ImClone Systems Inc on Tuesday posted its first quarterly profit in nearly 10 years, and said initial sales of its much anticipated cancer drug Erbitux were higher than expected.
ImClone, whose shares rose 5 percent, said sales of Erbitux in the first five weeks following its launch in February were $17.5 million, of which ImClone received a 39 percent royalty of $6.8 million.
"The $6.8 million definitely shows that the launch is off to a good start," said Jason Kantor, an analyst at WR Hambrecht & Co.
The initial rejection of Erbitux by US regulators in December 2001 had caused an insider trading scandal that led to the indictment of ImClone's founder, Sam Waksal, and his friend Martha Stewart.
ImClone reported a first-quarter net profit of $62.7 million, or 76 cents per share, compared with a loss of $34.8 million, or 47 cents a share, in the first quarter a year ago.
Much of the profit was derived from license fees and milestone payments ImClone received from partners Merck KGaA of Germany and Bristol-Myers Squibb Co for progress in developing and manufacturing Erbitux.
Revenue rose to $109.6 million from $19.6 million.
That comprised $67.5 million in license fees and milestone payments; $25.5 million in payments for manufacturing the product; royalty revenue of $7.1 million, including the Erbitux royalty; and collaborative agreement revenue of $9.5 million.
Michael King, an analyst at Banc of America Securities, said he was surprised by the amount of the drug the company is manufacturing.
"It suggests that Bristol-Myers is optimistic about what the uptake will be," he said.
The Erbitux sales represent sales to end-users only, the company said, and do not reflect sales to wholesalers for stocking inventory.
ImClone shares rose $4.09 to $77.16 in late morning trading on Nasdaq. Earlier they rose as high as $80.35.
Operating expenses fell to $38.8 million from $53.9 million, while research and development costs fell to $20.2 million from $39 million a year ago.
ImClone's costs related to Erbitux are now relatively small. Bristol-Myers is responsible for selling the drug and for clinical development in indications other than colorectal cancer.
ImClone is responsible for manufacturing, but Bristol-Myers reimburses it at slightly above cost.