I haven’t mentioned the attempt by Bristol-Meyers Squibb to buy out Imclone until now, but there’s a nice . The reasons for the move are unsurprising – BMS would like all the revenue from Erbitux, instead of just a share of it, and sees some value coming up in Imclone’s pipeline (such as their development drug candidate IMC-11F8, vide infra). They’ve waiting quite a while, and apparently feel that the time is right – the only question is how much money such a move will cost them.

And that’s the question, all right, since Carl Icahn started talking this week about a mysterious preliminary offer from some unnamed other company for significantly more money ($70/share) than BMS is putting up. A lot of investors seem to have expected a sigh, a roll of the eyes, and a reach back into the pocket for more money - IMCL has been trading above the original $60/share offer. But that’s not what they’re getting, at least so far.

In a letter, Bristol-Meyers Squibb’s CEO is now reminding Icahn of a few things that you’d think would be obvious. One of them is that their offer is well-supported and requires no due diligence, as opposed to nebulous preliminary figures from companies that no one will name. The next paragraph is even more to the point:

As you know, Bristol-Myers holds the exclusive, long-term marketing rights in the United States to ERBITUX® and related compounds, including IMC-11F8. Bristol-Myers has no intention of agreeing to any modifications to these rights. ImClone also should understand that our offer is for the entire company, and any potential restructuring of the company could severely jeopardize ImClone’s value and deprive ImClone’s stockholders of the benefits of our offer.

That’s about the size of it, and I think that this message is being delivered in the way that Icahn understands best – right across the top of the head, with some good wrist action. There’s no reason for BMS to give up on their rights to Imclone’s products, except on terms that would make other potential buyers lose interest. Why would they? There is, I should add, quite a dispute between the two companies about who has the rights to that development antibody, IMC-11F8. Imclone has recently been acting as if BMS has no rights to it at all, but as that WSJ link makes clear, two years ago they clearly stated to Merck KGaA that the antibody falls within the scope of the BMS agreement. It's hard for me to see how they'll get out of that, and even if they do, it'll take a lot of expensive wrangling.

So, if there really is a company willing to go to $70 a share for Imclone, with revenue still flowing to BMS and plenty of legal uncertainty on top of that, well, this is the time for them to speak up. I’m not sure that there is one, despite what Icahn says, but perhaps he’s hoping for one to materialize. He’s always reckoned Imclone to be worth vast amounts more than people who know anything about oncology think it is, so maybe he sees no problem with those figures. Anyone else live in the same world?

Update: Icahn has already replied, in a fashion that makes this affair look to go on a while. He says that he "doesn't understand the point" of the BMS letter, and goes on to say:

. . .With respect to a potential restructuring of ImClone, rest assured that we will act in what we consider the best interests of all our shareholders and not just Bristol.

Obviously, should you wish to make another offer which you believe we would not find inadequate, you are free to do so. Upon receipt of that offer, we will respond appropriately.

Well! My guess is at this point that BMS will sit tight and wait to see if anyone really wants to get in on all this action - betting, reasonably I think, that no one will. I would enjoy it if they raised their bid to, say, $60.25, just to steam up Icahn's windows, but I assume that they're above that. As time goes on, with no competing bids in sight, I would think that Icahn and his board-of-buddies would have to submit the BMS bid to the shareholders - wouldn't they?