Records on Cancer-Drug Talks Are Sought From 7 Companies

http://www.nytimes.com/2002/02/22/business/22DRUG.html

February 22, 2002


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Records on Cancer-Drug Talks Are Sought From 7 Companies

By ANDREW POLLACK

Congressional committee asked seven pharmaceutical companies yesterday to turn over records pertaining to negotiations they had with ImClone Systems (news/quote) about its cancer drug, Erbitux.

The company said yesterday that its chief executive, Samuel D. Waksal, returned $486,000 that he gained from stock sales that might have violated a rule on trading by insiders.

ImClone's application to sell Erbitux was turned down by the Food and Drug Administration in December after the company had predicted the drug would be readily approved and after Bristol-Myers Squibb (news/quote) had agreed to pay $2 billion for marketing rights. That has prompted shareholder lawsuits and government investigations into whether the company misled shareholders.

The House Energy and Commerce Committee sent letters yesterday to Pharmacia (news/quote), Merck (news/quote), Johnson & Johnson (news/quote), Eli Lilly, Amgen (news/quote), Chiron and Abbott Laboratories (news/quote). The committee said it had learned from ImClone that those companies had been in discussions with ImClone about deals for Erbitux. It wants to know whether the companies found any problems with the drug.

The documents, including audits and investigations related to ImClone, are due by Thursday.

As for Dr. Waksal's trades, the company said that on Oct. 25, Dr. Waksal withdrew 51,532 shares from an exchange fund, a kind of mutual fund that allows executives to invest with their stock rather than cash. Four days later, Dr. Waksal sold those shares to Bristol-Myers. But in those four days, ImClone's stock price rose, increasing the value of those shares by $471,000.

A rule made in the 1930's to discourage insider trading requires executives to disgorge any profits from buying and selling company shares within a six-month period. A spokesman said that it was unclear whether Dr. Waksal violated the rule because it is not legally certain whether redeeming his shares from the fund constituted buying them. Still, Dr. Waksal has written a check to the company for the profits from that transaction and from some smaller ones. The spokesman said Dr. Waksal took the action after a review by his lawyer.

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