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Takeda Chemical Industries, Ltd. v. Mylan Laboratories

February 21, 2006


The opinion of the court was delivered by: Denise Cote, District Judge:


Takeda Pharmaceutical Company Limited ("Takeda") and Takeda Pharmaceuticals North America, Inc. ("Takeda North America") have brought this patent action under the Food Drug Cosmetic Act, 21 U.S.C. §§ 301-99, the Drug Price Competition and Patent Term Restoration Act of 1984, Pub L. No. 98-417, 98 Stat. 1585 (1984) (codified in scattered sections of titles 21, 35, and 42 U.S.C.) (the "Hatch-Waxman Act"), and under the patent laws of the United States, alleging that four generic drug manufacturers have infringed and will induce infringement of Takeda's patents protecting its product ACTOS®, a drug used to treat Type 2 diabetes.

This Opinion presents the findings of fact and conclusions of law following a bench trial held between January 17 and January 30, 2006, to resolve the challenges made by defendants to Takeda's U.S. Patent No. 4,687,777 ("'777 Patent"), which protects the invention of the chemical compound 5-{4-[2-(5-ethyl-2-pyridyl)ethoxy]benzyl}-2,4-thiazolidinedione ("pioglitazone"). Alphapharm Pty. Ltd. and Genpharm, Inc. ("Alphapharm") contend that the invention is obvious based on the disclosure by Takeda of a structurally similar molecule in the prior art. Mylan Laboratories, Inc., Mylan Pharmaceuticals, Inc., and UDL Laboratories, Inc. ("Mylan") contend that Takeda deceived the Patent and Trademark Office ("PTO") when it applied for the '777 Patent, principally by misrepresenting the results of efficacy and toxicity tests. Neither challenge is meritorious. The length of this Opinion is occasioned by the need to address the many iterations of the defendants' arguments, as they searched for a viable theory to attack the '777 Patent.

As described below, the '777 Patent discloses a remarkable invention. After decades of work to develop an anti-diabetic treatment, Takeda discovered a pharmaceutical agent that was both effective and non-toxic. This represented a significant advance over compounds disclosed in the prior art. Takeda's application to the PTO for the '777 Patent reported the very analysis of test results on which Takeda itself had previously relied to select the pioglitazone molecule from the thousands it had synthesized and the hundreds it had tested. Faced with the task of proving their cases by clear and convincing evidence, both Alphapharm and Mylan have failed to make even a rudimentary showing that the invention was obvious or that Takeda engaged in inequitable conduct. Their challenges to the '777 Patent are rejected.

Trial Procedure

The trial was conducted in accordance with the Court's Individual Practices and the Scheduling Order dated July 20, 2004. The parties filed a Joint Pretrial Order and accompanying memoranda of law and proposed findings of fact and conclusions of law on November 18, 2005. The parties also served affidavits containing the direct testimony of all their witnesses, as well as copies of all the exhibits and deposition testimony which they intended to offer as evidence in chief at trial.

A science tutorial was held on December 1, 2005. Testifying for Takeda were Silvio Inzucchi ("Inzucchi"), a Professor of Medicine at Yale University and expert endocrinologist who serves as the Director of the Yale Diabetes Center; James Hendrickson ("Hendrickson"), the Henry F. Fischbach Professor of Chemistry, retired, at Brandeis University and an expert in organic chemistry; and Peter Valberg, a senior scientist at a private environmental health consulting firm, an expert in the statistical analysis of animal testing data, and formerly an Associate Professor of Physiology at Harvard's School of Public Health. Testifying for Alphapharm was Henry Mosberg ("Mosberg"), a Professor of Medicinal Chemistry at the University of Michigan, and an expert in drug design. Testifying for Mylan was Lawrence Hendry ("Hendry"), an Adjunct Professor of Physiology and Endocrinology at the Medical College of Georgia, an Associate Adjunct Professor of Medicinal Chemistry at the University of Georgia, and the founder of a chemical design firm.

The plaintiffs and defendants were each given twenty-four hours for opening statements, examination of witnesses and evidentiary arguments at trial. Of the time granted the defendants, Alphapharm was given eight hours and Mylan sixteen hours.*fn1 The parties were given additional time for summations.

In addition to the experts who testified on December 1, the following witnesses testified at trial. For Takeda, Richard Daly, Senior Vice President of Marketing at Takeda North America; William Kettyle ("Kettyle"), an expert endocrinologist with significant expertise in the treatment of diabetes; Loren Koller ("Koller"), a doctor in veterinary medicine, an environmental health and toxicology consultant, an expert in immunotoxicology, and an officer of the Association for Assessment and Accreditation of Laboratory Animal Care International; Takeshi Fujita ("Fujita"), a former Takeda employee who, as the Chief Scientist of Takeda's Biology Research Laboratory, was the co-inventor on the '777 Patent; Samuel Danishefsky ("Danishefsky"), a Professor of Chemistry at Columbia University who holds the Kettering Chair at the Memorial Sloan-Kettering Cancer Institute; Yasuo Sugiyama, Takeda's Manager of Strategic Research Planning and a researcher who was involved in the development of pioglitazone; Bernard Landau ("Landau"), a Professor of Biochemistry at Case and Western Reserve University, and, in 1996, a Nobel Fellow at the Karolinska Institute in Sweden; Bruce Stoner ("Stoner"), a former Chief Administrative Patent Judge; Gerard Colca ("Colca"), a former senior research scientist in metabolic disease research at The Upjohn Company ("Upjohn"), a U.S. pharmaceutical company that had worked with Takeda in the development of pioglitazone; and Douglas Morton, a former Director of Diabetes and Gastrointestinal Diseases Research at Upjohn.

Testifying for Alphapharm was Richard Wright, a Professor of Economics at the University of California at Berkeley, and a member of the Steering Committee for Berkeley's Center for Hunger and Obesity. Testifying for Mylan was Martin Ronis ("Ronis"), a Professor of Medicinal Sciences at the University of Arkansas, Associate Director of the Arkansas Childrens' Nutrition Center and an expert in chemical testing in animals. Mylan also presented the declaration of Mark Nusbaum ("Nusbaum"), a former Examiner-in-Chief and member of the Board of Patent Appeal and Interferences.*fn2

The parties also offered excerpts from the deposition testimony of some of the fact witnesses that testified at trial and of the following individuals: Michael Davis, the American patent attorney who prosecuted the '777 Patent; Yoshikazu Hasagawa, the Senior Manager in charge of Intellectual Property litigation for Takeda; Shelly Monteleone, Intellectual Property Counsel for Mylan; Brett Mooney, an Alphapharm employee involved in pharmaceutical development; Hiroyuki Odaka, a former Takeda employee who worked in Takeda's Biology Research Laboratories at the time of the development of pioglitazone; Brian Roman, an attorney and a Rule 30(b)(6) witness for Mylan; Howard Rosenberg ("Rosenberg"), the Group Intellectual Property and API Strategy Director for Generics U.K., a sister company of Alphapharm, and an Alphapharm Rule 30(b)(6) witness; Michael Rosenberg, the owner of Health Decisions, a company engaged in clinical research; Takashi Sohda, General Manager of Takeda's Pharmaceutical Research Division; Barry Spencer, a Senior Patent Officer at Alphapharm and a Rule 30(b)(6) witness for Alphapharm; Shigehisa Taketomi, a Takeda employee and Rule 30(b)(6) witness for Takeda; and Stephen Talton, a Mylan employee responsible for preparing applications to sell generic drugs.

The findings of fact based on the evidence presented at trial are scattered throughout this Opinion. The background section contains the story of the development of pioglitazone, an introduction to the prior art, a description of the relevant patents and their file histories, an introduction to the science that is necessary to understand the discussion that follows, and an outline of the procedural history of this litigation. The discussion section of the Opinion will address first the issue of obviousness and then the issue of inequitable conduct.


A. Diabetes

Diabetes is a disease in which the body is unable to metabolize blood sugar or glucose derived from food, primarily carbohydrates, into energy efficiently. The blood glucose level is essentially controlled by insulin, which drives the process whereby glucose enters the cells of the body and is turned into energy. Insulin is a hormone made by specialized cells within the pancreas called beta cells.

There are two types of diabetes. Type 1 diabetes is characterized by the fact that the pancreas does not produce insulin. Insulin must therefore be supplied from an external source, such as an injection or insulin pump. Type 1 diabetes compromises less than 10% of diabetes cases worldwide.

In Type 2 diabetes, the body fails to utilize effectively the insulin that is produced. This failure usually starts in the muscles, which collectively use most of the glucose produced by the body. The liver is also responsive to insulin, which instructs the liver when to stop making glucose. When the liver becomes insulin resistant, it resists those instructions and continues to create glucose. Insulin resistance also impacts the pancreas, at first by forcing it to produce more insulin than normal. Over time, the increased resistance to the action of insulin overwhelms the ability of the pancreas to produce sufficient insulin, and the symptoms of diabetes begin to appear. If Type 2 diabetes is left untreated, the demand for insulin from the pancreas can eventually lead the beta cells to become dysfunctional, a phenomenon known as "exhaustion" or "burn-out."

Diabetes can cause great damage to the body. Due to the toxic effects of high glucose on blood vessels, patients with diabetes are predisposed to chronic complications such as kidney failure, blindness, leg ulcers and amputations, heart attacks, and strokes.

B. Treatments of Diabetes

Type 2 diabetes may be treated with lifestyle changes, such as weight loss, improved diet, and exercise. These steps are rarely sufficient. A substantial portion of patients ultimately need injections of insulin. Insulin is effective because insulin resistence in Type 2 patients is not complete -- insulin may still lower blood glucose.

The past twenty-five years have seen the development of a number of oral antidiabetic drugs ("OAD") that are used instead of, or in conjunction with, insulin. Different classes of OADs have that have been developed work in the different parts of the body affected by diabetes. It is common practice to treat diabetes with a combination of several classes of drugs.

Sulphonylureas, which became available in the 1980s, are the oldest class of drug used to treat Type 2 diabetes, and work by stimulating the pancreas to secrete more insulin. Meglitinides work very much like the sulphonylureas but differ in that their onset is more rapid and their duration of action is briefer.*fn3

Biguanides help to reduce the liver's production of glucose. Metformin®, a biguanide, is frequently the first drug chosen to treat a newly diagnosed Type 2 diabetes patient. It became available in 1995.

The treatment of diabetes was revolutionized in the 1990's with the introduction of a class of drugs known as thiazolidinediones ("TZDs"). TZDs were first discovered by Takeda in the 1970s. They are peripheral insulin sensitizers, working within muscles to enhance the effect of insulin in that organ, and thereby to increase the muscles' ability to take glucose from the bloodstream.

The first TZD to be marketed in the United States was troglitazone, known by the commercial name Rezulin®. Rezulin®, which was developed by Pfizer, first became available in 1997. In May of 1999, two years after Rezulin® entered on the market, the Food and Drug Administration ("FDA") approved GlaxoSmithKline's Avandia® (whose active ingredient is rosiglitazone). The drug at issue here, ACTOS®, which was approved by the FDA in July of 1999, is the only other TZD currently approved by the FDA for sale in the United States.

In March 2000, Pfizer withdrew Rezulin® from the United States market due to significant concerns about its safety. After Rezulin® was withdrawn, ACTOS® and Avandia® essentially split the TZD market in the United States. More recently, research has shown that these two TZDs have a greater positive effect in the treatment of cardiovascular disease than other anti-diabetic drugs, and that ACTOS® in particular has a greater impact than Avandia® on lowering cardiovascular risk.*fn4

Based in part on this research, there is evidence that ACTOS® is becoming the preferred TZD among knowledgeable doctors.

By any measure, ACTOS® has been a hugely successful commercial product. It has led the TZD market for new prescriptions written by endocrinologists since February 25, 2000. In October 2001, it became the seventh fastest product in pharmaceutical history to reach $1 billion in annual sales.

C. Takeda's Research into Diabetes Takeda, a Japanese pharmaceutical company, is based in

Osaka, Japan. Takeda North America is a wholly owned United States subsidiary of Takeda America Holdings, Inc., which is a wholly owned subsidiary of Takeda.

Takeda began its research into obesity and related diseases in the early 1960s. Working with Nagoya University in Japan, Takeda developed an animal model that exhibits the symptoms of diabetes: KKAy mice. This is an obese strain of mice that consistently exhibits symptoms of insulin resistance under normal diet conditions. Takeda researchers also developed the genetically obese and diabetic Wistar fatty rat. The development of the KKAy mouse and the Wistar fatty rat were significant steps in the effort to develop pharmaceutical treatments for diabetes since compounds could now be tested in diabetic animals.

Takeda made a pharmacological breakthrough in the 1970s. Takeda researchers discovered the first TZD derivative compound and learned that TZDs exhibited considerable blood glucose lowering effects in KKAy mice.*fn5 The defining characteristic of TZDs is the presence of a thiazolidinedione group at the right end or moeity*fn6 of a molecule. The chemical structure of this group is:


Takeda's work with TZD derivatives revealed that at least some compounds within the TZD class did not lower blood glucose in normal, non-diabetic animals. This was another important finding because it suggested that TZD derivatives did not affect the level of insulin in the body, but instead were insulin sensitizers, a term for compounds that ameliorate insulin resistance, the defining characteristic of Type 2 diabetes.

While scientists did not initially understand how TZDs work, and still debate today precisely how TZDs actually function within the body, there is a growing consensus that TZDs enhance the signal of insulin receptors that reside in the cells that require or store energy, such as muscles and fat cells. When we eat, the level of glucose rises in the bloodstream, stimulating the pancreas to secrete more insulin. The insulin which is flowing through the blood binds to insulin receptors, causing changes inside cells that allow glucose to enter the cell from the bloodstream, where it can be burned for energy or stored. Because of a negative feedback system, as the level of glucose in the blood falls, the pancreas produces less insulin so that the blood glucose returns to normal levels.

TZDs activate the insulin receptors by binding to a molecule within the cell's nucleus known as PPAR-gamma. Together, they bind to specific areas on the cell's DNA, producing messenger RNA and effectively stimulating the production of glucose transporters within the cell. The transporters travel to the surface of the cell and facilitate the entry of glucose into the cell from the bloodstream.

Scientists still do not fully understand how insulin resistance works at the cellular level, but it is believed that the problem relates to the interaction between the insulin receptors and that section of the DNA in the cell's nucleus that is responsible for triggering the production of glucose transporters. As noted, TZDs work by binding with a molecule in the nucleus of the cell called PPAR-gamma. When that happens, the PPAR-gamma molecule changes shape and binds to the DNA in the cell. Each TZD seems to bind differently with the PPAR-gamma. As a result, different TZDs have different metabolic effects. TZDs also bind with other PPAR molecules in the cell, such as the PPAR-alpha and PPAR-delta molecules, further contributing to the differences among TZDs.

The fact that TZDs affect the gene transcription process within DNA makes them both effective but also unpredictable. Only a fraction of the genes in the human body have been identified. It is possible that TZDs stimulate genes that are still unknown. As one of Takeda's expert endocrinologists has explained, gene transcription is "a big black box.... When you are stimulating a gene, you can do a lot of things downstream that you may not understand."

D. The Development of Ciglitazone and the '200 Patent Takeda's research led to the synthesis of the TZD

ciglitazone in February of 1978. Takeda worked for many years to develop ciglitazone, only abandoning it when it proved toxic during human clinical trials. Thereafter, Takeda's search for a TZD to develop as a commercial pharmaceutical used ciglitazone as a benchmark. Takeda searched for a compound that was more potent than ciglitazone, which required unrealistically high doses to be effective, and yet non-toxic.

Ciglitazone's chemical structure is illustrated here:


It was identified as a particularly promising compound based on its blood lowering effect in KKAy mice. Based on this research, Takeda filed a United States patent application on July 27, 1979, covering a generic class of TZD derivatives including ciglitazone. The application eventually resulted in the issuance of U.S. Patent No. 4,287,200 ("'200 Patent").

The application for the '200 Patent ("'200 Application") made eight claims. Its first claim was its broadest and covered hundreds of millions of TZD compounds through a formula that allowed for a wide variety of chemical structures on the left-hand end to be attached to the TZD structure on the right. The '200 Application represented that TZDs are "novel compounds and useful as, for example, remedies for diabetes, hyperlipemia and so on of mammals including human beings."

The '200 Application was the subject of two office actions by the PTO. The second office action allowed two of the eight claims, but rejected all of the other claims as containing "improper Markush groups." See Ex parte Markush, 1925 CD 126, 340 Off. Gaz. Pat. Office 839 (Comm'r. Pat. 1925).*fn7 The office action identified three separate groups the patent examiner believed were contained in the '200 Application.*fn8

In response to the second office action, Takeda amended its application to cover only the first of the three groups identified by the examiner. In the amendment Takeda noted that it might file "divisional applications" to cover the other groups.

The '200 Patent was issued on September 1, 1981. Fujita and Dr. Yutaka Kawamatsu were named as co-inventors. In addition to the generic class of TZDs, the patent also presented, as examples, sixty specific compounds covered by the generic formula. Included among those disclosed was compound 42, whose left end was a 2-pyridyl ring with a methyl at the 6-position. Compound 42 is a compound of importance to this litigation and is discussed in detail below.*fn9 Like ciglitazone, compound 42 had first been synthesized in 1978.

E. Two Divisional Patents

Takeda obtained two divisional patents for the '200 Patent.

First, through a patent issued on July 20, 1982, as U.S. Patent No. 4,340,605 ("'605 Patent"), Takeda received a patent for the third group identified by the examiner.*fn10 In support of the application for that patent, Takeda presented a declaration from Fujita providing data for blood glucose and lipid lowering effects of twelve compounds tested in KKAY Mice, including compound 42 from the '200 Application.

On July 7, 1982, Takeda filed an application for a second divisional to the '200 Patent. The patent, which issued on March 20, 1984, as U.S. Patent 4,438,141 ("'141 Patent"), covered the second grouping that was identified by the examiner in the course of prosecuting the '200 Patent.

F. Sohda II

While it was securing the '200 Patent, Takeda continued its research into TZD derivatives and by early 1982 had evaluated approximately 1000 compounds for their potential as antidiabetic agents. Important information about TZDs and Takeda's research efforts was published in a series of articles by Takeda's scientists. Of particular importance to this Opinion, because it constitutes prior art for the '777 Patent, was an article received for publication on April 22, 1982, T. Sohda et al., Studies on Antidiabetic Agents. II. Synthesis of 5-[4-(1-Methylcyclohexylmethoxy)-benzyl]) thiazolidine-2,4-dione (ADD-3878) and its Derivatives, Chem. Pharm. Bull., 30:3580-3600 (1982) ("Sohda II"). Sohda II did not disclose pioglitazone, but it did disclose a compound that was structurally close to pioglitazone, and which Alphapharm contends made the invention of pioglitazone obvious.

Sohda II described 101 specific TZD compounds, giving data on each compound's efficacy. As was the case in the Fujita declaration submitted in the prosecution of the '605 Patent, the data were presented as a score ranging from one to four in two categories: hypoglycemic activity (blood sugar lowering activity) and plasma triglyceride lowering activity. A higher score represented greater potency.

While the article did not present data on the toxicity or side effects of the compounds, it did comment on these issues for particular compounds. Of the 101 compounds, the article identified three compounds -- compounds 47, 49 and 59 -- as showing the most favorable profiles "in terms of activity and toxicity." The article concluded that those three compounds "may be valuable for the treatment of maturity-onset diabetes and/or hyperlipidemia which involves obesity." Compound 49 was ciglitazone and compound 47 was a compound whose left end was structurally similar to ciglitazone's. The left end of compound 59 was different from 47 and 49, its left end terminated with a 3-pyridyl ring.

Since pioglitazone has a pyridyl ring at its left end, it is important to discuss compound 59 and related compounds described in Sohda II in some detail. To begin with, the term pyridine refers to a six-membered carbon-containing ring with one carbon replaced by a nitrogen. A pyridyl ring is diagramed as follows:


The numbering on a ring begins with the highest atomic weight atom in the ring, which in this case is nitrogen. The numbering moves in a counterclockwise fashion. As noted, compound 59 was a 3-pyridyl ring, which means that the ring is attached at the third position to the rest of the molecule.

The article disclosed two 2-pyridyl compounds: compound 57, the unsubstituted 2-pyridyl, and compound 58, the 6-methyl substituted 2-pyridyl. The term unsubstituted indicates that the pyridyl ring does not have any substituents (such as a methyl or ethyl group) linked to it, while the term 6-methyl indicates that a methyl is linked to the ring at the 6 position, using the numbering system described above. Diagrams of the two compounds are presented below:


Compound 57 from Sohda II was designated by Takeda as Compound 3894 ("Compound 3894"), and compound 58 was designated Compound 3959 ("Compound 3959") and identified in the '777 Patent as compound (b). The defendants' challenges to the '777 Patent largely hinge on assertions concerning these two compounds, and they will generally be referred to as compounds 3894 and (b) in the course of this Opinion.*fn11

The 101 compounds described by Sohda II were organized into seven groups. The article commented on characteristics associated with compounds in each of the seven groups. When discussing the group into which compounds 57 and 58 fell, it noted that "[a]lthough compounds 56, 57, 58, 59 and 63...showed potent activities, they, especially 57 and 58, caused considerable increases in body weight and brown fat weight," in the rodents in which they were tested. (Emphasis supplied.)

In the 1980's, scientists believed, as they do today, that increases in body weight are not desirable for diabetics. There was disagreement, however, about the implications of an increase in brown fat in rodents for humans treated with the same compound. Adult humans have relatively little brown (as opposed to white) fat, while rodents carry a significant amount of brown fat in the saddle between their scapulas. Brown fat has a thermogenetic effect, generating heat to keep them warm. At the time that Sohda II was written, overall weight and fat gain caused by pharmaceuticals were thought to correlate in mammals, including rodents and humans.

G. The Third Divisional Patent: The '779 Patent On March 15, 1983, Takeda filed a third divisional patent to the '200 Patent. The application sought to expand the grouping of compounds originally covered by the '605 Patent, by adding compounds where "the pyridyl or thiazolyl groups may be substituted."*fn12 A preliminary amendment also noted that compounds in which "hetrocyclic rings are substituted have become particularly important, especially Compound 42 in example 9." Compound 42 was the compound destined to be used as a comparator in the '777 Patent, where it is listed as compound (b).

Because the application only sought to expand the groups covered by the '605 Patent but not to introduce a substantively different claim, Takeda filed a terminal disclaimer, noting that the "inventive entity" covered by the '605 Patent and the application were the same, and thereby disclaiming any protection of the compounds in this application beyond the expiration of the '605 Patent. The application was approved by the PTO and issued on April 24, 1984, as U.S. Patent No. 4,444,779 ("'779 Patent").

H. The '902 Patent

Takeda's patent prosecutions were not limited to the divisionals of the '200 Patent. On December 29, 1982, Takeda filed an application covering TZD derivatives with a cyclohexane ring on the left end.*fn13 The patent issued on July 24, 1984 as U.S. Patent 4,461,902 ("'902 Patent").

I. The Failure of Ciglitazone After Takeda's TZD development program attracted the interest of Upjohn, Takeda and Upjohn worked together on the development of ciglitazone from 1981 to 1983. Both companies analyzed the compound's anti-diabetic properties and toxicity, and based on those studies, began Phase I safety studies with human volunteers in both the U.S. and Japan.

As work on the development of ciglitazone progressed it became evident that the compound could not be successful as a commercial anti-diabetic. In November 1982, it was determined that ciglitazone caused cataracts in rats that were being treated with the compound as part of a ninety-day toxicology study. Upjohn believed that the FDA would block a compound that caused cataracts from the U.S. market. Second, a clinical trial in Japan suggested that ciglitazone might not be effective for a Type 2 diabetic patient unless the dose was above 500 milligrams per day, a dosage which was impractical. By 1983, Takeda and Upjohn renewed their search for a more potent, non-toxic compound.

J. Initial Development of Pioglitazone Meanwhile, Fujita was working with Dr. Kanji Meguro

("Meguro"), the Chief Scientist of the Chemical Research Laboratory at Takeda, to develop ideas for new compounds to be synthesized and tested. On September 7, 1982, pioglitazone was synthesized. It terminates at its left end in a 2-pyridyl ring with an ethyl at the 5 position on that ring.*fn14 It was given the internal Takeda compound number 4833.


The first screening of pioglitazone for efficacy in November 1982 noted its promise:

Initial Screening

10 Samples were tested in KKAy mice. 2 samples were significant in lowering blood glucose. The effect of AD-4833 was relatively strong, 0.005% food admixture 4-day administration resulted in reducing blood glucose, plasma TG and NEFA by 46%, 31% and 30% respectively. No significant increase in body weight was observed. The effect was weaker than that of ADD-3959 [identified as compound (b) in the '777 Patent].*fn15

Takeda scientists also conducted preliminary toxicity tests on compounds that showed promise. Pioglitazone was the least toxic of all the TZD compounds evaluated in 1983 and 1984.

Following the failure of ciglitazone, Upjohn and Takeda renewed their collaborative research. In their search for a new compound they focused on the 130 TZD derivatives that had been tested during the ciglitazone selection process, but also synthesized some new compounds.

The decision by Takeda and Upjohn to continue to research TZD derivatives went against some of the thinking in the industry. Other leaders in the diabetes field believed that better avenues for research included developing insulin secretagogues (compounds which combat insulin resistance by causing the pancreas to create more insulin) and treatments for late-stage consequences of Type 2 diabetes, such as neuropathy, nephropathy, and retinpathy.

One of the compounds that was retested during this period was compound (b). Compound (b) had shown strong blood glucose lowering activity in mice and triglyceride lowering activity in both mice and rats. Despite its efficacy, compound (b) was dropped from consideration when testing revealed significant toxicity to the liver and heart as well as a decrease in the number of erythrocytes, a sign of potential toxicity to bone marrow. Compound (b) also failed the cataract screening test conducted by Upjohn.

Based on the experiences with ciglitazone and compound (b), Takeda made identifying a compound without toxic effects its highest priority. It was Upjohn's view that any compound that failed the in vitro chick lens assay test for cataractogenesis had to be ruled out from consideration for development.

K. Takeda's Testing Methods

Takeda conducted many efficacy tests on numerous compounds, including pioglitazone, throughout 1983 and 1984. In order to screen for efficacy, KKAy mice or rats were treated with different dosage levels of a compound for four days. Initial tests usually involved just two doses of the compound to determine roughly if the compound was active. The dosage levels were calculated as milligrams of compound per kilogram of body weight of the treated animal per day (mg/kg/day). The researchers typically matched the animals to be tested by age, sex and body weight. From the pools of animals, groups of five animals were randomly chosen for each dosage level in the test and a separate group of five was chosen to serve as a control. On the fifth day of the screening, the blood glucose and triglyceride levels of the test animals were measured and were compared to blood taken from untreated control animals.

For many compounds Takeda also conducted three dose efficacy tests, to assist researchers in determining the dosage of a compound necessary to reduce an animal's blood glucose level or trigylceride level by 25%. The effective dose required to reduce the levels by 25% is called the "ED25".

Takeda's experiments were performed by technicians. At the end of a three dose efficacy test, the technician would perform regression calculations to plot the best straight line between the three data points. The results would then be reviewed by a trained scientist or by Fujita in order to determine whether the points plotted or the line determined by the regression equation actually corresponded as well as it should to a true dose response curve.

The relationships between two variables in biological systems, such as the changes in blood glucose concentrations with a change in a dosage of a drug, are usually not linear but rather exponential. Plotting the change of the one variable against the other will often result in a curve which is made linear through the application of a process called linear regression. There are limitations, however, on the reliability of a linear regression. A linear regression is more reliable if the interval between the data points is limited. It is significantly less reliable when the administered dosages do not fall within the effective dosage range of the compound being tested since including even one data point that is outside of the linear response region can significantly change the relationship between the three points plotted in a three-dose test. Extending a line beyond a data point to reach an ED25 value that was not within the tested range also runs a considerable risk that the projected results will be unreliable.

Takeda was testing new compounds whose properties were unknown and it had to guess what the best dosage range for testing might be. Not infrequently, it chose dosages that were above or below the effective dosage range. This meant that Takeda often had to conduct several experiments to improve its understanding of the effective dosage range of a compound. In addition to the challenges of making an accurate determination of the ED25 values, Takeda scientists also had to monitor the experiments for other possible factors that might make a particular experiment's results unreliable.

L. Report A-15-13

On February 8, 1984, Takeda forwarded a copy of Fujita's report A-15-13 ("Report A-15-13") to Upjohn. The report, which was titled "Preliminary Studies on Toxicological Effects of Ciglitazone-Related Compounds in the Rats", disclosed the results of preliminary toxicity studies conducted on fourteen compounds that Takeda had considered as candidates for development. The report detailed the method of testing that had been employed: oral doses of 100mg/kg/day of the test compound for two weeks given to five to six week old male and female Wistar rats. At the end of the testing period the rats were sacrificed, body weights and organ weights were analyzed, as were blood chemistry and hematology. The report contained the organ weight expressed as normalized weight (calculated by dividing the organ's weight by the weight of the rat and expressing the weight as a percentage) in order to compensate for the fact that animals differ in size. Pioglitazone was one of the compounds presented in Report A-15-13 and showed no statistically significant toxicity.

In addition to pioglitazone, several other compounds of interest to this Opinion were among the fourteen, including the unsubstituted 2-pyridyl (compound 3894) and the 5-methyl 2-pyridyl (compound (c) as designated in the '777 Patent). The introduction to the report noted that each of these three compounds was less toxic "in regard to reduction of blood red (sic) cells and hypertrophy of liver and heart which were common toxic effects in ciglitazone-related compounds." It added, "[c]onsidering the fact" that compound 3894, pioglitazone and compound (c) "are five times as potent as ciglitazone in the pharmacological activities, they appear to be much easier to continue further studies including clinical trials." In point of fact, however, the report found that compound 3894 produced a statistically significant negative effect on the heart of male rats and that compound (c) had such an impact on platelets. Two other compounds that were used as comparators in the '777 Patent also demonstrated toxicity. Compound (b) was toxic to the liver, heart and erythrocytes, among others things, while compound (d) was toxic to the liver and heart.

M. March 1984 Plan

After two days of meetings between Takeda and Upjohn in March 1984, at Upjohn's headquarters in Kalamazoo, Michigan, the participants agreed that Takeda would select fifty TZD compounds based on hypoglycemic activity in both the KKAy mouse and the Wistar-fatty rat. Upjohn was to test the leads identified by Takeda in the in vitro chick lens assay for cataractogenic activity, and Takeda was responsible for other toxicity testing.*fn16 Takeda had already provided Upjohn with KKAy mice so that Upjohn could replicate Takeda's efficacy testing. It also gave Upjohn the fifty compounds that it had synthesized and selected for this intensive review.

The minutes of the March meeting reflect that it was "desirable that leads selected for further development are clean" in the chick lens assay. Based on a combination of the chick lens assay and the toxicity studies, nine to ten leads were expected to emerge and be subject to further testing by Takeda and Upjohn. It was anticipated that four to five leads would emerge from that further testing and proceed to ninety-day toxicity studies in both rats and dogs. Compounds which emerged as "clean" through all of the stages of testing would be "considered for further development with a goal of IND filing for the best compound as a drug candidate."*fn17 The minutes established a time line for each stage in the process. The next meeting, for selection of the nine to ten leads was scheduled for August 1984.

In selecting the fifty compounds, Takeda was also to consider the "uniqueness of chemical structure." The emphasis on the uniqueness of the chemical structure as a criterion for selecting the initial fifty compounds arose from a Takeda policy that candidate compounds should be reasonably unique from each other in their chemical structures because toxicological problems and adverse reactions are often caused by discrete chemical structures. By emphasizing variety in the chemical structures to be studied, Takeda hoped to avoid losing entire ranges of candidates due to a particular structure's toxicity.*fn18 Based on those same concerns, Upjohn researchers endorsed the decision to make chemical uniqueness a selection criterion.

The fifty compounds chosen by Takeda were a mix of those that had already been tested in earlier research and those that Takeda had recently synthesized. Among the recently synthesized compounds were three that appeared as comparators in the '777 Patent: compounds (c), (d), and (e), which were first synthesized on July 21, May 4, and August 4, 1983, respectively. Because Takeda had observed that pioglitazone was comparatively potent and exhibited no toxicity it synthesized compounds that were structurally related so that it could compare the results.

Takeda's benchmark for efficacy was the ED25 of ciglitazone. The candidate compounds were continually evaluated from July through October of 1984 in order to find what Takeda scientists considered the most reliable ED25 values.

N. October 30, 1984 Meeting and Report A-15-34

Obtaining the efficacy and toxicity data for the candidate compounds turned out to be much more complicated and time consuming than expected. The meeting with Upjohn originally planned for August 1984 did not take place until the end of October. At the meeting Takeda presented Fujita's report A-15-34, which was titled "Pharmacological and Toxicological Studies of Ciglitazone and its Analogues" ("Report A-15-34"). This report is of critical importance to the issues of inequitable conduct raised by defendant Mylan.

Report A-15-34 lists fifty compounds in Table 1. The report gives the chemical structure of each compound as well as efficacy and toxicity data. In generating the report, Fujita examined all of the test results to locate the most reliable ED25 numbers for each compound. In addition to listing the ED25 score which he considered to be the most reliable for each compound, Fujita also indicated in a parenthetical the relative efficacy of each compound to that of ciglitazone. For instance, the benchmark for all testing, ciglitazone, was listed first with an ED25 for glucose lowering in KKAy mice of "40 (1)". Pioglitazone was listed about one-third of the way down the table with an ED25 of "6 (6.7)", indicating that a dose of 6mg (per kg per day) of pioglitazone achieved an ED25 , rendering it about 6.7 times more potent than ciglitazone, which required a dose of 40mg to achieve that result. The parenthetical sometimes indicated the range of the test results obtained by Takeda.

Table 1 also indicated the results of the in vitro chick lens assays conducted by Upjohn. A compound failed the chick lens assay if it caused a change in pH or a cloudy appearance at a lower concentration than did ciglitazone.

Finally, the report provided summary data for hepatomegaly (liver toxicity), cardiomegaly (heart toxicity) and anemia (erythrocyte depletion) from two-week toxicology studies in male and female Wistar rats. The data were presented using a rating system based on the degree of toxicity. For liver and heart, toxicity was evaluated by a percentage gain in weight; for anemia, toxicity was evaluated by a percentage decrease of erythrocytes. Rather than give precise toxicity numbers, the report listed three ranges of toxicity in terms of growth or decline: 8-20%, 21-25%, and 26% and above.

Fujita selected twelve of the fifty compounds as compounds on which the meeting participants should particularly focus their attention, and presented the data for these twelve on Table 2 in the report. In selecting the twelve, Fujita considered the potency of a compound in comparison to its performance in toxicity testing, including the chick lens assay tests, as well as the structural diversity of the compounds. Fujita selected only two compounds whose left end was a pyridyl ring. One of those two was pioglitazone. Pioglitazone was the only compound among the twelve that showed no toxicity, although many of the others listed on Table 2 were far more potent. None of the comparator compounds from the '777 Patent appear on Table 2, although all of them appear on Table 1 of Report A-15-34.

During the meeting, the scientists from Takeda and Upjohn reviewed the data for all the compounds presented in Table 1, giving particular attention to the twelve compounds on Table 2. The discussion was an open one and Upjohn was free to suggest that ...

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