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Ebb & Flow

Although investors and analysts always push for more transparency, it's no guarantee that they'll like what they see when the veil parts. Such was the case with ImClone (IMCL) last week. The company provided relatively detailed guidance in its third quarter conference call on Thursday, and ended the week down $5.53 (11%) at $43.80.

Indeed, several analysts downgraded or reduced their price targets on the stock following the call (see "Analyst Picks & Changes," A16).Although IMCL's third quarter EPS of $0.45 beat the consensus estimate of $0.33 by $0.12, there were concerns about the company's higher than expected tax rate and IMCL's announcement that it formed a sales force.

On the tax front, IMCL increased its estimated effective tax rate to 14% from 10%. For 2005, the company noted that if it receives a $250 million milestone from partner Bristol-Myers (BMY), its tax rate could be 40-50%. The milestone would be triggered by FDA approval of Erbitux for head and neck cancer. The antibody, in Phase III testing for the indication, already is approved for colorectal cancer.

The company also said the annualized cost related to its new sales force should be about $10 million.

The stock has been driven by momentum players and people exited the stock at the slightest hiccup, said Wayne Rothbaum of Quogue Capital. "Capital is a coward - it flees uncertainty," he said.

IMCL's hosing last week started even before the conference call. On Monday, the stock fell $3.82 to $44 after SG Cowen analyst Eric Schmidt lowered his sales estimates for Erbitux. He said use of the antibody may top out sooner than expected and lowered his 2005 sales estimate to $500 million from $540 million.

Not quite quiet period

Speaking of transparency, the SEC last week voted 5-0

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