The Bristol-Meyers Squibb / Imclone story has taken a real bad-movie turn. (See my postings on this last week if you're not up on this one so far.) BMS has served up an ultimatum that I don't recall every seeing before: Ditch your CEO, or we walk.
Actually, it's even livlier than that: Ditch the CEO, ditch his brother (the chief operating officer,) give us control of your dealings with the FDA. . .oh yeah, and give us a bigger share of the profits from the drug. Or we walk.
It's an interesting threat, and I can't wait to see Imclone's response. Who will back down? You can argue that Imclone has to, since BMS is their best hope to get the drug to market - and at this point, the deal is still better than anything they're likely to get from anyone else. Their stock will sink even lower if BMS actually does walk, putting them in a weak negotiating position.
But you can argue that BMS has to back down, too. They've already sunk 1.2 billion into this, and to walk away after that (with no drug and some rather depreciated stock) would make the shareholders furious. (It's not like they're in a good mood already, although the tough talk must have cheered everone up.) And if they leave, their cancer pipeline is status quo ante- that is, still in the shape that made them think they needed to spend billions to improve it fast.
Much as I think that Imclone deserves what's happening to them, it doesn't take away from the fact that BMS didn't investigate this the way someone spending a billion dollars should have. There must be some pretty embarrassing PowerPoint presentations left on people's hard drives, talking about what a great job everyone's doing on the clinical and regulatory end. Eventually, BMS is going to have to figure out how this mess could have happened. It won't be easy, since everyone who even got close to the deal is probably hiding behind their nearest tree.
My prediction is that Imclone, with great protesting, will end up agreeing to almost all the terms. They might salvage some of the milestone payments that BMS wants to get rid of, or be able to talk them down a bit on their profit-percentage demands. But getting Erbitux through is probably their only hope for survival, and BMS is probably their only hope for getting it through.
