Northfield, our principal competitor
at this time, is beginning Phase III trials of their product for use in trauma,
hemosol, is currently on chemical hold due to safety issues. It is unclear when or
if they will progress from that point.
Our strategy from here is pretty straightforward. We’re going to make
ready for U.S. launch in orthopedic surgery. Our strategy uses a team of
experienced orthopedic device salespeople to persuade orthopedic surgeons this
is the important next step in high technology to incorporate in their practice.
When they insist that it be distributed in the hospitals, we will follow up with
medical science liaisons who will facilitate the training for anesthetists,
anesthesiologists, floor nurses and intensivists in order to ensure that the product
is safely and effectively used within the hospital scene. Secondarily, we are
going to work to grow our revenues within our veterinary business within our
South African business and through additional alliances.
Our licensing
agreements principally focused on geographic usage and geographies we don’t
intend to penetrate on our own. I’ve outlined for you the clinical program which
will be focused on trauma and cardiac ischemia over the next year or two. Our
aim is to get going on a cancer program sometime late in 2004. From a balance
sheet standpoint, we have continually strengthened our balance sheet during this
year. In fact, this graphic probably gives you the best picture. Cash on hand is
now in the ball park of $30,000,000 and we’ve been demonstrating repeatedly
our ability to raise the money necessary to keep this company on a strong cash
footing.
That’s our overview of our picture. I appreciate very much your interest in
this presentation this afternoon. I think we’re going to do a break out in the State
Suite. I look forward to hopefully talking to several of you there.
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Exhibit H
to PROPOSED SECOND CONSOLIDATED AMENDED COMPLAINT
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Biopure Corporation(ticker: BPUR,exchange:NASDAQ) NewsRelease-10/30/2003
Biopure Updates Regulatory and Operating Plans
Conference Call ScheduledFor 11:30 a.m. ET Today, October 30, 2003
CAMBRIDGE, Mass.,Oct. 30 /PRNewswire-FirstCall/--Biopure Corporation(Nasdaq:BPUR) todayannouncedits plan to respondby
June30, 2004,to the Food andDrug Administration's(FDA) questionsregardingits biologic licenseapplication(BLA) for Hemopure
(R) [hemoglobinglutamer-250 (bovine)]. The companyhasadjustedits operatingplan to reduceexpensesand conservecashwhile it
completesits written responseto the FDA.
Biopure applied for FDA approvalto marketthe company'soxygentherapeutic,Hemopure,in the United Statesfor the treatmentof
acutely
anemic
adult
patients
undergoing
orthopedic
surgery
and
for
the
elimination
or reduction
of red
blood
cell
transfusions
in these
patients.
During the pasttwo monthsthe companyhashad severalsubstantiveinteractionswith the FDA to clarify the Agency'squestions.Many
of Biopure'sresponseshavebeencompleted.However,somerequirethe retrieval of sourcemedical documentsand/orhistoricalblood
transfusiondatafrom clinical trial sites in various countries,which will take severalmonthsto complete.
Biopure hasengagedDavid Zuchero,Presidentof Chesapeake
RegulatoryGroup(CRG),asits interim seniorregulatoryofficer to direct
the FDA responseactivitiesofBiopure's in-houseregulatoryteam,the CRG teamand otherexternalconsultants.He replacesHoward
Richman,former SeniorVice Presidentof Regulatoryand Operations,who hasleft Biopure to pursueotherinterests.A 25-yearindustry
veteran,Zucherohasprovidedstrategiccounselandmanagedseveralmajor regulatorysubmissionsduring his 13-yeartenureat CRG
and in his previousregulatorypositionsat PhannakineticsLaboratories,Inc., ChelseaLaboratories,Inc., and Ayerst (now WyethAyerst)Laboratories.He is a certified regulatoryaffairs expert,attorneyand formermicrobiologist.
Biopurehasalso implementedcostreductionsdesignedto minimize its ongoingcashburn, which include reducingthe workforce by
approximately30 percentanddecreasingforecastmanufacturingexpensesfor fiscal2004. Thesemeasuresrepresentoverallanticipated
savingsof approximately$12 million in fiscal 2004,despitehighercostsassociatedwith FDA responseactivities.The companyis in the
processof renewinga standbyequity distributionagreementto provide up to $15 million asneeded.Biopure'scurrentcashand
anticipatedOxyglobinrevenuestogetherwith this standbyfacility areexpectedto fund operationsthroughDecember2004.
"In the bestinterestsof our shareholders,todaywe've takenthe stepsnecessaryto more efficiently run our businesswhile we complete
our comprehensive
responseto all of the FDA's questions,"saidBiopure PresidentandCEO ThomasA. Moore. "We view the Agency's
questionsasa 'roadrnap'to approvalandhave seta conservative,achievabletargetdatefor our response.We remainenthusiastically
committedto commercializingHemopurein the United Statesas expeditiouslyaspossible."
Biopure'supdatedplanscontinueto include clinical developmentofHemopure for otherpotentialindications.A PhaseII cardiac
revascularizationtrial in patientsundergoingelectivepercutaneous
coronaryintervention(e.g.,angioplasty,stent)is scheduledto begin
enrolling patientsin Europethis year,and a PhaseII traumatrial co-sponsoredby the U.S. Army and Navy is anticipatedin 2004. These
newtrials areunrelatedto the currentHemopureBLA.
ConferenceCall
Biopure PresidentandCEO ThomasA. Moore will discussthe company'sregulatoryand operatingplans in a conferencecall and
webcaston Thursday,October30, 2003,at 11:30 a.m.ET. The dial-in numbersare 1-800-535-9844(US/Canada)and 1-706-634-7089
(International).A live audio webcastof the conferencecall will be availablefrom the investorsectionof Biopure'sweb site at
www.biopure.comand will be archivedfor at leastoneweek. The webcastcanalsobe heardby individual investorsat
www.companyboardroom.com
and by institutionalinvestorswho subscribeto StreetEventsat www.streetevents.com.
An audio replay
of the conferencecall will be availableat approximately2:30 p.m. ET, October30, 2003,until midnight ET, November7, 2003. To
accessthe replay, dial 1-800-642-1687(US/Canada)or 1- 706-645-9291(InternationaVLocal)andreferenceconferenceill number
3753466.
Biopure Corporation
Biopure Corporation,headquarteredin Cambridge,Mass.,is a leading developer,manufacturerand marketerof oxygentherapeutics,a
http://www .corporate-ir .netlireye/ir_site.zhtml ?ticker=BPUR&script=411 &item_id=464811 &layout=23
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Page2 of2
new classof pharmaceuticalsthatare intravenouslyadministeredto deliver oxygento the body'stissues.Hemopure(R)[hemoglobin
glutamer-250 (bovine)], or HBOC- 20I, is approvedin SouthAfrica for the treatmentof adult surgicalpatientswho are acutelyanemic
and for eliminating,delayingor reducingthe needfor allogenicred blood cell transfusionin thesepatients.Biopure'sveterinaryproduct
Oxyglobin(R) [hemoglobinglutamer-200 (bovine)], or HBOC-301,the only oxygentherapeuticapprovedby the FDA andthe
EuropeanCommission,is indicatedfor the treatmentof anemiain dogs.
The contentof this pressreleasedoesnot necessarilyreflectthe position or the policy of the u.s. Governmentor the Departmentof
Defense,andno official endorsement
shouldbe inferred. Completionof the pivotal RESUSclinical trial ofHemopure in traumais
contingentupon furtherfunding. Statementsin this pressreleasethat are not strictly historical maybe forward-lookingstatements.There
canbe no assurancethatBiopure Corporationwill be ableto commerciallydevelopits oxygentherapeuticproducts,thatnecessary
regulatoryapprovalswill be obtained,thatanticipatedmilestoneswill be met in the expectedtimetable,that any clinical trials will be
successful,or that anyapprovedproductwill fmd marketacceptance
andbe sold in the quantitiesanticipated.Actual resultsmay differ
from thoseprojectedin forward-lookingstatementsdueto risks anduncertaintiesthat exist in the company'soperationsandbusiness
environment.Theserisks include,without limitation, the company'sstageof productdevelopment,history of operatinglossesand
accumulateddeficits,anduncertaintiesandpossibledelaysrelatedto clinical trials, regulatoryapprovals,possiblehealthcarereform.
manufacturingcapacity,marketing,marketacceptance,
competitionandthe availability of sufficient financingto supportoperations.
The companyundertakesno obligationto releasepublicly the resultsof anyrevisionsto theseforward-lookingstatements
to reflect
eventsor circumstancesarising afterthe datehereof.A full discussionof Biopure'soperationsand fmancial condition,and specific
factorsthat could causethe company'sactualperformanceto differ from currentexpectations,canbe found on the company'sWeb site
at www.biopure.com/corporate/legal/home_legal.htm
and in the company'sfilings with the U.S. Securitiesand ExchangeCommission,
which canbe accessedin the EDGAR databaseat the SEC Website,www.sec.gov,or throughthe Investorsectionof Biopure'sWeb
site, www.biopure.com.
* $4,502,900is from GrantDAMD17-02-l-0697. The U.S. Army Medical ResearchAcquisition Activity, 820 ChandlerStreet,Fort
Detrick MD 21702-5014is the awardingand administeringacquisitionoffice.
Contact:DouglasSayles(617) 234-6826
Tom Nealon(617)234-6873
Biopure CorporationIR@biopure.com
SOURCE Biopure Corporation
10/30/2003
CONTACT: DouglasSayles,+1-617-234-6826,or TornNealon,+1-617-234-6873both of Biopure Corporation,IR@biopure.corn
Website: http://www.biopure.com
(BPUR)
http://www .corporate-ir.netJireye/ir_site.zhtml?ticker=BPUR&script=411 &item_id=464811 &layout=23
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Exhibit I
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FINAL TRANSCRIPT
Event Transcript
BPUR - Biopure`s Regulatory and Operating Plans
Event Date/Time: Oct. 30. 2003 / 11:30AM ET
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FINAL TRANSCRIPT
BPUR - Biopure`s Regulatory and Operating Plans
CORPORATE PARTICIPANTS
Thomas Moore
CEO, President - Biopure Corporation
David Uchero
Senior Regulatory Manager - Biopure Corporation
CONFERENCE CALL PARTICIPANTS
may discuss projections and other forward-looking statements
which involve risks and uncertainties that could cause the
company's actual results or performance to differ materially from
those projected. The condensed list of these respective factors
appears at the end of today's press release, which you can access
on the internet, and there is a more comprehensive discussion
of these risk factors on our SEC filings at Biopure.com. Now
I'd like to turn over the call to our CEO and President Tom
Moore.
Marcus Denennero (ph)
Smith Barney - Analyst
Thomas Moore - CEO, President - Biopure Corporation
Bruce Peterson (ph)
Janney Montgomery Scott - Analyst
Good morning, everybody. I would like to add my thanks to
you for joining us this morning. Around the table here I also
have Ron Richards our CFO, and also on the line, David
Zuchero who's mentioned on the press release this morning,
who'll be introducing himself briefly a little bit later in our
remarks. As you all know this morning, we announced three
or four additional new events for Biopure Corporation. First of
all, our financial response time to the questions that the FDA
sent us on our biological license application, questions that we
received in late July. Second, our engagement of David Zuchero
on an interim basis as our senior regulatory manager replacing
Howard Richman. And third, a reduction in force by the
company to reduce our cash burn over the next several months
as we repair our responses. I'm going to address each of those
briefly, and then we'll throw it open to questions.
Gudrim Bowler (ph)
- Analyst
Unidentified Participant
Sapna Srivastava
ThinkEquity Partners - Analyst
David Hoffman
Accepitor Capital Management - analyst
Jakar Boz
Greenberg Healthcare - Analyst
Kevin Tang (ph)
Tang Capital - Analyst
Steven Marks (ph)
Blue Ridge Capital - Analyst
PRESENTATION
Operator
Good morning, my name is Corey, and I will be your
conference facilitator today. At this time, I would like to
welcome everyone to the Biopure Corporation Regulatory
Update conference call. All lines have been placed on mute to
prevent any background noise. After the speaker's remarks, there
will be a Q&A period. IF you would like to ask your question
during this time, please press * then 1 on your telephone keypad.
If you would like to withdraw your question, press * then 2 on
your telephone keypad. Thank you. Mr. Douglas, sir, you may
begin your conference.
Unidentified Participant
Good morning everyone and thank you for joining us on our
conference call today. We'll be discussing regulatory and
operating update after which we'll answer a few questions. But
before we begin, I'd like to point out that during this call we
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In terms of the response timing, as many of you know, we said
all along that the precise time of that response would be
dependent on our discussions with FDA, which we conducted
during the month of September. While the discussion covered
several items: specific clarifications of certain questions, the key
issue vis-à-vis our timing was to see whether or not we could
use sampling approaches as opposed to having to collect all the
blood transfusions and other source data that the FDA requested.
The FDA in all these discussions was very responsive, answering
all our questions promptly and we engaged in good discussion.
But nevertheless the bottom line conclusion that we drew was
that the FDA was not in a position where they could tell us of
the sampling approach in fact would be guaranteed to meet the
full needs of what they wanted to see.
On that basis, we made the decision that we're going to go out
and collect all the source data we requested which unfortunately
is going to be more time-consumptive that we would have
originally hoped. As we then stated, there's simply as not as
much data at hand for us to be able to answer these questions
without going out to the various sites. So, we already have a
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Case 1:03-cv-12628-NG
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FINAL TRANSCRIPT
BPUR - Biopure`s Regulatory and Operating Plans
traveling team in place collecting the information from the
various sites, but as we look at the total picture we wanted to
set an expectation for the market which was recently
conservative and one we could make, and by the end of June
2004 is precisely the expectation we want to set. In terms of the
change in regulatory leadership, change in personnel is always
difficult particularly in a somewhat high-profile position like
this, so we believe that it's an opportune time for us to make
this change for the company.
services so we help companies figure out where they're going
with their products and how to get to FDA approval. We
manage and coordinate the development approval process with
the FDA. We've worked with some of the largest companies as
well as intermediate and start-up companies. We've probably
worked on close to 50 approved products both in biologics and
drugs. Basically I know personally I've worked on
blood-replacement products in the past and am excited about
helping Biopure move this product forward to approval.
Howard's worked very hard the last several months in our
dialogue with the FDA to define the precise scope of the data
collection work we need to do, and we're very appreciative of
the job he has done in that area. We're now in a position where
we're sort of a regulatory law, by that I mean we know exactly
what we have to do. We know what the roadmap is that the
FDA has set out for us to respond to their questions, and our
teams are working hard to do that. Howard is not in a position
where he's managing the preparation of that response and so in
a sense, there's not much to be done in this area until those
responses are closer to being submitted to the FDA. At the same
time, we are looking at the development of other indications
which was mentioned in our press release in both cardiac
e d e m a (ph) as well as some trauma, as well as exploring
international opportunities. We felt as we looked at this broader
range of strategic issues that this was a good time to add
additional regulatory and strategic resources to our management
portfolio.
I think that's about it for me.
So on that basis, we decided to make this change, and we are
very happy to be able to secure on an interim basis the services
of the Chesapeake Regulatory Group and in particular, David
Zuchero to work us through this process while we're in the
process of bringing in a new in-company regulatory head. And
because I know there's a lot of interest in David in this hand-off,
I asked David to participate in this call. I've asked David to only
provide you with some perspective with his background, he's
not in a position to answer any of your questions about the
regulatory process and we're not going to ask him to do that.
So, David, I'd appreciate it if you could briefly introduce
yourself.
David Uchero - Senior Regulatory Manager - Biopure Corporation
Sure, thanks a lot Tom. My name is David Zuchero. I'm
basically a 25 year veteran in the biopharmaceutical industry,
the last 13 years of which I have founded and headed the
Chesapeake Regulatory Group, CRG. CRG basically provides
high-level strategic regulatory planning and regulatory liason
streetevents@ccbn.com
Thomas Moore - CEO, President - Biopure Corporation
Thank you David. Again, at the risk of frustrating some on the
call, that's all we're going to ask David to say. While he has spent
time working with us on this, he's not in a position as yet to
comment on our regulatory situation. So unfortunately you're
just going to have to rely on me for that. David, thank you very
much.
The third item we addressed in our... I'll go back a little bit, as
some will ask "Well, how do we and the CRG come together?"
As many of you know, we're very fortunate to have on our
board, folks with extensive FDA experience notably Richard
Crout who was division chief for the FDA as well as a variety
of other consultants and advisors that David C a i n e (ph) highly
recommended, and so we're very pleased to be able to bring
him onto the team.
The third matter we talked about in our release today was our
reduction in force, which is the polite way to describe the
lay-offs that we've in fact already executed this morning. Ever
since I joined this company, investors have been coaching me
on the need to reduce our basic burn rate with the company.
In the process, in September and in earlier October when we
got a real handle on the collecting timing of our response, giving
the time it's going to take to collect this source information. It
seemed right to finally make the step to reduce that burn rate,
as painful as that is both for this company and for me personally.
Fundamentally, this is a manufacturing reduction in force. We've
been staffing our facility to have a capacity of 50,000 units per
year. Until we get FDA approval, that's simply not a likely
demand situation, and so we have in essence reduced our
manufacturing staffing which will enable us to have an annual
capacity of 10,000 units a year, which is certainly adequate for
our needs on our growing Oxyglobin business as well as
Hemopure. The way we've approached this is to decide to keep
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Case 1:03-cv-12628-NG
Document 110-10
Filed 03/28/2006
Page 5 of 18
FINAL TRANSCRIPT
BPUR - Biopure`s Regulatory and Operating Plans
the manufacturing facility running basically all the time, and in
a position where we can ramp it back up to full capacity with
minimum effort and with no need to requalify or revalidate our
manufacturing processes, so we think it's the right and prudent
step for us to take. This is a very painful process but it is what
we believe is right for the business. Of the reductions we've
made, we've basically done a force reduction from 72 people.
Starting from about 240 of those people, 90% came from our
manufacturing operation. I want to extend my personal thanks,
and the thanks of the company, to these employees for departing.
They have helped get us to the terrific position we are in today,
and so while this is an extremely difficult time, this is the single
reduction we're doing, and this process is now complete.
And so, I guess to sum up, prior to your questions, my view is
that the job of the management of this company is to keep this
company moving forward and to provide real leadership,
communicating as openly as possible but also making the tough
decisions that are really in the best interests of the shareholders.
To carry that out, we've laid out a timeline which I hope is
conservative, but it's one we will make. We've moved forward
with personnel changes which we believe will help move this
company forward faster in the future, and we've addressed
structural cost issues which we've had actually for some time
but simply should be addressed in the context of the time it'll
take to make this response to the FDA. We're going to continue
to do what we think is in the best interest of the shareholders
and we hope our shareholders in turn will support us as we
continue to be cautiously optimistic in moving towards both
regulatory approval and an outstanding business in the future.
Marcus Denennero - Smith Barney - Analyst
Yes, the question is: you have experience in South Africa with
your products. What's been the result of that experience, and
other international possibilities?
Thomas Moore - CEO, President - Biopure Corporation
Our stretch in South Africa has been very positive from the
standpoint that we have had good experience with the patients
and developed what we consider a very good safety record with
the product. It has been approved for use in general surgery in
South Africa, and so it's being used in a wide variety of situations.
We've reported and carefully tracked the usage of this product,
reported very good therapeutic results. In particular, in the past,
we've talked about experience in areas like breast reconstruction
surgery where practices have converted totally to the use of our
product as opposed to transfused blood based on their perception
that the product is providing superior healing rates, lower
infection rates and less tissue rejection which is important
particularly in the case of breast reconstruction surgery as that
is generally followed by radiation or chemotherapy which can
only be begun when healing is in fact complete. We continue
to get very good interest in the product, we are continuing to
opt the product on the interim free basis as we are restructuring
our commercial agreements in South Africa so that we can in
essence leave the partnerships that we've currently been in which
has developed some real issues and market this with a new
partner. That activity is going on now, but the record of the
product and how it's been used is quite good.
Those are my comments; I will now welcome any questions.
Marcus Denennero - Smith Barney - Analyst
I'm sorry.
QUESTIONS AND ANSWERS
Operator
Thomas Moore - CEO, President - Biopure Corporation
At this time, I would like to remind everyone that in order to
ask a question, please press * then 1 on your telephone keypad.
We'll pause for just a moment to compile the Q&A roster.
M a r c u s (ph) had a second part of his question. He asked
about other international work.
Your first question comes from M a r c u s D e n e n n e r o
(ph) , from Smith Barney.
We have, sorry about that. We have had - we have had
regulatory discussions both with the European central regulatory
authorities as well as with specific European countries. We have
prioritized, however, our response to U.S. FDA as our really
top priority.
And while we're continuing to pursue these and there are
certainly some very real interest in the product there, we are
going to strategically hone our resources to make our FDA
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Case 1:03-cv-12628-NG
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Filed 03/28/2006
Page 6 of 18
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BPUR - Biopure`s Regulatory and Operating Plans
response our top priority and any other international
opportunities something we pursue a as the resources are
available basis.
M a r c u s (ph) , does that answer your question?
Operator
Yes.
Thomas Moore - CEO, President - Biopure Corporation
OK, good.
Marcus Denennero - Smith Barney - Analyst
Yes, thank you.
I have another question if no one else is on the line.
Thomas Moore - CEO, President - Biopure Corporation
Well, there are about 151 others.
There are? OK.
So in terms of fast track, we're past the point of fast track 'cause
we're well down the regulatory consideration phase here. And
so right now the FDA has been tremendously responsive to
what we're trying to do. And I assume that will continue to be
the case.
In terms of compassionate use, the company closed down its
U.S. compassionate use program I guess about three years ago.
The problem with compassionate use is it's a very uncontrolled
way to use the product. And frankly by its very nature it tends
not be as helpful as you'd like it.
Thomas Moore - CEO, President - Biopure Corporation
Why don't you fire away M a r c u s (ph) , and I'll try to be
succinct.
Marcus Denennero - Smith Barney - Analyst
Yes.
Just quickly, is there a possibility of getting fast track on your
products for compassionate uses?
Thomas Moore - CEO, President - Biopure Corporation
Those are two things, different things.
Marcus Denennero - Smith Barney - Analyst
It's truly a last resort use of the product as opposed to a situation
where a patient could really therapeutically benefit from it.
I will say I think as we look forward, we're probably going to
re-review that issue. And see whether that isn't a smart thing to
do.
However, any program we would do would have to be very
carefully constructed because an open-ended compassionate use
program ends up required enormous resources. So the company
is we are responsible for how the product is used, the training
of the medical personnel who use it, and inevitably as should
be and as is appropriate, for the recording the ultimate medical
outcome to our fundamentally medical file.
First off ...
So M a r c u s (ph) , there is another short answer to your
question.
Operator
Please hang up and try your call again. If you need assistance,
dial ...
Marcus Denennero - Smith Barney - Analyst
Thank you.
Thomas Moore - CEO, President - Biopure Corporation
Thomas Moore - CEO, President - Biopure Corporation
Are we still online?
But that is something we will look at again once we're confident
we have - we are in very good shape on our BLA response.
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Case 1:03-cv-12628-NG
Document 110-10
Filed 03/28/2006
Page 7 of 18
FINAL TRANSCRIPT
BPUR - Biopure`s Regulatory and Operating Plans
Marcus Denennero - Smith Barney - Analyst
Operator
All right, thanks.
Your next question comes from G u d r i m B o w l e r (ph) ,
an investor.
Operator
Your next question comes from B r u c e P e t e r s o n (ph)
with Janney Montgomery Scott.
Bruce Peterson - Janney Montgomery Scott - Analyst
What it's going to cost the company for this one time charge of
eliminating one-third of the employees? And give us a feel on
how the company is going to fund the timeframe going out to
June of '04 and beyond?
Thank you.
Gudrim Bowler - - Analyst
Yes, I have a question regarding the s a m p l i n g (ph) approach
that will not guarantee to meet FDA requirements. I'd like to
understand why now at the eleventh hour it's finally figured out
that that approach won't work. Having listened to past speeches
about how people had been hired as consultants and employees
to "address the FDA needs and understand them," I'd like to
know how in the eleventh hour it's finally figured out that you
don't have even the approach that the FDA wants.
Thomas Moore - CEO, President - Biopure Corporation
Thomas Moore - CEO, President - Biopure Corporation
Sure.
The cost of the severance program will be the number that we
have right is about $985,000. So I think it's fair to say about a
million. That represents a little over 3% of the current cash
resources we have on hand. With all that figured in, with cash
on hand we're in a position where we could operate into the
May/June timeframe.
We are in discussions right now setting up a financial facility
which would allow us to raise the necessary resources to actually
keep the company operating through the end of 2004. This is
a so-called standby equity agreement - basically allows the
company to sell shares as needed directly into the marketplace.
We've used a standby equity facility already very successfully
over the past year, and we believe that, assuming we can once
again renew this facility and we don't think there's an issue to
that, that we'll be able to, without doing a significant new
offering, be able to operate through the end of 2004.
Bruce Peterson - Janney Montgomery Scott - Analyst
I guess number one I think all along we knew that the
s a m p l i n g (ph) approach may or may not work. It seemed
right to talk with FDA and w e (ph) in fact set up the meeting
with FDA within a couple hour - a couple weeks, rather, after
receiving the letter. All along, we began our preparation to
actually do the full source data collection, and in fact have kept
going on that track even as we were having the discussions with
FDA. And so I'm not sure it's eleventh hour because we've been
working against this really since August.
Secondarily, I'd say while you characterized it as it's well known
the FDA won't accept that approach, in point of fact the FDA
has accepted that approach and several other regulatory filings
that we u n c o v e r e d (ph) in our research. And so it was not
unreasonable to talk with FDA about the possibility of doing
that.
And in point of fact, the FDA didn't say, "We won't accept it."
They just said, "You know, guys, we can't tell you until you
show us what you do whether or not it's going to work." And
because the last thing I want to do is get into multiple cycles
with FDA, we made the decision that we weren't going to put
our shareholders at risk for having additional cycles with FDA
because we didn't offer a complete enough answer to the FDA
question.
Thank you.
Thomas Moore - CEO, President - Biopure Corporation
You're welcome.
streetevents@ccbn.com
So that's why we've gotten to this point. I know I can sense
your irritation in your voice about - in the use of the phrase
"eleventh hour," but it would be unfair to say that we just
suddenly got surprised by this. We basically laid the groundwork
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Case 1:03-cv-12628-NG
Document 110-10
Filed 03/28/2006
Page 8 of 18
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BPUR - Biopure`s Regulatory and Operating Plans
in place for full data collection starting off very early in the
process. What we did do is we elected not to talk with our
investors about what the schedule would be until we were sure
we had exhausted the option of getting a shorter path.
Should I - is there any more you'd like me to convey?
Gudrim Bowler - - Analyst
I'd like to know why you're not further along in South Africa.
Thomas Moore - CEO, President - Biopure Corporation
There are fundamentally two issues. One is the company,
frankly, did not do a full commercial introduction when the
product initially became available there.
And then secondly, we took as our partner there a hospital chain,
and as soon as we got into trying to start up commercial
operations there, it became clear that structurally a hospital chain
really isn't the right partner to have when you're marketing a
pharmaceutical. Lack of - there's both issues concerning lack of
experience in marketing pharmaceuticals as well as, frankly,
competitive issues between hospital chains in South Africa which
the management of the company simply was unable to anticipate.
So now we're unwinding that agreement so we can get into a
more normal commercial kind of operation.
Thomas Moore - CEO, President - Biopure Corporation
Yes?
Sapna Srivastava - ThinkEquity Partners - Analyst
First of all, with the change in regulatory, I mean, who is going
to be the person who is responsible for now c a r r y i n g (ph)
the communications with the FDA? I mean it is a bit concerning
to change at this point of the game. And how does the new
person plan to get trained in the time, you know, which is pretty
close? I mean even if it's a few months, it's pretty close to really
understand the last, I don't know, 1 3 (ph) years of work or
something. So a little bit of color on that would be very, very
helpful. I would start with that and then I have a few more
questions.
Thomas Moore - CEO, President - Biopure Corporation
Sure. David Zuchero will be our chief regulatory contact with
FDA effective today. We have notified the agency of that
change. Nevertheless, I will emphasize David is - brings an
enormous wealth of experience and strategic perspective to us,
but it is our aim to hire a new senior regulatory officer who will
assume that communications responsibility as soon as we find
the right sterling individual who'll take that role.
Sapna Srivastava - ThinkEquity Partners - Analyst
I mean just you know level will not have a regulatory person
while the product is under review. I mean who in the company
is going to be r e g u l a t o r y (ph) responsible for any questions
that are coming from the FDA right now?
Gudrim Bowler - - Analyst
Thank you.
Thomas Moore - CEO, President - Biopure Corporation
You're welcome.
Operator
Your next question comes from Sapna Srivastava with
ThinkEquity Partners.
Sapna Srivastava - ThinkEquity Partners - Analyst
Yes, hi, Tom. I have a few questions.
Thomas Moore - CEO, President - Biopure Corporation
Well, we actually do intend to work through David for right
now. I mean we have a regulatory team of six individuals who
handle our regulatory process, and so it's not like we have any
sudden void in terms of regulatory relationships with FDA or
regulatory history with FDA. And again, I would emphasize
that Howard was not running the FDA response process. In
point of fact, I'm running the FDA response process and
coordinating the work amongst the teams. The communication
we sent to FDA announcing - informing them of the change
was a letter that I signed personally.
And so Howard's leaving does not affect our ability to make the
response. In terms of the communications with FDA, as you
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Case 1:03-cv-12628-NG
Document 110-10
Filed 03/28/2006
Page 9 of 18
FINAL TRANSCRIPT
BPUR - Biopure`s Regulatory and Operating Plans
know, they - I mean they're fairly formalized interactions back
and forth at this stage. They're not particularly intense at this
point because we're busy getting them the answers. We've done
all the clarification - with Howard's help all the clarification we
need to know what we've got to do and to know the extent of
rigor we have to apply to it.
And so from our perspective, Sapna, this is a - this is an
opportune time to make a change at what is broadly perceived
as a sensitive spot, but it will not represent a gap in terms of
ability to keep track of the history or ability to be able to
communicate effectively with FDA.
Sapna Srivastava - ThinkEquity Partners - Analyst
OK, and the second question is, you know, obviously your
timelines have slightly extended from the last time you gave the
update on what it would take to get the response to the FDA.
I mean could you just give a little bit more color, like, you
know, why the timeline extended and how many people are
working on getting the answers? Could this timeline be
accelerated if you had more people trying to get the answers
information, et cetera?
Thomas Moore - CEO, President - Biopure Corporation
Sure. We actually - I mean we provided some guidance briefly
right after we got the letter which in part was based on the
assumption that we had all the source data the FDA will be
looking for already in house. And that was literally within the
first 24-48 hours after we got the letter.
As we got into what the FDA is really looking for, we realized
we would have to go out to the sites in order to collect that
information and that's when we - when we provided the
guidance at our Q3 conference call which said, "Gee, we need
to have a meeting with FDA and we'll only know when exactly
we're going to be able to set a timing commitment after we
have those meetings with FDA." And so early on, we thought
this would be easier because we had the data in house. It took
literally a few days because you have to work with your contract
research organizations and your data management organizations
to find out exactly what you have. We discovered, "OK, this
really is going to be a field trip."
How big a field trip will it be? Well, on the data gathering area
alone, we have retained and trained 15 or so monitors to go out
and actually collect the data. We've now contacted the vast
majority of the sites and the - and they are - some are sending
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us the information directly. Others need to get visited by folks
who know what to look for to be able to pull that information
out. And so it represents a very substantial effort.
Once the material is in, we have to take the data out of the
forms and tabularize it in the way the FDA has asked to see it
tabularized to be able to do that. And of course, we have to do
rechecking of it to make sure everything we send is accurate.
So it's a collection process which in our - in our timeline, at
least, we're assuming is going to take several weeks. Then there's
a data extraction process, which we can start almost right away
when we get the source data in though it will still take some
time to take it out. Then there's a checking and verification
process and a tubularization process, and, frankly, we're also
going to just make sure all of this reconciles well with everything
we already have in house. And that's what pushes this timeline
out.
Again, it's critically important for our investors that the timing
promise we make is the one we meet, and that's what we're
going to do. The issue here is probably while we could go from
15 monitors to 30 or 45 monitors, that only shortens up the
collection process. There are several other steps we have to take.
So if it were - frankly, if it were just the number of monitors,
I would be - right after we finished this call, I'd have my ticket
hopefully to Miami, but I fear that my staff would probably send
me to Minneapolis instead, to actually pick up the data. But it's
more to it than that.
Sapna Srivastava - ThinkEquity Partners - Analyst
And so how is that to extract the data from because obviously
you're giving up control now for the data collection being having
to actually go to the sites? I mean would that be a challenge?
And I mean is that the only part of the questions which are still
w h e r e (ph) you have to answer to the FDA or are there any
questions on the efficacy and safety side which may be also more
time consuming?
Thomas Moore - CEO, President - Biopure Corporation
In previous communications we've had, we've said there of the
- all the questions we've gotten, there are about 50 which, you
know, require some substantial effort on our part. None of those
are going to be time-limited. We've focused on the source data
collection because that's the one that takes all the time. The rest
of them we're confident we can answer, and in fact, many of
the answers have already been finished.
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Case 1:03-cv-12628-NG
Document 110-10
Filed 03/28/2006
Page 10 of 18
FINAL TRANSCRIPT
BPUR - Biopure`s Regulatory and Operating Plans
We for the sake of simplicity have focused on the source
collection issues as being the one which will effect the issue
investors are most concerned about, namely the timing of our
response. But there are lots of other questions being answered.
It's fair to say the majority - the vast majority of the
non-manufacturing resources of the company are working on
those questions. Though that'll start shifting over in the next
few weeks as people complete the answers and can move back
to other aspects of the business.
There was another aspect to your question. So far, and we're
pretty far down the track, sites have been very cooperative with
us in terms of getting this data back. There are both issues about
their voluntary nature their cooperation. There've also been
new confidentiality regulations and laws passed, notably HIPAA,
since our trial began, which for some sites we thought could
create a problem. And so, so far, I guess I'm pleased by what I
see so far in site responsiveness. And if that continues to be very
good, then I'm going to be even more comfortable about our
June target date. But at this point - at this point, it's really so far,
so good.
Sapna Srivastava - ThinkEquity Partners - Analyst
OK. And my last question - I apologize questions - but
manufacturing, you've obviously, you know, reduced your
manufacturing team by 90%. I mean assuming approval ...
Sapna Srivastava - ThinkEquity Partners - Analyst
So, but, I mean if you need to build it back towards the end of
the next year, I mean, how much time would you need? And,
like, also how does this impact South Carolina, you know, going
forward manufacturing plant facilities?
Thomas Moore - CEO, President - Biopure Corporation
The way we structured it, and we made some very conscious
choices on this because you can imagine there were alternate
plans which have had a more dramatic effect on manufacturing,
we structured it so that we would be able to build back quite
rapidly. We have conscientiously retained the individuals with
the highest degree of skill and experience in the organization.
And so we've done it in a way where we can really build back
quite quickly and that was an important criteria laid out i n
t h e b o a r d (ph) when w e (ph) did this. Again, this was all
done not to hit a financial target but on a strategic way to say,
"What capabilities are we going to retain? What are we going
to give up?" And that's the way we've approached it.
And ...
Sapna Srivastava - ThinkEquity Partners - Analyst
South Carolina.
Thomas Moore - CEO, President - Biopure Corporation
I'm sorry, Sapna, I miscommunicated then. I'm glad you said
that. Ninety percent of the cuts come in manufacturing, but
manufacturing force overall was reduced by I guess - I'd say it's
about 40%.
Sapna Srivastava - ThinkEquity Partners - Analyst
OK.
Thomas Moore - CEO, President - Biopure Corporation
So it's a 40% manufacturing staff reduction, but they account
for 90% of the individuals we've laid off.
Thomas Moore - CEO, President - Biopure Corporation
... so we did that across the board both in the manufacturing as
well as in our quality control and quality assurance sides where
all the - all these organizations were left staffed in a way where
we could staff up quickly.
In terms of Sumter, the Sumter Realty Group, which you know
is the organization that's actually doing the financial negotiation
with us, is engaged in active financial negotiations. We have
instructed them to continue to do that. We have not moved
away from the possibility of doing the Sumter agreement and
hopefully they will have some news for us on that in the
relatively near future, but that's not a negotiation we're engaging
in directly ourselves.
Sapna Srivastava - ThinkEquity Partners - Analyst
But do you think your manufacturing plant will also be impacted
by the same amount of delay, in terms of timeline?
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Case 1:03-cv-12628-NG
Document 110-10
Filed 03/28/2006
Page 11 of 18
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BPUR - Biopure`s Regulatory and Operating Plans
David Hoffman - Accepitor Capital Management - analyst
Thomas Moore - CEO, President - Biopure Corporation
No, we don't think so. It'll take three years from the point where
the shovel hits the ground to the point where the facility is up
and running. And because our perspective on the approvability
of the product is unchanged and because three years is a long,
long time, we still think that it makes sense to move for them
up-front.
Sapna Srivastava - ThinkEquity Partners - Analyst
And to the extent, Sumter, they're much like any other investors,
the people that they're negotiating the financial agreement with.
They want the questions answered; they want to understand
the basis of what this call is. There might be a little shock at first,
then maybe relief that we have a plan and a path moving
forward, and then it's back to business. So that's the different
perspective.
Thomas Moore - CEO, President - Biopure Corporation
Okay, thanks so much. I will say goodbye.
Okay, and just regarding the standby equity distribution
agreement. Would that be similar to the Bank of New York
agreement in structure?
Thomas Moore - CEO, President - Biopure Corporation
Yes.
David Hoffman - Accepitor Capital Management - analyst
Okay, so just to clarify, these are essentially purchasing stock
from the company at a discount. So the market profit--
Thomas Moore - CEO, President - Biopure Corporation
Actually the way it works, it's the facility which allows the
company to sell stock directly into the marketplace. There's a
very small commission, it's 1% commission. So technically sir,
you are right, it's a discount but it's only a discount of 1%. It's
not anything beyond that.
David Hoffman - Accepitor Capital Management - analyst
Unidentified Participant
So just one other question. Did the head of regulatory
R i c h m o n d (ph) , was that departure, was he terminated or
was that departure voluntary at this point?
Thanks Sapna.
Operator
Your next question comes from D a v e H o f f m a n (ph) with
A c c e p i t o r (ph) Capital Management.
David Hoffman - Accepitor Capital Management - analyst
Hi, thank you very much for taking the question. I was just
curious, what exactly was the day on which the head of
regulatory R i c h m o n d (ph) left the company.
Thomas Moore - CEO, President - Biopure Corporation
As a matter of fact, it was late last week, and to be honest with
you, I don't recall the exact day. It was late last week.
Thomas Moore - CEO, President - Biopure Corporation
Well, Howard's a respected professional so I think the precise
circumstances of hwo all this happened is sort of personal. I guess
what I will say is that was something that was reached by mutual
agreement. He did not choose to leave us, let's say.
David Hoffman - Accepitor Capital Management - analyst
Finally, if you could just give us a sense of what time any sort
of charges might be taken with the workforce reduction?
Assuming that happens by end of 2003, not including the standby
facility, just what the end of 2003 cash balance might look like?
Thomas Moore - CEO, President - Biopure Corporation
I think my CFO won't let me give you the cash balance, but
what we can say is... One, all the charges will be absorbed by
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Case 1:03-cv-12628-NG
Document 110-10
Filed 03/28/2006
Page 12 of 18
FINAL TRANSCRIPT
BPUR - Biopure`s Regulatory and Operating Plans
the end of 2003. And two, that with all those charges in, we'll
still be a position with cash currently on hand to operate through
probably through either late May or early June.
what the FDA has requested. Between now and June is a big
black box, I mean. Do you have any idea what's going to happen
until June and until the FDA accepts it afterwards?
David Hoffman - Accepitor Capital Management - analyst
Thomas Moore - CEO, President - Biopure Corporation
Right, and the facility would take you through the end of 2004?
I understand, and I'm quite sure that during this period, we'll
be providing investors with regular updates of where we think
we'll stand and how we're doing on this. The key issue is sort
of as I described: the three phases of what we have to do with
gathering the source information. First the gathering per se. And
we've allowed ourselves between two and three months to
complete the gathering process. And then data extraction and
tabulation process, and then it's just finally summarization and
the other kind of things we have to do with that. And so--
Thomas Moore - CEO, President - Biopure Corporation
Exactly.
David Hoffman - Accepitor Capital Management - analyst
Great, well thank you very much. Best of luck.
Jakar Boz - Greenberg Healthcare - Analyst
Unidentified Participant
This is Douglas. I think we can take two more questions and
then we have other obligations today. We can talk individually
after that. For those of you on the call, you may want to make
a note that our earnings call and press release are on the
December 11th. We may have other things to say before that.
But do more two more questions, and then we'll end this call.
Operator
Your next question comes from J a k a r B o z (ph) with
Greenberg Healthcare.
Jakar Boz - Greenberg Healthcare - Analyst
Hello, can you hear me?
Thomas Moore - CEO, President - Biopure Corporation
I can barely hear you but I'm listening as carefully as I can.
Jakar Boz - Greenberg Healthcare - Analyst
Okay. I just wondered if you could walk us through the
timelines and milestones between now and June that would give
the impression to the investors that these issues have been
resolved with the FDA, and that the items that the FDA would
like from you have been obtained by your research people
adequately. Whether you meet those guidelines in line with
streetevents@ccbn.com
No, I'm not asking that part of the question, we can all collect
data. But what I'm wondering is that the data and the collecting,
to begin with, is the appropriate data? That the FDA will finally
find it adequate and satisfactory?
Thomas Moore - CEO, President - Biopure Corporation
We know exactly what the FDA is looking for, and we're quite
sure we can collect it. And from that standpoint, quite frankly,
we don't have much concern about whether or not the principal
work we're doing here is the right work to do. I think the more
fundamental question that you are interested in as everyone is,
is this answering all the FDA questions. Is this going to be
everything the FDA could possibly want in order to move
forward with an action letter? The FDA has used with us
repeatedly the phrase that "This is the roadmap" for where we
need to go to move forward, and we're taking them not just at
their word but based on the repeated correspondence with them
that that in fact is exactly what we're doing.
And so we will - we will, as we develop our lists, we'll also,
we'll be working with FDA to make sure we are getting all the
issues they have, even the ones they may not - that may not be
in the letter. But at this point, what they said is hey, the letter
is everything. Give us what we ask for and we'll be moving
forward.
So that's what we're focused on. I appreciate, you know, it'd be
great to have a lot of other little milestones but it really is got
to answer all their questions and that what we're doing.
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Case 1:03-cv-12628-NG
Document 110-10
Filed 03/28/2006
Page 13 of 18
FINAL TRANSCRIPT
BPUR - Biopure`s Regulatory and Operating Plans
Jakar Boz - Greenberg Healthcare - Analyst
Unidentified Participant
OK. So are they keep us in this change recently? Because his
appreciation of what the FDA were different to what the FDA
is willing to put on writing and other receipt in writing. Were
you going to address the issues of the new regulatory person on
board?
OK. We can do one, maybe two. I know there's people at the
top of the queue that have been waiting a long time.
I'm not quite understanding why the change in management
was made if we indeed have everything down right from the
FDA already. I'm a little confused.
Operator
Thomas Moore - CEO, President - Biopure Corporation
There's absolutely no issue about his interpretation of what we
have to do and the company's interpretation or for that matter
FDA's interpretation.
It's really a very explicit roadmap.
The change there was done for issues, which are - the change
there has nothing to do with the FDA response. It has more to
do with where we feel we need to go as a company. And some
of the other strategic issues we want to address and the kind of
resources we want to bring in to expand the scope of what we're
doing.
And this was an opportune time to make that change because
we had just completed all the dialogue with FDA over
clarification on alert. A dialogue, which was very productive,
raised no new issues. Simply said, guys, sample in one field, at
least our conclusion from it was that it was in the best interest
of the shareholders not to take a sampling approach but to go
out and get it all the data.
But I really do want to emphasize, 'cause your question is one
I know that a lot have, is that this has nothing to do with the
FDA response letter. And because H o w a r d (ph) was not
managing the response process, it doesn't impact our ability to
make that response happen in a timely fashion.
If we can fit two in quickly, let's do that.
Your next question comes from K e v i n T a n g (ph) with
T a n g C a p i t a l (ph) .
Kevin Tang - Tang Capital - Analyst
Thanks for taking my question.
I'm - can we discuss a little bit, you're going to go out in the
field and gather the raw data, case report forms, et cetera. There
hasn't been much discussion about, gee, what are you going to
find in those data?
Presumably if you find something, presumably you're going out
to look to gather that data for a reason. And the reason might
be there may be potentially some discordance with the data
you've presented to the FDA?
And if so, then would that then not trigger another trial
requirement?
Thomas Moore - CEO, President - Biopure Corporation
I don't think it would trigger another trial requirement. Though
I'm, when I last checked my business card I don't work for FDA.
But we don't think it's going to show - we don't think it's going
to show any difference in the data.
But if it were to do that then I suppose the one thing we'll do
is kind of look and see if there is any difference, whether it's
significant or not. We don't expect it will be.
Jakar Boz - Greenberg Healthcare - Analyst
Kevin Tang - Tang Capital - Analyst
Thank you very much.
OK. But if there was not a possibility then of course wouldn't
be any need to go collect it, right?
Thomas Moore - CEO, President - Biopure Corporation
I'm just trying to understand why would they have you go
collect this data unless there was some suspicion that there might
be a difference?
You're welcome.
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Case 1:03-cv-12628-NG
Document 110-10
Filed 03/28/2006
Page 14 of 18
FINAL TRANSCRIPT
BPUR - Biopure`s Regulatory and Operating Plans
Thomas Moore - CEO, President - Biopure Corporation
I really can't speculate on why they'd ask us to do that. All I can
say we know, we don't think there's any difference and I'm not
sure that they think there is any difference. But they are asking
us to do that.
But what would be your capacity to launch, what is your current
manufacturing - what if your manufacturing capacity short of
building a new plant I guess is what I'm asking?
Thomas Moore - CEO, President - Biopure Corporation
Sure. The current, the machines we currently have in place give
us a capacity of about 75,000 units per year of Hemopure.
Kevin Tang - Tang Capital - Analyst
OK. And then when you re-file, that triggers a six-month or a
12-monnth-review time?
Kevin Tang - Tang Capital - Analyst
OK. And then ...
Thomas Moore - CEO, President - Biopure Corporation
If the FDA chooses to classify this is a class two resubmission,
and again I can't say what FDA would do, then that would be
a six-month response time.
Thomas Moore - CEO, President - Biopure Corporation
Even though we're doing a staff reduction, OK? The staff in
place will be continuing on projects that we have, we already
have in process, which will allow us to ultimately increase the
capacity to 95,000 or so units a year.
Kevin Tang - Tang Capital - Analyst
OK. And if they don't it would be how long?
Thomas Moore - CEO, President - Biopure Corporation
It would be less. You have your choice of six months or less.
And while that process will go on a little slower, that process
will continue going.
So our anticipation is upon approval we'll have capacity of
95,000 units a year. And we hope we will have our Sumter
facility under construction so we will heading to add an
incremental 500,000 units of capacity not too long after product
launch.
Kevin Tang - Tang Capital - Analyst
OK. So there's no way it would be more than six months?
Thomas Moore - CEO, President - Biopure Corporation
Not under FDA regulations. But I will emphasize the FDA have
lots of options to do what they feel they can do.
But under P e d u f a (ph) , at most it's six-month response time.
Kevin Tang - Tang Capital - Analyst
OK. And that's, I should think about that as kind of a 30, 30
odd million-revenue capability at launch?
Thomas Moore - CEO, President - Biopure Corporation
I think it's higher than that. I think we would say it's closer to
a $60-70 million revenue capability.
Kevin Tang - Tang Capital - Analyst
OK. OK. And then one last question and I - you probably
discussed in the past. The delays of manufacturing facility build,
obviously understandable given their capital requirements of
that and so on, give what's going on.
streetevents@ccbn.com
Kevin Tang - Tang Capital - Analyst
OK. All right. So we don't have to get in that now, but that's
assuming something like a 200% premium to blood costs?
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Case 1:03-cv-12628-NG
Document 110-10
Filed 03/28/2006
Page 15 of 18
FINAL TRANSCRIPT
BPUR - Biopure`s Regulatory and Operating Plans
Thomas Moore - CEO, President - Biopure Corporation
Kevin Tang - Tang Capital - Analyst
We could have a very interesting discussion on what blood really
costs, in our view that would represent roughly a 30-40%
premium only.
And have you factored that into your cash lasting 'til the end of
'04 scenario?
Thomas Moore - CEO, President - Biopure Corporation
Kevin Tang - Tang Capital - Analyst
OK. And the one last question and I'm needing the story, but
I'm just trying to dot all the i's here.
Is there any litigation risk in the, any litigation undergoing that
you can update us on, if there are and if not, great?
We really can't predict what'll happen with that. And so the
answer is we haven't - we haven't put in a particular figure on
that but at the same time we don't think it's appropriate.
So that's really all I can say about it at this point.
Kevin Tang - Tang Capital - Analyst
Thomas Moore - CEO, President - Biopure Corporation
There's, well there's only, there's one litigation going on and
that relates to - I'm getting a little advice here on how to exactly
how to go. It's a contractual issue, it's a contract case that's being
litigated. It has nothing to do with the conduct of the business.
So to give you a straightforward answer to your question is
there's one piece of litigation currently going on. And it is in
our 10-Q.
OK. All right. Thank you.
Thomas Moore - CEO, President - Biopure Corporation
You're welcome.
Thomas Moore - CEO, President - Biopure Corporation
OK. Let's do one last call and then we're going to have to move
on. We have other obligations that are about to start. So that'll
be it. One more please.
Kevin Tang - Tang Capital - Analyst
OK.
Operator
Thomas Moore - CEO, President - Biopure Corporation
So beyond that there is no other new litigation activity going
on.
Your final question comes from S t e v e n M a r k s (ph) with
Blue Ridge Capital.
Thomas Moore - CEO, President - Biopure Corporation
Hi, S t e v e n (ph) .
Kevin Tang - Tang Capital - Analyst
And just the timeline of that? Is it resolving in this next year or
...
Steven Marks - Blue Ridge Capital - Analyst
How are you doing?
Thomas Moore - CEO, President - Biopure Corporation
Oh, yes. Yes, this is - this is one, well I won't characterize the
case. All I'll say is it's not too complex and so I think ultimately
it's going to be - it's going to rest on the parties deciding what
they really want to do to get this out of the way.
streetevents@ccbn.com
Hey, just so I understand a little bit better, you made the point
a couple of times that how, I was just more interested in how
was the SVT of regulatory affairs not managing the process with
the FDA?
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Case 1:03-cv-12628-NG
Document 110-10
Filed 03/28/2006
Page 16 of 18
FINAL TRANSCRIPT
BPUR - Biopure`s Regulatory and Operating Plans
Thomas Moore - CEO, President - Biopure Corporation
Thomas Moore - CEO, President - Biopure Corporation
I don't think he said he wasn't managing the process.
Yes. But it's not very intimate at this point because we had the
discussions and the clarifications. The intimacy of the process
right now is here's the list of questions it's, you know,
hammered, nailed to the door like Martin Luther's principles
and now we're going to answer them.
Steven Marks - Blue Ridge Capital - Analyst
OK.
Thomas Moore - CEO, President - Biopure Corporation
He certainly was the managing the process of the FDA. What
I said is he's not managing our response, OK? Because the
response represents the work of a lot of people ranging from
our clinical folks who are out collecting this data and arraying
it and the statisticians who work with it. Our medical personnel
who are dealing with medical interpretation discussions and the
like, our manufacturing people, while we've got very few
manufacturing questions there were a few. Even our current
management people are answering candid, intimate questions
about cows, OK?
So this is not the answer in its final form will pass through
regulatory because regulatory will ultimately say yes this is the
right format, the right way to answer this question and assist
then with our total regulatory strategy. And so from that
standpoint, you need regulatory leadership.
But frankly, this is a project that requires good project
management and management from me because the answer into
these questions requires allocation of company resources and
making sure everyone's making this job one.
And so Howard was not managing that total process. He was
working with me on it. He was working with an in-house
project manager we have to do that.
But the preparation of these answers goes well beyond simple
regulatory expertise. There was expertise from all over the
company being employed. And it's a key task we have as a
company today.
So I've got to be on top of that.
Steven Marks - Blue Ridge Capital - Analyst
But he was managing the intimate process with the FDA, I take
it?
streetevents@ccbn.com
So it's not a nuance situation with FDA at this point. It's really
a delivery thing.
I mean we've already answered many of the questions. We've
got many more to finish up and that's - and that's a general
management process. It's not an FDA relationship thing 'cause
we're going to send FDA all the answers in one load.
Steven Marks - Blue Ridge Capital - Analyst
OK. And a couple more questions, you guys have said that the,
there are kind of 50 substantive questions. How long was the
letter that the FDA sent you guys?
Thomas Moore - CEO, President - Biopure Corporation
That actually was about 35 pages.
Steven Marks - Blue Ridge Capital - Analyst
OK.
Thomas Moore - CEO, President - Biopure Corporation
Which is typical in its breadth and content for a major new
product application.
Steven Marks - Blue Ridge Capital - Analyst
OK, and then on South Africa, how many or two questions
there. You guys said that the partnership has real issues. I just
wanted to delve down and to understand what some of those
issues were.
And then the second part of the question was how many units
of the original, I think it was one to 2,000 units that you all
shipped over, still remain to be used?
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Case 1:03-cv-12628-NG
Document 110-10
Filed 03/28/2006
Page 17 of 18
FINAL TRANSCRIPT
BPUR - Biopure`s Regulatory and Operating Plans
Thomas Moore - CEO, President - Biopure Corporation
Thomas Moore - CEO, President - Biopure Corporation
Sure. I'll put it in graphic terms as a businessperson, S t e v e n
(ph) you can appreciate.
Actually we had for all intents and purposes, it appeared we had,
as I've been told. I was not here on that happen, that we basically
had the approval in hand when we in fact formed this
partnership.
Imagine my reaction when my South African team says we just
paid a call on the number-two hospital chain in the private
sector in South Africa and they said quote, "So long as you have
this partner, we'll never buy a unit from you guys."
We in fact initially made the filing with another company there
called MC Pharma.
And the third biggest chain said the same thing.
Steven Marks - Blue Ridge Capital - Analyst
And in fact they said basically none of us are going to buy a unit
from you guys so long as you guys have this particular chain as
your partner. I think you'll agree this is a major commercial
issue.
Yes.
Thomas Moore - CEO, President - Biopure Corporation
The filing was done with MC Pharma, not with this partner.
So this partner is really with us on the commercial end. It was
not with us with the filing at the regulatory end.
And that's the one we're faced with.
Steven Marks - Blue Ridge Capital - Analyst
OK.
Steven Marks - Blue Ridge Capital - Analyst
But let's say how into rolled were they in getting the product
approved? I take it from my recollection they and then the, I
can't remember what they were called, the - there's another
group that sounded like they were pretty integral in getting the
process approved.
OK, and then the number of units that still remain in South
Africa?
Thomas Moore - CEO, President - Biopure Corporation
Approximately 850.
Thomas Moore - CEO, President - Biopure Corporation
That actually isn't the case. Let me say one thing about my earlier
little anecdote. I tell you this story but I want to make it clear
it is the competitive reality how business appears to be done in
South Africa.
It doesn't necessarily reflect badly on our partner as a company.
It's just the way it is.
Steven Marks - Blue Ridge Capital - Analyst
And what the original, 1,000 or 2,000?
Thomas Moore - CEO, President - Biopure Corporation
Two thousand.
So having given you that small disclaimer, S t e v e n (ph) your
question was, I apologize. Could you repeat your question?
Steven Marks - Blue Ridge Capital - Analyst
Steven Marks - Blue Ridge Capital - Analyst
OK. And then one last question for you, when you all initially
announced the FDA letter, you all said that the clock was
stopped and the FDA and you thought the FDA would respond
within a month.
I'm trying to understand how integral they, and there was a,
there was like a ...
And now that doesn't seem to be the case. I'm just trying to
understand what happened there.
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© 2003 CCBN.com, Inc. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior
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Case 1:03-cv-12628-NG
Document 110-10
Filed 03/28/2006
Page 18 of 18
FINAL TRANSCRIPT
BPUR - Biopure`s Regulatory and Operating Plans
Thomas Moore - CEO, President - Biopure Corporation
Operator
You're right, S t e v e n (ph) . I think - I think, we questioned
that closely when it occurred and we termed the letter as a
hybrid because it was, the language, frankly, was a little confusing
to us in terms of where all that stacked up.
Thank you for participating in today's teleconference. You may
now disconnect.
And because they were early in responding and because they
used the phrase we have stopped the clock, our interpretation
of that was when you stop the clock it means the clock gets
restarted.
I think now as we look at the, actually the phrase they used was
we suspended the clock. And so when you suspend something
that means you can restart it again.
As we get into how, into however the depth of the response
we got to provide and continue to have interactions with the
agency, I think it's fair to say that when we respond, they'll
restart the clock. But the clock probably won't have 30 days on
it. And frankly it'd be unreasonable to expect it could 'cause this
response is not going to be a five-page letter with a one-page
cover note.
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It's going to be much more comprehensive than that.
So I think it's fair to say that in the first couple of days of August
when we were trying to communicate this immediately and
quickly as possible, the ambiguity of the letter led us to serve
an ambiguous outlook on what it really meant.
So we tried to clarify that since.
Steven Marks - Blue Ridge Capital - Analyst
OK. Thanks for the help.
Thomas Moore - CEO, President - Biopure Corporation
Thank you, S t e v e n (ph) .
OK. So we'd like to thank everyone for joining us today. And
we look forward to talking to you soon.
Thomas Moore - CEO, President - Biopure Corporation
Thank you all very much.
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Case 1:03-cv-12628-NG
Document 110-11
Filed 03/28/2006
Page 1 of 4
Exhibit J
to PROPOSED SECOND CONSOLIDATED AMENDED COMPLAINT
Case
1:03-cv-12628-NG
Search -18 Results
-biopure
Document 110-11
Filed 03/28/2006
Page 2 of 4
Page1 of 3
TheStreet.comOctober30,2003 Thursday
Copyright 2003 TheStreet.com, Inc.
TheStreet.com
TheStreet.com
October
SECTION:
LENGTH:
30, 2003 Thursday
TECH STOCKS; Adam Feuerstein
1275 words
HEADLINE:
Time Not on Biopure's
Side
BYLINE: By Adam Feuerstein, Senior Writer; Adam Feuerstein writes regularly for ReaIMoney.com. In
keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in
TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He invites
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BODY:
This is a bonus column from Adam Feuerstein, whose commentary usually runs only on RealMoney. We're
offering it today to TheStreet.com readers. To read Adam's commentary every day, click here for information
on a free trial to RealMoney.
In two-plus years following Biopure (BPUR: Nasdaq) and its faulty experimental blood substitute Hemopure,
I've been most surprised about one thing: the capacity for some investors to remain bullish despite the
weight of evidence to the contrary.
After the torrent of bad news released by the company Thursday, I wonder how even the most obstinate of
Biopure bulls could have any confidence left at all. The credibility of Biopure management is in question,
and the odds of Hemopure's eventual approval seem more remote than ever before.
Thursday, Biopure acknowledged that it would be unable to respond until the end of June 2004 to the Food
and Drug Administration's request for additional information on Hemopure --a significant delay. The
company also fired Howard Richman, its top regulatory executive in charge of the Hemopure filing, and
announced large-scale layoffs and cost-cutting because its bank account empties out in June.
All this bad news sent Biopure
shares tumbling
Thursday $2.37, or 39%, to $3.68
That's a tough break for Biopure
shareholders,
who have loyally kept the stock price up despite years of
disappointing
delays. One shareholder,
however, who has done well recently is Biopure
co-founder,
former
CEO and current CTO Carl Rausch, who was able to sell more than $1 million worth of his Biopure
holdings
this summer
when the stock was trading
in the $7 range.
Biopure has said that Rausch's stock sales were not related at all to Hemopure's regulatory situation. But
today's announcement, coupled with Rausch's insider status, should raise new concerns about the timing of
these stock sales.
.
Biopure
executives did not return a phone call Thursday seeking further
comment.
Let's address the FDA timeline,
first. June seems a long way off, especially compared to the confident tone
management
took last Aug. 1, when it announced --rather
triumphantly
--that
the FDA had completed
its
Hemopure
review, but had requested
a bit more clinical information
before it could issue a final decision. At
that time, CEO Tom Moore told the Boston Globe that a response to the FDA would take one or two months
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to compile. Later, as fall rolled around, that timeline from Biopure
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stretched to three or four months.
Now, Biopure says that it will take 11 months from the receipt of its FDA response letter to provide the
agency with the information requested.
Back in those heady days of August, Biopure
management
assured that its relationship
with the FDA
couldn't be better. The company insisted that regulators
actually completed
its Hemopure
review one month
earlier than expected, and that it would take just 30 days to issue a final decision on the product (a hint that
it likely would approve it) once it had a chance to go over the new Hemopure
data.
Thursday, Moore acknowledged that the FDA would in fact take a lot longer than one month to issue a
decision. It will likely take at least six months, possibly even longer, Moore now says.
This means that if Biopure
can meet its new June 30 deadline for an FDA resubmission,
an answer from
regulators
wouldn't
come until the end of December 2004. But how can anyone have any confidence
in
Biopure's
timeline? The June 30 date seems entirely arbitrary,
because the company admitted
yesterday
that collecting
all the data requested by the FDA will be a time-consuming
and arduous task. Biopure
doesn't even know if all the data is collectable.
And no one knows how long the FDA will really take to
respond.
Six months?
Twelve
months?
Longer?
Why was Howard Richman fired from Biopure? Biopure said in its press release that he left the company to
"pursue other interests." But on its conference call Thursday morning, CEO Moore said, "Let's just say that
he didn't choose to leave us, per se."
Richman was Biopure's
senior vice president of regulatory
affairs, and as such, was the primary point
person dealing with the FDA. He, more than any other Biopure
executive
including
Moore, was in a position
to understand
the full extent of the agency's feelings about Hemopure and likely knew more than anyone
how much
work
would
be required
to compile
the information
requested
by regulators.
But Thursday, Biopure tells us that Richman was fired, and at arguably the most critical juncture in the
company's history. Moore offers no explanation for the firing. The company has retained an outside
consultant, David Zuchero, to take up the regulatory slack, but he's coming into a red-hot situation ice cold.
When did Biopure
really know that the work ahead of it on Hemopure was going to be far more daunting
than it first realized? It's an important question,
given the company stock sold by insiders, including former
CEO Rausch,
during
the summer
months.
On the conference call Thursday morning, Moore said the Hemopure review letter sent by the FDA to the
company on Aug. 1 contained "language that was, quite frankly, confusing to us."
At other times during the conference
call, Moore acknowledged
that the company
information
request was going to be time-consuming,
but that it was negotiating
ultimately
knew the FDA's
for short cuts, which
failed.
But if the company had come clean about its timelines in August, when it first heard back from regulators,
the company's stock price likely would be closer to today's level than the $7 to $8 range it traded at over the
summer.
The higher price benefited Biopure insiders selling stock. On various dates from Aug. 5 through Aug. 28,
while CEO Moore was telling investors how well the FDA review was progressing, Rausch sold 149,500 shares
of Biopure common stock, at prices ranging from $7 to $8 per share, with net proceeds exceeding $1.1
million. Moore also sold some company stock, as did members of the board of directors.
On its fiscal third-quarter conference call of Aug. 21, Moore addressed the issue of insider selling, saying,
"Our co-founder and Chief Technology Officer Carl Rausch is continuing to sell a relatively small portion of his
Biopure holdings in order to meet his personal financial needs. He publicly announced his intent to do so, in
~
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-biopure
Case
1:03-cv-12628-NG
Document 110-11
Filed 03/28/2006
Page 4 of 4
Page3 of 3
fact, some time ago."
Finally, Biopure,
once again, is desperately
short of cash. Even with the layoffs and cost-cutting
announced
Thursday, the company only has enough cash to last through Mayor June. Biopure
is trying to renew an
equity stand-by agreement
that would allow it to sell another $15 million in stock to the public. If successful,
the new cash would last through December 2004.
Who would actually buy Biopure stock right now? Short-sellers and arbitragers, of course, because it's an
easy way of covering at least a portion of their short sales and pocketing instant profits. "Biopure is like an
ATM," one short-seller joked to me today.
Biopure longs, especially retail investors, should keep this in mind before they argue how Biopure's
continuing ability to raise cash represents some sort of validation and confidence in its blood substitute.
In fact, Biopure could be living on borrowed time. In some perverse way, it actually benefits the company to
drag out its FDA response as long as possible, so don't be surprised to see the new June deadline get
extended once again. Right now, Biopure controls the clock, but once it responds to the FDA, regulators
gain control, and that might finally bring this long, sad story to an end.
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Case 1:03-cv-12628-NG
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Filed 03/28/2006
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Exhibit K
to PROPOSED SECOND CONSOLIDATED AMENDED COMPLAINT
Case 1:03-cv-12628-NG
Document 110-12
Filed 03/28/2006
Page 2 of 3
Page 1 of 2
Biopure Corporation(ticker: BPUR,exchange:NASDAQ) News Release-12/24/2003
Biopure Receives'Wells Notice' From Securitiesand ExchangeCommission
CAMBRIDGE, Mass.,Dec. 24 /PRNewswire-FirstCalV
--Biopure Corporation(Nasdaq:BPUR)reportedthat on December22, 2003,it
receiveda "Wells Notice" from the staff of the Securitiesand ExchangeCommission(SEC)indicating the staffs preliminary decisionto
recommendthatthe SECbring a civil injunctive proceedingagainstthe company.As permittedunderthe Wells process,Biopure
intendsto respondpromptly and thoroughlyin writing beforethe SECstaff formally decideswhat action, if any, to recommend.The
company'schief executiveofficer and its former seniorvice presidentof Regulatoryand OperationsalsoreceivedWells Notices.
Biopure believesthe noticesrelateto the company'sdisclosuresconcerningits communicationswith the Food and Drug Administration
(FDA) abouta traumastudyprotocolthe companysubmittedto the Agency in March 2003and aboutthe company'sbiologics license
application(BLA) for Hemopure(R)[hemoglobinglutamer-250 (bovine)]. The companydid not publicly discloseits communications
with the FDA aboutthe proposedtraumaprotocoland investigationalnewdrug application(IND) becauseit doesnot believe
communicationsaboutproposedclinical trials are materialprior to the initiation of a trial. This traumatrial was not initiated in the
United Statesandno productwas shippedunderthis IND. Biopure alsobelievesthat its disclosuresaboutthe BLA are accurate.The
companywill continueto cooperatewith the SECstaff.
Biopure submittedthe traumaprotocol for a PhaseII clinical trial ofHemopure for the treatmentof hemorrhagicshockcasualtiesin the
hospitalsetting,wherered blood cell transfusionsareavailable.The FDA placedthis traumaprotocol undera new IND that is separate
from the company'spreviousIND and its BLA to marketHemopurefor the treatmentof acutelyanemicadult patientsundergoing
orthopedicsurgeryand for the elimination or reductionof red blood cell transfusionsin thesepatients.The protocol soughtto administer
up to 15units of Hemopure,a proposeddosagethatwas 50 percenthigherthan administeredin previous clinical trials.
After the in-hospitaltraumaprotocolwas submittedto the FDA andthe newIND was assigned,the Agencyplaceda clinical hold on the
proposedtraumatrial dueto safetyconcerns.The FDA referredto a review of adverseeventdata from the company'sPhaseIII
orthopedicsurgerytrial, which wassubmittedin the BLA. The data from thatPhaseIII trial has beenpreviouslypresentedat medical
meetings.
In May 2003,Biopurerespondedto the FDA's clinical hold andalsofiled the responseasa BLA amendmentbecauseit discusseddata
previouslysubmittedwith the BLA. That amendmentresultedin the FDA extendingits BLA reviewperiod up to 90 days,as previously
announcedon May 30,2003. The Agencyalsorequestedthree additionalpre-clinical animalstudiesof Hemopurein consciousswineto
addressits concernsregardinghigh-volumeadministration.After the company'sresponses,
the FDA hastwice declinedto lift the
clinical hold, mostrecentlyin a letterdatedJuly 30,2003.This letteris separatefrom the FDA completeresponseletterBiopure
receivedon that datein responsein to its BLA for orthopedicsurgery.The questionsin the FDA's traumaletterwere the sameas some
of the questionsin the BLA completeresponseletterandhadtwo additionalquestions,one aboutthe company'sanalysisof age-specific
effects in individuals overage75 in the PhaseIII orthopedicsurgerytrial anda secondquestionaboutdosing.
Biopure submitteda similar studyprotocol for in-hospitaltestingofHemopurein traumapatientsto the Medicines Control Council
(MCC) in SouthAfrica. The MCC approvedthe protocol aftermodificationsincluding lowering the maximumdoseof Hemopure.In
addition,the companycontinuesto work with its traumaadvisors,includingmilitary andacademicresearchers,
to developa clinical trial
protocol, with funding from the V.S. Departmentof Defense,to testHemopurein traumapatientsin an out-or-hospitalsettingwhere
blood is not available.The companybelievesthatthe risk-benefitratio is different in the out-or-hospitalsetting.The companyhas
withdrawnthe V.S. in-hospitaltraumaprotocol thatwas on clinical hold while it continuesto developits traumaprogram.
A Biopure-requested
meetinghasbeenscheduledwith the FDA on January6, 2004,to discussthe BLA. If thereare significant
developmentsat or following this meeting,the companyintendsto reportthempromptly. Biopure still expectsto respondto the
questionsin the FDA's completeresponseletter by June30,2004.
Biopure Corporation
Biopure Corporation,headquarteredin Cambridge,Mass.,develops,manufacturersand marketsoxygentherapeutics,a new classof
pharmaceuticalsthat are intravenouslyadministeredto deliver oxygento the body'stissues.Hemopure(R)(hemoglobinglutamer-250
(bovine)], or HBOC-20l, is an investigationalproductin North America andEuropeand is approvedin SouthAfrica for the treatment
of acutelyanemicsurgicalpatientsand for the elimination,delayor reductionof red blood cell transfusionsin thesepatients.In July
2003,the U.S. Food andDrug Administration(FDA) sentBiopurea completeresponseletterregardingthe company'sbiologics license
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Page 3 of 3
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applicationto marketHemopurein the United Statesfor a similar indicationin orthopedicsurgerypatients.Biopure is currently
preparinga comprehensivewritten responseto the FDA's questions.Oxyglobin(R) [hemoglobinglutamer-200 (bovine)], or HBOC301,is the only productof its kind approvedby the FDA andthe EuropeanCommissionfor the treatmentof anemiain dogs.
Statementsin this pressreleasethat are not strictly historicalmaybe forward-lookingstatements.There canbe no assurancethat
Biopure Corporationwill be able to commerciallydevelopits oxygentherapeuticproducts,that necessaryregulatoryapprovalswill be
obtained,thatanticipatedmilestoneswill be met in the expectedtimetable,that any clinical trials will be successful,or that any
approvedproductwill fmd marketacceptanceandbe sold in the quantitiesanticipated.Actual resultsmay differ from thoseprojectedin
forward-lookingstatementsdueto risks anduncertaintiesthat exist in the company'soperationsandbusinessenvironment.Theserisks
include,without limitation, the company'sstageof productdevelopment,history of operatinglossesand accumulateddeficits,and
uncertaintiesandpossibledelaysrelatedto clinical trials, regulatoryapprovals,possiblehealthcarereform, manufacturingcapacity,
marketing,marketacceptance,competitionandthe availability of sufficientfmancingto supportoperations.The companyundertakesno
obligationto releasepublicly the resultsof anyrevisionsto theseforward-lookingstatementsto reflect eventsor circumstancesarising
afterthe datehereof.A full discussionof Biopure'soperationsand fmancialcondition,and specific factorsthat could causethe
company'sactUalperformanceto differ from currentexpectations,
canbe found on the company'sWeb site at
www.biopure.com/corporate/legal/home_legal.htm
and in the company'sfilings with the U.S. Securitiesand ExchangeCommission,
which canbe accessedin the EDGAR databaseat the SEC Web site,www.sec.gov,or throughthe Investorsectionof Biopure'sWeb
site,www.biopure.com.
Contact:DouglasSayles
Biopure Corporation
(617)234-6826
IR@biopure.com
SOURCEBiopure Corporation
12/24/2003
CONTACT: DouglasSaylesofBiopure Corporation,+ 1-617-234-6826,or IR@biopure.com
Website: http://www.biopure.com
(BPUR)
7/21/04