Lilly in 'advanced talks' to buy ImClone

Carl Icahn was telling the honest truth when he said a Big Pharma company had stepped up to bid for ImClone Systems. And the mystery bidder is...Eli Lilly. The Indianapolis-based drugmaker made a preliminary offer of $70 a share, subject to the due diligence that wrapped up over the weekend. And now Lilly is in "advanced talks" to buy ImClone for that very price, sources tell the Wall Street Journal.

ImClone, however, hasn't confirmed anything. The company released a statement saying a "large Pharma company has completed due diligence and made a proposal" but that "the company has requested that ImClone not divulge its name until negotiations are completed."

As you know, Bristol-Myers Squibb made a $60-a-share offer for ImClone, its partner on the blockbuster cancer med Erbitux. Icahn scorned that price, so Bristol came back with a $62 bid. At the time, CEO Jim Cornelius told Icahn that a $62 bid on the table is better than a $70 bid pending due diligence. Cornelius even threatened to mount a proxy fight for board control and make its $62 offer into a hostile bid.

Now, though, Cornelius has to eat his words. Icahn wasn't bluffing. Though there's no deal yet between ImClone and Lilly, the two companies are in hot discussions, with Lilly facing a midnight deadline to make a firm offer.

What's next? If Lilly makes a formal $70 offer, then Bristol will have to put up or shut up. And there are still questions about ImClone's follow-up to Erbitux, an experimental drug likely to compete with the blockbuster treatment. Bristol claims a share of eventual revenues from that drug candidate; ImClone says no way. Presumably Lilly would want that issue resolved before taking over.

- see ImClone's release
- read the WSJ Health Blog item