The Good, Bad, and Ugly of an NYC Biotech Pioneer
From fast growth and profitable sales to research improprieties and legal trouble: the story behind ImClone.
Published July 1, 2006
By Pamela Sherrid and Sibyl Shalo
Boosters of the biotech industry in New York City face a conundrum when it comes to ImClone Systems, Inc. On the one hand, the company should be a poster child for why New York is a great place for biotech. Founded by local scientific talent and located at 180 Varick Street in Lower Manhattan, ImClone beat the longshot odds that face all drug developers and launched a cancer drug that last year had sales of $413 million.
On the other hand, it’s hard to think of a biotech company with more notoriety. The approval process for its lead drug hit a massive pothole in late 2001 because the company misguidedly relied on data from just one small clinical trial. Its founding CEO, Samuel Waksal, is in prison for securities fraud, and Martha Stewart famously served time for lying to investigators about the sale of her ImClone stock.
Today, the company has valuable assets, but it faces huge uncertainties. At the top of the list of assets is Erbitux, a monoclonal antibody that binds specifically to the epidermal growth factor receptor (EGFR). After its setback in 2001, the drug was approved by the FDA in 2004 for use in combination with irinotecan in the treatment of patients with EGFR-expressing, metastatic colorectal cancer who were refractory to irinotecan-based chemotherapy, and as a first-line treatment for patients who cannot tolerate irinotecan.
ImClone received a huge boost this March when Erbitux was approved by the FDA for use in a second indication, head and neck cancer. It opens up a whole new market for ImClone, and triggered a milestone payment of $250 million from ImClone’s corporate partner, drugmaker Bristol-Myers Squibb.
Early-Intervention Research
For ImClone to grow its revenue even further in colon cancer applications, it needs to get patients on the drug sooner and remain on treatment longer. To that end, ImClone has plenty of early-intervention research going on in both its current indications. For instance, David Pfister, MD, a medical oncologist and head and neck cancer specialist at Memorial Sloan-Kettering Cancer Center, is watching “with great interest” the development of a large, randomized study on the combination of Erbitux, cisplatin, and radiation being conducted by a multicenter research consortium that includes MSKCC. The potential for a synergistic effect, he says, is capturing the attention of the oncology community.
ImClone is also trying to win approval of Erbitux for other indications such as lung and pancreatic cancer. At the annual meeting of the American Society of Clinical Oncology in early June, one of the most well-attended cancer research conferences of the year, dozens of papers were presented on Erbitux and other drugs in ImClone’s pipeline. Research data will decide the future, says Mehta Partners biotechnology analyst Max Jacobs, for both Erbitux and ImClone.
Despite the turmoil during Waksal’s downfall, ImClone held on to most of its 900 employees. The company manufactures Erbitux in New Jersey, but its preclinical biology research facility remains on the sixth and seventh floors of the Varick Street building, which also houses ImClone’s corporate headquarters. When he founded the company in 1984, Waksal, who lived in lower Manhattan, wanted to work there, too. In 1986 he negotiated a cheap, long-term lease for 40,000 square feet in a building that was once a shoe factory. Michael Howerton, the company’s chief financial officer, says the company’s scientists, including the 120 in New York, are the “visionaries” of the company.
An Array of Daunting Challenges
With all the uncertainty and the taint of Waksal’s conviction, does ImClone have trouble filling scientific jobs? “Quite the opposite,” says CFO Howerton, “we never have a problem with recruiting top talent.” But ImClone and its employees face an array of daunting challenges. To start, there’s the threat of new competition. Amgen’s panitumumab, another antibody targeting the EGFR receptor, is awaiting FDA approval, and promises to be a worthy challenger to ImClone in the colorectal cancer market. ImClone is also facing a patent challenge regarding Erbitux from MIT and Repligen Corp.
In January, the company announced it had hired investment bank Lazard to review strategic alternatives for the company. Such an announcement can mean a company is putting itself up for sale. Indeed, a high-profile investor has taken an interest. Carl Icahn, who made his name as a corporate raider in the 1980s and more recently backed away from a proxy fight at Time Warner, owns nearly 10% of ImClone stock, second only to Bristol-Myers Squibb’s 17% ownership. Some speculate that ImClone’s January announcement might have been a way to force Icahn’s hand.
Meanwhile, NYC biotech boosters have found there is truth to the public-relations adage that even bad news is good news. Maria Mitchell, CEO and president of AMDeC, a consortium of New York biomedical research centers, says she sees an advantage to having ImClone in Manhattan. “It’s a high profile company,” she says, “which makes it easier to attract smaller companies to the city.”
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