As accusations many of them contained in lawsuit papers filed by shareholders fly right and left in the ImClone Systems Inc. imbroglio related to Erbitux (cetuximab), bystanders are trying to sort out what happened.

The bare facts of ImClone's "catastrophe" have been widely broadcast: An FDA refusal to accept ImClone's rolling biologics license application for Erbitux in irinotecan-refractory colorectal cancer delayed market launch by about six months (according to first word from the company, in early January); the action stalled a $300 million milestone payment from partner Bristol-Myers Squibb Co.; and it cast a pall over ImClone in general.

Explanations from the company have not satisfied everybody. President and CEO Samuel Waksal, in a presentation at the JPMorgan H&Q Healthcare Conference in mid-January, rather vaguely blamed a faulty BLA for the problem. But The Cancer Letter, a weekly newsletter on cancer research funding, legislation and policy issues, published excerpts from the FDA's confidential letter to ImClone that cited alleged protocol violations in trials, as well as data the agency said it wanted but didn't get.

The FDA is said to have complained in the letter that it had identified 21 deaths of patients within a month of their last Erbitux treatments, as opposed to three cited by ImClone. What's more, the agency apparently warned ImClone last summer that it would have to demonstrate Campostar (irinotecan) was required to be dosed with Erbitux, but ImClone never handed over such data.

Not good. For ImClone, the situation looked even worse when stockholders learned that Harlan Waksal, the chief operating officer, co-founder and brother of Samuel Waksal, had sold 700,000 ImClone shares valued at about $71 a share, or about $50 million in total, a few weeks before the FDA delivered its bad news. Which doesn't necessarily mean anything bad, but does seem to add to the pile of suspicions.

Now, the House Energy and Commerce Committee and the Oversight Investigations Subcommittee are involved. Billy Tauzin (R-La.) and James Greenwood (R-Pa.), the respective chairmen, are asking for records and interviews related to clinical research on Erbitux.

As tangled as it has become, the whole thing hardly seemed to merit a governmental inquiry. What's next a probe into why Kmart's going bankrupt? But the pair of legislators said they want to protect patients and investors by examining whether FDA rules ought to allow the agency to share more of its information regarding the research on would-be drug products, and to guard the integrity of biomedical research.

Almost inevitably, comparisons albeit overstated began to circulate between ImClone and Enron Corp., since Congress had begun poking around in the "scandals" involving both.

Doomsayers abound in the analyst community, and to say ImClone's woes may worsen before they improve is easy. But analyst Douglas Lind, at Morgan Stanley, has a less grim view.

ImClone's FDA snag "raised a red flag at a time when [Congress] wanted to be seen as proactive," he said. "I don't see this as a big deal for ImClone," he added. "It will be pretty clear there was no fraud, which is what the lawsuits are looking for."

Still, it's a mess. And it's a long way from the $2 billion deal ImClone disclosed with Bristol-Myers in September, hailed as a "landmark" agreement by analysts the same analysts who lost no time downgrading ImClone's stock in the wake of the FDA news.

Wall Street was as unforgiving as always. In the first day of trading after ImClone made public the FDA's refusal, its stock fell about 16 percent, or $8.79, to close at $46.46. The following Wednesday, ImClone ended at $43.33, down $3.13, or 6.7 percent. By late last week, with the investigations by Congress disclosed, shares had tumbled to about $16.

ImClone also had negotiated a $60 million deal with Germany's Merck KGaA for the right to market Erbitux in Europe and Japan, and Merck said its European studies with the drug in colorectal, as well as head and neck cancer, are going forward as planned. This didn't seem to cheer up much of anyone, although Lind believes it should have.

"I'm disappointed there's been all of this noise, controversy and media attention about things that are irrelevant to the investment thesis," he told BioWorld Financial Watch. "We believe the drug works, and that's what people need to focus on."

In a research note, Lind said ImClone won't discuss timing issues with regard to its ongoing FDA talks, but "if refiling with existing colorectal study results cannot be done, we expect these trials would form the basis of a BLA filing in a refractory head and neck setting by [the fourth quarter of this year], based on studies expected to be completed in the coming months."

Leaked portions of the FDA's Refusal to File (RTF) letter said Erbitux's pivotal trial was "not adequate and well controlled," and that more trials might be necessary.

"We believe this phrase principally implies that the FDA questioned in the RTF [letter] ImClone's documentation of enrolled patients' eligibility criteria," Lind wrote in the research note. "We expect that during the initial meeting ImClone has with senior FDA reviewers, this question will be addressed: Were irinotecan-refractory colorectal cancer patients enrolled in Erbitux's pivotal trial indeed refractory, and does ImClone have data in hand to be able to address this issue for FDA? ImClone management stands by the data and has indicated that the raw data that are necessary exist."

Lind acknowledged that he hadn't seen the RTF letter, "but I've seen the worst of it," he told Financial Watch.

"There were certain parts of the letter which, if taken literally, were pretty definitive, but it was legal, bureaucratic [language]," he said. "Does it mean, definitively, more clinical trials are required?" Lind said he thinks not. "Yes, you'll need more trials, but you'll need more trials [only] if these don't work," he said.

Also, the RTF letter seemed to indicate the FDA had "told [ImClone] over and over to do it this way. But, in fact, they've had a very strong dialogue with the company," Lind said, and the letter " was unclear whether they should do [more trials] before or after" results were finalized from those under way as part of the rolling BLA.

Developments were still taking place, and still getting wide reportage, late last week. ImClone got an informal inquiry from the SEC, and filed documents disclosing new items: the resignation from the board by Peter Peterson, who cited "time constraints"; the sale on by the Bank of America of 2.58 million shares pledged by Samuel Waksal as collateral for margin loans made to him by the bank; the sale by UBS Warburg of 213,000 shares on the same date under the same circumstances; and the sale by Bank of America of 72,754 shares pledged by Harlan Waksal as collateral to the bank for Samuel Waksal's loans. All sales occurred Jan. 18.

Samuel Waksal still owns about 582,000 shares, of which 416,666 are exercisable options to buy stock at $50.01 per share, and he has 833,334 unexercisable options to buy shares at $50.01 each. Harlan Waksal owns 3.1 million shares, of which 333,333 are exercisable options to buy shares at $50.01, and he has 666,667 options unexercisable at that price.

Interesting. But what jolted most people was the news about the RTF letter to ImClone, quotes from which likely were "taken out of context," Lind said. Such letters are "scary. They're very scary, and they're written that way partly to catch the attention of the pharmaceutical industry, who may not take them as seriously as they should."

Investors, on the other hand not to mention politicians (especially when the season is right) and journalists may take them extremely seriously. The episode probably will lead to proper re-evaluation of procedures, Lind said.

"I think the FDA will be under scrutiny as well," he said. "If you didn't mean what you said in the letter, why did you say it? And was this letter shared with the SEC, and should it have been?"

At the moment, the din and smoke may deafen and blind investors to what could turn out to be a good buy one that the giant Bristol-Myers put its diligence behind, way back when it signed the deal with ImClone for the drug that Lind views with optimism.

"No matter what people might think about this letter, or whatever, the bottom line is that the FDA is in control of this process," he said. "They will have to be absolutely satisfied."