Biotechnology Due Diligence Playbook

Biotechnology industry-specific challenges make a complete due diligence process all the more important! With our template, you will be collecting all the necessary patents and documents to confidently assess your target. Book a playbook demo to explore — schedule a call with us and we will reach out to help you get started.

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Due Diligence

‍

What Tasks does the

Biotechnology Due Diligence Playbook

Include

Legal

An organizational chart
Governing and constitutional documents of the corporation
A list of jurisdictions in which the business is permitted to do business
Minutes of any board, shareholder, and managerial meetings
List all related party transactions
Include the firm’s policies with respect to related party transactions
Compile the CVs for all board members, managers, and vital employees
Compile all information about the capital structure of the company that is not included on the Statement of Shareholder Equity
Compile a list of all of the firm’s permits, licenses, and authorizations
Describe the firm’s compliance policies and provide any related documentation
Disclose if any officers or persons holding substantial numbers of shares qualify as Bad Actors
Disclose if the firm is currently restricted from doing business under any regulatory or legal provision
Collect any communications with a regulatory agency
Include a list of all previous product recalls and significant warranty claims

Valuation

Obtain a current, “as-is” valuation of the firm

Compliance

Look for inaccurate or misleading government or claim forms
Investigate the payment of any improper kickbacks, bribes, or benefits to healthcare providers
Investigate possible violations of the Foreign Corrupt Practices Act
Investigate all instances of impermissible, “off-label” promotion of pharmaceuticals and biologics
Examine whether the firm provides any incentives for any compliance-related violations
Review all policies and procedures involving employees and contractors of the firm with an eye towards its sales force
Review all compliance functions and personnel
Review any past instances of non-compliant conduct and the firm’s response thereto
Consider the Physicians Payments Sunshine Act and compliance of the firm therewith
Examine the firm’s treatment of “protected health information” and compliance with HIPAA
Review compliance with, and results of, FDA inspections

Marketing

Confirm all marketing materials comply with FDA regulations
Confirm if any products are covered by restricted distribution programs or a Risk Evaluation and Mitigation Strategy
Confirm if the target analyzes marketing metrics?
Confirm that any direct-to-consumer marketing is associated with an FDA advisory review request

Manufacturing Protocols

Confirm all contracts with manufacturers accord with FDA Good Manufacturing Practices
Confirm Good Manufacturing Process manual accords with FDA requirements on the subject
Review the target’s Adverse Experience Reports
Confirm that adverse experience trends were analyzed and reported on

Investigational Research

‍

Confirm adequate in vitro and in vivo research for pending or approved products has been conducted by target or by contracted labs
Confirm compliance with: Good Laboratory Practices regulation
Confirm compliance with: Care and Use of Laboratory Animals regulation
Confirm compliance with: Good Clinical Practice regulation
The identities of all sponsors
Institutional Review Board approval
Investigator statements and research agreements have been signed
Informed consent forms meet regulatory guidelines
All annual reports have been filed
Any amended protocols have been forwarded to the FDA
Any deficiency letters from the FDA have been satisfactorily resolved
If any are considered inactive
Any treatment INDs have adequate reports and records
Confirm if any clinical research has been terminated or withdrawn
Confirm if any Special Protocol Assessments have been submitted to the FDA
Confirm if any trials are being conducted in foreign countries
Confirm all clinical monitoring is being conducted in accordance with FDA regulations

Tax & Finance

Identify any deferred tax liabilities or assets and valuation allowances
Outline all transfer pricing policies
Outline all tax sharing or allocation agreements
Justify and provide a written explanation of the classification of employees and contractors
Include all tax audits conducted in recent history (up to five years prior)
Include any loss surrenders made in exchange for research and development credits
Describe property taxes paid by the firm in recent history (up to five years prior)
Describe any overseas activity
Describe any sale and leaseback transactions
Disclose any matters related to the firm under investigation by any tax authority
Disclose the tax base of any asset when it differs from its original cost
Explain the firm’s current approach to tax planning and strategy

Current Agreements

Written contracts
Verbal contracts
“Handshake agreements”
Joint venture or partnership agreements
Any contracts terminable upon a change of control of the firm
Indemnification agreements
All real estate contracts and contracts involving real property or for the insurance thereof
Employment, independent contractor, consulting, compensation, and severance agreements
Assignability
Financial terms
Length of commitment
Identify any contracts to be entered into in the near future, including: Letters of intent, Ongoing negotiations
Identify any crucial relationships with vendors, distributors, etc.
Examine all agreements with manufacturers and suppliers
The allocation of rights
The imposition of diligence requirements on the target
Non-compete limitations
Change of control provisions
Identify any contract research organizations currently used by the target and examine their confidentiality and IP provisions and practices

Intellectual Property (IP)

Compile a summary of all of the firm’s trademarks, patents, copyrights, and web domains and sites
Examine the basis and substance of all trade secrets currently held by the firm
Determine the ability of the firm to protect and keep secure and confidential its trade secrets
List all agreements and contracts under which the firm is granted the use of a third party’s intellectual property
Determine whether the firm is using IP for which the assignment of rights is incomplete or defective
Determine whether the firm is using IP developed in collaboration with, or acquired from, a third party. If so, examine the agreements that allow for use of that IP
List all agreements and contracts under which a third party is granted the use of the firm’s intellectual property
List all intellectual property used by the firm that is not solely owned by the firm
Create a summary of all intellectual property litigation involving the firm that is either concluded, ongoing, or reasonably foreseeable
List all instances in which a third party has infringed on the firm’s intellectual property (even if it did not result in litigation)
Describe the company’s process for developing and protecting its intellectual property
List all subsisting patents and their remaining terms
Compile a list of all pending patent applications and determine their likelihood of success
Determine likely ability of the firm to protect the IP of all pending patents’ should a patent be granted
Determine the eligibility of any patents for term extension
Determine the market exclusivity terms attaching to each of the firm’s products and whether those terms can be extended
For each biologic and pharmaceutical product, determine its stage in the FDA approval process and, for those products not yet approved, the likelihood of their eventual approval
Consider the likely timing and impact of the introduction of generic and biosimilar drugs on the firm’s market share and profitability

FAQ

What Is Due Diligence?

Due diligence is a critical aspect of any deal that begins very early in the process and can continue right up until closing. During due diligence, the potential buyer asks questions and requests documentation from the seller that helps the buyer understand the target company and its business. These requests are usually general to start and become more specific as the buyer develops a greater understanding of the target. Buyers use the information provided by the seller to evaluate the opportunities and risks associated with the potential transaction. It is important for sellers to stay organized throughout the process. Buyers often submit thorough, detailed request lists that require input from numerous members of the seller’s deal team.

What is a due diligence checklist?

As the name implies, a due diligence request list is a list of questions and requests for information and documentation that a buyer submits to a seller in order to learn about the target company, its business and its operations. The initial diligence request list tends to be broad and typically includes an extensive list of questions covering a wide range of subjects. This allows the buyer to gain a broad understanding of the target company and identify key issues that can be investigated and considered more closely. Because every deal is different, due diligence request lists have to be tailored to meet the needs of the buyer and address the unique circumstances of your transaction.
However, there is a variety of fundamental requests that are relevant in most deals. These are the types of requests that our templates are designed to address.

What Questions Does the Master Due Diligence Questionnaire Include?

Key considerations when using our m&a due diligence template

Our templates are drafted to provide an inclusive and wide-ranging list of initial due diligence requests. However, the templates, as well as the information contained therein, are not legal advice. They are not complete, and they are not specific to your transaction. The templates are designed to elicit general information from the seller that will provide the buyer with a broad overview of the target and it’s business and operations. You should review any template before using it, and it may need to be modified to ensure that it is suitable and relevant to your circumstances. Information provided by the seller will likely trigger additional questions that focus on specific aspects of the target’s business and issues identified during the due diligence process.

Are the requests in the template comprehensive?

No. Our Due Diligence Checklist is drafted to include typical requests that are relevant in most transactions. However, every deal and every target company is unique. Before utilizing any template, it is important that you review it with the help of your legal and other professional advisors to ensure that the requests are complete and tailored to the specific circumstances of your deal.

How to use the template with Dealroom

Start 14-day Free Trial of DealRoom and sign-up
Select a Master Due Diligence Template while creating a new room
Start assigning, adding to, and completing due diligence requests with needed documents by uploading them into the built-in virtual data room. The Requests tab is automatically populated with the requests from the due diligence template.

Can I change requests in this checklist or add new?

Every M&A process is different. Downloaders are urged to make these checklists their own by changing the providing information to better fit their needs.

Does this questionnaire provide all the necessary integration information?

This checklist was created by and for M&A professionals. It includes a comprehensive starting point for the integration process. However, every deal is different and may require additional requirements and tasks.

How to use this template with DealRoom?

Start 14-day Free Trial of DealRoom and sign-up
Select an Integration Template while creating a new workspace
Start planning, assigning, adding to, and completing integration tasks. The Requests tab is automatically populated with the tasks from the integration template.

Key considerations when using our m&a due diligence template

Are the requests in the template comprehensive?

How to use the template with Dealroom

Start 14-day Free Trial of DealRoom and sign-up
Select a Master Due Diligence Template while creating a new room
Start assigning, adding to, and completing due diligence requests with needed documents by uploading them into the built-in virtual data room. The Requests tab is automatically populated with the requests from the due diligence template.

Biotechnology Due Diligence Playbook

Download now free

This template comes with Single Project plan and above

Automate your process today with this M&A checklist.

Utilizing a checklist is just step one. In order to have a seamless process, M&A checklists need to be utilized with the proper deal workflow tool.

‍Request a demo to learn how you can turn a checklist into an automated process and workflow with the DealRoom platform. With DealRoom, you can tackle any type of due diligence.

‍

Requests

Documents

Groups

Analytics

Overview

Progress

Timeline

Filter

All Requests

Export

An organizational chart
Governing and constitutional documents of the corporation
A list of jurisdictions in which the business is permitted to do business
Minutes of any board, shareholder, and managerial meetings
List all related party transactions
Include the firm’s policies with respect to related party transactions
Compile the CVs for all board members, managers, and vital employees
Compile all information about the capital structure of the company that is not included on the Statement of Shareholder Equity
Compile a list of all of the firm’s permits, licenses, and authorizations
Describe the firm’s compliance policies and provide any related documentation
Disclose if any officers or persons holding substantial numbers of shares qualify as Bad Actors
Disclose if the firm is currently restricted from doing business under any regulatory or legal provision
Collect any communications with a regulatory agency
Include a list of all previous product recalls and significant warranty claims

Obtain a current, “as-is” valuation of the firm

Look for inaccurate or misleading government or claim forms
Investigate the payment of any improper kickbacks, bribes, or benefits to healthcare providers
Investigate possible violations of the Foreign Corrupt Practices Act
Investigate all instances of impermissible, “off-label” promotion of pharmaceuticals and biologics
Examine whether the firm provides any incentives for any compliance-related violations
Review all policies and procedures involving employees and contractors of the firm with an eye towards its sales force
Review all compliance functions and personnel
Review any past instances of non-compliant conduct and the firm’s response thereto
Consider the Physicians Payments Sunshine Act and compliance of the firm therewith
Examine the firm’s treatment of “protected health information” and compliance with HIPAA
Review compliance with, and results of, FDA inspections

Confirm all marketing materials comply with FDA regulations
Confirm if any products are covered by restricted distribution programs or a Risk Evaluation and Mitigation Strategy
Confirm if the target analyzes marketing metrics?
Confirm that any direct-to-consumer marketing is associated with an FDA advisory review request

Confirm all contracts with manufacturers accord with FDA Good Manufacturing Practices
Confirm Good Manufacturing Process manual accords with FDA requirements on the subject
Review the target’s Adverse Experience Reports
Confirm that adverse experience trends were analyzed and reported on

Confirm adequate in vitro and in vivo research for pending or approved products has been conducted by target or by contracted labs
Confirm compliance with: Good Laboratory Practices regulation
Confirm compliance with: Care and Use of Laboratory Animals regulation
Confirm compliance with: Good Clinical Practice regulation
The identities of all sponsors
Institutional Review Board approval
Investigator statements and research agreements have been signed
Informed consent forms meet regulatory guidelines
All annual reports have been filed
Any amended protocols have been forwarded to the FDA
Any deficiency letters from the FDA have been satisfactorily resolved
If any are considered inactive
Any treatment INDs have adequate reports and records
Confirm if any clinical research has been terminated or withdrawn
Confirm if any Special Protocol Assessments have been submitted to the FDA
Confirm if any trials are being conducted in foreign countries
Confirm all clinical monitoring is being conducted in accordance with FDA regulations

Identify any deferred tax liabilities or assets and valuation allowances
Outline all transfer pricing policies
Outline all tax sharing or allocation agreements
Justify and provide a written explanation of the classification of employees and contractors
Include all tax audits conducted in recent history (up to five years prior)
Include any loss surrenders made in exchange for research and development credits
Describe property taxes paid by the firm in recent history (up to five years prior)
Describe any overseas activity
Describe any sale and leaseback transactions
Disclose any matters related to the firm under investigation by any tax authority
Disclose the tax base of any asset when it differs from its original cost
Explain the firm’s current approach to tax planning and strategy

Written contracts
Verbal contracts
“Handshake agreements”
Joint venture or partnership agreements
Any contracts terminable upon a change of control of the firm
Indemnification agreements
All real estate contracts and contracts involving real property or for the insurance thereof
Employment, independent contractor, consulting, compensation, and severance agreements
Assignability
Financial terms
Length of commitment
Identify any contracts to be entered into in the near future, including: Letters of intent, Ongoing negotiations
Identify any crucial relationships with vendors, distributors, etc.
Examine all agreements with manufacturers and suppliers
The allocation of rights
The imposition of diligence requirements on the target
Non-compete limitations
Change of control provisions
Identify any contract research organizations currently used by the target and examine their confidentiality and IP provisions and practices

Compile a summary of all of the firm’s trademarks, patents, copyrights, and web domains and sites
Examine the basis and substance of all trade secrets currently held by the firm
Determine the ability of the firm to protect and keep secure and confidential its trade secrets
List all agreements and contracts under which the firm is granted the use of a third party’s intellectual property
Determine whether the firm is using IP for which the assignment of rights is incomplete or defective
Determine whether the firm is using IP developed in collaboration with, or acquired from, a third party. If so, examine the agreements that allow for use of that IP
List all agreements and contracts under which a third party is granted the use of the firm’s intellectual property
List all intellectual property used by the firm that is not solely owned by the firm
Create a summary of all intellectual property litigation involving the firm that is either concluded, ongoing, or reasonably foreseeable
List all instances in which a third party has infringed on the firm’s intellectual property (even if it did not result in litigation)
Describe the company’s process for developing and protecting its intellectual property
List all subsisting patents and their remaining terms
Compile a list of all pending patent applications and determine their likelihood of success
Determine likely ability of the firm to protect the IP of all pending patents’ should a patent be granted
Determine the eligibility of any patents for term extension
Determine the market exclusivity terms attaching to each of the firm’s products and whether those terms can be extended
For each biologic and pharmaceutical product, determine its stage in the FDA approval process and, for those products not yet approved, the likelihood of their eventual approval
Consider the likely timing and impact of the introduction of generic and biosimilar drugs on the firm’s market share and profitability

Prepare for your due diligence

DealRoom’s biotech due diligence template is designed to help teams have an efficient due diligence process from the beginning. By providing your team with a premade professional diligence checklist, you can get a jump start on fulfilling diligence requests.

The template can act as a guide for common diligence requests categories such as legal, financial, HR, IT, commercial and more. And when you use a diligence tracker inside DealRoom, everything will be in one centralized space.