BMS Bids $4.5 Billion for ImClone Systems

New York (July 31)-Bristol-Myers Squibb (BMS) is seeking to acquire the biopharmaceutical company ImClone Systems (New York) for $4.5 billion or $60 per share. BMS currently holds a 17% stake in ImClone. 

BMS partnered with ImClone for the development and commercialization of the anticancer therapy “Erbitux” (cetuximab). The companies first joined forces for the product in the US and Canada in 2001, and later partnered with Merck KGaA (Darmstadt, Germany) for the development and commercialization of Erbitux in Japan. BMS’s global sales for Erbitux were $692 million in 2007.

BMS’ move to acquire ImClone is consistent with its strategy to build its biopharmaceutical portfolio and capabilities. In December 2007, BMS unveiled a new strategy that centered on transforming the company into what it called a “next-generation biopharma company.”

That strategy also includes a divestment program of noncore assets. BMS announced this week that it had closed on its previously announced divestiture of ConvaTec, a BMS business unit specializing in wound care and ostomy care products, to Nordic Capital Fund VII and Avista Capital Partners.

BMS’s board of directors has approved the company’s bid for ImClone. In a letter to ImClone Chairman Carl Icahn, BMS chairman and CEO James Cornelius extended BMS’s offer and offered to meet with Icahn and company advisors for purposes of securing a definitive agreement for the acquisition. 

ImClone announced on Aug. 4, 2008, that it has formed a committee to study BMS’ offer, but has said the current offer is insufficient. “The Board's preliminary view is that the offer substantially undervalues ImClone,” said the company in a prepared statement.

ImClone also stated that it had considered splitting its pipeline assets and its Erbitux assets into two separate entities, given the possible value to its shareholders in having the pipeline assets positioned as a separate business. 

A possible concern for a BMS-ImClone deal relates to the disclosure of information on ImClone’s consideration of separating the businesses and the potential of one of its antibody drug candidates.
ImClone released the following statement: “Mr. Icahn also stated that he was disturbed that one of the directors on the ImClone Board who is the Bristol-Myers designee was privy to the information discussed at previous meetings concerning the potential separation of ImClone into two separate components and how this restructuring might enhance stockholder value. Accordingly, the Board is reviewing whether Bristol-Myers had access to confidential information concerning ImClone and its pipeline. Additionally, Mr. Icahn pointed out that ImClone has a pipeline antibody, IMC-11F8, under development which, if ultimately approved for sale, might have a significant competitive effect on Erbitux and that Bristol-Myers may have no rights to market that product under its agreements with the company.”