Case 1:09-cv-00185-SLR Document 228 Filed 04/08/11 Page 1 of 115 PageID #: 2893
`939
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`- VOLUME E -
`IN THE UNITED STATES DISTRICT COURT
`IN AND FOR THE DISTRICT OF DELAWARE
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`
`CIVIL ACTION
`
`NO. 09-185 (SLR)
`
`:::::::::::::
`
`OSI PHARMACEUTICALS, INC.,
`PFIZER INC. and GENENTECH,
`INC.,
`
`Plaintiffs,
`
`vs.
`TEVA PHARMACEUTICALS USA,
`INC. And MYLAN
`PHARMACEUTICALS, INC.,
`Defendants.
`
`- - -
`Wilmington, Delaware
`Friday, March 18, 2011
`9:33 o'clock, a.m.
`- - -
`BEFORE: HONORABLE SUE L. ROBINSON, U.S.D.C.J.
`- - -
`
`APPEARANCES:
`
`MORRIS NICHOLS ARSHT & TUNNELL
`BY: JACK B. BLUMENFELD, ESQ.
`
`-and-
`
`Valerie J. Gunning
`Official Court Reporters
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`APOTEX EX. 1055-001
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`939
`
`- VOLUME E -
`IN THE UNITED STATES DISTRICT COURT
`IN AND FOR THE DISTRICT OF DELAWARE
`- - -
`
`CIVIL ACTION
`
`NO. 09-185 (SLR)
`
`:::::::::::::
`
`OSI PHARMACEUTICALS, INC.,
`PFIZER INC. and GENENTECH,
`INC.,
`
`Plaintiffs,
`
`vs.
`TEVA PHARMACEUTICALS USA,
`INC. And MYLAN
`PHARMACEUTICALS, INC.,
`Defendants.
`
`- - -
`Wilmington, Delaware
`Friday, March 18, 2011
`9:33 o'clock, a.m.
`- - -
`BEFORE: HONORABLE SUE L. ROBINSON, U.S.D.C.J.
`- - -
`
`APPEARANCES:
`
`MORRIS NICHOLS ARSHT & TUNNELL
`BY: JACK B. BLUMENFELD, ESQ.
`
`-and-
`
`Valerie J. Gunning
`Official Court Reporters
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`APOTEX EX. 1055-001
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`Case 1:09-cv-00185-SLR Document 228 Filed 04/08/11 Page 2 of 115 PageID #: 2894
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`APPEARANCES (Continued):
`
`KAYE SCHOLER LLP
`BY: LEORA BEN-AMI, ESQ. and
`BENJAMIN C. HSING, ESQ. and
`DANIEL BOGLIOLI, ESQ.
`SAPNA PALLA, ESQ.
`(New York, New York)
`
`Counsel for Plaintiffs
`
`PHILLIPS, GOLDMAN & SPENCE, P.A.
`BY: JOHN C. PHILLIPS, JR., ESQ.
`
`-and-
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`WILEY REIN LLP
`BY: JAMES H. WALLACE, JR., ESQ.,
`MARK A. PACELLA, ESQ.,
`ADRIENNE JOHNSON, ESQ. and
`MATTHEW J. DOWD, ESQ.
`(Washington, D.C.)
`
`Counsel for Defendant
`Mylan Pharmaceuticals Inc.
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`Case 1:09-cv-00185-SLR Document 228 Filed 04/08/11 Page 3 of 115 PageID #: 2895
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`P R O C E E D I N G S
`
`(Proceedings commenced in the courtroom,
`beginning at 9:33 a.m.)
`
`All right. Mr. Wallace?
`THE COURT:
`MR. WALLACE: Good morning, your Honor. As your
`Honor recalls, at the close yesterday, I moved in the
`admission of DTX-804, which I used with Dr. Sandler but
`failed to move at the time, and plaintiffs wanted to find
`it, look at it overnight, and I now move.
`THE COURT:
`I take it there's no objection?
`MR. HSING:
`Your Honor, the copy, the version
`they have is only a partial part of the book. It has the
`program schedule. Then he includes the abstract with the
`different sections.
`So we object on that ground. If
`they're willing to copy the whole book --
`THE COURT:
`Why in the world would I want a
`whole book? Do you really think I'm going to read a whole
`book?
`Do you really think you're going to cite to more than
`that part?
`
`Well, your Honor, if I may, then,
`MR. HSING:
`could I just mention where the immediate and next section
`starts on this -- in this book and where the lung section
`starts in this book? I will read that into the record and
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`APOTEX EX. 1055-003
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`Case 1:09-cv-00185-SLR Document 228 Filed 04/08/11 Page 4 of 115 PageID #: 2896
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`then we'll be satisfied.
`MR. WALLACE: Your Honor, I would be happy to
`cut my proffer down to three pages. The whole idea was, was
`this a special program, or was this a mere head and neck
`thing.
`
`All I'm interested in, your Honor, is the type
`of page, the program committee page, and the page that has
`the program for this special EGFR receptor.
`Those are the
`pages I used with Dr. Sandler. They're the only pages that
`are pertinent to my point. This was a special EGFR point.
`The contents of the individual abstracts have
`been, of the ones that are pertinent, have been in evidence,
`discussed ad nauseam, and while either side would want a
`whole book full of abstracts, I don't know.
`I will be happy
`to stipulate whatever pages Mr. Hsing --
`THE COURT:
`Well, if I can see it -- I mean, is
`your point covered by the index and the pages so we know
`where in the book the abstract is?
`The program
`MR. HSING:
`No. That's the issue.
`section that is part of that exhibit that's being proffered
`804 does not have the pagination, for example, where the
`head to neck cancer section starts, where the lung cancer
`section starts. So that's the reason we're objecting.
`MR. WALLACE: Your Honor, if Mr. Hsing will just
`read in those pages, I will stipulate.
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`APOTEX EX. 1055-004
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`Case 1:09-cv-00185-SLR Document 228 Filed 04/08/11 Page 5 of 115 PageID #: 2897
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`That's fine.
`MR. HSING:
`THE COURT: All right.
`MR. HSING:
`So I would just want to read for the
`record that the head and neck section where the abstract
`starts, Page 387a and ends at Page 410a, and then the lung
`cancer section starts at Page 458a and ends at Page 532.
`THE COURT: And this is where? And this DTX?
`MR. HSING:
`DTX-804.
`MR. WALLACE: That's the part of 804 that's not
`in my exhibit, but I will stipulate to those page numbers.
`With counsel's Honor permission, I will reduce 804 to the
`cover page, the program committee page, which is Roman No.
`VI, and the special EGFR targeting program, which is page
`39. So 804 will now be those three pages.
`MR. HSING:
`Your Honor, that's fine.
`THE COURT:
`All right. Great. Thank you very
`much, counsel.
`(DTX-804 was received into evidence.)
`MR. PACELLA: Your Honor, one additional matter
`that we'd like to raise.
`Yes?
`THE COURT:
`MR. PACELLA: Now that the evidence has
`substantially been presented and you've heard a lot of
`testimony about polarity, non-polarity, lipophilicity,
`hydrophobic, these terms, we believe that, at this point in
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`APOTEX EX. 1055-005
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`Case 1:09-cv-00185-SLR Document 228 Filed 04/08/11 Page 6 of 115 PageID #: 2898
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`time, we would renew our request to play the deposition of
`Dr. Anderson in rebuttal to the plaintiffs' case.
`As I explained earlier, her testimony was
`directly contrary to what these other two experts came in,
`Dr. Bridges and Dr. Jorgensen, and, your Honor, we believe
`-- they had four witnesses who testified on that topic in
`depositions, and, respectfully, your Honor, we request that
`we be allowed to show that plaintiffs had at least one
`expert who contradicted their theory of the case, and they
`chose not to bring that expert to trial.
`MS. BEN-AMI: Would you like argument?
`THE COURT:
`Yes. I will take argument. I
`might, for purposes of the record, at the very least, I
`might want to review the portions of the deposition that the
`defendant wants to put in the record.
`MS. BEN-AMI: So, your Honor, first of all, we
`did have an exchange last night of what they were going to
`do in rebuttal and I don't believe they told us about this.
`And I could be wrong, but I don't believe they even
`suggested this. So our rules, which require notice, those
`went out the window.
`Second of all, counsel wants to put this in to
`suggest to your Honor that we have an expert who does not go
`along with our theory of the case, but you would have to
`then look at what the witness actually says as her opinion,
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`APOTEX EX. 1055-006
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`Case 1:09-cv-00185-SLR Document 228 Filed 04/08/11 Page 7 of 115 PageID #: 2899
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`and that part says she believes that the claims are not
`obvious.
`
`So to take one snippet and say, well, that says
`they had an expert that went the other way and not take the
`important parts of the deposition where she says, but I
`believe this would not have been obvious and let me lay out
`all my reasons for you, it would be really prejudicial.
`So for those reasons as well as all the other
`reasons that we talked about before, including Third Circuit
`precedent, we do not believe that this is appropriate. And
`it's not rebuttal.
`It really is an issue relating to their
`direct case, which you already ruled on.
`THE COURT:
`Right. All I'm saying is, for
`purposes of the record, number one, I would like the pages
`identified.
`
`And, number two, I would like to take a look at
`the deposition.
`MS. PACELLA: And, your Honor, just to be clear,
`there's clearly no prejudice in terms of notice because it's
`the same testimony, exact same testimony that was designated
`earlier and discussed. And the plaintiffs, in fact,
`counter-designated exactly what Ms. Ben-Ami just said should
`be in the record.
`We would proffer only three minutes of testimony
`-- three minutes-plus, less than four minutes. Plaintiffs
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`APOTEX EX. 1055-007
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`Case 1:09-cv-00185-SLR Document 228 Filed 04/08/11 Page 8 of 115 PageID #: 2900
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`have designated about six minutes, for a total of ten
`minutes. And we would be happy to give you the several,
`maybe four or five pages of the transcript to look at, your
`Honor.
`
`MS. BEN-AMI: But under that circumstance, your
`Honor, we should be able to designate what we want to
`designate in response, because otherwise --
`THE COURT:
`Right.
`Right. I'm not making a
`
`decision.
`
`deposition.
`
`MS. BEN-AMI: Right.
`THE COURT:
`I just want to take a look at the
`
`MS. BEN-AMI: I understand.
`THE COURT:
`All right. Good enough.
`MR. PACELLA: Thank you, your Honor.
`THE COURT:
`You can hand it up --
`MR. PACELLA: Yes, your Honor.
`THE COURT:
`-- whenever you have it.
`All right.
`Let's move forward, if we can.
`(Mr. Pacella handed a deposition transcript to
`
`the Court.)
`
`MR. BLUMENFELD: Your Honor, our next witness is
`Dr. Robert Maness.
`All right.
`THE COURT:
`... ROBERT MANESS, having been duly sworn
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`APOTEX EX. 1055-008
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`Case 1:09-cv-00185-SLR Document 228 Filed 04/08/11 Page 9 of 115 PageID #: 2901
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`Maness - direct
`as a witness, was examined and testified as
`follows ...
`DIRECT EXAMINATION
`
`BY MR. BLUMENFELD:
`Q.
`Good morning, Dr. Maness.
`A.
`Good morning.
`Q.
`Where do you work?
`A.
`I work for a firm called Charles River Associates.
`Q.
`What is Charles River Associates?
`A.
`It's an economic and finance consulting firm. It does
`litigation consulting, but also a host of business
`consulting matters.
`Q.
`And what do you do at Charles River Associates?
`A.
`I'm a vice president. I do a variety of expert
`witness and business consulting-type things.
`Q.
`Can you give a brief description of the types of
`things you do?
`A.
`Sure.
`My background is in the pharmaceutical
`industry, so I do a lot of work, antitrust work, in the
`pharmaceutical industry, IP work in the pharmaceutical
`industry, general policy issues in the pharmaceutical
`industry.
`So business consulting time, governmental policy
`issues as well.
`Q.
`How long have you been at Charles River Associates?
`A.
`For two years.
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`APOTEX EX. 1055-009
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`Case 1:09-cv-00185-SLR Document 228 Filed 04/08/11 Page 10 of 115 PageID #: 2902
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`Maness - direct
`And what did you do before that?
`Q.
`Prior to that, I had a similar position at another
`A.
`firm called LECG.
`Q.
`And what kind of work did LECG do?
`A.
`It's a competitor of Charles River, so they do the
`same basic kind of work.
`Q.
`Can you tell us a little bit about your educational
`background?
`I have a Bachelor's degree in economics from
`A.
`Sure.
`Louisiana State University, a Ph.D. in economics from Texas
`A&M University. After my Ph.D., I was a professor back at
`LSU for a couple of years.
`Joined the Federal Trade Commission in 1995/96,
`doing antitrust economics, primarily in the pharmaceutical
`industry. My dissertation included competition between
`branded and generic drug companies, so my research
`background is in the pharmaceutical industry. So when I
`went to the FTC, those were the kinds of matters I tended to
`work on.
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`At that time,
`Left the FTC in '96 to join LECG.
`also since I've been back in College Station, Texas, I also
`have an appointment as an adjunct professor in the economics
`department at Texas A&M.
`I teach classes every now and
`then.
`
`And then as I said, joined Charles River two
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`APOTEX EX. 1055-010
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`Case 1:09-cv-00185-SLR Document 228 Filed 04/08/11 Page 11 of 115 PageID #: 2903
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`Maness - direct
`
`years ago.
`Q.
`You mentioned a little bit about this, but could you
`tell us a little bit about your expertise in the
`pharmaceutical industry?
`A.
`Sure.
`As I said, my dissertation included two
`pharmaceutical topics. One is competition between branded
`and generic drug companies. And the other was, at the time
`there was an active debate about price inflation in the
`pharmaceutical industry.
`And economists have known for some
`time that standard measures of price inflation can overstate
`inflation for a number of reasons.
`So we constructed an index that could account
`for those differences between the way price indexes should
`theoretically be constructed and the way they are actually
`constructed. So that was my dissertation research. Since
`been published.
`And when I went to the FTC, as I said, because
`my research background was in the pharmaceutical industry, I
`did a lot of pharmaceutical and health care work since that
`time. And then as I've gotten into consulting, also have
`done a number of pharmaceutical antitrust cases,
`pharmaceutical IP cases.
`And as I said, have consulted with
`pharmaceutical companies and trade associations on
`governmental policy issues.
`Q.
`Have you testified as an expert witness before?
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`Case 1:09-cv-00185-SLR Document 228 Filed 04/08/11 Page 12 of 115 PageID #: 2904
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`Maness - direct
`
`Yes.
`A.
`Including on the issue of commercial success?
`Q.
`Yes.
`A.
`If you look at the binder in front of you, one of the
`Q.
`exhibits is PTX-227. Is that your C.V.?
`A.
`Yes.
`
`MR. BLUMENFELD: Your Honor, plaintiffs move
`Plaintiffs' Exhibit 227 into evidence.
`MR. WALLACE: No objection.
`THE COURT:
`Thank you.
`(PTX-227 was received into evidence.)
`MR. BLUMENFELD: And plaintiffs also seek to
`qualify Dr. Maness as an expert in economics.
`MR. WALLACE: No objection.
`THE COURT:
`Thank you.
`BY MR. BLUMENFELD:
`Q.
`Dr. Maness, do you understand that erlotinib is
`covered by the, what we've been calling the RE065 patent?
`A.
`That's my understanding, yes.
`Q.
`And do you also understand that erlotinib is the
`active ingredient in the drug Tarceva that we've been
`talking about?
`A.
`Yes.
`Q.
`Have you formed an opinion as to whether Tarceva has
`been commercially successful?
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`APOTEX EX. 1055-012
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`Case 1:09-cv-00185-SLR Document 228 Filed 04/08/11 Page 13 of 115 PageID #: 2905
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`I have, yes.
`A.
`And did you prepare a slide that summarizes the basis
`Q.
`for your opinion about commercial success?
`A.
`Yes.
`
`MR. BLUMENFELD: Can we put up Slide 1, Maness
`
`1?
`BY MR. BLUMENFELD:
`Q.
`And can you explain the basis for your opinion?
`A.
`Sure.
`This is the sort of traditional economic
`analysis of commercial success, and some of this is the
`evidence.
`
`A part of the evidence is that Tarceva has had
`the most successful U.S. oncology launch ever. Its sales,
`the sales that it was able to achieve were well in excess of
`what was forecast by the companies at the time the product
`launched on the marketplace, and then the traditional
`commercial success measures.
`It had large and growing sales
`and large and growing market shares.
`So those factors all pointed to Tarceva being a
`commercial success.
`Q.
`Okay.
`We'll get into those in more detail in a
`minute, Dr. Maness, but before we do, in your opinion, was
`the commercial success of Tarceva related to the RE065
`patent?
`A.
`Yes. As I understand the patent, the patent covers
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`Case 1:09-cv-00185-SLR Document 228 Filed 04/08/11 Page 14 of 115 PageID #: 2906
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`Maness - direct
`the chemical. It's the chemical that I understand generates
`the clinical properties that are then in demand in the
`marketplace and have caused the product to sell.
`So in that
`sense, there's a relationship between the patent and the
`commercial success.
`Q.
`Were you here yesterday, when Dr. Sandler and Moore
`testified?
`A.
`I was. Well, for part of Dr. Sandler.
`Q.
`Did you hear each of them testify about the
`indications for which Tarceva has been approved in the
`United States?
`A.
`Yes.
`Q.
`And in forming your opinions, have you considered the
`indications for which Tarceva has been approved?
`A.
`I have, yes.
`Q.
`And how did you consider those indications?
`A.
`Well what I was looking at was what was the unmet need
`that this product was intended to address and those FDA
`indications give you a sense of what those unmet needs were,
`and then when you look at whether the product is sold much
`outside of those unmet needs, what you see is it's, in fact,
`not sold outside of those unmet needs, the approved FDA
`indication.
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`So that gives you some sense that the
`competition that's taking place with Tarceva and other
`
`APOTEX EX. 1055-014
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`Maness - direct
`products in the marketplace are directed at those areas
`where competition, or where Tarceva has its FDA approval.
`Q.
`Do you understand that Tarceva is a pill that's
`administered orally?
`A.
`Yes.
`Q.
`And how are other drugs for the same indications that
`Tarceva has been approved for administered?
`A.
`Well, with one exception, the other products are all
`I.V.
`And what is the one exception?
`Q.
`The one exception that I'm aware of is Iressa.
`A.
`And is the mode of administration of Tarceva important
`Q.
`in your analysis?
`A.
`Yes.
`It's a factor to consider. The fact that
`erlotinib is a molecule that can be absorbed orally is a
`factor to consider, sure.
`Q.
`Do you understand that Tarceva is an EGFR tyrosine
`kinase inhibitor?
`A.
`Yes.
`Q.
`And you just mentioned Iressa. Do you understand that
`that falls within the same class of compounds?
`A.
`Yes.
`Q.
`And was there a time when Iressa received FDA
`approval?
`A.
`I believe it received what's called a tentative
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`954
`Maness - direct
`approval pending further studies about its effectiveness.
`Q.
`And then what happened to Iressa?
`A.
`As I understand it, those further studies didn't
`sufficiently prove its effectiveness to the FDA's
`satisfaction, and so the FDA withdrew that tentative
`approval and put Iressa on a restricted use.
`Q.
`And what is your understanding of the status of Iressa
`in the United States market today?
`A.
`I don't know that there's actually no sales. Those
`people who were on Iressa and for whom Iressa was showing
`some effect were allowed to continue using Iressa. As I
`understand it, AstraZeneca is no longer pursuing any further
`approvals for Iressa.
`Q.
`Aside from Tarceva, what other drugs are used to treat
`non-small cell lung cancer in the United States?
`A.
`There's a couple of other drugs, primarily
`chemotherapy products that you've heard mention of as one
`class of drugs that's used. There's also products like
`Avastin, which have a different mechanism of action from
`Tarceva, but are also used in this area, along with
`chemotherapy, used in conjunction with chemotherapy.
`Q.
`And the other drugs that are used for non-small cell
`lung cancer, how are they administered?
`A.
`They're all, with the exception of Iressa and Tarceva,
`I.V. products.
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`APOTEX EX. 1055-016
`
`
`
`Case 1:09-cv-00185-SLR Document 228 Filed 04/08/11 Page 17 of 115 PageID #: 2909
`955
`Maness - direct
`In your opinion, are they direct competitors with
`Q.
`Tarceva?
`A.
`No. The economic evidence indicated that they were
`not direct competitors with Tarceva in the way Iressa was.
`Q.
`And why is that?
`A.
`Well, as I understand the unmet need in the
`marketplace, the unmet need in the marketplace was for a
`product that had a different mechanism of action from the
`chemotherapy products that had a lower level of toxicity and
`that had this route of administration advantage that Tarceva
`and Iressa had, so that's one factor.
`The other factor is what the economic evidence
`showed with regard to pricing behavior in the market. And
`the evidence in that case showed that when Tarceva came into
`the market, that it was priced on the basis of Iressa and,
`in fact, was priced at a premium, a 25-percent premium to
`Iressa.
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`And then a key fact is when Iressa came off the
`market, the evidence indicates that Tarceva, or the OSI and
`Genentech raised Tarceva's price by something like
`32 percent I think is the number used in the documents.
`So with the evidence, from an economist's
`standpoint, to the extent that products compete, one of the
`ways they compete is by constraining other products' prices.
`If there's sufficient competition between products, that
`
`APOTEX EX. 1055-017
`
`
`
`Case 1:09-cv-00185-SLR Document 228 Filed 04/08/11 Page 18 of 115 PageID #: 2910
`956
`Maness - direct
`acts to constrain their price. The chemotherapy products
`Avastin were still on the market at the time Tarceva was
`withdrawn.
`They clearly didn't constrain Tarceva's price, I
`mean at the time Iressa was withdrawn.
`So they
`clearly didn't constrain Tarceva's ability to increase its
`price in the way that Iressa does.
`So the economic evidence
`pointed to those other products being more distant
`competitors than Iressa was.
`Q.
`You mentioned in your answer chemotherapy and some
`differences. Is it your understanding that Avastin also has
`a different mechanism of action than Tarceva?
`A.
`Yes.
`That's my understanding, yes.
`Q.
`Now, one of the things you pointed to, the first two
`things on your list are the Tarceva launch. Maybe we can
`turn to that.
`Can you look at Plaintiffs' Exhibit 445 in your
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`notebook?
`A.
`Okay.
`Q.
`What is Plaintiffs' Exhibit 445?
`A.
`It's an OSI document describing their oncology
`business and including a discussion of Tarceva, which was
`one of their oncology products, obviously.
`Q.
`Did it also discuss the launch of Tarceva?
`A.
`Yes.
`Q.
`When was that launch?
`
`APOTEX EX. 1055-018
`
`
`
`Case 1:09-cv-00185-SLR Document 228 Filed 04/08/11 Page 19 of 115 PageID #: 2911
`957
`Maness - direct
`Well, the first indication that Tarceva received was
`A.
`in November of 2004.
`Q.
`And did you rely on that document in forming your
`opinion about commercial success of Tarceva?
`A.
`Yes.
`
`MR. BLUMENFELD: Your Honor, plaintiffs move
`Plaintiffs' Exhibit 445 into evidence.
`MR. WALLACE: No objection.
`THE COURT:
`Thank you.
`(PX-445 was received into evidence.)
`MR. BLUMENFELD: Can we put up Slide No. 2?
`BY MR. BLUMENFELD:
`Q.
`And can you explain what's shown on slide two, Dr.
`Maness?
`This is a page from Exhibit 445, and this is
`A.
`Sure.
`one of a number of places where OSI and Genentech talk
`internally about the success of Tarceva's launch, so they
`measured the success of Tarceva in two ways.
`First, they measured it in terms of the number
`of patients that it was able to attract with its -- within
`its first 12 months in the market, and what you can see is
`very clearly Tarceva was extremely successful relative to
`other product launches.
`It got something over 35,000
`patients in its first 12 months, the largest, most
`successful oncology launch ever. And even in terms of
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`APOTEX EX. 1055-019
`
`
`
`Case 1:09-cv-00185-SLR Document 228 Filed 04/08/11 Page 20 of 115 PageID #: 2912
`958
`Maness - direct
`revenue, significant revenue, the fourth largest in terms of
`revenue ever in the U.S.
`Q.
`And how did Tarceva's launch compare to the earlier
`launch of Iressa?
`A.
`Well, it has about 80 percent more patients in its
`first year than Iressa did in its first year on the market.
`Q.
`In considering the launch of Tarceva, did you also
`consider how it compared to Genentech's projections?
`A.
`Yes.
`Q.
`You understand that Genentech markets the Tarceva
`product?
`I guess they split
`A.
`Yes, that's my understanding.
`marketing budgets and sales force between OSI, but it's
`predominantly a Genentech function.
`Q.
`And did you review certain Genentech documents in
`looking to how the launch compared to the projections?
`A.
`I did, yes.
`Q.
`And could you look at Plaintiffs' Exhibits 438, 454
`and 455 in your book?
`A.
`Okay.
`All right. Yes.
`Q.
`I think the first one of those is an OSI document and
`the other two are Genentech documents; is that right?
`A.
`It's a Genentech document, yes, that was presented to
`-- to the team that included OSI personnel.
`But, yes, a
`Genentech document.
`Okay.
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`APOTEX EX. 1055-020
`
`
`
`Case 1:09-cv-00185-SLR Document 228 Filed 04/08/11 Page 21 of 115 PageID #: 2913
`959
`Maness - direct
`But 454 and 455 are Genentech documents?
`Q.
`Yes.
`A.
`And did you consider these documents in forming your
`Q.
`opinion?
`A.
`I did.
`
`MR. BLUMENFELD: Your Honor, plaintiffs move
`Plaintiffs' Exhibits 438, 454 and 455 into evidence.
`MR. WALLACE: No objection.
`THE COURT:
`Thank you.
`(PTX-438, 454 and 455 were received into
`
`evidence.)
`
`MR. BLUMENFELD: Can we put up Slide 3?
`BY MR. BLUMENFELD:
`Q.
`And can you tell what is on your Slide three, Dr.
`Maness?
`What we have for the first full year was the
`A.
`Sure.
`projections that Genentech was making with regard to what it
`thought first year sales would be and then what first year
`sales actually were. And so you can see that Genentech
`projected that this product would make about $80 million
`worth of sales in its first year. Its actual sales were
`about $275 million in the first year.
`And then even in the second full year, where the
`projection was that it would make about 390 million, it
`actually made about 402 million, so their sales exceeded the
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`APOTEX EX. 1055-021
`
`
`
`Case 1:09-cv-00185-SLR Document 228 Filed 04/08/11 Page 22 of 115 PageID #: 2914
`960
`Maness - direct
`forecast they were making in the pre-lunch period.
`Q.
`And was that important in your analysis of commercial
`success?
`A.
`The pre-launch forecasts were an important factor,
`yes, in my analysis of commercial success.
`Q.
`And why is that?
`A.
`Well, the pre-launch forecasts, as an economist and as
`a business thinking to launch its product, when it makes a
`projection, it makes a projection about whether the product
`is going to be profitable or not and it decides to launch or
`not based on those projections. The fact that it decided to
`launch based on those projections is an indication that the
`product would have been successful, at least the expectation
`was that the product would have been successful at an
`$80 million sales level.
`The fact that the product earned $275 million is
`an assessment that the product certainly was successful. So
`the projections at the time say this is a profitable product
`to launch at $80 million worth of sales. In fact, the
`product earned $275 million worth of sales. That's a good
`indicator of commercial success.
`Q.
`All right.
`You said before that the tentative
`approval that Iressa had was revoked, and that was during
`the first year that Tarceva was on the market; right?
`A.
`Yes.
`
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`APOTEX EX. 1055-022
`
`
`
`Case 1:09-cv-00185-SLR Document 228 Filed 04/08/11 Page 23 of 115 PageID #: 2915
`961
`Maness - direct
`And did that affect the success of Tarceva during that
`Q.
`first year?
`A.
`It's certainly a factor that could have affected their
`success. The evidence is a little bit ambiguous about what
`the companies thought and what actually happened.
`There was concern within the companies of what
`is termed in the documents an Iressa hangover effect, which
`you sometimes see in the pharmaceutical industry. So Iressa
`and Tarceva are closely related products, and the concern
`was if Iressa has a damaged reputation, that damaged
`reputation is going to flow over to us.
`And then there's, you know, what happened when
`the marketplace actually looked at the evidence here, the
`marketplace seemed to have switched from Iressa to Tarceva.
`So certainly Tarceva was picking up sales because the FDA
`had made a determination that Tarceva worked in a way that
`Iressa didn't.
`Q.
`In forming your opinion on commercial success, did you
`also consider Tarceva's overall revenues?
`A.
`Yes, I did.
`Q.
`And can you look at, it's the first exhibit in your
`book, DTX-210?
`A.
`Okay.
`Q.
`Is that an exhibit that you considered in forming your
`opinion?
`
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`APOTEX EX. 1055-023
`
`
`
`Case 1:09-cv-00185-SLR Document 228 Filed 04/08/11 Page 24 of 115 PageID #: 2916
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`
`A.
`
`It is, yes.
`MR. BLUMENFELD: Your Honor, we move DTX-210
`into evidence.
`MR. WALLACE: No objection.
`THE COURT:
`Thank you.
`(DTX-210 was received into evidence.)
`BY MR. BLUMENFELD:
`Q.
`Did you prepare a slide showing the sales revenue in
`the United States from Tarceva?
`A.
`I did.
`
`MR. BLUMENFELD: And can we put up the next
`slide, No. 4?
`BY MR. BLUMENFELD:
`Q.
`And can you explain what is on Demonstrative No. 4?
`A.
`Sure.
`This is plotting the annual sales Tarceva
`achieved based on this DTX-210. So some of these numbers
`you've seen in the prior art.
`So 2004, remember the product was approved in
`November, so there's two months' worth of sales in 2004.
`And then in 2005, as we said, about $275 million worth of
`sales on to 2006, where sales get up to over 400 million.
`And then sales continue to grow throughout this
`time period, up to about 489 million by 2010, which is
`annualized based on, we only had a partial year's worth of
`data at the time we put this slide together. So a product
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`APOTEX EX. 1055-024
`
`
`
`Case 1:09-cv-00185-SLR Document 228 Filed 04/08/11 Page 25 of 115 PageID #: 2917
`963
`Maness - direct
`that has gotten rapid growth in sales and has maintained a
`substantial level of sales over time.
`Q.
`In those later years, 2007, 8, 9, 10, the revenues for
`Tarceva you show continuing to grow, but you also mentioned
`a price increase.
`What about sales of the product itself, not in
`terms of dollars, but in terms of the amount of product?
`A.
`Well, in terms of the amount of product, the sales
`kind of level off at a certain level. The price increases
`occurred in 2006, 2005/2006 period. So you still see, even
`in terms of units, good growth in sales in 2005/2006.
`The price has continued to grow. In fact,
`prices continue to grow faster than prices of other products
`used to treat the areas where Tarceva is used, but the units
`have kind of flattened out a bit.
`Q.
`Did you also look at worldwide growth of Tarceva
`sales?
`I did.
`A.
`And what did you see there?
`Q.
`On the worldwide, well, we had several different
`A.
`sources of data, some of which were termed major market
`data.
`And in the major market, you see sales on the order
`of $680 million or so. It's my understanding that sales of
`the product are about a billion dollars worldwide.
`Q.
`And when you were doing your review of documents, did
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`APOTEX EX. 1055-025
`
`
`
`Case 1:09-cv-00185-SLR Document 228 Filed 04/08/11 Page 26 of 115 PageID #: 2918
`964
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`you also see documents regarding the profitability of
`Tarceva?
`A.
`I did, yes.
`Q.
`And has it been a profitable product?
`A.
`It has been, yes.
`Q.
`In forming your opinion on commercial success, did you
`also consider Tarceva's market share?
`A.
`I did.
`Q.
`And for what markets?
`A.
`Well, I looked at the specific uses of the product.
`The unmet need and the specific uses in the unmet need
`indicated that when you are looking at market share, right,
`the first thing you have to say is, what's the market.
`So the unmet need for a different mechanism of
`action, lower toxicity, different route of administration,
`and the economic evidence with regard to which products
`constrained Tarceva's price indicated that the relevant
`market to look at were the two EGFR tyrosine kinase
`inhibitors, Iressa and Tarceva.
`So within that market, obviously, Tarceva got
`rapid growth and very large sales.
`But even if you include
`other products with different mechanisms of action, such as
`Avastin, then you see Tarceva gaining large market share
`within its intended uses and rapidly growing market share.
`Q.
`In determining market share, did you consider the
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`APOTEX EX. 1055-026
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`
`
`Case 1:09-cv-00185-SLR Document 228 Filed 04/08/11 Page 27 of 115 PageID #: 2919
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`information in Plaintiffs' Exhibit 443?
`A.
`Yes.
`Q.
`And what is Plaintiffs' Exhibit 443?
`A.
`443 is a compilation of what's known as IMS data. IMS
`is a firm that collects sales and -- sales data and a host
`of other data in the ph
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