In a letter to Pharmion ceo Pat Mahaffy, Steven Cohen’s SAC Capital advisors contends that the biotech could be worth more as a standalone company than Celgene’s $2.9 billion offer, depending upon the results of a clinical trial for a rival’s key drug. MGI Pharma is testing Dacogen, a cancer med similar to Pharmion’s Vidaza, which is used to treat MDS, a bone marrow disease. SAC and its affiliates hold an 8.3 percent stake in Pharmion.

“Based on our own analyses and those in the published research of numerous sell-side analysts, we believe that if Dacogen’s survival data are worse than Vidaza’s, Vidaza could capture significantly more than half of the MDS market and peak sales could be $100 million to $250 million higher than current projectionsm,” they write (here’s the letter).

“If the Dacogen trial fails or produces data that are clearly worse than Vidaza’s survival data, we believe Pharmion would be worth $80 - $100 or more as a standalone company versus the $72 per share in stock and cash offered by Celgene. If the proposed merger is completed, Pharmion shareholders’ exposure to this upside will be diluted in Celgene’s stock.

“We see the merits of a potential merger with Celgene,” the shareholder said. “However, as the merger is currently proposed, we believe that Pharmion’s shareholders would not receive sufficient value for Pharmion’s current products or the opportunity for a higher valuation if competitive data from Dacogen does not match data already produced by Pharmion’s Vidaza.”