Washington Editor

WASHINGTON - Samuel Waksal, the former CEO of ImClone Systems Inc., is expected on Capitol Hill today even though he was arraigned in New York Wednesday on conspiracy to commit securities fraud and perjury charges.

Waksal was subpoenaed by the House Energy and Commerce Subcommittee on Oversight and Investigations last week to answer questions about the business transactions and development of the investigational cancer drug Erbitux (cetuximab).

But one day in advance of his testimony, Waksal was hauled out of his home at 6:30 a.m. by four FBI agents acting on behalf of the office of the U.S. Attorney of the Southern District of New York. The Securities and Exchange Commission has filed charges.

The court released Waksal on a $10 million bond.

Nevertheless, Ken Johnson, a spokesman for the House committee, told BioWorld Today that the arrest has no impact on the hearing and, "If Dr. Waksal is not in jail, he better show up for the hearing."

Certainly, Waksal has the option of invoking his Fifth Amendment right before the subcommittee today.

After nearly two decades on the job, Waksal, who led the effort to bring Erbitux to market, resigned his post in late May amid constant media speculation that he had misled investors and partner Bristol-Myers Squibb Co., of New York, about the efficacy and safety of Erbitux. Waksal's brother, Harlan Waksal, ImClone's former executive vice president and chief operating officer, is now CEO.

The SEC is accusing Samuel Waksal of advising two people to sell New York-based ImClone's stock one day before the FDA refused to accept the rolling biologics license application for Erbitux.

ImClone issued a prepared statement Wednesday saying it was aware that Samuel Waksal had been arrested. "The company reiterated that it intends to continue to cooperate fully with the SEC, the U.S. Department of Justice and the House Energy and Commerce Committee during the course of their respective inquiries," the company said.

Trouble for the Waksal brothers started to surface around Christmas when the FDA issued ImClone a "refuse-to-file" letter for Erbitux. The drug is a monoclonal antibody designed to target and block the epidermal growth factor receptor and treat irinotecan-refractory colorectal cancer. (See BioWorld Today, Jan. 3, 2002, and Jan. 22, 2002.)

On Dec. 28, Samuel Waksal held a conference call and told about 800 listeners that the RTF letter would delay the Erbitux launch by only six months at most, and the problem had to do with the "train of documentation."

Samuel Waksal characterized the problem as a "setback" at the time. Back then, the company's stock (NASDAQ:IMCL) was trading at $43.33. Wednesday, it closed at $7.83, up 28 cents.

But the SEC and members of the Energy and Commerce Committee are intrigued by the fact that friends and family of the Waksal brothers apparently started dumping ImClone stock before the conference call. Samuel Waksal's daughter, Aliza Waksal, reportedly made $2.5 million, and Martha Stewart, a businesswoman and friend of Samuel Waksal, reportedly sold 3,000 shares.

Despite all this negative news, it's worth mentioning that the FDA has not ruled whether it will clear Erbitux for marketing. ImClone officials hope the agency will accept the BLA without additional trials if the company reanalyzes Phase II data from the U.S. and combines it with data from a trial being conducted by partner Merck KGaA, of Darmstadt, Germany. (See BioWorld Today, May 23, 2002.)

Aside from Harlan Waksal, others on the list to testify at the subcommittee today are: Frank Papineau, from the Committee on Energy and Commerce; Raymond Weiss, committee consultant and clinical professor of medical oncology at the Georgetown University Medical Center in Washington; Laurie Smaldone, senior vice president of global regulatory sciences at Bristol-Myers; and Brian Markison, vice president of the division of oncology at Bristol-Myers. Additionally, five employees of the FDA are listed as witnesses.