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Japan’s Takeda Pharmaceutical is not the so-called “mystery bidder” for ImClone Systems Incorporated (NASDAQ:IMCL) despite media reports, three industry sources familiar with the situation told dealReporter. Rather, it is understood that the company that submitted the USD 70 per share proposal for ImClone is a US-based large pharmaceutical company with strategic pipeline synergies, it was said.
ImClone disclosed on Monday that the unnamed large pharmaceutical company that submitted the proposal – initially subject to two-week due diligence – would either make a proposal, that is no longer subject to due diligence, or withdraw by 11:59 pm on 1 October. As mutually agreed, if the party withdraws and negotiations end, the name of the company will be disclosed.
Meanwhile, it is understood that ImClone is still not entertaining conversations with current bidder Bristol-Myers Squibb (NYSE:BMY) as it has not yet reached its offer criteria of USD 70 per share. ImClone’s Chairman, Carl Icahn called Bristol-Myers’ sweetened offer of USD 62 per share “absurd” on 24 September.
Although Takeda has been interested in US-based acquisitions in the areas of oncology and metabolic diseases, to get engaged in a hostile takeover, or competitive bidding situation would be “unusual,” to their corporate culture, a source close to Takeda said.
Instead, Takeda usually makes recommended, agreed deals, and are more under the radar when it comes to its M&A strategy, the source added.
Takeda acquired US-based oncology powerhouse, Millennium Pharmaceuticals at a 53% premium for USD 8.8bn earlier this year.
However, one industry oncology executive said Takeda was likely a party invited by Icahn to evaluate the company. “Keeping it quiet is in line with [Takeda’s] corporate culture,” the executive said.
He did note that Takeda is interested in developing its own pipeline, and any product with “the word prostate” would be an attractive add-on to the Japanese pharma company. ImClone recently initiated a Phase II trial in prostate cancer comparing its drug candidates IMC-A12 and IMC-1121B.
US companies that have been cited as possible bidders by sources and market investors include Celgene (NASDAQ:CELG), Amgen (NASDAQ:AMGN), Eli Lilly (NYSE:LLY) and Pfizer (NYSE:PFE).
It was said that Celgene, which is engaged in the development of treatment for cancer and immune-inflammatory-related diseases, could probably recognize the value of ImClone’s own products.
Although, it was said, that Celgene is not always described as a “large pharmaceutical company” but rather a biotech company, so it could be debatable if they are the unnamed bidder. Celgene’s CEO Sol Barer was in meetings throughout the day and could not return calls for comment.
But the industry oncology executive said ImClone may be less of a strategic fit for Celgene than for Amgen. The executive said it would not surprise him to see Amgen mull a bid as it has EGFR inhibitor, Vectibix, while ImClone’s lead drug Erbitux is also an EGFR-targeted agent. “There is certainly a lot of technical synergy with both Erbitux and its follow-on pipeline,” he said.
Similarly, ImClone’s products are also complimentary to Eli Lilly, which markets oncology drug Alimta indicated for the treatment of locally advanced or metastatic non-small cell lung cancer (NSCLC) and Gemzar, which is indicated for the treatment of various cancers.
One market investor said Erbitux has shown a benefit in NSCLC patients with squamous cell carcinoma, one indication which Lilly’s Alimta is currently not approved for.
The source close to Takeda speculated that Celgene and Amgen could emerge as bidders for ImClone, however, said it was unclear whether it would make such synergistic sense from a product perspective.
As for valuation, the industry oncology executive said he “ran figures” on ImClone and noted paying over USD 70 per share does not make sense. “Up to USD 70 per share, over that, forget it,” he said.
But there is still the chance that a deal may not materialize, it was further offered. It was said that parties showing an interest now could wait and see if the unnamed bidder arises, and if not, would not need to pay more than USD 70 per share.
It was reported by this news service on Friday that it would not be a surprise if the due diligence period was extended past the Sunday deadline. It was further noted, however, that the mystery buyer was slightly taken aback by Icahn’s first public announcement of the USD 70 per share offer because the bidder’s approach was still at an early stage, but is serious.
The company opened trading for the week at around USD 63 per share.
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