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IMCLONE SYSTEMS INCORPORATED
(Name of Registrant as Specified In Its Charter)
CARL C. ICAHN
ALEXANDER J. DENNER
PETER S. LIEBERT
BARBERRY CORP.
HIGH RIVER LIMITED PARTNERSHIP
AND
HOPPER INVESTMENTS LLC
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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The attached letter is being delivered to stockholders of ImClone Systems
Incorporated.
EXHIBIT 1
Carl C. Icahn
767 Fifth Avenue, 47th Floor
New York, New York 10153
October 17, 2006
Dear Fellow Stockholders of ImClone Systems Incorporated:
I am soliciting your written consents: (1) to remove Vincent T. DeVita, Jr.,
John A. Fazio, Joseph L. Fischer and William R. Miller (the "Four Directors")
from ImClone's Board; and (2) to appoint Peter S. Liebert as a director.
We believe the best path for ImClone is the removal of the four directors
mentioned above. Each of these directors has been a member of the Board during
the last three years, a period during which the stock price declined from a high
of $86 (1) per share to its present price of $30 per share. In our opinion, the
Four Directors and their colleagues on the Board seriously damaged the company
in ways we will explain below. Furthermore, we believe that, if we do not remove
these four directors, obtaining a new CEO of the caliber ImClone needs will be
extremely difficult if not impossible because such a CEO will not wish to report
to a Board some of whose members are responsible for the many failures in
judgment made during the last few years.
Below, we highlight two of the many missteps of the pre-September 2006 Board of
Directors.
1.) Failing to cause ImClone to pursue an aggressive development program
for Erbitux.
On February 12, 2004, Erbitux was approved by the FDA. It is inexcusable that,
since that time, the Board did not insist on conducting first-line colon cancer
clinical trials. In our view obtaining this first-line approval would not only
have been extremely profitable to ImClone but, in addition, would have widened
the gap between ImClone and its competitors such as Amgen. Additionally,
positive results from such trials could potentially have helped suffering cancer
patients. What is inexplicable is that more than two years have gone by since
the original approval, and the company must now depend on the National Cancer
Institute, which luckily chose to fund a trial in this first-line indication. We
assume that they conducted this first-line trial because ImClone was not running
an appropriate trial. Most importantly, any potential benefit to cancer patients
was lost because the Board failed to act.
2.) The Board has allowed Erbitux's competitive lead to shrink.
Over the past two years, other competing drugs in the same class, called EGFR
antibodies, have advanced in clinical development more rapidly than Erbitux. We
blame the Board, which includes the Four Directors for failing to maintain the
overwhelming lead that Erbitux once enjoyed. Although Erbitux still has a lead
over its competitors, that lead has shrunk meaningfully and without our proposed
changes to the Board and the hiring of the right CEO, ImClone, in our opinion,
will continue to fall behind.
One of the major reasons for ImClone's problems is that in the past few years
ImClone has not had a CEO with biotechnology experience. Inexplicably, the Board
continues to hire CEOs failing to have this qualification. The pre-September
2006 Board has been responsible for hiring a string of CEOs who failed to act.
Even more concerning, is that several weeks ago, the Board entered into a
multi-million dollar contract extension with the current CEO whose previous
positions were at consumer products companies and who has no research,
development, or drug commercialization experience. The Board insists on making
the same damaging errors and certainly has not learned from its past mistakes.
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(1) The stock price was over $86.00 on July 1, 2004.
It is my belief that companies function best when they are run by a competent
CEO who understands the business, sets goals, and most importantly understands
that he is accountable to a Board he respects. One of my affiliated companies,
American Real Estate Partners LP, which trades on the New York Stock Exchange
(ACP), has a number of different businesses and it employs different CEOs for
each line of business. Each is a good leader and each is held accountable for
the business that he runs. As you can see from its stock price, ACP has done
extremely well during the same period that Imclone's stock has hit a high of
about $86 and is currently $30. If the Four Directors are removed by you and Dr.
Leibert is added, the new Board will endeavor to promptly get a top CEO who will
understand the business, understand the goals, and understand that he or she is
accountable to the Board.
How have the Four Directors fared as a result of being at ImClone? Since July 1,
2003, Vincent DeVita has netted approximately $2.8 million from selling stock,
John Fazio netted approximately $460,000 from selling stock and William Miller
netted approximately $420,000 from selling stock. Also, in aggregate the
directors to be removed collectively report holding more than 800,000 shares and
options, which we believe, for the most part, were given to them by ImClone. In
addition, Mr. Fischer, the current CEO (and a Board member since September
2003), receives cash compensation of approximately $87,000 per month in salary
and bonus. The Four Directors have not exactly shared in the bad fortune of
ImClone's shareholders. It is not surprising that they want to hold on to their
positions as directors.
But we do agree with the directors to be removed on at least one thing. In their
letter, they stated that the company has "good long-term prospects" and Erbitux
"studies are on track to begin to deliver results" at the end of this year. We
agree; but if they believe in the company, we wonder why (1) they have been
selling stock rather than buying and (2) they have vociferously complained that
we were opposed to selling the company at $36 per share. This contradictory
message is just another manifestation of the confusion that emanates from this
pre-September 2006 Board. This confusion must end. Remove the Four Directors who
share the blame for the company's missteps and lost opportunities.
We believe in ImClone. We have been buyers, not sellers. It is time for a
change. We must get a new CEO and this will not happen until the directors to be
removed leave the Board. Fast action is needed. We need your help. Please sign
and return the consent form as quickly as possible in order to help us get
ImClone back on track without delay.
WE BELIEVE THAT YOUR VOICE IN THE FUTURE OF IMCLONE CAN BEST BE EXPRESSED
THROUGH YOUR CONSENT TO THE TWO PROPOSALS OUTLINED ABOVE. WE URGE YOU TO PROTECT
YOUR INVESTMENT IN IMCLONE NOW BY SIGNING, DATING AND RETURNING THE ENCLOSED
WHITE CONSENT CARD TODAY.
Very truly yours,
/s/ Carl Icahn
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Carl Icahn