Ex-ImClone CEO: A very social scientist

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It was quite a party: Celebrity guests like Martha Stewart and Mick Jagger mingled with business tycoons around bowls of caviar in an art-adorned Soho loft.

Some guests saw the December affair as emblematic of the host's generosity, and that it reflected an eclectic circle of friends. Others saw it as blatant social climbing.

But all agree that Samuel Waksal, then the chief executive of ImClone Systems Inc., was his usual charming self. Amid the smiles and small talk, he showed no signs that only two days earlier the company he founded had learned that its touted cancer drug, Erbitux, might be headed for trouble.

Again, at another of his regular monthly salons, this time in June, there were no outward indications of just how much trouble Waksal was in. By then Erbitux's application had been rejected by the Food and Drug Administration, and the Securities and Exchange Commission and Justice Department were looking into suspicious insider trades.

Eight days later, he would be arrested.

"Sam is very determined, focused and positive," said Andrea Blanche, a longtime friend who was at both gatherings. "He once told me that failure was not a word in his vocabulary."

ImClone has failed to get Erbitux or any other drug approved. The company has never earned a penny, but is the subject of three federal investigations and numerous shareholder lawsuits.

Waksal was $80 million in debt when he was arrested, although his spokesman said he has repaid the $65 million secured by ImClone stock. In the past, there have been numerous liens against him for failing to repay loans and taxes, and several other lawsuits.

Lots of scientists start companies, and then struggle with finances or stumble as entrepreneurs. But Waksal's story is different.

The 53-year-old with a doctorate in immunobiology has a $20 million art collection, including a Picasso. Besides his Soho property, he owns two homes in Long Island's fashionable Hamptons beach resort.

His circle of friends includes Revlon CEO Ron Perelman and art dealer Larry Gagosian, who joined him on New York magazine's 1998 list of Hamptons playboys. Former girlfriends reportedly include socialite Patricia Duff, who is Perelman's ex-wife; Martha Stewart's daughter, Alexis; and Lally Weymouth, daughter of the late Washington Post owners Phil and Katharine Graham.

Waksal, who declined comment for this article, is accused of tipping off family members to sell ImClone shares a day before the FDA rejection.

Martha Stewart's sale of nearly 4,000 ImClone shares on the same day also has come under scrutiny, and her broker has been suspended by Merrill Lynch. Waksal and Stewart deny any wrongdoing.

In an era of scandals at much bigger companies like Enron Corp. and Tyco International Ltd., the allegations might seem like just another sign of the times.

But long before the ImClone imbroglio began unfolding, Waksal was already a flamboyant figure, standing out in the mostly staid pharmaceutical industry.

"Certainly no one in the biotech community has a personal life like Sam's," said Brian Rye, a biotech analyst at Raymond James & Associates.

Rye, like others, said Waksal's jet-setting tendencies didn't really detract from ImClone's promise. Doctors in the cancer community really believed Erbitux was a breakthrough medicine.

Still, his style -- especially his extraordinary confidence -- permeated ImClone's culture and operations. While other biotech companies hosted simple dinners at a major cancer meeting last year, ImClone rented out a bar and hired the Doobie Brothers to perform.

"That is something you would expect from a more established company," said Rye. "But ImClone always acted like a success."

Other biotech executives would caveat any discussion of experimental drugs with the obligatory phrase _ "if we get FDA approval." Industry analysts said Waksal always spoke to them in terms that assumed approval was certain.

And while biotech is littered with examples of once-promising drugs that ultimately failed, ImClone employees never seemed fazed by the industry's spotty history of success.

"The idea at the company was that we just couldn't go wrong," said Judy Lorenz, who worked at ImClone for two years before leaving in 1999. "There was much hubris. People were convinced Erbitux's approval would happen and didn't consider that it wouldn't be an option."

Dr. Richard Mulligan says Waksal's enthusiasm is understandable.

"He spent 20 years working on that drug. It was his dream, his life" said Mulligan, a professor at Harvard University Medical School, who is on ImClone's scientific board.

Waksal received both his graduate and undergraduate degrees from Ohio State University. Before founding ImClone in 1985, his career included stints at Stanford University Medical School, Mount Sinai School of Medicine and Tufts University School of Medicine.

Mulligan said Waksal is an excellent scientist and that his diverse circle of friends is just an outgrowth of his immense intellectual curiosity.

Blanche, who has known him for 30 years since college, said she was surprised he went into medicine because he was so interested in art.

Waksal's enthusiasm is contagious, and he has a talent for luring people with money or influence _ or both _ into his ventures.

Along with several investors, he poured $37.5 million into a now-defunct Web venture, ibeauty.com. Martha Stewart sat on the company's board, and at different points he persuaded entertainment industry powerhouse Tina Sharkey and fashion maven Gabriella Forte, now president of Dolce & Gabbana USA, to run the Web site. Both sued him over the venture, although Sharkey reportedly settled.

Waksal's circle helped salvage ImClone, which has had scraped up against bankruptcy several times. In 1995, billionaire investor Carl Icahn agreed to purchase ImClone's stake of Cadus Pharmaceutical Corp. for $6 million, which helped keep the company running.

His biggest snag of all was industry giant Bristol-Myers Squibb Co., which in October committed $2 billion for a 19.9 percent share of ImClone and a piece of the Erbitux profits.

The deal netted Waksal between $50 million and $60 million.

Earlier this year, Carl Icahn announced he was considering acquiring up to $500 million in ImClone shares. The company proposed a poison pill to ward off a takeover, but Waksal resisted, believing his friendship with Icahn made the strategy unnecessary. He eventually agreed to the measure, although his friendship with Icahn appears intact.

Another friendship might not prove so durable. A spokesman for Waksal said the former CEO and Martha Stewart haven't spoken since the insider-trading issue arose.

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