Biotech stocks made good water cooler talk Thursday as a few prospective merger stories opened to new chapters.

A day after ImClone ( IMCL) announced that a mystery shopper has bid $70 a share for the company, Bristol-Myers Squibb ( BMY) said it's standing by its own proposal. The company scorned ImClone for how the company handled and assessed the $60-a-share offer it made in July.

Bristol and ImClone appear to disagree on who owns the rights to a next-generation version of cancer drug Erbitux IMC-11F8 -- a crucial matter to both companies and any potential buyers.

Bristol shares were up $0.10, or 0.55%, at $21.80, while ImClone was down $0.98, or 1.44%, at $66.96.

In other drama, King Pharmaceuticals ( KG) increased its bid for pain drug company Alpharma ( ALO), offering to purchase all of the outstanding shares of its Class A Common Stock for $37 a share, up from $33. King said that Alpharma has privately rejected this bid, and it is prepared to take it directly to shareholders.

The new offer is a 67% premium to Alpharma's closing price on Aug. 4, the day of King's private written proposal to Alpharma, and a 54% premium over the closing price on Aug. 21, the last trading day before the public learned about the offer.

Meanwhile, Alpharma issued a statement urging shareholders not to take action until it can announce its official position. The board said it would review the proposal with its financial and legal advisors and make a recommendation within 10 business days.

King's shares were down 49 cents, or 4.36%, at $10.76, while Alpharma shares added $1.61, or 4.51%, to $37.31.

In clinical news, Biogen Idec ( BIIB) and Genentech ( DNA) updated the label for Rituxan to reflect a fatal instance of progressive multifocal leukoencephalopathy (PML), a dangerous brain infection, in a patient who had previously taken the drug for rheumatoid arthritis, an approved indication. The drugs label had already warned about PML in patients taking it for unapproved indications.

Biogen and Genentech were trading up 2.4% and 1.47%, respectively, on Thursday.

Elsewhere, Allergan ( AGN) shares picked up after announcing that Botox was effective as a preventive treatment for headaches in adults suffering from chronic migraines in two late-stage studies. Based on the initial data read out, the company hopes to file for Botox's approval for chronic migraines by mid 2009. Shares gained $5.95, or 10.9%, at $60.53.

Last, PDL BioPharma ( PDLI) shed 57 cents, or 4.91%, at $11.05 after JP Morgan analyst Geoffrey Meacham downgraded the stock to underweight from neutral, citing a disconnect between the share price and the company's true value.

Overall, biotech stocks fared slightly better than their pharma cousins Thursday. The Nasdaq and Amex biotechnology indices were up 1.41% and 0.83%, while the Amex pharmaceutical index was up by 0.38%.

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