ImClone Systems Inc. (IMCL) on Wednesday posted a quarterly profit on strong sales of colon cancer drug Erbitux (search) in its first full quarter on the market, but shares plunged 19 percent.

Sales of Erbitux met Wall Street consensus estimates, but analysts said there was disappointment among investors that sales were not even stronger.

"Apparently the market expected it to beat the numbers handily," said James Reddoch, an analyst for Friedman, Billings, Ramsey.

Reddoch downgraded his rating on ImClone's stock to "market perform" from "outperform" and slashed his price target to $75 from $93 as he reevaluated ImClone's long-term outlook.

Net income of the New York-based biotechnology company was $24 million, or 29 cents per share, compared with a loss of $34.8 million, or 47 cents per share, a year earlier.

Wall Street had expected 25 cents per share.

Sales of Erbitux, which was approved in February, were $71.4 million for the quarter.

"It was a great full first quarter for Erbitux," said SG Cowen analyst Eric Schmidt. "But because it didn't hit the highest expectations fast money is coming out of the stock."

Brian Rye, an analyst for Janney Montgomery Scott who was looking for $58 million in Erbitux sales, suggested investors may be unfavorably comparing Erbitux sales to Genentech's (DNA) new colon cancer drug Avastin.

"Avastin blew past everyone's estimates," Rye said.

Total revenue rose to $71.5 million from $17.9 million a year ago, but fell from $109.6 million in the first quarter. The company said its license and milestone revenue in the first quarter was higher because of a one-time gain of $42 million.

ImClone late on Tuesday said it planned to ask U.S. regulators to also approve Erbitux as a treatment for head and neck cancer by the second quarter of 2005.

Oppenheimer analyst Cory Kasimov said investors in a "skittish biotech market" may have been disappointed that ImClone would not seek approval for the additional indication this year, delaying a $250 million milestone payment from Bristol-Myers Squibb Co. (BMY)

However, Kasimov said, available data on head and neck cancer, which showed Erbitux and radiation controlled the disease better than radiation alone and helped some patients live longer, "should be sufficient to drive off-label use of the drug."

Erbitux costs about $2,400 per dose and is usually given by injection once a week.

Shares of ImClone closed down $15.29 at $65.44 on Nasdaq, after falling as low as $64.13 earlier.

ImClone, which was at the heart of an insider trading scandal that landed its founder, Sam Waksal (search), behind bars and led to the conviction of his friend Martha Stewart (search), has been turning itself around since the launch of Erbitux and said it expects to remain profitable for the rest of the year.

Stewart last week was sentenced to 5 months in prison for lying to investigators about the suspicious timing of her sale of ImClone shares.