The Markman Note: Bass Keeps Fishing for Pharma Shorts
Apr. 28, 2015 (Mimesis Law) — It was another busy week at the intersection of investing and intellectual property, particularly in the bio-pharma sector. Welcome to the fifth issue of the Markman Note, where we take a look at how the market reacts to patent litigation events, and try to anticipate what the next catalysts will be. Hopefully you have had a chance to catch our video “Markman Minutes” on what we consider the biggest current patent stories of interest to investors. Finally, we want your feedback and suggestions, so feel free to send it along to firstname.lastname@example.org or to @markmanadvisors on Twitter. You can also visit our website at www.markmanadvisors.com. Questions from the readership are always welcome as well; we will try to get you answers in future issues of the Markman Note.
The Big Story
Kyle Bass and Erich Spangenberg’s various Coalition for Affordable Drug entities continue to dominate discussion, as a slew of new IPR filings presaged a marked expansion of their war against the bio-pharma industry. The targets were varied and seem to have been selected for different reasons, but it is clear that the approach Bass and Co. are taking aims to challenge a cross-section of patents that they feel are weak — but are associated with valuable drug franchises. The market consensus is that we will see more IPR’s filed by variations of the Coalition for Affordable Drug entities, perhaps over the next few weeks. It will be interesting to see if Bass decides to inform everyone when his assault is over, so that attention can be turned to seeing which, if any, of his filed IPR’s get instituted by the PTAB over the next few months.
Even though Bass and Co. have picked up the pace of their filings, the market reaction continues to be muted, if slightly unfavorable to Bass’ promised short positions in the target companies. We are already starting to see more sophisticated analysis of Bass’ filings being put out in the financial media, including numerous pieces pointing out the flaws in Bass’ approach — such as not targeting all the patents protecting a drug in some cases, or attacking patents due to expire soon in others. In any event, this is turning into one of the patent stories of the year, and illustrates how Wall Street and the patent world are beginning to intersect more directly than in the past. We will continue monitoring Bass’ filings, and the all-important reception they receive before the PTAB.
As to Shire, Bass has filed another IPR challenging Gattex, a recently acquired-drug. Bass had previously attacked both Gattex and another important Shire drug, Lialda.
Celgene’s Thalomid, a derivative of Thalidomide, was a target of Bass, who attacked a method patent that expires in 2018.
Bass challenged a method patent, with a 2031 expiration date, protecting the treatment of mantle cell lymphoma with Pharmacyclic’s Imbruvica.
Bass attacked one of the patents protecting Biogen’s blockbuster multiple sclerosis drug, Tecfidera.
Recent Patent Litigation-Influenced Moves
A Delaware jury recently found that ZTE is not infringing on an InterDigital (IDCC) patent. IDCC is a long-time player in the patent licensing game, and has been entangled with ZTE for a number of years. ZTE itself is starting to establish a reputation for playing hardball, perhaps in an effort to change the perception of Asian-based companies as easy marks for patent licensing entities. In the latest development, ZTE was successful in convincing a Delaware jury that it did not infringe one of IDCC’s patents — but still faces a potential damages trial as to three IDCC patents a previous jury found infringed. Investors in IDCC will continue to watch for developments in this matter closely, as this situation presents a test of IDCC’s ability to tame a bucking bronco of a target that hopes to avoid filling IDCC’s licensing coffers. Just another example of the challenges patent holders face in their licensing efforts these days.
Marathon Patent Group (MARA) announced a claim construction ruling in the Signal IP case against auto manufacturers. Marathon has long been one of the darlings of the patent assertion space, as we ourselves wrote about the company almost two years ago, and presented our reasons for why we thought their approach was likely to generate positive returns for investors. Importantly for the company, a Markman decision came down in one of their higher-profile cases, where the company asserted numerous patents against the gamut of major automotive manufacturers. As with most Markman decisions, the recent decision should help both streamline the case and identify the key flashpoints on the liability issues as the case move forward. Whether or not MARA will be able to turn this decision into settlements is an important test of the company’s ability to execute on its strategic approach of generating revenue at every opportunity. Easier said than done in today’s patent universe.
The Week(s) Ahead — Expected Events
Upcoming Federal Circuit argument in Parkervision v. Qualcomm — May 8, 2015.
Disclosures and Disclaimers:
Nothing in this material is intended to constitute legal or investment advice of any kind, nor is any of this material based on any non-public information of any kind. In addition to my work at Markman Advisors, I am also a name partner at a NYC-based intellectual property litigation boutique firm, Kroub Silbersher & Kolmykov PLLC (www.kskiplaw.com). Markman Advisors is affiliated with a Houston-based investment management firm, Perdix Capital Management, which may have existing or potential positions relating to situations discussed in this material. Markman Advisors also provides consulting services to buy-side investors, including hedge funds and family offices, that may also have or enter into positions relating to situations discussed in this material. Questions or comments can be directed to me at email@example.com. All suggestions are welcome.
Main image via Flickr/e-Magine Art.