Waksal's latest biotech play is reportedly trying to go public after two misfires

Kadmon founder Sam Waksal

Kadmon, a biotech founded by once-jailed ImClone CEO Sam Waksal, is gearing up to test the waters for an IPO, according to CNBC, braving a brutal climate for drug developers on Wall Street after at least two previous efforts to go public amounted to nothing.

The New York company is on track to file pre-IPO paperwork with the SEC this week or the next, CNBC's Meg Tirrell reports, citing people close to Kadmon. Waksal handed over CEO duties to his brother, Harlan, in 2014, as the terms of his 2003 insider trading conviction ban him from serving as a director of a public company. His official role at Kadmon is chief of innovation, science and strategy.

The latest rumors of a Kadmon IPO come about 18 months after Waksal told Tirrell that his new company was on track to file an S-1 by the end of 2014. A year before, as the recent biotech IPO boom was finding its legs, he talked up the idea of taking Kadmon public and spinning off some of its drug programs into standalone firms.

None of those plans came to fruition, and Kadmon has chosen one of the worst market environments for its latest IPO attempt. After a years-long glut of biotech debuts, the pace of offerings slowed in the fall and halted by the end of 2015. An ensuing wave of cancelations thinned the queue of companies with IPO ambitions, and not one biotech has successfully priced a first-time offering in 2016. Meanwhile, the Nasdaq biotech index fell by more than 20% in January amid mounting investor malaise.

Despite its Wall Street misfires, Kadmon has stayed busy over the past two years, pushing three treatments into Phase II development and launching Kadmon Gene Therapy, a subsidiary planning to develop candidates based on the company's genetic regulation technology.

Waksal founded Kadmon in 2009 after serving a 5-year stint in federal prison, quietly raising a reported $500 million in equity as the company built out a pipeline through a series of small deals.

Last year, Waksal again ran into legal trouble when a jilted Kadmon investor sued over claims that the company stiffed him on a $15 million obligation. According to the lawsuit, back in 2010, Waksal was rounding up investors with plans to take Kadmon public and signed a deal with a now-closed firm called John Thomas Financial to trade 1 million shares of the company for $1. But Waksal never handed over the shares, the lawsuit alleges, offering John Thomas' founder $15 million as a make-good payment instead. That money didn't come through, either, according to the suit, and the investor is now seeking either the cash or the shares.

Waksal, who founded ImClone in 1984, pleaded guilty to informing friends and family that Erbitux, that company's top drug, had been rejected by the FDA before the information was public, igniting a scandal that would eventually see Martha Stewart convicted of insider trading.

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