Washington Editor

ImClone Systems Inc.'s stock fell more than 20 percent Thursday on news that the Securities and Exchange Commission is considering taking action against the company for reasons related to ImClone's receipt of the FDA rejection notice for the cancer drug Erbitux.

The SEC on Wednesday issued ImClone, of New York, a "Wells Notice" indicating that action is possible. Under the Wells process, the company has the right to respond in writing to the commission before SEC staff makes a formal recommendation regarding what action, if any, will be brought against the company.

ImClone's stock (NASDAQ:IMCL) closed Thursday at $9.03, down $2.38, or 20.9 percent.

ImClone released a prepared statement saying that it "reiterates its intention to cooperate fully with the SEC in the course of its investigation."

The trouble surrounds the Dec. 28 "refuse-to-file" (RTF) letter issued in response to the Erbitux rolling biologics license application filed by ImClone. Industry observers speculate that ImClone - specifically former CEO Samuel Waksal - downplayed the serious nature of the letter to investors.

In a conference call with 800 listeners on Dec. 28, Waksal said the RTF letter was based on a missing "train of documentation leading from the raw data to the conclusions." (See BioWorld Today, Jan. 3, 2002.)

Waksal last week was arrested on insider trading charges related to advising friends and family to sell company stock ahead of the public release of the FDA letter. He was released on $10 million bond, including a $5 million up-front cash payment. (See BioWorld Today, June 14, 2002.)

The House Energy and Commerce Committee is investigating ImClone's business transactions and development practices related to Erbitux.