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Articles

A Mixed Bag for Kyle Bass: Three Wins and Eight Losses at the PTAB

March 22, 2017

Articles

A Mixed Bag for Kyle Bass: Three Wins and Eight Losses at the PTAB

March 22, 2017

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Introduction

Over the past two years, hedge fund manager Kyle Bass has continued his efforts to invalidate biopharma patents through inter partes review (“IPR”).  Over the past month, he received eleven final written decisions from the PTAB.  The Board invalidated the claims of two Anacor patents, covering Kerydin®, and upheld the validity of Horizon’s patent covering Vimovo®, the University of Pennsylvania’s patents covering Juxtapid®, Acorda Therapeutics’ patents covering Amprya®, and Biogen’s patent covering Tecfidera®.

The Horizon Patent Decision

Horizon Pharma USA is the current owner of U.S. Patent No. 8,945,621 (the “Horizon Patent”), which covers its drug Vimovo.  Vimovo is a nonsteroidal anti-inflammatory drug (“NSAID”) and a proton pump inhibitor generally prescribed to treat osteoarthritis, rheumatoid arthritis, and is used to reduce the risk of stomach ulcers in NSAID users.  Horizon Pharma had Vimovo sales of $166 million in 2015, and $121 million in 2016.  Twelve Orange Book patents currently cover Vimovo, including the Horizon Patent.

The Horizon Patent has 16 claims, and discloses a method of reducing the incidence of ulcers in NSAID users by coating the NSAID portion of the drug with naproxen or another acceptable salt, and esomeprazole or another acceptable salt.  The claims disclose certain amounts of these salts designed in such a way to release into the gastric environment at a controlled rate, and further designed to raise the gastric pH of the patient during use, which reduces the occurrence of ulcers in chronic NSAID users.  On August 12, 2015, Bass’ Coalition for Affordable Drugs VII LLC (“CFAD VII”) petitioned the PTAB for IPR of all claims of the Horizon Patent on obviousness grounds, and on February 22, 2016, the Board instituted.

In the petition, the CFAD VII asserted that the claims were obvious over three prior art references that disclose: (1) the use of an acid inhibitor to raise gastric pH; (2) that proton pump inhibitors prevent ulcers in NSAID users; and (3) the use of certain salts with aspirin users lowered the risk of ulcers.  (IPR2015-01718, Paper 40 at 6-12.)  On February 21, 2017, the Board issued its decision, finding that while it would have been obvious for the ordinary artisan to combine the prior art methods to reduce the occurrence of ulcers in NSAID users, secondary considerations evidence, including unexpected results, weighed against a finding of obviousness.  The Board concluded that “Petitioner has not established that the claimed method would have been expected to be more effective” than previous methods of treatment, and concluded that the claims were not unpatentable.  (Id. at 27-29.)

The Anacor Patent Decisions

Anacor Pharmaceuticals (now a part of Pfizer) is the current owner of U.S. Patent Nos. 7,582,621 (the “’621 Patent”) and 7,767,657 (the “’657 Patent”), which cover its drug Kerydin.  Kerydin is an anti-fungal topical medicine used to treat toenail fungus.  Five Orange Book patents currently cover Kerydin, including the two cancelled by Bass.

The ’621 Patent has 12 claims, and discloses a method of treating fungal infections in various animals using various compounds containing boron.  The specification refers to three current treatments for nail or hoof fungal infections including, administration of medicine, surgical removal of the nail or hoof, and topical application of medicine with bandages to keep the medicine in place.  All have drawbacks, and so this patent discloses a medicine that can effectively penetrate the nail while also treating fungal infections.  The ’657 Patent has 24 claims, and discloses various boron-containing small molecules for use in treatment of fungal infections, especially cutaneous fungal infections.  More specifically, these compounds are specifically formulated to penetrate the nail plate in order to deliver the chemical to the particular part of skin infected by the fungus.  On August 20, 2015, Bass’ Coalition for Affordable Drugs X LLC (“CFAD X”) filed for IPR of the ’621 Patent, and also filed two petitions for IPR of the ’657 Patent, challenging all claims of both patents on obviousness grounds, and on February 23, 2016, the Board instituted all three petitions.

In the ’621 petition, the CFAD X asserted that the claims were obvious over three prior art references that disclose the use of compounds containing boron to treat fungal infections as well as various topical treatments of nail infections.  (IPR2015-01776, Paper 70 at 10-12, 37.)  The Board found that the first two references teach “each limitation of claims 2-10 and that a person of ordinary skill in the art would have had a reason to combine [them] with a reasonable expectation of success.”  (Id. at 31.)  The Board then considered secondary considerations of nonobviousness including unexpected results, long-felt need, and industry praise, and concluded that such evidence was unpersuasive.  (Id. at 36.)  In conclusion, the Board held all of the claims of the ’621 Patent unpatentable.  (Id. at 42.)

In the first ’657 petition, the CFAD X asserted that the claims were obvious over several combinations of 7 prior art references disclosing various methods and compounds for treating nail fungus, including those with boron, and those intended to penetrate the nail plate.  (IPR2015-01780, Paper 70 at 6-7, 13-17.)  The Board found that the various references rendered the claims obvious, and was unpersuaded by evidence of secondary considerations of nonobviousness including unexpected results, long-felt need, and industry praise.  (Id. at 59.)  The Board found all claims unpatentable as obvious.  (Id. at 60.)  In the second petition, the CFAD X asserted that the claims were obvious over six of the same references from the first petition, and substituted one other reference.  (IPR2015-01785, Paper 70 at 6.)  The Board again held the claims obvious in light of these references, and was not persuaded by similar evidence of secondary considerations of nonobviousness finding all claims unpatentable as obvious.  (Id. at 58-59.)   Anacor can request a rehearing by panel within 30 days of the final written decision, and must articulate all grounds it feels the Board “misapprehended or overlooked.”  37 C.F.R. § 42.71(d).  Alternatively, Anacor may appeal directly to the Federal Circuit, 35 U.S.C. § 319, and must file a notice of appeal within 63 days of the final written decisions, 37 C.F.R. § 90.3.

The University of Pennsylvania Patent Decisions

The University of Pennsylvania is the current owner of U.S. Patent Nos. 7,932,268 (the “’268 Patent”) and 8,618,135 (the “’135 Patent”), which cover Juxtapid.  Juxtapid is a drug that targets lowering cholesterol levels in the blood, and is covered by seven Orange Book patents including the two patents discussed here.

The ’268 Patent has eight claims and discloses methods for treating hypercholesterolemia.  The patent teaches the administration of various amounts of microsomal triglyceride transfer protein (“MTP”) inhibitors and increasing the concentrations administered over time.  The ’135 Patent has ten claims and also discloses methods for treating hypercholesterolemia by administering various amounts of MTP inhibitors.  On August 28, 2015, Bass’ Coalition for Affordable Drugs VIII LLC (“CFAD VIII”) filed petitions for IPR of the ’268 and ’135 Patents, challenging all claims of both patents on obviousness grounds, and on March 7, 2016 the Board instituted both petitions.

In the ’135 petition, the CFAD VIII asserted that the claims were obvious over two combinations of three prior art references including a Bayer Pink Sheet, a scientific publication, and a slide set for a presentation given at an MTP program.  (IPR2015-01835, Paper No. 56 at 8.)  The Board first found that the petition had not met its burden to prove that the slide set qualified as printed publication.  (Id. at 22.)  The Board then found that the claims were not obvious in light of the surviving references, and that substantial evidence of secondary considerations of nonobviousness showing commercial success had been offered, (Id. at 40, 44.), finding all claims valid, (Id. at 46.).  In the ’268 petition, the CFAD VIII asserted that the claims were obvious over the same three references from the ’135 petition.  (IPR2015-01836, Paper No. 58 at 7-8.)  The analysis and outcome from this petition was the same as was for the ’135 petition—the Board found all claims valid.  (Id. at 45.)

The Acorda Patent Decisions

Acorda Therapeutics is the current owner of U.S. Patent Nos. 8,440,703, 8,007,826, 8,663,685, and 8,354,437, which cover Ampyra.  Ampyra is prescribed to assist adults with multiple sclerosis in their ability to walk more quickly, and is covered by five Orange Book patents including these four patents.

All four patents disclose a method for increasing the walking speed of people with multiple sclerosis, by administering a therapeutically effective plasma level of aminopyridine in a controlled release form that lasts from 12 to 24 hours.  On September 2, 2015, Bass’ Coalition for Affordable Drugs LLC (“CFAD”) filed a petition for a petition for IPR of each patent, challenging all claims on obviousness grounds, and on March 11, 2016, the Board instituted all four petitions.

The CFAD asserted that the claims were obvious over three pieces of prior art.  The primary reference was a Registration Statement made by Acorda under the Securities Act of 1933, and the two secondary references were related scientific publications.  (IPR2015-01850, Paper 72 at 2-3.)  The PTAB issued one decision covering all four petitions, finding that the Registration Statement did not qualify as prior art under 35 U.S.C. 102(a) or 102(b) because it was solely the work of the named inventors, and because the patents-in-suit were entitled to claim priority date to a provisional application that was filed less than one year after the date of the Registration Statement.  (Id. at 37, 42-43.)  Because patentability of all of the claims depended on the Registration Statement alone or in combination with the two other publications, none of the claims were found to be unpatentable.  (Id. at 43.)  The Board came to the same conclusion on all of the IPRs.  (Id. at 54.)

The Biogen Patent Decision

Biogen is the current owner of U.S. Patent No. 8,399,514 (the “’514 Patent”), which covers Tecfidera.  Tecfidera is a drug prescribed to slow the debilitating effects of multiple sclerosis.  It is believed to protect against damage to the brain and spinal cord, and is covered by seven Orange Book patents including the patent at issue.

The ’514 Patent has twenty claims and discloses a method for the treatment of multiple sclerosis by administering a therapeutically effective amount of dimethyl fumerate or another effective compound.  On September 28, 2015, Bass’ Coalition for Affordable Drugs V LLC (“CFAD V”) filed a petition for IPR, challenging all claims on obviousness grounds, and on March 22, 2016, the PTAB instituted.

In the petition, the CFAD V asserted that the claims were obvious over three combinations of six prior art references.  (IPR2015-01993, Paper 63 at 4-5.)  After considering the references, the Board found “[w]hile the proof of the optimization of a result-effective variable is generally sufficient to establish the obviousness of a particular value of that variable, obviousness is not established when the results of optimization are shown to result in a property or benefit that a person of ordinary skill in the relevant art would have found to be unexpected.  (Id. at 26.)  The Board found that the evidence established unexpected results, and therefore the claimed dosage method was not obvious.  (Id. at 27.)  The Board held all claims not unpatentable.  (Id.)

Bass’ Record so Far

Since early 2015, Bass has filed 37 IPR petitions, challenging 30 patents covering 17 different drugs.  The Board instituted 21 of these petitions.  In two instances, opposing parties declined to file a response or abandoned the contest, resulting in cancelled claims.  As depicted in the table below, Bass has invalidated patents in 9 of the 18 IPRs that have a final decision issued.  Bass is currently waiting for a final decision from one petition involving Diprivan®, which is expected by the middle of June.  We will continue to monitor Bass’ activity and provide an update once that decision is rendered.

IPR Case No. Filing Date Patent Owner Drug US Pat No. Claims Invalidated
IPR2015-00988 4/1/15 Shire Inc./Cosmo Technologies Ltd. Lialda® 6,773,720 None
IPR2015-00990 4/1/15 NPS Pharmaceuticals, Inc. Gattex® 7,056,886 46-52 and 61-75 of 75
IPR2015-01092 4/23/15 Celgene Corporation Pomalyst® and Revlimid® 6,045,501 1-10 (all)
IPR2015-01093 4/23/15 NPS Pharmaceuticals, Inc. Gattex® 7,056,886 1-27, 31-40, and 44-45
IPR2015-01096 4/23/15 Celgene Corporation Pomalyst® and Revlimid® 6,315,720 1-32 (all)
IPR2015-01102 4/23/15 Celgene Corporation Pomalyst® and Revlimid® 6,315,720 1-32 (all)
IPR2015-01103 4/23/15 Celgene Corporation Pomalyst® and Revlimid® 6,315,720 1-32 (all)
IPR2015-01718 8/12/15 Horizon Pharma USA Vimovo® 8,945,621 None
IPR2015-01776 8/20/15 Anacor Pharmaceuticals, Inc. Kerydin® 7,582,621 1-12 (all)
IPR2015-01780 8/20/15 Anacor Pharmaceuticals, Inc. Kerydin® 7,767,657 1-24 (all)
IPR2015-01785 8/20/15 Anacor Pharmaceuticals, Inc. Kerydin® 7,767,657 1-24 (all)
IPR2015-01835 8/28/15 The Trustees of the University of Pennsylvania Juxtapid® 8,618,135 None
IPR2015-01836 8/28/15 The Trustees of the University of Pennsylvania Juxtapid® 7,932,268 None
IPR2015-01850 9/2/15 Acorda Therapeutics, Inc. Ampyra® 8,440,703 None
IPR2015-01853 9/2/15 Acorda Therapeutics, Inc. Ampyra® 8,007,826 None
IPR2015-01857 9/2/15 Acorda Therapeutics, Inc. Ampyra® 8,663,685 None
IPR2015-01858 9/2/15 Acorda Therapeutics, Inc. Ampyra® 8,354,437 None
IPR2015-01993 9/28/15 Biogen MA, Inc. Tecfidera® 8,399,514 None
IPR2016-00245 11/24/15 Alpex Pharma Suprenza® 8,440,170 1-3, 5-6, and 8-9
IPR2016-00694 3/1/16 Nissan Chemical Industries, Ltd. Bravecto™ 8,796,464 1

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