UNITED STATES PATENT AND TRADEMARK OFFICE
`_______________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`_______________
`
`ACRUX DDS PTY LTD., ACRUX LIMITED,
`ARGENTUM PHARMACEUTICALS LLC,
`Petitioner,
`
`v.
`
`KAKEN PHARMACEUTICAL CO., LTD. and
`VALEANT PHARMACEUTICALS INTERNATIONAL, INC.,
`Patent Owner.
`_______________
`
`Case IPR2017-001901
`Patent 7,214,506 B2
`_______________
`
`DECLARATION OF JOHN C. STAINES, JR. IN SUPPORT OF
`PETITIONER’S RESPONSE TO PATENT OWNER’S
`OBJECTIONS TO EVIDENCE
`
`1
`
`Case IPR2017-01429 has been joined with the instant proceeding.
`
`Page 1 of 8
`
`ACRUX DDS PTY LTD. et al.
`
`EXHIBIT 1671
`
`IPR Petition for
`
`U.S. Patent No. 7,214,506
`
`
`_______________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`_______________
`
`ACRUX DDS PTY LTD., ACRUX LIMITED,
`ARGENTUM PHARMACEUTICALS LLC,
`Petitioner,
`
`v.
`
`KAKEN PHARMACEUTICAL CO., LTD. and
`VALEANT PHARMACEUTICALS INTERNATIONAL, INC.,
`Patent Owner.
`_______________
`
`Case IPR2017-001901
`Patent 7,214,506 B2
`_______________
`
`DECLARATION OF JOHN C. STAINES, JR. IN SUPPORT OF
`PETITIONER’S RESPONSE TO PATENT OWNER’S
`OBJECTIONS TO EVIDENCE
`
`1
`
`Case IPR2017-01429 has been joined with the instant proceeding.
`
`Page 1 of 8
`
`ACRUX DDS PTY LTD. et al.
`
`EXHIBIT 1671
`
`IPR Petition for
`
`U.S. Patent No. 7,214,506
`
`
`
`I, John C. Staines, Jr., declare and state as follows:
`
`1.
`
`I am a Director and Principal in the Washington, DC office of
`
`Navigant Economics LLC (“Navigant Economics”), a subsidiary of Navigant
`
`Consulting, Inc., an international consulting firm. On November 1, 2017, I
`
`submitted a declaration (Exhibit 1511) that Petitioners in this matter, Acrux DDS
`
`Pty, Ltd. and Acrux, Ltd. (collectively, “Acrux”) retained me to prepare
`
`concerning whether or not the fungal toenail treatment, Jublia®, is a commercial
`
`success as that determination relates to the obviousness of U.S. Patent Number
`
`7,214,506 (“the ’506 patent”), and the extent to which any such commercial
`
`success may have a causal nexus to the unique features claimed by the ’506 patent.
`
`A copy of my curriculum vitae has been submitted as Attachment A to Exhibit
`
`1511.
`
`2.
`
`I have been asked by Rothwell, Figg, Ernst & Manbeck PC, Acrux’s
`
`counsel, to provide further information relating to the exhibits I discussed and
`
`relied upon in my previous declaration to develop the opinions set forth in that
`
`declaration. These exhibits consist of several different types of documents I
`
`reviewed to inform those opinions. I make this present declaration based on my
`
`personal knowledge.
`
`3.
`
`During the course of developing the opinions expressed in my
`
`previous declaration, I performed research into Valeant Pharmaceuticals
`
`Page 2 of 8
`
`
`
`International Inc.’s (“Valeant”) business practices as they related to the sales of
`
`Jublia®, which is relevant to the determination of whether or not Jublia® is a
`
`commercial success (both as to the significance of Jublia®’s sales and whether
`
`those sales have a nexus to the ’506 patent). My research led me to several sources
`
`of information including online articles pertaining to the relevant time period that
`
`described, among other things, those business practices and their later
`
`consequences. Among these sources were articles written for and available from
`
`various business and financial websites (such as Business Insider, Reuters, Forbes,
`
`Fortune, Financial Times, Citron Research, and Bloomberg) as well as newspapers,
`
`such as The New York Times, The Wall Street Journal, The LA Times and the San
`
`Francisco Gate. See Exhibits 1524-1525, 1527-1528, 1530-1534, 1539-1549,
`
`1555, 1557-1560, 1607, 1627, 1632-1634. As it is my understanding that Patent
`
`Owners did not provide materials regarding Valeant’s relationship with its
`
`specialty pharmacy Philidor Rx Services, LLC, or with its current retail partner,
`
`Walgreens Co., I obtained this information from publicly-available sources to
`
`provide access to relevant facts I required to inform my opinions. In particular, the
`
`information relating to the business practices employed to sell Jublia® is, in my
`
`opinion, directly relevant to the determination of whether or not the drug was (or
`
`is) a commercial success. I, and others in the economic field, routinely use
`
`business and financial websites and publications as well as news outlet sources to
`
`Page 3 of 8
`
`
`
`collect the relevant factual information necessary for reliable economic analysis
`
`and to inform the development of fact-based expert opinions.
`
`4.
`
`In addition to the sources identified above, I also looked to Patent
`
`Owner’s (Valeant’s and Kaken Pharmaceuticals Co., Ltd. (“Kaken”)) own public
`
`information to inform my opinions regarding, among other things, Jublia®’s
`
`quarterly net sales revenues, the Jublia® sales practices employed during the
`
`relevant time period, various expenditures made in support of those sales, and
`
`expenditures made to obtain approval of, and sales rights to, the product.
`
`Specifically, these corporate sources of public information included information
`
`available from Kaken’s corporate website (see, Exhibits 1523, 1590, 1646-1651),
`
`Valeant’s filings with the United States Securities and Exchange Commission
`
`(“SEC”) (see, Exhibits 1553-1554, 1587-1588, 1603-1604, 1630), Valeant’s
`
`investor and financial results presentations (see, Exhibits 1526, 1570-1575, 1578-
`
`1579, 1591-1593, 1608, 1610-1612, 1618), transcripts from various Valeant
`
`investor calls reporting its financial results (see, Exhibits 1529, 1569, 1576, 1582-
`
`1586, 1598, 1600, 1658-1660), Valeant’s promotion of Jublia® (Exhibit 1631) and
`
`Valeant’s press releases (see, Exhibits 1552, 1556). As both Kaken and Valeant
`
`are public companies, it is my experience that information relevant to company
`
`financials, updates on sales performance of various products and associated
`
`information are set forth in SEC filings and other publicly-available financial
`
`Page 4 of 8
`
`
`
`statements and are discussed during financial results disclosure calls and
`
`presentations to investors and/or potential investors. It is my understanding that
`
`Patent Owners refused to provide information relating to, at least, the gross to net
`
`sales revenue adjustments applicable to Jublia® and the costs associated with
`
`Jublia®’s sales. To address these deficiencies, I sought out publicly available
`
`information originating from Patent Owners (as well as other information relevant
`
`to my opinions that Patent Owners had shared with the public) to inform my
`
`opinions. I typically rely on such information to inform my expert opinions.
`
`5.
`
`I also sought publicly-available information from sources outside of
`
`Patent Owners to identify various facts relating to marketing expenditures
`
`committed in support of Jublia®. These included online articles and information
`
`from outlets that report and analyze marketing expenditures, including,
`
`specifically, direct-to-consumer marketing of branded pharmaceuticals. See,
`
`Exhibits 1594-1596, 1609. As this information was not provided by Patent
`
`Owners when requested, I obtained it through these public sources as well as
`
`through Patent Owner’s own public information discussed above. I also typically
`
`rely on these types of information to inform my opinions.
`
`6.
`
`In connection with my opinions I analyzed the information and
`
`testimony provided by Mr. Vincent A. Thomas, CPA, CVA, CFF, ABV, Patent
`
`Owner’s witness regarding Jublia®’s alleged commercial success and its alleged
`
`Page 5 of 8
`
`
`
`nexus to the ’506 patent. In so doing, I performed research regarding the available
`
`products with FDA-approved indications for the treatment of onychomycosis
`
`(including Jublia®) and those used off-label for such treatment. That background
`
`research required obtaining information regarding, among other things, those drugs
`
`and their manufacturers (including Jublia® and Patent Owners) (see, Exhibits 1599,
`
`1602, 1605), their labeled indications and use (see, Exhibits 1515-1517, 1550),
`
`their sales and marketing expenditures to date and how the sales of Jublia®
`
`compares to other brand pharmaceuticals (see, Exhibits 1566, 1577, 1613-1614,
`
`1638-1645) and information relating to their approval dates and availability of
`
`generic equivalents to those drugs (see, Exhibits 1652-1657). I, and others in my
`
`field, look to these types of sources to provide information relevant to the
`
`economic issues I have been asked to analyze in this matter, and specifically for
`
`purposes of examining the validity of the conclusions Mr. Thomas has offered.
`
`7.
`
`To further inform my analysis, I also utilized several journal articles,
`
`financial and news articles and books of the kind those in my field use to inform
`
`the basis for their opinions as well as to assist in my explanation of the
`
`pharmaceutical market and its unique economic characteristics. These included
`
`Exhibits 1535-1538, 1562-1565, 1567-1568, 1580-1581, 1589, 1596-1597, 1601,
`
`1615-1617, 1619-1626, 1628-1629, 1635, 1637. The sources of this information
`
`include, but are not limited to, government and foundational studies (see, e.g.,
`
`Page 6 of 8
`
`
`
`Exhibits 1563, 1568, 1597, 1635, 1637), scholarly journals from the economic
`
`field (see, e.g., Exhibits 1535, 1538, 1565, 1601, 1616, 1623), scholarly journals
`
`from the medical and health care fields addressing relevant economic principles
`
`(see, e.g., Exhibits 1562, 1615, 1619-1620, 1622, 1624-1625, 1629), business
`
`publications (see, e.g., Exhibits 1580-1581, 1596, 1617, 1621, 1626), and books
`
`relating to certain economic topics and concepts as applied to the pharmaceutical
`
`field (see, e.g., Exhibits 1564, 1567, 1589).
`
`8.
`
`Although I was provided the proper legal standards to employ in my
`
`analysis (see, e.g., Exhibit 1511, at ¶¶ 18, 55), I also reviewed journal articles that
`
`informed me with respect to the way in which to apply those legal principles to my
`
`economic analysis. See Exhibits 1561, 1606. Both of these law review articles
`
`discussed the obviousness analysis and the analysis of objective indicia and
`
`informed the way in which I applied the legal standards I was provided to my
`
`economic analysis. I, and others in my field, look to these types of sources to
`
`inform economic analysis in the patent context.
`
`9.
`
`Finally, I required historical financial information, including the
`
`prices of Valeant’s stock throughout the relevant time period (Exhibit 1551) and
`
`the yen to dollar exchange rate during the relevant time period (Exhibit 1636) to
`
`inform certain of my opinions and analysis. I obtained this information from
`
`internet sources which provide such data in a format that allows information
`
`Page 7 of 8
`
`
`
`Case IPR2017-00190
`
`Patent 7,214,506 B2
`
`retrieval for a specific time period.
`
`I, and others in my field, utilize this type of
`
`historical information to analyze trends in the market as they affect economic
`
`analysis and to put financial information into perspective for use in different
`
`markets by utilizing exchange rates for the relevant currencies.
`
`I declare under penalty of perjury that the foregoing is true and correct. Executed
`
`this 21St day of November, 2017, in Washington, DC.
`
`4% fl/fighr‘bf
`
`John C. Staines, Jr.
`
`Page 8 of 8
`
`Page 8 of 8
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`
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