ImClone Systems Rejects Bid by Bristol-Myers Squibb

New York (Sept. 10)-The biopharmaceutical company ImClone Systems rejected Bristol-Myers Squibb’s (BMS) previously announced bid of $60 per share in cash or $4.5 billion for acquiring ImClone, citing the bid as “inadequate.” In rejecting the bid, ImClone said it had been approached by a large pharmaceutical company offering $70 per share for the company.

BMS made its unsolicited bid for ImClone in late July.

BMS is 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 currently holds a 17% stake in ImClone. 

ImClone reported last week the Carl C. Icahn, chairman of the board of ImClone Systems, had several conversations with the CEO of a large pharmaceutical company, which submitted a proposal, subject to due diligence, but not subject to financing, to acquire ImClone for $70 per share in cash. Subject to the execution of a confidentiality agreement, ImClone said it would allow this company to conduct due diligence for a two-week period, subject to extension by mutual consent. “No determination has been made as to whether $70 per share would be adequate,” said ImClone in a prepared statement.

BMS Chairman and CEO James M. Cornelius responded to ImClone’s statement through a letter
dated Sept. 11, 2008 to Icahn. “We were disappointed to learn yesterday, nearly six weeks after we announced our offer, that ImClone's special committee unilaterally rejected our offer without discussing its merits with us and our advisors.”

Cornelius noted in ImClone's statement dated Sept. 10, 2008, that the preliminary proposal ImClone received from another company was subject to due diligence. “In contrast, we have made a formal written offer which has been approved by our board of directors, is not subject to due diligence, and has been fully disclosed to ImClone’s stockholders,” said Cornelius in his letter.

Cornelius also asserted that BMS holds the exclusive, long-term marketing rights in the US to Erbitux and related compounds, including IMC-11F8 and “has no intention of agreeing to any modifications to these rights.” The rights to “IMC-11F8,” an antibody drug candidate, has been the subject of disagreement between the two companies under any proposed acquisition of ImClone.

Responding through a letter to Cornelius, Icahn said:“On July 31, 2008, you sent us an unsolicited offer withouttrying to have a conversation first to discuss Bristol's intentions. You now complain that we rejected the offer as inadequate without discussing the merits with you. You are aware of course that I tried to reach you to discuss our position before we made it public.”

With regard to the rights of IMC-11F8, Icahn added that “we disagree that Bristol's rights are clear and [we] do not waive any rights that we may have…” 

Icahn, however, left the door open for another proposal by BMS, saying in his letter to Cornelius, that ImClone would respond to an offer “which you believe we would not find inadequate.”