Sam Waksal’s Fast Money and False Promises — and the Fate of ImClone’s Cancer Drug.
“Erbitux is going to be huge, one of the biggest drugs in the history of oncology — a drug that is going to alter the way cancer therapy is done from now on.” So promised Sam Waksal, the famously charming CEO of ImClone, a small New York biotech firm with a checkered past.
In 2001 ImClone Systems appeared unstoppable: in May, the company announced stunning results for its “revolutionary” drug; in June, Erbitux was put on a fast-track status by the FDA; and in September, Bristol-Myers Squibb signed an unprecedented $2 billion deal for Erbitux. As ImClone’s fortunes rose, so did Sam Waksal’s. Like a latter-day Jay Gatsby, Waksal had willed himself from humble Midwestern roots into the upper reaches of New York society. The son of Holocaust survivors, he befriended Martha Stewart, dated her daughter Alexis, hosted parties in his SoHo loft featuring Mick Jagger, bought noted paintings from A-list art dealer Larry Gagosian, and had Carl Icahn as a tennis partner and financial backer.
But in the last days of December 2001, the unthinkable happened: the FDA rejected Erbitux — not because there was anything wrong with the drug, but because ImClone’s science was “sloppy” and “incomplete.”
The company’s stock plunged, and Waksal, who was carrying $80 million dollars in debt, tried to save himself by lying, forging signatures and trading his family’s stock on inside information. The SEC and DOJ immediately opened investigations. FBI agents raided Waksal’s loft at dawn and led him away in handcuffs while paparazzi jeered and his octogenarian father punched a CNN cameraman. Congress opened hearings into how such a promising cancer drug — the “magic bullet” that was supposed to “change oncology forever” — had been so badly tarnished.
At that moment, Martha Stewart and her Merrill Lynch stockbroker, Peter Bacanovic, were linked to the unfolding scandal, and suddenly ImClone was making headlines around the world.
Like Enron and Tyco, ImClone is a leading example of late-1990s hubris and greed; but unlike any other case, the ImClone scandal was also about life and death. Lost in the hubbub over Waksal’s illegal trades and Martha’s lost millions were thousands of cancer patients who had run out of treatment options. Waksal gave them false hope and profited from their desperation. At his trial, the once-highflying CEO was excoriated by the judge, fined and given the maximum sentence of seven-plus years in jail. Since then, his brother has been pushed out of the company and their father has been indicted on insider trading.
In mid-February 2004 the FDA approved Erbitux for use against colon cancer, to the relief of cancer patients and ImClone’s investors. In June, Martha Stewart and her broker, Peter Bacanovic, were found guilty of obstruction of justice and each sentenced to five months in prison and five months of home-stay. Bristol-Myers Squibb has faced multiple investigations and has paid hefty fines for its business practices.
THE CELL GAME is a cautionary tale in the manner of Elmer Gantry, only it is set in the biotech business and Manhattan’s fin-de-siecle social whirl.
The book features an unusual cast of characters, including Dr. John Mendelsohn, the brilliant oncologist who developed Erbitux but was also embroiled in the Enron scandal; Shannon Kellum, the photogenic 28 year-old colon cancer patient whose “miraculous” turnaround with Erbitux launched the drug, but who later died in obscurity; Martha Stewart, Carl Icahn and others from New York’s social-business nexus; the scientists and executives of Bristol-Myers Squibb; investigators, Congressmen and FDA bureaucrats; Wall Street investors, doctors, cancer patients and journalists. Linking all of these people was the charismatic but terribly flawed antihero, Sam Waksal.
THE CELL GAME began with Prud’homme’s article, “Investigating ImClone,” published in the June 2002 issue of Vanity Fair, which was anthologized inBest Business Crime Writing of the Year, edited by James Suroweicki of The New Yorker. Prud’homme devoted nine months to investigative reporting and writing this book, and it contains much exclusive information.
THE CELL GAME was published by HarperBusiness on January 20, 2004. Showtime has optioned the book for a television movie, tentatively scheduled for 2005. HarperBusiness plans to issue a paperback version of the book when the movie airs.
THE S2 BILLION ANTIBODY 1 Cancer Cells Are Smart ….. 3
The Idea of the New ….. 17
Family Business ….. 42
The Miracle ….. 67
Small and OneArmed ….. 89
A Very HighRisk Opportunity ….. 117
The S2 Billion Antibody ….. 140
REFUSAL TO FILE ….. 165
Inquiries ….. 205
The Disconnect That Wouldn’t Go Away ….. 219
Who Knew What and When? ….. 235
Coincidences Piling Up ….. 261
In the Light of October ….. 277
THE ONCE AND FUTURE MIRACLE DRUG ….. 311
Epilogue ….. 355
Notes ….. 369
The Letter ….. 167
We Screwed Up ….. 185
CLINICAL TRIAL ….. 203
Index ….. 393