Predictions on Imclone's Suitors

So it seems that Bristol-Myers Squibb (BMY) took my advice (yeah, sure) and made an insultingly incremental counteroffer for Imclone (IMCL) , raising their $60/share all the way to. . .$62. I was hoping for something more like $60.25 myself, but you can’t have everything (I should send them a bill for consulting services and see how far that gets me).

Carl Icahn has replied in yet another public letter, saying that there must be more productive ways for BMS to enrich its lawyers. I notice that the folks at the Wall Street Journal’s Health Blog are getting tired of the extended correspondence between Icahn and BMS’s Jim Cornelius. Although I’m still enjoying the show, I can see where it will eventually pall.

Icahn claims that his mystery $70/share bidder is doing due diligence, which should be completed this weekend. You’d think that any due diligence worth the name would tell someone not to pay $70/share for Imclone while Erbitux is still tied up with Bristol-Myers Squibb and its successor’s status is still very much in doubt. Wouldn’t you? Just how long does it take to run those numbers, anyway? Especially in this financial market, with credit tightening and the investment banking community in chaos? Or is the whole thing just a load of. . .no, no, Carl Icahn wouldn’t stoop to tactics like that. And I am Marie of Rumania.

My prediction: 64% chance that the companies agree, with much face-saving theater, at a price of about $65 per share. 35% chance that the whole business falls apart for now, due to the uncertainly about IMC-11F8. And that leftover 1% chance is that there really is a $70/share bidder.

Comments

[nova:]

This is the second article by the same biotech-incompetent author.

Unfortunately, the author is incapable of understanding the ways to value biotechnology companies.

Diamonds and pearls are not valued by pounds and inches but rather by quality and beauty. The same is true for biotech.

The biotech value is in a company portfolio of drugs already available for sale including the presently approved and future indications, the value/potential of its pipeline in development and its patent portfolio.

These are the parameters potential buyer is looking at then they evaluate a potential biotech candidate rather than company's financials and/or its real-estate holdings.

This is a very difficult and complicated process. It is not a secret that the FDA evaluates drug candidates based on clinical trials results rather than on the Wall Street analysts or even the best scientists evaluations.

Back in 2001 then the FDA even refused to accept ImClone lead drug Erbitux for consideration, it appeared that ImClone has no value at all. Shortly from now, the same Erbitux being a bright oncology star is about to become a multi-billion dollar blockbuster drug helping thousands and thousands cancer patients all around world.

ImClone also has an outstanding pipeline of new drugs in developments. Some of these drugs are in the final Phase III development stage. A success of just one of these candidates will potentially double the present ImClone's value.

Consequently, a "secret" ImClone admirer has a lot of difficult work to do. There is no any need for either ImClone, its shareholders or a "secret" ImClone admirer to rush with the decision.

Disclosure: I am an ImClone shareholder. In my opinion, ImClone value is well above $8B.

2008 Sep 28 01:38 PM

[selene:]

Jeez. Is it not possible to disagree with Derek without calling him "incompetent" as well? What are your credentials?

2008 Sep 29 10:00 AM

[nova:]

IMO, it will be PFE with a $70+ bid for IMCL.

2008 Sep 30 12:27 AM