NEW YORK -- ImClone Systems Inc., a biotechnology company best known for the Martha Stewart trading scandal, abandoned its search for a buyer yesterday and offered investor Carl C. Icahn three board seats. Its shares dropped the most in more than nine months.
Multiple bidders failed to meet ImClone's price in an auction that began in January, interim Chief Executive Officer Joseph L. Fischer said.
In May, ImClone relaxed its "poison pill" provision to give Icahn the opportunity to increase his stake from the current 10 percent and added a director he supported. The company said it offered Icahn his own seat and one more in expanding the board to 11.
Since January, when the company said it might sell itself, ImClone's shares have fallen 18.5 percent, partly on concern about how long the review was taking. ImClone said yesterday that it no longer wants to be acquired because of surging sales of its only product, the Erbitux cancer drug, which may face competition next month from Amgen Inc.'s similar medicine.
Shares of ImClone fell $4.32, or 13.4 percent, to close at $28.05 yesterday on the Nasdaq stock market.
Icahn is ImClone's second-biggest investor, behind Bristol- Myers Squibb Co., which has a 17 percent stake. Under rules existing before May 2, any single shareholder who buys more than 15 percent of ImClone's shares would trigger an anti-takeover provision, or "poison pill."
The board raised the threshold to 19.9 percent in May on Icahn's request. The company said yesterday that his holdings haven't grown since then.
Icahn didn't return phone calls to his office seeking comment, and Fischer didn't discuss Icahn's role in a the conference call with investors and analysts yesterday. Icahn, known for taking stakes in companies to force executives to improve stock prices, may join the board four months after the company agreed to his request to add Alex Denner, an employee of Icahn and former portfolio manager at Viking Global Investors. New board members will be voted on at the company's annual meeting next month, ImClone said.
ImClone said it will also add another independent director to be suggested by Icahn. Fischer would remain as interim chief executive officer while the board renewed its search for a permanent leader.
In November, then-Chief Executive Officer Daniel Lynch resigned after almost 22 months and Chief Scientific Officer Philip Frost was named interim CEO. In January, the company replaced Frost with Fischer on an interim basis.
On the same day the company named Fischer, it hired investment banker Lazard Ltd. to explore a sale or merger to help ImClone raise money to develop new medicines.