Banned ImClone founder plans IPO for new venture
Sam Waksal is ready for Act II.
The details of the scientist-turned-CEO’s first act are well known: founding ImClone, the maker of the cancer drug Erbitux, then insider trading charges and a five-year prison term—a scandal that also brought jail time for his friend Martha Stewart.
Waksal emerged from prison in 2009, the year after ImClone was sold to Eli Lilly for $6.5 billion. He’s since raised $500 million in debt and equity and founded a new drug company, Kadmon, a closely held firm he’s led as chairman and CEO.
As part of his sentence, Waksal was barred permanently by the Securities and Exchange Commission from serving as an officer or director of any public company.
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Now, Kadmon has plans to go public. The company aims to file a form S-1 with the SEC by the end of this year and will move forward with an initial public offering, Waksal said in an interview.
The SEC ban is still in place. Waksal’s brother, Harlan, will join the company as president and CEO, while Sam said his title will be chief of innovation, science and strategy. He said he’ll also be chairman.
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Waksal declined to comment further, including on whether the bar on his serving as a director of a publicly traded company still holds.
Waksal founded Kadmon in 2010. The company, which is based in the same building along the East River in Manhattan as ImClone, sells drugs for hepatitis C and is in development for treatments for cancer and infectious and autoimmune diseases. Its most advanced experimental program is a drug called KD019, with planned late-stage trials in non-small cell lung cancer, according to its website.
Harlan Waksal has been out of the limelight in recent years. The brothers founded ImClone in 1984, and Harlan was chief operating officer and then CEO before leaving the company in 2003, just before Erbitux was approved. He runs a consulting business and is chairman of Sevion Therapeutics, a small firm formerly known as Senesco Technologies. He wasn’t immediately available for comment.
The troubles at ImClone came in late 2001, when the Food and Drug Administration rejected the company’s application for approval of Erbitux. Waksal’s insider trading charges stemmed from trying to sell stock and communicating with family members in the days before the FDA news, according to the SEC. On the drug’s rejection, ImClone’s stock sank 16 percent.
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Stewart also sold ImClone shares, based on information illegally gleaned from her broker, Peter Bacanovic, according to the SEC. She served five months in federal prison and time on house arrest.
Kadmon’s potential IPO would follow a record string in the biotechnology industry, which has been enjoying a market not seen since 2000. The Nasdaq Biotechnology Index gained 31 percent in the last year, compared with 17 percent for the Standard & Poor’s 500.