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Biotech / Medical : Biotech Valuation

CRSP 50.73

-5.2%

Nov 19 3:59 PM EST

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To: Arthur Radley who wrote (5487)	1/19/2002 2:07:48 PM
From: IRWIN JAMES FRANKEL	Read Replies (3) of 52153

TexasDude, Barron's has a copy of the RTF letter. That is OLD news. The Cancer letter produced that weeks ago and many of us read it at that time. Even before that the CC on the RTF letter raised enough issues in my mind that I called for IMCL to move to 20-35 and posted that view. Well, Friday it blew out the bottom of that range. You and others are suggesting legal action by BMY against IMCL, it's officers and even tendering shareholders. IMO, those suggestions are not supported by information available or rational considerations or extensions. Litigation generally does not create value. It does transfer value (always to the lawyers) and net of expenses at times to the winner. But litigation can also be a major destroyer of value. IMCL now carries a market cap of about $1.4 billion and about $500 million in cash. That stands in stark contrast to the $1.2 billion that BMY has already paid to acquire 40% of profits and 20% of the common of IMCL. The costs of litigation, direct and indirect, would not create value for BMY. The best course for them is to work with IMCL management to create value and participate in it. Perhaps, in the current distress, management of IMCL would even allow BMY to increase their ownership. Some have compared IMCL to ENE. The declines are comparable at this point. But the businesses are very different in nature. The difference in the nature of the businesses will dictate the outcome. ENE had a huge [in terms of instrument value] trading business which relied on the trust of counterparties to make trading possible. Once ENE was no longer trusted to be a counterparty collapse was probable. (I made that call when ENE was about 12.) IMCL has FDA hurdles ahead but those are manageable, provided the drug works. Does C225 work? If so, IMCL will recover. ij Disclosure: I bought IMCL Friday at 18+

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