I honestly didn’t think I’d ever get the chance to write about Imclone again. But never say never! It turns out that a pension fund, the State-Boston Retirement System of Massachusetts, is suing to block the Lilly acquisition – because, hold on to your hot beverages, they think that $70/share is just too cheap an offer. Not in the best interest of shareholders, the deal is. Clearly needs to be bumped up.

We have, in other words, found the only chordates who think that Imclone is worth even more than Carl Icahn thinks it is. I’ll be very interested to hear their reasoning. Surely this is just one of those “worth-a-try” ploys – the investment fund figures that they’ll spend a little on legal fees, and who knows, they might get a bit more money out of it. A lot of mergers attract these sorts of lawsuits, and if you’ve ever wondered how securities lawyers manage to enrich themselves, look no further. But you do have to advance serious arguments if you expect to win these things. And just what are those going to be?

And the problem is, after the acquisition goes through, it’ll be tricky to figure out if Lilly got their money’s worth or not. The Imclone stuff will disappear into Lilly’s accounting system, and odds are we’ll never see it broken out again. There are quite a few deals that never pay for themselves, but you sure don’t see the numbers laid out to show it. The main measures will be Erbitux sales, and whether Bristol Myers-Squibb gets a share of the follow-up antibody – beyond that, Lilly can always argue that they added value to the earlier-stage Imclone projects, making the accounting impossible to clear up.

At least in this case it’s something being added to Lilly’s pipeline – they’re not stopping work on other things, so you don’t have to factor in opportunity cost. That’s a real consideration when a company says “OK, we’re not going to do our own XYZ work – we’ll do a deal for it”. If that deal doesn’t work out, you always wonder how things would have been if they’d just kept the money at home. I’ve seen a couple of major examples of this in my own experience – one of them, at least, worked out OK on paper, since various stock transactions got a lot of the money back. But the time, the time spent working on things that didn’t ever deliver? We never got that back. Once the deal wound down, we went back to working on (to a good approximation) what we would have been doing if it had never happened. No, if the scientific (and clinical) output of the deal is underwhelming, those involved will always wonder What Might Have Been.