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Panel Subpoenas Ex-ImClone Chief

Biotech: CEO is called to testify at House hearing on whether investors were misled about drug.

June 05, 2002|DENISE GELLENE | TIMES STAFF WRITER

A congressional committee Tuesday subpoenaed former ImClone Systems Inc. Chief Executive Samuel Waksal to appear at a hearing next week on whether the drug maker misled investors about its colon cancer drug Erbitux.

Waksal met with investigators for the House Energy and Commerce Committee last month for four hours but answered "only a few of the many questions raised," said committee spokesman Ken Johnson.

Waksal, who resigned as chief executive in May, refused to meet again with investigators on the advice of his attorney, Johnson said.

Neither Waksal nor his attorney, Lewis Liman, could be reached.

The hearing, set for next Thursday, is expected to cover a number of issues surrounding ImClone's handling of Erbitux, a highly touted cancer treatment that failed a critical regulatory milestone in December. Hype about the drug drove ImClone's shares as high as $70 in the weeks before the Food and Drug Administration rejected the company's application. ImClone's shares closed at $8.95 on Tuesday, up 15 cents on Nasdaq.

Besides the actions of ImClone itself, the committee, chaired by Rep. W.J. "Billy" Tauzin (R-La.), will investigate whether the FDA's secret drug review process creates an environment in which "pre-market promotion and stock manipulation can occur," Johnson said.

ImClone told investors about the December rejection letter but did not share many details. The serious nature of the problems facing Erbitux emerged when an industry newsletter published a leaked copy of the FDA letter. The newsletter revealed that the FDA considered the data from Erbitux clinical trials so flawed that the agency could not tell whether the drug worked.

Harlan Waksal, ImClone chief executive and Samuel's brother, is expected to testify at the hearing. Representatives from the FDA and Bristol-Myers Squibb Co. also are expected to appear. Bristol paid $2billion last fall to acquire a stake in ImClone and marketing rights to Erbitux.

New York-based ImClone released a statement saying it would continue to "work closely with and cooperate fully" with the committee. The company also is the subject of an inquiry by the Securities and Exchange Commission and the Justice Department.

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