Kyle Bass - Hayman Capital

A thorn in pharma's side

Name: Kyle Bass
Title: Founder and principal of Hayman Capital

Hedge funder Kyle Bass made big waves in 2015 with his campaign to target "low-quality" drug patents and, not incidentally, profit off short-selling the companies in question. Using a new patent-challenge pathway, inter partes review (IPR), Bass' Hayman Capital fund went after intellectual property protecting some of pharma's biggest blockbusters. Many of those challenges fell flat. But at least one--a successful strike-down of a 2026 patent on Novartis' ($NVS) multiple sclerosis pill Gilenya--could take a big bite out of a blockbuster brand and shake up the market for oral MS therapies to boot. And almost all of Bass's IPR petitions deflated the target company's shares as soon as they were filed. That's particularly so for smaller companies with few products to start with, such as Acorda Therapeutics, whose stock plummeted after Hayman petitioned the U.S. Patent Review Board to scrutinize its Ampyra patents.

But Bass hasn't only been a thorn in the side of the drugmakers unlucky enough to draw his attention. His publicity-heavy IPR push put a spotlight on the new patent-challenge method--and may end up inspiring more of the challenges it was designed to encourage: generic drugmakers singling out shaky patents on meds they'd like to copy.

Mylan ($MYL), for one, persuaded the patent board to revisit IP coverage on Teva Pharmaceutical Industries' ($TEVA) newest formulation of the MS injectable Copaxone. Analysts put the odds of Mylan's success at about 50%. That 40-mg Copaxone dosage has been Teva's hope of keeping the brand alive after generic rivals to its original formula hit the market. And then there's the Gilenya challenges, filed by two different companies looking to knock off the $2.8 billion drug (2015 sales). Now, those copies could hit the market in 2019.

Indeed, after pharma's powerful lobby asked Congress to exempt the industry from the IPR process, the Congressional Budget Office totted up the money that federal health programs are likely to save from the Bass-style challenges. That would be $1.3 billion over 10 years.

 -- Tracy Staton (email | Twitter)

For more:
Patent challenger Bass wins IP reviews for Celgene, Shire meds
Sorry, Celgene, patent board says. Bass can challenge your IP, and profit, too
Undeterred by PTO setbacks, Bass slaps new challenges on Acorda patents

Kyle Bass - Hayman Capital

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