Eli Lilly agrees to buy ImClone for over $6 billion

October 06 06:05:03 AM, LA Times

INDIANAPOLIS -- Eli Lilly & Co. has agreed to buy biotechnology company ImClone Systems Inc. for more than $6 billion in a deal that would expand Lilly's cancer treatment pipeline a few years before several patent expirations hit the drug maker.

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 Monday 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.

Bristol-Myers, which owns about 17 percent of ImClone's shares, had previously offered $60 a share and later $62 per share for the part of ImClone it doesn't already own. 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.

The deal will add Erbitux, a treatment for colorectal and head and neck cancers, to Lilly's portfolio of cancer drugs. They include the lung cancer and mesothelioma treatment Alimta, and chemotherapy agent Gemzar.

Lilly said in a statement the ImClone addition helps it meet challenges posed by several looming patent expirations. The drug maker loses patent protection on its top-seller, the anti-psychotic Zyprexa, in 2011.

Zyprexa contributed more than a quarter of the company's $18.6 billion in sales last year. The company then will lose patent protection for its second- and third-best selling drugs, the antidepressant Cymbalta and Gemzar, in 2013.

Lilly also 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 metastatic breast cancer. Late-stage trials of the other drug candidates in a variety of indications could start in 2009.

ImClone was the company at issue when homemaking mogul Martha Stewart was sent to prison for lying about the sale of ImClone stock on a tip just before the Food and Drug Administration in 2001 denied ImClone's application to sell Erbitux.

In premarket 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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