FINANCIAL CONFLICT OF INTEREST (FCOI) POLICY

NEWLEOS THERAPEUTICS, INC.

PURPOSE; BACKGROUND

The Federal Department of Health and Human Services (HHS) has developed regulations described in 42 CFR Part 50 Subpart F and 45 CFR Part 94 that are designed to promote objectivity in research by establishing standards to ensure that the design, conduct, and reporting of research funded under all Public Health Service (PHS) grant awards is not biased by any conflicting financial interests of an “Investigator”, defined below as individuals who are planning to participate in, or who participate in research funded by PHS applications and/or awards. The regulations apply to all PHS (e.g., National Institutes of Health (NIH) funded grants, cooperative agreements, and research contracts, with the exception of Phase 1 Small Business Innovation Research (SBIR) or Small Business Technology Transfer (STTR)) applications and/or awards. In addition, the regulations serve to protect the safety of animals and human research participants, the reputation of the recipient institution and of the Investigator who participates in PHS-funded research. These regulations work together to preserve the public’s trust that the research supported by the PHS is conducted without bias and with the highest scientific and ethical standards.

The regulations place the responsibility for the identification and management of potential Investigator FCOIs with Newleos Therapeutics, Inc. (the “Company” or “NEWLEOS”), which oversees the Investigator’s activities. The NIH, as the grantor agency, has primary responsibility for overseeing compliance with these requirements, and Newleos, a recipient of NIH funding (or applicant for NIH funding) and supporter of this regulation, has responsibility for ensuring that all Investigators, including those at Subrecipient Institutions and vendors that are paid with grant funds and otherwise meet the definition of Investigators, comply with these requirements. These policies and procedures are designed to ensure compliance with the applicable regulations.

DEFINITIONS

For the purpose of these policies and procedures, the following definitions apply:

  • Designated Official (DO): The official designated by the Company to oversee the FCOI process, including solicitation and review of disclosures of significant financial interests, and identify FCOIs per the regulatory criteria provided in 42 CFR 50.604(f) and as stated within the policy below.
  • Financial Conflict of Interest (FCOI): A significant financial interest that could directly and significantly affect the design, conduct, or reporting of PHS-funded research.
  • Financial Interest: Financial Interest means anything of monetary value, whether or not the value is readily ascertainable.
  • Institution: Any domestic or foreign, public or private, entity or organization (excluding a Federal agency) that is applying for, or that receives, PHS research funding (herein, Newleos).
  • Institutional Responsibilities: Institutional responsibilities are the professional activities an Investigator performs on behalf of the Company (e.g., research, clinical development, research publication, consulting, administration, or institutional committee memberships).
  • Investigator/Co-investigator: The Project Director (PD) or Principal Investigator (PI) and any other person, regardless of title or position, who is responsible for the design, conduct, or reporting of research funded by a PHS award, or proposed for funding, which may include, for example, collaborators or consultants, and/or employees, collaborators or consultants of Newleos’ Subrecipient institution or vendors (e.g., CROs), and also includes the Investigator’s spouse and dependent children. NEWLEOS will consider the role, rather than the title, of those involved in the research and the degree of independence with which the individual works when determining who is responsible for the design, conduct, or reporting of the PHS-funded research.
  • NIH: National Institutes of Health, the biomedical research agency of the PHS.
  • PHS: The Public Health Service of the U.S. Department of Health and Human Services, and any components of the PHS to which the authority involved may be delegated, including NIH.
  • PHS-Funded Research: The term includes any such activity for which research funding is available from a PHS Awarding Component through a grant, cooperative agreement, or contract, whether authorized under the PHS Act or other statutory authority.
  • Research: Research implies a systematic investigation, study, or experiment designed to develop or contribute to generalizable knowledge relating broadly to public health, including behavioral and social sciences research. The term encompasses basic and applied research (e.g., a published article, book, or book chapter) and product development (e.g., a diagnostic test or therapeutic drug).
  • Senior/Key Personnel: Senior/Key Personnel means the PD/PI and any other person identified as Senior/Key Personnel by Newleos in the grant application, progress report, or any other report submitted to the PHS/NIH by Newleos. This term is defined only as it relates to the public accessibility requirements of identified FCOIs held by Senior/Key Personnel.
  • Significant Financial Interest (SFI): A domestic or foreign financial interest consisting of one or more of the following interests of the Investigator (and those of the Investigator’s spouse and dependent children) that reasonably appear to be related to the Investigator’s responsibilities performed on behalf of Newleos:
    • With regard to any publicly traded entity, a SFI exists if the value of any remuneration received from the entity in the twelve months preceding the disclosure and the value of any equity interest in the entity as of the date of disclosure, when aggregated, exceeds $5,000. For purposes of this definition, remuneration includes salary and any payment for services not otherwise identified as salary (e.g., consulting fees, honoraria, paid authorship); equity interest includes any stock, stock option, or other ownership interest, as determined through reference to public prices or other reasonable measures of fair market value;
    • With regard to any non-publicly traded entity, a SFI exists if the value of any remuneration received from the entity in the twelve months preceding the disclosure, when aggregated, exceeds $5,000, or when the Investigator (or the Investigator’s spouse or dependent children) holds any equity interest (e.g., stock, stock option, or other ownership interest); or,
    • With regard to intellectual property rights and interests (e.g., patents, copyrights), a SFI exists upon receipt of income of greater than $5,000 in the twelve months preceding the disclosure related to such rights and interests.
    • Investigators must disclose the occurrence of any reimbursed or sponsored travel that exceeds $5,000 (i.e., that which is paid on behalf of the Investigator and not reimbursed to the Investigator so that the exact monetary value may not be readily available) related to the Investigator’s institutional responsibilities. The initial disclosure of reimbursed or sponsored travel should include income received over the previous twelve months. The details of this disclosure will include, at a minimum, the purpose of the trip, the identity of the sponsor/organizer, the destination, and the duration. The disclosure requirement does not apply to travel that is reimbursed or sponsored by the following:
      • a federal, state, or local government agency located in the United States (US),
      • a US Institution of Higher Education (IHE),
      • an academic teaching hospital,
      • a medical center, or
      • a research institute affiliated with a US IHE

The term ‘significant financial interest’ does not include, and therefore, Investigators are not required to disclose, the following types of financial interests:

      • Salary, royalties, or other remuneration paid by NEWLEOS to the Investigator if the Investigator is currently employed or otherwise appointed by NEWLEOS, including intellectual property rights assigned to NEWLEOS and agreements to share in royalties related to such rights;
      • Any ownership interest in NEWLEOS, held by the Investigator, since NEWLEOS is a commercial or for-profit organization;
      • Income from investment vehicles, such as mutual funds and retirement accounts, as long as the Investigator does not directly control the investment decisions made in these vehicles;
      • Income from seminars, lectures, or teaching engagements sponsored by a federal, state, or local government agency located in the US, a US IHE, an academic teaching hospital, a medical center, or a research institute that is affiliated with a US IHE; and
      • Income from service on advisory committees or review panels for a federal, state, or local government agency located in the US, a US IHE, an academic teaching hospital, a medical center, or a research institute that is affiliated with a US IHE.

Foreign Financial Interests: Investigators must disclose all foreign financial interests (which include income from seminars, lectures, or teaching engagements, income from service on advisory committees or review panels, and reimbursed or sponsored travel) received from any foreign entity, including foreign Institutions of higher education or a foreign government (which includes local, provincial, or equivalent governments of another country) when such income meets the threshold for disclosure (e.g., income in excess of $5,000).

  • Subawardee: A subrecipient of federal funds that flow down from or through NEWLEOS to another individual or entity that will be conducting a substantive portion of a PHS-funded research project and is accountable to NEWLEOS for programmatic outcomes and compliance matters. Subawardees/Subrecipients include but are not limited to collaborators, consortium members, consultants, contractors, and subcontractors.

SIGNIFICANT FINANCIAL INTEREST DISCLOSURE REQUIREMENTS

  • At the time of application: The Principal Investigator and all other individuals who meet the definition of ‘Investigator’ must disclose their SFIs to the Designated Official below. Any new Investigator who, after applying to NIH for funding from NIH or during the course of the research project, plans to participate in the project must similarly disclose their SFI(s) to the Designated Official promptly and prior to participation in the project.
  • Annual Disclosure: Each Investigator who is participating in research under an NIH award must submit an updated disclosure of SFI at least annually (at least every 12 months), during the period of the award. Such disclosure must include any information that was not disclosed initially to NEWLEOS pursuant to this Policy or in a subsequent disclosure of SFI (e.g., any FCOI identified on an NIH-funded project directly as an NIH grantee and/or indirectly as a Subrecipient) that was transferred from another institution, and must include updated information regarding any previously disclosed SFI (e.g., the updated value of a previously disclosed equity interest).
  • New SFIs during the award: Each Investigator participating in PHS/NIH-funded research must submit an updated disclosure of SFI within thirty (30) days of discovering or acquiring a new SFI (e.g., through purchase, marriage, or inheritance). In addition, Investigators must submit an updated disclosure of reimbursed or sponsored travel within 30 days of each occurrence.

REVIEW OF SFI DISCLOSURES BY COMPANY’S DESIGNATED OFFICIAL

The Company’s Head of Legal is the Designated Official (DO) under these policies and procedures. All Investigators are required to fill out a FCOI Disclosure Form annually. Within 60 days of the report of an SFI, the DO will conduct reviews of SFI disclosures, and SFIs will be compared to each PHS/NIH research application and/or award on which the Investigator is identified as responsible for the design, conduct, or reporting of the research to determine if the SFI is related to the PHS/NIH-funded research and, if so, whether the SFI creates a FCOI related to that research award. The DO may request additional information or supporting documentation necessary to determine whether an SFI exists or constitutes an FCOI.

If the SFI creates a FCOI related to a research award, the DO will implement, on at least an interim basis, a management plan that shall specify the actions that have been, and will be, taken to manage the FCOI. The institution will submit the FCOI report to the NIH via the eRA Commons FCOI Module within 60 days of identifying the FCOI.

Reviews will occur at the following times:

  • Prior to the issuance of a new award: The DO will review the Investigator’s SFI(s) prior to the NIH issuing a new award and if an FCOI is identified, NEWLEOS will submit an FCOI report to the NIH prior to the expenditure of funds under the new award.
  • During the award period: The DO will conduct a review whenever an Investigator who is new to participating in the research project discloses a SFI or an existing Investigator discloses a new SFI.
  • Annual SFI disclosure: The annual disclosure will require the Investigator to disclose updated values of any previously disclosed SFIs (e.g., the updated value of a previously disclosed equity interest). The DO will review the Investigator’s annual disclosure and will use the updated information to determine if any changes are needed to an existing management plan. Any changes to the existing management plan will be reported to the NIH when the next Annual FCOI report is due, if applicable.

GUIDELINES FOR DETERMINING ‘RELATEDNESS’ OF SFI TO PHS/NIH-FUNDED RESEARCH AND A FCOI

These guidelines will be used by the DO to determine whether the SFI is a FCOI:

  • Relatedness Test: An Investigator’s SFI is “related” to the research when the DO reasonably determines the SFI:
    • could be affected by the PHS/NIH-funded research or
    • is in an entity whose financial interest could be affected by the PHS/NIH-funded research.

The DO may involve the Investigator or other Company personnel or resources in determining whether an SFI is related to the research supported by the PHS/NIH-funded award.

  • FCOI determination: A FCOI exists when the DO reasonably determines that the SFI could directly and significantly affect the design, conduct, or reporting of the PHS/NIH-funded research (“significantly” means that the financial interest would have a material effect on the research).

MANAGEMENT OF SFIs THAT ARE DETERMINED TO BE FCOIs

If a FCOI exists, the DO, in consultation with members of the Company’s management team and/or board of directors, as appropriate under the circumstances, will determine what management conditions and/or strategies will be put in place to manage the FCOI. Examples of conditions that might be imposed to manage a FCOI include, but are not limited to:

  • Public disclosure of FCOI (e.g., when presenting or publishing the research, to research personnel working on the study, to the Institution’s Institutional Review Board, Institutional Animal Care and Use Committee, Data Safety and Monitoring Board)
  • For research projects involving human subjects, disclose the FCOI directly to the participants in the Informed Consent Document
  • Appoint an independent monitor capable of taking measures to protect the design, conduct, and reporting of the research against bias resulting from the FCOI
  • Modification of the research plan
  • Change personnel or personnel responsibilities, or disqualification of personnel from
    participation in all or a portion of the research
  • Reduce or eliminate the financial interest (e.g., sale of an equity interest or other financial stake)
  • Sever the relationship(s) that created the FCOI

Once a management plan has been determined, the DO will communicate this in writing to the individual reporting the SFI, the relevant Principal Investigator/Project Director, and to the appropriate direct supervisor. The DO may impose one or more additional measures deemed reasonably necessary. No expenditures on an NIH award will be permitted until the Investigator has complied with the disclosure requirements of this Policy and has agreed, in writing, to comply with any management plans determined by the DO as necessary to manage the FCOI.

MONITORING INVESTIGATOR COMPLIANCE

During the period of an NIH-funded award, NEWLEOS will monitor the Investigators’ compliance with the management plan for the duration of the award or until the FCOI no longer exists. Monitoring public disclosure requirements will include reviewing publications and presentations to confirm that the Investigator disclosed the FCOI in such communications. To facilitate additional monitoring, Investigators will be required to disclose the FCOI in writing to research personnel in the study and send a copy of the communication to the DO.

PUBLIC ACCESSIBILITY OF FCOI POLICY AND INFORMATION RELATED TO A FCOI

FCOI Policy: A copy of the FCOI policy shall be posted and maintained on NEWLEOS’ public website per the NIH requirements in the NIH Grants Policy Statement Section 4.1.10 – Financial Conflicts of Interest.

Identified FCOIs held by Senior/Key Personnel: Prior to the expenditure of any funds under an NIH award, NEWLEOS will ensure public accessibility via a written response within five business days of a request for information concerning any SFI disclosed that meets the following three criteria:
1. The SFI was disclosed and is still held by the Senior/Key Personnel;
2. The Institution has determined that the SFI is related to the NIH-funded research; and
3. The Institution determines that the SFI is a FCOI.

The information that NEWLEOS will make available via a publicly accessible website or in a written response to any request within five days of request will include, at a minimum, the following:
• The Investigator’s name
• The Investigator’s title and role with respect to the research project
• The name of the entity in which the SFI is held
• The nature of the SFI
• The approximate dollar value of the SFI in the following ranges: $0-$4,999; $5,000-$9,999; $10,000-$19,999; amounts between $20,000-$100,000 by increments of $20,000; amounts above $100,000 by increments of $50,000, or a statement that the interest is one whose value cannot be readily determined through reference to public prices or other reasonable measures of fair market value.

Should NEWLEOS choose to use a publicly accessible website to comply with the public disclosure requirements of the Regulation, the information posted will be updated at least annually and within sixty days of receipt or identification of information concerning any additional SFI of the Senior/Key Personnel for the NIH-funded research project that had not been previously disclosed, or upon the disclosure of a SFI by Senior/Key Personnel new to the NIH- funded research project, if it is determined by the DO that the SFI is related to the research and is a FCOI.

Information concerning an individual’s SFI, as limited by this Policy, will remain available for responses to written requests or for posting via NEWLEOS publicly accessible website for at least three years from the date that the information was most recently updated.

REPORTING OF FINANCIAL CONFLICTS OF INTEREST

The DO will serve as the FCOI Signing Official (SO) and has the authority to submit FCOI reports to the NIH within the eRA Commons FCOI Module. Reports are filed when a grant or cooperative agreement is active and an FCOI is identified (i.e., no award – no FCOI and no FCOI – no FCOI report).

NEWLEOS will provide to NIH a FCOI report compliant with NIH regulations regarding any Investigator’s SFI found to be an FCOI, and will ensure that the Investigator has agreed to and implemented the corresponding management plan.

A FCOI Module User Guide is available to assist in submitting reports to the NIH.

The reports are submitted:
• Prior to the Expenditure of Funds: when an FCOI is identified upon the issuance of a new NIH award
• Within 60 Days of Identifying a new FCOI During an Award Period: when an FCOI is identified during the period of an NIH-funded award, for example, a new SFI is identified for an Investigator who is newly participating in the NIH-funded research.
• Revision (or Mitigation): following the completion of a retrospective review, if new information is discovered or a Mitigation Report, if bias is found.
• Annually: at the same time as the Research Performance Progress Report or multi-year progress report is due while the award is ongoing (including any extensions with or without funds), that addresses the status of the previously reported FCOI (i.e., an indication whether the FCOI is still being managed or if it no longer exists) and any changes in the management plan, if applicable.

TRAINING REQUIREMENTS

Each Investigator will be informed about NEWLEOS’s FCOI Policy and be trained on the Investigator’s responsibility to disclose foreign and domestic SFIs per this policy and of the FCOI regulation at 42 CFR Part 50 Subpart F. FCOI training will occur prior to an Investigator engaging in PHS/NIH-funded research, at least every four years and immediately (as defined below) when any of the following circumstances apply:

• NEWLEOS revises this Policy, or procedures related to this Policy, in any manner that affects the requirements of Investigators;

• An Investigator is new to NEWLEOS research under an NIH award (training is to be completed prior to his/her participation in the research); or

• NEWLEOS finds that an Investigator is not in compliance with this Policy or a management plan issued under this Policy (training is to be completed within 30 days in the manner specified by the DO).

In fulfillment of the FCOI training requirement of the FCOI regulation, NEWLEOS requires its Investigators to complete the NIH’s Financial Conflict of Interest Tutorial in accordance with the requirements and expectations of this Policy. All Investigators must print a certification of completion at the end of training and retain it for audit purposes. Additionally, NEWLEOS also requires its Investigators to acquaint themselves with the NIH Virtual Seminar Presentation containing helpful information on developing or refining institutional FCOI policies to ensure compliance with the FCOI regulation.

FAILURE TO COMPLY WITH THE FCOI POLICY

Whenever NEWLEOS identifies an SFI that was not disclosed, identified, reviewed or managed in a timely manner, the DO will, within 60 days, (i) review the SFI, (ii) determine whether the SFI is related to research, (iii) determine whether an FCOI exists, and, if so, (iv) implement, on at least an interim basis, a management plan that shall specify the actions that have been, and will be, taken to manage such FCOI going forward. NEWLEOS will also submit an FCOI report to the PHS/NIH via the eRA Commons FCOI Module, all as described above in this Policy.

In addition, when NEWLEOS determines that an FCOI was not identified or managed in a timely manner, including:
• failure by the Investigator to disclose an SFI that is determined by the Institution to constitute an FCOI;
• failure by the Institution to review or manage such an FCOI; or
• failure by the Investigator to comply with a management plan;

NEWLEOS will within 120 days of determining non-compliance:
• Complete a retrospective review of the Investigator’s activities and the PHS/NIH-
funded research project to determine whether any NIH-funded research, or portion thereof, conducted during the period of the noncompliance was biased in the design, conduct, or reporting of research
• Document the retrospective review consistent with this Policy and the Regulation

If bias is found, NEWLEOS shall notify NIH promptly and submit a Mitigation Report per the Regulation and consistent with this Policy to NIH via the eRA Commons FCOI Module that shall address the impact of the bias on the research project, and NEWLEOS’s plan of action or actions taken to eliminate or mitigate the effect of the bias.

Thereafter, the DO shall submit FCOI reports annually to NIH in accordance with the Regulations, the terms and conditions of the award agreement, and this Policy. Depending on the nature of the FCOI, the DO may determine that additional interim measures are necessary with regard to the Investigator’s participation in the research project between the date that the FCOI is identified and the completion of NEWLEOS’s independent retrospective review. If bias is not found, no further action is required.

CLINICAL RESEARCH REQUIREMENTS

If HHS determines that one of its funded clinical research projects whose purpose is to evaluate the safety or effectiveness of a drug, medical device, or treatment, has been designed, conducted or reported by an Investigator with a FCOI that was not managed or reported, the NEWLEOS shall require the Investigator involved to disclose the FCOI in each public presentation of the results of the research and to request an addendum to previously published presentations.

SUBRECIPIENT REQUIREMENTS

Subrecipients are subject to NEWLEOS’s terms and conditions of this Policy, and as such, NEWLEOS will take reasonable steps to ensure that any Subrecipient Investigator is in compliance with the federal FCOI regulation at 42 CFR Part 50 Subpart F.

NEWLEOS will incorporate, as part of a written agreement with the Subrecipient, terms that establish whether NEWLEOS’s FCOI Policy or that of the Subrecipient’s institution will apply to the Subrecipient Investigator(s).

If the Subrecipient’s FCOI policy applies to the Subrecipient Investigator, the Subrecipient institution will certify as part of the agreement with NEWLEOS that its policy is in compliance with the federal FCOI regulation. In this situation, the agreement shall specify the time period for the subrecipient to report all identified FCOIs to NEWLEOS in sufficient time to enable NEWLEOS to provide timely FCOI reports, as necessary, to PHS/NIH as required by the Regulation. Therefore, the written agreement may establish a reporting requirement of FCOIs identified during the period of an award to be submitted to NEWLEOS within 50 or 55 days of the subrecipient’s identification of an FCOI to allow NEWLEOS to report the FCOI within the 60 -day period. The DO will submit the Subrecipient FCOI report to the NIH via the e RA Commons FCOI Module.

If the Subrecipient cannot provide the certification of compliance with the FCOI regulation, the agreement shall state that the Subrecipient Investigator is subject to NEWLEOS’s FCOI Policy for disclosing SFI(s) that are directly related to the Subrecipient’s work for NEWLEOS
Therefore, NEWLEOS will require the submission of all Subrecipient Investigator disclosures of SFIs to NEWLEOS. The agreement will include sufficient time period(s) to enable NEWLEOS to comply timely with its review, management, and reporting obligations under the Regulation. When an FCOI is identified, NEWLEOS will develop a management plan, monitor Subrecipient Investigator compliance with the plan, and submit an FCOI Subrecipient report to the NIH through the eRA Commons FCOI Module for any FCOIs identified for a Subrecipient Investigator.

MAINTENANCE OF RECORDS

NEWLEOS will keep all records of all Investigator disclosures of FCOIs and the review of, or response to, such disclosure (whether or not a disclosure resulted in the NEWLEOS’s determination of a FCOI), and all actions under this Policy or retrospective review, if applicable. Records of FCOIs and any resulting action will be maintained by the NEWLEOS for at least three years from the date of submission of the final expenditures report or, where applicable, from other dates specified in 45 C.F.R. 75.361 for different situations. NEWLEOS will retain records for each competitive segment as provided in the regulation.

ENFORCEMENT ACTIONS: FAILURE TO COMPLY WITH THIS POLICY

Compliance with this Policy is a condition of employment and/or participation in PHS/NIH-funded research for all applicable Investigators. Therefore, Investigators who fail to comply with this policy are subject to discipline, including letters of reprimand, restriction on the use of funds, termination of employment or contract, and/or disqualification from further participation in any PHS/NIH-funded research, etc., as may be deemed appropriate.

POINT OF CONTACT

For any questions related to this FCOI Policy or to disclose a financial interest, contact:

Newleos Legal Department, Attn: Head of Legal
800 Boylston Street, Suite 1715
Boston, Massachusetts 02199
(781) 809-2392
LegalNotices@Newleos.com

For any questions related to FCOI compliance to the Regulations and other FCOI-related questions, contact: FCOIcompliance@mail.nih.gov