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An Inquiry into the ImClone Cancer-Drug Story
Subcommittee on Oversight and Investigations
Prepared Statement of The Honorable Jim Greenwood In
the past, when Americans of my generation have thought about the development of
life-saving miracle drugs, the images most likely to come to mind have been
those of self-effacing men of science like Alexander Fleming and Jonas Salk. In
1952, when Salk was convinced that he had developed a vaccine for the deadly
scourge of polio, he didn't rush out to the marketplace with effusive praise
either to the drugs efficacy or it's money making possibilities. Instead he
vaccinated volunteers, including his wife and three sons. And only when it
became clear that, even though the volunteers had developed antibodies to the
disease, none had become ill, did he finally publish his findings, the following
year, in the Journal of the American Medical Association. Now flash
forward to 2001. Another Doctor, this time with a PHD in immunology, claims that
his company is bringing another miracle drug to the market. Like
Salk in 1952, the disease he is researching strikes down roughly 60,000 thousand
Americans each year. That disease is colorectal cancer. The name of this new
drug is Erbitux. Here the similarity comes to a glaring halt. It
appears that, instead of concentrating his focus on the need to carefully
conduct clinical trials that the introduction of a breakthrough medicine
demands, ImClone seemed more focused on the sales pitch. Dr. Samuel Waksal is quoted as having said that Erbitux was,
". going to be the most important new oncology launch ever."
Investors and hopeful patients alike were told that the results of
ImClone's pivotal clinical trial were, ".knock-your-socks-off exciting."
While
others who had invested and hoped and perhaps prayed for a cure were busy having
their hopes dashed, Dr. Waksal and others close to him appear to have been too
busy cashing out to pay attention to those for whom the success or failure of
Erbitux represented the difference between life and death. Today
the Subcommittee examines the unraveling of ImClone, whose highly publicized
race to develop, and market what some thoughtful researchers still consider to
be a promising therapy, failed so spectacularly.
Presently,
only two drugs have established efficacy for treatment of metastatic colorectal
cancer. If these drugs are not
effective in a particular patient, there is no other real therapy available to
save that patient. ImClone
sought accelerated approval for Erbitux to meet this unmet medical need of
colorectal cancer patients who had failed standard chemotherapy treatments.
For these patients with no other options, many believed that Erbitux was
their best hope at survival, and late last year they had every reason to count
on a speedy FDA approval. These
cancer patients and their families were told that Erbitux was a leading
monoclonal antibody, part of a new class of 'targeted therapies' - drugs
such as Gleevec and Herceptin - that doctors hoped would revolutionize cancer
treatment and would not cause the severe side effects of toxic chemotherapy.
They
were assured by ImClone that Erbitux was going to be approved in early 2002.
They believed in a company that had a number of leading oncologists on
its Board of Directors. They believed in a company that, in October 2001, had
entered into a much-publicized and record-setting $2 BILLION strategic agreement
with a leading pharmaceutical maker, Bristol- Myers Squibb -- an agreement which
included an up-front $1 BILLION tender offer for ImClone stock from Bristol to
ImClone's existing shareholders at the premium price of $70 a share.
On
December 17, 2001, ImClone was one of seven biotechnology companies included for
the first time in the NASDAQ 100 index. Excitement
and confidence in ImClone was reflected in such media reports as a December 26,
2001 Los Angeles Times story, which proclaimed, in almost giddy language,
that "Erbitux, a colon cancer treatment from ImClone Systems Inc., is set to
make one of the biggest splashes of 2002." Yet
just days later, the hopes of cancer patients were crushed when they learned
that the deficiencies in the Erbitux clinical trials were so severe that FDA
took the rare action of issuing a refusal-to-file letter. This meant that, under the 60-day deadline to determine
whether a new product licensing application was adequate enough to be evaluated,
FDA found such serious deficiencies that the agency could not even continue its
review. After announcing FDA's
refusal-to-file letter, ImClone executives told investors and the public that
the problem was simply some missing documentation, and suggested that it was an
easily fixable problem of supplying the missing proof in the pivotal study.
But soon thereafter, excerpts of the non-public, FDA refusal-to-file
letter appeared in a trade publication, revealing the real truth behind the
FDA's action: the clinical study problems were much more than a failure to
provide some data elements. To
bring the drug to market, ImClone would need to conduct additional studies to
demonstrate the drug's efficacy as a combination therapy for cancer, which
would take substantial amounts of time and could in fact raise more questions
about Erbitux than they would answer. How
did a highly-touted drug like Erbitux, which attracted the interest of
Bristol/Myers/Squibb to the tune of $2 billion, stumble so completely before
even arriving at the regulatory starting gate?
Cancer patients and their families want to know.
And this Subcommittee Chairman wants to know. Today,
the Committee's investigative detailee, accompanied by the Committee's
scientific consultant, will present the preliminary staff report on this matter.
Here are some of the staff's key findings:
Yesterday,
the SEC charged Sam Waksal with illegal insider trading, alleging that he
alerted certain family members about the refusal-to-file letter before it became
public knowledge, who in turn sold large volumes of ImClone stock before the
market learned of the negative FDA action.
In
addition to the stock trading activity in late December of last year, the
Committee's investigation also reviewed the purchase and sale of ImClone stock
by ImClone's directors and top executives in the months leading up to the
Bristol $1 billion tender offer, which was consummated in October 2001.
On October 29, 2001, two days before ImClone completed its application
submission for Erbitux to FDA, Sam and Harlan Waksal, the founders and top
executives of ImClone, sold about 1.4 million shares of ImClone stock to Bristol
for about $111 million. However, unlike all the other ImClone shareholders who
tendered shares to Bristol, the Waksals were helped in part by loans of about
$35 million that they received from ImClone several months before, so that they
could exercise their options to purchase ImClone stock at highly discounted
prices. These
findings, and other information contained in the staff report and in our
witnesses' testimony, will be of great interest to the Subcommittee.
One of our chief concerns is assuring public confidence in our
biotechnology/pharmaceutical industry and the FDA process.
When there is a suspicion that we are not getting all the facts about a
new drug, investment dries up and clinical trial enrollments stall.
We must look seriously at whether the secrecy of the FDA approval process
can be - or has been -- abused and exploited for personal gain, and whether
useful drugs are delayed because of flawed development strategies and internal
FDA confusion. The
saga of failures like ImClone leads to a loss in confidence, not only in the
possibilities of the science, but in the firms that seek to bring new cures to
market and the public officials who must approve these cures and regulate these
markets. My hope is that the lessons we draw from this debacle will enable us to provide improved direction to the companies, investors and the regulators who need to work cooperatively and openly if we hope to continue to bring the promise of science to the American people.
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