Status Report: ImClone Systems - Bristol-Myers Squibb

On Thursday, September 11, Bristol-Myers Squibb (BMY)  issued this letter to ImClone Systems (IMCL) in response to IMCL's offer rejection. Excerpts include the following:

As you know, Bristol-Myers holds the exclusive, long-term marketing rights in the United States to ERBITUX® and related compounds, including IMC-11F8. Bristol-Myers has no intention of agreeing to any modifications to these rights. ImClone also should understand that our offer is for the entire Company, and any potential restructuring of the Company could severely jeopardize ImClone's value and deprive ImClone’s stockholders of the benefits of our offer.

Notwithstanding ImClone's receipt of a highly conditional preliminary proposal from another party, we continue to look forward to engaging directly with ImClone and its financial and legal advisors to discuss the merits of our all-cash offer, which is not subject to due diligence or financing, to acquire the approximately 83% of ImClone that we do not already own.

This reaction is viewed as relatively weak under the circumstances. BMY's attempt to leverage Erbitux and IMC-11F8 will likely have no impact whatsoever on IMCL/Icahn's pursuit of a superior offer from the still unknown third party.

In short, the response to IMCL's revelations will serve only to delay the inevitable, which is an increased offered by BMY at or above the $70 level.

Disclosure: We have no positions of any kind, in any security. We are a completely neutral source of research and analysis.

Comments

[nova:]

I second to the author.

For the last 7 years, Bristol contributed very little if any to successful Erbitux development and/or marketing.

Now, Bristol discovered that
- its own share lost almost half of its market value in the last 12 months
- its pipeline is almost empty
- it spent a lot of money paying huge fines for not so legal activities

Consequently, Bristol has made a "brilliant" move by claiming its rights to something Bristol does not own and trying to by a highly successful biotechnology company for nothing.

Yes, indeed it was a "great" move by Bristol but it will not work.

2008 Sep 14 10:47 AM