`573
`Case: 1:16-cv-00651 Document #: 141 Filed: 08/07/18 Page 1 of 100 PageID #:5611
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`IN THE UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF ILLINOIS
`EASTERN DIVISION
`
`Docket Nos. 16 C 651
` 17 C 7903
`
`Chicago, Illinois
`July 19, 2018
`10:13 a.m.
`
`)))))))))
`
`HOSPIRA, INC.,
`
`Plaintiff,
`
`vs.
`
`FRESENIUS KABI USA, LLC,
`
`Defendant.
`
`VOLUME 4A
`TRANSCRIPT OF PROCEEDINGS - Bench Trial
`BEFORE THE HONORABLE REBECCA R. PALLMEYER
`
`APPEARANCES:
`
`For the Plaintiff:
`
`For the Defendant:
`
`Also Present:
`
`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
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`Court Reporter:
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`FRANCES WARD, CSR, RPR, RMR, FCRR
`Official Court Reporter
`219 S. Dearborn Street, Suite 2144D
`Chicago, Illinois 60604
`(312) 435-5561
`frances_ward@ilnd.uscourts.gov
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`THE COURT: Sorry to keep you waiting.
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`I think we are ready to get started with the
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`plaintiff's case-in-chief.
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`MR. LYERLA: Your Honor, we call Mr. Chris Seaton.
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`THE COURT: Mr. Seaton, could you step forward,
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`please, sir.
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`Sir, can I ask you to raise your right hand.
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`ROBERT CHRISTOPHER SEATON, PLAINTIFF'S WITNESS, SWORN
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`DIRECT EXAMINATION
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`BY MR. LYERLA:
`
`Q.
`
`A.
`
`Q.
`
`Good morning, Mr. Seaton.
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`Good morning.
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`For the record, would you state your full name and spell
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`it for the court reporter.
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`A.
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`Q.
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`A.
`
`Q.
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`Robert Christopher Seaton, S-e-a-t-o-n.
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`So you have in front of you a book of exhibits.
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`Would you please turn to JTX143.
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`Yes, sir.
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`Do you recognize that document?
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`If it decides to come apart, the pages fall all
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`over the place and it is quite a mess, but that one stayed
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`together.
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`So I was directing your attention -- take your
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`time.
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`I was directing your attention to JTX143. That's a
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`recent copy of your curriculum vitae, correct?
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`A.
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`Q.
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`Yes, sir.
`
`All right. Feel free to refer to it. I am going to ask
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`you some other questions, but feel free to refer to your CV,
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`if it's helpful to your testimony.
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`Can you begin by telling me about your educational
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`background, beginning with college.
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`A.
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`Yes. I have an undergraduate degree, an Honours
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`Bachelor of Commerce from McMaster University. That's a
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`finance and accounting degree.
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`And I have a master's in business administration,
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`also from McMaster University in Hamilton, Ontario.
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`Q.
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`Can you tell us about the various past and current
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`professional positions that you have held.
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`A.
`
`Yes, sir. I think I have a slide for that.
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`MR. LYERLA: Can we see the slide, please.
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`Thank you.
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`BY MR. LYERLA:
`
`Q.
`
`Feel free to refer to the slide and tell us about
`
`your -- give us a high-level description of the positions you
`
`have held over the years, please.
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`A.
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`On graduation from university, I was recruited by
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`General Electric in Canada, into their financial management
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`program, and then subsequently into a number of financial
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`positions. I was with them for four years.
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`And then left them to join Miles Canada. Miles
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`Canada was a Bayer or Bayer subsidiary at the time. I was
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`with Miles for six years in positions ranging from senior
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`financial analyst through to controller for the
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`pharmaceuticals division.
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`In '98 -- in '88 -- I'm sorry -- I left Miles to
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`join Imperial Chemical Industries in the pharmaceuticals
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`business. That pharmaceuticals business has, over the years,
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`been spun out of ICI and become now AstraZeneca, one of the
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`larger pharmaceutical companies.
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`I was with ICI from 1988 to 1995 in Canada, in the
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`U.S., and in the U.K. And for part of that time, I moved out
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`of pharmaceuticals into their chemicals and polymers
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`division.
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`I think at the end I was the senior finance person
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`for one of their global businesses inside chemicals and
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`polymers.
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`I moved back to the U.S. in 1995 and joined Bayer
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`as the vice president of business planning and finance for
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`the North American pharmaceuticals business.
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`I then became, subsequently, senior vice president
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`for the global pharmaceuticals business, in charge of
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`licensing, acquisitions, and business development.
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`Following our merger with Schering AG, I became
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`senior vice president of global transactions for the
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`then-Bayer Schering Pharma and subsequently Bayer HealthCare
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`and a then change of title, but practically no change in
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`responsibilities from my last position as senior vice
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`president of negotiations for pharmaceuticals.
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`Q.
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`A.
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`How long did you work at Bayer in total?
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`So in total, certainly in the last iteration, I have
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`worked with Bayer for 23 years, but there were also six years
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`where I worked for Miles Canada.
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`Q.
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`A.
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`And that was the pharmaceutical business, Miles Canada?
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`In Miles Canada, it was either in the finance department
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`of the healthcare business or specifically in the
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`pharmaceuticals business, yes.
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`Q.
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`Now, I understand you recently retired from Bayer; is
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`that correct?
`
`A.
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`Q.
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`Yes. I retired on April 30th.
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`Congratulations. I am looking forward to that day soon,
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`I hope, in my own case.
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`Now, this is your first time testifying as an
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`expert?
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`A.
`
`Q.
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`Yes, sir, it is.
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`I gather you have had experience with a wide variety of
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`transactions in the pharma world; is that correct?
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`A.
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`Yes, sir. I have had a lot of experience with
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`transactions in the pharma world.
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`Q.
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`Can you tell us what your focus has been in the
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`pharmaceutical world?
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`A.
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`Q.
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`A.
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`Q.
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`A.
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`My focus has been on -- pardon me.
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`Did I give you some water?
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`Yes.
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`Feel free to take some water.
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`My focus has been on business development and
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`typically -- mostly licensing transactions, but it has
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`included just about every other type of transaction in the
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`pharmaceutical industry.
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`Q.
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`A.
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`Do you have a slide summarizing that experience?
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`I believe I do have a slide for that.
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`MR. LYERLA: Can we see that, please.
`
`Oh, it's already up. All right. Good.
`
`BY MR. LYERLA:
`
`Q.
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`A.
`
`Q.
`
`A.
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`Explain to us, would you, these examples of --
`
`Sure.
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`-- transactions that you have worked on.
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`This is actually a relatively short list of
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`transactions, some significant ones of the many that I have
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`worked on.
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`I guess I would start with the Schering-Plough
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`global collaboration. That actually won an award in 2005 at
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`the BioBusiness Network in Geneva for Deal of the Year. That
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`was a very complex deal with -- between Bayer and
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`Schering-Plough in which we transferred to Schering-Plough,
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`through a license, all of our U.S. primary care business. So
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`something on the order of $3 billion worth of sales for
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`products like Levitra and ciprofloxacin and Adalat. And in
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`addition, we transferred a number of people and marketing
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`staff, et cetera.
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`On the other side of that, we also received from
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`Schering-Plough rights to collaborate with them in Japan on
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`one of their drugs called Zetia.
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`The Nuvelo collaboration on alfimeprase, this was a
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`license agreement with a relatively small biotech company,
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`California Biotech. Actually, that also won a Deal of the
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`Year award from the recumbent and capital license conference
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`in San Francisco.
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`This was a collaboration where Bayer received
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`rights through to a license to alfimeprase to develop and
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`commercialize outside of the U.S.
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`The Genzyme collaboration on alemtuzumab and other
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`cancer products was a very large, very complex deal between
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`Bayer and the then-Genzyme corporation in which we had a
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`license collaboration on alemtuzumab itself. It's now on the
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`market as Lemtrada for multiple sclerosis. And we actually
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`sold as part of the deal, but in a separate transaction, two
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`cancer products to Genzyme. Another Deal of the Year from
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`the Licensing Executives Society.
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`Q.
`
`I think I am supposed to ask you a question somewhere in
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`this long narrative.
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`So can you tell us about the next deal, please?
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`A.
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`The Merck collaboration on sGCs was a part of our
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`$14 billion acquisition of the Merck consumer care business.
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`And within that, we then did a separate $3 billion
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`collaboration in pharmaceuticals around sGCs, soluble
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`guanylate cyclase inhibitors.
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`The Johnson & Johnson collaboration on Xarelto was
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`a global license from there to Johnson & Johnson to develop
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`Xarelto and market it in the United States.
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`Q.
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`A.
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`All right. And this is just an exemplary list?
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`Yes, sir. Actually, looking at it, I left off some of
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`the bigger deals, but yes.
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`Q.
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`All right. Well, maybe we have gone far enough on these
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`deals, and we may come back to some of the other deals.
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`So what was your role in these exemplary deals?
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`A.
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`I was either -- in all of the deals I have done, I have
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`either been the lead negotiator or the team lead or, in some
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`cases, the global head.
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`And in many deals -- and certainly actually all of
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`these or many of these on here -- I was all three.
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`Q.
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`All right. And just to round up the record a little
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`bit, can you tell us what a lead does, what a team leader
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`does, and what a global leader does.
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`A.
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`Sure.
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`So if I'm the lead negotiator, I am the person
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`tasked with sitting in the room with the other side and
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`negotiating the terms of the contract. And I will lead those
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`negotiations.
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`The team lead has the additional responsibility of
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`pulling together a team of multi -- a multifunctional team of
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`specialists from every relevant area and actually running the
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`project itself.
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`And then as global head, there are times when I
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`might have my staff actually working on the project, and I am
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`overseeing it, but I am not necessarily always in the room.
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`On the Johnson & Johnson collaboration on Xarelto,
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`for example, we actually had three separate negotiations with
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`three separate companies. It would be impossible for me to
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`physically be in all three.
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`I ran the Johnson & Johnson one, even as I ran the
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`team and as I oversaw other members of my staff, who were
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`running negotiations with the other two companies.
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`Q.
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`Okay.
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`Now, have you received any training with respect to
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`negotiating pharmaceutical deals?
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`A.
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`Yes, sir. I have had a lot of training.
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`Primarily we were focused on in-house training. We
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`would -- I ran and my predecessor and the company runs
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`training courses regularly, every year. We typically bring
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`in outside experts to educate people on aspects of the legal
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`aspects with respect to collaborations; the tactical aspects,
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`if you will; the interpersonal aspects.
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`And, of course, you have to come in with a good
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`business understanding. And even that, we train you on how
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`to look for the issues, the traps and pitfalls.
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`Q.
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`I know it's difficult, after many years doing this sort
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`of work, to quantify things, but can you give us a rough
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`estimation of how many license and supply agreements you have
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`been involved with?
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`A.
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`I would say somewhere between 60 and 100, depending on
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`how you want to look at it.
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`It would be a much larger number if you include
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`everything that all my staff did.
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`Q.
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`How many times have you been involved in a corporate
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`spin-off?
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`A.
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`Q.
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`Three to five times.
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`Now, are these -- when you are counting these, are these
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`just transactions that were consummated?
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`A.
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`In terms of the licensing agreements, yes, sir.
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`In terms of the spin-offs, I believe three of the
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`five were actually consummated.
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`Q.
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`If we were to count unconsummated license agreements,
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`how many would you say you have been involved with in your
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`career?
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`A.
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`Q.
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`Well over 100.
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`Do you have experience with the FDA's regulatory
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`approval process for pharmaceuticals?
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`A.
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`Q.
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`A.
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`Yes, sir, I do.
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`Can you describe that experience.
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`Certainly.
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`I mean, the status of a drug in the regulatory
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`process is an absolutely critical part of any license or
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`collaboration agreement. It's absolutely important to
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`understand, where is this drug? What's the status of the
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`IND? Is it a Phase 1, Phase 2, Phase 3? Is there an NDA?
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`What are the issues with the trials? What are the issues
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`with the NDA, et cetera?
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`I'm not sure if you want me to describe the
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`process.
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`Q.
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`Let me ask a more specific question for the moment.
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`Obviously you are familiar with the term "IND."
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`You have used it a couple of times already.
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`A.
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`Q.
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`Yes, sir. I am very familiar with the term "IND."
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`Can you give us your businessman's understanding of what
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`an IND is.
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`A.
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`Well, IND stands for investigational new drug. And it
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`is essentially the permission by the FDA for you to carry out
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`clinical experiments in humans.
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`You do it pursuant to a protocol that you have to
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`submit to the FDA. And while they do not approve it as such,
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`I guess I would say they acquiesce in it, because you have a
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`30-day window, and if they don't object, you may go forward.
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`Q.
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`You may go forward with the clinical trial if you don't
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`receive an objection?
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`A.
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`Q.
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`A.
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`Q.
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`Yes.
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`Are you familiar with the term "NDA"?
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`Yes, sir. I am very familiar with the term "NDA."
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`Again, can you give us your understanding of what that
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`means.
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`A.
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`An NDA is a New Drug Application. So at the end of the
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`clinical trial process, after you have the results of your
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`Phase 3 trial, and you have completed your statistical
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`analysis, you submit the NDA to FDA, and essentially you are
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`seeking their approval to market the drug.
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`Q.
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`A.
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`Again, in other words -- I'm sorry. I cut you off.
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`And they are, of course, trying -- the purpose of the
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`NDA is to demonstrate safety and efficacy of your compound.
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`Q.
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`Again, one of these unfair questions about trying to
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`quantify something, but your best guess of, over the course
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`of your career, how many INDs and NDAs have you been involved
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`with in various transactions?
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`A.
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`Well, the number of INDs is very large. It would be at
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`least as large as every transaction I have ever looked at.
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`So the number of INDs would be hundreds.
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`NDAs, of course, are much rarer. I have probably
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`seen or been involved in 20 or 25 -- 20ish NDAs.
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`Q.
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`That made it all the way to the point of a New Drug
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`Application?
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`A.
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`Yes, that made it all the way through all the phases,
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`into Phase 3 and to a submission to the FDA.
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`Q.
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`Why would a licensing and development business executive
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`in a pharmaceutical company become involved with looking at
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`INDs and NDAs?
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`A.
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`Because they are absolutely critical to the evaluation
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`of the deal.
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`You need to understand whether, first of all, what
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`you have been told by the other side is correct and whether
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`the IND reflects what you have been told.
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`In doing your due diligence, you certainly need to
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`understand what is the status of the IND, what is the quality
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`of the IND. I think this is something that's often
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`misunderstood.
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`Just because FDA acquiesces to an IND doesn't mean
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`that, from the standpoint of a large company such as mine,
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`that all the prior work was done to our standards.
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`The FDA may be satisfied, but it may not meet our
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`standards. We may feel we have to go back and redo some of
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`this work even though there is a live IND. And that, of
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`course, affects the evaluation of the project.
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`It also affects the probability of success of the
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`project, and that's a very important component for us.
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`Q.
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`A.
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`Q.
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`A.
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`Q.
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`And specifically --
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`I would just add the same is true of an NDA.
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`For the NDA.
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`Even more true of an NDA.
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`Well, maybe anticipating something you want to say
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`later, but as it moves from IND to NDA, the deal becomes more
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`certain, doesn't it?
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`A.
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`Well, the deal may not become more certain, but the
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`probability of success of the drug becomes more certain.
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`Q.
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`Now, specifically, in making the evaluation of an IND or
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`an NDA that you have just described, what did you personally
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`do?
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`What was your personal role in that?
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`A.
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`Well, I am not a technical expert on INDs or NDAs, but I
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`would be the executive charged with, if you will, pulling
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`together all of the technical expertise and making a judgment
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`as to whether this deal is worth doing.
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`So I would have input from all of the technical
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`experts involved in many, many areas. It depends on the
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`nature of the drug. But I would get input and have to make a
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`judgment on the adequacy of what we have seen and its
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`implications for the structure of the deal.
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`It may change the extent to which we are willing to
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`take risk in the deal. It may change the extent to which we
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`allocate the payments, later or earlier.
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`Q.
`
`Now, you mentioned that you have relied on experts.
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`What kind of experts would you use?
`
`A.
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`We would use just about every kind of expert there is.
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`We would use toxicologists. We would use chemists,
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`scientists. We would use clinicians, you know, medical
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`doctors.
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`We would even, on occasion, bring in outside
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`experts to evaluate a dossier if we did not have the
`
`necessary expertise in-house.
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`Q.
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`A.
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`Did you consult with statisticians?
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`Statisticians are absolutely critical to this. So we
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`typically, as do most large pharma companies, would have a
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`very large and highly qualified biostatistics department,
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`because at the end of the day, their judgments are very
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`important.
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`And a lot of this data ends up as statistical
`
`tables, and you really want to make sure you have the
`
`narrowest possible confidence interval so that you can
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`convince the FDA that your data is statistically sound and
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`valid.
`
`Q.
`
`Let me change the focus a little bit and go back to the
`
`regulatory path for obtaining approval.
`
`Could you just describe what the regulatory path
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`is, please.
`
`A.
`
`Sure.
`
`You typically start with drug design and drug
`
`discovery, if you will. This is all preclinical. This is
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`early research, where someone designs the molecule or the
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`compound.
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`You then move into preclinical testing of the drug.
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`This is typically done first in vitro, Latin for "in glass."
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`So you are doing this in test tubes and in labs.
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`And then you move into in vivo testing, typically
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`animal -- well, not typically. Animal testing. All
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`preclinical.
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`At that point you file an IND, and you are seeking
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`permission then to try the drug in humans.
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`Q.
`
`A.
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`What is the path after you obtain approval for humans?
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`Once you get your IND acquiesced to -- we would call it
`
`approval, but it's not -- then you enter Phase 1 clinical
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`trials.
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`And these trials are focused on safety. The drug
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`is typically given to not less than 10 human -- healthy human
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`volunteers. And what you are looking for here is
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`confirmation of the safety signals that you may have seen in
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`dogs or cats or other animals to make sure that you don't get
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`a negative safety signal from humans.
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`After Phase 1, you --
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`Q.
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`So let me ask you, before you go to Phase 2, what is the
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`pharmaceutical company looking for at the end of Phase 1 to
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`justify the jump to Phase 2?
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`A.
`
`You are looking for a high degree of confidence that
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`this isn't going to hurt anyone or kill anyone. Let me be
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`blunt about it. That's the number one goal of the Phase 1
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`trials. You really are not looking for efficacy.
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`You typically -- well, you are not giving it to
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`sick people or people with the disease entity that you are
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`trying to treat.
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`You are giving it to healthy individuals, and you
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`are looking for the safety signals.
`
`Q.
`
`A.
`
`What about Phase 2?
`
`In Phase 2 you are then looking to get what, I guess, we
`
`call -- what most people in the industry call proof of
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`principal or proof of concept.
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`So now we know that it's relatively safe. Now we
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`are going to start giving it to patients, to people who have
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`the illness and, again, in small numbers. And we are trying
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`to see, is there a signal that it is working and it is doing
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`what we expect it to do?
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`You also typically in Phase 2 do what we call
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`dose-ranging trials, because at this point we are still not
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`sure what's the appropriate dose or the best dose.
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`And we also need to see the relative tradeoff
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`between dosage, safety, and efficacy. Typically efficacy
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`goes up with dosage but so do side effects.
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`So these are small Phase 2 trials, and you are
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`looking to get proof of principal or proof of concept that
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`says, yeah, the drug does do what we think it does.
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`And that then gives you the confidence to move into
`
`what we call pivotal trials.
`
`Q.
`
`A.
`
`And what are pivotal trials?
`
`Pivotals are Phase 3 clinical trials. These are
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`typically where you now expose the drug to large numbers of
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`patients, typically thousands of patients, and sometimes many
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`thousands of patients.
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`And here, you are really seeking, in the clinical
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`setting, to prove safety and efficacy to the satisfaction of
`
`the regulatory authorities.
`
`Q.
`
`A.
`
`What comes after a successful Phase 3?
`
`A lot of work, a lot of statistics, and then the
`
`compilation of the NDA and filing the NDA with FDA.
`
`Q.
`
`A.
`
`What happens to the IND throughout this process?
`
`So the IND remains a live document.
`
`At the start of Phase 1, the IND is probably the
`
`only regulatory document. It stays alive, and you supplement
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`it every year with your new clinical trials, with your new
`
`process. And it stays alive throughout this whole process,
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`because it is the document that gives you the authorization
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`to conduct all of these clinical trials.
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`So it becomes a much larger document by the end.
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`And then when you file the NDA, the IND is, of
`
`course, subsumed within the NDA. It becomes a part of the
`
`NDA.
`
`Q.
`
`How -- in your experience at least, or based on industry
`
`guidance, if any, how many drugs make it from preclinical to
`
`approved NDA?
`
`A.
`
`Well, the preclinical numbers are hard to come by.
`
`What I can tell you is that, on average, about
`
`10 percent of the drugs make it from Phase 1 through to an
`
`approved drug.
`
`The estimate is much larger or, in other words, a
`
`much smaller percentage of preclinical drugs will make it,
`
`because one of the biggest steps is actually getting from
`
`preclinical to clinical.
`
`But from -- so from Phase 1 clinicals through to
`
`approval, it's on the order of 10 percent.
`
`Q.
`
`So I would like to show you what's been marked as
`
`JTX119.
`
`And does this document look familiar to you?
`
`Yes, sir, it is quite familiar.
`
`Does this document offer any -- I am going to call it
`
`A.
`
`Q.
`
`industry guidance on the prior answer that you just gave?
`
`A.
`
`Yes, sir. This is a study by the bio organization, the
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`593
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`Biotechnology Industry Organization, which is a large
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`organization in the U.S. that comprises just about all the
`
`biotech -- biotechnology companies and the major pharma
`
`companies.
`
`Q.
`
`If I could direct -- I'm sorry for interrupting, but let
`
`me direct your attention to Page 7. So that's 119.7. There
`
`is a bar chart there.
`
`Would you tell us how to interpret that bar chart.
`
`A.
`
`Yes, sir.
`
`So this is exactly what I was referring to when I
`
`said it's quite a journey to get from Phase 1 all the way
`
`through to approval.
`
`So this chart -- first of all, let me step back.
`
`Bio looked at all the FDA data they could have. And this
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`chart shows that you have about a 63 percent probability of
`
`making it from Phase 1 into Phase 2.
`
`You have about a 30 percent probability from
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`Phase 2 to Phase 3.
`
`About a 60 percent probability from Phase 3 to NDA.
`
`And typically once you get to an NDA, you have a
`
`very high probability, about 85 percent.
`
`But overall, if you multiply all those percentages,
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`you only have approximately a 10 percent chance for any given
`
`drug that you start out with in Phase 1 -- this is on
`
`average -- you have a 10 percent chance that you will
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`eventually end up with an approved drug that you can market
`
`in the United States.
`
`MR. LYERLA: Your Honor, at this time we would
`
`tender Mr. Seaton as an expert in licensing and business
`
`development transactions, which include licensing and supply
`
`agreements, acquisitions, divestments, and spinouts in the
`
`pharmaceutical industry.
`
`MR. NELSON: No objection.
`
`THE COURT: Thank you.
`
`So noted.
`
`BY MR. LYERLA:
`
`Q.
`
`Let's turn to the substance of your opinions in this
`
`case, Mr. Seaton.
`
`What have you been asked to opine on in this case?
`
`A.
`
`I have been asked to opine on two transactions.
`
`One is the alleged sale of an IND in the 1994
`
`Orion-Abbott License and Supply Agreement.
`
`And the other is an alleged sale of an IND in the
`
`2004 Abbott-Hospira spin-off.
`
`Q.
`
`And what are your general opinions related to the 1994
`
`agreement and the -- well, let's start with the 1994
`
`agreement.
`
`A.
`
`My opinion is very clearly that -- thank you; I was
`
`going to say I thought I had a slide for that -- that the
`
`transfer of the sponsorship in IND 32934, as part of the '94
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`Abbott-Orion License and Supply Agreement, is not a sale. It
`
`is not a commercial sale of goods in any way.
`
`Q.
`
`A.
`
`And what about the 2004 spin-out? What is your opinion?
`
`My opinion there is very much the same. The transfer of
`
`the sponsorship in the IND, as part of the Hospira spin-off,
`
`is not a commercial sale of goods. It is not a sale of the
`
`IND.
`
`Q.
`
`Now, for purposes of this case -- and this is really
`
`just to lay a foundation for some of the questions I am going
`
`to ask you later -- what is your understanding of a
`
`ready-to-use dexmedetomidine product?
`
`A.
`
`My understanding is that a ready-to-use product is one
`
`that would not require dilution, either in the operating room
`
`or typically in the compounding pharmacy of the hospital,
`
`prior to administration to the patient.
`
`Q.
`
`Another one of these background questions.
`
`In forming your opinions in this case, did you rely
`
`on the headings in the agreements that you reviewed?
`
`A.
`
`No, sir. The headings are there for convenience.
`
`I relied on my review of the text of the agreement
`
`and, you know, other information, but I did not rely on the
`
`headings, although I will say that the headings in this case
`
`did actually largely reflect what was in the agreement.
`
`Q.
`
`Now, you were here for Mr. Lankau's testimony earlier
`
`this week?
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`A.
`
`Q.
`
`Yes, sir, I was.
`
`Were Mr. Lankau's opinions that he offered in his
`
`testimony consistent with the text of the agreements that you
`
`reviewed?
`
`A.
`
`No, sir, they were not at all consistent with the text
`
`of the agreement.
`
`Q.
`
`All right. Before talking more in depth about your
`
`opinions, let me ask you, what's the difference between a
`
`licensing agreement and a sales agreement?
`
`A.
`
`Q.
`
`A.
`
`Q.
`
`A.
`
`So there are --
`
`May I interrupt you?
`
`Yes.
`
`Do we have a slide on this subject?
`
`Thank you. I believe we have a slide on the
`
`characteristics, not necessarily on the differences.
`
`So there are many characteristics to a license
`
`agreement. But typically the license agreement will have a
`
`very clear definition of the territory of the license grant.
`
`Sometimes that territory is the world. Sometimes that
`
`territory is a specific region or even a specific country.
`
`The license agreement will almost always clarify
`
`issues around who owns the patents, what other intellectual
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`property is there, things like know-how, and what's the
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`grant? What is the license grant to these assets?
`
`License agreements typically have significant
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`responsibilities placed on the parties. Usually the licensor
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`will place significant responsibilities on the licensee,
`
`requiring them to do certain things -- to use commercially
`
`reasonable efforts, or best efforts in some cases -- to carry
`
`out their responsibilities.
`
`The modes of payment or c