ImClone Systems Inc. (IMCL) Tuesday reported lower first-quarter net income and disappointing sales of its colon cancer drug Erbitux (search), but its shares rose more than 8 percent on what analysts were calling a relief rally.

ImClone said Erbitux sales were $87.1 million for the quarter, while Wall Street had on average been looking for Erbitux sales of about $93 million.

"There's not a lot of good news in here. For the last three quarters Erbitux sales are not growing at all," said Brian Rye, an analyst for Janney Montgomery Scott. "For the stock to be up this much, I don't think makes sense."

Rye said the rally was likely being fueled by hope for the future and investors "thinking the worst is now behind us."

Net income at the New York biotechnology company fell to $28.8 million, or 33 cents a share, from $62.7 million, or 76 cents a share, a year ago, when Bristol-Myers Squibb Co. (BMY) made a large milestone payment related to the Erbitux approval.

That was 2 cents a share better than average Wall Street estimates.

But that didn't justify Tuesday's jump in ImClone's share price, analysts said.

"I suspect it's more a relief rally," said SG Cowen analyst Eric Schmidt.

"Optimists would say the worst is behind the company, but the second quarter doesn't look any better," Schmidt said.

Revenue for the quarter fell to $85.8 million from $110.2 million a year ago.

License fees and milestone revenue fell to $24.5 million from $67.5 million a year ago. Manufacturing revenue fell to $11 million from $25.5 million a year ago, when Bristol-Myers made higher volume purchases to establish stocking levels of Erbitux following its February 2004 approval.

Collaborative agreement revenue rose to $13.8 million from $10 million a year ago, reflecting purchases of clinical materials by Germany's Merck KGaA and higher reimbursements for royalty payments.

ImClone shares rose $2.55, or about 8.1 percent, to $34.13 on Nasdaq.

ImClone shares fell 11 percent two weeks ago when the company announced it was delaying seeking approval of Erbitux to treat head and neck cancer.