ImClone Systems
Encyclopedia
ImClone Systems Incorporated is a biopharmaceutical
company dedicated to developing biologic medicines in the area of oncology
. It was founded in 1984 and is headquartered in New York City. On October 6, 2008, it accepted a $6.5 billion acquisition offer from Eli Lilly and Company
, and became a fully owned subsidiary of Eli Lilly and Company on November 24, 2008. Prior to the acquisition, it was traded on the NASDAQ
stock exchange under the symbol IMCL.
(FDA) approval. It was later revealed by the U.S. Securities and Exchange Commission that numerous executives sold their stock before the announcement of the decision after the close of trading on December 28.
Its founder, Samuel D. Waksal
, was arrested in 2002 on insider trading
charges for informing friends and family to sell their stock, and attempting to sell his own. His daughter, Aliza Waksal, sold $2.5 million in shares on December 27. His father, Jack Waksal, sold $8.1 million in shares over the 27th and 28th. Company executives had done the same. John B. Landes, the general counsel, sold $2.5 million in shares on December 6. Ronald A. Martell, the vice president for marketing and sales, sold $2.1 million in shares on December 11. Four other executives sold shares in the following weeks as well. Later, Samuel Waksal pleaded guilty to various charges, including securities fraud
, and on June 10, 2003, was sentenced to seven years and three months in prison.
Martha Stewart
, the founder of Martha Stewart Living Omnimedia
(Waksal had dated Stewart's daughter) also became embroiled in the scandal after it emerged that she sold about $230,000 in ImClone shares on December 27, just a day before the announcement of FDA decision. Although Stewart maintained her innocence, she was found guilty and sentenced on July 16, 2004 to five months in prison, five months of home confinement, and two years probation for lying about a stock sale, conspiracy, and obstruction of justice.
Ultimately a new clinical trial and FDA filing prepared by Imclone's partner Merck KGaA
("German Merck," not to be confused with the US company of similar name) resulted in an FDA approval of Erbitux in 2004 for use in colon cancer.
A Congressional hearing on improprieties at ImClone, held in October 2002, unveiled a culture of corruption dating back to 1986. This was the year that ImClone CEO Waksal first forged the signature of the company's general counsel John Landes (one of the three original employees of the company) for financial gain. Nonetheless, Landes defended Waksal's illegal actions at the hearings before the Subcommittee on Oversight and Investigations, portraying the forgery as "a good-faith misunderstanding," to which Representative James Greenwood
replied "My children know better than that, Mr. Landes." Further questioning about this and subsequent forgeries on Waksal's part revealed that neither Landes, the chief legal officer of the company, or the company's outside directors reported Waksal's actions to proper authorities or made any moves to have Waksal removed as CEO. Instead, testimony revealed that they initiated their own internal investigation, which was never concluded. The decades-long tolerance for Waksal's fraud, starting from the company's earliest days, provoked Representative Peter Deutsch
to refer to the ongoing misconduct as "wacky."
The FDA's February 2004 announcement of approval for use of Erbitux for treatment of colrectal cancer reported that conclusions were drawn from a trial involving 329 patients, of which 10.8% responded when Erbitux was used by itself, delaying tumor growth by 1.5 months. When used in conjunction with a standard treatment irinotecan, 22.9% of patients responded and tumor growth was delayed by approximately 4.1 months.
In September 2001, Bristol-Myers Squibb
committed $2 billion (including a $1 billion up-front cash payment) for less than 20% of ImClone due to what was called at the time the drug's "blockbuster" potential.
In January 2006, the company was put up for sale but failed to find any buyers, likely due to the fact that Erbitux by that time faced significant competition in the medical marketplace. ImClone directors withdrew the sale of the company in mid-2006.
In April 2007, The Wall Street Journal
reported that "Bristol-Myers Squibb Co. and ImClone Systems Inc. said their cancer drug, Erbitux, failed to significantly prolong the lives of people with pancreatic cancer in a new study, marking yet another setback in the drug industry's efforts to find a better treatment for this deadly disease."
of the drug. One ultimately succeeded; the other failed despite repeated pleas to ImClone officials. It was alleged in the story that ImClone was arbitrary in who received the drug and had no written criteria for compassionate use.
acquired a majority of stock thereby giving him control of the board. Within hours of the announcement, interim CEO Joseph Fischer resigned, and Icahn announced that other members of the Board of Directors would not be re-elected.
offered to take over ImClone for $60 a share cash. The offer was made by letter addressed to ImClone's chairman of the board, Carl Icahn.
On September 10, 2008, An undisclosed company and CEO offered to take over ImClone for $70 a share, financing approach was not disclosed. The offer was conditional on the results of a due diligence review of ImClone's business and technology by the undisclosed party, to be completed September 28, 2008.
On September 23, 2008, Bristol-Myers Squibb
upped its offer to take over ImClone to $62 a share. In addition, Bristol threatened to take the offer to the share holders for a proxy battle with the intention of replacing the current Board of Directors headed by Carl Icahn.
On October 6, 2008, ImClone agreed to be acquired by Eli Lilly for $6.5 billion ($70/share).
On November 24, 2008, ImClone was formally acquired by Eli Lilly, with all NASDAQ IMCL shares tendered for $6.5 billion ($70/share). ImClone is now a fully owned subsidiary of Eli Lilly and Company
in Israel, challenged the Aventis-owned patent, licensed by Imclone, for the use of anti-Epidermal growth factor receptor
antibodies in combination with chemotherapy, to slow the growth of certain tumors. This is the so-called '866' patent which was filed in 1989 by Rhone-Poulenc-Rorer and issued in 2001, on which Joseph Schlessinger was listed as first-named inventor.
Joseph Schlessinger's former colleagues at the Weizmann Institute, in particular Michael Sela
, claimed to have come up with this concept alongside Schlessinger when they worked together there years earlier, and Yeda challenged the Aventis patent in the United States
. Schlessinger testified in court that the idea of combining the anti-EGFR antibody that his lab had developed with chemotherapy in cancer treatment was his own idea. However, the Weizmann Institute scientists provided extensive documentation that they had been developing this idea using an antibody against that Schlessinger's laboratory had developed and generated, and that he had given them for these studies. Schlessinger claims to have initiated the idea of this use in combination therapy, but had not documented his research and ideas as thoroughly, leaving him forced to rely on his recollections of the events that led to the patent filing some 17 years before Yeda mounted their challenge.
The court ruled that Yeda are the sole owners of the disputed patent in the U.S., while Yeda and Sanofi-Aventis co-own the 866 Patent's foreign counterparts. Following the ruling, ImClone and Sanofi-Aventis agreed to settle the dispute with Yeda, for $120 million, with each company paying Yeda $60 million. In return, ImClone were also granted a worldwide license to technology covered by the 866 Patent, and agreed to pay a small royalty on Erbitux sales to Yeda.
Biopharmaceutical
Biopharmaceuticals are medical drugs produced using biotechnology. They include proteins , nucleic acids and living microorganisms like virus and bacteria where the virulence of viruses and bacteria is reduced by the process of attenuation, they can be used for therapeutic or in vivo diagnostic...
company dedicated to developing biologic medicines in the area of oncology
Oncology
Oncology is a branch of medicine that deals with cancer...
. It was founded in 1984 and is headquartered in New York City. On October 6, 2008, it accepted a $6.5 billion acquisition offer from Eli Lilly and Company
Eli Lilly and Company
Eli Lilly and Company is a global pharmaceutical company. Eli Lilly's global headquarters is located in Indianapolis, Indiana, in the United States...
, and became a fully owned subsidiary of Eli Lilly and Company on November 24, 2008. Prior to the acquisition, it was traded on the NASDAQ
NASDAQ
The NASDAQ Stock Market, also known as the NASDAQ, is an American stock exchange. "NASDAQ" originally stood for "National Association of Securities Dealers Automated Quotations". It is the second-largest stock exchange by market capitalization in the world, after the New York Stock Exchange. As of...
stock exchange under the symbol IMCL.
Insider trading scandal
ImClone's stock price dropped sharply at the end of 2001 when its drug Erbitux, an experimental monoclonal antibody, failed to get the expected Food and Drug AdministrationFood and Drug Administration
The Food and Drug Administration is an agency of the United States Department of Health and Human Services, one of the United States federal executive departments...
(FDA) approval. It was later revealed by the U.S. Securities and Exchange Commission that numerous executives sold their stock before the announcement of the decision after the close of trading on December 28.
Its founder, Samuel D. Waksal
Samuel D. Waksal
Samuel D. Waksal is the founder and former CEO of the biopharmaceutical company ImClone Systems, which developed the drug Erbitux...
, was arrested in 2002 on insider trading
Insider trading
Insider trading is the trading of a corporation's stock or other securities by individuals with potential access to non-public information about the company...
charges for informing friends and family to sell their stock, and attempting to sell his own. His daughter, Aliza Waksal, sold $2.5 million in shares on December 27. His father, Jack Waksal, sold $8.1 million in shares over the 27th and 28th. Company executives had done the same. John B. Landes, the general counsel, sold $2.5 million in shares on December 6. Ronald A. Martell, the vice president for marketing and sales, sold $2.1 million in shares on December 11. Four other executives sold shares in the following weeks as well. Later, Samuel Waksal pleaded guilty to various charges, including securities fraud
Securities fraud
Securities fraud, also known as stock fraud and investment fraud, is a practice that induces investors to make purchase or sale decisions on the basis of false information, frequently resulting in losses, in violation of the securities laws....
, and on June 10, 2003, was sentenced to seven years and three months in prison.
Martha Stewart
Martha Stewart
Martha Stewart is an American business magnate, author, magazine publisher, and television personality. As founder of Martha Stewart Living Omnimedia, she has gained success through a variety of business ventures, encompassing publishing, broadcasting, and merchandising...
, the founder of Martha Stewart Living Omnimedia
Martha Stewart Living Omnimedia
Martha Stewart Living Omnimedia Inc. is a diversified media and merchandising company founded by Martha Stewart. It is organized into four business segments: Publishing, Internet, Broadcasting media platforms and Merchandising product lines....
(Waksal had dated Stewart's daughter) also became embroiled in the scandal after it emerged that she sold about $230,000 in ImClone shares on December 27, just a day before the announcement of FDA decision. Although Stewart maintained her innocence, she was found guilty and sentenced on July 16, 2004 to five months in prison, five months of home confinement, and two years probation for lying about a stock sale, conspiracy, and obstruction of justice.
Ultimately a new clinical trial and FDA filing prepared by Imclone's partner Merck KGaA
Merck KGaA
Merck KGaA is a German chemical and pharmaceutical company. Merck, also known as “German Merck” and “Merck Darmstadt”, was founded in Darmstadt, Germany, in 1668, making it the world's oldest operating chemical and pharmaceutical company. The company was privately owned until going public in 1995...
("German Merck," not to be confused with the US company of similar name) resulted in an FDA approval of Erbitux in 2004 for use in colon cancer.
A Congressional hearing on improprieties at ImClone, held in October 2002, unveiled a culture of corruption dating back to 1986. This was the year that ImClone CEO Waksal first forged the signature of the company's general counsel John Landes (one of the three original employees of the company) for financial gain. Nonetheless, Landes defended Waksal's illegal actions at the hearings before the Subcommittee on Oversight and Investigations, portraying the forgery as "a good-faith misunderstanding," to which Representative James Greenwood
James C. Greenwood
James Charles "Jim" Greenwood is an American politician in the Republican Party. He represented Pennsylvania's Eighth Congressional District for six terms in the United States House of Representatives....
replied "My children know better than that, Mr. Landes." Further questioning about this and subsequent forgeries on Waksal's part revealed that neither Landes, the chief legal officer of the company, or the company's outside directors reported Waksal's actions to proper authorities or made any moves to have Waksal removed as CEO. Instead, testimony revealed that they initiated their own internal investigation, which was never concluded. The decades-long tolerance for Waksal's fraud, starting from the company's earliest days, provoked Representative Peter Deutsch
Peter Deutsch
Peter R. Deutsch is an American politician from the U.S. state of Florida. Deutsch was a Democratic Representative from Florida's 20th congressional district from 1993 until 2005.- Background :...
to refer to the ongoing misconduct as "wacky."
The FDA's February 2004 announcement of approval for use of Erbitux for treatment of colrectal cancer reported that conclusions were drawn from a trial involving 329 patients, of which 10.8% responded when Erbitux was used by itself, delaying tumor growth by 1.5 months. When used in conjunction with a standard treatment irinotecan, 22.9% of patients responded and tumor growth was delayed by approximately 4.1 months.
In September 2001, Bristol-Myers Squibb
Bristol-Myers Squibb
Bristol-Myers Squibb , often referred to as BMS, is a pharmaceutical company, headquartered in New York City. The company was formed in 1989, following the merger of its predecessors Bristol-Myers and the Squibb Corporation...
committed $2 billion (including a $1 billion up-front cash payment) for less than 20% of ImClone due to what was called at the time the drug's "blockbuster" potential.
In January 2006, the company was put up for sale but failed to find any buyers, likely due to the fact that Erbitux by that time faced significant competition in the medical marketplace. ImClone directors withdrew the sale of the company in mid-2006.
In April 2007, The Wall Street Journal
The Wall Street Journal
The Wall Street Journal is an American English-language international daily newspaper. It is published in New York City by Dow Jones & Company, a division of News Corporation, along with the Asian and European editions of the Journal....
reported that "Bristol-Myers Squibb Co. and ImClone Systems Inc. said their cancer drug, Erbitux, failed to significantly prolong the lives of people with pancreatic cancer in a new study, marking yet another setback in the drug industry's efforts to find a better treatment for this deadly disease."
Compassionate use controversy
The FDA approved the aforementioned colorectal cancer drug, Erbitux, on February 12, 2004. In May 2001, while ImClone was still seeking approval for the drug (then known as IMC-C225), the CBS news program "60 Minutes" aired a story about two cancer patients' struggles to obtain "compassionate use"Expanded access
Expanded access refers to the use of an investigational drug outside of a clinical trial by patients with serious or life-threatening conditions who do not meet the enrollment criteria for the clinical trial in progress...
of the drug. One ultimately succeeded; the other failed despite repeated pleas to ImClone officials. It was alleged in the story that ImClone was arbitrary in who received the drug and had no written criteria for compassionate use.
Carl Icahn acquisition
On October 25, 2006, a group led by billionaire investor Carl IcahnCarl Icahn
Carl Celian Icahn is an American business magnate and investor.-Biography:Icahn was raised in Far Rockaway, Queens, New York City, where he attended Far Rockaway High School. His father was a cantor, his mother was a schoolteacher...
acquired a majority of stock thereby giving him control of the board. Within hours of the announcement, interim CEO Joseph Fischer resigned, and Icahn announced that other members of the Board of Directors would not be re-elected.
Takeover offer from Bristol-Myers Squibb, and subsequent bidding showdown
On July 31, 2008, Bristol-Myers SquibbBristol-Myers Squibb
Bristol-Myers Squibb , often referred to as BMS, is a pharmaceutical company, headquartered in New York City. The company was formed in 1989, following the merger of its predecessors Bristol-Myers and the Squibb Corporation...
offered to take over ImClone for $60 a share cash. The offer was made by letter addressed to ImClone's chairman of the board, Carl Icahn.
On September 10, 2008, An undisclosed company and CEO offered to take over ImClone for $70 a share, financing approach was not disclosed. The offer was conditional on the results of a due diligence review of ImClone's business and technology by the undisclosed party, to be completed September 28, 2008.
On September 23, 2008, Bristol-Myers Squibb
Bristol-Myers Squibb
Bristol-Myers Squibb , often referred to as BMS, is a pharmaceutical company, headquartered in New York City. The company was formed in 1989, following the merger of its predecessors Bristol-Myers and the Squibb Corporation...
upped its offer to take over ImClone to $62 a share. In addition, Bristol threatened to take the offer to the share holders for a proxy battle with the intention of replacing the current Board of Directors headed by Carl Icahn.
On October 6, 2008, ImClone agreed to be acquired by Eli Lilly for $6.5 billion ($70/share).
On November 24, 2008, ImClone was formally acquired by Eli Lilly, with all NASDAQ IMCL shares tendered for $6.5 billion ($70/share). ImClone is now a fully owned subsidiary of Eli Lilly and Company
Eli Lilly and Company
Eli Lilly and Company is a global pharmaceutical company. Eli Lilly's global headquarters is located in Indianapolis, Indiana, in the United States...
Yeda/Aventis/Imclone Patent Dispute
Yeda Research and Development, a company set up to commercialize and market the products of research at the Weizmann Institute of ScienceWeizmann Institute of Science
The Weizmann Institute of Science , known as Machon Weizmann, is a university and research institute in Rehovot, Israel. It differs from other Israeli universities in that it offers only graduate and post-graduate studies in the sciences....
in Israel, challenged the Aventis-owned patent, licensed by Imclone, for the use of anti-Epidermal growth factor receptor
Epidermal growth factor receptor
The epidermal growth factor receptor is the cell-surface receptor for members of the epidermal growth factor family of extracellular protein ligands...
antibodies in combination with chemotherapy, to slow the growth of certain tumors. This is the so-called '866' patent which was filed in 1989 by Rhone-Poulenc-Rorer and issued in 2001, on which Joseph Schlessinger was listed as first-named inventor.
Joseph Schlessinger's former colleagues at the Weizmann Institute, in particular Michael Sela
Michael Sela
Michael Sela is an Israeli immunologist of Polish Jewish origin. He is W. Garfield Weston Professor of Immunology at the Weizmann Institute of Science in Rehovot.- Birth and academic career :...
, claimed to have come up with this concept alongside Schlessinger when they worked together there years earlier, and Yeda challenged the Aventis patent in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
. Schlessinger testified in court that the idea of combining the anti-EGFR antibody that his lab had developed with chemotherapy in cancer treatment was his own idea. However, the Weizmann Institute scientists provided extensive documentation that they had been developing this idea using an antibody against that Schlessinger's laboratory had developed and generated, and that he had given them for these studies. Schlessinger claims to have initiated the idea of this use in combination therapy, but had not documented his research and ideas as thoroughly, leaving him forced to rely on his recollections of the events that led to the patent filing some 17 years before Yeda mounted their challenge.
The court ruled that Yeda are the sole owners of the disputed patent in the U.S., while Yeda and Sanofi-Aventis co-own the 866 Patent's foreign counterparts. Following the ruling, ImClone and Sanofi-Aventis agreed to settle the dispute with Yeda, for $120 million, with each company paying Yeda $60 million. In return, ImClone were also granted a worldwide license to technology covered by the 866 Patent, and agreed to pay a small royalty on Erbitux sales to Yeda.
Articles
- Dying Patients Find Experimental Drugs Hard to Get., "WebMD Medical News," June 20, 2001
- Statement by Robert Temple, M.D., Associate Director for Center for Drug Evaluation and Research, Food and Drug Administration., "The Committee on Government Reform, U.S. House of Representatives," June 20, 2001
- For some, untested drug is a last chance., "The Boston Globe", September 23, 2003
- An Inquiry into the ImClone Cancer-Drug Story., "U.S. House Committee on Energy and Commerce, Subcommittee on Oversight and Investigations", June 13, 2002
- Controversial Compassionate Use., "60 Minutes", May 3, 2001
- ImClone Systems Incorporated Announces Decision by The FDA Not To Accept For Filing The ERBITUX Biologics License Application., BusinessWire, December 28, 2001
- ImClone Stock Sales Disclosed, The New York Times, July 15, 2002
- A Closer Look at Martha Stewart's Trades, The New York Times, July 15, 2002
- ImClone Founder Pleads Guilty to Avoiding Sales Taxes, The New York Times, March 3, 2003
- ImClone Founder Waksal Sentenced to 7 Years in Prison, San Francisco Chronicle, June 10, 2003
- 'I will be back,' Stewart vows after sentencing, AP, July 17, 2004
FDA
- FDA Approves Erbitux for Colorectal Cancer, February 12, 2004