ImClone Systems Inc., after being dragged to scandalous depths not often seen in the biotechnology sector, bobbed to the surface Wednesday following its meeting with the FDA concerning the cancer drug Erbitux.

ImClone and its partners discussed with the FDA “an approach” for ImClone to provide the agency with data from an ongoing European trial and reanalyzed data from U.S. Phase II trials as a means of bolstering its biologics license application for the besieged product Erbitux. That would shave sizeable time off what was considered ImClone’s unsavory alternative: additional trials.

The news launched ImClone’s stock (NASDAQ:IMCL) up $5.01 Wednesday, or 32.3 percent, to close at $20.53. The stock closed at $73.83 as recently as December.

Brian Rye, an analyst with Raymond James & Associates Inc. in St. Petersburg, Fla., spoke about ImClone’s “worst-case scenario” a term used over and over by those debating what might come of the meeting and told BioWorld Today it looks as if ImClone dodged a clinical bullet.

“[The news is] positive for ImClone and the stock is reflecting that,” he said. “A lot of people feared the worst-case scenario, which would be initiating a new pivotal trial in the U.S. And it appears that will not be the case.”

According to an ImClone press release, the New York-based company will look to provide the FDA with data from an ongoing European Phase II study run by Merck KgaA evaluating the combination of Erbitux and irinotecan vs. Erbitux alone in patients with irinotecan-refractory colorectal cancer. Merck, of Darmstadt, Germany, is ImClone’s European partner. Also, the discussed “approach” will include submitting reanalyzed data from ImClone’s Phase II Erbitux trials from the U.S.

How long this will take is hazy, Rye said, as is the FDA’s dedication to this new path.

“What I don’t know is when that data might be available,” he said. “And to be honest, the [ImClone press release] never says the FDA agreed to this, so I’ll throw that caveat out, too.”

Others felt the same way.

“I think there was no real answer that came out of the FDA,” said Jason Kantor, an analyst with JP Morgan Securities Inc. in New York. “But from the reports that have come out, it seems clear the FDA has agreed in principle to accept the Merck data. This clearly gets around the worst-case scenario, which was additional studies.”

Merck said last month that its European development plan for Erbitux (cetuximab or C225) remained unchanged by ImClone’s setback in the U.S. It said it intended to file for approval based on the 225-patient colorectal cancer trial in the third quarter this year, and expected to have the product on the market by the end of 2003. (See BioWorld Today, Jan 25, 2002.)

ImClone has found itself caught in the harsh lights of the FDA and other government bodies since its rolling biologics license application for Erbitux to treat colorectal cancer received a refusal-to-file letter from the FDA in late December. The refusal-to-file letter began ImClone’s downward stock spiral, and events since that time have unfolded like failed origami.

Those events include a House committee investigation into its drug development conduct; a report in the Cancer Letter claiming ImClone under-reported deaths in its Erbitux trials; allegations that Samuel Waksal, ImClone’s CEO, misled investors about the drug’s status; and Bristol-Myers Squibb Co., of New York, which had signed a partnership with ImClone for Erbitux worth up to $2 billion, attempting to restructure the deal after the negative response from the FDA. (See BioWorld Today, Jan. 3, 2002; Jan. 22, 2002; Feb. 7, 2002; and Feb. 13, 2002.)

Since December, nervous investors sold off ImClone holdings and the stock bottomed out at $14.73 this week. Those investors worried about two things, Kantor said the possibility of new trials and also “what Bristol-Myers is going to do.” ImClone, for its part, told Bristol-Myers it had no interest in revamping its potential $2 billion deal and saw no reason why it should. However, by failing to have its BLA accepted for filing, ImClone cost itself a $300 million milestone payment linked to its agreement with Bristol-Myers. Rye said he believes that ImClone could recoup the $300 million if and when the BLA is finally accepted, but even so, the news of the FDA meeting gives ImClone a better bargaining position with Bristol-Myers.

“I would say it strengthens ImClone’s position,” he said. “They’ve stated all along that they didn’t do anything wrong. I don’t think ImClone will be any more receptive [to restructuring the deal] than it was before, which was not at all. But Bristol-Myers, I think, wants to be part of the Erbitux story. I think they might be more interested now.”

Kantor said ImClone’s new approach lowers the probability that Bristol-Myers will “walk away from the deal,” although he added that Bristol-Myers “has not responded publicly yet, so I wouldn’t rule out further dealings there.”

With ImClone not facing the burden of additional trials, analysts have cautiously sketched a new timeline for Erbitux to reach patients. Kantor’s firm now models a 2003 filing and a launch in 2004. Rye’s estimation is similar.

“Realistically, we are looking at ImClone filing at the end of this year and then going through all those hoops and then possible approval toward the end of [2003] or beginning of [2004],” he said.

Perhaps the meeting didn’t cast in stone a guarantee for ImClone and Erbitux. Instead, it simply presented a direction that ImClone can now travel for possible eventual FDA approval, but that pointing finger is a good sign, Kantor said.

“It appears the FDA is willing to work with ImClone to get this drug approved and not have further delays in the process,” he said.

ImClone officials did not return calls seeking comment.