I really hope the IMCL insiders (and their friends) who sold stock just ahead of the rejection get nailed by the SEC:
Monday June 10, 7:51 pm Eastern Time
Reuters Company News
ImClone heard U.S. FDA questions in mid-December
By Lisa Richwine
WASHINGTON, June 10 (Reuters) - U.S. regulators raised "serious questions" about ImClone Systems Inc.'s (NasdaqNM:IMCL - News) data on its promising cancer drug more than two weeks before officials rejected the firm's application, a spokesman for a lawmaker probing the matter said on Monday.
Relatives of former ImClone Chief Executive Samuel Waksal sold shares in the company ahead of regulators' rejection, say congressional investigators who are seeking to determine exactly when the company learned that the drug was in trouble.
On Dec. 12, officials from ImClone, marketing partner Bristol-Myers Squibb Co. (NYSE:BMY - News) and the Food and Drug Administration talked in a conference call about the drug, Erbitux, said Ken Johnson, a spokesman for House Energy and Commerce Committee Chairman Billy Tauzin, a Louisiana Republican.
During the call, "the FDA began to raise serious questions about ImClone's data and supporting documentation," Johnson said.
An ImClone spokesman confirmed that the FDA had a number of questions regarding Erbitux during the Dec. 12 call. He said "the company believed the issues raised were not ones that would lead to a rejection of the application."
FDA officials told the firm they would meet the week of Dec. 17 to make a decision on the drug, the ImClone spokesman said.
On Dec. 28, ImClone disclosed it received an FDA letter saying the agency would not review Erbitux, news that sent the company's stock price plummeting.
The FDA told both Bristol-Myers and ImClone that it had made a decision on Dec. 20 but did not reveal the decision, Johnson said. The firms were told the news would come via fax on Dec. 28.
ASSUMPTION 'NEWS WASN'T GOOD'
"Any reasonable person would have assumed the news wasn't good," Johnson said.
On Dec. 4, an ImClone official asked an FDA official whether the agency might refuse to file the drug application, and the company was told that was a possibility, Johnson said.
The committee also learned that Harlan Waksal, Samuel Waksal's brother and now chief executive, was told on Dec. 25 the FDA might refuse to review Erbitux. Harlan Waksal, then the chief operating officer, was contacted by a Bristol-Myers official who had discussed the situation with an FDA official, according to Rep. James Greenwood, a Pennsylvania Republican who chairs the House committee's oversight and investigations subcommittee.
The trading by Samuel Waksal's relatives came in the 48 hours before regulators informed the company of their rejection, congressional investigators say. Style maven Martha Stewart, a friend, also sold ImClone shares ahead of the FDA ruling, but a spokesperson said Stewart did nothing unlawful.
A person familiar with ImClone said the Bristol-Myers tip had come from an FDA official outside the division that was reviewing Erbitux and therefore was treated as a rumor. Between Dec. 26 and Dec. 28, the company was unable to substantiate the information, the person said.
Bristol-Myers declined to comment.
The sequence of events will be the focus of a congressional hearing on Thursday. Lawmakers want to know why the FDA rejected Erbitux and whether ImClone, a New York-based biotech company, misled investors about the drug's prospects.
"On one side of the ledger you have this big buildup, this hype, this massive investment, and then on the other side you have this fizzle," Greenwood said in an interview.
"A lot of folks lost a lot of money. A lot of patients at least temporarily have lost a lot of hope," he said.
Greenwood said the panel also will examine whether the secret FDA drug approval process harmed investors, or if the FDA was unclear with ImClone during talks on the drug.
"I don't rule out the possibility that at least some of the blame lies at the FDA. We need to look to see if there are ways in which we can reform the FDA so that it's less likely that this kind of thing happens in the future," he said.
(with reporting by Toni Clarke in New York)
Tuesday June 11, 6:19 am Eastern Time
Associated Press
ImClone Drug Documents Surface
By THERESA AGOVINO
AP Business Writer
Documents Suggest ImClone Knew FDA Would Reject Drug Application, Congressional Staffer Says
NEW YORK (AP) -- An ImClone Systems Inc. document suggests the company knew in advance that the Food and Drug Administration would refuse to file the application for its star drug, Erbitux, a congressional staffer said Monday.
A handwritten memo dated Dec. 27, said that ImClone's then-chief executive Sam Waksal, and his brother, Harlan, at the time the chief operating officer, were trying to stop the FDA from issuing the refusal to file letter that was sent the next day, according to Ken Johnson, spokesman for the House Energy and Commerce Committee. That committee is investigating ImClone's implosion amid allegations of insider selling and stock manipulation. Johnson would not provide a copy of the memo or give details about its contents.
At least three individuals close to Sam Waksal sold their ImClone shares on Dec. 27, a source close to the investigation said.
Andrew Merrill, a spokesman for ImClone, said Monday that the company had no proof the application would be rejected until the FDA did so on Dec. 28.
Sources close to the investigation, however, said there were signals the company knew the filing was troubled in early December.
Those early signals culminated in a conversation on Dec. 25 when a Bristol-Myers Squibb Co. executive told Harlan that he'd heard the FDA might refuse the Erbitux filing, the sources said.
Between Dec. 25 and Dec. 28, Sam Waksal's two daughters, son-in-law, father and sister as well as his friend Martha Stewart all sold ImClone shares, Johnson said. One daughter, Aliza Waksal, reportedly reaped $2.5 million. She, along with Stewart and Waksal's sister, sold their shares Dec. 27, a source close to the investigation said. Those sales helped prompt the Securities and Exchange Commission to investigate Waksal and the company.
People close to ImClone have said the company had heard only rumors of problems, so the stock sales couldn't be considered illegal. But sources close to the investigation, speaking on condition of anonymity, said the memo disputes that.
"It didn't say the rumored rejection," said a source close to the investigation who requested anonymity. "They knew the ax was going to fall."
For investors, the legality is no longer the issue.
"Whether their actions were technically legal or illegal is beyond the point. You are seeing a company putting its interest in front of that of the shareholders," said Brian Rye, a biotechnology analyst at Raymond James & Associates. "The ultimate jury, the market, has already passed judgment.
ImClone stock has fallen 90 percent since early December. On Monday, ImClone shares fell 77 cents to $7.68 on the Nasdaq Stock Market.
Investors are expected to grill Harlan Waksal, the company's new chief executive, about the recent revelations and the company's fall from grace at ImClone's annual meeting on Tuesday. Similar questions are anticipated from the congressional staff at a hearing on Thursday.
Sam Waksal resigned late last month, saying he wanted investors to focus on the drug, not his travails. But many weren't satisfied when he was replaced by his brother.
Analysts note that the Dec. 25 phone call reinforces how intimately involved Harlan was in running the company, which is also under investigation by the Justice Department and being sued by various shareholders. The call came from Brian Markison, the head of the oncology and immunology group at Bristol-Myers. The pharmaceutical giant was involved because last fall, it agreed to pay up to $2 billion for a 20 percent stake in ImClone plus a share of Erbitux's revenues.
"People wanted a management change but a change didn't really occur," said Rye. "Harlan was the point person on Erbitux."
The sources close to the investigation, which is also examining whether the FDA's secretive approval process facilitates stock manipulation and insider trading, say ImClone first learned the application was troubled on Dec. 4.
They said that's when a senior ImClone official had lunch with an FDA administrator who said the drug would not receive an outright approval, leaving open the chance that there could be a conditional green light.
On Dec. 12, the FDA raised questions about the application in a conference call with Bristol-Myers and ImClone. By Dec. 25, ImClone heard about the possibility of the rejection.
This is really unbelievable: the company had heard only rumors of problems, so the stock sales couldn't be considered illegal.
Martha Stewart is going to have to revise her household guide to include a section on the perils of insider trading. <g>
Peter |
