Billionaire financier Carl Icahn has once again proved to be among the savviest of investors.
Ranked the 26th richest person in the United States by Forbes magazine, Icahn disclosed Wednesday that he now owns a 6.9 percent stake in ImClone Systems Inc. -- the company that is bouncing back from the insider trading scandal that landed its founder in jail and Martha Stewart on trial.
Icahn holds more than 5 million common shares of the New York-based biotechnology company, according to a filing with the U.S. Securities and Exchange Commission.
The financier, who made a huge profit on an earlier investment in ImClone, said he paid an average of $20 per share for his latest stake in the company, which last month saw its long-delayed drug Erbitux finally approved by U.S. regulators as a treatment for colon cancer.
ImClone shares jumped on news of the Icahn stake, rising 3 percent to $45.16 after hours from their close at $43.88 on Nasdaq.
“I’ve always believed that ImClone has a great drug in Erbitux,” Icahn told Reuters. “Wall Street underestimates its great potential.”
The U.S. Food and Drug Administration’s approval of Erbitux came more than two years after the agency refused to review the drug, citing poorly designed clinical trials. The FDA refusal sent ImClone’s stock into a tailspin.
Attempts by ImClone founder and former Chief Executive Sam Waksal and close family members to dump ImClone shares just before the company made public the FDA rejection led to Waksal’s seven-year prison sentence for insider trading.
Stewart, who shared the same stockbroker with her close friend Waksal, sold nearly 4,000 ImClone shares the day before the Erbitux rejection was announced. The domestic style trendsetter is awaiting a jury decision on charges that she lied to law enforcement officials about the stock sale.
Icahn, a former tennis buddy of Waksal’s, proved to have better timing with his ImClone investments.
One of the first financial backers of the company in the early 1990s when Waksal was trying to raise money to develop Erbitux, Icahn said he netted a gain of nearly $250 million by selling his ImClone stake in 2001.
That was shortly before Bristol-Myers Squibb Co. agreed to a $2 billion commitment to help develop and co-market Erbitux, and about three months before the bottom dropped out with the late-December FDA rejection.
Icahn, worth an estimated $7.3 billion, said he was again buying ImClone shares and had just surpassed the threshold at which he must report his stake to U.S. regulators.
