Investors bet on ImClone drug despite soft quarter

BOSTON (Reuters) - ImClone Systems Inc. IMCL.O reported lower-than-expected first-quarter sales of its cancer drug Erbitux on Thursday, but investors boosted the company's shares nearly 2 percent on optimism the drug has a more promising future.

"We believe U.S. Erbitux sales this quarter are inconsequential to the long-term growth prospects of this drug," said Michael King, an analyst at Rodman & Renshaw, in a research report.

ImClone's fortunes have been looking far more rosy since the end of March, when Amgen Inc. (AMGN.O), maker of a rival drug called Vectibix, stopped a clinical trial of its drug for safety reasons, giving additional breathing room to Erbitux, which is ImClone's only product.

"I think ImClone is getting a free pass this quarter given all the recent data generated by Erbitux and Vectibix," said Cory Kasimov, an analyst at Oppenheimer & Co. "People are now focused more on its growth prospects."

Alex Denner, chairman of the executive committee running ImClone pending its appointment of a new chief executive, said on a conference call with analysts that the company has increased its Erbitux sales force to 64 from 37.

"This is a vote of confidence in Erbitux," he said in an interview.

The move comes as ImClone and its marketing partner, Bristol-Myers Squibb Co. (BMY.N) try to work out a new, more effective, way of working together that will boost sales of Erbitux.

"I think it's fair to say that from the time Erbitux was launched until a year ago that the folks at Bristol-Myers weren't focusing as urgently on Erbitux as ImClone thought they should," said Brian Rye, an analyst at Janney Montgomery Scott. "I think it is positive that in increasing its sales force ImClone is willing to put its money where its mouth is."

ImClone, which is controlled by billionaire investor Carl Icahn, also named Andrew Bonfield, the chief financial officer of Bristol-Myers, to its board. John Fazio, who was chairman of the audit committee, resigned on Tuesday.

U.S. sales of Erbitux in the first quarter totaled $160.1 million, up from $138 million a year earlier but below the average forecast from analysts of $165 million.

Global sales of Erbitux rose to $306.1 million in the first quarter from $227.9 million a year earlier.

ImClone's first-quarter net income was $28.8 million, or 33 cents a share, 2 cents better than analysts' average forecast compiled by Reuters Estimates.

In the year-earlier quarter the company earned $229.6 million, or $2.51 a share, boosted by a one-time milestone payment from Bristol-Myers.

ImClone's partner for Erbitux outside the United States is Merck KGaA (MRCG.DE) of Germany.

ImClone's shares rose 72 cents, or 1.7 percent, to $43.47 in late trading on Nasdaq.