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The biotech firm's stockholders--including 20% owner Bristol-Myers Squibb--have taken a pounding. ImClone shares had doubled in less than a year before hitting $75.45 on Dec. 6. Then they started to fall, and just a month after the FDA's setback for Erbitux on Dec. 28, the stock had tumbled to $20 on its way to Friday's closing price of $8.79--a collapse that has wiped out $4.6 billion of stockholder wealth. Waksal and his physician brother Harlan, 49--who co-founded ImClone and then took over as CEO when Sam resigned last month amid questions about his stock trading--had become multimillionaires from sales of ImClone stock in late 2001.
The ImClone affair deepens a sinkhole of investor distrust that has been weighing on the stock market for months. Of far greater significance to cancer sufferers is that the whole messy episode throws into doubt a drug many had hoped would be a magic bullet for colon cancer soon and other cancers later. ImClone and independent scientists say the drug still has promise (see box), but its consideration for approval has been set back many months, at best.
Among Waksal's celebrity friends, only Stewart has been shown to have sold stock just before the FDA's action against Erbitux. On the same day that Waksal's father and daughter sold their shares, Stewart unloaded all 3,928 of hers. She has acknowledged phoning Waksal that day, and investigators have his phone log, which includes the 1:43 p.m. entry, "Martha Stewart something is going on with ImClone and she wants to know what." The two appear never to have connected. "I did not speak to Dr. Samuel Waksal regarding my sale," Stewart said.
The denial hasn't spared her horrendous publicity. A planned Democratic Senatorial Campaign Committee fund raiser slated to be hosted by Stewart this week was abruptly canceled because of the ImClone scandal. The tabloid press has been flogging Stewart for her ties to Waksal--noting that her daughter Alexis dated him for a time. Stewart used a Merrill Lynch broker, the dashing Peter Bacanovic, 40, another society hobnobber who worked for ImClone from 1990 to 1992.
Stewart says her broker had standing instructions to sell ImClone if it dipped below $60 (she sold at $58), but she has yet to produce any evidence of a formal "stop-loss" order. Sources say there never was one; Stewart left oral instructions in mid-December with Bacanovic, whose office called for permission to sell when the stock dipped on Dec. 27. Federal investigators are now trying to determine whether Stewart gave the go-ahead before or after placing her call to Waksal. The House Energy and Commerce Committee has asked Stewart twice for copies of three basic documents--the stop-loss order, the executed sell (which should have the time on it) and her phone logs--and could soon resort to issuing a subpoena. "We simply cannot accept 'Take my word for it,'" says committee spokesman Ken Johnson.
Sam Waksal owns property in the fashionable Hamptons on Long Island. He plays tennis with Icahn and poker with Nelson Peltz, the onetime corporate raider and current CEO of Triarc. Waksal's Dec. 27 phone log testifies to his standing. Some entries:
"Tara from Talk Magazine must have the photos by Friday"
"11:05 Carl Icahn...He is traveling tonight to Florida"
"11:20 Patricia and Callie [sic] want to bring you lunch today"