CALDERWOOD & HARKNESS LLP Attorneys at Law 1401 K Street NW, Suite 900 Washington, D.C. 20005 Telephone: (202) 555-7100
MEMORANDUM
PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION
TO: Dr. Niamh Tierney, Vice President of Regulatory Affairs, Solstice Biomedical Devices Ltd. Marcus Hale, Vice President of U.S. Operations, Solstice Biomedical Inc.
FROM: Miriam Calloway, Responsible Partner, Healthcare & Life Sciences Practice Group, Calderwood & Harkness LLP Amy Whitfield, Lead Associate, Healthcare & Life Sciences Practice Group, Calderwood & Harkness LLP
DATE: May 1, 2025
RE: Review of Proposed Master Services Agreement Between Solstice Biomedical Inc. and Veltrano Clinical Research Organization Inc. for Protocol SBD-LUM-CL-001 ("LUMINA-US")
ENGAGEMENT REF. NO.: 1037-00002
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I. Executive Summary
Calderwood & Harkness LLP ("Calderwood & Harkness" or the "Firm") has completed its review of the draft Master Services Agreement ("MSA") and the associated Work Order No. 1 (the "Work Order") proposed by Veltrano Clinical Research Organization Inc. ("Veltrano CRO") for the conduct of the LUMINA-US pivotal clinical study (Protocol SBD-LUM-CL-001) (the "Study"). This memorandum sets forth our analysis, findings, and recommended revisions in connection with the proposed agreement. This memorandum is provided pursuant to the engagement letter dated April 22, 2025, and is protected by the attorney-client privilege and the work product doctrine.
Study Overview. The LUMINA-US Study is a prospective, single-arm, multicenter clinical investigation designed to evaluate sensor accuracy (as measured by Mean Absolute Relative Difference, or "MARD"), safety, and user labeling comprehension for the Solstice Lumina™ Continuous Glucose Monitoring System (the "Lumina CGM System"). The Study will enroll a total of 350 subjects — 175 individuals with Type 1 diabetes mellitus and 175 individuals with Type 2 diabetes mellitus — across six (6) clinical sites located within the United States. Enrollment, sensor wear, and data analysis are expected to span approximately six months in total.
CRO Information. The proposed CRO is Veltrano Clinical Research Organization Inc., located at 500 North Capitol Street, Suite 700, Indianapolis, Indiana 46204. The primary CRO contact designated in the draft MSA is Dr. Lisa Fontaine, Vice President of Clinical Operations.
Study Budget. The total proposed study budget under the Work Order is Four Million Two Hundred Thousand Dollars ($4,200,000), calculated on the basis of 350 subjects at Twelve Thousand Dollars ($12,000) per subject. This figure is intended to encompass all site payments, CRO management fees, monitoring costs, data management, statistical analysis, clinical study report preparation, regulatory support, and pass-through expenses.
Timeline. The planned study commencement date is September 15, 2025, with a target completion date of March 15, 2026. This timeline encompasses approximately fourteen (14) weeks of enrollment, a fourteen (14)-day sensor wear period, and approximately eight (8) weeks of data analysis and clinical study report preparation. We note that this timeline is designed to support the target submission of the 510(k) premarket notification to FDA's Center for Devices and Radiological Health ("CDRH") by April 30, 2026.
Overall Assessment. Based on our review, the draft MSA provides a generally reasonable framework for governing the CRO relationship. The proposed scope of services is broadly consistent with industry practice for a pivotal study of this nature, and the fundamental structure of the agreement — including provisions addressing term, intellectual property, confidentiality, and indemnification — is recognizable as a standard CRO agreement form. However, we have identified several material areas in which the draft MSA requires revision to adequately protect the interests of Solstice Biomedical Inc. ("SBI") and its parent entity, Solstice Biomedical Devices Ltd. ("SBD"). These areas include, but are not limited to, the scope of CRO services, payment milestone structure, intellectual property ownership, regulatory compliance obligations, data integrity requirements, insurance coverage coordination, indemnification provisions, and termination rights.
In total, we recommend fourteen (14) substantive revisions to the draft MSA, together with various conforming and clarifying edits, each of which is described in detail in the sections that follow and summarized in the table presented in Section XV of this memorandum.
II. Background and Context
A. The LUMINA-US Study
The full protocol designation for the pivotal clinical study is SBD-LUM-CL-001, with the short title "LUMINA-US." The Study is designed as a prospective, single-arm, multicenter investigation to generate clinical evidence supporting the safety and effectiveness of the Solstice Lumina™ CGM System sufficient for inclusion in a 510(k) premarket notification to FDA CDRH.
Device Under Study. The Solstice Lumina™ CGM System is a two-component continuous glucose monitoring system consisting of:
(a) Lumina C14 Implantable Sensor — a subcutaneous, 14-day wear, fourth-generation enzymatic electrochemical biosensor featuring a proprietary PtIr-4G electrode coating (platinum-iridium, fourth-generation formulation), with Bluetooth Low Energy (BLE) 5.2 wireless connectivity. The sensor is designed for insertion into the subcutaneous tissue of the posterior upper arm using a single-use applicator. The sensor is a single-use, disposable component with a labeled use life of fourteen (14) days.
(b) Lumina R7 Wearable Reader/Transmitter — an arm-worn device that receives sensor data wirelessly, provides a real-time glucose display, trend arrows, eight (8)-hour trend graphs, and configurable alerts for hypo- and hyperglycemic excursions. The Reader/Transmitter communicates with the Lumina C14 sensor via BLE 5.2 and with the companion mobile application (Lumina Mobile App v1.0.3) via BLE 5.2 and Wi-Fi (802.11 b/g/n). The Reader/Transmitter operates on Firmware v3.4.2 and Reader OS v2.1.0, and incorporates the LuminaPredict v2.1 predictive glucose algorithm.
Primary Endpoints. The primary study endpoints are as follows:
(i) Sensor Accuracy (MARD): The primary accuracy endpoint requires demonstration that the Lumina CGM System achieves a Mean Absolute Relative Difference (MARD) of ≤ 9.0% overall, as compared to reference venous blood glucose measurements obtained using a laboratory-grade analyzer (Kestrel Partners LLC Model 2900D or equivalent).
(ii) Clarke Error Grid Analysis: A minimum of 99% of all paired data points (sensor glucose reading vs. reference blood glucose measurement) must fall within Zones A and B on the Clarke Error Grid.
Additional Performance Specifications. The Study will evaluate the following performance parameters against labeled specifications:
• Measurement range: 40–400 mg/dL
• Warm-up time: ≤ 60 minutes from sensor insertion to first glucose reading
• Alert latency: ≤ 5 minutes from glucose threshold crossing to alert notification
Subject Population. The Study population consists of persons aged eighteen (18) years and older who have been diagnosed with either Type 1 or Type 2 diabetes mellitus. The Study will enroll 175 subjects with Type 1 diabetes and 175 subjects with Type 2 diabetes, for a total of 350 subjects.
Clinical Sites. A total of six (6) U.S. clinical sites will participate in the Study. Veltrano CRO is responsible for site identification, qualification, and initiation pursuant to the draft MSA.
Institutional Review Board. The central institutional review board for the Study is Clearwater Institutional Review Board LLC, located at 3200 Bayshore Boulevard, Tampa, Florida 33629, IRB Registration No. IRB-2019-04821 (registered with the U.S. Department of Health and Human Services, Office for Human Research Protections). Clearwater IRB has been selected based on its experience with medical device studies and its capacity to serve as a single IRB of record for multicenter device investigations.
IDE Status. Based on the non-invasive diagnostic nature of the device and the study design, the LUMINA-US Study is anticipated to qualify for an Investigational Device Exemption (IDE) under 21 C.F.R. § 812.2(c)(3) as a non-significant risk ("NSR") diagnostic device study. The NSR determination is subject to review by the central IRB (Clearwater IRB) and is also anticipated to be addressed during the Pre-Submission ("Pre-Sub") meeting with FDA CDRH, Office of Health Technology 2 ("OHT2"), currently targeted for August 14, 2025. We discuss the regulatory implications of a potential significant risk determination in Sections VI.B and XII.B below.
B. Parties to the Agreement
Sponsor — Solstice Biomedical Inc. The contracting Sponsor entity under the proposed MSA is Solstice Biomedical Inc. ("SBI"), a corporation organized and existing under the laws of the State of Delaware (Secretary of State File No. 7834291), with its principal place of business at 220 Westbrook Drive, Suite 400, Cambridge, Massachusetts 02142. SBI is the wholly-owned U.S. subsidiary of Solstice Biomedical Devices Ltd. ("SBD"), a company organized under the laws of Ireland (Companies Registration Office No. 648231), with its registered office in Dublin, Ireland. SBI serves as the intended holder of the 510(k) premarket notification and is the U.S. regulatory entity responsible for FDA submissions and regulatory compliance.
We note that it is critical that the MSA correctly identify SBI — not the Irish parent entity SBD — as the contracting party. Because SBI is the intended 510(k) holder and the entity responsible for all U.S. regulatory submissions and obligations, the contractual privity must reside with SBI. At the same time, the MSA should be structured to ensure that Veltrano CRO's obligations flow to the benefit of both SBI and, by extension, SBD as the ultimate parent entity. We recommend including a provision that permits SBI to assign the MSA to SBD or any other affiliate without Veltrano CRO's consent, as discussed further in Section XIV below.
CRO — Veltrano Clinical Research Organization Inc. The proposed CRO is Veltrano Clinical Research Organization Inc. ("Veltrano CRO"), an Indiana corporation with its principal office at 500 North Capitol Street, Suite 700, Indianapolis, Indiana 46204. Dr. Lisa Fontaine, Vice President of Clinical Operations, is designated as Veltrano CRO's primary contact for the Study. We have not conducted independent due diligence on Veltrano CRO's corporate standing, financial condition, or regulatory history; however, we recommend that SBI confirm Veltrano CRO's good standing in Indiana and verify that Veltrano CRO does not appear on any FDA debarment or clinical investigator disqualification lists prior to execution of the MSA.
C. Regulatory Context
The clinical data generated by the LUMINA-US Study will serve as the principal clinical evidence supporting the 510(k) premarket notification for the Lumina CGM System, which SBI plans to submit to FDA CDRH by April 30, 2026. The regulatory pathway and predicate device strategy are summarized as follows:
Regulatory Pathway. SBI will seek clearance of the Lumina CGM System via a traditional 510(k) premarket notification under Section 510(k) of the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. § 360(k). The Lumina CGM System is classified as a Class II medical device under product code QKQ, pursuant to 21 C.F.R. § 862.1355 (Interstitial Glucose Monitor).
Predicate Devices. SBI has identified the following predicate devices for purposes of the 510(k) submission:
• Primary Predicate: NovaSense GlucoTrack NX-500 (510(k) No. K211034, cleared June 18, 2022). Product code QKQ, Class II, 21 C.F.R. § 862.1355.
• Secondary Predicate: NovaSense GlucoTrack NX-700 (510(k) No. K230489, cleared March 7, 2024). Product code QKQ, Class II, 21 C.F.R. § 862.1355.
Both predicate devices are interstitial continuous glucose monitors with comparable intended use populations, sensor architectures, and performance specifications. Detailed predicate comparison charts are being prepared by Pinnacle Regulatory Consulting Group LLC as part of the 510(k) submission package.
Pinnacle Regulatory Consulting Group LLC. Pinnacle Regulatory Consulting Group LLC ("Pinnacle Regulatory") has been engaged since January 15, 2025, to provide regulatory consulting support for the 510(k) submission. The Pinnacle Regulatory team, led by Dr. Sandra Ellison (President and Principal Regulatory Consultant) and Thomas Greenbaum (Senior Regulatory Associate), is responsible for regulatory strategy development, preparation of the Pre-Sub meeting request and meeting package, and drafting of the 510(k) submission, excluding the clinical data sections. Pinnacle Regulatory will coordinate with Veltrano CRO on protocol technical content and data formatting requirements. As discussed in Section III.B below, we recommend that the MSA include a coordination protocol as an exhibit to delineate responsibilities between Veltrano CRO and Pinnacle Regulatory.
Applicable Regulatory Framework. Compliance with the following federal regulations and FDA guidance documents is critical to the integrity and regulatory acceptability of the LUMINA-US Study data:
• 21 C.F.R. Part 11 — Electronic Records; Electronic Signatures
• 21 C.F.R. Part 50 — Protection of Human Subjects
• 21 C.F.R. Part 54 — Financial Disclosure by Clinical Investigators
• 21 C.F.R. Part 56 — Institutional Review Boards
• 21 C.F.R. Part 812 — Investigational Device Exemptions
• Applicable FDA guidance documents, including guidance pertaining to integrated continuous glucose monitoring (iCGM) systems, clinical study design for CGM devices, and the use of real-world evidence in device submissions
The MSA must impose upon Veltrano CRO a binding obligation to comply with all such regulations and guidance, and must allocate responsibility between Veltrano CRO and SBI for the various regulatory compliance activities associated with the Study. Our specific recommendations in this regard are set forth in Section VI below.
III. Scope of Services
A. Summary of CRO Services in Draft MSA
The draft MSA defines the scope of services to be performed by Veltrano CRO under the Work Order in the following general categories:
1. Project Management and Study Oversight. Veltrano CRO will assign a dedicated project manager and clinical operations team to provide overall study management, including study planning, timeline management, and resource allocation. The draft contemplates regular project team meetings, although the frequency and format of such meetings are not specified.
2. Clinical Site Identification, Qualification, and Initiation. Veltrano CRO will identify, qualify, and initiate six (6) U.S. clinical sites for the Study. Site qualification activities include feasibility assessments, site qualification visits, and execution of clinical trial agreements between Veltrano CRO (on behalf of SBI) and each site.
3. Clinical Monitoring. Veltrano CRO will conduct site monitoring throughout the Study, including site initiation visits ("SIVs"), interim monitoring visits ("IMVs"), and close-out visits ("COVs"). The draft also references remote monitoring capabilities, although the scope of remote monitoring is not defined with specificity.
4. Subject Recruitment Support and Enrollment Management. Veltrano CRO will provide support for subject recruitment and enrollment management, including development of recruitment materials (subject to SBI and IRB approval), enrollment tracking, and management of the screen failure process. The draft contemplates enrollment of 350 subjects (175 Type 1 diabetes, 175 Type 2 diabetes) across the six sites.
5. Data Management. Veltrano CRO will design, build, validate, and maintain an electronic data capture ("EDC") system for the Study. The draft references data management services including case report form ("CRF") design, data entry, data cleaning, query management, and medical coding.
6. Statistical Analysis. Veltrano CRO will perform all statistical analyses specified in the Study protocol and statistical analysis plan ("SAP"), including MARD calculation, Clarke Error Grid analysis, and safety data analysis.
7. Safety Monitoring and Adverse Event Reporting. Veltrano CRO will monitor safety throughout the Study, including processing, evaluation, and reporting of adverse events ("AEs") and serious adverse events ("SAEs"). The draft references compliance with applicable reporting requirements, although it does not specify the particular reporting timelines or notification procedures in detail.
8. Clinical Study Report Drafting. Veltrano CRO will prepare a clinical study report ("CSR") in accordance with applicable regulatory requirements and in a format suitable for inclusion in the 510(k) submission.
9. Regulatory Submissions Support. Veltrano CRO will provide regulatory submissions support, including preparation and filing of IRB submissions and coordination of FDA communications as directed by SBI.
The foregoing scope is generally consistent with standard industry practice for a CRO engaged to manage a pivotal medical device clinical investigation. However, we have identified several areas in which the scope requires clarification, expansion, or refinement, as discussed in Section III.B below.
B. Recommended Revisions to Scope
Based on our review, we recommend the following revisions to the scope of services provisions of the draft MSA:
Recommendation 1: IRB Coordination. The scope of services should explicitly include Veltrano CRO's responsibility for coordinating with Clearwater Institutional Review Board LLC (IRB Registration No. IRB-2019-04821) for all IRB-related activities, including the initial submission of the study protocol, informed consent documents, and investigator brochure for IRB review and approval; submission of protocol amendments and informed consent revisions; submission of continuing review applications at the intervals required by the IRB; and reporting of adverse events, unanticipated adverse device effects, protocol deviations, and other safety information to the IRB in accordance with 21 C.F.R. Part 56 and IRB standard operating procedures. While the draft MSA references "regulatory submissions support" in general terms, it does not explicitly assign IRB coordination responsibility to Veltrano CRO. Given that Veltrano CRO is the entity with the operational relationship with the clinical sites and with day-to-day visibility into study conduct, it is appropriate and consistent with industry practice for this responsibility to be clearly assigned to the CRO, acting on behalf of SBI as the Sponsor.
Recommendation 2: Protocol Compliance and Amendment Control. The scope of services should expressly reference compliance with the specific study protocol, Solstice Protocol SBD-LUM-CL-001, and should require that any proposed amendments, modifications, or deviations from the protocol be subject to the prior written approval of SBI. The draft MSA references the Study in general terms but does not incorporate the protocol by reference or establish a formal amendment control process. Given that the protocol defines the clinical and scientific parameters of the Study — including enrollment criteria, sensor wear procedures, reference blood glucose sampling schedules, and endpoint definitions — it is essential that SBI retain control over any changes to these parameters. We recommend that the protocol be attached to the MSA as an exhibit and that the MSA include a provision requiring that any protocol amendment proposed by Veltrano CRO, a clinical investigator, or any other party be submitted to SBI for review and written approval prior to implementation, except in cases where an immediate change is necessary to protect subject safety.
Recommendation 3: 510(k) Data Preparation. The scope should include an express obligation for Veltrano CRO to support the preparation of clinical data summaries in the format required by FDA for inclusion in the 510(k) submission. This includes ensuring that all clinical data, statistical analyses, and the CSR are prepared in a manner consistent with applicable FDA guidance and that all electronic records meet the requirements of 21 C.F.R. Part 11 (Electronic Records; Electronic Signatures). The draft MSA references CSR drafting and regulatory submissions support in general terms, but does not address the specific requirements of data formatting for a 510(k) submission. Given that the LUMINA-US Study is the pivotal clinical investigation supporting the 510(k), the data generated must be in a form that is directly usable by Pinnacle Regulatory and SBI in assembling the submission package. We recommend that the MSA include specific deliverable requirements, including data tabulations, summary tables, and a CSR structured in accordance with FDA's current expectations for CGM device submissions.
Recommendation 4: Coordination with Pinnacle Regulatory Consulting Group LLC. The draft MSA does not address Veltrano CRO's role relative to SBI's other external advisors, and in particular does not delineate the respective responsibilities of Veltrano CRO and Pinnacle Regulatory Consulting Group LLC with respect to clinical and regulatory deliverables. Both entities will be working on components of the data that will ultimately be included in the 510(k) submission, and clarity regarding their respective roles is essential to avoiding gaps, duplication, or conflicts in the work product. We recommend that the MSA include, as an exhibit, a coordination protocol or responsibility matrix (sometimes referred to as a "RACI matrix") that delineates which entity is responsible for each major deliverable, including: (a) the clinical sections of the Pre-Sub meeting package; (b) the clinical data tabulations and summaries for the 510(k) submission; (c) the CSR; and (d) responses to any FDA questions or requests for additional information relating to the clinical data. The coordination protocol should also specify communication channels, meeting schedules, and escalation procedures between Veltrano CRO, Pinnacle Regulatory, and SBI.
Recommendation 5: Study Status Reporting. The MSA should include an express obligation for Veltrano CRO to provide written study status reports to SBI at defined intervals. We recommend biweekly status reports during the active enrollment period and monthly status reports during the data analysis and CSR preparation phases. Each status report should include, at a minimum: (a) enrollment status by site (subjects screened, enrolled, completed, withdrawn); (b) monitoring visit schedule and completion status; (c) data management metrics (CRFs entered, queries issued, queries resolved); (d) safety data summary (AEs and SAEs reported); (e) study timeline status and identification of any actual or anticipated delays; and (f) budget status (actual expenditures vs. budget). Copies of all status reports should be provided to Calderwood & Harkness LLP at the address set forth in this memorandum. The draft MSA references project management and study oversight in general terms but does not establish specific reporting obligations or intervals. Given the aggressive timeline and the importance of the Study data to the 510(k) submission, SBI must have regular and comprehensive visibility into study progress.
IV. Study Budget and Payment Terms
A. Budget Overview
The total proposed study budget under Work Order No. 1 is Four Million Two Hundred Thousand Dollars ($4,200,000). The budget is calculated on a per-subject basis at a rate of Twelve Thousand Dollars ($12,000) per enrolled subject, multiplied by the target enrollment of 350 subjects ($12,000 × 350 = $4,200,000). The per-subject cost of $12,000 is inclusive of all CRO activities and pass-through costs associated with that subject's participation in the Study, including but not limited to clinical site payments (investigator fees, coordinator fees, pharmacy fees, and facility fees), CRO project management and oversight fees, monitoring costs (travel, per diem, and monitor time), data management services, statistical analysis, CSR preparation, regulatory support, and pass-through expenses (laboratory costs, IRB fees, shipping and logistics, and study supplies other than the investigational device itself).
We note that the per-subject cost of $12,000 falls within the range that we have observed in comparable medical device pivotal studies involving continuous glucose monitoring systems, although the overall budget should be evaluated in the context of the specific activities required and the geographic distribution of the clinical sites. We recommend that SBI request from Veltrano CRO a detailed budget breakdown showing the allocation of the per-subject cost across the major cost categories (site fees, CRO fees, monitoring, data management, statistics, regulatory, and pass-through costs) to enable a more informed assessment of the reasonableness of the proposed budget.
B. Payment Milestone Structure in Draft MSA
The draft MSA proposes a milestone-based payment schedule under which payments are tied to the achievement of specified study milestones. Based on our review, the proposed payment milestones are structured as follows:
1. Execution Payment. A payment of approximately $630,000 (15% of total budget) upon execution of the MSA, intended to cover CRO start-up activities, including project team mobilization, EDC system design and development, and initiation of site identification and qualification activities.
2. Site Initiation Payments. Payments tied to the completion of site initiation visits at each of the six (6) clinical sites. The draft proposes a payment of approximately $420,000 (10% of total budget) upon completion of all site initiation visits.
3. Enrollment Milestones. Payments tied to the enrollment of specified numbers of subjects, structured as follows: (a) 25% enrollment (88 subjects) — approximately $630,000; (b) 50% enrollment (175 subjects) — approximately $630,000; (c) 75% enrollment (263 subjects) — approximately $420,000; and (d) 100% enrollment (350 subjects) — approximately $420,000.
4. Database Lock. A payment of approximately $420,000 (10% of total budget) upon database lock.
5. Final CSR Delivery. A payment of approximately $630,000 (15% of total budget) upon delivery of the final clinical study report.
The proposed milestone schedule reflects the anticipated study timeline: study commencement on September 15, 2025; enrollment completion in approximately late December 2025; last subject last visit in approximately mid-January 2026; database lock in approximately mid-February 2026; and study completion (final CSR delivery) by March 15, 2026. We note that the draft payment schedule is generally reasonable in its allocation of payments across the study lifecycle, with a somewhat front-loaded structure that provides Veltrano CRO with working capital during the study start-up and enrollment phases, and a back-loaded component that is withheld until delivery of the final CSR. However, we have identified several areas in which the payment terms should be revised to better protect SBI's interests, as set forth below.
C. Recommended Revisions to Payment Terms
Recommendation 6: Deliverable-Based Milestones. We recommend that payment milestones be tied to the achievement of specific, verifiable deliverables rather than to calendar dates alone. As currently drafted, certain milestones reference anticipated dates rather than the completion of specific work products or achievements. This structure creates a risk that SBI may be obligated to make payments on a time-based schedule even if Veltrano CRO has not completed the underlying work. By way of example, the site initiation payment should be contingent upon documented completion of a site initiation visit at each site, as evidenced by a signed site initiation visit report; enrollment milestones should be contingent upon confirmed enrollment of the specified number of subjects, as evidenced by executed informed consent forms and completed eligibility checklists; and the database lock payment should be contingent upon completion of database lock procedures, including resolution of all outstanding data queries. We recommend that the MSA define the specific documentation required to evidence achievement of each milestone and include a verification and acceptance process under which SBI has a defined period (e.g., ten (10) business days) to review and confirm achievement before payment is due.
Recommendation 7: Holdback Provision. We recommend the inclusion of a holdback provision under which ten to fifteen percent (10–15%) of total fees under the Work Order are retained by SBI until delivery and acceptance of the final CSR and complete transfer of all source data and study databases to SBI. At a holdback rate of 15%, the retained amount would be $630,000; at a holdback rate of 10%, the retained amount would be $420,000. The purpose of the holdback is to ensure that Veltrano CRO maintains appropriate incentive and accountability through the final deliverables phase, which is critical to the 510(k) submission timeline. The holdback should be payable within thirty (30) days following SBI's written acceptance of the final CSR and confirmation of receipt of all data transfers. We note that holdback provisions of this nature are common in CRO agreements for pivotal regulatory studies and are generally accepted in the industry.
Recommendation 8: Budget Reconciliation Mechanism. We recommend the inclusion of a quarterly budget reconciliation process under which Veltrano CRO is required to provide SBI with detailed cost reports showing actual expenditures compared to budgeted amounts, broken down by cost category. Any cost overruns that would cause total study expenditures to exceed the approved budget by more than five percent (5%) — i.e., more than $210,000 above the approved budget of $4,200,000 — should require the prior written approval of SBI. This provision protects SBI from unexpected cost escalations and ensures transparency in the management of study funds. We also recommend that the MSA include a provision requiring Veltrano CRO to notify SBI promptly upon becoming aware of any circumstance that is reasonably likely to result in a cost overrun exceeding the approved budget by more than five percent.
Recommendation 9: Pass-Through Cost Controls. We recommend that pass-through costs — including clinical site fees, laboratory costs, Clearwater IRB fees, shipping and logistics, and other third-party expenses — be itemized separately from Veltrano CRO's professional fees in the budget and in all invoices. Pass-through costs should be subject to either (a) a defined aggregate cap, or (b) a pre-approval threshold above which Veltrano CRO must obtain SBI's written consent before incurring the expense. We recommend a pre-approval threshold of Twenty-Five Thousand Dollars ($25,000) for any individual pass-through expense not specifically identified in the approved budget. Additionally, Veltrano CRO should be required to pass through third-party costs at actual cost, without markup, and to provide supporting documentation (invoices, receipts) for all pass-through costs upon request.
Recommendation 10: Currency. We recommend that the MSA expressly confirm that all payments under the agreement are denominated in United States Dollars (USD). Because SBI is a U.S. Delaware corporation and the contracting party, and because all study activities will be conducted in the United States, payment in USD is appropriate and consistent with the parties' respective business operations. We note that SBD, the Irish parent entity, reports its consolidated financial results in Euros (EUR), and that SBI reported U.S. subsidiary revenue of $22.8 million in fiscal year 2024. To avoid any ambiguity, the MSA should specify USD as the sole currency for all payments, invoices, and budget references.
V. Intellectual Property Ownership
A. Draft MSA IP Provisions
The draft MSA includes intellectual property provisions that are generally structured in a manner consistent with industry practice for CRO agreements. As drafted, the IP provisions contemplate that all study data, results, clinical study reports, and other work product generated specifically in connection with the performance of the Study will be assigned to and owned by the Sponsor. The draft includes carve-outs for Veltrano CRO's pre-existing intellectual property, including its proprietary methodologies, statistical software tools, standard operating procedures, and general know-how that existed prior to the Study and that are not specifically developed for the Study. The draft provides that such pre-existing IP remains the property of Veltrano CRO, and that to the extent any pre-existing IP is incorporated into deliverables under the MSA, SBI receives a non-exclusive, royalty-free license to use such pre-existing IP solely in connection with the Study and the 510(k) submission.
While this basic structure is appropriate, we have identified several areas in which the IP provisions require strengthening, as discussed below.
B. Recommended Revisions
Recommendation 11: Comprehensive IP Assignment. We recommend that the IP provisions be revised to provide the broadest possible assignment of study-related intellectual property to SBI, given the critical importance of the Study data to the 510(k) submission and SBI's ongoing commercial program. Specifically, the MSA should:
(a) Provide that all clinical data, databases, case report forms (both blank and completed), source data, statistical analyses, study reports, and the clinical study report generated under Protocol SBD-LUM-CL-001, together with all revisions, updates, and derivative works thereof, are the exclusive property of SBI and, by extension, SBD. These materials constitute essential components of the 510(k) submission and must be under SBI's unqualified ownership and control.
(b) Include a clear and unconditional assignment of all right, title, and interest in and to all study-specific work product — including any inventions, improvements, discoveries, or innovations conceived or reduced to practice by Veltrano CRO personnel in the course of performing the Study — from Veltrano CRO to SBI. The assignment should be effective upon creation of the work product, without the need for any further action by Veltrano CRO.
(c) Confirm that Veltrano CRO retains ownership only of its pre-existing methodologies, tools, standard operating procedures, statistical models, and general know-how that: (i) existed prior to the commencement of the Study; (ii) were developed independently of the Study; and (iii) are not specific to the Lumina CGM System or Protocol SBD-LUM-CL-001. To the extent that any such pre-existing IP is incorporated into deliverables provided to SBI under the MSA, SBI should receive a perpetual, irrevocable, worldwide, royalty-free, non-exclusive license to use, reproduce, modify, and sublicense such pre-existing IP in connection with the Lumina CGM System, the 510(k) submission, and any related regulatory submissions or commercial activities.
(d) Include a specific prohibition on Veltrano CRO's use of Solstice's proprietary information — including, without limitation, the specifications, design, and performance characteristics of the Lumina CGM System, the PtIr-4G electrode coating technology, the LuminaPredict v2.1 predictive glucose algorithm, Firmware v3.4.2, Reader OS v2.1.0, and the Lumina Mobile App v1.0.3 — for any purpose other than the performance of the Study under the MSA. This prohibition should survive termination or expiration of the MSA and should be reinforced by the confidentiality provisions discussed in Section VIII below.
Freedom-to-Operate Sensitivity. We call to the attention of Dr. Tierney and Mr. Hale the fact that a freedom-to-operate ("FTO") analysis is currently being conducted by Crestline IP Advisory LLC with respect to certain NovaSense patents. Specifically, Crestline IP Advisory is performing a claim chart analysis with respect to the following U.S. patents owned by or licensed to NovaSense Technologies Inc.:
• U.S. Patent No. 10,847,221
• U.S. Patent No. 11,234,567
• U.S. Patent No. 11,502,893
The FTO analysis and all related communications, memoranda, and claim charts are subject to the attorney-client privilege and the work product doctrine. We strongly recommend that the MSA include provisions ensuring that Veltrano CRO personnel do not have access to any FTO materials, patent landscape analyses, or patent strategy communications relating to the Lumina CGM System. The IP provisions of the MSA should be drafted to avoid any inadvertent waiver of privilege that could result from the sharing of patent-sensitive information with CRO personnel. We recommend that all information provided to Veltrano CRO regarding the Lumina CGM System be limited to the device specifications, user instructions, and protocol-related technical information necessary for the conduct of the Study, and that no patent-related materials be shared with Veltrano CRO without the prior written authorization of Calderwood & Harkness.
VI. Regulatory Compliance Obligations
A. FDA Regulatory Requirements
The draft MSA contains general provisions requiring Veltrano CRO to comply with applicable laws and regulations. However, the level of specificity is insufficient for a CRO agreement governing a pivotal clinical investigation that will support a 510(k) submission. We recommend that the MSA be revised to require Veltrano CRO to comply with the following specific regulatory requirements:
• 21 C.F.R. Part 50 — Protection of Human Subjects / Informed Consent. Veltrano CRO must ensure that all study subjects provide informed consent in accordance with Part 50 requirements prior to the performance of any study-related procedures. The informed consent process must be documented and verifiable.
• 21 C.F.R. Part 54 — Financial Disclosure by Clinical Investigators. Veltrano CRO must ensure that all clinical investigators and sub-investigators at the six study sites complete financial disclosure forms in compliance with Part 54, and that such forms are collected, reviewed for completeness, and provided to SBI for inclusion in the 510(k) submission.
• 21 C.F.R. Part 56 — Institutional Review Boards. Veltrano CRO must ensure that all study activities at each site are conducted under the oversight of an IRB that operates in compliance with Part 56, and that all required IRB approvals are obtained and maintained throughout the study.
• 21 C.F.R. Part 812 — Investigational Device Exemptions. Although the LUMINA-US Study is anticipated to qualify for an IDE exemption as an NSR diagnostic device study, the MSA should require compliance with applicable provisions of Part 812, including the requirements for NSR studies set forth in 21 C.F.R. § 812.2(b).
• 21 C.F.R. Part 11 — Electronic Records; Electronic Signatures. All electronic records generated in connection with the Study — including EDC data, electronic case report forms, audit trails, and electronic signatures — must comply with Part 11 requirements regarding validation, audit trails, record retention, and system access controls.
• Applicable FDA Guidance Documents. Veltrano CRO should be required to comply with all applicable FDA guidance documents in effect at the time of the Study, including, without limitation, guidance documents pertaining to integrated continuous glucose monitoring (iCGM) clinical studies, clinical study design for CGM devices, and the acceptance and review of clinical data in premarket submissions.
Recommendation 12: FDA Inspection Cooperation and Notification. We recommend the addition of an explicit obligation requiring Veltrano CRO to cooperate fully with any FDA inspection, including Bioresearch Monitoring (BIMO) inspections, of Veltrano CRO's facilities, any clinical site, or any other location where study activities are conducted or study records are maintained. Additionally, the MSA should require Veltrano CRO to notify SBI in writing within twenty-four (24) hours of receiving any communication from the FDA, whether directed to Veltrano CRO or to any clinical site, including but not limited to: (a) notice of an inspection; (b) inspectional observations (FDA Form 483); (c) warning letters; (d) requests for information or documentation; and (e) any other regulatory correspondence relating to the Study. Veltrano CRO should further be required to provide SBI with copies of all such communications and to consult with SBI prior to responding to any FDA communication relating to the Study. This provision is essential to ensuring that SBI, as the Sponsor, maintains full visibility into the regulatory status of the Study and is able to respond appropriately to any regulatory developments.
B. IDE Exemption Compliance
As noted above, the LUMINA-US Study is anticipated to qualify for an IDE exemption under 21 C.F.R. § 812.2(c)(3) as a non-significant risk diagnostic device study. Under this regulatory framework, the Study may proceed without a full IDE application to FDA, provided that the study is conducted in accordance with applicable regulations (including Parts 50, 56, and the abbreviated requirements of Part 812 applicable to NSR studies) and that the IRB approves the study and concurs with the NSR determination.
The NSR determination is subject to confirmation at the Pre-Sub meeting with FDA CDRH, OHT2, currently targeted for August 14, 2025. If, at that meeting or at any subsequent time, FDA determines that the LUMINA-US Study constitutes a significant risk ("SR") study, an IDE application would be required prior to commencement of the Study. An SR determination would have material implications for the study timeline and budget, including the need to prepare and submit a full IDE application, the potential for a longer FDA review period, and additional regulatory requirements applicable to SR studies (including compliance with the full requirements of 21 C.F.R. Part 812).
We recommend that the MSA address this contingency in the following ways:
(a) The MSA should include a representation by Veltrano CRO that it will conduct the Study in compliance with all requirements applicable to the risk classification determined by the IRB and/or FDA, whether NSR or SR.
(b) If FDA determines that the Study is an SR study requiring an IDE application, the MSA should provide SBI with the right to modify the scope, timeline, and budget of the Study by mutual agreement, or to terminate the MSA pursuant to the regulatory contingency termination provision discussed in Section XII.B below.
(c) The MSA should include a provision requiring Veltrano CRO to cooperate with SBI in the preparation of an IDE application, if required, at additional cost to be negotiated in good faith by the parties.
C. Financial Disclosure
The MSA must include a specific provision requiring Veltrano CRO to collect and provide to SBI financial disclosure information from all clinical investigators (and sub-investigators, as applicable) at the six study sites, in accordance with 21 C.F.R. Part 54. Financial disclosure information is a required component of the 510(k) submission and must be obtained for all investigators who participate in the Study. The MSA should specify that:
(a) Veltrano CRO is responsible for distributing FDA Form 3455 (Certification: Financial Interests and Arrangements of Clinical Investigators) and FDA Form 3454 (Disclosure: Financial Interests and Arrangements of Clinical Investigators) to all investigators and collecting completed forms.
(b) All financial disclosure forms must be provided to SBI in their original, completed form within thirty (30) days of study completion (i.e., by no later than April 14, 2026), or within thirty (30) days of study termination, whichever occurs first.
(c) Veltrano CRO must promptly notify SBI of any disclosable financial interest or arrangement identified in any investigator's financial disclosure that could require disclosure or mitigation in the 510(k) submission.
VII. Data Integrity Requirements
A. Electronic Data Capture and 21 C.F.R. Part 11 Compliance
The integrity and reliability of the clinical data generated by the LUMINA-US Study are paramount, given that these data will form the basis of the pivotal clinical evidence in the 510(k) submission. Accordingly, the MSA must include robust data integrity provisions.
Veltrano CRO is responsible under the draft MSA for providing and maintaining an electronic data capture ("EDC") system for the Study. The MSA should require that the EDC system meet the following requirements:
(a) Validation. The EDC system must be validated in accordance with 21 C.F.R. Part 11 and applicable FDA guidance prior to use in the Study. Validation documentation must be made available to SBI upon request.
(b) Audit Trails. The EDC system must maintain a complete, computer-generated, time-stamped audit trail of all data entries, modifications, and deletions. Audit trail entries must identify the individual making the change, the date and time of the change, the original value, and the new value, together with the reason for the change.
(c) Access Controls. The EDC system must implement role-based access controls, ensuring that only authorized personnel have access to study data and that access privileges are assigned based on job function. Access logs must be maintained and available for audit.
(d) Electronic Signatures. To the extent that electronic signatures are used in connection with study data (including CRF signature pages and data lock certifications), such electronic signatures must comply with the requirements of 21 C.F.R. Part 11, Subpart C.
(e) Data Backup and Disaster Recovery. Veltrano CRO must maintain a validated data backup and disaster recovery system to ensure that study data are protected against loss, corruption, or unauthorized access. Backup procedures should include, at a minimum, daily incremental backups and weekly full backups, with off-site storage of backup media.
B. Source Data Access and Transfer
SBI, as the Sponsor, must have full access to all study data throughout the Study and thereafter. The MSA should include the following provisions:
(a) Real-Time Access. SBI and its authorized designees — including Pinnacle Regulatory Consulting Group LLC, Crestline IP Advisory LLC (to the extent necessary for regulatory purposes, excluding FTO materials), and Calderwood & Harkness LLP — must have real-time, read-only access to the EDC system throughout the duration of the Study. Access should be provided via secure web-based portal with appropriate user credentials.
(b) Data Transfer Upon Completion or Termination. Upon completion of the Study, or upon termination of the MSA for any reason, Veltrano CRO must transfer all study data to SBI in agreed-upon electronic formats within thirty (30) days. The data to be transferred must include, without limitation: (i) all raw sensor data (glucose readings, timestamps, sensor calibration data); (ii) all reference blood glucose values obtained from the laboratory-grade analyzer; (iii) all electronic case report form data; (iv) all adverse event logs and safety reports; (v) all monitoring visit reports; (vi) all correspondence with clinical sites, the IRB, and regulatory authorities; (vii) the complete audit trail; and (viii) all data validation and quality assurance documentation.
(c) Data Formats. The MSA should specify the electronic formats in which data will be transferred, which should include, at a minimum: (i) SAS transport files (XPT format) or equivalent for statistical data sets; (ii) PDF for reports and narrative documents; (iii) XML for structured data elements; and (iv) native database formats as applicable. The specific data format requirements should be finalized in consultation with Pinnacle Regulatory to ensure compatibility with FDA submission requirements.
C. Data Quality and Monitoring
To ensure the quality and integrity of the Study data, we recommend that the MSA include the following data quality and monitoring provisions:
(a) Data Query Resolution Timelines. The MSA should specify maximum timelines for the resolution of data queries issued by the data management team. We recommend a maximum of five (5) business days for resolution of routine data queries and two (2) business days for resolution of safety-related queries (i.e., queries relating to adverse events, serious adverse events, or device-related complaints).
(b) Minimum Monitoring Visit Frequency. The MSA should specify the minimum frequency of on-site monitoring visits. We recommend that Veltrano CRO conduct monitoring visits at each site at least once every four (4) to six (6) weeks during the active enrollment and subject participation phases, with additional visits as warranted by enrollment volume, data quality, or regulatory developments.
(c) Source Data Verification. We recommend that the MSA specify minimum source data verification ("SDV") rates. For the first ten percent (10%) of subjects enrolled at each clinical site, we recommend 100% SDV — i.e., verification of all data points in the electronic CRF against the source documents at the clinical site. Thereafter, a minimum SDV rate of twenty-five percent (25%) should be maintained for all subsequently enrolled subjects at each site. SDV rates should be subject to increase at SBI's discretion based on data quality trends, protocol deviations, or other risk indicators.
D. Recommended Revision
Recommendation 13: Data Integrity Exhibit. We recommend that the MSA include a dedicated data integrity exhibit — separate from the general scope of services and payment provisions — that specifies in detail the data handling procedures, EDC system validation requirements, data transfer formats, data quality standards, and data retention periods applicable to the Study. This exhibit should be developed in collaboration with Veltrano CRO's data management team and should be reviewed by Pinnacle Regulatory to ensure alignment with FDA submission requirements. We recommend that the data retention period be specified as a minimum of five (5) years following the date of 510(k) clearance by FDA, or such longer period as may be required by applicable federal or state regulations, FDA guidance, or the terms of the 510(k) clearance order. All study data, including raw data, processed data, statistical analyses, and the CSR, should be subject to the data retention requirements.
VIII. Confidentiality
The draft MSA includes confidentiality provisions, but in our view these provisions require strengthening to adequately protect Solstice's proprietary and confidential information. Given the sensitivity of the technology, regulatory strategy, and commercial plans associated with the Lumina CGM System, we recommend that the confidentiality provisions be revised to include the following elements:
Scope of Confidential Information. The definition of "Confidential Information" should be broad enough to encompass all proprietary information disclosed by SBI or SBD to Veltrano CRO in connection with the Study, including without limitation:
• Device specifications, designs, drawings, and technical data relating to the Lumina C14 sensor and the Lumina R7 reader/transmitter, including the PtIr-4G electrode coating technology
• Software and firmware specifications, including Firmware v3.4.2, Reader OS v2.1.0, the LuminaPredict v2.1 predictive glucose algorithm, and the Lumina Mobile App v1.0.3
• The study protocol (SBD-LUM-CL-001) and all amendments thereto
• Regulatory strategy documents, pre-submission meeting materials, and 510(k) submission drafts
• Manufacturing processes, quality system documentation, and supplier information
• Business plans, financial information, pricing strategies, and market analyses
• The terms and conditions of the MSA and the Work Order
Permitted Disclosures. Permitted disclosures of Confidential Information should be strictly limited to:
(a) Clinical site personnel who have a legitimate need to know the information in order to perform their duties in connection with the Study, and who are bound by written confidentiality obligations at least as protective as those in the MSA;
(b) Clearwater IRB, to the extent required for IRB review and approval of the Study;
(c) Disclosures required by applicable law, regulation, or court order, provided that Veltrano CRO provides SBI with prompt written notice of the requirement (to the extent legally permissible) and cooperates with SBI in seeking a protective order or other appropriate remedy; and
(d) Veltrano CRO's employees and subcontractors who have a need to know the information in order to perform services under the MSA and who are bound by written confidentiality obligations at least as protective as those in the MSA.
Survival. The confidentiality obligations should survive expiration or termination of the MSA for a minimum period of seven (7) years, or such longer period as may be required to protect trade secrets under applicable law. Given that certain elements of the Lumina CGM System technology — particularly the PtIr-4G electrode coating and the LuminaPredict v2.1 algorithm — may constitute trade secrets, we recommend that the MSA include a carve-out providing that confidentiality obligations with respect to trade secrets survive indefinitely, or for so long as the information qualifies as a trade secret under applicable law.
Publication Restriction. Veltrano CRO should be prohibited from publishing, presenting, or otherwise publicly disclosing the results or any data from the Study without the prior written consent of SBI. Any proposed publication or presentation must be submitted to SBI for review at least sixty (60) days prior to the proposed submission or presentation date, and SBI should have the right to: (a) require removal of any Confidential Information; (b) delay publication for up to an additional ninety (90) days to permit the filing of patent applications, if applicable; and (c) withhold consent in its sole discretion.
IX. Indemnification
A. Draft MSA Indemnification Structure
The draft MSA includes a mutual indemnification provision under which each party agrees to indemnify, defend, and hold harmless the other party and its officers, directors, employees, and agents from and against third-party claims, losses, damages, liabilities, costs, and expenses (including reasonable attorneys' fees) arising from the indemnifying party's breach of the MSA, negligence, or willful misconduct. While this mutual indemnification framework is consistent with industry practice, we have identified several areas in which the indemnification provisions should be clarified, expanded, or refined to adequately allocate risk between the parties.
B. Recommended Revisions
We recommend that the indemnification provisions be restructured as follows:
SBI's Indemnification Obligations. SBI should indemnify, defend, and hold harmless Veltrano CRO and its officers, directors, employees, and agents from and against third-party claims, losses, damages, liabilities, costs, and expenses (including reasonable attorneys' fees) arising from or relating to:
(a) The design, manufacture, labeling, or packaging of the Lumina CGM System devices provided for use in the Study (i.e., product liability claims), to the extent such claims do not arise from Veltrano CRO's negligence, willful misconduct, or failure to comply with the study protocol or applicable regulations;
(b) SBI's material breach of the MSA or the study protocol;
(c) SBI's negligence or willful misconduct in connection with the Study; and
(d) The content of the study protocol, to the extent that a third-party claim arises from a deficiency in the protocol design itself (as opposed to a failure to follow the protocol).
Veltrano CRO's Indemnification Obligations. Veltrano CRO should indemnify, defend, and hold harmless SBI, SBD, and their respective officers, directors, employees, and agents from and against third-party claims, losses, damages, liabilities, costs, and expenses (including reasonable attorneys' fees) arising from or relating to:
(a) Veltrano CRO's material breach of the MSA, the study protocol, or any applicable law or regulation;
(b) Veltrano CRO's negligence or willful misconduct in connection with the performance of the Study;
(c) Failure by Veltrano CRO or its personnel to comply with the study protocol, Good Clinical Practice ("GCP"), or applicable FDA regulations, including but not limited to 21 C.F.R. Parts 50, 54, 56, 812, and 11;
(d) Negligent acts or omissions of Veltrano CRO's employees, agents, subcontractors, or other persons under Veltrano CRO's direction or control in connection with the Study; and
(e) Any claim arising from Veltrano CRO's unauthorized use or disclosure of SBI's or SBD's Confidential Information.
Carve-Outs. Neither party should be required to indemnify the other party to the extent that the underlying claim arises from or is attributable to the indemnified party's own negligence, willful misconduct, or material breach of the MSA. This mutual carve-out ensures that neither party is relieved of responsibility for its own wrongful conduct.
Indemnification Procedures. The MSA should include standard indemnification procedures, including:
(a) Prompt Notice. The indemnified party must provide written notice to the indemnifying party within thirty (30) days of becoming aware of any claim for which indemnification is sought. Failure to provide timely notice should not relieve the indemnifying party of its obligations except to the extent the indemnifying party is materially prejudiced by the delay.
(b) Cooperation. The indemnified party must reasonably cooperate with the indemnifying party in the investigation and defense of the claim, at the indemnifying party's expense.
(c) Control of Defense. The indemnifying party has the right to assume and control the defense of the claim, using counsel of its own choosing (subject to the indemnified party's reasonable approval). The indemnified party may participate in the defense at its own expense. The indemnifying party may not settle any claim without the indemnified party's prior written consent if the settlement imposes any obligation on the indemnified party (other than the payment of money covered by the indemnity) or does not include a full release of the indemnified party.
Clinical Investigator Indemnification. We note that SBI's indemnification obligations under the MSA may not extend directly to the clinical investigators and clinical sites participating in the Study. Clinical investigators typically require separate indemnification from the Sponsor as a condition of their participation. We recommend that SBI prepare and execute a separate investigator indemnification letter or clinical trial agreement with each of the six study sites. Veltrano CRO may assist in the preparation and negotiation of these agreements on behalf of SBI, but SBI should be the party providing the indemnification commitment to the investigators.
Cap on CRO Indemnification Liability. The draft MSA may propose a cap on Veltrano CRO's aggregate indemnification liability. Caps of one to two times (1x–2x) the total contract value are common in CRO agreements. We recommend that SBI negotiate for a cap no lower than two times (2x) the total fees under the Work Order, which would result in a cap of Eight Million Four Hundred Thousand Dollars ($8,400,000). A cap below this level would be insufficient given the potential magnitude of claims that could arise from a