Shareholder Representative Services LLC v. Alexion Pharmaceuticals, Inc.

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

SHAREHOLDER REPRESENTATIVE ) SERVICES LLC solely in its capacity ) as representative of the Securityholders, ) ) Plaintiff, ) ) v. ) C.A. No. 2020-1069-MTZ ) ALEXION PHARMACEUTICALS, ) INC., ) ) Defendant. )

MEMORANDUM OPINION Date Submitted: January 12, 2024 Date Decided: September 5, 2024

Michael A. Barlow, QUINN EMANUEL URQUHART & SULLIVAN, LLP, Wilmington, Delaware; Andrew M. Berdon; Angus Chen; Alexandria Deep Conroy; Courtney C. Whang, QUINN EMANUEL URQUHART & SULLIVAN, LLP, New York, New York; Joseph M. Paunovich, David M. Elihu, James Bieber, Andrew Brayton, QUINN EMANUEL URQUHART & SULLIVAN, LLP, Los Angeles, California, Attorneys for Plaintiff and Counterclaim Defendant Shareholder Representative Services LLC.

David E. Wilks, Scott B. Czerwonka, WILKS LAW, LLC, Wilmington, Delaware; Deborah E. Fishman, Carson D. Anderson, ARNOLD & PORTER KAYE SCHOLER LLP, Palo Alto, California; Daniel L. Reisner, Jeffrey A. Fuisz, Angela R. Vicari, Matthew M. Wilk, ARNOLD & PORTER KAYE SCHOLER LLP, New York, New York; Howard Sklamberg, Jeremy Cobb, ARNOLD & PORTER KAYE SCHOLER LLP, Washington, DC, Attorneys for Defendant and Counterclaim Plaintiff Alexion Pharmaceuticals, Inc.

ZURN, Vice Chancellor.

This case is about the acquisition, development, and eventual termination of research into a monoclonal antibody known first as SYNT001, and then ALXN1830. Nonparty Syntimmune, Inc. began developing SYNT001 in 2013. Defendant Alexion Pharmaceuticals, Inc. (“Alexion”) acquired Syntimmune in November 2018, optimistic about SYNT001’s therapeutic and commercial success. The merger agreement designated plaintiff Shareholder Representative Services, LLC (“SRS”) as the former Syntimmune stockholders’ representative.

The merger agreement provided for a purchase price of $1.2 billion. Of that amount, $400 million was to be paid upfront, and $800 million would be paid in installments upon the completion of each of eight milestones.1 Milestone 1, at issue in this case, provided for a $130 million payment upon the completion of a successful Phase 1 Clinical Study, as defined by the agreement. The agreement required Alexion to use commercially reasonable efforts to achieve each milestone for seven years after closing. The agreement defined those efforts with an outward-facing metric, as Alexion’s efforts would be measured by what a similarly situated company would do.

As of closing, Alexion intended to pursue treatments for three conditions, known as indications. At least four competitors were developing therapies similar

1 For simplicity, I refer to individual milestones in the form “Milestone #.”

to ALXN1830 during the relevant period. Alexion believed it could distinguish ALXN1830 by being first to treat a specified indication through intravenous administration. Alexion hoped to develop a subcutaneous means of administration, which patients would prefer over intravenous administration. Alexion also hoped clinical testing would reveal that ALXN1830 could be differentiated from its competitors.

But the ALXN1830 program began hitting hurdle after hurdle. First, by early 2020 it was clear that the bulk of Alexion’s clinical drug supply was contaminated and could not be used. And it would be some time before Alexion could create more. With only a limited supply left, Alexion paused two ongoing Phase 1 trials and allocated its supply to two trials ongoing in the United Kingdom.

The same month, the first cases of the COVID-19 virus emerged in the UK. The third party administering the studies halted dosing, and Alexion could do nothing about it. For a time, Alexion pushed forward with its plans to conduct a Phase 2 clinical trial in patients in the United States. But the pandemic worsened, and Alexion determined it was not safe to proceed. Alexion decided to pause the study. At this point, Alexion had no ongoing clinical trials. Its competitors were able to continue with trials.

In April 2020, Alexion prioritized programs that were part of an initiative it referred to as “10 by 2023”—an externally announced goal of launching ten products *3 by 2023 to demonstrate value to investors. In doing so, Alexion reallocated a significant portion of the ALXN1830 program’s funds to other programs. Though funding was not completely removed, the deprioritization meant that when Alexion had the clinical supply and willingness to resume studies in September 2020, it was not prepared to do so. The ALXN1830 program continued to fall further behind its competitors.

Alexion was unfazed by its lack of progress relative to its competitors and remained resolute that ALXN1830’s development would continue. It began dosing in a Phase 1 trial in healthy volunteers called HV-108, which is at the heart of this case. It planned Phase 2 studies in two indications, even though it was clear ALXN1830 would be the fifth drug of its type to treat one of them and the third to treat the other—Alexion’s hopes of being first to market in those indications had disappeared. Alexion’s only hope was to differentiate ALXN1830, and it was optimistic it could do just that. It even identified two new indications to start pursuing.

But in July 2021, Alexion was acquired by AstraZeneca plc, a much larger pharmaceutical company. AstraZeneca promised $500 million in recurring synergies in connection with the acquisition, and it was Alexion’s job to deliver. Every program at Alexion fell under review, including ALXN1830. From that moment, the company’s tone on the ALXN1830 program changed. Within three *4 weeks, it paused one of the Phase 2 studies, which was on track to dose its first patient the following week.

In August 2021, the HV-108 study was paused due to a COVID outbreak. In mid-September, Alexon received preliminary HV-108 data. That data would take on great importance in assessing the ALXN1830 program, and its interpretation was a bellwether for perspectives on the program within Alexion. While the data reflected attributes typical of drugs like ALXN1830 and which had appeared in ALXN1830 data previously, Alexion began characterizing that data as new and unexpected. ALXN1830’s safety and commercial viability began to be questioned, and the remaining ALXN1830 indications were at risk of termination. Despite those doubts, a safety committee gave the green light to resume dosing in HV-108.

Less than a week after the safety committee’s green light, data suggested that the death of a primate in an ongoing ALXN1830 toxicology study could reflect that ALXN1830 was unsafe in humans. HV-108 was again paused. An AstraZeneca immunology expert and an external expert both opined that the HV-108 data did not reflect any safety concerns, and it was confirmed the primate death did not reflect that ALXN1830 might be unsafe.

But Alexion had made up its mind. In December, it officially terminated the program. It cited the HV-108 data and its implications as the primary driver.

SRS filed this action asserting claims for breach of the merger agreement. Its first claim asserts the HV-108 data reflected that Milestone 1 was satisfied, but Alexion failed to pay. Achievement of Milestone 1 is determined by the satisfaction of five criteria,2 two of which are in dispute. After resolving disputes over the interpretation of those criteria and whether the HV-108 data reflect they were met, I conclude SRS met its burden and award damages in the amount of $130 million.

SRS’s second claim asserts Alexion failed to use commercially reasonable efforts to achieve the remaining milestones. Under the merger agreement’s outward-facing metric, the parties offered evidence of ALXN1830’s commercial viability, informed by considerations including safety, efficacy, and likelihood of regulatory approval, which in turn are informed by the HV-108 data. I conclude Alexion breached the merger agreement’s requirement to use commercially reasonable efforts by terminating the ALXN1830 program in December.

The damages for Alexion’s breach will be addressed in a second opinion to follow. So will Alexion’s counterclaim based on the problems with the drug supply it received from Syntimmune.

2 Again for simplicity, I refer to the criteria in the form “Criterion #.”

I. BACKGROUND3

This decision follows a seven day-trial. SRS bore the burden of proving its claims by a preponderance of the evidence.⁴ The following constitute my findings of fact. I begin with primers on autoimmune therapies and drug development, followed by a note on the treatment of fact witness testimony based on the witness’s specialized knowledge of those subjects.

A. Overview of Autoimmune Therapies

The human body produces antibodies when exposed to pathogens to block the pathogens and prevent disease.5 The most common type of efficacious antibody is IgG.6 FcRn is a protein that keeps IgG antibodies in the bloodstream for longer,

3 The trial record includes over 3,400 exhibits. As is typical, the parties elicited testimony on a subset of those exhibits. At times in this decision, I cite to exhibits that were not discussed at trial, and in some cases, not cited in post-trial briefing. Where I do so, I give appropriate weight to such exhibits keeping in mind the possible lack of complete context. Citations in the form “[last name] Tr. –” refer to trial testimony of the referenced witness, available at docket item (“D.I.”) 348, D.I. 349, D.I. 350, D.I. 351, D.I. 352, D.I. 353, and D.I. 354. Citations in the form “SRS Op. Br.” refer to SRS’s post-trial opening brief, available at D.I. 364. Citations in the form “ALXN Op. Br.” refer to Alexion’s amended opening post-trial brief, available at D.I. 369. Citations in the form “SRS Ans. Br.” refer to SRS’s post-trial answering brief, available at D.I. 370. Citations in the form “ALXN Ans. Br.” refer to Alexion’s post-trial answering brief, available at D.I. 371. 4 Zimmerman v. Crothall, 62 A.3d 676, 691 (Del. Ch. 2013) (“As the party seeking enforcement of his interpretation of the [operating agreement], [the plaintiff] bears the burden to prove his breach of contract claim by a preponderance of the evidence.”). 5 See Kinch Tr. 226; JX 2498 ¶ 30 (“The primary function of antibodies is to elicit immunity by binding to foreign antigens, kill invading pathogens, and prevent infections from spreading to other parts of the body.”). 6 JX 2498 ¶ 31; see also Kinch Tr. 227 (explaining IgG “tends to be particularly efficacious in blocking . . . pathogens that might be considered threats by the body”).

resulting in higher total numbers of IgG antibodies.7 Higher levels of FcRn help the human body to fight pathogens more effectively.8

Some people develop autoimmune diseases.9 In the case of an IgG autoimmune disease, IgG “goes from friend to foe” and attacks healthy cells.10 Such conditions are rare, but can range from life-altering to fatal.11 For those with IgG autoimmune disorders, the resulting higher IgG levels are harmful.12

One class of therapies for IgG autoimmune diseases is known as anti-FcRn treatments, which include humanized monoclonal antibodies.13 These monoclonal antibodies bind with FcRn, making it unavailable to bind with, and extend the half-life of, IgG.14 This reduces the amount of IgG in circulation, lessening the damage to healthy cells.15 Anti-FcRns are increasingly being explored as a way to treat IgG autoimmune conditions.16

7 See JX 2498 ¶¶ 36–37; Kinch Tr. 228. 8 See Kinch Tr. 227–28. 9 Id. at 227. 10 Id. 11 D.I. 319 ¶ 30; see Hall Tr. 14. 12 JX 2498 ¶ 41. 13 Id. at ¶¶ 11, 43. 14 Id. at ¶¶ 41, 43–44. 15 Id. at ¶ 43. 16 Id. at ¶ 44.

The autoimmune conditions targeted by anti-FcRn therapies include warm autoimmune hemolytic anemia (“WAIHA”), pemphigus vulgaris (“PV”), and generalized myasthenia gravis (“gMG”).17 These conditions and others targeted by anti-FcRns are rare18 and chronic.19 For example, as of 2018, about 19,000 people in the United States had a PV diagnosis.20 Many of these conditions feature a high unmet need for effective therapies.21

Anti-FcRn therapies are potentially very lucrative, and, as early as 2014, the emerging anti-FcRn drug class was expected to generate substantial revenue.22 Expectations only grew with time, with one analyst noting in 2018 that an estimated $20 billion market for anti-FcRns “could be conservative.”23

17 Id. at ¶ 42. It is my understanding there are different ways of writing many of the acronyms used in this decision. For example, WAIHA is sometimes written “wAIHA.” E.g., id. Where the parties embrace the same spelling, I have adopted their convention. Where the parties employ different spellings, I have chosen one, perhaps arbitrarily. 18 Hall Tr. 12–13. 19 Sarin Tr. 939. 20 JX 2923 at 23. 21 See, e.g., Russell Tr. 689–90. 22 JX 76 at 9 (explaining anti-FcRn drugs “are expected to generate $1.5-2.2 billion in 2018 combined sales”). 23 See, e.g., JX 655 at 1.

B. Overview Of Drug Development

Bringing a drug to market is an expensive and lengthy process. Generally, it occurs over four phases.24 First is the discovery and research phase, which culminates in the “selection of [a] candidate antibody for clinical testing.”25 Syntimmune completed this phase by selecting the molecule that would become

ALXN1830.

Second is the development phase.26 This phase comprises two stages: a preclinical stage and a clinical stage.27 The preclinical stage entails the development of the drug formulation that will be used during the clinical stage. 28 “Formulation” refers to the method of delivery, and can include delivery “intravenously (i.e., into a vein), intramuscularly (i.e., into a muscle), or subcutaneously (i.e., under the skin).”29 The intravenous and subcutaneous formulations receive extensive focus throughout this decision, and I refer to them as “IV” and “SC,” respectively. The preclinical stage can also involve testing the drug in vitro (in a laboratory setting, for

24 JX 2498 ¶ 46. 25 Id. at ¶ 46(i). 26 Id. at ¶ 46(ii). 27 Id.; JX 2507 ¶ 50. 28 JX 2498 ¶ 50. 29 Id.

instance, examining cells in a test tube) and in vivo (in animals).30 One goal of in vivo testing is to obtain toxicology data.31

The clinical phase involves administering a chosen formulation to humans “to test for both efficacy and safety.”32 Efficacy refers to the ability of the drug to accomplish its purpose—here, by lowering IgG.33 Safety refers to the possibility that the drug will cause adverse health effects.

In clinical trials, safety is determined in part by the occurrence of negative side effects called adverse events.34 There are five grades of adverse events.35 Grades 1 or 2 adverse events are mild or moderate and can include headaches and rashes.36 They can generally be treated with over-the-counter medication.37 For purposes of this decision, Grade 1 and 2 adverse events will not influence the progression of an anti-FcRn clinical trial or the development of a therapy. Grade 3 to 5 adverse events are severe and denote conditions that require hospitalization or,

30 Id. at ¶¶ 72–73. 31 JX 2498 ¶¶ 72, 74(iii). 32 Id. at ¶ 46(ii). 33 See id. at ¶ 45 (identifying ALXN1830 as a humanized IgG antibody). 34 Kinch Tr. 242–43. 35 Id. at 243. 36 Ledwith Tr. 1037. 37 Kinch Tr. 271; Harvey Tr. 1713; see also Ledwith Tr. 1037; Hall Tr. 42.

in the case of a Grade 5 event, include death.38 An adverse event is a “serious adverse event” (“SAE”) if it is Grade 3 or higher.39 The occurrence of an SAE is noteworthy.

Safety and efficacy can also be informed by data. Clinical investigators can see signs of potential safety problems before the occurrence of an adverse event. They monitor pharmacokinetics (“PK”), or the way the drug moves into, through, and out of the body.40 Clinical investigators also look at pharmacodynamics (“PD”), which is the effect the drug has on the body.41 Here, PK is measured by the drug’s concentration in the body, and PD is measured by IgG lowering.42

When a drug is administered, the human body works to remove it. 43 There has to be a minimum level of the drug in the patient’s body for it to be effective.44 In the case of ALXN1830, the minimum effective concentration is established through the observation of IgG lowering.45

38 Kinch Tr. 243–44; see also Ledwith Tr. 1037; Hall Tr. 43. 39 Kinch Tr. 243–44. 40 Id. at 429; JX 2498 ¶ 71. 41 See Kinch Tr. 429–30. 42 Id. at 430. 43 See id. at 258–59 (describing clearance rate). 44 Id.; Robbins Tr. 552. 45 See Kinch Tr. 259.

But if the level of drug gets too high, it can cause adverse health consequences.46 One sign of a potential safety problem is unexplained drug accumulation.47 Drug accumulation is the phenomenon of a drug building up (i.e., PK increasing) in the human body.48 The range between the minimum effective level of drug concentration and the point at which the level of drug becomes toxic is known as the therapeutic window.49 The therapeutic window cannot be known until it is established through clinical trials.50 The minimum toxic concentration is established by the observation of adverse events.51 An SAE indicates that the concentration is approaching the minimum toxic concentration.52 Ideally, the drug will reach a concentration that remains stable over time, known as a steady state. 53

For anti-FcRns, investigators look for signs that the body is mounting an immune response against the drug itself, particularly one that neutralizes or binds the drug. Immunogenicity “is the likelihood that a study drug will elicit an antibody

46 Id. at 258–60. 47 Id. at 260 (“Q. Is it hypothetically possible for drug accumulation to lead to safety concerns? A. Oh, absolutely.”). 48 Id. at 253. 49 Id. at 258–59; Jagannathan Tr. 1277. 50 Kinch Tr. 260; see also Jagannathan Tr. 1290. 51 Kinch Tr. 260. 52 Id. 53 Jagannathan Tr. 1280; Robbins Tr. 553, 2068.

response by the person being injected” through the creation of antidrug antibodies (“ADAs”).54 Because “ADAs, in certain cases, can limit the efficacy of a therapeutic product or trigger adverse events following the administration of the drug, preclinical and clinical studies monitor the incidence of ADA response rates throughout treatments.”55 All or nearly all monoclonal antibodies generate an ADA response.56 The presence of ADAs does not present a safety concern per se.57 Neutralizing antibodies (“nAbs”) “are a subset of ADAs.”58 nAbs “block the pharmacological function and profile” of the drug, which can “reduce the therapeutic effect of the drug, leading to the need for increased dosing.”59

Investigators look for nAbs because they can contribute to drug accumulation. A drug can accumulate in three forms: free drug, meaning the drug is still capable of binding with FcRn; partially bound, which means the drug’s ability to bind with FcRn is reduced; and bound, which means the drug is incapable of binding with

54 Kinch Tr. 248–49 (noting immunogenicity is also “a general term to indicate the likelihood that a particular molecule will be recognized by the immune system”); see also JX 2543 ¶ 39 (“Immunogenicity is frequently presented in the form of anti-drug antibodies, or ADAs. ADAs are antibodies that are produced by the human body in response to the introduction of a drug.”). 55 JX 2498 ¶ 71(ii) (footnote omitted). 56 See Kinch Tr. 249. 57 Id. 58 JX 2543 ¶ 40. 59 Id.

FcRn.60 A drug becomes partially or fully bound when one or more nAbs bind with it.61

The clinical stage of development plays an outsized role in this case. Typically, a drug progresses through three phases of clinical trials.62

1. Phase 1 Clinical Trials

Phase 1 clinical trials are typically the first time the drug is administered to humans.63 These trials are generally conducted with healthy volunteers.64 The primary goal of a Phase 1 trial is to determine whether the drug is safe.65 Safety is determined in part based on the occurrence of adverse events.66 When possible, companies also look for evidence of efficacy in Phase 1 studies.67

Not all subjects in a clinical study receive the same dose of a drug. Rather, the pool of subjects is divided into cohorts, and each cohort receives a different dose.68 Relevant here, there are two models of dosing cohorts. The first is a single

60 Jagannathan Tr. 1300–01. 61 JX 2543 ¶ 40. 62 JX 2498 ¶ 51. There are exceptions, which are discussed below. 63 Kinch Tr. 242. 64 JX 2498 ¶ 53. 65 Kinch Tr. 242. 66 Id. at 242–43. 67 Id. at 244. 68 Cf. id. at 275–77 (describing dosing levels of cohorts in a study of ALXN1830).

ascending dose, or “SAD” model. Under this model, the first cohort will receive the lowest dose in the study.69 If there are no adverse safety signals, the next cohort will be dosed, and so on.70 Subjects in a Phase 1 study are dosed once.71

The second is a multiple ascending dose, or “MAD” model. A MAD cohort will receive multiple doses of the same volume of a drug over a period of time. 72 Here, that is typically over a number of weeks.

2. Phase 2 Clinical Trials

Phase 2 studies are generally larger than Phase 1 studies and enroll patients with a specified condition as opposed to healthy volunteers.73 From this point on, the clinical development process must focus on a specific indication.74 Syntimmune first targeted PV; later development efforts would center on gMG, WAIHA, and others.

Like Phase 1 trials, Phase 2 trials focus primarily on safety.75 In addition, the investigator in charge of the study seeks “evidence that the drug is efficacious,”

69 See JX 2498 ¶ 54; JX 0194 at 3 (describing methodology of a particular SAD trial). 70 See JX 0194 at 3. 71 See JX 2498 ¶ 54. 72 See id.; JX 1142 at 2 (describing methodology of a particular MAD trial). 73 JX 2498 ¶¶ 58–59. 74 Id. at ¶ 59. 75 Kinch Tr. 245.

meaning it is having its intended effect in that patient population.76 Another goal of Phase 2 trials is to determine the dosage that will be used at the Phase 3 trial.77

3. Phase 3 Trials, Approval, And Marketing The final clinical trial is a Phase 3 trial. The goal of a Phase 3 trial “is

generally to generate sufficient information that the regulator will be convinced that U.S. marketing should be allowed.”78 After a Phase 3 trial concludes, the company submits the drug to the relevant regulatory body for approval.79 If the drug is approved, it can be manufactured, marketed, and sold.80

Regulatory approval does not guarantee commercial success: the drug has to be competitive in the marketplace. One way to compete is being first to market in an indication.81 If a drug is first to an indication, physicians have the opportunity to gain experience and comfort prescribing it, which helps give the drug some staying power.82

76 Id. 77 Id. at 245–46. 78 Id. at 246–47. 79 Id. at 247; JX 2498 ¶ 46(iii). 80 JX 2498 ¶ 46(iv). 81 See Russell Tr. 733; Jagannathan Tr. 1329–30; Bahl Tr. 1743–45; see also Sarin Tr. 936. 82 See Jagannathan Tr. 1329; JX 2501 ¶ 105–06 (explaining that first entrants retain a disproportionate market share due to a variety of factors).

4. Commercial Viability

Another way to compete is through differentiation.83 Differentiation refers to having positive features that distinguish the drug from competitors to capture market share. When new therapies come to market, physicians “compare the relative benefits to the relative” downsides and “determine whether it’s worth replacing [the] existing therapeutic.”84 At a high level, physicians look at three factors: efficacy, safety, and patient preference.85

Patient preference denotes exactly that: the therapy the patient prefers.86 For example, patients generally prefer SC administration to IV administration.87 IV administration requires a patient to drive to an infusion center, prepare to receive the infusion, and receive the infusion, which alone can take forty-five to ninety minutes.88 By contrast, an SC dose can be self-administered at home.89

There are different ways to administer an SC dose that can make it more appealing to patients and therefore increase the drug’s competitiveness. There are a

83 See JX 2501 ¶ 107 (explaining that companies can turn late-mover status into an opportunity through differentiation); see also Bahl Tr. 1730. 84 Jagannathan Tr. 1329. 85 Id. at 1330–32. 86 Id. at 1331–32. 87 Id. 88 Borboroglu Tr. 1412–13. 89 See Sarin Tr. 939–40; Borboroglu Tr. 1412; Jagannathan Tr. 1331.

few forms of SC delivery, including a syringe, auto injector, an SC pump, and an on-body device.90 The syringe and auto injector could deliver only a relatively small dose volume, and so they were never a viable option for ALXN1830.91 Alexion was focused on the SC pump and an on-body device.92 An SC pump is “a pretty large” tabletop system.93 The patient must sit still while the drug is administered, for a period of anywhere from ten to forty-five minutes.94 Alexion found that preparation to deliver the dose through the pump was “too complex” for patients, making it less desirable.95

The second option Alexion considered was an on-body device.96 The device would be “about the size of an iPhone or maybe a little bit bigger.” 97 It adheres to the patient’s skin, allowing them to move around while the drug is being administered.98

90 See Jagannathan Tr. 1331–32; Borboroglu Tr. 1411–12. 91 Borboroglu Tr. 1410; Jagannathan Tr. 1331–32. 92 See Borboroglu Tr. 1412; see also JX 2507 at 14. 93 Borboroglu Tr. 1413. 94 Id.; see JX 1745 at 8. 95 JX 1745 at 9. 96 Id. 97 Borboroglu Tr. 1411–12. 98 Id. at 1412.

Another factor that affects competitiveness is the product’s label. The FDA provides a label to each drug it approves, which “is guidance to the physician who is thinking of prescribing the drug.”99 The information appearing on the label can include the ADA rate100 and the occurrence of drug accumulation in a clinical trial.101 To be sure, the FDA provides “guidance to clinicians . . . to consider that ADA rates are not directly comparable across labels.”102

C. Fact Witness Opinion Testimony Based On Specialized Knowledge

With the aid of those primers, I will proceed to set forth my findings of fact. But first I must address some thorny evidentiary issues presented, perhaps predictably, by the specialized knowledge set forth in those primers and the lay witnesses called to testify about ALXN1830’s progress and prognosis.

Under Delaware Rule of Evidence 701, a lay witness may offer opinion testimony that is “rationally based on the witness’s perception,” but “not based on scientific, technical, or other specialized knowledge within the scope of Rule 702.”103 That requirement was added in 2000 to “ensure[] that evidence qualifying

See Kinch Tr. 311–12; Robbins Tr. 612 (“Physicians utilize drug labels in determining 99

which products they would like to use for their patients.”). 100 See, e.g., Robbins Tr. 627. 101 Harvey Tr. 1690. 102 Jagannathan Tr. 1367–68. 103 D.R.E. 701.

as expert testimony under Rule 702 will not evade the reliability scrutiny mandated by the Supreme Court’s Daubert decision and the 2000 amendment to Rule 7.”104 Of course, a lay witness can offer factual descriptions of his personal observations.105 From there, a lay witness can offer his opinion as long as a foundation is laid “that the witness’[s] testimony is rationally based on his own perception of and personal experience with the substance and not on scientific, technical or other specialized knowledge.”106 The witness’s knowledge must be “accessible to ordinary persons”107 or within “the realm of common experience.”108

Alexion frequently cites and relies on the opinion testimony of lay witnesses to support its arguments as to topics including the proper interpretation of clinical data, the potential causes of drug accumulation observed during clinical trials, *21 immunogenicity, and the likelihood a monoclonal antibody will obtain FDA approval based on clinical data. As a general matter, those topics fall within the exclusive province of Rule 702.109 And for much of the opinion testimony at issue, Alexion elicited no testimony establishing those witnesses have or could have any personal knowledge of the matter in question.

I will offer a couple discrete examples. Alexion elicited testimony from two lay employees, Brian Ledwith (Alexion’s global medicine team lead for ALXN1830)110 and Gialuca Pirozzi (Alexion’s head of development, regulatory, and safety),111 that immunogenicity data based on a multidose cohort was meaningfully more reliable or offered meaningfully more information than data from earlier single-dose studies.112 This is opinion testimony that should be given exclusively by experts. Neither Ledwith nor Pirozzi was qualified as an expert. I could consider their testimony to the extent it credibly reflects the witness’s contemporaneous views on the matter. Ledwith did not take part in the events relevant to this issue, so his

109 3 Christopher B. Mueller & Laird C. Kirkpatrick, Federal Evidence § 7:6 (4th ed. 2023) (“When testimony reflects expertise, whether based formally on something that everyone would call ‘science’ (such as chemistry) or based instead on something that few would term ‘science’ (such as the experience of a perfume tester), such testimony must satisfy the standards of Rule 702 and Daubert.”); Dole Food, 114 A.3d at 553 (describing “rare disciplines like nuclear physics, brain surgery, or accident reconstruction”). 110 Ledwith Tr. 1035. 111 Pirozzi Tr. 1434. 112 ALXN Ans. Br. 23–24 (citing Pirozzi Tr. 1470–71; Ledwith Tr. 1092).

testimony cannot express any such contemporaneous views. While Pirozzi was directly involved, his testimony speaks in general terms, not to his personal and contemporaneous understanding of the data.113 And as opinion evidence, it was also too vague to be helpful. He testified that one has to look at multiple dose data if “you truly want to understand immunogenicity,” and that single dose data is “less meaningful.”114 But Pirozzi did not say he thought the single dose data was inaccurate, and he stopped far short of testifying that the single dose immunogenicity data was not at all informative on that question.115

As another example, Dr. Martine Zimmermann, Alexion’s global head of regulatory affairs, R&D, and commercial quality,116 gave her opinion as to the likelihood ALXN1830 would be approved by regulators.117 But the record does not establish that Zimmermann, a fact witness, would have personal and unspecialized knowledge supporting her prediction. The trial transcript speaks generally to Zimmermann’s credentials: she is a “doctor in pharmacy”; she “worked as a lab scientist” after receiving her doctorate; she eventually stopped working as a lab

See Pirozzi Tr. 1470 (“[I]f you want to understand immunogenicity, you need to look at 113

multiple doses over time, especially for a drug which is meant to be given chronically.”). 114 Id. at 1471. 115 See id. at 1501. 116 Zimmermann Tr. 1232. 117 Id. at 1243.

scientist at an unknown time; as her next job after leaving her position as a lab scientist she “did regulatory affairs” at “a company called Aventis Pharmaceuticals”; she eventually left Aventis but “continued working in regulatory affairs”; she joined Alexion in 2009, where she remained through 2023; her “role at Alexion was regulatory affairs”; her job title was “global head of regulatory affairs, R&D, and commercial quality”; in that role she “overs[aw] the regulatory strategy of the entire Alexion portfolio,” approximately 180 people reported to her, and she has “overseen” “programs” in her career; and she was involved with ALXN1830 from the time of the Syntimmune acquisition through 2021.118 But the record is silent on Zimmermann’s actual role in terminating ALXN1830 or determining its likelihood of regulatory approval. It is reasonable to infer from her involvement in “regulatory affairs” and her title at Alexion that she has some knowledge of the regulatory process, and I make that inference here. But there is no basis from which I can deduce the extent of her knowledge on the relevant topics.

As is typical in Chancery practice, I afford lay opinion testimony the weight it deserves rather than excluding it.119 Rules 701 and 702 serve as helpful guideposts in deciding how much weight to give. Where the testimony plausibly refers to either

118 Id. at 1231–33. 119 Murphy Marine Servs. of Del., Inc. v. GT USA Wilm., LLC, 2022 WL 4296495, at *21 n.221 (Del. Ch. Sept. 19, 2022) (declining to exclude testimony that was improper under the Delaware Rules of Evidence and instead “giv[ing] it the appropriate weight”).

the witness’s personal perception or contemporaneous thoughts on the matter at issue, as opposed to opinion testimony, I considered it as a statement of personal knowledge.

D. SYNT001’s Early Clinical Data Our story starts in 2013, when Syntimmune was founded.120 Since its

inception, it was developing SYNT001, a humanized monoclonal antibody 121 and anti-FcRn. At least four other companies would try their hand at developing anti-FcRn therapies, including Argenx, Immunovant, Momenta, and UCB.

In August of 2016, Syntimmune opened its first clinical trial of SYNT001, called “SYNT-101.”122 It was a Phase 1 study of the IV formulation in healthy volunteers.123 The study concluded in April of 2017.124 The results were promising: the dose of SYNT001 was “well tolerated” and the data showed that “[p]roof-of-concept for SYNT001 was demonstrated for the lowering of levels of total IgG.” 125 Syntimmune pushed forward with development.

120 D.I. 155 ¶ 22. 121 Id. at ¶ 3. 122 JX 194 at 1. The formal nomenclature for SYNT001 studies Syntimmune initiated is “SYNT001-###.” The parties and witnesses referred to the studies as SYNT-###. With the understanding that all relevant studies were of the SYNT001 molecule, I adopt the shorter nomenclature. 123 Id. at 2. 124 Id. at 1. 125 Id. at 80.

By early 2018, Syntimmune had opened two more trials: SYNT-102 and SYNT-103.126 SYNT-102 studied the IV formulation in patients with WAIHA, and SYNT-103 studied the IV formulation in patients with PV.127 Both were Phase 1B/2A studies.128 Phase 1B/2A studies are a hybrid of Phase 1 and Phase 2 studies: they seek to establish proof of concept in patients while testing the safety of dosing through a MAD protocol.129 But unlike Phase 2 studies, they generally do not establish the dose that would be used during a Phase 3 clinical trial.130

E. Alexion Expresses Interest In Acquiring Syntimmune.

Alexion was a large, publicly traded pharmaceutical company.131 It concentrated on the “metabolic and complement space,” with a focus on rare diseases.132 It became interested in developing treatments for autoimmune diseases, leading it to take interest in the momentum anti-FcRn drugs were building.133 In

126 JX 1229 at 1; JX 1424 at 1. 127 JX 1229 at 1–2; JX 1424 at 1–2. 128 JX 1229 at 1; JX 1424 at 1. 129 See JX 1229 at 29. 130 See Harvey Tr. 1683. 131 D.I. 308 ¶ 28. 132 Sarin Tr. 933 (noting that the term “complement” pertains to “pathways in the body . . . relating to the immune system”). 133 Id. at 934.

May 2018, Alexion reached out to Syntimmune to discuss a potential acquisition.134 By the end of the month the parties proceeded with due diligence.135

Alexion knew several companies were ahead of Syntimmune and that SYNT001 would not be the first anti-FcRn drug to market.136 At the time, at least three other companies were developing anti-FcRn drugs: Argenx, Momenta, and UCB.137 Argenx was in Phase 2 trials for an IV formulation and was also developing an SC formulation.138 Momenta was testing an IV formulation, but Alexion did not know the indications Momenta was pursuing at the time.139 UCB was testing an IV formulation and an SC formulation.140 Alexion believed Argenx and UCB were ahead of Syntimmune at the time of the acquisition and that Syntimmune could be the third anti-FcRn drug to market.141

Alexion saw SYNT001’s order of entry as a challenge to bringing a commercially successful product to market.142 To be successful, Alexion believed

134 Hall Tr. 53; JX 302. 135 See JX 348 at 73. 136 Sarin Tr. 935. 137 JX 2923 at 15. 138 Id.; Sarin Tr. 935–36. 139 JX 2923 at 15. 140 Id. 141 Sarin Tr. 939. 142 E.g., JX 437 at 2–3.

the drug had to get to market quickly and be differentiated from its competitors.143 It saw its best opportunity to do so as being first to an indication with a low volume SC formulation that patients could administer on their own, for instance, through an on-body device.144 Syntimmune agreed as to the importance of an SC formulation and had itself intended to eventually develop one.145 At the time, Syntimmune had done no work on an SC formulation or on a device to deliver that formulation.146

Alexion initially saw potential in multiple indications, including WAIHA and gMG.147 It viewed SYNT001 as having a “reasonable probability” of “regulatory success,” and believed it could “expedite development of SYNT001 and launch in [a] first indication in 2022.”148 Its primary focus was in WAIHA, where it believed it could be the first anti-FcRn to market.149 It also thought that it could be third to market in gMG.150

143 E.g., id. 144 Sarin Tr. 936, 940–41. 145 Id. at 940–1. 146 Id. at 938. 147 JX 609 at 2. 148 Id. 149 Id. at 12; JX 697 at 1. 150 JX 609 at 12.

F. Merger Negotiations

Alexion sent its first offer to acquire Syntimmune on July 27, 2018.151 The offer letter noted that “FcRn has quickly become a highly competitive space” and that “[t]iming to market and the competitive profile . . . for [SC] administration remain open questions.”152 Alexion proposed acquiring Syntimmune for $900 million, $600 million of which was tied to milestone payments.153 It proposed three milestones: (1) $100 million upon “the successful completion of Phase 1 trials” of the SC formulation, in which the drug is dosed once every two weeks; (2) $100 million upon “completion for each of the next two Phase 2 trials, regardless of indication”; and (3) $150 million upon “FDA approval for each of the next two indications, regardless of indication.”154

Upon receipt of Alexion’s offer, Syntimmune suggested internally that the first milestone pay $150 million for a subcutaneous dose every other week, and began crafting a bespoke definition of a successful Phase 1 trial.155 Syntimmune acknowledged internally that at the time, their data supporting dosing every other week was in IV, and they had “no current evidence” that they could achieve dosing

151 JX 437 at 1. 152 Id. at 2. 153 Id. at 3. 154 Id. 155 JX 447; JX 485.

every other week for SC; this was “a potential problem with [Alexion’s] deal.”156 Syntimmune’s CEO recommended they “push back for weekly (or even better for no mention of the regimen),”157 and responded with an approach omitting any milestone based on dosing regimen.158 Syntimmune made a $1.5 billion counteroffer, $1.1 billion of which would come from milestone payments.159 It proposed the first milestone be paid out “for the initiation/(first patient dosing) of any Phase III trials (regardless of indication),” and the second “for achieving SC formulation.”160

Alexion still wanted a milestone keyed to a dosing regimen.161 The parties’ negotiators spent time together, and Aradhana Sarin (Alexion’s lead merger negotiator, and later chief financial officer (“CFO”))162 recapped a discussion about what would be required to achieve once-weekly dosing; on this point, she concluded, “I am sure this will be a point of negotiation.”163

156 JX 485 at 1. 157 Id. 158 See JX 486 at 2; JX 489. 159 JX 497 at 2. 160 Id. 161 See id. at 1 (suggesting “every 2 weeks” as a definition of success for the SC formulation). 162 Sarin Tr. 936. Sarin became Alexion’s CFO in February 2019. She became AstraZeneca’s CFO when AstraZeneca later acquired Alexion. Id. 163 JX 515 at 1.

Alexion sent Syntimmune a proposal on August 3.164 It emphasized that to be competitive, SYNT-001 would need earlier proof that SC could be dosed every week or less frequently.165 Alexion explained:

To have commercial viability in the current landscape for anti-FcRn drugs, we believe SYNT-001 will need to achieve a favorable low- volume, high-concentration subcutaneous formulation that meets the following benchmarks:

(1) a volume of 3.5mL or lower per dose; (2) a concentration of 150mg/mL or higher; (3) dosing of once every week or less frequent; (4) comparable half-life, pharmacodynamics, and tolerability to the IV formulation; (5) provide sufficient exposure to maintain IgG suppression at steady state IgG reduction levels; (6) have favorable bioavailability; and (7) have no immunogenicity concerns or meaningful anti-drug antibody signals that would negatively impact efficacy.166 Alexion proposed those seven criteria would define the successful completion of a

Phase 1 trial that would trigger the first milestone payment.167 Syntimmune

164 JX 508 at 1. 165 Id. at 2–3. 166 Id. 167 Id. at 3.

discussed internally the risks and means of achieving dosing every other week,168 and every week.169

On August 4, Alexion sent a revised counteroffer removing a limitation that the Phase 3 approvals in later milestones be in SC.170 The parties agreed from that point on that the first milestone payment would be $130 million, and that it would be pegged to the “successful completion” of a Phase 1 study with weekly or less frequent dosing.171 But the parties would continue to negotiate over the meaning of successful completion.172

Syntimmune discussed the criteria with its advisors, seeking simpler criteria that still included a requirement of dosing every week or less frequent.173 On August 8, Alexion sent its “best and final” proposal, which provided that a Phase 1 trial would be considered successful upon:

(a) completion of a clinical trial of the SC formulation in healthy volunteers as demonstrated by achievement of measures to be agreed by the parties in the definitive agreement and (b) any submission of any protocol for a Phase 2 or Phase 3 clinical trial containing a weekly or less frequent SC dosing arm.174

168 JX 509. 169 JX 520. 170 Compare JX 524.02, with JX 508. 171 JX 524.02 at 2. 172 See, e.g., JX 534 at 3. 173 JX 531 at 6. 174 JX 534 at 3.

Syntimmune accepted these terms as a term sheet.175

Syntimmune and Alexion began exchanging merger agreement drafts. An August 24 draft paid the first milestone “upon the submission to the FDA of a clinical protocol for a Pivotal Clinical Trial containing a once-weekly or less frequent dosing regimen for the SC Formulation.”176 Alexion wanted to avoid “burdensome negotiation” on the definition of completion of a Phase 1 trial, and preferred language based on the submission of such a protocol.177 For its part, Syntimmune agreed the protocol submission definition was “easier and more objective,” but did not want to leave to Alexion the decision to submit such a protocol, even if the Phase 1 trial was successful.178

Syntimmune sent Alexion a draft on September 1.179 It reinserted a bespoke definition for successful completion of Phase 1 for purposes of the first milestone by reference to an exhibit listing four criteria:

1) Weekly or less frequent injections 2) SC Formulation concentration >1=150 mg/ml 3) 50% average reduction in total IgG at steady state with no meaningful changes in IgA, IgM, or albumin

175 Id. at 4. 176 JX 593.02 at 30. 177 JX 594 at 1; see JX 637 at 1–2. 178 JX 597 at 1. 179 JX 610 at 1.

4) Safety and tolerability results permit continued dosing of cohorts in additional SC Formulation studies.180 Alexion representatives discussed how to respond.181 In the first email on a

September 5 chain, an Alexion employee related a revised list of internally agreed-upon criteria:

1. an observed PK/PD profile that supports weekly or less frequent SC administration in long term safety and efficacy studies 2. A SC formulation that supports commercially feasible dose volumes (<10 mL as a flat therapeutic dose for treated patients) 3. SC formulation that achieves a concentration ≥150 mg/mL 4. achieves ≥50% average reduction in total IgG at steady state throughout the dosing interval with no meaningful changes in IgA, IgM, or albumin 5. safety and tolerability profile that results permit continued dosing of cohorts in additional SC formulation studies 6. anti-drug antibody profile that does not have meaningful impact on PK/PD, including total IgG reduction.182 In response to those criteria, Sarin wanted to add language including

regulatory input, keying the milestone to Alexion’s ability to move on to Phase 2 or 3 after showing Phase 1 data to regulators.183 She wanted such language because “it would delay at least slightly post Phase 1 completion and give [Alexion] a little more

180 Id. at 42–43, 120; see JX 637. 181 JX 617; JX 621. 182 JX 617 at 2. 183 Id. at 1.

certainty.”184 Another Alexion employee suggested accomplishing that goal via an addition to the third criterion making the SC formulation’s concentration “sufficient for use in Ph[ase] 2 or Ph[ase] 3 clinical studies,” to which Sarin responded, “Add it.”185

By September 7, Alexion’s internal proposal did not contain any such explicit regulatory benchmark.186 On September 7, Alexion sent a revised merger agreement.187 The draft changed the defined term in the merger agreement from “Phase I Clinical Trial” to “Phase Ib Clinical Trial.”188 That revised definition provided a “Phase Ib Clinical Trial” would be

intended to . . . (b) determine the further safety and pharmacology of the SC Formulation in healthy human subjects . . . and (c) establish sufficient data to be included in regulatory filings for a Phase II Clinical Trial or a Pivotal Clinical Trial with the FDA or its foreign counterpart.189

The draft revised the criteria used to define completion of a Phase 1 (now Phase 1B) study for purposes of the first milestone:

184 Id. at 2. 185 Id. at 1; see JX 621. 186 JX 627. 187 JX 633.01; JX 633.02; JX 633.03. 188 JX 633.02 at 23. This at least appears to be what Alexion intended, as it deleted the defined term “Phase I Clinical Trial” from the agreement and replaced it with “Phase Ib Clinical Trial,” though it did not replace the term “Phase I Clinical Trial” in the first milestone’s language. See id. § 3.8(a)(i) at 40. 189 JX 633.02 at 23.

1) An observed PK/PD profile that supports weekly or less frequent subcutaneous administration in long term safety and efficacy studies. 2) Commercially feasible dose volumes (≤7 mL as a flat therapeutic dose for treated patients). 3) A concentration >150 mg/mL that achieves minimum of nine (9) months stability at intended storage conditions for both drug supply and drug product. 4) >50% average reduction in total IgG at steady state throughout the dosing interval with no meaningful changes in IgA, IgM, or albumin. 5) Safety and tolerability profile that permits continued dosing of cohorts in additional subcutaneous formulation clinical studies. 6) Anti-drug antibody profile that does not have meaningful impact on PK/PD, including total IgG reduction.190

Syntimmune discussed internally, including the “expected dose range for subQ”191 and the addition of a Phase 1B clinical trial.192 Syntimmune employees thought the terms “look[] like a lawyer trying to define something that he does not understand,” and that “[t]he entire nomenclature around phases is confused.”193 A Syntimmune employee wondered whether Alexion intended to define the Phase 1 study, or to describe a pivotal bridging study.194 He concluded:

By using the first clinical efficacy study in patients, this clearly describes that the milestone will be achieved . . . if they believe the SC

190 Id. at 118; see JX 630; JX 637. 191 JX 634; see also JX 630; JX 637 (tracking the negotiation history). 192 JX 638 at 1–2. 193 Id. at 2. 194 Id.

formulation is adequate to progress into development based on the phase 1 SC study.195

Syntimmune rejected Alexion’s attempt to add a definition of “Phase Ib Clinical Trial.”196

Syntimmune responded to Alexion’s draft merger agreement with the following criteria:

1) An observed PK/PD profile that supports weekly or less frequent subcutaneous administration in long term safety and efficacy studies. 2) A concentration ≥150 mg/mL that achieves minimum of nine (9) months stability at intended storage conditions for both 150 mg/mL drug substance and 150 mg/mL drug product in vials. 3) ≥50% average reduction in total IgG at steady state with no meaningful changes in IgA, IgM, or albumin. 4) Safety and tolerability profile that permits continued dosing of cohorts in additional subcutaneous formulation clinical studies. 5) Anti-drug antibody profile that does not have meaningful impact on PK/PD as evidenced by total IgG reduction.197

Alexion found these criteria acceptable, and negotiation on those points ended.198

The parties also negotiated an efforts clause defining Alexion’s obligation to try to achieve each of the milestones. On September 2, Alexion proposed one that required it to use “such efforts and resources . . . as are used by [Alexion] . . . for the development and commercialization of similar products at similar development

195 Id. 196 JX 657 at 23. 197 JX 659 at 41, 222. 198 JX 653 at 11.

stages.”199 Syntimmune rejected this proposal and required a “customary objective CRE standard where the efforts are measured by comparable companies in the industry.”200 The parties agreed on an outward facing definition of commercially reasonable efforts.201

G. Alexion And Syntimmune Enter A Merger Agreement.

On September 28, the parties entered a merger agreement (the “Merger Agreement”).202 The agreement provided for an upfront payment of $400 million.203 It also provided for milestone payments totaling $800 million if eight milestones were satisfied.204 This dispute centers on Milestone 1, which reads:

i. a one-time payment of One Hundred Thirty Million Dollars ($130,000,000) upon the earlier of (A) the successful completion of a Phase I Clinical Trial of the SC Formulation as demonstrated by achievement of the criteria set forth on Exhibit I or (B) submission to the FDA of a protocol for a Pivotal Clinical Trial for any subcutaneous formulation.205

Specifically, the parties dispute whether the criteria in Exhibit I were satisfied. They are:

199 JX 631 at 13. 200 JX 649 at 9; compare JX 631 at 13, with JX 1 at 9 [hereinafter “Merger Agr.”]. 201 JX 649 at 9; JX 653 at 12–13; e.g., JX 657 at 11. 202 Merger Agr. 203 Id. § 3.6. 204 Id. § 3.8(b). 205 Id. § 3.8(a)(i).

1) An observed PK/PD profile that supports weekly or less frequent subcutaneous administration in long term safety and efficacy studies. 2) A concentration 150 mg/mL that achieves minimum of nine 9 months stability at intended storage conditions for both 150 mg/mL drug substance and 150 mg/mL drug product in vials. 3) 50% average reduction in total IgG at steady state with no meaningful changes in IgA IgM or albumin. 4) Safety and tolerability profile that permits continued dosing of cohorts in additional subcutaneous formulation clinical studies.

5) Anti-drug antibody profile that does not have meaningful impact on PK/PD as evidenced by total IgG reduction.206 The Merger Agreement required Alexion to use “Commercially Reasonable

Efforts,” as defined by the agreement, to satisfy each of the milestones for seven years (the “CRE Obligation”).207 That definition established an outward-facing standard, defining Commercially Reasonable Efforts as follows:

[U]sing such efforts and resources typically used by biopharmaceutical companies similar in size and scope to [Alexion] for the development and commercialization of similar products at similar development stages taking into account, as applicable, [SYNT001’s] advantages and disadvantages, efficacy, safety, regulatory authority-approved labeling and pricing, the competitiveness in the marketplace, the status as an orphan product, the patent coverage and proprietary position of [SYNT001], the likelihood of development success or Regulatory Approval, the regulatory structure involved the anticipated profitability of [SYNT001], and other relevant scientific technical and commercial factors typically considered by biopharmaceutical companies similar in size and scope to [Alexion] in connection with such similar products. The obligation to use such efforts and resources, however, does not

206 Id. Ex. I. 207 Id. § 3.8(f).

require that [Alexion] or its Affiliates act in a manner which would otherwise be contrary to prudent business judgment and, furthermore, the fact that the objective is not actually accomplished is not dispositive evidence that [Alexion] or any of its Affiliates did not in fact utilize its Commercially Reasonable Efforts in attempting to accomplish the objective.208

The Merger Agreement also contained a clause granting Alexion sole discretion over business operations:

Notwithstanding anything in this Agreement to the contrary, subsequent to the Closing, [Alexion] shall have sole discretion with regard to all matters relating to the operation of the Company, its Subsidiaries and their respective businesses and shall have no obligation, or liability as a result of the failure, to achieve any of the events described in Section 3.8(a) that would give rise to an Earn-Out Payment.209

And so, Alexion had sole discretion over ALXN1830, but its discretion was cabined by its promise to use commercially reasonable efforts to develop ALXN1830 into an approved anti-FcRn treatment.

The Merger Agreement designated SRS as the Syntimmune stockholders’ representative in connection with the transaction.210 The merger closed on November 2, 2018.211 After closing, Alexion began referring to SYNT001 as

ALXN1830.

208 Id. at 9. 209 Id. § 3.8(j). 210 Id. § 9.1(a). 211 JX 765.

H. ALXN1830’s Competitive Position Post-Closing

As of closing, Syntimmune had completed only the SYNT-101 study. SYNT-102, which tested the IV formulation in patients with WAIHA, and SYNT-103, which tested the IV formulation in patients with PV, were ongoing at the time.212 SYNT-104, a Phase 1 study of the IV formulation in healthy volunteers, was planned.213 The SC formulation had not yet been tested in humans, and Syntimmune had not identified a device by which to administer the SC formulation.214 Though Alexion was primarily interested in bringing an SC formulation to market, it continued to pursue the IV formulation because it was expected to be approved almost two years before an SC formulation.215 Because of that lead time, it made commercial sense to pursue both formulations simultaneously.216

Alexion was fairly far behind Argenx and UCB, but it was somewhat in line with Immunovant and Momenta. By November 2018, Argenx’s anti-FcRn asset had completed Phase 1 and 2 trials and was being studied in a Phase 3 trial in gMG

212 Hall Tr. 140. 213 Id. at 144; JX 713 at 14. 214 Hall Tr. 149. 215 See Ledwith Tr. 1079; Sarin Tr. 1018; JX 1407 at 2, 14 (showing development timeline as of March 2020). 216 Bahl Tr. 1752–55; see also Ledwith Tr. 1084–85.

patients.217 UCB’s anti-FcRn asset completed a Phase 2 trial in gMG and was being studied in another ongoing Phase 2 trial.218 Momenta’s anti-FcRn asset had completed a Phase 1 trial.219 Immunovant’s anti-FcRn asset had completed a Phase 1 trial.220

I. Infusion Related Reactions Halt SYNT-104.

After the merger closed, Alexion removed some of its drug supply from its clinical studies due to contamination.221 This forced it to prioritize its remaining supply and pause SYNT-103.222

The first subject was enrolled in SYNT-104 shortly after closing.223 In early 2019, multiple study subjects experienced infusion related reactions (“IRRs”).224 The IRRs were generally thought to be caused by impurities in the drug substance used to make ALXN1830.225 They led to Grade 1 and 2 adverse events, which were

217 JX 2870 at 4. 218 JX 758; JX 2873 at 2. 219 JX 2876 at 1. 220 JX 690 at 53; JX 2875 at 1. 221 Ledwith Tr. 1029–30. 222 Id. at 1030–31. 223 JX 1158 at 1. 224 See id. at 5; JX 883.02 at 1; see also JX 923 at 64. 225 Robbins Tr. 518.

treated with over-the-counter medication.226 The clinical investigator had to stop administering the drug each time they arose.227 The SYNT-102 and SYNT-104 studies were paused in February pending an investigation into the drug supply.228 Alexion officially terminated SYNT-104 in March 2019 and SYNT-102 later that year.229

The clinical study report (“CSR”) for SYNT-102 concluded ALXN1830 was “well tolerated in patients with WAIHA.”230 Two SAEs were observed, but both “were assessed as not related to ALXN1830.”231 Two of eight patients developed treatment-emergent ADAs, but “the presence of ADAs did not appear to have a significant impact on the PK or PD of ALXN1830.”232 The CSR for SYNT-103 concluded ALXN1830 “was well tolerated in subjects with [PV],” and that there

226 JX 1171 at 21; Ledwith Tr. 1037. To be sure, a presentation states that one of the adverse reactions was a grade 3. JX 923 at 64. But Ledwith, who prepared the relevant table, testified that the grade 3 notation was a typo. Ledwith Tr. 1037. 227 Ledwith Tr. 1036. 228 See JX 923 at 39; Ledwith Tr. 1038; JX 1139.04 at 25. 229 JX 1158 at 1; JX 1393 at 102; Ledwith Tr. 1036. The parties dispute whether Alexion knew of the drug substance problem before closing. Because I will be addressing Alexion’s breach of contract claim in a separate decision, and because I resolve Alexion’s unclean hands defense on other grounds, this decision makes no findings of fact as to whether Alexion had such knowledge or whether the manufacturing issues resulted in a breach of contract. 230 JX 1393 at 6. 231 Id. 232 Id.

were no serious adverse events related to the administration of ALXN1830.233 ALXN1830 resulted in an average IgG level reduction of 57.3%.234 ADAs were detected in seven of the eight subjects, though the ADAs caused “[n]o apparent impact on the IgG lowering effect of ALXN1830.”235 SYNT-103 was terminated early because the study’s objectives had been met.236 Although the results were partial, SYNT-104 produced promising data. One of the groups showed IgG lowering of 64%.237 ADAs were detected in at least eleven of the fifteen subjects.238 No SAEs were reported.239

J. The FDA Rejects Alexion’s Phase 2/3 Trial Request.

After the manufacturing issues were resolved in April 2019, Alexion sought to conduct what is known as a seamless Phase 2/3 study of the IV formulation in WAIHA. Typically, a drug candidate would receive approval for a Phase 2 study, and after that study was complete, the sponsor would meet with the FDA and receive approval for a Phase 3 study. The seamless Phase 2/3 study would allow Alexion to

233 JX 1229 at 5. 234 Id. at 6. 235 Id. at 5. 236 JX 1114 at 67–68 (noting SYNT-103 was a “study of the safety, tolerability, PK, PD, efficacy, and immunogenicity of ALXN1830 in subjects with [PV] and pemphigus foliaceus”). 237 JX 1158 at 6. 238 Id. 239 Id.

convert the Phase 2 study into a Phase 3 study without that meeting.240 Alexion sought approval for the seamless study because it would be faster than the normal process.241 Approval for such studies is “rare.”242

In support of its request, Alexion submitted the preliminary data from SYNT-101, SYNT-102,243 SYNT-103,244 and SYNT-104.245 The materials conveyed ALXN1830 was “well tolerated” in study subjects, and did not raise any safety concerns.246 But the FDA rejected the request to skip the pre-Phase 3 meeting, noting uncertainty around whether Alexion gathered sufficient data of “dose-response, efficacy and safety.”247 Notably, the FDA did not raise any concerns over whether the data presented safety concerns.

K. Alexion Begins Work On WAI-201, HV-105, and HV-106.

Later in 2019, Alexion opened three new studies: WAI-201, HV-105, and HV-106. WAI-201 was a Phase 2 study primarily designed to test the efficacy of

240 See Kinch Tr. 246. 241 Ledwith Tr. 1058. 242 Harvey Tr. 1716. 243 JX 1114 at 63 (showing data through May 10, 2019). 244 Id. at 67–68. 245 Id. at 73–77. 246 Id. at 23, 36, 61. 247 JX 1143 at 5.

the IV formulation in WAIHA patients, to be conducted in the United States.248 Alexion received approval for it in October 2019.249

In November of 2019, Alexion began dosing in HV-106, a Phase 1 SAD and MAD study in healthy volunteers primarily designed to assess the safety and tolerability of the IV formulation of ALXN1830.250 HV-106 would be conducted in the United Kingdom.251

In December 2019, Alexion began dosing in HV-105.252 HV-105 was a Phase 1 SAD and MAD trial of the SC formulation in healthy volunteers.253 Significantly, HV-105 was the first time the SC formulation had been tested in humans.254 HV-105 would also be conducted in the United Kingdom.255

L. The Trinity Consulting Report

In December 2019, Alexion received a presentation from an outside consultant regarding “opportunities for FcRn differentiation and strategic

248 JX 2299 at 8; JX 1181.02 at 33. 249 JX 1181.02. 250 JX 1221.02 at 26. 251 Ledwith Tr. 1063. 252 JX 1259 at 1. 253 JX 1139.04 at 25. 254 See id. (explaining the HV-105 trial was testing the SC formulation). 255 Ledwith Tr. 1063.

considerations for a novel product.”256 The report identified a lack of albumin lowering as a potential differentiator.257 Albumin “is a serum protein.”258 The report explained this trait could appeal to certain subpopulations like the elderly and those with kidney problems by lowering the risk of hypoalbuminemia.259 Importantly, the report identified that Immunovant’s, Momenta’s, and UCB’s anti-FcRns all caused albumin lowering.260 Argenx’s anti-FcRn was the only competitor that shared ALXN1830’s lack of albumin lowering.261

M. COVID-19 Causes A Pause Of All Alexion’s Ongoing Trials.

On Friday, January 31, 2020, Alexion’s clinical research organization in the UK, Richmond Pharmaceuticals (“RPL”), paused dosing of HV-105 and HV-106 in response to two people in the UK contracting the coronavirus.262 Ledwith believed RPL was “being overly conservative” and “felt like [Alexion] could conduct [the] study safely.”263 He received Pirozzi’s approval to fly to the UK to meet with RPL

256 JX 1230 at 2. 257 Id. at 25. 258 Jagannathan Tr. 1304. 259 Bahl Tr. 1766–77; JX 1230 at 25. 260 JX 1230 at 25. 261 Id. 262 JX 1333 at 3; JX 1337; Ledwith Tr. 1063. 263 Ledwith Tr. 1064.

the following Monday and Tuesday.264 Over the weekend, Ledwith had the ALXN1830 development team put together a comprehensive risk assessment touching on the risk of infection, steps that could be taken to mitigate the risk of infection, and the like.265 That assessment concluded that there was “[n]o increased risk of infection in previous anti-FcRn studies” and that any potential risks to study participants could be adequately mitigated.266 In Ledwith’s view, this was because HV-105 and HV-106 dosed subjects for a “relatively short” duration, the longest of which was twelve weeks.267

Ledwith flew to the UK to meet with RPL the following week.268 He charted a path forward, agreeing to “pause dosing for a few weeks at RPL’s request to allow the [COVID-19] exposure in the UK to be better understood.”269 During the pause, the ALXN1830 team would modify the study protocol and take other “preventative measures to minimize the risk of infection.”270 If the pandemic did not worsen

264 Id. 265 JX 1337; Ledwith Tr. 1064. 266 JX 1334 at 51. 267 Ledwith Tr. 1141; JX 2229 at 4 (noting cohort 5 would receive one dose a week for twelve weeks). 268 Ledwith Tr. 1064. 269 JX 1337. 270 Id.

during that time, dosing could resume.271 He expected the pause to last for four weeks.272

But the pandemic intensified and COVID cases in the UK spiked, prompting RPL to put an indefinite hold on the studies.273 ALXN1830’s clinical lead began pushing to halt the study, and Ledwith conducted “a very systematic risk assessment.”274

In March, Ledwith, on behalf of the ALXN1830 development team, presented that assessment to the research and development leadership team and recommended they endorse pausing WAI-201.275 His reasons included the fact that COVID-19 could “increase the number of infections (& SAEs) associated with ALXN1830,” that the IRRs could “require[] access to hospitals, ICUs, & ventilators which [were] projected to be in shortages in [the] coming weeks and months,” and that the trial population, which comprised WAIHA patients, is “[m]ore vulnerable to COVID-19” than the general population, among other things.276

271 Ledwith Tr. 1065. 272 JX 1337; see also JX 1333 at 2 (“There has been a decision to shift ALXN1830 HV dosing by 1 month to assess whether coronavirus is contained in the UK.”). 273 Ledwith Tr. 1065. 274 Id. at 1067–68. 275 JX 1397 at 2. 276 Id.

Between February and March, Ledwith did not change his conclusion that the administration of ALXN1830 posed no health risk to healthy subjects when administered for up to twelve weeks. Rather, his March recommendation for WAI-201 took into account the trial population (WAIHA patients as compared to healthy subjects in HV-105 and HV-106), the presence of IRRs, and the increase in the number of COVID cases.

Ledwith’s presentation noted the possibility that pausing the WAI-201 IV study could shorten the lead that IV had over SC, in which case the study’s value would be “diminished” such that it “may not restart.”277 The leadership team accepted the recommendation to pause the study.278 SRS does not dispute that this decision to pause WAI-201 was reasonable.279 It likewise does not contend that Alexion had the power to resume HV-105 and HV-106 in the UK.280

Alexion’s competitors continued to advance further ahead, including in both gMG and WAIHA. At the time, Argenx had three ongoing IV Phase 3 studies, two

277 Id. 278 Ledwith Tr. 1070. 279 Robbins Tr. 585–86. 280 SRS points to one document in which Ledwith explains “off the record” that RPL’s decision to pause the two UK studies was not just because of COVID, but also because it was seeking re-accreditation from the UK’s health authority. JX 1353 at 1. Even if this is true, it does not change the fact Alexion could not override RPL’s decision.

of which were in gMG.281 It also had an ongoing IV Phase 2 study in PV.282 UCB had two SC Phase 2 studies ongoing, both of which were in an indication Alexion did not pursue.283 UCB also had three ongoing SC Phase 3 studies, two of which were in gMG.284 And UCB had an ongoing Phase 1 study.285 Momenta had three ongoing IV Phase 2 studies, two of which were in gMG.286 It also had an ongoing IV Phase 2/3 study in WAIHA.287 Immunovant had three ongoing Phase 2 studies, one of which was in gMG.288 In contrast, Alexion had only limited data from a Phase 1A/2B study, and had yet to dose a patient in a Phase 2 study.

N. COVID Portfolio Rebalancing And The “10 By 2023” Initiative

By April, Alexion had no active ALXN1830 clinical trials. In late April, John Orloff, Alexion’s head of R&D,289 announced a “[r]ebalancing” of Alexion’s “R&D [p]riorities.”290 He explained the company was doing so because the pandemic

281 JX 2296; JX 2359; JX 2486. 282 JX 1659. 283 JX 2349; JX 2415. 284 JX 2569; JX 2388; JX 2451. 285 JX 1994. 286 JX 2583; JX 2302; JX 2745. 287 JX 2570. 288 JX 2791; JX 2272. 289 Orloff Tr. 870. 290 JX 1451 at 2–4.

created a situation in which Alexion had to “find savings across the company.”291 To that end, Orloff explained that Alexion had to “ensure that we are prioritizing the most important work, while best positioning Alexion for future growth.”292 He also explained that Alexion had to “remain[] focused on advancing our priority programs towards 10 launches by 2023.”293 The mention of “10 launches by 2023” referred to an initiative started years earlier intended to demonstrate value to Alexion’s investors.294 I interpret Orloff’s email, together with his testimony, to convey that COVID created a need to reallocate funds across the company, while prioritizing programs that could fulfill the promise of ten launches by 2023. His email noted ALXN1830 was among the programs that would be “paused and revisited during our 2021 prioritization this summer.”295

ALXN1830’s funding was “reduced significantly.”296 The deprioritization moved funding away from ALXN1830’s clinical activities, including preparing trial

291 Orloff Tr. 862. 292 JX 1451 at 3. 293 JX 1456 at 2. 294 See Orloff Tr. 859 (“[The 10 by 2023 program] was a way to characterize the breadth and depth of our pipeline to external people, investors, and comprised of all the assets that we did bring into the pipeline. So there was a definite focus to -- to demonstrate that we had a robust pipeline that we built from -- nearly from scratch and that we could execute on development progress because of our development prowess.”). 295 JX 1456 at 2. 296 Orloff Tr. 862.

protocols.297 But the program was not completely defunded, and some work continued, including manufacturing, device development, investigating potential new indications, and planning what would become the HV-108 study.298

In July, Orloff requested funding for ALXN1830 and Sarin authorized it.299 Still, when SC clinical supply necessary to conduct the new study became available in September, Alexion was not prepared to move forward with HV-108.300 Sarin lamented the delay and the “need to wait another several months because nobody ha[d] done any work on writing the protocol.”301

O. Alexion Abandons The IV Formulation.

Early spring 2020 also saw Alexion move away from developing an IV formulation of ALXN1830 and shift its focus exclusively to the SC formulation. Though an IV formulation and SC formulation could both be commercially viable, an SC formulation is far more desirable from a patient standpoint.302 The IV program

297 JX 1613 at 3 (“We expect the pause to be for a minimum of 3 months, possibly longer. Pencils down on protocol prep, . . . new reg submissions, etc.”); JX 1529 at 2 (“We are not authorized at present to work on the [HV-108] protocol.”); see also JX 1613 at 2–3 (listing other activities that were paused). 298 Ledwith Tr. 1071–88; see also Orloff Tr. 867. 299 JX 1529 at 1. 300 See JX 1597 at 2. 301 Id. 302 Borboroglu Tr. 1412–14.

was initially nearly two years ahead of the SC program in WAIHA.303 So, since closing, Alexion had continued to pursue an IV formulation as a means to get its “foot in the door.”304 But after Alexion paused the WAI-201 trial because of COVID, the IV and SC development timelines began “coalescing.”305

The ALXN1830 team proposed focusing exclusively on the SC formulation, with a plan to reduce the amount of time it would take to get SC to market.306 Originally, Alexion planned to submit the SC on-body device for approval in the fourth quarter of 2026 and obtain approval in the fourth quarter of 2027.307 Under the revised plan, Alexion would use an SC pump to allow ALXN1830 to reach the market sooner.308 It planned on submitting the SC pump for approval early in the first quarter of 2026 and obtain approval in the first quarter of 2027.309 It would then receive approval for the SC on-body device in the first quarter of 2028.310 The revised plan meant that any formulation for WAIHA would reach the market over a

303 JX 1407 at 2, 9, 14. 304 Ledwith Tr. 1079. 305 Id. 306 JX 1407 at 14. 307 Id. 308 Id. 309 Id. 310 Id.

year later, and the SC device would reach the market about three months later than initially planned.311

P. Alexion Starts HV-108 With Optimism. In March of 2020, the ALXN1830 team began thinking about conducting

another SC SAD and MAD study in healthy volunteers “basically to pick up where 105 left off.”312 Such a study was needed to gather PK, PD, immunogenicity, and safety data.313 While HV-105 was on hold, it made sense to pursue another SC study as that data was “critical to [the] program” in light of the move “away from IV for both MG and WAIHA.”314 Ledwith and his team arranged the HV-108 trial in New Zealand.315

The first HV-108 subject was enrolled in February 2021,316 and dosing began in March.317 The design of HV-108 was substantially similar to that of HV-105.318 It called for dosing six cohorts with eight subjects each.319 Six subjects in each

311 Id. 312 Ledwith Tr. 1087. It does not appear HV-105 ever resumed. JX 1699 at 4. 313 JX 1606.02 at 58. 314 Ledwith Tr. 1087–88. 315 See Pirozzi Tr. 1459–60. 316 JX 2367 at 1. 317 Pirozzi Tr. 1460. 318 Compare JX 2254.02 at 4, with JX 2367 at 3. 319 JX 2367 at 2.

cohort would receive an SC dose of ALXN1830, and the other two would receive a placebo.320 Cohorts 1 and 2 would receive a single dose; Cohort 3 would receive twelve doses over twelve weeks; and Cohorts 4, 5, and 6 would receive four doses over four weeks.321 Cohort 3 is at the heart of this decision.

In February 2021, with HV-108 up and running, Alexion was optimistic about ALXN1830 even though the COVID pauses, supply issues, and delays getting off the ground again meant Alexion continued to slip further behind its competitors.322 Preliminary modeling suggested that weekly dosing might be effective.323 It intended to pursue two Phase 2 studies later in the year to evaluate dose schedules.324 Alexion adjusted its projections and believed it would be fifth to market in gMG, down from third.325 Nevertheless, it believed it could capture about 7% of the gMG market, with anti-FcRn treatments having a total of 61%.326 This was despite Argenx, Immunovant, Momenta, and UCB all developing SC anti-FcRns for the

320 Id. at 3. 321 Id. 322 JX 1699 at 4. 323 See id. at 2 (noting that weekly dosing “may have the potential to provide >70% IgG lowering”). 324 Id. at 2, 4. 325 Id. at 7; JX 609 at 12. 326 JX 1699 at 7.

indication.327 Alexion saw differentiation in dosing frequency and route of administration.328

Alexion expected to be third to market in WAIHA.329 At the time, Alexion believed that WAIHA presented a “[h]igher probability of success and lower competitive headwinds than other FcRn indications.”330 Alexion saw the potential to differentiate within WAIHA through efficacy and safety.331 It also noted another potential differentiator: lack of albumin lowering.332 This trait meant ALXN1830 could appeal to certain subpopulations like the elderly and those with kidney problems.333

In the summer of 2021, Alexion resumed Phase 2 trials. In July, it was working on MG-201, a Phase 2 trial of the SC formulation in gMG patients.334 It was also working on WAI-202, a Phase 2 trial of the SC formulation in WAIHA patients.335

327 Id. 328 Id. at 5–7. 329 Id. at 9. 330 Id. 331 Id. 332 Id. 333 Bahl Tr. 1766–77; JX 1230 at 25. 334 JX 2298 at 1–2, 8. 335 JX 2299 at 1–2, 8.

In June 2021, Alexion received data on a competitor’s study that suggested anti-FcRns “that do not effect [sic] albumin levels (i.e., efgartigimod, ALXN1830) may have both an efficacy and safety advantage.”336 Orloff sent an email to Dana Washburn (ALXN1830’s global medicine team leader),337 Pirozzi, and others explaining “[t]his would appear to be good news for the 1830 program,” and it “represents a distinct advantage for 1830, and a reason why we should continue moving forward aggressively.”338 Washburn wrote that the ALXN1830 team “completely agree[s] that this is potentially good news for 1830” and that they were “collecting . . . albumin data in [their] ongoing Study 108.”339 He continued, “[s]o far our albumin data (available from IV and SC administrations) are very encouraging, but we have not reached our maximal IgG lowering yet.”340

Q. AstraZeneca Acquires Alexion.

In July 2021, Alexion was acquired by AstraZeneca plc.341 In connection with that acquisition, AstraZeneca promised $500 million in recurring synergies.342 The task of delivering on that promise fell to Alexion under the leadership of Marc

336 JX 1802 at 2. 337 Washburn Tr. 638. 338 JX 1802 at 1. 339 Id. 340 Id. 341 JX 1865 at 3. 342 See JX 1946 at 3.

Dunoyer, the CEO AstraZeneca installed after closing.343 In furtherance of its mission, Alexion launched a full portfolio review of all ongoing Alexion drug programs and indications.344

The gMG program quickly found itself in the crosshairs, and by August 9 Alexion paused screening of a study participant in MG-201 scheduled for that same week.345 In an email, Pirozzi explained that the decision was made to avoid a situation in which Alexion recruited a patient, started dosing, and then terminated the program due to budget cuts.346 Alexion also announced the ALXN1830 program would pursue two additional indications: thyroid eye disease (“TED”) and chronic antibody mediated rejection (“cAMR”).347 No decision was made as to WAIHA, and HV-108 was to proceed as planned.348

But on August 17, COVID cases spiked and New Zealand instituted a lockdown.349 The lockdown was scheduled to last until August 24, but was subject

343 See id. 344 See generally JX 1946; JX 1933; see also Washburn Tr. 638 (“[T]here was a reassessment of the portfolio strategies after AstraZeneca acquired Alexion. And in the process of reevaluating the overall pipeline of all activities, there was a decision made to pause gMG at that time.”). 345 JX 1928. 346 JX 1933 at 1; Lee Tr. 445; see also JX 1948. 347 JX 1928; Russell Tr. 732. 348 JX 1928. 349 JX 1972.02.

to possible extensions.350 At the time, HV-108’s Cohorts 3 and 4 completed dosing, Cohort 5 had been partially dosed, and Cohort 6 had not yet begun dosing.351 The record is not clear as to whether the lockdown forced a pause, but the ALXN1830 team decided to pause dosing.352

R. The September HV-108 Data

Alexion received partial data from HV-108 by September 16 (the “September Data”).353 In an email, Pirozzi highlighted that two cohorts, including Cohort 3, showed ADA rates of 67%.354 He referred to the 67% rate as “noteworthy given the high competitive environment of the class.”355 He conveyed that additional information on the ADAs and whether nAbs were present was forthcoming.356 As of the following day, the belief was that the two Cohort 3 subjects who did not test positive for ADAs were members of the placebo group, bringing Cohort 3’s ADA rate to 100%.357

350 Id. 351 See id.; JX 2367 at 3. 352 JX 1972.02. 353 JX 1990 at 2. 354 Id. 355 Id. 356 Id. 357 Id. at 1–2.

Notably, the immunogenicity rates in the September Data were not news to Alexion. Pirozzi’s email discussed data appearing in an earlier presentation. That presentation explained that ALXN1830 had “historically[] high ADA (63% to 91%) and Nab (44% to 65%) rates . . . in healthy volunteers and in two small patient studies.”358 Multiple contemporaneous documents confirm that the information on ADAs and nAbs was not news to Alexion, and that it had been aware of this information for some time.359

The next day, Lukasz Jarzyna, a vice president and head of global value, access, and pricing at Alexion,360 talked with Dunoyer and Simone Lauchart,

358 JX 1987 at 3. In post-trial briefing, Alexion attempts to distinguish the earlier immunogenicity findings on the basis that those were based on single dose administrations of ALXN1830. As support, it cites only the testimony of Ledwith and Pirozzi, which, as explained, I have given little weight because it is lay opinion testimony based on their specialized knowledge rather than personal knowledge. ALXN Ans. Br. 23–24 (citing Pirozzi Tr. 1470–71; Ledwith Tr. 1092); see supra Section I(C). 359 JX 2006 at 1 (“Anti-Fcrn class has high level of immunogenicity (based on public data on Ph 1 or PH 2 studies) . . . Aware that 1830 is immunogenic, so this is not a new finding.”); JX 2038 (October 5, 2021 email discussing a letter Alexion will send to the FDA, conveying that “[t]here is no new information to share as this is not a new finding. Immunogenicity and ADAs have always been present and we have been transparent that it is a potential risk.”); JX 2094 at 1 (email summarizing October 23, 2021 GPT meeting, which notes “ADA rates are known with 1830”); see also JX 2042 (October 6, 2021 email from Washburn noting “if a decision is made to stop WAIHA 202 it will not be based on immunogenicity findings from 108,” and “there have been no findings in 108 to date to indicate any adverse safety events or findings”). 360 Pirozzi Tr. 1602.

Alexion’s head of finance.361 Following those conversations, Jazyna updated Pirozzi and others:

Based on yesterday’s news, the current view is that development of 1830 is going to be stopped; while we don’t have data from the additional dose cohort, the decision should be taken before the end of Q3 to include it with other costs that will be included as part of the Q3 earnings.362

Jarzyna left open the possibility that further data would “alter [the] current view.”363

On September 17, the ALXN1830 global medicines team met.364 Erica Lee, who was in charge of regulatory strategy for ALXN1830, sent an email with an “update” from that meeting, which explained the team was “[a]ware that 1830 is immunogenic, so this is not a new finding.”365 It noted there were no SAEs or safety concerns reflected in the September Data, and that the data showed ALXN1830 lowered IgG “at the expected level.”366 High ADAs were observed in all dosed subjects; “neutralizing effects” were not observed during the twelve weeks of dosing, though Lee’s update noted the ADAs’ long term effect was unclear.367

361 Id. at 1607. 362 JX 1990 at 1. 363 Id. 364 See JX 2006 at 1. 365 Id. 366 Id. 367 Id.

At some point in September, Pirozzi communicated to others working on the ALXN1830 program that the WAIHA study needed to be “paused.”368 After Lauchart suggested issuing a broader communication about the AstraZeneca prioritization exercise, Pirrozi wrote that the WAIHA pause “is not about prioritization,” and that “for reasons [Lauchart] know[s], we should not say that WAIHA will be stopped because of prioritization.”369

Since receiving the September Data, both Alexion’s leadership and the ALXN1830 team maintained the HV-108 data showed no signs that ALXN1830 was unsafe, the ADAs observed did not affect the drug’s efficacy, and that Alexion was awaiting further HV-108 data to determine whether nAbs were present, which was

368 JX 2015 at 1. 369 Id.

forthcoming at the end of October or beginning of November.370 Lee and others consistently noted that the presence of ADAs was not a new finding.371

By the end of September, Pirozzi circulated a decision tree for ALXN1830 once additional immunogenicity data was received.372 The decision tree provided that if the HV-108 data revealed ALXN1830 had an acceptable immunogenic profile, Alexion would proceed to “[a]ssess ADA/Nab with longer treatment (6-12 mos) in patients” and confirm stable efficacy data over a longer dosing period.373 With the additional ADA and nAb data expected by November,374 Pirozzi expected Alexion’s leadership would provide a “Go/NoGo” decision on the ALXN1830 program by early November.375

370 JX 2019 at 4; JX 2032 at 8; JX 2065 at 1 (“[T]here has been emerging and prelim data coming from HV-108, in which there is a high occurrence of ADAs. There have been no safety signs, no adverse impact on efficacy (related to IgG level), and the Safety Review Committee for HV-108 has reviewed data and has approved escalation to the next cohort. No safety issues related to 1830 have been identified at this time. Additional data is expected from now until the end of October/Nov.”); JX 2094 at 1 (“No SAE or safety signals”; “IRRs reported[,] but not related to ADA [sic]. They are mild and resolved with little to no assistance”; “ADAs. [E]ven at high frequency—no associated impact to lgG lowering and safety; no PK effect”; “ADA rates are known with 1830”; “End of Nov will have a better idea on which indications to move ahead.”). 371 E.g., JX 2038 at 1 (“There is no new information to share as this is not a new finding. Immunogenicity and ADAs have always been present and we have been transparent that it is a potential risk.”). 372 JX 2025 at 1. 373 Id. 374 Id. at 2. 375 Id. at 1.

Even with a path forward under the decision tree, the program remained under pressure. The termination of the gMG indication remained a forgone conclusion.376 The ALXN1830 team also positioned itself to carry out the termination of the WAIHA indication if leadership decided to end the program.377

At some point in September, Alexion leadership “deprioritized” the WAIHA indication as well.378 That did not stop all work on the program, but certain functions were stopped.379 The record is not clear as to what work stopped.

By October 8, a “[s]afety [r]eview [c]ommittee for HV-108 . . . approved escalation to the next cohort.”380 Following that decision, the ALXN1830 global project team met to discuss the September Data.381 It agreed with the safety review committee’s determination that dosing could resume.382 Dosing was scheduled to resume on October 22.383

376 See JX 1928; JX 1933 at 1. See, e.g., JX 2042 at 1 (“Following our discussion last week, I’ve put together a draft 377

Notification Plan for Termination for your review. As agreed, this is just pre-planning.”). 378 JX 2021 at 1; JX 2065 at 1; Lee Tr. 457. 379 See Lee Tr. 457–58. 380 JX 2065 at 1; Lee Tr. 459. 381 JX 2070 at 1. 382 Id. at 2; JX 2095 at 1; Pirozzi Tr. 1362–63. 383 JX 2095 at 1.

But another setback came almost immediately. On October 5, a cynomolgus monkey died as part of an in vivo study of ALXN1830.384 Initially, Alexion did not believe the death was caused by the administration of ALXN1830.385 But on October 15—two days after the global project team’s vote to resume dosing in HV-108— Alexion received additional data suggesting ALXN1830 may have contributed to the death.386 A conclusive determination required more data, which was not expected for at least a few weeks.387 In the meantime, the group working on the toxicology study believed the news had to be reported to health authorities in the countries where Alexion was testing ALXN1830.388 The monkey death, with the backdrop of the forthcoming HV-108 immunogenicity data, caused Alexion to pause HV-108 once again.389

In late October, at Pirozzi’s direction, Alexion consulted with AstraZeneca immunology expert Catherine Betts concerning the September Data.390 After reviewing the available data, Betts conveyed her “initial thoughts [were] that the immunogenicity levels are not of too much concern given they are not actually

384 Id. at 2–3. 385 Id. 386 Id. at 1–2. 387 See id.. 388 Id. at 2. 389 JX 2100 at 3; JX 2104 at 1. 390 See Pradhan Tr. 887–88.

causing any observed adverse events, as far as we can tell.”391 Betts did not provide any follow up and Alexion asked for none.392

On October 27, Pirozzi, Rajendra Pradhan (Alexion’s executive director of clinical pharmacology and drug metabolism and pharmacokinetics),393 and others met to discuss the ALXN1830 immunogenicity data.394 In advance of the meeting, Washburn circulated a decision tree similar to that used in September.395 This version of the tree had two branches.396 One concerned the monkey death and concluded Alexion would stop development of the ALXN1830 program if the analysis of the death suggested “[p]ossible direct toxicity.”397 The other branch provided that if an assessment of the HV-108 ADA and nAb data showed an “[i]mpact on efficacy/safety,” Alexion would “likely” terminate the ALXN1830 program.398 On the other hand, if there was “[n]o impact on efficacy/safety,”

391 JX 2122; Pradhan Tr. 887–88. 392 Pradhan Tr. 888–89. 393 Id. at 872–73. 394 See JX 2109; JX 2118 at 2. 395 JX 2109 at 25. 396 Id. 397 Id. 398 Id.

Alexion would continue the program, resume dosing in the HV-108 study, and “[p]ursue new indications.”399

S. The November Data In November, Alexion received additional data from the HV-108 study (the

“November Data”), which the ALXN1830 team assessed on November 8.400 At this point, the focus was almost exclusively on Cohort 3. There were eight subjects in the cohort, two of which received a placebo.401 The new data showed that six of the eight subjects tested positive for the presence of ADAs, with the two testing negative being members of the placebo group.402 All six who tested positive for ADAs also tested positive for the presence of nAbs.403 The data showed that the ADAs began

399 Id. 400 JX 2140; Pirozzi Tr. 1467. 401 JX 2367 at 3. 402 JX 2140 at 11–12; Pirozzi Tr. 1469. 403 JX 2140 at 11–12; Pirozzi Tr. 1469. SRS contends that the immunogenicity rates were not reliable because 67% of the placebo group tested positive for ADAs and 22% tested positive for nAbs. SRS Ans. Br. 30. SRS is correct about the false positive rate. JX 1976 at 10; JX 2367 at 9. And Alexion had this information at the time. JX 1976 at 10. SRS’s expert, Mark Robbins, testified that he took this to mean the HV-108 data was not “highly reliable.” Robbins Tr. 544. Alexion’s expert, Dr. Prasanna Jagannathan, credibly and reliably testified that the false positive rate was of no concern. Jagannathan Tr. 1293–95. He explained there are three steps for immunogenicity testing during clinical trials: (1) a screening assay; (2) a confirmatory test, which quantifies the levels of ADAs; and (3) a neutralizing assay, which assesses whether the ADAs have a neutralizing quality. Id. at 1293–94. Jagannathan’s testimony is supported by HV-108’s protocol. JX 2206.02 at 68. It is further supported by the FDA guidance Robbins cites in his report. Immunogenicity Testing of Therapeutic

appearing in six subjects after the fourth dose.404 A figure further depicted that the PK for each of these subjects began increasing after the fourth dose, reflecting drug accumulation.405 At that point, the cause of the drug accumulation was not known.406 At the same time, PD, measured by IgG levels, began decreasing less dramatically than it had after the first three doses.407 Dosing stopped at day eighty-four.408 At that time, the drug accumulation decreased and each subject’s IgG levels began increasing.409 That figure, which is at the heart of this dispute, appears below.410

Protein Products — Developing and Validating Assays for Anti-Drug Antibody Detection, FDA at 3 (Jan. 2019), https://www.fda.gov/media/119788/download. Jagannathan also testified that the titer levels were sufficiently low in the placebo group such that he interpreted the screening assay to have produced a true false positive. Jagannathan Tr. 1294–95. Based on Jagannathan’s testimony, I find that the false positive rate in HV-108 does not render the data unreliable. 404 See JX 2140 at -9068(12); Kinch Tr. 335. 405 See JX 2140 at 12; Jagannathan Tr. 1368. 406 See Pirozzi Tr. 1482–83; see also Jagannathan Tr. 1373 (“Q. And there’s also no data showing 1830 binds to ADAs; right? A. That’s correct.”). 407 JX 2140 at 12; Kinch Tr. 335–36. 408 See JX 2140 at 12. 409 See id.; see also Pirozzi Tr. 1474 (testifying that the drug accumulation began decreasing after the drug stopped being administered); Kinch Tr. 315 (testifying that patient IgG levels rose after cessation of treatment). 410 JX 2140 at 12.

T. The Chamberlain Report

Pirozzi suggested that Alexion engage an external consultant to evaluate the HV-108 data and to “give advice on additional clinical work [Alexion] might want to take in order to clearly define the clinical significance of the ADA[s] [it] was seeing.”411 The hope was that the consultant would provide “an independent position or commentary” on the matter.412 After consulting with an AstraZeneca employee on the best expert to hire, Alexion decided to retain Dr. Paul Chamberlain,413 “an

411 JX 2031; Pirozzi Tr. 1613 (testifying it was his idea to retain Chamberlain). 412 Pradhan Tr. 889–90. 413 JX 2031; see generally JX 2190.

expert in immunology.”414 Alexion met with Chamberlain on November 1 and formally retained him later that month.415

On November 17, Alexion received data showing that the monkey death did not reflect safety concerns with ALXN1830.416 At that point, Alexion considered the matter resolved.417 But dosing did not resume in HV-108, now because of the November Data.418 Pirozzi testified that “[t]he general internal assessment was” that dosing could safely resume, but that he wanted AstraZeneca and Chamberlain to confirm that belief first.419

Chamberlain produced his analysis on November 23.420 His analysis squarely took on the question posed by the September decision tree: whether ALXN1830 was “associated with an unacceptable immunogenicity profile.”421 He answered that question: “Based on results for SC administration in study HV-108, detected ADA response does not appear to compromise overall benefit vs. risk. There is an

414 Zimmermann Tr. 1260–61. 415 Pradhan Tr. 889; JX 2121; JX 2186.01 at 2. 416 JX 2167; Pirozzi Tr. 1483–84. 417 Pirozzi Tr. 1484. 418 Id. 419 Id. at 1485. 420 JX 2189; JX 2186.01; JX 2186.02. 421 JX 2189 at 5.

adequate weight of evidence to resume study HV-108 and to progress to next stage of clinical development, e.g. clinical study in subjects with [gMG].”422

He further concluded:

• • “Subcutaneous route of administration reduces risk of immune complex mediated hypersensitivity reactions compared to intravenous administration”;423
• • The dosing regimen used in Cohort 3 “was adequate to sustain FcRn saturation & reduction in serum total IgG”;424
• • “PD responses IgG and FcRn saturation are maintained though 12 weeks of SC dosing, even in subjects with highest ADA levels”425;
• • “No serious reports of hypersensitivity, anaphylaxis, or other ADA- associated SAEs or AESIs”;426
• • “ADA response did not compromise tolerability or PD response in [Cohort 3] . . . .”;427
• • “Immunogenicity does not represent a ‘show-stopper’ for progression of ALXN-1830 to the next stage of clinical development”;428
• • “Cannot exclude possible enhancement of immunogenicity in autoimmune populations, but risks can be monitored & mitigated”;429 and

422 Id. at 26 (emphasis omitted). 423 Id. at 19. 424 Id. 425 Id. at 20. 426 Id. at 24. 427 See id. at 27. 428 Id. 429 Id.

• • The “SC route of adminsitration [sic] appears to reduce risk associated with immune complex formation.”430

Despite this report, dosing did not resume. Alexion did not consult with any experts other than Betts and Chamberlain.

U. The November 30 Rare Disease Development Review Committee Meeting

Notwithstanding Betts’ and Chamberlain’s conclusions, Alexion’s leadership increasingly favored terminating the ALXN1830 program. In November, the ALXN1830 team asked Alexion’s Rare Disease Development Review Committee (the “rDRC”) for input on the program’s next steps.431 The rDRC is “a committee within the R&D [group]” where employees discuss and “review programs.”432 The committee met on November 30.433

The rDRC considered “two important findings”: the immunogenicity rates seen in HV-108, which had “no apparent impact on IgG lowering (PD)”; and “[d]rug accumulation[,] the cause of which is not entirely understood.”434 Its discussion “focused on what has changed since the last governance interaction and the impact

430 Id. 431 JX 2195 at 2. 432 Zimmermann Tr. 1234. 433 JX 2187 at 1; JX 2195 at 1. 434 JX 2195 at 2.

of recent findings on the development plan.”435 The minutes note that the ADA rate did not “appear to have an impact on safety, PK or PD” and that Chamberlain advised that the “immunogenicity data (alone) d[id] not warrant termination of the program.”436

One attendee observed that “if the presence of ADA does not have an impact on clinical efficacy then nothing has changed since [Alexion’s] preparation of the TPP,”437 referring to the target product profile setting forth the features and characteristics a company expects a drug product to have.438 It was noted that Alexion had “already taken action to mitigate the commercial disadvantage of being on the later order of entry for FcRn inhibitors by selecting 2 indications in which [its] competitors are not currently engaged.”439 Zimmermann stated “the immunogenicity data will complicate development from a regulatory perspective” due to the need for “constant monitoring” and “updates to health authorities throughout development and marketing,” and that those burdens would “not

435 Id. 436 Id. at 3. 437 Id. 438 Bahl Tr. 1741. 439 JX 2195 at 3.

dissipate over time.”440 Another attendee expressed the “need to understand the actual impact [of the ADAs] on PD and efficacy.”441

The minutes reflect that Alexion was “close to achieving the desired level of IgG reduction,” though the full implications of longer-term drug accumulation remain unknown.442 The committee believed the accumulation was “likely related to ADA[s].”443

The minutes explain that moving forward with the program would require a Phase 1B/2A study, which would “address the uncertainty around immunogenicity with continued dosing and impact on the pharmacodynamic and safety profile.”444 But they note that in conducting the Phase 1B/2A study, Alexion would not “have the capacity to do enough patients necessary to dismiss the risk completely, [it] can only quantitate it”—with the capacity restriction inferably due to AstraZeneca’s budget cuts.445

The committee reserved decision for a future meeting. It concluded: “Ultimately the decision will be whether the risk is worth carrying forward,

440 Id. 441 Id. 442 Id. 443 Id. 444 Id. 445 Id. at 4.

particularly if our selected indications are not unique, or if other portfolio investments prove more favorable.”446

V. The PTRS The rDRC also considered a metric known as the probability of technical and

regulatory success, or “PTRS.”447 Alexion uses PTRS “as a guide” when conducting program assessments.448 Trial witnesses did not know and did not agree on how PTRS was calculated; trial revealed it to be an amalgamation of the subjective input of multiple ALXN1830 development team members.449 As the name suggests, PTRS

446 Id. 447 Id. at 3–4. 448 Lee Tr. 476. 449 Id. at 482 (“The PTRS is generally done by -- by the team, and we do evaluate based on the specific situation of the different program.”); Washburn Tr. 645–46 (“Q. Do you know how the PTRS is calculated? A. It is done by the team using a set of inputs that I can’t remember exactly what they are. But it is a way to assess at different stages of a development program what the probability is that you will be successful in getting a regulatory approval as well as a compound or drug that can be manufactured and delivered.”); id. at 652–53 (“I would answer that by saying that we had relooked at the PTRS in light of all the new findings that we had, and the PTRS had decreased from approximately 30 percent, my recollection, 30 percent, to 11 percent. So when we were reviewing this, and a PTRS -- with senior leadership, and a PTRS of 11 percent raises very large doubts about whether a program could be successful going forward. . . . I can’t remember the exact changes within the -- within the calculation of that, but the -- a component is safety. And since we didn’t know if that drug accumulation could present a significant safety problem, I think we -- I can’t remember the details. So I guess I will leave it at that.”); Pradhan Tr. 898–99 (“Q. But do you know how PTRS is calculated? A. I am not the expert on calculating PTRS. Q. Who would be the expert? A. This would be somebody from portfolio prioritization group, SPPM group.”). At times, the witnesses contradicted one another. Compare Washburn Tr. 646 (“We would rely on our commercial colleague to help with the assessment of the potential for a launch.”), with Borborogulu Tr. 1403 (“Q. What is it? And how does it factor into your work? A. So it’s the probability

is made up of “a technical portion and a regulatory portion.”450 The regulatory component is broken out as “the probability of regulatory success,” or “PRS.”451 The PRS score was based on the subjective judgment of “the regulatory person that’s on that particular program.”452 Trial did not identify the “regulatory person” responsible for setting the PRS before the rDRC meeting. It was equally unclear how the technical portion was calculated.

The rDRC minutes note the PTRS dropped from 30% to 11% for TED “based on emerging data from HV-108.”453 Lee circulated an email explaining the committee questioned whether the PTRS was too high.454 Washburn directed Lee to “re-assess the prob[ability] of success for [TED] specifically.”455 Lee reduced the likelihood of proceeding to Phase 2 and 3 by 23% and 15%, respectfully, based on

of technical and regulatory success. Technical success assigned by our clinical teams; regulatory success assigned by our regulatory teams. You multiply the two. That’s PTRS. Commercial has no input on that. But what commercial will have is we’ll take the PTRS and that essentially -- when I talked about risk times net present value equaling expected net present value, the PTRS is the risk.”), and Lee Tr. 475 (“And one thing that a PTRS assessment looks at is the likelihood of a program being approved; right? A. That’s just one portion of it. There’s a technical portion and a regulatory portion.”). 450 Lee Tr. 475. 451 Id. at 476–77. 452 Id. at 483. Lee was in charge of regulatory strategy for ALXN1830. Lee Tr. 441–42. 453 JX 2195 at 4. The minutes and accompanying presentation do not mention the PTRS for any other indication, including cAMR. 454 JX 2199 at 1. 455 Id.

the HV-108 immunogenicity data.456 This further reduced the PTRS from 11% to 10%.457

W. The rESPC Meeting Alexion’s Rare Disease Early Stage Protocol Review Committee (the

“rESPC”) was scheduled to meet on December 14. The rESPC meetings are attended by “the CEO and the head of the functions in the company.”458

The night before the meeting, Washburn emailed himself notes for the meeting.459 One read: “The team believes in the science and in the program and wants to continue development. Consultant Paul Chamberlain also stated that there was no scientific reason to abandon the program at this time.”460 He continued, “the team does not have the full understanding of all factors affecting portfolio prioritization so is not able to make a final recommendation.”461

The rESPC met the next day.462 Pirozzi, Zimmerman, Lauchart, and others were in attendance.463 The rESPC noted two paths forward. One was to continue

456 JX 2608 at 4. 457 Id. 458 Zimmermann Tr. 1254. 459 JX 2221. 460 Id. at 3. 461 Id. 462 JX 2225; JX 2226. 463 JX 2195 at 1.

developing ALXN1830, including completing the HV-108 study to “better understand dose for patient studies” and “[e]valuat[ing] potential of a late neutralizing effect and POC in a longer duration Phase 1B/2A study in TED or cAMR.”464 The other was to stop developing ALXN1830.465

The meeting presentation acknowledges there was no evidence that the ADAs and nAbs had an “impact on IgG lowering.”466 It mentions the possibility that the nAbs may demonstrate a neutralizing effect (i.e., begin decreasing the IgG lowering) after twelve weeks.467 Alexion would have to conduct an additional Phase 1B/2A study to get that data.468 If the program was not terminated, HV-108 dosing would not resume until February 2022.469 The presentation notes that immunogenicity data on the drug’s label could impact its competitive strength.470

The meeting minutes note that that the committee did not know the cause of the drug accumulation, and that it would have to develop a new assay to “elucidate

464 JX 2930 at 3. 465 Id. 466 Id. at 4. 467 Id. 468 Id. 469 Id. at 10. 470 Id. at 4.

the mechanism of” the accumulation.471 They also note that there were still no competitors developing anti-FcRn treatments for TED and cAMR.472

The rESPC decided to terminate the ALXN1830 program.473 The minutes provide that it considered:

• • “The risk of immunogenicity having a potential impact on PD/efficacy would be carried throughout development and even into post marketing.”474
• • “ALXN1830 has a far greater incidence of immunogenicity, and IgG reduction was comparable or slightly less than competitors.”475
• • ALXN1830 would be the fifth FcRn to market.476
• • “COVID and [the monkey death] which required a study pause for safety exacerbated the situation.”477
• • “Immunogenicity, drug accumulation, and high volume for the device all disadvantage this development program without advantages to balance the risks.”478
• • The lack of albumin lowering, which the committee viewed as a positive indication.479

471 JX 2226 at 2. 472 Id. 473 Id. 474 Id. at 1. 475 Id. 476 Id. 477 Id. 478 Id. at 1–2. 479 Id. at 3.

The presentation notes other factors favoring continuing the program, including the lack of any adverse safety signals and the fact the HV-108 data was “[e]xpected to achieve IgG lowering threshold required for efficacy.”480

SRS was notified of the program’s termination in January 2022 via letter from Alexion.481 Alexion’s letter included the following non-exhaustive list of disadvantages that it said contributed to its decision to terminate the program: “ALXN1830’s PK limitations, large required dosing volume and delivery challenges, less favorable immunogenicity profile, and unexplained immunogenicity and drug accumulation issues that would extend development timelines and would likely carry forward to post-marketing monitoring of the product.”482

X. The HV-108 CSR

The HV-108 CSR was issued in August 2022.483 The CSR was consistent with many contemporaneous documents from the fall and winter of 2021, noting: “Overall, across dose groups, irrespective of the presence of ADA, NAbs or high ADA titers, no impact on the drug concentrations (PK profile) or IgG (PD marker) levels were observed.”484 This phrase mirrored the merger agreement’s Criterion 5

480 JX 2220 at 16. 481 JX 2261. 482 Id. at 1. 483 JX 2367 at 1. 484 Id. at 10.

of Milestone 1, which requires that the Phase 1 data show an “[a]nti-drug antibody profile that does not have meaningful impact on PK/PD as evidenced by total IgG reduction.”485

In May 2023, after this suit was filed, Alexion released a revised CSR for the HV-108 study, changing only that phrase.486 It was revised to read: “Overall, across dose groups, irrespective of the presence of ADA, NAbs or high ADA titers, no reduction on the drug concentrations (PK profile) or IgG (PD marker) levels were observed.”487

Y. Procedural History

SRS filed its complaint in this action on December 17, 2020, days after AstraZeneca announced it was acquiring Alexion, asserting claims for breach of the Merger Agreement’s CRE Obligation to progress ALXN1830 towards achieving the milestones.488 SRS also sought a declaratory judgment as to Alexion’s request for indemnification based on contaminated drug supply. On February 12, 2021, Alexion answered the second count, counterclaimed for breach of SRS’s indemnification obligations, and moved to dismiss SRS’s breach of contract claim on the grounds

485 Merger Agr. Ex. I. 486 JX 2582 at 10. 487 The revision replaces the word “impact” with “reduction.” Id. 488 D.I. 1; D.I. 71 ¶ J.

that it was unripe because the CRE Obligation continued for another five years.489 I denied Alexion’s motion to dismiss on September 1, explaining the CRE Obligation spoke to Alexion’s efforts, not its results, and that it “requires persistent efforts for the entire contractual seven-year period, as distinct from long-term results.”490

After Alexion terminated the ALXN1830 program, SRS filed an amended complaint in March 2022.491 It added, among other things, a claim for breach of the Merger Agreement for failure to pay $130 million upon completion of Milestone 1. SRS’s operative complaint presents Count I for failure to exercise commercially reasonable efforts to achieve Milestones 1-3; Count II for failure to exercise commercially reasonable efforts to achieve Milestones 4-8; Count III for failure to pay for achievement of Milestone 1; Count IV for taking or omitting actions to avoid achievement of milestone events; and Count V for a declaratory judgment on Alexion’s indemnification claim.492

Alexion responded by amending its counterclaims, adding reciprocal causes of action for a declaratory judgment that it used commercially reasonable efforts,

489 D.I. 24; D.I. 26. 490 D.I. 71 ¶ 2; S’holder Representative Servs. LLC v. Alexion Pharms., Inc., 2021 WL 3925937, at *6 (Del. Ch. Sept. 1, 2021). 491 D.I. 155. 492 Id.

and another that it did not meet Milestone 1.493 Alexion also presented a counterclaim for breach of Section 4.13(a) of the Merger Agreement, a representation that Syntimmune’s product candidates were created and handled in compliance with regulations and good practices.494

The parties marched through extensive discovery and discovery motion practice. SRS brought several motions to preclude expert testimony. Before trial, I granted its motion to strike testimony based on an untimely expert report by Yogesh Bahl.495 The parties proceeded to a seven-day trial from July 10 to July 18.496 After trial, with the benefit of hearing the disputed testimony subject to SRS’s objections, I denied SRS’s motions to preclude testimony from Brian Harvey and rebuttal testimony by Bahl.497 I granted in part its motion to exclude some testimony by Prasanna Jagannathan as outside his still formidable expertise, and as to some testimony outside the scope of permissible rebuttal testimony.498

Post-trial argument was held on January 12, 2024.499 This opinion addresses the merits of the parties’ claims concerning whether Alexion met Milestone 1 and

493 D.I. 158. 494 Id. 495 D.I. 272. 496 D.I. 341. 497 D.I. 359 at 4–5. 498 Id. at 6–10. 499 D.I. 379 at 1.

whether it used commercially reasonable efforts. Damages and Alexion’s claim for indemnification will be addressed in a subsequent opinion.

II. ANALYSIS

SRS advances a claim for breach of the Merger Agreement for failure to pay $130 million following the successful completion of Milestone 1. It concedes Milestones 2 through 8 were not satisfied, but contends they would have been if Alexion had complied with the CRE Obligation. Alexion raises the affirmative defense of unclean hands to SRS’s breach of the CRE Obligation claim. Alexion seeks judgment in its favor on SRS’s claims as well as its own reciprocal declaratory judgment claims.

A. Alexion Satisfied Milestone 1.

Alexion and Syntimmune agreed that satisfaction of five criteria would demonstrate “successful completion of a Phase I Clinical Trial of the SC Formulation,” thereby triggering Milestone 1.500 Criterion 1 reads: “1) An observed PK/PD profile that supports weekly or less frequent subcutaneous administration in long term safety and efficacy studies.”501 Criterion 2 addresses storage stability, and Criterion 3 addresses reduction in total IgG without certain other effects. Criterion 4 requires the Phase 1 study data show a “[s]afety and tolerability profile that permits

500 Merger Agr. § 3.8(a)(i), Ex. I. 501 Id. Ex. I.

continued dosing of cohorts in additional subcutaneous formulation clinical studies.”502 And Criterion 5 addresses the anti-drug antibody profile. Alexion concedes Criteria 2, 3, and 4 have been satisfied.503 The parties dispute the interpretation and satisfaction of Criteria 1 and 5.

“Delaware adheres to the ‘objective’ theory of contracts, i.e. a contract’s construction should be that which would be understood by an objective, reasonable third party.”504 The Court reads the “contract as a whole and we will give each provision and term effect, so as not to render any part of the contract mere surplusage.”505 “When interpreting a contract, the Court will give priority to the parties’ intentions as reflected in the four corners of the agreement.”506 “If a contract is unambiguous, extrinsic evidence may not be used to interpret the intent of the parties, to vary the terms of the contract or to create an ambiguity.”507

502 Id. Ex. I(4). 503 ALXN Ans. Br. 3 n.1 (“Alexion does not dispute that Criteria 2–4 were met . . . .”). 504 Osborn ex rel. Osborn v. Kemp, 991 A.2d 1153, 1159 (Del. 2010) (internal quotation marks omitted) (quoting NBC Universal v. Paxson Commc’ns, 2005 WL 1038997, at *5 (Del. Ch. Apr. 29, 2005)). 505 Id. (internal quotation marks omitted) (quoting Kuhn Construction, Inc. v. Diamond State Port Corp., 2010 WL 779992, *2 (Del. Mar. 8, 2010)). 506 GMG Cap. Invs., LLC v. Athenian Venture P’rs I, L.P., 36 A.3d 776, 779 (Del. 2012). 507 Eagle Indus., Inc. v. DeVilbiss Health Care, Inc., 702 A.2d 1228, 1232 (Del. 1997).

1. Criterion 1

The parties disagree over the correct interpretation of Criterion 1 and whether Criterion 1 was satisfied. Both parties’ briefing assumes, without seriously arguing, that the Merger Agreement’s plain language supports their proposed interpretation. Neither party takes on the other’s textual interpretation. Left to my own devices, I conclude Criterion 1’s language is ambiguous. I then conclude the extrinsic evidence supports SRS’s interpretation.

a. Criterion 1’s Plain Language I start with the Merger Agreement’s plain language.508 Criterion 1 requires

that Phase 1 data show “[a]n observed PK/PD profile that supports weekly or less frequent subcutaneous administration in long term safety and efficacy studies.”509 The parties agree PK is measured by the concentration of ALXN1830 in the subject’s blood.510 They also agree PD is measured by IgG lowering.511

SRS argues Criterion 1 is keyed to dosing frequency. Under SRS’s interpretation, Criterion 1 is satisfied if a Phase 1 trial produces PK/PD data supporting the concept that ALXN1830 would not have to be dosed more than once

508 Symbiont.io, Inc. v. Ipreo Hldgs., LLC, 2021 WL 3575709, at *29 (Del. Ch. Aug. 13, 2021) (“Contractual interpretation begins with plain language.”). 509 Merger Agr. Ex. I(1). 510 ALXN Op. Br. 79; see SRS Op. Br. 47. 511 ALXN Op. Br. 79; SRS Op. Br. 47.

per week in the event Alexion were to proceed to a long term safety and efficacy study.512 SRS contends it prevails under this reading because the HV-108 data supported a weekly or less frequent dosing regimen for the duration of a long term study. SRS’s reading comports with the plain meaning and gives every word meaning. It is reasonable.

Alexion agrees with SRS that Criterion 1 demands the Phase 1 data require dosing no more than once a week.513 But Alexion contends Criterion 1 includes a second requirement: that the Phase 1 data show a PD/PK profile supporting the administration of ALXN1830 in a long term safety and efficacy study.514 Put differently, under Alexion’s interpretation, the language could read: “An observed PK/PD profile that supports administration in long term safety and efficacy studies, and the data must also support weekly or less frequent subcutaneous administration in the long term safety and efficacy study.” Alexion argues that it prevails under this interpretation because the unexplained drug accumulation from HV-108 required further study before a long term safety and efficacy study could be conducted: the data did not support actually administering such a study.515 The concept that data supporting weekly dosing would have to support dosing at all is

512 SRS Op. Br. 49. 513 ALXN Ans. Br. 3. 514 Id. 515 Id. at 6–8.

also consistent with the plain meaning and gives meaning to every word in the criterion. Alexion’s reading is also reasonable.

SRS argued that each of the five Exhibit I criteria addresses a separate issue, and that because Criterion 4 speaks to safety, Alexion is trying to “create a double assessment of safety” through its interpretation of Criterion 1.516 As an initial matter, SRS is incorrect that only one of the criteria speaks to safety. Criterion 5 addresses the presence of ADAs and whether those ADAs affect PK/PD, and the parties agree drug accumulation unaccompanied by IgG lowering can reflect a safety concern. And in any event, even if Criteria 1 and 4 overlap on the issue of drug accumulation, they do not overlap on all issues. Criterion 4, as measured by IgG lowering, is not superfluous of Criterion 1’s dosing metric. SRS has offered no reason why the two criteria cannot speak to safety in different ways.

Left with two reasonable interpretations, I look next to the entire Merger Agreement for context. “When interpreting a contract, this Court ‘will give priority to the parties’ intentions as reflected in the four corners of the agreement,’ construing the agreement as a whole and giving effect to all its provisions.”517 I see nothing in the Merger Agreement that makes either interpretation unreasonable. I first tried

516 D.I. 379 at 12. 517 Salamone v. Gorman, 106 A.3d 354, 368 (Del. 2014) (quoting GMG Capital, 36 A.3d at 779).

going down a rabbit hole of nested definitions in Milestone 1. Milestone 1 makes clear that the purpose of the criteria, including Criterion 1, are to demonstrate “the successful completion of a Phase 1 Clinical Trial.”518 The agreement defines “Phase 1 Clinical Trial” to mean “a Clinical Trial that is intended to satisfy the requirements of 21 C.F.R. § 312.21(a).”519 That section of the CFR adds further context, explaining Phase 1 trials “are designed to determine the metabolism and pharmacologic actions of the drug in humans, the side effects associated with increasing doses, and, if possible, to gain early evidence on effectiveness” and that “sufficient information about the drug’s pharmacokinetics and pharmacological effects should be obtained to permit the design of well-controlled, scientifically valid, Phase 2 studies.”520 But the reference to Phase 1 Clinical Trials is of little interpretative value. The point of Exhibit I was to create a bespoke definition of success in a Phase 1 clinical trial.

I next looked to the purpose of Milestone 1 and its criteria. The purpose is to benchmark progress that warrants compensating Syntimmune stockholders. On the one hand, the parties agreed Alexion’s efforts could take into account competitive and commercial considerations. This purpose emphasizes ALXN1830’s attributes

518 Merger Agr. § 3.8(a)(i)(A). 519 Id. at 20. The agreement defines “Clinical Trial” as “a clinical study of a pharmaceutical product conducted on human subjects.” Id. at 9. 520 21 C.F.R. § 312.21(a)(1).

that differentiate the drug in the marketplace, such as less frequent dosing; this tends to support SRS’s interpretation. But the milestones also show an intention to compensate Syntimmune stockholders when regulatory approval is obtained, which would tend to support Alexion’s interpretation.

The parties have pointed to nothing in the Merger Agreement that sheds any light on the parties’ intended meaning of Criterion 1. I conclude Criterion 1 is ambiguous because it is fairly susceptible to both parties’ reasonable interpretations.521

b. Extrinsic Evidence

Because I conclude Criterion 1 is ambiguous, I may consider extrinsic evidence to determine the parties’ intent.522 SRS bears the burden of proof of supporting its interpretation through extrinsic evidence.523 When interpreting an

521 Eagle Indus., 702 A.2d at 1232 (“When the provisions in controversy are fairly susceptible of different interpretations or may have two or more different meanings, there is ambiguity.”). I am not alone in finding the criteria ambiguous. As negotiations began, a Syntimmune employee wrote of the milestones, “I don’t like these as written since they are quite vague.” JX 509 at 1. Towards the end, Syntimmune employees observed, “[T]his looks like a lawyer trying to define something that he does not understand,” and struggled to divine Alexion’s intent. JX 638 at 2. 522 Eagle Indus., 702 A.2d at 1232 (“[W]hen there is uncertainty in the meaning and application of contract language, the reviewing court must consider the evidence offered in order to arrive at a proper interpretation of contractual terms.”). 523 Lillis v. AT & T Corp., 2008 WL 2811153, at *4 (Del. Ch. July 21, 2008) (“As the party seeking judicial enforcement of their interpretation of an ambiguous contract, the plaintiffs bear the burden of proof in this action.”), aff’d sub nom. AT&T Corp. v. Lillis, 970 A.2d

ambiguous contract provision through extrinsic evidence, “interpretation of the language becomes a question of fact.”524 The parties’ negotiation history is extrinsic evidence.525 Here, the extrinsic evidence shows the parties intended to compensate achievement of a dosing regimen based on Phase 1 data, not on readiness to move to Phase 2 or Phase 3.

First, the extrinsic evidence reveals an early and persistent emphasis on awarding prompt achievement of an infrequent dosing regimen. Alexion went into the merger negotiations emphasizing the significance of quickly establishing weekly or less frequent dosing for the SC formulation. It opened discussions with a benchmark of dosing every two weeks.526 Syntimmune understood the importance of this benchmark, wondering if its data at the time supported a belief that benchmark could be met, and responded by removing a dosing regimen milestone.527 Alexion

166 (Del. 2009); Bell Atl. Meridian Sys. v. Octel Commc’ns Corp., 1995 WL 707916, at *6 (Del. Ch. Nov. 28, 1995) (“Under this analysis, then, it becomes incumbent upon the party seeking judicial enforcement of their interpretation of the ambiguous language to show by a preponderance of the evidence that the other party knew or had reason to know of the meaning they attached to the language.”). 524 Motorola, Inc. v. Amkor Tech., Inc., 849 A.2d 931, 936 (Del. 2004). 525 See Emerging Eur. Growth Fund, L.P. v. Figlus, 2018 WL 6446467, at *5 (Del. Ch. Dec. 10, 2018) (stating “the history of negotiations” is extrinsic evidence). 526 JX 437 at 3. 527 JX 485 at 1; JX 486 at 2; JX 489 at 2.

continued to emphasize a weekly or less frequent dosing regimen.528 Alexion’s August 3 offer described its dosing requirement as “critical” to the commercial viability of ALXN1830.529 Alexion wrote that “dosing of once every week or less frequent” was necessary “[t]o have commercial viability in the current landscape.”530 The same letter proposed the first version of Milestone 1, which included dosing less than once a week as one of seven criteria.531 Syntimmune understood Alexion’s focus on dosing and weighed the risk that the criterion would not be met, but agreed that the first milestone would be based on successful completion of a Phase 1 study with weekly or less frequent dosing.532 From there, that dosing requirement would remain constant.533

Second, Alexion consistently pushed for a milestone based on a demonstrable ability to move to a Phase 2 or Phase 3 study, while Syntimmune consistently pulled for one based on what the Phase 1 data revealed. This push-pull manifested within the definition of Milestone 1 itself. Alexion wanted to define a successful Phase 1

528 JX 489 at 1 (suggesting “every 2 weeks” as a definition of success for the SC formulation); JX 515 at 1. 529 JX 524.02 at 2. 530 Id. 531 Id. 532 JX 509; see JX 520. 533 JX 610 at 42–43, 120; JX 617 at 2; JX 633.02 at 118; JX 649 at 8–9; see JX 630; JX 637.

trial as submission of a Phase 2 or Phase 3 protocol.534 Syntimmune wanted to define a successful Phase 1 trial with bespoke criteria based on that trial’s data.535 Syntimmune’s approach prevailed. This extrinsic evidence reveals that the Merger Agreement’s definition of Phase 1 success was intended to benchmark Milestone 1 on Phase 1 data, not on readiness to move to Phase 2 or Phase 3.

Alexion would then try to incorporate readiness to move to Phase 2 or Phase 3 into those criteria. Crucially, this effort reveals that Alexion’s lead negotiator did not believe that readiness was captured by Criterion 1’s current language. On a September 5 email chain, an Alexion employee offered Sarin and others the current version of Criterion 1.536 Sarin responded that it was important to add a regulatory demonstration that ALXN1830 was prepared for a Phase 2 or Phase 3 trial. 537 The solution at the time was to incorporate readiness for such a trial into an earlier version of Criterion 2, which addresses drug concentration.538 This reveals Sarin did not believe Criterion 1 required that readiness.539 And as negotiations unfolded, Syntimmune puzzled over Alexion’s proposed criteria and whether they were based

534 JX 534 at 3; JX 593.02 at 30; JX 594 at 1; see JX 637. 535 JX 567 at 1; JX 610 at 42–43, 120; see JX 637. 536 JX 617 at 2. 537 Id. at 1–2. 538 Id. at 1. 539 This contemporaneous evidence carries far more weight than Sarin’s conclusory testimony at trial, which I did not find credible. See Sarin Tr. 1006–07.

on Phase 1 data, or on progressing to a pivotal bridging study. 540 Syntimmune concluded:

By using the first clinical efficacy study in patients, this clearly describes that the milestone will be achieved . . . if they believe the SC formulation is adequate to progress into development based on the phase 1 SC study.541

The push-pull between what Phase 1 data showed, and readiness to move on to Phase 2 or Phase 3, also manifested in other terms that Syntimmune rejected. Alexion attempted to add language to the concentration criterion providing that the data must “support[] storage conditions for drug supply and drug product suitable for use in Phase 2/Phase 3 clinical studies.”542 Syntimmune rejected that language.543 Alexion also attempted to require readiness to move to Phase 2 or Phase 3 by revising the definition of Phase 1 Clinical Trial, changing the term to “Phase 1b Clinical Trial.”544 Under the revised definition, the clinical trial would be “intended to . . . establish sufficient data to be included in regulatory filings for a Phase II Clinical

540 JX 638 at 2. 541 Id. 542 JX 621. 543 See id. (reflecting conversation between Sarin and Syntimmune representatives regarding the proposed criteria); JX 633 at 118. 544 JX 633.02 at 23.

Trial or a Pivotal Clinical Trial with the FDA or its foreign counterpart.” 545 Syntimmune rejected this proposed addition as well.

This extrinsic evidence supports SRS’s interpretation that Criterion 1 was intended to emphasize the ability to dose weekly or less frequently. It shows the phrase was not intended to award readiness to dose a patient in a long term study. Alexion’s internal communications reveal that it did not read the current version of Criterion 1 as imposing such a requirement. Alexion attempted to include similar requirements elsewhere, but Syntimmune rejected that language. As to Syntimmune, there is no evidence it ever intended Criterion 1 to require data supporting a long term safety and efficacy study: Syntimmune explicitly and persistently wanted language that would reward Phase 1 data, not readiness to move on to Phase 2 or 3.

The parties also hotly dispute the meaning of “long term safety and efficacy study.” Alexion argues that “for chronically-administered drugs, like ALXN1830, [long term] is ‘generally 12 months or longer’ and therefore is typically a ‘phase 3,’ or ‘pivotal’ or ‘registrational’ study.”546 SRS disagrees, contending the meaning of “long term” varies by disease, and that a long term study in WAIHA “would last six-

545 Id. 546 ALXN Op. Br. 83–84 (citing Sarin Tr. 949–50; Robbins Tr. 619–21; Harvey Tr. 1683).

months.”547 As explained below, there is no evidence that ALXN1830 would have to be dosed more than once a week in a trial of any duration, and so I do not resolve that dispute.

c. Criterion 1 Was Satisfied. SRS proved at trial that Criterion 1 was satisfied. The parties focus

exclusively on the HV-108 Cohort 3 data. Cohort 3 was dosed once a week for twelve weeks.548 That dosing resulted in sustained IgG lowering for the duration of the trial.549 Dr. Michael Kinch (SRS’s expert on antibody development),550 Washburn, and Dr. Prasanna Jagannathan (Alexion’s expert on immunology) all testified that the level of IgG lowering supported dosing in future trials at the same frequency, regardless of trial length.551

547 SRS Ans. Br. 12. 548 JX 2367 at 3. 549 Jagannathan Tr. 1355; JX 2032 at 8 (analyzing the September Data, noting “[r]obust and sustained IgG lowering” despite a “[h]igh ADA rate” and “[n]o potential impact of ADA on PK/PD”); JX 2367 at 11; JX 2180 at 22. 550 Kinch Tr. 218. 551 Id. at 314 (“Q. Do you see any evidence here that, in your view, would caution against weekly or less frequent subcutaneous administration in long-term safety and efficacy studies? A. Well, it’s not just in this data. It’s also the fact that when you see these levels of antibody, you’re not detecting any adverse events that rise above a Grade 2, with, again, a majority being grade 1. So, no, there’s nothing that would prevent weekly dosing.”); Jagannathan Tr. 1354 (“[Y]ou are not aware of any data to support the rationale that 1830 would need to be given more frequently than once per week. Right? A. I’m not aware of any data that ALXN1830 would need to be given more frequently than once per week.”); id. at 1358–59 (testifying that the Cohort 3 data supported “weekly dosing in future long- term trials” for purposes of achieving IgG lowering of at least 50%); Washburn Tr. 656

Alexion makes two arguments. First, it argues that unexplained drug accumulation reflected potential safety problems that precluded actual dosing at any frequency in a long term study. Alexion argues those potential problems required gathering additional data on the cause of the drug accumulation (whether it was bound or free drug, and whether it would continue to rise to a level where it would cause an SAE) before any such dosing could occur. That may be so; Alexion might have more work to do before proceeding to that study. But under Criterion 1 as I have interpreted it, that additional work is irrelevant to Criterion 1 so long as it does not threaten dosing more than once a week. The preponderance of the evidence demonstrates that HV-108 established that any future long term study would feature weekly or less frequent dosing.

Alexion also argues the Cohort 3 data reflect that ALXN1830 did not achieve a steady state, rendering the dose amount uncertain. This argument assumes that if the dose amount is uncertain, then the dosing frequency is necessarily also uncertain, and if the frequency is uncertain, both increasing and decreasing the frequency are possible solutions. The only support for the view that more frequent dosing was

(“Q. Did the data from HV-108 suggest that 1830 needed to be administered more frequently than once weekly? A. I don’t believe so.”); see also Pradhan Tr. 898 (testifying that as of the December 2021 rESPC meeting, Alexion was considering an initial once a week dose and then dosing “less frequently to maintain efficacy”); JX 2180 at 22 (“750 mg or PBO SC QW x12 dose regimen was adequate to sustain FcRn saturation & reduction in serum total IgG.”).

even a possible response to the drug accumulation seen in Cohort 3 is the somewhat equivocal opinion testimony of Pradhan, a nonexpert.552

SRS established that Criterion 1 was satisfied.

2. Was Criterion 5 Satisfied? SRS also established the HV-108 data satisfied Criterion 5. As with Criterion

1, the parties dispute both the interpretation of the criterion and whether it was satisfied.

a. Interpretation Of Criterion 5 Criterion 5 requires that the trial data show an “[a]nti-drug antibody profile

that does not have meaningful impact on PK/PD as evidenced by total IgG reduction.”553 The parties dispute the metric by which Criterion 5 must be satisfied. SRS reads it to require an evaluation of only total IgG lowering, notwithstanding any other indications that ADAs may be affecting PK and PD. Alexion argues that the proper reading is broader, and that the Court should look to other markers of PK

552 Pradhan Tr. 909 (“Q. Why would drug accumulation and ADA response necessitate more frequent dosing than once per week? A. The simple-minded way to look at this is if we cross some kind of threshold in this accumulation where there is sufficient ADA circulating that is capable of consuming or sucking up the drug that is being given once a week, that once-a-week administration will be insufficient to maintain the required efficacy or IgG lowering, and that’s why the concern is we may have to give more frequent dosing.”). 553 Merger Agr. Ex. I.

and PD, including data reflecting safety generally and drug accumulation in particular.

The plain language of Criterion 5 demonstrates the parties intended it to ask whether ADAs meaningfully affected PK or PD. It unambiguously provides for one metric by which to measure this: IgG lowering. The parties included no other metrics, suggesting IgG lowering was intended as the sole metric.

Alexion argues this interpretation cannot be correct because the parties’ experts agree PK is measured not by IgG lowering, “but rather by blood serum concentration.”554 I agree the record does not explain how IgG lowering would be a direct metric for whether ADAs affect PK.555 But “[p]arties have a right to enter into good and bad contracts, the law enforces both.”556 The parties to the Merger Agreement were highly sophisticated. The language at issue was highly negotiated—and for good reason, as it is one of five criteria used to determine when Alexion would owe SRS a $130 million milestone payment. While IgG lowering may not be the most useful or direct metric for whether ADAs affect PK, it is the

554 ALXN Ans. Br. 13 (citing Kinch Tr. 429–30; Jagannathan Tr. 1320–21). 555 There is at least some connection between PK and IgG lowering. SRS’s expert, Michael Kinch, testified that drug accumulation (measured by PK) is “an indication that you have got a reservoir that drug can be drawn from so that if you dip below that [therapeutic] window, it can draw the drug from that particular reservoir.” Kinch Tr. 259–60. For ALXN1830, the therapeutic window begins where IgG lowering can be observed. 556 Nemec v. Shrader, 991 A.2d 1120, 1126 (Del. 2010).

one the parties chose. It is not for the Court to alter the unambiguous language the parties agreed to.557 Indeed, “it is not the job of a court to relieve sophisticated parties of the burdens of contracts they wish they had drafted differently but in fact did not.”558 I agree with SRS that Criterion 5 measures any effect on PK and PD solely by IgG lowering.

Though I resolved this issue solely based on the Merger Agreement’s plain language, the extrinsic evidence supports this reading as well. The Court may resort to extrinsic evidence to discern the contracting parties’ intent only when the agreement is ambiguous.559 Extrinsic evidence includes the parties’ negotiation

557 W. Willow-Bay Ct., LLC v. Robino-Bay Ct. Plaza, LLC, 2007 WL 3317551, at *9 (Del. Ch. Nov. 2, 2007) (“The presumption that the parties are bound by the language of the agreement they negotiated applies with even greater force when the parties are sophisticated entities that have engaged in arms-length negotiations.”), aff’d, 985 A.2d 391 (Del. 2009). 558 DeLucca v. KKAT Mgmt., L.L.C., 2006 WL 224058, at *2 (Del. Ch. Jan. 23, 2006). 559 Sunline Com. Carriers, Inc. v. CITGO Petroleum Corp., 206 A.3d 836, 847 (Del. 2019); cf. Eagle Indus., 702 A.2d at 1232 (“If a contract is unambiguous, extrinsic evidence may not be used to interpret the intent of the parties, to vary the terms of the contract or to create an ambiguity.”).

history.560 Such evidence cannot be used to alter the plain meaning of the agreement.561

On September 7, 2018, Alexion’s attorneys circulated a draft merger agreement with language mirroring the interpretation Alexion now advances: “Anti-drug antibody profile that does not have meaningful impact on PK/PD, including total IgG reduction.”562 The introduction of the IgG reduction metric through the use of “including” conveys that IgG reduction would be one of several

560 See SI Mgmt. L.P. v. Wininger, 707 A.2d 37, 43 (Del. 1998) (“[I]t is proper to consider extrinsic evidence of bilateral negotiations when there is an ambiguous contract that was the product of those negotiations.”); see also Eagle Indus., 702 A.2d at 1233 (“In construing an ambiguous contractual provision, a court may consider evidence of prior agreements and communications of the parties as well as trade usage or course of dealing.”). 561 IMO Ronald J. Mount 2012 Irrevocable Dynasty Tr. U/A/D Dec. 5, 2012, 2017 WL 4082886, at *5 n.19 (Del. Ch. Sept. 7, 2017) (“[E]xtrinsic evidence cannot alter the plain language within the four corners of [a contract].” (citing Eagle Indus., 702 A.2d at 1232– 33)). 562 JX 633.02 at 118 (emphasis added); JX 633.01 (transmitting draft of merger agreement); see also JX 617 at 2 (discussing framing used in the September 7 draft); JX 621 (same).

factors to consider.563 SRS rejected that phrasing.564 Instead, the parties settled on the “as evinced by” language seen in the final version of the Merger Agreement. The rejection of this language in favor of the language used in the final version of Criterion 5—which I have interpreted to unambiguously provide IgG lowering as the sole metric—demonstrates the parties did not intend for IgG lowering to be only one of several metrics used to assess whether the criterion was satisfied.565

b. The Levels Of IgG Lowering Shown In The HV-108 Trial Demonstrate Criterion 5 Was Satisfied. I now turn to whether Criterion 5 was satisfied, i.e. whether the levels of IgG

lowering in HV-108 reflect an effect from ADAs.

563 Include, Black’s Law Dictionary (12th ed. 2024) (defining include to mean “[t]o contain as a part of something”); Kenneth A. Adams, A Manual of Style for Contract Drafting § 13.354 (4th ed. 2017) (“In interpreting contracts and statutes, courts have routinely held that including or includes introduces an illustrative list.”); Antonin Scalia & Bryan A. Garner, Reading Law: The Interpretation of Legal Texts 132 (2012) (explaining the use of the word “include does not ordinarily introduce an exhaustive list”); see also Pauls v. State, 554 A.2d 1125, at *2 (Del. 1989) (“As mentioned above, 11 Del. C. § 222(5) merely provides an illustrative list of the instruments which qualify as deadly weapons, as is made clear by its use of the word “includes” before giving the list containing examples of proscribed weapons.”). 564 Hall Tr. 87 (testifying SRS rejected the framing of the Milestone 1 criteria set forth in the September 7 draft). Compare Merger Agr. Ex. I ¶ 5 (“Anti-drug antibody profile that does not have meaningful impact on PK/PD as evidenced by total IgG reduction.” (emphasis added)), with JX 633.02 at 118 (“Anti-drug antibody profile that does not have meaningful impact on PK/PD, including total IgG reduction.” (emphasis added)). 565 See GRT, Inc. v. Marathon GTF Tech., Ltd., 2012 WL 2356489, at *7 (Del. Ch. June 21, 2012) (“Under basic principles of Delaware contract law, and consistent with Delaware's pro-contractarian policy, a party may not come to court to enforce a contractual right that it did not obtain for itself at the negotiating table.”).

Myriad contemporaneous documents drafted by Alexion employees conclude the presence of ADAs did not have an impact on IgG lowering.566 Experts for both parties testified the HV-108 data do not reflect that the presence of ADAs had any effect on IgG lowering, let alone a meaningful one.567 Further, Pradhan testified Alexion did not observe an increase in PK at the time.568 And notably, the August 2022 CSR for the HV-108 study concluded: “Overall, across dose groups, irrespective of the presence of ADA, NAbs or high ADA titers, no impact on the drug concentrations (PK profile) or IgG (PD marker) levels were observed.”569 That

566 JX 2032 at 8 (presentation analyzing the September Data, which notes “[r]obust and sustained IgG lowering” despite a “[h]igh ADA rate” and “[n]o potential impact of ADA on PK/PD.”); JX 2094 at 1 (October 13, 2021 email from Lee giving an update from a GPT meeting, and explaining that “ADAs, even at high frequency — no associated impact to IgG lowering and safety; no PK effect”); JX 2109 at 5 (slides for October 26, 2021 meeting of ALXN1830 leadership team, reading, “Irrespective of the titer levels, no impact on % change of IgG.”); see also JX 1998 at 2 (September 17, 2021 email containing slides stating “[n]o observed association between ADA status and PD response”). 567 Kinch Tr. 335–36; Jagannathan Tr. 1308 (“So in the context of HV-108, you see the development of neutralizing antibodies. You also see that IgG lowering has -- you have actually significant IgG lowering. You don’t see loss of that lowering, meaning that you don’t see IgG levels going back to normal, despite repeated administration. And so within the context of HV-108, you don’t see loss of efficacy yet, at least within the context of the neutralizing antibodies that are there thus far.”). 568 Pradhan Tr. 881–82. 569 JX 2367 at 10. In May of 2023—nine months after the HV-108 CSR was released and less than two months before trial was set to begin in this litigation—Alexion issued a second version of the CSR. JX 2582. It read: “Overall, across dose groups, irrespective of the presence of ADA, NAbs or high ADA titers, no reduction on the drug concentrations (PK profile) or IgG (PD marker) levels were observed.” JX 2582 at 10 (emphasis added). The only change of which the Court is aware is that Alexion replaced the word “impact” with “reduction,” so that the language no longer mirrored that of Criterion 5. Compare JX 2367 at 10, with JX 2582 at 10. I give the revised CSR no weight.

language was drafted by Alexion’s head of immunogenicity.570 No contemporaneous documents in the record even suggest that anyone at Alexion believed the HV-108 data showed ADAs affected IgG lowering through August of 2022.

Alexion argues that the IgG lowering in the Cohort 3 data was “incremental at best” following the fourth dose.571 As support, it cites Pirozzi’s trial testimony that at the time the data came in, he believed the PD chart showed IgG lowering “stayed pretty much flat” after the fourth or fifth dose.572 Alexion’s expert Jagannathan testified that no additional IgG lowering occurred after the fourth dose, but conceded that he “wasn’t provided the actual numbers for IgG lowering.”573 Instead, he just looked at the graph, and “it appeared that the IgG lowering had reached a plateau.”574 By contrast, Kinch reviewed the data actually underlying the chart and testified that after the six subjects in Cohort 3 received their fourth dose,

570 Pirozzi Tr. 1626–27. 571 ALXN Ans. Br. 15. 572 Pirozzi Tr. 1476. Alexion also cites to the testimony of Pradhan, but Pradhan does not testify that IgG lowering was incremental following the fourth dose. See ALXN Ans. Br. 15. 573 Jagannathan Tr. 1368. 574 Id.

IgG lowering continued, and “the lowest levels were detected just until the studied drug was discontinued.”575

Having established that IgG lowering continued after the fourth dose, Kinch also testified that IgG lowering occurred after the appearance of ADAs. He testified that ADAs appeared on Day 23, and that IgG lowering reached its most significant levels thereafter.576 With Alexion’s contemporaneous views of the HV-108 data, the original HV-108 CSR, Chamberlain’s opinion, and Kinch’s opinion, SRS demonstrated Criterion 5 was satisfied.

B. Did Alexion Use Commercially Reasonable Efforts?

I now turn to whether SRS proved Alexion failed to use commercially reasonable efforts to achieve Milestones 2 through 8. SRS identifies three breaches of the CRE Obligation. First, it contends Alexion’s decision to deprioritize ALXN1830 in April 2020 constituted a breach. Second, it argues that Alexion breached this obligation in connection with its pivot away from the IV formulation to pursue the SC formulation exclusively, which was then terminated. Third, it

575 Kinch Tr. 335–36. Kinch explained that the rate of IgG lowering slowed because of saturation, not because of ADAs. Id. at 314–15. While Alexion points out that previous trials reached higher levels of target saturation, ALXN Ans. Br. 15, that argument does not dislodge Kinch’s testimony that IgG lowering slowed as saturation was reached, rather than due to ADAs. And Alexion waived this argument by failing to present it in its opening brief. Wimbledon Fund LP-Absolute Return Fund Series v. SV Special Situations Fund LP, 2011 WL 6820362, at *3 (Del. Ch. Dec. 22, 2011). 576 Kinch Tr. 335–36.

argues Alexion’s decision to terminate ALXN1830 in December 2021 was a breach. I conclude SRS has met its burden as to the third.

The Merger Agreement affords Alexion discretion over ALXN1830’s development and specifies that Alexion “shall have no obligation . . . to achieve any [milestone] events . . . that would give rise to an Earn-Out Payment.”577 The Merger Agreement cabins Alexion’s discretion by requiring Alexion to use “Commercially Reasonable Efforts” to achieve each milestone.578 The agreement defines Commercially Reasonable Efforts as follows:

577 Merger Agr. § 3.8(j). 578 Id. § 3.8(f).

[U]sing such efforts and resources typically used by biopharmaceutical companies similar in size and scope to [Alexion] for the development and commercialization of similar products at similar developmental stages taking into account, as applicable, the Product’s advantages and disadvantages, efficacy, safety, regulatory authority-approved labeling and pricing, the competitiveness in the marketplace, the status as an orphan product, the patent coverage and proprietary position of the Product, the likelihood of development success or Regulatory Approval, the regulatory structure involved, the anticipated profitability of the Product, and other relevant scientific, technical and commercial factors typically considered by biopharmaceutical companies similar in size and scope to [Alexion] in connection with such similar products. The obligation to use such efforts and resources, however, does not require that [Alexion] or its Affiliates act in a manner which would otherwise be contrary to prudent business judgment and, furthermore, the fact that the objective is not actually accomplished is not dispositive evidence that [Alexion] or any of its Affiliates did not in fact utilize its Commercially Reasonable Efforts in attempting to accomplish the objective.579

Commercially reasonable efforts clauses “define the level of effort that the party must deploy to attempt to achieve the outcome.”580 The provision is outward facing, meaning it imposes an objective standard.581 With an outward facing provision, Alexion’s “subjective intent or state of mind” does not determine whether it complied with its obligations.582 When the parties do not agree on their own

579 Id. at 4. 580 Akorn, Inc. v. Fresenius Kabi AG, 2018 WL 4719347, at *86 (Del. Ch. Oct. 1, 2018), aff’d, 198 A.3d 724 (Del. 2018). 581 Neurvana Med., LLC v. Balt USA, LLC, 2020 WL 949917, at *16 (Del. Ch. Feb. 27, 2020) (interpreting a similar provision). 582 Id. (“These provisions are viewed as seller-friendly, as they allow the seller, when attempting to plead or prove that the buyer has breached its obligations, to point to an

definition of commercially reasonable efforts, the party must “take all reasonable steps” to achieve the outcome.583 Here, the parties contractually defined commercially reasonable efforts. They defined them as the efforts and resources typically used by companies like Alexion, developing a product like ALXN1830, taking into account factors typically considered by such companies.

This Court considered similar provisions in Himawan v. Cephalon, Inc.584 There, the buyer had complete discretion over drug development, subject to the requirement that the buyer use “commercially reasonable efforts to develop and commercialize . . . [the drug] so as to achieve” milestone events, which would trigger earnout payments.585 The parties defined commercially reasonable efforts as “the exercise of such efforts and commitment of such resources by a company with substantially the same resources and expertise as [the buyer], with due regard to the nature of efforts and cost required for the undertaking.”586 The Court concluded the parties intended “to impose the CRE requirement on the buyer, as it found itself

objective metric—comparable industry standards—rather than the buyer’s subjective intent or state of mind.”). 583 Akorn, Inc., 2018 WL 4719347, at *88 (citing Williams Cos. v. Energy Transfer Equity, L.P., 159 A.3d 264, 272 (Del. 2017)). 584 2024 WL 1885560, at *4 (Del. Ch. Apr. 30, 2024). 585 Id. 586 Id.

situated, but that the requirement went beyond [the] buyer’s subjective good faith”587 in imposing an objective standard. Cabining the buyer’s discretion in this way simply meant the buyer “may not avoid the earnouts in . . . a way that is commercially unreasonable.”588

The Himawan clause permitted the buyer to give “due regard to the nature of efforts and costs,” which meant it could “eschew development where the circumstances reasonably indicate[d], as a business decision, that they not go forward. This include[d] all the costs and risks involved, including the milestone payments and the opportunity costs faced by Defendants.”589 That provision “disallow[ed] actions of the buyer that would be against the buyer’s self-interest.”590

Here, the Merger Agreement’s definition of Commercially Reasonable Efforts also cabins Alexion’s exercise of discretion with an objective standard. That standard is more outward facing than the one in Himawan.591 It calls for the efforts and resources “typically used by biopharmaceutical companies” like Alexion for the development of a product like ALXN1830 at its stage of development, taking into

587 Id. at *11. 588 Id. 589 Id. 590 Id. at *12. 591 The parties did not engage at all with the provision’s verbiage. They offered no view on its interpretation.

account factors typically considered by those typical companies, including certain enumerated factors. While the Himawan provision explicitly allowed the buyer to consider its own efforts and cost required for the undertaking, Alexion’s does not: Alexion’s obligation permits it to consider anticipated profitability, but only insofar as typical companies might typically consider it. Alexion’s efforts obligation is pegged to typical factors considered by typical companies—not Alexion’s own self-interest. Rather than considering its self-interest in determining what is commercially reasonable, Alexion can consider its self-interest only in drawing the upper bound of its commercially reasonable efforts: Alexion’s obligation “does not require that [it] act in a manner which would otherwise be contrary to prudent business judgment.”592

In Himawan, the Court puzzled over what the parties intended the objective standard to be. At the pleading stage, Vice Chancellor Glasscock considered two possible “way[s] to give meaning to the unusual language of the CRE Clause”: (1) a “yardstick approach,” defining commercially reasonable efforts in comparison to “the efforts of similarly-situated pharmaceutical companies and their actions in the real world”; and (2) a “hypothetical company approach,” defining commercially reasonable efforts as those efforts a similarly situated company “would expend under

592 Merger Agr. at 9.

the circumstances at hand.”593 After trial, the Vice Chancellor determined the yardstick approach was unworkable because “no exemplar companies operate[d] under the actual conditions of [the buyer].”594 Instead, the Court determined a hypothetical company standard was the best interpretation of the contract.595

Here, as in Himawan, the provision’s reference to “biopharmaceutical companies” could refer to actual existing companies and the efforts and resources they actually used in developing similar products at similar stages. But its reference to the efforts and resources the companies “typically used,” and the “scientific, technical and commercial factors” they “typically considered,” calls for a more abstract and aggregated industry standard. And as in Himawan, trial has revealed the yardstick approach is unworkable. There are no adequate exemplar companies, as none of Alexion’s competitors operated under the same conditions as Alexion. The competitors that the parties have referenced in this litigation even differ in their

593 Himawan, 2024 WL 1885560, at *11, *12 n.173; Himawan v. Cephalon, Inc., 2018 WL 6822708, at *8 (Del. Ch. Dec. 28, 2018); see also Neurvana, 2020 WL 949917, at *16 (contemplating a similar provision can apply an industry-wide standard or look to other actual participants in the industry and what they have done or would do). Himawan rejected the plaintiffs’ analogy to cases involving best efforts clauses aimed at closing a merger. The Court pointed out those clauses require “that a party pursue the contractual outcome unless it would be unreasonable to do so. . . . Here, the provisions are reversed; the buyer has complete discretion over development, cabined only by CRE.” Himawan, 2024 WL 1885560, at *12 n.173. 594 Himawan, 2024 WL 1885560, at *11. 595 Id. at *11, *12 n.173.

circumstances as between themselves. Like Himawan, the realities of applying the provision call for a hypothetical company approach.

Thus, Alexion promised to use the efforts and resources that would be used by a hypothetical typical company of Alexion’s size, working on a molecule like ALXN1830 at a similar stage of development, considering the factors such a company would typically consider, up until the point of being contrary to prudent business judgment. This provision is intended to adjust to Alexion’s capitalization, progress on ALXN1830, and the molecule’s developing attributes. It is not static. Identifying the benchmark at any moment in Alexion’s journey with ALXN1830 requires factfinding to circumscribe that hypothetical company. The benchmark cannot be discerned from the plain text of the provision alone.

Both sides have offered a three-pronged approach to set the benchmark for Alexion’s efforts. First, the parties identified four Alexion competitors, and compared and contrasted Alexion’s progress to their progress, and Alexion’s product to their product. The parties focused on Argenx, Immunovant, Momenta, and UCB. Each was a biopharmaceutical company developing anti-FcRn therapies.596 At the

596 Russell Tr. 675. To be sure, some competitors, like Argenx, already received approval for their anti-FcRns for at least one indication. And, at times, some of the competitors’ therapies were at different clinical stages of development (at least as to some indications) than ALXN1830. I nevertheless consider some of their actions generally, and with regard to therapies in clinical development, as probative of what a similarly situated company would do.

time, none of the competitors were significantly larger than Alexion, and none had materially greater resources.597 Under a similar hypothetical company approach, the actions of such companies remain useful in benchmarking the efforts and resources typically used. Second, the parties relied on experts to opine on conclusions to be drawn from Alexion’s circumstances. And third, the parties focused on the efforts and resources Alexion used, and factors Alexion considered, before the 2020 deprioritization and before it terminated ALXN1830. In assessing this evidence, Alexion is not bound by what it has done in the past. That would only be appropriate if the Merger Agreement had defined commercially reasonable efforts as past practices. Here, Alexion’s view of the ALXN1830 program is relevant insofar as it sheds light on what efforts and resources a similar hypothetical company would use under Alexion’s circumstances at the time of the alleged breach, taking into account typical factors.

1. The April 2020 “Deprioritization” SRS focuses on Alexion’s shifting funding away from the ALXN1830

program “because it wanted to develop other drugs.”598 The ALXN1830 program’s funding was “reduced significantly” as part of an R&D rebalancing program

597 Id. at 675–76. 598 SRS Ans. Br. 43. SRS does not contend the initial pause of HV-105 and HV-106 at the start of COVID was unreasonable. Nor does it charge Alexion with restarting those trials after RPL paused them. And it does not specifically challenge the initial decision to pause WAI-201.

initiated in response to COVID.599 Orloff’s April 27 email explained Alexion was rebalancing its portfolio to try to fulfill its promise to stockholders of ten launches by 2023.600 Funding was moved so that Alexion could ensure the “10 by 2023” promise was not thwarted by the pandemic. ALXN1830 was not one of the programs set to be one of ten launches in 2023, so most of its funding was cut.601

To be sure, certain activities continued.602 But moving those funds away prevented certain work from continuing, including preparing protocols for upcoming clinical trials: because funding was reduced, Alexion was not prepared to move forward when SC drug supply became available in September.603

SRS has proven Alexion’s 2020 deprioritization of ALXN1830 fell short of the commercially reasonable efforts it agreed to use. A hypothetical company similar to Alexion, taking into account factors typically considered by such companies, would not have drastically reduced funding for a product like

599 Orloff Tr. 862; JX 1456 at 2. 600 JX 1451 at 3. 601 See JX 1460 at 7. 602 Ledwith Tr. 1071–88; see also Orloff Tr. 867 (“I should say that in the meantime, we did instruct the 1830 team to continue with their formulation, manufacturing, CMC, and device development work. In parallel, none of that activity was touched because of this reprioritization exercise.”). 603 JX 1613 at 3 (“We expect the pause to be for a minimum of 3 months, possibly longer. Pencils down on protocol prep, . . . new reg submissions, etc.”); JX 1529 at 2 (“We are not authorized to present work on the [HV-108] protocol.”); see also JX 1613 at 2–3 (listing other activities that were paused).

ALXN1830. Alexion cut funding for ALXN1830 because it could not be launched quickly enough to be part of “10 by 2023.” But “10 by 2023” was not a typical factor. It was an idiosyncratic corporate initiative. A reduction in drug development efforts to accommodate such a unique program cannot satisfy an outward-facing efforts clause based on the typical efforts of similar companies. Alexion does not pretend otherwise.604

The evidence provided shows that Alexion’s competitors were all moving forward with similar products in 2020.605 John Russell (SRS’s expert on the evaluation of pharmaceutical competitive landscape, market opportunities, and commercial potential and pricing and reimbursement)606 testified that “[a]ll of the competitors made some sort of progress in the clinical development of their particular molecule during” the year.607 Alexion itself had viewed the ALXN1830 program as a “high priority” and a “Key Strategic Interest.”608 Alexion believed

604 Alexion has not suggested that the decision could be protected by the carveout for decisions that would be “contrary to prudent business judgment.” Merger Agr. at 9. Rather, Alexion contends that there “was no ‘deprioritization.’” ALXN Op. Br. 52. 605 Russell Tr. 715; see JX 2870 (showing Argenx’s open trials in 2020, including a Phase 1 trial in healthy volunteers); JX 2873 (same for UCB); JX 2876 (showing open trials in 2020); see also Robbins Tr. 534 (testifying Immunovant did not announce any pauses related to Covid); Russell Tr. 746 (“The key point here is all these companies are continuing to develop their products . . . in gMG.”). 606 Russell Tr. 669. 607 Id. at 715. 608 JX 1460 at 7. Alexion advances this position in this case. ALXN Ans. Br. 52.

ALXN1830 had commercial potential if it was brought to market on the heels of competitors poised to enter the marketplace first.609 When ALXN1830 was deprioritized, all of Alexion’s competitors had Phase 2 or Phase 3 trials ongoing in gMG, and Momenta had an ongoing Phase 2/3 trial in WAIHA.610 gMG and WAIHA were the two indications Alexion was pursuing at the time. Alexion itself thought ALXN1830’s development needed to be accelerated, not slowed. 611 The evidence at trial shows cutting ALXN1830’s funding in April 2020 to support products that could be launched by 2023 fell short of commercially reasonable efforts.

609 ALXN Op. Br. 10 (“But Alexion believed that ALXN1830 had commercial potential if its development could be accelerated and it could be differentiated from other anti-FcRn drug candidates. Alexion hoped to accomplish this by developing a convenient, low volume SC means of delivery and by being the first anti-FcRn to market in an orphan indication, with speed to market critical for both objectives.” (emphasis in original)); Sarin Tr. 936 (“But we felt that there was potential that we could be first in one indication, you know, if we -- if we moved the molecule fast enough. And we also thought that there was opportunity to differentiate, if we were able to get a sub-Q formulation.”); id. at 939 (“[I]t was really important because of the order of entry. And, you know, time is of the essence, right? So we had Argenx that was ahead in terms of competition. We had UCB that was ahead. They were actually developing a subcutaneous formulation, but it was a large- volume subcutaneous formulation. So if you were third to market, for example, but you have a differentiated product because it’s not IV and it’s a small-volume sub-Q. So that’s why the sub-Q was so important.”); JX 518 at 2. 610 JX 2296; JX 2359; JX 2569; JX 2388; JX 2302; JX 2067; JX 2570. 611 Pirozzi Tr. 1534; see also JX 609 at 9.

But that does not end the inquiry. A claim for breach of contract requires proof that the breach caused the plaintiff to suffer harm.612 SRS points to several delays in ALXN1830’s development: after RPL’s January 2020 pause of HV-105 and HV-106, Alexion did not open another Phase 1 trial for over a year, and after WAI-201 was paused, it took Alexion sixteen months to open a Phase 2 gMG trial and eighteen months to open a Phase 2 WAIHA trial.613 But SRS fails to account for numerous confounding events during those periods, including any reasonable duration of the COVID pauses; for HV-105 and HV-106, the amount of time it would have taken to move the studies to a new country; and Alexion’s need to wait for drug supply. SRS failed to account for the amount of time that it would take to prepare and launch new studies. SRS has not met its burden to show Alexion’s failure to use commercially reasonable efforts caused those delays.

Even affording SRS a guess that the 2020 deprioritization caused a delay of several months,614 SRS falters on proving it was harmed by that delay. The only harm SRS identifies is Alexion’s failure to achieve Milestones 2 through 8. SRS has offered no evidence that delays from the 2020 deprioritization contributed to

612 Trifecta Multimedia Hldgs. Inc. v. WCG Clinical Servs. LLC, 318 A.3d 450, 470 (Del. Ch. 2024) (“The elements of a claim for breach of contract are (i) a contractual obligation, (ii) a breach of that obligation by the defendant, and (iii) a causally related injury that warrants a remedy, such as damages or in an appropriate case, specific performance.”). 613 SRS Op. Br. 24. 614 JX 1597 at 2.

Alexion’s failure to achieve the milestones, at all or independently from Alexion’s termination of ALXN1830.615 SRS failed to substantiate any role the 2020 deprioritization played in Alexion’s failure to achieve the milestones. SRS has not proven the 2020 deprioritization harmed SRS as it must to obtain a judgment on its breach of contract claim.

2. The Decision To Terminate The IV Formulation In WAIHA The second decision SRS challenges as a breach of the CRE Obligation is

Alexion’s pivot away from the IV formulation for the WAIHA indication.616 Since the acquisition, Alexion was focused on developing an SC formulation. It believed it needed that formulation to be competitive in the increasingly crowded anti-FcRn market. It always viewed the SC formulation as the better product, but continued

615 SRS Op. Br. 71 (“SRS also established that its damages ‘flowed’ from Alexion’s breaches—Alexion’s failure to obtain Milestones 2 to 8 was the ‘foreseeable’ consequence of its decision to abandon ALXN1830’s development. Indeed, Alexion’s decision to kill ALXN1830 made achieving these Milestones impossible.”). 616 In its answering brief, SRS argues that Alexion misconstrued its argument by focusing solely on WAIHA, while ignoring the effect the decision had on other indications. SRS Ans. Br. 46 (“As a preliminary matter, SRS’s IV CRE claim is not limited to ‘switch[ing] from IV to SC in WAIHA.’ Rather, SRS argues that Alexion breached CRE by terminating IV ALXN1830’s development to supposedly pursue the SC formulation, and then immediately abandoning clinical development of SC ALXN1830.” (alteration in original)). SRS’s opening brief does not address abandoning the IV formulation as to other indications. In fact, it addresses the pivot away from that formulation only in the background. To the extent this argument applies to other indications, SRS waived it by failing to raise the issue in its opening brief. See Wimbledon Fund, 2011 WL 6820362, at *3.

pursuing the IV formulation because it would get ALXN1830 to market just under two years earlier.617

Alexion presented credible testimony that the pause in early 2020 caused the development timelines for the IV and SC formulations to begin converging.618 From there, Alexion’s expert established it did not make sense to continue pursuing both methods of administration simultaneously.619 Neither the record nor logic offers any reason to doubt that a hypothetical company in Alexion’s situation would consider this factor in deciding whether to terminate a drug formulation. SRS failed to demonstrate by a preponderance of the evidence that the decision to terminate the ALXN1830 IV program for WAIHA was a breach of the CRE Obligation.

3. Terminating The ALXN1830 Program

SRS proved by a preponderance of the evidence that Alexion’s 2021 termination of the ALXN1830 program breached the CRE Obligation.620 The

617 See JX 1407 at 14. 618 See Ledwith Tr. 1079–80; see also JX 1407 at 14. 619 Bahl Tr. 1752–54. 620 SRS also argued that Alexion breached Section 3.8(f) of the Merger Agreement because it decided to terminate ALXN1830 in September 2021, then created a paper trail to make it appear as though it really made the decision in December 2021 for facially legitimate reasons. This argument is based on a handful of joint exhibits. Many of SRS’s citations are to Alexion’s privilege log. SRS may not rely on inferences drawn from Alexion’s privilege log. D.R.E. 512(a); see DLO Enters., Inc. v. Innovative Chem. Prods. Grp., LLC, 2021 WL 2258752 (Del. Ch. June 2, 2021) (ORDER).

definition of Commercially Reasonable Efforts calls for typical efforts based on at least eleven potential typical factors.621 For ease of analysis, and in light of the parties’ approach to this issue, I group those considerations into the following categories: safety, efficacy, order of entry, the likelihood of regulatory approval, and other advantages and disadvantages.

I do not read the remaining documents SRS cites to establish such a conspiracy. See generally SRS Op. Br. 68–70. First, a September 16, 2021 email in which Lukasz Jarzyna (an Alexion employee who did not testify at trial) conveys “the current view . . . that development of 1830 is going to be stopped.” JX 1990 at 1. But the email goes on to explain that Alexion is awaiting further data, and nothing in the email suggests that a final decision had been made. The second document is an email on the same chain that discusses next steps Jarzyna identifies. JX 2214. Those next steps were in furtherance of being prepared in case Alexion decided to terminate ALXN1830, and they do not establish or even suggest that Alexion had already made that decision. The third is a presentation circulated on September 19, which lists the WAIHA and gMG ALXN1830 programs as “De-Prioritized.” JX 2005 at 156. SRS elicited no testimony at trial about this document and has provided no context for it. It is not clear who drafted it, including who listed the WAIHA and gMG indications as deprioritized; what it means for an indication to be deprioritized in this context; and whether the presentation was suggesting the WAIHA and gMG indications should be deprioritized or whether they had already been deprioritized. Against that backdrop, this presentation carries little weight. Fourth, SRS argues Alexion “closed” MG-201 and WAI-202. JX 2015; JX 1928 (“slowing down” the gMG study); JX 1991 (pausing WAI-202 study); see also JX 2015 at 1 (indicating the WAI-202 study was paused). Lee testified credibly at trial that the decision was a pause, as opposed to closing the studies, and that it was possible for patients to be enrolled in the future. Lee Tr. 445– 46. Documents in the record corroborate her testimony. JX 1932 at 2; JX 1933 at 1; see also JX 1948 at 1. The final piece of evidence on which SRS relies is an email concerning the WAI-202 pause, in which Pirozzi wrote to Lauchart that “for reasons you know we should not say that WAIHA will be stopped because of prioritization.” JX 2015 at 1. Though it is plausible to read this email as suggesting Alexion had a pretext for terminating the ALXN1830 program, it does not alone establish that fact by a preponderance of the evidence. 621 Merger Agr. at 9.

a. Safety

Safety is an important consideration for a company similar to Alexion bringing an anti-FcRn to market. If a drug is unsafe, it is less likely—and perhaps even unlikely or unable—to receive regulatory approval.622 Without regulatory approval, the drug will never reach the market, making further development pointless. Even if approval is obtained, physicians consider safety in prescribing therapies to patients.623 A doctor may be less willing to prescribe a therapy that is less safe than comparable alternatives, meaning safety can be an important differentiator within an indication.624 To that end, a hypothetical company similarly situated to Alexion would consider any signals that a drug was unsafe during clinical development. If such signals were observed, the company would consider them in deciding whether to continue development. As explained, safety signals can manifest through the occurrence of SAEs, which suggest that the drug concentration is reaching the top of the therapeutic window.

SRS contends Alexion’s decision to terminate ALXN1830 was not, as Alexion stated at the time and in this litigation, fairly based on safety concerns that would support termination by a hypothetical similar company. The parties spar over

622 See Harvey Tr. 1675 (testifying that the “overarching principle at FDA is patient protection, patient safety”). 623 Jagannathan Tr. 1330–31. 624 Bahl Tr. 1765; see also Russell Tr. 666.

whether HV-108’s Cohort 3 data, reflecting a 100% immunogenicity rate and the unexplained drug accumulation after the fourth dose,625 supported termination.

The HV-108 trial did not record any SAEs.626 This indicates the concentration of ALXN1830 accumulating in patients did not reach the top of the therapeutic window.627 Dr. Mark Robbins (SRS’s expert on clinical and regulatory development of biopharmaceuticals)628 testified credibly and reliably that levels of total drug accumulation did not approach the top of the therapeutic window.629 He explained that much higher concentrations were seen in SYNT-104 participants and HV-108’s Cohort 1, without causing an SAE.630 Additionally, numerous contemporaneous documents indicate Alexion believed ALXN1830 was safe and well tolerated in the HV-108 study, which also tends to show that the level of drug in the Cohort 3 subjects did not approach the top of the therapeutic window.631

625 Kinch Tr. 283, 432; Jagannathan Tr. 1285. 626 Kinch Tr. 264, 268, 270; Robbins Tr. 549 (testifying no SAEs were reported in the HV- 108 trial and that there is no basis to believe that “continued clinical study of ALXN1830 would present a serious risk to patients”). Even the December rESPC presentation pointed to ALXN1830’s safety as a factor favoring continued development. JX 2220 at 16. 627 JX 2367 at 35; Kinch Tr. 244, 260. 628 Robbins Tr. 512. 629 Id. at 552–57. 630 Id. at 553–57. 631 Kinch Tr. 260, 283, 298–99.

Alexion argues that the drug accumulation seen in Cohort 3 presented a possible safety issue because Alexion did not know the cause of the accumulation, and it could have been caused by bound drug instead of free drug. ALXN1830 did not reach a steady state during HV-108’s twelve weeks of dosing.632 Drug levels rose over the duration of the trial, and no expert could determine when they would have leveled off.633 The experts agreed that it was possible the drug accumulation could have an effect on efficacy and safety.634 The cause of the drug accumulation was unknown.635

632 Id. at 432; Jagannathan Tr. 1281. 633 Kinch Tr. 432; Jagannathan Tr. 1281; see also Harvey Tr. 1664, 1671 (“[G]iven the data, you don’t know whether [the drug concentration] was going to continue up, stay the same, or go down. So it was an incomplete story.”). 634 Kinch Tr. 260 (“Q. Is it hypothetically possible for drug accumulation to lead to safety concerns? A. Oh, absolutely.”). 635 Jagannathan Tr. 1289 (“We don’t know why the drug is accumulating.”); see also Kinch Tr. 317 (hypothesizing that drug accumulation could be due to the drug’s sticking to albumin); Jagannathan Tr. 1305 (hypothesizing drug accumulation may be due to ADAs and nAbs). Alexion cites Pradhan’s testimony that at the time of receiving the relevant data, he and others believed it was clear that the drug accumulation was the product of bound drug. Pradhan Tr. 893. He disagreed that he could not “be certain that” ADAs were not binding to ALXN1830 and causing the accumulation, and “the observed data was clearly demonstrating that the drug accumulated, and we did not see a corresponding improvement in efficacy or [PD] effect.” Id. at 894. Pradhan was directly contradicted by Pirozzi, who testified that at the time the data came in, Alexion did not understand what was causing the accumulation, and that the only way they could do so would be to do “additional testing.” Pirozzi Tr. 1482–83. Pirozzi’s testimony is corroborated by the December rESPC meeting minutes. JX 2226 at 2. And Jagannathan testified that there is “no data showing [ALXN]1830 binds to ADAs.” Jagannathan Tr. 1373. Alexion also points to a February 2022 presentation as support for its 2021 hypothesis that the drug accumulation was caused

SRS has demonstrated drug accumulation posed only a hypothetical risk. There was no evidence that it caused any safety issue in the twelve weeks Cohort 3 was dosed. A hypothetical company using commercially reasonable efforts would respond by gathering further data, as Alexion’s September and October decision trees provided—not by terminating the program.

b. Efficacy

A hypothetical similarly situated company would also consider the anti-FcRn’s efficacy. Efficacy is an important differentiator, as it speaks to how well the anti-FcRn addresses the relevant indication.636 Drugs with greater efficacy will typically have greater commercial success. ALXN1830’s efficacy is measured by IgG lowering.

Sustained IgG lowering was observed in Cohort 3, indicating the drug had a beneficial effect.637 The December rESPC presentation noted ALXN1830 demonstrated IgG lowering of 66%.638 The HV-108 data reflected IgG lowering in

by bound drug. JX 2292. I do not consider this exhibit in my analysis, as Alexion did not have this information at the time it made the decision to terminate the ALXN1830 program. The evidence shows that at the time of termination, it was possible, but far from certain, that the accumulation was caused by bound drug. 636 Bahl Tr. 1765 (testifying that efficacy is the most important differentiator); see also Russell Tr. 702 (testifying physicians may cycle through different treatments due to “side effects or lack of efficacy”). 637 Jagannathan Tr. 1355; JX 2032 at 8; JX 2367 at 11; JX 2180 at 22. 638 JX 2220 at 11.

excess of Alexion’s targeted levels.639 Still, that degree of lowering was less than that of Argenx’s and Momenta’s therapies, marginally better than UCB’s, and at the low end of the range demonstrated by Immunovant’s.640 ALXN1830 would struggle to compete solely on the basis of efficacy, at least in indications in which Argenx and Momenta were present.641

Alexion further attacks ALXN1830’s efficacy. It argues the presence of ADAs and nAbs, as observed in Cohort 3, threatened to diminish ALXN1830’s efficacy in future trials.642 But the nAbs observed did not affect IgG lowering for the duration of the HV-108 study.643 A longer-term study might reveal such an effect, but trial showed that to be speculative.644 I give no weight to Alexion’s additional concerns over ADAs and nAbs decreasing ALXN1830’s observed efficacy.

639 Pradhan Tr. 897 (“Q. Do you agree that 1830 showed expected IgG reduction in the HV-108 trial? A. Yes.”); JX 2006 at 1 (“The IgG lowering effect has been consistent and is at the expected level . . . .”). 640 JX 2220 at 11. 641 Bahl Tr. 1765 (“[I]f you have better efficacy, you’re the likely winner in a majority of diseases, meaning that efficacy is very important. It’s one of the primary differentiators.”). 642 ALXN Op. Br. 86. 643 Kinch Tr. 283 (“[T]here was no impact [from ADAs] on the efficacy of the drug nor the safety that I was able to identify through my independent evaluation.”); JX2094 at 1 (“ADAs. even at high frequency — no associated impact to lgG lowering and safety; no PK effect.”); Jagannathan Tr. 1308. 644 Robbins Tr. 596 (“Q. And the neutralizing antibodies seen with 1830 had the potential to impact efficacy. Correct? A. Yes, they had the potential.”).

c. Likelihood Of Regulatory Approval

Likelihood of regulatory approval is an important factor because a drug cannot be marketed without that approval. Alexion itself, Alexion’s expert, and SRS’s expert each peered into different crystal balls to predict regulatory approval. None of those crystal balls offers me an answer that I afford any weight.

As described, Alexion, on the precipice of termination, downgraded ALXN1830’s PRS based on the HV-108 immunogenicity and drug accumulation data.645 As explained, I have afforded that reduction little weight. The PTRS percentage and its PRS component, at least for ALXN1830, was a subjective black box calculation.646 And the reduction was based entirely on “immunogenicity observed from HV-108,” unexplained drug accumulation, and the consequences of immunogenicity on labeling.647 That subjective change is inconsistent with the objective trial record, which shows Alexion appreciated ALXN1830’s immunogenicity before it received the HV-108 data. I give the trial record more weight than Alexion’s PTRS number.

SRS offers Kinch’s opinion; he calculated industry averages of approvals of similar molecules from his own open-source database tracking regulatory

645 JX 2608; JX 2227 at 3. 646 See supra note 452. 647 JX 2608 at 2–3.

decisions.648 He estimated a Phase 2 monoclonal antibody like ALXN1830 had a 39.8% chance of obtaining regulatory approval, then adjusted that probability upward based on his review of ALXN1830’s clinical trial data, given its proof of concept in diseased patients.649 But Kinch’s opinion was offered to calculate damages if Alexion breached, and he specifically disclaimed any opinion on whether Alexion breached.650 SRS offers no other evidence of how to consider the likelihood of regulatory approval in determining whether Alexion breached its CRE Obligation.

Alexion’s expert Brian Harvey (expert in regulatory strategy and affairs) testified he believes ALXN1830 was unlikely to be approved in the US.651 His conclusion was based on HV-108’s data and what he referred to as “uncontrolled, unpredictable drug accumulation.”652 I afford this testimony little weight. Harvey was told by Alexion’s lawyers that HV-108 showed immunogenicity and drug accumulation.653 He then looked at the HV-108 Cohort 3 chart, observed that the “numbers” went from “about 35, around 50, and then well over 1,000,” and

648 SRS Op. Br. 66 (citing Kinch Tr. 364–65); Kinch Tr. 207–09. 649 Kinch Tr. 349–50, 356, 358. 650 Id. at 369. 651 Harvey Tr. 1691. Zimmermann also gave her opinion as to the likelihood ALXN1830 would be approved by regulators. As explained, I gave this opinion testimony almost no weight. 652 Harvey Tr. 1691. 653 Id. at 1662, 1698.

concluded on that basis that drug accumulation was “profound,” and that the data left open the question of whether it was going to increase, decrease, or stay the same.654 This statement was rebutted by Robbins, who compared HV-108’s maximum concentration against previous studies and noted it was much lower.655

As explained, the contemporaneous record evidence supports at most speculation that future studies would reveal actual safety concerns or a concerning reason for drug accumulation. The drug accumulation seen in Cohort 3 did not reflect a safety problem and never reached the top of the therapeutic window. And as explained, that bound drug was causing the increase was speculation at the time. HV-108 offered no basis to conclude ALXN1830 had reached the top of the therapeutic window. ALXN1830’s drug accumulation would be investigated in the normal course in the Phase 1B/2A trial. The record evidence on which Harvey relied did not itself substantiate any concerns stemming from drug accumulation.

And Harvey’s opinion offers nothing more than speculation that the data might indicate a safety concern.656 He agreed he did not go so far as to opine that HV-108 showed ALXN1830 was unsafe.657 Instead, he opined the data left open the

654 Id. 1664; see also id. at 1716–18 (clarifying that Harvey had not performed any calculations using Cohort 3 data, nor seen written documents suggesting drug accumulation impacted IgG lowering, but rather he “just see[s] it in the graphs”). 655 Robbins Tr. 2069–70. 656 Harvey Tr. 1664. 657 Id. at 1703.

question of the direction drug accumulation would go.658 Harvey’s opinion that ALXN1830 would not receive regulatory approval because the HV-108 data presented unpredictable drug accumulation carries little weight.

Neither SRS nor Alexion has offered any credible evidence of the likelihood of ALXN1830’s approval for purposes of determining whether Alexion breached its CRE Obligation. I draw no conclusions based on this factor.

d. Order Of Entry

Order of entry to an indication or multiple indications is important, especially here where Alexion was entering a relatively crowded field.659 Physicians are typically more comfortable prescribing therapies that they have more experience with.660

In early 2019, Alexion believed that it could be first and third in WAIHA and gMG, respectively.661 By June 2021, its expected order of entry into those

658 Id. at 1664; see also id. at 1716–17 (“Q. Okay. Now, I want to ask you about drug accumulation, which you said was profound, in your view; right? A. Correct. Q. But you don’t do numbers; right? A. I don’t do numbers.”). 659 See Sarin Tr. 939. 660 Jagannathan Tr. 1329–30. 661 See Russell Tr. 741–42; JX 609 at 12.

indications had slipped to third and fifth, respectively.662 gMG development was paused in August 2021663 and WAIHA was paused in September.664

At the time of termination, Alexion was pursuing cAMR and TED.665 The December rESPC presentation showed that Alexion predicted the Phase 1B/2A study would push back development by six months.666 Still, Alexion believed it could be first in those indications, as it did not know of any other competitors developing therapies in those indications at the time.667

e. Other Advantages And Disadvantages

ALXN1830 had an important advantage in that it did not lower albumin.668 The lack of albumin lowering meant ALXN1830 could appeal to certain subpopulations like the elderly and those with kidney problems.669 This gave ALXN1830 a slight advantage over all competitors other than Argenx.670

662 Russell Tr. 741–42. 663 JX 1928. 664 JX 1991 at 2. 665 See JX 2220 at 6. 666 JX 2226 at 2; JX 2220 at 14–15. 667 Russell Tr. 772; JX 1955 at 7. 668 Russell Tr. 740–43; see JX 1802 at 2. 669 Bahl Tr. 1766–77; JX 1230 at 25. 670 Russell Tr. 740–41; see also Bahl Tr. 1766–69.

Labeling is another typical factor. ALXN1830’s drug accumulation and immunogenicity rates would not meaningfully affect its label such that it would be less competitive. Alexion correctly points out that the FDA would require the immunogenicity rates and drug accumulation to be disclosed.671 But Jagannathan testified that the FDA cautions against the utility of comparing ADA rates across products, and that the guidance provides “ADA rates are not directly comparable across labels.”672 The record contains no evidence that a hypothetical similarly situated company would think that ALXN1830’s predicted labeling would support termination.

SRS points out that ALXN1830 also successfully obtained orphan drug designation in PV and that Alexion intended to seek the same in WAIHA.673 As to WAIHA, whether Alexion sought to obtain orphan drug status has no bearing on the likelihood it would be obtained. And the indications in Alexion’s pipeline at the

671 See Robbins Tr. 627; Jagannathan Tr. 1332; Harvey Tr. 1690 (“[T]he product label is intended to inform the practitioner how -- the safe and effective use of a product and to then help select those patients where the benefits outweigh the risks.”); Harvey Tr. 1690; see also Borboroglu Tr. 1429 (“So all biologics will have a section within their labeling that refers to immunogenicity that may or may not be observed. Regardless of wherever this would land, there would be a section within the ALXN1830 that would show ADA rates.”). 672 Jagannathan Tr. 1367–68. 673 JX 2513 at 106; JX 2975 at 1, 2; JX 2011 at 1.

time of termination were cAMR and TED. SRS has not explained how orphan drug status would translate across indications. I draw no conclusions based on this factor.

SRS also points out ALXN1830 had strong patent protection until 2036, after its competitors’ would have expired.674 This factor inspired Alexion’s acquisition of Syntimmune in the first place.675

• • * *

Considering these typical factors, I conclude termination of ALXN1830 fell short of the typical efforts a hypothetical company similarly situated to Alexion would have devoted to the program. My holistic assessment of the above factors reveals ALXN1830 was not the strongest anti-FcRn that would come to market. It would not have the highest efficacy. It would be fifth to market overall, and at the time of termination, Alexion believed it could be first to market in TED and cAMR. More work in the form of a Phase 1A/2B study was needed; progress was slowing. But that did not mean ALXN1830 could not compete. It did not present concrete safety concerns or outsized risk due to immunogenicity, and its lack of albumin lowering gave it an advantage.

Alexion’s own view of the efforts the program deserved just before termination supports this conclusion. In 2021, Alexion believed it could capture

674 Tr. Bahl 1776; JX 690 at 231. 675 JX 690 at 231.

about 7% of the gMG market676 and saw the potential to differentiate within WAIHA through efficacy, safety, and lack of albumin lowering.677 Alexion was pressing ahead with Phase 2 trials in gMG and WAIHA in the summer of 2021. 678 Alexion was still identifying new indications by exploring pursuing cAMR and TED by July 2021.679 With the exception of the delay from a Phase 1B/2A study, there were no significant changes in any factor considered above between June 2021 and December 2021.680 The parties have not identified, and the Court is not aware of, any information suggesting Alexion was hesitant about the program before June 2021 or believed that it was too far behind to make development worthwhile.

676 JX 1699 at 7. 677 Id. at 9. 678 JX 2298 at 1; JX 2299. 679 JX 1955. 680 The December 2021 rESPC presentation includes a slide listing information learned after August 2021. JX 2220 at 7. That slide listed: potential toxicity from the monkey death, immunogenicity, the need to assess the long-term effect of nAbs on PD, drug accumulation, and device development uncertainty. JX 2220 at 7. The parties agree that the monkey death did not provide new information. As to device development, the evidence shows that the delay in developing an on-body device is commensurate with the delay in conducting an additional clinical study of ALXN1830, such that considering the delay would be to double count the effect of conducting a Phase 1B/2A trial. Further, the slide states that the impact of the uncertainty in device development was that Alexion would have to use an SC pump at launch until it could complete development of the on- body device. But this had been Alexion’s plan since early 2020 when it abandoned the IV formulation. See JX 1407 at 14. The other items in the list have been addressed elsewhere in this decision.

The six-month delay for a Phase 1B/2A study does not appear to have changed much. ALXN1830 was already going to be the fifth anti-FcRn to market, which Alexion describes as being “last.”681 There is no indication that Alexion believed it would no longer be first in TED or cAMR because of the delay. In fact, the rESPC meeting minutes confirm no competitors had entered those indications at the time of termination.682 And though getting to market six months earlier would still have some benefit, Alexion did not seem worried: that delay received only passing mention in its termination discussions.683

As for competitors, they continued to move forward with development despite Argenx’s advantages in being first to market generally, having a 31% immunogenicity rate, and not lowering albumin.684

C. Why?

All of this naturally gives rise to the question of why Alexion would terminate a program that it once believed in and that was supported under the factors defining Commercially Reasonable Efforts. Based on the trial record, the answer is in the AstraZeneca acquisition.

681 ALXN Op. Br. 61. 682 JX 2226 at 2. 683 JX 2227 at 3. 684 See JX 2220 at 11.

When AstraZeneca acquired Alexion on July 21, 2021, AstraZeneca promised $500 million in recurring synergies.685 In furtherance of delivering on that promise, Alexion launched a full portfolio review of all ongoing Alexion drug programs and indications.686 Less than three weeks after the merger closed, Lee notified the ALXN1830 team that the gMG study would be slowed down following a “portfolio level review,” with the cited rationale being competition within the indication and timing to market—both of which were known before the acquisition closed.687

The initial HV-108 data came in on September 15.688 By the next day, “the current view [at Alexion was] that development of 1830 [was] going to be stopped,” though a final decision was not yet made.689 The stated rationale was the high rate of ADAs; both nAb rates (the nAb data would not arrive until later) and drug accumulation went unmentioned.690

By the end of September, Alexion developed a decision tree establishing it would continue development of ALXN1830 if the “[c]umulative ADA data from

685 See JX 1946 at 3. 686 See id. at 7–9; JX 1933 at 1; JX 1997; Washburn Tr. 638 (“[T]here was a reassessment of the portfolio strategies after AstraZeneca acquired Alexion. And in the process of reevaluating the overall pipeline of all activities, there was a decision made to pause gMG at that time.”). 687 JX 1928 at 1. 688 JX 1989.02; JX 1990 at 1. 689 JX 1990 at 1. 690 See id. at 1–2.

HV-108,” which included the ADA positivity rate and the data on nAbs, was “[a]cceptable.”691 By the end of October, that decision tree was more refined: if the immunogenicity observed in HV-108 had “[n]o impact on efficacy/safety,” then Alexion would continue development and even “[p]ursue new indications.”692 In early November, Alexion had the drug accumulation data at the center of this case and had already developed the often-discussed Cohort 3 charts.693 By November 17, Alexion thought the ADAs and nAbs had “no impact on IgG lowering” and “[n]o safety events” were observed.694 This was confirmed by the August 2022 CSR, which reported that despite the presence of ADAs and nAbs, Alexion observed “no impact on the drug concentrations (PK profile) or IgG (PD marker) levels.”695 Alexion retained Chamberlain to evaluate immunogenicity, and he likewise concluded that HV-108 presented no safety concerns and that the study saw sustained IgG lowering.696 Further, the development team did not appear moved by the data that came in.697

691 JX 2025 at 1. 692 JX 2109 at 24. 693 JX 2161 at 8. 694 JX 2163 at 2. 695 JX 2367 at 10. 696 JX 2186.02 at 18. 697 See JX 2221 at 3 (showing notes Washburn emailed himself for the December rESPC presentation, which explain “[t]he team believes in the science and in the program and

Against this backdrop, the rESPC faced the decision of whether to continue development of ALXN1830 through completion of HV-108 and a longer duration Phase 1B/2A study or terminate ALXN1830’s development.698 The rESPC decided to terminate, citing immunogenicity, order of entry to market, and developmental issues caused by COVID and the monkey death.699 The trial record simply does not support those reasons for termination. The preponderance of the evidence supports the conclusion that the decision was influenced, motivated by, or driven by AstraZeneca’s pursuit of merger synergies.

D. Unclean Hands

Alexion asserts unclean hands as a defense to SRS’s claim for breach of the CRE Requirement. Under that doctrine, the Court will refuse equitable relief “in circumstances where the litigant’s own acts offend the very sense of equity to which he appeals.”700 SRS’s claim sounds in contract and is therefore a legal claim. The

wants to continue development. Consultant Paul Chamberlain also stated that there was no scientific reason to abandon the program at this time. However, the team does not have the full understanding of all factors affecting portfolio prioritization so is not able to make a final recommendation.”); Washburn Tr. 658–60 (testifying that the development team “believed in the science” and that they “wanted to support the program”). 698 JX 2220 at 16. 699 JX 2226 at 1. 700 Wagamon v. Dolan, 2013 WL 1023884, at *2 n.19 (Del. Ch. Mar. 15, 2013) (quoting Nakahara v. NS 1991 Am. Tr., 718 A.2d 518, 522 (Del. Ch. 1998)).

defense of unclean hands is unavailable where the plaintiff asserts a legal claim seeking monetary relief.701 The defense of unclean hands is unavailable to Alexion.

E. A Note On What Remains

This opinion does not address damages for Alexion’s breach of its CRE Obligation. I ask the parties to submit supplemental briefing on the proper damages model, including causation and the propriety of SRS’s two proposed approaches.702 Damages will be addressed in an opinion to come.

This opinion does not address whether Alexion breached Section 3.8(f) of the Merger Agreement by taking actions with the primary purpose of avoiding the achievement of any milestone. I ask the parties to advise if SRS’s Count IV carries with it any additional potential for damages or practical ramifications, given what it has taken to get this far.

This opinion does not address the merits of the parties’ dispute over the drug supply Alexion inherited from Syntimmune, presented in SRS’s Count V requesting a declaratory judgment as to indemnification, and Alexion’s third counterclaim for

701 NASDI Hldgs., LLC v. N. Am. Leasing, Inc., 2019 WL 1515153, at *6 (Del. Ch. Apr. 8, 2019), aff’d, 276 A.3d 463 (Del. 2022). 702 As the post-trial briefing page count already left me without the benefit of the parties’ development of these important issues, I reject SRS’s argument that Alexion waived any opposition to SRS’s damages argument, on which SRS bears the burden, by not presenting it in its opening post-trial brief. SRS Ans. Br. 47 (citing Gener8, LLC v. Castanon, 2023 WL 6381635, at *19 n.262 (Del. Ch. Sept. 29, 2023) (addressing waiver of a factual point the plaintiff omitted from its opening brief). Alexion presented its opposition in its answering brief. ALXN Ans. Br. 47–56.

breach of Section 4.13(a) of the Merger Agreement. Those counts will be addressed in an opinion to come.

III. CONCLUSION

Alexion is liable for breach of Section 3.9(a) of the Merger Agreement by failing to pay SRS $130 million upon the successful completion of a Phase 1 Clinical Trial, as defined by the Merger Agreement. SRS is awarded damages in that amount. Judgment will be entered for SRS on its Count III and Alexion’s Counterclaim II.

Alexion is liable for breaching Section 3.9(f) of the Merger Agreement through its termination of the ALXN1830 program. I ask the parties to confer on mapping this finding of breach onto SRS’s counts I and II as presented in its amended complaint. Judgment will be entered for SRS on Alexion’s counterclaim I.

Footnotes

[4] Weinstein’s Federal Evidence § 701.03[4][b] at 701-39 (2d ed. Nov. 2022); see also 104 D.R.E. 701 cmt. (“D.R.E. 701 tracks F.R.E. 701 in effect on December 31, 2000.”). 105 Lamere v. N.Y. State Off. for the Aging, 2004 WL 1592669, at *2 (N.D.N.Y. July 14, 2004); Lundgren v. Matrixx Initiatives, Inc., 2013 WL 3087726, at *2 n.3 (D. Utah June 18, 2013); Pete v. Youngblood, 2006 UT App 303, ¶¶ 13–14, 141 P.3d 629. 106 Campbell v. State, 974 A.2d 156, 168–69 (Del. 2009); accord Wright v. State, 953 A.2d 188, 194–95 (Del. 2008) (concluding a lay witness “with familiarity and experience with the drug in question” could testify “he had bagged what he believed was cocaine based on its appearance, smell, and his two years of experience as a cocaine dealer”); Norman v. State, 968 A.2d 27, 31 (Del. 2009) (explaining that lay opinions on the identity of drugs can be offered so long as the opinion is not based on “training and [] specialized experience”). 107 United States v. Jones, 739 F.3d 364, 369 (7th Cir. 2014). 108 Montoya v. Sheldon, 286 F.R.D. 602, 619–20 (D.N.M. 2012); accord In re Appraisal of Dole Food Co., Inc., 114 A.3d 541, 553 (Del. Ch. 2014) (contrasting “rare disciplines” against “common skill”).