Sam Waksal

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Lore & Background

Waksal was born on September 8, 1947, in Paris, France, to a Jewish family, the son of Holocaust survivors. He earned a bachelor's degree in 1969 and a doctorate in immunology in 1974, both from The Ohio State University. Over the next 15 years, he worked as a medical researcher at Stanford University, the National Cancer Institute, Tufts University and Mount Sinai Hospital, New York. Waksal founded ImClone Systems in 1984. The company was engaged in several research and development projects before filing its first Biologic License Application with the FDA in 2001. When it won the rights to develop Erbitux, a cancer antibody, the drug's clinical success caused ImClone's stock to reach a high of $70 a share. In September 2001, Bristol-Myers Squibb was intrigued enough by Erbitux to sign a $2 billion deal with the company in return for the marketing rights to the drug. In December 2001, however, the FDA issued a Refuse to File decision effectively turning down ImClone's application due to concerns about the structure of the clinical trials. In 2004, Erbitux was approved by the FDA. In 2008, the drug generated over $1.5 billion in sales and was credited with aiding thousands of cancer patients. That same year, ImClone was sold to Eli Lilly and Company for $6.5 billion.

In Their Own Story

Waksal became aware of the FDA's rejection on Christmas Day 2001. Unable to get the FDA to reconsider, ImClone began drafting a press release announcing the Erbitux rejection. This was due to be released at the close of business on December 28. Until then, under federal securities law, Waksal was barred from selling his ImClone stock or telling anyone about the pending rejection. However, public release of the Erbitux rejection would expose Waksal to a number of financial problems beyond the near-certainty of ImClone's stock sliding. For example, Waksal had pledged a warrant to buy ImClone shares as collateral for a loan from Bank of America despite having already executed the warrant in 2000. If Bank of America discovered the warrant was no longer valid, Waksal could be charged with bank fraud. He tipped off several of his friends and family to sell their ImClone stock. When Waksal's broker at Merrill Lynch, Peter Bacanovic, became aware of the pending rejection, he alerted their mutual friend, Martha Stewart, that ImClone was about to lose a good deal of its value. Waksal was arrested June 12, 2002 on insider trading charges. On October 15, he pleaded guilty to charges of securities fraud, bank fraud, obstruction of justice, and perjury. On March 3, 2003, he pleaded guilty to charges of conspiracy and wire fraud for avoiding $1.2 million in sales taxes on $15 million in artwork. The art included works by Mark Rothko, Richard Serra, Roy Lichtenstein, and Willem de Kooning, purchased between June 2000 and October 2001. On June 10, 2003, Waksal was sentenced to seven years and three months in prison and ordered to pay more than $4 million in fines and back taxes, all the maximum punishments allowable under law. Waksal wanted to go to Federal Prison Camp, Eglin, but instead he went to Federal Correctional Institution, Schuylkill. He was later transferred to the Federal Correctional Institution, Milan. On February 9, 2009, Waksal, Federal Bureau of Prisons (BOP) # 53803-054, was released from BOP custody.

Reader's Guide

The series draws heavily from Waksal's 2001 insider trading scandal involving ImClone Systems. In reality, Waksal learned of the FDA's rejection of Erbitux days before it became public knowledge. He then directed his wife to sell her shares in the company at a significant profit, while he held onto his own stock until after the news broke and the price plummeted. This real-world event mirrors the show's depiction of how hedge fund managers leverage non-public information for personal gain. The legal proceedings against Waksal involved complex investigations into family trading patterns and communication logs, similar to the FBI tactics employed by Chuck Rhoades in the series. Waksal ultimately pleaded guilty to conspiracy charges related to insider trading and making false statements. His conviction highlighted the strict enforcement of securities laws during that era, providing a realistic backdrop for the show's intense cat-and-mouse games between regulators and financial titans.

Did You Know?

• Samuel D. Waksal was born on September 8, 1947, in Paris, France, to a Jewish family, the son of Holocaust survivors.
• He earned a bachelor's degree in 1969 and a doctorate in immunology in 1974, both from The Ohio State University.
• Waksal was sentenced to seven years and three months in prison and ordered to pay $4.26 million in restitution and a $3 million criminal fine.
• He pleaded guilty to evading sales taxes on $1.2 million in artwork by Mark Rothko, Richard Serra, Roy Lichtenstein, and Willem de Kooning.
• Waksal's daughter, Elana, is married to Jarrett Posner, son of Steven Posner and grandson of Victor Posner.

Scientific Origins and Early Controversies

Born in Paris to Holocaust survivors, Samuel D. Waksal established his academic foundation at The Ohio State University, earning a bachelor's degree in 1969 and later a doctorate in immunobiology in 1974. His early professional life was defined by fifteen years of research across prestigious institutions including Stanford University, the National Cancer Institute, Tufts University, and Mount Sinai Hospital in New York. Despite these high-profile affiliations, his tenure as a medical researcher was marred by significant ethical concerns. Colleagues and investigators frequently scrutinized his work for misrepresenting the sources of biological materials and fabricating laboratory results. These early red flags foreshadowed the controversies that would later engulf his corporate career, yet they did not prevent him from transitioning into the biopharmaceutical industry where he would eventually found a major company.

The Rise and Fall of ImClone Systems

In 1984, Waksal founded ImClone Systems, steering it through various research projects until securing rights to develop Erbitux, a groundbreaking cancer antibody. The drug's clinical promise drove the company's stock to $70 per share and attracted a massive $2 billion marketing deal from Bristol-Myers Squibb in September 2001. However, momentum stalled when the FDA issued a 'Refuse to File' decision in December 2001 due to structural concerns regarding clinical trials. Although Erbitux was eventually approved in 2004 and generated over $1.5 billion in sales by 2008, aiding thousands of patients, the company's trajectory was permanently altered by the scandal surrounding Waksal's reaction to the initial rejection. Ultimately, ImClone was acquired by Eli Lilly and Company for $6.5 billion in 2008, marking a complex legacy where medical innovation coexisted with corporate collapse.

The Insider Trading Scandal and Imprisonment

On Christmas Day 2001, Waksal learned of the FDA's rejection before the public announcement scheduled for December 28. Facing potential financial ruin, including bank fraud charges related to invalid stock warrants pledged as collateral, he illegally tipped off friends and family to sell their shares. This chain of communication reached Martha Stewart via his broker, Peter Bacanovic. Arrested in June 2002, Waksal pleaded guilty to securities fraud, obstruction of justice, perjury, and bank fraud. He also admitted to conspiracy and wire fraud for evading $1.2 million in sales taxes on $15 million worth of modern art by masters like Rothko and de Kooning. Sentenced to seven years and three months in federal prison with maximum fines, he served time at facilities in Schuylkill and Milan before his release in February 2009.

Post-Prison Ventures and Continued Influence

Following his release from federal custody in 2009, Waksal immediately began fundraising to launch Kadmon Pharmaceuticals in New York City. Although he served as CEO initially, legal restrictions stemming from his conviction banned him from serving as an officer or director of any public company for life. Consequently, he stepped down in 2014 to facilitate the company's planned IPO, transitioning into the role of Chief of Innovation while his brother Harlan assumed the CEO position. Waksal eventually left Kadmon in February 2016 but retained a shareholder stake as the company successfully raised $75 million during its IPO later that year. Despite his criminal record, he maintained professional engagement by holding executive positions with the New York Biotechnology Association and serving on the board of advisors for Rockefeller University.