1. Nutter McClennen & Fish LLP World Trade Center West 155 Seaport Boulevard Boston, Massachusetts 02210 Telephone 617.439.2000 www.nutter.com Massachusetts Biotechnology Council: Securities and Shareholder Liability Risk Issues Ian D. Roffman, Litigation Partner, Securities Enforcement and Litigation March 14, 2008

2. Nutter McClennen & Fish LLP www.nutter.com2 Securities and Exchange Commission Headquarters in D.C. 11 regional offices Enforcement Activity (FY07): 776 investigations initiated 656 enforcement actions brought 40% of actions brought involved public company disclosure and/or insider trading Cooperation With Other Federal Agencies Long-standing relationship with FDA FDA and SEC share information about companies

3. Nutter McClennen & Fish LLP www.nutter.com3 Securities and Exchange Commission: Focus on Information Two common sense principles: 1.Keep confidential information confidential 2.Disclose material information quickly and accurately

4. Nutter McClennen & Fish LLP www.nutter.com4 Protecting Confidential Information Goal – Avoid insider trading inquiries Loss of key personnel Costly, embarrassing, distracting Potential red flag events Corporate transactions –Mergers, acquisitions, financing Regulatory or Clinical Developments –Communications from FDA or foreign equivalents –Clinical trial results –Good and bad news

5. Nutter McClennen & Fish LLP www.nutter.com5 Protecting Confidential Information: Three Simple Rules 1.Have a written, well-publicized Insider Trading Policy 2.Require senior executive approval prior to any transactions in company securities Short window to execute transactions Should cover employee’s entire household Consider extending to all industry securities Use 10b-5-1 plans when appropriate 3.Control the flow of information Corporate transactions –Need-to-know basis only Regulatory and Clinical Developments –Get material information to the market quickly

6. Nutter McClennen & Fish LLP www.nutter.com6 Disclosure Issues Disclosure decisions depend on specific facts and circumstances When in doubt, seek advice “Material” information Securities law standards apply, not FDA standards Information is “material” if a reasonable investor would view it as having significantly altered the “total mix” of available information Be aware of events that may trigger a Disclosure Obligation Major company news –Communications from Food & Drug Regulators –Not limited to “Final” decisions –Clinical results Sale of securities Periodic reporting obligations

7. Nutter McClennen & Fish LLP www.nutter.com7 Disclosure Issues: Three (Not So) Simple Rules 1.Diverse key personnel should be involved in Disclosure Decisions People who are raising funds/speaking with investors People who are communicating with food & drug regulators People who understand scientific and clinical results 2.Form a Disclosure Committee Ensure timely and accurate disclosure of material information Assist in compliance with Sec. 302 and 404 of SOX Include senior officers and independent directors Adopt a formal charter and follow it 3.When in doubt, seek advice Independent directors In-house or outside counsel Must provide complete explanation of facts and circumstances

8. Nutter McClennen & Fish LLP www.nutter.com8 Disclosure Issues Require Continual Attention Always re-read boilerplate in periodic disclosures to ensure ongoing accuracy Have regulators told you something that changes the status of your clinical trials, product or license approvals? Do you have new safety data? Do you other new clinical data? Is your verb tense accurate? Are you raising money from public capital markets? Are there new developments that need to be disclosed?

9. Nutter McClennen & Fish LLP www.nutter.com9 Conclusion Maintain focus on compliance issues Seek advice as questions arise

10. Nutter McClennen & Fish LLP World Trade Center West 155 Seaport Boulevard Boston, Massachusetts 02210 Telephone 617.439.2000 www.nutter.com