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Contributors: Douglas McIntyre Jon C. Ogg

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Monday, July 31, 2006

Erbitux New Woes for Imclone and Bristol-Myers Squibb

Stock Tickers: RGEN, IMCL, BMY

If you take a look at the summary of the press release you can tell that it won't kill the Imclone (IMCL) and Bristol-Myers Squibb (BMY) dealings, but it is probably going to require some substantial payments that retroact. That may also require one or both firms to restate past quarters if they cannot include it as a current one-time expense.

Repligen Corporation (RGEN) today reported that on July 28, 2006, the US District Court in Massachussetts issued a Summary Judgment ruling in favor of Repligen and The Massachusetts Institute of Technology (MIT) and rejected ImClone Systems' (IMCL) defense of patent exhaustion in the ongoing patent infringement lawsuit over the production of Erbitux®. In their complaint, Repligen and MIT allege that ImClone's production of Erbitux® infringes U.S. patent 4,663,281 which covers certain genetic elements that increase protein production in a mammalian cell. This patent is assigned to MIT and exclusively licensed to Repligen. ImClone has previously reported that it produced approximately $1 billion worth of Erbitux® prior to the expiration of the patent-in-suit in 2004 and that Bristol-Myers Squibb, ImClone's commercial partner, has paid ImClone $900 million in up-front and milestone payments as well as a 39% royalty on the net sales of Erbitux® in the United States. Repligen and MIT intend to seek damages adequate to compensate Repligen and MIT for ImClone's unlicensed use of the patented technology and they will also seek a multiplier of any damage award based on ImClone's willful infringement.

It looks like both RGEN and IMCL are halted pending the street digesting the news. Bristol-Myers seems to in one week have bad news after bad news hitting the tape.

Repligen (RGEN) has a mere $72 million market capitalization of its common stock. It only has about 2.8 million in stated revenues per quarter. As of last quarter it had $18.8 million in cash and equivalents with $2.9 million in current obligations and NO long-term debt.

Jon C. Ogg
July 31, 2006

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