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`UNITED STATES PATENT AND TRADEMARK OFFICE
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
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`
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`ACRUX DDS PTY LTD. & ACRUX LIMITED
`Petitioners,
`
`v.
`
`KAKEN PHARMACEUTICAL CO., LTD. and
`VALEANT PHARMACEUTICALS INTERNATIONAL, INC.
`Patent Owner and Licensee.
`
`
`
`Case: IPR2017-00190
`U.S. Patent No. 7,214,506
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`
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`PATENT OWNER’S RESPONSE
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`

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`I.
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`II.
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`
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`Table of Contents
`
`Introduction ...................................................................................................... 6
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`Technical Background ..................................................................................... 9
`
`A. Onychomycosis is an Infection of the Nail Plate and Underlying
`Nail Bed ................................................................................................. 9
`
`B. Nail is Unlike Skin and Hair, Producing Distinct Interactions
`with Antifungal Agents .......................................................................11
`
`C. Uncertainty in the Art Regarding the Factors Contributing to
`the Effectiveness of a Topical Treatment Hindered
`Development .......................................................................................13
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`D. Many Antifungal Agents were Available Prior to the ’506
`Patent but Lacked Proven Efficacy in Treating Onychomycosis
`Topically ..............................................................................................15
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`III. The Discovery of Efinaconazole was a Breakthrough for the Field .............19
`
`A.
`
`B.
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`The Claimed Invention and the ’506 Patent ........................................19
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`Efinaconazole Displays Superior Efficacy ..........................................22
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`IV. Relevant Field and the Person of Ordinary Skill in the Art ..........................24
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`V. Claim Construction ........................................................................................27
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`VI. Priority Date ...................................................................................................31
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`VII. The Challenged Claims are Not Obvious Over the Cited Art .......................32
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`A. Overview of Nonobviousness Position ...............................................32
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`B.
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`Petitioner’s Primary References Only Relate to the Use of
`Efinaconazole in Skin ..........................................................................35
`The Kaken Abstracts Test Efinaconazole In Vitro and in
`a Guinea Pig Model of Skin Infection ......................................35
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`
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`Ogura Is Not Prior Art ..............................................................41
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`2
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`Ogura Does Not Add Anything to the Kaken Abstracts...........43
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`C.
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`The Secondary Art Cited by Petitioner Only Discloses the Nail
`Penetrance of Unrelated Compounds ..................................................47
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`JP ’639 Only Evaluates the Structurally Unrelated
`Compound Amorolfine .............................................................48
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`Amorolfine Never Became Established as an Effective
`Treatment for Onychomycosis, Demonstrating Further
`Unpredictability ........................................................................51
`
`The ’367 Patent and Hay Only Evaluate Another
`Structurally Unrelated Compound, Tioconazole ......................53
`
`The ’367 Patent Fails to Offer Any Data Establishing
`Efficacy for Tioconazole ...........................................................54
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`Hay Likewise Fails to Establish Efficacy Even for
`Tioconazole Because of Poor Study Design .............................55
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`D. No Motivation to Apply the Claimed Triazole Compounds to
`Nail with a Reasonable Expectation of Successfully Treating
`Onychomycosis ...................................................................................56
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`VIII. Topical Treatment of Onychomycosis with Other Triazole Antifungal
`Agents Would Not Have Been Obvious Either .............................................60
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`IX. Secondary Considerations Support the Nonobviousness of the
`Invention ........................................................................................................60
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`X. Conclusion .....................................................................................................65
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`3
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`TABLE OF AUTHORITIES
`
`
`
`Page(s)
`
`Federal Cases
`Aceto Agricultural Chem. Corp. v. Gowan Co.,
`IPR2016-00076, Paper 51 (Final Written Decision) .......................................... 48
`
`ACTV, Inc. v. Walt Disney Co.,
`346 F.3d 1082 (Fed. Cir. 2003) .......................................................................... 29
`
`Cooper v. Goldfarb,
`154 F.3d 1321 (Fed. Cir. 1998) .......................................................................... 41
`
`Crocs Inc. v. International Trade Com’n,
`598 F.3d 1294 (Fed. Cir. 2010) .................................................................... 61, 63
`
`Dynamic Drinkware LLC v. Nat’l Graphics, Inc.,
`IPR2013-00131, Paper 42 (Final Written Decision) .......................................... 42
`
`Hockerson-Halberstadt, Inc. v. Converse Inc.,
`183 F.3d 1369 (Fed. Cir. 1999) .......................................................................... 29
`
`Innopharma Licensing, Inc. v. Senju Pharm. Co., Ltd.,
`IPR2015-00902 (Paper 90, 17) ........................................................................... 64
`
`Insite Vision Inc. v. Sandoz, Inc.,
`783 F.3d 853 (Fed. Cir. 2015) .......................................................... 33, 45, 52, 58
`
`Intelligent Bio-systems Inc. v. Illumina Cambridge LTD,
`821 F.3d 1359 (Fed. Cir., May 9, 2016) ............................................................. 47
`
`In re Kahn,
`441 F.3d 977 (Fed. Cir. 2006) ............................................................................ 41
`
`KSR Int’l Co. v. Teleflex Inc.,
`550 U.S. 398 ....................................................................................................... 46
`
`Loral Fairchild Corp. v. Matsushita Elec. Indus. Co., Ltd.,
`266 F.3d 1358 (Fed. Cir. 2001) .......................................................................... 42
`
`In re Magnum Oil Tools,
`829 F.3d 1364 (Fed. Cir. 2016) .......................................................................... 32
`
`
`
`4
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`Mahurkar v. C.R. Bard, Inc.,
`79 F.3d 1572 (Fed. Cir. 1996) ...................................................................... 42, 43
`
`Medichem, S.A. v. Rolabo, S.L.,
`437 F.3d 1157 (Fed. Cir. 2006) .......................................................................... 42
`
`Otsuka Pharm. Co., Ltd. v. Sandoz, Inc.,
`678 F.3d 1280 (Fed. Cir. 2012) .......................................................................... 35
`
`In re Paulsen,
`30 F.3d 1475 (Fed. Cir. 1994) ............................................................................ 28
`
`Phillips v. AWH Corp.,
`415 F.3d 1303 (Fed. Cir. 2005) (en banc) .................................................... 28, 29
`
`Procter & Gamble Co. v. Teva Pharms. USA, Inc.,
`566 F.3d 989 (Fed. Cir. 2009) ............................................................................ 32
`
`SAS Inst., Inc. v. ComplementSoft, LLC.,
`825 F.3d 1341 (Fed. Cir. 2016) .......................................................................... 29
`
`Sequenom Inc. v. Stanford,
`IPR2013-00390, Paper 45 (Final Written Decision) (P.T.A.B. Nov.
`25, 2014) ............................................................................................................. 43
`
`Takeda Chem. Indus. Ltd. v. Alphapharm Pty., Ltd.,
`492 F.3d 1350 (Fed. Cir. 2007) .......................................................................... 51
`
`Transocean Offshore Deepwater Drilling, Inc. v. Maersk Contractors
`USA, Inc.,
`617 F.3d 1296 (Fed. Cir. 2010) .......................................................................... 60
`
`W.L. Gore & Assoc., Inc. v. Garlock, Inc.,
`721 F.2d 1540 (Fed. Cir. 1983) .......................................................................... 37
`
`Federal Statutes
`
`35 U.S.C. § 103(a) ................................................................................................... 47
`
`Regulations
`
`37 C.F.R. § 42.100(b) .............................................................................................. 28
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`5
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`Introduction
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`The patent at issue (U.S. Patent No. 7,214,506 (“the ’506 patent)) claims a
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`I.
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`
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`novel method for treating fungal infections of the nail (known as
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`“onychomycosis”) by topically administering a therapeutically effective amount of
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`efinaconazole (also known as “KP-103”). Efinaconazole is the active
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`pharmaceutical ingredient in Jublia®, the first FDA-approved monotherapy for the
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`topical treatment of onychomycosis. Since launching in 2014, Jublia® has
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`dominated the onychomycosis market, generating over $1 billion in revenue and
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`quadrupling the use of topical treatments for onychomycosis over pre-launch
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`levels.
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`Jublia®’s technical and commercial success came in a highly skeptical and
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`unpredictable field. An effective model for testing compounds in nail did not exist,
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`antifungal agents that worked in skin models did not work in nail, and the
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`properties necessary for a compound to achieve therapeutic efficacy were
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`unknown. Indeed, even today the art continues to hypothesize about the properties
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`needed to effectively treat onychomycosis. Faced with these challenges,
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`researchers sought for years to develop a topical treatment that could alone,
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`without concomitant systemic therapy or comprehensive nail management,
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`effectively treat onychomycosis. For decades, they failed. Instead, the field relied
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`on treatment with oral anti-fungal medications with their associated side effects.
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`At the time of the invention, efinaconazole was known in the art. It
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`performed well in skin models and demonstrated anti-fungal activity generally
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`comparable to existing antifungal treatments. Despite efinaconazole’s broad
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`spectrum anti-fungal activity in skin, no one, not even Kaken, sought to develop
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`the drug— not as a skin antifungal treatment, and certainly not as a topical
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`treatment for onychomycosis. Indeed, despite the intense focus and
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`experimentation on virtually any antifungal agent that seemed even remotely
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`promising for topical treatment of onychomycosis, no one ever suggested trying
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`efinaconazole. Years after its disclosure, the inventors decided to test
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`efinaconazole in nail. They developed a new animal model to test a compound’s
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`efficacy in topically treating onychomycosis and only then discovered
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`efinaconazole’s surprising therapeutic effectiveness.
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`
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`Petitioner’s obviousness allegations ignore this history and rely instead on a
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`hindsight reconstruction of the art with full knowledge of the invention. Nowhere
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`is this hindsight bias more clear than in the opinion of Petitioner’s expert, Dr.
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`Walters. Dr. Walters is a professional expert in the field of formulations—he
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`concedes that he has no experience in the relevant field of treating onychomycosis.
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`Given his lack of experience, it is not surprising that he ignores the lessons of the
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`prior art. For instance, Dr. Walters opines that one of skill would have used
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`efinaconazole to treat onychomycosis based on its low affinity for keratin. But the
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`art at the time of the invention believed the exact opposite was true. Dr. Walters
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`also ignores the objective evidence indicating that those in the art never
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`appreciated efinaconazole’s promise for treating onychomycosis until the claimed
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`invention. In fact, not even Patent Owner appreciated efinaconazole’s surprising
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`efficacy in treating onychomycosis until they actually conducted tests in an animal
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`nail model of nail infection. That those in the art at the time of the invention
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`objectively ignored efinaconazole as a treatment option for onychomycosis
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`evidences the hindsight bias in Petitioner’s obviousness allegations.
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` In addition to using improper hindsight, Petitioner cites nothing in the art
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`that would motivate the skilled artisan to use efinaconazole over other existing
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`antifungals for topical treatment of onychomycosis. Objectively, no one did. Nor
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`would a skilled artisan have expected success from this unrecognized use of
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`efinaconazole. Petitioner tries to avoid this glaring flaw by connecting the results
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`of efinaconazole’s in vitro skin testing to the treatment of onychomycosis, but its
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`own expert admitted that results from skin testing “do not relate” to the method of
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`treating onychomycosis.
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`Thus, Petitioner provides no reasonable explanation as to why the cited art
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`renders the claims of the ’506 patent obvious. That the art objectively ignored
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`efinaconazole, coupled with its surprising efficacy in onychomycosis and its
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`undoubted commercial success as the first topical monotherapy to receive FDA
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`approval to treat onychomycosis, forecloses any case of obviousness Petitioner
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`could have raised.
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`II.
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`Technical Background
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`A. Onychomycosis is an Infection of the Nail Plate and Underlying
`Nail Bed
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`
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`Onychomycosis is an infection of the toenails or fingernails, most commonly
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`caused by the fungi Trichophyton rubrum and Trichophyton mentagrophytes. Ex.
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`2009, 284; Ex. 2010, 416; Ex. 2012, 363. There are several types of
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`onychomycosis, all generally involving the nail bed and/or nail plate. Ex. 2010,
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`417-18. The defining feature of the disease is the presence of infection in the nail
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`bed and/or nail plate, as well as in the nail matrix. Ex. 2007, 3 (“onychomycosis
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`refers to a fungal infection of the nail unit - the nail matrix, bed, or plate.”); see
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`also Ex. 2048, 2628 (“To complicate matters, onychomycosis, frequently in a
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`hyperkeratotic presence, involves the deeper nail layer and the nail bed.”); Figure
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`1; see also Ex. 2007, 3.
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`Figure 1. Nail Components
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`There are many fungal infections that do not involve the nail, including tinea
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`capitis (a fungal infection of the scalp), tinea corporis (a fungal infection of the
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`body skin), and tinea pedis (a fungal infection of the skin on a foot). Ex. 2075,
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`2344, 2346, 2349. Similarly, paronychia refers to an infection of the skin around
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`the fingernail or toenail and is caused predominantly by bacteria or the fungi
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`Candida. Ex. 2078, 568-69. Carefully distinguishing between different types of
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`infections is particularly important because “the site of infection is critical in
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`selecting therapy.” Ex. 2075, 2738. Each is treated differently. Id. at 2737-39.
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`Treating onychomycosis in particular requires an agent capable of providing
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`(1) broad spectrum antifungal activity, (2) reaching the site of fungal infection in
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`the nail bed and plate, and (3) persisting in the nail to effectively combat the
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`underlying infection. Ex. 2027, ¶¶30-34, 38-44, 85; see also Ex. 2010, 422; Ex.
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`2012, 369; Ex. 2015, Abstract; Ex. 2048, 2628; Ex. 2076, Abstract (“[T]he
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`accumulation of terbinafine and itraconazole in keratinous tissues makes them
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`ideal agents for the treatment of onychomycosis”). But for many years this has
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`been a challenge because it is “difficult for a topically applied antifungal drug to
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`achieve a therapeutically effective level in the inner ventral layer, let alone the nail
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`bed.” Ex. 2048, 2628. Indeed, the art recognized that “fungal infections of the nail
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`are notoriously difficult to treat.” Ex. 2007, 3.
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`B. Nail is Unlike Skin and Hair, Producing Distinct Interactions with
`Antifungal Agents
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`
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`The nail unit is complex, having several specialized structures, including a
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`nail plate, nail bed, nail matrix, and nail folds (including the lateral and posterior
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`nail folds), as well as the eponychium, and hyponychium surrounding these other
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`structures. Ex. 1001, 4:65-67; Figure 2; see also Ex. 2012, 5; Ex. 2013, 8-12. The
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`eponychium and hyponychium alone do not make up the nail, as they are simply
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`skin structures that accompany the other components of the nail unit. Ex. 2027,
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`¶¶35-37.
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`The unique properties of the nail, particularly its thickness and relatively
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`compact construction, make it a formidable barrier to the entry of topically applied
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`agents as compared to skin and hair. Ex. 2012, 364-367; see also Ex. 2049, 3837.
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`The nail includes several specially structured layers, each of which possesses
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`unique physicochemical properties, with distinct drug permeabilities and
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`interactions through each of the layers. Ex. 2082, 69.
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`The upper dorsal layer of the nail is only a few cells thick but consists of
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`hard keratin, constituting the main barrier for drug diffusion through the nail plate.
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`Ex. 2012, 364, 367; see also Ex. 2049, 3837. While keratin also appears to some
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`extent in skin and hair, in nail it has a very different concentration, density, and
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`arrangement that acts as a unique barrier to the permeation of drugs. See, e.g., Ex.
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`2012, 366-69; Ex. 1028, 278. Other components of the human nail include
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`carbohydrates, lipids, water, and trace elements. Ex. 2012, 366-67; Ex. 2013, 242.
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`The lipid content of nail is less than 5%, much lower than skin or hair. Ex. 2012,
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`367. The lower lipid content in nail restricts its ability to hold a high concentration
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`of a poorly water soluble drug. Ex. 2021, 7; see also Ex. 2014, 10; Ex. 2019, 1.
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`The unique structure of the nail thus ultimately affects diffusion and activity of
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`therapeutic compounds.
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`Drug transport into the nail plate is also influenced by the physicochemical
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`properties of the chosen compound (i.e., size, shape, charge, and hydrophilicity),
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`formulation characteristics, the presence of permeation enhancers, as well as
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`individual nail properties (thickness and hydration). Ex. 2051, 2. These properties
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`interact differently with the distinct structures in nail, skin, and hair.
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`Given the structural and functional differences between hair, skin, and nail
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`and the distinct types of dermatophyte infections in these tissues, they also require
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`different treatment strategies. See Ex. 2075, 2738. Skin infections reside in the
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`superficial layers of the stratum corneum (also known as the “horny layer” or
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`“horny material”), making them easily accessible by topical means, often more
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`easily than through oral routes. But these same agents are generally less effective
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`topically in nail. Even infections caused by the same microorganism can require
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`different types of treatment depending on whether the infection is located in the
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`skin, hair, or nail (i.e., in the nail plate or nail bed). See Ex. 2075, 2737-39. For
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`example, terbinafine works topically but not orally to treat Candida infections in
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`skin, whereas the opposite is true in nail. Ex. 2074, 16; Ex. 2013, 292. This
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`demonstrates the unpredictability in attempting to translate the efficacy of a
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`compound between skin and nail. It also demonstrates that nail requires particular
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`treatment modalities that differ from skin.
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`In short, nails are unique, specialized structures that differ in many respects
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`from hair and skin in ways that ultimately affect drug diffusion and efficacy. The
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`art is replete with examples of agents that effectively treated fungal infections in
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`skin but not nail. Ex. 2010, 422; Ex. 2075, 2739; Ex. 2052, 291-92.
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`C. Uncertainty in the Art Regarding the Factors Contributing to the
`Effectiveness of a Topical Treatment Hindered Development
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`
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`The art had many theories and much uncertainty as to why an agent might
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`penetrate the nail plate and treat onychomycosis. Chief among these was low
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`molecular weight. Ex. 2012, 371-72; Ex. 2020, 31-32; Ex. 2083, 385; Ex. 2015, 9.
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`Dr. Walters reported in 2012 that “the primary drug property controlling . . . nail
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`permeability” and that nail penetrance decreased as molecular weight increased,
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`with the largest tested agent (croconazole) having the slowest rate of permeation.
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`Ex. 2021, 344. Notably, efinaconazole has a higher molecular weight than
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`croconazole, the slowest compound reported in the article. Ex. 2050, 183:3-184:8;
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`see also Ex. 2070, Tbl. 1 (comparing the molecular weight of efinaconazole to
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`other antifungal compounds).
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`Beyond molecular weight, the art also suggested other features thought to
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`contribute to nail penetrance. For instance, nail permeability may depend on the
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`structural features of an antifungal agent, including hydrophilicity, keratin affinity,
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`and chemical structure among other factors thought to influence penetrance. See
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`e.g., Ex. 2012, 369-73; Ex. 2051, 278.
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`
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`The art at the time of invention speculated about the role of keratin affinity
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`or binding in treating onychomycosis. The art suggested, if anything, that high
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`keratin binding was important to promote antifungal persistence in the nail. Ex.
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`2027, ¶¶45-53. Griseofulvin, for example, has low affinity for keratin and it was
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`thought this might explain why it did not work effectively to treat onychomycosis.
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`Ex. 2075, 2850. In contrast, itraconazole was thought to be effective because it
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`had high affinity for keratin and persisted over long periods of time in the nail at
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`effective amounts, thereby reducing the frequency of treatment. Ex. 2010, 425;
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`Ex. 2077, 37. Terbinafine likewise exhibited high keratin binding and was
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`investigated for topical treatment. See, e.g., Ex. 2065, Abstract, 456. A drug with
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`high lipophilicity would promote this keratin binding. Ex. 2070, 8. Notably,
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`efinaconazole has low keratin binding and is a hydrophilic molecule (i.e., has low
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`lipophilicity). Id.
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`The ability to penetrate the nail did not equal success. Even if an agent
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`could penetrate the nail, this alone did not guarantee efficacy because “[t]he fact
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`that therapeutic molecules can penetrate into and permeate across nails in vivo [but
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`this] does not necessarily indicate that they will have therapeutic effect.” Ex.
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`2021, 352; see also Ex. 2008, 44 (“Penetration of the drug, tioconazole, through
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`the plate is excellent, but not matched by clinical efficacy.”). Accordingly, it was
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`clear that there was no recipe for success when developing a topical treatment for
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`onychomycosis because the field had not determined what factors fully controlled
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`the efficacy of a topical treatment. To that end, the art had not singled out any
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`feature (or features) that particularly suggested efinaconazole would provide for
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`therapeutic efficacy in treating onychomycosis after topical application. Indeed,
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`efinaconazole’s properties were opposite to what was believed at the time to be
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`desirable.
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`D. Many Antifungal Agents were Available Prior to the ’506 Patent
`but Lacked Proven Efficacy in Treating Onychomycosis Topically
`
`
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`By the late 1990s, the field recognized that “topical therapy [for
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`onychomycosis] is the most desirable, but it has met with limited success to date.”
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`Ex. 2012, 364; see also, e.g., Ex. 2010, 422; Ex. 2011, 137-39; Ex. 2009, 286.
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`Instead, the available treatment options relied almost exclusively on systemic
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`administration of oral antifungal agents or no treatment at all. Ex. 2009, 286.
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`Surgical options, including nail removal, were also available but disfavored as
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`painful, disfiguring, and potentially causing a permanently abnormal nail plate.
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`Id., 285-86; Ex. 2010, 427. The available systemic agents could produce
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`significant adverse side effects, including liver toxicity, or they could interfere with
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`other systemic drugs taken by the patient. Ex. 2008, 54. Although these
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`drawbacks were well-recognized, the art had not identified effective topical
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`therapies to treat onychomycosis. Ex. 2009, 286; Ex. 2010, 422; Ex. 2075, 2737.
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`
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`In general, the thought at the time of the invention and for many years
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`thereafter was to evaluate the known oral antifungals for their topical efficacy in
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`treating onychomycosis. Ex. 2017, 13 (“The logical place to start [in developing a
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`topical treatment] is with the oral antifungal agents already being used to
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`effectively treat dermatophyte onychomycosis.”). Petitioner’s expert, Dr. Walters,
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`agrees that oral antifungal drugs were generally the standard of care at the time of
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`the invention. Ex. 1005, ¶43. Dr. Walters nevertheless refers to early studies of
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`topical treatments using tioconazole, miconazole and clotrimazole to suggest the
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`skilled artisan had numerous options for topical treatment. Ex. 1005, ¶43. The art
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`may have suggested these and many other agents for topical use but none of them
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`met with clinical success. Ex. 2010, 422; Ex. 2069, 11; Ex. 2027, ¶¶ 54-56.
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`
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`Indeed, those in the art had experimented with multiple structurally variant
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`classes of antifungal agents, including morpholines, allylamines, benzylamines,
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`azoles, imidazoles, and triazoles. Ex. 2050, 90:9-91:11. The art considered older
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`agents like griseofulvin (a mitotic inhibitor) and ketoconazole (an imidazole), and
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`newer agents like itraconazole (a triazole), fluconazole (another triazole),1 and
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`terbinafine (an allyamine). Ex. 2010, 422-27. But none had been proven effective
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`for topical treatment.
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`
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`Even other antifungal compounds in the same broad azole class as
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`efinaconazole exhibited disappointing topical efficacy. For instance, prior to the
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`invention, several other azole compounds such as fluconazole and itraconazole
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`exhibited antifungal activity against T. rubrum and T. mentagrophytes when
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`administered orally. Ex. 1033, S23, S24; see also Ex. 1034, S26; Ex. 2010, 422-
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`23; Ex. 2075, compare 2737 (Tbl. 247-1) with 2848-50. These same compounds,
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`however, failed to treat fungal infections of the nail when used topically. Ex.
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`2010, 422; Ex. 2027, ¶¶ 57-58.
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`Despite attempts to improve nail penetrance using specialized formulations
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`for agents such as amorolfine, terbinafine, and tioconazole, none exhibited
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`therapeutic efficacy. Ex, 2052, 292 (“In the present studies, TNS [terbinafine] was
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`1 While Petitioner points to the FDA approval of itraconazole and fluconazole as
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`supposed evidence that the field was replete with treatments for onychomycosis,
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`including the use of triazole compounds (Ex. 1005, ¶46), these agents were used
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`only for oral administration (and indeed fluconazole has never been approved in
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`the United States to treat onychomycosis). Ex. 2010, 422-23; see also Ex. 2075,
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`compare 2737 (Tbl. 247-1) with 2849-50.
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`17
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`not superior to vehicle in terms of complete cure rate, … and amorolfine 5% nail
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`lacquer did not result in any treatment benefit over and above TNS [and therefore
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`it did no better than placebo].”).
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`Petitioner’s expert recognized the difficulty in identifying effective topical
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`treatments for onychomycosis based on efficacy in skin. For instance, in 1983 he
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`published an article challenging the extrapolation from an agent’s permeability in
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`skin to its properties in nail, as the nail plate’s “permeability properties have been
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`inferred without foundation from the behaviour of other horny tissues.” Ex. 2020,
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`28. Dr. Walters concluded that the “physiochemical criteria governing the
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`selection of therapeutic candidates to treat nail disorders would seem to be very
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`different from the established criteria used for drug selection for the skin.” Id., 32.
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`The art recognized the unpredictability in correlating a compound’s success in skin
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`to its likelihood of also working in nail.
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`Decades later, those working in the field still had significant doubts about
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`what would allow an antifungal agent to penetrate the nail, let alone provide for an
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`effective topical treatment of onychomycosis. Even if an agent could penetrate the
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`nail, this did not guarantee efficacy. Indeed, before he was retained by Petitioner,
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`Dr. Walters admitted that “[t]he fact that therapeutic molecules can penetrate into
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`and permeate across nails in vivo does not necessarily indicate that they will have
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`therapeutic effect.” Ex. 2021, 352.
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`18
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`Accordingly, at the time of the invention and for decades thereafter, the field
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`recognized the difficulty of identifying suitable topical treatments for
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`onychomycosis, even when agents worked effectively in skin and regardless of
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`whether the agent could penetrate keratinized tissue. See Ex. 2010, 422; see also
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`Ex. 2075, 2737, 2739; Ex. 2027, ¶¶ 59-63.
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`III. The Discovery of Efinaconazole was a Breakthrough for the Field
`A. The Claimed Invention and the ’506 Patent
`While researchers struggled for decades to develop topical treatments of
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`
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`onychomycosis, they met with more success developing treatments for fungal
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`infections of the skin. See Ex. 2075, 2737-39. Scientists at Kaken were among
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`those synthesizing and testing potential antifungal candidates to evaluate their
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`efficacy in skin. Ex. 2025, ¶¶ 6, 7.2 One compound, efinaconazole, performed
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`well and demonstrated anti-fungal activity generally comparable to existing
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`antifungal treatments. Ex. 2025, ¶¶ 8-10. Based on this data, Kaken initiated
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`clinical trials for the treatment of tinea pedis, but it ultimately discontinued those
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`trials. Ex. 2025, ¶ 11.
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`
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`In an effort to find a license partner to advance efinaconazole further in
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`clinical trials of tinea pedis, Kaken published some of their skin testing data and
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`2 Citations are made herein to Ex. 2025, which is the Certified English Translation
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`(see Ex. 2026) of Ex. 2024, the Declaration of Yoshiyuki Tatsumi, Ph.D.
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`19
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`presented it at a conference. Ex. 2025, ¶ 9; Ex. 1012, 1; Ex. 1015, 4. Despite
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`efinaconazole’s broad spectrum anti-fungal activity in skin, no one, not even
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`Kaken, sought to develop the drug further. Ex. 2025, ¶¶ 12-13.
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`
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`Years later, the inventors decided to test efinaconazole in nail despite its low
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`affinity to keratin and relatively high molecular weight, which the prevailing view
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`suggested were detrimental to treating onychomycosis. Ex. 2025, ¶ 14; Ex. 2010,
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`Tbl. 2; Ex. 2008, 20. The inventors developed a new model to test a compound’s
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`topical activity against onychomycosis and discovered efinaconazole’s surprising
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`therapeutic effectiveness. Ex. 2025, ¶¶ 14-21. The ’506 patent reports the results
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`of that later testing.
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`
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`The ’506 patent explains that, at the time of the claimed invention, the field
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`lacked a suitable assay to use in evaluating the efficacy of nail treatments, which
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`contributed to the difficulty of identifying effective agents. Ex. 1001, 1:53-2:8.
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`The patent reports a new method for evaluating test compounds in a guinea pig nail
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`model, providing steps for eliminating residual antifungal agent after obtaining test
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`samples that might confound test results. Id., 2:63-3:6, 5:62-6:57.
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`
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`Using the new model, the ’506 patent identifies efinaconazole as an effective
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`compound for treating onychomycosis. While the patent lists nail penetrance as an
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`important factor of efinaconazole’s efficacy, it also identifies other key drivers.
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`For instance, the patent mentions its good nail retention, high activity in the nail
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`20
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`bed, and easy topical application, all while avoiding the side effects of and drug-
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`drug interactions of oral treatments. Id., 3:37-4:7.
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`
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`The ’506 patent evaluates the efficacy of efinaconazole in skin (Examples 1-
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`3 and 5) and in nail (Example 4). As petitioner’s expert points out, the skin data
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`evaluates a different medical indication (Ex. 1005, ¶¶55, 58, 65-67), whereas the
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`nail testing data distinguishes the patent from the prior art evaluation of
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`efinaconazole in vitro and in skin. Dr. Walters notes that the specification
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`discusses the effects of antifungal agents on “skin or nail” but the claims “are
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`directed only to a method of treating a subject having onychomycosis of the nail.”
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`Id., ¶58; Ex. 2050, 63:9-64:2. This confirms the need for nail testing to evaluate
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`efficacy in treating onychomycosis. The first such reports for efinaconazole are in
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`the ’506 patent. Ex. 2027, ¶¶ 64-73.
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`
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`From the nail testing data reported in the patent, the inventors concluded that
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`“KP-103 significantly reduced the number of fungal cells in the nail.” Ex. 1001,
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`16:17-23. This not only demo