Kyle Bass Fires Opening Salvo Against Pharma Patents

Feb 11 2015 | 8:02pm ET

Texas hedge fund manager Kyle Bass, head of Hayman Capital Management, has taken the first step in what has been described as a “short activist” strategy against U.S. drug makers.

In a 60-page petition filed with the U.S. Patent & Trademark office, Bass challenged the legitimacy of Acorda Therapeutics’ patents on multiple-sclerosis drug Ampyra.

Bass claims the patents rely on previously known technology and minor tweaks to such things as dosage and packaging.

Bass is not alone in targeting Acorda.

Eight generic drug manufacturers have gone to court for permission to market low-priced versions of Ampyra, which generated approximately $366 million in 2014 sales for Acorda and is the company’s flagship product. The company’s shares, traded on the Nasdaq , fell nearly 10% yesterday on the news.

Bass revealed the activist strategy at a conference on January 7.

He alleged that U.S. drug firms were benefiting from questionable patents designed to limit generic competition, keeping drug prices inflated for much longer than necessary. Bass has reportedly identified several other companies with blockbuster drugs protected under what he believes are dubious patents, and he has formed a separate fund vehicle aimed at overturning them. 

Generic drug manufacturers have long targeted drug patents, but Bass’s filing is the first time such a challenge has been used by an activist investor. 

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