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`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`
`
`
`ARGENTUM PHARMACEUTICALS LLC,
`Petitioner,
`
`v.
`
`RESEARCH CORPORATION TECHNOLOGIES, INC.,
`Patent Owner.
`
`Case No. IPR2016-00204
`Patent No. RE 38,551
`
`DECLARATION OF
`CHRISTOPHER A. VELLTURO, PH.D.
`IN SUPPORT OF PATENT OWNER RESPONSE
`
`Argentum Pharm. v. Research Corp. Techs., IPR2016-00204
`RCT EX. 2132 - 1/40
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`

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`Table of Contents
`
`IPR2016-00204
`
`Page(s)
`
`I.
`
`Introduction and Summary ............................................................................. 1
`
`A. Qualifications and Experience ............................................................. 2
`
`B.
`
`C.
`
`Evidence Considered ............................................................................ 3
`
`Summary of Opinions .......................................................................... 3
`
`II.
`
`BACKGROUND ............................................................................................ 5
`
`A.
`
`B.
`
`C.
`
`Epilepsy ................................................................................................ 5
`
`Demand for AED Treatments .............................................................. 6
`
`Supply of AEDs .................................................................................... 7
`
`III. COMMERCIAL SUCCESS ANALYSIS ...................................................... 9
`
`A.
`
`Revenues ............................................................................................ 10
`
`1.
`
`2.
`
`Absolute ................................................................................... 10
`
`Shares ....................................................................................... 10
`
`B.
`
`Units (Prescriptions) ........................................................................... 12
`
`1.
`
`2.
`
`Absolute ................................................................................... 13
`
`Shares ....................................................................................... 13
`
`IV. VIMPAT®’s Commercial Success Is Due in Significant Part to the
`Claims of the ’551 Patent ............................................................................. 15
`
`A.
`
`B.
`
`C.
`
`The ’551 Patent Covers Lacosamide .................................................. 16
`
`VIMPAT®’s Commercial Success Is Not Attributable to
`Excessive Marketing Spend Levels ................................................... 17
`
`VIMPAT®’s Commercial Success Is Not Due to Aggressively
`Low Pricing ........................................................................................ 20
`
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`IPR2016-00204
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`V.
`
`The Prior Existence of IP (or Potential IP) Relating to Lacosamide
`Did Not Represent a "Blocking Patent" Issue .............................................. 21
`
`A. Overview ............................................................................................ 21
`
`B.
`
`C.
`
`IP Rights Relating to the Kohn Compounds Were Available
`From RCT in the Early 1990s, When Formative Work Leading
`to the ’551 Patent Was Being Undertaken ......................................... 23
`
`IP Rights Governing Lacosamide Remained Available Through
`Harris Throughout the Late 1990s – These Opportunities Were
`Rejected by Pharmaceutical Companies ............................................ 26
`
`D.
`
`Economic Skepticism ......................................................................... 34
`
`
`
`
`
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`IPR2016-00204
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`I, Christopher A. Vellturo, hereby declare and state as follows:
`
`I.
`
`Introduction and Summary
`
`1.
`
`I have been retained as a consultant on behalf of Research Corporation
`
`Technologies, Inc. (“RCT”), the patent owner in the present proceeding. I
`
`understand that the petition names Argentum Pharmaceuticals LLC (“Argentum”)
`
`as the petitioner, and that Intelligent Pharma Research LLC, APS GP LLC, and
`
`APS GP Investors LLC have been identified as real parties-in-interest. I further
`
`understand that KVK-TECH, Inc. has also been identified as a potential real party-
`
`in-interest. I have no financial interest in, or affiliation with, the petitioner, the
`
`identified actual or potential real parties-in-interest, or the patent owner.
`
`Quantitative Economic Solutions, LLC, a consulting firm of which I am the
`
`founder and president, is being compensated for my work at my usual and
`
`customary consulting rate of $850.1 QES's compensation is not dependent upon
`
`the outcome of, or my testimony in, the present inter partes review or any
`
`litigation proceedings.
`
`2.
`
`I have been asked to evaluate the commercial success of the drug
`
`
`1 QES is also compensated for the time spent on this matter by persons working at
`
`my direction. Those rates are generally lower than my hourly rate.
`
`1
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`lacosamide – marketed by UCB, Inc. ("UCB") as VIMPAT® – and the extent to
`
`which VIMPAT®’s commercial success is causally linked to the patent claims in
`
`IPR2016-00204
`
`U.S. Patent No. RE 38,551 (“the ’551 patent”).
`
`A.
`
`
`
`Qualifications and Experience
`
`3. My qualifications and experience relevant to the issues in this
`
`proceeding are summarized below. My curriculum vitae is submitted herewith as
`
`Exhibit 2133.
`
`4.
`
`I am the founder and president of Quantitative Economic Solutions,
`
`LLC, a microeconomic consulting firm. I received a Doctor of Philosophy degree
`
`(Ph.D.) in Economics from the Massachusetts Institute of Technology in
`
`Cambridge, Massachusetts in 1989. My fields of specialization include industrial
`
`organization and econometrics.
`
`5.
`
`I have extensive experience in the valuation of intellectual property
`
`and in the assessment of economic injury/damages sustained as a result of
`
`copyright, trademark, and/or patent infringement. Industries that I have studied in
`
`this context include: pharmaceutical products, over-the-counter medications and
`
`instruments, medical devices, consumer products, computer hardware and
`
`software, and semiconductors. I have also evaluated pharmaceutical patent issues
`
`in the context of commercial success and injunctive relief considerations on
`
`2
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`numerous occasions. I have been qualified and have testified as an expert in many
`
`Federal Courts throughout the United States as an expert in economics, statistics,
`
`survey design and implementation, as well as an expert specifically in the
`
`economics of the pharmaceutical industry.
`
`6.
`
`I have also studied the competitive dynamics and payments systems
`
`surrounding pharmaceutical drugs in the context of numerous non-litigation
`
`consulting projects relating to mergers and acquisitions in the industry.
`
`B.
`
`7.
`
`Evidence Considered
`
`I have reviewed and relied on the articles and other documents and
`
`data cited in this declaration.
`
`C.
`
`Summary of Opinions
`
`8. Based on my training and experience, my understanding of patent law,
`
`the information I have reviewed, and the analyses I have performed, I conclude
`
`that:
`
` VIMPAT® has been commercially successful
`
` U.S. net sales since VIMPAT®'s launch in 2009 through June 2016 have
`
`totaled more than $2.4 billion;
`
` Since launch, VIMPAT® U.S. net sales have increased significantly each
`
`year – in 2015, net sales totaled $568.3 million;
`
`3
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` VIMPAT®’s success is particularly noteworthy given the widespread
`
`availability and use of low-cost generic antiepileptic drugs ("AEDs"),
`
`especially since 2009.
`
` The commercial success of VIMPAT® is due in significant part to the
`
`characteristics of the drug that I understand are attributable to the subject matter
`
`of the claims of the ’551 patent, namely
`
` I understand from counsel that claims 1-5 and 7-13 of the ’551 patent cover
`
`the compound lacosamide – the active ingredient in VIMPAT® –
`
`compositions comprising lacosamide, and use of lacosamide to treat CNS
`
`disorders, and that lacosamide as encompassed by these claims provides
`
`VIMPAT® with therapeutic qualities of efficacy, safety and tolerability;
`
` As I would expect in the treatment of seizures, VIMPAT®’s commercial
`
`success is not due to exceptional levels of promotional expenditure;
`
` As I would expect in the treatment of seizures and in the presence of so
`
`many low-cost generic alternatives, VIMPAT®’s success is not attributable
`
`to aggressive or low prices.
`
` The prior existence of IP relating to lacosamide did not represent a “blocking
`
`patent” issue that would have deterred investment in further development
`
`efforts by others to discover inventions claimed by the ’551 patent:
`
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` License rights to prior IP relating to lacosamide were available and actively
`
`marketed and remained available throughout the relevant period;
`
` License rights remained available even after the invention of lacosamide,
`
`though many established pharmaceutical companies exhibited economic
`
`skepticism as to the commercial potential for lacosamide.
`
`9.
`
`This declaration and the opinions expressed herein are based on my
`
`analysis of the information I have considered to date. I may supplement, refine, or
`
`revise my analysis as appropriate if additional testimony, documents or other
`
`discovery materials become available.
`
`II. BACKGROUND
`
`A. Epilepsy
`
`10.
`
`I understand from counsel that Dr. Carl Bazil, an expert epileptologist,
`
`has testified that drug therapy is the preferred treatment for epileptic seizures2 and
`
`drugs used to treat such seizures are commonly known as antiepileptic drugs
`
`(“AEDs”). Multiple AEDs released as branded products before 1990 are still
`
`commonly used today to treat seizures and all of these drugs have been available as
`
`generics for over a decade. Additionally, several AEDs introduced as branded
`
`
`2 http://www.medicinenet.com/epilepsy_treatment/article.htm (Ex. 2134).
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`5
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`drugs after 1990 became available as generics between 2003 and 2012.
`
`11.
`
`I further understand that drug therapy used to treat seizures associated
`
`with epilepsy may consist of a single AED, (“monotherapy”) or multiple AEDs
`
`(“polytherapy,” also referred to as “adjunctive therapy”) and that treatment
`
`frequently begins with one or more successive regimens of monotherapy, followed
`
`by polytherapy for patients whose seizures are not well-controlled using
`
`monotherapy.
`
`B. Demand for AED Treatments
`
`12.
`
` As noted, I understand from counsel that Dr. Bazil has testified that
`
`drug therapy is the preferred treatment for epilepsy, and physicians select AEDs by
`
`balancing seizure control, tolerability, the risk of serious adverse events, and
`
`minimization of disruption of the patient’s quality of life. In this context, AEDs
`
`are commonly evaluated by physicians for their efficacy, safety, and tolerability.
`
`13. Many clinicians continue to prescribe generic forms of early AEDs due
`
`to familiarity, limited data comparing efficacy of early AEDs to that of AEDs
`
`introduced later, and cost.3 As of 2010, approximately 80% of total prescriptions
`
`
`3 Erik K. St. Louis, et al., “Antiepileptic Drug Monotherapy: The Initial Approach
`
`in Epilepsy Management,” Current Neuropharmacology, 7:77-82 at 78 (2009) (Ex.
`
`
`
`6
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`IPR2016-00204
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`of AEDs for epilepsy were generic.4 From an economic standpoint, these demand
`
`characteristics imply that initial trial and expanded usage on newer branded AEDs
`
`proceeds deliberately, as physicians gain familiarity with newer branded drugs in
`
`the context of polytherapy that includes established treatment regimens.
`
`C.
`
`Supply of AEDs
`
`14. VIMPAT® was first available for commercial sale in the United States
`
`in 2009. By this time (and to an even greater degree subsequently), the AED
`
`marketplace consisted of numerous suppliers, with many common drugs available
`
`at low cost from multiple generic providers. I provide a brief summary of the
`
`drugs in UCB’s “AED market basket”5 – a set of drugs that I understand from
`
`counsel UCB has identified whose approved indications include epilepsy – in
`
`Figure 1:6
`
`
`2135).
`
`4 See Ex. 2171, p. 4.
`
`5 Ex. 2136.
`
`6 In addition to the drugs listed in Figure 1, the FDA approved brivaracetam,
`
`marketed
`
`in
`
`the U.S.
`
`by UCB
`
`as Briviact®,
`
`in
`
`2016
`
`(see
`
`http://www.accessdata.fda.gov/scripts/cder/ob/docs/obdetail.cfm?Appl_No=20583
`
`
`
`7
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`IPR2016-00204
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`FIGURE 1.
`Branded/Branded Generic Drug
`(Manufacturer)
`
`
`DILANTIN (Pfizer)
`
`TEGRETOL, TEGRETOL-XR
`(Novartis)
`
`
`
`Active
`Ingredient
`
`Phenytoin
`
`
`
`Brand
`Approval
`
`1/6/53
`
`
`
`Generic
`Approval
`
`9/25/92
`
`Carbamazepine
`
`3/11/68
`
`8/14/86
`
`DEPAKOTE, DEPAKOTE ER (AbbVie)
`
`NEURONTIN (Pfizer)
`
`LAMICTAL, LAMICTAL XR
`(GlaxoSmithKline)
`
`TOPAMAX (Janssen); TROKENDI XR
`(Supernus); QUDEXY XR (Upsher)
`KEPPRA, KEPPRA XR (UCB)
`TRILEPTAL (Novartis)
`ZONEGRAN (Eisai)
`LYRICA (Pfizer)
`BANZEL (Eisai)
`
`Valproates
`(Divalproex and
`Valproic Acid)
`
`3/10/83
`
`2/28/86
`
`Gabapentin
`
`12/30/93
`
`9/12/03
`
`Lamotrigine
`
`12/27/94
`
`6/21/06
`
`Topiramate
`
`12/24/96
`
`3/27/09
`
`Levetiracetam
`
`Oxcarbazepine
`
`Zonisamide
`
`Pregabalin
`
`Rufinamide
`
`11/30/99
`1/14/00
`3/27/00
`12/30/04
`11/14/08
`
`11/4/08
`
`10/9/07
`
`12/22/05
`
`7/3/12
`
`N/A
`
`
`6&TABLE1=OB_Rx (Ex. 2137)). Briviact® is indicated as adjunctive therapy in
`
`the treatment of partial-onset seizures in patients 16 years and older with epilepsy
`
`(see http://www.accessdata.fda.gov/drugsatfda_docs/label/2016/205836s001,20583
`
`7s001,205838s001lbl.pdf (Ex. 2138)).
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`8
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`

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`SABRIL (Lundbeck)
`POTIGA (GlaxoSmithKline)
`FYCOMPA (Eisai)
`
`APTIOM (Sunovion)
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`
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`IPR2016-00204
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`Vigabatrin
`
`Ezogabine
`
`Perampanel
`
`Eslicarbazepine
`Acetate
`
`8/21/09
`6/10/11
`10/22/12
`
`N/A
`
`N/A
`
`N/A
`
`11/8/13
`
`N/A
`
`III. COMMERCIAL SUCCESS ANALYSIS
`
`15.
`
`I understand that, under United States patent law, commercial success
`
`of a patented invention can be evidence of nonobviousness. I understand further
`
`that there must be a nexus – or causal connection – between the characteristics of
`
`the patented invention and the marketplace success of the product that incorporates
`
`that invention for commercial success to be evidence of nonobviousness.
`
`16. Given this understanding, I examine the marketplace performance of
`
`VIMPAT® in this section to determine whether VIMPAT® is a commercial
`
`success. In Section IV, I evaluate whether a nexus exists between the claims of the
`
`’551 patent and such success. My conclusion is that VIMPAT®’s marketplace
`
`performance demonstrates that it is a commercial success and that this success is
`
`due in significant part to the subject matter of the claims of the ’551 patent.
`
`
`
`
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`9
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`IPR2016-00204
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`A. Revenues
`
`1.
`
`Absolute
`
`17. Since its launch in the United States in 2009 through June 2016,
`
`VIMPAT® has generated over $2.4 billion in net sales in the United States (see Ex.
`
`2174, p. 2). VIMPAT®’s U.S. net sales have steadily increased during this time: its
`
`net sales were $126 million in 2010, $218 million in 2011, $316 million in 2012,
`
`$407 million in 2013, $443 million in 2014, $568 million in 2015, and $321
`
`million in the first six months of 2016.
`
`2.
`
`Shares
`
`18.
`
`I also evaluate VIMPAT®’s U.S. sales revenues in the broader context
`
`of branded AEDs, and of all AEDs including generics. Specifically, I analyze a
`
`dataset of sales information for drugs included in UCB’s “AED market basket” –
`
`as noted above, the set of drugs I understand from counsel that UCB has identified
`
`whose approved indications include epilepsy. I further understand from counsel
`
`that UCB’s standard business practice for evaluating the performance of
`
`VIMPAT® in the AED marketplace is to "factor" sales information related to
`
`certain AEDs to determine dollar sales that are associated with epilepsy. This
`
`limitation is important because some drugs that are prescribed for epilepsy also
`
`carry indications for conditions unrelated to epilepsy. Under this methodology,
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`some drugs (like VIMPAT®) would be factored at 100% (all use attributable to
`
`epilepsy), whereas other drugs with different indications would reflect epilepsy
`
`sales only. Lyrica®, for example, is indicated to treat and commonly prescribed for
`
`non-epilepsy conditions such as pain associated with diabetic peripheral
`
`neuropathy (DPN), post-herpetic neuralgia (PHN), and fibromyalgia,7 and thus its
`
`sales numbers are adjusted to reflect epilepsy-only sales.
`
`19. As an initial approach, I study the marketplace success of VIMPAT® in
`
`share form by considering the share of sales dollars commanded by VIMPAT®
`
`among branded AEDs only. As mentioned above in Section II.C, there exist
`
`several long-established and widely prescribed low-cost generic drugs which are
`
`used to treat epilepsy. Here I evaluate VIMPAT®’s share among the more recent
`
`branded products that have been added to this established set of generics, as well as
`
`branded versions of AEDs for which there are generics available. Exhibit 2176
`
`shows that by 2014, VIMPAT®’s share of total branded sales dollars had grown to
`
`over 30% (see Ex. 2176, p. 2).
`
`
`7 See http://www.accessdata.fda.gov/drugsatfda_docs/label/2016/021446s030,0224
`
`88s010lbl.pdf (Ex. 2139).
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`20. VIMPAT®’s commercial success is demonstrated by its material and
`
`sustained increase in share of branded sales dollars since its launch in 2009 (see
`
`Ex. 2176, p. 2). VIMPAT®’s share of branded sales dollars increased from 9.3% in
`
`2010, 15% in 2011, 21.3% in 2012, and 27.4% in 2013, to over 31% in 2014 and
`
`the beginning of 2015.
`
`21. Next, I consider VIMPAT®’s share of sales dollars among all AEDs,
`
`both branded and generic. Here, VIMPAT® has demonstrated similar steady
`
`growth in every year since its launch (see Ex. 2176, p. 2). Its share of total AED
`
`sales dollars increased from 6.8% in 2010, 11.1% in 2011, 16.3% in 2012, and
`
`19.8% in 2013, to over 22% in 2014 and the beginning of 2015.
`
`B. Units (Prescriptions)
`
`22.
`
`I undertake a similar analysis using unit prescription data from IMS. I
`
`note that a drug’s share of prescriptions may differ from its share of sales dollars in
`
`a given therapeutic class for reasons such as differences in pricing among various
`
`drugs in the class. For example, in the case of AEDs, where there is a prevalence
`
`of low-cost generic drugs, branded drugs constitute a higher share of sales dollars
`
`than they do prescriptions. This is because, in general, a prescription written for a
`
`generic drug does not generate as many sales dollars as one written for a similar
`
`branded drug. As with my share of sales dollars analysis, I base my prescription
`
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`share calculations on IMS data that have been “factored” to reflect those
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`IPR2016-00204
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`prescriptions written for epilepsy indications.
`
`1.
`
`Absolute
`
`23. Prescriptions for VIMPAT® have increased in every year since its
`
`launch. Annually, there were more than 300,000 prescriptions written for
`
`VIMPAT® in 2010, more than 500,000 in 2011, more than 650,000 in 2012, more
`
`than 800,000 in 2013, and more than 950,000 in 2014. In sum, there have been
`
`more than 3.5 million prescriptions written for VIMPAT® through February 2015,
`
`the date of the most recent available data (see Ex. 2171, p. 2).
`
`2.
`
`Shares
`
`24. As in my share of sales dollars analysis, I first assess VIMPAT®’s unit
`
`share of branded prescriptions. VIMPAT® constituted more than a quarter of all
`
`branded prescriptions for epilepsy in 2014 and the beginning of 2015. Like the
`
`other shares I have calculated, this share has risen steadily since VIMPAT®’s
`
`launch, starting at less than 5% in 2009, and growing to 6% in 2010, 11% in 2011,
`
`16% in 2012, 23% in 2013, and to over 27% in 2014 (see Ex. 2171, p. 2).
`
`25. Also depicted in Exhibit 2171 is VIMPAT®’s share of prescriptions
`
`among all AEDs (see Ex. 2171, p. 2). Here, VIMPAT®’s share was less than 1%
`
`in its year of launch, and grew to 1.3% in 2010, 2% in 2011, 2.6% in 2012, 3.1% in
`
`13
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`2013, 3.5% in 2014, and 3.7% in the beginning of 2015. This steady growth
`
`occurred despite the presence of numerous established, low-cost alternatives.
`
`26.
`
`It is worth noting that my general conclusions based on these unit share
`
`calculations – and the dollar sales share calculations discussed in the previous
`
`section – would not be materially affected by slight changes to UCB's "factoring"
`
`methodology. For instance, if instead of "factoring" VIMPAT® at 100% epilepsy,
`
`UCB estimated that some minor VIMPAT® use corresponded to the treatment of
`
`conditions other than epilepsy, the observed trends in VIMPAT®'s shares over time
`
`would remain intact. Further, such a hypothetical adjustment to VIMPAT®'s
`
`epilepsy factoring may necessarily coincide with a similar adjustment to that of
`
`branded Keppra – another UCB drug which is factored at 100% epilepsy by UCB.8
`
`A VIMPAT® share calculation which incorporates these two adjustments would
`
`result in both a lower numerator (i.e., VIMPAT® sales or units) and a lower
`
`denominator (i.e., total epilepsy sales or units, including those associated with
`
`
`8 I can observe that branded Keppra is factored at 100% epilepsy by UCB by
`
`comparing Keppra-IR's and Keppra-XR's "factored" sales data (see Ex. 2136) with
`
`their unfactored sales data (see Ex. 2140).
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`VIMPAT® and branded Keppra) – each of which would have offsetting effects on
`
`calculated share figures.
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`IV. VIMPAT®’s Commercial Success Is Due in Significant Part to the
`Claims of the ’551 Patent
`27. As noted earlier, I understand that claims 1-5 and 7-13 of the ’551
`
`patent cover lacosamide, compositions comprising lacosamide, and use of
`
`lacosamide to treat CNS disorders. I understand from counsel that Dr. Bazil has
`
`testified that VIMPAT® is valued among physicians for its efficacy in controlling
`
`seizures, and for its tolerability and safety profile. Because lacosamide, which is
`
`covered by the claims of the ’551 patent, is the source of these valuable properties
`
`there is a nexus between the commercial success of VIMPAT® and the claims of
`
`the ’551 patent.
`
`28. Moreover, I considered whether other factors, such as marketing spend
`
`and aggressive pricing, played a major role in VIMPAT®’s success (and thus may
`
`temper the nexus between the ’551 patent and VIMPAT®’s success). As a general
`
`economic industry consideration, I note that extensive marketing is largely absent
`
`among AEDs. Further, I note that substantial price-based demand for VIMPAT® is
`
`highly unlikely, given the widespread availability and use of low-cost generic
`
`AEDs. My analysis confirms these basic economic principles – extensive
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`marketing spend and low pricing played no significant role in VIMPAT®’s success.
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`A. The ’551 Patent Covers Lacosamide
`
`29.
`
`I understand from counsel that claims 1-5 and 7-13 of the ’551 patent
`
`cover lacosamide, which is the active ingredient in VIMPAT®, compositions
`
`comprising lacosamide, and its use in treating CNS disorders, including epilepsy:
`
` I understand that claims 1-5 and 7-9 cover compounds including lacosamide,
`
`that claim 8 claims the compound known as lacosamide, and claim 9 claims
`
`lacosamide containing at least 90% by weight of the R stereoisomer;
`
` I understand that claim 10 includes therapeutic compositions of any of the
`
`compounds of claims 1-9, and that VIMPAT® is such a therapeutic
`
`composition;
`
` I understand that claims 11-13 cover the use of VIMPAT® to treat central
`
`nervous system disorders, including epilepsy.
`
`30.
`
`I further understand from counsel that Dr. Bazil has testified that
`
`physicians’ treatment decisions, including the decision to prescribe VIMPAT® are
`
`tailored to the individual patient, and based on the efficacy, tolerability, ease of
`
`administration, and long-term safety of the AED to be administered, and that
`
`VIMPAT® has an important and steadily growing position in the armamentarium
`
`that physicians use to treat epilepsy.
`
`
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`B. VIMPAT®’s Commercial Success Is Not Attributable to Excessive
`Marketing Spend Levels
`
`31.
`
`In my experience, widespread/extensive marketing spends on
`
`pharmaceutical products are largely limited to drugs where there is a material joint
`
`interaction between the physician and patient as to the nature of the patient’s
`
`condition, and the options for treatment. I understand from counsel that Dr. Bazil
`
`has testified that patients look overwhelmingly to their neurologists to evaluate and
`
`put forward AED treatment options; as such, I do not expect, a priori, large
`
`marketing spends to have played any role in VIMPAT®’s success. See also CARL.
`
`W. BAZIL, LIVING WELL WITH EPILEPSY AND OTHER SEIZURE DISORDERS 96-97
`
`(2004) (Ex. 2079). This observation is reinforced by the widespread availability
`
`and use of generic AEDs in the marketplace, since the presence of several low-cost
`
`generic options in such a marketplace can also dampen the incentive of branded
`
`drug manufacturers to spend significant amounts on marketing.
`
`32.
`
`In Exhibit 2177, I evaluate marketing spend levels for AEDs provided
`
`by IMS, in addition to the realized sales as reported by IMS for each drug.9 I
`
`
`9 As mentioned, my revenue share analyses discussed in Section III rely on IMS
`
`sales data that have been adjusted to reflect sales associated with epilepsy
`
`indications only. I understand that such adjusted data related to marketing spend
`
`
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`assess whether the marketing spend on VIMPAT® was inordinately responsible for
`
`the success it realized relative to other branded AEDs. If it were, I would expect
`
`the ratio of reported marketing spend per dollar sales of VIMPAT® to be materially
`
`above those observed for AEDs more generally. Further, I evaluate these ratios
`
`taking into account where branded products are in their product lifecycle, since
`
`branded products at (or near) their initial launch commonly exhibit very high
`
`spend/sales ratios as sales remain embryonic while initial spend to create
`
`awareness are quite high.
`
`
`are not available. Therefore, to ensure I perform appropriate comparisons of
`
`marketing spend and sales dollars data, in this section I evaluate total marketing
`
`spend and total sales dollars data (i.e., totals not adjusted to reflect only epilepsy
`
`indications) for each drug. By comparing the epilepsy-only IMS sales data
`
`described in Section III with unadjusted IMS sales data, I can determine which
`
`drugs UCB considers to be used virtually entirely for the treatment of epilepsy.
`
`These drugs include the majority of AEDs considered in Exhibit 2177, namely
`
`ATPIOM®, BANZEL®, FYCOMPA®, SABRIL®, and VIMPAT®.
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`33. These data demonstrate that VIMPAT®’s success is not due to any
`
`unusual level of marketing spend.10 In its initial launch year, VIMPAT®’s
`
`marketing spend/sales ratio was 23.9%, which is well below the ratio reported for
`
`the majority of other branded drugs released during this period (POTIGA® –
`
`32.6%, APTIOM® – 66%, FYCOMPA® – 50.8%, TROKENDI® XR – 67.4%,
`
`SABRIL® – 60.9%). In the year immediately after launch, VIMPAT®’s
`
`spend/sales ratio of 9.0% again lies well below those observed for other drugs
`
`(POTIGA® – 15.5%, TROKENDI® XR – 15.1%, SABRIL® – 18.2%). In
`
`subsequent “steady state” years (2013-14), VIMPAT® spend sales ratio (1.8%) lies
`
`in the middle of the range of other established branded AEDs, below drugs such as
`
`DEPAKOTE® ER and LAMICTAL® XR, and slightly above drugs such as
`
`BANZEL® and SABRIL® (see Ex. 2177).
`
`
`10 I note that it is widely recognized that IMS marketing spend data commonly
`
`capture only a portion of the total actual spend. Nonetheless, IMS marketing spend
`
`data are commonly used in the pharmaceutical industry to perform comparisons in
`
`spend across products (so-called "share of voice") or to study trends in spend.
`
`These common uses are consistent with the analyses of the IMS marketing spend
`
`data that I perform presently.
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`C. VIMPAT®’s Commercial Success Is Not Due to Aggressively Low
`Pricing
`34. As described in Section II, the AED marketplace consists of many
`
`generic versions of drugs which combined have constituted over 80% of AED
`
`prescriptions in the United States since the time of VIMPAT®’s launch in 2009.11
`
`In the pharmaceutical industry in general, generic versions of drugs are uniformly
`
`and consistently priced lower than branded medications. I confirmed that this
`
`dynamic holds true for the AED marketplace in particular by computing the sales
`
`dollars per prescription for the branded and generic drugs considered in my share
`
`analyses discussed in Section III.
`
`35.
`
`I provide a summary of my calculations in Exhibit 2178. As shown,
`
`during the 2009 – February 2015 time period, generic AEDs generated less than
`
`$30 per prescription, while branded AEDs on average generated more than $360
`
`per prescription and VIMPAT® specifically generated more than $550 per
`
`prescription. Thus, branded AEDs generally – and VIMPAT® in particular – do
`
`
`11 See Ex. 2171, p. 4. I note that since generic drugs are low-cost relative to
`
`branded drugs, their share of AED dollar sales is significantly lower than their
`
`share of AED prescriptions.
`
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`not derive their demand substantially through a lower relative price among AED
`
`options.
`
`V. The Prior Existence of IP (or Potential IP) Relating to Lacosamide Did
`Not Represent a "Blocking Patent" Issue
`A. Overview
`
`36. From a basic economic perspective, commercial success factors into
`
`the non-obvious nature of an invention by considering whether the observed
`
`success demonstrates material incentives would have been in place (at the time the
`
`invention was discovered) for developers to search for the patented invention. In
`
`the present matter, I understand from counsel that the petitioner has argued that the
`
`prior U.S. Pa