Celgene Corp. shares jumped after the company said it settled a patent dispute over Revlimid, its top-selling drug, with Natco Pharma Ltd.
Under the settlement, Natco will be able to start selling generic Revlimid in the U.S. in March 2022, but with restrictions on the volume sold, according to a Celgene statement on Tuesday. Starting Jan. 31, 2026, Natco will be able to sell the generic without volume limitations.
Celgene jumped 8 percent to $119.99 at 9:39 a.m. in New York. The settlement also included a unit of Allergan Plc that is working with India-based Natco.
"The biggest overhang on Celgene’s stock, in our view, has just been lifted," Cory Kasimov, an analyst with JPMorgan Chase & Co., wrote in a note to clients Tuesday. "This essentially provides clarity on a product runway that extends out another 10 years."
The settlement controls the rate at which generic competition can erode Revlimid’s market share. The volume limitation starts at "a mid-single-digit percentage" of Revlimid sales and gradually increases year by year until 2025, when it’s not expected to exceed one-third of the total Revlimid capsules dispensed in the U.S., according to the statement.
While Celgene is trying to diversify beyond Revlimid, it continues to rely heavily on the multiple myeloma treatment. Revenue from Revlimid represented 65 percent of Celgene’s product sales in 2014. Revlimid is covered by a number of patents; the main patent expires in 2019 and the last patent expires in 2027.