ImClone down on downgrade

Smith Barney analyst Yaron Werber dropped his rating on IMCL to "hold" from "buy" to reflect higher-than-expected royalty obligations that he said "would have a noticeable impact on its profitability." Werber also lowered his price target to $72 from $90 and decreased his 2005 EPS estimate to $2.60 from $2.75. IMCL was off $9.62 (15%) to $56.42 on 20.2 million shares on Monday.

The royalties include those that IMCL owes to the University of California (San Diego, Calif.) and Aventis (AVE) for IP related to IMCL's colorectal cancer drug Erbitux cetuximab. In the second quarter, IMCL allocated $5.4 million for royalties, of which an undisclosed amount was paid to the university and AVE. The remainder may have to be paid to other parties in the future, according to the company. ...