2001 was Sam Waksal’s year.
Seven years after discovering Erbitux — the so-called wonder drug — everything seemed to be falling into place. The drug had made it onto the cover of BusinessWeek, Waksal’s company ImClone’s stock was at record highs, and he was living like a celebrity. There were photographs of him with Mick Jagger, Lorraine Bracco, Matthew Modine. He was best friends with Martha Stewart, dated her daughter Alexis for years, and he’d just sold $111 million worth of shares.
To anyone watching, Waksal looked like the golden boy of biotech — a scientist turned successful entrepreneur. But within months, he’d be kicked out of his own company, placed under federal investigation, and eventually sent to prison — dragging others, most famously Martha Stewart, down with him.
And of course, that moment didn’t come out of nowhere. It started years earlier, and to understand how he got there, we have to go back to the beginning.
Sam Waksal was born in Paris in 1947, the son of Jewish parents. His mother had survived Auschwitz. His father had fought in the Polish resistance. By the early 1950s, the family had settled in Dayton, Ohio, and both Sam and his younger brother Harlan gravitated toward science. Sam was exceptionally bright — a proper polymath. He could speak six languages, fancied himself an intellectual, and in many ways, he was.
By 1974, he had earned a PhD in immunology. Friends from back then described him as charismatic, intensely ambitious, and absolutely convinced he was destined for something big.
With his doctorate in hand, he landed a job at Stanford’s famous immunology lab. But the trouble started early. It turned out that Waksal had lied about the experiments he was running, and he was asked to leave.
In 1978, he joined the National Cancer Institute in Bethesda. And the same pattern appeared again. Whenever he was meant to present his findings, there was always some catastrophe — data missing, excuses piling up — and so the NCI decided not to renew his appointment.
Still, Waksal had charm. He managed to get a faculty post at Tufts University in Boston around 1980. And as always, at first, he dazzled colleagues. Then they began to question the accuracy of his data.
Around that time a family scandal erupted. In February 1981, Harlan — a qualified doctor and medical researcher, and incredibly close to Sam — was caught in Florida with more than two pounds of cocaine hidden in his clothes. He was charged with possession with intent to distribute.
Harlan was convicted in 1982 and sentenced to nine years, but on appeal, the case collapsed over an illegal search. He walked free. Meanwhile, Sam left Tufts quietly again under a cloud.
Mount Sinai Hospital in New York gave him yet another fresh start. He ran an immunology lab, recruited a team, and threw himself into work. But in 1985, it all imploded. The details were never made public — his file was sealed — but insiders pointed to falsified data, money irregularities, and disputes over intellectual property. Another exit under a cloud of suspicion.
You could see the pattern forming — flashes of brilliance followed by self-sabotage.
By now, Waksal was in his late thirties and his academic career was effectively over. So he and Harlan started brainstorming. They wanted to build something of their own — a company in immunology, cancer, and infectious disease. They called it ImClone, short for “immunology” and “cloning.”
Sam was CEO. Harlan was his number two. On paper, Sam’s résumé — Stanford, the National Cancer Institute, Tufts, Mount Sinai — looked impressive to investors who didn’t know the messy details. Venture capital came in — four million dollars to start.
The pitch was that ImClone would be a fully integrated biopharmaceutical startup targeting cancer, AIDS, and hepatitis, using the new tools of immunology and genetic engineering. At first, it would act more like a holding company, funding outside scientists’ research with the goal of spinning their work into commercial products.
Early projects included diagnostic test kits for hepatitis B and new vaccine research for infectious diseases. A few of these efforts brought in modest revenue, but not enough. The company needed constant funding, so Waksal decided to take it public in 1987.
But then came Black Monday. The stock market crashed. There wasn’t one single cause — the market had been on a five-year bull run that just came to an end. As a result, ImClone’s IPO was pulled. Cash dried up. Waksal scrambled for private investors, he hustled and kept the company going.
Finally, in 1991, ImClone made it onto NASDAQ. The timing was good — investors were hungry for biotech stocks. Shares launched at $14 and shot up to $27 in early trading, mostly thanks to Waksal’s ability to spin a great story, to make people believe the company was on the verge of a medical breakthrough.
He divorced his first wife — his high school sweetheart — around this time. As a newly eligible bachelor CEO, he cultivated a glamorous social circle. He bought a chic loft in SoHo and began hosting monthly salon parties there — wine, art, debate, and plenty of high ceilings. He loved playing the polymath host.
He also dated Alexis Stewart, Martha Stewart’s daughter, for four years, and through her became close to Martha herself. He built friendships with wealthy investors too, including Carl Icahn, who later took a stake in ImClone and would become key to the story.
Outwardly, Waksal looked every inch the successful biotech millionaire. But in reality, the company was continually strapped for cash, and he was leveraged to the hilt — constantly juggling creditors.
Then in 1994, his hustling finally paid off. ImClone licensed a promising antibody from Dr. John Mendelsohn — a drug called C225, later renamed Erbitux. It showed early potential in slowing the spread of cancer by blocking certain growth receptors on cells.
By 1995, two patients with head and neck cancer in early trials of Erbitux showed dramatic responses. Their tumours shrank significantly. Suddenly, ImClone had something real.
Waksal poured everything into it. Funding was still a constant battle — ImClone was a small fish in a big biotech pond — but he was relentless. Each new data point, each small success, became part of his pitch. He spun it into another story, another round of funding.
And then came the breakthrough that changed everything. In 1999, a young woman in Florida became the first colon cancer patient to try Erbitux. The results were jaw-dropping. Her tumours shrank by more than 80 percent in a matter of months. Growths the size of grapefruits became operable. Surgeons went in and removed them. Her cancer was essentially in remission.
For ImClone, this was huge. Colon cancer was one of the biggest markets in oncology. If Erbitux could work there, the potential was massive. Larger trials followed with 125 patients, and by mid-2000, the first results from this trial looked good.
That year, Waksal took the stage at ASCO — the world’s biggest oncology conference. With dramatic patient stories and his natural charisma, he not only won over oncologists but caught Wall Street’s eye. He announced that “Erbitux is going to be huge — one of the biggest drugs in the history of oncology.” And for once, it didn’t seem like bluster. ImClone’s stock hit $78.
In February 2001, ImClone received what looked like ultimate validation. The U.S. Food and Drug Administration granted “fast-track” status to Erbitux for advanced colon cancer. That meant the FDA saw it as a promising therapy for a serious condition and would allow accelerated approval based on the ongoing trials.
By July, BusinessWeek put Erbitux on its cover.
So of course, Big Pharma came calling. In September 2001, Bristol-Myers Squibb signed a $2 billion partnership deal with ImClone. It was validation, cash, and prestige all rolled into one.
On the back of that deal, Sam and Harlan sold $111 million worth of shares, though they still held plenty more, but I couldn’t find out how much.
The timing was perfect. On Wall Street, biotech was booming. In New York, Waksal was living like a celebrity. He had a $20 million art collection and his name in the social pages.
He’d become exactly what he always wanted to be: a scientist who wasn’t confined to the lab, a celebrated entrepreneur with a drug that could change lives. A polymath who held parties where he impressed guests with his charisma and intelligence — because this is important to point out — Waksal was all of these things. He wasn’t a conman pretending to be someone he wasn’t.
The flipside of this, though, is that this was the same Sam Waksal who’d flattered to deceive throughout his life — brilliant, yes, but always cutting corners, dodging rules, ignoring due diligence.
As one former colleague put it: “Cutting corners for Sam was like substance abuse. He did it in every aspect of his life, throughout his entire life.”
And this pattern repeated itself again.
Because on December 28th, 2001, the FDA released its findings on Erbitux. Waksal maintained that he had been expecting good news — maybe a few last-minute requests for documentation, but essentially a green light. Instead, the FDA delivered a hammer blow.
Not only did they refuse to approve Erbitux — they refused even to review it.
The FDA’s letter laid everything bare. It called ImClone’s application “scientifically incomplete,” full of missing data and sloppy documentation. Worse still, it said the pivotal clinical trial wasn’t “adequate and well controlled.” That meant the study’s design and execution were so flawed, the results couldn’t be trusted. In short — the data that was supposed to prove Erbitux worked was useless.
And what made all of this even worse was that the FDA had apparently warned ImClone about these issues multiple times in meetings. But the company, under Waksal’s direction, had ploughed ahead regardless.
Waksal said, “I was in shock… I was very disappointed.”
But it’s striking — he seemed almost oblivious to his own part in it. The man never seemed to learn from his mistakes, always convinced he’d done nothing wrong. It’s the kind of blind spot that defines him.
When markets reopened on December 31st, ImClone stock plunged nearly 20% in a single day. Waksal scrambled to contain the damage. He held a conference call with investors, insisting the problems were purely technical — saying ImClone was like “the kid who writes down the answers to his maths problems but doesn’t show how he got them.” He promised approval would still come, maybe later in 2002.
Investors weren’t buying it — and they were right — because on January 4th, The Cancer Letter, a respected industry newsletter, published excerpts from the FDA’s refusal. The details were brutal. This wasn’t about a few missing forms; the entire study design was fundamentally broken. The FDA’s confidence in ImClone was gone.
As one analyst put it at the time, “The Waksals have probably lost all credibility with the FDA.”
At an industry conference in San Francisco that same month, Waksal took the stage — hoarse, tired, clearly rattled — and admitted: “We screwed up.”
The fallout was immediate. Peter Peterson, who co-founded Blackstone, quit the ImClone board having only joined two months previously. Angry shareholders filed lawsuits, accusing Waksal and his team of misleading investors. And perhaps most painful of all, patients with advanced colon cancer — who’d pinned their hopes on Erbitux — felt betrayed.
By early 2002, ImClone’s stock had lost almost 70% of its value.
Bristol-Myers Squibb, ImClone’s $2 billion partner, was panicking. They’d bet big on Waksal’s vision, and now it was disintegrating. They tried to oust him as CEO, but the ImClone board — stacked with Waksal loyalists — refused. The feud spilled into public view, the stock slid further, and day by day, the company’s credibility eroded.
Meanwhile, federal investigators were starting to sniff around. The SEC and the Department of Justice had noticed some very strange trading activity in ImClone shares — just before the FDA letter became public.
On December 27th, 2001, several major shareholders had suddenly dumped their stock. Among them were members of Waksal’s own family — and his close friend, Martha Stewart.
It turned out that Waksal’s youngest daughter had quietly sold nearly 40,000 ImClone shares that day — worth about $2.5 million. And on December 26th, the day before, Waksal himself had tried to sell $5 million worth of shares from his own account. But his brokers refused to execute the trade because of insider restrictions.
Undeterred, he tipped off his 75-year-old father, Jack, who went on to sell $8 million worth of shares before the FDA’s decision became public.
It was brazen — and stupid. For a man as intelligent as Waksal, it was astonishing how reckless he could be.
Now, the big question was how he knew the FDA decision would be so bad. There was no proof of an official tip-off, and to be fair, the earlier drug trials had been legitimate — Erbitux genuinely had potential. But given Waksal’s history, it’s not hard to imagine he knew their submission was flawed.
This is complicated and difficult to understand — you can see the split in him. On one side, there’s that familiar blind spot — the corner-cutting, the shortcuts, the belief that rules were things for other people. He walked into trouble again and again, almost as if he never quite connected cause and effect. But then you look at what happened here. He didn’t wait for the FDA results. He moved first. He got his family to sell. And that tells you something. It tells you he did understand that his methods, his MO, were not going to go down well with the FDA. Or at least some part of him was aware that the news from the FDA might not be good.
As the investigation widened, regulators discovered that throughout the 1990s, Waksal had made dozens of unreported stock trades — another clear violation of SEC rules.
By May 2002, the pressure became unbearable. Waksal resigned as CEO, and his brother Harlan stepped in.
Three weeks later, at dawn on June 12th, FBI agents showed up at Sam’s Manhattan home. Cameras captured the scene — the once-celebrated biotech star being led away in handcuffs.
The charges were pretty damning: insider trading, obstruction of justice, bank fraud. Prosecutors said he’d even forged signatures to secure a $44 million loan.
But what was probably most damning was that the criminal complaint revealed that straight after the FDA released its findings on December 28th, Waksal had secretly bought put options on ImClone stock through a Swiss account — essentially betting that his own company’s shares would fall.
It was an extraordinary breach of trust: the CEO of a biotech firm secretly wagering on his own failure. And remember, at this very time Waksal was reassuring investors that this was all just a big misunderstanding, that they just hadn’t crossed their T’s and dotted their I’s.
It’s fair to say that when the details of these investigations became known, Waksal’s goose was cooked. By October 2002, he pleaded guilty to securities fraud, perjury, and obstruction of justice.
His downfall dragged others into the storm too. In June 2003, Martha Stewart was indicted on five counts related to her ImClone stock sale.
Now, her trial became the tabloid focus. Waksal didn’t tip Stewart off directly. Her broker, who was also Waksal’s, had called Stewart after seeing the Waksal family dumping shares. Stewart’s net worth was about $650 million, and the trade that triggered everything had saved her just $45,000.
Now, Stewart wasn’t convicted of insider trading. Instead, she was found guilty of making false statements and obstructing justice. In July 2004, she was sentenced to five months in federal prison and two years of supervised release — including five months of electronic monitoring.
Now we’ve got to remember that at that time Stewart was without doubt one of the most admired and celebrated entrepreneurs in the US, so this was a huge fall from grace. Stewart’s is a fascinating story and one that I will cover in an episode.
Now back to Waksal.
He’d already pleaded guilty, and on June 10th, 2003, he faced sentencing in a packed courtroom. The judge told him:
“You abused your position of trust as chief executive and undermined the public’s confidence in the integrity of the capital markets. Then you tried to lie your way out of it. The harm that you wrought is truly incalculable.”
The sentence: seven years and three months in prison, a $4.3 million fine, and $1.2 million in restitution for tax evasion. He was also banned from ever running a public company again.
What a fall. In less than two years, he’d gone from hosting SoHo dinner salons to being led away in shackles.
He had built ImClone, bet it all on Erbitux, and for a moment touched glory. But ambition, deception, and the habits of a lifetime brought it all down.
While in prison, Waksal did a lot of reading and reflection. He also wrote two novels, a memoir, and a stack of business plans.
And he vowed that once free, he’d find a way back into biotech.
Now what’s really significant is that while Waksal was in jail, ImClone kept going.
And in 2004, the FDA finally approved Erbitux. Then, in 2006, one of its biggest investors — Carl Icahn, who else — I mean I just can’t seem to get away from this guy, he makes an appearance in every second or third story I research — anyway, Icahn more or less took control. He had been a very early investor in the company. Two years later, 2008, ImClone was sold to Eli Lilly for $6.5 billion.
Icahn, who owned 14 percent of the stock, made over $400 million in profit.
And what’s interesting is that he went out of his way to namecheck and praise Waksal, and here’s the quote:
“While it is easy to hurl stones, all stockholders owe a debt of gratitude to Sam Waksal, without whose dedication and perseverance neither Erbitux nor our great pipeline would exist.”
And while it’s known that Waksal still held shares in the company at the time of this sale, no one could quite pin down how much he made. There was a great New York Magazine piece at the time that hinted he likely made a lot of money, but when asked, Waksal simply declined to say.
So when he was released in 2009 — aged 61 — the world saw him in two very different lights. To the public, he was a disgraced CEO, a felon, a cautionary tale. But in certain corners of Wall Street, people quietly acknowledged that, for all his flaws, ImClone had ultimately been a success — and that Waksal had played a huge part in making it one.
That year, he launched a new company called Kadmon.
And he got investment from some very big names: Steven A. Cohen, Daniel Loeb, Ron Burkle, GoldenTree Asset Management.
Interestingly, Carl Icahn didn’t. I couldn’t find out why.
Waksal pitched Kadmon as a new model — a biotech that could sell drugs while developing them. “Kadmon is building a new paradigm,” he said, promising to bring medicines to market faster and cheaper.
But in reality, the business model wasn’t that different to ImClone. The strategy was to find drugs that other companies had abandoned and give them another chance. Kadmon became a patchwork of orphaned assets, glued together by Waksal’s conviction that one of them would hit.
By 2014, the company had a few hundred employees and big R&D costs. Officially, Waksal wasn’t CEO — that title went to his brother Harlan. Sam took on the role of “Chief of Innovation, Science and Strategy.”
But in reality, it was still his show. He ran the labs, cut the deals, and continued to host salon dinners in SoHo, quoting philosophers over wine while pitching the company’s pipeline.
By 2016, Kadmon was preparing to go public. For that to happen, Waksal had to step away completely. He resigned all formal roles — though not without cushioning the exit.
The IPO prospectus revealed he’d walk away with a severance package worth up to $25 million, plus a 12.7 percent ownership stake.
Kadmon listed on the New York Stock Exchange that July, raising $75 million at an $800 million valuation. But the stock dropped 20 percent on its first day. Investors were jittery — the company was $218 million in debt, and R&D spending was soaring.
After the IPO, Kadmon cut jobs, tightened spending, and shifted focus to a new drug: KD025, later branded belumosudil. It was designed for patients aged 12 and over suffering from chronic graft-versus-host disease — a brutal condition that can occur after a bone-marrow or stem-cell transplant, when the donor’s immune cells attack the recipient’s own body.
Early trials were promising. Belumosudil showed remarkable responses in patients who had run out of options.
And then, in July 2021, the FDA approved it. Under the name Rezurock, Kadmon finally had its own proprietary drug on the market.
The payoff was immediate. Within weeks, Sanofi swooped in and bought Kadmon for $1.9 billion.
For Sam Waksal, it wasn’t just a big payday, it was vindication.
Erbitux hadn’t been a fluke. He’d done it again — found an overlooked drug, recognised its potential, and this time brought it to market properly. No corner-cutting this time.
And even now, at 77, he’s still going. He’s the CEO and founder of another biotech company called Graviton. Hard to know exactly how it’s doing, but they’ve raised serious funding and partnered with big players like Sanofi.
So… what do I make of Sam Waksal?
Colleagues call him eloquent, charismatic, a polymath. Critics call him arrogant, deceitful, incapable of learning. And, in fairness, there is truth in both.
Now, one thing that got my goat when I was researching for this episode was that there was this constant sneering tone, mocking his love of art, or those salon parties where he’d talk about philosophy. It was very much along the lines of — if you love art, love talking philosophy, then you’re some sort of pretentious intellectual, you’re a tosser.
From what I can gather, Waksal genuinely loves that stuff. Just because it goes over most of our heads — mine included — doesn’t mean he should be ridiculed for it.
We don’t mock people who love sport or movies, so let him enjoy what he enjoys. Anyway, rant over.
Yes, he had a long history of carelessness, of cutting corners, of failing to deliver. He even shorted his own company while lying to investors and did plenty of shady shit when he realised that the FDA wasn’t going to approve the drug.
And the tragedy is that with Erbitux, he really was on the cusp of a genuine medical breakthrough, and he wrecked it through his inability to do things the right way. Yet, at the same time, he doesn’t really fit the mould of a business scammer. The only reason Erbitux eventually made it to market was because of all the hustling, fundraising, groundwork he’d done — the vision, the persistence, the belief. And then he did it again with Belumosudil.
That’s the flip side of Waksal. For all his flaws, he achieved a lot. Two successful multi-billion-dollar exits. Two significant drugs that have had a positive impact on the lives of the patients who use them. That’s no small thing.
I think Waksal is best summed up by a quote from a friend of his:
“Sam is not a bad person. He never intentionally goes into something trying to burn or hurt someone. He believes what he tells you, and in his head it’s done already. But getting it executed — that doesn’t always happen.”
And look, I know some of you listeners will think I’m being a bit soft on Sam, maybe I am, maybe I’ve been charmed by him, but whatever you think of Sam Waksal, you’d have to agree — he makes for a great business story.
And with that, we get to our listeners’ emails — and this one is from Gary, and this isn’t a suggestion, it’s some new facts in relation to the Leon Black episode. Gary points out that The New York Times had a fantastic story on Jeffrey Epstein on Oct 25, so this was after the episode was recorded. In the article, which I’ve since read, they publish very detailed and revealing emails that Epstein wrote to Leon Black, and these emails really are something else. I recommend you read them, where Epstein is pressuring Black to pay him what he believes he’s owed — like he even calls Black’s kids retards in it — and what’s also significant in the article is that it says that notes from a congressional hearing claim that Black paid off eight women. There’s no additional details on who the women were, or the paper trail — but this is new material, and if true, then Black is going to be in serious trouble. Let’s see how it pans out.
I hope you’ve enjoyed today’s episode as much as I have. And remember — if you’ve got any comments, corrections, or stories you’d like us to cover, email us at info@gbspod.com.
All the best, folks.