Shire's Lialda, Gattex are hedge funder's latest patent targets

Kyle Bass

Hedge fund manager Kyle Bass has struck out at drug patents once again. Just weeks after challenging two patents on an Acorda Therapeutics ($ACOR) drug, Bass asked the U.S. Patent and Trademark Office to reconsider coverage on two Shire ($SHPG) meds, Lialda and Gattex.

Bass's firm, Hayman Capital Management, is taking advantage of a new patent-challenge process created by Congress. Rather than limiting patent fights into court, the new inter partes review process allows a direct challenge at the U.S. Patent and Trademark Office, which might be more likely to overturn patents. The process is cheaper, too.

The Shire challenges focus on two gastrointestinal products: Lialda, an ulcerative colitis med that brought in $633 million in sales last year; and Gattex, a short-bowel syndrome treatment Shire acquired along with NPS Pharmaceuticals in February for $5.2 billion.

As Shire points out, one of the Lialda patents Bass disputes has survived a challenge in court. Bass's Gattex challenge focuses on a patent that expires in 2022; the company has orphan drug exclusivity through 2019.

"The patents listed in the FDA Orange Book for Lialda and Gattex protect the innovation and value Shire brings to patients who benefit from these important medicines," the company said in a statement. "Shire will continue to defend vigorously its patents and pursue all legal options available to protect its products."

It remains to be seen whether any of Bass's challenges will work. But the very idea of it is spooking investors. Acorda's stock slipped 7% on Bass' move, and Shire's dropped on the news, too.

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.

- see the Shire statement

Special Report: The 25 most influential people in biopharma today - 2013 - Flemming Ornskov - Shire

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