The Drug That Could Have Been
When a young company called ImClone said it had a hot new cancer drug, its stock leapt on the bet that it would get an OK from the FDA. Now the stock has tanked, ImClone's charismatic CEO is indicted, and, Martha Stewart is in trouble, too. But the big losers are cancer victims. Here's the real story behind ImClone and why it failed to win the FDA's approval
As word of the FDA's refusal spread, investors dumped too. Within weeks, ImClone had lost nearly $1.5 billion of market value. In a December 31 conference call, Sam Waksal tried to downplay the seriousness of the problems, but on Jan. 4, 2002, The Cancer Letter, a Washington, D.C., newsletter for oncologists, published the FDA's letter--and investors realized they'd bought a lemon. Indeed, investors saw for the first time the many hurdles the FDA had set for Erbitux's approval--and how sloppy ImClone's evidence really was. They felt they'd been conned. But not all were had. Lance Willsey, a physician who at the time helped run a hedge fund, had decided early on to short-sell the stock, and the fund profited when ImClone tanked. He just did not believe the FDA would approve the drug based on a combination treatment. David Hines, president and research director at Avalon Research Group, says one warning sign was the Waksal brothers' promotional style. "When I hear management make overstatements, I get interested," he said. He put out his first sell recommendation in April 2001.
Still waiting
As a congressional investigation sifts through the debris, several things become clear. Certainly, congressional sources say, ImClone should have run better studies and not hyped the drug. But the FDA bears a big share of the blame. It had put the drug's review in the hands of its biologics division, whose experience in dealing with companies was limited. Pazdur, director of oncology in the FDA's old-school drug division, says when his reviews are not going well the company is urged to quietly withdraw its application--thus avoiding volatile market reactions to bumps in the regulatory road. Pazdur's division routinely meets with new drug applicants early in the process to design trials the FDA will accept. His division had such protocol assessments for 120 new drugs; the division that handled Erbitux had done one. On June 27, U.S. Reps. Billy Tauzin of Louisiana and James Greenwood of Pennsylvania, both Republicans investigating the ImClone affair, demanded that high-level FDA officials meet with their committee to discuss how to fix problems with fast-track approval.
Cancer patients are still hopeful that Erbitux can be approved. Despite the plunge in its stock price, ImClone is flush. It has raised $400 million in cash through stock sales and the Bristol-Myers deal, which it vows to use to build an Erbitux plant in New Jersey. In February, ImClone and Bristol-Myers met with the FDA, and now they are pushing ahead with new clinical trials to get Erbitux approved. That could take a couple of years, however. Meanwhile, advocates say they are frustrated with the stalled progress of the compassionate-use program. In January, the company was saying it needed to meet with the FDA in February before it could consider starting the program. In June, Abigail Alliance founder Burroughs says, he had more conversations with Harlan Waksal but got nowhere. By July, ImClone was promising it would apply to start the program in the fall.
Meanwhile, only patients like Rita Essigmann, who is in a clinical trial, are able to get Erbitux. Every Wednesday, the 81-year-old colon cancer patient travels from her home on Cape Cod to the Dana-Farber Cancer Institute in Boston. After a checkup with her doctor she sits in a recliner in the hospital's "infusion room" and receives her dose. She says it seems to be helping. "I have no symptoms and I feel better," she says. "I've been told that I look well, too."
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