REDACTED- SUBJECT TO PROTECTIVE ORDER
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`
`
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`
`
`TORRENT PHARMACEUTICALS LIMITED
`and
`APOTEX, INC. AND MYLAN PHARMACEUTICALS INC.,
`Petitioners,
`
`Vv.
`
`NOVARTIS AG AND MITSUBISHI PHARMA CORP.,
`Patent Owners.
`
`
`Case IPR2014-00784
`Case IPR2015-00518
`Patent 8,324,283 B2
`
`
`DECLARATION OF PROF. JOEL W. HAY
`
`.
`|
`|
`
`Pelition for Inter Partus Review
`
`Page 1 of 152
`
`Biogen Exhibit 2209
`Mylanv. Biogen
`IPR 2018-01403
`
`;
`
`Of U.S. Patent 6,324.283
`
`
`
`PENGAD800-631-691
`
`Exhibit
`alORRENT— 1041
`apie
`DEPOSITION
`EXHIBI
`
`~—_
`
`ae
`
`Page 1 of 152
`
`Biogen Exhibit 2209
`Mylan v. Biogen
`IPR 2018-01403
`
`

`

`TABLE OF CONTENTS
`
`I
`
`IL.
`
`TT.
`
`INTRODUCTION... cece ececeeseeseesesscesaceeeserseaseneeaeeseeeaeessesenenseeseeseas 1
`
`BACKGROUND AND QUALIFICATIONS. .0...ceeceeceeseseeseeeeetseees 2
`
`RELEVANT LEGAL CONCEPTS. o0..cccccccecccsseseeeeeseeteneeeaseeseesenens 7
`
`A.-Commercial Success... ee cceececsceeseeseseeseeeaeceeasessesseseenersteseseessesenees 8
`
`IV.
`
`V.
`
`B.
`
`Long-Felt but Unmet Need. oe cccesesesesseceesseessessesseessestereeees 9
`
`SUMMARYOF OPINIONS. 0.0....cccccecceeceeseeceeeeesseseesseceesseeseeseeeeees 10
`
`OPINIONS AND THE REASONS AND BASES FOR
`
`MY OPINIONS. ....ceccecccceeceeescesccesecesccaseessesaceaeceerevensesseesseseeaseeeseaes 13
`
`A.—Relevant Market 0... ccccccseccnsesseseeseeceeeseneeerseesaesaeseesesestsseeeeseess 15
`
`1.
`
`2.
`
`Dr. Blackburn Makes No Attempt to Actually
`Define the Relevant Market and Excludes Key
`Drugs from His Analyses... ccc cceseeeneceseteeeneceastneeeanseneeae 15
`
`Dr. Blackburn Fails to Use Accurate and Reliable
`MS Drug Sales Data... eecessecsecsscssnsesseecseeeneeseesesasseessess 21
`
`B.
`
`No Showing of Commercial Success.........cccccccccsessscssceseesseessenseeeeeaes 35
`
`1.
`
`2.
`
`3.
`
`4.
`
`5.
`
`6.
`
`Gilenya Sales and Market Share
`
`
`Dr. Blackburn Does Not Address Profitability or
`ROT, Both Cut Against a Finding of Commercial
`SUCCESS, 0... ceeseenceseceneceeeneeeeeseeeenseeeensersceaecsecaesatsaesaesieeaseseeatens 40
`
`bducucucesssssssssevaccessusecseecceserevevevenuacsecesecesceceersutaas 35
`
`Gilenya Does Not Have Economic Value. ............ccccscseeeeee 48
`
`Novartis’ Financial Impact of Gilenya........0.. cose eeeserereeeees 51
`
`AOS. Loc cccccccesccccuscvevecereuacevseccecscessenauestsesceseussecedeusecsuuauassetsceteecs
`
`Novartis’ Promotion and Marketing: No Nexus
`with Patent Claims, But at Least Partially Driving
`Novartis’Promotion and Marketing: All Patient
`Testimonials in Dr. Blackburn’s Declaration Are
`Unreliable Because They Were Paid for by
`NOVAITUIS. 0.0.0... ccecccccsesecccccssseeseeceececcegacauuctececeuseusersesesceuauseserseverss 57
`
`53
`
`DECLARATION OF
`PROF. JOEL W. HAY
`U.S. PATENT NO. 8,324,283 B2
`Page 2 of 152
`
`CASE NO. IPR2014-00784, IPR2015-00518
`
`-ii-
`
`Page 2 of 152
`
`

`

`7.
`
`Dr. Blackburn’s Arguments about Gilenya’s
`Premium Pricing a1[Azar
`TEES © IMCOTTECE. eee eee eceeeeececucaeeeeceeceaueeceseaanees 59
`
`C.
`
`NO NOXUS........cccccccccccsseeseessosessessecensccnsenseececaceseesseneseaaseeaececseeseceescetees 62
`
`1.
`
`2.
`
`3,
`A,
`
`5.
`
`Dr. Kent’s Opinion Is that All Claims of the ‘283
`Patent Were Either Obvious or Disclosed in the
`Prior Art. oo. ccccscecceccceccccssccssseeeeeececcsceeesscunessecesceuccaseccuscuseesesres 62
`
`Dr. Blackburn Does Not Establish a Nexus
`Between U.S. Sales of Gilenya and the Claims of
`the ‘283 Patent. 2... ccceccecsecssceseeseceecseeseeeseteneseeeseeeeeeeneeneees 66
`
`No Nexus Shown with ne to Why Gilenya
`No Nexus Shown with Regard to
`a :
`leccescesscescsenseaucasensevatencensesrhestesseaesensesseneserseasees 70
`
`69
`
`No Nexus Shown with Regard to FDA Approval
`ANG ROVICW. oo... cecceecceeeeeseeseeeeeseceseeceeeseesaeeeceacnecaecateaseatentaes 72
`
`D.
`
`No Long-Felt But Unmet Need... cccccseceteccesseesesteetsneseneeees 75
`
`VI.
`
`VIL
`
`MISCELLANEOUS. ....ccccccecscssscsseeseeseeseceneescenseseeeeseesesssssesesssaesecas 76
`
`EXHIBITS AND RESERVED RIGHTS... ceececceseteesceteeeeeseeeee 76
`
`DECLARATION OF
`PROF. JOEL W. HAY
`U.S. PATENT NO. 8,324,283 B2
`
`Page 3 of 152
`
`CASE NO. IPR2014-00784, IPR2015-00518
`
`~iii-
`
`Page 3 of 152
`
`

`

`IL.
`
`INTRODUCTION.
`
`1.
`
`I, Professor Joel W. Hay, Ph.D., submit this Declaration in reply to the
`
`April 3, 2015 Declaration of David Blackburn, Ph.D. on behalf of Apotex, Inc.,
`
`Mylan Pharmaceuticals Inc. and Torrent Pharmaceutical Inc. (Petitioners) in the
`
`case captioned above before the Patent Trial and Appeal Board (PTAB).
`
`2.
`
`A copy of my curriculum vitae and a listing of legal cases where I
`
`have testified at trial or by deposition since 2011 are attached as AttachmentA.
`
`3.
`
`This Declaration discloses my opinions regarding, among other
`
`things, certain “secondary considerations” as they pertain to U.S. Patent No.
`
`8,324,283 B2 (“the ‘283 patent”).
`
`4.
`
`My opinion is that Dr. Blackburn has not established commercial
`
`success of or long-felt unmet need for Gilenya or the ‘283 patent. Moreover, none
`
`of the mdicia of commercial success or long-felt unmet need that he discusses have
`
`any nexusin the claimsof the ‘283 patent.
`
`5.
`
`I reserve the right to supplement this opinion as new or additional
`
`information becomesavailable to me.
`
`6.
`
`[am being compensated for my testimony in the present case at my
`
`standard rate of $900.00 per hour, plus any reasonable out-of-pocket expenses. No
`
`payments to me are contingent upon the outcome of this or any other hearings or
`
`litigation or upon the nature of my opinions.
`
`DECLARATION OF
`PROF. JOEL W. HAY
`U.S. PATENT NO. 8,324,283 B2
`
`Page 4 of 152
`
`CASE NO. IPR2014-00784, IPR2015-00518
`
`-|-
`
`Page 4 of 152
`
`

`

`Il.
`
`BACKGROUND AND QUALIFICATIONS.
`
`7.
`
`In 1974, I received my B.A. in Economics, summa cum laude, from
`
`Amherst College.
`
`I then went on to receive my M.A. in Economics in 1975 and
`
`my M.Ph. in Economics in 1976 from Yale University.
`
`In 1980, I received my
`
`Ph.D. in Economics from Yale.
`
`8.
`
`I am a tenured Full Professor and Founding Chair of Pharmaceutical
`
`Economics and Policy in the School of Pharmacy, with joint appointments in the
`
`Department of Economics and at the Schaeffer Center for Health Policy and
`
`‘ Economics at the University of Southern California (USC).
`
`I also served for 15
`
`years as the USC Project Coordinator for the Rand Evidence-Based Medicine
`
`Practice Centers of Southern California funded by the U.S. Agency for Health
`
`Research and Quality.
`
`| am a Health Economics Research Scholar at the UCLA
`
`Center for Pediatric Vaccine Research.
`
`I am a founding member and founding
`
`Executive Board member of the American Society for Health Economics
`
`(ASHEcon) and a founding member and founding Executive Board memberofthe
`
`International Society of Pharmacoeconomics and Outcomes Research (ISPOR).
`
`9.
`
`From 1978 to 1980, I was an Assistant Research Professor at USC.
`
`Then from 1980 to L984,
`
`I was an Assistant Professor in the Department of
`
`Behavioral Sciences and Community Health and Department of Economicsat the
`
`University of Connecticut.
`
`I was also a Senior Policy Analyst with Project Hope
`
`DECLARATION OF
`PROF. JOEL W. HAY
`U.S. PATENT NO. 8,324,283 B2
`
`Page 5 of 152
`
`CASE NO. [PR2014-00784, IPR2015-00518
`
`-2-
`
`Page 5 of 152
`
`

`

`from 1983 to 1985, Then from 1985 to 1992, I was a Senior Research Fellow at
`
`the Hoover Institution at Stanford University.
`
`In 1992 I was recruited to USC to
`
`found the Department of Pharmaceutical Economics and Policy.
`
`I have been a
`
`tenured USC faculty membersince then.
`
`10.
`
`I have authored or coauthored over 500 scientific abstracts, reports,
`
`and presentations, including 180+ peer-reviewed scientific articles in the fields of ©
`
`pharmaceutical markets, pharmaceutical economics, health economics, outcomes
`
`research, disease management, statistics, econometrics, epidemiology, and health
`
`care in journals including: American Journal of Cardiology; American Journal of
`
`Health-Systems Pharmacy; American Journal ofManaged Care; American Journal
`
`of Public Health; Archives of Neurology, Cancer; CNS Drugs; Haemophilia,
`
`Health Care Financing Review; Health Economics, Health Policy; JAMA; Journal
`
`of AIDS; Journal of the American Geriatrics Society; Journal of Business &
`
`Economic Statistics, Journal of Clinical Gastroenterology, Journal of Health
`
`Economics; Journal of Health Politics, Policy and Law; Journal of Human
`
`Resources; Journal of the Royal Statistical Association; Medical Care; Pediatrics;
`
`and Value in Health.
`
`11.
`
`In addition to the hundreds of pharmacoeconomic studies that I have
`
`conducted,
`
`I have published numerous peer-reviewed scientific articles and
`
`DECLARATION OF
`PROF. JOEL W. HAY
`U.S. PATENT NO. 8,324,283 B2
`
`Page 6 of 152
`
`CASE NO. IPR2014-00784, [PR2015-00518
`
`7
`
`BL
`
`Page 6 of 152
`
`

`

`abstracts on the cost effectiveness and the economic value of drugs, screening
`
`programs, and prevention programs.
`
`I recently co-authored a peer-reviewed
`
`scientific article on the economic value of Gilenya (generic name: fingolimod) in
`
`the treatment of Multiple Sclerosis (MS) and I have given formal presentations on
`
`this topic at scientific conferences.!
`
`12.
`
`In April 2015,
`
`I was one of three invited outside experts who
`
`presented to the Directors and Staff of the Office of Medical Policy (Dr. Jonathan
`
`Jarow) and the Center for Drug Evaluation and Research (Dr. Robert Temple) at
`
`Xinke Zhang, Joel W. Hay & Xiaoli Niu, Cost Effectiveness ofFingolimod,
`
`Teriflunomide, Dimethyl Fumarate and Intramuscular Interferon-B1, in Relapsing-
`
`Remitting Multiple Sclerosis, 29 CNS Drugs 71 (2015) (Ex. 1040); Xinke Zhang,
`
`MS & Joel W. Hay, PhD, Cost-effectiveness ofFingolimod, Teriflunomide,
`
`Dimethyl Fumarate and Intramuscular Interferon Beta-la in Relapsing-remitting
`
`Multiple Sclerosis, Poster, Monday Morning, PND20, ISPOR 19th Annual
`
`International Conference, May 2014, Montreal, Quebec, Canada (Ex. 1054); Xinke
`
`Zhang, MS & Joel W. Hay, PhD, Cost-effectiveness ofFingolimod, Teriflunomide,
`
`Dimethyl Fumarate and Intramuscular Interferon Beta-la in Relapsing-remitting
`
`Multiple Sclerosis, American Society for Health Economics 5th Biennial
`
`Conference, June 2014, Los Angeles, CA (Ex. 1055).
`
`DECLARATION OF
`PROF. JOEL W. HAY
`U.S. PATENT NO. 8,324,283 B2
`
`Page 7 of 152
`
`CASE NO. IPR2014-00784, IPR2015-00518
`
`-4.
`
`Page 7 of 152
`
`

`

`the U.S. Food and Drug Administration (FDA) on regulation of economics claims
`
`for pharmaceutical products.
`
`13.
`
`I have served as a consultant to the U.S. Centers for Medicare and
`
`Medicaid Services, U.S. Agency for Healthcare Research and Quality, U.S. Centers
`
`for Disease Control and Prevention, U.S. Public Health Service, FDA, U.S.
`
`Environmental Protection Agency, Government of Hungary, Hong Kong Centre for
`
`Economic Research, Hong Kong Medical Executives Association, World Bank,
`
`California AIDS Commission, California Medi-Cal Drug Advisory Board, County
`
`of San Diego Medically Indigent Adult Program, and County of Sacramento
`
`Homeless Program.
`
`14.
`
`I have also written numerous health-related op-eds published in
`
`papers such as Los Angeles Times, New York Times, Wall Street Journal, San
`
`Francisco Chronicle, San Diego Union, Sacramento Bee, Orange County Register
`
`and Newsday.
`
`I have been interviewed numerous times on television and radio
`
`regarding health-related and drug-related policy issues, including media networks
`
`such as NPR, PBS, CBS, ABC, NBC, Fox News, C-SPAN, BBC and the Australian
`
`Broadcast Company.
`
`15.
`
`I have served as a member of the Expert Advisory Panel on Drug
`
`Utilization Review, United States Pharmacopeial Convention; an Executive
`
`DECLARATION OF
`PROF. JOEL W. HAY
`U.S. PATENT NO. 8,324,283 B2
`
`Page 8 of 152
`
`CASE NO. IPR2014-00784, IPR2015-00518
`
`-5-
`
`Page 8 of 152
`
`

`

`Committee member for the federally sponsored Southern California Evidence-
`
`Based Medicine Practice Center; and a member of the J4MA Web Site HIV/AIDS
`
`Editorial Review Panel.
`
`I also just completed a third consecutive two-year term as
`
`a Study Section member for the Extramural Grants Review Program for the
`
`Agency for Healthcare Research and Quality of the U.S. Department of Health and
`
`Human Services.
`
`16.
`
`From 2004 to 2010, I was a founding memberof the Health Policy
`
`Scientific Council of the International Society for Pharmacoeconomics and
`
`Outcomes Research (ISPOR). From 2006 to 2010, I was founding Co-Chair of
`
`ISPOR’s Drug Cost Task Force.
`
`In 2010, this Task Force published six peer-
`
`reviewed guideline papers on pharmaceutical costing methodology in the journal
`
`Value in Health, all of which [ edited and co-authored.
`
`17.
`
`I served as the Founding Editor-in-Chief of Value in Health, the peer-
`
`reviewed scientific journal of ISPOR, from its 1998 inception until 2003.
`
`In its
`
`first scientific citation impact factor, Value in Health was ranked numberone in
`
`two categories for the year 2004 by the ISI Journal Citation Reports® (JCR) with
`
`an impact factor of 3.657. Value in Health led all other journals listed in both the
`
`Health Care Sciences and Services category of the JCR Science Edition and in the
`
`Health Policy & Services category of the JCR Social Sciences Edition. These
`
`DECLARATION OF
`PROF. JOEL W. HAY
`U.S. PATENT NO. 8,324,283 B2
`
`Page 9 of 152
`
`CASE NO. IPR2014-00784, IPR2015-00518
`
`-6-
`
`Page 9 of 152
`
`

`

`categories include all journals relating to health economics and pharmaceutical
`
`economics.
`
`18.
`
`I have provided sworn testimony and expert opinions in numerous
`
`legal cases and arbitration hearings on issues relating to pharmaceuticals,
`
`pharmaceutical markets and prescription medications.
`In particular
`I have
`provided expert opinions on the commercial success and long-feld unmet need for
`
`pharmaceutical products in numerous legal cases (see, e.g., Attachment A).
`
`In
`
`various separate cases I have testified both for plaintiffs and for defendants in these
`
`and other legal matters.
`
`Til, RELEVANT LEGAL CONCEPTS,
`
`19.
`
`J understand that Patent Owners have the burden to show the
`
`existence of secondary considerations of non-obviousness.
`
`20.
`
`I understand that
`
`long-felt but unmet need for, and commercial
`
`success of, a product are two of the “secondary considerations” that the PTAB and
`
`the courts may consider in their determination of the validity of a patent.
`
`I
`
`understand that a showing ofeither of these factors can provide potential evidence
`
`that the invention disclosed in a patent was non-obvious at the time that the
`
`application for the patent wasfiled.
`
`DECLARATION OF
`PROF. JOEL W. HAY
`U.S. PATENT NO. 8,324,283 B2
`
`Page 10 of 152
`
`CASE NO. IPR2014-00784, IPR2015-00518
`
`7.
`
`Page 10 of 152
`
`

`

`A.
`
`COMMERCIAL SUCCESS.
`
`21.
`
`Ihave been advised that commercial success is a legal construct that
`
`has been established through case law.
`
`I understand that the courts and the Patent
`
`and Trademark Office consider a number of factors in determining whether a
`
`product is a “commercial success,” including, but not limited to: (1) sales; (2)
`
`profits; (3) total prescriptions; (4) market share in prescriptions and dollar shares;
`
`(5) rate and growth in market share; (6) displacement of existing products in the
`
`market; and (7) the standing or “rank” of the product in the market.
`
`I also
`
`understand that sales figures alone are not evidence of commercial success—rather,
`
`sales must be considered in light of the relevant market and the product’s return on
`
`investment.
`
`I further understand that courts have found that one cannot merely
`
`rely on total sales alone to establish “commercial success.” These factors are
`
`consistent with my experience and understanding in evaluating the success of
`
`pharmaceutical products, but are by no means exhaustive.
`
`22.
`
`I understand further that in order for the commercial success of the
`
`product incorporating the patented technology to be relevant for the purpose of
`
`evaluating non-obviousness,
`
`there must be a demonstrable nexus between the
`
`claimed invention and the product’s commercial success.
`
`I understand this to mean
`
`that Patent Owners must show that ~ as with long-felt but unmet need — any
`
`alleged commercial success is driven by and attributable to a patented feature as
`
`DECLARATION OF
`PROF. JOEL W. HAY
`U.S. PATENT NO. 8,324,283 B2
`
`Page 11 of 152
`
`CASE NO. IPR2014-00784, IPR2015-00518
`
`-2-
`
`Page 11 of 152
`
`

`

`opposed to some other characteristic of the product or method ofselling.
`
`I further
`
`understand that where commercial success can be attributed to characteristics of
`
`the invention that were already disclosed in the prior art, nonobviousness is not
`
`shown.
`
`B.
`
`LONG-FELT BUT UNMET NEED.
`
`23.
`
`J understand that a patentee may support its assertion that its patent is
`
`not obvious by showing that a product embodying a patented inventionfills a long-
`
`felt but unmet need.
`
`24.
`
`Ialso understand that a patentee must show several things to establish
`
`a long-felt need, such as the nature of the problem, when the problem cameto
`
`light, how others tried to solve the problem, and for how long the problem existed.
`
`Importantly, the patentee must show how the claimed invention solved the problem
`
`—i.e., that there is a nexus to the patented features.
`25.
`Iam informed that courts routinely consider sales, market share,
`
`revenues, and customer demand for the commercial embodimentof the patent-in-
`
`suit to determine whether a long-felt need for the invention existed. However, as
`
`with evidence of commercial success, there must be demonstration that any indicia
`
`of long-felt need have a nexus to the patented features and not to features disclosed
`
`in the prior art and/or obviousto a person of ordinary skill in theart.
`
`DECLARATION OF
`PROF. JOEL W. HAY
`U.S. PATENT NO. 8,324,283 B2
`
`Page 12 of 152
`
`CASE NO. I[PR2014-00784, IPR2015-00518
`
`-9-
`
`Page 12 of 152
`
`

`

`IV.
`
`SUMMARY OF OPINIONS.
`
`26.
`
`As will be established infra, Dr. Blackburn has not defined or
`
`adequately measured the relevant market, which is crucial for an analysis of
`
`commercial success. Dr. Blackburn has left key MS drugs out of his sales analysis,
`
`such as Tysabri, Novantrone, Lemtrada, H.P. Acthar Gel and Prednisolone. At
`
`some points Dr. Blackburn seems to consider all MS drugs, at other points he
`
`refers only to oral MS drugs and at other pomts he talks about second-line MS
`
`drugs. Dr. Blackburn relies primarily IMS Health data, which, as disclosed in
`
`footnotes to his Declaration, do not capture sales of all MS drugs. Many MS
`
`injectable drugs are either not captured, or are poorly captured in the IMS Health
`
`sales data.
`
`27.
`
`Regardless of the market considered, Dr. Blackburn also fails to
`
`_ establish commercial success of Gilenya and the ‘283 patent. Dr. Blackburn’s
`
`analysis focuses on raw sales data, using an aggregation of “Total Prescriptions”
`
`that ignores MS drug dosing differences ranging from one injection every three
`
`months to two pills per day, as well as different dosing strengths. This is an
`
`incorrect analysis of commercial success. His analysis of Gilenya’s profitability
`
`and return on investment are incomplete, and lack the necessary level of
`
`explanation and documentation.
`
`DECLARATION OF
`PROF. JOEL W. HAY
`U.S. PATENT NO.8,324,283 B2
`
`CASE NO. IPR2014-00784, IPR2015-00518
`
`-10-
`
`Page 13 of 152
`
`Page 13 of 152
`
`

`

`28.
`
`Both oral MS drugs Aubagio and Tecfidera had been under FDA
`
`review for many years at the time of the Gilenya launch. Hadeither of them been
`
`approved before the Gilenya approval, Gilenya sales would have been drastically,
`
`if not overwhelmingly, curtailed. Despite being oral MS drugs, neither Aubagio
`
`nor Tecfidera were excluded from the U.S. market for alleged infringement of the
`
`‘283 patent. To the extent that Gilenya’s alleged commercial success relate to it
`
`being the first oral MS agent approved for marketing in the U.S. by the FDA, any
`
`such success relates to the FDA approvalprocessitself, rather than to any claims of
`
`the ‘283 patent.
`
`29. My
`
`independent
`
`published
`
`peer-reviewed
`
`scientific
`
`research,
`
`conducted prior to my engagement in this case and not funded by any interested
`
`party or pharmaceutical company, found that both Aubagio and Tecfidera have
`
`better economic value than Gilenya (better clinical outcomes and lowercosts).
`
`In
`
`contrast, to support his claims of commercial success Dr. Blackburn relies on
`
`admittedly incomplete and unreliable sales data, non-scientific financial investment
`
`reports, commercialization reports and promotional materials paid for by Novartis.
`
`He admits that he completely failed to consider the R&D costs of Gilenya and
`
`therefore has no understanding of the drug’s profitability or return on investment.
`
`DECLARATION OF
`PROF. JOEL W. HAY
`U.S. PATENT NO. 8,324,283 B2
`
`Page.14 of 152
`
`CASE NO. IPR2014-00784, IPR2015-00518
`
`‘l1-
`
`Page 14 of 152
`
`

`

`30.
`
`Dr. Blackburn has also failed to demonstrate a nexus between the
`
`alleged commercial success or long-felt unmet need for Gilenya and the patented
`
`invention.” First, I understand that Petitioners’ expert, Dr. Kent, has opined that the
`
`claims of the ‘283 patent are obvious and/or disclosed in the prior art.
`
`Furthermore, Dr. Blackburn concedes that oral fingolimod formulations were
`
`disclosed in the prior art and therefore his evidence of alleged commercial success |
`
`is tied not to original claims of the ‘283 patent, but rather to disclosed prior art. Dr.
`
`Blackburn has not established a nexus between U.S. sales of Gilenya and the
`
`claims of the ‘283 patent.
`
`31.
`
`Dr. Blackburn admitted in his deposition that he did not consider any
`
`other possible causes of Gilenya’s sales other than oral administration. Gilenya’s
`
`raw sales numbers are driven at least in part by an aggressive sales and marketing
`
`campaign and by patient co-pay coupons and/or other price discounts and rebates
`
`that have no nexus to the patent claims. Dr. Blackburn does not consider whether
`
`Gilenya’s sales are due to safety warnings orrestrictions on Tysabri or other MS
`
`Declaration of David Blackburn, PhD, April 3, 2015 (hereinafter,
`
`“Blackburn Declaration,” Ex. 2045). Deposition of David Blackburn, Ph.D., May
`
`29, 2015 (hereinafter, “Blackburn Deposition,” Ex. 2272).
`
`DECLARATION OF
`PROF. JOEL W. HAY
`U.S. PATENT NO. 8,324,283 B2+CASE NO. IPR2014-00784, IPR2015-00518
`
`-12-
`
`Page 15 of 152
`
`Page 15 of 152
`
`

`

`drugs. Nothing that Dr. Blackburn cites in the Gilenya marketing campaign has
`
`any nexus to the ‘283 patent.
`
`Vv.
`
`OPINIONS AND THE REASONS AND BASES FOR MY OPINIONS.
`
`32.
`
`In my opinion, Dr. Blackburn has not demonstrated commercial
`
`success, nor any indicia of long-felt but unsolved need. Moreover, his alleged
`
`indicia of commercial success have no nexusto the claims of the ‘283 patent.
`
`33.
`
`As detailed below, Dr. Blackburn’s analysis falls short because he
`
`failed to consider which products are in the relevant market, misinterpreted the
`
`limited IMS data provided to him by Novartis, incorrectly measured sales of the
`
`limited products that he did consider, left H.P. Acthar Gel, Tysabri and Lemtrada
`
`(among others) out of his market analysis, disregarded that MS drugs are used in
`
`combination with each other and/or with other medicationsto control symptoms of
`
`relapsing and remitting MS, and incorrectly measured financial success.
`
`34. Moreover, Dr. Blackburn failed to review the scientific literature on
`
`the economic value of Gilenya and other MS drugs, failed to consider the R&D
`
`costs for Gilenya[a
`
`GE,failed to understand why Tysabri, Lemtrada, H.P. Acthar Gel, Novantrone
`
`(and its generic equivalents) were not included in the IMS MStherapeutic category
`
`data, failed to understand that many injectable drugs are distributed through
`
`specialty pharmacies and physcians’ offices and thus underreported in IMS data,
`
`DECLARATION OF
`PROF. JOEL W. HAY
`U.S. PATENT NO.8,324,283 B2
`
`:
`CASE NO. IPR2014-00784, IPR2015-00518
`
`-13-
`
`Page 16 of 152
`
`Page 16 of 152
`
`

`

`failed to consider MS drug promotional spending, and failed in his burden to show
`
`that other factors without any alleged nexusto the ‘283 patent were key to sales of
`
`Gilenya, such as price rebates, patient coupons and paymentassistance programs,
`
`FDAapproval, Tysabri safety concerns, or some other characteristic of the product
`
`or methodofselling.
`
`35.
`
`Further undermining his Declaration, Dr. Blackburn stated in his
`
`deposition that Novartis tasked him to find a nexus to the ‘283 patent and then do
`
`no further analysis:*
`
`But the question that I was asked to analyze was the nexusto the ‘283
`patent. It would be a different analysis for a different case to lay out
`other factors and determine whether they are factors or significant
`factors or what have you. Butit's not a part of a commercial success
`analysis for the *283 patent to detail everything else that might have
`played a role one way or another. Once you can show that the ‘283
`patent has a nexus to the success, you know, doing anything moreis
`
`unnecessary.
`
`36.
`
`But Dr. Blackburn’s NERA colleagues, Jessie David and Marion B.
`
`Stewart, in their chapter on Commercial Success: Economic Principles Applied to
`
`Patent Litigation oppose his position, stating:*
`
`;
`
`Blackburn Deposition at 168:24-169:10.
`
`DECLARATION OF
`PROF. JOEL W. HAY
`U.S. PATENTNO.8,324,283 B2.
`
`Page 17 of 152
`
`CASE NO. IPR2014-00784, IPR2015-00518
`
`14.
`
`Page 17 of 152
`
`

`

`Courts have also considered whether the patent holder has established
`
`a “nexus” between the
`
`claimed invention and the product’s
`
`commercial success—that
`
`is, whether the commercial success,
`
`if
`
`evident,
`
`is due to the patented feature as opposed to some other
`
`characteristic of the product or mode of selling employed by the
`
`manufacturer.
`
`A.
`
`RELEVANT MARKET
`
`1.
`
`Dr. Blackburn Makes No Attempt to Actually Define the
`Relevant Market and Excludes Key Drugs
`from His
`Analyses.
`
`37.
`
`Sales figures alone are not evidence of commercial success—rather,
`
`sales must be considered in light of the relevant market. Dr. Blackburn’s opinionis
`
`flawed because he sets forth no specific market definition, and neither lists nor
`
`fully includes the likely competitors within that defined market.
`
`In fact, Dr.
`
`Blackburn does no analysis regarding the relevant market definition, and merely
`
`discusses a highly-flawed measure of sales for an incomplete list of MS drugs.
`
`4
`
`Jesse David & Marion B. Stewart, Commercial Success: Economic
`
`Principles Applied to Patent Litigation, in Economic Damagesin Intellectual
`
`Property: A Hands-on Guide to Litigation 159, 160 (Daniel Slottje ed., John Wiley
`
`& Sons, Inc. 2006) (emphasis added) (Ex. 1056).
`
`DECLARATION OF
`PROF. JOEL W. HAY
`U.S. PATENT NO. 8,324,283 B2.
`
`Page 18 of 152
`
`CASE NO. IPR2014-00784, IPR2015-00518
`
`-15-
`
`Page 18 of 152
`
`

`

`38.
`
`Dr. Blackburn’s analysis of monthly ‘Total prescriptions of oral and
`
`injectable MS treatments by drug’ does not include key second-line MS drugssuch
`
`as Tysabri. Tysabri generates more than $1 billion in sales annually.> Leaving out
`
`such a key drug biases the context of the analysis.PT
`
`
`Po Because of the absence of this information, all of Dr.
`
`Blackburn’s sales and prescription figures have no proper context, and thus his
`
`analysis of those figures is suspect.
`
`39.
`
`Rather than define a single market for his commercial success
`
`analysis, Dr. Blackburn appears to shift between several different market
`
`definitions throughout his Declaration. There are times when Dr. Blackburn
`
`un
`
`See, e.g., Catherine Larkin, Biogen Says Tysabri Sales Topped $1 Billion
`
`Last Year (Update 2), Bloomberg, Jan. 12, 2010 (Tysabri sales exceeded $1 billion
`
`in 2009) (Ex. 1057); Elan Corporation, 2012 Annual Report 35 (2013) (Tysabri
`
`sales exceeded $1 billion in 2011 and 2012) (Ex. 1058).
`
`DECLARATION OF
`PROF. JOEL W. HAY
`U.S. PATENT NO.8,324,283 B2
`
`Page 19 of 152
`
`CASE NO. IPR2014-00784, IPR2015-00518
`
`-16-
`
`Page 19 of 152
`
`

`

`indicates that he thinks Gilenya competes against all MS drugs (while failing to
`
`provide any sales data on Ampyra, Tysabri, Lemtrada, Novantrone, Prednisolone,
`
`or H.P. Acthar Gel and any relevant generics or alternative brands for these
`
`products).© Other times, Dr. Blackburn suggests that he thinks the relevant market
`
`P| Dr. Blackburn claims that Novantrone was
`
`withdrawn from the U.S. market since at least 2008. However generic
`
`mitoxantrone formulations have been approved by the FDA andare currently on
`
`the U.S. market. See, e.g., Hospira, Mitoxantrone Injection USP Order Sheet,
`
`http://www.hospira.com/en/products_and_services/drugs/MITOXANTRONE(Ex.
`
`1059). He is correct that Ampyra is only indicated onits label for improving
`
`walking in MS patients (Blackburn Declaration at n.9), but nevertheless Ampyra is
`
`classified as an MS disease modifying drug, just like the MS drugs that he does
`
`include in his sales comparisons. Since many drugsthat are used to treat RRMS
`may not always be used only on-label for that indication, he needs more evidence
`
`to exclude it from his market definition. See Christopher Luzzio, MD & B Mark
`
`Keegan, MD, Multiple Sclerosis Medication, Medscape Reference (Nov.24,
`
`2014), http://emedicine.medscape.com/article/1146199-medication#1 (Ex. 1060).
`
`For example, alemtuzumab (Lemtrada) was only approved for RRMSin
`
`November, 2014, but Lemtradais the same as alemtuzumab (Campath), which was
`
`DECLARATION OF
`PROF. JOELW. HAY
`U.S. PATENTNO. 8,324,283 B2.
`
`Page 20 of 152
`
`CASE NO. IPR2014-00784, IPR2015-00518
`
`VW.
`
`Page 20 of 152
`
`

`

`is comprised solely of Gilenya and other oral agents.’ See, e.g., Blackburn
`
`Declaration at 4] 35 (“[Mlany physicians and patients prefer oral MS treatments to
`
`injectable alternatives.”).aa
`
`
`
`40.
`
`Even before Gilenya’s launch, Tysabri was indicated for patients with
`
`MS who have failed to respond to or have intolerance to preferred first line and
`
`available prior to November 2014 in the U.S. as a cancer drug, and was known and
`
`used off-label for RRMSprior to that point. See, e.g., Multiple Sclerosis Trust, A
`
`to Z of MS Alemtuzumab (Lemtrada),
`
`http://Awww.mstrust.org.uk/atoz/alemtuzumab-lemtrada.jsp (Ex. 1102); Randy
`
`Osbome, Buzz around Campath proof-of-concept trial in MS, 27 Nature
`
`Biotechnology 6 (2009) (Ex. 1061); Jeffrey A. Cohen,et al., Alemtuzumab versus
`
`interferon beta 1a as first-line treatmentfor patients with relapsing-remitting
`multiple sclerosis: a randomized controlledphase 3 trial, 380 Lancet 1819 (2012)
`
`(Ex. 1062).
`
`
`
`DECLARATION OF
`PROF. JOEL W. HAY
`U.S. PATENT NO. 8,324,283 B2
`
`Page 21 of 152
`
`CASE NO. IPR2014-00784, IPR2015-00518
`
`-18-
`
`Page 21 of 152
`
`

`

`conventional therapies.
`
`° This makes Tysabri a direct competitor to Gilenya for
`
`second-line therapy. Without any meaningful explanation, Dr. Blackburn writes in
`
`his Declaration (footnote 24) “I understand that IMS Data for Tysabri are not
`
`available. Therefore, it has been excluded from this analysis.” Dr. Blackburn’s
`
`9
`
`Aetna Inc., Natalizumab (Tysabri),
`
`http:/Avww.aetna.com/cpb/medical/data/700_799/0751.html (Ex. 1063). See also
`
`Laura Kolaczkowski, Tysabri— A Second Line MS Treatment,
`
`MultipleSclerosis.net (June 4, 2013), http://multiplesclerosis.net/living-with-
`
`ms/tysabri-an-aggressive-ms-treatment/ (Ex. 1064).
`
`0
`
`Dr. Blackburn erroneously states that Tysabri is excluded from the IMSdata
`
`becauseit is an “infusion treatment.” Blackburn Declaration at n.11. This is not
`
`credible since in my experience IMSdata often capture IV infusionsales(e.g.,
`
`Remicade). Mostlikely the reason that IMS doesn’t capture Tysabri sales data is
`
`becauseit is distributed through a specialty pharmacy to manage its FDA-
`
`mandated Risk Evaluation and Mitigation Strategies (REMS)program. As
`
`discussed below, IMS does an incomplete job of capturing drugs distributed
`
`through speciaity pharmacies. Because Lemtrada also requires a REMSprogram it
`
`is also likely missing from the IMS data for this reason. Novantrone, generic
`
`mitoxantrone, H.P. Acthar Gel, Prednisolone and other MS drugsarelikely listed
`
`DECLARATION OF
`PROF. JOEL W. HAY
`U.S. PATENT NO. 8,324,283 B2
`
`Page 22 of 152
`
`CASE NO. IPR2014-00784, IPR2015-00518
`
`-19-
`
`Page 22 of 152
`
`

`

`analysis is invalid because it excludes a direct major competitor of Gilenya with
`
`estimated annualsales in 2013 of $1.41 billion.”
`
`41.
`
`Tysabri has been knownto cause a fatal brain infection called PML
`
`-
`
`(Progressive Multifocal Leukoencephalopathy). The risk of PML is higher in
`
`patients who are JC virus positive.'* Leaving out Tysabri again invalidates Dr.
`
`Blackburn’s analysis of comparative sales, since he does not analyze or consider
`
`whether initial Gilenya prescriptions after its launch were second-line switches
`
`from Tysabri due to the high risk of PML with Tysabri.'"* It is also likely after the
`
`FDAespecially recognized the risk of PML in JC virus positive patients with MS
`
`in other IMS therapeutic categories because they have other treatment indications
`
`besides MS