NEW YORK – ImClone Systems Inc. (search) founder and former chief executive Samuel Waksal (search) was sentenced to more than seven years in prison and fined $3 million on Tuesday for insider trading.
Waksal attempted to sell shares of the biotechnology company before it released bad news about its experimental cancer drug Erbitux (search) in late 2001, setting in motion a scandal that led to the indictment of Waksal's friend Martha Stewart (search), the domestic trendsetter, earlier this month.
Waksal worked as a researcher at Stanford University, Tufts College and Mount Sinai School of Medicine prior to founding ImClone.
Key dates:
1984 - Sam and brother Harlan g discovery company.
1993 - ImClone completes purchase of rights to molecule C225, which was discovered in the early 1980s by Dr. John Mendelsohn and his colleagues at the University of California San Diego. C225 would later be given the brand name Erbitux.
May 2000 - Sam Waksal presents case of Shannon Kellum at the American Society of Clinical Oncology. After other treatments failed, Kellum took Erbitux and had two large tumors the size of grapefruits reduced to the size of a pea and surgically removed.
Sept. 19, 2001 - Bristol-Myers Squibb Co. (BMY) agrees to pay ImClone up to $2 billion for a 20 percent stake in the company and for rights to sell cancer drug Erbitux in the U.S and Canada. The tender offer valued ImClone at $70 per share, a financial windfall for the two brothers who founded the small, New York biotech company.
Dec. 12, 2001 - ImClone and Bristol-Myers meet with FDA on Erbitux, their last meeting with regulators before receiving official news the FDA would not review Erbitux. According to prosecutors, Waksal became aware in early December that the FDA had concerns about the Erbitux application.
Dec. 26, 2001- Waksal received a tip from his brother Harlan, that the FDA would reject the Erbitux application, and then tried to sell 79,797 shares of ImClone, according to a government indictment. Waksal was unable to complete his own trade because two different brokerages would not execute the orders, the SEC said.
Dec. 27, 2001 - Family and close friends of Sam Waksal sell almost $3 million worth of stock, including Sam's daughter Aliza and home style guru Martha Stewart, a friend of Sam Waksal. The stock closes at $58.30. Aliza's share sales were not revealed until March 2002 and the rest were not revealed until early June.
Dec. 28, 2001 - ImClone announces that the U.S. Food and Drug Administration rejects the application for Erbitux, saying the trials did to satisfy requirements. The stock begins a precipitous decline taking it down to the high teens.
Jan. 25, 2002 - U.S. Securities and Exchange Commission and the U.S. Justice Department launch probe into ImClone and Waksal.
Feb. 14, 2002 - Waksal notifies the Securities and Exchange Commission for the first time of 50 trades he made in ImClone stock going back as far as 1992, transactions that should have been reported within months of their execution.
May 22, 2002 - Samuel Waksal resigns as CEO of ImClone. Samuel's brother Harlan Waksal takes over as CEO.
June 12, 2002 - Samuel Waksal is arrested on charges he illegally acted on inside information in attempting to sell ImClone shares, and tipped family members to do the same.
Aug. 7, 2002 - Samuel Waksal, already charged with insider trading, is indicted for obstruction of justice and bank fraud in a case that has rocked investors' confidence. Waksal is accused of pledging ImClone securities he no longer owned to secure a $44 million loan and forging the signature of ImClone's general counsel to fool the bank into believing he still owned the securities.
Aug 14, 2002 - ImClone sued Samuel Waksal, claiming Waksal ordered the destruction of documents that may be important in a government investigation into the company.
Oct. 15, 2002 - Waksal entered a partial guilty plea to insider trading and obstruction of justice charges.
March 3, 2003 - Already awaiting sentencing for insider trading, Waksal pleads guilty to charges of evading tax on $15 million of art. He allegedly sent the art to an ImClone manufacturing facility in New Jersey to avoid New York sales taxes and then had the paintings re-directed to his Soho apartment.
March 11,2003 - Waksal agreed to partially settle a U.S. SEC suit by agreeing to be barred from acting as an officer of any publicly traded company and paying back more than $800,000 in insider trading profits.
March 31, 2003 - ImClone discloses that Waksal failed to pay income tax on the exercise of certain stock options and that it will take a charge of $23.3 million to account for the omission.
April 9, 2003 - The company says securities regulators are investigating ImClone's failure to pay taxes on stock options exercised by Waksal and other officers and directors.
June 4, 2003 - Martha Stewart charged with obstruction of justice in connection with an investigation into the timing of her sale of ImClone stock.
June 10, 2003 - Samuel Waksal, the former head of Imclone Systems was sentenced to 87 months in prison and is ordered to pay $3 million in fines for tax evasion and insider trading.
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