NEW YORK (Reuters) - Sam Waksal, the former chief executive of ImClone Systems Inc, whose insider trading scam sent him and Martha Stewart to prison, on Monday announced an acquisition meant to catapult him back into the biotech game.
Waksal said his drug company Kadmon Pharmaceuticals has bought the privately held Three Rivers Pharmaceuticals, and that its treatments for hepatitis C, infections and cancer will be the backbone of his new enterprise.
“Hepatitis treatment is on the verge of major change,” Waksal said in a release. “With Three Rivers as a cornerstone, Kadmon will play an important role in the evolution of this global market.”
Kadmon did not provide financial details, although the Wall Street Journal valued the deal at more than $100 million. Waksal said Kadmon will keep Three Rivers’ headquarters in Warrendale, Pennsylvania, and its manufacturing, distribution, commercial and administrative operations.
Waksal was convicted in 2002 of securities fraud, bank fraud, obstruction of justice and perjury. After paying $4.3 million in fines and serving five years in prison, he was released in February 2009.
The U.S. Securities and Exchange Commission barred Waksal from serving as a director or officer of any public company.
Three Rivers sells hepatitis C drugs, including the Infergen brand of interferon and its Ribasphere and RibaPak brands of the anti-viral drug ribavirin. But the products have tiny sales compared to leading interferons and ribavirins sold by drugmakers Merck & Co and Roche Holding AG for liver disease.
Three Rivers also sells Amphotec for treatment of invasive aspergillosis, a dangerous systemic fungal infection, and a generic form of AstraZeneca Plc’s breast cancer treatment Arimidex (anastrozole). And it is developing new cancer medicines.
Neither Waksal nor Three Rivers could be immediately reached for comment.
Kadmon, whose lead investor is SBI Holdings Inc of Japan, said the Three Rivers purchase was financed through debt and equity capital.
Waksal, an immunologist, founded New York-based ImClone in 1984 and spearheaded development of its Erbitux drug for colon cancer. But when the U.S. Food and Drug Administration initially rejected the drug, Waksal tipped off relatives and friends to sell their ImClone shares before the rejection was made public.
Regulators became suspicious when his father and daughter sold $9.2 million of ImClone shares, and eventually arrested Waksal for attempting to dump his own shares and tipping off the others.
His close friend, Stewart, sold almost 4,000 shares just days before the FDA’s rejection of Erbitux and served five months in prison for her role in the case.
Time Magazine has named Waksal one of the “Top 10 Crooked CEOs” in history, with a ranking of No. 7. Ponzi scheme Bernard Madoff heads the list.
Erbitux was approved in 2004 after ImClone provided the FDA persuasive new clinical data.
Eli Lilly bought ImClone for $6.5 billion in 2008 and generated third-quarter revenue of $95 million from Erbitux, which is also approved to treat head and neck cancer.
Reporting by Ransdell Pierson. Editing by Robert MacMillan
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