Hedge fund activist Bass takes aim at pricey Shire, Jazz drug patents
- Kyle Bass, founder of Hayman Capital Management, is challenging Shire's patents on Lialda and Gattex. On Tuesday, Bass-affiliated organization Coalition for Affordable Drugs also filed an Inter partes review (IPR) of Jazz Pharma's best-selling narcolepsy drug Xyrem.
- Together, Lialda and Gattex represent 14% of Shire's revenues, while Xyrem is by far Jazz's biggest product.
- At issue is the validity of the patents, as well as Bass's contention that laws to prevent patent trolling are helping pharmaceutical companies retain invalid patents.
Bass's challenge of Shire's and Jazz's patents is potentially damaging, as the drugs represent an important part of the companies' portfolios. Gattex, which came to Shire as part of the NPS acquisition, is used for treatment of short bowel disease. As for Lialda, this drug, which is used to treat colitis, generated $633.8 million in revenues last year, and Xyrem could cross the blockbuster threshold this year.
Challenging patents is part of Bass's modus operandi. In February, he challenged five patents covering the multiple sclerosis drug, Ampyra, which is manufactured by Acorda Therapeutics. Each time Bass filed a patent challenge with the U.S. Patent and Trademark Office, Acorda's stock dipped. While it is not clear whether this was part of an investment strategy that involves shorting stocks, many onlookers have speculated that this may be the case.
As for Shire, the company has vowed to "vigorously defend" its patents. Jazz has yet to officially respond to Bass' Xyrem IPR.
- Bloomberg Business Hayman’s Bass Targets Shire in New Drug Patent Challenges