ImClone Systems Inc. (IMCL) said U.S. regulators would reconsider the biotechnology company's request to bring Erbitux, a promising colon cancer drug, to market if the firm resubmits U.S. data and supplements it with new data from Europe.

The decision could mean Erbitux could be on the market by the middle of next year, analysts said -- a full year later than ImClone had hoped for but not as late as some had feared after the U.S. Food and Drug Administration refused to consider the company's first application last year.

ImClone's shares soared on the news, rising $6.61, or 42.4 percent, to $22.10 in early trading on Nasdaq. Shares of partner Bristol-Myers Squibb Co. rose $1.83, or 3.8 percent, to $47.25.

At a meeting Tuesday, the FDA told ImClone and pharmaceutical giant Bristol-Myers what they would need to do to get the drug approved.

The measures include collating new data from ImClone's U.S. trial and presenting them for evaluation by an independent council. That data should then be supplemented by data from Erbitux trials being conducted in Europe by Germany's Merck KGaA , the FDA said. Merck holds the right to market Erbitux outside the U.S.

"This outcome is a positive because it appears to have avoided the worst-case scenario that everyone feared, which was that the FDA demanded new trials," said Brian Rye, an analyst at Raymond James & Associates.

ImClone must revisit its U.S. trial results to answer questions that were not settled in the company's first submission to the FDA. The regulator said it was not clear how much of the improvement seen in patients on Erbitux was due to the drug and how much due to just chemotherapy.

Erbitux was tested on patients who were taking the chemotherapy drug irinotecan but who had supposedly become resistant to it. ImClone did not test patients with Erbitux alone, while Merck's trial does.

'PRODUCTIVE' MEETING

Merck, which was present at the FDA meeting, said in a statement it found the meeting "productive" and agreed to provide the data from its trial to ImClone. It expects to have the data available by the end of this year.

In the Tuesday meeting, the FDA did not examine new data collected by ImClone or Bristol-Myers over the past six weeks or discuss overtly whether ImClone would need to conduct new clinical trials to obtain approval.

In the two months following Dec. 28, when it was announced that the FDA would not accept ImClone's original application, the company's shares fell more than 70 percent to around $15.50, prompting a slew of shareholder lawsuits and a U.S. Congressional inquiry into possible mismanagement.

Last year, the big drug company agreed to pay $2 billion for a 20 percent stake in ImClone. So far, it has paid $1.2 billion and wants to cancel the remaining $800 million it owes in staggered payments.

Bristol-Myers earlier this month threatened to walk away from the partnership unless it was given a greater share of any future profit from Erbitux.

Bristol-Myers Wednesday said it was weighing its options following the FDA meeting, but did not specify whether it was referring to its threat to walk away from its partnership.

Nor did it say how it intended to co-operate with ImClone as the smaller firm attempts to refile the marketing application.

"The FDA provided clarity that the addition of the ongoing Merck KGaA colorectal trial will be required to bolster the existing ImClone database. We are actively evaluating our options in view of yesterday's FDA meeting," Bristol-Myers spokeswoman Nancy Goldfarb said.

Analysts have said they doubt Bristol-Myers will walk away from Erbitux, which many cancer experts think could be a blockbuster.