NEW YORK (AP) – Financier Carl Icahn won the nasty battle to take control of biotech company ImClone Systems Inc. on Wednesday. The company named him chairman and said the four board members he was trying to oust are leaving, including the interim CEO, who resigned effective immediately. ImClone shares climbed more than 5 percent.

Icahn, who owns roughly 14 percent of the company, had been seeking a management shake-up since September after declaring the board had done a deplorable job, noting it had failed to both fully capitalize on the potential of cancer drug Erbitux and find a suitable CEO.

In a statement, Icahn said his top priorities were finding a new chief executive and repairing relations with Bristol-Myers Squibb Co., which owns about 17 percent of ImClone and jointly markets Erbitux, ImClone’s only product.

Erbitux is facing competition from a recently approved product from Amgen Inc.

ImClone said that interim CEO Joseph L. Fischer, who resigned Wednesday, would be replaced by a newly formed executive committee chaired by board member Alex Denner, who works for Icahn.

Denner said candidates for the CEO slot had already been identified.

The three other directors Icahn sought to expel – Dr. Vincent T. DeVita Jr., John A. Fazio and William R. Miller – will not run for re-election to the board at the next annual meeting in the first quarter of 2007, the company said.

As a result, Icahn withdrew his revised proxy statement he filed to replace the four directors.

And even with three of Icahn’s targets remaining on the board for now, the board is primarily comprised of his allies. Last week, ImClone named Icahn nominee, Dr. Peter S. Liebert, to its board.

However, Cowen & Co. analyst Eric Schmidt, who rates ImClone “underperform,” said in an interview that Icahn’s rise to chairman may be “too little, too late.”

“I agree in part with (Icahn) that the company was poorly run, but he may have missed his window of opportunity,” Schmidt said.

Schmidt added that ImClone seems poorly prepared to defend itself from Amgen’s rival drug Vectibix and that the shake-up at ImClone will aid Amgen in its sales.

Icahn said in a statement that he planned to investigate why ImClone’s relationship with Bristol-Myers had “seriously deteriorated over the past few years.” The companies had feuded publicly a few years ago after the FDA initially refused to review Erbitux.

But ImClone spokesman David Pitts said that both companies need to examine how clinical development dollars are being spent on Erbitux going forward as competition increases, and ensure that agreed upon marketing plans are being executed.

Erbitux is approved to treat colorectal cancer in patients who have not responded to other treatments. It is also approved to treat head and neck cancer. It is being studied for additional colorectal cancer uses and as a treatment for pancreatic cancer and lung cancer.

Bristol-Myers said in a statement that, “We have made and continue to make significant investments in the commercialization and development of Erbitux.” Bristol-Myers pays ImClone a 39 percent royalty on its sales of the drug.

In September, Icahn filed a proxy statement to remove half of ImClone’s 12-member board. But earlier this month, David M. Keis, the former chairman, and board member William W. Crouse, resigned. Icahn revised the filing to seek the removal of the remaining four.

On Wednesday, ImClone reported that third-quarter earnings rose 85 percent- far exceeding analysts’ expectations – to $57.3 million, or 65 cents per share. Revenue rose 42 percent to $150.7 million from $106.5 million last year. Analysts surveyed by Thomson Financial expected earnings per share of 45 cents per share on revenue of $163.3 million.

In a note, Schmidt called reported earnings per share “an essentially meaningless figure,” and that the only number of significance was the $174.6 million in end-user Erbitux sales, compared with his estimate and analyst consensus of $185 million.

ImClone was at the center of the insider trading scandal that sent domestic diva Martha Stewart to prison for several months. The company’s founder and former chairman, Sam Waksal, remains in prison.

Shares of ImClone rose $1.56, or 5.3 percent, to close at $31.00 on the Nasdaq Stock Market.

AP-ES-10-25-06 1650EDT


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