Oktoberfest For ImClone & Dendreon (Update On Mystery Bid)

UPDATE--Mystery Solved: Eli Lilly is in advanced talks to acquire ImClone for $70 per shares according to sources. No deal is yet in place. The Lilly offer values ImClone at about at $6.1 billion.

A spokesman for BMY says, "No comment." A Spokesman for LLY says, "We don't comment on speculation that's out there in the market. We cannot confirm or deny the report."

While the Street is focused on the big vote in the Senate tonight on the bailout package, biotech investors will be on the lookout for news out of ImClone Systems.

Earlier this week the company announced that its mystery counter-bidder will decide whether to follow through on its $70-a-share offer by midnight tonight. On light volume, so far, IMCL is trading higher, although it's already below its best level of the morning. Bristol-Myers Squibb recently raised its offer from $60 to $62 a share, so at least a few investors seem to be making a small bet that the as-yet unidentified "large Pharma" company might start a formal bidding war.

In a research note to clients this morning Rodman & Renshaw senior biotech analyst Mike King is lowering his third-quarter sales estimates for the cancer drug Erbitux, which it shares with BMY . But King writes, "We continue to believe that a bid in excess of $70 will likely emerge for ImClone before an acquisition is concluded. However, we would point out that Bristol has the upper hand in the negotiations." R&R makes a market in IMCL.

Meantime, this is gonna be a big month for Dendreon . October is when the biotech company has said it would have the interim data from the pivotal clinical trial of its prostate cancer treatment Provenge. Before you ask, DNDN has not provided any specific date or range of dates. If the mid-term study results are good enough, Dendreon officials have said the Food and Drug Administration has told them it would approve Provenge. Otherwise, patients and investors will have to wait for the final test results to come in sometime next year.

According to this week's Barron's, DNDN is 27th on the list of Nasdaq stocks with the largest short positions. However, from the end of August through the middle of September, the number of shares sold short dropped by more than 38,000. DNDN is also 17th on the list of Nasdaq stocks with the largest short interest ratios with more than 33,500,000 in bear claws as of September 15th. Remember, though, that was before the recent launch of the crackdown on short-selling.

The debate over whether the interim study results will be robust enough is intense. Oktober will be a ride on die achterbahn for Dendreon investors. Will it be the longs or the shorts who are left crying in das bier?

Questions? Comments? Pharma@cnbc.com