Insider trading scandal ImClone Systems

imclone s stock price dropped sharply @ end of 2001 when drug erbitux, experimental monoclonal antibody, failed expected food , drug administration (fda) approval. later revealed u.s. securities , exchange commission numerous executives sold stock before announcement of decision after close of trading on december 28.

its founder, samuel d. waksal, arrested in 2002 on insider trading charges informing friends , family sell stock, , attempting sell own. daughter, aliza waksal, sold $2.5 million in shares on december 27. father, jack waksal, sold $8.1 million in shares on 27th , 28th. company executives had done same. john b. landes, general counsel, sold $2.5 million in shares on december 6. ronald a. martell, vice president marketing , sales, sold $2.1 million in shares on december 11. 4 other executives sold shares in following weeks well. later, samuel waksal pleaded guilty various charges, including securities fraud, , on june 10, 2003, sentenced 7 years , 3 months in prison.

martha stewart, founder of martha stewart living omnimedia (waksal had dated stewart s daughter) became embroiled in scandal after emerged sold $230,000 in imclone shares on december 27, day before announcement of fda decision. although stewart maintained innocence, found guilty , sentenced on july 16, 2004 5 months in prison, 5 months of home confinement, , 2 years probation lying stock sale, conspiracy, , obstruction of justice.

ultimately new clinical trial , fda filing prepared imclone s partner merck kgaa ( german merck, not confused company of similar name) resulted in fda approval of erbitux in 2004 use in colon cancer.

a congressional hearing on improprieties @ imclone, held in october 2002, unveiled culture of corruption dating 1986. year imclone ceo waksal first forged signature of company s general counsel john landes (one of 3 original employees of company) financial gain. nonetheless, landes defended waksal s illegal actions @ hearings before subcommittee on oversight , investigations, portraying forgery good-faith misunderstanding, representative james greenwood replied children know better that, mr. landes. further questioning , subsequent forgeries on waksal s part revealed neither landes, chief legal officer of company, nor company s outside directors reported waksal s actions proper authorities or made moves have waksal removed ceo. instead, testimony revealed initiated own internal investigation, never concluded. decades-long tolerance waksal s fraud, starting company s earliest days, provoked representative peter deutsch refer ongoing misconduct wacky.

the fda s february 2004 announcement of approval use of erbitux treatment of colorectal cancer reported conclusions drawn trial involving 329 patients, of 10.8% responded when erbitux used itself, delaying tumor growth 1.5 months. when used in conjunction standard chemotherapy treatment, irinotecan, 22.9% of patients responded , tumor growth delayed approximately 4.1 months.

in september 2001, bristol-myers squibb committed $2 billion (including $1 billion up-front cash payment) less 20% of imclone due called @ time drug s blockbuster potential.

in january 2006, company put sale failed find buyers, due fact erbitux time faced significant competition in medical marketplace. imclone directors withdrew sale of company in mid-2006.

in april 2007, wall street journal reported bristol-myers squibb co. , imclone systems inc. said cancer drug, erbitux, failed prolong lives of people pancreatic cancer in new study, marking yet setback in drug industry s efforts find better treatment deadly disease.