April 2nd Note: Short shares of Acorda from February 27, 2015 to March 13, 2015 grew again: from 7.4 million to almost 8 million and now have been driven from 17.8% to 22.4% of float and 12.6 days to cover. This is the 4th consecutive increase in short shares since January 30th. Hedge Fund head Kyle Bass filed a patent challenge on February 10th and another on February 27th. It is expected that there will be others filed by Bass as time goes on and that his hedge fund, Hayman Capital, will likely profit to the extent they are successful in their challenges. Of course, that remains to be seen.
It has been reported today that a second company, Shire, has been targeted for a patent challenge through the Interpartes Review Process (IPR) by Hayman. Bass had previously announced that he has as many as 15 pharma companies in mind for patent challenges. As this process develops, if successful, one would expect other hedge funds to tap what could be a lucrative avenue for driving down biopharma stocks. It is also likely that, feeling threatened, biopharma lobbying efforts will be directed at Congress for legislation to prevent hedge funds from having standing to make these challenges or at least to add restrictions. Am I alone in my belief that there is something terribly wrong when a firm can use the levers of the United States Government in this way where maximum profit can be derived by destroying a company that seeks to find remedies for the terrible diseases that plague us?