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`(Mark One)
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`UNITED STATES
`SECURITIES AND EXCHANGE COMMISSION
`WASHINGTON, D.C. 20549
`
`FORM 10-K
`
`
`ý
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`¨
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`ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
`For the fiscal year ended December 31, 2014
`or
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`TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
`For the transition period from to
`Commission File Number: 001-33500
`
`JAZZ PHARMACEUTICALS PUBLIC LIMITED COMPANY
`(Exact name of registrant as specified in its charter)
`
`
`Ireland
`(State or other jurisdiction of incorporation or organization)
`
`
`
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`98-1032470
`(I.R.S. Employer Identification No.)
`
`Fourth Floor, Connaught House,
`One Burlington Road, Dublin 4, Ireland
`011-353-1-634-7800
`(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
`
`Securities registered pursuant to Section 12(b) of the Act:
`
`Name of each exchange on which registered
`Title of each class
`
`The NASDAQ Stock Market LLC
`Ordinary shares, nominal value $0.0001 per share
`
`Securities registered pursuant to Section 12(g) of the Act:
`None
`
`Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý No ¨
`Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No ý
`Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
`months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨
`Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and
`posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
`files). Yes ý No ¨
`Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s
`knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ý
`Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large
`accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
`
`Large accelerated filer x
`
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`Non-accelerated filer ¨
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`Accelerated filer ¨
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`(Do not check if a smaller reporting company)
`
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`Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No ý
`The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant, as of June 30, 2014, the last business day of the registrant’s most
`recently completed second fiscal quarter, was approximately $8,420,403,204 based upon the last sale price reported for the registrant’s ordinary shares on such date on The NASDAQ
`Global Select Market. The calculation of the aggregate market value of voting and non-voting common equity excludes 2,311,701 ordinary shares of the registrant held by executive
`officers, directors and shareholders that the registrant concluded were affiliates of the registrant on that date. Exclusion of such shares should not be construed to indicate that any such
`person possesses the power, direct or indirect, to direct or cause the direction of the management or policies of the registrant or that such person is controlled by or under common
`control with the registrant.
`As of February 18, 2015, a total of 60,657,182 ordinary shares, nominal value $0.0001 per share, of the registrant were outstanding.
`DOCUMENTS INCORPORATED BY REFERENCE
`Portions of the registrant’s definitive Proxy Statement for the 2015 Annual General Meeting of Shareholders to be filed with the Securities and Exchange Commission pursuant to
`Regulation 14A not later than 120 days after the end of the fiscal year covered by this Form 10-K are incorporated by reference in Part III, Items 10-14 of this Form 10-K.
`
`
`
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`Smaller reporting company ¨
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`JAZZ PHARMACEUTICALS PLC
`2014 ANNUAL REPORT ON FORM 10-K
`TABLE OF CONTENTS
`
`
`
`
`Business
`Risk Factors
`Unresolved Staff Comments
`Properties
`Legal Proceedings
`Mine Safety Disclosures
`
`
`PART I
`
`PART II
`
`
`Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
`Selected Financial Data
`Management’s Discussion and Analysis of Financial Condition and Results of Operations
`Quantitative and Qualitative Disclosures About Market Risk
`Financial Statements and Supplementary Data
`Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
`Controls and Procedures
`Other Information
`
`
`PART III
`
`
`Directors, Executive Officers and Corporate Governance
`Executive Compensation
`Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
`Certain Relationships and Related Transactions, and Director Independence
`Principal Accountant Fees and Services
`
`
`
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`
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`Item 1.
`Item 1A.
`Item 1B.
`Item 2.
`Item 3.
`Item 4.
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`
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`Item 5.
`Item 6.
`Item 7.
`Item 7A.
`Item 8.
`Item 9.
`Item 9A.
`Item 9B.
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`
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`Item 10.
`Item 11.
`Item 12.
`Item 13.
`Item 14.
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`
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`Item 15.
`Signatures
`
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`Exhibits and Financial Statement Schedules
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`PART IV
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`Page
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`101
`102
`103
`103
`105
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`105
`105
`105
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`112
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`We own or have rights to various copyrights, trademarks, and trade names used in our business in the United States and/or other countries, including
`the following: Jazz Pharmaceuticals®, Xyrem® (sodium oxybate) oral solution, Xyrem Success Program®, Erwinaze® (asparaginase Erwinia chrysanthemi),
`Erwinase®, Defitelio® (defibrotide), Prialt® (ziconotide) intrathecal infusion, FazaClo® (clozapine, USP), Versacloz® (clozapine) oral suspension, LeukotacTM
`(inolimomab) and ProstaScint® (capromab pendetide). This report also includes trademarks, service marks, and trade names of other companies. Service
`marks, trademarks and trade names appearing in this Annual Report on Form 10-K are the property of their respective owners.
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`CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
`This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended,
`and Section 21E of the Securities Exchange Act of 1934, as amended, which are subject to the “safe harbor” created by those sections. Forward-looking
`statements are based on our management’s beliefs and assumptions and on information currently available to our management. In some cases, you can
`identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,”
`“project,” “predict,” “propose,” “intend,” “continue,” “potential,” “possible,” “foreseeable,” “likely,” “unforeseen” and similar expressions intended to
`identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors which may cause our actual
`results, performance, time frames or achievements to be materially different from any future results, performance, time frames or achievements expressed or
`implied by the forward-looking statements. We discuss many of these risks, uncertainties and other factors in this Annual Report on
`Form 10-K in greater detail under the heading “Risk Factors.” Given these risks, uncertainties and other factors, you should not place undue reliance on
`these forward-looking statements. Also, these forward-looking statements represent our estimates and assumptions only as of the date of this filing. You
`should read this Annual Report on Form 10-K completely and with the understanding that our actual future results may be materially different from what
`we expect. We hereby qualify our forward-looking statements by our cautionary statements. Except as required by law, we assume no obligation to update
`our forward-looking statements publicly, or to update the reasons that actual results could differ materially from those anticipated in these forward-looking
`statements, even if new information becomes available in the future.
`
`NOTE REGARDING COMPANY REFERENCE
`In this report, unless otherwise indicated or the context otherwise requires, all references to “Jazz Pharmaceuticals,” “the registrant,” “we,” “us,”
`and “our” refer to Jazz Pharmaceuticals plc and its consolidated subsidiaries, except when the context makes clear that the time period being referenced is
`prior to January 18, 2012, in which case such terms are references to Jazz Pharmaceuticals, Inc. and its consolidated subsidiaries. On January 18, 2012, the
`businesses of Jazz Pharmaceuticals, Inc. and Azur Pharma Public Limited Company, or Azur Pharma, were combined in a merger transaction, or the Azur
`Merger, in connection with which Azur Pharma was re-named Jazz Pharmaceuticals plc and we became the parent company of and successor to Jazz
`Pharmaceuticals, Inc., with Jazz Pharmaceuticals, Inc. becoming our wholly-owned subsidiary. Jazz Pharmaceuticals, Inc. was treated as the acquiring
`company in the Azur Merger for accounting purposes, and as a result, the historical consolidated financial statements of Jazz Pharmaceuticals, Inc. became
`our consolidated financial statements.
`
`Item 1.
`
`Business
`
`PART I
`
`Overview
`Jazz Pharmaceuticals plc is an international biopharmaceutical company focused on improving patients’ lives by identifying, developing and
`commercializing meaningful products that address unmet medical needs.
`Our strategy is to create shareholder value by:
`•
`Growing sales of the existing products in our portfolio, including by identifying new growth opportunities;
`•
`Acquiring additional differentiated products that are on the market or product candidates that are in late-stage development; and
`•
`Pursuing focused development of a pipeline of post-discovery differentiated product candidates.
`We have made substantial progress in the execution of our strategy. We have a diverse portfolio of products and product candidates, with a focus in the
`areas of sleep and hematology/oncology.
`Our lead marketed products are:
`Xyrem® (sodium oxybate) oral solution, the only product approved by the United States Food and Drug Administration, or FDA, for the treatment
`•
`of both cataplexy and excessive daytime sleepiness, or EDS, in patients with narcolepsy;
`Erwinaze® (asparaginase Erwinia chrysanthemi), a treatment approved in the United States and in certain markets in Europe (where it is marketed
`as Erwinase®) for patients with acute lymphoblastic leukemia, or ALL, who have developed hypersensitivity to E. coli-derived asparaginase; and
`Defitelio® (defibrotide), a product approved in Europe for the treatment of severe hepatic veno-occlusive disease, or VOD, in adults and children
`undergoing hematopoietic stem cell transplantation, or HSCT, therapy.
`
`•
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`•
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`Our research and development activities include clinical development of new product candidates, line extensions for existing products and the
`generation of additional clinical data for existing products. A summary of our development pipeline activities is provided below:
`
`Project
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`Disease Area
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`Status
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`Sleep
`JZP-110
`
`JZP-386
`Xyrem
`
`
`
`Expect to initiate a Phase 3 clinical trial in the second quarter of 2015
`EDS in narcolepsy
`EDS in obstructive sleep apnea, or OSA Expect to initiate two Phase 3 clinical trials in the second quarter of 2015
`EDS in narcolepsy
`Phase 1 clinical trial in progress; expect additional data in the second quarter of 2015
`Cataplexy in narcolepsy in children and
`Phase 3 clinical trial initiated in the fourth quarter of 2014
`adolescents
`Hematology/Oncology
`Defibrotide
`Severe VOD
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`Erwinaze
`
`JZP-416
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`LeukotacTM
`
`Our Products
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`ALL in young adult population
`
`ALL
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`Steroid refractory acute graft vs. host
`disease, or GvHD
`
`
`Rolling new drug application, or NDA, submission initiated in the United States in December
`2014; expect to complete the submission in mid-2015
`Pharmacokinetic study in Phase 2 initiated in the second quarter of 2014
`
`Phase 1 clinical trial in Europe completed; enrollment suspended in pivotal Phase 2 clinical
`trial in North America in first quarter of 2015
`Phase 3 clinical trial enrollment complete; expect preliminary data in mid-2015
`
`Xyrem® (sodium oxybate) oral solution
`Xyrem is the only treatment approved by the FDA for both EDS and cataplexy in patients with narcolepsy. Sodium oxybate, the active pharmaceutical
`ingredient in Xyrem, is a formulation of the sodium salt of gamma-hydroxybutyrate, an endogenous neurotransmitter and metabolite of gamma-aminobutyric
`acid. Xyrem was approved in the United States for the treatment of cataplexy in patients with narcolepsy in 2002 and was approved for EDS in patients with
`narcolepsy in 2005. The American Academy of Sleep Medicine recommended Xyrem as a standard of care for the treatment of both EDS and cataplexy
`associated with narcolepsy.
`Narcolepsy is a chronic neurological disorder caused by a loss of neurons that produce the neurotransmitter hypocretin (also known as orexin), which is
`hypothesized to stabilize sleep-wake states. The primary symptoms of narcolepsy include EDS, cataplexy, sleep paralysis, hypnogogic hallucinations and
`disrupted nighttime sleep. EDS is an essential symptom of narcolepsy, is present in all narcolepsy patients and is characterized by chronic, pervasive
`sleepiness as well as sudden irresistible and overwhelming urges to sleep (inadvertent naps and sleep attacks). Cataplexy, the sudden loss of muscle tone, can
`be one of the most debilitating symptoms of narcolepsy. Cataplexy is present in approximately 70% of patients with narcolepsy. Cataplexy can range from
`slight weakness or a drooping of facial muscles to the complete loss of muscle tone resulting in postural collapse. It may also impair a patient’s vision or
`speech. Cataplexy is often triggered by strong emotions such as laughter, anger or surprise. Cataplexy can severely impair a patient’s quality of life and
`ability to function.
`Narcolepsy may affect many areas of life, including limiting a patient’s education and employment opportunities and leading to driving or machinery
`accidents or difficulties at work resulting in disability or job dismissal. Patients with narcolepsy may also suffer from significant medical comorbidities,
`including social anxiety disorder, OSA, bipolar disorder, depression, hypercholesterolaemia, diseases of the digestive system, cardiovascular diseases, upper
`respiratory tract diseases and hypertension.
`It is estimated that narcolepsy affects approximately 1 in 2,000 people in the United States, or approximately 160,000 people in 2014. Less than half of
`those people have been definitively diagnosed with narcolepsy. In the fourth quarter of 2014, the average number of patients in the United States receiving
`Xyrem treatment was approximately 12,250 patients, and we believe that there are significantly more patients with narcolepsy and cataplexy and/or EDS who
`might benefit from treatment with Xyrem. In an effort to reach more patients, we have implemented a number of initiatives including increased outreach to
`prescribers who treat narcolepsy and physician/healthcare provider disease education programs.
`In 2014, net product sales of Xyrem were $778.6 million, which represented 67.0% of our total net product sales.
`We promote Xyrem in the United States through a specialty sales force of approximately 100 sales professionals dedicated to Xyrem. Our marketing,
`sales and distribution of Xyrem are subject to a risk management and controlled distribution system, or Xyrem Risk Management Program, which was
`required in conjunction with Xyrem’s approval by the
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`FDA to ensure the safe distribution of Xyrem and minimize the risk of misuse, abuse and diversion of sodium oxybate. The Xyrem Risk Management Program
`includes a number of elements including patient and physician education, a database of information so that we may track and report certain information, and
`the use of a single central pharmacy to distribute Xyrem.
`Under our current Xyrem Risk Management Program, all of the Xyrem sold in the United States must be dispensed and shipped directly to patients
`through a single central pharmacy, Express Scripts Specialty Distribution Services and its affiliate CuraScript, Inc., or ESSDS. Xyrem may not be stocked in
`retail pharmacies. Physicians and patients must enroll in the Xyrem Success Program®, which is part of our Xyrem Risk Management Program, prior to
`fulfillment of Xyrem prescriptions. Each physician and patient receives materials concerning the risks and benefits of Xyrem before the physician can
`prescribe, or a patient can receive, the product. Whenever a prescription is received by the central pharmacy, the central pharmacy verifies the prescription
`and must speak with the patient before each prescription of Xyrem is filled and sent to the patient. The central pharmacy ships the product directly to the
`patient by a courier service, and the patient or his/her designee signs for the package. The initial shipment may only be for up to a one-month supply, and
`refill orders may only be for up to a three-month supply.
`Pursuant to our agreement, ESSDS exclusively distributes Xyrem in the United States and provides customer support services related to the sales and
`marketing of Xyrem. For example, ESSDS provides reimbursement support to patients by coordinating insurance coverage for Xyrem, and as applicable,
`referring qualified patients to various patient savings or assistance programs. Our agreement with ESSDS, which has been in effect since July 2002, expires on
`June 30, 2015, subject to automatic two-year extensions unless either party provides notice to the other of its intent to terminate the agreement not less than
`120 days before the end of the then current term. We do not intend to exercise our termination right, and ESSDS has informed us that it does not intend to
`exercise its termination right, in connection with the expiration of the current term. Under the agreement, we own all of the standard operating procedures,
`business rules and intellectual property, and the agreement provides for ESSDS to assist in the orderly transfer of the services that ESSDS provides to us and
`the related intellectual property, including intellectual property related to the patient database, to any new pharmacy that we may we engage.
`Elements of the Xyrem Risk Management Program, adopted in 2002 before the FDA had authority to require a risk evaluation and mitigation strategy,
`or REMS, are deemed to be an approved REMS pursuant to the Food and Drug Administration Amendments Act of 2007, or the FDAAA. The Xyrem Risk
`Management Program, however, is not in the form that is now required for REMS documents. The FDAAA requires that deemed REMS and related documents
`be updated to comply with the current requirements for REMS documents. We are engaged in ongoing communications with respect to our REMS documents
`for Xyrem, but have not reached agreement with the FDA on certain significant terms. In late 2013, the FDA notified us that it would exercise its claimed
`authority to modify our REMS and that it would finalize the REMS as modified by the FDA unless we initiated dispute resolution procedures with respect to
`the modification of the Xyrem deemed REMS. Given these circumstances, we initiated dispute resolution procedures with the FDA at the end of February
`2014, and the process is ongoing. See more discussion regarding this matter under “Business—Government Regulation—Approval of Pharmaceutical
`Products” in Part I, Item 1 of this Annual Report on Form 10-K.
`Five companies have notified us that they have filed abbreviated new drug applications, or ANDAs, with the FDA seeking FDA approval to market a
`generic version of Xyrem. We initiated lawsuits against each of these companies, and the litigation proceedings are ongoing. In addition, certain of the
`ANDA filers have sought to challenge the validity of our patents covering the distribution system for Xyrem by filing petitions for covered business method,
`or CBM, post-grant patent review and/or inter partes review, or IPR, by the Patent Trial and Appeal Board, or PTAB, of the U.S. Patent and Trademark Office,
`or USPTO. The PTAB has issued decisions denying institution of CBM review for all of the CBM petitions and has not yet determined whether to institute
`proceedings with respect to the petitions for IPR. For a description of these matters, see “Legal Proceedings” in Part I, Item 3 of this Annual Report on Form
`10-K.
`
`We also expect to face pressure to license or share our Xyrem Risk Management Program, which is the subject of multiple issued patents, or elements of
`it, with generic competitors. In January 2014, the FDA held an initial meeting with us and the then-current Xyrem ANDA applicants to facilitate the
`development of a single shared system REMS for Xyrem (sodium oxybate). The parties have had numerous interactions with respect to a single shared system
`REMS since the initial meeting, and we expect the interactions to continue. In addition, if we do not develop a single shared system REMS or license or share
`our REMS with a generic competitor within a time frame or on terms that the FDA considers acceptable, the FDA may assert that its waiver authority permits
`it to allow the generic competitor to market a generic drug with a REMS that does not include the same elements that are in our deemed REMS or, when
`Xyrem REMS documents are approved, with a separate REMS that includes different, but comparable, elements to assure safe use, or ETASU. Similarly, it is
`possible that, consistent with the position that the FDA articulated in its December 2012 response denying a Citizen Petition we filed in July 2012, the FDA
`could approve an ANDA with a risk management plan that is separate from our Xyrem deemed REMS, rather than with a final REMS or a shared REMS for
`both the generic and Xyrem. For a more detailed explanation and discussion regarding these matters, see “Business—Government Regulation—The Hatch
`Waxman Act” in Part I, Item 1 of this Annual Report on Form 10-K.
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`For further discussion regarding the challenges we face with respect to Xyrem, see the risk factors in Part 1, Item 1A of this Annual Report on Form 10-K
`entitled “The manufacture, distribution and sale of Xyrem are subject to significant regulatory oversight and restrictions and the requirements of a risk
`management program, and these restrictions and requirements, as well as the potential impact of changes to these restrictions and requirements, subject us
`to increased risks and uncertainties, any of which could negatively impact sales of Xyrem,” “If generic versions of Xyrem or other sodium oxybate products
`that compete with Xyrem are approved and launched, sales of Xyrem would be adversely affected,” “It is difficult and costly to protect our proprietary
`rights, and we may not be able to ensure their protection,” and “We have incurred and expect to continue to incur substantial costs as a result of litigation
`or other proceedings relating to patents, other intellectual property rights and related matters, and we may be unable to protect our rights to, or
`commercialize, our products.”
`Xyrem is a controlled substance in the United States, subject to regulation by the U.S. Drug Enforcement Administration, or DEA, under the Controlled
`Substances Act, or CSA. Therefore, its manufacturing and distribution are highly restricted. The finished product and active pharmaceutical ingredient for
`Xyrem are each manufactured for us by a single source contract manufacturer. See more details regarding Xyrem supply under “Business—Manufacturing” in
`Part I, Item 1 of this Annual Report on Form 10-K.
`Outside of the United States, UCB Pharma Limited, or UCB, has an exclusive license to market Xyrem for the treatment of narcolepsy in 54 countries
`and currently sells the product in 19 countries. We have licensed to Valeant Canada Limited, or Valeant, the Canadian marketing rights to Xyrem for the
`treatment of narcolepsy. We supply Xyrem to UCB and Valeant.
`We have 19 U.S. patents covering Xyrem, which expire at various times from December 2019 to March 2033. Our issued patents relate to Xyrem’s
`stable and microbially resistant formulation, its manufacturing process, its method of use, including its restricted distribution system, and its method of
`administration.
`
`Erwinaze® / Erwinase® (asparaginase Erwinia chrysanthemi)
`Erwinaze, a biologic product, is used in conjunction with chemotherapy to treat patients with ALL who have developed hypersensitivity to E. coli-
`derived asparaginase. Erwinaze is an asparaginase, a type of enzyme that can deprive leukemic cells of an amino acid essential for their growth. It is derived
`from a rare bacterium (Erwinia chrysanthemi) and is immunologically distinct from E. coli-derived asparaginase and suitable for patients with
`hypersensitivity to E. coli-derived treatments. For ALL patients with hypersensitivity to E. coli-derived asparaginase, Erwinaze can be a crucial component of
`their therapeutic regimen. Erwinaze was originally developed by Public Health England, or PHE, a U.K. national executive agency. First approved by the
`FDA under a biologics license application, or BLA, for administration via intramuscular injection in conjunction with chemotherapy, Erwinaze was launched
`in the United States in November 2011. In December 2014, the FDA approved a supplemental BLA for administration of Erwinaze via intravenous infusion in
`conjunction with chemotherapy. Outside of the United States, Erwinaze is sold under the name Erwinase pursuant to marketing authorizations, named patient
`programs, temporary use authorizations or similar authorizations in multiple countries in Europe and elsewhere.
`ALL is the most common childhood cancer. Based on data from the U.S. National Cancer Institute, the U.S. Census Bureau and the American Cancer
`Society, we estimate that approximately 5,000 to 6,000 new cases of ALL were diagnosed in the United States in 2013. Approximately 50% of ALL patients
`were diagnosed under age 15 and approximately 20% were diagnosed between 15 and 39 years of age, which suggests that approximately 3,500 to 4,200
`ALL patients were pediatric, adolescent or young adults. A study published by Dana Farber Cancer Institute, with median follow-up of 57 months, concluded
`that the intensive use of high-dose asparaginase has an important role in the treatment of children with ALL. Data reported in two separate papers published
`in Pediatric Blood & Cancer and Journal of Clinical Oncology, respectively suggest that up to 20% of ALL patients may develop hypersensitivity to E.
`coli-derived asparaginase. Current treatment guidelines and protocols recommend switching a patient receiving E. coli-derived asparaginase to treatment
`with Erwinaze if the patient’s hypersensitivity reaction to the E. coli-derived asparaginase is Grade 2-4, indicating that the hypersensitivity reaction has
`resulted in an intervention or interruption in infusion occurring in the patient’s treatment regimen. While pediatric treatment protocols commonly include
`asparaginase, adult protocols do not. A retrospective comparison to determine whether the outcome for ALL patients between 15 and 39 years of age differed
`depending on their enrollment in pediatric compared with adult cooperative group trials showed that the seven-year overall survival rate among the
`adolescent and young adult ALL patients treated on pediatric protocols was 67% compared to 46% for those patients treated on adult protocols. As more
`treatment protocols in adult centers incorporate the use of asparaginase-based regimens, we expect to see increased use of Erwinaze. In addition, we believe
`that Erwinaze has the potential for use in patients with silent hypersensitivity, a situation in which E. coli-derived asparaginase may induce antibodies that
`can neutralize the enzyme or increase its clearance, thereby depriving patients of its therapeutic benefits without manifesting the clinical symptoms of
`hypersensitivity. A third party has introduced an assay to determine the enzyme activity of asparaginase in patients who have been treated with any E.
`coli-derived asparaginase or Erwinaze. With this assay, physicians may be able to monitor asparaginase levels to identify patients with silent
`hypersensitivity and maintain asparaginase activity by switching asparaginase preparations. We expect adoption of this assay to be limited until its use is
`included in existing pediatric and adult treatment protocols.
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`In 2014, net product sales of Erwinaze/Erwinase were $199.7 million, which represented 17.2% of our total net product sales.
`We promote Erwinaze in the United States through a specialty sales force of approximately 25 sales professionals. We provide reimbursement support
`through our JumpStartTM Access & Reimbursement Solutions program, a dedicated Erwinaze call center. Our field-based and office-based reimbursement team
`provides additional reimbursement support, dealing specifically with the more complex needs of physicians and payors.
`In Europe and elsewhere around the world, Erwinase is sold pursuant to marketing authorizations, named patient programs, temporary use
`authorizations or similar authorizations. Our hematology and oncology sales force outside of the United States has approximately 25 hematology field
`specialists responsible for promoting Erwinase and Defitelio in approved markets where we commercialize these products. In those markets where Erwinase is
`not currently approved, approximately 15 medical science liaisons and medical directors are responsible for responding to medical information requests and
`for providing information consistent with local treatment protocols.
`Erwinaze is exclusively licensed to us for worldwide marketing, sales and distribution by PHE, which also manufactures the product for us. PHE is our
`sole supplier for Erwinaze. We are obligated to make tiered royalty payments to PHE based on worldwide net sales of Erwinaze and Erwinase. See more
`details regarding the supply of Erwinaze under “Business—Manufacturing” in Part I, Item 1 of this Annual Report on Form 10-K.
`Erwinaze has no patent protection, although it has orphan drug exclusivity for the treatment of ALL in the United States until November 2018, and it is
`expected to receive exclusivity that prevents approval of a biosimilar in the United States through late 2023 under the U.S. Biologics Price Competition and
`Innovation Act, or BPCIA.
`
`Defitelio® (defibrotide) / defibrotide
`Defibrotide, the active pharmaceutical ingredient in Defitelio, is the sodium salt of a complex mixture of single-stranded oligodeoxyribonucleotides
`derived from porcine DNA. In in vitro studies, defibrotide has shown a number of pharmacological effects that suggest it has a role in both protection of the
`endothelial cells that form the inner lining of blood vessels and the restoration of the balance between clot formation and breakdown in the blood.
`Defibrotide has been developed for the treatment and prevention of VOD, a potentially life-threatening complication of HSCT. Stem cell
`transplantation is a frequently used treatment modality for hematologic cancers and other conditions in both adults and children. Certain conditioning
`regimens used as part of HSCT can damage the lining cells of hepatic vessels which is thought to lead to the development of VOD, a blockage of the small
`vessels in the liver, that leads to liver failure and can result in significant dysfunction in other organs such as the kidneys and lungs. The condition is also
`referred to