Bristol-Myers Squibb is making a bid to acquire the 83% stake it does not already own in ImClone Systems, a move which will give it further control of the cancer drug Erbitux.

The New York-based major is offering $60.00 per share in cash, or a total payment of around $4.5 billion, which represents a premium of 30% over ImClone’s closing stock price on Wednesday, and over 40% over the last month. At the heart of the deal is increased access to Erbitux (cetuximab), which is currently indicated for metastatic colorectal cancer and the treatment of squamous cell carcinoma of the head and neck.

B-MS and ImClone signed a co-commercialisation deal for the drug covering the USA and Canada in September 2001 and under that agreement, the latter receives a distribution fee based on a flat rate of 39% of net sales in North America. This deal was amended in July 2007 to provide for additional development funding for certain indications and the agreement expires in September 2018 with respect to Erbitux in the USA. The two firms have a co-promotion deal covering Japan with Merck KGaA and the German firm holds the European rights to the drug.

B-MS chief executive James Cornelius said the proposed acquisition “represents an evolutionary development in our companies’ seven-year-long relationship, and is in the best interests” of both. He added that “our current contractual relationship with ImClone…has been very successful, and we believe that, by applying B-MS’ financial, R&D and marketing capabilities to support the product, we will be able to reach an even broader patient population”.

Mr Cornelius has written to Carl Icahn, ImClone’s chairman, saying that his firm has a high regard for the potential of ImClone's pipeline assets, “while recognising the early stage of their development and the significant investment which is required to further their development”.

The B-MS CEO goes on to say that “we and our advisors are prepared to meet with you and your advisors to answer any questions you may have about our offer”. He adds that “we do not foresee any regulatory or other impediment to closing [and] our offer is not conditioned on financing or due diligence.” He ends by saying to Mr Icahn that the price “represents an extremely attractive opportunity for the shareholders of ImClone to realise today the future value of the company” and “our desire is to conclude a transaction which is enthusiastically supported by you and all other members of the ImClone board.”

This is far from a done deal, however, and speaking on a conference call, Mr Cornelius said he is "not absolutely confident" of winning the day. If unsuccessful, B-MS still views its stake in ImClone as a major asset, though a sale of that holding has not been ruled out either.

ImClone issued a tiny statement saying it is “currently studying the situation" and Mr Icahn, the biotech billionaire investor famed for his tough negotiating skills, has said nothing yet. A number of analysts believe the offer B-MS is making may need to be upped especially as ImClone’s shares shot up 37.7% to end the day at $63.93, well above B-MS’ offer.

Eric Schmidt of Cowen & Co said that “excluding ImClone's pipeline and biologic capabilities”, the broker’s analysis suggests the company “has tangible asset value in the mid-$40 range". Nevertheless, “given our view that ImClone has one of the best oncology pipelines in the industry, and that the market is continuing to ascribe scarcity value to fully integrated biologic capabilities”, B-MS (and possibly the other Erbitux partner Merck) could well be willing to pay “a significant premium".

However JP Morgan analyst Geoffrey Meacham issued a research note saying he thinks the B-MS bid is pretty decent. “We believe it offers ImClone investors a low risk exit strategy ahead of the controversial filing for Erbitux in non-small cell lung cancer and colorectal cancer, that is key to reaching long-term consensus estimates," he wrote.