Shareholder Representative Services, LLC v. Alexion Pharmaceuticals, Inc.

COURT OF CHANCERY
OF THE
STATE OF DELAWARE
MORGAN T. ZURN LEONARD L. WILLIAMS JUSTICE CENTER
VICE CHANCELLOR 500 N. KING STREET, SUITE 11400
WILMINGTON, DELAWARE 19801-3734

May 27, 2026

Michael A. Barlow, Esquire David E. Wilks, Esquire
Quinn Emanuel Urquhart & Sullivan, LLP Wilks Law, LLC
500 Delaware Avenue, Suite 220 4250 Lancaster Pike, Suite 200
Wilmington, DE 19801 Wilmington, DE 19805

RE: Shareholder Representative Services, LLC v. Alexion Pharmaceuticals, Inc.,
C.A. No. 2020-1069-MTZ

Dear Counsel:

I write to resolve your clients’ claims regarding problems with drug materials

Alexion acquired when it acquired Syntimmune.1 This letter is fairly characterized

as inside baseball. After trial, and with assistance from a court-appointed expert, I

1
Readers seeking more background, defined terms, and citation formats can refer to
S’holder Representative Servs. LLC v. Alexion Pharms., Inc., 2024 WL 4052343 (Del. Ch.
Sept. 5, 2024) [hereinafter “Alexion I”]. This letter assumes familiarity with that opinion.
Citations in the form “Sharpnack Rep.” refer to the Expert Report of Robert
Sharpnack, available at D.I. 414. Citations in the form “DB Exp. __” refer to Defendant
and Counterclaim Plaintiff Alexion Pharmaceuticals, Inc.’s Brief Regarding the
Conclusions of the D.R.E. 706 Expert Robert Sharpnack, available at D.I. 425. Citations
in the form “PB Exp. __” refer to Plaintiff and Counterclaim Defendant’s Brief Regarding
the Opinions and Testimony of Court-Appointed D.R.E. 706 Expert Robert Sharpnack,
available at D.I. 426. Citations in the form “PB Exp. Ex. __” refer to the exhibits to the
Transmittal Affidavit of Michael A. Barlow in Support of Plaintiff and Counterclaim
Defendant's Brief Regarding the Opinions and Testimony of Court-Appointed D.R.E. 706
Expert Robert Sharpnack, available at D.I. 426. Citations in the form “Sharpnack Dep.”
refer to the Deposition of Bob Sharpnack available at D.I. 426 Ex. 1.
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have concluded that Alexion proved by the preponderance of the evidence that

Syntimmune breached its representation about the manufacture of those drug

materials, and that Alexion is entitled to approximately $11 million in

indemnification.

Before the Merger, Syntimmune was attempting to develop a monoclonal

antibody into a clinical drug. That work requires drug substance, meaning the active

ingredient intended to provide a therapeutic effect, and drug product, meaning the

final product in dosage form as in a tablet, capsule, or solution.2 Drug substance is

a necessary component of drug product.

When Alexion bought Syntimmune, Alexion also bought Syntimmune’s drug

product and drug substance on hand and in its manufacturing pipeline.3 Syntimmune

2
21 C.F.R. § 314.3(b). The FDA defines a “[d]rug product” as “a finished dosage form,
for example, tablet, capsule, or solution, that contains a drug substance, generally, but not
necessarily, in association with one or more other ingredients.” Id. And it defines
“[d]rug substance” as “an active ingredient that is intended to furnish pharmacological
activity or other direct effect in the diagnosis, cure, mitigation, treatment, or prevention of
disease or to affect the structure or any function of the human body.” Id; see 21 C.F.R. §
210.3(b)(4) (defining “[d]rug product as “a finished dosage form, for example, tablet,
capsule, solution, etc., that contains an active drug ingredient generally, but not necessarily,
in association with inactive ingredients. The term also includes a finished dosage form that
does not contain an active ingredient but is intended to be used as a placebo.”).
3
S’holder Representative Servs., LLC v. Alexion Pharms., Inc., 2025 WL 1089166, at *5
(Del. Ch. Apr. 11, 2025) [hereinafter “Alexion II”] (“Alexion bought all of Syntimmune’s
drug supply with the goal of rapid development through clinical trials. Alexion bought a
promise that the supply would be compliant.”).
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represented in Section 4.13 of the Merger Agreement that its “Product Candidates”

were and would continue to be manufactured “in compliance in all material respects”

with applicable federal law and regulations relating to current good manufacturing

practices (“cGMP”).4

Alexion claims drug product lots AJ8794A, AK3858, AF6404A and

AG3356A (each a “DP Lot,” and together the “DP Lots”), and drug substance lots

CMC-L-0125 and CMC-M-0009 (each a “DS Lot,” and together the “DS Lots,” and

with the DP Lots the “Acquired Lots”), were not manufactured in compliance with

cGMP.5 At closing, Alexion knew DP Lot AJ8794A was contaminated with a

particulate and could not be used.6 Shortly after closing, Alexion learned DS Lots

CMC-L-0125 and CMCM-0009 were under investigation due to ongoing issues.7

Alexion also learned DP Lot AK3858, which was intended to resupply clinical

trials,8 was contaminated with protein particles. That spurred investigations by

4
Merger Agr. § 4.13(a).
5
Alexion II, 2025 WL 1089166, at *1, n.42.
6
JX 722 at 3–4; JX 668 at 1–3, 5; JX 1191.
7
JX 784 at 11; JX 2846 at 2 (“Batch was not released by time of acquisition due to open
QC investigation for spiked DNA recovery failure . . . potential presence of polyallylamine
in DS”); JX 804 at 4, 13; JX 668 at 3 (noting CMC-L-0125 and CMCM-0009 “pending
final release”).
8
JX 804 at 13, 16; JX 843 at 3, 10; Ledwith Tr. 1030–31.
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Alexion and its manufacturers.9

In early 2019, Alexion learned of adverse events and infusion-related

reactions (“IRRs”) in a clinical trial dosed with DP Lot AG7907A.10 That trial was

paused; then all of Alexion’s clinical studies were paused pending an investigation

into the manufacture of the Acquired Lots.11 In March, Alexion’s investigation

revealed DP Lots AF6404 and AG7907 were unusable.12 Alexion’s investigation

found the DS Lots slated for release, and the DS Lots that produced the drug product

already in clinical use, were adulterated.13 The study with the IRRs was

terminated.14

9
JX 804 at 5; JX 817; JX 2846; JX 890; JX 1040; Ledwith Tr. 1030–31.
10
JX 1164 at 3, 78–80 (describing the four reported IRRs from clinical trial subjects in
study SYNT001-104); JX 923 at 64 (noting the IRRs reported in trials SYNT001-104,
SYNT001-103, and SYNT001-102).
11
JX 983 at 5–16 (noting trials SYNT001-104 and SYNT001-103 were already “closed
out” and “GMT recommends to terminate Study 102 (WAIHA) as well”); JX 996 at 2; JX
1164 at 75.
12
JX 911 at 2 (noting DP Lots AF6404 and AG7907 “will not be used anymore” given
recent infusion related reactions); JX 959 at 1 (noting “all studies were paused in 15 Feb
[20]19 . . . AF6404 & AG7907 will be reconciled from the clinic”); JX 945 (“Because of
the high HCP (host cell protein) contamination of the one DP lot we thought could
potentially be re-released for use in Cohort 2 WAIHA, we will not be able to proceed with
dosing more patients in the Ph 1b/2a trial.”); JX 996 at 1.
13
Ledwith Tr. 1038–40; see JX 996 at 16 (“HCP testing has demonstrated that the Cygnus
2nd generation kit used for release is not sensitive enough to detect HCP levels present in
OS product.”).
JX 945 at 1; JX 959 at 3; JX 1164 at 75 (“Due to the occurrence of the IRRs, this study
14

was paused as a precautionary measure and a manufacturing investigation was initiated.
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Alexion claims Syntimmune failed to manufacture the Acquired Lots in

accordance with cGMP standards in breach of Section 4.13(a).15 Alexion seeks

indemnification under the Merger Agreement for the losses it incurred investigating,

remediating, and remanufacturing the Acquired Lots.16 SRS seeks a declaratory

judgment that it is not liable for indemnification.17

Those claims went to trial. Alexion and SRS disagree on the applicable

regulations or guidance, and on whether the Acquired Lots fell short. Their experts

diverged along party lines. The Court appointed an independent expert to assist in

bridging that divide.18

This letter first resolves some gating issues on the interpretation of Section

4.13(a) and the weight to give the court-appointed expert’s opinion. Then it provides

two capsule post-trial opinions explaining why the DP Lots and the DS Lots

breached Section 4.13(a). Then it applies the Merger Agreement’s indemnification

The study was subsequently terminated. Although there was no conclusive clinical or
safety link to the IRRs, the investigation identified higher levels of HCP and a leachate
(polyallylamine) in the clinical study material.”).
15
Counterclaims ¶¶ 109–19; see JX 1202.
16
JX 1202; Merger Agr. §§ 8.1(a), 8.3(d); see Counterclaims ¶¶ 37–38, 113–14; see also
Alxn Op. Br. at 39–43; JX2502 [hereinafter “Marshall Rep.”] at ¶¶ 125–33, App. B.
17
D.I. 155 ¶¶ 279–83.
18
D.I. 410 [hereinafter “Expert Order”] ¶¶ 1–2(a).
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provisions, and concludes Alexion is entitled to indemnification for costs incurred

replacing the Acquired Lots, but not for half the purchase price as Alexion contends.

A. Gating Issues

1. Section 4.13

Syntimmune promised in Section 4.13(a) that the Acquired Lots:

are being, and at all times have been, developed, tested, labelled,
manufactured, stored, imported, exported and distributed, as applicable,
in compliance in all material respects with the FDCA and applicable
implementing regulations issued by the FDA, the EMA and any other
applicable Governmental Entities, including, as applicable, those
requirements relating to the FDA’s current good manufacturing
practices, good laboratory practices, good clinical practices,
investigational use, pre-market approval and applications to market a
new pharmaceutical product, except as disclosed on Section 4.13(a) of
the Disclosure Schedule.19

Section 4.13(a) mandates the Acquired Lots be manufactured “in compliance in all

material respects” with “applicable” “requirements relating to” cGMP.20 The

Merger Agreement does not define “in all material respects” or identify the

“applicable” “requirements.”

The meaning of those terms is a question of law.21 Neither party contends

19
Merger Agreement § 4.13(a).
20
Id.
21
I therefore decline SRS’s suggestion to hold an additional evidentiary hearing. PB Exp.
51–57; Sharpnack Dep. at 14 (testifying the phrase “in all material respects” is not an FDA
term of art).
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Section 4.13(a) is ambiguous. Delaware’s well-established principles of contract

interpretation govern.22 “In construing a contract, our goal is to give effect to the

intent of the parties.”23 “The court’s task is to fulfill the parties’ shared expectations

at the time they contracted.”24 “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.”25 “When interpreting a contract, the Court will

give priority to the parties’ intentions as reflected in the four corners of the

agreement.”26 “Delaware courts read the agreement as a whole and enforce the plain

meaning of clear and unambiguous language.”27 “If a contract is unambiguous,

extrinsic evidence may not be used to interpret the intent of the parties, to vary the

22
Weinberg v. Waystar, Inc., 294 A.3d 1039, 1043 (Del. 2023).
23
Id. at 1044 (citing Salamone v. Gorman, 106 A.3d 354, 368 (Del. 2014)).
24
Centene Corp. v. Accellion, Inc., 2022 WL 898206, at *5 (Del. Ch. Mar. 28,
2022) (quoting Leaf Invenergy Co. v. Invenergy Renewables LLC, 210 A.3d 688, 696 (Del.
2019) (internal quotation marks omitted)).
25
Osborn ex rel. Osborn v. Kemp, 991 A.2d 1153, 1159 (Del. 2010) (quoting NBC
Universal v. Paxson Commc’ns, 2005 WL 1038997, at *5 (Del. Ch. Apr. 29, 2005)).
26
GMG Cap. Invs., LLC v. Athenian Venture P’rs I, L.P., 36 A.3d 776, 779 (Del. 2012).
27
Manti Hldgs., LLC v. Authentix Acq. Co., Inc., 261 A.3d 1199, 1208 (Del. 2021).
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terms of the contract or to create an ambiguity.”28

a. “In All Material Respects”

The phrase “in all material respects” is familiar to the Court, particularly in

the context of a merger agreement. In Akorn, Inc. v. Fresenius Kabi AG, the Court

surveyed treatises and case law and determined “in all material respects” is a

qualifier that seeks to “limit the operation of the [representation] to issues that

are significant in the context of the parties’ contract, even if the breaches are not

severe enough to excuse a counterparty’s performance under a common law

analysis.”29 The Delaware Supreme Court embraced that approach, holding the

phrase “in all material respects” in a merger agreement “seeks to exclude small, de

minimis, and nitpicky issues that should not derail an acquisition.”30 The Court has

consistently interpreted the qualifier “in all material respects” to be “less onerous”

28
Eagle Indus., Inc. v. DeVilbiss Health Care, Inc., 702 A.2d 1228, 1232 (Del. 1997).
29
2018 WL 4719347, at *86 nn.782–86 (Del. Ch. Oct. 1, 2018), aff’d, 198 A.3d 724 (Del.
2018) (TABLE).
30
AB Stable VIII LLC v. MAPS Hotels & Resorts One LLC, 268 A.3d 198, 216 (Del. 2021)
(citing Akorn, 2018 WL 4719347, at *86).
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for the party asserting breach than the common law material breach standard. 31

b. “Applicable . . . Requirements”

Section 4.13 represents “compliance in all material respects with the FDCA

and applicable implementing regulations issued by the FDA . . . , including, as

applicable, those requirements relating to the FDA’s current good manufacturing

practices.”32 Those requirements are rooted in the Federal Food, Drug, and Cosmetic

Act of 1938 (the “FDCA”). The FDCA’s guiding principle is to avoid adulteration

of drugs and drug components by cGMP-compliant manufacturing.33

As empowered by the FDCA, the FDA promulgated regulations governing

31
Dermatology Assocs. of San Antonio v. Oliver St. Dermatology Mgmt. LLC, 2020 WL
4581674, at *26 (Del. Ch. Aug. 10, 2020) (explaining “in all material respects” excludes
those “small, de minimis, and nitpicky issues that should not derail an acquisition”); Snow
Phipps Grp., LLC v. Kcake Acq., Inc., 2021 WL 1714202, at *38 (Del. Ch. Apr. 30,
2021) (same); AB Stable VIII LLC v. Maps Hotels & Resorts One LLC, 2020 WL 7024929,
at *73 (Del. Ch. Nov. 30, 2020) (same), aff’d, 268 A.3d 198 (Del. 2021); Channel
Medsystems, Inc. v. Bos. Sci. Corp., 2019 WL 6896462, at *17 (Del. Ch. Dec. 18,
2019) (applying the Akorn standard); In re Anthem-Cigna Merger Litig., 2020 WL
5106556, at *134 n.426 (Del. Ch. Aug. 31, 2020) (distinguishing “material breach” from
“in all material respects”), aff’d sub nom. Cigna Corp. v. Anthem, Inc., 251 A.3d 1015
(Del. 2021) (TABLE); Williams Cos., Inc. v. Energy Transfer LP, 2021 WL 6136723, at
*25 (Del. Ch. Dec. 29, 2021), aff’d sub nom. Energy Transfer, LP v. Williams Cos., Inc.,
346 A.3d 1089 (Del. 2023).
32
Merger Agreement § 4.13(a).
33
21 U.S.C. § 351(j); id. § 351(a)(2)(B) (providing a drug is adulterated if “the methods
used in, or the facilities or controls used for, its manufacture . . . do not conform to or are
not operated or administered in conformity with current good manufacturing practice to
assure that such drug meets the requirements of this chapter”).
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drug products.34 Those regulations, in C.F.R. Parts 210 and 211, have the force of

law for drug product.35

Those regulations also guide drug substance manufacture.36 The FDA

announced, “[T]hese cGMP are not applied to the manufacture of bulk drug

components,” but noted “there are numerous instances where good manufacturing

practices for [drug substances] would parallel the requirements set forth in Part

211.”37 The FDA stated it “will utilize the standards of Part 211 as guidelines during

34
21 U.S.C. § 371(a); see 21 C.F.R. § 10.40.
35
Current Good Manufacturing Practice in Manufacture, Processing, Packing or Holding,
43 Fed. Reg. 45076 (Sept. 29, 1978); 21 C.F.R. § 210.1(a) (“The regulations set forth in
this part and in parts 211, 213, 225, and 226 of this chapter contain the minimum current
good manufacturing practice for . . . the manufacture, processing, packing, or holding of a
drug to assure that such drug meets the requirements of the act as to safety, and has the
identity and strength and meets the quality and purity characteristics that it purports or is
represented to possess.”); id. § 210.1(b) (“The failure to comply with any regulation set
forth in this part and in parts 211, 213, 225, and 226 of this chapter . . . shall render such
drug to be adulterated under section 501(a)(2)(B) of the act and such drug, as well as the
person who is responsible for the failure to comply, shall be subject to regulatory action.”);
id. §§ 211.1 et seq.
36
43 Fed. Reg. at 45026; see U.S. Food & Drug Admin., Compliance Program: Chapter
56 – Drug Quality Assurance Active Pharmaceutical Ingredient Process Inspection, at 4
(Aug. 1, 2025) [hereinafter “FDA Ch. 56”]; see also Wright-Gottshall v. New Jersey, 2024
WL 1826421, at *1 n.2 (3d Cir. Apr. 26, 2024) (noting it is appropriate to “take judicial
notice of information that is publicly available on government websites” (internal quotation
mark and citation omitted)), cert. denied, 145 S. Ct. 438, 220 L. Ed. 2d 187 (2024).
37
43 Fed. Reg. 45026; accord, Dennis Tosh, FDA Enforcement Manual § 1631 Scope and
Application of cGMP Requirements (Jan. 2023) [hereinafter “FDA Enforcement Manual
§1631”]; see FDA Ch. 56 at 4 (“No distinction is made between an API and a drug product
in the FD&C Act, and if either fail to comply with CGMP requirements, they will be in
violation of the FD&C Act.”).
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inspections of manufacturers of bulk drug components . . . .”38 To determine whether

drug substances are adulterated, “the FDA makes an assessment of what

manufacturing practices are ‘current’ and ‘good’ for these ingredients.”39

For drug substance, the FDA issues interpretive guidance documents, which

are not legally binding.40 The FDA’s guidance documents “describe the agency’s

interpretation of or policy on a regulatory issue.”41 One may “use an approach other

than the one set forth in a guidance document,” but a different approach must still

38
43 Fed. Reg. 45014, 45026; id. at 45027 (“[T]he cGMP regulations set forth in part 211
apply only to establishments engaged in the preparation of a drug product.”).
39
FDA Enforcement Manual § 1631.
40
21 C.F.R. § 10.115(b)(1); id. § 10.115(d)(1) (“Guidance documents do not establish
legally enforceable rights or responsibilities. They do not legally bind the public or FDA.”);
see 21 U.S.C. § 371(h)(1)(A) (“The Secretary shall develop guidance documents with
public participation and ensure that information identifying the existence of such
documents and the documents themselves are made available to the public both in written
form and, as feasible, through electronic means. Such documents shall not create or confer
any rights for or on any person, although they present the views of the Secretary on matters
under the jurisdiction of the Food and Drug Administration.”); id. § 371(h)(1)(C)(i); see
also 43 Fed. Reg. 45027.
The FDA recently explained that recommendations for regulatory action on drug
substance should use the guidance as a guideline, then explain how the deficiencies affect
the drug substance quality and cite the underlying FDCA statute—not guidance or
regulations. FDA Ch. 56 at 33.
41
21 C.F.R. § 10.115(b)(1).
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“comply with the relevant statutes and regulations.”42

The parties dispute what regulations are applicable to the DP Lots, and what

guidance is applicable to the DS Lots. I will resolve those disputes in the context of

the appropriate lots. They present legal issues on which expert opinions are not

helpful or appropriate.43

2. Sharpnack’s Report

After hearing divergent trial testimony from the parties’ technical experts, the

Court selected Robert Sharpnack to serve as a court-appointed expert under

Delaware Rule of Evidence 706 to assist in resolving the cGMP claims.44 The Court

directed Sharpnack to submit a report addressing the following:

Whether the Syntimmune drug product lots and drug substance lots
Alexion has identified were manufactured in compliance in all material
respects with the FDCA and applicable implementing regulations
issued by the FDA, the EMA and any other applicable Governmental
Entities, including, as applicable, those requirements relating to the

42
Id. §§ 10.115(d)(1)–(3).
43
Itek Corp. v. Chicago Aerial Indus., Inc., 274 A.2d 141, 143 (Del. 1971) (“[I]t is
exclusively within the province of the trial judge to determine issues of domestic law.”);
United Rentals, Inc. v. RAM Hldgs., Inc., 2007 WL 4465520, *1 (Del. Ch. Dec. 13, 2007)
(“It is within the exclusive province of this Court to determine such issues of domestic law.
I, in interpreting the disputed contractual provisions at issue in this case, need not-
indeed, may not-look beyond the well-established precedent of the Delaware courts.”).
44
Expert Order ¶¶ 1–2. This letter assumes familiarity with the surprisingly extensive
procedural history of his appointment. D.I. 381; D.I. 389; D.I. 390; D.I. 394; S’holder
Representative Servs., LLC v. Alexion Pharms., Inc., 2025 WL 289505 (Del. Ch. Jan. 24,
2025); Alexion II, 2025 WL 1089166, at *5; D.I. 402.
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FDA’s current good manufacturing practices.45

On June 30, 2025, Sharpnack’s report (the “Report”) was provided to the

parties and the Court.46 The Report opines on the cGMP requirements applicable to

the DS and DP Lots, and applies the cGMP requirements to the facts.47 It concludes

Syntimmune’s DS and DP manufacturers made “several unapproved changes to the

manufacturing process” in contravention of cGMP standards requiring change

control and oversight.48

The parties deposed Sharpnack and briefed the Report’s conclusions.49 SRS

argued it is unreliable and should be excluded.50 SRS contends Sharpnack lacks

expertise with monoclonal antibody products; is unaware of the applicable

regulatory framework; employed a flawed methodology; walked back certain

conclusions at his deposition; and failed to provide an explanation of materiality in

45
Expert Order ¶ 2(a).
46
D.I. 414.
47
See generally Sharpnack Rep.
48
Id. ¶¶ 60–72, 74–79, 82.
49
Sharpnack Dep.; PB Exp.; DB Exp.; D.I. 427; D.I. 430; D.I. 433; D.I. 455; see Charles
A. Wright & Arthur R. Miller, Federal Practice & Procedure § 6305 (2d ed.) [hereinafter
“Wright & Miller”] (noting formal depositions of court-appointed experts are relatively
infrequent).
50
PB Exp. 11–16.
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the context of cGMP noncompliance.51

Rule 706 permits the Court to appoint an expert of its choosing, so long as

that expert is qualified under Rule 702.52 Under Rule 702, an expert’s specialized

knowledge must be helpful to the trier of fact; the testimony must be based on

sufficient facts or data; the testimony must be the product of reliable principles and

methods; and the expert must have reliably applied those principles and methods to

the facts of the case.53 When an expert’s “factual basis, data, principles, methods,

or their application” are challenged, Rule 702 requires the court to decide if the

expert’s testimony “has a reliable basis in the knowledge and experience of [the

relevant] discipline.”54 “[A]lthough it is critical in a jury trial for a court to exercise

its gatekeeper function in advance of allowing an expert to testify, the importance of

addressing issues raised under Daubert and Rule 702 before an expert testifies is

51
See id. at 10–50.
52
D.R.E. 706(a); see Wright & Miller § 6304.
53
D.R.E. 702.
54
M.G. Bancorporation, Inc. v. Le Beau, 737 A.2d 513, 523 (Del. 1999) (quoting Kumho
Tire Co. v. Carmichael, 526 U.S. 137, 149 (1999)); see Goodridge v. Hyster Co., 845 A.2d
498, 503 (Del. 2004) (“A witness may testify as an expert when qualified as an expert and
the trial judge determines that the witness has scientific, technical or other specialized
knowledge that will assist the finder of fact in understanding evidence or in determining a
fact at issue.”); Cede & Co. v. Technicolor, Inc., 758 A.2d 485, 498 (Del. 2000) (“Delaware
Rules of Evidence 702 and 703 requires a trial judge to act as a ‘gatekeeper’ and to screen
scientific, technical or specialized opinion evidence in order to exclude from consideration
such evidence as it finds to be unreliable as a matter of law.”).
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more attenuated in a bench trial.”55 In a bench trial, the issue is more of weight than

admissibility.56

Sharpnack has fifty-three years of helpful cGMP compliance experience.57

He worked at the FDA from 1972 to 2004, including 18 years as a member of FDA’s

Foreign Inspection Cadre, inspecting APIs at manufacturing sites outside the United

States.58 He also served as an FDA Drug Expert, one of five FDA employees tasked

with training FDA investigators on pharmaceutical inspection requirements and

standards.59 Since departing the FDA, Sharpnack spent 22 years as a cGMP

55
Beard Rsch., Inc. v. Kates, 2009 WL 7409282, at *6 (Del. Ch. Mar. 31, 2009); accord,
Alcoa, Inc. v. Alcan Rolled Prod. Ravenswood LLC, 2020 WL 433856, at *3 (D. Del. Jan.
28, 2020) (“The main purpose of Daubert exclusion is to protect juries from being swayed
by dubious scientific testimony. . . . [t]hat interest is not implicated where the judge is the
decision maker. The [] court’s ‘gatekeeping function’ under Daubert ensures that expert
evidence ‘submitted to the jury’ is sufficiently relevant and reliable, but ‘[t]here is less need
for the gatekeeper to keep the gate when the gatekeeper is keeping the gate only for
himself.’” (quoting United States v. Brown, 415 F.3d 1257, 1269 (11th Cir. 2005))).
56
BCD Assocs., LLC v. Crown Bank, 2022 WL 1316234, at *5 (Del. Super. Ct. May 2,
2022) (“Expert testimony should receive whatever weight and credit the Court thinks
appropriate, given all the other evidence in the case.”), aff’d, 292 A.3d 759 (Del. 2023);
Strategic Inv. Opps. LLC v. Lee Enters., Inc., 2022 WL 453607, at *12 n.131 (Del. Ch.
Feb. 14, 2022) (declining to exclude report under Rule 702 but instead giving “the [expert]
report the weight deemed appropriate”).
57
Sharpnack Rep. ¶¶ 10–32.
58
Id. ¶¶ 10–13.
59
Id. ¶¶ 19–20. Sharpnack was also one of five FDA reviewers deployed to represent the
FDA on the newly formed International Society of Pharmaceutical Engineers Baseline
Guide on Commissioning and Qualification. Id. ¶ 21. Sharpnack’s excellence has been
recognized. In 1998, he received the “International Hammer Award” from then-Vice
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consultant, drafting process validation protocols and presenting remediation plans to

the FDA.60

Sharpnack’s experience in cGMP-compliant manufacturing is helpful even

without significant experience with monoclonal antibodies.61 I need assistance in

identifying manufacturing problems in deviation from federal regulations and

guidance; I do not see that the problems here are specific to monoclonal antibodies.

SRS also claims Sharpnack lacks familiarity with the applicable regulatory

framework.62 But that is a legal issue on which I did not consider Sharpnack’s

President Al Gore and then-Prime Minister Tony Blair for his efforts combatting
international API counterfeiting. Id. ¶ 30.
60
Id. ¶¶ 23–27.
61
Sharpnack Dep. at 82–83; see Withrow v. Spears, 967 F. Supp. 2d 982, 992 (D. Del.
2013) (“The basis of this specialized knowledge may be ‘practical experience as well as
academic training and credentials.’ At a minimum, however, ‘a proffered expert witness
must . . . possess skill or knowledge greater than the average layman.’” (quoting Elcock v.
Kmart Corp., 233 F.3d 734, 741 (3d Cir. 2000))).
62
PB Exp. 41–42 (citing Sharpnack Dep. at 94). SRS contends when “presented with an
FDA document establishing the Phase I clinical trial exemption to 21 C.F.R. Part 211,
Sharpnack admitted he ‘never saw [the 2008] amendment to Part 211 and acknowledged
that awareness of this exemption ‘could’ ‘change some of [his] opinions in this case.’” Id.
41 (quoting Sharpnack Dep. at 94). But Sharpnack was shown a book excerpt authored by
a consulting firm, not “an FDA document.” Sharpnack Dep. at 93. The excerpt provided:
“For approved products, the requirements for in-process and final release testing are further
defined in 21 CFR 210 and 21 CFR 211. Recently, FDA acknowledged that during the
development of a new drug, full compliance with the regulations in 21 CFR 210 and 21
CFR 211 is not required until late in the development process and, in July, 2008, issued an
amendment to 21 CFR 210 specifying that 21 CFR 211 no longer applies to Phase 1
investigational drugs.” PB Exp. Ex. 21 (BioProcess Tech. Consultants, Inc., The
Development of Therapeutic Monoclonal Antibody Products: A Comprehensive Guide to
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opinion.63

SRS also argues Sharpnack’s methodology is flawed. “The foci of a Daubert

analysis are the ‘principles and methodology’ used in formulating an expert’s

testimony, not on the expert’s resultant conclusions.”64 The Court must determine

whether the “expert’s opinion [is] based upon proper factual foundation and sound

methodology.”65 The “proper factual foundation” criterion requires the expert’s

opinion to be based on “facts” and not “suppositions.”66

SRS claims Sharpnack uncritically adopted certain conclusions reached by

CMC/Activities from Clone to Clinic, 64 (Howard L. Levine & Gunter Jagschies) (2017)).
The excerpt differs from 21 C.F.R. § 210.2(c) in that it appears to provide a blanket
exemption from the requirements imposed by Part 211, while the codified amendment
provides that “this exemption does not apply to an investigational drug for use in a phase
1 study once the investigational drug has been made available for use by or for the sponsor
in a phase 2 or phase 3 study . . . .” 21 C.F.R. § 210.2(c).
More importantly, Sharpnack demonstrated his familiarity with Part 211’s
regulatory scheme. Sharpnack Dep. at 45, 57–58, 90–91 (demonstrating his knowledge of
Part 211 exemptions). He explained that because the DP Lots were intended for Phase 2,
Patheon was subject to Part 211. Sharpnack Dep. at 18–20, 24, 28–32.
63
See infra, Sections B2 and C2.
64
Bowen v. E.I. DuPont de Nemours & Co., 906 A.2d 787, 794 (Del. 2006) (quoting
Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 595 (1993)); see Tumlinson
v. Advanced Micro Devices, Inc., 81 A.3d 1264, 1269 (Del. 2013).
65
Perry v. Berkley, 996 A.2d 1262, 1267 (Del. 2010).
66
Id. at 1269 (quoting 4 Weinstein’s Federal Evidence § 792.95[2][b] (2d ed. 2009)).
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Alexion’s expert Paul Marshall without examining the underlying records.67

Specifically, SRS emphasizes Sharpnack concluded a Syntimmune manufacturer

failed a system suitability test by wholly relying on Marshall, without independently

assessing any of the underlying data.68 But Sharpnack could not independently

verify the suitability test results because that manufacturer failed to perform one.69

Finally, SRS attacks Sharpnack’s methodology on the basis he failed to

consider certain key documents.70 An assessment of whether the expert’s opinion is

based upon information reasonably relied upon by experts in the field “does not

67
PB Exp. 28–40; see Sharpnack Rep. ¶ 76 (“Mr. Marshall notes that the HCP assay used
by AGC failed its SST and under-reported actual HCP contamination by 3-8-fold, which
would render the product far out of specification for human use. . . . Although I did not
receive the laboratory records to verify where the SST failed, if Mr. Marshall’s statements
are accurate, no reliance should have been placed on the HCP Assay results.”).
68
PB Exp. 3, 28–30, 32–36.
69
JX 1025 at 3; Marshall Tr. 1893–96 (addressing JX 1025 and explaining why the record
demonstrates a suitability test was never performed). In May 2019, Syntimmune’s co-
founder Laurence Blumberg asked Syntimmune’s cGMP consultant, Susan Dana Jones,
for the suitability test results, and she responded, “AGC had proposed quite early in the
program that we do the assessment of how much coverage the generic kit provided for our
process but we chose to not make that investment early on.” JX 1025 at 3. Blumberg
asked Jones her thoughts on the threshold, and Jones answered, “Endotoxin and DNA are
fine . . . HCP is the question mark because of course you can become immune to one of the
HCP and that increases over time. That’s why FDA and others are so concerned about
characterizing all HCP and detecting it.” Id. at 2. Blumberg responded, “we need to speak
. . .” and followed up with “I don’t want to put this in writing.” Id. at 1. On cross, Marshall
was not challenged on his conclusions based on JX 1025. Marshall Tr. 1905–26; see also
Dep. Dana-Jones, Susan at 238–43.
70
PB Exp. 30–32 (citing JX 2625, JX 284, JX 979; PB Exp. Ex. 18).
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pertain to information which the expert has not relied on.”71 And Sharpnack’s

opinion was reliably informed by adequate knowledge of the relevant

manufacturer’s process.72 He opined that once the manufacturer learned of a

particular protein-loading inconsistency, it should have investigated the issue

because “variation[s] . . . in the loading ranges would raise a flag” that should be

addressed.73

In my view, nothing about Sharpnack’s experience or methodology detracts

from the weight his Report deserves. There is certainly no reason to exclude it.

From there, SRS simply disagrees with how Sharpnack applied his knowledge of

71
Norman v. All About Women, P.A., 193 A.3d 726, 731 (Del. 2018).
72
E.g., Sharpnack Rep. ¶¶ 80–84 (describing Patheon’s manufacture process and
concluding “Patheon failed to properly evaluate the differences between Suite #1 and Suite
#2 and the impact the manufacturing differences may have had on product quality, in
violation of cGMP requirements, per 21 CFR §§ 211.100 and 211.63.”); Sharpnack Dep.
at 52 (explaining AGC’s use of the Cygnus 2 Kit violated cGMP requirements because
“for all chromatographic assays you do a system suitability first. . . . It didn’t pass yet they
continued to use the instrument to analyze the product.”).
73
Sharpnack Dep. at 124–31 (“Q. What was the basis of your statement that AGC did not
have adequate control over protein loading? A. Because it wasn’t addressed.”). SRS claims
“Sharpnack was compelled to adopt Boyle’s conclusions” regarding AGC’s protein
loading ranges. PB Exp. 36. Not so. When confronted with the data from Boyle’s report
and asked if he agreed with it, Sharpnack explained, “I don’t know if I can make that
statement” and added he was “looking for ranges during the manufacturing process” and
that the data he received did not resolve his questions. Sharpnack Dep. at 136–38.
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cGMP compliance to these facts.

B. The DS Lots

1. Background

AGC Biologics (“AGC”) manufactured the DS Lots for Syntimmune’s Phase

I and Phase II clinical trials.74 In the governing Development and Manufacturing

Services Agreement, AGC agreed that where the “Stage of the Services defines the

performance of that Stage to be in accordance with cGMP standards, then [AGC]

shall comply with the applicable cGMP criteria” and represented each cGMP Batch

would meet the cGMP standards required by the work order.75

74
JX 202 at 4 (“The objective of [Project Change Order No. 48] is to add additional work
to manufacture and release [] one 2000L batch for Phase I/II in March/April 2018.”); JX
203 at 1 (“The objective [of Project Change Order No. 49] is to add additional work to
manufacture and release one 2000L batches for phase I/II in Q4 2018.”); JX 97 at 2 (noting
Project Change Order No. 53 subject to cGMP manufacturing standards); JX 172 at 1, 6.
75
JX 95 at 13 (“Where applicable [AGC] will comply with the requirements stipulated in
the International Conference on Harmonisation guidelines on quality.”); see JX 111 at 4
(“[AGC] is responsible for ensuring that the quality requirements for DS . . . is developed,
manufactured, stored, and released in accordance with current Good Manufacturing
Practice (cGMP) and quality requirements as defined in applicable EU, US and
international guidance’s and regulations, referenced in Section 6.”). Section 6 of the
Quality Agreement then defined the “[a]pplicable US Guidance’s and Regulations include
. . . CFR parts 210, 211, 312 Subpart D, 600, 601 [and] US FDA Guidance for Industry:
cGMP for Phase 1 Investigational Drugs.” Id. at 15. The cGMP work orders differed from
prior work orders where certain engineering or pilot batches would be manufactured “under
non-GMP conditions . . . to identify issues with the process, product, and/or batch records
prior to executing a GMP run.” JX 101 (ordering a “100L Pilot Batch” and providing the
object of the amendment “is to generate non-GMP pilot materials”); but see JX 172 at 6
(noting “[t]he objective of [Stages 46 and 47] is to execute one manufacturing run under
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AGC’s DS Lots had too much host cell protein (“HCP”) and DNA in them.76

DS Lots CMC-L-0125 and CMC-M-0009 were contaminated to the point of being

unusable.77

AGC concluded “with a high degree of likelihood” the contamination was

caused by changing the filter and not washing the new filter according to the

vendor’s instructions.78 AGC used two smaller Sartobind Filters in manufacturing

previous lots, but changed to one STIC Jumbo Filter for the DS Lots.79 AGC failed

to adjust its filtration settings when it introduced the STIC Jumbo Filter, prolonging

the DS Lots’ exposure to the filter membrane, which caused a particular compound

that inhibits DNA recovery to leach into the DS Lots.80 AGC did not wash the STIC

Jumbo filter membrane according to the vendor’s instructions, which increased the

cGMP conditions. . . . Bulk Substance generated by the process will be used to support
Phase II clinical trials.”).
76
JX 1044 at 13; JX 866 at 2–3.
77
JX 933 at 3, 9, 14, 16, 19; JX 1044 at 1.
78
JX 1044 at 13.
79
Id. at 5 (“For batch CMC-L-0125, CMC-M-0009 and CMC-M-0010, the STIC filter used
were the Jumbo version with a membrane volume of 2.5 L and an area of 9.1m², compared
to previous batches using 2 parallel filters with a total membrane volume of 1.1L and an
area of 4m².”); Marshall Tr. 1855–56.
80
JX 866 at 2–3 (“It was found that when the filter was introduced . . . the required CIP
volume, flow rate and time . . . was not transferred from the Development to Master
Production Instructions. The mode of operation was copied from then on to other Master
Production Instructions and Master Production Records.”).
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leaching of that compound.81 And when AGC introduced the Jumbo STIC Filter, it

“effectively did a cut and paste on the operating conditions” using flow and wash

setting for the original filter.82 When AGC “shift[ed] from 2x STIC 2m² to a 9.1 L

Jumbo filter for batch CMC-L-0125, the flow rate was not adjusted to retain the

same flux during filtration.”83 AGC’s Master Production Instructions (“MPI”) and

Master Production Records (“MPR”) ignored the difference between the two smaller

filters and one STIC Jumbo Filter.84 The failure to adjust the flow and wash settings

doubled the filtration time, prolonging the DS Lots’ exposure, which caused more

81
JX 1044 at 4, 5, 9, 12, 13 (“A contributing root cause was that the membranes were not
washed in accordance with the vendor recommendation (100 MV) after the CIP.”); JX 270
at 16 (“[T]he fact that all batches up to and including CMC-M-0010 were operated without
adequate flushing of the STIC membrane per vendor instructions and specifically batch
CMC-K-0068 also having a loss of control in the use of a larger STIC membrane area
during production makes all batches manufactured in this manner suspect.”); JX 866 at 2–
3.
82
Marshall Tr. 1871; see JX 866 at 2–3; JX 1044 at 4, 5, 9, 12, 13.
83
JX 1040 at 5.
84
Compare JX 283 at 15 (noting MPR Revision 2 was effective April 30, 2018, when the
DS Lots were manufactured) with JX 2629 at 19 (providing the MPR was not revised to
update the filter and wash setting until Revision 4, which became effective on May 15,
2019). The DS Lots were manufactured in April 2018. JX 277. MPR Revision 2 was
operative when AGC manufactured the DS Lots. JX 283 at 15. Following the
investigations into AGC’s manufacturing processing the MPR was updated to mandate the
STIC Jumbo Filter’s use would be in accordance with their instructions. JX 866 at 3 (“8571
Downstream processing CMC16087 was updated to revision 03 27NOV2018 to ensure
STIC Membranes were used as required.”).
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leaching into the DS Lots.85 AGC acknowledged this error and updated its MPI and

MPR.86

Alexion found another problem at AGC. AGC’s protein loading range varied

greatly from 123 g/m² up to 1110 g/m².87 The inconsistent protein loading ranges

contributed to excessive levels of foreign HCP.88

AGC measured HCP with an assay called the “Cygnus 2 Kit.”89 AGC

neglected to evaluate the Cygnus 2 Kit’s potential impact on drug substance purity.90

The Cygnus 2 Kit instructions require that its suitability “must be determined and

qualified experimentally by each laboratory” prior to use.91 But AGC failed to

properly qualify the Cygnus 2 Kit, as the testing it performed failed to confirm the

85
JX 1044 at 4, 5, 9, 12, 13; JX 866 at 2–3 (describing the “root cause” of the leaching into
the DS Lots as the failure to update the MPR and the MPI to account for the attributes of
the STIC Jumbo Filter); see Gupta Tr. 2039 (“[The] Jumbo STIC Filter, as you’ve already
heard has not been washed appropriately and AGC admitted that.”); Sharpnack Rep. ¶ 71.
86
JX 958 at 1–5.
87
JX 949 at 1–2, Table A1 (“Avg STIC AEX loading”).
88
JX 270 at 10 (“Analysis of DP AF6404A (and parent DS lot CMC-K-0002) contained
an average of 835 ng/mg HCP, which is > 8x above specification limit (per CMC00747)
as <100 ng/mg protein.”).
89
Id. at 16 (“HCP testing has demonstrated that the Cygnus 2nd generation kit used for
release is not sensitive enough to detect HCP levels present in DS product.”); see JX 211
(providing vendor’s instructions on determining the suitability of the Cygnus 2 Kit).
90
JX 270; Marshall Tr. 1888–92; JX 2240 at 3, 78–80.
91
JX 211 at 2.
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Cygnus 2 Kit’s HCP coverage capacity.92 AGC used the Cygnus 2 Kit anyway, and

that kit failed to detect the excessive HCP in the DS Lots.93

Alexion launched its own investigation into AGC’s manufacturing process

after the reported IRRs.94 Alexion’s investigation revealed the Cygnus 2 Kit was

“not sensitive enough to detect HCP levels present in the DS [Lots].” 95 Alexion

“recognized that the [Cygnus 2] kit may underrepresent CHO HCP by potentially an

order of magnitude compared to the 3rd generation kit and the true magnitude of the

difference can only be determined experimentally.”96 Alexion determined the

Cygnus 3rd generation kits would be utilized going forward “to evaluate HCP levels

92
JX 2240 at 77–78 (“Capacity for clearance of HCP cannot be documented as the load is
below LOQ.”); JX 128 at 15–16 (noting certain samples were reported as < LOQ); JX 2602
at 17 (“Dilutional linearity was not assessed as buffer spiked samples were below LOQ.”).
SRS’s expert Boyle asserted AGC qualified Cygnus 2 Kit’s HCP coverage by
“perform[ing] a spike recovery study and determine[ing] the dilutional linearity.” Boyle
Tr. 1997. But, on cross-examination Boyle was forced to concede the dilutional linearity
figure does nothing to determine the HCP coverage of the Cygnus 2 Kit. Id. 2017–18; see
JX 2577 at 6 (“[S]imply determining the appropriate dilution factor does nothing to verify
an HCP assay or its suitability for use with a particular sample. Nearly every analytical
assay, including HCP assays, require appropriate dilution, and determining that dilution
factor does not verify an assay’s specificity, accuracy, or precision, which should have
been done by AGC.”).
93
JX 270 at 16; see JX 2240 at 78.
94
JX 270; Ledwith Tr. 1030–40.
95
JX 270 at 16.
96
Id. at 6.
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for all upcoming DS batches.”97

2. The Applicable Regulations

The DS Lots’ compliance with the FDCA’s cGMP mandate are informed by

particular nonbinding FDA guidance documents, including “ICH Q7,” “ICH Q7

Q&A,” and “ICH Q8.”98 The FDA published the relevant ICH Q7 guidance in

97
Id. at 13.
98
The International Council for Harmonisation of Technical Requirements for
Pharmaceuticals for Human Use (“ICH”) is an international nonprofit association that
brings together regulatory authorities, including the FDA, and industry to harmonize
scientific and technical aspects of drug registration. International Regulatory
Harmonization, https://www.fda.gov/drugs/cder-international-program/international-
regulatory-harmonization (last visited May 24, 2026) (noting the FDA “has participated in
ICH as a Founding Member since 1990 and implements all ICH Guidelines as FDA
Guidance); see JX 2541 [hereinafter “Elder Rep.”] ¶ 33; Sharpnack Rep. ¶ 49. The FDA
has adopted and published several official guidances from that organization: ICH: Good
Manufacturing Practice Guidance for Active Pharmaceutical Ingredients Guidance for
Industry (“ICH Q7”); Guidance for Industry: cGMP for Phase 1 Investigational Drugs
(“Phase 1 Guidance”); Guidance for Industry: Q8 (“ICH Q8”); and Guidance for Industry:
Validation of Analytical Procedures (“ICH Q2”). In April 2018, the FDA published an
official companion guidance to ICH Q7 titled Q7 Good Manufacturing Practice Guidance
for Active Pharmaceutical Ingredients, Questions and Answers, Guidance for Industry
(“ICH Q7 Q&A”). Elder Rep. ¶ 34; see e.g., Sharpnack Rep. ¶¶ 44, 68; JX 2497 [hereinafter
“Gupta Rep.”] ¶¶ 67–68; JX 2539 [hereinafter “Gupta RR.”] ¶ 20; Marshall Rep. ¶81 n.73;
JX 2538 [hereinafter “Boyle Rep.”] ¶ 23.
The experts were unanimous that ICH Q7 informs the cGMP requirements
applicable to evaluating AGC’s compliance. See Elder Rep. ¶¶ 27, 33–42, 48; JX 2544
[hereinafter “Marshall RR.”] ¶ 7; Sharpnack Rep. ¶¶ 38, 40, 44, 49; Gupta Rep. ¶¶ 36, 41,
51; see FDA Ch. 56 at 5 (“ICH Q7 represents FDA’s current thinking on CGMP for APIs.
Thus, API and related manufacturing and testing facilities that follow this guidance will
generally be considered in compliance with the statutory CGMP requirement. However,
alternative approaches may be used if such approaches satisfy the requirements of section
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2016.99 ICH Q7 provides GMP guidance for APIs used in clinical trials.100 The

FDA’s intention behind ICH Q7 is “to help ensure that all APIs meet the standards

for quality and purity they purport or are represented to possess.”101

The parties dispute which sections of ICH Q7 inform the DS Lots. Alexion

asserts ICH Q7 is applicable in its entirety.102 Alexion contends AGC’s

manufacturing process of the DS Lots failed to satisfy the cGMP standards in

Sections 5, 8, 12, 13, and 19.103 SRS claims the DS Lots were a “new” API used in

a clinical trial governed exclusively by ICH Q7 Section 19,104 and that Section 19’s

501(a)(2)(B) of the FD&C Act and ensure that the API meets its purported purity, identity,
and quality characteristics.”).
99
See generally ICH Q7; id. § 1.1 (“This guidance revises and replaces the guidance Q7A
Good Manufacturing Practice Guidance for Active Pharmaceutical Ingredients. This
revision changes the ICH codification from Q7A to Q7.”).
100
Id. §§ 1.1–1.3.
101
Guidance on Good Manufacturing Practice for Active Pharmaceutical Ingredients, 66
Fed. Reg. 49028 (September 25, 2001).
102
ALXN Op. Br. 21–22, 29, 30–31, 34; DB Exp. 10, 11, 15–16 (identifying ICH Q7
Section 5, 13, and 19 as providing the cGMP standards governing the DS Lots).
Alexion also claims “[t]o the extent SRS argues that only §19 of ICH Q7 is
applicable here, each of these batches failed to comply with numerous provisions of § 19.”
ALXN Op. Br. at 29 n.111.
DB Exp. 10, 15; ALXN Op. Br. 29–31 (asserting AGC’s manufacturing process violated
103

ICH Q7 Sections 5.10, 5.11, 5.12, 5.22, 13.10, 13.13, 13.15, 19.11, and 19.30).
104
SRS Ans. Br. 59; ICH Q7 § 19.10 (“Not all the controls in the previous sections of this
guidance are appropriate for the manufacture of a new API for investigational use during
its development. Section XIX (19) provides specific guidance unique to these
circumstances.”).
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specific guidance supplants every other section of ICH Q7. 105 SRS argues Section

19.10, which provides that “[n]ot all the controls in the previous sections of this

guidance are appropriate for the manufacture of a new API for investigational use

during its development,”106 exempts the manufacture of APIs intended for use in

clinical trials from the other ICH Q7 “controls.”107 And SRS asserts Section 19.7

“is specific to changes for clinical trial material” and supplants the more general

oversight described in Section 13.10.108 SRS contends AGC complied with Section

19.7 because AGC “adequately recorded” its use of the STIC Jumbo Filter. 109

In the first instance, SRS does not gain much from limiting ICH Q7 to Section

19. Section 19.11 provides “manufacturers should ensure that APIs are

manufactured in suitable facilities using appropriate production and control

105
SRS Op. Br. 88; PB Exp. 20–21, 25; Gupta Tr. 2040–42; Gupta RR. ¶¶ 66-67.
106
ICH Q7 § 19.10.
107
SRS Op. Br. 88–89 (citing Gupta Tr. 204–44); SRS Ans. Br 58–67; PB Exp. 21; see
Gupta Tr. 2040–45; Gupta RR. ¶¶ 66-67.
108
PB Exp. 25–27; SRS Ans. Br. 58–62; Gupta Tr. 2042–43; compare ICH Q7 § 13.10
(“A formal change control system should be established to evaluate all changes that could
affect the production and control of the intermediate or API.”); with id. § 19.70 (“Changes
are expected during development, as knowledge is gained and the production is scaled up.
Every change in the production, specifications, or test procedures should be adequately
recorded.”); see also id. § 19.11.
109
PB Exp. 25–27; SRS Ans. Br. 58, 61.
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procedures to ensure the quality of the API.”110 FDA guidance documents, including

ICH Q7, provide that “the term should identifies recommendations that, when

followed, will ensure compliance with CGMPs.”111 The FDA recognizes alternative

approaches may be implemented only “if such approach satisfies the requirements

of the applicable statutes.”112 In addition, Section 19.30 requires manufacturers to

“ensure that equipment is calibrated, clean, and suitable for its intended use.”113

And SRS’s attempt to evade the entirety of ICH Q7 fails on the merits. SRS

relies on the opinion of its expert, Patricia Gupta, that Section 19 governs APIs used

in clinical trials while the remaining sections “are commercial manufacturing

requirements for validated processes, which apply to Phase 3 and FDA-approved

products.”114 Gupta contends “developmental batches and batches to be used in

110
ICH Q7 § 19.11.
111
Id. § 1.1 (emphasis added); see FDA Ch. 56 (“ICH Q7 represents FDA’s current
thinking on CGMP for APIs. . . . manufacturing and testing facilities that follow this
guidance will generally be considered in compliance with the statutory CGMP
requirement. However, alternative approaches may be used if such approaches satisfy the
requirements of section 501(a)(2)(B) of the FD&C Act and ensure that the API meets its
purported purity, identity, and quality characteristics.”).
112
ICH Q7 § 1.1; 21 C.F.R. § 10.115(d)(2).
113
ICH Q7 § 19.30.
114
SRS Ans. Br. 59; PB Exp. 21, 25 (citing Gupta Rep. ¶¶ 58–60, 65–68). SRS contends
“ICH Q7 §§ 5.10, 5.11, 5.12, 5.22, 13.10, 13.13, and 13.15 are commercial manufacturing
requirements for validated processes, which apply to Phase 3 and FDA-approved
products.” SRS Ans. Br 59 (citing ICH § 19.10; Gupta RR. ¶¶ 15–17, 24–26, 37–38; Gupta
Tr. 2040–41).
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clinical trials” are exempt from ICH “Q7’s general requirements” and cGMP

requirements informing “commercial batches of finished drug production.”115 She

claims drug substances must meet ICH Q7 “commercial” cGMP requirements only”

upon the completion of “process validation.”116 She characterizes the DS Lots as

“scale-up” or “development batches” because AGC had not previously

manufactured a 2000L batch and the DS Lots were intended for use in clinical

trials.117

The record does not support characterizing the DS Lots as “scale-up” or

“development” batches. The DS Lots were intended for dosing human subjects in

Phase 1/2 clinical trials,118 and were specifically ordered to be manufactured under

cGMP standards.119

From there, it follows that ICH Q7 did not exempt those clinical DS Lots from

115
Gupta Rep. ¶¶ 69–70 (citing ICH §§ 1–17.2, 18.1–18.53).
116
Id. ¶ 70.
117
Id. ¶¶ 41, 62–65, 67–72, 88, 112–115, 119, 131, 133–134, 136.
118
JX 202 at 4 (“The objective of [Project Change Order No. 48] is to add additional work
to manufacture and release [] one 2000L batch for Phase I/II in March/April 2018); JX 203
at 1 (The objective is to add additional work to manufacture and release one 2000L batches
for phase I/II in Q4 2018.”); JX 172 at 1, 6; JX 949 at 6; JX 382.02; see also JX 97 at 2.
119
Compare JX 101 at 6 (ordering a 100L “Pilot batch” and noting “[t]he objective of this
Stage is to generate non-GMP pilot material”) with JX 202 (ordering “one 2000L batch for
phase I/II” and specifying the batch preparation subject to “cGMP manufacturing”
standards).
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any cGMP requirements.120 The guidance on which Gupta relies, called the “New

Drug Guidance,” states that “[w]hen drug development reaches the stage where the

drug products are produced for clinical trials in humans or animals, then compliance

with the cGMP regulations is required.”121 As a contrast, the New Drug Guidance

exempts preclinical work: “cGMP regulations do not apply for the preparation of

new drug substance or drug products during such initial preclinical

experimentation.”122

The New Drug Guidance also refutes Gupta’s opinion that the DS Lots were

120
Marshall RR. ¶¶ 13–14, n.9 (noting ICH Q7 mentions term “scale-up” only in the
context of scale-up reports when describing proper documenting systems and additionally
noting the term the fails to appear in 21 C.F.R. §§ 210 or 211.); Elder Rep. ¶¶ 44–45, 52,
n.31, n.32; see U.S. Food and Drug Administration, Center for Drug Evaluation and
Research, Guideline on the Preparation of Investigational New Drug Products (Human
and Animal) (1991) [hereinafter “New Drug Product Guidance”] (“The cGMP regulations
do not apply for the preparation of new drug substance or drug products during [] initial
preclinical experimentation.” (emphasis added)).
121
New Drug Guidance at 2; see Gupta Rep. ¶ 41 (citing New Drug Guidance; Phase 1
Guidance; ICH Q8; Guidance for Industry: INDs for Phase 2 and Phase 3 Studies –
Chemistry, Manufacturing, and Controls Information (“Phase 2 and 3 Guidance”); U.S.
Food and Drug Administration, Compliance Program Guidance Manual 7346.832,
Chapter 46–New Drug Evaluation (2022)).
122
New Drug Guidance at 2; but see Gupta Rep. ¶¶ 41, 58 (“the Q7 regulations, practices,
and regulatory expectations applicable to drug substances used in batches manufactured
for commercial use or clinical trials differ from those articulated in 21 CFR Parts 210 and
211 which apply to commercial manufacturing of finished drug products (tablets,
capsules or injectables, etc. ) only.” (emphasis in original)).
The New Drug Guidance informs the cGMP requirements for drugs covered by an
investigational new drug application (“INDA”). New Drug Guidance at 1–3. Syntimmune
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exempt for cGMP requirements regarding production and process controls.123 It

recognizes certain control procedures for the manufacture of an investigational drug

may undergo “considerable refinement,” but “[i]t is essential that all changes from

initial procedures be fully document[ed] and be based on well-founded scientific

data.”124 The FDA’s Phase 1 Guidance is in accord, noting that compliance with

cGMP requirements necessitates manufacturers to use “methods, facilities, and

manufacturing controls to ensure that the phase 1 investigational drug meets

appropriate standards of safety, identity, strength, quality, and purity.”125

And finally, no aspect of ICH Q7 limits its applicability or distinguishes the

submitted its INDA on July 1, 2016 and the DS Lots were subject to FDA’s INDA reporting
regime. JX 149; JX 151.
123
Gupta Rep. ¶¶ 61–62 (“FDA . . . recognize[s] that pharmaceutical companies developing
new products and processes must have more flexibility in making process changes
(especially after product or process failures) in these small experimental batches without
the same degree of GMP documentation and process validation required for commercial
products that are specified in 21 CFR Part 211.” (citing ICH Q8)). Gupta’s report does not
identify any section of ICH Q8 to support that proposition but instead relies on a “see
generally” citation. Id. ¶ 62. But ICH Q8, like ICH Q7, requires the manufacturing process
to be controlled. ICH Q8 § 2.3 (“The manufacturing process development program or
process improvement program should identify any critical process parameters that should
be monitored or controlled (e.g., granulation end point) to ensure that the product is of the
desired quality.”).
124
New Drug Guidance at 4.
125
Phase 1 Guidance § 5.
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relevance of any section based on the drug’s “commercial” status.126 To the

contrary, ICH Q7’s scope of applicability covers “the manufacture of APIs for use

in human drug (medicinal) products.”127 ICH Q7 further states its applicability

covers the manufacture of APIs “up to the point immediately prior to the APIs being

rendered sterile.”128 ICH Q7’s own limiting principle turns on sterilization—not

commercial use.129

The companion piece to ICH Q7, called ICH Q7 Q&A, makes clear ICH Q7

applies to the DS Lots in its entirety.130 It provides that when a “mixture is classified

126
ICH Q7 defines the term “manufacturing” as “include[ing] all operations of receipt of
materials, production, packaging, repackaging, labeling, relabeling, quality control,
release, storage and distribution of APIs and the related controls.” ICH Q7 § 1.1. ICH Q7
further provides “[w]ithin the world community, materials may vary as to their legal
classification as an API. When a material is classified as an API in the region or country in
which it is manufactured or used in a drug product, it should be manufactured according to
this guidance.” Id. § 1.2. ICH Q7 notes terms “API” and “drug substance” are intended to
have the same meaning and can be used interchangeably. Id. at Glossary (“Active
Pharmaceutical Ingredient (API) (or Drug Substance): Any substance or mixture of
substances intended to be used in the manufacture of a drug (medicinal) product and that,
when used in the production of a drug, becomes an active ingredient of the drug product.
Such substances are intended to furnish pharmacological activity or other direct effect in
the diagnosis, cure, mitigation, treatment, or prevention of disease or to affect the structure
and function of the body.”).
127
Id. § 1.3.
128
Id. ICH Q7 explicitly notes it informs the cGMP requirements during the isolation and
purification step of the manufacturing process. Id. at Table 1.
129
Id. § 1.3; see id. at Table 1.
130
ICH Q7 Q&A §§ 1.2, 2.2, 5.4 (“ICH Q7, paragraphs 5.23 and 8.50 set forth the
expectations that equipment be cleaned at appropriate intervals (e.g., time or number of
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in the regulatory filing as an API . . . ICH Q7 should be applied to the manufacturing

of the mixture.”131 It further explains “[t]he ICH Q7 document should be read in its

entirety regardless of the nature of the manufacturing activities being conducted to

fully understand the linkages between certain sections and successfully implement

appropriate good manufacturing practices [ ] at all stages of the [APIs] supply chain,

including distribution.”132

I conclude ICH Q7 is applicable in its entirety. AGC’s manufacturing rubs

up against ICH Q7 Section 13.133 Section 13.10 mandates “[a] formal change control

system [ ] be established to evaluate all changes that could affect the production and

control of the intermediate or API.”134 Section 13.13 requires “[t]he potential

impact of the proposed change on the quality of the intermediate or API should be

batches) to prevent build-up and carryover of contaminants so that they do not adversely
alter the quality of the API.”). Gupta acknowledged “jumbo STIC filter . . . had not been
washed appropriately, and AGC . . . did not take into account this additional PAA that was
in the jumbo STIC filter,” and “the flow rate was also miscalculated when they calculated
the wash aspect.” Gupta Tr. 2039; but see Gupta Tr. 2040–42 (claiming Section 5 is
inapplicable because it is supplanted by Section 19.3).
131
ICH Q7 Q&A § 1.2; see JX 335.08 at 1, 4 (Amendment 4.0 to Protocol SYNT001-103
and stating the amendment is for a “Phase 1b/2” clinical trial); JX 763.02 at 1 (Amendment
5.0 to Protocol SYNT001-102 for WAIHA stating the amendment is for “Phase 1b/2”
clinical).
132
ICH Q7 Q&A § I.
133
ICH Q7 §§ 13.10, 13.11, 13.13, 13.14, 13.15.
134
Id. § 13.10.
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evaluated.”135 Similarly, Section 5 addresses oversight of the equipment used in the

manufacturing process. And Section 5.11 provides that “[e]quipment should be

constructed so that surfaces that contact raw materials, intermediates, or APIs do not

alter the quality of the intermediates and APIs beyond the official or other

established specifications.”136

3. The Experts

At trial, Alexion’s experts Paul Marshall and David Elder concluded AGC’s

manufacturing process revealed multiple cGMP violations grounded in ICH Q7’s

oversight requirements.137 They both found AGC’s failure to follow a “formal

change control system” and failure to ensure the use of the Jumbo Filter would not

135
Id. § 13.13.
136
Id. § 5.11.
137
Elder Rep. ¶¶ 80–87 (finding AGC violated ICH Q7 Section 5 in its adoption of the
STIC Jumbo filter); Marshall Rep. ¶¶ 70–3 (finding AGC’s failure to make the necessary
adjustments to the manufacturing process in its introduction of STIC Jumbo filter violated
ICH Q7 §§ 5.10, 5.20, 5.22); Marshall RR. ¶¶ 30, 34, 36 (concluding AGC violated ICH
Q7 §§ 13.10, 13.13, 13.15); Marshall Tr. 1872–76 (explaining AGC violated ICH Section
19 in failing to evaluate the impact the introduction of the STIC Jumbo Filter could have
on the DS Lots); Elder Tr. 1955–62 (concluding AGC violated ICH Q7 Sections 5.10, 5.11,
5.12, 5.22, 13.13, 19.11, 19.30 and 19.70 in its implementation of the STIC Jumbo Filter);
see ICH Q7 § 1.1 (stating its objective is to “provide guidance regarding good
manufacturing practice (GMP) for the manufacturing of active pharmaceutical ingredients
(APIs)” and to “ensure that APIs meet the quality and purity characteristics that they
purport, or are represented, to possess.”). Elder was not asked to address either the protein
loading issue or the Cygnus 2 kit. Elder Tr. 1949.
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alter the quality of the DS Lots to be a cGMP violation.138 Marshal and Elder agreed

the DS Lots “were not manufactured in compliance with the cGMP requirements of

the FDCA and are therefore adulterated.”139 Marshall also determined AGC’s

failure to assess the potential impact from its inconsistent protein loading range and

failure to verify the Cygnus 2 Kit constituted cGMP violations.140

SRS’s experts, Gupta and Dr. Denis Boyle, concluded AGC’s process was

cGMP compliant.141 Gupta found the introduction of the STIC Jumbo Filter

complied with cGMP requirements because AGC had a procedure in place to wash

the filter, documented changes that arose like the leakage, rejected the DS Lots for

being contaminated, and investigated the root cause of the contamination.142 As for

138
Elder Rep. ¶¶ 80–87; Marshall Rep. ¶¶ 67–77.
139
Elder Rep. ¶ 80; Marshall RR. ¶ 35 (describing the “change in control procedures at
AGC” failed to evaluate the potential impact of the introduction of the STIC Jumbo Filter
constituting “a failure of cGMP, which is designed to prevent haphazard, disorganized, and
unsystematic changes in manufacturing procedures that can impact product quality and
purity”).
140
Marshall Rep. ¶¶ 25, 80–94; Marshall Tr. 1881–1900.
141
Gupta Rep. ¶¶ 35, 79–94, 116–29, 137; Boyle Rep. ¶¶ 31–34, 51–113. Boyle was not
qualified as a cGMP expert. Boyle Tr. 1992 (“I’m not a GMP compliance expert, but I am
very well aware of the GMPs as they apply to the space in which I work.”); id. Tr. 2010
(confirming on cross-examination that Boyle is not opining as a cGMP compliance expert).
142
Gupta Rep. ¶¶ 79–90, 116–29; Gupta Tr. 2031. Gupta concluded there was no “GMP
process gap” because AGC complied with its MPI and MPR. Gupta Rep. ¶¶ 84–86, 128
(citing JX 2629); Gupta RR. ¶¶ 62–64, 82. But Gupta relies on MPR Revision 5 to support
her claim, which only became effective on August 16, 2019. JX 2629 at 19; see Gupta
Rep. ¶¶ 128, n.138 (citing JX 2629). AGC revised its MPR to specify the STIC Jumbo
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AGC’s failure to adjust the flow and wash settings to the STIC Jumbo Filter’s vendor

settings, Gupta opined that was not a cGMP deviation because AGC followed the

standard wash settings it “defined several years earlier” and had been using without

incident or product impact for years.143 Again relying on her characterization of the

DS Lots as “scale-up” batches, Gupta concluded “AGC’s usage of the improper

washing procedure is not considered a GMP deviation.”144 Gupta further opined

AGC could “only” be found to violate cGMP requirements “[i]f AGC had NOT

performed a thorough investigation or had released the [DS Lots].”145

Boyle, who is not a cGMP compliance expert, opined neither AGC’s use of

the Cygnus 2 Kit nor the protein loading ranges violated cGMP standards.146 As for

Filter must be washed according to the vendor’s instruction only after it was determined
the DS Lots were unusable. JX 958; JX 1285 at 2 (noting the downstream processing MPI
was updated “to ensure STIC Membranes [are] used as required.”). The operative MPR
when the DS Lots were manufactured included wash and filter settings that deviated from
the vendor’s instructions, and were only revised following AGC’s manufacture of the DS
Lots. JX 2629 at 19 (noting the MPR was updated on May 15, 2019 to conform with
“CMC16085 rev05”); JX 958 at 2 (revising CMC 16085 to change the max load and wash
setting for the STIC Jumbo Filter).
143
Gupta Rep. ¶¶ 88, 90, 123.
144
Id. ¶ 88. Gupta’s Expert Report also identified Alexion’s settlement agreement with
AGC as supporting her conclusion because the settlement noted the DS Lots were
“executed to protocol.” Id. ¶ 89 (quoting JX 1243 at 2).
145
Id. ¶ 90.
146
Boyle Tr. 1992, 2010 (confirming he is not a cGMP compliance expert); Boyle Rep. ¶¶
28–30; Boyle Tr. 1992–94 (concluding the “Cygnus 2 assay was an appropriate choice”
and “the protein loading ranges were appropriately established”).
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the Cygnus 2 Kit, Boyle concluded “AGC performed the verification of the Cygnus

2 [Kit], as indicated in the kit’s instructions, and found that the sample must be

appropriately diluted in order to deliver valid test results.”147 On cross-examination,

Boyle was forced to concede the “verification” he relied upon addressed the dilution

linearity range, which does nothing to determine the assay’s HCP coverage.148

Nevertheless, Boyle concluded cGMP did not require an independent assessment of

an off-the-shelf assay like the Cygnus 2 Kit for use in Phase 1 and Phase 2 studies.149

As for protein loading, Boyle found that “[w]hile protein loading did vary from batch

to batch, it is incorrect to conclude that this variation was problematic” because

“Syntimmune correctly defined protein loading ranges in GMP batch records and

controlled protein loading within those ranges.”150

Sharpnack explained that AGC’s failure to evaluate its introduction of the

STIC Jumbo Filter “is a significant issue” and demonstrates “a very poor display of

147
Boyle Rep. ¶ 92 (citing to JX 2602 at 16); JX 2602 at 16 (“Dilutional linearity was not
assessed as buffer spiked samples were below LOQ.”). Boyle Tr. 2017–18 (confirming JX
2602 at 16 is the document he relied upon for the conclusion the Cygnus 2 Kit was
verified); JX 538 at 29 (concluding “[i]valid assay” because “e. coli recovery can be
detected.”).
148
Boyle Tr. 2017–18 (describing the tests reflected in Section 7.5 of JX 2602).
149
Boyle Rep. ¶ 92.
150
Id. ¶ 64.
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the quality oversight at AGC.”151

4. Analysis

AGC’s failure to ensure the STIC Jumbo Filter was suitable for its intended

use materially deviated from the guidance provided by multiple sections of ICH Q7.

AGC fell short of Section 19.11 in failing to ensure the DS API was manufactured

according to appropriate production and control procedures.152 And it fell short of

Sections 13.10 and 13.13 in failing to establish a formal control system to evaluate

the filter switch, and to evaluate the potential impact of that change.153 AGC’s

failures constitute cGMP violations.154

Section 4.13(a) promised “compliance in all material respects.”155 The

determination of whether a party breached a representation to comply “in all material

151
Sharpnack Rep. ¶ 71; Sharpnack Dep. at 42.
152
ICH Q7 § 19.11.
153
Id. §§ 13.10, 13.13.
154
21 U.S.C. § 351(a)(2)(B) (“A drug or device shall be deemed to be adulterated . . . (B)
if it is a drug and the methods used in, or the facilities or controls used for, its manufacture,
processing, packing, or holding do not conform to or are not operated or administered in
conformity with current good manufacturing practice to assure that such drug meets the
requirements of this chapter as to safety and has the identity and strength, and meets the
quality and purity characteristics, which it purports or is represented to possess. . . .”).
155
Merger Agr. § 4.13(a).
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respects” turns on the effect the purported noncompliance had on the company.156

“Put differently, the materiality standard at issue asks whether the business deviation

significantly alters the buyer’s belief as to the business attributes of the company it

is purchasing.”157 The question is whether AGC’s noncompliant manufacturing

process “would have been viewed by the reasonable investor as having significantly

altered the ‘total mix’ of information.”158 “ It strives to limit the operation of

[Section 4.13(a)] to issues that are significant in the context of the parties’ contract,

even if the breaches are not severe enough to excuse a counterparty’s performance

under a common law analysis.”159

The usability of the drug substance Alexion bought from Syntimmune was

significant. Alexion sought value from quick development and winning the race to

the market, so Alexion needed drug product that was compliant and usable.160 “Time

156
Akorn, 2018 WL 4719347, at *65; Dermatology Assocs., 2020 WL 4581674, at *26–
29; Channel Medsystems, 2019 WL 6896462, at *17; see also Anthem-Cigna, 2020 WL
5106556, at *134 n.426 (distinguishing common law “material breach” standard from “in
all material respects” standard).
157
Snow Phipps Grp., LLC, 2021 WL 1714202, at *30–*35, *38.
158
Akorn, 2018 WL 4719347, at *86.
159
Id.
160
Sarin Tr. 950–53, 975–76; Ledwith Tr. 1030–34, 1039–41; Alford Tr. 1172–73, 1863,
1876, 1904.
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was of the essence” for Alexion to begin clinical trials.161 That significance is baked

into the Merger Agreement. The parties agreed Section 4.13 was a “Fundamental

Representation,” and was singled out as being in effect for four years.162 And the

Merger Agreement’s indemnification regime exempts the Fundamental

Representations from the $2,000,000 “Threshold” applicable to all other

indemnification claims based on the Agreement’s representations and warranties.163

AGC’s cGMP violations resulted in the DS Lots being rendered completely

unusable, including the DS Lots that produced the DP already in clinical use.164

Alexion concluded “[a]ll clinical DP [Lot] Batches in circulation are not suitable for

human use,” requiring the nonroutine disposal of the released DP Lots. 165 Without

drug product, Alexion could not perform clinical trials. Alexion’s trials were

paused, then terminated.166 Alexion fell behind its competitors in performing

161
Sarin Tr. 975–76.
162
Merger Agr. § 1.1 (defining “Fundamental Representations” to mean “the
representations or warranties contained in Section 4.1 (Organization, Standing and Power),
Section 4.2 (Authorization), Section 4.3 (Capitalization), Section 4.13 (Regulatory),
Section 4.14 (Intellectual Property) and Section 4.18 (Brokers).”); id. § 8.5 (addressing
Sections 4.13 and 4.14).
163
Id. §§ 8.4(a)–(e).
164
JX 1044 at 1; JX 866 at 2–3.
165
JX 977 at 17.
166
JX 923 at 39, 42–43 (noting study 104 and 102 were paused due to the reported IRRs
pending the outcome of an investigation into AGC’s manufacturing process); JX 1164 at
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trials.167 Alexion’s inability to use the DS Lots in clinical trials caused a year-long

delay.168

These are not “small, de minimis, [or] nitpicky issues”169—Alexion had

purchased a time-sensitive pathway to developing a molecule into a medication, and

that pathway was clogged. Alexion has proven the DS Lots breached Section

4.13(a).

C. The DP Lots

1. Background
On March 29, 2018, Syntimmune contracted with Patheon Manufacturing

78–80 (noting the first reported IRRs occurred in mid-January 2019 and the study was
terminated in March 2019); JX 1508.05 at 4 (“The top two candidate root causes identified
were the potential leachate (Poly-allylamine, PAA) from the STIC membrane step (after it
was determined the DS CMO did not follow manufacturer’s instructions for operation) and
the use of the less sensitive Cygnus 2nd generation HCP kit for residual HCP
determination.”); JX 996 at 2; Ledwith Tr. 1032–35.
167
Ledwith Tr. 1032–41; JX 945 at 1 (“Because of the high HCP (host cell protein)
contamination of the one DP lot we thought could potentially be rereleased for use in
Cohort 2 WAIHA, we will not be able to proceed with dosing more patients in the Ph 1b/2a
trial. On the other hand, the clinical investigation suggests that the culprit in the observed
infusion reactions is likely contamination by PAA (polyalyamine) that leached from the
last chromatography step. These two contamination issues (HCP and PAA) will be
addressed in the new DS campaigns starting now, but we will not have DP available until
Dec (for Ph 2 grade) or March 2020 for P3 start.”); id. at 2–3 (explaining the DS Lots “will
need to be recalled” due to the leached particulate).
168
JX 965; JX 933; JX 932; JX 930; JX 927.02; JX 845 at 4–6; JX 835; see JX 833.
169
AB Stable VIII LLC, 268 A.3d at 216 (citing Akorn, 2018 WL 4719347, at *85).
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Services LLC (“Patheon”) to manufacture the DP Lots for a Phase 2 clinical study.170

Patheon agreed to comply with cGMP standards and to strictly adhere to “the

applicable guidances and regulations” including 21 C.F.R. Parts 210, 211, 312

Subpart D, and FDA’s Phase 1 Guidance.171

Patheon’s investigation after the IRRs revealed all samples tested had visible

particulates.172 An independent lab analyzed eight vials of DP Lot AJ8794A and

found each vial had bubbles,173 and each sample had “a moderate to heavy load of

amorphous particulate residue”174 determined to be “protein with silicone.”175

Patheon and Alexion conducted a joint root cause analysis and focused on the

fact that manufacturing moved from one Patheon suite to another (“Suite 1” to “Suite

170
JX 312.03 at 4 (“Syntimmune has requested Patheon to provide a proposal for the
manufacture of clinical supply of aseptically filled SYNT001 Sterile Liquid Vials (the
‘Product’) for a Phase II study. Client has stated the clinical trial will be conducted in the
USA, thus, all formulation components and finished product must meet the regulatory
requirements of USP/EP. Patheon intends to execute the sterile manufacture on PDS Suite
2 in Patheon’s Steriles North facility.”); JX 220 at 3–4.
171
JX 138 at 9, 33.
172
JX 1338 at 1.
173
JX 827 at 2.
174
Id. at 4; see also JX 2854 (“Particle IDs for lot AK3858 pending. Most likely root cause
identified to be a result of excess pump speed during fill which creates particulation from
the fill tubing & shear to the molecule.”).
175
JX 827 at 3; see also JX 2854 (“Particle IDs from lot AJ8794A determined to be silicone
oil & proteinaceous matter.”).
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2”), with different methods and equipment.176 Syntimmune’s contract with Patheon

had authorized the use of Suite 2. 177 DP Lots AJ8794A and AK3858 were the first

lots filled in Suite 2: all previous Syntimmune lots had been filled in Suite 1.178 The

two suites had different equipment: Suite 1 used a Watson-Marlow Flexion filler at

16 vials/min, with a batch size of approximately 500 L and filler pump speed of 200-

300 revolutions per minute (“RPM”); Suite 2 used a high-speed Bosch filler at 80

vials/min, with a 2000 L batch size and faster filler pump speed of 500 RPM.179

Patheon created its Change Control Report for moving filling to Suite 2, which

noted a required stability study, and that Suite 2 needed to be validated.180 There is

no evidence Patheon evaluated the potential impact the switch to Suite 2 could have

on the drug products; the inference is that it did not do so before the move.181

Patheon decided to perform that investigation only after particulates were

176
JX 1338 at 7; JX 2605 (noting the differences between Patheon’s Suite 1 and Suite 2
and identifying five “key potential root cause[s]”).
177
JX 312.03 at 4; JX 275 at 1.
178
JX 830.04 at 2–3; JX 799; JX 800 at 8 (suspending all work orders on Suite 2).
179
JX 799 (highlighting the differences between Suite 1 and Suite 2).
180
JX 275 at 1, 4.
181
Marshall Tr. 1861–62; Elder Tr. 1954–55; Sharpnack Rep. ¶ 82 (“Patheon’s failure to
implement a change control when switching from Suite #1 to Suite #2, combined with the
unresolved protein loading range issue as well as the changed filtration system without a
change control, resulted in the drug product batches not being in compliance with cGMP
requirements, per 21 CFR §§ 211.100 and 211.63.”).
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discovered.182

Patheon never identified any one specific root cause.183 Patheon ordered the

destruction of DP Lots AK3858B and AJ8794A “impacted” by their production at

Suite 2.184

2. The Applicable Regulations

The FDA promulgated relevant cGMP requirements in the Code of

Federal Regulations, at 21 C.F.R. parts 210 and 211.185 Parts 210 and 211 “contain

the minimum current good manufacturing practice . . . to assure that such drug meets

the requirements of the act as to safety, and has the identity and strength and meets

the quality and purity characteristics that it purports or is represented to possess.”186

Section 210.1(b) states the failure to comply “with any regulation” in Part 210 or

182
JX 1338 at 7 (noting the joint root cause analysis “determined that a potential root cause
could be attributed to a change in Suites and equipment.”); JX 799 (highlighting the
differences between Suite 1 and Suite 2).
183
JX 1338 at 8 (“A Root cause Analysis was performed. During the RCA no assignable
root cause for this particulate issue was identified. A possible root cause could be
contributed to change in production from PDS Suite 1 to PDS Suite 2 (Refer to File
Attachment 1: Suite Comparison).”). That “File Attachment 1” is JX 2605. Compare JX
2605 (titled “Suite Comparison DIR 514770) with JX 1338 at 2–3 (describing “DIR
514770” investigation).
184
JX 1338 at 7.
185
21 C.F.R. § 210.1(a); see United States v. Regenerative Scis., LLC, 741 F.3d 1314, 1324
(D.C. Cir. 2014) (“The FDA has established the specific elements of current good
manufacturing practice at 21 C.F.R. parts 210–211.”).
186
21 C.F.R. § 210.1(a).
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211 “shall render such drugs to be adulterated,” and that the party responsible for

failing to comply shall be “subject to regulatory action.”187 The cGMP requirements

announced in Parts 210 and 211 “apply to all aspects of drug manufacture, including

packaging and labeling operations, drug testing and quality control operations.”188

The parties disagree whether Part 211’s regulations for finished drug products

apply to the DP Lots. Alexion contends they are governed by Part 211; SRS

contends they are exempt.189 Section 210.2(c) exempts some introductory work

from Part 211. Its exemption reads as follows:

An investigational drug for use in a phase 1 study, as described in §
312.21(a) of this chapter, subject to the statutory requirements set forth
in 21 U.S.C. 351(a)(2)(B). The production of such drug is exempt from
compliance with the regulations in part 211 of this chapter. However,
this exemption does not apply to an investigational drug for use in a
phase 1 study once the investigational drug has been made available
for use by or for the sponsor in a phase 2 or phase 3 study, as described
in § 312.21(b) and (c) of this chapter, or the drug has been lawfully
marketed. If the investigational drug has been made available in a phase
2 or phase 3 study or the drug has been lawfully marketed, the drug for
use in the phase 1 study must comply with part 211.190
SRS contends “Part 211 applies to finished pharmaceuticals products only,” so the

187
Id. § 210.1(b).
188
FDA Enforcement Manual § 1631; see 21 C.F.R. § 210.1(a).
189
See PB Exp. 38–40; DB Exp. 4–9; SRS Op. Br. 88; ALXN Op. Br. 21–22.
190
21 CFR §210.2(c) (emphasis added).
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DP Lots were exempt as “scale-up” batches intended for use in clinical trials.191

SRS argues DP Lot AK3858 is exempt because it was intended for stability testing

only,192 and because it was manufactured in May 2018 before any Phase 2 dosing

began.193 Alexion contends Part 211 kicks in once a drug product is manufactured

with the intention it will be used, or is used, in a Phase 2 or 3 clinical trial, and points

to FDA’s Phase 1 Guidance applying cGMP to investigational drugs used in Phase

1 trials.194

The statute’s meaning is plain. By its text, an investigational drug to be used

in a Phase 1 study is exempt from Part 211’s cGMP requirements, and that

exemption applies unless and until the drug “has been made available for use by or

for the sponsor in a Phase 2 or Phase 3 study.”195 The Phase 1 Guidance is in accord:

191
PB Exp. 19 (citing Gupta Rep. ¶ 58); Gupta Rep. ¶ 112 (“[T]he Patheon drug product
lot was a scale-up batch similarly subject to the requirements applicable to scale-up/clinical
production as opposed to commercial manufacturing.”).
192
SRS Ans. Br. 53 n.4; Gupta Tr. 2034–35.
193
SRS Ans. Br. 53–54.
194
DB Exp. 3–5; Elder Rep. ¶¶ 43–95, 109 n.130 (citing to Phase 1 Guidance); Phase 1
Guidance § III (“[I]f an investigational drug has already been manufactured by an IND
sponsor for use during phase 2 or phase 3 clinical trials or has been lawfully marketed,
manufacture of such a drug must comply (21 CFR 211.1) with 21 CFR part 211 for the
drug to be used in any subsequent phase 1 clinical trials, irrespective of the trial size or
duration of dosing.”); Marshall RR. ¶¶ 12–43.
195
21 C.F.R. § 210.2(c).
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“if an investigational drug has already been manufactured by an IND sponsor for use

during phase 2 or phase 3 clinical trials . . . such a drug must comply with 21 C.F.R.

Part 211 for the drug to be used in any subsequent phase 1 clinical trials, irrespective

of the trial size or duration of dosing.”196 Investigational drug products

manufactured for Phase 2 and Phase 3 clinical trials “must comply with the

appropriate sections of 21 C.F.R. Part 211 for the drug to be used in any subsequent

phase 1 clinical trial, irrespective of the trial size or duration of dosing.”197 The FDA

has explained this exemption makes sense because the “FDA oversees drugs for use

in Phase 1 trials through its existing IND authority” which authorizes it to place a

clinical study on hold or terminate the study for inadequate controls.198 And that

196
Phase 1 Guidance § III (citing 21 C.F.R. 210.2(c)).
197
Id. § III n.7; Marshall Tr. 1942–46, 1987–88; see Phase 1 Guidance § III (“This guidance
does not apply to the following phase 1 investigational products . . . manufactured for phase
2 and phase 3 clinical trials.”); see 21 C.F.R. § 312.21(b) (“Phase 2 includes the controlled
clinical studies conducted to evaluate the effectiveness of the drug for a particular
indication or indications in patients with the disease or condition under study and to
determine the common short-term side effects and risks associated with the drug.”).
198
Current Good Manufacturing Practice Regulation and Investigational New Drugs, 71
Fed. Reg. 2458, 2494–95 (June 1, 2006) (describing drugs subject to IND application are
subject to the requirements of 21 C.F.R. § 312.23(a)(7)); 21 C.F.R. § 312.23(a)(7) (“[T]he
the emphasis in an initial Phase 1 submission should generally be placed on the
identification and control of the raw materials and the new drug substance.”); see 21 C.F.R.
§§ 312.44(a)–(b)(iii) (“This section describes the procedures under which FDA may
terminate an IND. . . . A termination action may be based on deficiencies in the IND or in
the conduct of an investigation under an IND. . . . [including if] The methods, facilities,
and controls used for the manufacturing, processing, and packing of the investigational
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“even if exempted from the requirements of parts 210 and 211, investigational drugs

remain subject to the statutory requirement that deems a drug adulterated” if the

manufacturing process ‘do[es] not conform to or [is] not operated or administered in

conformity with current good manufacturing practices . . . .’”199

The preponderance of the evidence shows DP Lots AJ8794A and AK3858

were manufactured for use in Phase 2 studies, such that they are not exempt from

Part 211. The clinical study protocol amendments establish those DP Lots were

manufactured for use in “Phase 1b/2” studies.200 Phase 1b/2 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.”201 The manufacturing

directives to AGC and Patheon decisively show DP Lots AJ8794A and AK3858

drug are inadequate to establish and maintain appropriate standards of identity, strength,
quality, and purity as needed for subject safety.”).
199
73 Fed. Reg. 40454 (quoting 21 U.S.C. § 351(a)(2)(B)).
200
JX 335.08 at 1, 4 (Amendment 4.0 to Protocol SYNT001-103 and stating the
amendment is for a “Phase 1b/2” clinical trial); JX 763.02 at 1 (Amendment 5.0 to Protocol
SYNT001-102 for WAIHA stating the amendment is for “Phase 1b/2” clinical); JX
1163.04 at 1 (Amendment 5.0 to Protocol SYNT001-103 for WAIHA stating the
amendment is for “Phase 1b/2” clinical); JX 183 at 1( explaining the protocol amendments
“related to the release of additional drug substance (DS) batches and an additional drug
product (DP) lot for use in planned clinical trials.”); JX 205 at 15 (“Specifications for
SYNT001 DS . . . used to release the 500L cGMP batches that have been used or are
intended for human clinical trials.”); see Elder Rep. ¶¶ 31–32; Elder Tr. 1943–46, 1976,
1984.
201
Alexion I at *9; see JX 1229 at 29.
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were manufactured with the intention to be used in a Phase 2 study.202 Syntimmune

contracted with Patheon specifically for DP Lots AJ8794A and AK3858 to be

manufactured “for a Phase 2 study.”203 Syntimmune’s agreements with Patheon

mandating compliance with cGMP requirements identify Part 211 as an applicable

regulation.204

SRS makes two arguments to the contrary. First, its expert opined that DP

Lot AK3858A is exempt from Part 211 because it was intended for stability testing,

202
JX 172 at 6 (“Bulk Drug Substance generated by the process will be used to support
Phase II clinical trials”); JX 202 at 4 (“Bulk Drug Substance generated by the process will
be used to support Phase I/II clinical trials.”); JX 203 at 3 (directing AGC to prepare “for
cGMP manufacturing of one 2000L” batch); JX 97 at 2 (“Bulk Drug Substance generated
by the process will be used to support Phase I/II clinical trials.”); see JX 275 at 2 (Patheon
change control report regarding DP Lots for “Phase II to Suite 2 … Syntimmune has
requested Patheon to manufacture of [sic] clinical supply … for a Phase II study”); JX 183
at 4 (noting the DS Lots “were ear-marked for both Phase 1 re-supply and initial Phase 3
IV supply, and now should be considered not suitable for clinical use.”); JX 878 at 4
(same); see also JX 872 at 1 (same).
203
JX 312.03 at 4 (“Syntimmune has requested Patheon to manufacture of clinical supply
of aseptically filled SYNT001 Sterile Liquid Vials [] for a Phase II study.”); id. at 6 (noting
the objective of the agreement is “[t]o provide Client with one batch of 10,000 units of
[clinical trial material] active for use in Phase II clinical trials.”). Patheon further agreed
the scope of the project included compliance with “cGMP conditions & QA review.” Id.
at 7.
204
JX 138 at 9 (“Patheon will ensure that Product(s) are manufactured and tested in strict
compliance with the applicable guidances and regulation listed in Appendix F.”); id. at
App. F (listing 21 C.F.R. Parts 210 and 211 and ICH Q7 among applicable guidances and
regulations).
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not a Phase 2 clinical trial.205 But DP Lot AK3858A doses that remained after

stability testing were intended for clinical trials; they were diverted by the

determination that Lot was unusable.206

Second, SRS argues Section 210.2(c)’s exemption applies to DP Lots

AJ8794A and AK3858 because they were not made available to Syntimmune until

fall of 2018, and at that time no Phase 2 study was underway.207 SRS has not offered

any support for a regulatory scheme under which a manufacturer could produce a

stockpile of drug product intended for Phase 2, but evade Phase 2 cGMP

requirements until dosing began.208 SRS’s argument is contradicted by the FDA’s

commentary accompanying Section 210.2(c):

This direct final rule adds § 210.2(c) to make clear that production of
an investigational drug for use in a Phase 1 study conducted under an
IND, when the drug has not yet been, or is not being, manufactured for
use in Phase 2 or 3 studies or for an already approved use, is not subject

205
Gupta Rep. ¶ 58; Gupta Tr. 2034–35.
206
JX 784 at 82 (“limited leftover for clinical inventory”); JX 819 at 17; Ledwith Tr. 1030–
31.
207
SRS Ans. Br. 57–8; Gupta Tr. 2046; see JX 2632 at 2 (“Lot was only filled for stability;
forward processed by Syntimmune - remaining DS was inventory at time of deal close.”);
Ledwith Tr. 1030–31; see also JX 804 at 5 (noting 2053 vials of DP Lot AK3858 are
currently available and that “pending release” the “[l]imited leftover [is] for clinical
inventory”).
208
See Elder Tr. 1944–45, 1987–88.
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to the requirements in part 211.209

DP Lots AJ8794A and AK3858 were manufactured “for use” in a Phase 2 study.210

Therefore, the cGMP requirements in Part 211 are applicable.

Part 211, Subpart F (Production and Process Controls) requires written

procedures for production and process control.211 It requires changes to such written

procedures to be reviewed and approved.212 Section 211.63 requires that

“[e]quipment used in the manufacture, processing, packing, or holding of a drug

product shall be of appropriate design, adequate size, and suitably located to

facilitate operations for its intended use and for its cleaning and maintenance.”213

Part 211, Subpart J (Records and Reports) requires master batch records that include

complete manufacturing and control instructions214 and batch production records

that include complete information relating to the production and control of the

209
Current Good Manufacturing Practice Regulation and Investigational New Drugs, 71
Fed. Reg. 2458 (June 1, 2006).
210
E.g., JX 335.08 at 1, 4; JX 763.02 at 1; JX 1028 at 2; JX 312.03 at 4; JX 275 at 2.
211
21 C.F.R. § 211.100.
212
Id.
213
Id. § 211.63.
214
Id. § 211.186.
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batch.215

Patheon would have been held to the same standard even if the DP Lots were

exempt from Part 211. Even investigational and exempt drug substances and drug

products are subject to FDCA Section 351(a)(2)(B), which requires all drugs to be

manufactured in accordance with cGMP requirements.216 And an exempt

investigational drug product is evaluated as if it were a drug substance—by guidance

looking to Part 211.217 The Sterile Products Guidance speaks directly to Patheon’s

215
Id. § 211.188.
216
21 U.S.C. § 351(a)(2)(B); FDA Ch. 56 at 4–5; 73 Fed. Reg. 40453–54 (quoting 21
U.S.C. § 351(a)(2)(B)).
217
Compare Phase 1 Guidance § D (“The manufacturer should establish acceptance criteria
for specified attributes on each material. . . . attributes and acceptance criteria selected for
assessment should be based on scientific knowledge and experience for use in the specific
phase 1 investigational drug.”) with 21 C.F.R § 211.63 (“Equipment used in the
manufacture, processing, packing, or holding of a drug product shall be of appropriate
design, adequate size, and suitably located to facilitate operations for its intended use and
for its cleaning and maintenance.”) with 21 C.F.R § 211.100 (“There shall be written
procedures for production and process control designed to assure that the drug products
have the identity, strength, quality, and purity they purport or are represented to possess.
Such procedures shall include all requirements in this subpart. These written procedures,
including any changes, shall be drafted, reviewed, and approved by the appropriate
organizational units and reviewed and approved by the quality control unit.”); with
Guidance for Industry: Sterile Drug Products produced by Aseptic Processing—cGMP
[hereinafter “Sterile Products Guidance”] § II (“Any manual or mechanical manipulation
of the sterilized drug, components, containers, or closures prior to or during aseptic
assembly poses the risk of contamination and thus necessitates careful control.”); with
Guidance for Industry: Quality Systems Approach to Pharmaceutical cGMP Regulations
[hereinafter “Pharmaceutical cGMP Guidance”] § III.A (“Every pharmaceutical product
has established identity, strength, purity, and other quality characteristics designed to
ensure the required levels of safety and effectiveness. For the purposes of this guidance
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manufacture of the DP Lots and mandates compliance with Part 211, including

requirements governing oversight and change of control during the manufacturing

process.218 The Pharmaceutical cGMP Guidance “applies to manufacturers of drug

products” like Patheon.219 Pharmaceutical cGMP Guidance requires that “[c]hanges

to an established process must be controlled and documented to ensure that desired

attributes for the finished product will be met (§ 211.100(a))” and when a change is

implemented “its effect should be determined by monitoring and evaluating those

specific elements that may be affected based on an understanding of the process.”220

And ICH Q7 Section 19.11 provides that once a drug product is intended for clinical

document, the phrase achieving quality means achieving these characteristics for a
product.”).
218
Sterile Products Guidance at 6 (“This guidance pertains to current good manufacturing
practice (CGMP) regulations (21 CFR parts 210 and 211) when manufacturing sterile drug
and biological products using aseptic processing.”). Patheon’s Change Control Report
stated that “Syntimmune has requested Patheon to manufacture [] clinical supply of
aseptically filled SYNT001 Sterile Liquid Vials” and that the “manufacturing process
consists of thawing, pooling, aseptic filtering and then aseptically filling.” JX 275 at 2.
The Sterile Products Guidance mandates that “21 CFR 211.63, 211.65, and 211.67 address,
respectively, ‘Equipment design, size, and location,’ ‘Equipment construction,’ and
‘Equipment cleaning and maintenance’ [and] 21 CFR 211.100(a) states, in part, that
‘[t]here shall be written procedures for production and process control designed to assure
that the drug products have the identity, strength, quality, and purity they purport or are
represented to possess. Such procedures shall include all requirements in this subpart.’”
Sterile Products Guidance at 24.
219
Pharmaceutical cGMP Guidance at 6.
220
Id. at 23.
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trials, “manufacturers should ensure that APIs are manufactured in suitable facilities

using appropriate production and control procedures to ensure the quality of the

API.”221 Whether supplied by Part 211 or one of the guidances, the potential impact

of moving from Suite 1 to Suite 2 needed to be evaluated.

3. The Experts

Alexion’s experts opined Patheon’s filling process failed to comply with

cGMP standards because Patheon failed to evaluate the potential impact on the drug

product from moving to Suite 2.222 Alexion’s experts and Sharpnack concluded

Patheon’s change control documentation to be “completely inadequate” because

Patheon “failed to properly evaluate the differences between Suite 1 and Suite 2 and

the impacts that these differences may have on product quality, before transferring

production from Suite 1 to Suite 2.”223

SRS’s expert Gupta started from the premise that Part 211 applies only “to

221
ICH Q7 § 19.11.
222
Marshall RR. ¶¶ 44–52 (concluding Patheon violated the cGMP requirements set forth
in 21 C.F.R. §§ 211.100, 211.63, 211.188); Elder Rep. ¶¶ 96–112 (concluding Patheon
violated the cGMP requirements set forth in 21 C.F.R. §§ 211.100, 211.186, 211.188).
223
Marshall Tr. at 1861–1862; Marshall Rep. ¶ 105; Elder Rep. ¶ 106 (“There is no
information contained within this Change Control Report that demonstrates that the
differences between the [Suite] 1 and [Suite] 2 [] were identified and evaluated prior to
implementation of this change. . . . which is a violation of cGMP and 21 C.F.R §
211.100.”); Sharpnack Rep. ¶ 84 (“Patheon failed to properly evaluate the differences
between Suite #1 and Suite #2 and the impact the manufacturing differences may have had
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commercial batches, not to the development or ‘scale-up’ batches being

manufactured by Patheon in this case.”224 As explained, I disagree. I give no weight

to Gupta’s opinion that Patheon satisfied cGMP requirements.

4. Analysis

Patheon’s switch to Suite 2 failed to comply with Part 211.100 by failing to

evaluate what further testing might be necessary to ensure drug product quality.225

Section 211.100 mandates the implementation of “process control designed to assure

that the drug products have the identity, strength, quality, and purity they purport”

and that “[a]ny deviation from the written procedures shall be recorded and

justified.”226 By failing to undertake an evaluation of the differences until after the

discovery of the particulate, Patheon failed to ensure the DP Lots’ quality and purity

on product quality, in violation of cGMP requirements, per 21 CFR §§ 211.100 and
211.63.”).
224
Gupta Rep. ¶¶ 131–37. Gupta opined she saw “no evidence” Patheon failed to comply
with change control requirements and further noted that based on “my experience from
prior inspections at Patheon . . . [it] most certainly documented the change from Suite 1 to
Suite 2.” Id. ¶ 132.
225
21 CFR §§ 211.100(b) (“Written production and process control procedures shall be
followed in the execution of the various production and process control functions. . . . Any
deviation from the written procedures shall be recorded and justified.”). Patheon’s root
cause analysis reveals the significant difference between Suite 1 and Suite 2 was not
evaluated under after visible particles appeared in the DP Lots. JX 800; see Marshall
Report ¶¶ 101–04.
226
21 CFR §§ 211.100(a)–(b).
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would not be impacted by Suite 2.

Section 211.63 mandates that equipment used in the manufacturing process

for a drug product “shall be of appropriate design, adequate size, and suitably

located” for its intended use.227 Patheon used Suite 2 to fill over 8,900 vials of drug

product to be used in a Phase 2 study.228 Patheon failed to evaluate whether Suite 2

was suitable to produce the drug product.229 The subsequent root cause analysis

“determined that a potential root cause could be attributed to a change in Suites and

Equipment.”230 Patheon’s use of Suite 2 without evaluating its suitability for the

production of drug product for a Phase 2 Study constitutes a failure to comply with

Section 211.63’s cGMP requirements.231

Patheon’s cGMP violations were material.232 The differences between Suite

1 and Suite 2 were significant, yet Patheon failed to evaluate those differences until

227
Id. § 211.63.
228
JX 804 at 13; JX 799; Marshall Tr. 1852–57.
229
JX 800; see Marshall Rep. ¶¶ 97–106.
230
JX 800 at 8; JX 799.
231
21 CFR § 211.63 (“Equipment used in the manufacture, processing, packing, or holding
of a drug product shall be of appropriate design, adequate size, and suitably located to
facilitate operations for its intended use and for its cleaning and maintenance.”).
232
Akorn, 2018 WL 4719347, at *85.
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three months after processing the DP Lots.233 They resulted in the required

destruction of over 8,900 vials of drug product.234 Patheon’s lack of oversight in

switching to Suite 2 derailed Alexion’s planned clinical trial schedule and frustrated

the very purpose of Section 4.13(a).235 Patheon’s cGMP deviations constitute a

material failure of cGMP, and therefore a breach of Section 4.13(a).

D. Indemnification

Alexion and Syntimmune agreed to a specific regime governing

indemnification for breached representations. Section 8.2 of the Merger Agreement

provides for indemnification against “Losses . . . arising out of or resulting from . . .

any breach of any covenant” in the Merger Agreement.236 The Merger Agreement

defines “Losses” as “costs and expenses, including reasonable attorneys’ fees and

expenses” resulting from “any breach of any representation or warranty of

[Syntimmune] contained in Article IV[.]”237 Section 8.3 sets forth specific

233
JX 1338 at 2–3; see JX 799 (highlighting the differences between Suite 1 and Suite 2).
234
JX 1338 at 8 (“Customer signature on the investigation authorizes rejection and
destruction of the batches AJ8794A and AK3858B impacted by this deviation per site
processes.”).
235
JX 816 at 15–25 (describing the delay on planned clinical studies).
236
Merger Agr. § 8.2.
237
Id. §§ 8.1–8.1(a). Alexion does not seek attorneys’ fees. DB Exp. 17 n.69.
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requirements on a party submitting a direct claim for indemnification.238

On November 1, 2019, Alexion submitted notice of its direct claim for

indemnification under Section 8.1(a).239 The basis for Alexion’s direct claim was

the “impurities in the Company’s supplies of drug substance” which rendered “th[e]

drug product unusable.”240 Alexion’s notice claimed the impurities with the drug

substance and drug product resulted from a breach of Section 4.13(a).241 The notice

asserted Syntimmune breached Section 4.13(a) in the manufacture of DS Lots CMS-

L-0125, CMC-L-009, and CMC-L-0079.242 The notice stated the amount of its

direct claim was for “the replacement batches of drug substance and drug product”

which Alexion valued at the time of $6,983,361.08.243 In addition to the replacement

costs, Alexion noted it “suffered additional Losses” in the form of substantial delays

238
These include specific notice requirements. Merger Agr. § 8.3(d). While SRS claims
the DP and DS issues Alexion complains of were disclosed before closing, SRS does not
claim Alexion’s notice failed to comply with Section 8.3’s requirements. SRS Op. Br. 89–
90.
239
JX 1202.
240
Id. at 1.
241
Id. (“[T]he Impurity and Stability Issues resulted from the failure of the Product
Candidates to be (and at all times to have been) manufactured in compliance in all material
respects with the FDA’s good manufacturing practices (‘GMP’) in effect at the time of the
Closing.”).
242
Id. at 1–2. DS Lot CMC-L-0079 became DP Lot AJ8794A. Alexion II, 2025 WL
1089166, at *3 n.34.
243
JX 1202 at 2.
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to its planned clinical studies.244

I take on the replacement costs first. Alexion seeks $13,368,796.33 for the

direct costs and expenses it incurred to manufacture replacement DS and DP, and

personnel costs to investigate and remediate Syntimmune’s cGMP failures.245 To

replace DS Lots CMC-L-0125 and CMC-M-0009, Alexion had to manufacture two

replacement drug substance lots at 2000L scale and at the 50mg/mL

concentration.246 Alexion manufactured CMC-N-0040 to replace DS Lot CMC-L-

0125, at a cost of $2,590,669.60.247 Alexion manufactured CMC-N-0041 to replace

DS Lot CMC-M-0009, at a cost of $2,490,997.53.248 As for DP Lots, Alexion

manufactured drug substance lot CMC-N-0039 to replace DP Lot AJ8794, at a cost

244
Id.
245
DB Exp. 18–21; ALXN Op. Br. 37–44. While Alexion claims its actual costs were
more than $16.6 million, the amount claimed subtracts out a settlement between Alexion
and AGC. See JX1242; DB Exp. 18 n. 70. Alexion also sought indemnification in the
amount of $2,540,958.38 for the costs incurred to replace DS Lot CMC-M-0010. DB Exp.
18; Marshall Rep. ¶ 131. But the Court ruled “CMC-M-0010 was not intended for human
use,” and therefore is not included under Section 4.13(a)’s representations. Alexion, 2025
WL 1089166, at *1 n. 6.
246
Marshall Rep. ¶ 128. DS Lot CMC-L-0125 was filled into 2,053 5mL vials of finished
drug product at Patheon, but Alexion does not seek to recover “an additional allocation for
filling replacement drug product vials to replace this 15L stability drug product fill.” Id. ¶
128 n. 157; see JX 804 at 5.
247
JX 1754.02 at ALXN1830; Marshall Rep. ¶ 128 n.159; see JX 1027; JX 1593.03; JX
1081; JX 1148; JX 1031; JX 1257.04; JX 1184.
248
Marshall Rep. ¶ 128 n.162; see JX 1027; JX 1128; JX 1201; JX 1697; JX 4002; JX
1247.
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of $2,821,208.249 DP Lot AK3858 was filled from DS Lot CMC-L-0125, which was

replaced with CMC-N-0040.250 To replace DP Lots AF6404A and AG3356A,

Alexion manufactured CMC-N-0018, which was filled into drug product lot

028G19A, at a cost of $3,212,681.20.251

SRS’s argument against indemnification of those costs is limited to restricting

the lots. SRS argues Alexion is limited to seeking indemnification for the

replacement costs of the three specific DS Lots identified in Alexion’s

Counterclaim: CMC-N-0039, CMC-N-0040, and CMC-N-0041.252 The Court

previously ruled that DP Lots AK3858, AF6404A, and AG3356A were tried by

consent.253 So the fact that they were not identified in the Counterclaim is no reason

to exclude them from indemnification.254 Alexion is entitled to $11,115,556.33 in

249
JX 1754.02 at ALXN1830; Marshall Rep. ¶ 129 n.165; see JX 948; JX 1147; JX 1250;
JX 940; JX 1183; JX 4003 at 17.
250
Alexion II, 2025 WL 1089166, at *3 n.35.
251
JX 1754.02 at ALXN1830; Marshall Rep. ¶ 130 n.169; see JX 948; JX 1249.07; JX
1249.06; JX 1249.05; JX 1249.04; JX 1249.04; JX 1249.04; JX 1249.03; JX 1132.03; JX
4003 at 17.
SRS Ans. Br. 50–1; Counterclaim ¶ 113. To be clear, SRS’s argument is based on the
252

Counterclaim, not Alexion’s initial indemnification notice.
253
Alexion II, 2025 WL 1089166, at *3 n.42.
254
Id.; see Zutrau v. Jansing, 2014 WL 6901461, at *3 (Del. Ch. Dec. 8, 2014), aff’d, 123
A.3d 938 (Del. 2015) (noting Rule 15(b) is “intended to correct the theory of an existing
claim and not to assert new or different claims” (internal quotation omitted)).
S’holder Representative Servs. LLC v. Alexion Pharms., Inc.,
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May 27, 2026
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costs to manufacture replacement drug substance and drug product lots due to

Syntimmune’s breach of Section 4.13(a).255

Alexion also seeks indemnification to cover the personnel cost for twelve

employees it claims investigated and remediated Syntimmune’s cGMP failures.256

Alexion relies on its expert Yogesh Bahl’s analysis to substantiate that request.257

But the Court struck Bahl’s report from the record as untimely and precluded Bahl

from testifying.258 Alexion fails to provide any other evidence of personnel costs.

Alexion is not entitled to indemnification of those costs.

Finally, Alexion seeks to recover “benefit-of-the-bargain damages” based on

the amount that would put Alexion in the position it would have been in if

Syntimmune’s representation in Section 4.13(a) had been true.259 Alexion claims if

255
Merger Agr. § 4.13(a).
256
ALXN Op. Br. 38 n.157 (citing JX2551); JX 2551 (Bahl CRE Rebuttal Report).
257
ALXN Op. Br. 38; DB Exp. 18–20; DB Exp. 20 n.77 (“In addition, but-for the Court’s
order excluding such testimony [ ], Alexion would have offered the expert testimony of
Yogesh Bahl quantifying the damages, including diminution in value damages, that
Alexion suffered as a result of Syntimmune’s breaches of §4.13.”). Alexion seeks
$300,000 per FTE associated with its remediation and replacement efforts and argues
Marshall’s report provides evidence of this expenditure (ALXN Op. Br. 38–39), but
Marshall’s report fails to calculate an FTE cost. Marshall Rep. ¶ 126 (noting he spoke with
two Syntimmune employees and concluding “it is my opinion that utilizing 7 FTEs for an
investigation and mitigation effort of this scale is typical and reasonable”).
258
D.I. 272.
259
ALXN Op. Br. 39–44.
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it had known clinical trials would be delayed by a year, it would have sought “a very

different deal with a very different up-front and earnout” structure.260 Alexion seeks

the contractual maximum of half the purchase price, which Alexion calculates in

briefing at $374,854,080.261

As SRS points out, this figure is wholly unsupported by any evidence. Under

Delaware law, the standard remedy for breach of contract is based upon the parties’

ex ante reasonable expectations.262 “Expectation damages are calculated as the

amount of money that would put the non-breaching party in the same position that

the party would have been in had the breach never occurred.”263 The Supreme Court

has explained “expectation damages must be proven with reasonable certainty, and

‘no recovery can be had for loss of profits which are determined to be uncertain,

contingent, conjectural, or speculative.’”264 While the law does not “require

260
Id. (quoting Sarin Tr. 980).
261
Merger Agr. § 8.4(a); ALXN Op. Br. 43; DB Exp. 21 (calculating half the purchase
price).
262
Siga Techs., Inc. v. PharmAthene, Inc., 132 A.3d 1108, 1130–31 (Del. 2015); E.I.
DuPont de Nemours & Co. v. Pressman, 679 A.2d 436, 445 (Del. 1996) (observing that
“damages for breach of contract have been limited to the non–breaching
parties’ expectation interest”).
263
Cobalt Operating, LLC v. James Crystal Enters., 2007 WL 2142926, at *29 (Del. Ch.
July 20, 2007), aff’d, 945 A.2d 594 (Del. 2008).
264
Siga Techs., Inc., 132 A.3d at 1131 (quoting SIGA Techs., Inc. v. PharmAthene, Inc.,
67 A.3d 330, 351 (Del. 2013)).
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certainty in the award of damages where a wrong has been proven and injury

established,” mere speculation is insufficient to provide the Court with a responsible

estimate of damages.265 Plaintiffs must prove their damages by a preponderance of

the evidence.266 “[W]hen acting as the fact finder, this Court may not

set damages based on mere ‘speculation or conjecture’ where a plaintiff fails to

adequately prove damages.”267

Even assuming the cGMP violations delayed Alexion’s progress by a year,268

and even if the cost of that delay would put Alexion back in the position it expected

to be in but for the breaches of Section 4.13, Alexion did not provide any estimate

for the cost of that delay at trial. Alexion first tried to prove it was out half the

purchase price through an expert witness, but that expert was excluded before trial

because his report was untimely.269 At trial, Alexion’s lead negotiator and later CFO,

Dr. Aradhana Sarin, testified the delay had some unquantified effect on the value of

265
Delaware Exp. Shuttle, Inc. v. Older, 2002 WL 31458243, at *17 (Del. Ch. Oct. 23,
2002).
266
Beard Rsch., Inc., 8 A.3d at 613.
267
Id. (quoting Medek v. Medek, 2009 WL 2005365, at *12 n.78 (Del.Ch. July 1, 2009)).
268
Sarin Tr. 974.
269
D.I. 272 (striking the expert report and precluding expert testimony from Yogesh Bahl);
see D.I. 257 ¶¶ 22–31 (arguing Alexion did not identify its diminution of value theory,
which Bahl was going to present, until after the expert disclosure deadline); D.I. 266 ¶¶
17–23; D.I. 269.
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the deal. Sarin testified:

[H]ad we known that we would not have cGMP product to start studies
right away and it would be a year later that we would actually be able
to dose patients, you know, it would have had an impact on value, it
would have had an impact on whether we even pursued it or not. You
don't want to be fourth to market. That's just not a good position to be
in. So I think it would have been very different had we known that we
wouldn't be able to start right away, and it would take -- you know,
would be delayed by a year. That's a very different value and
commercial proposition.270

Sarin testified knowledge of the cGMP manufacturing issues would have impacted

the “commercial sensitivity” of the deal, including the net present value (“NPV”) of

the deal.271 Sarin also testified that the success rate of Alexion’s sensitivity models

factored in the potential success rate of clinical trials.272 Sarin did not quantify the

value of the one-year delay.

There is no record evidence in the record of that value. Alexion’s argument

that it is entitled to approximately $350 million in damages relies solely on Sarin’s

testimony on the impact the problematic DS and DP Lots had on Syntimmune’s

value. Alexion concedes it did not quantify these damages, as it was relying on the

270
Sarin Tr. 974–75.
271
Id. 977–79 (testifying to the commercial sensitivity reflected on JX 609 at 29); see JX
609 at 29.
272
Sarin Tr. 1021–22.
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expert who was excluded before trial.273 Alexion’s contentions as to the value of

Syntimmune’s breach are entirely speculative and insufficient under Delaware

law.274

E. Conclusion

For the foregoing reasons, Alexion is entitled to indemnification in the amount

of $11,115,556.33. The parties shall confer and submit a proposed implementing

order for the Court’s consideration, and a final order and judgment for this case.

Sincerely,

/s/ Morgan T. Zurn

Vice Chancellor

MTZ/ms

cc: All Counsel of Record, via File & ServeXpress

273
DB Exp. 20 n.77.
274
E.g., In re Mobilactive Media, LLC, 2013 WL 297950, at *24 (Del. Ch. Jan. 25,
2013); Doft & Co. v. Travelocity.com Inc., 2004 WL 1152338, at *5–6 (Del. Ch. May 21,
2004) (finding management projections unreliable in the context of an appraisal action
because, among other reasons, management themselves did not regard them as reliable);
OptimisCorp v. Waite, 2015 WL 5147038, at *82 (Del. Ch. Aug. 26, 2015) (holding that
the court cannot award speculative damages), aff’d, 137 A.3d 970 (Del. 2016); Ivize of
Milwaukee, LLC v. Compex Litig. Supp., LLC, 2009 WL 1111179, at *11 (Del. Ch. Apr.
27, 2009) (same); Am. Gen. Corp. v. Cont’l Airlines Corp., 622 A.2d 1, 12 (Del. Ch.
1992) (same); Twardowski v. Jester, 163 A.2d 242, 224 (Del. Ch. 1960) (same).