Guest guest Posted January 19, 2002 Report Share Posted January 19, 2002 What's even worse...I OWN IMCLONE STOCK AND I'VE JUST HAD MY INVESTMENT CUT IN HALF! Friday January 18, 5:59 pm Eastern Time U.S. House panel to probe ImClone Systems (UPDATE: Adds comment from board member) By Toni e NEW YORK, Jan 18 (Reuters) - A government committee said on Friday it will investigate allegations that ImClone Systems Inc. misled investors by hiding negative information about research into its experimental cancer drug Erbitux. ADVERTISEMENT The House Energy and Commerce Committee said it will seek records from the U.S. Food and Drug Administration, ImClone (NasdaqNM:IMCL - news) and ImClone partner Bristol-Myers Squibb Co. (NYSE:BMY - news), to establish the validity of ImClone's clinical research into Erbitux. Shares of ImClone fell $8.93, or 29.7 percent, to close at $21.15 on Nasdaq. The stock has plunged nearly 65 percent since Dec. 28, when the FDA refused to review what it considered a deficient marketing application for the drug. ``It's not a good situation,'' said Rye, an analyst for & Associates. ``A congressional investigation means more negative publicity for ImClone and Bristol-Myers, but particularly for ImClone since almost the whole value of the company is tied up in Erbitux.'' Over the past three weeks, close to a dozen lawsuits have been filed against ImClone by angry investors who claim the company made false or misleading statements about the prospects for Erbitux, an experimental treatment for colon cancer. Now the government is weighing in. ``We have several serious concerns,'' said W.J. Tauzin, chairman of the Subcommittee on Oversight and Investigations, in a letter to ImClone, Bristol-Myers and acting FDA Commissioner Bernard Schwetz. One concern, Tauzin said, is that ImClone failed to disclose negative information in a Dec. 28 press release in which it announced the FDA had rejected the Erbitux marketing application. The release contained ``questionable descriptions'' of the FDA's rejection letter and did not mention the crucial news that the agency believed a new clinical trial would be needed for Erbitux, Tauzin said. ImClone and Bristol-Myers declined to comment except to say they would cooperate with the investigation. But an ImClone board member and co-discoverer of Erbitux defended the drug. ``I've been working on this for well over a decade, and we've been doing the clinical trials for a very long period of time,'' said Dr. Mendelsohn. ``This is a delay, this is not a turn-down. It's a delay in getting approved what we believe is an excellent drug, and we hope the data will speak for itself the next time around.'' The government committee also plans to look into whether ImClone's top management, including Chief Executive Waksal and Chief Operating Officer Harlan Waksal, his brother, sold shares in ImClone at a time they had reason to believe the drug would not be reviewed. ``Adding to the controversy are sales of stock by ImClone executives in the weeks just before FDA issued the refusal-to-file letter,'' Tauzin said in his letter. On July 12, the Waksals borrowed a combined $33.9 million from New York-based ImClone in the form of interest-bearing promissory notes to exercise options and warrants on nearly 3 million shares of ImClone common stock, according to regulatory documents. They purchased the stock at about $8 a share when it was trading at nearly $41.60. Two months later Bristol-Myers paid $70 a share, or $1 billion, for a 20 percent stake in the company, and agreed to pay up to $1 billion more in milestone payments as Erbitux reached certain stages of development. Bristol-Myers has since lost about $640 million of its investment. ImClone has made consistently upbeat projections for the drug and for the company, telling investors repeatedly that they expected the drug to come before the FDA Oncology Drug Advisory Committee in February and the drug to be approved shortly thereafter. ******************************************************************** http://www.thestreet.com/_yahoo/tech/adamfeuerstein/10007044.html Congress to Put ImClone Under Scrutiny By Adam Feuerstein Staff Reporter 01/18/2002 05:23 PM EST Updated from 2:29 p.m. EST One of the congressional committees investigating Enron's (ENRNQ:OTC BB - news - commentary - research - analysis) business irregularities has started an inquiry into ImClone's (IMCL:Nasdaq - news - commentary - research - analysis) handling of its cancer drug Erbitux. Related Stories ImClone CEO: 'We Screwed Up' Today's Main Course: Grilled ImClone Execs How You Could Have Seen ImClone's Implosion Coming In another stunning chapter to the ImClone saga, a committee of the U.S. House of Representatives said Friday that it is starting an investigation into the beleaguered biotech firm and the way it conducted clinical testing for the experimental cancer drug. And now, sources close to the company say partner Bristol-Myers Squibb (BMY:NYSE - news - commentary - research - analysis), which owns 20% of ImClone and is angered by the Erbitux debacle, is beginning to exert more influence over ImClone's management. One rumor making the rounds is that Bristol-Myers may go as far as asking ImClone COO Harlan Waksal to resign. A company spokesman denies this, stating that " there are no senior-level departures. " Trading was halted in ImClone when news of the congressional investigation was released. When trading resumed, shares plummeted Friday to close down $8.93, or 30%, to $21.15. After hours, the stock fell another $1.71, to $19.28 The House Energy and Commerce Committee, led by Reps. Tauzin (R., La.) and Greenwood (R., Pa.), is asking many of the same questions of ImClone that investors have been asking since Dec. 28, when the Food and Drug Administration rejected the approval application for Erbitux. Formal letters of inquiry from the House panel were sent Friday to ImClone, its partner Bristol-Myers Squibb and the Food and Drug Administration. Questions About Waksals' Role According to the letters, the congressmen -- who are also involved in the Enron investigations -- want to know whether ImClone CEO Sam Waksal and his brother and COO Harlan Waksal knew about the FDA concerns with Erbitux all along but failed to disclose the information to investors or to Bristol-Myers. In shades of the Enron investigation, the congressmen are concerned that the Waksals were offered sweetheart loans from the company last summer to purchase low-priced shares of ImClone stock. At the same time, the Waksals were negotiating a partnership with Bristol-Myers that allowed them to sell that stock for tens of millions of dollars. The Waksals' windfall was reported first by TheStreet.com in September, when the ImClone-Bristol-Myers deal was announced. But as first reported by the Cancer Letter, a Washington, D.C.-based cancer newsletter, the " refuse to file " letter sent by the FDA to ImClone on Dec. 28 says that regulators expressed serious concerns with Erbitux as early as August 2000. Specifically, the FDA told ImClone on several occasions that the clinical trial for Erbitux was " not adequate and well-controlled. " ImClone didn't disclose this information publicly until last week, when Sam Waksal made a presentation at the JP H & Q health care conference. And even when he did, he downplayed the FDA concerns, as reported in the Cancer Letter, insisting that Erbitux was an effective and safe drug and that ImClone would be able to address the FDA issues promptly. One of the thrusts of the congressional inquiry will be to determine whether ImClone misled the public -- and investors -- into believing that all was well with Erbitux when in fact it was not. Sharing Information With SEC And in what could spell even more bad news for ImClone, the House panel is asking why the FDA shouldn't be able to share information with the Securities and Exchange Commission if the agency believes a company is not being truthful with the public. " We have several serious concerns. Available information seems to conflict with ImClone's description of the contents of FDA's RTF letter and its clinical research. ... Without the Cancer Letter article, investors would have had to rely on ImClone's questionable descriptions of the RTF letter, " states the congressional letter of inquiry sent to the FDA. " The FDA's statute and regulations appear to inhibit the agency on its own from disclosing some, if not all, of the RTF letter or other similar, relevant information to the Securities and Exchange Commission when there are concerns about the accuracy and completeness of company's descriptions of FDA actions, " the letter continues. More than a dozen private class-action lawsuits have been filed against ImClone alleging that the company, indeed, did mislead investors. The congressional panel is asking for all records relating to the FDA's rejection of the Erbitux approval application, as well as all records relating to meetings held between ImClone and the FDA concerning Erbitux. Most interestingly, however, the panel wants to know " whether the FDA has had contact with the SEC on the ImClone/Erbitux matter, and, if there was contact, appropriate details about the nature of the contact, " according to the letters of inquiry. ImClone, Bristol-Myers and the FDA have until the end of January to comply with the House panel's request. Meanwhile, sources close to ImClone say that Harlan Waksal could be resigning from the company. Waksal has come under intense scrutiny because, as the company's COO, he is ultimately responsible for shepherding the Erbitux approval application through the FDA. But on Dec. 6, just three weeks before the FDA rejection, Waksal sold $50 million in company stock. ImClone defended the sale, explaining that Waksal needed to sell the stock to pay taxes, but investors, angry about the steep decline in ImClone's stock price, have questioned whether Waksal benefited from insider information. While other ImClone executives, including Sam Waksal, have come to Harlan Waksal's defense, he has not made any public statements and was conspicuously absent from the JP H & Q health care conference last week. A source familiar with the situation says Waksal might be considering resigning from ImClone, possibly spurred by pressure from Bristol- Myers. Waksal could be replaced by a Bristol-Myers executive or someone handpicked by Bristol-Myers. ImClone executives could not be reached for comment. In a public statement, the company said it was cooperating with the congressional inquiry. ********************************************************************** Friday January 18, 5:19 pm Eastern Time Press Release SOURCE: RABIN & PECKEL LLP Rabin & Peckel LLP Commences Class Action Against ImClone Systems, Inc. and Certain of Its Officers and Directors Alleging Violations of Federal Securities Law NEW YORK--(BUSINESS WIRE)--Jan. 18, 2002--A class action complaint has been filed in the United States District Court for the Southern District of New York, civil action number 02 Civ. 0448(RO), on behalf of all persons or entities who purchased ImClone Systems, Inc. (``ImClone'' or the ``Company'') common stock (Nasdaq: IMCL - news) between May 12, 2001 and January 4, 2002, both dates inclusive (the ``Class Period''). ImClone, D. Waksal, and Harlan W. Waksal are named as defendants in the action. The complaint alleges that defendants violated section 10( of the Securities Exchange Act of 1934 by issuing a series of false and misleading statements about the efficacy of the Company's new ``blockbuster'' drug for the treatment of cancer, Erbitux. In particular, the complaint alleges that the Company mislead investors as to the progress of Erbitux's application for FDA approval, representing that all necessary information to allow the FDA to accept ImClone's application for the drug had been assembled and presented to the FDA. On December 28, 2001, ImClone announced that the FDA would not accept the Company's application for Erbitux. The Complaint alleges that as a result of these false and misleading statements the price of ImClone common stock was artificially inflated throughout the Class Period causing plaintiff and the other members of the Class to suffer damages. Plaintiff is represented by the law firm of Rabin & Peckel LLP. Rabin & Peckel LLP and its predecessor firms have devoted its practice to shareholder class actions and complex commercial litigation for more than thirty years and have recovered hundreds of millions of dollars for shareholders in class actions throughout the United States. You can learn more information about Rabin & Peckel at www.rabinlaw.com. If you purchased ImClone common stock during the Class Period described above, you may, no later than March 8, 2002, move the Court to serve as lead plaintiff. To serve as lead plaintiff, however, you must meet certain legal requirements. You can join this action as a lead plaintiff online at www.rabinlaw.com. If you wish to discuss this action further or have any questions concerning this announcement, or your rights or interests, please contact plaintiff's counsel, Belfi or Maurice Pesso, Rabin & Peckel LLP, 275 Madison Avenue, New York, NY 10016, by telephone at or (212) 682-1818, by facsimile at , or by e-mail at email@.... ********************************************************************** Friday January 18, 4:40 pm Eastern Time Press Release SOURCE: Law Offices of Marc S. Henzel Class Action Lawsuit Commenced Against ImClone Systems, Inc. By The Law Offices of Marc S. Henzel BALA CYNWYD, Pa., Jan. 18 /PRNewswire/ -- A class action lawsuit was filed in the United States District Court for the Southern District of New York against ImClone Systems, Inc. (Nasdaq: IMCL - news) and two of its principal officers, on behalf of all persons or entities who purchased IMCL common stock during the period from May 12, 2001 through January 7, 2002. The Complaint alleges that defendants violated Sections 10( and 20 (a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 by making false and misleading statements regarding the Company's lead cancer drug, ERBITUX or IMC-C225 and the prospects for near-term approval of that drug for the treatment of colorectal cancer by the U.S. Food and Drug Administration (``FDA''). Among other things, (1) defendants repeatedly represented that ERBITUX was a blockbuster drug that would become ``one of the important new drugs in the history of oncology;'' (2) defendants told investors that ERBITUX would ``be on the market next year'' for the treatment of colorectal cancer, and that they were confident that the drug would be evaluated at the February 2002 meeting of the FDA Advisory Committee, stating: ``We believe we'll be before the FDA Oncology Drug Advisory Committee in February and the drug should be approved shortly thereafter;'' (3) defendants represented that the results of the Company's clinical trial of ERBITUX in the treatment of patients with colorectal cancer produced results that exceeded FDA requirements. The Complaint alleges that these statements were materially false and misleading because, among other things (1) contrary to directives to the Company by the FDA, the trial was not designed to demonstrate that ERBITUX was responsible for the reported results; (2) the clinical trial on which the application was based was seriously flawed by the protocol violations, and was not ``adequate and well controlled;'' and (3) the safety database for the trial was incomplete and contained inconsistencies and discrepancies. As such, defendants knew or should have known that the FDA would refuse to file the Company's defective application, which would have a disastrous effect on the price of the Company's stock. The Complaint further alleges that defendants made these false and misleading statements, in part, in order to convince Bristol-Myers Squibb Co. to purchase $1 billion of ImClone stock, of which approximately $150 million was tendered by ImClone insiders, including the Individual Defendants, and to persuade Bristol-Myers to make an additional $1 billion cash investment in the Company. On December 28, 2001, ImClone shocked the market by issuing a press release that disclosed that the FDA had rejected its filing of a Biologics License Application (``BLA'') for ERBITUX. ImClone's shares plummeted $11.15, or 20%, to $44.10. On January 4, 2002, a publication known as The Cancer Letter reported that ImClone was repeatedly informed about the problems with the clinical trials by the FDA during and before the Class Period. After these additional facts were disclosed, the price of ImClone stock fell further to open on January 7, 2002 at $34.96 per share. On January 9, 2002, the Company issued a press release which admitted that the Company ``may need to conduct new trials of ... ERBITUX, potentially delaying the treatment's launch by months.'' Plaintiff is represented by The Law Offices of Marc S. Henzel. If you bought the securities during the class period, you may, no later than March 8, 2002, request that the Court appoint you as lead plaintiff. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as ``lead plaintiff.'' Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. If you have any questions concerning this case or your rights or interests with respect to these matters, please contact: Marc S. Henzel, Esq. of The Law Offices of Marc S. Henzel, 273 Montgomery Ave, Suite 202 Bala Cynwyd, PA 19004-2808, by telephone at (888) 643- 6735 or , by facsimile at , by e-mail at Mhenzel182@... or visit the firm's website at http://members.aol.com/mhenzel182. ********************************************************************** Friday January 18, 9:56 am Eastern Time Press Release SOURCE: Goodkind Labaton Rudoff & Sucharow LLP Goodkind Labaton Rudoff & Sucharow LLP Announces Class Action Lawsuit Against ImClone Systems Inc. NEW YORK--(BUSINESS WIRE)-\226Jan. 18, 2002-\226Goodkind Labaton Rudoff & Sucharow LLP announces that pursuant to Section 21D(a)(3)(A) (i) of the Securities Exchange Act of 1934, notice is hereby given that on January 16, 2002, a class action lawsuit was filed in the United States District Court for the Southern District of New York, (the \223Court\224), on behalf of all open market purchasers of the common stock of ImClone Systems Inc.(\223ImClone\224; NASDAQ:IMCL - news) during the period of November 1, 2001 and January 7, 2002 inclusive (the \223Class\224). Excluded from the Class are ImClone and its affiliates. The named Plaintiff is Warren Wechsler. The named Defendants are ImClone, Dr. Harlan Waksal and D. Waksal. The docket number of the case is 02-CV - 401. The case has been assigned to United States Judge, Owen. The Court is located at 40 Foley Square, New York, NY 10007. The Complaint charges Defendants with violations of Section 10( of the Securities Exchange Act of 1934 and Rule 10(-5 promulgated thereunder and Section 20(a) of the Exchange Act of 1934. ImClone is purportedly a biotechnology company focused on developing drugs to treat cancer. This action involves false and misleading statements concerning the completeness and status of an application for approval of a new drug called Erbitux, which was submitted by ImClone to the Food and Drug Administration (\223FDA\224). Plaintiff alleges that between November 1, 2001 and January 7, 2002 inclusive (the \223Class Period\224) Defendants falsely represented that they had assembled and presented to the FDA the necessary information to allow the FDA to accept ImClone's application for Erbitux. In fact, at the beginning of the Class Period, Defendants had filed a materially deficient application. On or about December 28, 2001, ImClone announced that the FDA would not accept the company's application for Erbitux. In response to the FDA's rejection of the application, ImClone misleadingly downplayed the severity of the problem by issuing additional false and misleading statements. Following the FDA's rejection of ImClone's application for Erbitux, and as news of the rejection was disseminated to the market, the company's share price plummeted below $36 per share on January 7, 2002. Shares of ImClone had traded as high as $75 during the Class period and the decline of the share price represented a huge financial loss to investors. Plaintiff seeks to recover damages and other relief on behalf of all members of the Class. Plaintiff is represented by the law firm of Goodkind Labaton Rudoff & Sucharow LLP of New York, New York a firm with extensive experience prosecuting class actions on behalf of defrauded investors. Any member of the proposed class may move the court to serve as lead plaintiff no later than March 8, 2002. In order to serve as lead plaintiff, however, you must meet certain legal requirements. These legal requirements include, but are not limited to, (1) filing a motion for the lead plaintiff position in response to this notice, and (2) having the largest financial interest in the relief sought by the Class as determined by the Court. However, the situation may arise where the person or entity with the largest financial interest in the relief sought by the Class is not otherwise qualified to act as lead plaintiff, and therefore the lead plaintiff may not necessarily have the largest financial interest in the relief sought by the Class. If you wish to discuss this action or have any questions concerning this notice or your rights or interests with respect to these matters, and/or if you would like a copy of the Complaint, you may, but are not required to, contact any of the following attorney: Jonathon M. Plasse Esq. (jplasse@...) H. Rachman Esq. (prachman@...) GOODKIND LABATON RUDOFF & SUCHAROW LLP 100 Park Avenue, 12th Floor New York, New York 10017- 5563 Telephone: 212/907-0700 You can also learn about us and view a copy of the complaint by visiting our website at http://www.glrslaw.com ********************************************************************** ImClone CEO: 'We Screwed Up' By Adam Feuerstein Staff Reporter 01/09/2002 07:07 PM EST SAN FRANCISCO -- ImClone Systems (IMCL:Nasdaq - news - commentary - research - analysis) knew as early as 1999 that U.S. drug regulators had concerns about its approval application for its highly anticipated Erbitux cancer drug but did nothing to address the issues. Related Stories ImClone's Erbitux Problems May Be Worse Than Believed ImClone May Have Lost Trust as Well as Time Over Erbitux This acknowledgment of a massive blunder was the highlight of ImClone CEO Sam Waksal's presentation to a packed house of Wall Street fund managers at the JP H & Q health care conference Wednesday morning. Bottom line: ImClone is trying its best to fix the Erbitux mess, but it has no confidence it can do so. If everything goes right, the biotech could refile its Erbitux application in a few months. If not, the company will have to start from scratch, forcing a delay of at least a year. If that sounds exactly like what Waksal said nearly two weeks ago, you're right. That's why some fund managers who attended a presentation and breakout session were dissatisfied. " It was a complete circus, " said one hedge fund manager who has no position in ImClone right now. " It's clear they don't know what they're doing. " Said another fund manager, someone who until recently was an ImClone bull but has sold his stake: " ImClone still hasn't come clean; they're still glossing over major issues. " Shares of ImClone fell $5, or 13.6%, to $31.85 Wednesday. ImClone was trading fairly flat until the presentation began at 1:30 pm EST, then the stock sold off aggressively. A tired-looking Waksal cracked a few jokes during his 30-minute presentation but acknowledged sleeping little since the Food and Drug Administration rejected Erbitux on Dec. 28. And who can blame him when you have to stand up in front of thousands of professional investors (there were two overflow rooms where the presentation was piped in) and say: " We put together a faulty BLA [biologic license application] package, and we screwed up. " Waksal says the FDA issued its refuse-to-file letter for Erbitux because the agency was not provided with complete documentation -- mainly annotated patient X-rays -- that would conclusively prove that colon cancer patients in its clinical trial were refractory, that is, that other drug therapies had failed them. This disclosure wasn't new, but what followed was: Waksal acknowledged the FDA made it very clear to ImClone -- as early as 1999 when the company was getting ready to start its pivotal clinical trial -- that the absence of this documentation of patient " refractory-ness " (Waksal's term) was an absolute deal-breaker. In other words, if ImClone didn't provide this information, the FDA was not going to accept the Erbitux application. ImClone began its clinical trial in the third quarter of 1999 and completed it in March 2001. But instead of making sure ImClone's doctors and an independent panel of radiologists and oncologists put together the necessary documentation for the FDA, the company did nothing. ImClone had several follow-up conversations with the FDA, starting in August 2000, during which this issue came up, says Waksal. But again, ImClone did nothing. The Crucial Question Why? Waksal didn't say. The lack of that answer is what has fund managers scratching their heads -- and selling ImClone stock. The company had ample warning and time to make sure that it could satisfy FDA regulators, but, for some mysterious reason, it failed to do so. Waksal, instead, tried to explain how ImClone is going to fix the problem. First, the company expects to meet with the FDA within the month to clarify all the outstanding issues. Then it will attempt to reconstruct the necessary documentation from the raw files, says Waksal. A new panel of independent doctors will go over the original X-rays and determine whether patients were refractory to existing chemo treatments, and whether they actually responded to Erbitux. But Waksal made it clear that ImClone was not sure this backward approach was possible, or if the FDA would allow it. " If we can't put together the information that the FDA requires, we will have to do new clinical trials, " he said. This raises the possibility that ImClone will be forced to drop its plan to get Erbitux approved for colon cancer patients. Instead, the company could use data from completed trials in head and neck cancer to file an entirely new approval application with the FDA. But if this alternate plan becomes necessary, ImClone won't be in a position to refile until the end of 2002. During ImClone's breakout session with fund managers, Waksal was asked about this scenario. He didn't rule it out, although he said the company's focus now was on trying to fix the Erbitux application for colon cancer. The 30-minute breakout session was jammed, and fund managers were clearly ready to challenge Waksal's statements. Questions were asked about the role of Bristol-Myers Squibb (BMY:NYSE - news - commentary - research - analysis), ImClone's Erbitux partner. One question was whether Bristol-Myers had access to the complete approval application before it was filed; the CEO said he didn't know. Waksal was also asked about the appropriateness of his sale of $36 million of ImClone stock as part of the Bristol-Myers deal. The same questioner asked, too, about the insider-selling activities of the CEO's brother and company COO Harlan Waksal, who has now sold more than $100 million in ImClone shares. Sam Waksal defended himself and his brother, calling the stock deals " appropriate. " Harlan Waksal was not present to speak for himself. His absence was noted by many fund managers in the audience, especially because, as ImClone's COO, he would be the executive responsible for making sure that the Erbitux application process was completed correctly. While Sam Waksal insisted that Bristol-Myers was still very much on board, executives from the drug giant also were missing in action. At one point during the Q & A session, the CEO peered out into the audience and asked a questioner to identify himself. " Who am I talking to? " Waksal asked. " You're talking to all of us, " someone yelled out. At this point, no one likes what they're hearing. ******************************************************************** Quote Link to comment Share on other sites More sharing options...
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