Celgene dodges Alvogen bid to overturn Revlimid patent

Revlimid (lenalidomide) is a crucial drug for Celgene and its nearly $10 billion in annual revenue is a key part of Bristol-Myers' deal to buy the storied biotech.

Celgene and Bristol-Myers Squibb expect limited generic competition to the multiple myeloma therapy in March 2022, followed by full generic entry in early 2026. If that timeline holds, Bristol-Myers could count on years of substantial cash flow generation that would help pay down debt raised to afford the $74 billion deal. 

The PTAB's rejection of petitions from first Dr. Reddy's and now Alvogen makes that prospect more likely, although district court litigation between Celgene and Dr. Reddy's continues.

Dodging those challenges could also help convince investors skeptical of the deal. A shareholder vote is set for April 12 and a major institutional investor recently joined activist investor Starboard Value in opposing the business combination.

The looming expiration of market exclusivity for Revlimid is a central part of Starboard's objection to the deal.

"Bristol-Myers is knowingly acquiring a massive patent cliff with significant deal value concentrated in the net present value of the cash flows from one product," the activist investor wrote in a proxy solicitation to Bristol-Myers' shareholders.

Even though Alvogen's petition was not expected to succeed, its denial avoids "potential issue that could unnerve investors ahead of the merger votes," wrote Brian Abrahams, an analyst at RBC Capital Markets, in a March 14 note to clients.

Alvogen had sought to overturn U.S. Patent No. 7,968,569, which covers dosing of Revlimid in multiple myeloma, on grounds of obviousness. The PTAB, however, found it unlikely that Alvogen would prevail in invalidating at least one of the claims contained within that patent and therefore denied the company's petition. 

Interestingly, Alvogen last month launched a generic version of Revlimid in Romania, Croatia, Bulgaria and several Baltic states — a development that took investors by surprise and triggered new worries over Revlimid's patent position.

That launch, however, came via a confidential agreement with Celgene which permitted Alvogen and its partner Lotus to begin sales of their copycat version. Celgene doesn't expect any broader launch in the EU to follow. 

Whether the PTAB denials of petitions from Dr. Reddy's and Alvogen do, in fact, boost investor confidence in sales projections by Bristol-Myers and Celgene leadership isn't clear.

But Bristol-Myers CEO Giovanni Caforio has clarified there are no other offers on the table waiting. 

"This is not a defensive deal," Caforio told investors at a recent conference. "We didn't do it because there was an offer on the table." 

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