A decline in ImClone Systems ( IMCL) helped drag down the biotech sector Tuesday, as a courtroom setback for the drugmaker weighed on its shares.

The U.S. District Court in Massachusetts ruled in favor of Repligen ( RGEN) and the Massachusetts Institute of Technology, who alleged that ImClone had improperly conducted itself and intimidated a witness in a patent infringement case.

Consequently, the court barred one of ImClone's in-house lawyers from any further use of confidential information in the case and prohibited the company from communicating with the witness or his employer without permission, Repligen said. The patent suit involves the rights to the cancer treatment Erbitux that ImClone sells.

Repligen gained 30 cents, or 8.5%, to $3.85, while ImClone fell $1.04, or 2.7%, to $37.03.

ImClone is a component of the Amex biotechnology index, which was down 6.94, or 0.9%, to 785.33.

Other companies gained ground on positive analyst comments. For instance, Generex Biotechnology ( GNBT) hopped up 44 cents, or 35%, to $1.70 after Rodman & Renshaw initiated coverage on the company with an outperform rating and a price target of $6. The firm also said Generex's oral insulin, Oral-lyn, "could be a significant player in the non-injectable insulin market."

NeurogesX ( NGSX) rose $1.29, or 16.2%, after Pacific Growth Equities started coverage of the stock with a buy rating. On Monday, Lazard Capital also initiated coverage with a buy. The company said this week that it completed enrollment in a second phase III clinical trial for a patch to treat shingles.

Elsewhere, Adventrx ( ANX) named Jack Lief chairman to replace M. Ross Johnson, who retired. Lief is president and chief executive of Arena Pharmaceuticals ( ARNA). Shares of Adventrx were down 9 cents, or 3.3%, to $2.63.

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