On Jan. 9, then-

ImClone Systems

(IMCL)

CEO Sam Waksal stood in front of hundreds of fund managers gathered in San Francisco for a health care investment conference, and

uttered three words that summed up his company's drug approval application:

"We screwed up," he said.

Waksal, of course, was referring to errors made by ImClone that led to the stunning decision by the U.S. Food and Drug Administration to reject, on Dec. 28, 2001, the approval application for ImClone's experimental cancer drug, Erbitux.

Wednesday, Waksal's words took on added meaning, after he was

arrested on criminal and civil charges of insider trading and perjury.

Investors, stung by blow-ups at companies such as

Enron

and

Tyco

(TYC)

, have lost a great deal of confidence in the management of publicly traded companies. Combing back through past media reports, it seems clear that Waksal's own words, will contribute further to investor cynicism.

Waksal has never been shy about talking about Erbitux. In fact, one of the reasons why ImClone stock has lost more than 85% of its value since Dec. 28 is because the charismatic CEO incessantly hyped the drug's potential but failed to deliver on the boasts. "Erbitux is going to be one of the biggest drugs in the history of oncology," he was fond of saying.

On Nov. 6, he told

Bloomberg News

that the company was "very comfortable" Erbitux would be on the market in early 2002, and that ImClone would become "one of the most important new companies in the biopharmaceutical field." When the FDA's letter became public, it was clear that the agency had voiced concerns over Erbitux for months before rejecting it.

Nine days before his company received the FDA's rejection letter -- long after rumors were out that Erbitux was in trouble -- Waksal told

The New York Times

he was confident of the drug's approval and that the studies would be adequate.

According to the criminal complaint filed today, Waksal learned Dec. 26 that the Food and Drug Administration was getting ready to issue a "refuse to file" letter to ImClone regarding its Erbitux application. That letter was issued on Dec. 28.

On Dec. 31, Waksal held an early morning conference call with investors to discuss the FDA decision.

"It's a shock to us, because it obviously deals with the credibility of the company," he said, quoted by

Dow Jones Newswires

.

At the aforementioned health care conference on Jan. 9, Waksal was asked a number of questions about precisely when the company found out about the FDA decision.

"On Wednesday, Waksal insisted he disclosed all of the FDA's major concerns soon after receiving the bad news," wrote the

Associated Press

, in its account of the conference.

On Jan. 25, ImClone disclosed that it was the subject of two federal probes. In a Jan. 28 story,

The Wall Street Journal

wrote that "Samuel Waksal, president and chief executive, and his brother, Harlan, executive vice president and chief operating officer, have said the company's disclosures have been proper and that it hasn't done anything wrong. Both have said they were stunned by the FDA's decision?"

On the same day, the

Los Angeles Times

wrote, "The brothers had no idea the FDA rejection was coming,

Sam Waksal said, adding: "I haven't slept a wink since that evening."