Staff Writer

Wednesday is the big day for Bristol-Myers Squibb Co. The tender offer associated with the big pharma's $2.4 billion acquisition of Medarex Inc. is set to expire at midnight on Aug. 26.

Unless, of course, it gets extended. The original expiration date was midnight on Aug. 24, but the companies decided last week to extend the deadline, as only 8.7 percent of shares had thus far been tendered by Medarex's investors.

Jason Kantor, an analyst with RBC Capital Markets Corp., said institutional investors typically don't tender their shares "until the last minute." He maintained that he believes the deal will go through and urged folks not to draw any conclusions from the fact that so few shares had been tendered last week.

Yet Medarex's retail investors were drawing plenty of conclusions. The message boards were buzzing with speculation that BMS may have to increase its $16 per share offer, which already represents a 90 percent premium for Medarex shareholders. (See BioWorld Today, July 24, 2009.)

Some investors are hoping to derail the tender and force a shareholder vote, a lengthy process that could last into next quarter, when data are expected from Medarex's ongoing Phase III trial of ipilimumab in metastatic melanoma. It's a risky gamble: Positive data could drive Medarex's value higher, but melanoma is a tricky indication and a failure could leave investors wishing they'd cashed in.

Genentech Inc.'s investors initially argued against the Roche AG acquisition for a similar reason. They thought data from an ongoing Phase III trial of Avastin (bevacizumab) in adjuvant colon cancer could drive up the price. The two companies agreed to higher-priced deal in March, and while it wasn't as high as Genentech wanted, it looked pretty good when the much-anticipated trial failed a month later. (See BioWorld Today, March 13, 2009, and April 23, 2009.)

Some Medarex investors have filed lawsuits, complaining that the BMS offer is too low because Medarex traded above $17 a few years ago. Others have taken issue with the multimillion-dollar bonus Howard Pien, Medarex chairman, president and CEO, gets for closing the deal. And there are plenty of whispers that the deal may fall apart like BMS's previous bid for ImClone Systems Inc., which turned hostile before Eli Lilly and Co. stole the show with a higher offer. (See BioWorld Today, Oct. 7, 2008.)

But it seems unlikely that the Medarex deal will suffer the same fate. Medarex agreed not to solicit competing offers, and the biotech doesn't have ImClone Chairman Carl Icahn fighting for a different outcome. In fact, Medarex's board of directors recommended that investors tender their shares.

Despite the drama, most experts believe the BMS/Medarex acquisition will get done.

Jason Zhang, analyst with BMO Capital Markets Corp., wrote in a research note that he "didn't see anything in [Medarex's] second quarter that would lead us to believe that the merger with Bristol-Myers Squibb would not go through."

A BMS spokesperson said the low number of tendered shares was "very, very typical" for that stage of a tender process. He declined to speculate as to whether the deadline would need to be extended again. "We'll see where we are on the 26th and go from there," he told BioWorld Today.

Shares of Medarex (NASDAQ:MEDX) closed up 1 cents at $15.93 on Tuesday, while shares of BMS (NYSE:BMY) rose 37 cents to close at $22.95.