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News > Companies
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ImClone ex-CEO takes 5th
Sam Waksal declines to testify; his brother Harlan says his stock sales were not improper.
June 13, 2002: 5:02 PM EDT

WASHINGTON (CNN) - Federal lawmakers trying to get the bottom of problems behind ImClone Systems' experimental cancer drug Erbitux learned little Thursday about a setback that angered investors and patients.

Samuel Waksal, the former CEO of ImClone facing insider trading charges, declined to testify before the congressional panel probing the rejection last December of the new cancer drug from the biotechnology company.

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His brother, Harlan Waksal, the current CEO, told lawmakers that "we let patients down" by submitting a flawed application to the government for approval of the drug.

But Harlan Waksal insisted that the problems that led to the Food and Drug Administration's refusal to review Erbitux were ones of documentation, even though Erbitux was fast-tracked because of its potential promise for treating colon cancer.

The Dec. 28 refusal by the FDA set off a tumble in ImClone (IMCL: Research, Estimates) shares, which are down 83 percent this year. Was a so-called life-saving miracle drug over-hyped? And did ImClone executives profit from early knowledge of the problems that sent ImClone shares tumbling?

Few clear answers emerged Thursday before a panel that wants to know if the Waksals' relatives and friends sold shares after being tipped off to information unavailable to the public.

Under questioning by a subcommittee of the House Energy and Commerce Committee, Harlan Waksal said he sold ImClone shares in early December without any improper foreknowledge of Erbitux's FDA status.

"There was no material information available to me at that time," Harlan Waksal testified. He said that on Christmas Day last year he informed ImClone management that a Bristol-Myers source said an FDA refusal appeared to be on the way.

The testimony came a day after Sam Waksal was arrested and charged with nine criminal counts of conspiracy, securities fraud and perjury, and then freed on $10 million bail.

In a related civil complaint, the Securities and Exchange Commission said Sam Waksal tried to sell ImClone stock and tipped family members before ImClone's official FDA announcement on Dec. 28.

As for Erbitux, Laurie Smaldone, head of Bristol-Myers Squibb's global regulatory operations, told the panel the drug's application will be resubmitted as soon as possible.

"We believe that this drug has positive potential," said Smaldone, who said there was a 13 percent positive response rate among patients.

Bristol-Myers took a $1 billion equity stake in ImClone as part of a $2 billion marketing agreement for the drug.

Lawmakers are trying to get to the real promise of Erbitux. Both Smaldone and Harlan Waksal characterized its early stumble with the FDA as a problem of incomplete documentation, though no resubmission has been made.

"We now know that we could and should have done a better job in putting together our application package," Harlan Waksal said in testimony prepared for a hearing by the House investigative subcommittee. "We let patients down, and for that, I am truly sorry."

An FDA representative echoed this problem with the Erbitux application

"Our conclusion was there was insufficient information to judge whether it would work alone," Patricia Keegan, a physician with the FDA, told the panel. "We felt there were multiple deficiencies in the application."

The main Erbitux study was too flawed to tell if anybody benefited from Erbitux, said Dr. Raymond Weiss of Georgetown University Medical Center, according to the Associated Press.

One flaw: A stunning quarter of patients shouldn't even have been enrolled because it was unclear if they were sick enough, and they were taking additional cancer drugs, he said. A second study that enrolled just 57 patients "does show the drug has an effect for a rare patient'' but probably little benefit, he added.

Sam Waksal, appearing before the panel, used his constitutional right against self-incrimination.

"Unfortunately, upon the advice of counsel, I wish to assert my constitutional rights and decline to answer,'' Waksal told lawmakers, Reuters reported.

A statement from Sam Waksal's lawyer, Lewis Liman, said the former CEO believes all allegations against him are improper.

"One of Dr. Waksal's major goals has been to make available a drug that would prolong the lives of people with cancer," Liman said.  Top of page


--from staff and wire reports






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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.