On December 31, ImClone held a conference call for analysts and investors, during which it painted a somewhat optimistic picture
of the reasons for FDA's refusal to file and the prospects for moving forward. Waksal told investors that the agency had denied
the application because ImClone had not provided enough data about the cancer patients participating in the trial. He projected
that ImClone would be able to answer the questions by the end of the first quarter of 2002 and said he expected FDA to approve
Erbitux for marketing by the fall of 2002.
The plot thickens. Unbeknownst to ImClone, FDA's RTF letter, which is a non-public document, had been leaked to the Cancer Letter, a Washington, DC-based newsletter. On Jan-uary 4, 2002, the Cancer Letter disclosed the contents of the letter and revealed for the first time that the agency had repeatedly informed ImClone about
problems with the structure of its Erbitux trials and had warned it about violations of protocol.
The agency letter stated: "In order for your applicationto be considered, you were informed during the meeting of August 11,
2000, in our letter of January 19, 2001, and during the telephone conference call of January 26, 2001, that the application
must provide evidence that the addition of a toxic agent (irinotecan) is necessary to achieve the clinical effect."
Failure to Disclose
FDA'S LETTER INDICATED THAT THE AGENCY had talked to ImClone about ways to rectify the problems to ensure the application and clinical trials were complete. FDA
also told ImClone that trial patients had to have failed previous chemotherapy treatments. Despite this, ImClone failed to
submit such refractory evidence.
According to the Cancer Letter, the defects in ImClone's clinical trials were so serious that the company would not likely be able to refile its Erbitux
application in the first half of 2002 and would likely be delayed until late in 2002 because FDA was requiring additional
Faced with that exposure, on January 9, 2002, Waksal finally admitted, "We put together a faulty package. We screwed up."
The CEO also admitted that ImClone would need to conduct new clinical trials to prove Erbitux's efficacy. On January 10, 2002,
the New York Times reported that Waksal had admitted at the 20th Annual J.P. Morgan H&Q Healthcare Conference that FDA's rejection was "not
an insignificant problem; the data does not exist." Between December 28, 2001 and January 9, 2002, ImClone's stock lost more
than 42 percent of its value.
IN JANUARY 2002, THE HOUSE ENERGY AND Commerce Committee, which at the time was investigating the Enron scandal, initiated an inquiry into ImClone's clinical trials
and its pre-approval promotional statements about Erbitux.
The thrust of the congressional inquiry, led by Republicans Billy Tauzin and James Greenwood, was whether ImClone had misled
public investors into believing that its FDA application was on track when it was not. The committee delved into issues of
timing, specifically when ImClone's officers first learned about FDA's concerns about clinical trial structure, and whether
the agency had talked with SEC about any pre-approval promotional statements that ImClone had made to investors.
The committee served formal letters of inquiry on ImClone, BMS, and FDA. Its letter to FDA underscored the gravity of the
situation: "We have several serious concerns. Available information seems to conflict with ImClone's description of the contents
of the agency's RTF letter and its clinical research. Without the Cancer Letter article, investors would have had to rely on ImClone's questionable descriptions of the RTF letter."
The congressional inquiry letter also stated: "The FDA's statute and regulations appear to inhibit the agency on its own from
disclosing some, if not all, of the RTF letter or other similar, relevant information to the Securities and Exchange Commission
when there are concerns about the accuracy and completeness of company's descriptions of FDA actions."