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 #.”
1
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

2
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

3
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.

4
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 #.”
5
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”).
6
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.
7
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.
8
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.
9
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.
10
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.
11
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.
12
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, pre-

clinical 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.
13
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).
14
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.
15
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).
16
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.
17
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.
18
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.
19
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,

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”).
20
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).
21
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.
22
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”).
23
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.
24
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.
25
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.
26
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.
27
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.
28
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.
29
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.
30
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.
31
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.
32
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.
33
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.
34
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.
35
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.
36
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).
37
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).
38
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.
39
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.
40
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.
41
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.
42
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.
43
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.
44
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.
45
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.
46
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.
47
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.
48
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.
49
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.
50
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.
51
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.
52
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.
53
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.
54
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.
55
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.
56
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.
57
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.
58
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.
59
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.
60
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.
61
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.
62
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.
63
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.
64
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.
65
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.
66
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

67
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.
68
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.
69
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.
70
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.
71
• 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.
72
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.
73
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.
74
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

75
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.
76
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.
77
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.
78
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.
79
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.
80
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.
81
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.
82
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.
83
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.
84
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).
85
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.
86
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.
87
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).
88
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).
89
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

90
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.
91
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.
92
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.
93
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.
94
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).
95
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

96
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.”).
97
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.
98
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).
99
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.”).
100
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).
101
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.”).
102
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.
103
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.
104
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.
105
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).
106
[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

107
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.
108
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.
109
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.
110
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.
111
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.
112
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.
113
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).
114
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.
115
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.
116
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.
117
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.
118
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).

119
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.
120
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.
121
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.
122
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

123
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.
124
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.”).
125
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.
126
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.
127
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.
128
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.
129
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.
130
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.
131
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.
132
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.
133
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.
134
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.
135
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

136
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)).
137
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.
138
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.

139