Celgene Investors: Watch This Hearing In 5 Weeks

Citi issued a note on Celgene Corporation CELG Tuesday ahead of a May 7 hearing to determine if the Revlimid EU polymorph patent will be revoked.

According to analyst Yaron Weber and the firm's external patent attorney, Oliver Kingsbury at Elkington and Fife, the most likely outcome from the hearing will be a "revocation of the patent while the second most likely outcome is that the patent will be narrowed to remove any protection for the anhydrous polymorph form A."

The case hinges on is whether the "EP'682 patent covering polymorphs forms A, B and E is novel and whether the previous composition of matter patent (US'517) serves as anticipatory prior art," according to Weber.

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Teva Pharmaceutical Industries Ltd (ADR) TEVA and Mylan NV MYL have argued that the "anhydrous polymorph Form A lacks novelty and that Forms B and E lack inventive step over Form A."

Weber noted the the base case scenario assumed that Revlimid would face generic competition beginning in 2024.

If, however, if the polymorph patent is revoked or substantially limited following the hearing's outcome, then competition could be on the market in 2022, according to Weber, with a potential impact on the DCF of -$6 per share.

The firm maintained a Buy rating and $143 price target on the stock.

Celgene recently traded at $115.98, down 3.3 percent.