Sale of ImClone Cancer Drug Blocked by FDA

Shares of ImClone Systems Inc. fell nearly 16% Monday after regulators said they would not accept the biotechnology company’s application to sell its eagerly awaited colon cancer drug, Erbitux.

Although the company’s chief executive, Sam Waksal, told investors he doesn’t believe ImClone will need to conduct new trials to get approval, analysts said the likely delay in launching the drug is a blow.

The New York City-based company had hoped to launch the drug, projected to be a blockbuster, as early as next May. That could be pushed back six months or more, and the drug may not hit the market until the first quarter of 2003, said Scott Brown of Raymond James & Associates Inc. in a report.

The rejection of ImClone’s application by the Food and Drug Administration comes three months after Bristol-Myers Squibb Co. agreed to pay $1billion for a 20% stake in ImClone to gain access to Erbitux.

The FDA’s demands of ImClone could cause a slowdown in the flurry of biotech mergers and acquisitions of the last few weeks, as potential acquirers, eager for late-stage compounds to fill their pipelines, take harder looks at the deals.

ImClone’s shares fell $8.79, or 15.9%, to $46.46 on Nasdaq. Bristol-Myers’ shares fell 80 cents, or 1.5%, to $51 on the New York Stock Exchange.

Erbitux is one of the most promising drugs to emerge from the biotech pipeline, analysts say, and although it may be delayed, few expect it to be rejected. The drug is one of a new class of drugs designed to block a protein found on the surfaces of many types of cancer cells.

“The regulatory delay does not have any effect on the core thesis that Erbitux is a blockbuster drug,” said Jason Kantor, an analyst at J.P. Morgan who has a “buy” recommendation on ImClone’s stock.