The top two executives of ImClone Systems Inc. resigned amid federal tax and accounting investigations, the biotechnology company said late Tuesday.
It is the latest blow to a company attempting to develop a breakthrough cancer drug.
ImClone President and Chief Executive Harlan Waksal was asked to step down, the company said. Waksal, who served as chief operating officer before being named CEO, will remain with the company as its chief scientific officer. Chairman Robert Goldhammer also resigned.
The Securities and Exchange Commission is investigating the company’s tardy reporting of its 2002 performance and the firm’s plans to restate results for 2001.
The accounting problems stem from the failure of Waksal’s brother -- ImClone’s former chief executive, Samuel D. Waksal -- to pay taxes on stock options and warrants he exercised.
ImClone determined the management change was necessary as it conducts its own probe, spokesman David Pitts said.
The firm estimates Samuel Waksal may have failed to pay $60 million in taxes, excluding penalties and interest, which will result in at least a $23.3-million charge against results.
Investigators also have questioned Harlan Waksal about his sale of ImClone stock while they look into the tax accounting on the stock options he exercised. Harlan Waksal has not been charged with a crime.
Samuel Waksal stepped down as ImClone’s CEO last May. In October, he pleaded guilty to bank fraud, securities fraud, conspiracy to obstruct justice and perjury in an insider-trading scandal involving the experimental cancer drug Erbitux. In December 2001, the Food and Drug Administration told ImClone it would not accept the drug application. The shares, then about $55, plummeted.
Daniel Lynch, ImClone’s financial chief, will serve as acting CEO until a permanent replacement is found, the company said.
ImClone shares Tuesday rose 79 cents to $18.63 on Nasdaq.