WASHINGTON, Dec. 11 (UPI) -- A year ago, a previously little-known New York biotech company called ImClone Systems Inc. was flying high, its share topping $80 on the heels of a record-shattering, $2 billion deal with Bristol-Myers Squibb for a highly touted cancer drug expected to hit the market in 2002.
The drug, Erbitux, was called "the $2 billion molecule."
However, the breathless adoration ended on Dec. 28 after the Food and Drug Administration's decision not to accept the company's application for market approval of Erbitux lead to a precipitous drop in the company's stock. It was subsequently reported that various family members and and at least one friend of then-company President Sam Waksal dumped millions of dollars in stock the day prior to the rejection.
The Waksal friend who was implicated in the insider trading scandal is American homemaking icon Martha Stewart, who sold 4,000 shares of ImClone for about $230,000 just before the rejection announcement.
On the brink of 2003, Erbitux remains mired in the FDA's clinical trial landscape.
ImClone's leader, the charismatic Waksal, has pleaded guilty to federal charges of insider trading, obstruction of justice and securities fraud, which will most likely result in a prison sentence. And late-night comedians continue to manufacture new jokes on the question of homemaking-maven Stewart's participation in the too-early-for-comfort ImClone stock dumping.
The ImClone debacle features the requisite characters of an American corporate scandal: a blockbuster product that promises to drastically change the way Americans do something; a band of corporate evildoers who sell stock on insider information and tip off their celebrity investment cronies; and wide-eyed and slack-jawed investors left holding almost-worthless stock.
However, this story has a key centerpiece -- one that doesn't always make the headlines -- cancer, a disease that continues to elude and evade researchers, and debilitates and kills patients in sinister and crafty ways.
According to the American Cancer Society, more than 500,000 Americans die of cancer each year -- almost 1,500 per day. In 2000, cancer cost the United States close to $200 billion in treatment.
After a year of media attention on corporate wrongdoing and insider trading, what happened to the drug that was purported to revolutionize cancer treatment? Could Erbitux still turn out to be all that its pushers promised? Will the reverberations of corporate scandal cripple or halt this kind of risky yet critical biotech financing and research?
Erbitux is a form of molecular cancer treatment that targets specific cancer growth factors using monoclonal antibodies, which bind to the surface of a cancer cell, and interfere with its ability to grow.
While several monoclonal antibody cancer treatments already have been approved, including Herceptin, which targets breast cancer, and Rituxan, which targets non-Hodgkin's lymphoma, ImClone's Erbitux targets a specific growth factor that is involved in the growth of a number of different cancers. The idea behind Erbitux is to springboard off an initial narrow indication -- in this case colon cancer -- into treating a wide variety of cancers.
Monoclonal antibodies -- including Erbitux -- continue to be considered as a breakthrough industry in cancer treatment.
According to Dr. Harmon Eyre of the American Cancer Society, "there's no question about the fact they've opened a new era."
Eyre explained that science is only beginning to understand the implications of monoclonal antibody therapy in cancer treatment. "There are thousands of different types of cancers - then subtypes and different characteristics beyond that," said Eyre.
Despite cancer's daunting variety, Eyre said there are only dozens of pathways through which cancer cell activity develops. Monoclonal antibodies target these pathways, but science will learn about safety and efficacy as they combine products and move down the different pathways, but "very clearly, they are part of the future," said Eyre.
ImClone spokespeople share the same enthusiasm, albeit tempered from their earlier unbridled eagerness. According to a company statement the company continues "to work with the FDA in designing and implementing the Erbitux clinical and regulatory programs. The Companies continue to believe that Erbitux is a promising investigational drug for the treatment of cancers that express the epidermal growth factor receptor."
At least four clinical trials for Erbitux are in Phase II or III, and, according to industry analysts, most of ImClone's clinical trial team remains, despite the tarnished corporate image and the decline in stock value.
In fact, according company spokespeople, ImClone's 2002 employee turnover rate was 9.25 percent, considerably lower than the 18.2 percent industry average, and the company has 72 more employees than it had this time last year. For many, this is a display of corporate determination, and speaks well for its future.
Jason Zhang, Ph.D., an analyst for Stephens Inc., follows ImClone and the progress of Erbitux.
For certain kinds of cancer, Zhang still believes "the drug is effective, but the clinical trial data is probably not going to be enough for an approval until possibly 2005."
Zhang does not believe that ImClone's corporate problems have had a negative impact on the drug itself. The fact that "the management took advantage of a drug" should not dampen the promise of monoclonal antibody technology.
However, his company rates ImClone as "underweight," a recommendation similar to "sell." This rating is based on ImClone as a whole, and not just one promising therapy.
According to Zhang, the outstanding Securities and Exchange Commission and Department of Justice investigations need to be resolved before the rating can be changed. This rating has little to do with Erbitux alone, as "the drug has a lot of promise, but there is a difference between the drug and the whole company, and we must evaluate it totally," said Zhang.
In contrast to Zhang's company, half of the analysts contributing information regarding ImClone on the Nasdaq Web site gave the company a "buy" or "strong buy" recommendation, even through the company's financial data continue to reflect its corporate turbulence.
But the rash of corporate scandals such as ImClone's, coupled with the decimation of the capital markets post-Sept. 11, 2001, may make securing critical financial investment for small biotech companies difficult, especially when viewed in the illuminating hindsight of the ImClone-Bristol-Myers deal.
However, stocks and capital investment in biotechnology is up, and 3rd quarter financing is only a couple million off from 2001.
The success of Erbitux and other ground-breaking new medical treatments seems to be inextricably tied to the behavior of corporate executives and the health of their companies. As a result, the health of Americans, in this case those suffering from cancer, is not only in the hands of scientists - but of corporate executives as well.
So, while Waksal may look forward only to prison in 2003, and Stewart may be creating fashion tips for prison stripes -- biotechnology company executives dance harder and faster for the money that will keep their laboratories up and running, and scientists continue to try to make it work.
Cancer patients across the country await the news that the FDA has approved a new treatment the may help save their life -- and another year begins for both the science and business of biotechnology.
(Long is a Washington-based free-lance science, business and feature writer. Send comments to [email protected].)
