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ImClone's insider trading scandal has drawn more attention than its promising cancer treatment has.
By WES ALLISON and KRIS HUNDLEY
© St. Petersburg Times, published July 30, 2002
A year ago, Theresa Ouellette was so sick and weak she couldn't shower without the aid of oxygen. She had broken all her ribs from coughing. She couldn't eat. With a golfball-size tumor near her windpipe and cancer spreading to her ribs and neck, friends figured she would be dead by Christmas.
But now Ouellette, of Clermont, who had been diagnosed with late-stage lung cancer, is back at work full time. Most of her cancer has disappeared, and she feels like her old self.
"What I did every morning is just pray I'd make it to the night," said Ouellette, 54. "I just can't even believe I'm like I am now. I thought it would be like that for the rest of my life -- all day, waiting for the night, and at night, waiting for the day."
The source of her salvation? Erbitux, an experimental cancer drug developed by ImClone Systems. That's the young biotechnology firm upended by a recent insider trading scandal that resulted in the arrest of its former chief executive and allegations of wrongdoing against style arbiter Martha Stewart.
Getting far less media attention is the drug at the heart of the company's troubles. ImClone's mishandling of early clinical trials for Erbitux led the FDA to reject the drug and sent the company's stock plunging.
Erbitux still appears to offer promise. But analysts say the scandal has caused a major setback on its path to market. It remains at least two years away from FDA approval, frustrating doctors and their dying patients.
Although most acknowledge more study is needed, they say there are people alive today, including Ouellette, who likely would be dead without the drug.
"Most people in the community are very encouraged by the drug, and we just have to get the numbers and do the trials," said Dr. Jennifer Tseng, an oncologist and Erbitux researcher at M.D. Anderson Cancer Institute in Orlando.
"In my mind, I feel that there definitely are patients for whom it helps. It has an excellent and sound biological basis."
In May, at the annual meeting of the American Society of Clinical Oncology in Orlando, researchers from New York, Texas and Connecticut presented at least nine small to medium studies that illustrated the drug's safety and efficacy for patients with incurable lung, colorectal and head and neck cancers.
Not all patients respond to the drug, but some respond remarkably well. Three large studies are under way or in the final design stages, including one on colorectal cancer that will be conducted under the auspices of the National Cancer Institute. The NCI's study is expected to have more than 1,000 participants.
Another Erbitux trial, with 250 patients, is ongoing at Dana-Farber Cancer Institute at Harvard University, Memorial Sloan-Kettering in New York and other institutions. Smaller trials for lung cancer and an incurable form of head and neck cancer also are taking place.
Researchers hope these trials will finally prove -- or disprove -- Erbitux's usefulness and get the regulatory process back on track.
"I think the hostage in all this is the cancer patient, who reads repeatedly about a promising treatment and all of the legal and congressional and Martha Stewart-like discussions, and yet has no access to it themselves," said Dr. Robert J. Mayer, chief of gastrointestinal oncology at Dana-Farber in Boston. "This is certainly not what I as a clinician or my colleagues would like to see happen."
ImClone's troubles began in late December, when the U.S. Food and Drug Administration rejected the company's request to approve Erbitux for sale and ordered more testing. The FDA won't discuss the case and ImClone isn't talking.
But researchers who have worked with the drug, including Mayer, said the company's original trials had been poorly designed and loosely controlled.
For instance, colorectal cancer patients in one of ImClone's centerpiece studies all received chemotherapy before trying Erbitux, but not necessarily the same amount or duration of chemotherapy.
InClone's studies also lacked an independent review process, and it was no wonder the FDA failed to ratify them, Mayer and others said.
Analysts say ImClone's former chairman, Sam Waksal, had unabashedly promoted the drug as a $2-billion blockbuster but ultimately couldn't produce the data to back it up.
"ImClone was so good at selling people, it sold Bristol-Myers on the drug," said Michael Krensavage, an analyst with Raymond James & Associates. He was referring to the big drug company that owns a 20 percent stake in ImClone. "Bristol never would have paid so much if it had done due diligence. But it was desperate for product."
In September, when ImClone shares were flying high, Bristol-Myers Squibb Co. agreed to spend about $1-billion buying 14.4-million shares at $70 per share. It also said it would give ImClone up to $1-billion more for marketing rights to Erbitux.
Coupled with several promising studies engineered by the company, Waksal's pitchmanship helped drive ImClone's stock to more than $75 a share in early December.
Days before news of the FDA's rejection was made public, however, Waksal allegedly tipped off one of his daughters and his father about the bad news, prompting them to sell more than $10-million of ImClone stock, the Securities and Exchange Commission said.
The SEC said Waksal tried to sell $4.9-million worth of his own shares, but brokers refused to do it, citing regulations restricting the sale of stock by corporate insiders. Also selling her ImClone shares immediately before the bad news broke was Martha Stewart, a close friend of Waksal's. She made $227,824 on the sale.
When the news became public after the Dec. 28 close of market, ImClone stock plummeted. It is now trading at less than $8 a share.
As ImClone's shares dropped, so did the value of Bristol-Myers' investment. The company has written off $875-million in connection with the deal and in early March revised the terms of its agreement with ImClone. In addition to the $1-billion stock purchase, Bristol-Myers has so far given ImClone $340-million in cash. In return, it took over supervision of clinical trials for Erbitux and gets 61 percent of Erbitux's revenues if it ever gets to market.
But just as ImClone is imploding, Bristol-Myers has more serious problems than embarrassment over a bad deal. On July 11, the company said the SEC is investigating whether the company inflated its revenues last year by $1-billion by giving inappropriate incentives to wholesalers. Bristol-Myers denies any wrongdoing.
Analysts think Bristol-Myers' current troubles won't affect its ability to take the lead on supervising the Erbitux trials. Todd Lebor, analyst with Morningstar Inc., said, "ImClone inhaled more than a billion in cash from Bristol, so Bristol will end up carrying the ball and having full decisionmaking power. They're writing the checks."
Brian Rye, an analyst with Raymond James, said Bristol-Myers has given ImClone enough cash for two years of study.
"ImClone's balance sheet is in fairly good condition, but certainly everything rests on the shoulders of Erbitux," he said. "If it isn't approved, there's not a lot else the company can fall back on."
If Erbitux ever makes it to market, which analysts estimate could happen by 2004 at the earliest, it's likely to be pricey for the patient. That's why financial analysts and investors are watching its progress with such interest.
"Erbitux would probably cost $25,000 to $30,000 per year per patient," said Rye, who based his estimate on the cost of similar cancer-fighting drugs already on the market. "It could be a blockbuster. But a lot of other companies are trying to target the same kind of molecule ImClone is."
Erbitux is one of three drugs, including AstraZeneca's Iressa and Genentech's Tarceva, now in late stages of testing. All three appear to control solid tumor cancers by targeting a single type of molecule on the cancer cells. Normally, this molecule, called an epidermal growth factor receptor, sends signals to the cancer cell telling it to divide and reproduce.
These new drugs imitate another molecule needed to complete the chain reaction, short-circuiting the process.
Researchers are trying to determine why some cancers respond to it and others do not, as well as determine whether Erbitux works best with traditional chemotherapy or if it can be effective alone. Unlike chemotherapy, which kills many noncancer cells as well as cancer cells, Erbitux and the other molecular targeted therapies have few side effects.
"All this (insider trading) stuff is sort of overshadowing all the scientific aspects of this drug," said Dr. William J. Gradishar, head of the breast cancer program at Northwestern University, who reviewed Erbitux studies presented at the American Society of Clinical Oncology's annual meeting.
"I don't think, despite all the peripheral stuff going on, anyone doubts it has activity in cancer. It may not be the miracle drug . . . but it's good."
Mayer of the Dana-Farber Cancer Institute said a patient of his who had end-stage colorectal cancer has been on Erbitux for 13 months, "and she shouldn't really be with us at this point." Others are doing much better as well.
"What's clear is that the drug is active, that the drug does provide benefit," he said. "I think all of my colleagues who have used it have patients . . . who have experienced remarkable benefit from it."
At its best, Erbitux and others in its class will never help everyone with colorectal or lung cancer. But helping a fraction of them would mean huge progress: Both cancers are nearly impossible to cure. They also are among the most common cancers; according to the American Cancer Society, an estimated 148,300 people will be diagnosed with colorectal cancer this year, and 56,600 will die.
New lung cancer cases are expected to number 169,400 this year, with 154,900 deaths -- nearly a third of all cancer deaths. The five-year survival rate for lung cancer is just 14 percent.
Ouellette is typical: Last summer, she had a nagging cough, and a doctor diagnosed her with bronchitis, then pneumonia. She didn't get better, and eventually her doctor ordered an X-ray. It showed a shadow on her upper right lung, near the Y where the windpipe splits. She went to Tseng at M.D. Anderson, who told her the cancer already was advanced.
"I just sat there and I remember saying, when she told me it was stage 4, "Does this mean I'm going to die?' " Ouellette recalled. Tseng told her it was not curable, but might be controllable.
However, traditional chemotherapy made little headway against her cancer and surgery was not an option. In October, she became first of 32 people nationally enrolled in a trial pitting Erbitux against the most common kind of lung cancer, called nonsmall-cell lung cancer.
At the time, she had a 2.5-inch tumor in her right lung, next to her windpipe. It had spread to two spots in her neck, and she had lesions on her ribs and vertebrae. A second, smaller tumor in her right lung was hidden by fluid.
Within a week of taking Erbitux, her breathing had vastly improved. And at every CT scan since, the tumor and lesions have shrunk.
Today, only a smidgen of the second tumor remains. Last month, she returned to working four 10-hour days each week in her job at customer communications at Disney in Orlando. On Fridays, she goes to M.D. Anderson for intravenous injections of Erbitux, which she will be on indefinitely.
"I sent back the (oxygen) machine, I sent back the tanks," she said. "I never thought I'd go back to work."
-- Wes Allison can be reached at allison@sptimes.com or (727) 893-8430. Kris Hundley can be reached at hundley@sptimes.com or (727) 892-2996.