UNITED STATES PATENT AND TRADEMARK OFFICE
`_______________________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`_______________________
`
`AMERIGEN PHARMACEUTICALS LIMITED and
`ARGENTUM PHARMACEUTICALS LLC
`Petitioners,
`
`v.
`
`JANSSEN ONCOLOGY, INC.
`Patent Owner.
`
`_______________________
`
`Case IPR2016-002861
`Patent 8,822,438 B2
`_______________________
`
`
`DECLARATION OF
`CHRISTOPHER A. VELLTURO, PH.D.
`IN SUPPORT OF PATENT OWNER RESPONSE
`
`
`1 I understand case IPR2016-01317 has been joined with this proceeding.
`
`
`
`JANSSEN EXHIBIT 2115
`Amerigen v. Janssen IPR2016-00286
`
`
`_______________________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`_______________________
`
`AMERIGEN PHARMACEUTICALS LIMITED and
`ARGENTUM PHARMACEUTICALS LLC
`Petitioners,
`
`v.
`
`JANSSEN ONCOLOGY, INC.
`Patent Owner.
`
`_______________________
`
`Case IPR2016-002861
`Patent 8,822,438 B2
`_______________________
`
`
`DECLARATION OF
`CHRISTOPHER A. VELLTURO, PH.D.
`IN SUPPORT OF PATENT OWNER RESPONSE
`
`
`1 I understand case IPR2016-01317 has been joined with this proceeding.
`
`
`
`JANSSEN EXHIBIT 2115
`Amerigen v. Janssen IPR2016-00286
`
`
`
`
`
`Table of Contents
`
`
`
`Page(s)
`
`I.
`
`INTRODUCTION AND SUMMARY ........................................................... 1
`
`A. Qualifications and Experience ............................................................. 2
`
`B.
`
`C.
`
`Evidence Considered ............................................................................ 3
`
`Summary of Opinions .......................................................................... 3
`
`II.
`
`BACKGROUND ............................................................................................ 6
`
`A.
`
`B.
`
`C.
`
`D.
`
`Prostate Cancer ..................................................................................... 6
`
`Demand for mCRPC treatment ............................................................ 7
`
`ZYTIGA® ............................................................................................ 9
`
`The Patent-at-Issue ............................................................................. 10
`
`III. CONSIDERATION OF MCDUFF DECLARATION ................................. 10
`
`A. Overview of Dr. McDuff’s Contentions ............................................ 11
`
`B.
`
`The Barrie Patent as a Purported “Blocking Patent” Does Not
`Invalidate a Commercial Success Assessment ................................... 13
`
`1.
`
`2.
`
`Overview .................................................................................. 13
`
`Development and License Attempts of Abiraterone
`Acetate...................................................................................... 15
`
`C.
`
`Dr. McDuff’s Analysis Concerning the Relevance of
`ZYTIGA®’s “Unexpected Commercial Success” Is Incorrect ......... 16
`
`D. Dr. McDuff’s Mischaracterization of Marketplace Success .............. 17
`
`IV. AFFIRMATIVE ASSESSMENT ................................................................. 19
`
`A.
`
`B.
`
`Evaluation of Marketplace Success ................................................... 19
`
`ZYTIGA®’s Commercial Success Is Due in Significant Part to
`
`
`- i -
`
`
`
`
`
`
`
`the Claims of the ’438 Patent ............................................................. 22
`
`1.
`
`2.
`
`3.
`
`4.
`
`The ’438 Patent Covers the Only FDA-Approved Use of
`ZYTIGA® ................................................................................ 23
`
`Physicians Value ZYTIGA® – The Combination of
`Abiraterone Acetate and Prednisone – for its Therapeutic
`Survival Benefit ....................................................................... 23
`
`ZYTIGA®’s Commercial Success Is Not Attributable to
`Excessive Marketing Spend Levels ......................................... 26
`
`ZYTIGA®’s Commercial Success Is Not Due to
`Aggressively Low Pricing ........................................................ 28
`
`V.
`
`CONCLUSION ............................................................................................. 29
`
`
`
`
`
`
`
`
`- ii -
`
`
`
`
`
`I.
`
`I, Christopher A. Vellturo, hereby declare and state as follows:
`
`INTRODUCTION AND SUMMARY
`1.
`
`I have been retained as a consultant on behalf of Janssen Oncology,
`
`
`
`Inc. (“Janssen”), the patent owner in the present proceeding. I understand that the
`
`petition names Amerigen Pharmaceuticals Limited (“Amerigen”) and Argentum
`
`Pharmaceuticals LLC (“Argentum”) (collectively, “petitioners”). I have no
`
`financial interest in, or affiliation with, the petitioners 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 hourly consulting rate of $850.2 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 analyses and conclusions put forth on
`
`behalf of the petitioners by Dr. Deforest McDuff in his declaration (“the McDuff
`
`Declaration”).3 I have also been asked to independently evaluate the commercial
`
`
`2 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.
`
`3 Declaration of DeForest McDuff, Ph.D., December 4, 2015 (Ex. 1017).
`
` 1
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`
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`
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`
`
`
`
`
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`success of the combination therapy of abiraterone acetate and prednisone –
`
`marketed by Janssen as ZYTIGA®4 – and the extent to which ZYTIGA®’s
`
`commercial success is causally linked to the patent claims in U.S. Patent No.
`
`8,822,438 B2 (“the ’438 patent” or the “Patent-at-Issue”).
`
`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 2040.
`
`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.
`
`
`4 As used herein, unless otherwise stated, the term “ZYTIGA®” refers to
`
`ZYTIGA® therapy, i.e., abiraterone acetate in combination with prednisone for the
`
`treatment of patients with metastatic castration-resistant prostate cancer. (See Ex.
`
` 2
`
`
`
`1065).
`
`
`
`
`
`
`
`
`
`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
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`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
`
`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.
`
`B.
`6.
`
`Evidence Considered
`
`I have reviewed and relied on the articles and other documents and
`
`data cited in this declaration. The specific documents I have reviewed are listed in
`
`Appendix A of my declaration.
`
`C.
`7.
`
`Summary of Opinions
`
`I have reviewed Dr. McDuff’s assessment of commercial success of
`
`ZYTIGA® as it relates to the ’438 patent. Interestingly, at no point does Dr.
`
`McDuff explicitly state a conclusion that ZYTIGA® is not a commercial success –
`
` 3
`
`
`
`
`
`
`
`
`
`
`
`rather Mr. McDuff seems to contend that ZYTIGA®’s commercial success is of
`
`limited “economic relevance” due to other factors.
`
`8. Dr. McDuff’s declaration reflects a mischaracterization of the evidence
`
`regarding the marketplace success of ZYTIGA®, and a misapplication of
`
`economic principles underlying a nexus consideration with respect to the ’438
`
`patent. Specifically, I find:
`
`• Dr. McDuff’s opinion that the prior existence of IP relating to abiraterone
`acetate (specifically, U.S. Patent No. 5,604,213, “the Barrie patent”)
`represented a “blocking patent” issue that would have deterred investment in
`further development efforts by others to discover inventions claimed by the
`’438 patent is superficial; when fully investigated, his claim is rejected as
`licensing rights were available to abiraterone acetate for substantial periods of
`time in the relevant period;
`• Dr. McDuff opines that “unexpected commercial success” is a form of success
`that is not relevant to a commercial success analysis – his reasoning is flawed
`and confuses incentives to find a solution to substantial physician and patient
`demand (the relevant incentive of overall expected demand for a solution) with
`the unexpected ability of ZYTIGA® to have met this demand;
`• Dr. McDuff does not conclude that ZYTIGA® is not a commercial success,
`though he does mischaracterize the available evidence in an attempt to
`deemphasize the extent of ZYTIGA®’s commercial success:
`• Dr. McDuff’s attempts to temper the significance of the substantial net sales
`and associated shares of sales of ZYTIGA® – a blockbuster drug – establish
`an untenable standard of commercial success that few drugs would meet;
`• Dr. McDuff’s analysis relies on a list of the top 50 drugs in the world – this
`list includes ZYTIGA®, thereby highlighting ZYTIGA®’s success;
`• Indeed, ZYTIGA®’s continued commercial success in the face of significant
`new competition reinforces the commercial significance ZYTIGA® has had
`
` 4
`
`
`
`
`
`
`
`
`
`
`
`and continues to have in treating metastatic castration-resistant prostate
`cancer (“mCRPC”).
`
`9.
`
`I have undertaken an assessment of the degree of commercial success
`
`realized by ZYTIGA® and evaluated the question regarding the nexus between
`
`such success and the inventions covered by the claims of the ’438 patent. Based
`
`on the evidence available to me, I conclude:
`
`• ZYTIGA® has been commercially successful:
`• ZYTIGA® has generated more than $3.4 billion in U.S. net sales from the
`time of its launch through 2015;
`• In 2015, ZYTIGA®’s U.S. net sales totaled $1.07 billion – a level
`commonly referred to “blockbuster drug” status;
`• ZYTIGA®’s U.S. net sales have increased significantly each year since its
`launch despite entry of competitor drugs used to treat mCRPC.
`• The commercial success of ZYTIGA® is due in significant part to use of a
`therapeutically effective amount of abiraterone acetate in combination with a
`therapeutically effective amount of prednisone for cancer treatment – use that I
`understand embodies the claims of the ’438 patent:
`• The only FDA-approved indication of ZYTIGA® calls for use of
`abiraterone acetate in combination with prednisone – use that I understand is
`covered by the claims of the ’438 patent;
`• Approximately 90% of the use of ZYTIGA® is for abiraterone acetate in
`combination with prednisone for the treatment of cancer – use that I
`understand is covered by the claims of ’438 patent;
`• Physicians value treatment using the combination of abiraterone acetate and
`prednisone for its anti-tumor benefits related to patients’ increased life
`expectancy (survival);
`• ZYTIGA®’s observed expansion of net sales in the U.S. comes despite
`
` 5
`
`
`
`
`
`
`
`
`
`
`
`certain associated concerns related to tolerability associated with the use of
`prednisone – this is probative of the benefits the combination treatment of
`abiraterone acetate and prednisone provides to patients;
`• ZYTIGA®’s commercial success is not due to exceptional levels of
`promotional expenditure nor is it attributable to aggressive or low prices.
`
`10. 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
`11. To provide an economic perspective for this action, I first provide
`
`background on the condition that ZYTIGA® is used to treat – namely prostate
`
`cancer. I then discuss factors affecting demand and supply for drugs used to treat
`
`prostate cancer. Finally, I discuss the Patent-at-Issue and my understanding of the
`
`inventions it covers.
`
`Prostate Cancer
`A.
`12. Prostate cancer is a form of cancer that develops in the prostate gland,
`
`a male organ that produces the seminal fluid that nourishes and transports sperm in
`
`the human body. (See Ex. 2098). Its cells rely on testosterone, a male androgen or
`
`hormone, to grow. Prostate cancer is the most common non-skin cancer to occur
`
` 6
`
`
`
`in American males. (See Ex. 2100).
`
`
`
`
`
`
`
`
`
`13. Castration-resistant prostate cancer (“CRPC”) refers to the disease
`
`state in which prostate cancer continues to grow, despite use of drugs to lower
`
`male androgen levels. (See Ex. 2099). CRPC is evidenced by either a continuous
`
`rise in prostate-specific antigen (“PSA”) levels, pre-existing disease progression,
`
`and/or the appearance of new metastases.5 (See Ex. 2109 at S72). Metastatic
`
`castration-resistant prostate cancer (“mCRPC”) refers to CRPC that has then
`
`metastasized (i.e., spread) to other parts of the body. (See Ex. 2099). mCRPC
`
`patients’ cancer has progressed and spread beyond the prostate gland, despite
`
`previous treatment to lower testosterone levels. (See Ex. 1051 at 2).
`
`B. Demand for mCRPC treatment
`14. The major participants in prescribing decisions for prostate cancer,
`
`including CRPC and mCRPC, are healthcare professionals and their patients. The
`
`primary treating physicians for patients with prostate cancer are typically either
`
`urologists or oncologists. Physicians classify individuals with prostate cancer as
`
`either pre-chemotherapy patients or chemo-refractory patients. Pre-chemotherapy
`
`patients have not yet undergone a chemotherapy treatment for prostate cancer.
`
`
`5 “Metastases” refers to the process by which cancer cells spread into normal tissue
`
`in other parts of the body. (See, e.g., Ex. 2105).
`
` 7
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`
`
`
`
`
`
`
`
`
`
`Chemo-refractory patients have received chemotherapy treatment(s) for prostate
`
`cancer that were either partially or fully ineffective. (See Ex. 2103).
`
`15.
`
`In general, the effective treatment of a given condition or disorder is a
`
`fundamental factor affecting prescribing decisions. I understand from Patent
`
`Owner’s expert, Dr. Matthew Rettig, that in the case of mCRPC, both treating
`
`physicians and patients evaluate anti-tumor effects as the key treatment attribute to
`
`consider. Further, in the realm of mCRPC drug development, the primary
`
`emphasis is the improvement in the patient’s life expectancy (i.e., survival), which
`
`is a goal of clinicians, researchers, and patients. Physicians and patients evaluate
`
`efficacy of mCRPC treatments based upon survival; while a patient’s level of
`
`prostate-specific antigen (“PSA”) and radiographic responses are important, the
`
`ultimate objective is to improve survival with treatment. (See Ex. 2038 (Rettig
`
`Decl.) ¶ 195).
`
`16. Certain therapies used to treat mCRPC – including ZYTIGA® – are
`
`indicated for use in combination with prednisone. (See Ex. 1065). Prednisone is in
`
`the class of drugs known as glucocorticoids, which work to mimic the effects of
`
`naturally-produced hormones in the human body. (See Ex. 2102).
`
` 8
`
`
`
`
`
`
`
`
`
`
`
`C. ZYTIGA®
`17.
`I understand from Dr. Rettig that in the 2004 – 2010 time period,
`
`chemotherapy treatment, commonly using the drug docetaxel (which is marketed
`
`as Taxotere), was the only mCRPC treatment that was associated with modest
`
`improvements in survival rates of mCRPC patients.6
`
`18. Abiraterone acetate was approved by the FDA on April 28, 2011, and
`
`is marketed by Janssen in combination with prednisone, as per its FDA-approved
`
`use, as ZYTIGA®. (See Ex. 1035). ZYTIGA® was initially indicated for the
`
`treatment of patients with mCRPC who have received prior chemotherapy
`
`containing docetaxel. (See Ex. 1018). On December 10, 2012, ZYTIGA®’s
`
`indication was modified to include treatment of patients with mCRPC regardless of
`
`prior docetaxel treatment. It is available as an oral tablet at a recommended dose
`
`of 1,000 mg (taken in four 250 mg tablets) administered orally once daily; it is to
`
`be taken in combination with prednisone (5 mg), administered twice daily. (See
`
`Ex. 1065).
`
`
`6 Conversation with Dr. Matthew Rettig, September 28, 2016; see also Ex. 2104.
`
` 9
`
`
`
`
`
`
`
`
`
`
`
`D. The Patent-at-Issue
`19.
`I understand the Patent-at-Issue is U.S. Patent No. 8,822,438 (“the
`
`’438 patent”), which issued on September 2, 2014. (Ex. 1001). I further
`
`understand based on my conversation with Dr. Matthew Rettig that the ’438 patent
`
`covers a method for treating prostate cancer by the administration of a
`
`therapeutically effective amount of abiraterone acetate (or a pharmaceutically
`
`acceptable salt thereof) and a therapeutically effective amount of prednisone. I
`
`understand that when used as directed on its label, ZYTIGA®’s use practices the
`
`’438 patent.
`
`III. CONSIDERATION OF MCDUFF DECLARATION
`20.
`In this section, I review the commercial success analysis set forward by
`
`Dr. DeForest McDuff in his declaration. First, I summarize Dr. McDuff’s
`
`principal contentions.
`
` I then assess his characterization of ZYTIGA®’s
`
`marketplace success and his discussion of certain elements that he asserts limit the
`
`relevance of ZYTIGA®’s marketplace success in the current matter. I note Dr.
`
`McDuff does not conclude that ZYTIGA® has not been a marketplace success.
`
`Further, I find his attempts to temper the extent of ZYTIGA®’s marketplace
`
`success fail to undermine ZYTIGA®’s clear marketplace success. I further find
`
`his attempts to call into question the economic relevance of ZYTIGA®’s
`
`
`
`
`10
`
`
`
`
`
`
`
`marketplace success and the nexus of such success to the claims of the ’438 patent
`
`fail to withstand economic scrutiny.
`
`A. Overview of Dr. McDuff’s Contentions
`21. Dr. McDuff begins by laying out his standard for “economic relevance
`
`of commercial success.” (Ex. 1017 (McDuff Decl.) ¶¶ 16-17). He notes that
`
`“evidence of commercial success is only relevant if there is a nexus between the
`
`alleged commercial success and the patentable features of the asserted claims” and
`
`adds that commercial success must be “attributable to the novel parts of a patent
`
`claim, and not on factors that are unrelated or were already known.” (Id. at ¶ 16).
`
`22. Next, Dr. McDuff discusses U.S. Patent No. 5,604,213 (“the Barrie
`
`patent”) – a patent which I understand covers a class of compounds including
`
`abiraterone acetate (Ex. 1017 (McDuff Decl.) § III.B). He contends that the Barrie
`
`patent effectively served as a “blocking patent” for ZYTIGA®, which prevented
`
`others from “making, selling, or using abiraterone,” (id. at ¶ 18) and thus its
`
`existence “would have significantly reduced economic incentives for development
`
`of the technology claimed in the ’438 patent.” (Id. at ¶ 20).
`
`23. Dr. McDuff makes
`
`the
`
`following characterizations
`
`regarding
`
`ZYTIGA®’s marketplace success:
`
`• “‘[U]nexpected’ commercial success…is not relevant for an evaluation of
`whether material economic incentives for development existed at the time of the
`
`
`
`
`11
`
`
`
`
`
`
`
`alleged invention” (id. at ¶ 21);
`• ZYTIGA®’s sales share as of April 2013 among all mCRPC patients was 29%,
`and its share among all prostate cancer patients was approximately 3 to 6% (id.
`at ¶ 24);
`• J&J’s evidence cited in its correspondence with the USPTO overstated
`marketplace shares to the extent individual patients took more than one
`medication (id. at ¶ 25);
`• “J&J’s claim that Zytiga is … ‘the most successful oral oncology launch in
`history’ is misleading in light of non-oral cancer drugs with greater sales” (id. at
`¶ 26);
`• ZYTIGA®’s marketplace share declined in conjunction with an increase in that
`of Xtandi®, another mCRPC drug (id. at ¶ 28);
`• The gross sales price per pill of Xtandi® reflects a modest premium when
`compared with that of ZYTIGA® (id. at ¶ 29); and
`• Several Wall Street analyst reports predicted future success for Xtandi® (id. at
`¶ 30).
`
`24. Dr. McDuff also contends that the following factors “indicate a lack of
`
`nexus between the alleged invention and sales of Zytiga.” (Id. at ¶ 31):
`
`• The ingredient abiraterone acetate is itself covered by the Barrie patent, not the
`’438 patent (id. at ¶ 32);
`• Methods for treating patients with combinations of drugs are common in the
`marketplace for cancer treatment, including combinations encompassing a
`glucocorticoid (id. at ¶ 33);
`• There is no evidence that ZYTIGA® sales are due to the benefits of the
`combination of abiraterone and prednisone as opposed to the benefits of each
`component individually (id. at ¶ 34);
`• The incremental contribution of the ’438 patent beyond existing treatment is
`“relatively low” (id. at ¶ 35).
`
`
`
`
`12
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`
`
`
`
`
`
`25. As noted above, Dr. McDuff neither concludes nor disputes that
`
`ZYTIGA® has constituted a marketplace success, though he does attempt to
`
`deemphasize that success. He also raises certain points that he contends undermine
`
`the “relevance” of ZYTIGA®’s marketplace success. In this section, I assess Dr.
`
`McDuff’s affirmative contentions regarding ZYTIGA®’s marketplace success and
`
`its economic relevance in this matter.7 I conclude that nothing in Dr. McDuff’s
`
`discussion calls into dispute the overwhelming marketplace success of ZYTIGA®.
`
`I further conclude that the economic relevance of ZYTIGA®’s marketplace
`
`success is not materially limited by the factors raised by Dr. McDuff, nor do these
`
`factors temper the nexus between such success and the claims of the ’438 patent.
`
`B.
`
`26.
`
`The Barrie Patent as a Purported “Blocking Patent” Does Not
`Invalidate a Commercial Success Assessment
`1. Overview
`I understand
`the Barrie patent covers
`
`the abiraterone acetate
`
`compound. It claims a priority date of March 31, 1992, was issued on February 18,
`
`7 I note that Dr. McDuff has put forth opinions that clearly extend beyond his areas
`
`of expertise (see, e.g., Ex. 1017 (McDuff Decl.) ¶ 33), and I don’t address those for
`
`obvious reasons. I evaluate Dr. McDuff’s opinions and the underlying bases for
`
`those opinions that are grounded in economics.
`
`
`
`
`13
`
`
`
`
`
`
`
`1997, and was originally assigned to British Technology Group, Ltd. (“BTG”) (Ex.
`
`1005). The ’438 patent claims a priority date of August 25, 2006 and was issued
`
`on September 2, 2014 and assigned to Janssen. (Ex. 1001).
`
`27. Dr. McDuff notes that in general, “[f]rom an economic perspective,
`
`commercial success presumes that if an idea were obvious to market participants,
`
`then others would have brought that idea to market sooner had there been material
`
`economic incentives to do so.” (Ex. 1017 (McDuff Decl.) ¶ 17). In the present
`
`matter, Dr. McDuff has argued that the Barrie patent would have significantly
`
`reduced economic incentives for those in the industry without access to the Barrie
`
`patent to find and develop the technology covered by the ’438 patent.
`
`28.
`
`In this context, I consider the historical development of abiraterone
`
`acetate and the economic incentives that were actually in place for developers to
`
`search for the ’438 Patented Invention in the years leading up to the 2006 priority
`
`date and 2014 issuance of the ’438 patent. When the salient facts are properly
`
`considered, the Barrie patent did not serve as a disincentive to the industry to
`
`discover the invention claimed in the ’438 patent, as numerous opportunities arose
`
`that provided access to the Barrie patent.
`
`
`
`
`14
`
`
`
`
`
`
`
`Development and License Attempts of Abiraterone Acetate
`2.
`29. Early development work of the inventions underlying the Barrie patent
`
`was conducted in the 1990s by scientists at the U.K.-based Institute of Cancer
`
`Research (“ICR”), which assigned rights for abiraterone acetate’s development to
`
`BTG. (See Ex. 2097). I understand that Boehringer Ingelheim partnered with ICR
`
`and BTG in the 1996 – 1999 period, during which time the Barrie patent issued
`
`and the parties conducted Phase I clinical trials of abiraterone acetate in humans
`
`for the first time. (Ex. 2005 (Judson Decl.) ¶¶ 3, 5-6).
`
`30.
`
`I further understand that following these trials and the submission of a
`
`final report in 1999, Boehringer Ingelheim suspended its involvement in the
`
`development of abiraterone acetate (Id. at ¶ 7) and that ICR/Royal Marsden
`
`undertook a search for an alternative commercial partner, during which “a number
`
`of major multinational pharmaceutical companies were approached.” (Id.).
`
`31.
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`Initially, none of the approached parties elected to support taking
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`abiraterone acetate into further trials. (Id.). Rights under the Barrie patent went
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`unclaimed for almost five years, until April 2004 when Cougar Biotechnology Inc.
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`(“Cougar”) executed a license for the rights to “develop and commercialize”
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`abiraterone acetate. (Id. at ¶ 9). J&J (Janssen’s parent company) acquired Cougar
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`in 2009. (See Ex. 2101).
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`15
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`
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`32. An examination of the above history of the rights to the Barrie patent
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`reveals an important dynamic. First, in several years leading up to the 2006
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`priority date of the ’438 patent (i.e., approximately 1999-2004), licensing rights to
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`abiraterone acetate were available and indeed actively shopped. Thus, for
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`significant periods of time immediately preceding the priority date for the ’438
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`patent, the incentives relevant to the commercial success inquiry were broadly
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`available.
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`C. Dr. McDuff’s Analysis Concerning the Relevance of ZYTIGA®’s
`“Unexpected Commercial Success” Is Incorrect
`33. Dr. McDuff asserts at the outset of his commercial success discussion
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`that the value of the commercial success inquiry depends on whether there were
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`“material economic incentives for development at the time of the alleged
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`invention.” (Ex. 1017 (McDuff Decl.) ¶ 17). In other words, commercial success
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`considers whether there was a problem that, if solved, would have generated
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`substantial expected demand for a solution. In the present matter, I understand that
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`the problem where a solution was sought was the need for an mCRPC treatment
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`that exhibited an enhanced survival benefit, for example, relative to docetaxel
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`chemotherapy. (See Ex. 2038 (Rettig Decl.) ¶ 197).
`
`34. Dr. McDuff contends that “‘unexpected’ commercial success…is not
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`relevant for an evaluation of whether material economic
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`incentives for
`
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`16
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`
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`
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`
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`development existed at the time of the alleged invention.” (Ex. 1017 (McDuff
`
`Decl.) ¶ 22). Dr. McDuff is incorrect. In claiming that “unexpected sales” would
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`not have incentivized market participants to develop the claimed technology at the
`
`time of the alleged invention,” (id.) Dr. McDuff simply confuses demand for the
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`answer (which creates the incentives to innovate and discovery) with ex ante
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`expected demand for the therapy. In other words, even if ZYTIGA®’s particular
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`success in meeting this demand was unexpected, once ZYTIGA® was developed
`
`and commercialized as a solution, expected material demand awaited it. The
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`existence of this demand is supported by ZYTIGA®’s billions of dollars of net
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`sales in the United States since its launch. (See Section IV.A).
`
`D. Dr. McDuff’s Mischaracterization of Marketplace Success
`35. As I discuss below in my affirmative assessment, the commercial
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`success inquiry comprises two key elements: 1) has the patented product been
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`commercially successful (a concept I have referred to as “marketplace success”),
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`and 2) is there a nexus between this marketplace success and the claimed invention
`
`of the patent at issue. With respect to whether ZYTIGA® has constituted a
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`marketplace success, Dr. McDuff has apparently drawn no conclusion one way or
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`the other, despite overwhelming evidence that it has been a success. Indeed, his
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`review of ZYTIGA®’s marketplace performance, ostensibly included in his
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`
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`17
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`
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`declaration to deemphasize the extent of ZYTIGA®’s marketplace success, largely
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`reinforces ZYTIGA®’s substantial success.
`
`36. For example, Dr. McDuff asserts that “J&J’s claim that ZYTIGA is
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`‘the most successful oral oncology launch in history’ is misleading in light of the
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`non-oral cancer drugs with even greater sales,” though he takes no issue with the
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`accuracy of the claim (Ex. 1017 (McDuff Decl.) ¶ 26). Relatedly, Dr. McDuff
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`cites the higher sales levels of other multi-billion dollar cancer drugs (Rituxan,
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`Avastin, and Herceptin), none of which are indicated to treat prostate cancer. As
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`Dr. McDuff notes, these three drugs all generated more than $6 billion worldwide
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`in 2014. (Id.). If Dr. McDuff means to imply that, to be considered a marketplace
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`success, a drug need generate more sales than all of these multi-billion dollar
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`drugs, then according to his own source, only five drugs of any class would qualify
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`as a marketplace success in 2014 based on worldwide sales. (Ex. 1055). It is also
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`noteworthy that Dr. McDuff’s source for these revenue figures is a list of the “[t]op
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`50 pharmaceutical products by global sales” – a list that includes ZYTIGA®.
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`37. ZYTIGA® has generated more than $3 billion in net sales in the U.S.
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`through 2015. Its net sales have increased substantially in each year since its
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`launch and topped $1 billion in 2015 – qualifying ZYTIGA® as a “blockbuster”
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`drug based on U.S. sales alone. (See Ex. 2111 (McDuff Tr.) at 30:23-31:6). The
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`18
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`
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`evidence plainly and overwhelmingly supports the conclusion that ZYTIGA® has
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`constituted a marketplace success, a finding consistent with petitioners’ expert Dr.
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`Serels’ testimony that ZYTIGA® indeed has been commercially successful. (See
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`Ex. 2037 (Serels Tr.) at 71:6-8).
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`IV. AFFIRMATIVE ASSESSMENT
`38.
`I have been asked to provide an affirmative assessment of the
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`commercial success of ZYTIGA®, and whether there is a nexus between such
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`success and the claims of the ’438 patent. I find that ZYTIGA® has been
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`commercially successful, due in significant part to the invention claimed in the
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`’438 patent.
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`A. Evaluation of Marketplace Success
`39.
`I understand that, under United States patent law, commercial success
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`of a patented invention can be evidence of nonobviousness. I understand further
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`that there must be a nexus – or causal connection – between the characteristics of
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`the patented invention and the marketplace success of the product that incorporates
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`that invention for commercial success to be evidence of nonobviousness. To
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`evaluate the first part of my commercial success assessment, I examine the
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`marketplace performance of ZYTIGA®.
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`19
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`40. First, I note that Dr. Scott Serels, the medical expert retained by the
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`petitioners, has conceded that ZYTIGA® therapy has been commercially
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`successful. (See Ex. 2037 (Serels Tr.) at 71:6-8). My analysis of the substantial
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`sales dollars and associated shares generated by ZYTIGA® in the U.S. since its
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`2011 launch demonstrate the clear commercial success that ZYTIGA® has
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`enjoyed.
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`41.
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`I assess the net sales generated by ZYTIGA® in the United States from
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`the time of its launch in 2011 through the end of 2015, as reported in Appendix B.
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`ZYTIGA® has generated more than $3.4 billion in net sales in the United States in
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`this period. In my experience, such a total is a remarkable amount of net sales for
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`a single drug to generate in its first few years of commercial availability.
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`ZYTIGA®’s net sales have also increased considerably in each year since its
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`launch, even in the face of material new entry into the category, reaching $1.07
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`billion in 2015. ZYTIGA® has enjoyed this continued expansion of annual net
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`sales in the face of the launches of competitor drugs Xtandi®8 and Xofigo®9 in the
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`mCRPC treatment space.
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`8 Xtandi® was approved by the FDA on August 31, 2012. (See Ex. 2107).
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`9 Xofigo® was approved by the FDA on May 15, 2013. (See Ex. 2106).
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`20
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`42. Given this extraordinary level of sales, it is not surprising that an
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`analysis of ZYTIGA®’s share of sales within the mCRPC treatment marketplace is
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`substantial as well. For instance, Appendix C reports ZYTIGA®’s share of sales
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`among Xtandi® and Jevtana® – “[s]elect mCRPC Drugs” evaluated by Dr.
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`McDuff (Ex. 1017 (McDuff Decl.) Attachment B-3) using data provided in
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`c
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