It may have been April 1, but hedge fund manager Kyle Bass was not fooling when he continued to make good on his promise to try to invalidate big pharmaceutical’s companies’ patents through the Patent Trial and Appeal Board (PTAB).
The Coalition for Affordable Drugs, Erich Spangenberg, Bass, and various companies that they run filed two inter partes review (IPR) petitions against patents owned by Shire and NPS Pharmaceuticals. Shire agreed to buy NPS for $5.2 billion in January this year.
One of the patents covers controlled released oral compositions containing mesalazine, which is used to treat Crohn’s disease; the other provides formulations for GLP-2 peptides. Both IPR petitions were filed by law firm Merchant & Gould.
On April 6, the same petitioners filed another IPR petition, this time challenging a patent owned by Jazz Pharmaceuticals. It is an FDA Orange Book-listed patent for sodium oxybate that is used in Jazz's Xyrem drug for treating narcolepsy.
These latest IPR petitions follow Bass and Spangenberg filing two petitions in February challenging patents owned by Acorda Therapeutics, covering a composition to treat various neurological diseases and a composition to treat various neurological diseases. Both of these petitions were filed by law firm Skiermont Puckett.
More to come?
More of these types of petitions ae likely to come. Bass announced in January that he would take on some of the world’s biggest drug producers by challenging their patents through IPR proceedings. He said about 15 companies would be targeted.
"We are going to challenge and invalidate patents through the IPR process ... (and) we are not going to settle," Reuters quoted Bass saying in a presentation in Oslo in January.
He added: “The companies that are expanding patents by simply changing the dosage or the way they are packaging something are going to get knee capped.”
Bass said in January his aim was to lower drug prices for Medicare and others. However, many viewed the move as a ploy to take advantage of falling stock prices. For example, Accorda’s share price fell 9.6% the day of the first IPR, compared with the closing price the day before, and 4.8% the day of the second IPR. Shire’s share price fell 2.7% on April 1, compared with the closing price the previous day.
Bass and Spangenberg may started a trend. Earlier this month, Ferrum Ferro Capital filed an IPR petition against one claim of an Allergan patent covering a treatment for glaucoma by administering timolol and brimonidine in a single composition. This patent was the subject of lengthy litigation against generic drug company Sandoz, with the Federal Circuit eventually agreeing with the district court that the claim was valid.
This use of the PTAB has caused concern. For example, the first IPR petition from Bass and Spangenberg prompted Jim Greenwood, BIO president and CEO, to say in a statement: "Hedge fund manager Kyle Bass has opened a new door to abuse of the US patent system, exploiting the USPTO' s patent challenge proceeding as part of his cynical short-selling strategy against innovative biotech companies that are delivering transformative therapies to patients in need.
"Congress never intended for the patent challenge system to be utilised by those attempting to profit from the confusion the current system creates. Such efforts not only damage the value of companies working on cures – but hurts those sick and suffering patients and their families who are eager for cures.
"Patents are the lifeblood of innovative, lifesaving biotech companies. Congress and the USPTO should act promptly to prevent abuse of the patent system in this manner."
