Innovate or Else: Kyle Bass Strikes Again and Challenges Shire Patents - Pharmalot - WSJ
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`Apr 2, 2015
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`Innovate or Else: Kyle Bass Strikes
`Again and Challenges Shire Patents
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`By ED SI LVER MAN
`
`Three months ago, Kyle Bass warned the
`pharmaceutical industry that he would
`challenge and, ultimately, invalidate
`some of their patents. And once again,
`he is making good on his word.
`
`Yesterday, he filed challenges against
`patents for two Shire drugs – the Lialda
`medicine for ulcerative colitis and the
`Gattex treatment for short bowel
`syndrome. The move comes just a few
`weeks after he challenged a patent that
`Acorda Therapeutics ACOR -0.23% holds on its Ampyra multiple sclerosis drug.
`
`Kyle Bass — Bloomberg News
`
`In his view, some drug makers and biotechs hold specific patents that do not represent
`an innovation and, instead, are designed to fend off competition. By challenging the
`patents, he argues that drug prices can be lowered.
`
`“A small minority of drug companies are abusing the patent system to sustain invalid
`patents that contain no meaningful innovations but serve to maintain their anti-
`competitive, high-price monopoly to the detriment of Americans suffering from illness,”
`according to a statement sent to us by Hayman Capital Management, the fund that Bass
`founded.
`
`A Shire spokeswoman writes us that the drug maker is “aware of the two petitions that
`were filed, and will vigorously defend any proceedings that may be instituted at the U.S.
`Patent and Trademark Office. Shire is confident that the validity of our patents will be
`upheld.”
`
`His filings are part of a new wave of patent challenges that emerged in the wake of a
`provision of the America Invents Act that went into effect in September 2012. Known as
`Inter Partes Review, the procedure has made it easier and faster to file a patent
`challenge.
`
`About Pharmalot
`
`On average, an IPR can cost about $300,000 and take up to 18 months, while
`conventional litigation needed to invalidate a patent may cost $3 million or more and
`take years, according to Matthew Cutler, an attorney at Harness Dickey, who specializes
`in intellectual property and runs a website that tracks IPR filings with the U.S. Patent &
`Trademark Office.
`
`“An IPR filing is a much more cost effective and efficient way to challenge a patent,” he
`says. Of the 2,536 challenges filed since the law passed in 2012, 383 were filed against
`chemical and biotechnology patent holders. And Cutler notes that 87% of IPR filings
`
`Pharmalot explores the fast-moving, complicated world that
`develops and markets medicines – and the drug makers that
`are attempting to replenish their pipelines while grappling with
`pricing and regulatory dictates, among many other challenges.
`Writer Ed Silverman has covered the pharmaceutical industry
`
`
`
`http://blogs.wsj.c.ws om/pharmalot/2015/04/02/innovate-or-else-kyle-bass-strikes-again-and-challenges-shire-patents/
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`CELGENE EXHIBIT 2031
`Coalition for Affordable Drugs VI LLC (Petitioner) v. Celgene Corporation (Patent Owner)
`Case IPR2015-01102
`
`

`
`Innovate or Else: Kyle Bass Strikes Again and Challenges Shire Patents - Pharmalot - WSJ
`
`challenging pharmaceutical patent claims have, so far, been successful.
`
`For its part, the BIO trade group has denounced the tactic. In a statement issued when
`Bass filed his first patent challenge two months ago, BIO ceo Jim Greenwood argued
`that “Congress never intended for the patent challenge system to be utilized 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.”
`
`Often, Cutler says an IPR challenge is filed by a drug maker in order to invalidate
`another company’s patents and would otherwise block its entrance to a particular
`market. Companies, he explains, are saying “let’s go on the offensive even before we
`enter a market and [try] to invalidate a patent [in order] to gain access to a market.” This
`allows a drug maker to avoid the cost of patent litigation in court.
`
`However, experts say IPR challenges may also be filed by someone shorting a stock,
`because the news about a challenge on a big-selling drug can rattle investors. On the
`day Bass filed his first challenge against an Acorda patent, the biotech’s shares dropped
`9.6%. The stock dropped 4.8% when he filed his second challenge to an Acorda patent.
`A Hayman spokesperson did not respond to questions about what, if any, kind of
`investment the firm holds in either Acorda or Shire.
`
`for nearly two decades and has closely followed the many
`hurdles facing drug companies as they move ideas from the
`laboratory to the medicine chest. He started Pharmalot while
`at The Star-Ledger of New Jersey and previously worked at
`New York Newsday and Investor’s Business Daily. Email Ed
`Silverman at ed.silverman@wsj.com, and follow him on
`Twitter @Pharmalot.
`
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`Comments (3 of 3)
`
`10:57 am April 9, 2015
`
`hp wrote:
`
`CLEAR POST
`
`Pharmalot Blogroll
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`View all Comments »
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`Generic Pharmaceutical
`Association
`National Institute for Health
`and Care Excellence
`National Institutes of Health
`
`PhRMA
`U.S. Food and Drug
`Administration
`
`People should keep in mind that the AIA was put in place at the insistence of Google, Cisco,
`HP and other large Silicon Valley tech companies. Their motivation -- depending upon whom
`you ask -- was either to cut down on patent trolls, or to facilitate big tech's misappropriation of
`technology from small innovative start ups. Either way, patents are now pretty much a joke in
`terms of conferring any real legal rights on the patent owner. If pharma wants to blame anyone,
`they should put the blame on Google.
`
`2:24 pm April 3, 2015
`
`Cluetanian wrote:
`
`Here's repeat free clue for the anti-pharma crowd: There's no such thing as a free lunch!
`
`You can't take away drug company patent protections AND take away market defense tactics
`without harming future drug development!
`
`If you beat up on pharma companies, you'll get no more new drugs!
`
`5:33 pm April 2, 2015
`
`ak wrote:
`
`Go Kyle Go! If this is true Bass has found a way to both make money while making drugs
`cheaper to the consumers/ sick/ ill people.
`
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`http://blogs.wsj.c.ws om/pharmalot/2015/04/02/innovate-or-else-kyle-bass-strikes-again-and-challenges-shire-patents/
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`Innovate or Else: Kyle Bass Strikes Again and Challenges Shire Patents - Pharmalot - WSJ
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