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   Daily Blog - Tiger Software

               September 17, 2007

Why Biotech Investments Are So Dangerous.
    CEO Lies and Greed Make Risky Biotechs
    Even More Dangerous for Investors and Patients.  

William Schmidt, - Tiger Software's Creator
      (C) 2007 William Schmidt, Ph. D.  - All Rights Reserved. 

      No reproductions of this blog or quoting from it
      without explicit written consent by its author is permitted.

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      to william_schmidt@hotmail.com



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          Investors, Don't Expect The Full Truth from Biotech CEOs

  I have been hard on FDA bureaucrats for being timid, arbitrary and
     taking too long to get good drugs approved.  The case of ImClone shows that
     corrupt CEOs are every bit as much a threat and it is the FDA that ultimately
     must take responsibility for preventing the dangerous consequences of a
     biotech's  mis-reporting and malfeasance.

          Consider the case of Sam (The Weasel) Waksal of ImClone and his brother Harlan Waksal.   Together
      they ran Imclone.  All the while the FDA was privately warning ImClone that its clinical trials of Erbitux
      (IMC-C225) were problematic in 2001, the company was telling patients, doctors and investors that its
      drug was showing a 23% response rate in inhibiting tumors and was showing a 44% partial response with
      chemotherapy in colorectal cancer. 
The company set forth these finding in May 2001 at the annual meeting of the
      American Society of Clinical Oncologys.  The year before Sam Waksal presented the case of Shannon Kellum to
      the same, saying that after other treatments had failed, Kellum had taken Erbitux and had two large tumors the size of
      grapefruits reduced to the size of a pea, which were then surgically removed.  Soon
newspaper stories appeared
      showing terminal patients desperately wanting to be enrolled in the Erbitix trials.  All this gave a big boost to IMCL's
      stock, as it moved up from 25 to 55 between Marchand May 2001.

         The truth was very different.  The FDA told ImClone in August 2001 that there were serious problems
      with its trial reports and that the drug showed inadequate responses or no complete responses.  No patients treated
      with Erbitux went into remission and only 15% had partial responses. None of this was reported in the financial press.  
      ImClone officials were notified unofficially in early December that Erbitux would not be approved. On December 6th,
      the day afterwards, Harlan Waksal dumped $44 million of his IMCL stock, without telling shareholders of this
      very material information until much later.  The insider selling got worse.  The day before the company released
      the news that the FDA had turned down the Erbitux application, Samuel transferred 79,797 shares to his daughter
      and tried to sell the shares on 27 December.  He was refused and he transferred them to still another account but
      a sale could not be made quickly enough. His daughter dumped 40,000 of her shares the same day. Waksal's father
      also unloaded all his shares the day before the FDA announcement.

         Why did ImClone officials not disclose the whole truth about Erbitux?  Why did they mislead doctors,
      patients and investors?  Some of IMCL's officials were caught up in the role of being a company booster.  But
      clearly the Waksals were caught up in the same CULTURE OF SELFISHNESS AND GREED that brought
      down Enron, Arthur Anderson, Global Crossing and World Comm. 
The Waksal brothers clearly just wanted
      to get their stock up as much as possible, while they still could. They wanted IMCL's biggest prospective investor,
      Bristol Meyers, to buy as many shares in the company as possible and to pay the highest possible price.  No regard
      was shown patients, doctors and certainly not to shareholders!

          Why were they in such a hurry to sell?  ImClone was in a race with AstraZenca's Iressa to be the first signal
     transduction inhibitor (STI) to be approved as an inhibitor of epidermal growth factor receptors (EGRF). Erbitux is
     an intravenous MoAB with multiple side-effects; Iressa is a daily oral pill with few side-effects. Iressa was closer to
     approval.  And, in fact,  in 2002,  it was approved in Japan for treatment of lung cancer on 5 July 2002.  Another
     drug, Eloxatin (oxaliplatin), a direct competitor of Erbitux, was also soon afterwards to be approved by the FDA
      on a fast-track basis. 

                        ImClone - 2001   - Fabricated Results and Insider Trading
IMCL.GIF (31568 bytes)

  See especially Bill Ashman's "ImClone Debacle: How Much Truth Can We Put in Clinical Trials
  To Determione Our Treatments."

- )

                The Aftermath: IMCL Declines from 74 to 6 in Only 5 Months!

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       IMCLONE Time Line: 2002-2003

Jan. 25, 2002 - U.S. Securities and Exchange Commission and the U.S. Justice Department launch probe into ImClone and Waksal.

Feb. 14, 2002 - Waksal notifies the Securities and Exchange Commission for the first time of 50 trades he made in ImClone stock going back as far as 1992, transactions that should have been reported within months of their

May 22, 2002 - Samuel Waksal resigns as CEO of ImClone. Samuel's brother Harlan Waksal takes over as CEO.

June 12, 2002 - Samuel Waksal is arrested on charges he illegally acted on inside information in attempting to sell ImClone shares, and tipped family members to do the same.

Aug. 7, 2002 - Samuel Waksal, already charged with insider trading, is indicted for obstruction of justice and bank fraud in a case that has rocked investors' confidence. Waksal is accused of pledging ImClone securities he no longer owned to secure a $44 million loan and forging the signature of ImClone's general counsel to fool the bank into believing he still owned the securities.

Aug 14, 2002 - ImClone sued Samuel Waksal, claiming Waksal ordered the destruction of documents that may be important in a government investigation into the company.

Oct. 15, 2002 - Waksal entered a partial guilty plea to insider trading and obstruction of justice charges.

March 3, 2003 - Already awaiting sentencing for insider trading, Waksal pleads guilty to charges of evading tax on $15 million of art. He allegedly sent the art to an ImClone manufacturing facility in New Jersey to avoid New York sales taxes and then had the paintings re-directed to his Soho apartment.

March 11,2003 - Waksal agreed to partially settle a U.S. SEC suit by agreeing to be barred from acting as an officer of any publicly traded company and paying back more than $800,000 in insider trading profits.

March 31, 2003 - ImClone discloses that Waksal failed to pay income tax on the exercise of certain stock options and that it will take a charge of $23.3 million to account for the omission.

April 9, 2003 - The company says securities regulators are investigating ImClone's failure to pay taxes on stock options exercised by Waksal and other officers and directors.

June 4, 2003 - Martha Stewart charged with obstruction of justice in connection with an investigation into the timing of her sale of ImClone stock.

June 10, 2003 - Samuel Waksal, the former head of Imclone Systems was sentenced to 87 months in prison and is ordered to pay $3 million in fines for tax evasion and insider trading.

                                           ImClone - 2006-2007

                     We would trade this stock very circumspectly.  Depending on which side of its
          50 day moving average, one could be bullish or bearish.  Even better is to use a 50-day
          moving average Tiger's unique "Closing Power Indicator."  Its gain for the past
          year is 134%.  Call us and we will be glad to discuss this indicator, orginated by and
          only offer by Tiger Software.

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                Eventually Erbitux did win FDA approval.  One of the FDA officials working on the application
     said it was a case of "good drug but bad application".   The stock has been laboring under the bad
     press for years.  Investors can't forget how this company wiped out their life savings.  Nor should they!
     It is best to stay completely clear of a stock like this once news about its credibility comes out.  Simply
     selling out when the stock drops below the 50-day moving average when the Accumulation Index is
     negative is nearly always a good idea.  Selling short stocks that gap down like this on very bad news is
     certainly the only way to profit from them until all the news comes out.  Thinking that the stock looks
     cheap because it is down 50% does not work.  This stock lost 90% of its value in 6 months.

                Interestingly, the stock turned up from a bottom near $6 the very day Sam Waksal was
     found guilty of insider trading.

           Being an insider is the only safe way to own a stock like this.  Putting Tiger's Accumulation Index
     on your side, is the next best thing to having a seat on the Board of Directors next to Carl Icahn.
     And even that is problematic.   

                        Don't Trust A Board of Directors To Right Itself Voluntarily

            Recent News:
                        Sept. 21, 2006 - 
Carl Icahn Asks Imclone Chairman, David Kies, To Step Down and
               Ddisclosed a 13.85% Stake in the company (11.67 million shares).  His letter shows how badly the
               company was being run in his view:                       

"During your tenure, ImClone has suffered as a result of its inability to attain the leadership position it should enjoy
as an important biotechnology company.Most importantly, a great disservice has been done not only to stockholders,
but, potentially, to cancer patients as well, by ImClone's apparent passivity in pushing to start appropriate trials in
first-line colon cancer and otherindications.

During your tenure, I believe that commercialization has suffered, trials have not been sufficiently pursued, the head
and neck data was needlessly delayed,patent suits have been lost and the Company has not provided its stockholders
the performance that they deserve. Rumors abound about employee dissatisfaction and probable defections.

During your tenure, ImClone hired a President and CEO who was totally the wrong person for the position and it
took you many many months to recognize this and replace him. His replacement lasted only a few months. Now,
ImClone has ano the rinterim CEO and his permanent replacement is nowhere on the scene. To make matters worse,
you even rewarded him with a favorable contract increasing his compensation and making it more expensive to replace him.
This has all occurred during the most critical period in the history of the Company in which its ability to exploit its lead in
cancer treatment was being tested. Your regime has failed the test.

During your tenure, ImClone's meaningful lead relative to potential competitors has shrunk considerably and ImClone
has suffered reversals such as the loss of the patent suit in the past week. I cannot believe that there were not a number
of opportunities to achieve a favorable settlement of the patent suit under your leadership. Now the suit has been lost....

Very truly yours,

Carl Icahn

  On September 28th, Imclone said "NO".

We are disappointed that Carl Icahn, a minority shareholder and director, is trying to seize control of the Company without
paying a control premium to all ImClone Systems shareholders. Despite our best efforts to avoid this kind of distraction
by giving Mr. Icahn disproportionate representation on the Board, he has chosen to proceed with this attempt to take control
of the Company. It would be a significant mistake to dismiss half of the directors elected by shareholders less than ten days
ago, as each of them has made valuable contributions during their tenures as representatives of all of our shareholders.

            But on October 5, 2006 they reversed course and
          Icahn was made Chairman of the Board.

The Company also announced that Directors Vincent T. DeVita, Jr., M.D., John A. Fazio and William R. Miller
will not stand for reelection to the Board at the Company's next annual meeting, which the Company expects to host in the first
quarter of 2007. As a result of this decision, Carl Icahn and related parties have withdrawn their shareholder
consent solicitation,

                             Big Changes at Imclone

Icahn stated:

The Board also determined today that it would waive all director fees for 6 months and all option grants for the next year.
Regarding this decision, Mr. Icahn stated: "The board fees and option grants at ImClone have been egregious, especially
in light of the fact that shares have declined from a high of $86 to the current price of $30 in the past three years. The
options given to directors in corporate America have become disturbingly unrealistic, given that there is little correlation
between the number of options granted and the performance of the companies being governed." Mr. Icahn pointed out that
AREP, a public company on the New York Stock Exchange (Ticker symbol: ACP), which he controls, grants no options
to board members and during the last three years the stock has moved from $8 to $62.

Additionally Mr. Icahn stated: "ERBITUX is an important drug, and action must be taken quickly to make up for the
errors and inaction of the last three years. My immediate priorities as chairman are to 1) investigate the reasons for why
the relationship between ImClone Systems and its partner Bristol-Myers Squibb has seriously deteriorated over the past
few years and 2) to act expeditiously to find a qualified CEO with biotechnology experience."


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