Former ImClone chief invokes Fifth Amendment at hearing
WASHINGTON -- The former chief of embattled ImClone Systems refused to testify before Congress on Thursday about an experimental drug -- once touted as miraculous -- that cost investors millions, raised charges of insider trading and left cancer victims in limbo. But his brother said, "We let patients down."
Lawmakers called on current ImClone CEO Harlan Waksal and his brother Samuel -- out on bail from his Wednesday arrest on securities fraud charges -- to explain how ImClone imploded over its colorectal cancer drug Erbitux.
The questioning of Samuel Waksal began and ended with a challenge: Was ImClone's strategy "to put personal profiteering ahead of patients," asked Rep. Jim Greenwood, R-Pa., chairman of the House Energy and Commerce investigative subcommittee.
Samuel Waksal invoked his Fifth Amendment right against self-incrimination and declined to answer any questions.
Harlan Waksal, by contrast, did testify, and faced tough questioning about why he couldn't put together a scientific study to prove Erbitux worked, yet he juggled complex company stock transactions that netted him millions.
'Errors took place'
"It is a tragedy," Waksal said of the Erbitux saga. His explanation for the scientific failures: "We're a small company. We didn't have the resources to do some of the quality research that needed to be done. ... Unfortunately that's where the errors took place."
"You understood all this intimately about your own money," said Rep. Cliff Stearns, R-Fla., after Waksal outlined a series of transactions, including a $44 million stock sale that concluded days after he learned the Food and Drug Administration had problems with Erbitux.
Waksal acknowledged the FDA's concerns weren't public knowledge then, but insisted they were not material, or significant, to investors. Trading on nonpublic information considered material for investors can be illegal.
In any case, Waksal said, that particular transaction had been set in motion months earlier.
Lawmakers also pointed fingers at Bristol-Myers Squibb, which has spent $1.2 billion buying a stake of Erbitux, for not assuring the quality of the drug's research. And they questioned the accuracy of some ImClone testimony.
ImClone promoted Erbitux as a miraculous treatment for colorectal cancer right up until the FDA on Dec. 28 formally refused to even consider the drug, calling its studies too flawed to tell if Erbitux benefits patients. ImClone's stock has plummeted 90 percent since then.