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Taken to task

THE US government is considering charging Imclone Drugs Inc, a biotechnology firm for deluding investors about the status of their cancer drug, Erbitux. Company officials revealed that they have received a 'wells notice' from the Securities and Exchange Commission. This notice is issued when the staff of the panel is close to bringing charges on a company or a person and gives them time to respond before any action is taken.

Imclone's troubles started in December 2001 when the Federal Food and Drug Administration (FDA) withheld the approval of Erbitux - the company's drug against colon cancer - because of shortcomings in its clinical trials. In a late-stage trial of 120 head and neck cancer patients treated with Cisplatin, a chemotherapy drug, half were also given Erbitux, and half were given a placebo. Those given Erbitux did not show any significant improvement over those given the placebo. Investigators said that while the drug did show some promise, the numbers are too small to draw definitive conclusions.

The charges, the securities panel is contemplating against Imclone, involve fraud and cover of the period after the company received the rejection letter in December. A dozen shareholder lawsuits have been filed against Imclone, contending that it misled investors about the Erbitux drug.

The notice by the securities panel came in the wake of the recent arrest of Samuel Waksal, Imclone's former chief executive, on charges of insider trading. It was revealed that several friends and relatives of Samuel Waksal had sold their shares in the firm just before FDA's decision was published. The information that the commission unearths could be helpful in filing a lawsuit against the company, Lewis Lowenfels, a New York based expert on securities law is reported to have said.

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