SABITA BARAL
Case 6: Samuel Waksal and ImClone (Reflection paper)
ImClone is a biopharmaceutical company, which is devoted to develop biologic medicines in the area of oncology (forbes.com). During November 2001, ImClone focused on developing Erbitux. Erbitux is intended to make cancer treatment more effective by “targeting a protein called epidermal growth factor receptor (EGFR), which exists on the surface of cancer cells. Samuel Waksal, ImClone’s cofounder and chief executive officer at the time, was directly involved in coordinating and publicizing Imclone’s efforts to develop Erbitux and to obtain FDA approval for it. On June 28, 2001 ImClone began the process of submitting a rolling application called Biologics License Application (BLA) seeking FDA approval for Erbitux. On December 2001, FDA issue a RFT(Refusal to File) letter for Erbitux. After Waksal heard about FDA’s decision, he attempted to sell 79,799 shares of ImClone stock that were held in his brokerage account with Merrill Lynch. Later on, he called his father, Jack Waksal, informing him of the impending RTF. The next morning, Jack Waksal placed an order to sell 110,000 shares of ImClone stock. Samuel Waksal also called his daughter on the morning of December 27, before the stock market open to tell her to sell all the stock of ImClone. On December 28, 2001 he purchased 210 put option contracts and he sold them right after that and earned profits. Waksal failed to file a statement disclosing a change of ownership of his securities. He violate securities laws and illegally tipped his father about the FDA decision. On may 21. 2002, Waksal resigned as ImClone CEO. On June 12, 2002 he was arrested for securities fraud and perjury. Waksal pled guilty to all of his counts in the indictment. On February 12, 2004 FDA finally approve Erbitux under the leadership of Daniel Lynch.
References
Weiss, J. W. (2006). Business Ethics: A stakeholder and issues management approach (5th ed). OH: Thomson.
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