Hope for Erbitux Again Lifts ImClone

Shares of ImClone Systems ( IMCLE) were finding buyers in the premarket session Friday after the company and its prospective cancer drug Erbitux were mentioned positively in a published article.

ImClone is preparing to discuss clinical data on Erbitux at this weekend's American Society of Clinical Oncology meeting, and The Wall Street Journal reported that doctors who have reviewed results of a new clinical trial of Erbitux say it confirms the findings of ImClone's study first presented two years ago. The Food and Drug Administration ultimately denied ImClone's drug application in December 2001, saying that an Erbitux clinical trial was deficient.

ImClone's German partner Merck KGaA conducted the latest study. RealMoney columnist Adam Feuerstein reported earlier this month that sources familiar with Erbitux said the drug's performance in Merck's clinical trial was more positive than preliminary results had initially indicated. (Merck KGaA isn't affiliated with U.S. drugmaker Merck ( MRK).)

The Journal wrote that Mark Pegram, an oncologist with UCLA, said on May 1 that anyone familiar with ImClone's previous Erbitux study won't be surprised by the new data to be presented Sunday.

Though Friday's report didn't appear to contain new information, investors were encouraged by the positive press. Shares of ImClone were gaining $3.49, or 15%, to $26.95 on the Instinet platform before the opening bell. Since the start of the year, ImClone's shares have more than doubled.

If the data hold up to closer study, some analysts and investors believe ImClone and its U.S. partner Bristol-Myers Squibb ( BMY) will try to gain FDA approval for Erbitux this year, the Journal reported. The reason for the optimism is the belief among some industry observers that the agency, now that it has a new chief, wants to work faster to get new drugs on the market.

Biotech Boost

Biotechnology stocks have been running higher lately, as a variety of factors -- the perception of a friendlier FDA, earnings growth, short-covering, takeover rumors and the upcoming ASCO meeting -- have brought investors into the sector. ImClone received some positive news earlier this week when it got a $6 million payment from Merck KGaA for achieving a manufacturing milestone under the firms' license agreement for Erbitux.

The company has lately been making headlines for Erbitux, a welcome change from 2002. Last year, ImClone's name was tarnished by an insider-trading scandal that led to the resignation of then-CEO Sam Waksal and also ensnared home and lifestyle expert Martha Stewart.

Just weeks ago, Harlan Waksal, who took over as CEO following his brother's departure from the post, and Chairman Robert Goldhammer quit in connection with a federal tax probe.

New and experimental cancer therapies have been making plenty of news recently, for companies large and small. AstraZeneca's ( AZN) Iressa and Millennium Pharmaceuticals' ( MLNM) Velcade, both cancer treatments, just received FDA approval.

Earlier this month, Genentech ( DNA) said its experimental drug Avastin "markedly" improved the survival of patients with colon cancer when used alongside chemotherapy.

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