After weeks of drama, a deal is finally done. Lilly will pay $70 a share, well above the $62 offered by Bristol-Myers Squibb. In doing so, Lilly gets access to the Erbitux cancer treatment and other cancer meds being developed. Plagued by expiring patents on other big sellers, drugmakers are increasingly looking to oncology as a lifeline.

“This transaction will broaden our portfolio of marketed cancer therapies and boost Lilly’s oncology pipeline with up to three promising targeted therapies in Phase III in 2009,” Lilly ceo John Lechleiter says in a statement. “By bringing together ImClone’s and Lilly’s marketed oncology products, pipelines, and biotech capabilities, we are taking a very important step forward in addressing the challenges of patent expirations we will face early in the next decade.”

As for ImClone chairman Carl Icahn, his various entities control about 14 percent of ImClone stock and so he gets the higher price he sought. “We feel that the Eli Lilly transaction vindicates our decision to oppose in 2006 a potential transaction in which the company would have been sold at approximately $36 per share which the prior board favored,” he says in a statement.

And Bristol-Myers can get a premium for its 16.6 percent stake in ImClone should it choose to sell. UPDATE: Indeed, Jim Cornelius, Bristol-Myers’ ceo, issued this statement later in the morning: “We are pleased to have initiated a process that has resulted in the substantial increase of ImClone’s value for all of its stockholders.” Bristol-Myers, in fact, is selling its $1 billion stake.

“Perhaps Bristol-Myers has made a comfortable bid for ImClone which would be, in our view, very attractive to the company. If however, it did not succeed then it can liquidate its stake at a premium. In our opinion, the stake’s value independent of full ownership of IMCL is NOT strategic, and gets BMY nothing,” Deutsche Bank analyst Barbara Ryan wrote in an investor note last week.

UPDATE: Meanwhile, Moody’s placed Lilly’s Aa3 long-term rating under review for possible downgrade, while affirming Lilly’s Prime-1 short-term rating. The review is prompted by the material increase in Lilly’s debt, especially relative to ImClone’s modest level of free cash flow. Although the strategic benefits of the acquisition appear solid, the rating review further considers the risks related to execution of ImClone’s pipeline.

pic thx to o5com on flickr