An independent panel verified that a clinical trial showed ImClone Systems Inc.'s (IMCL) drug Erbitux (search) used in combination with radiation was more effective in checking the spread of cancerous tumors beyond the head and neck than radiation alone, the company said on Wednesday.

Shares rose 16 percent both on the panel's finding and news that financier Carl Icahn (search) filed with regulators to become ImClone's biggest shareholder, by acquiring an 18 percent stake. As of March, he held about 5 million shares, or 6 percent of ImClone, according to a company spokesman.

The independent panel of radiologists and oncologists had been asked to review data and conclusions from a late-stage trial of Erbitux that researchers had presented last year at a major medical meeting. The drug is already approved for colon cancer.

"The independent review committee has verified the primary finding of the trial, that Erbitux helped control the spread of tumors beyond the head and neck," ImClone spokesman David Pitts said.

With that hurdle now cleared, Pitts said ImClone plans to meet shortly with the FDAto discuss how to go forward with its marketing application for head and neck cancer. He said no new drug had been approved in over a decade for such tumors.

ImClone has previously said it hopes by the end of the year to submit the new marketing application.

The Food and Drug Administration (search) last summer told ImClone it wanted conclusions of the Phase III study to be verified by an independent panel. Some patients with head or neck tumors in the 424-person trial received Erbitux along with radiation, while others received radiation alone.

The study showed that tumors did not spread beyond the head and neck after two years in 56 percent of patients with such tumors who received Erbitux as well as radiation. That was statistically better than the 48 percent of patients who received radiation alone, Pitts said.

ImClone shares, which dipped to their lowest level in almost two years at one point on Tuesday, were up $4.88 to $35.04, in heavy trading Wednesday morning on the Nasdaq.

Some 40,000 Americans will be diagnosed with oral, head and neck cancer this year, and more than 11,000 Americans died from the disease in 2004, according to the American Cancer Society.

Erbitux was the drug at the center of the insider trading scandal that landed ImClone founder and former Chief Executive Sam Waksal (search) and his friend Martha Stewart (search) in jail.