Bristol, ImClone Dispute Rights (Update)

Bristol-Myers Squibb ( BMY) stood by its bid for ImClone Systems ( IMCL) this week, in the process raising a point of contention between the two companies that will be key to any potential buyer.

The pharmaceutical company and ImClone openly disagree on who owns the rights to a next-generation version of cancer drug Erbitux -- which will pose a significant threat to their shared product.

Greg Mayes, ImClone's vice president and interim general counsel said in the company's second-quarter conference call that ImClone believes it fully owns the IMC-11F8 molecule.

Bristol, which has marketing rights to Erbitux in the U.S., said in its most recent letter to ImClone's board that it also has U.S. rights to IMC-11F8 and other Erbitux-related products.

In a retort Thursday night, ImClone's chairman and activist investor Carl Icahn jabbed: "With regard to your assertion concerning rights to IMC-11F8 (which, if ultimately approved for sale, may have a significant competitive effect on ERBITUX), we disagree that Bristol's rights are clear and do not waive any rights that we may have with regard thereto."

IMC-11F8 is a fully humanized version of Erbitux, meaning it won't cause the severe allergic reactions that occur in some patients who take Erbitux, TheStreet.com Senior Columnist Adam Feuerstein wrote on sister site RealMoney.com (RealMoney.com subscription required) earlier this week. Theoretically, it should also be as effective, and thus could potentially overtake the Erbitux franchise.

Exactly what belongs to whom in the Bristol-ImClone partnership will be a key question of interest as ImClone's new mystery bidder conducts its due diligence over the next few weeks.

Earlier in the week, ImClone announced that it had received an offer from a large unnamed pharmaceutical company that trumps Bristol's $60 a share bid by $10 a share. Subsequently, ImClone's board officially deemed the Bristol proposal as inadequate.

"Notwithstanding ImClone's receipt of a highly conditional preliminary proposal from another party, we continue to look forward to engaging directly with ImClone and its financial and legal advisors to discuss the merits of our all-cash offer, which is not subject to due diligence or financing, to acquire the approximately 83% of ImClone that we do not already own," Bristol Myers CEO James Cornelius wrote in a letter to ImClone chairman Carl Icahn.

Icahn closed his most recent reply letter to Cornelius with: "Obviously, should you wish to make another offer which you believe we would not find inadequate, you are free to do so." Icahn said the company would respond appropriately upon receipt of a new offer.

The recent pen-pal series has inspired anonymous commenters to pen their own "Dear Carl" and "Dear Jim" letters on Yahoo!'s ( YHOO) board for ImClone's stock.

ImClone shares were recently down 0.4% to $66.69, while Bristol shares were up 1.5%.

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