Eli Lilly beats out Bristol-Myers to buy ImClone for $6.5 billion
— -- The all-cash deal, which has been approved by both companies' boards, values ImClone at $70 a share.
That's a 51% premium to ImClone's closing price on July 30, the day before Bristol's $60-a-share offer was made public. That was later boosted to $62 a share.
Lilly's shares fell 7% Monday to $38.42 on news of the deal and during a day of carnage in the overall market. ImClone shares rose 3% to $66.89.
"It has the potential to be a good deal, long term. The risk is higher because of the high price," says Robert Hazlett, Lilly analyst at BMO Capital Markets.
ImClone has one drug on the market, Erbitux. It is a treatment for colon, head and neck cancers that posted $1.3 billion in 2007 sales worldwide, up 18% from 2006.
Bristol, which owns 17% of ImClone and got some revenue from Erbitux, says it will sell its shares, netting it $1 billion in the deal.
Financier Carl Icahn, who became chairman of the company in 2006 when its prospects were dim, and his associates own 14% of ImClone. They, too, have agreed to sell.
In a research note Monday, Citigroup biotech analyst Yaron Werber said he expects the deal to go through at the announced price at the end of this year or early next. Erbitux is one of a handful of targeted cancer therapies that attack cancer cells but not healthy cells as traditional chemotherapy does.
ImClone has five other cancer drugs in development, and three may enter late-stage testing next year.
The deal may help position Lilly with new products as patents expire on its three best-selling drugs by 2013. The three are anti-psychotic Zyprexa, anti-depressant Cymbalta and cancer drug Gemzar.
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