Free Declaration in Support - District Court of California - California

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F.T. Alexandra Mahaney, State Bar No. 125984 WILSON SONSINI GOODRICH & ROSATI Professional Corporation 12235 El Camino Real, Suite 200 San Diego, CA 92130 Telephone: (858) 350-2300 Facsimile: (858) 350-2399 Email: [email protected] Bruce R. Genderson (admitted pro hac vice) Aaron P. Maurer (admitted pro hac vice) Rachel Shanahan Rodman (admitted pro hac vice) Adam D. Harber (admitted pro hac vice) WILLIAMS & CONNOLLY LLP 725 Twelfth St. NW Washington, DC 20005 Telephone: (202) 434-5000 Facsimile: (202) 434-5029 Attorneys for Defendant and Counterclaimant SENORX, INC. IN THE UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION HOLOGIC, INC., CYTYC CORPORATION and ) HOLOGIC L.P., ) ) Plaintiffs, ) ) v. ) ) SENORX, INC., ) ) Defendant. ) ) ) ) SENORX, INC., ) ) Counterclaimant, ) ) v. ) ) HOLOGIC, INC., CYTYC CORPORATION and ) HOLOGIC L.P., ) ) Counterdefendants. )

Case No. 08-CV-0133 RMW DECLARATION OF ROY WEINSTEIN IN SUPPORT OF DEFENDANT SENORX, INC.'S OPPOSITION TO PLAINTIFFS' MOTION FOR A PRELIMINARY INJUNCTION REDACTED VERSION

Date: April 21, 2008 Time: 2:00 p.m. Courtroom: 6, 4th Floor Judge: Hon. Ronald M. Whyte

DECLARATION OF ROY WEINSTEIN

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I.

INTRODUCTION 1. I am an economist and President of Micronomics, Inc., an economic research and

consulting firm located in Los Angeles, California. I have more than 38 years of consulting experience analyzing questions relating to industrial organization, competitive impact, patent damages, the valuation of intellectual property, antitrust economics, and the collection, tabulation and analysis of various types of economic and statistical data. I have spoken on these subjects before the National Association of Attorneys General, the American Bar Association, the Steering Committee of the California Society of Certified Public Accountants, the Los Angeles County Bar Association, the UCLA Institute on Mergers and Acquisitions, and the Midwest Economics Association. My articles have appeared in the Journal of the Patent and Trademark Office Society, The Journal of Law and Technology, The Licensing Journal, The Antitrust Bulletin, The International Journal of the Economics of Business, the California State Bar Journal, and Competition, the Journal of the Antitrust and Trade Regulation Law Section of the State Bar of California. 2. I have extensive experience pertaining to the valuation of intellectual property in

the context of patent infringement litigation and have been asked to calculate damages adequate to compensate for patent infringement on at least 35 separate occasions. I also have extensive experience involving medical devices, the prescription drug industry, and managed care. Detailed biographical information, including a list of the matters in which I have given testimony, either by deposition or at trial, is attached at Exhibit 1. My billing rate is $650 per hour. I also have been assisted by members of my staff. II. ASSIGNMENT 3. I have been asked by counsel for SenoRx, Inc. ("SenoRx") to consider whether

Hologic, Inc., Cytyc Corporation ("Cytyc"), and Hologic L.P. (collectively "Hologic") would suffer "irreparable harm" if SenoRx is allowed to continue to market its Contura Multi-Lumen Balloon ("Contura") product through the end of trial.1
1

In that regard, I understand that

Cytyc Corporation and Hologic L.P. are subsidiaries of Hologic, Inc. Hologic, Inc. Form 10-K for the fiscal year ended September 29, 2007, Exhibit 21.01, Subsidiaries of Hologic.
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"irreparable" harm is injury that cannot be quantified as monetary damages or for which the injured party cannot be made whole by the party causing the damage. 4. In performing my analysis, I have reviewed pleadings, including Plaintiffs' Notice

of Motion and Motion for Preliminary Injunction ("Motion"), the Declaration of Glenn Magnuson in Support of Plaintiffs' Motion for Preliminary Injunction ("Magnuson Declaration"), deposition testimony, and the patents asserted by Hologic. In addition, I have reviewed publicly available trade press and studies concerning accelerated partial breast irradiation ("APBI") and brachytherapy treatments. I also have reviewed financial statements of SenoRx and Hologic as well as SenoRx presentations and records. In arriving at my opinions, I have relied on my training as an economist, my knowledge and experience regarding the medical device and prescription pharmaceutical industries, and the economics of entry and competition. A summary of the

materials considered in connection with my assignment is attached at Exhibit 2. 5. I will supplement this declaration should that be necessary in order to consider

additional information that might become available, including documents, court filings and witness testimony. III. SUMMARY AND CONCLUSIONS 6. I have concluded that neither the entry nor the continued sales of Contura by

SenoRx would inflict irreparable harm on Hologic. First, the economic impact caused by such sales would be readily calculable and remediable through an award of money damages at the end of trial. Second, Third, Hologic already licensed a competing APBI treatment system and invested in another competitor, Cianna Medical, Inc. ("Cianna Medical"). Finally, continued sales of Contura will not otherwise inflict irreparable harm to Hologic as a result of loss of reputation, damage to the APBI market, irrecoverable investments in research and development, or competitive entry. 7. I also have determined that the balance of harms does not support granting an

injunction. Hologic is "one of the world's largest companies focused on advanced technology in

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women's health," is diversified, and generates significant revenue from a wide array of products.2 Sales of MammoSite in the company's most recent fiscal quarter accounted for a very small fraction of overall revenue.

Lost profits and market share for SenoRx will not be recoverable if an injunction is granted. BACKGROUND A. 8. Therapeutic Category My understanding is that breast cancer patients may be treated with "breast-

7 IV. 8 9 10 11 12 13 14 15 16 17 18
2

conserving therapy," commonly referred to as lumpectomy, as an alternative to full mastectomy surgery.4 When supplemented by whole-breast irradiation therapy, lumpectomy can treat earlystage breast cancer as effectively as mastectomy.5 Indeed, lumpectomy followed by whole-breast irradiation confers certain benefits, including conservation of non-cancerous breast tissue.6 While useful in reducing recurrence of cancer, however, whole-breast irradiation also entails drawbacks. Treatment is lengthy, lasting five to six weeks, and healthy breast tissue is unnecessarily exposed to radiation.7 It is theorized that these factors cause as many as 20 percent of eligible patients to forgo radiation treatment following lumpectomy.8

19
3

"Hologic and Cytyc Complete Merger," Hologic 2007 News Release, October 22, 2007.

20 21 22 23 24
6 4

"Accelerated Partial Breast Irradiation as Sole Radiotherapy After Breast-Conserving Surgery for Early Stage Breast Cancer," Blue Cross and Blue Shield Association Technology Evaluation Center Assessment Program, Volume 22, No. 4, August 2007, p. 1.
5

Id.

25 26 27 28

Cytyc Corporation Form 10-K/A (Amendment No. 2) for the fiscal year ended December 31, 2006, p. 5. "Accelerated Partial Breast Irradiation as Sole Radiotherapy After Breast-Conserving Surgery for Early Stage Breast Cancer," Blue Cross and Blue Shield Association Technology Evaluation Center Assessment Program, Volume 22, No. 4, August 2007, p. 1.
8 7

Hologic, Inc. Form 10-K for the fiscal year ended September 29, 2007, p. 12. -3CASE NO. 08-CV-0133 RMW

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11

9.

APBI, on the other hand, targets radiation treatment to only the breast area from

which the tumor was excised.9 Radiation exposure to healthy breast tissue is thereby diminished, and therapy is completed in four or five days, markedly shorter than the treatment period required for whole-breast irradiation.10 By reducing radiation exposure and treatment duration, it is

believed that APBI could induce more women to undergo post-lumpectomy radiation therapy and thus improve overall health outcomes for breast cancer patients.11 10. APBI can be administered via one of a variety of methods, including interstitial

brachytherapy, balloon brachytherapy (a form of interstitial brachytherapy), intensity-modulated therapy, 3-dimensional conformal radiotherapy, and intraoperative radiotherapy.12 Each treatment technique involves unique benefits and risks.13 Balloon brachytherapy, for example, is prone to dose inhomogeneity and underdosing portions of the targeted area.14 Because lumpectomy

cavities often are irregularly shaped, the spherical source design of balloon brachytherapy catheters can result in poor conformance to the cavity wall.15 B. 11. Products In May 2002, the MammoSite radiation therapy system ("MammoSite") received

510(k) marketing clearance by the U.S. Food and Drug Administration ("FDA") as "substantially
9

"Accelerated Partial Breast Irradiation as Sole Radiotherapy After Breast-Conserving Surgery for Early Stage Breast Cancer," Blue Cross and Blue Shield Association Technology Evaluation Center Assessment Program, Volume 22, No. 4, August 2007, p. 1.
10

Id.

21 22 23 24 25 26 27

"Accelerated Partial Breast Irradiation as Sole Radiotherapy After Breast-Conserving Surgery for Early Stage Breast Cancer," Blue Cross and Blue Shield Association Technology Evaluation Center Assessment Program, Volume 22, No. 4, August 2007, p. 3. "Accelerated Partial Breast Irradiation as Sole Radiotherapy After Breast-Conserving Surgery for Early Stage Breast Cancer," Blue Cross and Blue Shield Association Technology Evaluation Center Assessment Program, Volume 22, No. 4, August 2007, p. 1. "Accelerated Partial Breast Irradiation as Sole Radiotherapy After Breast-Conserving Surgery for Early Stage Breast Cancer," Blue Cross and Blue Shield Association Technology Evaluation Center Assessment Program, Volume 22, No. 4, August 2007, p. 9.
14 15 13 12

Id.

28

Id.; SenoRx, Inc. Form S-1/A Registration Statement (Amendment No. 3), filed February 21, 2007, p. 2.
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equivalent to other commercially available brachytherapy applicators used with sealed radiation sources."16 MammoSite is a balloon brachytherapy device originally marketed by Proxima

Therapeutics, Inc. ("Proxima").17 Following a series of acquisitions, MammoSite is now marketed by Hologic.18 The MammoSite device comprises a "dual lumen catheter with a silicon balloon and an applicator shaft that permits access through an external port" for administration of radiation.19 12. Other brachytherapy systems also have received 510(k) FDA clearance. In

December 2005, Xoft was cleared to market its Axxent Electronic Radiotherapy device ("Axxent"), a balloon brachytherapy system.20 BioLucent, Inc. ("BioLucent") received clearance in October 2006 for its Strut-Adjusted Volume Implant ("SAVI"), a remote controlled radionuclide applicator that combines elements of interstitial brachytherapy and balloon brachytherapy.21 In November 2006, the North American Scientific, Inc. ("North American

Scientific") Adjustable Multi-Catheter Source Applicator, ClearPath, was cleared.22 Finally, in

"Accelerated Partial Breast Irradiation as Sole Radiotherapy After Breast-Conserving Surgery for Early Stage Breast Cancer," Blue Cross and Blue Shield Association Technology Evaluation Center Assessment Program, Volume 22, No. 4, August 2007, p. 3; 510(k) Summary of Safety and Effectiveness, dated May 6, 2002. "Proxima Therapeutics Announces FDA Clearance of MammoSite RTS, a Tumor SiteSpecific Radiation Therapy System for Breast Cancer," BW HealthWire, May 6, 2007; Cytyc Corporation Form 10-K/A (Amendment No. 2) for the fiscal year ended December 31, 2006, p. 16.
18 19 17

16

Hologic, Inc. Form 10-K for the fiscal year ended September 29, 2007, p. 12.

"Accelerated Partial Breast Irradiation as Sole Radiotherapy After Breast-Conserving Surgery for Early Stage Breast Cancer," Blue Cross and Blue Shield Association Technology Evaluation Center Assessment Program, Volume 22, No. 4, August 2007, p. 14. "Accelerated Partial Breast Irradiation as Sole Radiotherapy After Breast-Conserving Surgery for Early Stage Breast Cancer," Blue Cross and Blue Shield Association Technology Evaluation Center Assessment Program, Volume 22, No. 4, August 2007, p. 15. Id.; Cianna Medical is now responsible for development and sales of SAVI. "Cianna Medical Will Continue Innovation in SAVI Breast Brachytherapy Begun by BioLucent," Press Release, September 20, 2007. "Accelerated Partial Breast Irradiation as Sole Radiotherapy After Breast-Conserving Surgery for Early Stage Breast Cancer," Blue Cross and Blue Shield Association Technology Evaluation Center Assessment Program, Volume 22, No. 4, August 2007, p. 15; "North (continued...) DECLARATION ROY WEINSTEIN CASE NO. 08-CV-0133 RMW -522 21 20

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May 2007, SenoRx received marketing clearance for its SenoRad Multi-Lumen Balloon Source Applicator for Brachytherapy.23 The SenoRx product is marketed under the name Contura. 13. Contura was first sold by SenoRx in June 2007 and was fully commercially

launched on January 17, 2008.24 At the time of launch, SenoRx expected Contura to assist in promoting use of APBI as an alternative to whole-breast irradiation treatment in eligible patients. In addition, the Contura "multi-lumen design" was meant to make APBI treatment available to certain patients previously excluded from brachytherapy due to breast size and location of the lesion.25 Some "clinical sites are already reporting...that they are in fact able to treat patients that they don't believe they have been in the past."26 The Contura also was designed to address drawbacks to balloon brachytherapy, including dosing imprecision stemming from poor balloon conformance within the lumpectomy cavity.27 Vacuum suction assists in removing fluid around the balloon to improve treatment delivery.28 C. 14. Patents at Issue On July 2, 2002, Proxima was assigned U.S. Patent No. 6,413,204 ("the `204

patent"), which relates to "Interstitial brachytherapy apparatus and method for treatment of

(...continued from previous page) American Scientific Announces FDA Clearance of its ClearPath HDR Breast Brachytherapy System," North American Scientific Press Release, November 14, 2006. "Accelerated Partial Breast Irradiation as Sole Radiotherapy After Breast-Conserving Surgery for Early Stage Breast Cancer," Blue Cross and Blue Shield Association Technology Evaluation Center Assessment Program, Volume 22, No. 4, August 2007, p. 15; "SenoRx Announces 510(k) Clearance for its Multi-Lumen Radiation Balloon," Press Release, May 23, 2007. SenoRx, Inc. Form 10-Q for the period ended September 30, 2007, p. 15; "SenoRx Announces First Uses of its Multi-Lumen Radiation Balloon; Company Records First Commercial Sales of New Product," Press Release, June 28, 2007; "SenoRx Launches Contura MLB," Press Release, January 17, 2008.
25 26 24 23

"SenoRx Launches Contura MLB," Press Release, January 17, 2008.

Factset: Callstreet Raw Transcript, SenoRx, Inc. Q4 2007 Earnings Call, February 19, 2008, p. 11.
27 28

"SenoRx Launches Contura MLB," Press Release, January 17, 2008. Id.; Pacific Growth Equities analyst report, SenoRx, Inc., February 15, 2008, p. 2. -6CASE NO. 08-CV-0133 RMW

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proliferative tissue diseases." Proxima obtained U.S. Patent No. 6,482,142 ("the `142 patent"), entitled "Asymmetric radiation dosing apparatus and method," on November 19, 2002. The `204 and `142 patents (collectively "patents in suit") were acquired by Cytyc through its purchase of Proxima in March 2005.29 On October 22, 2007, Cytyc was acquired by Hologic, Inc., resulting in accrual of the patents in suit to Hologic.30 15. I understand that on December 22, 2005, Xoft filed suit against Cytyc and Proxima

with regard to the patents in suit and additional patents, alleging them invalid and not infringed by Xoft.31 This lawsuit settled on August 13,

D. 16.

Parties Hologic is a medical technologies company that specializes in diagnostic imaging

products and interventional devices for women's health.33 On October 22, 2007, Hologic merged with Cytyc to create "one of the largest companies in the world focused on advanced technology in women's health."34 The combined entity sells mammography and breast care products,

osteoporosis assessment instruments, imaging systems, diagnostic products, and surgical products.35 MammoSite is one of four surgical systems marketed by Hologic and is now a part of Hologic's Breast Health segment.36
29

Cytyc Corporation Form 10-K/A (Amendment No. 2) for the fiscal year ended December 31, 2006, pp. 16 and 34.
30 31

Hologic, Inc. Form 10-K for the fiscal year ended September 29, 2007, pp. 3 and 5.

Cytyc Corporation Form 10-K/A (Amendment No. 2) for the fiscal year ended December 31, 2006, p. 23.
32

Cytyc Form 8-K, Exhibit 99.1, Cytyc and Xoft Settle Intellectual Property Dispute, Press Release dated August 15, 2007.
33 34

Hologic, Inc. Form 10-K for the fiscal year ended September 29, 2007, p. 3. "Hologic and Cytyc Complete Merger," Hologic 2007 News Release, October 22, 2007. Hologic, Inc. Form 10-K for the fiscal year ended September 29, 2007, pp. 5-12.

26
35

27
36

28

Hologic, Inc. Form 10-K for the fiscal year ended September 29, 2007, pp. 11-12; Hologic, Inc. Form 10-Q/A (Amendment No. 1) for the period ended December 29, 2007, pp. 43-44.
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37 38 39

17.

Hologic total revenue for the fiscal year ended September 29, 2007 was

approximately $738.4 million.37 This figure excludes revenue from Cytyc, as the merger between the companies was not completed until after the close of the Hologic fiscal year.38 Cytyc total revenue for its fiscal year ended December 31, 2006 was approximately $608.3 million.39 As a combined entity, revenue for the quarter ended December 29, 2007 exceeded $371.4 million.40 Reported sales of MammoSite were approximately $7.8 million during this quarterly period.41 Comparative income statements for Hologic and Cytyc are set forth at Exhibit 3. A summary of MammoSite sales is attached as Exhibit 4. 18. SenoRx was incorporated in 1998.42 Until 2002, SenoRx was principally involved

in the development and regulatory clearance of biopsy tissue markers and breast biopsy systems.43 In 2008, SenoRx launched the Contura.44 SenoRx continues to develop medical devices relating to breast health, including breast surgery and breast reconstruction devices, which are expected to launch in 2009.45 SenoRx completed its initial public offering on April 3, 2007.46

Hologic, Inc. Form 10-K for the fiscal year ended September 29, 2007, p. 41. Hologic, Inc. Form 10-K for the fiscal year ended September 29, 2007, p. 5.

Cytyc Corporation Form 10-K/A (Amendment No. 2) for the fiscal year ended December 31, 2006, p. F-4. This figure includes Cytyc revenue for the 10 week period beginning October 22, 2007. Hologic, Inc. Form 10-Q/A (Amendment No. 1) for the period ended December 29, 2007, pp. 4 and 7. Reported MammoSite revenues reflect sales for the 10 week period beginning October 22, 2007. Hologic, Inc. Form 10-Q/A (Amendment No. 1) for the period ended December 29, 2007, pp. 7 and 39.
42 43 44 45 46 41 40

SenoRx, Inc. Form 10-Q for the period ended September 30, 2007, p. 13. Id. "SenoRx Launches Contura MLB," Press Release, January 17, 2008. SenoRx, Inc. Form 10-Q for the period ended September 30, 2007, p. 13. SenoRx, Inc. Form 10-Q for the period ended September 30, 2007, p. 7. -8CASE NO. 08-CV-0133 RMW

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19.

SenoRx revenue for the year ended December 31, 2007 was approximately $35.0

million.47 As of December 31, 2007, SenoRx held total assets of approximately $42.1 million and total current assets of nearly $40.6 million, including cash and cash equivalents and short term investments of approximately $27.9 million.48 Contura sales in 2007 generated $542,000 in revenue.49 SenoRx comparative financial statements are set forth at Exhibit 5. A summary of Contura sales is included at Exhibit 6. V. HOLOGIC WILL NOT BE IRREPARABLY HARMED SHOULD SENORX CONTINUE TO MARKET CONTURA 20. In the present context, I understand that "irreparable harm" constitutes injury that

cannot be quantified as monetary damages or, if quantified, for which the injured party cannot be made whole by the party causing the damage. In my opinion, Hologic would not experience "irreparable" harm should SenoRx be allowed to continue to market Contura prior to trial. A. Any Economic Damage is Recoverable Through a Monetary Award After Trial i. Any Damage to Hologic is Readily Calculable 21. It is my opinion that any harm to Hologic stemming from declines in MammoSite

revenue, unit sales, average selling price, profits, or market share could be readily monitored, calculated, and awarded as damages. Data sufficient to determine such damages presently are available and will continue to be available through the conclusion of trial. 22. Hologic tracks sales of its MammoSite product and reports revenue figures in its

public filings. In its most recent fiscal quarter, Hologic recorded $7.8 million in revenue from MammoSite sales.50 Prior to its merger with Hologic, Cytyc also tracked sales of MammoSite and

"SenoRx Reports Revenue Growth of 43.2 Percent in Q4 2007 Compared with Q4 2006," Press Release, February 19, 2008.
48 49 50

47

Id. SenoRx Fourth Quarter/FY 2007 Conference Call Notes, February 19, 2008, p. 7. Hologic, Inc. Form 10-Q/A (Amendment No. 1) for the period ended December 29, 2007,

p. 39.
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reported them in its SEC filings.51 In addition, Hologic reports business results from each of its operating segments, including Breast Health.52 For each segment, revenue and operating income generated by its products are recorded. As such, Hologic tracks expenses associated with products it sells, including MammoSite, which is part of the Breast Health segment SenoRx also closely tracks its product sales, including sales of Contura.54 23. To the extent any economic harm accrues to Hologic due to continued sales of

Contura by SenoRx, these data would be sufficient to estimate any lost profits or other economic damages. ii. Any Decreases in the Price or Market Share of MammoSite Will Be Measurable and Quantifiable as Monetary Damages 24. Any price reductions in the MammoSite would be readily observable, measurable,

and quantifiable as monetary damage. As discussed above, Hologic tracks the revenue and unit sales performance of MammoSite. Hologic's own business records could be used to monitor any price declines, for which Hologic could be remunerated with an award of price erosion damages at the conclusion of trial. 25. Were any price declines attributable to SenoRx's marketing of Contura to occur,

Hologic would be able fully to restore MammoSite price levels following removal of Contura at the conclusion of trial. Any suggestion that the price of MammoSite would be irreversibly depressed as a result of the marketing of Contura is speculative. To the extent, however, that Hologic would be unable to recover its pricing of MammoSite, forecasts of MammoSite pricing "but for" sales of Contura could be used to compute price erosion damages, a calculable measure

Cytyc Corporation Form 10-Q for the period ended June 30, 2007, p. 28; Cytyc Corporation Form 10-K/A (Amendment No. 2) for the period ended December 31, 2006, p. 32. Hologic, Inc. Form 10-Q/A (Amendment No. 1) for the period ended December 29, 2007, pp. 38 and 43-44. Declaration of Glenn Magnuson in Support of Plaintiffs' Motion for Preliminary Injunction, pp. 7-9.
54 53 52

51

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of economic harm. This is a standard approach to calculating such damage in patent infringement cases. 26. Though damages associated with any decreases in the price of MammoSite are

measurable and remediable through a monetary award, it is not apparent why MammoSite price should decline with Contura on the market

27.

28.

I understand Hologic also contends that any market share loss to Contura will be

unrecoverable because the APBI market is "nascent" and "high-growth."60 As an initial matter, it is unclear that the market in question is "nascent" or "high-growth." The MammoSite product
55

Declaration of Glenn Magnuson in Support of Plaintiffs' Motion for Preliminary Injunction, p. 9.
56 57

SenoRx, Inc. Board of Directors' Meeting Presentation, September 26, 2007, p. 14.

The suggested retail price of MammoSite is $2,750 per unit. Deposition of Glenn Magnuson, March 18, 2008, p. 133. Declaration of Glenn Magnuson in Support of Plaintiffs' Motion for Preliminary Injunction, p. 9.
59 60 58

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was cleared by the FDA in 2002; for at least five years MammoSite has been available for use.61 Prior to MammoSite, other APBI methods, including interstitial brachytherapy, had been developed for treatment of breast cancer.62 Indeed, I understand there has been a recent slowdown in the balloon brachytherapy market.64 Given that

and that a recent slowdown has been observed, it is not clear how the market can be characterized as "high-growth." 29. Regardless, any temporary MammoSite market share losses would be measurable

and recoverable at the end of trial. Moreover, if it is true, as Hologic contends, that "Hologic is the only current supplier of radionuclide-based balloon applicators for breast brachytherapy" then, upon the Contura's removal at the end of trial, MammoSite would immediately recover its share of the market.65 B. 30. SenoRx Has Assets Sufficient to Pay Any Money Judgment Likely to Be Awarded in This Matter SenoRx has more than adequate assets to fund any damages payment. SenoRx

cash and cash equivalents and short term investments held as of December 31, 2007, were valued

"Accelerated Partial Breast Irradiation as Sole Radiotherapy After Breast-Conserving Surgery for Early Stage Breast Cancer," Blue Cross and Blue Shield Association Technology Evaluation Center Assessment Program, Volume 22, No. 4, August 2007, p. 3; 510(k) Summary of Safety and Effectiveness, dated May 6, 2002. "Accelerated Partial Breast Irradiation as Sole Radiotherapy After Breast-Conserving Surgery for Early Stage Breast Cancer," Blue Cross and Blue Shield Association Technology Evaluation Center Assessment Program, Volume 22, No. 4, August 2007, p. 14. Declaration of Glenn Magnuson in Support of Plaintiffs' Motion for Preliminary Injunction, pp. 6-7.
64 63 62

61

Citigroup Global Markets Equity Research analyst report, SenoRx Inc, February 19, 2008, Plaintiffs' Notice of Motion and Motion for Preliminary Injunction, p. 21. -12CASE NO. 08-CV-0133 RMW

p. 14.
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at approximately $27.9 million.66 Total current assets were $40.6 million, and total assets equaled approximately $42.1 million as of that date.67 31. With nearly $30 million in cash, cash equivalents and short term investments alone, even if every dollar of expected Contura revenue resulted in a dollar of economic damage to Hologic, the assets discussed above are sufficient to pay such an award. 32. Moreover, total Contura revenue significantly overstates likely damages from the

alleged infringement.

C. 33.

Hologic's License Competitive Harm is Not Irreparable

Demonstrates

"SenoRx Reports Revenue Growth of 43.2 Percent in Q4 2007 Compared with Q4 2006," Press Release, February 19, 2008.
67 68 69

66

Id. SenoRx, Inc. General Session Presentation of 2008 Operating Plan, pp. 92 and 109.

Declaration of Glenn Magnuson in Support of Plaintiffs' Motion for Preliminary Injunction, p. 7.
71

70

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72 73

34.

D.

Other Aspects of Alleged Irreparable Harm i. Hologic Will Not Suffer Any Loss of Reputation

35.

I understand, however, that it is a matter of contention whether Contura even infringes the patents in suit. I also understand that there are questions of validity regarding those patents. Hence, if it is proven either that Contura does not infringe Hologic's patents or that those patents are invalid, then Contura's marketing will have no relation to Hologic's intellectual property position. Additionally, Hologic already has sent a message that it will seek to enforce its intellectual property rights by filing a patent infringement suit against

Deposition of Glenn Magnuson, March 18, 2008, p. 208.

"Cianna Medical Will Continue Innovation in SAVI Breast Brachytherapy Begun by BioLucent," September 20, 2007.
74 75

"SAVI Breast Brachytherapy Reaches 100-Patient Milestone," October 22, 2007.

"Cianna Medical Will Continue Innovation in SAVI Breast Brachytherapy Begun by BioLucent," September 20, 2007. Cianna Medical website, About Cianna (www.ciannamedical.com). Declaration of Glenn Magnuson in Support of Plaintiffs' Motion for Preliminary Injunction, p. 10.
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SenoRx. Contura's continued marketing before trial does not undermine Hologic's reputation or indicate that Hologic will not protect its intellectual property. ii. Contura's Availability Will Not Harm the APBI Market 36.

I note, however, that other APBI treatments were available prior to MammoSite and that MammoSite received 510(k) clearance from the FDA because it was "substantially equivalent to other commercially available brachytherapy applicators."78 In addition, efforts similar to those made on behalf of MammoSite have been undertaken by SenoRx, Cianna Medical (and BioLucent before them), and Xoft. Each

of these companies has invested resources to develop, test, and refine their respective brachytherapy products. They also have sponsored symposia and publications, provided education and training, and performed clinical evaluations.79 If investing money to develop APBI products

Declaration of Glenn Magnuson in Support of Plaintiffs' Motion for Preliminary Injunction, pp. 5-6, 8. "Accelerated Partial Breast Irradiation as Sole Radiotherapy After Breast-Conserving Surgery for Early Stage Breast Cancer," Blue Cross and Blue Shield Association Technology Evaluation Center Assessment Program, Volume 22, No. 4, August 2007, p. 3; 510(k) Summary of Safety and Effectiveness, dated May 6, 2002.
79 78

77

SenoRx Announces First Uses of its Multi-Lumen Radiation Balloon; Company Records First Commercial Sales of New Product," Press Release, June 28, 2007. "SenoRx Launches Contura MLB," Press Release, January 17, 2008. Factset: Callstreet Raw Transcript, SenoRx, Inc. Q4 2007 Earnings Call, February 19, 2008, p. 2. "North American Scientific Introduces ClearPath at ASTRO," Press Release, November 8, 2006. "North American Scientific Showcases CLEARPATH-HDR at ASTRO," Press Release, November 8, 2007. "SAVI Produces Promising Results, Doctors Report at ASCO Meeting," Press Release, October 9, 2007. "SAVI Applicator for Breast Brachytherapy May Optimize Treatment and Spare Healthy Tissue, Study Finds," Press Release, October 25, 2007. "New Technology to Treat Breast Cancer Shows Promise in Early Application," University of California, San Diego Medical Center Moores Cancer Center News, November 19, 2007. "New Research at UCSD Shows SAVI Breast Brachytherapy Has Multiple Benefits," Press Release, December 5, 2007. "Momentum for Xoft's Electronic Brachytherapy (continued...) DECLARATION ROY WEINSTEIN CASE NO. 08-CV-0133 RMW -15-

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and educate physicians and the public about their use is what constitutes "creation and development" of a market, then SenoRx, Cianna Medical, and Xoft are also contributing to the development of the APBI market. iii. Sales of Contura Will Not Cause Hologic to Forgo Additional Research and Development Investment in MammoSite or Prevent Recoupment of its Investments 37. The relationship between MammoSite sales and Hologic's research and

development efforts is tenuous. During Hologic's most recent fiscal quarter, MammoSite sales accounted for no more than three percent of revenue.80 More than $360 million in revenue was generated from Hologic's sales of its broad array of other products, completely independent of MammoSite.81 Hologic has myriad revenue streams from which to draw in support of research and development.82 For a corporation as large and diversified as Hologic, a temporary decline in sales of one product ­ particularly one that accounts for such a small proportion of overall revenue ­ is unlikely to have any impact on research and development efforts. 38. In addition, recovery of research and development investments in MammoSite can

be achieved whether Contura sales are allowed to continue or are enjoined. Hologic can be fully remunerated by a damages award that would place it in the same position it would have occupied "but for" Contura sales. iv. Continued Marketing of Contura Will Not Induce Competitive Entry 39. No fewer than three APBI products other than MammoSite and Contura have

received FDA 510(k) clearance.83 Those products include the Xoft Axxent, Cianna Medical

(...continued from previous page) System Grows with Six Papers Accepted for Presentation at AAPM," Press Release, July 25, 2006.
80 81 82 83

Exhibit 4. Exhibit 4. Hologic, Inc. Form 10-K for the fiscal year ended September 29, 2007, pp. 5-12.

"Accelerated Partial Breast Irradiation as Sole Radiotherapy After Breast-Conserving Surgery for Early Stage Breast Cancer," Blue Cross and Blue Shield Association Technology Evaluation Center Assessment Program, Volume 22, No. 4, August 2007, p. 15.
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SAVI, and North American Scientific ClearPath. Each of these three APBI systems received 510(k) clearance before Contura, and one of those products, the Axxent, was commercially available prior to Contura's launch.84 SAVI and ClearPath also were used to treat patients before Contura launched.85 The decisions of Xoft, Cianna Medical, and North American Scientific to market APBI products were made independent of the marketing of Contura. If the marketing of any APBI product has induced or would induce competitive entry, it is Xoft's Axxent, sales of which Cytyc itself decided to allow. Medical, a firm with no products other than the SAVI brachytherapy system.86 VI. BALANCE OF HARMS DOES NOT SUPPORT GRANTING THE INJUNCTION 40. In my opinion, the harm SenoRx will experience if the injunction is granted Cianna

exceeds that of Hologic. 41. Contura is a singularly important product for SenoRx. SenoRx only recently

completed its IPO in April 2007

Id.; Cytyc Form 8-K, Exhibit 99.1, "Cytyc and Xoft Settle Intellectual Property Dispute," Press Release dated August 15, 2007 "SAVI Breast Brachytherapy Reaches 100-Patient Milestone," Press Release, October 22, 2007; "North American Scientific Announces First ClearPath-HDR Clinical Experience," Press Release, September 28, 2007. Cianna Medical website, About Cianna (www.ciannamedical.com). Deposition of Glenn Magnuson, March 18, 2008, pp. 208 and 210. SenoRx, Inc. Board of Directors' Meeting Presentation, February 27, 2008, p. 60. SenoRx, Inc. Board of Directors' Meeting Presentation, September 26, 2007, pp. 81-82.
88 87 86 85

84

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92 93 94

42.

SenoRx has invested significant resources in developing Contura, conducting pre-

launch evaluations, and securing three patents on the product with additional patents pending.89 SenoRx expects Contura to be a substantial contributor to the company's future growth and creation of revenue.90

Lost profits and market share for SenoRx will not be recoverable if a preliminary injunction is granted. 43.

44.

Hologic, on the other hand, will not experience any unrecoverable losses. Any

harm can be quantified and awarded as monetary damages upon completion of trial. Also, unlike SenoRx, a small company with heavy dependence on the success of Contura, Hologic is a diversified corporation and "one of the world's largest companies focused on advanced technology in women's health" with little reliance on MammoSite sales.94 In fact, the overwhelming majority of Hologic's business is unrelated to MammoSite. In Hologic's most recent fiscal quarter, ended

"SenoRx Launches Contura MLB," Press Release, January 18, 2007; SenoRx, Inc. Form 10-Q for the period ended September 30, 2007, p. 15.
90 91

89

SenoRx, Inc. Form 10-Q for the period ended September 30, 2007, p. 20.

SenoRx, Inc. 2007 Operating Plan, pp. 10-11. Declaration of William Gearhart, Paragraph 21. "Hologic and Cytyc Complete Merger," Hologic 2007 News Release, October 22, 2007. -18CASE NO. 08-CV-0133 RMW

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December 29, 2007, it reported MammoSite revenue of approximately $7.8 million.95 Hologic total revenue during the period exceeded $371.4 million.96 MammoSite accounted for no more than three percent of Hologic revenue. Accordingly, it is not evident that changes in the level of MammoSite sales, up or down, would significantly affect Hologic.

95

Hologic, Inc. Form 10-Q/A (Amendment No. 1) for the period ended December 29, 2007, Hologic, Inc. Form 10-Q/A (Amendment No. 1) for the period ended December 29, 2007,

p. 39.
96

p. 4.
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