`
`
`
`
`THE UNITED STATES PATENT AND TRADEMARK OFFICE
`______________________________________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`______________________________________
`
`INNOPHARMA LICENSING, INC., INNOPHARMA LICENSING LLC,
`INNOPHARMA INC., INNOPHARMA LLC, MYLAN PHARMACEUTICALS
`INC., and MYLAN INC.
`Petitioners
`v.
`SENJU PHARMACEUTICAL CO., LTD., BAUSCH & LOMB,
`INCORPORATED, and BAUSCH & LOMB PHARMA HOLDINGS CORP.
`Patent Owners
`______________________________________
`
`Case IPR2015-00903
`Patent 8,129,431
`
`______________________________________
`
`
`
`DECLARATION OF JOHN C. JAROSZ
`
`
`
`Page 1 of 122
`
`SENJU EXHIBIT 2130
`INNOPHARMA v. SENJU
`IPR2015-00903
`
`

`

`
`
`
`
`I. 
`
`II. 
`
`TABLE OF CONTENTS
`
`INTRODUCTION ................................................................................. 1 
`A.  Assignment .................................................................................. 1 
`B. 
`Qualifications .............................................................................. 2 
`C. 
`Compensation .............................................................................. 4 
`D. 
`Evidence Considered .................................................................. 4 
`E. 
`Summary of Opinions ................................................................. 5 
`BACKGROUND ................................................................................... 7 
`Parties to the Inter Partes Review .............................................. 7 
`A. 
`1. 
`Senju ................................................................................. 7 
`2. 
`Bausch & Lomb ................................................................ 8 
`3. 
`InnoPharma ....................................................................... 9 
`4.  Mylan .............................................................................. 10 
`Cataract Treatments .................................................................. 11 
`Post-Surgery Options ................................................................ 12 
`1. 
`Non-Bromfenac NSAIDs ............................................... 13 
`a. 
`Diclofenac Sodium ............................................... 13 
`b. 
`Ketorolac Tromethamine ...................................... 14 
`c. 
`Nepafenac ............................................................. 14 
`Corticosteroids ................................................................ 15 
`2. 
`Prolensa® .................................................................................. 17 
`1. 
`Earlier Bromfenac Products ............................................ 17 
`2. 
`ISTA’s Acquisition by Bausch & Lomb ........................ 19 
`3. 
`Development and Launch of Prolensa® ......................... 19 
`Patented Technology ................................................................. 20 
`E. 
`FRAMEWORK OF ANALYSIS ........................................................ 22 
`III. 
`IV.  COMMERCIAL SUCCESS OF THE ’431 PATENT ........................ 24 
`A.  Marketplace Success ................................................................. 24 
`1. 
`Absolute Performance of Prolensa® .............................. 24 
`2. 
`Relative Performance of Prolensa® ............................... 26 
`a. 
`Initially ................................................................. 26 
`b. 
`Over Time ............................................................. 28 
`
`B. 
`C. 
`
`D. 
`
`i
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`Page 2 of 122
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`
`
`
`B. 
`
`c. 
`Third-Party Perceptions ........................................ 30 
`Licensing Activity ................................................ 32 
`d. 
`Causal Nexus ............................................................................. 34 
`1. 
`Benefits of the Patented Inventions ................................ 34 
`a. 
`Clinical Importance of the Benefits ..................... 36 
`b.  Marketing Importance of the Benefits ................. 42 
`i. 
`Healthcare Professionals ............................ 42 
`ii. 
`Other Audiences ......................................... 45 
`Third-Party Perceptions ........................................ 46 
`c. 
`Promotional Activities .................................................... 48 
`a. 
`Informative and Persuasive Advertising .............. 48 
`b. 
`Pharmaceutical Demand Factors .......................... 50 
`i. 
`Impact of Product Characteristics .............. 50 
`ii. 
`Impact of Product Quality .......................... 52 
`Impact of Promotional Efforts ............................. 54 
`c. 
`Impact of Price ..................................................... 55 
`d. 
`Promotional Spending .................................................... 58 
`3. 
`CONCLUSION ................................................................................... 61 
`
`2. 
`
`V. 
`
`
`
`
`ii
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`Page 3 of 122
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`I, John C. Jarosz, do hereby declare, under penalty of perjury, as follows.
`
`
`
`I.
`1.
`
`INTRODUCTION
`I am over the age of eighteen (18) and otherwise competent to make
`
`this declaration.
`
`A. Assignment
`
`2.
`
`I have been retained as an expert on behalf of Bausch & Lomb
`
`Incorporated, Bausch & Lomb Pharma Holdings Corp. (collectively,
`
`“Bausch & Lomb”) and Senju Pharmaceutical Co. Ltd. (“Senju”)
`
`(collectively, with Bausch & Lomb, “Patent Owners”) in connection with
`
`the above captioned inter partes review (“IPR”) proceeding before the
`
`United States Patent and Trademark Office Patent Trial and Appeal Board
`
`(“PTAB”).
`
`3.
`
`I understand that the PTAB has granted the petition of InnoPharma
`
`Licensing, Inc., InnoPharma Licensing LLC, InnoPharma Inc., InnoPharma
`
`LLC (collectively, “InnoPharma”), Mylan Pharmaceuticals Inc., and Mylan
`
`Inc. (collectively, “Mylan”) (collectively, with InnoPharma, “Petitioners”) to
`
`institute an IPR regarding claims 1-22 of U.S. Patent No. 8,129,431 (the
`
`“’431 patent”) on obviousness grounds. That IPR was assigned Case
`
`IPR2015-00903.
`
`4.
`
`I understand that the PTAB has granted the petition of the Petitioners
`
`1
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`to institute a separate IPR regarding claims 1-30 of U.S. Patent No.
`
`
`
`8,669,290 (the “’290 patent”) on obviousness grounds. That IPR was
`
`assigned Case IPR2015-00902.
`
`5.
`
`6.
`
`I understand that Senju is the assignee of the ’431 patent and that
`
`Shirou Sawa and Shuhei Fujita are the named inventors of the patent.
`
`I understand that the ’431 patent describes and claims compositions of
`
`the active ingredient bromfenac sodium (“bromfenac”) and the surfactant
`
`tyloxapol.1 I further understand that Prolensa® embodies the compositions
`
`disclosed in the ’431 patent.
`
`7.
`
`I have been asked by Counsel for Patent Owners to assess whether
`
`Prolensa® has been a marketplace success, and whether such success is
`
`attributable to the inventions claimed in the ’431 patent.
`
`B. Qualifications
`
`8.
`
`I am a Managing Principal of Analysis Group, Inc. (“Analysis
`
`Group”) and Director of the firm’s Washington, DC office. Analysis Group
`
`is an economic, financial, and strategy consulting firm with offices in
`
`Beijing, China; Boston, MA; Chicago, IL; Dallas, TX; Denver, CO; Los
`
`Angeles, CA; Menlo Park, CA; Montreal, Quebec; New York, NY; San
`
`
`1 I understand that a surfactant is a substance that, when added to a liquid,
`reduces the surface tension of that liquid.
`
`2
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`Francisco, CA; and Washington, DC. We provide research and analysis in a
`
`
`
`variety of business, litigation, and regulatory settings, and have particular
`
`expertise in intellectual property (“IP”) matters, having been engaged in
`
`numerous matters involving patents, trademarks, copyrights, trade secrets,
`
`and unfair competition.
`
`9.
`
`I am an economist whose specialty is IP valuation, monetary relief
`
`assessment, and the economics of commercial success. I have been involved
`
`in more than 350 such engagements spanning a broad range of industries and
`
`technologies, including a variety of covering pharmaceutical products. I
`
`received a J.D. from the University of Wisconsin and an M.A. in Economics
`
`from Washington University in St. Louis, where I completed most of the
`
`requirements for a Ph.D. in Economics. I also hold a B.A. in Economics and
`
`Organizational Communication from Creighton University in Omaha. I am a
`
`member of several professional associations, including the Licensing
`
`Executives Society. I have been a speaker and instructor many times on a
`
`variety of financial, economic, and valuation topics, most having to do with
`
`IP protection.
`
`10.
`
`A copy of my curriculum vitae is provided as Appendix 1. It includes
`
`a more detailed description of my educational background and professional
`
`experience.
`
`3
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`C. Compensation
`
`
`
`11.
`
`My firm has billed the Patent Owners on a time-and-materials basis
`
`for my work and that of my colleagues. My hourly billing rate is $665. I also
`
`have directed the efforts of other staff members of Analysis Group, whose
`
`hourly billing rates range from $265 to $425. My compensation is not, in
`
`any way, dependent on the outcome of this proceeding or on the substance
`
`of my opinion.
`
`D. Evidence Considered
`
`12.
`
`In undertaking my study and arriving at my conclusions and opinions,
`
`I have relied upon the materials cited here, and considered my own
`
`knowledge and experience, as well as additional information from a variety
`
`of sources that an expert economist would routinely consider in performing
`
`this undertaking. I specifically relied upon the materials cited and, although
`
`at times I refer to only selected portions of a cited reference, it should be
`
`understood that I have considered and relied upon all relevant aspects of
`
`such cited reference.
`
`13.
`
`My analysis and opinions in this case are based on my knowledge,
`
`education, and research. In connection with the opinions and conclusions
`
`contained in this declaration, I also considered revenue, prescription, and
`
`promotional expenditure data provided by IMS Health (“IMS”). IMS data
`
`4
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`are routinely relied upon by pharmaceutical industry professionals and
`
`
`
`researchers.
`
`14.
`
`Appendix 2 through Appendix 13 provide a summary of the
`
`voluminous IMS data relating to Prolensa® that I considered. I and others
`
`working under my direction and supervision prepared these appendices.
`
`E.
`
`Summary of Opinions
`
`15.
`
`Based upon my review and analysis of the evidence received to date,
`
`it is my opinion that Prolensa® has achieved substantial marketplace success
`
`in the United States. It is also my opinion that there is a nexus between the
`
`marketplace success of Prolensa® and the claims of the ’431 patent. In
`
`short, the claims of the ’431 patent at issue here have been a commercial
`
`success.
`
`16.
`
`A number of facts demonstrate that Prolensa® has been a marketplace
`
`success. Prolensa®’s revenues and prescriptions grew substantially after its
`
`commercial launch in April 2013. In its first ten quarters of commercial
`
`availability, Prolensa® has been prescribed approximately 1.4 million times
`
`in the U.S., generating $246.9 million in revenue. (Appendix 13.) Prolensa®
`
`achieved this success despite being introduced into a marketplace in which
`
`at least six branded drugs and three generic drugs had already received U.S.
`
`Food and Drug Administration (“FDA”) approval to treat similar indications
`
`5
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`as Prolensa®. (See, e.g., Appendix 2.) Since its introduction, Prolensa® has
`
`
`
`achieved the second highest share of revenues and prescriptions among
`
`branded drugs with similar indications as Prolensa®. (Appendix 3;
`
`Appendix 6.)
`
`17.
`
`A number of facts demonstrate that there is a causal nexus between
`
`the success of Prolensa® and the claimed features of the ’431 patent. The
`
`patent describes and claims compositions of the active ingredient bromfenac
`
`and the surfactant tyloxapol. Specifically, claims of the ’431 patent disclose
`
`aqueous liquid compositions of the active ingredient bromfenac and the
`
`surfactant tyloxapol, which is the technology embodied in the drug
`
`Prolensa®. (Ex. 2082, at ¶152.) I understand that these compositions have a
`
`lower, more natural pH level with improved ocular penetration relative to
`
`other bromfenac formulations, allowing Prolensa® to deliver the same
`
`clinical efficacy, but using a lower concentration of the active ingredient
`
`bromfenac and a lower concentration of surfactant relative to other
`
`bromfenac formulations. The reduced concentrations of active ingredient
`
`and surfactant, as well as the lower pH, result in an improved side effect
`
`profile relative to other nonsteroidal anti-inflammatory drug (“NSAID”)
`
`formulations, with no stinging or burning. The lower pH and reduced side
`
`effects make Prolensa® more comfortable to use relative to other NSAID
`
`6
`
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`formulations and enhance patient compliance.
`
`
`
`
`
`
`
` As explained by Dr. Trattler, the development of Prolensa®
`
`was “highly significant to the field of ophthalmology and cataract surgery.”
`
`(Ex. 2116, at ¶52.) The claimed features of the ’431 patent have been a
`
`critical driver of the success of Prolensa®. That is, Prolensa® is consistently
`
`marketed based on the benefits made possible by the ’431 patent.
`
`18.
`
`Bausch & Lomb’s promotional expenditures on Prolensa® are
`
`consistent with those for competing drugs with similar indications that
`
`became commercially available around the same time as Prolensa®.
`
`(Appendix 12.) Specifically, Bausch & Lomb’s promotional expenditures as
`
`a percent of sales are consistent with those for Ilevro®, which was
`
`commercially released six months prior to Prolensa®. (Appendix 12.) And
`
`the success of Prolensa® is not attributable to any pricing advantages,
`
`because it has none.
`
`II. BACKGROUND
`A.
`Parties to the Inter Partes Review
`
`1. Senju
`
`19.
`
`Senju is a pharmaceutical company that operates out of Osaka, Japan.
`
`(Ex. 2194; Ex. 2195.) Senju manufactures a number of different prescription
`
`7
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`and over-the-counter drugs, specializing in the development of eye care
`
`
`
`products and ear, nose, and throat treatments. (Ex. 2194; Ex. 2196.) Senju is
`
`the original assignee of the ’431 patent. (Ex. 1001.)
`
`2. Bausch & Lomb
`
`20.
`
`Bausch & Lomb Incorporated is a manufacturer of eye care products
`
`headquartered in Rochester, New York. (Ex. 2186.) Originally incorporated
`
`as Bausch & Lomb Optical Company, the company changed its name to
`
`Bausch & Lomb Incorporated in 1960. (Ex. 2186.) Bausch & Lomb
`
`Incorporated is a subsidiary of Bausch & Lomb Holdings Incorporated
`
`(“Bausch & Lomb Holdings”). (Ex. 2186.)
`
`21.
`
`I understand that Bausch & Lomb Pharma Holdings Corp. is the
`
`licensee of the ’431 patent from Senju and is a wholly-owned subsidiary of
`
`Bausch & Lomb Incorporated.
`
`22.
`
`In 2007, Bausch & Lomb Holdings was acquired by the private equity
`
`firm Warburg Pincus PLC (“Warburg”) for $4.5 billion, including $3.67
`
`billion in cash and the assumption of $830 million in debt. (Ex. 2212.) As a
`
`result of this acquisition, Bausch & Lomb Holdings stock was delisted from
`
`the New York Stock Exchange on October 26, 2007. (Ex. 2212.)
`
`23.
`
`On June 6, 2012, Bausch & Lomb Holdings acquired ISTA
`
`Pharmaceutical, Inc. (“ISTA”), a manufacturer of eye drugs, in a $465.5
`
`8
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`million all-cash transaction.2 (Ex. 2237, at 52. See also, Ex. 2208; Ex. 2210.)
`
`
`
`As a result of the acquisition, Bausch & Lomb Holdings gained ownership
`
`of four prescription eye care products, including Bromday® (a once-daily
`
`bromfenac formulation that was first launched in November 2010), as well
`
`as several eye care products in various stages of development, including
`
`Prolensa®. (Ex. 2185, at 5-6; Ex. 2208; Ex. 2210.) Also on June 6, 2012,
`
`Bausch & Lomb Incorporated submitted a New Drug Application (“NDA”)
`
`to the FDA seeking approval for Prolensa®. (Ex. 2152.)
`
`24.
`
`On August 5, 2013, Warburg sold Bausch & Lomb Holdings to
`
`Valeant Pharmaceuticals International, Inc. (“Valeant”) for approximately
`
`$8.7 billion, including $4.2 billion to repay Bausch & Lomb’s existing debt.
`
`(Ex. 2205; Ex. 2236, at 33.) Following the acquisition, Bausch & Lomb
`
`Holdings retained its name and became a division of Valeant, and Valeant’s
`
`existing ophthalmology business was integrated into Bausch & Lomb
`
`Holdings. (Ex. 2184.)
`
`3. InnoPharma
`
`25.
`
`InnoPharma, Inc. is a pharmaceutical company based in Piscataway,
`
`New Jersey. (Ex. 2159; Ex. 2216.) Founded in 2005, InnoPharma Inc.
`
`focuses on developing generic and specialty pharmaceutical products in
`
`
`2 Purchase price is net of cash acquired.
`
`9
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`injectable and ophthalmic dosage forms. (Ex. 2159; Ex. 2216.) On
`
`
`
`September 25, 2014, InnoPharma, Inc. was acquired by Pfizer Inc. for $225
`
`million in cash and up to $135 million in contingent milestone payments.
`
`(Ex. 2215; Ex. 2216.)
`
`26.
`
`I understand that InnoPharma Licensing, Inc. operates as a patent
`
`owner and lessor for InnoPharma, Inc. I understand that InnoPharma
`
`Licensing, Inc. submitted Abbreviated New Drug Application (“ANDA”)
`
`No. 206326 seeking approval to sell a generic bromfenac ophthalmic
`
`solution, intended to be a generic version of Prolensa®. (Ex. 2010, at 7-8.)
`
`27.
`
`I understand that InnoPharma Licensing, LLC and InnoPharma, LLC
`
`are limited liability companies existing under the laws of New Jersey and
`
`have the same principal place of business as InnoPharma, Inc. I understand
`
`that these two companies are wholly-owned subsidiaries of InnoPharma, Inc.
`
`and are involved in seeking FDA approval to sell InnoPharma Licensing,
`
`Inc.’s generic bromfenac ophthalmic solution.
`
`4. Mylan
`
`28.
`
`Mylan Inc. is a global pharmaceutical company that develops,
`
`licenses, manufactures, markets, and distributes generic, branded generic,
`
`and specialty pharmaceuticals. (Ex. 2206, at 3.) Mylan Inc.’s product
`
`portfolio includes approximately 1,400 products marketed to customers in
`
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`more than 140 countries and territories. (Ex. 2206, at 3-4.)
`
`
`
`29.
`
`On February 27, 2015, Mylan Inc. completed a transaction to acquire
`
`Abbott’s non-U.S. developed market specialty and branded generics
`
`business for $6.31 billion. (Ex. 2206, at 53.) As part of this transaction,
`
`Mylan Inc. was reorganized to become a wholly-owned indirect subsidiary
`
`of the newly formed Mylan N.V. (Ex. 2206, at 53.)
`
`30.
`
`Prior to the acquisition, Mylan Inc.’s principal executive offices were
`
`located in Canonsburg, Pennsylvania. (Ex. 2206, at 4.) Mylan N.V. is
`
`headquartered in Amsterdam, the Netherlands, and has principal executive
`
`offices in Potters Bar, United Kingdom and global centers for excellence in
`
`multiple locations, including Canonsburg, Pennsylvania. (Ex. 2197; Ex.
`
`2206, at 53.)
`
`31.
`
`Mylan Pharmaceuticals, Inc. is a wholly-owned subsidiary of Mylan
`
`Inc. and Mylan N.V. based in Morgantown, West Virginia. (Ex. 2187; Ex.
`
`2206, at Exhibit 21.1.) I understand that Mylan Pharmaceuticals, Inc. is
`
`involved in Mylan Inc.’s efforts to develop and seek FDA approval for
`
`generic pharmaceutical products.
`
`B. Cataract Treatments
`
`32.
`
`A cataract is a congenital or degenerative clouding of the lens of the
`
`eye that affects vision. (Ex. 2067, at 606.) Early symptoms include loss of
`
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`contrast, glare, needing more light to see well, and problems distinguishing
`
`
`
`dark blue and black. (Ex. 2067, at 606.) Cataracts are the leading cause of
`
`blindness worldwide, and affect more than 20 million Americans over the
`
`age of 40. (Ex. 2052, at 447.)
`
`33.
`
`Cataracts develop slowly over time, and occur as a result of aging or
`
`other risk factors such as trauma, smoking and alcohol use, under-nutrition,
`
`exposure to x-rays, or other factors. (Ex. 2067, at 606.) If external treatments
`
`such as corrective eyeglasses or long-term pupillary dilation do not
`
`sufficiently improve eyesight, the next option is surgery. (Ex. 2067, at 607.)
`
`Cataract surgery is one of the most commonly performed operations in the
`
`world. (Ex. 2052, at 447.) During cataract surgery, the clouded lens is
`
`removed from the eye and typically replaced with a plastic or silicone
`
`intraocular lens. (Ex. 2067, at 606-07.)
`
`C.
`
`Post-Surgery Options
`
`34.
`
`A wide range of medications are approved for use in treating
`
`inflammation (and pain) following cataract surgery. The two most common
`
`types are NSAIDs and corticosteroids. (See, e.g., Ex. 2153, at 5; Ex. 2155.)
`
`NSAIDs and corticosteroids treat inflammation by different mechanisms.
`
`(Ex. 2116, at ¶23.) They act on different enzymes that cause post-surgical
`
`inflammation and, thus, mediate post-surgical inflammation in different
`
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`ways. (Ex. 2116, at ¶23.) Moreover, NSAIDs and corticosteroids exhibit
`
`
`
`different side effect profiles. (Ex. 2116, at ¶23.)
`
`35.
`
`In addition to the NSAID bromfenac (the active ingredient in
`
`Prolensa®), the FDA has approved three major topical ophthalmic NSAIDs
`
`for use in the treatment of post-cataract surgery inflammation and, in some
`
`cases, pain:3 1) diclofenac sodium; 2) ketorolac tromethamine; and 3)
`
`nepafenac. (See, e.g., Ex. 2153, at 5; Ex. 2155.)
`
`1. Non-Bromfenac NSAIDs
`
`36.
`
`a. Diclofenac Sodium
`Diclofenac sodium is sold under the brand name Voltaren® as a 0.1
`
`percent concentration ophthalmic solution and a 1 percent topical gel. (Ex.
`
`2162; Ex. 2166.) Generic versions of diclofenac sodium are available in
`
`solution and topical gel formulations. (Ex. 2170; Ex. 2171.)
`
`37.
`
`Voltaren® solution first received FDA approval in March 1991. (Ex.
`
`2162.) Diclofenac sodium ophthalmic solution is indicated for the treatment
`
`3 The IMS data for USC 61420 (ophthalmic NSAIDs) includes a fourth
`additional NSAID, flurbiprofen sodium, and its branded form Ocufen®.
`However, according to Dr. Trattler, Ocufen® has never been approved by the
`FDA for the treatment of inflammation or pain following cataract surgery. (Ex.
`2116, at ¶25.) To be conservative, the appendices to this declaration show totals
`and relative shares that include Ocufen®/generic flurbiprofen sodium and that
`exclude Ocufen®/generic flurbiprofen sodium.
`
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`of inflammation following cataract surgery, and is administered four times
`
`
`
`per day through an eye drop. (Ex. 2057.)
`
`38.
`
`b. Ketorolac Tromethamine
`Ketorolac tromethamine is sold in 0.4 percent, 0.45 percent, and 0.5
`
`percent ophthalmic solution formulations under the brand names Acular
`
`LS®, Acuvail®, and Acular®, respectively.4 (Ex. 2161; Ex. 2163; Ex.
`
`2167.) Generic versions of ketorolac tromethamine are available in solution
`
`formulations with varying concentrations. (Ex. 2168; Ex. 2169.)
`
`39.
`
`Acular® first received FDA approval in November 1992. (Ex. 2161.)
`
`Acular LS® and Acuvail® received FDA approval in May 2003 and July
`
`2009, respectively. (Ex. 2163; Ex. 2167.) Acular® and Acular LS® are
`
`administered four times per day, while Acuvail® is administered twice per
`
`day. (Ex. 2155, at 18; Ex. 2193.) Ketorolac tromethamine is indicated for the
`
`treatment of inflammation and pain following cataract surgery, and is
`
`administered through an eye drop. (Ex. 2060; Ex. 2183; Ex. 2240.)
`
`40.
`
`c. Nepafenac
`Nepafenac is sold as a 0.1 percent concentration ophthalmic
`
`4 The IMS data for USC 61420 (ophthalmic NSAIDs) includes a fourth form of
`Acular®, known as Acular PF®. According to Dr. Trattler, Acular PF® was not
`indicated for the treatment of inflammation or pain following cataract surgery.
`(Ex. 2116, at ¶29.) To be conservative, the appendices to this declaration show
`totals and relative shares that include Acular PF® and that exclude Acular PF®.
`
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`suspension under the brand name Nevanac® and as a 0.3 percent
`
`
`
`concentration ophthalmic suspension under the brand name Ilevro®. (Ex.
`
`2165; Ex. 2178.)
`
`41.
`
`Nevanac® and Ilevro® first received FDA approval in August 2005
`
`and October 2012, respectively. (Ex. 2165; Ex. 2178.) Nevanac® is
`
`administered three times per day, while Ilevro® is administered once per
`
`day. (Ex. 2155, at 18; Ex. 2193.) Nepafenac is indicated for the treatment of
`
`inflammation and pain following cataract surgery and is administered
`
`through an eye drop. (Ex. 2241.)
`
`2. Corticosteroids
`
`42.
`
`Various corticosteroids have been approved for the treatment of post-
`
`operative inflammation and, in some cases, pain. These treatments include
`
`loteprednol etabonate 0.5 percent ophthalmic solution, sold under the brand
`
`name Lotemax®; difluprednate 0.05 percent ophthalmic solution, sold under
`
`the brand name Durezol®; and rimexolone 1 percent ophthalmic suspension,
`
`sold under the brand name Vexol®. (Ex. 2153, at 5; Ex. 2155.)
`
`43.
`
`Although NSAIDs and corticosteroids can both be used to treat post-
`
`operative ophthalmic inflammation and pain, they represent distinct drug
`
`classes. (Ex. 2155.) According to Dr. Trattler, NSAIDs and corticosteroids
`
`act on different enzymes that cause post-surgical inflammation and, thus,
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`mediate the major inflammatory response following surgical trauma in
`
`
`
`different ways. (Ex. 2116, at ¶23.)
`
`44.
`
`An October 2014 review, done by Dr. Line Kessel et al., of existing
`
`research comparing the effectiveness of NSAIDs and corticosteroids in
`
`treating inflammation following cataract surgery found that NSAIDs are
`
`more effective in controlling inflammation and recommended the use of
`
`NSAIDs over corticosteroids to prevent inflammation. (Ex. 2202, at 1922.)
`
`Additionally, NSAIDs and corticosteroids have different side effect profiles
`
`when used to treat ocular inflammation. (Ex. 2116, at ¶23; Ex. 2119.) The
`
`superior performance and different side effect profile of NSAIDs relative to
`
`corticosteroids are also consistent with Bausch & Lomb’s Prolensa®
`
`marketing and promotional materials, which focus almost exclusively on
`
`NSAIDs with only passing mentions of corticosteroids. (See, e.g., Ex. 2220;
`
`Ex. 2221; Ex. 2226.)
`
`45.
`
`The relevant competitive marketplace for Prolensa®
`
`includes
`
`ophthalmic NSAIDs that are indicated for the treatment of inflammation or
`
`inflammation and pain following cataract surgery.5 It does not include
`
`
`5 There is some evidence that Bausch & Lomb considers Prolensa/bromfenac’s
`competitive set to be limited to branded ketorolac (i.e., Acular LS®, Acuvail®,
`and Acular®), generic ketorolac, and branded Nepafenac (i.e., Nevanac® and
`
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`
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`corticosteroids.
`
`D.
`
`Prolensa®
`
`46.
`
`I understand that Prolensa® embodies the relevant claims of the ’431
`
`patent. (Ex. 2082, at ¶152.) Approved by the FDA on April 5, 2013,
`
`Prolensa® is a once-daily, sterile, topical, NSAID indicated for the treatment
`
`of postoperative inflammation and reduction of ocular pain in patients who
`
`have undergone cataract surgery. (Ex. 2013; Ex. 2176.) Prolensa® contains
`
`a 0.07 percent concentration of the active NSAID bromfenac. (Ex. 2013.)
`
`Prolensa® is formulated using tyloxapol as a surfactant. (Ex. 2013.)
`
`Prolensa® was first commercially available in April 2013. (Ex. 2211.)
`
`Prolensa® is administered through an eye drop. (Ex. 2013.)
`
`1. Earlier Bromfenac Products
`
`47.
`
`In July 2000, Bromfenac was approved for use in Japan and was
`
`marketed by Senju under the name Bronuck. (Ex. 2224; Ex. 2226, at 876.)
`
`ISTA acquired the ophthalmic rights to bromfenac under a license from
`
`Senju in May 2002. (Ex. 2229.) On March 24, 2005, ISTA received U.S.
`
`
`Ilevro®). (Ex. 2220, at 692.) However, the IMS data for USC 61420
`(ophthalmic NSAIDs) also includes Voltaren® and generic diclofenac sodium,
`which are also indicated for the treatment of inflammation following cataract
`surgery. (Ex. 2057.) I have included Voltaren® and generic diclofenac sodium
`in my analysis.
`
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`FDA approval for Xibrom®, a twice-daily topical NSAID for the treatment
`
`
`
`of ocular inflammation following cataract surgery. (Ex. 2164; Ex. 2213; Ex.
`
`2223.) Xibrom® contains a 0.09 percent concentration of the active NSAID
`
`bromfenac, and uses polysorbate 80 as a surfactant. (Ex. 2164; Ex. 2190; Ex.
`
`2213.) Xibrom® was first commercially available in the second quarter of
`
`2005. (Ex. 2213; see also, Appendix 2; Appendix 5.) In January 2006, the
`
`FDA expanded the approved Xibrom® indications to include the treatment
`
`of pain following cataract surgery. (Ex. 2189; Ex. 2223.)
`
`48.
`
`On October 16, 2010, ISTA received FDA approval for Bromday®, a
`
`once-daily topical NSAID for the treatment of ocular inflammation and pain
`
`following cataract surgery. (Ex. 2164; Ex. 2188; Ex. 2223.) Like Xibrom®,
`
`Bromday® contains a 0.09 percent concentration of the active NSAID
`
`bromfenac, and uses polysorbate 80 as a surfactant; however Bromday® is
`
`dosed once a day compared to twice daily for Xibrom®. (Ex. 2027; Ex.
`
`2164; Ex. 2188.) Bromday® was first launched commercially in November
`
`2010. (Ex. 2185.)
`
`49.
`
`The first generic version of Xibrom® was launched in May 2011 by
`
`Mylan under a development and supply agreement with Coastal
`
`Pharmaceuticals. (Ex. 2214; Ex. 2242.) Subsequently, several additional
`
`generic pharmaceutical companies, including Paddock LLC, Luitpold,
`
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`Apotex Inc., and Hi-Tech Pharmacal, launched generic bromfenac 0.09
`
`
`
`percent ophthalmic solutions, including generic versions of Bromday. (Ex.
`
`2172; Ex. 2173; Ex. 2174; Ex. 2175; Ex. 2177; Ex. 2238; Ex. 2239.)
`
`2. ISTA’s Acquisition by Bausch & Lomb
`
`50.
`
`Bausch & Lomb (which, at the time, was owned by Warburg) paid
`
`$465.5 million to acquire ISTA in June 2012.6 (Ex. 2208; Ex. 2210; Ex.
`
`2237, at 52.) At the time of the acquisition, ISTA had Prolensa® in its
`
`product pipeline. (Ex. 2210.) Ten months after Bausch & Lomb’s acquisition
`
`of ISTA, in preparation for the sale of Bausch & Lomb, Warburg filed an S-
`
`1 statement with the U.S. Securities and Exchange Commission (“SEC”) in
`
`which it identified the fair value of Bromday® and Prolensa® at $297.9
`
`million, or approximately 64 percent of the $465.5 million acquisition price
`
`for ISTA.7 (Ex. 2237, at 53.)
`
`3. Development and Launch of Prolensa®
`
`51.
`
`On June 6, 2012, the same day that Bausch & Lomb’s acquisition of
`
`ISTA was completed, Bausch & Lomb submitted NDA No. 203168 to the
`
`FDA seeking approval for Prolensa®. (Ex. 2152.) On April 5, 2013, the
`
`FDA approved Prolensa® for the treatment of postoperative inflammation
`
`
`6 Purchase price is net of cash acquired.
`7 $297.9 million / $465.5 million = 64.0 percent.
`
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`and reduction of ocular pain in patients who have undergone cataract
`
`
`
`surgery. (Ex. 2013; Ex. 2176.) Like Bromday®, Prolensa® is a once-daily
`
`topical NSAID. (Ex. 2013; Ex. 2027.) However Prolensa® contains a lower
`
`concentration of bromfenac than Bromday® (0.07 percent vs. 0.09 percent),
`
`and uses tyloxapol rather than polysorbate 80 as the surfactant. (Ex. 2013;
`
`Ex. 2027.)
`
`E.
`
`Patented Technology
`
`52.
`
`The ’431 patent is entitled “Aqueous Liquid Preparation Containing
`
`2-Amino-3-(4-Bromobenzoyl)Phenylacetic Acid” and the Abstract of the
`
`patent provides,
`
`An aqueous liquid preparation of the present invention
`containing 2-amino-3-(4-bromobenzoyl)phenylacetic acid or its
`pharmacologically acceptable salt or a hydrate thereof, an alkyl
`aryl polyether alcohol type polymer such as tyloxapol, or a
`polyethylene glycol fatty acid ester such as polyethylene glycol
`monostearate is stable. Since even in the case where a
`preservative
`is
`incorporated
`into
`said aqueous
`liquid
`preparation, the preservative exhibits a sufficient preservative
`effect for a long time, said aqueous liquid preparation in the
`form of an eye drop is useful for the treatment of blepharitis,
`conjunctivitis, scleritis, and postoperative inflammation. Also,
`the aqueous liquid preparation of the present invention in the
`form of a nasal drop is useful for the treatment of allergic
`rhinitis and
`inflammatory rhinitis (e.g. chronic rhinitis,
`hypertrophic rhinitis, nasal polyp, etc.).