The rumor mill churned out bad news for ImClone Systems Inc. Thursday when a German publication reported that Merck KGaA would not share its much-needed colorectal cancer trial data with ImClone for Erbitux. Throw in the release of first-quarter earnings that showed a greater-than-expected loss per share, and ImClone began Thursday with an 18 percent stock drop.

However, ImClone, which received from the FDA a "refusal to file" letter for Erbitux in December, fought back. By market's close, ImClone's stock (NASDAQ:IMCL) sat at $13.05, a drop of $1.99, or 13.2 percent.

While the news from Merck didn't prove to be as bad as originally reported - that it would not give its trial data to ImClone nor participate in the biologics license application in the U.S. - Merck did say it would not alter its trial to fit ImClone's new needs.

"We stick to our contractual obligations," said Hartmut Vennen, spokesman for Merck KGaA, of Darmstadt, Germany. "We have a contract with ImClone and ImClone with us and it says both partners share existing clinical data. But as far as enlarging [the trial] or doing a different set-up, that we will not do."

ImClone officials could not be reached for comment.

Erbitux (cetuximab) is a monoclonal antibody designed to target and block the epidermal growth factor receptor. ImClone began filing its rolling BLA for Erbitux to treat irinotecan-refractory colorectal cancer in June 2001. Merck KGaA licensed rights in 1998 to develop and market Erbitux outside North America. (See BioWorld Today, June 29, 2001.)

Following the FDA's dismissal of the Erbitux BLA - and the subsequent soap opera of events that included a federal investigation into ImClone's business dealings, allegations of insider trading, accusations of unreported deaths in Erbitux trials, and squabbles with its U.S. partner, Bristol-Myers Squibb Co., over their $2 billion deal - ImClone met with the FDA and seemingly righted itself. Coming out of the meeting, the company said the agency had agreed to an approach that might allow the acceptance of the BLA without doing additional trials. Instead, ImClone would need to reanalyze Phase II data from the U.S. and package that information with data from Merck's European colorectal cancer trial. (See BioWorld Today, Jan. 3, 2002; Jan. 27, 2002; and Feb. 28, 2002.)

Rumors suggest ImClone then approached Merck with requests for changes to the European trial, including that Merck bump up the patient count from 300 to 500. What, exactly, was requested, is not clear, but this is: Merck is not interested in stepping outside the original contract.

"The discussions we had with ImClone and Bristol-Myers were about potential modifications that might have been useful for the filing in the States," Vennen told BioWorld Today. "But that is all beyond our obligations."

That decision was not made by Merck alone, however. Bristol-Myers, ImClone and Merck sat down, Vennen said, discussed matters and came to the conclusion that changing Merck's trials would not be in everyone's best interest. Pushing back a European filing for the drug for ImClone's sake certainly has no benefit to Merck, said Fariba Ghodsian, analyst with Roth Capital Partners Inc.

"What is the incentive to [Merck] to delay the filing?" she said. "ImClone and [Bristol-Myers] need a trial in order to get FDA approval and they wanted to piggy-back on the European trials. You think they would have given some incentive to Merck for them to do that. But it seems like they didn't offer any incentive to Merck."

Merck's filing plans, thanks to ImClone, have changed enough. The company originally planned to file in Europe for head and neck cancer later this year, and had expected to use ImClone's U.S. data to file for colorectal cancer sometime after that. When ImClone's BLA was shot down by the FDA, it sent Merck searching for colorectal answers.

"We learned we couldn't count on ImClone's data for our filing with colorectal cancer," Vennen said, so the company changed its plans. In Europe, there are no rolling submissions - once an application is filed in one indication, a second filing can't occur until the first is reviewed. Merck switched gears, Vennen said, and decided to include its own colorectal cancer data in the filing and seek approval for both indications. In the process, the number of patients in the colorectal trial increased from 225 to 330, and Vennen said Merck should be ready to file early next year, with possible approval in 2004. (See BioWorld Today, April 25, 2002.)

That's data on 330 colorectal patients at ImClone's fingertips. The question remains, however, if that is enough to satisfy the FDA. Vennen's comment that ImClone approached Merck requesting "modifications" to the trial suggests that what ImClone needs, the Merck trial may not provide.

"I think ImClone, based on its discussions with the FDA, believed that it needed more patients," Ghodsian said, adding that if ImClone needs data on more patients that the Merck trial has enrolled, or needs the trial conducted differently, then perhaps ImClone will find itself back in the clinic.

There is the chance that ImClone can provide Merck with some incentive to doctor the trial or continue enrolling patients, Ghodsian said, but "right now, that doesn't seem likely."

ImClone's first-quarter earnings, released Thursday, showed the company posted a loss of $30 million, or 41 cents per share, missing the consensus estimate of 34 cents per share. But that's much less of a concern, Ghodsian said.

"Unless you are in a cash-crunch situation, at this time that is irrelevant," she told BioWorld Today. (ImClone had $414.7 million in cash as of March 31.) "The bigger thing is not to delay the product filing here and getting [Erbitux] on the market. That is what investors are waiting for."