UNITED STATES PATENT AND TRADEMARK OFFICE
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`ARGENTUM PHARMACEUTICALS LLC
`Petitioners,
`
`v.
`
`CIPLA LTD.
`Patent Owner and Licensee
`
`Case: IPR2017-00807
`U.S. Patent No. 8,168,620
`
`DECLARATION OF JOHN C. STAINES, JR. IN SUPPORT OF
`PETITIONER’S REPLY TO PATENT OWNER’S RESPONSE
`
`MARCH 6, 2018
`
`Exhibit 1140
`IPR2017-00807
`ARGENTUM
`
`000001
`
`

`

`Inter Partes Review of U.S. Patent No. 8,168,620
`
`Table of Contents
`
`I.
`
`II.
`
`III.
`
`IV.
`
`V.
`
`QUALIFICATIONS...............................................................................................................1
`
`OBJECTIVES.........................................................................................................................2
`
`SUMMARY OF FINDINGS..................................................................................................5
`
`PRODUCT BACKGROUND..............................................................................................13
`
`COMMERCIAL SUCCESS ANALYSIS..........................................................................20
`
`A. Mr. Jarosz Has Not Shown Dymista® to be an “Absolute Success”.............22
`
`1.
`
`Average Growth Rates Alone Do Not Demonstrate Absolute Success............ 22
`
`2.
`Actual Net Revenue Levels & Growth Lower than Jarosz Gross Revenues .... 26
`Mr. Jarosz Has Not Shown Dymista® to be a “Relative Success”................28
`
`B.
`
`C.
`
`D.
`
`1.
`
`2.
`
`3.
`
`4.
`
`Comparisons to Generic-Eroded Sales of Other Brands is Not Meaningful..... 29
`
`Share of Only Brand Sales is Not Meaningful in a Genericized Market............ 34
`
`Share of Brand+Generic Dollar Sales Not Meaningful in a Genericized Market36
`
`1.8% Share of Brand+Generic Prescriptions is Not Significant......................... 38
`
`5.
`Sales Shares Overstated by Failure to Include Competing OTC Products ...... 42
`Dymista Commercial Success Criteria Mr. Jarosz Did Not Consider.........49
`
`1.
`
`2.
`
`Significance Threshold for Brand Pharmaceutical Sales is Comparatively High49
`
`Dymista® Sales Not Significant Relative to Prelaunch Forecasts...................... 55
`
`3.
`Dymista® Sales Not Significant Relative to Costs and Investment.................... 61
`Duonase & “Imitators” Sales Do Not Evidence Commercial Success .........68
`
`1.
`
`2.
`
`3.
`
`4.
`
`5.
`
`Duonase Does Not Practice Challenged Claims 42-44 of the ’620 Patent....... 70
`
`Useful Invention in India Not Necessarily a Useful Invention in the U.S. .......... 71
`
`Imitator Sales Irrelevant to Nonobviousness of ’620 Patent Claims ................. 75
`
`Annual Sales of $0.5 million to $2.6 million Are Not Significant ........................ 77
`
`Duonase Prescription Shares Are Overstated................................................... 79
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`Inter Partes Review of U.S. Patent No. 8,168,620
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`E.
`
`Attempted Entry of Apotex Generic and Duonase Imitators Do Not Evidence
`Commercial Success...........................................................................................82
`
`VI.
`
`NEXUS ANALYSIS .............................................................................................................86
`
`A.
`
`B.
`
`Other Developers Blocked by Previously-Issued Patents..............................87
`
`Dymista® Has Minimal Incremental Benefit Over Concurrent Use of
`Individual Antihistamine and Corticosteroid Products ................................88
`
`C. Mr. Jarosz Has Incorrectly Eliminated Non-Patented Features as Primary
`Drivers of Dymista®’s Sales...............................................................................97
`
`1.
`
`Dymista®’s Low Effective Price to Insurers and Patients................................... 97
`
`2.
`Dymista®’s Increasingly High Marketing “Share of Voice”............................... 103
`Duonase Sales Driven by Factors Unrelated to the ’620 Patent .................110
`
`D.
`
`1.
`
`2.
`
`3.
`
`Duonase is a “Branded Generic” with Sales Driven by Price .......................... 111
`
`Duonase Sales Reflect Demand for Azelastine Alone .................................... 118
`
`10 Non-Imitator Products Indicate Sales Are Not Driven by ‘620 Patent ........ 119
`
`4.
`Marketing Does Not Claim Combination Superiority Over Separate Use....... 120
`Meda-Cipla License Agreement Does Not Demonstrate Nexus..................120
`
`E.
`
`VII. CONCLUSION ...................................................................................................................123
`
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`Inter Partes Review of U.S. Patent No. 8,168,620
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`I.
`
`QUALIFICATIONS
`
`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. Navigant Economics provides
`
`expertise primarily in economics, finance, public policy, and business strategy. I am
`
`knowledgeable in the fields of microeconomics, industrial organization, financial
`
`economics, and statistics, and have particular expertise in applying the tools of these
`
`disciplines to legal disputes arising in the pharmaceutical and related industries.
`
`2. My educational background includes a B.A. in Economics and
`
`M.P.M. in Public Policy from the University of Maryland and an M.B.A. in
`
`Business Economics and Finance from the University of Chicago. Since 1984, I
`
`have worked as a consultant on economic, financial, statistical, and general business
`
`issues arising in commercial litigation disputes. My work primarily has involved
`
`analyzing competitive issues and estimating commercial damages associated with
`
`various types of legal and regulatory matters, most often relating to the
`
`pharmaceutical industry. I have been accepted as an expert witness in Federal Court
`
`to opine on economic issues arising in pharmaceutical-related patent and antitrust
`
`litigation. A copy of my curriculum vitae is included as Appendix A to this report.
`
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`Inter Partes Review of U.S. Patent No. 8,168,620
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`3. Navigant Economics is being compensated for the work I perform
`
`in connection with this case at my standard hourly rate of $535. Part of the work
`
`underlying this report was performed by staff of Navigant Economics working
`
`under my direction. Payment of fees to Navigant Economics associated with work
`
`performed on this matter is not contingent upon or in any way affected by the nature
`
`of my opinions or the outcome of this litigation.
`
`II. OBJECTIVES
`
`4.
`
`I have been retained by the Petitioners in this matter, Argentum
`
`Pharmaceuticals LLC. ( “Argentum”) to render independent expert opinions con-
`
`cerning the existence and sources of any commercial success that may be associated
`
`with the allergic rhinitis (“AR”) treatments, Dymista® and Duonase (and certain
`
`Duonase “imitator” products), as they may relate to the obviousness of the technolo-
`
`gy claimed by U.S. Patent Number 8,168,620 (the “’620 patent”), entitled “Combi-
`
`nation of Azelastine and Steroids.”1 Dymista® was marketed in the United States as
`
`an AR treatment by Meda AB (“Meda”),2 and currently is marketed by Mylan, Inc.
`
`1
`
`2
`
`Exhibit 1001.
`
`Exhibit 2068, p. 2.
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`(“Mylan”).3 Duonase is marketed in India by Cipla Ltd. (“Cipla” and “Patent Own-
`
`er”).4 The ’620 patent was issued to Cipla on May 1, 2012,5 and is exclusively li-
`
`censed in the United States to Mylan.6 On February 2, 2017, Argentum petitioned
`
`the Patent Trial and Appeal Board (“PTAB”) to institute an inter partes review of
`
`3
`
`4
`
`5
`
`6
`
`Exhibit 2149, ¶17. Meda was acquired by Mylan in 2016. (Exhibit 2100.)
`
`Exhibits 2072, 2087, 2088, 2126.
`
`Exhibit 1001.
`
`Exhibit 2049. Cipla exclusively licensed intellectual property covering
`
`azelastine/fluticasone combination nasal spray in the United States and cer-
`
`tain other territories to MedPointe Healthcare, Inc. on November 13, 2006.
`
`(Exhibit 2019). This license was transferred to Meda AB upon Meda’s acqui-
`
`sition of MedPointe in 2007 (Exhibit 1057; Exhibit 2050), and subsequently
`
`to Mylan upon Mylan’s acquisition of Meda in 2016 (Exhibit 2100).
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`the validity of claims 1, 4-6, 24-26, 29, and 42-44 of the ’620 patent,7 which the
`
`PTAB did institute on October 21, 2017.8
`
`5.
`
`I understand that the commercial success of a product allegedly
`
`containing technology claimed by an asserted patent may in some cases represent a
`
`secondary indicium that the patented technology was nonobvious.9 In this context,
`
`counsel for Argentum has asked me to evaluate the opinions and supporting evi-
`
`dence expressed in the Declaration of John C. Jarosz,10 in which Mr. Jarosz con-
`
`7
`
`8
`
`9
`
`10
`
`Argentum Pharmaceuticals LLC v. Cipla, Ltd., U.S. Patent and Trademark
`
`Office, Patent Trial and Appeals Board, IPR2017-00807, Petition for Inter
`
`Partes Review, filed on February 2, 2017 (“Petition”), p. 2.
`
`Argentum Pharmaceuticals LLC v. Cipla, Ltd., U.S. Patent and Trademark
`
`Office, Patent Trial and Appeals Board, IPR2017-00807, Paper No. 12, Deci-
`
`sion, Institution of Inter Parties Review, entered on October 21, 2017, pp. 26-
`
`27.
`
`Graham v. John Deere, Co., 383 U.S. 1, 17–18 (1966).
`
`Second Declaration of John C. Jarosz, filed on November 20, 2017 as Exhibit
`
`2149 (“Jarosz Declaration”).
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`cluded that Dymista® and Duonase (in combination with its “imitator” products in
`
`India) represent “marketplace successes” due, in large part, to features claimed by
`
`the ’620 patent.11 My evaluation involves assessing: (1) whether there is sufficient
`
`evidence to conclude that Dymista® and Duonase/imitators have achieved a level
`
`and type of commercial success that would have motivated others to have developed
`
`a combination azelastine/fluticasone treatment as described by the challenged claims
`
`of the ’620 patent had that technology been obvious; and (2) whether any such
`
`commercial success that may exist has a causal nexus to the challenged claims of the
`
`’620 patent.
`
`III.
`
`SUMMARY OF FINDINGS
`
`6. This evaluation, and specifically my review of the Jarosz
`
`Declaration, leads me to the opinion that there is insufficient evidence to conclude
`
`that Dymista® or Duonase have achieved commercial success for the following
`
`reasons.
`
`11
`
`Id., at ¶¶4, 114.
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`(cid:120)
`
`(cid:120)
`
`Mr. Jarosz’ analysis of Dymista®’s “Absolute Success,” based solely on
`Cumulative Average Growth Rates in dollar sales and prescriptions,
`does not support his commercial success conclusion.
`
`- Cumulative Average Growth Rates by themselves do not address
`the significance and commercial success of Dymista®’s sales.
`
`- The average revenue growth rate is overstated because it is based
`on Dymista®’s $92 million to $157 million nominal gross revenues
`rather than its $63 million to $84 million actual net revenues,
`which reflects deduction of insurer rebates and other discounts.
`
`- Use of cumulative average growth rates masks the prompt
`flattening and then downward trend in Dymista® sales over time.
`
`Mr. Jarosz’ analysis of Dymista®’s “Relative Success” compared to
`other antihistamine and corticosteroid nasal sprays used to treat AR
`does not support his commercial success conclusion.
`
`- Comparison only to other brand product sales is not meaningful
`because sales of most brands have been significantly eroded by
`competition from generic equivalents prior to and continuing after
`Dymista®’s launch.
`
`- Dymista®’s sales revenues are not significant when appropriately
`compared to sales revenues achieved by comparable brand AR
`nasal sprays before the entry of their generic versions.
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`- Dymista®’s share of combined brand and generic sales revenues is
`not meaningful because of distortion by: 1) the large number of
`generic alternatives that compete on price rather than on marketing;
`and 2) Mr. Jarosz’ calculation being based on nominal gross
`revenues rather than actual net revenues.
`
`- Dymista®’s share of combined brand and generic nasal spray
`prescription quantities, ranging from 1.2% to 1.8%, does not
`support a conclusion that Dymista®’s has been a “relative success.”
`
`- Even Dymista®’s <2% prescription
`the
`share overstates
`significance of its sales because it excludes OTC versions of these
`products, oral antihistamines, and other AR treatments.
`
`(cid:120)
`
`Other factors Mr. Jarosz did not consider indicate that Dymista® sales
`have not been significant, and thus, are not a commercial success.
`
`- Dymista® gross revenues of $92 million to $157 million are not
`large relative to brand pharmaceutical products generally, which
`typically require large sales revenues to recover significant past
`R&D investment and to fund current marketing activities.
`
`- Dymista®’s actual 2013 to 2015 net revenue of $63 million to $84
`million are not significant compared to Meda’s pre-launch net
`revenue forecast of $155 million to $544 million.
`
`- The estimated $52 million present value of operating profits
`generated from Dymista® sales over 2012 to 2017 is insufficient to
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`its conservatively-estimated $98 million
`recover
`investment.
`
`in R&D
`
`(cid:120)
`
`Mr. Jarosz’s analysis of sales made in India by Cipla’s Duonase and its
`“imitators” does not support a finding of commercial success.
`
`- Duonase does not contain edetate disodium, as required by claims
`42 to 44 of the ‘620 patent, and therefore, Mr. Jarosz’ conclusions
`regarding Duonase’s purported commercial success as an indicium
`of nonobviousness do not apply to these claims.
`
`- A useful invention in India is not necessarily a useful invention in
`the United States because developing the ’620 patent technology
`for marketing approval is far more rigorous and costly in the
`United States than it is in India.
`
`- The 23% average annual growth rate and 24% to 26% shares for
`combined sales of Duonase and 6 “imitator” products are
`inapplicable because another developer would not have been
`motivated to develop the ’620 patent technology by imitator
`product sales the developer could not appropriate. The average
`growth rate was only 15% and sales shares only 12% for Duonase
`alone.
`
`- The 15% cumulate average growth rate in Duonase sales from
`2004 to 2017 does not demonstrate the significance of those sales
`or whether the product has achieved absolute success.
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`- Duonase’s sales revenues have averaged just $1.6 million per year
`since 2004, which reflects that it competes as a generic product.
`These sales are not significant compared to either U.S. Dymista®
`sales of $92 million to $157 million, or U.S. Dymista® royalty
`revenue received by Cipla, estimated to be $12.6 million in 2014.
`
`- Mr. Jarosz does not consider whether Duonase sales are significant
`relative to operating costs and R&D investment, or to prelaunch
`forecasts/expectations.
`
`- Duonase’s 12% sales share is overstated because it excludes other
`AR nasal spray products (other than azelastine, fluticasone, and
`mometasone), prescription oral antihistamines, OTC products, and
`other AR treatments from the marketplace denominator.
`
`(cid:120)
`
`Mr. Jarosz incorrectly infers that the commitment of resources by
`Apotex and the Duonase imitators to launch versions of Dymista® and
`Duonase is indicative of commercial success because these generic
`competitors bear much less significant cost, time, and risk than would
`be borne by an alternative developer of the ’620 patent technology.
`
`7. My analysis leads me to the further conclusion that those
`
`commercial sales Dymista® and Duonase have generated do not have a causal nexus
`
`to the ’620 patent claims for the following reasons.
`
`(cid:120)
`
`If others would have been blocked from developing the azelastine/
`fluticasone combination drug by the “Hettche” and/or “Phillipps”
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`(cid:120)
`
`(cid:120)
`
`(cid:120)
`
`(cid:120)
`
`(cid:120)
`
`patents, relating to azelastine and fluticasone, respectively, Dymista®’s
`commercial performance has no nexus to the challenged claims of
`the’620 patent.
`
`Dymista® is not significantly differentiated from existing AR
`treatments, including concurrent use of uncombined antihistamines and
`corticosteroids, as reflected in insurers’ resistance to reimburse it.
`
`Meda substantially reduced Dymista®’s effective price by providing
`large rebates to insurers and extensive copayment subsidies to patients.
`
`Dymista® benefited from an increasingly high share of voice in
`marketing to physicians, as generic entry and OTC conversion reduced
`marketing by other prescription brands, and as Meda’s salesforce
`shifted promotion from Astepro® to Dymista®.
`
`Meda’s marketing support for Dymista® did not claim any clinical
`superiority over concurrent use of uncombined azelastine and
`fluticasone products.
`
`Duonase is effectively supplied as a generic product that competes
`primarily on price rather than on any differentiated product features
`attributable to the ’620 patent. Its prices are similar to the “imitator”
`and numerous other AR nasal spray products supplied by numerous
`“branded generic” competitors in India.
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`(cid:120)
`
`(cid:120)
`
`(cid:120)
`
`In contrast to the U.S. marketplace, there is no standalone azelastine
`nasal spray in the Indian market, according to Mr. Jarosz’ data, which
`suggests that some unknown portion of Duonase purchases could be
`made by those who are interested only in the azelastine component of
`the drug.
`
`combination
`non-imitator
`10
`by
`penetration
`sales
`The
`azelastine/fluticasone products in the Indian market suggests that some
`or all of Duonase’s sales have not been driven by features unique to the
`’620 patent.
`
`Meda’s licensing of the ’620 patent from Cipla does not indicate a
`nexus to commercial success because Mr. Jarosz has not shown that the
`$1.5 million fee was significant, that it represents the patent’s value, or
`that it represents actual, rather than predicted, commercial success.
`
`8. The opinions I express herein are based upon my personal
`
`knowledge, experience, and expertise, as well as upon evidence filed in this
`
`proceeding and my independent research in this case. This evidence consists of
`
`publicly-available information and documents collected by me and by my staff, as
`
`well as information I have requested and that has been provided to me by
`
`Petitioner’s attorneys, which includes case filings, deposition transcripts and
`
`exhibits, and documents and data filed by the parties in this proceeding.
`
`Specifically, I have considered the exhibits identified throughout this Declaration,
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`including the Jarosz Declaration (Exhibit 2149) and documents referenced therein.
`
`The documents and data I cite in this Declaration are the types that economists
`
`consider to be reliable and upon which economists typically rely.
`
`9.
`
`I reserve the right to amend or supplement my opinions based on
`
`further information I may receive after the date of this report, including, without
`
`limitation, documents and data filed by the parties, deposition transcripts and
`
`exhibits, legal submissions, affidavits/declarations, and expert declarations.
`
`10. In the remaining sections of this Declaration I provide a detailed
`
`evaluation of Mr. Jarosz’ conclusions and supporting analysis regarding the
`
`commercial success of products allegedly practicing the challenged claims of the
`
`’620 patent as an indicium that the claimed technology was nonobvious. I begin by
`
`describing the subject products, Dymista® and Duonase, and the products with
`
`which they compete. I then analyze the validity of Mr. Jarosz’ opinion that the
`
`commercial sales performance of Dymista® in the United States, as well as Duonase
`
`and its imitators in India, represent a “commercial success” in the context of this
`
`obviousness inquiry. I also assess the commercial success significance Mr. Jarosz
`
`attributes to Apotex’s development of a generic version of Dymista® in the United
`
`States, and the market launch of imitator Duonase products in India. Finally, I
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`examine Mr. Jarosz’ analysis supporting his opinion of a nexus between the
`
`commercial performance of Dymista® and Duonase, and the challenged claims of
`
`the ’620 patent, as well as the validity of Mr. Jarosz’ inference of nexus from
`
`Meda’s willingness to license the ’620 patent from Cipla to allow it to develop
`
`Dymista®.
`
`IV. PRODUCT BACKGROUND
`
`11. The U.S. Food and Drug Administration (“FDA”) granted Meda
`
`approval to market Dymista® for the treatment of seasonal AR on May 1, 2012.12
`
`Dymista® is a combination of two pre-existing nasal spray products separately
`
`approved for treating AR:13 1) the antihistamine, azelastine hydrochloride, which is
`
`also marketed by Meda under the brand names Astelin® and Astepro® (Astepro® is a
`
`“sweetened” and higher-strength follow-on to Astelin®); and 2) the corticosteroid,
`
`12
`
`13
`
`Exhibit 2067.
`
`Exhibit 1058 at p. 3. Astelin® was also approved for the treatment of Vaso-
`
`motor Rhinitis. Astepro® was also approved for the treatment of Perennial
`
`AR. Flonase® was also approved for the treatment of Perennial AR and of
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`Non-Allergic Rhinitis. (Id.)
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`fluticasone propionate, marketed by GlaxoSmithKline under the brand name
`
`Flonase®.14 As indicated in Ex. 1,15 generic versions of both Astelin® and Flonase®
`
`were available in generic form prior to Dymista®’s September 24, 2012 market
`
`launch.16 Generics for Astepro® became available less than two years later, in mid-
`
`2014.17
`
`12. Concurrent administration of an antihistamine and a corticosteroid
`
`as separate products has been a common practice.18 Antihistamines are more
`
`effective at treating the “early phase response” associated with AR and
`
`14
`
`15
`
`16
`
`17
`
`18
`
`Exhibit 1076 at p. 24; Exhibit 1058 at p. 3.
`
`I have prepared various tables and graphs to assist my analysis which are at-
`
`tached hereto and are referenced as “Ex. ___.” The underlying information I
`
`used to prepare my exhibits is specifically cited on each exhibit.
`
`Exhibit 2093 at p. 2.
`
`Exhibit 2053 at p. 194.
`
`Exhibit 1003 at ¶¶68; Exhibit 2053 at pp. 70-71, 73; Exhibit 2073 at p. 1; Ex-
`
`hibit 2082 at p. 7.
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`corticosteroids are more effective at treating the “late phase response”.19 Similarly,
`
`decongestant products are often used concurrently with antihistamine products due
`
`to their complementary effects: decongestants work on congestion but not on other
`
`AR symptoms, while antihistamines tend to work best on itching, sneezing, and
`
`runny nose.20 In fact, decongestants and antihistamines “were often combined with
`
`great effect in products like Allegra-D®, Claritin-D®, and Zyrtec-D®.”21
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`13.
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`Development of the combination azelastine/fluticasone product
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`that eventually was marketed as Dymista® appears to have been initiated by
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`MedPointe in 2002 as a life-cycle management strategy to extend the life of
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`Astelin®’s patent protected sales.22 Astelin® had been approved for marketing in the
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`United States since 1996,23 and would eventually face entry by generic equivalents
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`19
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`20
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`21
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`22
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`23
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`Exhibit 1003 at ¶¶27-28, 52-55; Exhibit 2147 at ¶134.
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`Exhibit 2147 at ¶¶42, 47.
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`Exhibit 2147 at ¶42; Exhibit 2053 at p. 100.
`
`Exhibit 2048 at p. 4; Exhibit 2054 at pp. 10-11; Exhibit 2056 at p. 11.
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`Exhibit 1058 at p. 3; Ex. 1.
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`in 2010.24 In November 2006, MedPointe obtained an exclusive license from Cipla
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`to intellectual property related to a azelastine/fluticasone combination product in the
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`United States and certain other territories, which included Cipla’s application for
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`what later would be issued as the ’620 patent.25 After acquiring Medpointe in
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`2007,26 Meda continued development of Dymista® through its 2012 FDA
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`approval,27 and then marketed the product up to its acquisition by Mylan in 2016.28
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`14. Dymista® competes with a number of other pharmaceutical
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`products that are used to treat AR, which primarily include antihistamine-only nasal
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`sprays/tablets and corticosteroid-only nasal sprays, as well as decongestants,
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`cromolyn, and leukotriene.29
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`The intranasal formulations of corticosteroid
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`24
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`25
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`26
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`27
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`28
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`29
`
`Exhibit 1060; Exhibit 1061.
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`Exhibit 2049 at pp. 1, 28.
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`Exhibit 1057.
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`See, e.g., Exhibit 1058 at p. 1; Exhibit 2067.
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`See, e.g., Exhibits 2066, 2073, 2076, 2093, 2094, 2100; and Exhibit 2149 at
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`¶16-17.
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`Exhibit 1003 at ¶29; Exhibit 2053 at pp. 67-74; Exhibit 2147 at ¶¶37-44, 47.
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`treatments are generally used to treat AR because of side effects associated with the
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`oral forms.30 The portion of these treatments supplied by generic producers has
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`increased significantly over time, as generic versions of several brand AR treatments
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`became available for the first time.31 The generic share of just nasal spray product
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`prescriptions is reported to have increased from 40% in 2007/2008 to 70% in 2012,
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`80% in mid-2014,32 and further to 96% as of early 2017.33,
`
`15. Ex. 1 shows that this shift corresponded to first-time generic
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`launches for several brand nasal sprays, which include Flonase® in 2006, Nasarel®
`
`in 2007, Nasacort AQ® in 2011, Astelin® in 2010, Astepro®, Patanase®, and
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`Rhinocort Aqua® in 2014, and Nasonex® in 2016.34
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`In more recent years, some
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`prescription nasal sprays have converted to OTC status,35 including Nasacort AQ®
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`30
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`31
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`32
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`33
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`34
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`35
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`Exhibit 2147 at ¶¶44, 138.
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`See, e.g., Exhibit 2079 at p. 14; Exhibit 2149 at ¶¶23-25 and Ex. 1.
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`Exhibit 2074 at p. 14, Exhibit 2075 at p. 2.
`
`Exhibit 2149 at Tab 1.
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`Exhibit 2149 at Tab 1; Ex. 1.
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`Ex. 1. See also, Ex. 2076 at p. 3.
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`in 2014, Flonase® in 2015, Rhinocort® Aqua and Nasonex® in 2016 and Veramyst®
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`in 2017. Ex. 1 shows that as a result of these generic and OTC shifts, 6 of the 8
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`prescription nasal spray treatments (unique active ingredients) marketed in 2006
`
`experienced first-time generic entry and/or OTC conversion over the next 10 years,
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`leaving only 2 treatments, beclomethasone (Beconase AQ® / Qnasl®)36 and
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`ciclesonide (Omnaris®/Zetonna®), marketing prescription nasal spray brands without
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`bioequivalent generic competition by the end of 2016. As a result of Dymista®’s
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`launch in 2012, the total number of prescription brand nasal sprays without generic
`
`competition
`
`in
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`2016
`
`is
`
`now 3
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`(beclomethasone,
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`ciclesonide,
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`and
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`azelastine/fluticasone.37
`
`16. Ex. 1 also shows that the non-sedating (“second-generation”) oral
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`antihistamines used to treat AR, which include the “blockbusters,” Claritin®
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`36
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`Beconase AQ ®is a very small-selling old product that does not have patent
`
`protection, but no suppliers have elected to market a generic version of the
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`product. (See Ex. 1 and Exhibit 1123.)
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`37
`
`Ex. 1 indicates that the antihistamine nasal spray, Patanase®, launched after
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`2006 (in 2008) but experienced generic entry in 2014.
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`(loratadine),
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`Clarinex®
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`(desloratadine),
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`Zyrtec®
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`(cetirizine),
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`Allegra®
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`(fexofenadine),38 and Xyzal® (levocetirizine), all experienced generic entry prior to
`
`2011, at which time Claritin® and Zyrtec® were immediately converted to OTC
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`status. Allegra® converted to OTC in early 2011 and Xyzal® very recently
`
`converted in early 2017, while Clarinex® still remains available only by prescription.
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`The numerous first generation (sedating) antihistamines, such as Benadryl®
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`(diphenhydramine) and Chlor-Trimeton® (chlorpheniramine), underwent generic
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`entry and OTC conversion long before the non-sedating antihistamines.39
`
`17. Duonase is another combination azelastine/fluticasone nasal spray
`
`treatment for AR that purportedly also incorporates the ’620 patent technology.40
`
`Patent Owner, Cipla, launched Duonase in India in April 2004.41 Since that time, 16
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`other combination/fluticasone nasal spray products have entered the Indian market,
`
`38
`
`39
`
`40
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`41
`
`Exhibit 2147 at ¶38; Exhibit 2053 at p. 100.
`
`Exhibit 2147 at ¶¶38-39.
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`Exhibit 2149 at ¶¶19, 55.
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`Exhibit 2072; Exhibit 2149 at ¶19.
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`of which 6 “imitator” products reportedly embody the challenged claims of the ’620
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`Inter Partes Review of U.S. Patent No. 8,168,620
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`patent, leaving 10 which do not.42
`
`V.
`
`COMMERCIAL SUCCESS ANALYSIS
`
`18. I understand that the commercial success of a product practicing
`
`features of a patented invention can represent a secondary indicium of that
`
`invention’s nonobviousness in the context of determining the patent’s legal
`
`validity.43 The underlying rationale is that the product’s actual commercial success
`
`suggests others would have been motivated previously to have developed and
`
`marketed such a product before the Patent Owner, had the invention been obvious.44
`
`I further understand that a Patent Owner’s claim of the subject product’s actual
`
`“commercial success [is] usually shown by significant sales in a relevant market.”45
`
`42
`
`43
`
`44
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`45
`
`Exhibit 2072; Exhibit 2123 at p. 23, 26; Exhibit 2124 at p. 5; and Exhibit
`
`2149 at ¶20.
`
`Graham v. John Deere, Co., 383 U.S. 1, 17–18 (1966).
`
`See, e.g., Exhibit 1065 at pp. 10-11; Exhibit 1124 at p. 2.
`
`J.T. Eaton & Co. Inc. v. Alt. Paste & Glue Co., 106 F.3d at 1563, 1571 (Fed.
`
`Cir. 1997).
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`Below I analyze whether the evidence presented by Patent Owner’s expert in this
`
`case, Mr. Jarosz, is sufficient to support his opinions that U.S. sales of Dymista® and
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`Indian sales of Duonase and its imitators have been significant and represent
`
`evidence of commercial success as a secondary indicium of nonobviousness.
`
`19.
`
`Mr. Jarosz analyzes commercial success for Dymista® in the
`
`United States and Duonase in India in terms of “Absolute Success” and in terms of
`
`“Relative Success.”46 Based on this analysis, he concludes that Dymista® and
`
`Duonase (in combination with its “imitator” products) each represent a “marketplace
`
`success,”47 which presumably equates to the “commercial success” he has been
`
`tasked to analyze. In the sections below, I evaluate Mr. Jarosz’ conclusions
`
`supporting his analysis regarding Dymista®’s and then Duonase’s alleged absolute
`
`and relative success.
`
`46
`
`47
`
`Exhibit 2149 at ¶¶37-39, 50-54 (“Absolute Success”). 40-49, 55-56 (“Rela-
`
`tive Success”).
`
`Exhibit 2149 at ¶¶4, 35, 114.
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`A. Mr. Jarosz Has Not Shown Dymista® to be an “Absolute Success”
`
`20. The evidence Mr. Jarosz presents to support his opinion that
`
`Dymista®’s sales represent an “absolute success” consists exclusively of his
`
`calculations showing that Dymista® prescriptions grew at an average annual rate of
`
`14.5%, from 641,212 in 2013 to 963,299 in 2016, and that its reported sales revenue
`
`grew at an average annual rate of 30.9%, from $92 million in 2013 to $157 million
`
`in 2015.48 In my opinion, this analysis is insufficient to support that Dymis