`
`UNITED STATES DISTRICT COURT
`FOR THE CENTRAL DISTRICT OF CALIFORNIA
`WESTERN DIVISION
`
`MEDIMMUNE, INC.
`
`Plaintiff
`
`v.
`
`GENENTECH, INC and
`CITY OF HOPE,
`
`)
`)
`) Case No. CV03-2567 (CTx)
`)
`) RESTRICTED
`) CONFIDENTIAL
`) Attorney's Eyes Only
`)
`) U.S. District Judge
`) Mariana R. Pfaelzer
`)
`)
`
`Defendants.
`
`______________________ )
`
`Expert Report of E. Fintan Walton
`
`Dr E Fintan Walton
`PharmaVentures Limited
`Magdalen Centre
`Oxford Science Park
`Oxford OX4 4GA
`United Kingdom
`
`Dr E Flntan Walton Expert Report
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`RESTRICTED CONFIDENTIAL
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`Table of Contents
`
`Introduction and Summary of Opinions ..................................................... 3
`1
`2 Professional Credentials and Qualifications .............................................. 3
`3 Documents, Data, and Other Information Considered .............................. 5
`4 Background lnformation ............................................................................ 5
`4.1
`The Parties ........................................................................................ 5
`4.1.1
`Genentech .................................................................................. 5
`4.1.2
`City of Hope ................................................................................ 7
`4.1.3 Medlmmune ............................................................................... 8
`4.2
`The Pharmaceutical Industry ........................................................... 11
`4.3
`The Cabilly Inventions ..................................................................... 14
`5 The Industry's Acceptance of the '415 Patent.. ....................................... 15
`5.1
`Licensing of Other Breakthrough Biotechnology Patents ................. 16
`5.1.1
`Recombinant DNA Patents (Cohen/Boyer) .............................. 16
`5.1.2
`Antibody Humanisation Patents (Winter/Queen/Adair) ............. 18
`5.1.3
`PEGylation ............................................................................... 20
`5.2
`Licensing of the '415 patent.. ........................................................... 22
`6 The Significance of Licensing in the Pharmaceutical Industry ................ 26
`7 Potential Additional Analyses to Perform ................................................ 29
`8 Compensation ......................................................................................... 29
`Appendix 1-Curriculum Vitae of Dr E. Fintan Walton ................................... 30
`Appendix 2- Documents, Data, and Other Information Considered ............. 34
`Appendix 3-Summary of Genentech's Licensing Deals for the '415 Patent. 37
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`1
`
`Introduction and Summary of Opinions
`
`This report addresses the non-obviousness of U.S. Patent No.
`6,331,415 ("the '415 patent") and, in particular, the objective
`consideration of industry acceptance. As I explain below, dozens
`of pharmaceutical companies, including some of the largest in the
`world, have licensed the '415 patent, and paid very substantial
`sums for the right to practice its technology. This licensing activity
`reflects the widely held view within the industry that the '415 patent
`represents not just a legitimate invention, but one of a handful of
`groundbreaking patents that have laid the foundation for the
`modern field of therapeutic antibodies. In this regard, I agree with
`Medlmmune's corporate designee, Edward Mathers, who testified
`that "[i]t was well known in the industry that there are certain
`patents necessary if you are gong to be in the antibody field," and
`that these patents were "Cabilly, Boss, Queen, Winter, ultimately
`Adair," and possibly others. 1 The industry indeed recognises
`these patents-with the Cabilly '415 patent taking the place of
`Boss after priority of inventorship was awarded to the Cabilly
`inventors-as the scientific breakthroughs that have made this
`entire field possible.
`
`2 Professional Credentials and Qualifications
`
`My name is Edward Fintan Walton. I have been retained by Keker
`& Van Nest LLP ("KVN"} and Sidley Austin LLP ("Sidley"}, counsel
`to Genentech, Inc. ("Genentech"}, to act as an expert witness in
`the above-identified action for Genentech and City of Hope. My
`background and experience are briefly summarised in the following
`paragraphs; a fuller curriculum vitae is presented in Appendix 1.
`
`My initial training was as a scientist. I hold bachelor's and doctoral
`degrees, both from Trinity College, University of Dublin, Ireland. I
`also conducted research at the University of Michigan.
`
`I gained broad commercial experience in biotechnology in
`management positions at Bass Brewing Ltd. (1982-1983) and
`
`1 Mathers deposition. at 65-66.
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`Celltech Ltd. (1984-1992). Celltech, one of the first biotechnology
`companies, became one of the largest in Europe and a leader in
`the development of antibody-based drugs. My research
`experience, in which I reached the level of departmental head at
`Celltech, covered gene expression, antibody engineering,
`metalloproteinases and HIV research. I also gained business
`experience during my time at Celltech, including the establishment
`of contract research and licensing agreements with European,
`Japanese and US corporations.
`
`In 1992, I co-founded CONNECT Pharma Ltd., a firm providing
`consultancy services and informational products to the
`international pharmaceutical industry. I acted as CEO of Connect
`Pharma from 1993 until1997. In 1997, I established a new
`company, PharmaVentures Ltd. ("PharmaVentures"). I have been
`Chairman and CEO of PharmaVentures ever since.
`PharmaVentures assists healthcare company clients in forming
`alliances, conducting acquisitions and executing other transactions
`of strategic importance, including patent license agreements.
`PharmaVentures also performs technical and commercial
`evaluations of pharmaceutical and biotechnology products, product
`portfolios and companies. Through my experience at
`PharmaVentures and elsewhere, I have built up substantial
`expertise in the analysis of healthcare markets and of
`pharmaceutical and biotechnology companies, their technologies,
`and their intellectual property. Deal structuring, valuation and
`negotiation form a major part of my business.
`
`In addition to its consulting services, PharmaVentures provides
`strategic information services to the pharmaceutical and related
`industries. Marketed under the brand name PharmaDeals®,
`PharmaVentures' information products include PharmaDeals®
`Agreements, which is a comprehensive database of
`pharmaceutical industry deal making. Initiated in 1996, it now
`contains details of some 28,000 transactions, with around 200 new
`deal records typically being added each month. PharmaDeals®
`Agreements provides a summary of the deal and, where available,
`information on total deal value, upfront payments, equity
`investments, milestone payments, royalty rates and other financial
`parameters. Other PharmaVentures information products include
`PharmaDeals® Opportunities, a database of available licensing
`
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`opportunities; and PharmaDeals® Intelligence Bank, a
`comprehensive online resource of hundreds of articles with regular
`updates on deal-making highlights, trends, news and analysis.
`PharmaVentures' publications include the monthly PharmaDeals®
`Review, which examines and analyses trends and developments
`within pharmaceutical deal making across a wide spectrum of
`technology and therapy areas; Valuing and Structuring
`Pharmaceutical Licensing Agreements; Effective Licensing and
`Commercialisation of Drug Delivery Systems; Pharmaceutical Deal
`Structures-The Essential Manual for Deal Makers; Facts and
`Trends in Deal Making-A Perspective on the Pharma & Biotech
`Industries; and Strategies and Tactics for Successful Partnering.
`
`Under my direction, PharmaVentures also provides training and
`coaching to business-development and licensing executives from
`around the world at regular residential workshops on the
`negotiation and valuation of strategic alliances. Since 2000, it has
`trained more than 500 executives.
`
`3 Documents, Data, and Other Information Considered
`
`Appendix 2 lists the documents, data, and other information that I
`have considered in forming my opinions.
`
`4 Background Information
`
`4.1 The Parties
`
`4.1.1 Genentech
`
`Genentech was founded on 7 April 1976, following a meeting
`between the venture capitalist Robert A. Swanson and biochemist
`Dr Herbert W. Boyer (who had previously pioneered the
`development of recombinant DNA technology with geneticist
`Stanley Cohen 2
`). In 1977 Genentech and City of Hope
`collaborated to produce the first recombinant human protein,
`
`2 See Section 5.1 on breakthrough patents: Recombinant DNA (Cohan/Boyer).
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`somatostatin, and within the following two years their scientists had
`expressed both human insulin and human growth hormone in
`bacterial hosts.
`
`In 1982 Eli Lilly launched the recombinant human insulin product
`Humulin, for the treatment of type I diabetes, which it had
`previously licensed from Genentech. This was a landmark in the
`evolution of the biotechnology industry, as it was the first ever
`recombinant DNA drug to be marketed. In 1985 Genentech
`launched its first internally developed product, Protropin®
`(somatropin for injection), a growth hormone for children with
`growth-hormone deficiency. This was another major landmark for
`the industry, as it was the first product to be developed,
`manufactured and marketed entirely by a biotechnology company,
`setting a new benchmark for early-stage biotech companies across
`the globe.
`
`In 1997, Genentech achieved another landmark with the launch of
`Rituxan® (rituximab ), the first therapeutic antibody to be approved
`for the treatment of cancer, which Genentech developed in
`partnership with IDEC Pharmaceuticals (now Biogen Idee). In the
`following year, Genentech launched its second antibody product,
`Herceptin® (trastuzumab), as a treatment for patients with HER2-
`overexpressing breast cancer. Today, Genentech has a total of 14
`marketed products spread across three major therapeutic areas:
`oncology, immunology and tissue growth & repair. It is the world's
`leading company in the area of therapeutic antibodies, with a
`market share of more than 50%, and in 2006, it became the
`world's number one company within the oncology sector, with a
`15% share of the global market. 3
`
`Genentech has achieved its remarkable success by combining
`groundbreaking science with high levels of R&D investment and
`extensive inter-company collaboration and co-development. Its
`commitment to R&D is particularly notable. Genentech invests a
`significantly higher percentage of its revenues in R&D than most
`leading companies in the industry do: 19% compared to 15%
`(2006). 4 This strategy has helped to fuel extraordinary scientific
`
`3 EvalutePharma 2007.
`4 The sector-average values represent the average R&D expenditure figures of the top 50
`pharmaceutical companies by total revenues generated in 2006. Source: EvaluatePharma.
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`breakthroughs, but it comes at a high risk. As I explain in Section
`4.2 below, the inherent risks involved in the development of new
`medicines and technologies means that companies must
`constantly and efficiently translate their R&D spending into an
`ability to generate revenues. Genentech has accomplished this, in
`significant part, by licensing and collaborating with other
`companies, demonstrating the commercial viability of generating
`clinically important medicines and techniques by this approach. As
`I explain below, this strategy has become the standard business
`model for the entire biotechnology sector and for many other
`companies in the pharmaceutical industry as well.
`
`4.1.2 City of Hope
`
`City of Hope was founded in 1913, initially as a treatment centre
`for those afflicted with tuberculosis. Since its founding, City of
`Hope and its two subsidiary organisations-City of Hope National
`Medical Center and the Beckman Research Institute of the City of
`Hope-have developed into an internationally recognised
`biomedical research, treatment and educational centre specialising
`in all forms of cancer treatment.
`
`City of Hope is one of only 40 institutions designated by the
`National Cancer Institute as Comprehensive Cancer Centers in the
`United States, and is a founding member of the National
`Comprehensive Cancer Network. U.S. News & World Report has
`recognised City of Hope as one of America's Best Cancer
`Hospitals, and U.S. News & World Report's 18th annual special
`report (July 13, 2007 edition) ranks City of Hope 30th among the
`nation's top 50 medical centres for cancer treatment and 29th on
`the list for urology among 5,462 hospitals nationally. City of
`Hope's Beckman Research Institute is one of the nation's premier
`centres for pioneering biomedical research. Beckman scientists
`undertake fundamental investigations in molecular genetics and
`cellular biology. They study normal and abnormal biological
`processes, including mutagenesis and DNA repair, cell
`differentiation and early development, inter- and intracellular
`signalling, RNA processing, and genome structure. Scientists at
`the Beckman Research Institute have achieved major advances in
`recombinant DNA technology, monoclonal antibodies, gene
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`therapy and radioimmunotherapy. This work is the foundation for
`continued innovation in prevention, diagnosis, and treatment of
`cancer, diabetes and other life-threatening illnesses.
`
`4.1.3 Medlmmune
`
`Medlmmune was incorporated in 1987 as Molecular Vaccines Inc.
`It began operations in 1988, and changed its name to Medlmmune
`in 1990. It commercialised its first product, Cytogam, in 1992.5 It
`has since brought four other main products to market (Respigam,
`Synagis, Ethyol® and Flumist®), and two minor products
`(Neutrexin® and Hexalen®). On February 4, 2008, Medlmmune
`announced that it had submitted a Biologics License Application for
`motavizumab (formerly Numax), a next-generation version of
`Synagis. 6
`
`Medlmmune has focused much of its activities on drugs targeting
`respiratory syncytial virus (RSV). RSV is the leading cause of
`pneumonia and bronchiolitis in children, and results in an
`estimated 90,000 hospitalisations and 4,500 deaths annually in the
`United States. RSV outbreaks occur worldwide, usually during the
`late fall, winter and early spring. Certain populations are at
`increased risk for developing severe RSV disease. These include
`severely premature infants (i.e., less than or equal to 32 weeks
`gestation) and infants with a lung condition called
`bronchopulmonary dysplasia ("BPD"). There are approximately
`100,000 children in this high-risk group in the United States.
`
`The market for anti-RSV products was quoted at $1 billion
`worldwide in 2004. 7 Medlmmune became established as a
`preeminent company in the market in 1996 with the launch of
`RespiGam. At the time, RespiGam was the only product
`demonstrated to be safe and effective in reducing the incidence
`and duration of RSV hospitalisation and the severity of RSV illness
`in these high risk infants. 8 RespiGam achieved sales of $17.3
`
`5 Antiviral Agents Bulletin, February 1996.
`6 February 4, 2008 press release available at www.medimmume.com.
`7 Speciality Pharmacy News September 2005.
`8 Medlmmune SEC Filing 1996 MED0017540.
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`million in 1996 and $45 million in 1997, indicating good market
`potential for an anti-RSV product. 9
`
`RespiGam had a number of weaknesses, however. RespiGam
`consists of purified pooled immune globulin having high titres of
`RSV antibodies obtained from screened plasma donors. This
`product, because it is human-derived, requires donor
`hyperimmune serum as the primary raw material, potentially
`presenting security-of-supply issues. 1° Further, human-derived
`products present an inherent risk of transmitting pathogenic
`viruses. The manufacturing process for RespiGam is designed to
`minimise this risk through careful donor screening, detergent~
`based viral inactivation, and ethyl alcohol precipitation, but the risk
`can never be eliminated. 11 Further, RespiGam was administered
`by intravenous injections in five monthly doses, each taking
`several hours, and up to 8% of children with fluid sensitivity also
`required additional diuretics, which affected parental and clinician
`acceptance. 12 Clearly this is less than ideal given the patient
`population of very young children, and thus the population that
`received administration of the drug was restricted to a subset of
`particularly high~risk premature patients. Consequently, a large
`number of high~risk patients did not receive the prophylactic
`therapy. 13 Finally, the cost of producing RespiGam was also high,
`with Cost of Goods (COGS) quoted at 50%. 14
`
`In 1998 Medlmmune replaced RespiGam with Synagis, an anti~
`RSV humanised monoclonal antibody. Because such monoclonal
`antibodies are recombinant and do not rely on donor material, they
`potentially provide an unlimited supply of product. Further, while
`polyclonal antisera such as RespiGam are reactive with different
`viral structures (i.e., they have multiple specificities), monoclonal
`antibodies such as Synagis have singular specificity. Thus,
`Synagis is directed only against a neutralising epitope (binding
`region) of RSV. This provides for much greater potency, as
`Medlmmune demonstrated in side-by~side studies where Synagis
`
`9 Medlmmune Annual Report 1997 MED17059.
`10 Synagis Product Knowledge: Module 4. MED 0015340.
`11 BLAMED 004231; Antiviral Agents Bulletin, February 1996.
`12 Investigators Brochure MED 003570.
`13 Synagis Product Knowledge MED0015339.
`14 Biopharma Vol 3 209 2004
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`exhibited 100 times greater potency than RespiGam. 15 This
`increased potency allows intramuscular administration of Synagis,
`thereby permitting it potentially to be delivered in situations other
`than the hospital (e.g., a doctors' office or even the home),
`effectively broadening the target population to all "at risk" patients.
`The COGS for Syna~is is also much lower-just 10%, compared to
`50% for RespiGam 1 -allowing for a 20-25% reduction in cost-to(cid:173)
`end-user compared to RespiGam. 17
`
`Synagis rapidly supplanted RespiGam, with sales of $2.9 million in
`1998 (the year it was launched), $293 million in 1999, and steady
`growth thereafter. 18 Figure 1 below shows Medlmmune's total
`product sales and Synagis' contribution.
`
`Figure 1-Medlmmune's sales by product
`
`Source: EvaluatePharma
`
`Medlmmune Sales by Product
`
`•RespiGam
`
`• NeuTrexin
`• Hexalen
`• CytoGam
`1111FiuMist
`
`• Ethyol
`11 Synagis
`
`1200
`
`1000
`
`on
`c
`~
`i
`
`~
`rJ)
`:;,
`
`800
`
`600
`
`400
`
`200
`
`1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
`Year
`
`15 MEDI-493 briefing presentation slides MED005074; Cotton Rat Studies MED 002738.
`16 Antiviral Agents Bulletin, February 1996.
`17 Synagis Product Knowledge MED0015344.
`18 EvaluatePharma 2007.
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`4.2 The Pharmaceutical Industry
`
`The global pharmaceutical market was worth $643 billion in 2006.
`This compares with $173 billion in 1990. Approximately 80% of
`the market value can be attributed to just 10 countries. The US is
`by far the single largest national market, comprising nearly 50% of
`the value, followed by Japan and Europe.
`
`The economics of the pharmaceutical industry are driven by three
`principal factors: the enormous cost of developing new medicines
`and techniques; the likelihood that most of those development
`efforts will never bear fruit; and the limited time frame to recoup
`costs from those that do.
`
`In the first discovery phase of pharmaceutical research and
`development, less than 5% of the molecules screened will result in
`the identification of a compound sufficiently promising to be taken
`into further development. The chances of progressing through the
`subsequent stages of pre-clinical and clinical development to
`launch are also very small, so that overall, for every 5,000- 10,000
`compounds screened, only one will reach the market. 19 For these
`reasons it is estimated that on average it takes 10-15 years and
`costs over $800m (in 2000 dollars) to bring a single new drug to
`the market2°. This typically leaves a short period of patent life in
`which to recover development costs. This is summarised in Figure
`2.
`
`19 Pharmaceutical Industry Profile 2007. Pharmaceutical Research and Manufacturers of
`America (PhRMA)
`20 The price of innovation: new estimates of drug development costs. DiMasi, J., et at, Journal
`of Health Economics 22(2003): 151·185.
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`Figure 2-Summary of pharmaceutical R&D process
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`Source PhRMA' 1
`
`• R&D Brochure 2007
`
`...
`
`...
`
`Costs increase significantly as a drug candidate progresses
`through the development process, with particular rises occurring in
`the move from pre-clinical testing into Phase I clinical trials, and
`from Phase II to Phase Ill clinical trials. For this reason companies
`frequently stop the development of drugs that have limited
`commercial potential at these stages, even though the companies
`may already have invested an enormous amount of resources and
`many years of work.
`
`These realities have led companies in the pharmaceutical industry
`to adopt three principal business models, which reflect different
`approaches to managing the costs and risks:
`
`• Fully integrated company model-In this model the
`pharmaceutical company assumes full responsibility for all
`stages of research and development (R&D), manufacturing
`and commercialisation to create value-added products. It
`retains all functions in-house with all the benefits this has for
`control of both resources and budgets.
`
`• Collaborative model-In this model the pharmaceutical
`company develops its products to a certain stage and then
`licenses them to third parties for further collaborative
`development and commercialisation. This involves the
`pharmaceutical company giving away a share of the future
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`income from the project in return for sharing the costs and
`risk.
`
`• Supplier/service model-In this model the company, often
`a platform technology company, forms the basis for providing
`devices, materials, equipment, expertise and/or contract
`services that add vale to its customers' products.
`
`In practice there are few companies that adopt one or another of
`these business models exclusively. Companies may employ a
`different approach for different products or different parts of the
`business, or may change their approach over time due to changing
`circumstances. In general, however, larger companies with more
`resources typically favour the first approach, the fully integrated
`model, while many smaller or emerging companies tend to adopt
`the collaborative or supplier/service model.
`
`The second approach, the collaborative model, has become
`increasingly popular in all sectors of the pharmaceutical industry,
`and in particular among the small research-based companies
`frequently known as biotechnology companies. Biotech
`companies often focus on discrete areas of R&D, and
`subsequently partner their products and techniques with larger
`companies for eventual commercialisation. As I explained in
`Section 4.1.1 above, Genentech-one of the world's first biotech
`companies, and considered by many to have founded the
`biotechnology industry21 -was a pioneer of this strategy.
`
`The collaborative model is built upon licensing, and the rapid
`growth of this approach is reflected by the increase in the number
`of licensing deals in the pharmaceutical industry. Figure 3
`summarises that increase since 1997.
`
`21 See, e.g., Eugene Russo, "Special Report: The birth of biotechnology," Nature 421, 456-
`457 (23 January 2003) (http://www.nature.com/nature/journal/v421/n6921/full/nj6921-
`456a.html).
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`Figure 3-Number of licensing deals for the pharmaceutical industry (1997-2006)
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`No of deals
`
`2,000
`
`1,500
`
`1,000
`
`500
`
`0
`
`1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
`
`Source: PharmaDeals Agreements
`
`I discuss the importance of licensing in the pharmaceutical industry
`in more detail in Section 6 below.
`
`4.3 The Cabilly Inventions
`
`Historically, antibodies were first used as research tools, frequently
`as purified animal sera whereby rodents, sheep or goats were
`repeatedly immunised with the protein or antigen to which an
`antibody was required. This method relies solely on the immune
`system of the animal being used, and generates a repertoire of
`antibodies of mixed specificity, affinity and type (polyclonal
`antibodies). The difficulty of processing these animal-derived
`materials into something of appropriate concentration and·
`specificity for clinical therapeutic utility precluded their application
`outside of research or in vitro diagnostics.
`
`With the discovery in 1975 of hybridoma technology came the
`promise of producing monoclonal antibodies for therapeutic use.
`Hybridoma technology involves the fusion of antibody-producing B(cid:173)
`cells extracted from the spleens of immunised rodents with an
`immortal myeloma cell line in order to produce a hybridoma line of
`cells that expressed antibody molecules of singular defined
`specificity and type, a so-called monoclonal antibody. By 1983,
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`when the '415 patent was applied for, hybridomas were being used
`to produce monoclonal antibodies for diagnostic purposes.
`Hybridomas were also under active investigation as a source of
`therapeutic monoclonal antibodies, although it was not assured
`that such antibodies would find widespread application or
`acceptance.
`
`At a time when others were focused on hybridoma-derived
`monoclonal antibodies, Genentech applied its expertise in
`recombinant DNA technology to address issues such as antibody
`engineering and production, enabling Genentech's scientists, in
`collaboration with scientists from the Beckman Research Institute
`of the City of Hope in California, to develop the method patented in
`the '415 patent These discoveries expanded the potential
`application of antibodies in both basic scientific research and
`human health and disease, and formed the foundation for the
`development of the entire field of therapeutic antibodies.
`
`5 The Industry's Acceptance of the '415 Patent
`
`I understand that an industry's acceptance or adoption of a patent
`through licensing may serve as objective evidence of the patent's
`validity, because it demonstrates that the industry recognises that
`the patent represents a real invention. In my opinion, the '415
`patent is a prime example of this. The '415 patent is recognised
`within the pharmaceutical industry as one of a handful of
`groundbreaking patents that launched the modern field of
`therapeutic antibodies, and the industry has licensed the patent
`consistently with that view.
`
`In the remainder of this section I will describe the licensing of
`several other groundbreaking biotechnology patents as a basis for
`comparison, then describe the licensing of the '415 patent. That
`licensing demonstrates that the industry views the '415 patent not
`just as a patentable invention, but as one of the small group of
`breakthrough patents that have paved the way for entire new fields
`of therapy.
`
`Or E Flntan Walton Expert Report
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`Sanofi/Regeneron Ex. 1 041 , pg 1 040
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`Merck Ex. 1041, pg 1066
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`5.1 Licensing of Other Breakthrough Biotechnology Patents
`
`There have been many seminal discoveries that have allowed the
`pharmaceutical industry to make great steps forward and bring
`new therapies to market for the benefit of mankind. By way of
`illustration, I will describe several of these discoveries relevant to
`biotechnology, and their licensing within the pharmaceutical
`industry.
`
`5.1.1 Recombinant DNA Patents (Cohen/Boyer)
`
`One of the earliest and certainly most significant examples of
`breakthrough biotechnology patents is Stanford University's
`Cohen/Boyer patents for gene splicing and cloning. The portfolio
`consists of three patents:
`
`• US Patent 4237224-a process patent for making molecular
`chimeras;
`• US Patent 4468464-a product patent for producing proteins
`using recombinant prokaryotic DNA; and
`• US Patent 4740470-a product patent for producing proteins
`from eukaryotic DNA.
`
`The technological breakthroughs claimed in these patents are
`considered to be the founding technologies of the modern
`biotechnology industry. 22 As I noted above, Genentech was the
`first company to be based on this technology. Gene splicing and
`cloning was of such fundamental importance to molecular biology
`research that it was (and remains) virtually a required technology
`for every molecular biology laboratory. It was also inexpensive
`and relatively easy to implement, meaning the only potential barrier
`to wide dissemination of the technology could have been the
`adoption of a restrictive licensing strategy.' The decision to
`negotiate non-exclusive licenses with a large number of companies
`was critical to the rapid development of the biotechnology industry.
`
`22 See, e.g., Beardsley T. (1994) Big time biology. Scientific American, November: 90-97
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`Dr E Fintan Walton Expert Report
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`Sanofi/Regeneron Ex. 1 041 , pg 1 041
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`Merck Ex. 1041, pg 1067
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`Over the lifetime of the patents, licenses were granted to 468
`companies for a range of industries. 23 This broad licensing
`strategy benefited the licensees and the public through the launch
`of many successful and important therapies. Highly successful
`therapeutic products such as Epogen® (Amgen), Humalog® (Lilly),
`Nutropin® (Genentech), lntron® (Schering/Biogen), Procrit®
`(Johnson & Johnson), Recombivax HB® (Merck/Biogen), HIV
`Diagnostics (Abbott), Novolin® (Novo Nordisk) and Proleukin®
`(Chiron), and many more currently in development, owe their
`existence to the wide licensing of the Cohen/Boyer patents. Sales
`in excess of $950 billion from thousands of products have resulted
`from the Cohen/Boyer patented technologies. Sales of some of
`the key drugs are depicted in Figure 4 below.
`
`Figure 4-Sales of a number of key drugs that owe their availability to the Cohen &
`Boyer patents
`
`12000
`
`10000
`
`!i 8000
`... .. .!
`
`:lsooo
`....
`~
`:i5
`~ 4000
`
`2000
`
`0
`
`Cohan/Boyer License Dependent Drugs
`-
`
`I
`-~==~;'
`I
`
`