throbber
UNITED STATES PATENT AND TRADEMARK OFFICE
`_____________________________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`_____________________________
`
`
`
`ARGENTUM PHARMACEUTICALS LLC, MYLAN PHARMACEUTICALS
`INC., BRECKENRIDGE PHARMACEUTICAL, INC., and ALEMBIC
`PHARMACEUTICALS, LTD.,
`
`Petitioners,
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`v.
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`RESEARCH CORPORATION TECHNOLOGIES, INC.,
`Patent Owner.
`
`_____________________________
`
`Case IPR2016-00204
`Patent RE38,551 E1
`_____________________________
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`DECLARATION OF DEFOREST MCDUFF, Ph.D.
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`1 Petitioners Mylan (IPR2016-01101), Breckenridge (IPR2016-01242), and
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`Alembic (IPR2016-01245) have each been joined as Petitioner to this proceeding.
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`Declaration of DeForest McDuff, Ph.D.
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`ARGENTUM Exhibit 1086
`Argentum Pharmaceuticals LLC v. Research Corporation Technologies, inc.
`IPR2016-00204
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`I, DeForest McDuff, Ph.D., declare as follows:
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`I.
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`Introduction
` Qualifications
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`1.
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`I am a Vice President of Intensity Corporation (“Intensity”) and an
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`expert in applied business economics, with more than ten years of experience in
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`consulting, finance, and economic research. I provide expert witness testimony
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`and consulting in a variety of areas, including lost profits, reasonable royalties,
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`unjust enrichment, commercial success, irreparable harm, finance, statistics,
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`valuation, and business optimization.
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`2. My expertise and experience span a variety of topics, including
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`intellectual property, competition, business, antitrust, finance, labor, employment,
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`and class action. I am an expert in the economics of technology and intellectual
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`property. My work spans the life sciences (including pharmaceuticals,
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`biotechnology, diagnostics, and medical devices), electronics (including consumer
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`electronics, semiconductors, computers, and telecommunications), and has
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`included projects on a diverse range of other industries.
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`3.
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`I have significant experience evaluating the economics of the
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`pharmaceuticals industry. I have provided expert analysis and consulting in over
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`50 cases involving pharmaceuticals and related products, including evaluations of
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`economic damages, competition, commercial success, irreparable harm, and other
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`issues. I have evaluated a number of pharmaceutical product launches, both in a
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`litigation setting and an advisory role, and have published articles and taught
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`continuing legal education on pharmaceutical products as well.
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`4.
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`I earned my Ph.D. in economics from Princeton University. At
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`Princeton, I received a National Science Foundation Graduate Research Fellowship
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`for academic research studying economic and statistical properties of housing
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`markets and financial derivatives. I have published research in several peer-
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`reviewed academic journals. I graduated summa cum laude with undergraduate
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`degrees in economics and mathematics from the University of Maryland.
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`5. My curriculum vitae, provided in Ex. 1088, Attachment A, contains
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`more details on my background, experience, publications, and prior expert
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`testimony.
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`
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`Scope of Work
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`6.
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`In connection with my work on this matter, Intensity has been retained
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`by Dowd PLLC on behalf of Argentum Pharmaceutical, Inc., Wilson Sonsini
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`Goodrich & Rosati on behalf of Mylan Pharmaceuticals, Inc.; by Merchant &
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`Gould P.C. on behalf of Breckenridge Pharmaceutical, Inc.; and Carlson, Caspers,
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`Vandenburgh, Lindquist & Schuman, P.A. on behalf of Alembic. Intensity is
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`being compensated at a rate of $700 per hour for my work and at lower rates for
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`time spent by others on my team. The compensation of Intensity is not dependent
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`on the substance of my testimony or the outcome of this matter.
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`7.
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`For this declaration, I was asked to review and discuss the declaration
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`of Dr. Christopher A. Vellturo relating to the alleged commercial success of
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`Vimpat (lacosamide; the “product-at-issue”) and U.S. Patent No. RE38,551 E (“the
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`’551 patent” or “patent-at-issue,” Ex. 1001) submitted on August 15, 2016
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`(“Vellturo Declaration”).2 This declaration is a statement of my opinions in this
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`matter and the basis and reasons for those opinions. In forming the opinions
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`expressed in this declaration, I have relied upon my education, experience, and
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`knowledge of the subjects discussed.
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`8.
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`This declaration summarizes only my current opinions, which are
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`subject to change depending upon additional information and/or analysis. The
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`entirety of my declaration, including exhibits Ex. 1088 (CV) & Ex. 1158
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`(attachments) and referenced materials, supplies the basis for my analysis and
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`conclusions. The organizational structure of the declaration is for convenience.
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`To the extent that facts, economic analysis, and other considerations overlap, I
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`generally discuss such issues only once for the sake of brevity. Neither the specific
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`Ex. 2132: Vellturo Declaration.
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`Declaration of DeForest McDuff, Ph.D.
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`order in which each issue is addressed nor the organization of my declaration or
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`attachments affects the ultimate outcome of my analysis.
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`II. Background
` Epilepsy
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`9.
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`Epilepsy is a central nervous system disorder in which nerve cells in
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`the brain become disrupted, causing seizures or unusual behavior.3 Seizures seen
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`in epilepsy are temporary changes in behavior caused by problems with the
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`electrical and chemical activity of the brain.4 Approximately 1 in 26 people in the
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`United States will develop a seizure disorder in their lifetimes.5
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`3
`Ex. 1159: Mayo Clinic, Epilepsy: Overview,
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`http://www.mayoclinic.org/diseases-conditions/epilepsy/home/ovc-
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`20117206.
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`4
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`Ex. 1160: Epilepsy Foundation, About Epilepsy: The Basics,
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`http://www.epilepsy.com/start-here/about-epilepsy-basics.
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`5
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`Ex. 1159 : Mayo Clinic, Epilepsy: Overview,
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`http://www.mayoclinic.org/diseases-conditions/epilepsy/home/ovc-
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`20117206.
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`Declaration of DeForest McDuff, Ph.D.
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` AEDs
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`10. Antiepileptic drugs (AEDs) are used to control and prevent seizures.6
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`While AEDs do not correct the cause of seizures, they can prevent seizures from
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`occurring.7 AEDs generally include first-generation products introduced several
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`decades ago and second-generation products introduced in the last two decades.8
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`See Attachment B-1 (Ex. 1158).
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`6
`Ex. 1161: Epilepsy Foundation, Seizure and Epilepsy Medicines,
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`http://www.epilepsy.com/learn/treating-seizures-and-epilepsy/seizure-and-
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`epilepsy-medicines.
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`Ex. 1161: Epilepsy Foundation, Seizure and Epilepsy Medicines,
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`http://www.epilepsy.com/learn/treating-seizures-and-epilepsy/seizure-and-
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`epilepsy-medicines.
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`8
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`Ex. 1162: American Association for Clinical Chemistry Website,
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`“Antiepileptic Drugs: Therapeutic Drug Monitoring of the Newer
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`Generation Drugs,” 6/1/2013,
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`https://www.aacc.org/publications/cln/articles/2013/june/antiepileptic-drugs.
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` Vimpat (lacosamide)
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`11. Vimpat is a brand-name antiepileptic drug sold by UCB with the
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`active ingredient lacosamide.9 UCB first launched Vimpat for sale in the United
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`States in 2009.10 Vimpat has been approved by the FDA as monotherapy or
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`adjunctive therapy in patients aged 17 years and older with partial onset seizures.11
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`Vimpat first received FDA approval for adjunctive therapy in partial onset seizures
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`in oral tablet and intravenous solution form in October 200812 and then in oral
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`9
`Ex. 1165: UCB, Annual Report, 2014, at 12.
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`10
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`11
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`Ex. 1164: UCB, Annual Report, 2009, at 2.
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`Ex. 1167 : Vimpat (lacosamide) Label, 8/29/2014, at 2. (“VIMPAT
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`(lacosamide) is indicated in patients 17 years and older with partial-onset
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`seizures as monotherapy or adjunctive therapy. VIMPAT (lacosamide)
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`injection for intravenous use is an alternative when oral administration is
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`temporarily not feasible.”).
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`12
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`Ex. 1163: UCB, Annual Report, 2008, at 19.
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`Ex. 1166: Vimpat (lacosamide) Label, 10/28/2008, at 2.
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`solution form in April 2010.13 In August 2014, the FDA expanded Vimpat’s
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`approval to include monotherapy treatment of partial-onset seizures.14
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` The ’551 patent
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`12. U.S. Patent No. RE 38,551, entitled “Anticonvulsant Enantiomeric
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`Amino Acid Derivatives,” was filed on January 28, 2002 and reissued on July 6,
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`2004. 15 The ’551 patent is a reissue of U.S. Patent No. 5,773,475, which was filed
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`on March 17, 1997 and issued on June 30, 1998.16 The patent lists Harold Kohn as
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`the inventor and Research Corporation Technologies, Inc. (“RCT”) as the
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`13
`Ex. 1168: FDA, Drug Details, Vimpat (NDA 022255),
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`http://www.accessdata.fda.gov/scripts/cder/drugsatfda/index.cfm?fuseaction
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`=Search.DrugDetails.
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`Ex. 1183: Letter from FDA to UCB, Re: “NDA Approval”, 4/20/2010.
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`14
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`Ex. 1167: Vimpat (lacosamide) Label, 8/29/2014, at 2.
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`Ex. 1169: Letter from FDA to UCB, Re: “Supplement Approval,”
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`8/29/2014.
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`15
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`Ex. 1001: Anticonvulsant Enantiomeric Amino Acid Derivatives, U.S.
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`Patent No. RE 38,551 E (filed 1/28/2002, reissued 7/6/2004).
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`16
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`Ex. 1001: Anticonvulsant Enantiomeric Amino Acid Derivatives, U.S.
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`Patent No. RE 38,551 E (filed 1/28/2002, reissued 7/6/2004).
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`assignee.17 I understand that the ’551 patent is alleged to cover the compound
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`lacosamide.18
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`III. Analysis of the Vellturo Declaration
` Overview
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`13. Commercial success is a secondary consideration that a patent owner
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`may use to argue that a patent is not obvious based on the alleged commercial
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`success of a product embodying the invention of the patent. I understand that
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`commercial success is relevant to the determination of a patent’s obviousness since
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`the law presumes that an idea would have been brought to market sooner, in
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`response to market forces, had it been obvious to persons skilled in the art. I
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`further understand that evidence of commercial success is only relevant if there is a
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`nexus between the alleged commercial success and the patentable features of the
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`asserted claims. In other words, the patent owner must show that the commercial
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`success is attributable to the novel parts of a patent claim, and not on factors that
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`are unrelated or were already known.
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`17
`Ex. 1001: Anticonvulsant Enantiomeric Amino Acid Derivatives, U.S.
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`Patent No. RE 38,551 E (filed 1/28/2002, reissued 7/6/2004).
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`18
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`Ex. 2132: Vellturo Declaration, ¶¶ 29–30.
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`14. Upon review, I find that the Vellturo Declaration does not establish
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`the commercial success of Vimpat or a nexus to the ’551 patent. By contrast,
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`based on all of the information and analysis described herein, I provide the
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`following primary conclusions: (1) Vimpat sales do not demonstrate commercial
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`success (see Section III.B); (2) there is a reduced relevance of any alleged
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`commercial success to obviousness of the ’551 patent (see Section III.C); and
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`(3) there is a limited nexus (if any) to the ’551 patent (see Section III.D). These
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`opinions are discussed in more detail below.
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` Vimpat sales do not demonstrate commercial success
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`15. Several factors indicate that Vimpat sales do not demonstrate
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`commercial success: (i) Vimpat prescription shares have been low; (ii) Vimpat
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`sales do not show an economic profit; and (ii) Vimpat has underperformed
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`expectations.
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`i. Vimpat prescriptions shares have been low
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`16. The Vellturo Declaration sets forth a variety of sales shares within
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`epilepsy use that purport to demonstrate commercial success of Vimpat, including
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`(1) Vimpat’s share of branded dollar sales, (Ex. 2132: Vellturo Declaration, ¶¶ 19–
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`20) (2) Vimpat’s share of AED dollar sales (Id., ¶ 21), (3) Vimpat’s share of
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`branded prescriptions (Id., ¶ 24), and (4) Vimpat’s share of AED prescriptions (Id.,
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`¶ 25). However, the variety of shares set forth in the Vellturo Declaration are
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`highly misleading; by contrast, prescription shares are the best measure of relative
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`share for the AED market, and Vimpat’s share using that measure has been low.
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`17. First, sales and prescription shares based exclusively on branded
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`drugs, as set forth in the Vellturo Declaration, are misleading and uninformative in
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`light of the large number of generics representing most of the use in the AED
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`marketplace. For example, 13 out of 25 compounds in the marketplace have a
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`generic counterpart. See Attachment E-2 (Ex. 1158). As of 2014, more than 85%
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`of epilepsy prescriptions were written for generic products. See Attachment E-3
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`(Ex. 1158). The AED marketplace is not defined by branded drugs only, since all
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`of these drugs—both branded and generic—compete for sales in the marketplace.
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`Accordingly, analyzing Vimpat within an artificially narrow set of branded-only
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`products does not provide indication of commercial success, but rather reflects the
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`longevity of many AEDs and the prevalence of generic products throughout the
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`marketplace. Furthermore, since the market is becoming more generic over time
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`(from 69% in 2009 to 88% in 2015 – see Ex. 2171), Vimpat’s rising share among
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`branded drugs represents to a large extent a shrinking pie rather than a growing
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`share, per se.
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`18. Second, sales share based on revenues, as also set forth in the Vellturo
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`Declaration, are also misleading and uninformative in light of higher branded
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`prices and the large number of generics in the AED marketplace. Because branded
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`drug prices are typically multiples of generic drug products, sales shares based on
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`revenues are highly skewed towards branded drugs. That is, Vimpat has a
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`relatively higher sales share based on revenues simply because of its higher price
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`rather than earning a greater share of the marketplace. Because the AED
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`marketplace has a high fraction of generic products, Vimpat’s sales share measured
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`in dollars is particularly inflated and thus uninformative here.
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`19. Third, Dr. Vellturo’s shares for Vimpat are overstated because he
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`improperly assumes that all Vimpat prescriptions are for epilepsy only. The
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`Vellturo Declaration utilizes a 100% factoring rate for Vimpat, even though
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`Vimpat (like other AEDs) has material off-label use. Accordingly, even his
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`calculations themselves overstate Vimpat’s share of the market.
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`20. By contrast, a number of AEDs are prescribed significantly more
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`often than Vimpat. Even setting aside off-label use, Vimpat’s prescription share of
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`epilepsy use is only 3.7% as of 2015. See Attachment C-3 (Ex. 1158). Utilizing
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`an off-label use share of 46% for anticonvulsant drug prescriptions asserted in
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`Radley et al. (2006), Vimpat’s prescription share is reduced to no more than
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`2.0%.19 See Attachment C-3 (Ex. 1158). The fact that Vimpat has a narrower set
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`3.7% x 54% = 2.0%.
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`of approved indications and fewer prescriptions across non-epilepsy uses bears on
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`its commercial success, since Vimpat has a reduced ability to earn sales compared
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`to other AEDs in the marketplace. Total prescriptions from 2012 to 2015 indicates
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`that lacosamide had fewer epilepsy prescriptions than nine other AEDs. See
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`Attachment C-3 (Ex. 1158). As a share of overall use (epilepsy and off-label use),
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`Vimpat’s share is even lower (since it has less off-label use compared to other
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`AEDs). As part of the public district court trial in which both Dr. Vellturo and I
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`testified, I explained that Vimpat’s share of AED prescriptions overall is less than
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`one percent, and I publicly showed a demonstrative with this information: DDX-
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`415. Ex. 1170 at 1073:7-18; Ex. 1171 (DDX-415). See Attachment C-6 (Ex.
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`1158). I understand that UCB chose not to produce in this proceeding documents
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`underlying this comparison.
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`21. Ultimately, the majority of the shares of sales and prescriptions set
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`forth in the Vellturo Declaration are flawed, and examination of corrected
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`prescription shares within epilepsy and all AED use do not demonstrate
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`commercial success. The presence of significantly more successful AEDs
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`Ex. 1172: Radley, David C., Stan N. Finkelstein, Randall S. Stafford (2006),
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`"Off-label Prescribing Among Office-Based Physicians," Archives of
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`Internal Medicine," 166(9): 1021-1026, at 1024.
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`compared to Vimpat indicates that other products have achieved significantly more
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`use and are preferred by doctors and patients in the marketplace.
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`ii. Vimpat sales do not show an economic profit
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`22. The Vellturo Declaration identifies Vimpat sales from $126 million in
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`2010 to $568 million in 2015 and prescriptions from 300,000 in 2010 to 900,000 in
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`2014 as evidence of Vimpat’s commercial success.20 In other words, Dr. Vellturo
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`tabulates sales and prescriptions and declares them to be a “success” in some
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`abstract, unexplained sense. However, the Vellturo Declaration fails to provide
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`appropriate context to determine whether those sales are, in fact, successful or
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`large enough to demonstrate a commercial profit opportunity.
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`23. Sales of Vimpat have not come close to approaching levels associated
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`with many other AEDs receiving FDA approval since 1990, such as Neurontin
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`20
`For example, see:
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`Ex. 1173: UCB Epilepsy Meetings, UCB: The Epilepsy Company,
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`http://www.ucbepilepsymeetings.com/.
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`Ex. 1175: UCB, Annual Report, 2009, at 24 (“The cornerstone of our
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`epilepsy franchise, Keppa (levetiracetam) continued to generate double-digit
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`(gabapentin) at $2.7 billion in 2004;21 Lamictal (lamotrigine) at $2.0 billion in
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`2007;22 Topamax (topiramate) at $2.7 billion in 2008;23 UCB’s own Keppra
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`(levetiracetam) at $1.9 billion in 2008;24 and Lyrica (pregabalin) at $5.2 billion in
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`2014.25 Dr. Vellturo provides no such comparisons nor any comparison that
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`adequately puts Vimpat into context for evaluating its commercial success.
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`24. Similarly, a fundamental consideration of commercial success is
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`whether the sales and profits are large enough to have generated a commercial
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`opportunity and economic profit. Consistent with this, a fundamental economic
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`evaluation in the pharmaceutical industry (and more generally for commercial
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`success) involves a comparison of the expected costs of commercialization and
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`FDA approval against potential sales and profits, occurring with uncertainty and
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`21
`Ex. 1176: Pfizer, Financial Report, 2005, at 13.
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`22
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`Ex. 1178: GlaxoSmithKline, Annual Report, 2007, at 37, 78 (£1.097 billion
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`× 1.8162 $/£ = $2.0 billion).
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`23
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`24
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`Ex. 1179: Johnson & Johnson, Annual Report, 2008, at 23.
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`Ex. 1174: UCB, Annual Report, 2008, at 8, 49 (€1.266 billion × 1.462 $/€ =
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`$1.9 billion).
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`25
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`Ex. 1177: Pfizer, Form 10-K - Financial Report, 2014, at 20.
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`many years into the future.26 Published research shows that the costs of
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`commercialization and FDA approval are substantial, with fully capitalized and
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`26
`For a variety of sources and discussion, see:
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`Ex. 1180: Mestre-Ferrandiz, Jorge, Jon Sussex, and Adrian Towse (2012),
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`“The R&D Cost of a New Medicine,” Office of Health Economics, London
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`UK, 1–86.
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`Ex. 1181: DiMasi, Joseph, Henry Grabowski, and Ronald Hansen (2016),
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`"Innovation in the pharmaceutical industry: New estimates of R&D costs,"
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`Journal of Health Economics 47: 20–33.
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`Ex. 1184: David, Jesse and Marion B. Stewart (2005), “Commercial
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`Success: Economic Principles Applied to Patent Litigation,” in Gregory K.
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`Leonard and Lauren J. Stiroh, ed., Economic Approaches to Intellectual
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`Property Policy, Litigation, and Management, White Plains, NY: National
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`Economic Research Associates, Inc., at 196 (“From an economic
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`perspective, commercial success could in principle be defined by a single
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`criterion: Does the patented invention earn a positive net return (risk-
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`adjusted) on invested capital after accounting for all relevant costs
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`associated with developing and commercializing the patent as well as any
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`alternatives available to the patent holder?”).
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`risk-adjusted expenses associated with development and commercialization now
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`exceeding $2.5 billion, on average.27 The total economic cost of bringing a drug to
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`market should account for the out-of-pocket costs, opportunity cost, and
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`uncertainty of failed research and development, which are common and expected
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`in the pharmaceutical industry.28
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`25. Facts and information in this case indicate that commercialization
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`costs for Vimpat are likely to have been comparable to the $2.6 billion in risk-
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`
`27
`Ex. 1181: DiMasi, Joseph, Henry Grabowski, and Ronald Hansen (2016),
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`"Innovation in the pharmaceutical industry: New estimates of R&D costs,"
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`Journal of Health Economics 47: 20–33, at 20.
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`28
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`Ex. 1180: Mestre-Ferrandiz, Jorge, Jon Sussex, and Adrian Towse (2012),
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`“The R&D Cost of a New Medicine,” Office of Health Economics, London
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`UK, 1–86, at 5.
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`Ex. 1181: DiMasi, Joseph, Henry Grabowski, and Ronald Hansen (2016),
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`"Innovation in the pharmaceutical industry: New estimates of R&D costs,"
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`Journal of Health Economics 47: 20–33, at 28.
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`adjusted, capitalized expenses discussed in DiMasi, et al. (2016):29 (1) like the
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`drugs studied in the published research, Vimpat was a new molecular entity;
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`(2) FDA marketing approval for drugs in the DiMasi, et al. (2016) cohort ranged
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`from 2005 to 2013, compared to FDA approval and product launch in 2009 for
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`Vimpat; (3) drugs in the DiMasi, et al. (2016) cohort began clinical trials between
`
`1995 and 2007, compared to before 2006 for Vimpat;30 (4) commercialization costs
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`can vary by type of drug, but central nervous system drugs tend to be, all else
`
`being equal, relatively more expensive to develop.31
`
`26. By comparison, the net present value of Vimpat sales discounted back
`
`to product launch in 2009 (consistent with how the academic literature evaluates it,
`
`
`29
`Ex. 1181: DiMasi, Joseph, Henry Grabowski, and Ronald Hansen (2016),
`
`"Innovation in the pharmaceutical industry: New estimates of R&D costs,"
`
`Journal of Health Economics 47: 20–33, at 20.
`
`30
`
`Ex. 1185: Vimpat Clinical Trials,
`
`https://www.clinicaltrials.gov/ct2/show/NCT00220415?term=Vimpat&rcv_s
`
`=01%2F01%2F2000&rcv_e=01%2F01%2F2007&rank=11
`
`31
`
`Ex. 1182: DiMasi, Joseph, Henry Grabowski, and John Vernon (2004),
`
`“R&D Costs and Returns by Therapeutic Category,” Drug Information
`
`18
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` Case IPR2016-00204
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`Journal 38: 211–223, at 218.
`
`
`Declaration of DeForest McDuff, Ph.D.
`
`
`
`
`

`
`
`
`and based on a mid-level operating profit margin in the pharmaceutical industry of
`
`75% for illustrative purposes, as I am not aware of Vimpat’s costs or profit
`
`margins being available or analyzed by Dr. Vellturo) is less than $1.2 million. See
`
`Attachment B-3 (Ex. 1158). In other words, a comparison of likely costs of
`
`commercialization costs to Vimpat sales and profits to date indicate that has not
`
`come close to generating an economic profit and thus indicates a lack of
`
`commercial success.
`
`27. By comparison, the Vellturo Declaration fails to consider profits of
`
`any sort, not only economic profits more generally but even ongoing costs or
`
`profits associated with actively selling Vimpat and earned over time by UCB. This
`
`is a significant shortcoming of his analysis and calls into question any conclusion
`
`of commercial success.
`
`iii. Vimpat has underperformed expectations
`
`28. Evidence that sales of Vimpat underperformed relative to expectations
`
`provides further indication of lack of commercial success. As I noted in my
`
`district court testimony, UCB predictions of what they expected for Vimpat sales
`
`“were optimistic" and what “they expected for sales weren't actually what the sales
`
`realized.” Ex. 1170 at 1072:4-8. As discussed, the AED marketplace is well
`
`developed and offered limited expectation of opportunity for lacosamide. Yet even
`
`19
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` Case IPR2016-00204
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`Declaration of DeForest McDuff, Ph.D.
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`
`
`
`

`
`
`
`with expectations that were constrained in light of these limited opportunities,
`
`Vimpat has underperformed relative to those constrained expectations.
`
`29. Moreover, UCB has not received FDA approval for Vimpat for any
`
`additional indications besides epilepsy, despite completed and/or ongoing clinical
`
`trials related to neuropathic pain, postherpetic neuralgia, fibromyalgia,
`
`osteoarthritis, and migraine disorders.32 The fact that Vimpat has not earned FDA
`
`approval in these areas provides further explanation for its lack of ability to meet
`
`expectations within a marketplace where AEDs are frequently used for non-
`
`epilepsy uses.
`
`30. Evidence also indicates that Vimpat is not a preferred first-line
`
`epilepsy treatment. For example, I understand that Dr. Bazil, a physician testifying
`
`on behalf of UCB, confirmed that it would be “unusual” for him to prescribe
`
`lacosamide as a first-line epilepsy treatment. Ex. 1048 at 244:11-23. Moreover,
`
`despite the regulatory approval of Vimpat, the percentage of epilepsy patients who
`
`remain refractory to AED treatment remains essentially unchanged. Id. at 221:7-
`
`222:2.
`
`
`32
`Ex. 1186: UCB, Clinical Study Information for Vimpat (lacosamide),
`
`http://www.ucb.com/rd/clinical-study-information/vimpat-lacosamide.
`
`20
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` Case IPR2016-00204
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`
`Declaration of DeForest McDuff, Ph.D.
`
`
`
`
`

`
`
`
` Reduced relevance of any alleged success
`
`31. Several factors indicate that any alleged commercial success, even if it
`
`exists, is less relevant for obviousness of the ’551 patent, since they indicate a lack
`
`of economic incentives for the market to bring lacosamide to market sooner, thus
`
`weighing against any economic inference of non-obviousness based on commercial
`
`success. These factors are: (i) blocking rights reduced incentives to develop
`
`lacosamide; (ii) lacosamide offered limited opportunity for success; and (iii) UCB
`
`had unique interests in developing lacosamide.
`
`i. Blocking rights reduced incentives to develop lacosamide
`
`32. A blocking patent is one that effectively blocks others from making,
`
`selling, or using a product without use of the invention purportedly claimed in that
`
`patent. Courts have found that, in the presence of a blocking patent, the existence
`
`of commercial success provides little probative value on whether a claimed
`
`technology is obvious.33
`
`33.
`
`In this case, blocking rights in the form of previously issued patents,
`
`U.S. Patent No. 5,378,729 (“the ’729 patent”) and U.S. Patent 5,654,301 (“the ’301
`
`
`Ex. 1187: Merck & Co., Inc. v. Teva Pharmaceuticals USA, Inc., 395 F.3d
`33
`
`21
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` Case IPR2016-00204
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`1364, 1376–77 (Fed. Cir. 2005).
`
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`Declaration of DeForest McDuff, Ph.D.
`
`
`
`
`

`
`
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`patent”),34 would have prevented others from freely commercializing a lacosamide
`
`product and would have reduced economic incentives to develop such a product.
`
`Any lack of development observed in the marketplace that was deterred by
`
`blocking rights from other patents does not demonstrate that the technology
`
`claimed in the ’551 patent was not obvious.
`
`34. Dr. Vellturo claims that other intellectual property relating to
`
`lacosamide did not represent a “blocking patent” issue that would have deterred
`
`investment in further development efforts by others to discover the technology
`
`claimed by the ’551 patent, since license rights to (1) prior IP were “available and
`
`actively marketed,” (2) license rights were available even after lacosamide was
`
`discovered, and (3) the ’729 patent and the ’301 patent did not issue until 15
`
`months before the priority date of the ’551 patent.35
`
`35. However, incentives to innovate and pursue a lacosamide product
`
`would have been significantly reduced by the presence of the ’729 patent and the
`
`
`34
`Ex. 1019: Amino Acid Derivative Anticonvulsant, U.S. Patent No.
`
`5,654,301 (filed 1/12/1993, issued 8/5/1997).
`
`
`
`Ex. 1009: Amino Acid Derivative Anticonvulsant, U.S. Patent No.
`
`5,378,729 (filed 6/4/1991, issued 1/3/1995).
`
`35
`
`Ex. 2132: Vellturo Declaration, ¶¶ 8, 36–40.
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`22
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` Case IPR2016-00204
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`Declaration of DeForest McDuff, Ph.D.
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`

`
`
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`’301 patent, since entities considering further innovation relative to those
`
`technologies would not have certainty in being able to achieve access to those
`
`patents in the form of a license. For example, I understand that from the mid-
`
`1980s to 1991, RCT and Eli Lily cooperated in connection with a license
`
`agreement that would not have made the blocking patents “available” to the
`
`broader market. Ex. 2068 (1987 Short List of Potential New Drug Candidates for
`
`Synthesis and Evaluation for Lilly); Ex. 2067 (Nov. 1991 letter terminating
`
`license).
`
`36. During my public testimony in the related district court trial, I
`
`presented the demonstratives DDX-404 (Ex. 1170 at 1060:9-23), which identifies
`
`the RCT/Eli Lilly License running from 1986 through 1991 based on a citation to
`
`DTX-2310. Ex. 1171. I also presented the demonstrative DDX-408 (Ex. 1170 at
`
`1065:23-1068:24), which indicates that RCT and Eli Lilly entered into an
`
`exclusive license agreement in June 1989 based on a July 1986 option agreement.
`
`I testified that it was “the exclusive nature of the licensing which indicates they’re
`
`not widely available, they’re available to one entity at a time in a licensing, you
`
`know, specific license offer.” Ex. 1170 at 1068:8-12. When asked whether Lilly
`
`23
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` Case IPR2016-00204
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`Declaration of DeForest McDuff, Ph.D.
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`
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`

`
`
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`was disincentivized from taking a license, I confirmed that “the point is that there
`
`can only be one licensee at a time.” Id. at 1091:4-16.36
`
`37.
`
` My opinion is the same today. Economically, not only would entities
`
`have been directly prevented from development during an exclusivity period
`
`through 1991, entities would have been further deterred from pursuing a program
`
`in this area even during the non-exclusivity periods, since companies considering
`
`development programs in this area would not necessarily know in advance that
`
`they would be able to obtain a future license before RCT licensed the patent to
`
`another entity. At a minimum, there would be reduced incentives associated with
`
`developing lacosamide in terms of paying royalties if and when a commercialized
`
`product were developed

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