Friedman Billings Cuts Imclone to Market Perform

From Standard & Poor's Equity Research

Friedman Billings downgraded Imclone Systems (IMCL) to market perform from outperform, citing the data from a recent drug research trial.

Analyst Jim Reddoch says the data from the CALGB first-line colorectal cancer trial presented last night make positive data from the CRYSTAL study (which is key to first- and second-line market expansion) look riskier than he thought. He now gives the study a 50:50 chance of success. He notes Erbitux's response rate was strong at 52% vs 38% for control, but this did not translate into meaningful benefit for progression-free survival. He cut his $44 target to $38 based on a higher discount rate of 25% (up from 20%).