throbber
Case: 1:16-cv-00651 Document #: 136 Filed: 08/07/18 Page 1 of 103 PageID #:5127
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`91
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`IN THE UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF ILLINOIS
`EASTERN DIVISION
`
`1 2 3 4 5 6 7 8 9
`
`Docket Nos. 16 C 651
` 17 C 7903
`
`Chicago, Illinois
`July 16, 2018
`1:30 p.m.
`
`)))))))))
`
` HOSPIRA, INC.,
`
`Plaintiff,
`
`vs.
`
` FRESENIUS KABI USA, LLC,
`
`Defendant.
`
`VOLUME 1B
`TRANSCRIPT OF PROCEEDINGS - Bench Trial
`BEFORE THE HONORABLE REBECCA R. PALLMEYER
`
`APPEARANCES:
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`For the Plaintiff:
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`For the Defendant:
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`Also Present:
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`Court Reporter:
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`JENNER & BLOCK LLP
`BY: MR. BRADFORD P. LYERLA
`MR. YUSUF ESAT
`MR. AARON A. BARLOW
`MR. REN-HOW H. HARN
`MS. SARA T. HORTON
`353 North Clark Street
`Chicago, Illinois 60654
`
`SCHIFF HARDIN LLP
`BY: MR. IMRON T. ALY
`MR. JOEL M. WALLACE
`MS. TARA L. KURTIS
`MR. KEVIN M. NELSON
`233 South Wacker Drive, Suite 6600
`Chicago, Illinois 60606
`
`SCHIFF HARDIN LLP
`BY: MR. AHMED M.T. RIAZ
`666 Fifth Avenue, 17th Floor
`New York, New York 10103
`
`Mr. Michael P. Bauer, Hospira
`Mr. Ryan Daniel, Fresenius Kabi
`Mr. Ali Ahmed, Fresenius Kabi
`
`CHARLES R. ZANDI, CSR, RPR, FCRR
`Official Court Reporter
`219 S. Dearborn Street, Suite 2138
`Chicago, Illinois 60604
`
`

`

`Case: 1:16-cv-00651 Document #: 136 Filed: 08/07/18 Page 2 of 103 PageID #:5128
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`92
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`(Proceedings heard in open court:
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`MS. HORTON: Your Honor, before we recall Mr. Lankau,
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`I had a matter to address with the Court.
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`THE COURT: Okay.
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`MS. HORTON: I've spoken or asked Mr. Aly over break
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`if we could perhaps call Dr. Roychowdhury now, given the time
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`constraints, and do Mr. Lankau's cross later, the issue being
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`this: Long ago, Dr. Roychowdhury, who's the inventor, who is
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`no longer an employee, actually works for a competitor, told
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`us she was available on July 16th. They wanted to call her in
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`their case. They're planning to and calling her adversely.
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`Counsel committed to her getting on and off the stand
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`today. Given the time of day it is already, I'm worried that
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`that won't happen, so I've asked Mr. Aly if it would be okay
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`to call her out of order. Given that it's a bench trial, I
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`think it would be okay.
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`MR. ALY: And, your Honor, it's only two witnesses,
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`Lankau's cross and Roychowdhury. That's all that's left. So
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`I don't see the time issue. It's kind of unfair for
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`Mr. Lankau to be waiting for his cross overnight and then
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`having that finished. And that's also in their control
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`however long that's going to be. Whatever their cross is, I
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`don't know how long it is, and they could still have plenty of
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`time left for Roychowdhury adverse and the redirect.
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`MR. NELSON: Your Honor, on a related point there,
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`Case: 1:16-cv-00651 Document #: 136 Filed: 08/07/18 Page 3 of 103 PageID #:5129
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`93
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`we've done something to actually expedite this issue. We
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`actually took -- your Honor heard something about an
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`offer-for-sale issue. I think the characterization of that
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`was a little bit unfair. We took that issue off the plate.
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`We want to streamline this case. We think that the IND sale
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`issue is something that the Court benefited from Mr. Lankau's
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`testimony as somebody who is in the pharmaceutical industry
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`and deals with these agreements all the time.
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`We took the offer-for-sale issue off to streamline
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`this issue. We think that gets rid of not only one issue in
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`the case. We think it gets rid of this UCC issue as well that
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`the Court heard about during the pretrial conference. There's
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`no reason to talk about the UCC. There's no reason for
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`Professor White to testify.
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`So, that's why we think, again, Mr. Aly's point,
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`Mr. Imron Aly's point, we think we can get this done today.
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`That's what we're trying to do.
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`THE COURT: If we can't get them both done in a day,
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`then we're inconveniencing either one witness or the other;
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`and I don't know why one witness's inconvenience is greater
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`that the other's.
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`MS. HORTON: The one witness is a non-employee
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`witness, not an expert, not a paid expert, which is
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`Mr. Lankau. The witness that I'm talking about is
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`Dr. Roychowdhury, who's a non-party witness, who's agreeing to
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`Case: 1:16-cv-00651 Document #: 136 Filed: 08/07/18 Page 4 of 103 PageID #:5130
`Lankau - cross by Mr. Lyerla
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`94
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`be here to testify in their case in chief and for us. She
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`works at Amgen in Massachusetts, and --
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`THE COURT: But presumably --
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`MR. LYERLA: Could I say something, your Honor?
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`THE COURT: Sure.
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`MR. LYERLA: So, Mr. Lankau is a compensated witness.
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`THE COURT: And you're not compensating this witness,
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`is that what you're saying?
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`MS. HORTON: Right.
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`MR. LYERLA: Yeah, that's what we're saying. But
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`more than that, we fronted this and asked them to take
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`Roychowdhury first. Lankau could have testified at any time
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`during the trial. He's available -- he's under contract with
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`them. He's engaged by them. He's available at any time.
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`It's really not an inconvenience for him in any genuine sense.
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`And Miss Roychowdhury, who is --
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`THE COURT: How do we know what he's got scheduled
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`for tomorrow? Let's put Mr. Lankau on the stand.
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`Mr. Lankau, you may resume the witness stand. I'll
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`remind you, sir, that you're under oath.
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`THE WITNESS: Yes.
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`PETER A. LANKAU, DEFENDANT'S WITNESS, DULY SWORN.
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`CROSS-EXAMINATION
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`BY MR. LYERLA:
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`Q. Mr. Lankau, you have next to you some notebooks that
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`Case: 1:16-cv-00651 Document #: 136 Filed: 08/07/18 Page 5 of 103 PageID #:5131
`Lankau - cross by Mr. Lyerla
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`95
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`contain documents that I may ask you about. Feel free to
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`refer to them as you wish. We'll also be pulling things up on
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`the screen, and maybe that will help this go a little faster.
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`And as you may now be aware, speed all of a sudden has become
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`more important than it was before.
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`MS. KURTIS: Excuse me. We don't have any cross
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`binders.
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`MR. LYERLA: Oh, you don't have the binders? I'm
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`sorry.
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`(Bench conference, not reported.)
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`THE COURT: Go ahead.
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`MR. LYERLA: All right. Sorry for that, Mr. Lankau.
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`BY MR. LYERLA:
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`Q. So, you don't claim to have any UCC expertise, is that
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`correct?
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`A. That's correct.
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`Q. And you're not contending that the transaction involving
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`the IND in the '94 agreement is a transaction that would fall
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`within the purview of the Uniform Commercial Code?
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`A. No, I'm not.
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`Q. Same for the sale, in quotes, of the IND in 2004?
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`A. Can you rephrase the question, please?
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`Q. Are you contending that the sale in 2004 that you say
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`involved the IND is a sale that would fall within the purview
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`of the Uniform Commercial Code?
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`Case: 1:16-cv-00651 Document #: 136 Filed: 08/07/18 Page 6 of 103 PageID #:5132
`Lankau - cross by Mr. Lyerla
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`96
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`A. No, I'm not saying that. I didn't have any reference to
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`UCC at all, and I'm not an expert in it.
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`Q. Good. Thank you.
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`A. So, I couldn't characterize that.
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`Q. And you don't have any science expertise, either, isn't
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`that correct?
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`A. I do have a Bachelor's of Science in biology.
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`Q. Okay. In your deposition, you said that, "I'm not a
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`chemist."
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`A. That's correct.
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`Q. That's it. Okay.
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`A. That's correct.
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`Q. Now, do you understand what a preclinical study is?
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`A. Yes, I do.
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`Q. What is a preclinical study?
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`A. A preclinical study is a study that's performed typically
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`on animals for various purposes.
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`Q. And preclinical studies ordinarily are done before an IND
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`is applied for, isn't that correct?
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`A. Sometimes they're done in advance, and sometimes they're
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`done after.
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`Q. In any event, when they're done, they are in -- the
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`information related to the preclinical is included in the IND,
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`is it not?
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`A. Yes, it is.
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`Case: 1:16-cv-00651 Document #: 136 Filed: 08/07/18 Page 7 of 103 PageID #:5133
`Lankau - cross by Mr. Lyerla
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`97
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`Q. Now, to move from preclinical studies to studies with
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`human beings, a pharma company must obtain an IND first,
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`correct?
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`A. Yes. In order to initiate human clinical trials, an IND
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`must be issued.
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`Q. When a pharmaceutical company applies for an IND, it is
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`customary to submit its preclinical studies documentation
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`together with the investigation -- Investigational New Drug
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`application, correct?
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`A. That's correct.
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`Q. Now, the IND in this case that was applied for in 1989
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`includes a two-page preprinted form; am I correct?
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`A. I believe that that's correct. I have not seen the IND,
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`so I cannot comment on that.
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`Q. Well, I thought at your deposition you said that you
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`looked at the IND, but not carefully, or words to that effect?
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`A. Yes. I had looked at the -- at the initial submission
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`document, but I did not go into the details of the IND. I was
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`not given access to it.
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`Q. You were not given access to it?
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`A. No.
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`Q. So, you were asked to give an opinion whether the IND had
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`been licensed or sold, but you weren't allowed to look at the
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`IND?
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`A. Well, the fact that the IND was licensed or sold is
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`Case: 1:16-cv-00651 Document #: 136 Filed: 08/07/18 Page 8 of 103 PageID #:5134
`Lankau - cross by Mr. Lyerla
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`98
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`irrelevant to what's in the content of the IND. An IND is a
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`government document. There's standard procedures for filing
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`them. And it doesn't matter whether or not there's four pages
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`or 4,000 pages in an IND.
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`Q. Well, in your direct testimony, I think you said that the
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`IND is a compilation of information that is known about
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`dexmedetomidine at least at the time that the IND is
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`submitted; is that what you said?
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`A. That is correct.
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`Q. And I think you said that the IND includes non-clinical
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`information, correct?
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`A. What I said is that an IND, not the dexmed IND.
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`Q. Oh, you don't know if the dexmed IND includes --
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`A. I would absolutely assume it contains a significant amount
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`of non-clinical data because that's the basis for which you're
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`going into clinical.
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`Q. So, you made that assumption when you gave your opinion,
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`that the IND -- that the dex IND included non-clinical
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`information, is that right?
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`A. Well, as I said, I didn't need to look at the IND
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`particularly to know what was in it to opine on the fact of
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`whether or not an IND is the subject of a sale according to
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`the contract.
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`Q. Well, did you make an assumption that the IND in this case
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`included non-clinical information?
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`Case: 1:16-cv-00651 Document #: 136 Filed: 08/07/18 Page 9 of 103 PageID #:5135
`Lankau - cross by Mr. Lyerla
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`99
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`A. INDs always include non-clinical information.
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`Q. So, you assumed that this one did, too?
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`A. Of course.
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`Q. And did you assume that this one included preclinical
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`information?
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`A. I would assume so, yes.
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`Q. And did you assume that it included clinical information?
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`A. I believe this one did include clinical information from
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`conduct of studies outside of the United States.
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`Q. I'm sorry. I couldn't hear the end of that answer. Would
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`you say it again?
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`A. I said I believe that this IND would have included
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`clinical studies data from conduct outside of the United
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`States.
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`Q. But it also would include the proposal for the clinical
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`studies that Farmos was planning to conduct when it submitted
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`the IND, wouldn't it?
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`A. That, I don't know.
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`Q. Okay. Well, let's look at the IND. You have a copy of it
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`in front of you in the big binder.
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`MS. KURTIS: Your Honor, I object. This is outside
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`the scope. He said he hasn't seen the IND. He wasn't asked
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`about the contents of the IND during his direct.
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`THE COURT: Overruled.
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`BY MR. LYERLA:
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`Case: 1:16-cv-00651 Document #: 136 Filed: 08/07/18 Page 10 of 103 PageID #:5136
`Lankau - cross by Mr. Lyerla
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`100
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`Q. So, let's look at the IND. It's JTX 35. And I'm sorry,
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`Mr. Lankau, but it's a big document. It's actually in three
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`folders -- three binders. Pardon me. If you can find the
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`first binder, I want to ask you about the first few pages of
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`the IND.
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`And you're free to look at the binders, of course;
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`but if you want to get through this a little bit faster, you
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`can also rely on what's on the screen. Do you see what's on
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`the screen?
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`A. Yes, I do.
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`Q. All right. What is the first page of the exhibit?
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`A. It appears to be page 1 of an Investigational New Drug
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`application.
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`Q. Okay. And that's a preprinted form from the FDA, correct?
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`A. Yes, Form 1571.
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`Q. And the applicant fills out Form 1571 and submits it to
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`the FDA when applying for an IND, correct?
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`A. That would be correct.
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`Q. Now, the preprinted form -- check me to make sure that I'm
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`right. The preprinted form is only two pages, right?
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`A. Yes, it appears to be.
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`Q. Now, the rest of what is in the IND is identified in the
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`table of contents, which follows immediately after the IND;
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`am I right?
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`A. That's what I see, yes.
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`Case: 1:16-cv-00651 Document #: 136 Filed: 08/07/18 Page 11 of 103 PageID #:5137
`Lankau - cross by Mr. Lyerla
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`101
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`Q. All right. And the table of contents tells us what the
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`rest of these 2,000-plus pages includes, correct?
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`A. It appears to be a summary of what content is behind it,
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`yes.
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`Q. I'm sorry. One second.
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`Pardon me. All right. So, when we look at the table
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`of contents, which begins on JTX 35.3, we see that certain
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`sections are required -- or are -- pardon me, are included in
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`the information included in the IND, is that correct?
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`A. I see that there are sections included on the table of
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`contents, yes.
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`Q. Okay. So, look back at JTX 35.2. That's the second page
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`of the preprinted form. Do you see it?
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`A. Yes.
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`Q. And on the second page of the preprinted form, there's a
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`box that includes a section called, "Contents of Application."
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`Do you see that?
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`A. Yes.
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`Q. And somebody has checked all the boxes. So, there are
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`10 boxes, and it looks like every one of them is checked.
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`Do you see that?
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`A. Yes, I do.
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`Q. All right. And would you confirm that those 10 boxes
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`that have been checked on the preprinted form correspond
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`to the 10 sections that are identified in the table of
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`Case: 1:16-cv-00651 Document #: 136 Filed: 08/07/18 Page 12 of 103 PageID #:5138
`Lankau - cross by Mr. Lyerla
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`102
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`contents of this IND.
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`A. It appears to correspond.
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`Q. All right. So, can we conclude, then, that this IND, the
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`dex IND, includes the usual information that is required to be
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`submitted to the FDA in conjunction with an IND application?
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`A. So, just to be clear, this application has a number of
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`sections that are to be checked off.
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`Q. Yes.
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`A. Not every box for every IND needs to be checked off --
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`Q. Understood.
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`A. -- in order for it to be submitted to the agency.
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`Q. That's helpful. But this particular IND is one where
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`every box was checked off.
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`A. I see the check marks, yes.
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`Q. Okay. So, if everything was checked off, then can we
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`safely conclude that there's non-clinical information included
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`in this IND?
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`A. As I said earlier, I believe that that would be the case,
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`yes.
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`Q. And can we safely conclude that there's preclinical
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`information included in this IND?
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`A. I would say that that's the case, yes.
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`Q. And can we safely conclude that there's clinical
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`information included in this IND?
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`A. Yes, there is, at least according to the box checked
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`Case: 1:16-cv-00651 Document #: 136 Filed: 08/07/18 Page 13 of 103 PageID #:5139
`Lankau - cross by Mr. Lyerla
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`103
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`No. 9.
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`Q. Well, and look at the table of contents, because that
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`helps, too, right? The table of contents describes in greater
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`detail what's included.
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`The table of contents, for the record, appears on
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`pages 33 -- sorry, 35.3 through 35.6, for the record, correct?
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`A. Yes, it is.
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`Q. Now, when you look at the table of contents, do you see
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`anything that's not either non-clinical data, clinical data,
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`or preclinical data?
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`A. No, I don't.
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`Q. All right. So, the entirety of this 2,000-plus pages is
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`either non-clinical data, clinical data, or -- which one did
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`I leave out -- preclinical data, correct?
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`A. It appears that that's the case, yes.
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`Q. Now, if we wanted to know how the contract treats -- the
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`'94 contract treats preclinical data, clinical data, and
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`non-clinical data, where would we look?
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`A. Well, you'd certainly look at the IND as a portion of
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`that, but not all information that was signed to in 1994 would
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`have been part of the 1989 submission.
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`Q. Well, we're talking about the '89 submission right now,
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`and let's confine our questions to that.
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`A. But --
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`Q. So, where would we look in the '94 agreement to see how
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`Case: 1:16-cv-00651 Document #: 136 Filed: 08/07/18 Page 14 of 103 PageID #:5140
`Lankau - cross by Mr. Lyerla
`
`104
`
`the -- actually, let me withdraw that.
`
`You said also -- I think in your direct testimony,
`
`you said that the IND is a living document, correct?
`
`A. That is correct.
`
`Q. All right. It's a living document because it never gets
`
`smaller; it just keeps getting bigger, isn't that correct?
`
`A. Yes, it is.
`
`Q. So, as the IND sponsor accumulates more information,
`
`whether that's through running clinical trials or otherwise,
`
`it adds that information to the IND; and that's why the IND is
`
`huge at the beginning and just keeps getting more and more
`
`huge as time goes on, correct?
`
`A. Yes, that's correct.
`
`Q. All right. So, anything that was in the 1989 version of
`
`the IND would still have been in the IND in 1994, correct?
`
`A. That is correct.
`
`Q. All right. So, if we wanted to know how the '94 agreement
`
`treats preclinical data, clinical data, and non-clinical data,
`
`where in the '94 agreement would we look to find that?
`
`A. Do you have a copy of the agreement that I can --
`
`Q. I'm going to -- well, you do have a copy. It should be in
`
`your binders. It's JTX 110. And let me help you. Let's look
`
`at Section 1.14.
`
`A. JTX --
`
`Q. JTX 110, Section 1.14, which actually appears on 110,
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`Case: 1:16-cv-00651 Document #: 136 Filed: 08/07/18 Page 15 of 103 PageID #:5141
`Lankau - cross by Mr. Lyerla
`
`105
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`page 11.
`
`A. Are you looking at this definition of "know-how."
`
`Q. I'm looking at the definition of "know-how," because isn't
`
`it the fact that the 1994 agreement treats non-clinical,
`
`preclinical, and clinical documentation as Orion know-how?
`
`A. Orion know-how is defined in this definition as all
`
`non-patented, unpublished non-clinical, preclinical, and
`
`clinical documentation.
`
`Q. So, unless it was published, it's treated as Orion
`
`know-how in the '94 agreement, correct?
`
`A. That would be correct.
`
`Q. All right. Now, that applies to everything after the
`
`table of contents, correct, in the '89 version of the IND?
`
`A. In terms of general description of data that's in the IND,
`
`that's correct. But as I said earlier, the actual content in
`
`'94 versus the content of this submission in all likelihood
`
`would have been very different.
`
`Q. And there would be even more clinical data in the '94
`
`version of the IND, correct?
`
`A. Could have been more non-clinical data --
`
`Q. And more non-clinical data. All of this know-how would
`
`have been increased by 1994, correct?
`
`A. It could have been, yes.
`
`Q. Now, I think during your deposition, you testified that
`
`the IND is a registration package. Do you recall that?
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`Case: 1:16-cv-00651 Document #: 136 Filed: 08/07/18 Page 16 of 103 PageID #:5142
`Lankau - cross by Mr. Lyerla
`
`106
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`A. I believe what I said was that the IND is a
`
`registration -- is part of a registration package.
`
`Q. Well, I think the question was, "Would you consider the
`
`IND a registration package?" Do you remember how you answered
`
`that?
`
`A. Not off the top of my head, no.
`
`Q. Well, your answer, if I may, I'll read it back to you. Do
`
`you remember saying, "The IND is a registration package. It's
`
`part of the NDA, and so I would consider it to be a component
`
`of a registration package"?
`
`A. That, I recall, yes.
`
`Q. All right. And do you agree with that?
`
`A. Yes.
`
`Q. All right. How does the '94 agreement treat registration
`
`packages? Do you know?
`
`A. It treats registration packages in a number of different
`
`ways.
`
`Q. All right. Well, let me -- let me point you to 1.14, the
`
`same place we've been looking.
`
`A. Sure.
`
`Q. Do you see where registration materials appears in 1.14?
`
`A. I do.
`
`Q. Does not 1.14 define Orion know-how to include all
`
`registration packages?
`
`A. No, I don't read it that way, and I think anyone who's
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`Case: 1:16-cv-00651 Document #: 136 Filed: 08/07/18 Page 17 of 103 PageID #:5143
`Lankau - cross by Mr. Lyerla
`
`107
`
`been in the industry would look at --
`
`Q. Well, wait a second. I'll ask you that separate.
`
`Go ahead and finish your answer. I'm sorry. Go
`
`ahead and finish your answer.
`
`A. I was going to say, anyone in the industry would look at
`
`registration materials as being components of a registration
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`package, not necessarily the registration package.
`
`Q. All right. So, in terms of the -- well, I want to make
`
`sure I understand that. In fact, let me -- let's do this in
`
`small steps.
`
`Number one, you agree that literally this says
`
`registration materials are Orion know-how? You agree with
`
`that?
`
`A. I would agree with that.
`
`Q. All right. But you were telling me that people in the
`
`industry might read something more into that; is that what
`
`you're telling me, and they would think it's something more
`
`than that?
`
`A. Well, certainly, because registration package is
`
`predominantly a submission that is made to the FDA. That is
`
`what a package is. It's what is submitted to the FDA. What
`
`materials are could be some components of that, and so
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`certainly there could be overlap; but it's not one and the
`
`same.
`
`Q. All right. Well, let's look at the first two pages of the
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`Case: 1:16-cv-00651 Document #: 136 Filed: 08/07/18 Page 18 of 103 PageID #:5144
`Lankau - cross by Mr. Lyerla
`
`108
`
`IND, JTX 35 that we've been looking at. The first two pages
`
`are the -- just to refresh your recollection, that's the
`
`preprinted form. Do you see it?
`
`A. I see it on the screen.
`
`Q. Do you agree that the preprinted form would constitute
`
`registration materials?
`
`A. Yes, I do.
`
`Q. All right. So, paragraph 1.14 of the '94 agreement treats
`
`registration materials as Orion know-how, doesn't it?
`
`A. As I said earlier, the fact that a standardized form could
`
`be a registration material doesn't mean that all the material
`
`that follows is registration material. In fact, it is
`
`registration package because it's what has been filed with the
`
`agency.
`
`Q. Okay.
`
`A. And I don't mean to parse words, but a lot of times in
`
`these agreements, there are specific understandings of
`
`different materials or different words that are applicable.
`
`And I can tell you that at least based upon this information,
`
`it does not suggest to me that IND and registration materials
`
`are one and the same.
`
`Q. All right. But I think we've established that Orion
`
`know-how in this agreement is defined to include non-clinical,
`
`preclinical, clinical documentation, and registration
`
`materials, correct?
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`Case: 1:16-cv-00651 Document #: 136 Filed: 08/07/18 Page 19 of 103 PageID #:5145
`Lankau - cross by Mr. Lyerla
`
`109
`
`A. That is correct.
`
`Q. All right. So, what does this agreement say will happen
`
`to Orion know-how?
`
`A. It will be licensed as part of the royalty that is applied
`
`to the payment structure.
`
`Q. All right.
`
`A. And it will be provided to Abbott for its use in compiling
`
`its registration packages.
`
`Q. Let's look at 2.1.1. Do you see that? That is on
`
`JTX 110.15.
`
`A. Yes.
`
`Q. I'm looking in the middle of that paragraph, beginning
`
`with the word "further." It says, "Further, Orion hereby
`
`grants to Abbott an exclusive license under Orion know-how to
`
`make, have made, use, and sell the product in the territory."
`
`Do you see that?
`
`A. I do see that.
`
`Q. Now, look down at 2.1.3 at the bottom of the same page.
`
`That paragraph is entitled, "Use of Orion Know-How." Do you
`
`see that?
`
`A. Yes, I do.
`
`Q. The very last sentence in 2.1.3 says, and I'll read it,
`
`"Subject to the license rights granted hereunder, Orion
`
`retains ownership rights to all Orion know-how." Do you see
`
`that?
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`Case: 1:16-cv-00651 Document #: 136 Filed: 08/07/18 Page 20 of 103 PageID #:5146
`Lankau - cross by Mr. Lyerla
`
`110
`
`A. I do see that, yes.
`
`Q. All right. Now, how is this know-how supposed to be paid
`
`for under the '94 agreement?
`
`A. The only way that the know-how is paid for is if the
`
`product becomes commercialized and there's a royalty paid on
`
`the account.
`
`Q. No. I meant how does the contract deal with it? Look at
`
`4.2. It's on page JTX 110.23. Tell me when you're there.
`
`A. Okay.
`
`Q. Now, this paragraph is entitled, "Know-How Royalty." Do
`
`you see that?
`
`A. Yes, I do.
`
`Q. All right. And the paragraph begins, "Orion has granted
`
`Abbott an exclusive license in Orion know-how pursuant to
`
`Section 2.1.1." Do you see that?
`
`A. Yes, I do.
`
`Q. And very helpfully in the same paragraph a little farther
`
`down, there's a little matrix that actually sets out the
`
`royalty rates that will be paid for the license for the
`
`know-how, correct?
`
`A. Assuming that there is commercialization of the product,
`
`that would be correct.
`
`Q. Okay. Now, what happens to the know-how if the license
`
`and supply agreement is terminated?
`
`A. Orion retains ownership of the know-how.
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`Case: 1:16-cv-00651 Document #: 136 Filed: 08/07/18 Page 21 of 103 PageID #:5147
`Lankau - cross by Mr. Lyerla
`
`111
`
`Q. All right. Let's look --
`
`A. And Abbott will never have paid for it.
`
`Q. Let's look at sections -- Section 2.5 of the agreement.
`
`And that appears on JTX 110.80.
`
`A. .80?
`
`Q. .80. I'm looking at paragraph 25.2. Do you see that?
`
`A. Yes, I do.
`
`Q. All right. And this section says, "If Abbott terminates
`
`this agreement pursuant to Section 24.5 or if Orion terminates
`
`this agreement pursuant to Section 24.2 or 24.4, Abbott's
`
`license rights in Orion patent rights and Orion know-how
`
`hereunder terminate."
`
`Do you see that?
`
`A. I do see that.
`
`Q. And if we flip over to the next page and we look at 25.4,
`
`that's JTX 110.81, we see what happens if Abbott -- what
`
`happens to registration packages if there's termination. Do
`
`you see that?
`
`A. I do see that.
`
`Q. And it says there that, "If Abbott terminates the
`
`agreement pursuant to 25" -- I'm sorry, "Section 24.5 or if
`
`Orion terminates this agreement pursuant to Section 24.2 or
`
`24.4, Abbott shall promptly transfer to Orion, at no cost to
`
`Orion, all Abbott regulatory approvals and registration
`
`packages for the product in the territory."
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`Case: 1:16-cv-00651 Document #: 136 Filed: 08/07/18 Page 22 of 103 PageID #:5148
`Lankau - cross by Mr. Lyerla
`
`112
`
`Do you see that?
`
`A. I see that, yes.
`
`Q. So, when the license is terminated, everything is
`
`returned. Do you see that? Do you understand that?
`
`A. I see that. And --
`
`Q. And in a sale, that doesn't happen, does it?
`
`A. In the case of very narrow circumstances, as I said in my
`
`testimony earlier, these conditions would come into play.
`
`Q. Right. If there's a termination.
`
`A. But in the absence of those --
`
`Q. Yeah. If it's not terminated, they don't come into play.
`
`A. There's no change in the ownership of the IND.
`
`Q. But do you understand that if there's a termination, all
`
`of these materials are returned?
`
`MS. KURTIS: Objection, your Honor. It's
`
`argumentative.
`
`THE COURT: Sustained.
`
`BY MR. LYERLA:
`
`Q. Let me ask a different question. Is it the case that if
`
`there's a termination, whatever the circumstances, if there's
`
`a termination, the rights in the registration packages and the
`
`rights in the Orion know-how return to Orion?
`
`A. Well, it's clear under 25.2 that the license rights
`
`return, but they were never owned by Abbott in the first
`
`place. The regulatory approvals are owned by Abbott, and the
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`Case: 1:16-cv-00651 Document #: 136 Filed: 08/07/18 Page 23 of 103 PageID #:5149
`Lankau - cross by Mr. Lyerla
`
`113
`
`registration packages are owned by Abbott. So, yes, in the
`
`narrow circumstances that you're describing, those would be
`
`returned.
`
`Q. So, this is the one in a billion sales where when there's
`
`a termination, the thing that's been sold gets returned?
`
`A. This is not an uncommon condition in the industry, where
`
`you utilize some termination language in order to accommodate
`
`the more extreme circumstances that are unlikely to occur.
`
`Q. All right. So, how is confidential information treated
`
`under the '94 agreement?
`
`A. Do you have a section reference?
`
`Q. Well, let's look at 10.1. It's on page JTX 110.46.
`
`A. Okay.
`
`Q. Now, it says, does it not, "Each party shall hold the
`
`other party's confidential information, as defined below, of
`
`which it becomes informed in connection with this agreement
`
`in strictest confidence and shall not disclose such
`
`confidential information to third parties or otherwise use
`
`it," and then it goes on, of course.
`
`Did I read that correctly?
`
`A. I believe so, yes.
`
`Q. All right. Now, what constitutes confidential information
`
`under the agreement?
`
`Let's look at 10.3. That's on the next page. And
`
`here we have a definition of "confidential information." And
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`Case: 1:16-cv-00651 Document #: 136 Filed: 08/07/18 Page 24 of 103 PageID #:5150
`Lankau - cross by Mr. Lyerla
`
`114
`
`this is very helpful. Look it. It includes clinical and
`
`non-clinical studies involving the product. That's the IND,
`
`isn't it?
`
`A. It could form part of the IND, but there's no correlation
`
`between clinical and non-clinical studies that are listed here
`
`and whether or not they have appeared in the IND.
`
`Q. But we know they've appeared in the IND. We just went
`
`through that a few minutes ago. The IND is filled with
`
`clinical and non-clinical studies.
`
`A. And subsequent to the signing of this agreement, the IND
`
`would be supplemented by additional clinical information that
`
`would be supplied by Abbott.
`
`Q. Right. And that information would also be treated as
`
`confidential under the agreement, right?
`
`A. Yes, it would.
`
`Q. So, the clinical information is always confidential?
`
`A. Except that which is published.
`
`Q. Unless they publish it. But the FDA can't publish it,
`
`can they? They have to keep it confidential?
`
`A. That's correct.
`
`Q. So, unless one of the parties who has the right publishes
`
`something, it all remains confidential; isn't that correct?
`
`A. That is correct.
`
`Q. And you haven't looked to see whether there was anything
`
`in the IND in this case that was published, isn't that true?
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`Case: 1:16-cv-00651 Document #: 136 Filed: 08/07/18 Page 25 of 103 PageID

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