Non-disclosure agreements (NDAs) in the pharmaceutical and biotech industry are not like standard commercial NDAs. The confidential information in a pharma NDA can include pre-clinical data, compound synthesis routes, clinical trial protocols, regulatory filing strategies, patient enrollment data, and proprietary formulation technology. The legal stakes are correspondingly higher. At Lopes Law LLC, Anthony Lopes, Esq. reviewed mutual and unilateral NDAs, CTRAs, confidentiality agreements, and redlines at Merck’s clinical trials launch department through CRO PRA Pharmaceuticals. This is not theoretical for us.

This guide explains how pharma NDAs differ from standard commercial agreements, what provisions every pharmaceutical NDA must include, the most common drafting mistakes, and how to protect your most sensitive compound data before disclosing it to any partner.

How Are Pharmaceutical NDAs Different from Commercial NDAs?

The fundamental difference between a pharma NDA and a standard commercial NDA is the nature of the information being protected and the consequences of inadequate protection. In a commercial context, a poorly drafted NDA might expose pricing information or a business strategy. In a pharma context, an inadequate NDA can expose years of preclinical research, a compound synthesis route, or proprietary clinical data that cannot be recreated.

Scope of Confidential Information

The definition of “Confidential Information” in a pharma NDA must specifically address the following categories, none of which appear in standard commercial NDA boilerplate:

• Compound data: chemical structures, synthesis routes, structure-activity relationship (SAR) data, lead compound series
• Preclinical data: in vitro and in vivo pharmacology data, toxicology studies, ADME (absorption, distribution, metabolism, excretion) data
• Clinical study reports: Phase 1, 2, and 3 clinical trial protocols, interim and final study reports, patient-level data
• Regulatory correspondence: IND applications, FDA meeting minutes, agency feedback letters, NDA/BLA filing strategies
• Safety signals: adverse event data, pharmacovigilance reports, SUSAR (suspected unexpected serious adverse reaction) data
• Manufacturing processes: synthesis procedures, formulation technology, process chemistry, scale-up data

A pharma NDA that relies on a generic catch-all definition (“all information disclosed by one party to the other”) without specifically listing these categories creates ambiguity about what is actually protected. In litigation, ambiguity favors the receiving party.

Duration of Confidentiality Obligations

Standard commercial NDAs typically have terms of 2 to 3 years. Pharmaceutical NDAs routinely have terms of 5 to 10 years for most categories of confidential information. For trade secret categories, including compound synthesis routes and manufacturing processes, the confidentiality obligation should be indefinite: it survives the NDA’s stated term as long as the information remains a trade secret. Any pharma NDA that imposes a fixed expiration on trade secret protection is inadequate.

Permitted Disclosures to Third Parties

Drug development requires sharing confidential information with multiple third parties: Contract Research Organizations (CROs), Contract Development and Manufacturing Organizations (CDMOs), regulatory affairs consultants, IRBs (Institutional Review Boards), and ECs (Ethics Committees). The NDA must explicitly permit these disclosures under appropriate conditions. If the NDA prohibits all third-party disclosure without the disclosing party’s prior written consent, development activities may technically require consent for every routine business operation.

Patent Filing Exception

A pharmaceutical company that discloses its compound data under an NDA must retain the ability to file patent applications based on that data. Without an explicit patent filing exception, the NDA can create a conflict between the company’s confidentiality obligations and its patent prosecution requirements. The exception should be narrow: it permits the disclosing party to file patent applications based on its own information but does not permit the receiving party to file patents based on the disclosed information.

What Is the Difference Between a Mutual and Unilateral Pharmaceutical NDA?

Choosing the right NDA structure for a pharma disclosure is not a formality. It affects the scope of obligations for both parties and the level of protection available to the disclosing company.

Unilateral NDA (One-Way)

In a unilateral NDA, one party (the disclosing party) shares confidential information with the other (the receiving party). Only the receiving party has confidentiality obligations. This structure is most appropriate when a biotech or pharma company is sharing compound data with a potential licensing partner, distributor, or collaborator during early-stage discussions where only one party is disclosing.

The advantage of a unilateral NDA is clarity: the disclosing party’s obligations are minimal, and all protective obligations rest on the receiving party. In a mutual NDA, both parties have obligations, which can create arguments about whether the receiving party’s own confidential information somehow reduces its obligations to protect the disclosing party’s information.

Mutual NDA (Bilateral)

A mutual NDA is appropriate when both parties will be disclosing confidential information, such as in early-stage co-development partnership discussions, M&A due diligence, or when two companies are evaluating a collaboration where each party has valuable proprietary data to share.

The risk with a mutual NDA is that the receiving party can point to the obligations flowing to both parties as justification for weaker protections. Mutual NDAs also require careful attention to whose data is subject to which provision, particularly in the definition of permitted use.

CDA (Confidential Disclosure Agreement)

In the pharmaceutical industry, you will frequently see the term “CDA” used interchangeably with “NDA.” A CDA is substantively the same document as an NDA; the label differs, but the legal structure is identical. Some companies prefer CDA because it avoids confusion with the regulatory term NDA (New Drug Application), which is the FDA filing for a new pharmaceutical product.

What Provisions Should Every Pharmaceutical NDA Include?

Beyond the standard NDA elements (definition of confidential information, obligations of the receiving party, exceptions, term), a pharmaceutical NDA requires several provisions that are either absent from or inadequately addressed in standard commercial templates.

Permitted Use Clause

The permitted use clause defines exactly what the receiving party may do with the disclosed information. In a pharma NDA, this should be tightly defined: the receiving party may use the confidential information only for the specifically stated “Permitted Purpose,” such as evaluating a potential licensing transaction or conducting due diligence for a specific acquisition. Any use beyond the Permitted Purpose is a breach of the NDA. A broad permitted use clause (“to evaluate a potential business relationship”) is too vague and can be exploited.

Standard of Care

Pharmaceutical NDAs should specify that the receiving party will protect the confidential information using at minimum the same standard of care it uses for its own most sensitive proprietary information, but no less than a reasonable standard. In a pharma context where the disclosing party’s compound data may be worth hundreds of millions of dollars, a low standard of care is inadequate.

Compelled Disclosure Provision

What happens if the receiving party receives a subpoena, regulatory request, or court order requiring disclosure of the confidential information? The NDA should require the receiving party to: (1) provide prompt written notice to the disclosing party before making any disclosure; (2) cooperate reasonably with the disclosing party’s efforts to seek a protective order or confidential treatment; and (3) disclose only the minimum amount required by the legal obligation. Without this provision, a receiving party can simply comply with a subpoena and disclose your compound data without any obligation to notify you first.

Return and Destruction of Information

Upon termination of the NDA or upon the disclosing party’s request, the receiving party must return or certify destruction of all confidential information, including all copies in any medium. Electronic copies, including email attachments, backup server copies, and cloud storage, must be addressed specifically. A destruction certificate signed by an authorized officer of the receiving party provides evidence of compliance.

What Are the Most Common Mistakes in Pharmaceutical NDAs?

After reviewing pharmaceutical NDAs across early-stage biotech, clinical-stage companies, and large pharma partnerships, the same mistakes appear consistently. These are the provisions most likely to create serious exposure if not addressed before signing.

Residuals Clause Without Carve-Outs for Compound Data

A residuals clause allows the receiving party’s personnel to use information retained in their “unaided human memory” after the permitted purpose ends without restriction. In a technology context, this can be reasonable: a software engineer who learned general coding patterns does not remember proprietary code line by line. In a pharma context, the same clause is extremely dangerous. A chemist who reviewed your compound synthesis route retains that knowledge in exactly the form the residuals clause permits. The receiving party’s scientists can use that knowledge to develop competing compounds without restriction.

The fix: negotiate deletion of the residuals clause entirely, or add explicit carve-outs that exclude compound structures, synthesis routes, biological sequences, formulation details, and clinical data from the residuals exemption.

Overly Broad “General Technical Knowledge” Exception

Some NDAs include an exception allowing the receiving party to use “general technical knowledge” or “skills and know-how” acquired during the disclosure without restriction. In a pharma context, this exception is extremely broad. A receiving party’s scientists can characterize nearly any knowledge gained from reviewing your compound data as “general technical knowledge of drug development.” Avoid this language entirely or define it narrowly to exclude all compound-specific information.

No Patent Filing Exception

As noted above, the absence of a patent filing exception can create a conflict between the disclosing party’s NDA obligations and its patent prosecution strategy. A disclosing party that files a patent application based on disclosed information without an exception could be in technical breach of its own NDA. This is particularly dangerous in early-stage biotech where patent filing timelines are critical to competitive positioning.

Failure to Address Sublicensing to CROs and CDMOs

Development-stage companies routinely need to share disclosed information with their own CROs, CDMOs, and regulatory consultants. If the NDA does not permit these disclosures, every engagement with a CRO or CDMO that involves the disclosed information requires separate consent from the disclosing party. The NDA should include a list of permitted third-party recipients (or categories of permitted recipients) with appropriate confidentiality flow-down obligations.

No Governing Law Clause for International Agreements

Pharmaceutical NDAs with international partners must include a clear choice of law and dispute resolution provision. Without a governing law clause, disputes over NDA interpretation are subject to choice-of-law analysis that can result in application of the law of a jurisdiction neither party anticipated. For international pharma NDAs, arbitration (typically ICC or AAA-ICDR) is strongly preferred over local court litigation for both enforceability and confidentiality reasons.

Client Scenario: The Residuals Clause That Almost Cost a Compound

A small biotech company shared its pre-clinical compound data with a large pharmaceutical company under a mutual NDA that included a standard residuals clause without any carve-outs for compound-specific information. The discussions concerned a potential licensing arrangement for the compound’s lead indication.

Three years after the discussions ended without a deal, the large pharma published a patent application for a related compound in the same chemical series. The patent application disclosed a synthesis route with meaningful overlap with the small biotech’s disclosed compound data. The small biotech’s in-house counsel believed the large pharma’s application was only enabled by the residuals clause, which permitted the large pharma’s scientists to use the compound knowledge they had retained from the earlier disclosure.

The resulting dispute required extensive investigation of internal emails, laboratory notebooks, and the chemistry underlying both compounds. The process took two years and significant legal fees before a resolution was reached. At Lopes Law LLC, we advise small biotech clients to negotiate the deletion or significant narrowing of residuals clauses before sharing any compound-level data, regardless of the apparent good faith of the large pharma partner.

How Should You Prepare Before Signing a Pharma NDA?

Before signing any pharmaceutical NDA, take the following steps to protect your position.

First, identify exactly what information will be disclosed. Create a specific list of the compound data, preclinical results, clinical data, or regulatory information you will share. This list determines what the NDA’s definition of confidential information must cover.

Second, assess the residuals clause. If the large pharma’s form NDA includes a residuals clause, request its deletion or a compound-specific carve-out before disclosing anything. This is a non-negotiable protection for any pre-clinical or clinical-stage compound.

Third, verify the permitted use clause. Confirm that the permitted purpose is specifically defined and that the receiving party cannot use your data for anything beyond the stated evaluation purpose.

Fourth, verify the patent filing exception exists. If the NDA is silent on patent prosecution, add an explicit exception before signing.

Fifth, confirm the sublicensing provisions address your development needs. If you will need to share the information with CROs or CDMOs during the collaboration, verify that the NDA permits this without requiring additional consent for each engagement.

For a broader discussion of cross-border pharma agreement considerations, see our guide on Cross-Border NDA and CDA Agreements. For the specific provisions governing clinical research engagements, see our post on Clinical Trial Research Agreements. For a discussion of confidentiality agreements beyond the standard NDA, see Confidentiality Agreements in Pharmaceutical Development.

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