Saturday, June 03, 2023

I don’t think I have to tell the readers of this column who Martha Stewart is. She is a native of New Jersey, a graduate of Barnard who made her fortune as an expert on daily living and the home. She advises the public on food and cooking, household management, interior design, manners and day-to day-life. All of this advice is profitably distributed through appearances on television shows such as Oprah Winfrey, later on her own TV shows, and through various publications she developed. She later also developed a production empire that distributed items under her brand name.

So what does Martha Stewart have to do with cancer? She used as her broker a fellow by the name of Peter Bucanovic at Merrill Lynch who advised her to purchase a stock called ImClone. Imclone was a biotech company founded in 1984 with a brilliant scientist, Samuel Waksal, as its CEO. Waksal was the son of Holocaust survivors; he earned a PhD in immunology from Ohio State University before joining the faculty at Stanford. He worked at other prestigious institutions as well, but there were frequent questions about whether his data was valid.

Imclone had a variety of drugs in its portfolio under development, but its big acquisition was Erbitux (cetuximab). This was obtained in 2001. The drug was an antibody against epidermal growth factor receptors. i.e., it was the first EGFR inhibitor, and it seemed to have promise in the treatment of colorectal cancer. These agents are biological agents (antibodies) that are targeted against oncogenes. Antibodies tend to have fewer side effects than standard chemotherapy drugs and so, if they are efficacious, they are welcome additions to the antineoplastic armamentarium, and they can be combined with other standard chemotherapy drugs. Erbitux was so promising in animal studies and early human trials that Imclone shares reached a price of $70/share, and Bristol Myers Squibb signed a $2 billion deal for the rights to market the drug after it completed its clinical trials and received FDA approval. So far, everybody was happy.

However, in December of 2001, technical questions were raised by the FDA about the ongoing clinical trials of Erbitux, and ImClone’s application for FDA approval was temporarily put on hold. The public announcement of this was to be made after Christmas by Waksal on December 28, 2001. Naturally, it was anticipated that the price of the stock would plummet afterwards. Waksal alerted various friends and family members about the impending announcement. This included his own broker, Peter Bucanovic, who he asked to sell off some of his holdings in advance of the announcement, and Bucanovic alerted Martha Stewart. As a consequence, she also sold off about $230,000 worth of shares before the announcement, avoiding the loss of approximately $40,000.

Waksal was arrested in June of 2002 for insider trading and ultimately served seven years in prison for insider trading and paid $4 million in fines. Bizarrely, given how small the sums involved were, Martha Stewart was also arrested for insider trading and was convicted in 2004, serving five months in a federal prison.

It is ironic that the drug trials with Erbitux went on. They proved spectacularly successful. Erbitux was extremely potent in the treatment of metastatic colorectal cancer that was KRAS wild-type, a marker on the tumor tissue which is present in approximately 60% of patients. These trials reached fruition by 2008 and thus Erbitux was approved by the FDA for colorectal cancer in 2009, and all the stock prices did indeed skyrocket at that point in time. Erbitux subsequently proved efficacious for cancer of the head and neck as well.

I am not sure what lessons to draw from this episode. The story of ImClone, Erbitux and the insider trading is rife with scoundrels. Yet all paid their dues to society and all went on to second successful careers. Marth Stewart has more than rebuilt her product empire. Samuel Waksal, upon release from prison, formed a new company, Kadmon Pharmaceuticals, that ultimately resulted in a profitable IPO.

And lucky for all of us, EGFR inhibitors are indeed outstanding drugs that have been highly useful in the treatment of colorectal cancer as well as other malignancies, and now include other agents as well, such as panitumumab (Vectibix). However, I have little doubt that insider trading remains a problem in the biotech industry.

Alfred I. Neugut, MD, PhD, is a medical oncologist and cancer epidemiologist at Columbia University Irving Medical Center/New York Presbyterian and Mailman School of Public Health in New York. Email: [email protected]

This article is for educational purposes only and is not intended to be a substitute for professional medical advice, diagnosis, or treatment, and does not constitute medical or other professional advice. Always seek the advice of your qualified health provider with any questions you may have regarding a medical condition or treatment.

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