UNITED STATES PATENT AND TRADEMARK OFFICE
`_____________________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`_____________________
`
`MYLAN PHARMACEUTICALS INC.,
`Petitioner,
`
`v.
`
`ASTRAZENECA AB,
`Patent Owner.
`
`_____________________
`
`Case IPR2015-01340
`Patent RE44,186 E
`_____________________
`
`
`
`DECLARATION OF CHRISTINE S. MEYER, PH.D.
`August 2, 2016
`
`
`
`CONFIDENTIAL INFORMATION - SUBJECT TO PROTECTIVE ORDER
`
`Page 1 of 61
`
`AstraZeneca Exhibit 2059B
`Mylan v. AstraZeneca
`IPR2015-01340
`
`
`_____________________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`_____________________
`
`MYLAN PHARMACEUTICALS INC.,
`Petitioner,
`
`v.
`
`ASTRAZENECA AB,
`Patent Owner.
`
`_____________________
`
`Case IPR2015-01340
`Patent RE44,186 E
`_____________________
`
`
`
`DECLARATION OF CHRISTINE S. MEYER, PH.D.
`August 2, 2016
`
`
`
`CONFIDENTIAL INFORMATION - SUBJECT TO PROTECTIVE ORDER
`
`Page 1 of 61
`
`AstraZeneca Exhibit 2059B
`Mylan v. AstraZeneca
`IPR2015-01340
`
`
`
`Table of Contents
`INTRODUCTION ............................................................................................. 1
`I.
`A. PROFESSIONAL QUALIFICATIONS AND EXPERTISE ............................................ 1
`B. RETENTION AND ASSIGNMENT .......................................................................... 2
`C. COMPENSATION ................................................................................................ 3
`D. INFORMATION CONSIDERED .............................................................................. 4
`E. SUMMARY OF OPINIONS .................................................................................... 4
`II. BACKGROUND ............................................................................................... 5
`A. ASTRAZENECA AND SAXAGLIPTIN .................................................................... 5
`B. THE PRODUCTS AT ISSUE .................................................................................. 6
`C. THE PATENT AT ISSUE ....................................................................................... 9
`III. THE PURPOSE OF AN ANALYSIS OF COMMERCIAL SUCCESS ....11
`IV. THE COMMERCIAL SUCCESS OF ONGLYZA® AND
`KOMBIGLYZE™ XR ....................................................................................13
`A. THE MARKETPLACE PERFORMANCE OF ONGLYZA® AND KOMBIGLYZE™ XR IS
`DRIVEN BY THE CLAIMED FEATURES OF THE RE’186 PATENT .......................14
`B. ONGLYZA® AND KOMBIGLYZE™ XR ARE A MARKETPLACE SUCCESS ...........16
`C. THE IMPORTANCE OF EXTRINSIC FACTORS IN THE SALES OF ONGLYZA® AND
`KOMBIGLYZE™ XR ........................................................................................26
`
`Page 2 of 61
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`
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`I, Christine S. Meyer, hereby declare as follows.
`
`I.
`
`INTRODUCTION
`
`A. Professional Qualifications and Expertise
`
`1.
`
`I am an economist and Senior Vice President at National Economic
`
`Research Associates, Inc. (“NERA”). NERA is a firm of consulting economists
`
`that was founded in 1961 and provides research and analysis in economics,
`
`including analysis in the areas of competition, regulation, and finance. I joined the
`
`firm in 2000 and have worked since then mainly in the areas of the economics of
`
`intellectual property, antitrust analysis, and the evaluation of commercial damages.
`
`I have testified as an expert witness in the United States District Court, the
`
`Supreme Court of the State of New York, the Federal Court of Canada, and the
`
`High Court of Justice in England.
`
`2.
`
`Since joining NERA, I have analyzed economic issues in a wide
`
`variety of cases. As part of my work, I have written expert reports and declarations
`
`related to commercial success in patent cases for both District Court and Patent
`
`Trial and Appeal Board proceedings. I have also analyzed damages arising from
`
`patent infringement; irreparable harm as related to potential injunctions in patent
`
`cases; and the value of several patents, licenses, and potential business
`
`acquisitions. I have written articles and book chapters about patent infringement
`
`damages and have been asked to speak about economic issues related to
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`Page 3 of 61
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`intellectual property on numerous occasions, including by the U.S. Federal Trade
`
`Commission in its hearings entitled “The Evolving IP Marketplace.” I have been
`
`involved in many cases involving a variety of technologies across a broad range of
`
`industries, including pharmaceutical products, medical devices, and consumer
`
`products.
`
`3.
`
`I received my bachelor’s degree with a concentration in economics
`
`from the United States Military Academy at West Point and my Ph.D. in
`
`economics from the Massachusetts Institute of Technology. I taught economics and
`
`statistics at Bentley College and Colgate University. A list of my prior testimony
`
`and publications can be found in my curriculum vitae, which is appended to this
`
`declaration as Exhibit 2060.
`
`B. Retention and Assignment
`
`4.
`
`NERA has been retained by Finnegan, Henderson, Farabow, Garrett
`
`& Dunner, LLP, counsel for AstraZeneca AB (“AstraZeneca” or “Patent Owner”)
`
`for the above-captioned inter partes review (“IPR”) of U.S. Patent Number
`
`RE44,186 (“the RE’186 patent” or “the patent at issue”).
`
`5.
`
`I understand that the Patent Trial and Appeal Board has granted
`
`Mylan Pharmaceuticals Inc.’s (“Mylan” or “Petitioner”) petition to institute this
`
`IPR regarding the RE’186 patent on obviousness grounds. I understand that the
`
`RE’186 patent, which is titled “Cyclopropyl-Fused Pyrrolidine-Based Inhibitors of
`
`Page 4 of 61
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`Dipeptidyl Peptidase IV and Method,” claims, among other things, the new
`
`chemical entity saxagliptin.1
`
`6.
`
`I understand further that the RE’186 patent is listed in the U.S. Food
`
`and Drug Administration’s (“FDA”) Approved Drug Products with Therapeutic
`
`Equivalence Evaluations (“the Orange Book”) for the branded pharmaceutical
`
`drugs Onglyza® and Kombiglyze™ XR, which were developed by AstraZeneca in
`
`a collaboration agreement with Bristol-Myers Squibb Company (“BMS”), and are
`
`marketed in the U.S. by AstraZeneca.
`
`7.
`
`I provide this declaration in regards to Patent Owner’s arguments
`
`concerning objective indicia of non-obviousness. Specifically, I have been asked
`
`by counsel for AstraZeneca to evaluate the marketplace performance of Onglyza®
`
`(saxagliptin) and Kombiglyze™ XR (saxagliptin and metformin hydrochloride
`
`extended-release) and to provide an opinion regarding whether Onglyza® and
`
`Kombiglyze™ XR are a commercial success as a result of the patented features of
`
`the RE’186 patent.
`
`C. Compensation
`
`8.
`
`NERA is being compensated for the time I spend on this assignment
`
`at my customary hourly rate of $675 and is separately reimbursed for reasonable
`
`1 Ex. 1001, 1, col. 3.
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`Page 5 of 61
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`out-of-pocket expenses. Professional staff members employed by NERA and
`
`working under my direction have hourly billing rates that range from $270 to $425.
`
`No part of my or NERA’s compensation is dependent upon the outcome of this
`
`action or the nature of the opinions that I express.
`
`D. Information Considered
`
`9.
`
`In preparing this declaration, I (or economists working under my
`
`direction) have reviewed information from a variety of sources. These include, for
`
`example, pleadings, documents, exhibits, and data submitted to the Board by the
`
`parties in this inter partes review, as well as information and data from publicly
`
`available sources. In addition, I have relied on my experience and training as an
`
`applied microeconomist. My understanding of the medical and technical aspects of
`
`Onglyza® and Kombiglyze™ XR derives from my review of relevant literature and
`
`the declaration of AstraZeneca’s clinical expert, Dr. James Lenhard.2
`
`E. Summary of Opinions
`
`10. Based on the information available to me and on my analysis to date, I
`
`have reached the following conclusions:
`
`• Onglyza® and Kombiglyze™ XR are commercially successful products.
`
`2 Ex. 2057.
`
`Page 6 of 61
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`
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`• Sales of Onglyza® and Kombiglyze™ XR are driven by the patented
`
`features of saxagliptin, which I understand is the chemical compound
`
`claimed in the RE’186 patent. The marketing messaging for Onglyza®
`
`and Kombiglyze™ XR focuses on their safety and efficacy profiles and
`
`their clinical benefits, which I understand are a direct result of the active
`
`pharmaceutical ingredient in these products—saxagliptin.
`
`• Sales of Onglyza® and Kombiglyze™ XR during the first six years since
`
`launch have already been substantial, and these products have realized
`
`substantial market shares in their therapeutic category. Indeed, sales of
`
`Onglyza® and Kombiglyze™ XR have generated almost $2.5 billion in
`
`net revenues in the U.S. and over $3.5 billion worldwide through the
`
`period ending December 2015.
`
`• The marketing expenditures on and pricing of Onglyza® and
`
`Kombiglyze™ XR are similar to those of other DPP-4 inhibitors
`
`available in the U.S. and, thus, do not account for the substantial sales of
`
`Onglyza® and Kombiglyze™ XR.
`
`II. BACKGROUND
`
`A. AstraZeneca and Saxagliptin
`
`11.
`
`In January 2007, AstraZeneca entered into a worldwide collaboration
`
`agreement with BMS to, among other things, commercialize the pharmaceutical
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`Page 7 of 61
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`
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`compound saxagliptin, which had been discovered by BMS and was being
`
`investigated for the treatment of type 2 diabetes.3 At that time, saxagliptin, a
`
`dipeptidyl peptidase-4 (“DPP-4”) inhibitor, was in Phase III clinical trial testing.4
`
`Under the terms of this agreement, BMS was to manufacture products embodying
`
`this compound and book sales, but AstraZeneca and BMS were to co-promote
`
`these products and equally share expenses and profits from global sales.5 On
`
`February 1, 2014, AstraZeneca purchased BMS’s interest in the parties’ diabetes
`
`alliance.6
`
`B. The Products at Issue
`
`1. Onglyza®
`
`12.
`
`I understand that Onglyza® is a DPP-4 inhibitor indicated for the
`
`treatment of adults with type 2 diabetes as an adjunct to diet and exercise to
`
`improve blood sugar control.7 Specifically, Onglyza® is a once daily oral tablet
`
`comprised of the active pharmaceutical ingredient (“API”) saxagliptin, in the form
`
`3 Ex. 2121; Ex. 2101, 53-54.
`
`4 Ibid.
`
`5 Ex. 2121.
`
`6 Ex. 2004, 172; Ex. 2115, 65-66; Ex. 2116, 65-67; Ex. 2122.
`
`7 Ex. 2047, 1-3.
`
`Page 8 of 61
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`of saxagliptin hydrochloride, and is available in two dosage strengths: 2.5 mg
`
`saxagliptin and 5.0 mg saxagliptin.8 Onglyza® attained FDA marketing approval
`
`under a New Drug Application (“NDA”) in July 2009, and was launched for sale in
`
`the U.S. in August 2009.9
`
`13.
`
`I understand that type 2 diabetes is a medical condition characterized
`
`by, among other things, the body’s lack or inefficient use of insulin, and therefore
`
`poor glycemic control.10 In particular, I understand that bloodstream concentrations
`
`of incretin hormones are lower in patients with type 2 diabetes compared to healthy
`
`patients.11 I understand further that saxagliptin slows DPP-4 enzyme activity,
`
`thereby increasing bloodstream concentrations of the incretin hormones glucagon-
`
`like peptide-1 (“GLP-1”) and glucose-dependent insulinotropic polypeptide
`
`(“GIP”) in patients with type 2 diabetes, thus resulting in increased insulin
`
`secretion from pancreatic beta cells, decreased glucagon secretion from pancreatic
`
`alpha cells, and improved glycemic control.12 Specifically, both as a monotherapy,
`
`8 Ibid.
`
`9 Ex. 2120, 52-53; Ex. 2118.
`
`10 Ex. 2127, 18-20.
`
`11 Ex. 2047, 9-10.
`
`12 Ibid.
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`Page 9 of 61
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`and as a combination therapy, saxagliptin has been found clinically to produce
`
`statistically significant improvements in glycated hemoglobin, i.e., hemoglobin
`
`A1C (“A1C”), fasting plasma glucose (“FPG”), and postprandial glucose
`
`(“PPG”).13
`
`2. Kombiglyze™ XR
`
`14.
`
`I understand that Kombiglyze™ XR is a combination of saxagliptin
`
`and metformin hydrochloride extended-release and is indicated for the treatment of
`
`adults with type 2 diabetes as an adjunct to diet and exercise to improve blood
`
`sugar control.14 Kombiglyze™ XR is a once daily oral tablet to be taken with a
`
`meal in the evening and is available in three dosage strengths: 2.5 mg
`
`saxagliptin/1000 mg metformin hydrochloride extended-release, 5.0 mg
`
`saxagliptin/500 mg metformin hydrochloride extended-release, and 5.0 mg
`
`saxagliptin/1000 mg metformin hydrochloride extended-release.15 Kombiglyze™
`
`XR was approved by the FDA and first marketed in the U.S. in November 2010.16
`
`13 Ex. 2047, 15-25.
`
`14 Ex. 2048, 1-4.
`
`15 Ibid.
`
`16 Ex. 2118; Ex. 2120, 48-49.
`
`Page 10 of 61
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`3. Other Commercially Available Dipeptidyl Peptidase-4
`Inhibitors in the United States
`
`15. Several other prescription DPP-4 inhibitors, i.e., gliptins, are or have
`
`been available for sale in the United States, both as monotherapies and as
`
`combination therapies for the treatment of type 2 diabetes. These include (see
`
`Table 1):17 the Januvia Family of Products (“The Januvia Family”), Januvia®,
`
`Janumet®, Juvisync™,18 and Janumet® XR; the Tradjenta Family of Products
`
`(“The Tradjenta Family”), Tradjenta®, and Jentadueto®; and the Nesina Family of
`
`Products (“The Nesina Family”), Nesina®, Kazano®, and Oseni®.
`
`C. The Patent at Issue
`
`16. The FDA’s Approved Drug Products with Therapeutic Equivalence
`
`Evaluations (“the Orange Book”) lists several patents for Onglyza® and
`
`Kombiglyze™ XR, including the RE’186 patent.19
`
`17 Ex. 2118; Ex. 2120, 36-47, 50-51, 54-57.
`
`In this declaration, I generally refer to DPP-4 inhibitors as DPP4s (“DPP4s”),
`
`single active ingredient DDP4s as DPP4 monotherapies (“DPP4
`
`monotherapies”), and a group of DPP4s that are marketed by the same
`
`pharmaceutical company as a DPP4 product family (“DPP4 product family”).
`
`18 Juvisync™ was discontinued from sale in September 2013. [Ex. 2123.]
`
`19 Ex. 2124.
`
`Page 11 of 61
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`1. The RE’186 Patent
`
`17.
`
`I understand that this IPR involves the RE’186 patent, which is
`
`entitled “Cyclopropyl-Fused Pyrrolidine-Based Inhibitors of Dipeptidyl Peptidase
`
`IV and Method.” 20 The RE’186 patent was reissued by the United States Patent
`
`and Trademark Office (“USPTO”) on April 30, 2013.21
`
`18.
`
`I understand that the RE’186 patent claims DDP-4 inhibiting
`
`compounds and discloses a method for the treatment of type 2 diabetes by the use
`
`of such compounds or by the use of such compounds in combination with other
`
`antidiabetic agents.22 Specifically, I understand that the RE’186 patent claims the
`
`new chemical entity saxagliptin, which is the active pharmaceutical ingredient in
`
`the single-agent drug Onglyza® and one of the active pharmaceutical ingredients in
`
`the combination-agent drug Kombiglyze™ XR.23
`
`20 Ex. 1001, 1.
`
`The RE’186 patent is a reissue of U.S. Patent No. 6,395,767 (“the ’767 patent”),
`
`which was issued on May 28, 2002. [Ibid.]
`
`21 Ex. 1001, 1; Ex. 2124.
`
`22 Ex. 1001, 1, col. 3.
`
`23 Ex. 1001, cols. 88-89, 91.
`
`Page 12 of 61
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`2. Other Patents Listed in the Orange Book for Onglyza® and
`Kombiglyze™ XR
`
`19.
`
`I understand that U.S. Patent Number 7,951,400 (“the ’400 patent”) is
`
`listed in the Orange Book for Onglyza®, and U.S. Patent Number 8,628,799 (“the
`
`’799 patent”) is listed in the Orange Book for Kombiglyze™ XR.24 I understand
`
`that the ’400 patent and ’799 patent each disclose a coated tablet formulation of
`
`saxagliptin.25
`
`20. As explained below, the marketing messages for Onglyza® and
`
`Kombiglyze™ XR are centered on the pharmaceutical benefits of their shared
`
`active ingredient, saxagliptin.26 As such, it is my opinion that the coated tablet
`
`formulations claimed in the ’400 patent and ’799 patent are not the drivers of the
`
`commercial success of Onglyza® and Kombiglyze™ XR.
`
`III. THE PURPOSE OF AN ANALYSIS OF COMMERCIAL SUCCESS
`
`21.
`
`I understand that, under 35 U.S.C. § 103, a patent may only be
`
`obtained if the claimed invention has a non-obvious subject matter. I understand
`
`that an analysis of the obviousness of a patent involves comparing the patent to the
`
`prior art to determine whether the claimed invention would have been obvious to a
`
`24 Ex. 2124.
`
`25 Ex. 2125, 1; Ex. 2126, 1.
`
`26 See Section IV.A.
`
`Page 13 of 61
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`
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`person of ordinary skill in the art, in view of the prior art and in light of the general
`
`knowledge in the art.
`
`22.
`
` I understand that the commercial success of a product that embodies
`
`the claimed invention is a legal construct and one of a number of secondary
`
`considerations that may be considered when determining the obviousness of a
`
`patent. I also understand that, for a commercial success analysis to be considered
`
`relevant for the purposes of evaluating the non-obviousness of a patent, there must
`
`be a demonstrable nexus between the invention claimed in the patent and the
`
`commercial success of the product embodying that invention. I understand further
`
`that a nexus can be shown between the commercial success and the claimed
`
`invention as long as there is a causal connection between the product’s commercial
`
`success and the patented invention—that is, the patented invention is a driving
`
`force, but not necessarily the sole driving force, behind the invention’s marketplace
`
`success.
`
`23. As a matter of economics, the rationale behind a commercial success
`
`analysis is as follows. If the subject matter of the patent at issue were obvious, then
`
`products with those features would have already been introduced into the market,
`
`thereby preempting the marketplace success of the products at issue. Conversely, if
`
`products embodying the novel features claimed in the patent at issue have been
`
`Page 14 of 61
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`successful in the marketplace, and that success follows from those features, then
`
`the claimed invention was not obvious to commercialize.
`
`24.
`
`In this case, I understand that the RE’186 patent claims the chemical
`
`compound saxagliptin, which is the active pharmaceutical ingredient embodied in
`
`Onglyza® and Kombiglyze™ XR. As such, it is my understanding that the purpose
`
`of a commercial success analysis is to assess whether Onglyza® and Kombiglyze™
`
`XR have been a success in the marketplace, and whether saxagliptin is a driver of
`
`that marketplace success.
`
`IV. THE COMMERCIAL SUCCESS OF ONGLYZA® AND
`KOMBIGLYZE™ XR
`
`25.
`
`I understand that an assessment of commercial success as a secondary
`
`consideration of non-obviousness requires a demonstration that Onglyza®’s and
`
`Kombiglyze™ XR’s marketplace performance is, at least in part, a result of the
`
`novel features claimed in the patent at issue. My analysis and review of the
`
`documents produced in this IPR on Onglyza® and Kombiglyze™ XR finds that the
`
`marketing program for these products relates to saxagliptin, i.e., the compound
`
`claimed in the RE’186 patent. Further, Onglyza® and Kombiglyze™ XR have
`
`generated substantial sales, and sales of Onglyza® and Kombiglyze™ XR are
`
`motivated by the patented features of saxagliptin.
`
`Page 15 of 61
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`
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`A. The Marketplace Performance of Onglyza® and Kombiglyze™ XR
`is Driven by the Claimed Features of the RE’186 Patent
`
`26. As part of my analysis of the commercial success of Onglyza® and
`
`Kombiglyze™ XR, I have reviewed various marketing documents from publicly
`
`available sources. The promotional message exhibited in these documents is
`
`centered on the themes of saxagliptin’s mechanism of action, efficacy, and safety
`
`profile. This marketing focus is consistent with my understanding of the
`
`underlying claims of the patents at issue, and it is my opinion that the marketplace
`
`success of Onglyza® and Kombiglyze™ XR is due to the features of the claimed
`
`invention of the RE’186 patent, and not to other factors.
`
`27. As Dr. Lenhard discusses in his declaration, Onglyza®’s FDA-
`
`approved indication is as follows: “ONGLYZA is a dipeptidyl peptidase-4 (DPP4)
`
`inhibitor indicated as an adjunct to diet and exercise to improve glycemic control
`
`in adults with type 2 diabetes mellitus in multiple clinical settings.”27 The FDA-
`
`approved indications and usage of Kombiglyze™ XR reads as follows:
`
`“KOMBIGLYZE XR is a combination of saxagliptin, a dipeptidyl peptidase-4
`
`(DPP4) inhibitor, and metformin, a biguanide, indicated as an adjunct to diet and
`
`27 Ex. 2047, 1; Ex. 2057, ¶46.
`
`Page 16 of 61
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`exercise to improve glycemic control in adults with type 2 diabetes mellitus when
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`treatment with both saxagliptin and metformin is appropriate.”28
`
`28. Consistent with the products’ labeling and approved indications,
`
`AstraZeneca’s promotional efforts focus on the properties of saxagliptin, which is
`
`claimed in the RE’186 patent. The following discussion of these promotional
`
`activities serves to highlight, consistent with Dr. Lenhard’s opinion, that the
`
`patented features of the drug’s properties (and not the promotional activities
`
`themselves), drive Onglyza®’s and Kombiglyze™ XR’s commercial sales.29
`
`29. For example, Onglyza®’s branded websites and marketing brochures
`
`emphasize how Onglyza® helps treat patients with type 2 diabetes.30 The Onglyza®
`
`website for healthcare professionals (“HCPs”) discusses Onglyza®’s efficacy,
`
`explaining that, “[b]y inhibiting DPP-4, ONGLYZA helps to reduce fasting plasma
`
`28 Ex. 2048, 1.
`
`29 Ex. 2057, ¶54-56.
`
`30 Ex. 2127; Ex. 2128; Ex. 2129.
`
` Like the websites for Januvia®, Tradjenta®, and Nesina®, the website for
`
`Onglyza® also offer savings and support information to patients and prescribers,
`
`including information about a savings card for eligible patients. [Ex. 2130; Ex.
`
`2131; Ex. 2132; Ex. 2127, 9-13.]
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`Page 17 of 61
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`glucose (FPG), and postprandial glucose (PPG) in a glucose-dependent manner,
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`which helps to reduce blood glucose levels and A1C.”31 The safety profile section
`
`of this website highlights clinical data showing that Onglyza® had similar
`
`incidence of adverse events as compared to placebo.32
`
`30. The structure and general focus of Kombiglyze™ XR’s branded
`
`websites and marketing brochures, including the messaging about its efficacy and
`
`safety, are similar to those discussed above for Onglyza®.33 For example, a
`
`Kombiglyze™ XR patient brochure discusses how Kombiglyze™ XR has been
`
`“proven to lower A1C levels for patients whose blood sugar was not controlled
`
`with metformin alone.”34
`
`B. Onglyza® and Kombiglyze™ XR Are a Marketplace Success
`
`31.
`
`I understand that an evaluation of commercial success under relevant
`
`legal authority may be shown by significant sales in a relevant market, as well as
`
`by gains in market share. Based on my analysis below, I find that Onglyza® and
`
`31 Ex. 2128, 10-16.
`
`32 Ex. 2128, 17-23.
`
`33 Ex. 2133; Ex. 2134; Ex 2135.
`
`34 Ex 2135, 3.
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`Page 18 of 61
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`Kombiglyze™ XR, i.e., the Onglyza Family of products (“the Onglyza Family”),
`
`are commercially successful products.
`
`1. Onglyza®’s and Kombiglyze™ XR’s Sales Are Substantial
`
`32. Since the launch of Onglyza® in August 2009, sales of Onglyza® and
`
`Kombiglyze™ XR, both unit and dollar sales, have been substantial.
`
`33.
`
`In Table 2(a) and Figure 1, I summarize, by month and dosage
`
`strength, IMS Health estimates of total dispensed prescriptions for Onglyza® and
`
`for Kombiglyze™ XR for the period August 2009 through October 2015, the last
`
`month for which these data are available.35 These data show that the number of
`
`35 Ex. 2117.
`
`These summaries are based on IMS Health’s National Prescription Audit
`
`(“NPA”), which surveys dispensed prescriptions in the U.S. across four
`
`channels: retail, standard mail service, specialty mail service, and long-term
`
`care pharmacies. The universe contained in the audit comprises more than three
`
`billion prescriptions, or more than 70 percent of the prescription activity in the
`
`U.S. As shown in Table 2(b), summaries of IMS Health estimates of extended
`
`units of Onglyza® and Kombiglyze® XR show similar patterns and result in
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`similar conclusions. Here, I focus on unit sales measured in terms of total
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`prescriptions, as this measure provides a consistent means by which to compare
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`Page 19 of 61
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`Onglyza® dispensed prescriptions increased from approximately 678,000 in 2010,
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`Onglyza®’s first full year of sales, to an annual peak of over 1.9 million in 2012,
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`and then remained above 1.7 million in both 2013 and 2014. Since its launch, there
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`have been approximately 8.9 million total dispensed prescriptions for Onglyza®
`
`through October 2015. When combined with Kombiglyze™ XR, the number of
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`dispensed prescriptions for products in the Onglyza Family reached an annual peak
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`of more than 2.8 million in 2012, and totaled approximately 12.8 million between
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`August 2009 and October 2015.
`
`34.
`
`In Table 3 and Figure 2, I summarize IMS Health estimates of
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`monthly dollar sales of Onglyza® and Kombiglyze™ XR in the U.S. for the period
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`August 2009 through September 2015, the last month for which these sales data
`
`are available.36 These data show that Onglyza®’s sales have grown from
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`sales of different pharmaceutical products available in different dosage
`
`strengths. [Ex. 2136, 1-2; Ex. 2117.]
`
`36 Ex. 2118.
`
`These sales summaries are based on IMS Health’s National Sales Perspectives
`
`(“NSP”), which surveys direct sales from pharmaceutical companies and
`
`indirect sales from distribution centers to various outlets across “every major
`
`class of trade and channel of distribution for prescription pharmaceuticals”, and
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`Page 20 of 61
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`approximately $150 million in 2010 to an annual peak of nearly $580 million in
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`2014. Since launch, Onglyza® has generated over $2.5 billion in total sales through
`
`September 2015. Further, when combined with sales of Kombiglyze™ XR, sales
`
`of products in the Onglyza Family have generated over $3.5 billion in total sales
`
`through September 2015.
`
`35. BMS’s and AstraZeneca’s annual financial reports confirm that
`
`Onglyza® and Kombiglyze™ XR have generated substantial revenues. In Table 4
`
`and Figure 3, I summarize, by year, net revenues from sales of Onglyza® and
`
`Kombiglyze™ XR during the period fiscal year 2009 through fiscal year 2015.37
`
`Net revenue from Onglyza® and Kombiglyze™ XR in the U.S. grew from
`
`approximately $22 million in 2009 to an annual peak of nearly $591 million in
`
`2013. Since launch, the Onglyza Family has generated nearly $2.5 billion in total
`
`net revenue from sales in the U.S.
`
`captures “100% of the total U.S. pharmaceutical market.” Notably, the prices in
`
`these data reflect transaction prices and not wholesale prices. [Ex, 2137, 1-2.]
`
`37 Ex. 2111, 26-28; Ex. 2112, 36-39; Ex. 2113, 35-38; Ex. 2114, 29-32; Ex. 2115,
`
`35-38; Ex. 2004, 222-228; Ex. 2108, 227-233.
`
`
`
`In their annual reports, both BMS and AstraZeneca report Kombiglyze™ XR
`
`revenue amounts together with Onglyza® revenue amounts. [Ibid.]
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`Page 21 of 61
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`36.
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`In addition, Onglyza® and Kombiglyze™ XR are sold in markets
`
`throughout the world. For example, by the end of 2012, Onglyza® had received
`
`regulatory approval in 81 countries, including the U.S., Canada, Mexico, the
`
`European Union countries (“the EU”), Brazil, India, and China.38 BMS and
`
`AstraZeneca have reported net revenues from sales of Onglyza® and
`
`Kombiglyze™ XR/Komboglyze® outside the U.S. ranging from $2 million in 2009
`
`to a peak of $366 million in 2015.39 Through the end of 2015, Onglyza® and
`
`Kombiglyze™ XR/Komboglyze® have generated a total of over $1.3 billion in net
`
`revenue outside of the U.S.40
`
`38 Ex. 2106, 54-55.
`
`
`
`In Canada and Europe, AstraZeneca’s combination saxagliptin and metformin
`
`HCl product is sold under the brand name Komboglyze®. By the end of 2012,
`
`Kombiglyze™ XR had received regulatory approval in 17 countries including
`
`the U.S., Brazil, Mexico, and India; and Komboglyze® had received regulatory
`
`approval in Canada, the EU, Iceland, Liechtenstein, Norway, and Switzerland.
`
`[Ibid.]
`
`39 See Table 4.
`
`
`
`40 Ibid.
`
`Page 22 of 61
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`
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`37. Onglyza®’s ability to garner substantial sales, both in terms of total
`
`dispensed prescriptions and in terms of revenues, makes it a commercially
`
`successful product. When combined with Kombiglyze™ XR, sales of the Onglyza
`
`Family products are even more substantial, totaling over 12 million dispensed
`
`prescriptions in the U.S. and generating almost $2.5 billion in net revenue in the
`
`U.S., and over $3.8 billion in net revenue worldwide.
`
`2. Onglyza® and Kombiglyze™ XR Have Realized Substantial
`Market Shares
`
`38. To put sales of Onglyza® and Kombiglyze™ XR into perspective, I
`
`examine their market shares and compare sales of Onglyza® and Kombiglyze™
`
`XR with the sales of other DPP-4 inhibitors. An analysis of market shares also
`
`allows me to assess the sales of Onglyza® and Kombiglyze™ XR controlling for
`
`the overall growth in the market for DPP-4 inhibitors and, more generally, the
`
`population of type 2 diabetes patients, as market shares are constructed by
`
`normalizing the sales of each product by the total sales of all products in the
`
`marketplace.
`
`39.
`
`I first consider the set of products to which Onglyza® and
`
`Kombiglyze™ XR should be compared for purposes of this analysis. I understand
`
`that, while there are other commercially available noninsulin antidiabetic
`
`medications (“NIADs”) for oral administration, it is Dr. Lenhard’s opinion that
`
`DPP4s are a unique class within the general space of treatments for type 2
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`Page 23 of 61
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`diabetes.41 For example, Dr. Lenhard states that DPP4s provide treating physicians
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`with another class of safe and effective treatment options with favorable side-effect
`
`profiles necessary to treat a large population of type 2 diabetes patients.42
`
`Therefore, it is reasonable to calculate Onglyza®’s and Kombiglyze™ XR’s market
`
`shares relative to the group of DPP-4 inhibitors.
`
`40. The DPP-4 inhibitors that are most directly comparable to Onglyza®
`
`consist of the other DPP4 monotherapies, i.e., Januvia®, Tradjenta®, and Nesina®.
`
`In Table 5 and Figure 4, I summarize, by month, each of these product’s share of
`
`total dispensed prescriptions for DPP4 monotherapies in the U.S. during the period
`
`August 2009 to October 2015.43 As shown, Onglyza® has been able to realize a
`
`substantial market share in the U.S. marketplace for DPP4 monotherapies, with its
`
`annual share of total dispensed prescriptions for DPP4 monotherapies ranging from
`
`1.2 percent (in the year of its commercialization) to 16.7 percent, and with an
`
`41 Ex. 2057, ¶42.
`
`42 Ibid.
`
`43 Ex. 2117.
`
` During this period, DPP4 monotherapies accounted for a monthly share of
`
`between 70 and 75 percent of total dispensed prescriptions for all DPP4s. [Ibid.]
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`Page 24 of 61
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`overall share of 13.4 percent of total dispensed prescriptions for DPP4
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`monotherapies from August 2009 to October 2015.
`
`41. More broadly, in Table 6(a) and Figure 5, I summarize the share of
`
`total dispensed prescriptions for DPP4s for each DPP4 product family available for
`
`sale in the U.S.44 Since launch, Onglyza®’s annual share of total dispensed
`
`44 Ex. 2117.
`
`To the extent that there are other NIADs available for sale in the U.S., in the
`
`opinion of Dr. Lenhard, DPP4s represent a unique class of products in the
`
`treatment of type 2 diabetes. Nevertheless, for completeness, in Table 6(b) I
`
`compare each DPP4 monotherapy and each DPP4 product family in terms of its
`
`share of total dispensed prescriptions for all NIADs. I understand that the
`
`marketplace for NIADs includes therapies such as metformins, TZDs, and SUs,
`
`branded and generic versions of which have been available for quite some time
`
`now. I understand further that the marketplace for NIADs also includes newer
`
`classes of therapies, such as GLP-1 agonists, the first brands of which (Byetta®
`
`and Victoza®) became available in late 2009-early 2010, as well as sodium-
`
`glucose cotransporter-2 (“SGLT-2”) inhibitors, the first brands of which
`
`(Invokana® and Farxiga®) became available in 2013-2014. Between August
`
`2009 and October 2015, DPP4s accounted for a share of between 7.2 and 12.1
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`Page 25 of 61
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`
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`prescriptions for DPP4s has ranged from 0.9 percent (in its first year of
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`commercialization) to 11.9 percent. When combined with Kombiglyze™ XR, the
`
`Onglyza Family has accounted for a monthly share ranging from 10 percent in
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`December 2010 (i.e., the month immediately after Kombiglyze™ XR’s launch) to
`
`18.2 percent in November and December 2012 (i.e., the months of peak market
`
`share) of total monthly dispensed prescriptions for DPP4s, with an overall share of
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`13.7 percent of total dispensed prescriptions for DPP4s from August 2009 and
`
`October 2015.
`
`42. Onglyza®’s ability to garner and then maintain a substantial market
`
`share—and indeed to continue to grow its sales—in an increasingly crowded
`
`marketplace, and with a product with a substantial first-mover advantage (i.e.,
`
`Januvia®, which had a two-and-a-half year head start on Onglyza®), makes it a
`
`commercially successful product.
`
`percent of total dispensed prescrip
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