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ImClone Shares Rise on News of Cancer Drug's Promise
Jun 04, 2003 (Chicago Tribune - Knight Ridder/Tribune Business News via COMTEX) -- The biotech company shares Martha Stewart dumped 18 months ago have once again become a darling on Wall Street. Shares of ImClone Systems Inc. have jumped above $30 recently for the first time in more than a year on news that Erbitux, which the company had touted as a promising drug, shrank tumors in some colon cancer patients. The stock had sunk as low as $5.24 in September. ImClone shares closed 5 cents higher in trading Tuesday to $33.55. Still, that's about half the price when Stewart sold nearly 4,000 Imclone shares at about $58. The new data exciting Wall Street is practically identical to the research presented to the Food and Drug Administration when Imclone sought approval of the drug in late 2001. Stewart has been under intense scrutiny for selling ImClone shares on Dec. 27, 2001, just one day before the FDA rejected the biotech company's experimental cancer treatment. Stewart and ImClone CEO Dr. Samuel Waksal, who is accused of tipping off friends and family to the looming FDA rejection, have been key subjects of an insider trading probe. But it is now becoming clear that the quality of the data Imclone submitted to the FDA, and not the effectiveness of the drug itself, was the reason why the agency rejected Imclone's application, analysts say. "The interesting thing is that the drug did always work," said Uwe Reinhardt, a professor of economics and public affairs at Princeton University who follows the health-care industry. "The study wasn't carefully enough framed." The new data from Germany's Merck KgaA, which owns European rights to Erbitux, show that 23 percent of colorectal cancer patients taking Erbitux in combination with a standard chemotherapy treatment experienced a 50 percent reduction in tumor size, compared with about 11 percent of patients taking Erbitux alone. Merck, which isn't related to U.S.-based Merck & Co., conducted the study and presented the data at this week's American Society of Clinical Oncologists meeting in Chicago as part of the company's effort to gain European regulatory approval for Erbitux. European patients could begin using the drug by the end of this year, analysts say. Meanwhile, Imclone and U.S. partner Bristol-Myers Squibb Co. said earlier this week they plan to discuss the findings with the FDA in hopes of winning marketing approval for the drug here. The drug's fate before the FDA, however, is uncertain. Analysts, however, see the new data is helping the case for Erbitux. "In any case, the FDA generally likes to see two studies," said Kenneth Abramowitz, managing director of The Carlyle Group in New York. "Now, armed with this extra information, chances are now good (for Erbitux)." The new results validate some of the claims made by Waksal before the insider-trading scandal hit. But it shouldn't have been a surprise to Wall Street or those who know the drug industry that a small biotech company like Imclone would have difficulty winning approval of the many FDA regulatory hurdles, analysts say. Often times, small biotech companies have to turn to larger, more experienced companies or risk being turned away as Imclone was. The FDA has also long been criticized by the industry for delaying applications and onerous reviews of drugs. "The FDA has certain rules as to how it wants filings to look," Abramowitz said. "Early stage companies like Imclone are just not experienced as companies like Pfizer in filing new drug applications. It is not shocking that a company that size would have problems in getting FDA approval." Last year, Stewart said she had agreed with her broker to dump the shares if they dipped below $60. She said the trade was executed at $58 a share.