Washington Editor

ImClone Systems Inc.'s decline in value hours before the FDA released a statement saying it had approved Erbitux may have raised a few eyebrows, but so far it's unclear whether anything fishy went on.

The firm's stock opened Thursday at $43.96, then plummeted 21 percent to $33.76 before Nasdaq implemented a "news pending trade hold" at 1:34 p.m. EST, as is customary when a company is preparing to release material information.

Shortly after trading stopped, the FDA issued its approval, and trade resumed after hours at 4:20 p.m EST. The company's stock (NASDAQ:IMCL) on Friday gained it all back, climbing $9.79, or 28.8 percent, to close at $43.79.

Sources told BioWorld Today ImClone lost value Thursday on rumors that the FDA planned to reject the colorectal cancer drug, Erbitux (cetuximab), a day in advance of the company's Prescription Drug User Fee Act action date, Friday, Feb. 13.

Investors may have been spooked because of ImClone's unusual, headline-making history that began in December 2001 when the FDA refused to file the company's first rolling biologics license application for Erbitux, reportedly because it was missing a "train of documentation." As the events that followed showed, there was more to it.

In order to get approval, the company ended up filing data on a European Phase II trial and initiating additional Phase III trials and a single-arm Phase II. (See BioWorld Today, Jan. 3, 2002, and June 9, 2003.)

Prior to publicizing the refuse-to-file letter in late 2001, former CEO Samuel Waksal tried to dump his stock and is rumored to have advised a family member or two to do the same. While Waksal ended up in prison for his illegal activities surrounding the company, his friend Martha Stewart, the expert on good taste, is answering to obstruction of justice charges for selling her stock before it tanked.

Unusual trading or attempts at unusual trading caught attention in 2001, so it stands to reason that such activities would be noted under current circumstances.

On Friday several news outlets reported that suspicious trades were being investigated by Nasdaq and the SEC. But Wayne Lee, a Nasdaq spokesman, told BioWorld Today that Nasdaq does not confirm or deny whether it is investigating a company. An SEC spokesman simply said, "no comment," when asked whether the government was looking into the matter.

However, the SEC's standard operating procedure requires a review of trading activity that precedes market moves.

Nasdaq also has real-time surveillance systems that allow it to detect any unusual trading activity.

The FDA approved Erbitux for use in combination with irinotecan in the treatment of patients with epidermal growth factor receptor-(EGFR) expressing, metastatic colorectal cancer who are refractory to irinotecan-based chemotherapy and for use as a single agent in the treatment of patients with EGFR-expressing, metastatic colorectal cancer who are intolerant to irinotecan-based chemotherapy.

Erbitux is a genetically engineered version of a mouse antibody that contains both human and mouse components.

Once Erbitux is approved in other indications, including early stage colorectal cancer and possibly non-small-cell lung cancer, biotechnology analysts believe worldwide annual sales potentially could peak at $2 billion. The drug is expected to be available in two weeks.

Erbitux is partnered with Bristol-Myers Squibb Co., of New York, in the U.S., and Merck KGaA, of Darmstadt, Germany, in Europe.

ImClone has been without an official CEO since Sam Waksal and his brother, Harlan, also a former ImClone CEO, resigned. In conjunction with its Erbitux release, ImClone said Daniel Lynch, senior vice president, chief administrative officer and acting CEO, had been named CEO and director. Lynch has served as ImClone's senior vice president finance and chief financial officer.

David Kies, who has served under the title of lead director of ImClone's board, has been named chairman.