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Hedge fund loses challenge of patent for Biogen’s MS drug

Texas investor Kyle Bass says he’s trying to cut drug prices

Biogen Inc. fended off a closely followed patent challenge to its blockbuster multiple scleroris drug Tecfidera, dealing another setback to Texas hedge fund manager Kyle Bass and his attempts to invalidate key intellectual property rights of leading biotech companies.

The Patent and Trademark Office refused on Wednesday to hold a hearing to review the validity of a Biogen patent, as requested by Bass. It cited a “failure to establish a likelihood of success as to any challenged claim.”

The patent in question is one of several covering Tecfidea, an oral MS treatment that generated $2.9 billion in sales for the Cambridge company last year.


“Tecfidera is a significant advance for the treatment of MS and this result speaks to the pioneering efforts by Biogen to bring this therapy to patients,” chief executive George A. Scangos said in a statement. “Patent protection is critical to enabling biopharmaceutical companies to develop new therapies and advance science and medicine.”

Biogen’s shares jumped $11.71, or 4 percent, to $304.21. The stock has been under pressure this summer, falling about 25 percent since the company announced disappointing quarterly results in July. One problem: Sales of Tecfidera fell short of forecasts.

Bass and his firm, Hayman Capital Management, rose to prominence eight years ago when he made a bold bet anticipating the crash of the US housing market. More recently, he has organized a group called the Coalition for Affordable Drugs to challenge the patents of many drugs owned by biotechnology companies.

Among those challenges, he has filed patent cases against Shire PLC, an Irish company with a large presence in Lexington, and Aegerion Pharmaceuticals Inc. of Cambridge.

Bass has publicly complained that a “small minority of drug companies” have used illegitimate patents to sustain an “anticompetitive high-price monopoly to the detriment of Americans suffering from illness.”


His critics in the drug industry said the hedge fund manager was betting against the stocks of biotech companies and then attacking the intellectual property behind their products to drive down share prices.

One of Bass’s targets, Celgene Inc., asked the patent agency last month to sanction the hedge fund manager and the coalition for “abuse” of the review process in attempting to profit from falling stock prices.

The Biogen decision is the second recent setback for Bass and his drug strategy. Last week, the patent office rejected Bass’s request to review patents on another MS drug, Ampyra, made by Acorda Therapeutics.

Hayman Capital did not return a call or e-mail seeking comment.

Stock analyst Michael Yee of RBC Capital Markets called the Biogen decision “yet another win for biotech patent owners.”

He said Wall Street could react by giving “less credit to other [challenges] filed by similar anti-patent groups.”

Bass first announced his plans to challenge drug patents at the start of this year, promising to target more than a dozen companies with a combined market value of $450 billion. He followed through with about 20 challenges, using a relatively new law written for a very different purpose.

The America Invents Act of 2012 included a process meant to help companies fight so-called patent trolls holding them up in court. Trolls often acquire dubious intellectual property, claim the products of established companies infringe on their patents, and demand payments.

The new law gives third parties the ability to request a review of any unexpired patent by the Patent and Trademark Office, avoiding a lengthy court challenge in the process. It’s an express lane for patent challenges, a process that typically runs up big bills and takes years to resolve in lawsuits.


Steven Syre can be reached
at steven.syre@globe.com.