Think the controversy surrounding ImClone is all about a stock deal? Think again
By Regan Eberhart
A couple of years ago, the emerging cancer drug Erbitux became a household name when two people closely associated with it were embroiled in a stock-purging scandal. Sam Waksal, the CEO of ImClone Systems, the biotech company trying to bring Erbitux to market, and his friend Martha Stewart made headline news for months. Although preliminary studies indicated that Erbitux was a highly effective cancer treatment, it was the story of Waksal and Stewart that most people knew. But the story behind Erbitux is much more interesting—as Alex Prud'homme '84 shows us.
In his book The Cell Game (HarperCollins, 2004), Prud'homme has peeled back every layer of the Erbitux saga, as if he were stripping an onion. By following Erbitux from its first moments in the lab, through its fits and starts—as various drug companies decided not to pursue it, through the drug trials and FDA application, to the heady world of Wall Street financing—he lays bare the realities that determine whether promising drugs ever make it to market and how patients gain access (or not) to treatments they need. Prud'homme also illuminates the story with enough historical perspective to generate compassion for the problems faced by all players in the biotech industry—the FDA, which must protect consumers and approve new treatments quickly; the scientists in small biotech firms with limited resources seeking magic bullets; and the giant drug companies shouldering the financial risks and bureaucratic hassles of bringing drugs to mass markets.
Against this complex backdrop looms "mercurial" Sam Waksal, an associate professor of pathology and medical researcher, who believed he was destined for greatness ("I will win the Nobel prize," he had said). To that end, he and his brother Harlan founded ImClone Systems, "to focus on infectious diseases, cancer and diagnostics, make some products, get rich, and retire early."
The story begins at the University of California, San Diego, in the early 1980s, when Dr. John Mendelsohn and his colleagues tested their 225th monoclonal antibody, an immune system protein created in the lab. They were looking for an antibody that would attach to receptors on cancer cells before EFG did; EFG causes cancer cells to proliferate. Number 225, later called C225, worked. This was one of the first "targeted treatments" that would zero in on cancer cells and prevent their growth.
For two decades, Mendelsohn tried to commercialize C225. His attempts to find a company to perform the medical trials and get it through the approval process met with repeated disappointment, until he was introduced to Sam Waksal. Although Waksal's company was almost broke and Waksal had "zero experience taking a drug through the FDA regulatory process," he agreed to take it on. Mendelsohn, happy to find someone who understood the importance of his antibody, agreed to let Waksal have C225.
As ImClone pursued its clinical trials in 1999, Shannon Kellum was riddled with colo-rectal cancer. Her physician had worked on C225 research in the past and requested permission from ImClone to try it on her. ImClone released some of the drug to Kellum's doctor, and her tumors shrank by an unprecedented 80 percent. No one had ever seen a cancer patient at this stage of the disease turn around like that. Overnight, Erbitux became "one of the hottest products in the history of biotech." ImClone stock began to skyrocket.
As word spread, more and more cancer patients sought C225, now officially named Erbitux. Patients wrote, called, and begged for inclusion in clinical studies or in a "compassionate-use program"; yet, ImClone barely reacted—most requests went unanswered. While Waksal was enjoying an exceedingly lavish life and selling the world on the future of Erbitux, Prud'homme writes, ImClone was conducting flawed trials and overlooking the FDA's requests for specific data and studies. The evidence as presented in The Cell Game seems unmistakable: Waksal, "the highest paid CEO in biotech," played and partied while Erbitux approval sank.
When Waksal—$80 million in debt and with monthly margin payments of $80,000 —received word that the FDA would not be approving Erbitux, he instructed his father and daughter to sell their ImClone stock, and attempted to transfer his shares to his daughter's account and sell. Compliance officers, noticing this suspicious activity, denied this transaction. At the same time, Martha Stewart received a message from her broker and instructed him to sell her ImClone stock.
Word of the FDA rejection reached the biotech industry quickly; the FDA letter of refusal had been leaked. Angry colleagues and investors demanded explanations. Government investigations began. ImClone stock fell, eventually bottoming out at $5.24, from a high of $75. And desperate cancer patients languished.
Today, Waksal is in jail. Stewart endured serious business setbacks and a devastating trial. (Prud'homme made regular appearances on CBS's Early Show to provide commentary about the trial.) In February 2003, 25 months after it issued its initial refusal, the FDA approved Erbitux to treat patients with advanced colo-rectal cancer.
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