NEW YORK -(Dow Jones)- Wall Street seems to expect a higher offer for ImClone Systems Inc. (IMCL), and the company's shareholders certainly believe one is warranted.

Although the company's largest shareholder - Chairman Carl Icahn - has yet to state his feelings publicly.

Early Thursday, Bristol-Myers Squibb Co. (BMY) offered $4.5 billion, or $60 a share, for the 83% of ImClone that it doesn't already own. But some major shareholders of the New York-based biotech company are already registering their expectations for a higher price, and they are feeling confident that the billionaire investor is going to lead the charge for greater value.

"Bristol cannot have our stock at $60 per share," said Sam Isaly, managing partner of asset manager Orbimed Advisors, which owns about 3 million ImClone shares, or about 3.5% of the shares outstanding.

"But today's stock price action says that others will not sell at that price as well," Isaly said.

Indeed, shares of ImClone recently traded up 38% to $64.25, nearly 7% above the offer price, suggesting that Wall Street expects a higher offer. Bristol- Myers shares were flat at $21.51.

The two companies co-market cancer drug Erbitux in North America, but it is sold outside North America by Merck KGaA (MRK.XE) of Germany. Erbitux, with 2007 global sales of $1.3 billion, is approved to treat colorectal as well as head and neck cancer, and will be filed for lung-cancer approval later this year.

In a conference call earlier Thursday, Bristol-Myers refused to comment about potentially raising its bid, but noted that it believes the $60 price is a "full and fair offer" and represents its "best thinking."

Despite those comments, the New York-based drug maker didn't rule out a higher offer and it is clear that some movement on price may be necessary to close the deal.

"I think that the $60 price is probably a reasonable starting point for negotiation," said Patrick Lee, a partner with hedge fund Palo Alto Investors, owner of about 860,000 ImClone shares, or 1% of the shares outstanding, at the end of March.

Lee said he doesn't have a specific price in mind, but that the offer doesn't incorporate the full value of Erbitux's expansion into treating other cancer types or the company's robust pipeline.

"As a standalone entity, the stock price could have doubled from $40, but that assumes several years of execution and some risk as well," Lee said. "So it will probably be somewhere in between."

Isaly is a bit more aggressive in his expectations.

"I would accept $80 per share, but I am not sure that I would take less," he said.

Although institutions make up the majority of ImClone's shareholder base, the company's individual holders also will be heard.

Charles Berner, an ImClone shareholder who has owned the stock since its 1991 initial public offering at $14 a share, also believes that the Bristol offer undervalues his long-term expectations for the company.

"I think that $65 to $70 will be more like it," Berner said of his expectations for the deal.

He believes that Bristol wants to insure it has access to the follow-up version of Erbitux that won't enter pivotal trials until the first half of 2009, but it is expected to be safer, with less-frequent dosing than Erbitux.

Unlike with Erbitux, ImClone owns all the rights to the follow-on and intends to keep them, a point that has been cited in the past as an impetus for Bristol- Myers buying ImClone outright.

Notably, Berner believes that Germany's Merck may want to have a say in the matter and could make an offer for ImClone

"They have way too much to lose and have contributed tremendously to [ Erbitux's] trials and marketing success worldwide," he said.

Regardless of the end results, ImClone shareholders seem to be in capable hands with Carl Icahn being the likely leader of negotiations with Bristol- Myers.

Icahn entered the picture for ImClone after the company failed to sell itself over a seven month period in 2006 - following the ordeal he was named chairman and he ousted the former management.

"By reputation, he is someone that is very active and very experienced in negotiations," notes Lee.

-By Thomas Gryta, Dow Jones Newswires; 201-938-2053; thomas.gryta@dowjones.com

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  07-31-08 1216ET
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