Excluding Freak Detour, ImClone's Gain is Modest

SEC spokesman Herb Perone said whenever a stock drops that dramatically it prompts an investigation by the market's surveillance team, and such an investigation is underway. He said such a big drop in a stock in such a short time is rare, although at this time, there is no indication of anything nefarious.

Meanwhile, Bristol-Myers Squibb(BMY Quote), which owns about 20% of ImClone and will be Erbitux's distributor, was recently trading for $29.92 on Instinet, up 3 cents from its Thursday close.

The dustup is only the latest for ImClone, whose founder, Sam Waksal, is currently serving seven years in prison for insider trading and whose frantic efforts to get out of the stock in December 2001 set off events that led to the Martha Stewart scandal.

It's also the second go-round for ImClone, Erbitux and the FDA. In December 2001, the agency rejected the company's application, saying the data were incomplete. It was before news of that setback became public that Waksal brazenly tried to unload his shares and, prosecutors allege, tip off family members the stock was about to tank.

Waksal later pleaded guilty to bank fraud, securities fraud and conspiracy to obstruct justice. He was given an 87-month prison sentence and ordered to pay a fine of $4.2 million.

Stewart, the former CEO of Martha Stewart Living Omnimedia(MSO Quote), sold a 4,000-share slug of ImClone on Dec. 27, 2001, the same day Waksal tried to make his sales. She's currently on trial in federal court in Manhattan for allegedly concocting a story with her broker about the circumstances of the sale, which she claims was carried out under an informal agreement to sell the stock when it fell below $60.

Despite the sideshows, ImClone pressed on with Bristol-Myers, and the two companies requested an accelerated review from the FDA in August 2003. It was granted in October 2003.

This time, the FDA approved the drug to treat patients with advanced colon cancer whose disease has spread to other parts of the body. The FDA approved Erbitux as a treatment with another colorectal cancer drug, irinotecan, or as a single treatment if patients cannot tolerate the other medication.