Hedge Fund Manager Making Money by Challenging and Betting against Patents

Published By : 08 Apr 2015 | Published By : QYRESEARCH

A renowned hedge-fund manager is taking an innovative approach for making money, that is, by publicizing and filing patent challenges against pharmaceutical enterprises while also making a bet against their stocks.

Mr. Kyle Bass, the head of the Hayman Capital Management LP that made a fortune by betting on the housing bust, is focusing on patents that according to him have little value other than to boost up prescription drug costs. His innovative fund stakes against firms whose patents it considers are forged, and invests in those that would bring in profit if the patents are cancelled, stated people who are familiar with the matter. 

His recent most challenge wants to employ a comparatively new and reasonably priced petition procedure to nullify a patent of Jazz Pharmaceuticals PLC for Xyrem, which is a narcolepsy drug with sales recorded around US$779 million the previous year, around two-thirds of the revenues generated by Jazz in 2014.

Mr. Bass formed the Coalition for Affordable Drugs, which is an organization and the lead petitioner in challenges filed with the U.S. Patent and Trademark Office against various patent. Previously he has challenged patents held by Shire PLC, based Dublin and Acorda Therapeutics Inc., based in Ardsley, N.Y. Shire and Acorda stated that they would defend their patents, and also stated that the patents on target represent a portion of the intellectual property that protects their drugs.
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