INDIANAPOLIS—Ending speculation about a "mystery bidder" for ImClone Systems Inc. and a failed courtship of the biotech by Bristol-Myers Squibb Co., Eli Lilly and Co. and ImClone announced Oct. 6 that both companies approved a definitive merger agreement under which Lilly will acquire ImClone for $70 per share, or approximately $6.5 billion.
The acquisition, Lilly's largest to date, is expected to gird against impending generic competition and create a leading oncology franchise focused on solid tumor types including lung, breast, ovarian, colorectal, head and neck and pancreatic cancers. The transaction is expected to close either later this year or the first quarter of 2009.
Lilly's offer represents a premium of 51 percent to ImClone's closing stock price on July 30, the day before BMS—ImClone's biggest shareholder—made a $60-per-share, or $4.5 billion, unsolicited takeover bid. After ImClone promptly rejected the offer, BMS boosted its price to $62 per share, or $5.4 billion—an offer ImClone Chairman Carl Icahn dismissed as "absurd" in a letter to BMS CEO Jim Cornelius (see "ImClone says no to BMS," DDN September 2008).
BMS responded to the acquisition news by announcing it will sell its $1 billion stake in ImClone. The Lilly-ImClone agreement includes a "no shop" provision that prevents ImClone from actively soliciting superior offers.
According to a statement released by the companies, ImClone's state-of-the-art development and commercial manufacturing facilities will enable Lilly to better support its oncologists, develop and manufacture complex biomolecules and address looming patent expirations. Lilly currently markets two oncology drugs: Alimta, which generated $854 million in 2007 sales, and Gemzar, which saw $1.6 billion in sales last year but will lose patent protection in 2010.
"This transaction will broaden our portfolio of marketed cancer therapies and boost Lilly's oncology pipeline with up to three promising targeted therapies in Phase III in 2009," Lilly President and CEO John Lechleiter said in a statement announcing the deal. "By bringing together ImClone's and Eli Lilly's marketed oncology products, pipelines, and biotech capabilities, we are taking a very important step forward in addressing the challenges of patent expirations we will face early in the next decade."
Lilly's acquisition is also expected to generate additional value for the blockbuster cancer drug Erbitux, which ImClone markets with BMS and Merck KGaA. ImClone is currently developing five cancer therapies, including a successor to Erbitux that BMS asserted it will continue to co-market with ImClone.
"The significant progress ImClone has made over the last few years is a direct result of the important contributions of our employees, and joining forces at this stage of our growth will allow us to leverage Lilly's global capabilities and make even greater advancements in our proprietary pipeline," ImClone CEO John H. Johnson added in the statement.
The morning of the announcement, ImClone shares rose 4.2 percent to $67.71, while Lilly shares fell 4.4 percent to $39.50. BMS shares fell 2.1 percent to $20. Some analysts suggested that Lilly lacks the ability to finance the deal, particularly in light of its July acquisition of oncology biotech SGX Pharmaceuticals for approximately $64 million (see "FAST pharma friends," DDN August 2008). According to regulatory filings, Lilly had $5.17 billion in cash and marketable securities in June—$1.33 billion less than its $6.5 billion offer for ImClone.
"This is an act of desperation on the part of Eli Lilly," David Moskowitz, an analyst for Caris & Co., told Bloomberg. "Lilly will drain substantially all of its cash on the deal. Lilly is already bidding outside the range of what you think would be rational, but these companies are losing big products early next decade.'"
But Lechleiter said Lilly is "very confident in our ability to finance this deal," which is expected to add to earnings in 2013. DDN
The acquisition, Lilly's largest to date, is expected to gird against impending generic competition and create a leading oncology franchise focused on solid tumor types including lung, breast, ovarian, colorectal, head and neck and pancreatic cancers. The transaction is expected to close either later this year or the first quarter of 2009.
Lilly's offer represents a premium of 51 percent to ImClone's closing stock price on July 30, the day before BMS—ImClone's biggest shareholder—made a $60-per-share, or $4.5 billion, unsolicited takeover bid. After ImClone promptly rejected the offer, BMS boosted its price to $62 per share, or $5.4 billion—an offer ImClone Chairman Carl Icahn dismissed as "absurd" in a letter to BMS CEO Jim Cornelius (see "ImClone says no to BMS," DDN September 2008).
BMS responded to the acquisition news by announcing it will sell its $1 billion stake in ImClone. The Lilly-ImClone agreement includes a "no shop" provision that prevents ImClone from actively soliciting superior offers.
According to a statement released by the companies, ImClone's state-of-the-art development and commercial manufacturing facilities will enable Lilly to better support its oncologists, develop and manufacture complex biomolecules and address looming patent expirations. Lilly currently markets two oncology drugs: Alimta, which generated $854 million in 2007 sales, and Gemzar, which saw $1.6 billion in sales last year but will lose patent protection in 2010.
"This transaction will broaden our portfolio of marketed cancer therapies and boost Lilly's oncology pipeline with up to three promising targeted therapies in Phase III in 2009," Lilly President and CEO John Lechleiter said in a statement announcing the deal. "By bringing together ImClone's and Eli Lilly's marketed oncology products, pipelines, and biotech capabilities, we are taking a very important step forward in addressing the challenges of patent expirations we will face early in the next decade."
Lilly's acquisition is also expected to generate additional value for the blockbuster cancer drug Erbitux, which ImClone markets with BMS and Merck KGaA. ImClone is currently developing five cancer therapies, including a successor to Erbitux that BMS asserted it will continue to co-market with ImClone.
"The significant progress ImClone has made over the last few years is a direct result of the important contributions of our employees, and joining forces at this stage of our growth will allow us to leverage Lilly's global capabilities and make even greater advancements in our proprietary pipeline," ImClone CEO John H. Johnson added in the statement.
The morning of the announcement, ImClone shares rose 4.2 percent to $67.71, while Lilly shares fell 4.4 percent to $39.50. BMS shares fell 2.1 percent to $20. Some analysts suggested that Lilly lacks the ability to finance the deal, particularly in light of its July acquisition of oncology biotech SGX Pharmaceuticals for approximately $64 million (see "FAST pharma friends," DDN August 2008). According to regulatory filings, Lilly had $5.17 billion in cash and marketable securities in June—$1.33 billion less than its $6.5 billion offer for ImClone.
"This is an act of desperation on the part of Eli Lilly," David Moskowitz, an analyst for Caris & Co., told Bloomberg. "Lilly will drain substantially all of its cash on the deal. Lilly is already bidding outside the range of what you think would be rational, but these companies are losing big products early next decade.'"
But Lechleiter said Lilly is "very confident in our ability to finance this deal," which is expected to add to earnings in 2013. DDN