The National Press Club, Washington D.C., for the American Society of Business Publication Editors.
March 3, 2004
Good Afternoon, my name is Alex Prud’homme. I am a freelance writer based in New York City.
A little over a month ago — on the day that Martha Stewart went on trial for obstruction of justice and securities fraud — HarperCollins published my book, THE CELL GAME: Sam Waksals Fast Money and False Promises – and the Fate of ImClone’s Cancer Drug, about the case. The book is an investigation into the dramatic rise and fall of ImClone, the New York City biotech firm run by Sam Waksal, and the many people and institutions that were affected by the scandal.
I got involved in this story innocently enough, but soon found it turning into one of the oddest, most challenging and interesting pieces I’ve ever written. Today I will explain a bit about what it was like to have a front row seat at the glorious rise and terrible fall of ImClone Systems, Inc.
I first met Sam Waksal at 10:00 o’clock on the morning of October 5, 2001, when I arrived at the ImClone’s office on Varick Street, in SoHo, to interview him for a profile I was writing for Talk magazine.
At the time, Sam was on top of the world – two weeks earlier, he had signed what he called, with typical enthusiasm, “the biggest deal in biotech history” – a $2 billion deal with pharmaceutical giant Bristol-Myers Squibb for ImClone’s promising cancer drug, Erbitux.
The profile had been suggested by Tina Brown, Talk’s editor, who knew that I was interested in biotech and that Sam was a very unusual biotech entrepreneur — not only a brilliant scientist and charismatic salesman, but a man-about-town who collected art and beautiful women, was good friends with top financiers like Carl Icahn and Pete Peterson, and socialized with Martha Stewart, whose daughter Alexis Sam had dated. All of this, and he claimed to have a “breakthrough” drug that would “change oncology as we know it.” In other words, he would make a perfect profile for Talk.
Tina, who knew Sam and occasionally lunched with him at the Four Seasons, told me to “pick Sam’s brains about hot science stories ... He’s got a really quick, febrile mind, and he’ll put you onto all sorts of stuff.”
Well, as things turned out, she was right about that – just not in the way that any of us expected.
Sam Waksal is a reed-thin, medium height, olive-skinned man with thinning dark hair, roaming Almond-shaped eyes, and a tricky grin. He co-founded ImClone in 1984 with his younger brother, Harlan – who looks like a chunkier version of Sam – in their apartment on Manhattan’s Upper West Side. Their goal, Harlan said, was to conquer “big” diseases like AIDS and cancer, make a fortune, and retire early.
By the time I met Sam in 2001, after years of failure and near-bankruptcy, ImClone had finally gotten what every biotech company in the world wanted: Erbitux, a new kind of cancer drug with seemingly magical powers that would not only help thousands of dying patients, but would also make its sponsors rich and famous.
“Erbitux is going to be huge, one of the biggest drugs in the history of oncology — a drug that is going to alter the way cancer therapy is done from now on,” Sam told me many times. And then he’d smile and add: “This drug will be a billion-dollar-a-year product.”
This was a very seductive message, coming from a very persuasive man, and many bright and substantial people bought into it. Some of the nation’s leading financiers and oncologists joined the ImClone board – people like Pete Peterson (a former chairman of the Federal Reserve and Nixon’s Secretary of Commerce), Robert Goldhammer (former vice-chairman of Kidder Peabody), Dr. John Mendelsohn (the father of Erbitux and head of MD Anderson Cancer Center in Houston, Texas), and Dr. Vincent DeVita (the former head of the National Cancer Institute). 26 leading hospitals around the nation, led by Dr. Leonard Saltz (a highly-regarded young oncologist at Memorial Sloan Kettering), had participated in the drug’s clinical trial. Martha Stewart was one of Waksal’s first investors. It was an all-star lineup, a cast that seemed too good to be true.
Sam was effervescent. He told me about his parents’ terrible Holocaust experiences. Showed me his collection of signed baseballs. Dropped the names of “good friends” like President Clinton, Mick Jagger, Kofi Annan, Antonin Scalia, and Marielle Hemmingway. He said he ran the New York office of the National Endowment for the Humanities, and was about to become president of the New York Biotech Association. Finally, he invited me to join him and “a really interesting group of thinkers” to drink wine and have a stimulating discussion at the next of the literary salons he held in his art-filled, duplex loft in SoHo.
As I left ImClone’s offices that day, I remember thinking that I had never met anyone quite like Sam Waksal. He was smart, funny, irreverent, and maybe a little odd — but in a lively, polymath kind of way. He was the kind of extra-ordinary person you meet in New York once in awhile, the kind that make the hassle of the city worth it. In his office that day, it felt as if he had opened a door into an exclusive club, and, with an arm around my shoulder, had invited me inside. I had no reason to question anything he said.
But a couple of days after that meeting, I noticed some discrepancies in his story. He liked to call himself “Dr. Waksal,” and gave the impression he had a medical degree, when in fact he had a PhD in Immunology. Reading through his dissertation (which he gave me) I noticed that it listed a different birthdate — September 8, 1947 — than the one listed on his ImClone C.V., which said he’d been born on September, 8, 1949. A company spokesman said the two-year difference was “probably a typo,” and I laughed-off the discrepancy. It was no big deal, after all, and many people lie about their age.
Then I learned that he had been raised in Dayton, Ohio, not Toledo, as he had claimed. It was another minor shading of the truth, but now my reporter’s antennae went up: if he had lied about his birth-date and his hometown, facts that are easy to check, then what about the more complicated subjects of science, finance and the law in which he was involved?
I began to call the people and institutions listed on Sam’s resume.
The first person I reached was Dr. Len Herzenberg, in whose Stanford University lab Sam had worked as a Research Associate in 1974.
“Sam Waksal? A brilliant man, but he’s not trustworthy,” Len said.
His wife, Lee Herzenberg, joined the conversation, and for the next 45-minutes they regaled me with story after story of the dark side of Waksal – how he had lied to them, how his experiments never seemed to pan out, how a test-tube of mysterious and exclusive antibodies that only he had was suddenly spilled and ruined.
“Sam is very charming,” Lee declared, “and he’s a psychopathic liar.”
As I worked my way through Sam’s resume, I spoke to people who had known him ten, twenty, thirty years ago. They put me onto other people. Everyone had a story about Sam Waksal — some good and some bad. Several people laughed outright when I called to ask about him.
“Sam Waksal! I haven’t talked to him in thirty years, but I still think about him all the time,” said one source. “He’s not the kind you easily forget.”
Today, I have interviewed more people involved with ImClone than any other journalist. And what I have learned is that Sam’s vigorous self-promotion frequently skirted, and sometimes crossed, the boundary separating fact from fiction. The pattern I saw over and over again, in all aspects of his life, was that he’d start a new endeavor with great hope and expectation; everything would go swimmingly, at first, until something went wrong — he would break a promise or would be caught in a dumb lie; and it would inevitably end badly, sometimes awfully, usually in an acrimonious lawsuit.
I learned that he had been kicked out of four prestigious labs, including the Herzenbergs. I learned that he had an enormous list of lawsuits trailing him – from former friends, business partners, even charity organizations. I learned that he had broken hearts across the country. The difference between his shining public persona and this dark private Sam was bizarre.
I mentioned my findings to Tina Brown, who encouraged me to keep following the story.
Then, in late December 2001, the FDA did something it hardly ever does – it rejected the application for ImClone’s “breakthrough” cancer drug, Erbitux. This set off a chain reaction of events that ultimately landed Sam in jail for insider trading, and his friend Martha Stewart and their mutual stockbroker, Peter Bacanovic, in court.
In early January, 2002 – right after the FDA’s decision – I interviewed Sam in his office. At this point, the reasons for the FDA’s decision were not yet public. But I knew enough about Sam to be suspicious.
When I asked him about some of the less complementary things I’d heard, Sam swatted away questions about the FDA, the many lawsuits against him, and his unhappy career in academia as if they were just minor annoyances. But when I asked about his brother Harlan’s cocaine bust – Harlan had been found with 2 kilos of coke stashed in his underwear in a Florida airport while he was a medical resident, but was eventually let off on a technicality — Sam turned bright red and angry. When I asked if Sam had impersonated Harlan and done his medical rounds at the Tufts Medical Center, he grew cold and withdrawn, and hinted that he could have my story killed. When I asked about the future of Erbitux, he suddenly brightened again.
This was the last official interview he gave before being sentenced to prison. In retrospect, it’s hard to believe he kept the appointment with me that day. But I’m glad he did.
Two weeks later, after the bad news had landed on the front page of every leading newspaper, and his handlers had shut him down, Waksal called me late one night, on his cell phone, from a parking garage. He ranted and raved for 45 minutes, about how great Erbitux (and he) was and how people (like me) were out to do a “hatchet-job” on him. I kept feeding him questions, and made sure my tape deck was running.
I was in the midst of “closing” my article with editors and fact-checkers a few days after that phone call when two things happened: the FDA’s rejection letter was leaked to The Cancer Letter, an industry trade paper, which set the ImClone crisis in motion, and Talk magazine suddenly folded.
Luckily for me, Graydon Carter, the editor of Vanity Fair picked up my orphaned story and told me to keep reporting. The resulting article, “Investigating ImClone,” ran in the June 2002 issue of that magazine. Vanity Fair arrived on newsstands in late May, just before Martha Stewart’s name was linked to insider-trading charges, and just before the first of two Congressional hearings into the ImClone scandal opened.
By mid-summer new revelations about Sam were appearing on a weekly basis, and the ImClone story surged ahead with an increasingly destructive momentum.
How did this happen? Science and commerce are supposed to be disciplines built on verifiable fact, rigorous self-discipline, and personal reputation. So how could a person like Sam Waksal — whose identity was malleable, instincts were selfish, self-discipline was negligible, and reputation was shot full of holes — managed to thrive in biotech?
A lot depended on Sam’s words. I can tell you from personal experience that he was a very persuasive talker – funny and smart and personable — and his statements were always designed to shine the most positive light possible on ImClone, Erbitux and himself. Because he was “doing good” for cancer patients, and he promised that his work would bring big profits to his backers, his listeners wanted to believe what he said — even when they should have known better. Also, it would appear that none of them had taken the time to do even the most basic due diligence on the Waksal brothers.
Like all charmers, Sam was adept at sensing the strengths and weaknesses of others; he tapped into deep human longings – the desire for life, the desire to help another person, the desire for attention or power or riches – and manipulated them for his own ends. In doing so, he managed to lay bare many of humanity’s deepest impulses, and to tell us more about ourselves than we generally care to admit.
Ultimately, he wanted more than mere scientific acclaim, a nice apartment, his photo in all the magazines, an invite to every party, and his name on the lips of every bigshot in the country. He wanted the world to admire and respect him – to, in effect, love him.
Elana Castaneda, a brokenhearted former girlfriend of his, told me: “Sam doesn’t intentionally hurt people. He really believes what he’s saying at the time. He never thinks about the downside — which is his flaw, but also his asset. Without that, he wouldn’t have gotten this far. He built ImClone from nothing. But he can’t say ‘No.’ He wants to please everyone, and by doing that he hurts many people . . . He sweeps you up into his dream, and then you’re on a wild ride.”
In a letter to the court at his sentencing, Sam admitted that he is driven by forces that even he doesn’t understand: “No man truly understands another,” he wrote, referencing Albert Camus’ The Stranger.
Sam pled guilty to 8 of the government’s 15 counts, and is now in a rural Pennsylvania jail for over seven years. Harlan has been pushed out of ImClone, albeit with $97 million in his pocket. Their 82 year-old father has been indicted on insider trading charges. Martha Stewart and Peter Bacanovic are in court.
And just the other day the FDA finally approved the cancer drug Erbitux — using European clinical data rather than ImClone’s faulty research — which gives the story a happy, if bitterly ironic, ending.
And, as you might have guessed, Hollywood is interested.