Is Another Setback in Store for ImClone?

ImClone issued its own statement Tuesday. "As our partner Merck KGaA has said, the information in this story is premised solely on unsubstantiated rumor. Merck KGaA has said that the clinical data cutoff for the study is at the end of the year and data analysis is expected in the first quarter of 2003. Accordingly, any speculation about the results of the data at this time is both premature and irresponsible."

Imclone shares were off 9% to $7.27 in recent Tuesday trading.

ImClone has been counting on positive results from the Merck study to bolster its own suspect data collected on Erbitux, which would have allowed the company to once again submit the colon cancer drug to the FDA for review. The most optimistic estimates had ImClone pushing Erbitux back to the FDA early next year.

Without strong European data, FDA officials are likely to tell ImClone to wait for the completion of new, ongoing U.S. studies before resubmitting Erbitux for review. At least one of these studies started only in August.

But TheStreet.com has spoken to two separate sources, both of whom have European investigator contacts with knowledge of preliminary results from the study. The preliminary results show that Erbitux was not effective in boosting the response rates of colon cancer patients enrolled in the study.

One source who spoke to TheStreet is a U.S.-based oncologist, specializing in colon cancer, with no investment position in ImClone or Merck. The other source is a Wall Street fund manager who has been long ImClone in recent months. Both sources requested anonymity.

Last December, the FDA refused to accept ImClone's application for Erbitux, chastising the company for sloppy clinical work that made it impossible to determine the drug's efficacy in patients with advanced colon cancer. ImClone claimed that Erbitux, when given alongside the chemo drug, irinotecan, shrunk tumors in 22.5% of patients.

But after these results were re-examined by researchers at Bristol-Myers Squibb(BMY Quote), ImClone's partner, the response rate was reduced to 12.5%, a level unacceptable for FDA approval, according to testimony offered at a recent congressional hearing into the matter.

The FDA's refuse-to-file letter of Dec. 28 sent ImClone's shares tumbling and set off a series of revelations that placed the company's name in the corporate rogues gallery alongside the likes of Enron, WorldCom, Tyco and Adelphia Communications. On Dec. 28, ImClone was trading at $55 per share; the stock closed Monday at $8.01.