SAN FRANCISCO -- ImClone Systems ( IMCL) knew as early as 1999 that U.S. drug regulators had concerns about its approval application for its highly anticipated Erbitux cancer drug but did nothing to address the issues.
This acknowledgment of a massive blunder was the highlight of ImClone CEO Sam Waksal's presentation to a packed house of Wall Street fund managers at the JPMorgan H&Q health care conference Wednesday morning. Bottom line: ImClone is trying its best to fix the Erbitux mess, but it has no confidence it can do so. If everything goes right, the biotech could refile its Erbitux application in a few months. If not, the company will have to start from scratch, forcing a delay of at least a year. If that sounds exactly like what Waksal said nearly two weeks ago, you're right. That's why some fund managers who attended a presentation and breakout session were dissatisfied. "It was a complete circus," said one hedge fund manager who has no position in ImClone right now. "It's clear they don't know what they're doing." Said another fund manager, someone who until recently was an ImClone bull but has sold his stake: "ImClone still hasn't come clean; they're still glossing over major issues." Shares of ImClone fell $5, or 13.6%, to $31.85 Wednesday. ImClone was trading fairly flat until the presentation began at 1:30 pm EST, then the stock sold off aggressively. A tired-looking Waksal cracked a few jokes during his 30-minute presentation but acknowledged sleeping little since the Food and Drug Administration rejected Erbitux on Dec. 28. And who can blame him when you have to stand up in front of thousands of professional investors (there were two overflow rooms where the presentation was piped in) and say: "We put together a faulty BLA biologic license application package, and we screwed up." Waksal says the FDA issued its refuse-to-file letter for Erbitux because the agency was not provided with complete documentation -- mainly annotated patient X-rays -- that would conclusively prove that colon cancer patients in its clinical trial were refractory, that is, that other drug therapies had failed them. This disclosure wasn't new, but what followed was: Waksal acknowledged the FDA made it very clear to ImClone -- as early as 1999 when the company was getting ready to start its pivotal clinical trial -- that the absence of this documentation of patient "refractory-ness" (Waksal's term) was an absolute deal-breaker. In other words, if ImClone didn't provide this information, the FDA was not going to accept the Erbitux application. ImClone began its clinical trial in the third quarter of 1999 and completed it in March 2001. But instead of making sure ImClone's doctors and an independent panel of radiologists and oncologists put together the necessary documentation for the FDA, the company did nothing. ImClone had several follow-up conversations with the FDA, starting in August 2000, during which this issue came up, says Waksal. But again, ImClone did nothing.