Four Thoughts on the Imclone/Lilly Deal

Includes: BIIB, BMY, IMCL, LLY
by: Derek Lowe

Well, it looks as if I'll finally be able to stop talking about Imclone (IMCL): the word came out Monday morning that they've agreed to a $70/share deal with Lilly (NYSE:LLY). Some thoughts on this:

1. I would still like to know how the uncertainty around the Erbitux follow-up antibody is supposed to be resolved. It's hard for me to make sense of this for Lilly unless they think that they can get substantial revenue from it, and Bristol-Myers Squibb (NYSE:BMY) presumably will disagree with their projected figures. None of the news stories so far has addressed this issue, and I presume that it's going to be a matter for negotiations (or for the courts, if it comes to that).

2. It seems that some analysts are seeing this deal as a sign of weakness in Lilly's pipeline, perhaps signaling that Effient (prasugrel) might be delayed more or labeled so restrictively that it has no chance of living up to expectations. We'll see how Lilly's stock performs, and read the mood of its investors.

3. Well, Carl Icahn really did have something up his sleeve. Considering what Imclone was trading at before all this, he has plenty of reasons to be happy. But now will he turn his attention to Biogen (NASDAQ:BIIB) again, and try to do the same thing with (or to) them?

4. I stand corrected! I had trouble believing that someone would come in at this price under these conditions, but, well, here they are. I should keep in mind that a fair number of mergers and acquisitions in this industry seem problematic (or downright senseless) to me, and adjust accordingly.

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