Replies to post #31251 on Biotech Values

[DewDiligence]

>Dew and others interested in Imclone. Do any of you know about the Yeda vs. Imclone patent suit… Could this be holding up the sale of Imclone? Lots of volume, no price increase.<

Hi lois. Long time. My short answer is No—this dispute is not holding up a “strategic transaction” involving IMCL nor is it affecting the price of any prospective deal to a material degree. Why do I say this? Because I think the patent in dispute isn’t worth much in the first place. I don’t see how a dispute over something trivial can be non-trivial. Regards, Dew

[ello]

Thanks Dew.

This suit was discussed briefly on the IMCL board. MBK also thought it was nbd.

However, the stock has had lots of volume and is lagging.

One of the Pharmas is going to get a great buy.

Thanks too, for your nice reply.

lois

[DewDiligence]

ImClone Patent Ruling Due

[lois et al: Here’s a view from the current issue of Barron’s that strongly disagrees with my contention that the patent in dispute (a “use’ patent on the idea of giving an EGFR drug with chemo/radiation to treat cancer) has little value due to its obviousness. IMCL currently pays a royalty to SNY, the licensor of the patent in question, of approximately 1.5% on U.S. sales of Erbitux when it is given with chemo or radiation. Such combination use represents more than 90% of current Erbitux sales.

What may work against IMCL in this case is that Dr. Sela of the Weizmann Institute is one of the world’s most respected scientists.]

http://online.barrons.com/article/SB115292001356607488.html

>>
By BILL ALPERT
July 17, 2006

Imclone Systems, the stock that dressed Martha Stewart in prison stripes, has bucked the spring slump in biotech shares.

Prodded by notable biotech mavens like Carl Icahn, the New York-based company (ticker: IMCL ) put itself on the block in January and has reportedly attracted a couple of bids. So ImClone shares have spent the past couple months in the vicinity of their Friday price of 38.44, which values the company at more than $3.2 billion, or some 30 times consensus earnings estimates for each of the next few years. That's already close to the price that admirers -- like Morgan Stanley's Steven Harr -- believe ImClone can expect from an acquirer.

The bidding deadline supposedly was pushed out to sometime this month, to allow bidders to savor the second-quarter sales report scheduled for this coming Thursday. ImClone should report about $150 million in revenue from its cancer treatment Erbitux. The monoclonal antibody blocks a tumor-growth trigger known as EGFR that's overexpressed in cancers of the colon, head and neck -- diseases for which ImClone won the FDA's marketing approval.

But if ImClone's bidders have any brains, they'll also use the extra time to focus on a patent case that ImClone has been defending in a crowded federal district courtroom in Manhattan. That's where Israel's prestigious Weizmann Institute is claiming that a key patent now licensed to ImClone was stolen earlier from Weizmann scientists. Closing arguments are set for this week, in the bench trial before Judge Naomi Reice Buchwald.

If Buchwald finds against ImClone, the company's revenue growth could hit a roadblock, while Weizmann and its scientists relicense the patent. If she rejects the Weizmann Institute's claims, ImClone might use the patent to block Amgen (AMGN) from commercializing an EGFR-antibody treatment that would compete with Erbitux.

The transcript of last month's trial runs more than 1,400 pages and rings with Old Testament fury, as 82-year-old Weizmann scientist Michael Sela testifies that he and two colleagues came up with the idea of fighting cancer by combining an EGFR-antibody (like Erbitux) with chemo drugs, in a 1988 paper. Only in 2000, Sela testified, did he learn that a U.S. patent application on the idea had been secretly sought by a former Weizmann colleague, Joseph Schlessinger, who had gone to work for a biotech unit of Revlon, which had become part of Sanofi-Aventis by the time the patent was issued in 2001. It was Sanofi-Aventis (SNY) that licensed the patent to ImClone.

Schlessinger, now at Yale University School of Medicine, denied any impropriety and testified that the idea of mixing antibodies and chemo was truly his. ImClone's lawyers note that Sela will share in any royalties if the Weizmann Institute prevails. "If they get what they want," George Badenoch, an attorney for ImClone, told the judge, "there is no question they are going to hold us up for a king's ransom."
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