Plea negotiations between prosecutors and lawyers for Samuel Waksal in the ImClone Systems Inc., insider-trading case are accelerating, Monday’s Wall Street Journal reported.
Meanwhile, in the wake of revelations about Dr. Waksal’s past employment history, a spokesman for Bristol-Myers Squibb Co., which acquired co- marketing rights to ImClone’s cancer drug a year ago in a $2 billion deal, said it intends to focus its attention on trying to bring the drug to market.
Negotiations between prosecutors and Dr. Waksal’s lawyers had resumed recently after Dr. Waksal, the former chief executive officer of ImClone, concluded that cooperating gives him the best chance of winning less jail time for himself and shielding his father and daughter from being pursued in court.
The 55-year-old Dr. Waksal has been indicted on charges of securities fraud for allegedly tipping off his father and daughter to sell ImClone shares and trying to sell his own stock before the Food and Drug Administration turned away his company’s cancer-drug application in December. His father and daughter who sold about $10 million in stock in the days before the FDA decision haven’t been charged, but prosecutors have threatened to charge them as well, people close to the situation have said. Dr. Waksal is also charged with bank fraud, perjury and obstruction of justice. All have denied any wrongdoing.
It is unclear whether revelations in Friday’s Wall Street Journal detailing problems with Dr. Waksal’s work at four research institutions where he worked before founding ImClone in 1985, might affect his plea talks. He was asked to leave Stanford University, the National Cancer Institute of the National Institutes of Health, Tufts University School of Medicine and Mount Sinai School of Medicine for what supervisors and others say was misleading, and in one case, falsified research.
But John Coffee, an expert in securities law at Columbia University, said the new revelations likely wouldn’t affect the case. Prosecutors “want to keep this very simple and say this is just about securities fraud,” he said.
A spokesman for Dr. Waksal declined to comment.
Dr. Waksal is also a close friend of decorating diva Martha Stewart, who is under criminal investigation for her own sale of nearly 4,000 shares of ImClone stock shortly before the FDA decision was announced. Prosecutors want to know what, if anything, Dr. Waksal may know about Ms. Stewart’s sale, and the issue could influence how inclined the government is to grant him a plea deal.
Bristol-Myers declined to comment on Dr. Waksal’s past. The company wouldn’t say whether it knew about those matters when it signed the deal with ImClone. But according to people familiar with the situation, Bristol-Myers’s due diligence hadn’t turned up the questions in Dr. Waksal’s employment history, and the directors weren’t aware of the controversies at the institutions where he had worked before founding ImClone when they signed off on the deal. The board probably wouldn’t have gone forward with the investment had they known of the problems, one of these people said.