Hedge funder's first assault on iffy drug patents? Acorda's MS med Ampyra

Kyle Bass

Last month, Texas hedge fund manager Kyle Bass said he had pharma and its "questionable" patents in his sights. Now, he's made his first move--and he's said 14 more targets will follow.

The weapon: inter partes review, a type of patent challenge allowed by 2012's America Invents Act. The target: Acorda Therapeutics ($ACOR) and its Ampyra drug. The argument: A key Ampyra patent should be tossed out for obviousness. And as The New York Times points out, Ampyra's active ingredient was used for decades as bird poison; Acorda modified it to help multiple sclerosis patients walk better, safely and effectively enough to pass FDA scrutiny.

The patent is vulnerable enough that a slew of generics makers have already challenged it in court, despite the fact that Ampyra (dalfampridine) only hit the market in 2010. And it's a tempting target; despite its relative youth, the drug made FiercePharma's 2014 list of top 10 best-selling multiple sclerosis treatments, with $303 million in 2013 sales.

The inter partes review process is different; it's a direct challenge at the U.S. Patent and Trademark Office, which might be more likely to overturn patents, the NYT figures. But the process has its limits as well. Bass can only make obviousness claims via inter partes review, while court challengers have a variety of strategies to use.

It remains to be seen whether Bass's challenge will work. But the very idea of it spooked investors enough to drag Acorda's stock down Thursday morning.

And if the inter partes approach works, then other drugmakers may want to start worrying. Bass says he's focusing on patent "evergreening," in which drugmakers tweak drug dosages, formulations and so on to extend the life of a branded med. It's not an uncommon strategy by any means. Abbott Laboratories ($ABT), for instance, managed to fend off generic versions of its blood pressure drug TriCor for years by making incremental changes to its formula--and even to its pill design.

Bass says he's eyeing 15 different inter partes challenges. "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 told investors during a recent presentation in Oslo, Norway. Any guesses about who's next?

- read the NYT piece

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