Biopharmaceutical company ImClone Systems (NASDAQ:IMCL) has always provided investors with a lot of ups and downs. Take, for instance, the notorious insider trading scandal that the company's management was involved in several years ago and the subsequent approval of its lead drug, Erbitux, to fight colorectal cancer. 2006 has been no different, as the company has oscillated back and forth between regulatory successes and legal stumbles, or between financial gains and competitive threats.

ImClone started the year off right by getting approval from the FDA to market Erbitux for head and neck cancer, as well as a positive European Union opinion on the drug for this indication later on in the first quarter. Setting the stage for more possible Erbitux label expansions later on, enrollment in three additional phase 3 trials were completed in the quarter.

In the second quarter, ImClone received a $250 million milestone payment from partner Bristol-Myers Squibb (NYSE:BMY) in conjunction with Erbitux's approval to treat head and neck cancer. As a result of this label expansion, Erbitux sales experienced renewed growth and ImClone clocked in revenues and earnings to the tune of 62% and 32% higher, respectively.

The third quarter started quietly enough, but then things started to fall apart for ImClone. A similar but potentially superior rival monoclonal antibody from Amgen was approved for marketing and will compete directly against Erbitux in colorectal cancer, and in head and neck cancer in the future.

Then a patent case contesting the ownership of the key Erbitux patents was ruled against ImClone, and now it will have to pay royalties on sales of Erbitux and potentially millions of dollars worth of damages if the case holds up on appeals (which it should). Then, ten days later, institutional investor Carl Icahn made public his intentions to seize control of the company.

At least the financial side of things turned out a little better in third quarter. Revenues were up to $150 million for the quarter on the back of 69% growth of Erbitux royalties and diluted earnings per share were 86% higher year over year, to $0.65 a share.

The fourth quarter is notable because Icahn finally got his wish and convinced three directors to resign, thus giving him and his allies control of ImClone's board of directors. In a shareholder friendly maneuver, he and the rest of the board decided to waive all options grants for the next year, but I still think he is just taking over ImClone to give himself, as largest shareholder, a lucrative buyout via a dutch auction with ImClone's over $1 billion in cash.

Overall, 2006 has offered only mixed results for ImClone. It did well on the financial side of things by growing diluted earnings per share 265% in the first nine months of the year, and it is flush with cash. But it's how it utilizes that cash that determines how well shares of ImClone perform in 2007.

Here's how our Motley Fool CAPS community rates ImClone as a potential investment:

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ImClone only garnered one star out five, despite having more outperform than underperform picks. This is thanks to the high ranking of the players who have given the thumbs down on it.

Rule Breakers analyst and CAPS all-star TMFBreakerCharly sums up his bearishness on ImClone thusly: "Too much going wrong here. Amgen's Vectibix just approved and going to be priced very aggressively to take market share from Erbitux. ImClone (is) also going to have to pay IP damages and future royalties which will further erode margins. On top of that, there's trouble in the board room."

In past years ImClone has had a revolving door at the upper management level, which definitely will not help the company as it goes through it toughest operational period (post-Erbitux approval). Now that its only marketed drug is facing a strong competitive challenge, the window for either selling itself or transforming into a more diversified biotech via acquisitions is rapidly closing.

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Check out the other companies featured in "The Motley Fool's 2006 in Review and 2007 Preview" special.

Fool contributor Brian Lawler does not own shares of any company mentioned in this article. The Fool has a disclosure policy.