Investor Sees Ipilimumab Conspiracy in Medarex-BMS Deal: 90% Premium Not Good Enough!

(MoneyWatch)  If you held stock in Medarex before the company agreed to be acquired by Bristol-Myers Squibb, you're very happy right now: Medarex closed at $8.40 before the sale and BMS agreed to buy it for $16 a share, an almost 90 percent premium on your holding.

But not everyone is happy. Kenneth Blumberg of Pikesville, Md., is suing Medarex and BMS claiming he's been shortchanged. He owns "tens of thousands of shares of Medarex common stock."

• Download the complaint in Blumberg v. Medarex here.

Why does he believe that his sudden upturn in fortunes is a ripoff? Because, according to his suit, the $16 offer is:

an almost 11% discount to Medarex's closing price of $17.90, reached on August 21, 2007 ...

In a startling lack of self-awareness, Blumberg admits that this mighty peak was reached "before the current financial crisis."

Nonetheless, he believes that if Medarex had started an auction for its wares, shareholders could have gotten even more. His logic is based on a notorious press release noted by BNET in June, which said that in a Mayo Clinic trial two men with with "inoperable" prostate cancer had become free of the disease after taking Medarex's ipilimumab. Blumberg terms the release "dramatic" and "nothing short of astonishing."

BNET noted that the release was indeed "astonishing," if only because it contained no information that backed it with any scientific credibility. Even so, Medarex's stock bumped up only to about $8.40 after the release -- in other words the full value of the potential described in the release was priced in to the stock before the acquisition.

Blumberg believes that BMS and Medarex are keeping a secret:

... the two companies are the only ones who have any knowledge of the full potential of ipilimumab.

... which is why they did not seek competing offers for Medarex. In the meantime, Blumberg is probably the only person in America right now who thinks a 90 percent return in the stock market is bum deal.

• Previously:
• Medarex CEO Shrugged at $250K Stock Deal in Face of $17.1M in Compensation
• Medarex CEO Gets $4.2M Bonus in BMS Deal After Just 2 Years' Work
• UPDATED: Medarex Stock Defies Gravity Despite Nonsensical Ipilimumab Release
• Medarex Execs Got 10% Pay Raise Despite Delivering Nothing