Carl Icahn has succeeded in shaking up ImClone Systems, becoming chairman of the board Wednesday, and prompting interim CEO Joseph Fischer to resign.

Mr. Fischer also resigned from the board of the New York City-based biotech firm, which has developed the cancer treatment Erbitux. Three other directors, Vincent DeVita, John Fazio, and William Miller, will not stand for reelection at the next annual meeting.

No new chief executive has been named at the company, so a newly formed executive committee of the board chaired by Dr. Alex Denner and including Dr. Richard Mulligan and Dr. Charles Woler will run the company until a new chief executive is found.

Shares of ImClone rose $0.21 to $29.65 in recent trading.

In return for getting control of ImClone, Mr. Icahn will cancel his attempt to eject three other board members who are not allied with him by withdrawing his shareholder consent solicitation, shareholder consent revocation solicitation, and the consent solicitation committee of the board (see ImClone Urges Icahn Refusal).

Chairman David Kies and board director William Crouse stepped down this month amid complaints by Mr. Icahn.

The tumultuous activity at ImClone follows on the heels of Mr. Icahn’s so-far unsuccessful attempt to wrest away control of Time Warner from Chairman and CEO Dick Parsons. While Mr. Icahn only controls about 14 percent of ImClone’s stock, and Bristol-Myers Squibb holds a 17 percent stake, he nevertheless succeeded in getting his way.

Problematic History

ImClone has had a troubled history, with founding CEO Sam Waksal and investor Martha Stewart going to jail after accusations of insider trading and obstruction of justice. Mr. Icahn filed a proxy statement in September saying half the board should be removed because he felt they had done a deplorable job of running the company.

The board under Mr. Icahn’s control is now going to waive all director fees for six months and all option grants for the next year. He made some pointed statements upon taking over the helm at the company.

“The board fees and option grants at ImClone have been egregious, especially in light of the fact that shares have declined from a high of $86 to the current price of $30 in the past three years,” Mr. Icahn said in a statement.

“The options given to directors in corporate America have become disturbingly unrealistic, given that there is little correlation between the number of options granted and the performance of the companies being governed,” he added.

AREP, a public company on the New York Stock Exchange that Mr. Icahn also controls, grants no options to board members, he noted, and during the last three years the stock has moved from $8 to $62.

“Erbitux is an important drug, and action must be taken quickly to make up for the errors and inaction of the last three years,” Mr. Icahn stated.

He said his immediate priorities as chairman are to investigate the reasons why the relationship between ImClone Systems and its partner Bristol-Myers Squibb has seriously deteriorated over the past few years and “to act expeditiously” to find a qualified chief executive with biotech experience.

Mr. Icahn has complained that the ImClone board had not been able to persuade a qualified industry executive to run the company.

Financial Results Hit and Miss

ImClone also announced its third-quarter results, with earnings per share of $0.65, beating Wall Street consensus forecasts of $0.45 per share. Revenue climbed to $150.7 million compared with $106.7 million a year ago, but analysts had expected $163.3 million.

Sales of Erbitux in the United States also missed expectations, reaching $175 million, or $10 million less than consensus forecasts.

“The earnings upside was due to lower-than-expected operating expenses and taxes,” noted Goldman Sachs analysts May Kin-Ho and Meg Malloy in a research note.

Contact the writer:MCohn@RedHerring.com

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