BMS Offers US$4.5 bil. for ImClone

BMS Makes Whopping US$4.5-billion Offer

U.S. multinational pharmaceutical company Bristol-Myers Squibb (BMS) has announced its offer to acquire an 83% share in compatriot oncology specialist biotech ImClone for a cash payment of US$60.0 per share, making a total payment offer of approximately US$4.5 billion, the company noted in a press release. At present BMS owns a 17% share and is the largest shareholder of ImClone.

The US$60.0-per-share cash offer , according to BMS, represents a premium of approximately 30% over ImClone's closing stock price on the last day of trading before BMS made its offer (30 July 2008). The offer is also 40% higher compared to the average closing price of ImClone stock over the past month and the most recent three-month and 12 month-periods.

According to BMS Chairman and CEO James M. Cornelius, "the proposed acquisition of ImClone represents a strategically and financially sound add-on to our business, consolidating a relationship we have had for nearly seven years. The acquisition is expected to contribute to our financial performance in the 2012-2013 timeframe as well as drive growth beyond 2013," notes the source.

BMS entered a partnership agreement with ImClone in 2001 over the development and commercialisation of cancer drug Erbitux (cetuximab) in the United States and Canada. Under the terms of the agreement, ImClone received a distribution fee based on a flat rate of 39% of net sales in North America, which was updated in July 2007 to include additional development funding for certain indications. In Japan, Erbitux in is co-marketed by German Merck KGaA and ImClone. Erbitux is indicated for use in patients with metastatic colorectal cancer and squamous-cell carcinoma of the head and neck. ImClone's research pipeline includes a number of potential biotechnology drugs in early stages of development (see table below).

Outlook and Implications

The latest move by BMS is a continuation of the successful partnership between the two companies over the last seven years over the development and commercialisation of top-selling oncology drug Erbitux, sales of which were up 21% year-on-year in the second quarter of 2008 to US$196 million.

The BMS offer by is intentionally high in order to get a quick positive response from ImClone. Assuming ImClone accepts the offer BMS would become a majority shareholder having both operational and governance rights, enabling it to acquire a number of new oncology drugs in pre-clinical testing in addition to Erbitux. In return, BMS could offer ImClone the financial, research and development (R&D) and marketing capabilities necessary to bring these compounds to the market.

BMS's keen interest in biotechnology is part of a long-term future plan (see United States: 1 February 2008: Streamlining Strategy Shows Results as BMS Cuts Net Loss 33.5% Y/Y in Q4).