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Securities and Exchange Commission

has made a request for information that could signal the beginning of an investigation of whether

ImClone Systems


misled investors about troubles with its experimental cancer drug Erbitux.

Also coming to light Thursday were filings showing ImClone CEO Sam Waksal, already under fire for insider stock sales, has sold even more of his ImClone holdings since the middle of January. The sales were filed after a separate congressional probe of the company began.

Back Issues


Cancer Letter

newsletter is reporting Thursday that it received a request for information from the SEC in a letter dated Jan. 16.

The SEC letter said the agency was conducting an "informal investigation" of ImClone and is seeking a copy of the newsletter's Jan. 4 issue. In that, excerpts were first published of a Food and Drug Administration letter that rejected ImClone's approval application for Erbitux.

"We are trying to determine whether there have been any violations of the federal security laws," the SEC letter to the Cancer Letter states. "The investigation does not mean that we have concluded that anyone has broken the law."


Last week, a congressional committee said it was launching its own investigation into ImClone's handling of Erbitux, including allegations that ImClone CEO Sam Waksal and his brother and COO, Harlan Waksal, misled the public and investors by concealing FDA concerns, while selling $150 million in stock.

The congressional investigation was announced Jan. 18. Since then, Sam Waksal has filed plans with the SEC to sell another 213,000 shares of ImClone stock for proceeds of $4.1 million, according to Thomson Financial. A Morgan Stanley research note sent to clients Thursday says Waksal has in fact sold these shares.

An SEC spokesman wouldn't comment on the matter, but the regulatory agency is believed to be gathering documents and other information related to the actions of ImClone executives and their dealings with the FDA. An informal inquiry means SEC staffers have not yet asked for permission to issue subpoenas -- the usual trigger point for a formal investigation.

It is not known whether the SEC has contacted ImClone executives. Wednesday morning, ImClone's Harlan Waksal spoke by telephone to institutional clients of Morgan Stanley.

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gained access to the call.

When asked by Morgan Stanley analyst Doug Lind if the company was asked to provide material to the SEC, Waksal replied: "We don't comment on discussions with government agencies, but we are happy to provide the SEC with any information that it may deem useful to assure we're in compliance with SEC regulations."

Good Opportunity

Waksal did say the company was cooperating with congressional investigators.

"We were very surprised to hear about the

congressional investigation, but on reflection, it may be a good opportunity for us to go ahead and clear the air on many of the issues that have been raised, primarily by the media, and picked up by various groups," he said, adding that he was confident that Congress would not find any evidence of wrongdoing.

The Morgan Stanley teleconference with Waksal lasted about 30 minutes. He answered questions from Lind, but not from investors. Lind has an outperform on ImClone, and his firm has an investment banking relationship with the company.

Waksal didn't shed any new light on the company's plan to address the Erbitux issue. As CEO Sam Waksal had two weeks ago, he downplayed concerns raised in the FDA's refuse-to-file letter and said the company was confident it could get the Erbitux approval application accepted by simply providing additional information from its completed study.

"We believe we can refile with this existing study, with appropriate guidance from the FDA," he said, adding that ImClone also was receiving assistance from partner

Bristol-Myers Squibb

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Differing Interpretations

The FDA refused to accept the Erbitux approval application on numerous grounds, including ImClone's failure to provide enough documentation to prove that patients in its study had failed previous chemotherapy treatments. This is the heart of the matter, according to ImClone executives.

But the FDA criticisms run much deeper, in essence scolding the company for ignoring the agency's recommendations, allowing shoddy clinical conclusions to pass uncorrected, not abiding by the rules of its own clinical trial, and even violations of FDA regulations.

"Because we have also determined that the current study was not adequate and well controlled and that robustness of the overall response rate is less than is stated in the study reports, you will need to conduct additional studies to provide us this evidence," the FDA letter to ImClone states.

During the Morgan Stanley teleconference, Waksal was asked by Lind to shed more light on the FDA's refuse-to-file letter.

"The RTF letter did raise other issues, and we take them all very seriously," he said. "One comment I want to make and stress is that we've been forthright and clear in the characterization of our interaction with the FDA."

That, it seems, will be for congressional -- and now SEC -- investigators to decide.