Nexus Pharmaceuticals, Inc. v. Exela Pharma Sciences, LLC

[[COURTLISTENER_SUBOPINION {"id":"11103720","type":"100trialcourt","part":"other","author":null,"source_field":"html_with_citations"}]]
IN THE UNITED STATES DISTRICT COURT 
                     FOR THE DISTRICT OF DELAWARE 
NEXUS PHARMACEUTICALS, INC., 
                        Plaintiff, 
                   Vv.                       Civil Action No. 22-1233-GBW 
EXELA PHARMA SCIENCES, LLC, 
                       Defendant. 

Kelly E. Farnan, Christine D. Haynes, RICHARDS, LAYTON & FINGER, P.A., Wilmington, 
DE; Imron T. Aly, Kevin Nelson, Matthew T. Wilkerson, Julie A. Vernon, ARENTFOX SCHIFF 
LLP, Chicago, IL; Ahmed M.T. Riaz, Max Heckendorn, ARENTFOX SCHIFF LLP, New York, 
NY. 
           Counsel for Plaintiff 
Robert M.  Oakes,  Douglas  E.  McCann,  Gregory  R.  Booker,  FISH  &  RICHARDSON  P.C., 
Wilmington,  DE;  Deanna  J.  Reichel,  Sarah  E.  Jack,  Madison  Murhammer  Colon,  FISH  & 
RICHARDSON  P.C.,  Minneapolis,  MN;  Corrin N.  Drakulich,  Christina D.  Brown-Marshall, 
Dexter S. Whitley, Charles N. Reese, FISH & RICHARDSON P.C., Atlanta, GA; Caroline G. 
Koonce, FISH & RICHARDSON P.C., Washington, DC; Satish Chintapalli,  CHINTAPALLI 
LAW FIRM PLLC, Cary, NC. 
           Counsel for Defendant 

                          MEMORANDUM OPINION 
July 18, 2025 
Wilmington, Delaware 

                                                      GREGORY B. WILLIAMS 
                                             UNITED STATES DISTRICT JUDGE 

     Pending before the  Court is Exela’s Daubert Motion to  Exclude Mr.  Hofmann’s Lost 
Profits and Price Erosion Opinions (“Motion” or “Daubert Motion”) (D.I. 204), which has been 
fully briefed (D.I. 206; D.I. 232; D.I. 254).'  For the following reasons, the Court denies Exela’s 
Daubert Motion (D.I. 204).  Exela’s Request for Oral Argument (D.I. 262) is denied-as-moot. 
L     BACKGROUND 
     This patent-infringement action concerns U.S. Patent Nos. 11,464,752 (“the *752 patent’), 
11,426,369  (“the  °369  patent”),  and  11,571,398  (“the  °398  patent”)  (together,  the  “Asserted 
Patents”).  See D.I. 200 at 1.  The Asserted Patents generally relate to  5 mg/mL ephedrine sulfate 
products. 
     Exela hired Mr. Ivan Hofmann (“Mr. Hofmann”) “to offer opinions on lost profits and price 
erosion damages.”  See D.I. 206 at 1.  In Mr. Hofmann’s reports, he opines that “Nexus would 
have made every one of Exela’s sales at three times Exela’s price” and that “Nexus would have 
made every sale it made in the actual world for $13 more per syringe in the ‘but for’ world.”  See 
D.I. 206 at 1.  In other words, Mr. Hofmann opines that (1) for every accused product Exela sold 
at the reduced  generic price, Nexus would have sold the  same number of its products at the 
premium price that Nexus sold its products prior to Exela introducing its products to the market, 
and (2) absent Exela selling its accused generic products, Nexus would have sold all of its products 
at the premium price.  See generally, D.1. 206 at 1. 

' The Plaintiff is Nexus Pharmaceuticals, Inc. (“Nexus” or “Plaintiff’).  The Defendant is Exela 
Pharma Sciences, LLC (“Exela” or “Defendant”).

     In  its  opening  brief  in  support  of  its  Daubert  Motion,  Exela  contends  that  these 
“assumptions” from Mr.  Hofmann are “flawed” in that they  “fly  in the  face of the bedrock 
economic principle of price elasticity—i.e., that consumers will usually purchase fewer units of a 
product at a higher price.”  D.J. 206 at 1.  In particular, Exela contends that Mr. Hofmann “failed 
to provide any analysis” on price elasticity.  D.I. 206 at 15.  Thus, Exela seeks exclusion of Mr. 
Hofmann’s opinions and testimony on lost profits and price erosion as unreliable.  D.I. 206 at 1, 
3.  “Without these excluded opinions,” Exela contends that “Nexus has no evidence to support its 
lost profits claim, warranting summary judgment of no lost profits.”  D.I. 206 at 15. 
Il.     LEGAL STANDARD 
      In Daubert v. Merrell Dow Pharmaceuticals, Inc., the U.S. Supreme Court held that Federal 
Rule of Evidence 702 creates “a gatekeeping role for the [trial] judge” in order to “ensur[e] that an 
expert’s testimony both rests on a reliable foundation and is relevant to the task at hand.”
509 U.S. 
579, 597
(1993).  Rule 702 provides: 
      A witness who is qualified as an expert by knowledge, skill, experience, training, or 
      education  may  testify  in  the  form  of an  opinion  or  otherwise  if the  proponent 
      demonstrates to the court that it is more likely than not that: (a) the expert’s scientific, 
      technical, or other specialized knowledge will help the trier of fact to understand the 
      evidence or to determine a fact in issue; (b) the testimony is based on sufficient facts 
      or data; (c) the testimony is the product of reliable principles and methods; and (d) the 
      expert’s opinion reflects a reliable application of the principles and methods to the facts 
      of the case. 
Fed. R. Evid. 702.  As the Third Circuit has explained: 
      Rule  702  embodies a  trilogy  of restrictions  on  expert  testimony:  qualification, 
      reliability and fit.  Qualification refers to the requirement that the witness possess 
      specialized expertise. We have . . . [held] that a broad range of knowledge, skills, and 
      training qualify an expert. Secondly, the testimony must be reliable; it must be based 
      on  the  methods  and  procedures  of  science  rather  than  on  subjective  belief or 
      unsupported speculation; the expert must have good grounds for his o[r] her belief. In 
      sum, Daubert holds that an inquiry into the reliability of scientific evidence under Rule 
      702 requires a determination as to its scientific validity. Finally, Rule 702 requires that 
      the expert testimony . . . must be relevant for the purposes of the case and must assist 
      the trier of fact.

Schneider ex rel. Estate of Schneider v. Fried,
320 F.3d 396, 404
(3d Cir. 2003) (cleaned up); Kuhar 
v. Petzl Co., No.  19-cv-3900,
2022 WL 1101580
, at *7 (3d Cir. Apr. 13, 2022) (acknowledging the 
same trilogy). 
      Rule 702 “has a  liberal policy of admissibility,” Pineda v. Ford Motor Co.,
520 F.3d 237, 243
(3d Cir. 2008) (citation omitted); see also United States v. Scripps,
599 F. App’x 443, 447
(3d Cir. 
2015) (same), as “the question of whether the expert is credible or the opinion is correct is generally a 
question for the fact finder, not the court,” Summit 6, LLC v. Samsung Elecs. Co.,
802 F.3d 1283, 1296
(Fed.  Cir.  2015).   “Vigorous  cross-examination,  presentation  of contrary  evidence,  and  careful 
instruction on the burden of proof are the traditional and appropriate means of attacking shaky but 
admissible evidence.”  Daubert,
509 U.S. at 596
; see Karlo v. Pittsburgh Glass Works, LLC,
849 F.3d 
61
, 83 Gd Cir. 2017) (quoting Daubert,
509 U.S. at 596
). 
Il.    DISCUSSION 
     The dispositive inquiry before the Court is whether an expert in an action for patent 
infringement, to survive a Daubert challenge, must, to some degree, analyze price elasticity when 
opining on lost profits and price erosion damages.  The answer to that inquiry is no.  See Anesta 
AG v. Mylan Pharms., Inc., No. CV 08-889-SLR,
2014 WL 3976456
, at *3 (D. Del. Aug.  14, 
2014) (“I agree that the issue of price elasticity was not discussed by Dr. Maness in his expert 
report. I have held that he was not required per se to do so. Moreover, the issue was apparently 
addressed at his deposition, and defendants have his best thoughts through that discovery tool on 
why he did not consider price elasticity in his analysis. Dr. Maness will be limited to the evidence 
of record. I decline to exclude Dr. Maness’ lost profits analysis based on defendants’ now rejected 
argument that price elasticity is always in play; that is fodder for cross examination. Therefore, 
both defendants’  motions for partial summary judgment (D.I.  351) and to exclude the expert 
testimony of Dr. Maness (D.I. 360) are denied.”);  VARTA Microbattery GmbH v. Audio P’ship

LLC, No. 221CV00400JRGRSP,
2023 WL 5434854
, at *4 (E.D. Tex. Aug. 23, 2023) (“EVE 
argues  that  Mr.  Metzdorff uses  $2.15  as  EVE’s  sales  price—300%  higher than what  EVE 
reported—and  then  he  multiples  that  price  by  the  number  of products  EVE  sold  without 
considering that the increased price may reduce sales. According to EVE, Mr. Metzdorff’s lost 
profits opinions should be excluded for using an unreliable methodology. The Court disagrees. 
EVE’s  criticisms  go to  the weight to  be  accorded to  Mr.  Metzdorff’s  opinions  and  not  its 
admissibility.”) (citations omitted). 
     The primary case upon which Exela relies is Crystal Semiconductor Corp.  v.  TriTech 
Microelectronics Int'l, Inc.,
246 F.3d 1336
(Fed. Cir. 2001).  D.I. 206 at 1, 8-15 (citing Crystal 
over ten times).  Therein, the Federal Circuit explained that, “in a credible economic analysis, the 
patentee cannot show entitlement to a higher price divorced from the effect of that higher price on 
demand for the product.”  Crystal,
246 F.3d 1336
, 1357.  The Federal Circuit also stated that “the 
patentee must also present evidence of the (presumably reduced) amount of product the patentee 
would have sold at the higher price.”  Crystal,
246 F.3d 1336
, 1357.  Nexus’s reliance on Crystal, 
however, is unconvincing for at least three reasons. 
     First, the procedural vehicle in which the Federal Circuit and the district court below in 
Crystal considered the purported issues with the expert’s testimony was not a Daubert motion; 
rather, the vehicle was a motion to remit damages.  See id. at 1358. 
     Second, Nexus fails to identify any binding precedent which has relied on Crystal to 
exclude an expert’s opinion and testimony on lost profits and price erosion damages where that 
expert’s opinion and testimony did not consider price elasticity.  See D.I. 206.  In fact, this Court 
has previously denied that Crystal requires such exclusion. See Anesta,
2014 WL 3976456
, at *2- 
3 (“Defendants argue that plaintiffs should be precluded from claiming lost profits because their

expert, Dr. Maness, failed to consider price elasticity in his lost profits analysis. .  .. With respect 
to  the  substantive  aspects  of the  dispute,  I  start  with  an  analysis  of defendants’  primary 
case, Crystal  Semiconductor  Corp.  v.  TriTech  Microelectronics  Int'l,  Inc.,
246  F.3d  1336
(Fed.Cir.2001). . . . The lesson I take away from Crystal is not that the Federal Circuit has a rigid 
formula for judging economic analyses, but that its demand for a ‘credible economic analysis’ can 
be met by a variety of evidence—both fact and expert—depending on the facts of the case and the 
nature of the markets at issue. Therefore, I will not preclude the presentation of a lost profits 
analysis by plaintiffs...  . Having rejected defendants’ proposition that there are rigid standards 
applicable to every case, I decline to take the issue of lost profits damages away from the jury.”). 
      Third, to the extent that Mr. Hofmann did not address or consider price elasticity in his lost 
profit analysis and/or testified during his deposition that the market is “fairly inelastic” (D.I. 232 
at 2), both are “fodder for cross examination” at trial.  See Anesta,
2014 WL 3976456
, at *3. 
Indeed, the Federal Circuit has, post-Crystal, confirmed that, while “an inelastic market may be 
rare,” whether the market is inelastic is an issue for resolution by the jury.  Ericsson, Inc. v. Harris 
Corp.,
352 F.3d 1369, 1379
(Fed. Cir. 2003) (quotation marks omitted). 
      Moreover, the Court is not obliged to follow the precedents that Exela identifies (see, e.g., 
D.I.  206  at  10)  from  other  district  courts,  including  those  outside  of  this  circuit.   See 
Daubert v. NRA Grp., LLC,
861 F.3d 382, 395
(3d Cir. 2017) (“A decision of a federal district 
court judge is not binding precedent in either a different judicial district, the same judicial district, 
or  even  upon  the  same  [district]  judge  in  a  different  case.” (alteration  in  original) 
(quoting Camreta v. Greene,
563 U.S. 692
(2011)); Wahl Clipper Corp. v. Conair Corp. & Conair 
LLC, No. 23-cv-00114-JCG-LDH,
2024 U.S. Dist. LEXIS 23526
, at *2 (D. Del. Jan. 16, 2024) 
(confirming that out-of-circuit cases “are not binding on this Court”).

     In summary, since the law does not require that an expert’s opinions on lost profits and 
price erosion damages in a patent infringement action address price elasticity, Mr. Hofmann’s 
purportedly  incomplete  or  entirely  lacking  analysis  of price  elasticity  does  not  constitute  a 
sufficient ground for exclusion under Daubert and its progeny.  Instead, the Federal Circuit and 
this Court have instructed that, on cross-examination during trial, Exela can challenge or test Mr. 
Hofmann’s  expert  opinions  on  lost  profits  and  price  erosion  through  questions  about  Mr. 
Hofmann’s lack of analysis and/or consideration of price elasticity in reaching his opinions on lost 
profits and price erosion. 
IV.    CONCLUSION 
     For all the foregoing reasons, Exela’s Daubert Motion to Exclude Mr. Hofmann’s Lost 
Profits and  Price  Erosion Opinions  (D.I.  204)  is  DENIED.  Also,  Exela’s Request for Oral 
Argument (D.I. 262) is DENIED-AS-MOOT.