WILMINGTON, DEL. (CN) – ImClone shareholders are fighting Bristol-Myers Squibb’s buyout offer of $60 a share in a Chancery Court class action. They say the offer is $10 cheaper than the $70 Bristol-Myers paid for 14.4 million ImClone shares in 2001, and significantly undervalues the value of ImClone’s cancer drug, Erbitux. Among the defendants are ImClone Chairman of the Board Carl Icahn, who holds 13.5% of ImClone’s stock.
Erbitux already is approved for colorectal cancer and some head and neck cancers, and plaintiffs say they expect it to be approved for lung cancer this financial year. They say UBS projects $1.7 billion in Erbitux sales this financial year, rising to $3.1 billion in 2011, and Standard & Poor’s expects $4 billion in Erbitux sales by 2012.
Bristol-Myers’ offer of $60 a share for 86 million outstanding shares comes to $5.16 billion, or less than two years of Erbitux’s projected sales. Erbitux is ImClone’s only successful product.
Shareholders say Icahn and the ImClone board appear to consider the buyout offer inadequate, but “hired JPMorgan Chase as its financial advisor to advise ImClone on BMs’ offer in more detail, and weigh a possible plan to split ImClone into two businesses.” Shareholders want the buyout enjoined.
ImClone and Erbitux were at the center of the Martha Stewart inside trading scandal. Stewart and ImClone CEO Samuel Waksal were sentenced to prison for dumping ImClone shares after getting advance word that Erbitux would be denied FDA approval. Share price tanked on the announcement, but ironically, the FDA denial appears to have been caused by a faulty application, not by problems with the drug itself. ImClone, a monoclonal antibody, turned out to be a financially successful drug.
Plaintiffs in this case are represented by Robert Goldberg with Biggs & Battaglia.