Hedge-Fund Manager Challenges Jazz Pharmaceuticals Patent

Hedge-fund manager Kyle Bass filed a patent challenge late Monday against Jazz Pharmaceuticals PLC and its narcolepsy drug Xyrem.

The challenge was the latest salvo in Mr. Bass's new battle against pharmaceutical companies that he believes host spurious patents to keep drug prices artificially high. The challenge was filed in the name of the Coalition for Affordable Drugs, an organization partly controlled by Mr. Bass.

Shares of Jazz Pharmaceutical rose 0.4% to $168.70 in early trading on Tuesday after falling 2.9% in premarket trading. The company didn't immediately respond to a request for comment.

Xyrem had sales of $778.58 million last year, which represented 66.4% of the company's total revenues.

Last week, Mr. Bass filed challenges against patents for two Shire drugs--the Lialda medicine for ulcerative colitis and the Gattex treatment for short bowel syndrome. Earlier, he challenged a patent that Acorda Therapeutics holds on its multiple sclerosis drug Ampyra. Acorda shares dropped dramatically after the challenges were filed.

Mr. Bass's more than $2 billion Hayman Capital Management L.P. stands to profit if the patents are invalidated, as the firm has placed trades to bet on and against shares of companies involved in the disputes, people familiar with the firm said.

Write to Rob Copeland at [e-mail] and Joseph Walker at [e-mail]

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