Hayman Capital's Kyle Bass Vows to Continue Drug-Patent Challenges
September 03 2015 - 7:26PM
Dow Jones News
By Joseph Walker
Hedge-fund manager Kyle Bass says he'll persist in his campaign
to invalidate what he calls weak pharmaceutical patents, despite
being handed two early setbacks in recent weeks.
"I've spent years of my life working on this and my arguments
are as good as can be," Mr. Bass said in an interview on Thursday.
"I think I can win if they'll just hear the cases on the
merits."
On Wednesday, a panel of judges employed by the U.S. Patent and
Trademark Office declined to review Mr. Bass's challenge to Biogen
Inc.'s multiple sclerosis pill Tecfidera patent. The ruling, which
came ahead of schedule, followed a denial in August of Mr. Bass's
challenges to Acorda Therapeutics Inc.'s drug Ampyra .
"Patent protection is critical to enabling biopharmaceutical
companies to develop new therapies and advance science and
medicine," Biogen Chief Executive George A. Scangos said in a
statement on Wednesday following the patent board's decision.
Mr. Bass, the head of Hayman Capital Management L.P., re-filed
two challenges against Acorda's Ampyra on Wednesday, which he said
now include more documentation. He also filed two new challenges
against other Ampyra patents.
"We're reviewing the petitions and will oppose the requests to
institute the IPRs," an Acorda spokesman said. "If they are allowed
to proceed, we will defend our patents vigorously."
Mr. Bass said he plans to file a motion to have the patent board
reconsider his challenges against Tecfidera, though he said the
chances of it being accepted are slim. Mr. Bass is also considering
other options for challenging the Tecfidera patent.
Mr. Bass has undertaken an unusual investment strategy: using an
administrative process known as Inter Partes Review, or IPR, to
challenge drug companies' patents while betting against their
shares.
"We invest in companies that we think have strong intellectual
property and we invest against companies we think have weak
intellectual property, " Mr. Bass said.
Among the companies that Mr. Bass said he has taken long
positions in--wagering their share prices will rise--are Endo
International PLC, ProNAi Therapeutics Inc., Impax Laboratories
Inc. and ZS Pharma Inc.
Pharmaceutical companies have accused Mr. Bass of abusing the
patent procedure to further his investment strategy.
Mr. Bass said the patent board's decisions were inconsistent
with patent law. He said the industry's criticism was behind what
he called the politically motivated nature of the patent office's
rulings.
"The standards we're being held to are completely different than
others, " Mr. Bass said. "They're running a kangaroo court," he
said of patent-office officials.
The patent office declined to comment.
Jacob S. Sherkow, an associate professor at New York Law School,
said he was puzzled by the patent office's reasoning behind its
decision on Tecfidera on Wednesday, which he said contradicted
legal precedent.
Mr. Bass's petition argued the Tecfidera patent was invalid
because it was known before the patent was issued that the drug
could be used to treat multiple sclerosis. His petition cited a
published description of a pilot study that tested a class of drugs
to which Tecfidera belongs as a treatment for MS. The patent board,
in explaining why it had denied the challenge, said the pilot-study
description didn't prove the drug worked against multiple
sclerosis, but was at best a "hope" it would work.
Mr. Sherkow said determining the effectiveness of an invention
is outside the patent judges' authority in evaluating IPR petitions
and that for decades pilot studies have been considered permissible
evidence in patent challenges. "I am shocked by the reasoning of
the decision," he said.
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(END) Dow Jones Newswires
September 03, 2015 19:11 ET (23:11 GMT)
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