Fast Track Fallout: ImClone Stumbles, Takes BMS With It

Executives at Enron aren't the only ones feeling the heat. ImClone's CEO and COO-brothers Samuel and Harlan Waksal-recently got an ultimatum from Bristol-Myers Squibb: Step aside and let BMS take Erbitux (IMC 225) through the approval process, or it will terminate their agreement. The Waksals refused, and BMS backed down-for now.

The threat came after FDA's unexpected refusal late last year to review ImClone's application for the monoclonal antibody-based cancer treatment. Stock in both companies fell after the FDA snub. Now Congress, the Justice Department, and the Securities and Exchange Commission are investigating whether investors were misled about the drug's potential, according to the Wall Street Journal.

In an unusual and somewhat risky move, ImClone submitted its Erbitux application last year with data from only one clinical trial-a Phase II. The study's design was also risky. Erbitux was tested in combination with irinotecan, a chemotherapy standard, and researchers selected patients for whom other treatments had failed, including irinotecan. ImClone apparently believed that was the fastest way to prove its effectiveness. Nearly a quarter of the study's participants responded to the combination treatment, but FDA claims the company lacked documentation that the patients had previously not responded to irinotecan and, therefore, it could not separate the results of the two treatments.

BMS has paid ImClone more than half of the $2 billion it pledged for a 19.9 percent stake in ImClone and co-marketing rights to Erbitux. Now it wants to restructure that agreement, and, at press time, the two companies were still in negotiations.

According to news reports, doctors who have studied the treatment claim it's effective. But the delay-which could be more than a year-will give an edge to competitors' products if they reach the market first. AstraZeneca's Iressa, a lung-cancer treatment with fast-track status, is now with FDA and Japanese regulators for review. And the OSI/ Genentech product, Tarceva (erlotinib) for solid tumors, is expected to reach the market by the end of next year.