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ZANTAC PATENT TRIAL WILL CONTINUE, WITH FOCUS ON INHERENCY AND INEQUITABLE CONDUCT; INVENTOR CLAIMS NOVOPHARM FORM 2 RESULTS ARE SOLELY DUE TO "SEEDING"

Executive Summary

The Zantac patent infringement bench trial will continue, focusing on the issues of "inherency" and "inequitable conduct," Elizabeth City, N.C. federal court Judge Terrence Boyle told Glaxo and Novopharm after considering and refusing a Glaxo motion for dismissal of the case Aug. 12. Under Boyle's ruling, defendant Novopharm has the burden of proving in "clear and convincing evidence" its allegations that Form 2 ranitidine HCl is not novel (the inherency issue) and that Glaxo misled the U.S Patent & Trademark Office by failing to disclose that by following example 32 in the Form 1 patent ('658), Form 2 ranitidine is produced (the inequitable conduct issue). The bench trial, which began Aug. 9, pits Novopharm, Inc., the Chicago-based subsidiary of the Canadian generic drug marketer Novopharm Ltd., against Glaxo in what Glaxo attorney Stephen Judlowe (New York firm Hopgood, Calimafde, Kalil, Blaustein & Judlowe) characterized as a "battle" of opposing scientific expert witnesses. At issue in the trial is the validity of ranitidine's form 2 patent (#4,521,431), which expires in June 2002. Glaxo also holds a patent for Form 1 of Zantac ('658); that patent expires in December 1995. Novopharm filed an ANDA for ranitidine in 1991, claiming it would market the drug after the Form 1 patent expired. Glaxo sued the company, asking the court to uphold the validity of Form 2. The thrust of Glaxo's case is that if example #32 of the Form 1 '658 patent is performed, the result is Form 1. Novopharm is arguing that its experts produced Form 2 ranitidine repeatedly by performing example #32 of the Form 1 patent. Glaxo maintains that Novopharm only achieved Form 2 because of "seeding," or contamination by Form 2, on the packaging of the ranitidine base used by Novopharm. Boyle's Aug. 12 ruling indicates that Novopharm presented enough evidence on the inherency and inequitable conduct issues for the judge to require that Glaxo present its arguments before deciding the case. He indicated that he does not need to hear Glaxo's response to Novopharm's third argument, that Glaxo had not disclosed the "best mode" of manufacture for Form 1. At the close of the first week before Judge Boyle, Glaxo had two more expert witnesses scheduled to testify. Scheduled first for the morning of Aug. 16 is Stephen Byrn, PhD, Purdue University, an expert on polymorphic crystal structures. Glaxo is expected to rest its case by noon on Aug. 16 with the trial closing forecast for Aug. 17 or 18. A ruling could come before year-end. The trial began Aug. 9 with a 40-minute opening statement from Glaxo attorney Judlowe in which he challenged Novopharm's claim that the Form 1 patent leads to Form 2 ranitidine HCl based on X- ray powder diffraction tests that show "that each compound has its own signature." Judlowe warned the court that on the inherency question the court "will have a battle of experts" and stressed that it is "important for the court to examine the credentials of the witnesses" on both sides. On the charge of "inequitable conduct" made against Glaxo, Judlowe maintained that it is "used in 80% of patent trials" and diminished the charge by calling it the "defense of last resort" in the legal community. Novopharm lead attorney Robert Green (Chicago firm Leydig, Voit & Mayer) delivered a 45-minute opening statement, asserting that at the time of the '431 patent application, the patent examiner raised questions about the similarities between Form 1 example #32 and the Form 2 patent. Green also charged that Glaxo "only disclosed the best mode for tablets" of ranitidine HCl because the "patent makes no mention of the granulation procedure." The first witness for Glaxo, crystallographer expert Jenny Glusker, University of Pennsylvania, gave the court a lesson in crystal formation, explaining that "seeding" is used to "accelerate the crystallizing process." Glusker claimed that seeding could be "intentional or accidental" and could be "airborne" or carried inadvertently by a scientist. Seeding is used to crystallize a "super saturated solution," she told Judge Boyle. Novopharm Research Chemist Idilko Riss testified that in the summer of 1991 she conducted experiments at Novopharm's Hood Road research facility in Markham, Ontario in which she compared infra- red spectroscopy test results of Form 1 example #32, Form 2 and Zantac powder and found them to be "the same." Riss was challenged in cross examination on her use of "free-based" synthesized ranitidine used to complete the Hood Road experiments. Novopharm counsel John Rosenquist (Chicago firm Leydig, Voit & Mayer) reminded the court that Glusker attained ranitidine base the same way. In his cross-examination of Glusker, Rosenquist asked: "How long airborne seeds of ranitidine HCl would last in 75% humidity" to which Glusker replied, "they wouldn't." Rosenquist's questioning set the stage for Novopharm's expert witness, Natalie Lazarowych, PhD, Dalton Labs. Lazarowych, an organic chemist, conducted over 130 experiments with ranitidine HCl, including the production of Form 2 six times using example #32 of the Form 1 patent. In Aug. 11 testimony, Lazarowych said "ranitidine base seeding contamination was unlikely." Judge Boyle precipitated Lazarowych's statement, asking: "Is it impossible to have crystals in a water soluble solution...they had to dissolve, not be crystalline?" "Yes," Lazarowych replied. She went on to call example #32 "a dumb way" to produce Form 2 ranitidine HCl because, she told the judge, it is the equivalent of "trying to keep three cups of sugar dissolved in one cup of water." Judlowe led the often contentious two-hour cross-examination of Lazarowych, claiming she lacked the skills and background in crystallography and was therefore unable give an informed opinion of polymorphic crystals. Judlowe questioned Lazarowych on the purity of the ranitidine base used in the Novopharm experiments, on boiling points, and generally tried to show that Lazarowych's methods were inconsistent with the methods in example #32 of the '658 patent. In Glaxo's Aug. 12 motion for dismissal, Judlowe argued that Lazarowych's testimony showed Novopharm's inherency claim to be invalid because ranitidine HCl Form 2 was not produced every time Lazarowych ran example #32 of the '658 patent. Judlowe argued that the statute is clear: "you must always get the intended product to claim it was inherent" in the the previous patent. Green completed Novopharm's case Aug. 12 by reading the deposition of ranitidine inventor David Collin, a Glaxo U.K. scientist. Green drew the court's attention to the Collin record noting that the scientist who led the research into the discovery of ranitidine stated that his "laboratory notebook for example #32 of the '658 patent produced ranitidine HCl Form 2." In Aug. 13 testimony on the issue of inequitable conduct, Collin denied that Glaxo had "misled" the U.S. Patent Office. Led by Glaxo counsel Steven Lockman (D.C. office of Arnold & Porter), Collin testified that on the issue of inherency, Form 2 ranitidine HCl is "a different polymorphic formation of ranitidine HCl" than Form 1. Collin continued, saying that "from his experience" he was "convinced" that the only way to get Form 1 from example #32 was from Form 2 seeds." Paying close attention to the court proceedings throughout the first week of the trial was Genpharm, which is also being sued by Glaxo for Zantac patent infringement. The Canadian generic drug firm was attending to any information provided by Glaxo during the Novopharm trial about the ranitidine HCl Form 1 '658 patent. Glaxo v. Genpharm is expected to begin in May 1994 in Baltimore federal court.

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