ImClone Systems Inc. filed a lawsuit against its founder and former CEO, Sam Waksal, claiming he destroyed documents possibly relevant to a government investigation of the company's business practices.
The New York-based company, now headed by Waksal's younger brother, Harlan Waksal, is seeking repayment of a $7 million lump sum given to Sam Waksal upon his resignation in May. ImClone also wants cancellation of stock options that vested as a result of the separation agreement, as well as repayment of legal fees and expenses.
ImClone's stock (NASDAQ:IMCL) moved up $1.08 Thursday, or 13.6 percent, to close at $9.02.
The lawsuit, filed in New York State Supreme Court, comes just days after Waksal, 54, pleaded innocent to insider trading and fraud charges associated with the FDA's rejection of a rolling biologics license application for the investigational cancer drug Erbitux.
The SEC and the House Energy and Commerce Commission have been investigating Waksal and his business dealings related to ImClone for several months now. (See BioWorld Today, June 13, 2002; June 14, 2002; and June 18, 2002.)
And according to ImClone's second-quarter financial report released Wednesday, "The company has recently learned that Dr. Waksal, in contravention of company policy, directed the destruction of certain documents that were, or could be perceived to be, material to the pending government investigations."
ImClone officials were not available for comment Thursday.
While Waksal is facing the possibility of a prison term on several counts, including a charge that he advised family members and a friend - Martha Stewart, CEO of Martha Stewart Living Omnimedia Inc. - to sell stock ahead of the FDA's rejection, Harlan is trying to get Erbitux to market.
ImClone and its partner, New York-based Bristol-Myers Squibb Co., are hoping that re-analyzed data from earlier studies, along with data from development partner Merck KGaA, of Darmstadt, Germany, will be enough to win FDA approval for Erbitux (cetuximab) as a treatment for colorectal cancer. (See BioWorld Today, May 23, 2002.)
Resolving those problems could take until next year. As for U.S. colorectal cancer patients, they received a new treatment option Monday when the FDA approved Eloxatin (oxaliplatin for injection) following a 46-day priority review. Sanofi-Synthelabo, of Paris, said Eloxatin should be on the market by the end of August. Eloxatin is already marketed in 55 countries.
Eloxatin in combination with infusional 5-FU/LV was approved for an unmet medical need in patients whose advanced colorectal cancer has recurred or progressed following bolus 5-FU/LV plus irinotecan therapy. Erbitux is a monoclonal antibody designed to target and block the epidermal growth factor receptor and treat irinotecan-refractory colorectal cancer.
In its financials, ImClone said total revenues for the second quarter were $11.6 million as compared with $3.9 million for the second quarter 2001. The net loss was $43.1 million, or 59 cents per common share, compared with a net loss of $29.5 million, or 44 cents per common share for the same period in 2001.
Revenues included $1.5 million from license fees and $2.4 million from the amended commercial agreement with Bristol-Myers Squibb. ImClone also received $7.5 million in collaborative agreement revenue through the Merck deal.
ImClone had $351.6 million in cash, cash equivalents and securities as of June 30. The company received a non-refundable $140 million cash payment upon signing the amended Bristol-Myers deal in March 2002. (See BioWorld Today, March 7, 2002.)