Authored by Maria Luisa Palmese and Eric Paul Greenwald
We recently referenced Coalition for Affordable Drugs LLC’s (“CFAD”) unconventional practice of filing inter partes review petitions seeking to invalidate patents covering approved drug products after obtaining a “short” position on the stock of companies marketing those drugs. CFAD leader Kyle Bass explains that the strategy is designed to increase returns for his investors while lowering drug prices. He does not address the long-term effect of this type of speculation on the pharmaceutical industry and pharmaceutical innovation. In February, we wrote about CFAD’s first IPR filing, which targets patent protection on Acorda Therapeutics’ multiple sclerosis drug Ampyra and reported that Acorda’s shares fell five percent in the two days following the filing . See IPR2015-00720. Last week’s filings bring the total IPR petitions to twelve and drugs targeted to nine, including Celgene Corp.’s multiple myeloma drugs Pomalyst, Thalomid and Revlimid and NPS Pharmaceuticals’ (now part of Shire PLC) short bowel syndrome drug Gattex. See IPR 2015-01096; IPR2015-01102; IPR2015-01103, and IPR2015-01093. The filings and share prices the day before, day of, and day after filing are summarized in the chart below. The chart also indicates whether CFAD challenged all Orange Book patents listed for the target drug. As can be seen, so far Shire PLC’s Lialda is the only drug for which CFAD has challenged all Orange Book patents listed.
Of the targeted companies, only Acorda Therapeutics and Shire PLC experienced an immediate appreciable drop in share price after patents on their drugs were challenged, dropping 7.6% and 5.2%, respectively. The CFAD’s IPR petitions have yet to be decided on and we expect there may be more significant movement when that happens. We will be watching and updating this blog entry to include further filings and results of the proceedings.
1 Key: CELG, Celgene Corp.; ACOR, Acorda Therapeutics; SHPG, Shire PLC; PCYC, Pharmacyclics, Inc.; BIIB, Biogen Idec International GmbH; JAZZ, Jazz Pharmaceuticals.
2 Source: Yahoo! Finance “Historical Prices” feature, available at https://finance.yahoo.com.
3 The patent owner is NPS Pharmaceuticals, Inc., which was purchased by Shire PLC in January 2015.
4 Short bowel syndrome.