Election Section

ImClone Systems Inc.’s woes mounted Friday and its stock tumbled to the lowest level in a year after the company disclosed two federal agencies are investigating the biotechnology firm. 

The New York City company said in a regulatory filing Friday that the U.S. Department of Justice and the Securities and Exchange Commission are probing allegations that ImClone executives misled investors about troubles surrounding its highly anticipated cancer drug Erbitux. 

A congressional panel announced last week it would investigate insider trading at ImClone, as well as the company’s handling of its failed application for Food and Drug Administration approval. 

“The company intends to cooperate fully in response to these inquiries,” ImClone spokesman Jason Farber said Friday. 

ImClone also announced that Peter Peterson resigned from the company’s board. Peterson, chairman of The Blackstone Group and secretary of commerce under President Nixon, was appointed in November. 

He did not immediately return a telephone call seeking comment. Farber said Peterson cited “time constraints” as his reason for resigning. 

ImClone’s stock was down 16 percent to $16.49 at the close of trading on the Nasdaq Stock Market, its lowest level in a year. 

“It’s more of the same,” said Jason Kantor, an analyst with JP Morgan. “This thing has taken on a life of its own.” 

The company’s stock has plummeted more than 70 percent from $55.25 a share since Dec. 28, when it disclosed that the FDA refused to consider its application to market Erbitux. At the time, the executives said they could overcome the FDA’s concerns and expressed confidence Erbitux could be approved by the end of this year. 

Earlier this month, information released by a trade publication indicated problems with the application were more serious than ImClone had led investors and analysts to believe. 

Analysts who follow ImClone still believe the FDA will approve Erbitux, but no earlier than the end of 2003. 

“I think the drug is a viable drug and cancer patients would benefit,” said Brian Rye, an analyst with Raymond James & Associates Inc. “Unfortunately, the way it has been handled leaves a lot to be desired.” 

Angry shareholders have filed at least two dozen federal class action lawsuits alleging fraud. 

On Thursday, Bristol-Myers Squibb wrote off $735 million of the $1.2 billion it recently invested in the company.  

In September, Bristol-Myers Squibb announced it would pay $1 billion to purchase 19.9 percent of ImClone, valuing the biotechnology firm at $71 a share. In addition, it paid $200 million to ImClone to share in the future profits of Erbitux and promised another $800 million in payments once the drug cleared FDA hurdles. 

“We couldn’t be more disappointed with the turn of events since the filing,” Bristol-Myers Squibb chief executive Peter Dolan told investors on a conference call Thursday. 

A Bristol-Myers Squibb spokeswoman couldn’t be reached for comment Friday. 

Dolan said the company was doing everything it could to refile the application without conducting additional tests and that bringing the drug to market was a top priority. He also said Bristol-Myers Squibb would pursue “all options” to protect its shareholders. 

Bristol-Myers Squibb’s share price was down slightly at the close of trading on the New York Stock Exchange to $46.25, its lowest level in a year. 

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On the Net: 

ImClone: http://www.imclone.com 

SEC: http://www.sec.gov 

Justice Department: http://www.usdoj.gov 

FDA: http://www.fda.gov