ImClone Shares Dip on Inquiry
ImClone Systems Inc. is under investigation by the Securities and Exchange Commission and the Justice Department, increasing scrutiny into whether the biotechnology company misled investors about prospects for its cancer drug Erbitux.
Since Dec. 28, when ImClone surprised investors by disclosing that U.S. regulators refused to consider its Erbitux application, the company’s shares have fallen 70%, including a 16% drop Friday after ImClone disclosed the probes in a regulatory filing.
The House Energy and Commerce Committee started a probe Jan. 18 to find out whether ImClone hid flaws in company research from investors and cancer patients while executives, including Chief Executive Samuel Waksal, were selling their shares. The committee has asked for documents by Jan. 31 from ImClone, the Food and Drug Administration and Bristol-Myers Squibb Co., which owns 20% of ImClone.
Representatives for ImClone, the SEC and the Justice Department declined to comment.
Shares of ImClone fell $3.09 to $16.49 on Nasdaq. Bristol-Myers shares fell 60 cents to $46.25 on the New York Stock Exchange.
Also Friday, Peter G. Peterson, chairman of the investment firm Blackstone Group and former commerce secretary under President Nixon, resigned from ImClone’s board, according to regulatory filings. Peterson, who also is chairman of the Federal Reserve Bank of New York, did not return a call for comment.
The House panel investigating ImClone also is probing the collapse of energy trader Enron Corp. The panel has put an investigator on the ImClone probe full time. So far, the committee hasn’t scheduled any hearings on ImClone.
Investors have alleged in a lawsuit that ImClone rushed to file its Erbitux application with the FDA to receive a cash payment from Bristol-Myers of $300million.
The FDA gave the application “fast track” status in February 2001, a designation that sometimes leads to review within six months.
Still, the FDA found the application flawed, according to the Cancer Letter, a Washington-based newsletter. The FDA had concerns that some patients didn’t meet criteria for participating in the study, that the firm didn’t provide enough information on Erbitux’s side effects and provided explanations for only three of 21 patient deaths that occurred within 30 days of treatment, the Cancer Letter said.
