If this is true, jail would be tooo good for IMCL's CEO.
ImClone May Have Lost Trust as Well as Time Over Erbitux
By Adam Feuerstein
Staff Reporter
01/08/2002 08:58 AM EST
More than 5,000 people gathered in San Francisco Monday morning for the start of the JPMorgan H&Q health care investment conference, and everyone was asking the same question: Can the management of ImClone Systems be trusted.
The revelation that ImClone could be having much more serious problems than previously disclosed with its experimental cancer drug, Erbitux, has cast a cloud over the conference. H&Q, as the confab is known colloquially, is the largest Wall Street biotech and drug investment conference of the year, and as such helps set the tone for the health care sector for the rest of the year. And right now, fund managers gathered here are angry at ImClone and its management.
"This gives the entire biotech and drug sectors a black eye," says one fund manager, who, until last week, was long ImClone. "This is going to have investors questioning whether they can ever trust anything that a biotech executive says anymore."
Shares of ImClone closed Monday down $7.66, or 17.6%, at $35.83 per share.
Contradiction
As fund managers woke up in hotel rooms Monday morning, their New York offices were already faxing copies of The Cancer Letter newsletter. The newsletter claims to have obtained a copy of the "refuse to file" letter that the Food and Drug Administration sent to ImClone on Dec. 28, 2001, which details the concerns regulators have with the approval application for Erbitux. What has Wall Street pros attending H&Q so angry is not the actual contents of the RTF letter, but that it clearly contradicts many of the assertions and promises that ImClone has made for well over a year.
"What's so shocking to me is that the letter makes it clear that the FDA has had issues with ImClone and Erbitux for a long time, but the company never told anyone about it," says another fund manager who has been playing ImClone as a trade, both long and short.
ImClone executives did not return phone calls seeking comment.
In particular, there is one passage from the RTF letter that has everyone scratching their heads. "In order for your application to be considered complete, you were informed during the meeting of Aug. 11, 2000, in our letter of Jan. 19, 2001, and during the telephone conference call of Jan. 26, 2001, that the application must provide evidence that the addition of a toxic agent (irinotecan [CPT-11] ) is necessary to achieve the clinical effect."
ImClone has repeatedly told investors and Wall Street that FDA regulators had signed off on its development strategy for Erbitux. When the company began filing its approval application last summer, ImClone executives said they were in constant contact with the FDA to ensure that any agency concerns were resolved before they escalated into outright problems.
The RTF letter as quoted in the newsletter paints a different picture -- one of a company that continuously ignored FDA concerns. |
