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Eli Lilly agrees to buy ImClone for over $6B
2008-10-06
NEW YORK - The drugmaker Eli Lilly & Co. said Monday it has agreed to buy biotechnology company ImClone Systems Inc. for more than $6 billion in a deal that would expand its pipeline of cancer treatments. New York-based ImClone had previously rejected as too low two lower-priced takeover offers from Bristol-Myers Squibb Co., its marketing partner for the cancer drug Erbitux. Indianapolis-based Lilly said it will pay $70 per share in cash for ImClone, up 7.7 percent from Friday's close and more than 50 percent over its price in July before Bristol-Myers made its first bid. With about 87 million shares outstanding as of Aug. 1, that would amount to nearly $6.1 billion. Lilly said in its news release that the transaction is worth $6.5 billion. Both boards have approved and recommended that ImClone stockholders tender their shares. Bristol-Myers had previously offered $60 a share and later $62 per share for ImClone. Bristol-Myers Squibb had no immediate comment on the Lilly offer Monday. ImClone said its chairman, Carl Icahn, who owns about 14 percent of ImClone stock, has agreed to vote in favor of the Lilly deal. In a press release, Icahn said the move "vindicated" his opposition to a 2006 buyout offer that was worth $36 per share. The billionaire investor became ImClone's chairman in late October of that year after replacing several of the company's directors, which he termed "the old regime" on Monday. At the time Icahn became chairman, ImClone had recently turned down a buyout offer worth $36 per share from an undisclosed pharmaceutical buyer. Lilly's cancer drugs include Erbitux, a treatment for colorectal and head and neck cancers, the lung cancer and mesothelioma treatment Alimta, and chemotherapy agent Gemzar. The company identified three ImClone drug candidates as particularly promising: IMC-112B, IMC-A12 and IMC-11F8. The 112B drug is designed to kill tumors by preventing the growth of the blood vessels that feed them, similar to Genentech Inc.'s cancer drug Avastin. The 11F8 drug is an antibody that targets production of a protein found on the surface of many cancer cells. That protein, epidermal growth factor receptor, is also targeted by Erbitux. The 112B drug is in late stage testing as a treatment for metastastatic breast cancer. Late stage trials of the other drug candidates in a variety of indications could start in 2009. In premarket electronic trading, ImClone shares rose $3.74, or 5.8 percent, to $68.70. The stock finished at $64.96 Friday, and traded at $46.44 before Bristol-Myers Squibb made its initial offer in late July.
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