TRENTON, N.J. - The drugmaker, Bristol-Myers Squibb Co., on Thursday offered $4.5 billion in cash for its cancer drug partner, biotechnology company ImClone Systems Inc., saying the two are "a natural fit" and together could reach more patients.
ImClone's board has yet to comment on the proposal, which offers its stockholders $60 per share, a 30 percent premium to New York-based ImClone's closing price of $46.44 Wednesday. New York-based Bristol-Myers already owns about 17 percent of ImClone.
The two companies have been partners since September 2001 in developing Erbitux, which is approved for treating advanced colorectal cancer and head and neck cancers.
ImClone shares surged beyond Bristol's offering price and were up 38 percent, to $17.65, at $64.09 in morning trading. Bristol-Myers shares fell 25 cents, or 1.2 percent, at $21.26.
"In my view, and in the view of our board of directors, this transaction makes compelling business sense for both of our companies and is in the best interests of our respective shareholders and the cancer patients for whom our companies' life saving medicines are so important," Bristol-Myers Chairman and Chief Executive James M. Cornelius said in a letter to ImClone's board.
Cornelius characterized the offer as "full and fair" price for "a strategically and financially sound" acquisition, adding that Bristol-Myers has the know-how and resources to advance ImClone's long-term growth. His letter said Bristol officials look forward to a "prompt response."
A spokesperson for New York-based ImClone did not immediately return a call seeking comment.
"We have high regard for the potential of ImClone's pipeline assets, while recognizing the early stage of their development and the significant investment which is required to further their development," the letter stated.
ImClone has about a half-dozen experimental drugs for fighting solid tumors in laboratory testing, along with one for treating two types of leukemia.
Icahn, a billionaire activist investor, won control of ImClone in 2006 after a proxy battle that led to the departure of CEO Joseph L. Fischer and four board members. He was named chairman and created an executive committee to lead the company. John H. Johnson was named CEO in August of 2007.
At the time of the takeover, Icahn said he planned to investigate why ImClone's relationship with Bristol-Myers had "seriously deteriorated" following a public feud over Erbitux.
Under an agreement that runs until 2018, Bristol-Myers has exclusive marketing rights to Erbitux in the United States and ImClone receives a distribution fee for part of those sales.
ImClone is seeking approval to sell Erbitux to treat lung cancer, the leading cause of cancer death in this country. Last month, one analyst forecast that ImClone and Bristol-Myers could see peak Erbitux sales for lung cancer of $700 million if the drug is approved for that use.
ImClone's second-quarter revenue totaled just $166.5 million; it posted net income of $25.3 million, or 29 cents per share.
Cornelius said in a statement that the acquisition should boost Bristol-Myers' financial performance by around 2012-13 — a key time frame because the company expects big drops in sales of its blockbuster blood thinner Plavix and two other key drugs then, due to patent expirations and the end of a joint marketing deal.
His letter to Icahn and the ImClone board said he hopes the deal is "enthusiastically supported by you" and said Bristol does not expect any regulatory or other impediments to delay closing of the deal.
Source: http://news.yahoo.com/s/ap/20080731/ap_on_bi_ge/bristol_myers_imclone
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