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Panel Seeks Data on FDA's Refusal to Review Application by ImClone

June 08, 2002|ANGELA ZIMM | BLOOMBERG NEWS

WASHINGTON — A House panel subpoenaed Food and Drug Administration employees, seeking information about the agency's refusal to review a cancer drug application from ImClone Systems Inc., whose shares have plummeted.

The subpoenas for a hearing next week are unusual because FDA staff members usually don't testify on matters that may involve trade secrets.

Rep. James C. Greenwood (R-Pa.) said his oversight subcommittee is trying to determine when the FDA, ImClone and its partner Bristol-Myers Squibb Co. realized that the Erbitux application didn't contain enough data to win a review and whether investors should have been notified sooner.

The panel also wants to know whether Martha Stewart, a friend of former Chief Executive Samuel Waksal's, and his family members used inside information to sell ImClone shares before the FDA announced its decision Dec. 28.

"We are interested in learning as much as we can about anyone at ImClone who may have exaggerated the promise of this drug," Greenwood said. "We're looking to learn who sold stock as a result of inside information."

It's "pretty unusual" for the FDA to refuse to review a drug-approval filing, said Ira Loss, an analyst for Washington Analysis who has followed the FDA for 30 years. "It's less than 1% of applications."

Trading by insiders--including company officials and major shareholders--is illegal when the buying or selling of shares is based on information that isn't made public to all investors.

Stewart, a former stockbroker who was elected this week to the New York Stock Exchange board, is chief executive of Martha Stewart Living OmniMedia and a longtime friend of Waksal. She sold all 3,000 of her shares, the New York Times reported, citing Susan Magrino, a Stewart spokeswoman.

"Martha Stewart did not receive any nonpublic information regarding ImClone prior to her sale of a small number of ImClone shares," Magrino said.

Erbitux last year was the apparent leader in a race to develop a new drug class designed to kill cancerous tumor cells with fewer side effects. ImClone had predicted that the drug would win FDA approval this year.

ImClone shares closed as high as $73.83 in December, and at $58.30 the day before the FDA refused to consider the application for Erbitux. The company's shares rose $1.05 to $8.45 on Nasdaq. The shares have fallen 13% this week.

Bristol-Myers' shares rose 88 cents to $27.08 on the New York Stock Exchange.

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