ImClone Calls Bristol Offer Too Low

Biotechnology company ImClone Systems said on Monday that a $60-per-share takeover bid from partner Bristol-Myers Squibb was too low, but it would hire financial advisers to help it study the unsolicited offer.

Bristol-Myers offered last week to acquire the ImClone shares it does not already own in a deal that values the company at $5.2 billion. I

Activist investor Carl Icahn, who is chairman of ImClone and a large shareholder of the company, told its board that he opposed Bristol-Myers' offer because he believes it "greatly undervalues the company."

"We all expected Carl would come back and say the initial offer was inadequate," said Cowen & Co analyst Eric Schmidt. "There has been posturing on both sides."

ImClone shares fell 1.1 percent to $64.60 in morning trading on Monday. Analysts said last week that ImClone could fetch much more than what Bristol-Myers had offered.

ImClone said its board had been discussing the possibility of splitting the company in two, separating its Erbitux cancer treatment and its drug-development pipeline businesses.

Erbitux is approved for colorectal and head and neck cancer in the United States, and Canada, while a recent approval for the drug in Japan and new lung cancer data are expected to drive sales.

ImClone said it believed the pipeline business "may be extremely valuable and significantly increase stockholder value as a separate business."

Icahn said he was disturbed that one of the directors on ImClone's board was a Bristol-Myers designee who was privy to discussions about potentially separating the company.

As a result, ImClone said its board was reviewing whether Bristol-Myers had access to confidential information about the company and its pipeline.

ImClone has an antibody, IMC-11F8, under development. If approved for sale, the company said, the antibody "might have a significant competitive effect on Erbitux," and Bristol-Myers may have no rights to market that product.

A Bristol spokesman declined to comment, but Morningstar analyst Karen Andersen said the terms of the current agreement between the two companies appeared open to interpretation.

"I feel like Icahn is hoping Bristol would rather pay up for ImClone than get into some sort of legal battle over who has rights to 11F8, assuming it could turn out to be a next-generation Erbitux," she said.

For nearly seven years, Bristol and ImClone have had a relationship centered on Erbitux, whose second-quarter global sales rose 33 percent to $423.3 million.

Bristol and ImClone co-promote Erbitux in the United States and Canada, while Germany's Merck co-markets the drug with Bristol in Japan and has rights to it in other countries.

Bristol-Myers's offer for ImClone marked the latest in a spate of pharmaceutical-biotech deals, including Roche Holding's recent $43.7 billion bid for the part of Genentech it doesn't already own.

Drug makers have been eager to buy biotech assets to replenish dry pipelines amid patent expirations on their top medicines.

A buyout would be the latest twist in ImClone's colorful history. Stock trades in late 2001, based on insider news about Erbitux, landed the company's original CEO, Sam Waksal, and his friend Martha Stewart in jail.

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