April 10 (Bloomberg) -- ImClone Systems Inc.'s drug Erbitux failed to help pancreatic cancer patients live longer in a study, a setback for the company's plan to expand the market for its only product. The shares fell 6.4 percent.

The research was testing whether Erbitux, given with chemotherapy, extends survival of patients with cancer that has spread from the pancreas, an organ that secretes digestive enzymes and hormones such as insulin. ImClone and partner Bristol-Myers Squibb Co., both based in New York, announced the results in a statement today.

ImClone counted on positive results to help win U.S. Food and Drug Administration approval for the new use. Erbitux, which had $1.1 billion in 2006 sales, was accepted as a treatment for colon cancer in 2004 and won FDA clearance for head and neck cancer last year. The study's researchers, along with ImClone and Bristol Myers, plan to review the results.

``Pancreatic cancer is extremely tough to treat, and there was some hope on the part of some people'' that Erbitux would be effective, said Brian Rye, an analyst with Janney Montgomery Scott in Philadelphia, in a telephone interview. ``The upside would have been greater than the downside is now.''

Shares of ImClone fell $2.71 to $39.64 at the close of Nasdaq Stock Market trading. They've risen 48 percent this year.

Additional Trials

ImClone hasn't given up on Erbitux's use in pancreatic cancer and plans additional tests, including a study testing a combination of Erbitux and Avastin and chemotherapy against the disease, the company said in the statement.

``In the wake of recent successes Erbitux has had, we think the future is still very bright for Erbitux,'' said Rye, who rates the shares ``buy.'' ``We do expect 2007 to gain momentum in colorectal cancer and other indications still to come.''

About 37,170 new cases of pancreatic cancer are expected to occur in the U.S., and 33,370 people will die from the disease, according to the American Cancer Society. Pancreatic cancer is one of the most aggressive malignancies, and there is no test to catch it in its early stages.

Only about 5 percent of patients with pancreatic cancer are still alive five years after being diagnosed.

``There are reasons to think Erbitux works in pancreatic cancer, but the current results are not as dramatic as we hoped,'' said Alex Denner, who leads an executive committee that manages ImClone, in an e-mailed response. ``We remain committed to evaluating Erbitux in pancreatic cancer.''

If approved, Erbitux would compete with Tarceva, a cancer medication sold by Roche Holding AG, Genentech Inc. and OSI Pharmaceuticals Inc. as a treatment for pancreatic and lung cancers. OSI's shares rose 79 cents, or 2.3 percent, to $35.94.

Bristol-Myers

ImClone co-markets Erbitux with Bristol-Myers in the U.S. and receives about 39 percent of the drug's sales through the partnership. Bristol-Myers shares fell 5 cents to $33.90 in New York Stock Exchange composite trading.

The study was conducted by the Southwest Oncology Group, a cancer-research network sponsored by the National Cancer Institute and involved more than 700 pancreatic cancer patients.

Billionaire investor Carl Icahn took over control of ImClone last October, ousting the company's board and management. ImClone's management has turned over several times since an insider trading scandal engulfed founder Samuel Waksal and his friend, Martha Stewart, five years ago.

Icahn has been pushing ImClone to expand Erbitux's market.

To contact the reporter on this story: Angela Zimm in Boston azimm@bloomberg.net.

Last Updated: April 10, 2007 16:13 EDT