In an amended 13D filing on Imclone Systems Inc. (Nasdaq: IMCL), Carl Icahn and related funds disclosed a 13.85% stake in the company (11.67 million shares). Icahn also disclosed a letter delivered to Chairman David Kies asking him to give up his position as Chairman of the Board.
Icahn said, "Now that I am becoming a director of ImClone, I am asking you again for the good of ImClone and its stockholders to give up your position as Chairman of the Board. Given what I consider the sorry record of the Company under your watch, it is time for you to step aside and allow someone else to be elected. You have even admitted to me that the board has done a bad job. ImClone has been without effective leadership for almost three years."
A copy of the letter:
September 20, 2006
David Kies, Chairman of the Board
ImClone Systems Incorporated
180 Varick Street
New York, NY 10014
When you offered me a directorship at ImClone in August, we discussed and Ithought you indicated that you would not continue to be the Chairman of theBoard of the Company. I also told you that it would be a mistake to give theInterim CEO a long term contract, given that he has little or no expertise inbiotech companies. I asked that you at least allow the new Board to make thisdecision. Nevertheless, without warning, ImClone entered into a multimilliondollar contract with the Interim CEO. You have also indicated that you will notbe willing to give up your chairmanship at today's meeting.
Now that I am becoming a director of ImClone, I am asking you again for the goodof ImClone and its stockholders to give up your position as Chairman of theBoard. Given what I consider the sorry record of the Company under your watch,it is time for you to step aside and allow someone else to be elected. You haveeven admitted to me that the board has done a bad job. ImClone has been withouteffective leadership for almost three years.
During your tenure, ImClone has suffered as a result of its inability to attainthe 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 inpushing to start appropriate trials in first-line colon cancer and otherindications.
During your tenure, I believe that commercialization has suffered, trials havenot been sufficiently pursued, the head and neck data was needlessly delayed,patent suits have been lost and the Company has not provided its stockholdersthe performance that they deserve. Rumors abound about employee dissatisfactionand probable defections.
During your tenure, ImClone hired a President and CEO who was totally the wrongperson for the position and it took you many many months to recognize this andreplace him. His replacement lasted only a few months. Now, ImClone has anotherinterim CEO and his permanent replacement is nowhere on the scene. To makematters worse, you even rewarded him with a favorable contract increasing hiscompensation and making it more expensive to replace him. This has all occurredduring the most critical period in the history of the Company in which itsability to exploit its lead in cancer treatment was being tested. Your regimehas failed the test.
During your tenure, ImClone's meaningful lead relative to potential competitorshas shrunk considerably and ImClone has suffered reversals such as the loss ofthe patent suit in the past week. I cannot believe that there were not a numberof opportunities to achieve a favorable settlement of the patent suit under yourleadership. Now the suit has been lost.
You should recognize that your leadership of ImClone should come to an immediateend. The time has come for you to peacefully pass the baton to a successor whowill be able to bring strong leadership back to ImClone. If you fail to do so,you will have thrown down the gauntlet and we will have to react accordingly.
Very truly yours,