ImClone Systems Inc., maker of the Erbitux cancer drug, said it will remain independent and invited billionaire U.S. investor Carl Icahn to join its board. The shares dropped.

ImClone decided not sell or merge with another company after its board finished a six-month review of strategic alternatives, the New York-based company said in a statement today. Interim Chief Executive Officer Joseph Fischer will stay in that role until a replacement is found, the company said.

Imclone made its decision in light of ``significant improvements'' in performance, the statement said. Erbitux, approved in 2004 to treat colon cancer, got a boost in March when it was cleared as the first treatment for head and neck malignancies in 45 years. Yet a similar drug by Amgen Inc. awaits approval, clouding the outlook, an analyst said.

``The company is in a lot of trouble going forward,'' said Cowen & Co. analyst Eric Schmidt, who has an ``underperform'' rating on the stock and doesn't own any shares, in a telephone interview today. ``They're not making any money today owning the monopoly they had. And with a superior, competitive drug coming, their financials will only get worse.''

Shares of ImClone fell $3.42, or 11 percent, to $28.95 as of 8:17 a.m. New York time in Nasdaq Stock Market composite trading, after closing at $32.37 yesterday. ImClone shares fell 12.99 euros, or 12 percent, to 22.60 euros in Frankfurt.

Amgen

Amgen, the world's biggest biotechnology company, is seeking U.S. approval of a cancer drug called panitumumab. Like Erbitux, it is designed to block the protein EGFR involved in the growth of cancer cells.

In January, Imclone said it hired investment banker Lazard Ltd. to explore a sale or merger to help it raise money to develop more new medicines. Today, Imclone said it concluded ``that the alternatives available, including bids received for the acquisition of the company, did not match the value potential of ImClone Systems as an independent company.''

ImClone in July said second-quarter earnings rose more than expected as sales of Erbitux gained 77 percent. Net income increased 43 percent to $37.2 million, or 42 cents a share, from $26 million, or 30 cents, a year earlier. U.S. sales of Erbitux, the company's only marketed product, rose to $172.8 million.

``The company has a very strong cash position,'' said ImClone spokesman David Pitts in a telephone interview today. ``Through better Erbitux sales and improvements in our top and bottom lines, we certainly expect to be able to fund our ongoing operations and certainly our strong cash position keeps our options open in terms of business development opportunities.''

$964 Million in Cash

ImClone had $964 million in cash at the end of second quarter, Pitts said.

In May, ImClone agreed to Icahn's request to expand the board and add Alex Denner, then a portfolio manager at Viking Global Investors. Today, the company said it will keep Denner, now an Icahn employee, on the board's slate for its September 20 annual meeting and add an independent director to be suggested by Icahn.

The company also agreed in May to change a rule to allow Icahn to almost double his stake in ImClone to 19.9 percent. Icahn currently holds about 10 percent of the company's shares, ImClone said today.

Bristol-Myers Squibb Co., a partner in selling Erbitux, already has a 17 percent stake in ImClone. Bristol-Myers said in February it had no current plans to acquire the biotech company.