Updated from 12:07 p.m.

A second congressional hearing into

ImClone Systems

(IMCL)

kicked off Thursday morning with lawmakers calling for policy changes at the Food and Drug Administration and raising additional questions about the conduct of ImClone executives and directors in the weeks before the regulatory setback that sent company shares into a tailspin.

Imclone executives, including CEO Harlan Waksal, told members of the House Energy and Commerce Committee that the company is working hard to get Erbitux approved. New internal rules have been put in place to better monitor insider selling and strengthen the independence of its board of directors. ImClone is also cooperating fully with all the ongoing investigations, he added.

Waksal's remarks came after the committee released documents showing that a host of executives, employees and directors of ImClone sold about $74 million in company stock in December, before U.S. drug regulators announced their refusal to review the approval application for the colon cancer drug Erbitux.

Along with information on insider stock sales, the committee made public an internal email dated Dec. 18 from an ImClone executive stating that several members of ImClone's management team knew in advance that the FDA might reject the Erbitux application. The FDA issued its rejection letter on Dec. 28.

In opening statements Thursday morning, lawmakers, including Rep. Jim Greenwood (R., Pa.), said the purpose of today's hearing would be to question ImClone executives and directors about these stock sales and to examine why the company's board of directors failed to protect the interest of shareholders.

Rep. Bart Stupak (D., Mich.) said he wanted to know why ImClone's board of directors allowed company executives to use the publicly traded company as "their own personal piggy bank."

Three Imclone directors -- Robert Goldhammer, John Mendelsohn and Paul Kopperl -- testified today, asked to explain their actions, or lack thereof, in the face of evidence of management shenanigans. For instance, ImClone's board learned in February that former CEO Sam Waksal may have forged the signature of a company attorney on a document certifying that he owned ImClone stock warrants. But the board didn't ask Waksal to resign until May, after it was known that the SEC was planning to come after him.

The other focus of the hearing dealt with the FDA and the way the agency handles the review process for experimental cancer drugs. In their opening statements, lawmakers expressed optimism about changes to the drug review process already under way at the FDA. But they also wanted to know what, if anything, the FDA plans to do about cracking down on drug companies that make misleading statements about drugs in the review process.

Acting FDA head Lester Crawford testified that although the agency has the power to send warning letters to companies that make false or misleading statements, the agency typically defers to the SEC in such cases because it has more power to exact penalties.

Crawford, however, said the FDA is reviewing its policies concerning companies and the way they communicate to the public about unapproved drugs. He also said the FDA and SEC plan to improve their communication.

As for Erbitux, itself, Crawford told lawmakers that the FDA wouldn't be able to make an approval decision on the drug before mid-2003 at the earliest, depending on the outcome of ongoing clinical trials.

During the committee's first ImClone hearing, held in June, it was revealed that FDA officials used a Dec. 4 meeting with an ImClone regulatory executive to hint at the possibility of an Erbitux rejection. But at the same hearing, ImClone executives said they didn't think the drug's application was in jeopardy at that time.

Current ImClone CEO Harlan Waksal sold $50 million in company stock on Dec. 6, although Waksal, who was the company's COO at the time, said the sale was prearranged and had nothing to do with the Dec. 4 meeting.

The internal email released Wednesday by congressional investors backs up testimony at the June hearing which alleged that ImClone executives had strong clues in mid-December that an FDA refuse-to-file letter for Erbitux was coming. Four days before the letter was sent, a

Bristol-Myers Squibb

(BMY) - Get Report

executive heard from an FDA source about the agency's decision. He then contacted Waksal.

With the exception of former ImClone CEO Sam Waksal, Harlan Waksal's brother, ImClone has denied that any of its employees used material, non-public information to illegally sell company stock.

Sam Waksal has been indicted on charges that he tipped off friends and relatives to sell their ImClone shares in the days before the Dec. 28 FDA announcement. Lifestyle guru Martha Stewart is also

under investigation for her sales of ImClone stock in December, before the company's shares crashed.