Old & New Friends for Bristol
Bristol-Myers Squibb announced today a potential $1 billion partnership deal with the biggest pharmaceutical company in the world, Pfizer, on a clot-busting drug. And there are signals that its older, troubled partnership with ImClone Systems could be in for some reconciliation.
Shares of IMCL were down after the company reported that sales of the cancer drug it markets with BMY, Erbitux, climbed 16% in the first quarter, but fell short of the analyst consensus by $5 million. Then, during the Q&A portion of ImClone's conference call at 11 a.m. ET today, the stock suddenly shot up to a new high. That happened after officials on the call made a comment about how they're mending fences regarding their relationship with Bristol.
Activist investor Carl Icahn has been pushing ImClone and Bristol to make nice. To that end, ImClone announced today that Bristol's CFO Andrew Bonfield is getting a seat on the IMCL Board. Then the stock went down when an official answered a question about whether with biotech M&A being so hot lately, could ImClone get taken out? The official said, "We are not planning to sell the company. We are not spending any time trying to do that."
Talk about a roller coaster of a conference call, because the stock shot back up later when they came back to the subject of the Bristol "talks," and an official said, "We don't wanna mislead people to conclude there could be a dramatic change in the structure of the (Erbitux) agreement. But we don't wanna discuss any details. Over time, we can give more information about how things are developing." Hmmm.
ImClone is also still searching for a new CEO. On the call, they said they're "making significant progress. But we're not ready to announce anything." Bristol, on the other hand, announced today that it's hiring interim CEO, Jim Cornelius, as its permanent CEO. Cornelius had said he didn't want the job.
But after spending the past several months working with all of the good people at BMY, listening to a "persistent and persuasive" Chairman try to lure him, and Cornelius' wife apparently taking a liking to New York City, the 63-year-old decided to sign on for two years.
In addition to that announcement, Bristol also beat the Street and raised its full-year earnings guidance. So, guess what happened? The stock went down! On the call, CFO Bonfield explained that some analysts think the PFE partnership and the hiring of Cornelius indicates Bristol may not be for sale and so disappointed investors are selling the stock today.
Some analysts also think that Cornelius' hiring means Bristol couldn't find anyone else. With the up-'til-now persistent rumors about the company being a takeout target and the pending court decision on its Plavix patent, who would come from outside to take the job?
On a conference call with reporters, Chairman Jim Robinson insisted, "We had a number of highly-regarded people who were interested in the company." One of those people is rumored to be Schering-Plough's turnaround-guy extraordinaire, Fred Hassan. Robinson would only say, "He's a respected CEO in the industry and we have a high regard for him."
How high is their regard for Cornelius? We'll find out tomorrow when the company is expected to post on the SEC website (sec.gov) the pay package for Cornelius. On the call officials declined to say whether it includes the $25,000 a month BMY has been paying for Cornelius' Manhattan apartment. No wonder his wife likes the city so much.
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