NEW YORK (CNN/Money) -
ImClone Systems CEO and founder Sam Waksal, criticized by investors for being more concerned with a celebrity lifestyle than with his company's stock, can now devote all his time to other interests.
Waksal resigned Wednesday as the biotech company prepared to go back to the beginning in getting approval for its key cancer drug Erbitux.
Sam Waksal will be replaced by his brother Harlan, who was chief operating officer of ImClone.
Sam Waksal, who founded the company with Harlan in 1984, has been stung by criticism and lawsuits in his handling of the approval process for Erbitux.
In December, ImClone (IMCL: Research, Estimates) unexpectedly received a rejection letter from the Food and Drug Administration for Erbitux to treat colorectal cancer, citing inadequate testing data, which led to a sharp drop in the stock.
Sam Waksal said in a Dec. 31 conference call that the problem was one of documentation, but he told investors and analysts at a Jan. 9 conference that it was "not an insignificant problem," that certain data did not exist and that the company "screwed up."
The stock plunged, leading to the barrage of lawsuits and a congressional investigation, which is still ongoing.
The Erbitux situation was exacerbated by a January photo in New York magazine of Sam Waksal at a holiday party with rock star Mick Jagger, reviving among ImClone investors controversies over the time Waksal spends socializing with celebrities and working on outside business ventures.
Bristol-Myers, which had sunk a $1 billion equity investment into ImClone and promised a further $1 billion in milestone payments for a cut of Erbitux, demanded the numbers of the deal be changed and that Sam and Harlan Waksal be removed until the drug is approved.
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ImClone stood its ground in February, then backed down in March, agreeing to about $100 million less in milestone payments and 40 percent of future sales. But Sam and Harlan Waksal stayed put.
After meeting with the FDA, ImClone and Bristol-Myers (BMY: Research, Estimates) planned to resubmit Erbitux with data from European partner Merck KGaA, but on Monday the companies reported disappointing results in a trial for Erbitux to treat head and neck cancer.
ImClone is now planning to start new clinical trials of Erbitux with Bristol for colon, head and neck, lung and pancreatic cancer. Analysts said this pretty much indicates executives felt Erbitux would not be approved, even with the Merck KGaA data.
Sam Waksal was also the subject of scrutiny in his financial dealings involving ImClone.
In February, Waksal gave a check to ImClone for $471,002 and has asked the board of the company to make an independent decision as to whether or not he violated the short-swing profit rule last year.
The short-swing profit rule states that if a company insider buys and then sells company stock within a six-month period, any profit must be returned to the company.
Shares of ImClone rose 60 cents to $11.50 after hours.
-- Reuters contributed to this report