Icahn Wins Control of ImClone Systems and Company’s Chief Leaves
Icahn Wins Control of ImClone Systems and Company’s Chief Leaves
Icahn Wins Control of ImClone Systems and Company’s Chief Leaves
Carl C. Icahn won control of the cancer drug developer ImClone Systems yesterday after an intense proxy battle. He vowed to recruit an experienced chief executive to run the company and to increase sales of Erbitux, the company’s only product.
Mr. Icahn, who owns 14 percent of ImClone and joined its board last month, was named chairman of the company, which is based in
The actions followed a board meeting Tuesday at which three other directors opposed by Mr. Icahn agreed not to stand for re-election at the company’s next annual meeting in next year’s first quarter. In exchange, Mr. Icahn dropped his effort to persuade shareholders to oust the directors.
An executive committee of three directors allied with Mr. Icahn will run the company until a new chief executive is chosen.
“This is the beginning of a new ImClone, one that will be defined by decisiveness, execution and accountability,” Alexander J. Denner, a board member who works for Mr. Icahn and who will lead the new executive committee, said in a conference call with analysts yesterday.
ImClone’s shares rose $1.56, or 5 percent, to close at $31. That is still well below its 52-week high of more than $43, in mid-May.
Other than saying his priority would be to find a new chief executive with ample biotechnology experience, Mr. Denner was vague on what else the company would do. He did say the board was not interested in selling ImClone.
Some analysts said there was probably little Mr. Icahn and his team could do in the short run, given that it takes years to develop and test new drugs.
Erbitux, which had
Vectibix, at $8,000 a month, is about 20 percent less expensive than Erbitux, can be given less frequently and, in the view of some analysts, is safer. ImClone is developing several other cancer drugs but they are in early stages of clinical trials.
“Unfortunately, I do think he’s inheriting a sinking ship,” Eric Schmidt, an analyst at Cowen & Company, said of Mr. Icahn. “In biotech, it is all about the drug. Neither Carl nor anyone else can go in the lab and improve ImClone’s prospects” in the short term.
Still, it appears Mr. Icahn and his team intend to persuade Bristol-Myers Squibb, which sells Erbitux in the
Bristol-Myers said in a statement: “We have made and continue to make significant investments in the commercialization and development of Erbitux.” It would not comment further.
Mr. Icahn has amassed a fortune estimated by Forbes magazine at $9.7 billion by taking positions in companies and agitating for change. He does not always succeed, however. Earlier this year he gave up an attempt to force Time Warner to split into four companies. And shares of Blockbuster, the video rental company, continued to decline after Mr. Icahn and his allies won seats on the board last year.
Mr. Icahn has little experience in biotechnology. Mr. Denner, however, said he himself has a doctorate in biomedical engineering and has managed some health-care-oriented investment funds.
The agreement of the three directors not to stand for re-election will remove the last of the board members remaining from before scandal rocked the company in 2002, with the exception of Bristol-Myers’s representative, Andrew G. Bodnar.
Samuel D. Waksal, ImClone’s co-founder and then chief executive, is now serving a seven-year prison sentence for insider trading and other crimes after he tipped family members to sell stock in December 2001 before the company announced a big regulatory setback. Mr. Waksal’s friend Martha Stewart also served a short sentence linked to her sales of ImClone shares.
Since Mr. Waksal left in 2002, ImClone has gone through a series of chief executives. Mr. Fischer, a consumer products executive who had been on ImClone’s board since 2003, became interim chief executive in January. He will get a $650,000 severance payment.
Mr. Icahn had criticized the board for not having recruited an experienced chief executive and for not doing clinical trials quickly enough aimed at expanding the uses of Erbitux beyond its initial approval for colorectal cancer. The drug has since been approved as a treatment for head and neck cancer.
In September, Mr. Icahn and three allies were elected to the board, but he failed in a bid to be elected chairman. The former chairman subsequently resigned and resistance to Mr. Icahn seemed to crumble.
The $174.6 million third-quarter sales for Erbitux that ImClone reported yesterday as part of its quarterly financial report, were up from $107 million in the comparable quarter a year earlier. But the drug’s sales barely increased from the second quarter of this year.
The company reported a profit for the quarter of $57.3 million, or 65 cents a share.
Mr. Icahn, despite knowing little about biotechnology, has long been an investor in ImClone because of his friendship with Mr. Waksal.
Mr. Icahn said in an interview yesterday that in the mid-1990’s, when ImClone needed money, he bought two million shares at $2 a share and sold after the price rose to around $130, before a split. He said he got out of the stock before the deal with Bristol-Myers was announced, and therefore before the crash that occurred after the scandal erupted.
He said that after the stock price plummeted he began buying more. Most of what he owns now, he said, was acquired when ImClone shares were selling below $20.
“I hope I get lucky with it again,” he said. But he added, “This time, to get lucky, there has to be some activism.”
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