ImClone Falls on Erbitux Sales

Shares of ImClone Systems(IMCL - Cramer's Take - Stockpickr) dropped Monday after analysts noticed that U.S. sales of the company's colon cancer drug Erbitux were lower in July.

Recently, ImClone's stock had lost $4.02, or 7.2%, to $51.98.

The dip in U.S. sales to $25.4 million in July vs. $30.1 million in June "is a cause of concern, but not for alarm," said Corey Kasimov of Oppenheimer in a brief note to clients Monday. The sales are tracked by IMS Health.

"Overall, we are slightly disappointed," said Kasimov, who maintains his buy rating on the New York-based biotechnology company, whose drug was approved in mid-February by the Food and Drug Administration. Erbitux was launched in the U.S. in late February.

Kasimov said the results support the belief of some on Wall Street that Erbitux's strong sales start was due to a "significant backlog of patient demand." But Kasimov is still sticking with a 12-month price target of $98. (He doesn't own shares; his firm is a market maker in ImClone's stock.)

Another analyst troubled by the sales figures is David Witzke of SunTrust Robinson Humphrey, who told clients in a Monday research report that some ImClone watchers have probably overestimated Erbitux's sales.

"With some analysts expecting third-quarter U.S. Erbitux sales in the $85-million-to-$95-million range compared to second-quarter sales of $71 million, we remain concerned that investors will be disappointed if results fall far short of these lofty expectations," Witzke said.

He predicts third-quarter U.S. sales will reach $76 million and that full-year U.S. sales will hit $243 million. He has a neutral rating on the stock and a 12-month price target of $66. (He doesn't own shares; his firm is also a market maker in ImClone's stock.)

Erbitux is approved in the U.S. as a treatment for patients with advanced colon cancer. It is approved for use in conjunction with standard chemotherapy in patients for whom chemotherapy alone hasn't worked. It also has been approved as a single therapy for advanced colon cancer in patients who cannot tolerate chemotherapy.

ImClone is marketing the drug with Bristol-Myers Squibb (BMY - Cramer's Take - Stockpickr) and the German company Merck . Shares of Bristol-Myers Squibb were off 21 cents, or 0.9%, to $24.02 in late morning trading. Bristol-Myers Squibb co-markets Erbitux in North America; Merck is ImClone's marketing partner outside North America.