10-Q

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TABLE OF CONTENTS

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 2007
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition period from                        to

Commission file number 0-19612

ImClone Systems Incorporated
(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)	04-2834797 (IRS Employer Identification No.)
180 Varick Street, New York, NY (Address of principal executive offices)	10014 (Zip Code)

(212) 645-1405
(Registrant's telephone number, including area code)

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

        Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ý Accelerated filer o Non-accelerated filer o

        Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes o No ý

        Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class	Outstanding as of October 31, 2007
Common Stock, par value $0.001	86,252,110 Shares

IMCLONE SYSTEMS INCORPORATED
INDEX

PART I—FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Unaudited Consolidated Balance Sheets—September 30, 2007 and December 31, 2006	1
	Unaudited Consolidated Statements of Operations—Three Months and Nine Months Ended September 30, 2007 and 2006	2
	Unaudited Consolidated Statements of Cash Flows—Nine Months Ended September 30, 2007 and 2006	3
	Notes to Unaudited Consolidated Financial Statements	4
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	34
PART II—OTHER INFORMATION
Item 1.	Legal Proceedings	35
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 3.	Defaults Upon Senior Securities	37
Item 4.	Submission of Matters to a Vote of Security Holders	37
Item 5.	Other Information	38
Item 6.	Exhibits	38
Signatures		39

i

PART I. FINANCIAL INFORMATION

Item 1.    Financial Statements

IMCLONE SYSTEMS INCORPORATED
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share and share data)
(Unaudited)

			September 30, 2007			December 31, 2006
ASSETS
Current assets:
	Cash and cash equivalents		$	414,323		$	20,568
	Securities available for sale			642,441			1,023,609
	Prepaid expenses			3,159			3,972
	Amounts due from corporate partners			92,640			78,030
	Inventories			117,394			102,215
	Deferred income taxes, net			14,708			29,715
	Other current assets			13,244			12,123
		Total current assets		1,297,909			1,270,232
Property, plant and equipment, net				404,464			423,000
Deferred financing costs, net				6,034			8,818
Deferred income taxes, net				107,767			124,033
Other assets				27,496			13,753
		Total assets	$	1,843,670		$	1,839,836
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Accounts payable (including $1,387 and $4,765 due Bristol-Myers Squibb Company ("BMS") at September 30, 2007 and December 31, 2006, respectively)		$	24,424		$	26,421
	Accrued expenses (including $3,079 and $21,705 due BMS at September 30, 2007 and December 31, 2006, respectively)			58,355			69,080
	Current portion of deferred revenue			66,203			142,013
	Other current liabilities			4,719			1,418
		Total current liabilities		153,701			238,932
Deferred revenue, less current portion				238,529			237,864
Long-term debt				600,000			600,000
Share-based compensation, less current portion				734			261
Deferred rent, less current portion				3,505			3,130
		Total liabilities		996,469			1,080,187
Commitments and contingencies (Note 8)
Stockholders' equity:
	Preferred stock, $1.00 par value; authorized 4,000,000 shares; reserved 1,200,000 series B participating cumulative preferred stock, none issued or outstanding			—			—
	Common stock, $0.001 par value; authorized 200,000,000 shares; issued 87,169,631 and 86,143,604 at September 30, 2007 and December 31, 2006, respectively; outstanding 86,178,566 and 85,138,930 at September 30, 2007 and December 31, 2006, respectively			87			86
	Additional paid-in capital			905,291			865,560
	Accumulated deficit			(10,534	)		(71,785	)
	Treasury stock, at cost; 991,065 and 1,004,674 at September 30, 2007 and December 31, 2006, respectively			(28,754	)		(29,149	)
	Accumulated other comprehensive loss:
		Net unrealized loss on securities available for sale		(18,889	)		(5,063	)
		Total stockholders' equity		847,201			759,649
Total liabilities and stockholders' equity			$	1,843,670		$	1,839,836

See accompanying notes to consolidated financial statements.

1

IMCLONE SYSTEMS INCORPORATED

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(Unaudited)

				Three Months Ended September 30,						Nine Months Ended September 30,
				2007			2006			2007			2006
Revenues:
	Royalties			$	87,853		$	78,599		$	242,360		$	213,483
	License fees and milestones				19,226			34,948			81,965			212,807
	Manufacturing				21,973			20,884			61,456			68,589
	Collaborative agreement reimbursements				18,495			16,266			53,698			50,805
		Total revenues			147,547			150,697			439,479			545,684
Operating expenses:
	Research and development				43,626			26,437			112,224			87,013
	Clinical and regulatory				4,761			13,527			33,389			43,537
	Selling, general and administrative				20,748			15,977			54,674			56,941
	Royalties				19,324			18,051			55,098			56,531
	Cost of manufacturing revenue				22,256			19,187			59,110			61,466
	Litigation settlement				50,000			—			50,000			—
		Total operating expenses			160,715			93,179			364,495			305,488
			Operating income (loss)		(13,168	)		57,518			74,984			240,196
Other income (expense):
	Interest income				13,369			11,058			39,203			28,444
	Interest expense				(3,100	)		(2,974	)		(9,062	)		(6,350	)
	Gain on insurance settlement				3,775			—			3,775			—
		Other income, net			14,044			8,084			33,916			22,094
			Income before income taxes		876			65,602			108,900			262,290
		Income tax provision (benefit)			1,792			8,286			49,156			(61,826	)
			Net income (loss)	$	(916	)	$	57,316		$	59,744		$	324,116
Earnings (loss) per common share:
	Basic			$	(0.01	)	$	0.68		$	0.70		$	3.86
	Diluted			$	(0.01	)	$	0.65		$	0.69		$	3.58
Shares used in calculation of earnings (loss) per common share:
	Basic				85,957			84,335			85,649			84,013
	Diluted				85,957			91,915			86,568			91,974

See accompanying notes to consolidated financial statements.

2

IMCLONE SYSTEMS INCORPORATED

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

				Nine Months Ended September 30,
				2007			2006
Cash flows from operating activities:
	Net income			$	59,744		$	324,116
	Adjustments to reconcile net income to net cash provided by (used in) operating activities:
	Depreciation and amortization				23,593			22,054
	Amortization of deferred financing costs				2,784			2,784
	Share-based compensation				4,480			6,264
	Tax benefit from share-based compensation				(14,040	)		(69,133	)
	Loss on disposal of fixed assets				3,969			—
	Deferred income taxes				31,273			(146,764	)
	Other				40			—
	Changes in:
		Prepaid expenses			813			(1,974	)
		Amounts due from corporate partners			(14,610	)		(33,512	)
		Inventories			(15,179	)		(5,732	)
		Other current assets			(1,121	)		(2,910	)
		Other assets			(14,037	)		903
		Accounts payable			(1,997	)		(7,557	)
		Accrued expenses			1,753			86,088
		Share-based compensation, less current portion			473			661
		Other current liabilities			3,301			2,063
		Withholding tax liability			—			(31,736	)
		Deferred revenue			(75,145	)		40,314
		Deferred rent, less current portion			375			493
			Net cash (used in) provided by operating activities		(3,531	)		186,422
Cash flows from investing activities:
	Acquisitions of property, plant and equipment				(8,772	)		(41,118	)
	Purchases of securities available for sale				(1,229,228	)		(1,213,832	)
	Proceeds from sale of securities available for sale				1,346,750			872,665
	Proceeds from maturities of securities available for sale				249,820			120,800
			Net cash provided by (used in) investing activities		358,570			(261,485	)
Cash flows from financing activities:
	Proceeds from exercise of stock options				23,620			17,166
	Proceeds from issuance of common stock under the employee stock purchase plan				556			669
	Tax benefit from share-based compensation				14,040			69,133
	Proceeds from sale of treasury stock				500			—
			Net cash provided by financing activities		38,716			86,968
Net increase in cash and cash equivalents					393,755			11,905
Cash and cash equivalents at beginning of period					20,568			3,403
Cash and cash equivalents at end of period				$	414,323		$	15,308
Supplemental cash flow information:
	Cash paid for:
		Interest, net of amounts capitalized		$	4,215		$	1,503
		Income taxes		$	3,722		$	4,058
Non-cash investing and financing activity:
	Change in net unrealized loss in securities available-for-sale			$	13,826		$	(2,832	)

See accompanying notes to consolidated financial statements.

3

IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1) Business Overview and Basis of Presentation

        The accompanying consolidated financial statements of ImClone Systems Incorporated ("ImClone Systems" or the "Company") as of September 30, 2007 and for the three and nine months ended September 30, 2007 and 2006 are unaudited. The accompanying unaudited consolidated balance sheets, statements of operations and statements of cash flows have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and in conjunction with the rules and regulations of the Securities and Exchange Commission ("SEC"). Accordingly, they do not include all of the disclosures required by GAAP for complete financial statements. The financial statements reflect all adjustments, consisting only of normal, recurring adjustments, which are in the opinion of management, necessary for a fair presentation for the interim periods. Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and related revenue and expense accounts and the disclosure of contingent assets and liabilities to prepare these consolidated financial statements in conformity with GAAP. Actual results could differ materially from those estimates. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2006, as filed with the SEC.

        The results of operations for the interim periods are not necessarily indicative of results to be expected for the entire fiscal year or any other period.

        The Company is a biopharmaceutical company whose mission is to advance oncology care by developing and commercializing a portfolio of targeted treatments designated to address the medical need of patients with cancer. Our commercially available product, ERBITUX® (cetuximab) binds specifically to epidermal growth factor receptor (EGFR, HER1, c-ErbB-1) on both normal and tumor cells, and competitively inhibits the binding of epidermal growth factor (EGF) and other ligands, such as transforming growth factor-alpha. We are conducting, and in some cases have completed, clinical studies evaluating ERBITUX for broader use in colorectal cancer, squamous cell carcinoma of the head and neck ("SCCHN"), for the potential treatment of lung and pancreatic cancers, as well as other potential indications. The Company does not operate separate lines of business or separate business entities and does not conduct any of its operations outside the United States. Accordingly, the Company does not prepare discrete financial information with respect to separate product areas or by location and does not have separately reportable segments.

Impact of Recent Accounting Pronouncements

        In September 2006, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards (SFAS) No. 157, "Accounting for Fair Value Measurements" ("SFAS 157"). SFAS 157 defines fair value, and establishes a framework for measuring fair value in accordance with GAAP, and expands disclosure about fair value measurements. SFAS 157 is effective for fiscal years beginning after November 15, 2007. The Company is currently evaluating the requirements of SFAS 157.

        In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities" ("SFAS 159"). SFAS 159 permits the measurement of certain financial instruments and certain other items at fair value. Entities may choose to measure eligible items at fair value at specified election dates, reporting unrealized gains and losses on such items at each subsequent reporting period. SFAS 159 is effective for fiscal years beginning after November 15, 2007. The Company is currently evaluating the requirements of SFAS 159.

4

IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(1) Business Overview and Basis of Presentation (Continued)

        In June 2007, the Emerging Issues Task Force reached a consensus on Issue No. 07-3, "Accounting for Nonrefundable Advance Payments for Good or Services to Be Used in Future Research and Development Activities." This Issue requires that nonrefundable advance payments for research and development activities be deferred and capitalized. Such amounts should be recognized as an expense as the related goods are delivered or the services are performed or when the goods or services are no longer expected to be provided. This Issue will be effective for fiscal years beginning after December 15, 2007, and earlier adoption is not permitted. This consensus is to be applied prospectively for new contracts entered into after that date. The Company is currently evaluating the potential impact of this consensus on its consolidated financial statements.

Comprehensive Income (Loss)

        The following table reconciles net income to comprehensive income (loss): (in thousands)

	Three Months Ended September 30,					Nine Months Ended September 30,
	2007			2006		2007			2006
Net income (loss)	$	(916	)	$	57,316	$	59,744		$	324,116
Other comprehensive income (loss):
Unrealized gain (loss) on marketable securities during the period		(15,286	)		4,835		(13,826	)		2,832
Total other comprehensive income (loss)		(15,286	)		4,835		(13,826	)		2,832
Total comprehensive income (loss)	$	(16,202	)	$	62,151	$	45,918		$	326,948

        The tax benefit (provision) on the items included in other comprehensive income (loss) assuming they were recognized in income would be approximately $6.3 million and $(687,000) for the three months ended September 30, 2007 and 2006, respectively, and $5.7 million and $(388,000) for the nine months ended September 30, 2007 and 2006, respectively.

        The increase in unrealized losses for the three and nine months ended September 30, 2007 is due to a decline in the fair market value of certain debt securities. These investments are all AAA/Aaa rated and interest continues to be paid by the holder of the instruments. The Company believes that this loss position is temporary and that no asset impairment charge is needed at this time.

Fair Value of Financial Instruments

        The fair value of the Company's 1³/8% convertible senior notes of $600.0 million was approximately $559.5 million and $545.6 million at September 30, 2007 and December 31, 2006, respectively, based on their quoted market price.

Treasury Stock

        John H. Johnson was appointed as the Company's Chief Executive Officer ("CEO") in August 2007. On September 7, 2007, the Company sold 13,609 shares of treasury stock to Mr. Johnson for an aggregate consideration of $500,000, or $36.74 per share, which was the fair value of our common stock on such date, in order to enable Mr. Johnson to satisfy his obligation under his employment agreement to purchase $500,000 worth of Company common stock within three months of his commencement of employment.

5

IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(1) Business Overview and Basis of Presentation (Continued)

Insurance Reimbursement

        Other income for the third quarter of 2007 includes a gain of $3.8 million from the proceeds of an insurance reimbursement primarily for lost royalties on an ERBITUX shipment that was damaged in-transit during 2006.

(2) Inventories

        Inventories are stated at the lower of cost, determined on the first-in-first-out method, or market. Inventories consist of the following: (in thousands)

		September 30, 2007		December 31, 2006
Raw materials and supplies		$	16,153	$	17,818
Work in process			89,763		79,048
Finished goods			11,478		5,349
	Total	$	117,394	$	102,215

        In June 2006, the Company began producing ERBITUX for commercial use at its multiple product manufacturing facility ("BB50"), located in Branchburg, New Jersey. On August 20, 2007, the Company received approval from the U.S. Food and Drug Administration ("FDA") for the manufacture of ERBITUX in BB50, and therefore is now able to sell the ERBITUX inventory produced in BB50. Effective July 2007, the Company transitioned its BB50 plant from the production of ERBITUX to the production of pipeline products and is expensing the cost of manufacturing these products as Research and Development expense. The Company's current plan is to produce pipeline products in BB50 during the remainder of 2007.

(3) Property, Plant and Equipment

        Property, plant and equipment are recorded at cost and consist of the following: (in thousands)

		September 30, 2007			December 31, 2006
Land		$	4,899		$	4,899
Building			282,811			281,556
Leasehold improvements			24,266			14,595
Machinery and equipment			174,577			164,869
Furniture and fixtures			6,957			6,368
Construction in progress			28,839			45,924
	Total cost		522,349			518,211
Less accumulated depreciation			(117,885	)		(95,211	)
	Property, plant and equipment, net	$	404,464		$	423,000

        In the first quarter of 2007, the Company determined that it was not cost effective to develop its Spring Street facility to house its Research organization. As a result, the Company recorded a write-off of approximately $3.6 million related to design and engineering costs associated with this facility that were included in construction in progress as of December 31, 2006. This write-off is included in Research and Development expenses in the Company's Statement of Operations for the nine months

6

IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(3) Property, Plant and Equipment (Continued)

ended September 30, 2007. The Company is in the process of evaluating alternative uses for this facility.

        The process of preparing consolidated financial statements in accordance with GAAP requires the Company to evaluate the carrying values of its long-lived assets. The recoverability of the carrying values of long-lived assets depends on the Company's ability to earn sufficient returns on ERBITUX. Other than the asset impairment discussed above, based on management's current estimates, the Company expects to recover the carrying value of such assets.

(4) Share-Based Compensation Plans

        On February 15, 2007, the Company awarded, for no consideration, 268,283 Restricted Stock Units ("RSU") to its employees under its 2006 Stock Incentive Plan (the "06 Plan"). The grant date fair value of the Company's RSU awards was calculated using the closing market price of the Company's common stock as listed on the Nasdaq Global Select Market on February 15, 2007. The RSU granted in this issuance vest 33¹/3% annually over the three-year vesting period. On August 27, 2007, the Company awarded 31,347 RSU to its new CEO under the 06 Plan. The grant date fair value of the such RSU awards was calculated using the closing market price of the Company's common stock as listed on the Nasdaq Global Select Market on August 27, 2007. The RSU granted to the CEO vest 25% annually over the four-year vesting period.

        RSU activity for the nine months ended September 30, 2007 is summarized as follows:

		Number of Shares		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2006		—
	Granted	299,630
	Forfeitures	(41,230	)
Outstanding at September 30, 2007		258,400		1.50	$	10,682
Expected to vest		211,184		1.43	$	8,730

        The weighted average grant date fair value of the RSU was $29.84. The aggregate intrinsic value of RSU outstanding as of September 30, 2007 is calculated as the number of shares multiplied by the closing market price of our common stock on that date, which was $41.34.

        The Company recognized for the three and nine months ended September 30, 2007 approximately $426,000 and $1.0 million, respectively, in share-based compensation expense, net of amounts capitalized, for RSU granted under the 06 Plan. As of September 30, 2007, there was $5.0 million of total unrecognized compensation cost related to the RSU. This amount considers the Company's expected forfeiture rate. That cost is expected to be recognized over a weighted average period of 2.6 years. The Company will utilize newly issued shares to satisfy the vesting of RSU.

7

IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(4) Share-Based Compensation Plans (Continued)

        In addition to the RSU discussed above, the Company also granted stock options for promotions and new hire grants. The activity related to stock options for the nine months ended September 30, 2007 is summarized as follows:

		Number of Shares		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2006		10,509,294		$	38.55
	Granted	936,000		$	34.19
	Exercised	(1,009,335	)	$	23.40
	Forfeitures	(755,838	)	$	44.79
Outstanding at September 30, 2007		9,680,121		$	39.23	5.78	$	55,056
Vested and expected to vest		9,286,028		$	39.45	5.64	$	52,160
Exercisable at September 30, 2007		7,927,616		$	40.38	5.04	$	42,107

        The weighted average fair value of options granted during the three months ended September 30, 2007 and 2006 was $14.34 and $14.27, respectively. The weighted average fair value of options granted during the nine months ended September 30, 2007 and 2006 was $14.77 and $14.74, respectively. The aggregate intrinsic value of options outstanding at September 30, 2007 is calculated as the difference between the exercise price of the underlying options and the market price of the Company's common stock for the 5,384,197 options that had exercise prices that were lower than the market price of the Company's common stock at September 30, 2007. The total intrinsic value of options exercised during the three months ended September 30, 2007 and 2006 was $4.2 million and $7.8 million, respectively, determined as of the date of exercise. The total intrinsic value of options exercised during the nine months ended September 30, 2007 and 2006 was $15.6 million and $21.0 million, respectively, determined as of the date of exercise.

(5) Earnings (Loss) Per Common Share

        Basic earnings per common share is computed by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted earnings per common share is computed by dividing net income by the weighted-average number of common shares outstanding during the period increased to include all additional common shares that would have been outstanding assuming potentially dilutive common share equivalents had been issued. Dilutive common share equivalents include (1) the dilutive effect of in-the-money shares related to stock options, which is calculated based on the average share price for each period using the treasury stock method. Under the treasury stock method, the exercise price of an option, the average amount of compensation cost, if any, for future service that the Company has not yet recognized, and the amount of tax benefits that would be recorded in additional paid-in capital, if any, when the option is exercised, are assumed to be used to repurchase shares in the current period and (2) the conversion of convertible debt which is calculated using an "if-converted" basis. In addition, in computing the dilutive effect of convertible debt, the numerator is adjusted to add back the after-tax amount of interest recognized in the period and (3) the dilutive effect of RSU which is calculated under the treasury stock method. Under the treasury stock method for RSU, the average amount of compensation cost, if any, for future service that the Company has not yet recognized, and the amount of tax benefits that would be recorded in

8

IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(5) Earnings (Loss) Per Common Share (Continued)

additional paid-in capital, if any, are assumed to be used to repurchase shares in the current period. For the three months ended September 30, 2007 and 2006, there were an aggregate of 16,231,000 and 9,132,000, respectively, potential common shares excluded from the diluted earnings per share computation because their inclusion would have had an anti-dilutive effect. For the nine months ended September 30, 2007 and 2006, there were an aggregate of 10,107,000 and 8,574,000, respectively, potential common shares excluded from the diluted earnings per share computation because their inclusion would have had an anti-dilutive effect. The potential common shares excluded from the computation consist of anti-dilutive stock options for all periods and anti-dilutive shares related to the RSU and 1³/8% convertible notes for the three months ended September 30, 2007, and anti-dilutive shares related to the 1³/8% convertible notes for the nine months ended September 30, 2007.

        Basic and diluted earnings (loss) per common share (EPS) were computed using the following: (in thousands, except per share data)

		Three Months Ended September 30,					Nine Months Ended September 30,
		2007			2006		2007		2006
EPS Numerator—Basic:
	Net Income (Loss)	$	(916	)	$	57,316	$	59,744	$	324,116
EPS Denominator—Basic:
	Weighted-average number of shares of common stock outstanding		85,957			84,335		85,649		84,013
EPS Numerator—Diluted:
	Net Income (Loss)	$	(916	)	$	57,316	$	59,744	$	324,116
Adjustment for interest, net of amounts capitalized and income tax effect			—			2,610		—		5,481
	Net income (loss), adjusted	$	(916	)	$	59,926	$	59,744	$	329,597
EPS Denominator—Diluted:
	Weighted-average number of shares of common stock outstanding		85,957			84,335		85,649		84,013
Effect of dilutive securities:
	Stock options		—			1,244		864		1,625
	Restricted stock units		—			—		55		—
	Convertible subordinated notes		—			6,336		—		6,336
	Dilutive potential common shares		—			7,580		919		7,961
Weighted-average common shares and dilutive potential common shares			85,957			91,915		86,568		91,974
Basic earnings (loss) per common share		$	(0.01	)	$	0.68	$	0.70	$	3.86
Diluted earnings (loss) per common share		$	(0.01	)	$	0.65	$	0.69	$	3.58

9

IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(6) Taxes

        The Company's estimated annual effective income tax rate for 2007 is expected to be approximately 41.5%, excluding the effect of any discrete charges. For the nine months ended September 30, 2007, the Company has recognized a net discrete charge of approximately $4.3 millon primarily related to certain tax return method changes filed as well as certain deferred charges. The difference between the statutory rate and the Company's expected annual effective income tax rate primarily relates to state taxes. Actual cash tax payments in 2007 are estimated to be approximately $4.0 million.

        In July 2006, the FASB issued FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes" ("FIN 48"), which clarifies the accounting and disclosure for uncertainty in tax positions. The Company adopted the provisions of FIN 48 effective January 1, 2007, and as a result of the adoption the Company recorded a decrease to beginning accumulated deficit of approximately $1.5 million and an offsetting amount to additional paid-in capital. As of the adoption date, the Company had unrecognized tax benefits of approximately $38.3 million. Of this amount $36.1 million would have impacted the effective income tax rate. A portion of the $36.1 million if recognized could have required an additional valuation allowance to be recorded.

        The Company recognizes both interest and penalties accrued related to unrecognized tax benefits as elements of income tax expense in the Consolidated Statements of Operations. As of the adoption date, the total amount of accrued interest and penalties was approximately $787,000. Additionally, during the three and nine months ended September 30, 2007, the Company recorded approximately $229,000 and $857,000, respectively, of net interest and penalties.

        The Company is subject to U.S. federal income tax as well as income tax of multiple state jurisdictions. The statute of limitations on the Company's federal income tax returns through 2002 has expired. A New Jersey State audit was recently concluded for income tax years 2001 through 2004. The outcome of this audit did not have a material impact on the Company's results of operations or financial position. The statute of limitations on the Company's New Jersey income tax returns through 2002 has expired.

(7) Collaborative Agreements

        The following represents an update of the Company's contractual relationship with Merck KGaA and BMS during the nine months ended September 30, 2007. For a more detailed description of the Company's contractual agreements with our partners Merck KGaA and BMS, reference Note 10 of the Notes to the Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2006.

(a) Merck KGaA

        In July 2006, the Company and Merck KGaA entered into agreements amending and supplementing the 1998 development and license agreement. As part of the agreements, the Company consented to Merck KGaA's sublicense of certain intellectual property rights relating to the development and commercialization of an anti-EGFR antibody to Takeda Pharmaceutical Company ("Takeda"). Merck KGaA and Takeda signed an alliance in September 2005 for the development and commercialization of matuzumab (EMD-72000), a humanized EGFR-targeting monoclonal antibody. In consideration for the Company's consent, Merck KGaA agreed to pay the Company € 2.5 million within 30 days of the execution of the agreements and a further € 5.0 million within 30 days of the Company's

10

IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(7) Collaborative Agreements (Continued)

written consent to the sublicense. The Company received the payments of € 2.5 million and € 5.0 million in August 2006 and August 2007, respectively and has deferred the revenue associated with these payments and is recognizing them over the estimated service period. The Company has a liability due Merck KGaA of approximately $58,000 as of September 30, 2007 and December 31, 2006.

(b) Bristol-Myers Squibb Company

        In July 2007, the Company and BMS amended the terms of their commercial agreement for the co-development and co-promotion of ERBITUX in North America (the "BMS Amendment"). Under the BMS Amendment, the companies have jointly agreed to expand the investment in the ongoing clinical development plan for ERBITUX by up to several hundred million dollars. Development costs, up to a threshold amount, will be the sole responsibility of BMS; costs in excess of this threshold will be shared by both companies according to a pre-determined ratio. With this additional funding, the companies will further explore the use of ERBITUX in additional tumor types including brain, breast, bladder, esophageal, gastric, lung, pancreas and prostate.

        Under the BMS Amendment, ERBITUX clinical development costs, up to a threshold amount, are the sole responsibility of BMS, with costs in excess of this threshold shared by both companies according to a predetermined ratio effective January 1, 2007. As a result, reimbursable ERBITUX clinical development costs from BMS increased by $2.8 million for the nine months ended September 30, 2007, including $2.3 million for costs previously recorded by the Company in the first half of 2007 that are now reimbursable. Also, an adjustment of $7.6 million was recorded in clinical and regulatory expenses to reduce the Company's share of ERBITUX clinical development costs incurred by BMS that were previously recorded, which the Company is no longer required to reimburse.

        Development of the Product—The Company incurred approximately $943,000 and $4.1 million pursuant to cost sharing agreements with BMS for the three months ended September 30, 2007 and 2006, respectively and $2.6 million and $17.7 million for the nine months ended September 30, 2007 and 2006, respectively. The decreases versus the comparable periods are due to more development costs being the responsibility of BMS as a result of the BMS Amendment. The Company has also incurred $601,000 and $1.0 million for the three months ended September 30, 2007 and 2006, respectively, and $1.9 million and $2.2 million for the nine months ended September 30, 2007 and 2006, respectively, related to the agreement with respect to development in Japan.

Collaborative Agreement Tables

        Royalty revenue consists of the following: (in thousands)

		Three Months Ended September 30,				Nine Months Ended September 30,
		2007		2006		2007		2006
BMS—ERBITUX		$	71,957	$	68,100	$	197,627	$	189,158
Merck KGaA—ERBITUX			15,860		10,442		44,651		24,055
Other			36		57		82		270
	Total royalty revenue	$	87,853	$	78,599	$	242,360	$	213,483

11

IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(7) Collaborative Agreements (Continued)

        License fees and milestone revenue consists of the following: (in thousands)

		Three Months Ended September 30,				Nine Months Ended September 30,
		2007		2006		2007		2006
BMS—ERBITUX		$	18,958	$	34,830	$	81,460	$	212,578
Merck KGaA—ERBITUX			268		118		505		229
	Total license fees and milestone revenue	$	19,226	$	34,948	$	81,965	$	212,807

        Manufacturing revenue consists of the following: (in thousands)

		Three Months Ended September 30,				Nine Months Ended September 30,
		2007		2006		2007		2006
BMS—ERBITUX		$	20,923	$	20,305	$	57,781	$	64,541
Merck KGaA—ERBITUX			1,050		579		3,675		4,048
	Total manufacturing revenue	$	21,973	$	20,884	$	61,456	$	68,589

        Collaborative agreement reimbursement revenue consists of the following: (in thousands)

			Three Months Ended September 30,					Nine Months Ended September 30,
			2007		2006			2007		2006
BMS:
	ERBITUX supplied for clinical trials		$	2,736	$	1,936		$	7,875	$	6,329
	ERBITUX clinical and regulatory expenses			7,040		3,277			14,430		9,419
	ERBITUX selling, general and administrative			387		297			878		848
	ERBITUX royalty expenses			4,612		7,858			12,668		21,826
		Total BMS		14,775		13,368			35,851		38,422
Merck KGaA:
	ERBITUX supplied for clinical trials			1,815		1,651			11,477		7,215
	ERBITUX selling, general and administrative			1		10			89		109
	ERBITUX royalty expenses			1,904		1,238			5,681		5,044
		Total Merck KGaA		3,720		2,899			17,247		12,368
Other				—		(1	)		600		15
		Total collaborative agreement reimbursement revenue	$	18,495	$	16,266		$	53,698	$	50,805

12

IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(7) Collaborative Agreements (Continued)

        Amounts due from corporate partners consists of the following: (in thousands)

		September 30, 2007		December 31, 2006
BMS—ERBITUX		$	75,008	$	64,991
Merck KGaA—ERBITUX			17,632		13,039
	Total amounts due from corporate partners	$	92,640	$	78,030

        Deferred revenue consists of the following: (in thousands)

		September 30, 2007			December 31, 2006
BMS—ERBITUX commercial agreement		$	292,755		$	374,215
Merck KGaA—ERBITUX development and license agreement			11,977			5,662
	Total deferred revenue		304,732			379,877
Less current portion			(66,203	)		(142,013	)
	Total long term deferred revenue	$	238,529		$	237,864

(c) Merck KGaA/Bristol-Myers Squibb Company Japan Commercial Agreement

        On October 12, 2007, the Company entered into agreements with Merck KGaA and BMS for the co-development and co-commercialization of ERBITUX in Japan. Under the terms of the agreements, the Company, BMS and Merck KGaA will collaborate on a joint effort to develop and, following regulatory approval, market ERBITUX in Japan for the treatment of EGFR-expressing mCRC, as well as for the treatment of any other cancers the parties agree to pursue. BMS and Merck KGaA will utilize their respective sales forces in Japan, and the three companies will share development costs incurred and profits/losses realized as a result of their collaboration. Merck Serono Japan will distribute the product and record the sales for the collaboration. The agreements have a term of twenty-five years; provided that either BMS or Merck KGaA may terminate the agreement without cause upon three months' notice if ERBITUX is not launched in Japan by December 31, 2009 and without cause upon six months' notice following the earlier of a launch of a biosimilar product in Japan and the tenth anniversary of the agreements.

        The Company, BMS and Merck KGaA submitted an application in Japan earlier this year for the use of ERBITUX in treating patients with EGFR-expressing mCRC. The submission is a result of a collaboration among the three companies and is based on results from studies conducted in North America, Europe and Japan. ERBITUX is the first monoclonal antibody that inhibits EGFR to be submitted for marketing authorization in Japan.

        The terms of these new agreements provide that Merck KGaA will receive 50% of the profit/loss from sales in Japan and bear 50% of the related development expense, and the Company and BMS will each receive 25% of the profit/loss and bear 25% of the related development expense. The sharing of profit/loss reflect the co-exclusive rights to ERBITUX in Japan previously granted by the Company to Merck KGaA and BMS. In addition to its percentage of profit/loss, ImClone Systems will receive from Merck KGaA a royalty equal to 4.75% of total net sales in Japan. Any bulk ERBITUX supplied by the Company pursuant to the agreements for use in Japan will be at its fully burdened manufacturing cost.

13

IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(8) Commitments and Contingencies

        On October 28, 2003, a complaint was filed by Yeda Research and Development Company Ltd. ("Yeda") against ImClone Systems and Aventis Pharmaceuticals, Inc. ("Aventis") in the U.S. District Court for the Southern District of New York (03 CV 8484). This action did not seek damages, but rather alleged that three individuals associated with Yeda should also be named as co-inventors on U.S. Patent No. 6,217,866, which relates to the therapeutic use of EGFR antibodies (such as ERBITUX, the Company's EGFR antibody product) in combination with chemotherapy. The Company has exclusively licensed this patent from Rhone-Poulenc Rorer Pharmaceuticals, now known as Sanofi-Aventis. On June 7, 2005, Yeda amended its U.S. complaint to seek sole inventorship of the subject patent. On November 2, 2005, the Court denied the Company's motion for summary judgment with respect to this matter, as filed with the Court on June 24, 2005. At the same time, the Court granted summary judgment to Yeda dismissing two of the Company's affirmative defenses. A bench trial on the merits of Yeda's complaint was held between June 5, 2006 and July 19, 2006. On September 18, 2006, the Court ruled in favor of Yeda by awarding it sole inventorship rights to the patent. The Company then appealed the Court's decision to the Court of Appeals for the Federal Circuit. The appeal was docketed on October 5, 2006 (as No. 2007-1012). Briefing is now complete. A hearing is scheduled for December 7, 2007 and a decision from the Federal Circuit is expected in due course. The Company, having had the advice of its patent counsel, plans to vigorously pursue this appeal.

        On September 20, 2006, subsequent to the Court's inventorship decision, the Company also filed an action (06 CV 7190) against Yeda in the U.S. District Court for the Southern District of New York seeking a declaratory judgment that U.S. Patent No. 6,217,866 is invalid. On October 31, 2006, Yeda filed an answer and counterclaim to the Company's declaratory judgment complaint in which Yeda alleges the Company is liable to Yeda for willful patent infringement, unjust enrichment and conversion, and seeks damages from the Company and an order requiring the Company to license the patent and pay Yeda royalties until the patent expires. The Company filed an answer denying all counterclaims. In addition, on November 7, 2007, the Company filed a first amended answer to defendant's counterclaims asserting that the Company's activities are protected by the safe harbor provisions of 35 U.S.C 271(e)(1), that Yeda's claims for damages for any infringement more than six years prior to filing of its counterclaims are barred by the statute of limitations, and that federal law preempts Yeda's claims for unjust enrichment and conversion. The Company, having had the advice of its patent counsel, plans to vigorously pursue this action. The Company is unable to predict the outcome of these actions at this time. If the Company's appeal is unsuccessful and Yeda's sole inventorship rights to the patent are upheld and the Company is unsuccessful with respect to its declaratory judgment action, the Company may become obligated to pay Yeda a royalty and may be liable to Yeda for other damages.

        On March 25, 2004, an action was filed in the United Kingdom Patent Office requesting transfer of co-ownership to Yeda and amendment of patent EP (UK) 0 667 165 to add three Weizmann former employees as inventors. The Company was not named as a party in this action which relates to the European equivalent of U.S. Patent No. 6,217,866 discussed above. Accordingly, the Company intervened. On June 29, 2005, Yeda sought to amend its pleadings to seek sole ownership. That amendment was refused by the High Court and the Court of Appeal but was further appealed by Yeda to the House of Lords. The House of Lords heard Yeda's appeal on July 23-25, 2007. On October 24, 2007, the House of Lords issued a decision that reinstated the permission given by the Patent office, namely, that Yeda may proceed with a claim in relation to the EP (UK) to sole entitlement,

14

IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(8) Commitments and Contingencies (Continued)

alternatively to joint entitlement with Aventis. A hearing on the substantive case relating to entitlement to the EP (UK) will now likely occur in 2008.

        On March 25, 2004, a German action was filed in the Munich District Court I, Patent Litigation Division, in which Yeda claims a 75% ownership interest in patent EP (DE) 0 667 165 based on its allegation that the inventorship on that patent was incorrect. The Company was not named as a party in this action which relates to the European equivalent of U.S. Patent No. 6,217,866 discussed above. Accordingly, the Company intervened. On October 7, 2005, Yeda sought to amend its claim to seek sole ownership. That amendment was refused by the Munich District Court and on appeal by the Munich Higher Regional Court in a Decision dated September 20, 2007. That decision will likely be appealed by Yeda to the German Supreme Court. Presently, Yeda's claim in respect of the EP (DE) remains restricted to joint entitlement.

        On March 25, 2005, Yeda filed an action in the Austrian Patent Office ("APO") against Aventis seeking sole entitlement of EP (AU) 0 667 165, as well as payment of legal costs and fees. The Company was not named as a party to this action which relates to the European equivalent of US Pat. No. 6,217,866 discussed above. Accordingly, the Company intervened. Aventis' Defence and the Company's Intervention were filed on February 15, 2006. Yeda's Reply to the Defence/Intervention was filed on February 12, 2007. The Company's Rejoinder was filed on September 14, 2007. The case has been sent to the Technical Examiner, who will report back to the Nullity Division of the APO in due course. The Company, having had the advice of its patent counsel, believes there are sound defenses to these actions, and it plans to vigorously defend against the claims asserted.

        On March 29, 2005, Yeda filed an action in the Tribunal de Grande Instance, Paris jointly against Aventis and the Company seeking sole entitlement of EP (FR) 0 667 165, as well as payment of damages, legal costs and fees. This is the European equivalent of US Pat. No. 6,217,866. Aventis and the Company filed their Defences on September 22, 2006. Yeda submitted a Reply to Defence on September 17, 2007. Additionally, Yeda requested the French Court to take jurisdiction over the 9 non-French counterparts of the '165 EP in: Belgium, The Netherlands, Luxembourg, Liechtenstein, Sweden, Switzerland, Spain, Italy and Greece. A preliminary challenge to the jurisdiction of the French Court to hear Yeda's claim to those non-French parts of the European Patent will be made and that preliminary challenge is likely to be heard in early 2008. The Company, having had the advice of its patent counsel, believes there are sound defenses to these actions, and it plans to vigorously defend against the claims asserted.

        On May 4, 2004, an action was filed against the Company by Massachusetts Institute of Technology ("MIT") and Repligen Corporation ("Repligen"). This action alleged that ERBITUX infringes U.S. Patent No. 4,663,281, which is owned by MIT and exclusively licensed to Repligen and that the Company should therefore pay damages. In September 2007, the parties signed a settlement and certain sublicensing agreements, for which the Company paid $65.0 million in cash for full and final settlement of the claims against the Company in the matter, as well as for a royalty-free, irrevocable worldwide sublicense to technology patented under U.S. Patents No. 4,663,281. The total settlement was $65.0 million, of which $50.0 million was attributable to an expired Repligen patent and was expensed in the period and $15.0 million was attributed to the sublicensed Abbott patents. Repligen is responsible for providing MIT with its portion of the settlement payment. Repligen also granted to the Company a royalty-free, irrevocable worldwide sublicense for the future use of other patented technology, including U.S. Patent No. 5,665,578, which is owned by Abbott Laboratories ("Abbott"), but

15

IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(8) Commitments and Contingencies (Continued)

to which Repligen has the power to sublicense under an agreement between Abbott and Repligen. U.S. Patent No. 5,665,578 is the patent upon which Abbott sued the Company for patent infringement earlier this year.

        On February 5, 2007, a complaint was filed against the Company by Abbott in the U.S. District Court for the District of Massachusetts (07-cv-10216). This action alleges that the manufacture and sale of ERBITUX infringes U.S. Patent No. 5,665,578, which is owned by Abbott and that the Company should therefore pay damages. On April 24, 2007, the Company filed an answer, which it amended on May 17, 2007, to this complaint denying all claims. The court has ordered a mediation hearing to occur on December 20, 2007. The Company, having had the advice of its patent counsel, plans to vigorously defend against the claims asserted.

        In December 2002, Opposition Proceedings seeking to revoke EP (UK) 0 667 165 were brought by Scripps Research Institute, Amgen Inc., Abgenix, Inc., and YM Biosciences Inc. The Opposition Proceedings are suspended pending a final determination of the entitlement cases in Europe.

        On May 2, 2007, the Company filed an Opposition in the European Patent Office against EP 1,058,562 B1, which is a patent directed to, inter alia, the use of either radiation or chemotherapy in concert with an EGFR antibody that inhibits receptor dimerization. The patent is assigned to the University of Pennsylvania. Oppositions to that European Patent have also been filed by Amgen, Merck KGaA, Oncoscience, Genmab and Hoffmann La-Roche.

        No reserve has been established in the financial statements for any of the legal proceedings described above as the Company does not believe that such a reserve is required to be established at this time under SFAS No. 5. However, if in a future period, events in any such legal proceedings render it probable that a loss will be incurred and if such loss is reasonably estimable at that time, the Company will establish such a reserve. Thus, it is possible that legal proceedings and settlements arising there from, if any, may have a material adverse impact on operating results for that period, on our balance sheet or both.

        In October 2001, the Company entered into a sublease (the "Sublease") for a four-story building at 325 Spring Street, New York, New York, which includes approximately 100,000 square feet of usable space. The Sublease has a term of 22 years, followed by two five-year renewal option periods. In order to induce the sublandlord to enter into the Sublease, the Company made a loan to the sublandlord in the principal amount of a $10.0 million note receivable, of which $8.0 million is outstanding as of September 30, 2007. The loan is secured by a leasehold mortgage on the prime lease as well as a collateral assignment of rents by the sublandlord. The loan is payable by the sublandlord over 20 years and bears interest at 5¹/2% in years one through five, 6¹/2% in years six through ten, 7¹/2% in years eleven through fifteen and 8¹/2% in years sixteen through twenty. In addition, the Company paid the owner a consent fee in the amount of $500,000. Effective March 1, 2005, the Company amended the Sublease to add an additional 6,500 square feet of space upon all the same terms and conditions set forth in the Sublease. In connection with this amendment, the Company paid an up-front fee of $1.7 million which is being amortized to lease expense over the respective term of the Sublease. The future minimum lease payments remaining as of September 30, 2007, are approximately $44.7 million.

16

IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(9) Employee Benefit Plans

Defined Contribution Plan

        All employees of the Company who meet certain minimum age and period of service requirements are eligible to participate in a 401(k) defined contribution plan. The 401(k) plan allows eligible employees to defer up to 25% of their annual compensation, subject to certain limitations imposed by federal law. The amounts contributed by employees are immediately vested and non-forfeitable. Under the 401(k) plan, the Company, at management's discretion, may match employee contributions and/or make discretionary contributions. Neither the employee contributions nor voluntary matching contributions are invested in the Company's securities. Total expense incurred by the Company was $502,000 and $607,000 for the three months ended September 30, 2007 and 2006, respectively, and approximately $1.6 million and $1.8 million for the nine months ended September 30, 2007 and 2006, respectively.

(10) Long-term Debt

        The Company's long-term debt was $600.0 million at September 30, 2007 and December 31, 2006. For a more detailed description of the Company's long-term debt, reference Note 8 of the Notes to the Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2006.

        In December 2006, the FASB issued FASB Staff Position Issue No.EITF 00-19-2, "Accounting for Registration Payment Arrangements" ("FSP 00-19-2"). FSP 00-19-2 addresses an issuer's accounting for registration payment arrangements and specifies that the contingent obligation to make future payments or otherwise transfer consideration under a registration payment arrangement, whether issued as a separate agreement or included as a provision of a financial instrument or other agreement, should be separately recognized and measured in accordance with SFAS No. 5. FSP 00-19-2 is effective immediately for registration payment arrangements and financial instruments subject to those arrangements that were entered into or modified subsequent to the issuance of FSP 00-19-2. For registration payment arrangements and financial instruments subject to those arrangements that were entered into prior to the issuance of FSP 00-19-2, it is effective for financial statements issued for fiscal years beginning after December 15, 2006. The Company has adopted the provisions of FSP 00-19-2 as of January 1, 2007, and has determined that it had no impact on the consolidated financial statements.

        Under the Registration Rights Agreement for these convertible notes, the Company could be subject to liquidated damages if the effectiveness of the registration statement covering the convertible debt is not maintained at any time prior to the redemption of the convertible notes, the repayment of the convertible notes, or certain corporate events as defined in the convertible note agreement. The Company believes the likelihood of such an event occurring is remote and, as such has not recorded a liability as of September 30, 2007. In the unlikely event that it becomes probable that the Company would have to pay liquidated damages under the Registration Rights Agreement, until a shelf registration statement covering the convertible debt is again effective, the potential liquidated damages would be 0.25% of the outstanding amount of notes for the first 90 days and 0.50% of the outstanding amount of notes thereafter. Such damages (i) would accrue only with respect to the shares of the Company's common stock that were not already sold by the holder (using the registration statement or pursuant to SEC Rule 144) and that were not eligible for sale without a registration statement; (ii) would accrue only over the period during which the registration statement was not effective; and (iii) would be settled in cash in accordance with the terms of the Registration Rights Agreement.

17

Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations

        The following discussion and analysis is provided to further the reader's understanding of the consolidated financial statements, financial condition and results of operations of ImClone Systems in this Quarterly Report on Form 10-Q. This discussion should be read in conjunction with the consolidated financial statements and the accompanying notes included in our filings with the SEC, including our 2006 Annual Report on Form 10-K. This discussion contains forward-looking statements based upon current expectations that involve risk and uncertainties. Our actual results and the timing of certain events could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth below and under "Risk Factors" and elsewhere in our 2006 Annual Report on Form 10-K.

OVERVIEW

        ImClone Systems is a biopharmaceutical company whose mission is to advance oncology care by developing and commercializing a portfolio of targeted treatments designed to address the medical needs of patients with cancer. Our commercially available product, ERBITUX® (cetuximab) binds specifically to epidermal growth factor receptor (EGFR, HER1, c-ErbB-1) on both normal and tumor cells, and competitively inhibits the binding of epidermal growth factor (EGF) and other ligands, such as transforming growth factor-alpha. We are conducting, and in some cases have completed, clinical studies evaluating ERBITUX for broader use in colorectal cancer, squamous cell carcinoma of the head and neck ("SCCHN"), for the potential treatment of lung and pancreatic cancers, as well as other potential indications.

        In July 2007, the Company and BMS amended the terms of their agreement for the co-development and co-promotion of ERBITUX in North America ("the BMS Amendment"). Under this amendment, the companies have jointly agreed to expand the investment in the ongoing clinical development plan for ERBITUX by up to several hundred million dollars. Development costs, up to a threshold amount, will be the sole responsibility of BMS; costs in excess of this threshold amount will be shared by both companies according to a pre-determined ratio. With this additional funding, the companies will further explore the use of ERBITUX in additional tumor types including brain, breast, bladder, esophageal, gastric, lung, pancreas and prostate. In 2007 and beyond, the BMS Agreement will allow us to significantly reduce our clinical and regulatory expenses for ERBITUX while at the same time expanding the antibody's development.

        Our revenues, as well as our results of operations, have fluctuated and are expected to continue to fluctuate significantly from period to period due to several factors, including but not limited to:

•

the amount and timing of revenues earned from commercial sales of ERBITUX;



•

the timing of recognition of license fees and milestone revenues;



•

the status of development of our various product candidates;



•

whether or not we achieve specified research or commercialization objectives;



•

any business development transactions;



•

fluctuations in our effective tax rate and timing on when we may revise our conclusions regarding the realization of our net deferred tax assets, which currently have a partial valuation allowance;



•

legal costs and the outcome of outstanding legal proceedings; and



•

the addition or termination of research programs or funding support and variations in the level of expenses related to our proprietary product candidates during any given period.

        As a result of our substantial investment in research and development, we incurred significant operating losses prior to fiscal 2004 and have an accumulated deficit of $10.5 million as of September 30, 2007. We anticipate that our accumulated deficit will continue to decrease in the future

18

as we earn revenues on commercial sales of ERBITUX and generate net income. There is no assurance that we will be able to continue to successfully manufacture market or commercialize ERBITUX or that potential customers will buy ERBITUX. We rely entirely on third-party manufacturers for filling and finishing services with respect to ERBITUX. If our current third-party manufacturers or critical raw material suppliers fail to meet our expectations, we cannot be assured that we will be able to enter into new agreements with other suppliers or third party manufacturers without an adverse effect on our business.

HIGHLIGHTS AND OUTLOOK

        John H. Johnson was appointed as the Company's Chief Executive Officer in August 2007. Mr. Johnson has more than two decades of executive and operational management experience in the biopharmaceutical and healthcare industries. He has held senior management positions of increasing responsibility at Johnson & Johnson and most recently served as Company Group Chairman of its worldwide biopharmaceuticals unit. Additionally, in July 2007, ImClone further strengthened its Board of Directors with the appointment of Dr. Thomas Deuel, a preeminent scientist with a strong background in oncology.

        In August 2007, ImClone Systems received FDA approval in August 2007 for a second facility to manufacture ERBITUX. The approval of this new 250,000-square-foot multi-product state-of-the-art manufacturing facility, referred to as "BB50", more than doubles the Company's total available production volume capacity for ERBITUX. This approval, in conjunction with ImClone Systems' existing "BB36"manufacturing facility, enhances the Company's ability to meet increasing demand for ERBITUX in the worldwide market while advancing its clinical development pipeline.

        In September 2007, ImClone Systems signed settlement and sublicensing agreements with MIT and Repligen to end litigation related to U.S. Patent No. 4,663,281, which is owned by the Massachusetts Institute of Technology ("MIT") and exclusively licensed to Repligen Corporation ("Repligen"). In addition to a full and final settlement of the claims against ImClone in the matter, Repligen granted to ImClone Systems a royalty-free, irrevocable worldwide sublicense for the future use of other patented technology, including U.S. Patent No. 5,665,578, which is owned by Abbott Laboratories ("Abbott"), but to which Repligen has the power to sublicense under an agreement between Abbott and Repligen. U.S. Patent No. 5,665,578 is the patent upon which Abbott sued ImClone Systems for patent infringement earlier this year.

        The U.S. in-market third quarter sales of ERBITUX continued to increase as compared to both the third quarter of 2006 and sequentially over the second quarter of 2007. We have built on the positive sales trend with increased promotional efforts to establish ERBITUX as the standard of care in refractory colorectal and head and neck cancers. With our expanded field force, we hope to increase share in markets where ERBITUX has proven to provide significant clinical benefit and has received FDA approvals. Overall, we are encouraged by the performance of ERBITUX and optimistic about our prospects for the future.

ERBITUX Clinical Development Update

        In October 2007, ImClone Systems, BMS and Merck KGaA established an agreement for the co-development and co-commercialization of ERBITUX in Japan. Under the terms of the agreement, the companies will collaborate on a joint effort to develop and, following regulatory approval, market ERBITUX in Japan for the treatment of EGFR expressing metastatic colorectal cancer (mCRC), as well as for the treatment of any other cancers the parties agree to pursue. The companies submitted an application in Japan earlier this year for the use of ERBITUX in treating patients with EGFR-expressing mCRC. ERBITUX is the first and only monoclonal antibody that inhibits the EGFR to be submitted for marketing authorization in Japan.

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        In October 2007, the FDA approved an update to the ERBITUX product labeling to include overall survival data as a single agent in EGFR-expressing mCRC patients after failure of both irinotecan- and oxaliplatin-based regimens. With this approval, ERBITUX is the only approved biologic therapy to demonstrate improved overall survival as a single agent in patients with mCRC.

        In September 2007, the Company announced that a Phase III study of ERBITUX in combination with platinum-based chemotherapy (vinorelbine plus cisplatin) met its primary endpoint of increasing overall survival compared with chemotherapy alone in patients with advanced non-small cell lung cancer (NSCLC). This large, randomized multi-national study, known as FLEX, was conducted by Merck KGaA and enrolled patients with Stage IIIB or Stage IV NSCLC who had not previously received chemotherapy. Based on the FLEX results, ERBITUX is the only member of the class of epidermal growth factor inhibitors to demonstrate survival in the first-line treatment of patients with advanced NSCLC. Results from this study will be submitted for presentation at an upcoming medical conference.

        In July 2007, ImClone Systems and BMS amended the terms of their commercial agreement for the co-development and co-promotion of ERBITUX in North America. The amendment significantly increases BMS' financial investment in ERBITUX by up to several hundred million dollars. With this additional funding, the companies will seek to add numerous Phase II and Phase III clinical trials that will further explore the activity of ERBITUX in a wide variety of therapeutic settings. The companies intend to utilize the results of these studies to support new registration opportunities for ERBITUX.

Pipeline Clinical Development

        A number of the Company's clinical pipeline candidates have progressed into Phase II during the second half of 2007. Patient enrollment commenced for Phase II studies of IMC-A12 for mCRC and prostate cancer, for a Phase II study of IMC-1121B for renal cell cancer, and for a Phase II study of IMC-11F8 for mCRC. The Company plans to initiate additional Phase II and Phase III studies of these clinical pipeline candidates over the next several quarters. Also, the Company announced that the Cancer Therapy Evaluation Program (CTEP) of the Division of Cancer Treatment and Diagnosis (DCTD), National Cancer Institute (NCI), has selected 10 proposals for Phase I/II clinical trials of IMC-A12.

CRITICAL ACCOUNTING POLICIES

        The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. We base our estimates on historical experience and on assumptions that we believe to be reasonable under the circumstances. Estimates are deemed critical when a different methodology could have reasonably been used or where changes in the estimate from period to period may have a material impact on our financial condition or results of operations. Our critical accounting policies that require management to make significant judgments, estimates, and assumptions are set forth below. The development and selection of the critical accounting policies, and the related disclosure below, have been reviewed with the Audit Committee of our Board of Directors.

        Revenue Recognition—Our revenues are derived from four primary sources: royalty revenue, license fees and milestone payments, manufacturing revenue, and collaborative agreement reimbursement revenue.

        Royalty revenues from licensees, which are based on third-party sales of licensed products and technology, are recorded as earned in accordance with contract terms when third-party sales can be reliably measured and collection of funds is reasonably assured.

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        Revenues from license fees and milestone payments primarily consist of up-front license fees and milestone payments received under the Commercial Agreement with BMS, relating to ERBITUX, and milestone payments received under the development and license agreement with Merck KGaA. We recognize all non-refundable up-front license fees as revenues in accordance with the guidance provided in the SEC's Staff Accounting Bulletin No. 104. Our most critical application of this policy relates to the $900.0 million in license fees and milestones received from BMS under the Commercial Agreement. We recognize license fees and milestones received from BMS based upon actual ERBITUX clinical development costs incurred as a percentage of the estimated total of such costs to be incurred over the projected term of the ERBITUX clinical development plan. Any future changes in the estimated total costs of the clinical development plan will be addressed on a prospective basis. Of the $900.0 million in payments received to date, $19.0 million and $81.5 million was recognized as revenue for the three and nine months ended September 30, 2007, respectively, and $607.3 million from the commencement of the Commercial Agreement in 2001 through September 30, 2007. The methodology used to recognize deferred revenue involves a number of estimates and judgments, such as the estimate of total ERBITUX clinical development costs to be incurred under the BMS Amendment. Changes in these estimates and judgments can have a significant effect on the size and timing of revenue recognition. In addition, if management had chosen a different methodology to recognize the license fees and milestone payments received under the Commercial Agreement, the Company's financial position and results of operations could have differed materially. For example, if the Company were to recognize the revenues earned from the Commercial Agreement on a straight-line basis over the life of the agreement, the Company would have recognized approximately $16.0 million and $48.0 million for the three and nine months ended September 30, 2007, respectively, and $237.1 million from the commencement of the Commercial Agreement through September 30, 2007. Management believes that the methodology used to recognize revenues under the Commercial Agreement, which reflects the level of effort consistent with our product development activities, is the most appropriate methodology because it reflects the level of expenditure and activity in the period in which it is being spent as compared to the total expected expenditure over the life of the ERBITUX clinical development plan. This cost-to-cost approach is systematic and rational, it provides a factually supportable pattern to track progress, and is reflective of the level of effort, which varies over time.

        Non-refundable upfront payments received from Merck KGaA were deferred due to our significant continuing involvement and are being recognized as revenue on a straight-line basis over the estimated service period because the activities specified in the agreement between the Company and Merck KGaA will be performed over the estimated service period and there is no other pattern or circumstances that indicate a different way in which the revenue is earned. In addition, the development and license agreement with Merck KGaA does not contain any provisions for establishing a clinical budget and none has been established between the parties. This agreement does not call for co-development with the Company in Merck KGaA's territory; rather Merck KGaA is solely responsible for regulatory efforts in its territory. Non-refundable milestone payments, which represent the achievement of a significant step in the research and development process, pursuant to collaborative agreements other than the Commercial Agreement, are recognized as revenue upon the achievement of the specified milestone. This is because each milestone payment represents the achievement of a substantive step in the research and development process and Merck KGaA has the right to evaluate the technology to decide whether to continue with the research and development program as each milestone is reached.

        Manufacturing revenue consists of revenue earned on the sale of ERBITUX to our corporate partners for subsequent commercial sale. The Company recognizes manufacturing revenue when the product is shipped, which is when our partners take ownership and title has passed, collectibility is reasonably assured, the sales price is fixed or determinable, and there is persuasive evidence of an arrangement. We are contractually obligated to sell ERBITUX to BMS at our cost of production plus a 10% markup on bulk. We sell bulk inventory to Merck KGaA at our cost of production. The

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continuing level of manufacturing revenue in future periods may fluctuate significantly based on market demand, our cost of production, as well as BMS's required level of safety stock inventory for ERBITUX and whether Merck KGaA continues to order ERBITUX for commercial use.

        Collaborative agreement reimbursement revenue consists of reimbursements received from BMS and Merck KGaA related to clinical and regulatory studies, ERBITUX provided to them for use in clinical studies, reimbursement of a portion of royalty expense and certain marketing and administrative costs. Collaborative agreement revenue is recorded as earned based on the performance requirements under the respective contracts.

        Inventories—Our policy is to capitalize inventory costs associated with our products when, based on management's judgment, future economic benefit is expected to be realized. Our accounting policy addresses the attributes that should be considered in evaluating whether the costs to manufacture a product have met the definition of an asset as stipulated in FASB Concepts Statement No. 6. If applicable, we assess the regulatory and approval process including any known constraints and impediments to approval. We also consider the shelf-life of the product in relation to the expected timeline for approval. We review our inventory for excess or obsolete inventory and write down obsolete or otherwise unmarketable inventory to its estimated net realizable value.

        In June 2006, we began producing ERBITUX for commercial use at our BB50 manufacturing facility and on August 20, 2007, we received approval from the FDA for the manufacture of ERBITUX in BB50, and are now able to sell the ERBITUX inventory produced in BB50.

        Litigation—The Company is currently involved in certain legal proceedings more fully described under Part II—Item 1—"Legal Proceedings" and as disclosed in the notes to the consolidated financial statements. As of September 30, 2007, we have not established a legal reserve in our financial statements as we do not believe that such a reserve is required to be established at this time, in accordance with Statement of Financial Standards ("SFAS") No. 5, "Accounting for Contingencies." However, if in a future period, events in any such legal proceedings render it probable that a loss will be incurred, and if such loss is reasonably estimable at that time, we will establish such a reserve. Thus, it is possible that legal proceedings and settlements arising there from, if any, may have a material adverse impact on the operating results for that period, on our balance sheet or both.

        Long-Lived Assets—We review long-lived assets for impairment when events or changes in business conditions indicate that their full carrying value may not be recovered. Assets are considered to be impaired and written down to fair value if expected associated undiscounted cash flows are less than carrying amounts. Fair value is generally determined as the present value of the expected associated cash flows. We own a number of buildings that are primarily dedicated to the manufacturing of ERBITUX and other clinical products in our pipeline. Based on management's current estimates, we expect to recover the carrying value of such assets. Changes in regulatory or other business conditions in the future could change our judgments about the carrying value of these facilities, which could result in the recognition of material impairment losses.

        Income Taxes—Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Significant estimates are required in determining our provision for income taxes. In 2006, we released a portion of our valuation allowance against our deferred tax assets. This partial release was based on revised expectations of our projected book and taxable income which caused us to conclude that it is more likely than not that a portion of the benefits of these deferred taxes would be realized. The financial projections supporting our conclusion to release a portion of our valuation allowance contain significant assumptions based on current facts about our market share and our competitive landscape. If such assumptions were to differ significantly, it may have a material impact on our ability to realize our deferred tax assets. We will continue to

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monitor our current performance and future financial projections, including market share and competitive landscape, in order to determine the effect on the valuation allowance.

Impact of Recent Accounting Pronouncements

        In September 2006, the FASB issued SFAS No. 157, "Accounting for Fair Value Measurements" ("SFAS 157"). SFAS 157 defines fair value, and establishes a framework for measuring fair value in accordance with accounting GAAP, and expands disclosure about fair value measurements. SFAS 157 is effective for fiscal years beginning after November 15, 2007. The Company is currently evaluating the requirements of SFAS 157.

        In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities" ("SFAS 159"). SFAS 159 permits the measurement of certain financial instruments and certain other items at fair value. Entities may choose to measure eligible items at fair value at specified election dates, reporting unrealized gains and losses on such items at each subsequent reporting period. SFAS 159 is effective for fiscal years beginning after November 15, 2007. The Company is currently evaluating the requirements of SFAS 159.

        In June 2007, the Emerging Issues Task Force reached a consensus on Issue No. 07-3, "Accounting for Nonrefundable Advance Payments for Good or Services to Be Used in Future Research and Development Activities." This Issue requires that nonrefundable advance payments for research and development activities be deferred and capitalized. Such amounts should be recognized as an expense as the related goods are delivered or the services are performed or when the goods or services are no longer expected to be provided. This Issue will be effective for fiscal years beginning after December 15, 2007, and earlier adoption is not permitted. This consensus is to be applied prospectively for new contracts entered into after that date. The Company is currently evaluating the potential impact of this consensus on its consolidated financial statements.

RESULTS OF OPERATIONS

        Selected financial and operating data for the three and nine months ended September 30, 2007 and 2006 are as follows: (in thousands)

			Three Months Ended September 30,								Nine Months Ended September 30,
			2007			2006		Variance			2007		2006		Variance
Results of Operations:
Royalties			$	87,853		$	78,599	$	9,254		$	242,360	$	213,483	$	28,877
License fees and milestones				19,226			34,948		(15,722	)		81,965		212,807		(130,842	)
Manufacturing				21,973			20,884		1,089			61,456		68,589		(7,133	)
Collaborative agreement reimbursements				18,495			16,266		2,229			53,698		50,805		2,893
	Total revenues			147,547			150,697		(3,150	)		439,479		545,684		(106,205	)
Research and development				43,626			26,437		17,189			112,224		87,013		25,211
Clinical and regulatory				4,761			13,527		(8,766	)		33,389		43,537		(10,148	)
Selling, general and administrative				20,748			15,977		4,771			54,674		56,941		(2,267	)
Royalties				19,324			18,051		1,273			55,098		56,531		(1,433	)
Cost of manufacturing revenue				22,256			19,187		3,069			59,110		61,466		(2,356	)
Litigation settlement				50,000			—		50,000			50,000		—		50,000
	Total operating expenses			160,715			93,179		67,536			364,495		305,488		59,007
		Operating income (loss)	$	(13,168	)	$	57,518	$	(70,686	)	$	74,984	$	240,196	$	(165,212	)

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Three Months Ended September 30, 2007 and 2006

Revenues

Royalties

        Royalty revenues consist primarily of royalty payments earned on the sales of ERBITUX by our partners, BMS and Merck KGaA. Under our agreement with BMS, we are entitled to royalty payments equal to 39% of BMS's net sales of ERBITUX in the United States and Canada. Under our agreement with Merck KGaA, beginning July 2006, we are entitled to royalty payments equal to 9.5% of Merck's KGaA's net sales outside of the United States and Canada.

        In the third quarter of 2007, our royalty revenue increased by approximately $9.3 million, or 12%, from the comparable period in 2006 due to an increase in domestic and international net sales of ERBITUX. U.S. in-market sales by BMS in the third quarter of 2007 amounted to $184.5 million compared to the comparable period in 2006 of $174.6 million, an increase of $9.9 million, or 6%. Approximately $9.0 million of this increase resulted from BMS transitioning from a drop-shipment methodology to a more traditional wholesaler distribution model in the third quarter of 2007 whereby currently three domestic wholesalers are now maintaining an inventory of ERBITUX for distribution in the U.S. International net sales of ERBITUX by our partner Merck KGaA in the third quarter of 2007 amounted to approximately $166.9 million, an increase of $56.8 million or 52% from the comparable period in 2006.

License Fees and Milestones

        License fees and milestone revenues consist of the recognition of up-front license fees and milestone payments received under the Commercial Agreement with BMS and recognition of payments received under the development and license agreements with Merck KGaA. In the third quarter of 2007, total license fees and milestone revenue consisted of approximately $19.0 million earned from BMS and $268,000 from Merck KGaA, as compared to the same period in 2006, in which approximately $34.8 million was earned from BMS and $118,000 was earned from Merck KGaA.

        The decrease in license fees and milestone revenues is attributable to the impact of the BMS Amendment on the ERBITUX clinicial development cost estimates used to calculate BMS license fees and milestone revenues.

Manufacturing

        Manufacturing revenues consist of sales of ERBITUX to our corporate partners for commercial use. In accordance with the Commercial Agreement, we are contractually obligated to sell ERBITUX to BMS at our cost of production plus a 10% markup on bulk. We sell bulk inventory to Merck KGaA at our cost of production.

        During the third quarter of 2007, manufacturing revenue increased by $1.1 million from the comparable period in 2006 primarily due to an increase in the number of vials sold by both of our corporate partners year over year. This increase was partially offset by efficiencies in the manufacturing process of ERBITUX resulting in a decrease in the price we charge our partners for ERBITUX.

Collaborative Agreement Reimbursements

        Collaborative agreement reimbursement revenue consists primarily of reimbursements from our partners BMS and Merck KGaA under our collaborative agreements. There are certain categories for which we receive reimbursement from our partners: the cost of ERBITUX supplied to our partners for use in clinical studies, clinical and regulatory expenses, certain marketing and administrative expenses, and a portion of royalty expense. During the third quarter of 2007, we earned approximately

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$18.5 million in collaborative agreement revenue, which consists of $14.8 million earned from BMS and $3.7 million earned from Merck KGaA, as compared to $16.3 million earned in the comparable period in 2006, of which $13.4 million was earned from BMS and $2.9 million was earned from Merck KGaA.

        The increase from the comparable period of $2.2 million, or 14%, is primarily due to an increase in reimbursements of clinical expenses following the BMS Amendment. As a result of the BMS Amendment, ERBITUX clinical development costs, up to a threshold amount, are the sole responsibility of BMS, with costs in excess of this threshold amount shared by both companies according to a predetermined ratio, effective January 1, 2007. As a result, reimbursable ERBITUX clinical development costs from BMS increased by $2.8 million for the quarter, including $2.3 million for costs previously recorded by us in the first half of 2007 that are now reimbursable. The increase is also due to more reimbursable clinical trial activity year over year of approximately $1.0 million as well as an increase in clinical shipments of ERBITUX to our partners of approximately $1.0 million. These increases were offset by a decrease in reimbursement for royalty expenses of $2.6 million resulting from the lower reimbursement rate from BMS for third-party royalties, which dropped from 4.5% to 2.5%, effective January 1, 2007.

Expenses

Research and Development

        Research and development expenses include costs associated with our in-house research programs, product and process development expenses, costs to manufacture our product candidates for clinical studies, quality assurance, and quality control infrastructure. Research and development expenses also include our cost of inventory that is supplied to our corporate partners for use in clinical studies that are reimbursable from our corporate partners. Approximately $4.6 million and $3.6 million of costs representing research and development expenses in the third quarters of 2007 and 2006, respectively, were reimbursable and included under collaborative agreement reimbursement revenue since they represent inventory supplied to our partners for use in clinical studies.

        Research and development expenses in the third quarter of 2007 of $43.6 million increased from the comparable period in 2006 by $17.2 million, or 65%. This increase is primarily due to the transition of our BB50 manufacturing facility from the production of ERBITUX to pipeline products on July 1, 2007. This transition resulted in approximately $14 million of inventory production costs for pipeline products being recorded as research and development expense as compared to the prior year when these costs were incurred and capitalized into the production of ERBITUX. In addition, there was an increase of $5.6 million in material costs associated with the production of pipeline products which were expensed. These increases were partially offset by decreases in various other expense categories.

        For the full year of 2007, we expect research and development expenses to be in the range of approximately $155 to $160 million.

Clinical and Regulatory

        Clinical and regulatory expenses consist of costs to conduct our clinical studies and associated regulatory activities. Clinical and regulatory expenses in the third quarter of 2007 amounted to $4.8 million, a decrease of $8.8 million or 65% from the comparable period in 2006. Clinical and regulatory expenses includes certain amounts that are reimbursable from our corporate partners. As a result, approximately $7.0 million and $3.3 million of the costs included in this category for the third quarters of 2007 and 2006, respectively, are reflected as revenues under collaborative agreement reimbursement revenue since they represent costs that are reimbursable by our corporate partners.

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        The BMS Amendment specifies that each year BMS will fund nearly all of the annual ERBITUX development costs up to a specific threshold amount and that we will contribute a portion of the costs in excess of that threshold amount. For 2007, this threshold amount is effective January 1, 2007, therefore, a $7.6 million adjustment was recorded by the Company to reduce previously expensed ERBITUX clinical development costs incurred during the period prior to signing the BMS Amendment, which fell under the newly established threshold amount and therefore are the sole responsibility of BMS.

        For the full year of 2007, we expect clinical and regulatory expense to be in the range of approximately $50 to $55 million.

Selling, General and Administrative

        Selling, general and administrative expenses include selling and administrative personnel costs, including related facility costs, additional costs to develop internal selling and field operations capabilities and expenses associated with applying for patent protection for our technology and products.

        Selling, general and administrative expenses in the third quarter of 2007 amounted to $20.7 million, an increase of $4.8 million or 30% from the comparable period in 2006. Expenses in this category have increased from the comparable period in 2006, mainly due to the expansion of our field sales force during the second quarter of 2007 as well as an increase in legal fees associated with patent litigation matters. Selling, general and administrative expenses include amounts reimbursable from our corporate partners of which approximately $388,000 and $307,000 of costs in the third quarters of 2007 and 2006, respectively, were reimbursable and included in collaborative agreement reimbursement revenue.

        For the full year of 2007, we expect total selling, general and administrative expenses to be in the range of approximately $75 to $80 million.

Royalties

        Royalty expense consists of obligations related to certain licensing agreements regarding ERBITUX. In July 2007, a patent we licensed expired and therefore the royalty rate we pay on North American net sales decreased from 9.25% to 8.50%. We pay a low single-digit royalty on sales outside of North America, which will increase if sales outside of North America consist of ERBITUX produced in the United States. In 2007, we receive reimbursements from our corporate partners of 2.5% on North American net sales and a single-digit percentage on net sales outside of North America, which is reflected in collaborative agreement reimbursement revenue. Approximately $6.5 million and $9.1 million of royalty expense were reimbursable by our corporate partners and included as collaborative agreement reimbursement revenue in the third quarters of 2007 and 2006, respectively.

        In the third quarter of 2007, we incurred royalty expense of $19.3 million an increase of $1.3 million, or 7%, from the comparable period in 2006. The increase is due to an increase in global net sales of ERBITUX in the third quarter of 2007 from the comparable period in 2006.

Cost of Manufacturing Revenue

        We sell ERBITUX to BMS at our cost of production plus a 10% mark-up on bulk and to Merck KGaA at our cost of production. Therefore, depending on certain circumstances, such as the mix of demand from our partners, and the costs of filling and finishing ERBITUX bulk (for which we do not charge a 10% markup when selling to BMS), we expect that our gross margins on sales of ERBITUX may fluctuate from quarter to quarter.

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        Cost of manufacturing revenue in the third quarter of 2007 amounted to $22.3 million, which includes a $2.1 million expense for batches of ERBITUX that were damaged during the period, compared to approximately $19.2 million for the same period of 2006. Excluding the costs of the damaged batches, our gross margin was 8% for the third quarter of 2007.

Litigation Settlement

        Litigation settlement expense of $50.0 million was recorded in the third quarter of 2007 resulting from the settlement agreement executed in September 2007 with MIT and Repligen. The total settlement was $65.0 million, of which $50.0 million was attributable to an expired Repligen patent and was expensed in the period and $15.0 million was attributed to the sublicensed Abbott patents.

Other Income (Expense)

        Interest income in the third quarter of 2007 amounted to $13.4 million, an increase of approximately $2.3 million, or 21% from the comparable period in 2006. This increase is attributable to higher average interest rates and balance of our investment portfolio from the comparable period in 2006.

        Interest expense in the third quarter of 2007 amounted to $3.1 million, an increase of $126,000 from the comparable period in 2006.

        Other income for the third quarter of 2007 includes a gain of $3.8 million from the proceeds of an insurance reimbursement primarily for lost royalties on an ERBITUX shipment that was damaged in-transit during 2006.

Provision for Income Taxes

        Our estimated annual effective income tax rate for 2007 is approximately 41.5%, excluding the effect of any discrete charges. The income tax provision for the quarter ended September 30, 2007 reflects the cumulative impact of the increased estimated annual effective tax rate. Additionally, during the three months ended September 30, 2007, the Company recorded a benefit of approximately $786,000 primarily related to the reconcilation of estimates to actual filed tax returns. The estimated annual income tax rate is higher than the prior year's rate mainly due to the utilization in 2006 of fully reserved deferred tax assets. Cash taxes in 2007 are expected to be approximately $4 million.

Net Income (Loss)

        In the third quarter of 2007 we had a net loss of $916,000, or $(0.01) per diluted common share, compared with net income of $57.3 million, or $0.65 per diluted common share for the comparable period in 2006. The fluctuation in results was due to the factors noted above.

Nine Months Ended September 30, 2007 and 2006

Revenues

Royalties

        Royalty revenues consist primarily of royalty payments earned on net sales of ERBITUX by our partners, BMS and Merck KGaA. Under our agreement with BMS, we are entitled to royalty payments equal to 39% of BMS's net sales of ERBITUX in the United States and Canada. Under our agreement with Merck KGaA, beginning July 2006, we are entitled to royalty payments equal to 9.5% of Merck's KGaA's net sales outside of the United States and Canada.

        For the nine months ended September 30, 2007, royalty revenue amounted to $242.4 million, an increase of $28.9 million, or 14%, from the comparable period in 2006. This increase is due to an

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increase in global net sales of ERBITUX. U.S. in-market sales by BMS for the first nine months of 2007 amounted to $506.7 million, an increase of $21.7 million, or 4% compared to the prior year period. Approximately $10.6 million of this increase resulted from BMS's switch from a drop-shipment methodology to a more traditional wholesaler distribution model in the third quarter of 2007 whereby currently three domestic wholesalers are now maintaining an inventory of ERBITUX for distribution in the U.S. Outside of North America. Net sales of ERBITUX by Merck KGaA in the first nine months of 2007 amounted to $470.0 million, an increase of $167.6 million or 55% from the comparable period in 2006.

License Fees and Milestones

        License fees and milestone revenues consist of the recognition of up-front license fees and milestone payments received under the Commercial Agreement with BMS and recognition of payments received under the development and license agreements with Merck KGaA. For the nine months ended September 30, 2007, license fees and milestone revenue consisted of $81.5 million earned from BMS and $505,000 from Merck KGaA, as compared to the same period in 2006 in which $212.6 million was earned from BMS and $229,000 was earned from Merck KGaA.

        The decrease of $130.8 million, or 60%, from the comparable period in 2006 is due to the fact that in March 2006, we received the last milestone payment from BMS of $250.0 million, as a result of obtaining approval from the FDA for ERBITUX in a head and neck indication. The milestone revenue in the first quarter of 2006 included a "catch-up" adjustment of approximately $112.7 million related to the actual product clinical development costs incurred from inception through December 31, 2005 as a percentage of the estimated total costs to be incurred over the term of the Commercial Agreement.

Manufacturing

        Manufacturing revenues consist of sales of ERBITUX to our corporate partners for commercial use. In accordance with the Commercial Agreement, we are contractually obligated to sell ERBITUX to BMS at our cost of production plus a 10% markup on bulk. We sell bulk inventory to Merck KGaA at our cost of production.

        During the first nine months of 2007, manufacturing revenue decreased by $7.1 million from the comparable period in 2006 due primarily to efficiencies in the manufacturing process of ERBITUX resulting in a decrease in the price we charge our partners for ERBITUX. Total volume purchases from our partners in the first nine months of 2007 increased by approximately 5% from the comparable period in 2006.

Collaborative Agreement Reimbursements

        Collaborative agreement reimbursement revenue consists primarily of reimbursements from our partners BMS and Merck KGaA under our collaborative agreements. There are certain categories for which we receive reimbursement from our partners: the cost of ERBITUX supplied to our partners for use in clinical studies, clinical and regulatory expenses, certain selling and administrative expenses, and a portion of royalty expense. During the nine months ended September 30, 2007, we earned $53.7 million in collaborative agreement revenue, which primarily consists of approximately $35.9 million earned from BMS, approximately $17.2 million earned from Merck KGaA and $600,000 as final payment from a former corporate partner, as compared to $50.8 million earned in the comparable period in 2006, of which $38.4 million was earned from BMS and approximately $12.4 million was earned from Merck KGaA. The increase in collaborative agreement revenue of $2.9 million is principally due to increases in reimbursement for clinical drugs of approximately $5.8 million and in the reimbursement of clinical expenses of approximately $5.0 million, $2.3 million for costs previously recorded by the Company in the first half of 2007 that are now reimbursable by

28

BMS. These increases were partially offset by a decrease in reimbursement for royalty expense of $8.5 million, primarily resulting from the lower reimbursement rate from BMS for third-party royalties, which dropped from 4.5% to 2.5% on January 1, 2007.

Research and Development

        Research and development expenses include costs associated with our in-house research programs, product and process development expenses, costs to manufacture our product candidates for clinical studies, quality assurance and quality control infrastructure. Research and development expenses also include our cost of inventory that is supplied to our corporate partners for use in clinical studies that are reimbursable from our corporate partners. Approximately $19.4 million and $13.5 million of costs representing research and development expenses in the first nine months of 2007 and 2006, respectively, were reimbursable and included under collaborative agreement reimbursement revenue as they represent inventory supplied to our partners for use in clinical studies.

        Research and development expenses for the nine months ended September 30, 2007 of $112.2 million increased by approximately $25.2 million, or 29%, from the comparable period in 2006. The increase is due primarily to the transition of our BB50 manufacturing facility from the production of ERBITUX to pipeline products on July 1, 2007. This transition resulted in inventory production costs for pipeline products being recorded as research and development expense as compared to the prior year when these costs were incurred and capitalized into the production of ERBITUX. As part of this transition we also experienced increased material costs associated with the development of our pipeline products of approximately $7.5 million which were expensed. In addition, we had an increase in shipments of ERBITUX to our partners for clinical studies of approximately $7.1 million, as well as the write-off of $3.6 million of previously capitalized costs associated with the development of our Spring Street location. These increases were partially offset by smaller decrease across various categories.

        For the full year of 2007, we expect research and development expenses to be in the range of approximately $155 to $160 million.

Clinical and Regulatory

        Clinical and regulatory expenses consist of costs to conduct our clinical studies and associated regulatory activities. Clinical and regulatory expenses also include certain amounts that are reimbursable from our corporate partners. As a result, approximately $14.4 million and $9.4 million of the costs included in this category for the first nine months of 2007 and 2006, respectively, are reflected as revenues under collaborative agreement reimbursement revenue since they represent costs that are reimbursable by our corporate partners.

        Clinical and regulatory expenses for the nine months ended September 30, 2007 amounted to $33.4 million, a decrease of $10.1 million, or 23%, from the comparable period in 2006. This decrease is due primarily to an adjustment of $7.6 million that was recorded by the Company as a result of the BMS Amendment, to reduce previously expensed ERBITUX development costs incurred during the period prior to signing the BMS Amendment, which fell under the newly established threshold amount and therefore are the sole responsibility of BMS.

        For the full year of 2007, we expect clinical and regulatory expense to be in the range of approximately $50 to $55 million.

Selling, General and Administrative

        Selling, general and administrative expenses include selling and administrative personnel costs, including related facility costs, additional costs to develop internal selling and field operations

29

capabilities and expenses associated with applying for patent protection for our technology and products. Selling, general and administrative expenses also include amounts reimbursable from our corporate partners. Approximately $967,000 and $957,000 of costs in the first nine months of 2007 and 2006, respectively, were reimbursable and included in collaborative agreement reimbursement revenue.

        Selling, general and administrative expenses for the nine months ended September 30, 2007 amounted to $54.7 million, a decrease of $2.3 million or 4% from the comparable period in 2006. Expenses in this category have decreased from the comparable period in 2006, mainly due to a $4.2 million decrease in personnel costs as a result of the turnover of executive level employees, some of whom have not been replaced. This decrease was partly offset by small increases in various other categories.

        For the full year of 2007, we expect total selling, general and administrative expenses to be in the range of approximately $75 to $80 million.

Royalties

        Royalty expense consists of obligations related to certain licensing agreements regarding ERBITUX. Due to the expiration of a patent we licensed, in July 2007 the royalty rate we pay on North American net sales decreased from 9.25% to 8.50%. We pay a low single-digit royalty on sales outside of North America, which will increase if sales outside of North America consist of ERBITUX produced in the United States. In 2007, we receive reimbursements from our corporate partners of 2.5% on North American net sales and a single-digit percentage on net sales outside of North America, which is reflected in collaborative agreement revenue. As a result, approximately $18.3 million and $26.9 million of royalty expense were reimbursable by our corporate partners and included as collaborative agreement revenue in the first nine months of 2007 and 2006, respectively.

        During the nine months ended September 30, 2007, we incurred royalty expense of $55.1 million, a decrease of $1.4 million, or 3% from the comparable period in 2006. The decrease is primarily due the fact that (1) prior to the second quarter of 2006, we paid royalties of approximately 12.25% of North American net sales and effective in the second quarter of 2006, our obligation decreased by 3%; and (2) as previouisly dicussed, as a result of the expiration in July 2007 of a patent we licensed, our total domestic royalty expense decreased from 9.25% to 8.5% These decreases in royalty rates were partially offset by the increased worldwide net sales of ERBITUX from $787.5 million for the first nine months of 2006 to $976.7 million in the first nine months of 2007.

Cost of Manufacturing Revenue

        We sell ERBITUX to BMS at our cost of production plus a 10% mark-up on bulk and to Merck KGaA at our cost of production. Therefore, depending on certain circumstances, such as the mix of demand from our partners, and the costs of filling and finishing ERBITUX bulk (for which we do not charge a 10% markup when selling to BMS), we expect that our gross margins on sales of ERBITUX may fluctuate from quarter to quarter.

        Cost of manufacturing revenue for the nine months ended September 30, 2007 amounted to $59.1 million, which includes a $3.1 million charge for batches of ERBITUX that were damaged during the period, compared to approximately $61.5 million in the comparable period of 2006. Excluding the costs of the damaged batches, our gross margin was 9%.

Litigation Settlement

        Litigation settlement expense of $50.0 million was recorded in the third quarter of 2007 resulting from the settlement agreement executed in September 2007 with MIT and Repligen. The total

30

settlement was $65.0 million, of which $50.0 million was attributable to an expired Repligen patent and was expensed in the period and $15.0 million was attributed to the sublicensed Abbott patents.

Other Income (Expense)

        Interest income for the nine months ended September 30, 2007 amounted to $39.2 million, an increase of approximately $10.8 million, or 38% from the comparable period in 2006. This increase is attributable to higher average interest rates and balances in our investment portfolio from the comparable period in 2006, due primarily to the receipt of a $250.0 million milestone payment we received from BMS on March 31, 2006.

        Interest expense for the nine months ended September 30, 2007 amounted to approximately $9.1 million, an increase of approximately $2.7 million, or 43% from the comparable period in 2006. The increase is primarily due to the fact that we finalized construction of our BB50 manufacturing facility in May 2006, and therefore, ceased capitalizing interest on the construction of the facility at that time.

        Other income for the third quarter of 2007 includes a gain of $3.8 million from the proceeds of an insurance reimbursement primarily for lost royalties on an ERBITUX shipment that was damaged in-transit during 2006.

Provision for Income Taxes

        Our estimated annual effective income tax rate for 2007 is approximately 41.5%, excluding the effect of any discrete charges. Additionally, for the nine months ended September 30, 2007, the Company has recognized a net discrete charge of approximately $4.3 million primarily related to certain tax return method changes filed as well as certain deferred tax charges. The estimated annual income tax rate is higher than the prior year's rate mainly due to the utilization in 2006 of fully reserved deferred tax assets. For the nine months ended September 30, 2006, the Company had also recorded a discrete benefit related to the partial release of the valuation allowance. We expect to pay cash taxes of approximately $4 million in 2007.

Net Income

        For the nine months ended September 30, 2007, we had net income of $59.7 million, or $0.69 per diluted common share compared with net income of $324.1 million, or $3.58 per diluted common share for the comparable period in 2006. The fluctuation in results was due to the factors noted above.

LIQUIDITY AND CAPITAL RESOURCES

        At September 30, 2007, our principal sources of liquidity consisted of cash and cash equivalents and securities available for sale of approximately $1.1 billion. Historically, we have financed our operations through a variety of sources, most significantly through the issuance of public and private equity and convertible notes, license fees and milestone payments and reimbursements from our corporate partners. Since the approval of ERBITUX on February 12, 2004, we began to generate royalty revenue and manufacturing revenue from the commercial sale of ERBITUX by our corporate partners and we have generated income from operations since 2004. As we continue to generate income, our cash flows from operating activities are expected to increase as a source to fund our operations. Therefore, we anticipate that our future financial condition and our future operating performance will continue to experience significant changes and that past performance will not likely be indicative of our future performance.

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SUMMARY OF CASH FLOWS

			September 30, 2007			September 30, 2006			Variance
Cash provided by (used in):
	Operating activities		$	(3,531	)	$	186,422		$	(189,953	)
	Investing activities			358,570			(261,485	)		620,055
	Financing activities			38,716			86,968			(48,252	)
		Net increase in cash and cash equivalents	$	393,755		$	11,905		$	381,850

        Historically our cash flows from operating activities have fluctuated significantly due to the nature of our operations and the timing of our cash receipts. During the first nine months of 2007, we used approximately $3.5 million in cash from operating activities, as compared to generating $186.4 million in the comparable period of 2006. The decrease in operating cash flows in the first nine months of 2007 is primarily due to the receipt of a $250.0 million milestone payment from our corporate partner BMS in March 2006, as a result of obtaining approval from the FDA for ERBITUX in a second indication, and the payment of $65.0 million to settle the Repligen/MIT litigation in September 2007, partially offset by an increase in cash flows from royalty revenues in 2007.

        Our primary sources and uses of cash from investing activities consist of purchases and sales activity in our investment portfolio, which we manage based on our liquidity needs, possible business development transactions and amounts used for capital expenditures. During the first nine months of 2007, we generated cash from investing activities of $358.6 million which consists of net proceeds of $367.4 million from sales and maturities of securities available for sale due to our decision to increase our money market fund investments until more stability returns to the financial markets. The proceeds were partially offset by approximately $8.8 million in acquisition of fixed assets. As of September 30, 2007, we had approximately $149.2 million of variable-rate financial instruments that failed at auction during the quarter. These investments are all AAA/Aaa rated and the interest continues to be paid by the holder of the notes. The Company believes that this loss position is temporary and that no asset impairment charge is needed at this time.

        Net cash flows generated in financing activities in 2007 were approximately $38.7 million, of which approximately $24.2 million of proceeds were generated from the exercise of stock options and sales under the Company's employee stock purchase plan, $14.0 million was generated from tax benefits associated with equity net operating losses that will be taken as a reduction on our tax returns, and $500,000 was generated through the sale of treasury stock.

        Our future working capital and capital requirements will depend upon numerous factors, including, but not limited to:

•

progress and cost of our research and development programs, pre-clinical testing and clinical studies;



•

the amount and timing of revenues earned from the commercial sale of ERBITUX;



•

our corporate partners fulfilling their obligations to us;



•

timing and cost of seeking and obtaining additional regulatory approvals;



•

possible business development transactions;



•

level of resources that we devote to the development of marketing and field operations capabilities;

32

•

costs involved in filing, prosecuting and enforcing patent claims; and legal costs associated with the outcome of outstanding legal proceedings and investigations;



•

status of competition; and



•

our ability to maintain existing corporate collaborations and establish new collaborative arrangements with other companies to provide funding to support these activities.

OFF-BALANCE SHEET ARRANGEMENTS

        We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.

Item 3.    Quantitative and Qualitative Disclosures About Market Risk

        Our holdings of financial instruments comprise a mix of U.S. dollar denominated securities that may include U.S. corporate debt, foreign corporate debt, U.S. government debt, foreign government debt, asset-backed securities, auction rate securities, and commercial paper. All such instruments are classified as securities available for sale. Generally, we do not invest in equity investments, commodities, foreign exchange contracts or use financial derivatives for trading purposes, however, we may make these investments depending upon our needs. Our debt security portfolio represents funds held temporarily pending use in our business and operations. We manage these funds accordingly. We seek reasonable assuredness of the safety of principal and market liquidity by investing in investment grade fixed income securities while at the same time seeking to achieve a favorable rate of return. Our market risk exposure consists principally of exposure to changes in interest rates. Our holdings are also exposed to the risks of changes in the credit quality of issuers. We invest in securities that have a range of maturity dates.

        The table below presents the principal amounts and related weighted average interest rates by year of maturity for our fixed and variable rate securities within our investment portfolio as of September 30, 2007: (in thousands, except interest rates)

	2007			2008			2009			2010			2011			2012 and Thereafter			Total			Fair Value
Fixed Rate	$	60,000		$	115,015		$	55,000		$	193,397		$	20,000		$	10,012		$	453,424		$	452,856
Average Interest Rate		3.53	%		4.10	%		4.33	%		5.39	%		5.5	%		5.70	%		4.70	%
Variable Rate(1)		—			1,801			—			—			—			175,020			176,821			158,487
Average Interest Rate		—			5.70	%		—			—			—			5.69	%		5.69	%
	$	60,000		$	116,816		$	55,000		$	193,397		$	20,000		$	185,032		$	630,245		$	611,343

(1)

These holdings primarily consist of U.S. corporate and foreign corporate floating rate notes. Interest on the securities is adjusted monthly, quarterly or semi-annually, depending on the instrument, using prevailing interest rates. These holdings are highly liquid and we consider the potential for loss of principal to be minimal.

        Our outstanding 1³/8% fixed rate convertible senior notes in the principal amount of $600.0 million due May 15, 2024 are convertible into our common stock at a conversion price of $94.69 per share, subject to certain restrictions as outlined in the indenture agreement. The fair value of fixed interest rate instruments is affected by changes in interest rates and in the case of the convertible notes by changes in the price of our common stock as well. The fair value of the convertible senior notes was approximately $559.5 million at September 30, 2007.

33

Item 4.    Controls and Procedures

Disclosure Controls and Procedures

        Our management, with the participation of our Chief Executive Officer and Interim Vice President, Finance, has evaluated the effectiveness of our "disclosure controls and procedures" (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this report. Based on such evaluation, our Chief Executive Officer and Interim Vice President, Finance have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information that we are required to disclose in the reports that we file or submit under the Exchange Act.

Changes In Internal Control Over Financial Reporting

        There has been no change in our internal control over financial reporting during the three months ended September 30, 2007 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

34

PART II
OTHER INFORMATION

Item 1.    Legal Proceedings

Intellectual Property Litigation

        As previously reported, on October 28, 2003, a complaint was filed by Yeda Research and Development Company Ltd. ("Yeda") against ImClone Systems and Aventis Pharmaceuticals, Inc. ("Aventis") in the U.S. District Court for the Southern District of New York (03 CV 8484). This action did not seek damages, but rather alleged that three individuals associated with Yeda should also be named as co-inventors on U.S. Patent No. 6,217,866, which relates to the therapeutic use of EGFR antibodies (such as ERBITUX, the Company's EGFR antibody product) in combination with chemotherapy. The Company has exclusively licensed this patent from Rhone-Poulenc Rorer Pharmaceuticals, now known as Sanofi-Aventis. On June 7, 2005, Yeda amended its U.S. complaint to seek sole inventorship of the subject patent. On November 4, 2005, the Court denied the Company's motion for summary judgment with respect to this matter, as filed with the Court on June 24, 2005. At the same time, the Court granted summary judgment to Yeda dismissing two of the Company's affirmative defenses. A bench trial on the merits of Yeda's complaint was held between June 5, 2006 and July 19, 2006. On September 18, 2006, the Court ruled in favor of Yeda by awarding it sole inventorship rights to the patent. The Company then appealed the Court's decision to the Court of Appeals for the Federal Circuit. The appeal was docketed on October 5, 2006 (as No. 2007-1012). Briefing is now complete. A hearing is scheduled for December 7, 2007 and a decision from the Federal Circuit is expected in due course. The Company, having had the advice of its patent counsel, plans to vigorously pursue this appeal.

        As previously reported, on September 20, 2006, subsequent to the Court's inventorship decision, the Company also filed an action (06 CV 7190) against Yeda in the U.S. District Court for the Southern District of New York seeking a declaratory judgment that U.S. Patent No. 6,217,866 is invalid. On October 31, 2006, Yeda filed an answer and counterclaim to the Company's declaratory judgment complaint in which Yeda alleges the Company is liable to Yeda for willful patent infringement, unjust enrichment and conversion, and seeks damages from the Company and an order requiring the Company to license the patent and pay Yeda royalties until the patent expires. The Company filed an answer denying all counterclaims. In addition, on November 7, 2007, the Company filed a first amended answer to defendant's counterclaims asserting that the Company's activities are protected by the safe harbor provisions of 35 U.S.C. 271(e)(1), that Yeda's claims for damages for any infringement more than six years prior to filing of its counterclaims are barred by the statute of limitations, and that federal law preempts Yeda's claims for unjust enrichment and conversion. The Company, having had the advice of its patent counsel, plans to vigorously pursue this action. The Company is unable to predict the outcome of these actions at this time. If the Company's appeal is unsuccessful and Yeda's sole inventorship rights to the patent are upheld and the Company is unsuccessful with respect to its declaratory judgment action, the Company may become obligated to pay Yeda a royalty and may be liable to Yeda for other damages.

        On March 25, 2004, an action was filed in the United Kingdom Patent Office requesting transfer of co-ownership to Yeda and amendment of patent EP (UK) 0 667 165 to add three Weizmann former employees as inventors. The Company was not named as a party in this action which relates to the European equivalent of U.S. Patent No. 6,217,866 discussed above. Accordingly, the Company intervened. On June 29, 2005, Yeda sought to amend its pleadings to seek sole ownership. That amendment was refused by the High Court and the Court of Appeal but was further appealed by Yeda to the House of Lords. The House of Lords heard Yeda's appeal on July 23-25, 2007. On October 24, 2007, the House of Lords issued a decision that reinstated the permission given by the Patent office, namely, that Yeda may proceed with a claim in relation to the EP (UK) to sole entitlement,

35

alternatively to joint entitlement with Aventis. A hearing on the substantive case relating to entitlement to the EP (UK) will now likely occur in 2008.

        On March 25, 2004, a German action was filed in the Munich District Court I, Patent Litigation Division, in which Yeda claims a 75% ownership interest in patent EP (DE) 0 667 165 based on its allegation that the inventorship on that patent was incorrect. The Company was not named as a party in this action which relates to the European equivalent of U.S. Patent No. 6,217,866 discussed above. Accordingly, the Company intervened. On October 7, 2005, Yeda sought to amend its claim to seek sole ownership. That amendment was refused by the Munich District Court and on appeal by the Munich Higher Regional Court in a Decision dated September 20, 2007. That decision will likely be appealed by Yeda to the German Supreme Court. Presently, Yeda's claim in respect of the EP(DE) remains restricted to joint entitlement.

        On March 25, 2005, Yeda filed an action in the Austrian Patent Office ("APO") against Aventis seeking sole entitlement of EP (AU) 0 667 165, as well as payment of legal costs and fees. The Company was not named as a party to this action which relates to the European equivalent of US Pat. No. 6,217,866 discussed above. Accordingly, the Company intervened. Aventis' Defence and the Company's Intervention were filed on February 15, 2006. Yeda's Reply to the Defence/Intervention was filed on February 12, 2007. The Company's Rejoinder was filed on September 14, 2007. The case has been sent to the Technical Examiner, who will report back to the Nullity Division of the APO in due course. The Company, having had the advice of its patent counsel, believes there are sound defenses to these actions, and it plans to vigorously defend against the claims asserted.

        On March 29, 2005, Yeda filed an action in the Tribunal de Grande Instance, Paris jointly against Aventis and the Company seeking sole entitlement of EP (FR) 0 667 165, as well as payment of damages, legal costs and fees. This is the European equivalent of US Pat. No. 6,217,866. Aventis and the Company filed their Defences on September 22, 2006. Yeda submitted a Reply to Defence on September 17, 2007. Additionally, Yeda requested the French Court to take jurisdiction over the 9 non-French counterparts of the "165 EP in: Belgium, The Netherlands, Luxembourg, Liechtenstein, Sweden, Switzerland, Spain, Italy and Greece. A preliminary challenge to the jurisdiction of the French Court to hear Yeda's claim to those non-French parts of the European Patent will be made and that preliminary challenge is likely to be heard in early 2008. The Company, having had the advice of its patent counsel, believes there are sound defenses to these actions, and it plans to vigorously defend against the claims asserted.

        As previously reported, on May 4, 2004, an action was filed against the Company by Massachusetts Institute of Technology ("MIT") and Repligen Corporation ("Repligen"). This action alleged that ERBITUX infringes U.S. Patent No. 4,663,281, which is owned by MIT and exclusively licensed to Repligen and that the Company should therefore pay damages. In September 2007, the parties signed settlement and certain sublicensing agreements, for which the Company paid $65.0 million in cash for full and final settlement of the claims against the Company in the matter, as well as for a royalty-free, irrevocable worldwide sublicense to technology patented under U.S. Patent No. 4,663,281. Repligen is responsible for providing MIT with its portion of the settlement payment. Repligen also granted to the Company a royalty-free, irrevocable worldwide sublicense for the future use of other patented technology, including U.S. Patent No. 5,665,578, which is owned by Abbott but to which Repligen has the power to sublicense under an agreement between Abbott and Repligen. U.S. Patent No. 5,665,578 is the patent upon which Abbott sued the Company for patent infringement earlier this year.

        As previously reported, on February 5, 2007, a complaint was filed against the Company by Abbott in the U.S. District Court for the District of Massachusetts (07-cv-10216). This action alleges that the manufacture and sale of ERBITUX infringes U.S. Patent No. 5,665,578, which is owned by Abbott and that the Company should therefore pay damages. On April 24, 2007, the Company filed an answer, which it amended on May 17, 2007, to this complaint denying all claims. The court has ordered a

36

mediation hearing to occur on December 20, 2007. The Company, having had the advice of its patent counsel, plans to vigorously defend against the claims asserted.

        In December 2002, Opposition Proceedings seeking to revoke EP (UK) 0 667 165 were brought by Scripps Research Institute, Amgen Inc., Abgenix, Inc., and YM Biosciences Inc. The Opposition Proceedings are suspended pending a final determination of the entitlement cases in Europe.

        On May 2, 2007, the Company filed an Opposition in the European Patent Office against EP 1,058,562 B1, which is a patent directed to, inter alia, the use of either radiation or chemotherapy in concert with an EGFR antibody that inhibits receptor dimerization. The patent is assigned to the University of Pennsylvania. Oppositions to that European Patent have also been filed by Amgen, Merck KGaA, Oncoscience, Genmab and Hoffmann La-Roche.

        No reserve has been established in the financial statements for any of the items described above in this Part II. Item 1—"Legal Proceedings—Intellectual Property Litigation" because the Company does not believe that such a reserve is required to be established at this time under Statement of Financial Accounting Standards No. 5. However, if in a future period, events in any such legal proceedings render it probable that a loss will be incurred and if such loss is reasonably estimable, the Company will establish such a reserve. Thus, it is possible that legal proceedings and settlements arising therefrom, if any, may have a material adverse impact on operating results for that period, on our balance sheet or both.

Item 1A.    Risk Factors

        There have been no material changes to the risk factors as set forth in the Company's Annual Report filed on Form 10-K for the year ended December 31, 2006.

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds

        On September 7, 2007, the Company sold 13,609 shares of treasury stock in a private placement exempt from registration in reliance on Section 4(2) under the Securities Act of 1933 to John H. Johnson, the Company's Chief Executive Officer, for an aggregate consideration of $500,000, or $36.74 per share, in order to enable Mr. Johnson to satisfy his obligation under his employment agreement to purchase $500,000 worth of Company common stock within three months of his commencement of employment.

Item 3.    Defaults upon Senior Securities

        Not applicable

Item 4.    Submission of Matters to a Vote of Security Holders

(a)	The Company held its annual meeting of stockholders on August 2, 2007 (the "Annual Meeting").
(b)	No response is required to Paragraph (b) because (i) proxies for the meeting were solicited pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended; (ii) there was no solicitation in opposition to those nominees listed in the proxy statement; and (iii) all such nominees were elected.
(c)	Each of the matters voted upon at the Annual Meeting were approved by the margins set forth below.

37

(i)

Proposal to approve nominees for the Board of Directors:

Name	In Favor	Withheld
Andrew R.J. Bonfield	63,823,716	498,289
Alexander J. Denner	45,758,217	18,561,788
Thomas F. Deuel	63,923,195	396,810
Jules Haimovitz	63,916,490	403,515
Carl C. Icahn	63,198,467	1,121,538
Peter S. Liebert	63,905,436	411,569
Richard C. Mulligan	63,784,408	535,597
David Sidransky	63,903,605	416,400
Charles Woler	63,912,894	407,111

(ii)

Proposal to ratify the appointment of KPMG LLP to serve as the Company's independent registered public accounting firm for the fiscal year ending December 31, 2007:

FOR	63,461,501
AGAINST	778,734
ABSTAIN	79,770

Item 5.    Other Information

        Not applicable

Item 6.    Exhibits

Exhibit No.	Description
10.41	Amendment No. 2 to the Development, Promotion, Distribution and Supply Agreement, dated as of July 27, 2007, among the Company, Bristol-Myers Squibb Company and E.R. Squibb & Sons, L.L.C.
10.42	Employment Agreement between the Company and John H. Johnson dated August 8, 2007
31.1	Certification of the Company's Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of the Company's Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32	Certification of the Company's Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

38

SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	IMCLONE SYSTEMS INCORPORATED (Registrant)
Date: November 9, 2007	By:	/s/  JOHN H. JOHNSON John H. Johnson Chief Executive Officer Principal Executive Officer
Date: November 9, 2007	By:	/s/  PETER R. BORZILLERI Peter R. Borzilleri Interim Vice President, Finance Principal Financial Officer

39

EX-10.41

Exhibit 10.41

[NOTE: CERTAIN PORTIONS OF THIS DOCUMENT HAVE BEEN MARKED TO INDICATE THAT CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR SUCH PORTIONS BY IMCLONE SYSTEMS INCORPORATED. THESE PORTIONS HAVE BEEN MARKED WITH AN ASTERISK ENCLOSED IN BRACKETS (I.E., [*]). THE CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION]

AMENDMENT NO. 2 TO DEVELOPMENT, PROMOTION,
DISTRIBUTION AND SUPPLY AGREEMENT

        This AMENDMENT NO. 2 dated as of July 27, 2007 (this "Amendment No. 2"), is entered into by and among E.R. SQUIBB & SONS, LLC, a limited liability company organized and existing under the laws of the State of Delaware, having offices located at Route 206 and Province Line Road, Princeton, New Jersey 08543 ("ERS"), BRISTOL-MYERS SQUIBB COMPANY, a corporation organized and existing under the laws of the State of Delaware, having offices located at Route 206 and Province Line Road, Princeton, New Jersey 08543 ("BMS") and IMCLONE SYSTEMS INCORPORATED, a corporation organized under the laws of the State of Delaware, having offices located at 180 Varick Street, New York, New York 10014 (the "Company").

        WHEREAS ERS, BMS and the Company (collectively, the "Parties") are parties to the Development, Promotion, Distribution and Supply Agreement among ERS, BMS and the Company dated as of September 19, 2001, as amended by Amendment No. 1 dated as of March 5, 2002 ("Amendment No. 1"), by and among the Parties (the agreement as so amended, the "Agreement"), pursuant to which the Parties have agreed to collaborate on the development and commercialization of Products in the Territory;

        WHEREAS simultaneously with the execution of this Amendment No. 2, and as a condition to the effectiveness of this Amendment No. 2, the Parties are entering into a Letter of Intent Regarding the Japan Co-Commercialization Agreements (as defined below) and the Side Letter (as defined below), and executing the Release and Waiver (as defined below);

        NOW THEREFORE, in consideration of the mutual agreements herein contained and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, and subject to the conditions set forth herein, the Parties hereby agree to amend the Agreement as follows:

        Definitions.    Capitalized terms used but not defined in this Amendment No. 2 shall have the meanings set forth in the Agreement. References in the Agreement to "this Agreement" shall be deemed to refer to the Agreement as amended by this Amendment No. 2. Notwithstanding the foregoing, the date of the Agreement, as amended hereby, shall in all instances remain September 19, 2001, and references to "the date hereof", "the date of this Agreement" and "the Effective Date" in the Agreement shall continue to refer to September 19, 2001.

Confidential Treatment Requested

        SECTION 1.    Amendments to Section 1 and Exhibits.

        (a)   Sections 1.78 and 1.95 of the Agreement are hereby deleted in their entirety.

        (b)   Sections 1.19 and 1.20 of the Agreement are hereby deleted in their entirety and replaced with the following:

"1.19 "Clinical Budget" shall mean (i) the budget for Development Costs for each Approved Study and Contingent Approved Study that is included in Exhibit B or C of the 2007-2009 Clinical Development Plan as of the date of this Amendment No. 2, as set forth in such Exhibit B or C, as the case may be, (ii) subject to Sections 4.3(b)(ii) and 4.3(h)(ii), each budget for Development Costs for each Approved Study and Contingent Approved Study that is included in Exhibit A of the 2007-2009 Clinical Development Plan as of the date of this Amendment No. 2 as set forth in such Exhibit A; and (iii) each budget for Development Costs for each Proposed Study or Emergency Study that becomes an Approved Study or a Contingent Approved Study that is not set forth in the 2007-2009 Clinical Development Plan as of the date of this Amendment No. 2 that is included in a subsequent Clinical Development Plan and that is approved in accordance with the provisions of this Agreement, in each case as such Clinical Budget may be modified or amended from time to time in accordance with the provisions of this Agreement. Each Clinical Budget shall set forth the approved aggregate Development Costs through completion for each Approved Study and each Contingent Approved Study included in the Clinical Development Plan (including the budgeted Development Costs for each such Approved Study and Contingent Approved Study for each calendar year included in the applicable Clinical Development Plan and the estimated Development Costs, if any, for each subsequent calendar year through completion) and shall include the other cost information required by Exhibit 1.20 for each Approved Study and each Contingent Approved Study included in the Clinical Development Plan.

1.20 "Clinical Development Plan" shall mean (a) the 2007-2009 Clinical Development Plan and (b) each subsequent Clinical Development Plan prepared and approved in accordance with the provisions of Sections 4.3(c) and 4.3(f), in each case as such Clinical Development Plan may be modified or amended from time to time to add or delete an Approved Study or a Contingent Approved Study or otherwise modified or amended in accordance with the provisions of Sections 2.1(b)(ii), (iii), (iv) and (v). Each Clinical Development Plan shall include for each Approved Study and Contingent Approved Study (other than any Clinical Study that was included in a Clinical Development Plan prior to the date of this Amendment No. 2), all the information required by Exhibit 1.20 including a Clinical Budget.

1.20A "2007-2009 Clinical Development Plan" shall mean the Clinical Development Plan set forth in Exhibit 1.20A that has been agreed to among the Parties as of the date of this Amendment No. 2, as the same may be amended or modified in accordance with the provisions of this Agreement."

        (c)   Section 1 of the Agreement is further amended by inserting the following definitions in alphabetical order:

"1.5A "Alliance Committee" shall have the meaning assigned to such term in Section 2.10(a).

1.10A "Approved Study" shall mean a study that the Parties have agreed shall be conducted and jointly funded in accordance with Section 4.6, which comprises (a) each study designated as an Approved Study in the 2007-2009 Clinical Development Plan as of the date of this Amendment No. 2 and (b) each other study that shall be designated as

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an Approved Study in a subsequent Clinical Development Plan in accordance with the procedures set forth in Section 4.3(f), each Proposed Study or Emergency Study that is added to the then-current Clinical Development Plan as an Approved Study in accordance with the provisions of Sections 4.3 (f) or 4.3 (i), as the case may be, and each Contingent Approved Study that shall be designated as an Approved Study in accordance with the provisions of Section 4.3(h).

1.10B "Attributable Other Party SFI Expenses" shall have the meaning assigned to such term in Section 7.2(b).

1.20A "Clinical Study" shall mean (a) any clinical study undertaken (i) for approval of new indications for the Product, (ii) to obtain a compendial listing, (iii) for the purpose of providing data that will result in a labeling change for the Product, or (iv) for any other purpose under an IND for the Product (e.g., Phase I through Phase III studies), (b) any Phase IIIb Clinical Trial or Phase IV Clinical Trial for the Product, and (c) any non-clinical study that is (1) required, requested or advised by a Regulatory Authority or (2) undertaken with the intention to obtain or maintain a regulatory approval or compendial listing, or to develop and provide additional information for inclusion in the label for the Product. A clinical study shall be deemed to have commenced when the first patient in such study is enrolled. For clarity, for purposes of this Agreement, Clinical Studies do not include clinical trials or other studies where a Product is used in such study as provided in Section 4.3(a)(iii).

1.28A "Contingencies" shall mean, with respect to any Contingent Approved Study, the specific contingencies, decision points, and "go/no go" criteria for the commencement or continuation of such Contingent Approved Study as set forth in the Clinical Development Plan for each such Contingent Approved Study.

1.28B "Contingent Approved Study" shall mean a study that the Parties have unanimously agreed shall be conducted if the Contingencies related to such study are satisfied in which event the commencement of such study shall be jointly funded in accordance with Section 4.6, which comprises (a) each study designated as a Contingent Approved Study in the 2007-2009 Clinical Development Plan as of the date of this Amendment No. 2 and (b) each other study that shall be designated as a Contingent Approved Study in a subsequent Clinical Development Plan in accordance with the procedures set forth in Section 4.3(f) or each Proposed Study that is added to the then-current Clinical Development Plan as a Contingent Approved Study in accordance with the provisions of Section 4.3(f).

1.37A "Emergency Study" shall mean a Clinical Study that is to be performed to respond to a significant patient safety issue, a significant toxicity management issue or a request from a Regulatory Authority to conduct a Clinical Study relating to a significant patient safety issue or a significant toxicity management issue.

1.54A "Incremental SFI Profit Or Loss" means Net Sales in North America of the Products that are attributable to a given Successful Indication for a given period, less the following costs, if any, incurred by the applicable Non-Proposing Party or any of its Affiliates for such Products that are attributable or reasonably allocable to such Successful Indication with respect to such period, including without limitation: [*]. For purposes of this Section 1.54A, where the definition of [*] refers to "Japan", such reference to "Japan" will be replaced by North America.

^*

Omitted and filed separately pursuant to a request for confidential treatment submitted to the Securities and Exchange Commission.

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1.60A "Japan Co-Commercialization Agreements" shall mean the Amended and Restated Co-Development and Co-Commercialization Agreement for Erbitux in Japan among Bristol-Myers Squibb Company, Bristol-Myers K.K., E.R. Squibb & Sons, LLC, Merck KGaA, Merck Ltd. and ImClone Systems Incorporated and the BMS-ImClone Japan Agreement among Bristol-Myers Squibb Company, Bristol-Myers K.K., E.R. Squibb & Sons, LLC and ImClone Systems Incorporated, in each case as referenced in the Letter of Intent Regarding the Japan Co-Commercialization Agreements.

1.60B "Letter of Intent Regarding the Japan Co-Commercialization Agreements" means the letter executed by the Parties as of the date of this Amendment No. 2 with respect to certain matters related to the co-development and co-promotion of the Compound in Japan, including the negotiation and agreement of the Japan Co-Commercialization Agreements.

1.72A "Material Modification" shall have the meaning assigned to such term in Section 2.1(b)(v).

1.77A "Non-Proposing Party" shall have the meaning assigned to such term in Section 4.3(g)(i).

1.88A "Phase IIIb Clinical Trial" means a human clinical trial of a Compound or Product for an indication that (a) is not required for receipt of Regulatory Approval for such indication for a country but which may be useful in providing additional drug profile data in support of such Regulatory Approval (whether the trial is commenced prior to or after receipt of such Regulatory Approval), or (b) is required, requested or advised by a Regulatory Authority as a condition of, or in connection with, obtaining or maintaining such Regulatory Approval (whether the trial is commenced prior to or after receipt of such Regulatory Approval). For clarity, for purposes of this Agreement, Phase IIIb Clinical Trials do not include clinical trials or other studies where a Product is used in such study as provided in Section 4.3(a)(iii).

1.88B "Phase IV Clinical Trial" means a product support human clinical trial, or other test or study, of a Compound or Product for an indication that is either (a) commenced after receipt of the initial Regulatory Approval for such indication in the country for which such trial is being conducted and that is conducted within the parameters of the Regulatory Approval for the Compound or Product for such indication (and which may include investigator-sponsored clinical trials ("ISTs")), but shall not include any Phase IIIb Clinical Trial or (b) is an IST that does not fall within the approved label for a Product. Phase IV Clinical Trials may include trials or studies conducted in support of pricing/reimbursement, epidemiological studies, life cycle management, modeling and pharmacoeconomic studies, post-marketing surveillance studies, outcome research studies and health economics studies. For clarity, for purposes of this Agreement, Phase IV Clinical Trials do not include clinical trials or other studies where a Product is used in such study as provided in Section 4.3(a)(iii).

1.91A "Proposed Study" shall have the meaning assigned to such term in Section 4.3(e).

1.91B "Proposing Party" shall have the meaning assigned to such term in Section 4.3(g)(i).

1.95 "Release and Waiver" shall mean the Release and Waiver between the Parties dated as of the date of this Amendment No. 2.

1.96A "Responsible Party" shall mean (a) with respect to any Approved Study or Contingent Approved Study, the Party responsible for conducting such study or, if such study is to be conducted by a CRO, the Party responsible for overseeing the conduct of

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such study, in each case as set forth in the Clinical Development Plan and (b) with respect to any Sole-Funded SFI Registrational Study, the Proposing Party for such Sole-Funded SFI Registrational Study.

1.99A "Scientific Expert" means a disinterested individual without any conflict-of-interest who is not affiliated with either Party and who has appropriate scientific, technical or regulatory expertise to resolve any disputes referred to him or her under this Agreement. A Scientific Expert shall not be or have been at any time within the previous five years an Affiliate, employee, consultant, officer or director of either Party or any of its respective Affiliates.

1.99B "Selected Scientific Expert" shall have the meaning assigned to such term in Section 2.1(d)(vi).

1.99C "SFI" shall have the meaning assigned to such term in Section 4.3(g)(ii).

1.99D "SFI Net Canadian Sales" shall have the meaning assigned to such term in Section 7.2(b).

1.99E "SFI Net U.S. Sales" shall have the meaning assigned to such term in Section 7.2(b).

1.101A "Side Letter" shall mean the Side Letter between the Parties dated as of the date of this Amendment No. 2.

1.101C "Sole-Funded SFI Registrational Study" shall mean a Clinical Study solely funded individually by either the Company or ERS subject to the provisions of Section 4.3(g).

1.102A "Specified Phase III Study" shall have the meaning assigned to such term in 4.3(g)(i).

1.102B "Specified Signal Finding Study" shall have the meaning assigned to such term in 4.3(g)(i).

1.104A "Successful Indication" shall have the meaning assigned to such term in Section 4.3(g)(ii)."

        (d)   Exhibits 4.3(A), 4.3(B), 8.12(b)(i) and 8.12(b)(ii) are hereby deleted in their entirety.

        (e)   New Exhibits 1.20 and 1.20(A) and Schedule 4.3(g)(i) are hereby added to the Agreement in the form of Exhibits 1.20 and 1.20(A) and Schedule 4.3(g)(i) to this Amendment No. 2.

        (f)    The definition of "Development Costs" included in the Financial Appendix is hereby deleted in its entirety and replaced with the following:

"'Development Costs'

        (a)   In each of North America and Japan, "Development Costs" means the development costs incurred by each Party with respect to a Product in North America or Japan, as the case may be, from the Effective Date of the Agreement through the later of (i) the date of Registration (including thereafter costs to maintain or expand such Registration) of such Product in the Field in North America or Japan, as the case may be, or (ii) the date of termination of development efforts of such Product in the Field, as applicable in North America or Japan. Such costs shall comprise those costs incurred to obtain, maintain and/or expand the relevant authorization and/or ability to manufacture, formulate, fill, use, ship, sell and/or distribute the relevant Product in commercial quantities to Third Parties in North America or Japan, as the case may be.

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        (b)   In each of North America and Japan, "Development Costs" shall include, without limitation, costs of research or development including costs of studies on the toxicological, pharmacokinetical, metabolical or clinical aspects of a Product conducted internally or by individual investigators or consultants necessary for the purpose of obtaining, maintaining and/or expanding marketing/ pricing approval of a Product (including costs of Clinical Studies), costs for preparing, submitting, reviewing or developing data or information for the purpose of submission to a governmental authority to obtain, maintain and/or expand marketing/pricing approval of a Product, and applicable Allocable Overhead.

        (c)   In each of North America and Japan, "Development Costs" shall also include, without limitation, expenses for data management, statistical designs and studies, document preparation, and other administration expenses associated with the clinical testing program or post-marketing studies required to maintain product approvals.

        (d)   For a given Approved Study or Contingent Study included in the Clinical Development Plan or a Sole-Funded SFI Registrational Study, Development Costs shall include the internal FTE Costs (for which a Party's internal FTE Rate shall be calculated based on the relevant Parties' costs set forth in Annex I to the Financial Appendix, which shall be reviewed and mutually agreed by ERS and the Company prior to the beginning of each new calendar year beginning with calendar year 2008) and direct out-of-pocket costs that are paid or incurred by a Party or any of its Affiliates that are attributable or reasonably allocable to such Approved Study, Contingent Approved Study or Sole-Funded SFI Registrational Study, including without limitation:

          (i)  the internal FTE Costs and direct out-of-pocket costs incurred in connection with the planning and conduct of any such Approved Study, Contingent Approved Study or Sole-Funded SFI Registrational Study, including grant costs and contract research organization ("CRO") costs;

         (ii)  the Fully-Burdened Manufacturing Cost for (1) Compound or Product used in such Approved Study, Contingent Approved Study or Sole-Funded SFI Registrational Study, and (2) the manufacture, purchase or packaging of comparators, placebo or other clinical supplies for use in such Approved Study, Contingent Approved Study or Sole-Funded SFI Registrational Study (with the manufacturing costs for such comparators, placebo or clinical supplies that are (A) manufactured by a Party or its Affiliates to be determined in the same manner as Manufacturing Costs are determined for such Product or (B) purchased by a Party or its Affiliates from a Third Party based on the actual cost of purchase), as well as the reasonable direct costs and expenses of disposal of drugs and other supplies used in such Approved Study, Contingent Approved Study or Sole-Funded SFI Registrational Study;

        (iii)  regulatory expenses (including internal FTE costs and direct out-of-pocket costs) incurred that directly relate to such Approved Study, Contingent Approved Study or Sole-Funded SFI Registrational Study;

        (iv)  costs of recruitment initiatives for such Approved Study, Contingent Approved Study or Sole-Funded SFI Registrational Study; and

         (v)  Allocable Overhead relating to such Approved Study, Contingent Approved Study or Sole-Funded SFI Registrational Study.

If any cost or expense is specifically identifiable or reasonably allocable to more than one activity set forth above, such cost or expense shall only be counted as Development Costs with respect to one of such activities, provided that, other than with respect to any cost or expense incurred in connection with the obtaining, maintaining and/or expanding marketing/pricing

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approval of a Product, no expense that is specifically identifiable or reasonably allocable as a Marketing Cost may be counted as a Development Cost.

        (e)   Each Party will use its respective project accounting systems and will review and approve its respective project accounting systems and methodologies with the other Parties, provided that in determining the amount of Development Costs incurred in a given year for purposes of the cost sharing provisions of Section 4.6, the Parties will use the cash basis of accounting."

        (g)   New Annex I to the Financial Appendix is hereby added to the Agreement in the form of Annex I to this Amendment No. 2.

        (h)   The definition of "Marketing Costs" included in the Financial Appendix is hereby amended by inserting the following at the end thereof:

        "(d) "Marketing Costs" will specifically exclude the costs of [*]."

^*

Omitted and filed separately pursuant to a request for confidential treatment submitted to the Securities and Exchange Commission.

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        SECTION 2.    Amendments to Section 2 of the Agreement.

        (a)   Section 2.1(b) is hereby deleted in its entirety and replaced with the following:

        "(b) Responsibilities.    The JEC shall perform the following functions:

          (i)  oversee the development and commercialization of the Compounds and Products pursuant to the terms of this Agreement;

         (ii)  review and approve, pursuant to Section 4.3(f), each Clinical Development Plan, including the Clinical Budget for each Approved Study and Contingent Approved Study included in such Clinical Development Plan;

        (iii)  review and approve, pursuant to Section 4.3(f) or 4.3(i), as applicable, each Proposed Study and each Emergency Study proposed to be added as an Approved Study or a Contingent Approved Study to the then-current Clinical Development Plan pursuant to Section 4.3(e) or 4.3(i), as applicable, including the related Clinical Budget for such Proposed Study or Emergency Study;

        (iv)  (A) review and approve, pursuant to Section 4.3(h), the determination that either (1) each of the Contingencies applicable to a Contingent Approved Study has been satisfied and such Contingent Approved Study shall become an Approved Study or (2) at least one of the Contingencies related to a Contingent Approved Study has failed to be satisfied and such Contingent Approved Study shall be removed from the Clinical Development Plan; and (B) review and approve, pursuant to Section 4.3(h), the protocol and updated Clinical Budget for each Contingent Approved Study that shall become an Approved Study;

         (v)  review and approve (A) any amendments or modifications to any Approved Study or Contingent Approved Study included in the then-current Clinical Development Plan that would reasonably be expected to result in an increase in the aggregate Clinical Budget through the completion of such Approved Study or Contingent Approved Study, as applicable, of [*] or more or (B) any other material modification or amendment to any Approved Study or Contingent Approved Study, including (1) any delay in the expected start date of such Approved Study or Contingent Approved Study by more than [*], (2) any change of [*] or more in the number of patients enrolled or to be enrolled in such approved Study or Contingent Approved Study, (3) a change in the primary or secondary endpoints or any other key provisions of the study protocol design (including study power), publication strategy or data analysis relating to such Approved Study or Contingent Approved Study, (4) any modification or amendment to the Contingencies required to be satisfied for any Contingent Approved Study to become an Approved Study or (5) the early termination of an Approved Study or Contingent Approved Study (any such amendment or modification in clause (A) or (B) of this Section 2.1(b)(v), a "Material Modification"), provided that this Section 2.1(b)(v) shall not apply to the termination of a Contingent Approved Study as a result of failure to satisfy the Contingencies applicable to such Contingent Approved Study (which is the subject of Section 2.1(b)(iv)), provided further that, pending the JEC approval of early termination under this Section 2.1(b)(v)(B)(5), the Responsible Party for an Approved Study or Contingent Approved Study may suspend such Approved Study or Contingent Approved Study, as the case may be, if it believes that failure to do so would jeopardize the welfare or safety of patients;

        (vi)  at each meeting of the JEC review a comparison of the actual expenses to the budgeted expenses for the year-to-date (including Development Costs for each Approved

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Omitted and filed separately pursuant to a request for confidential treatment submitted to the Securities and Exchange Commission.

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Study and each Contingent Approved Study), as current as practicable to a date immediately prior to the date of the meeting;

       (vii)  review and evaluate the progress of the other Committees;

      (viii)  review and take action on any other matters within the scope of the authority of another Committee that are referred to the JEC by such other Committee;

        (ix)  review and, if unanimously agreed, reallocate spending from the Marketing Budget to the Clinical Budget;

         (x)  establish and empower a finance committee, which shall consist of an equal number of representatives from each of the Company and BMS (the "Finance Committee") to advise the JEC and make recommendations to the JEC for the areas it has responsibility as provided in Section 2.2;

        (xi)  at least once each year, meet with each of the other Committees (which meetings do not need to include all of the other Committees at the same meeting);

       (xii)  in accordance with the procedures established in Section 2.1(d), resolve disputes, disagreements and deadlocks unresolved by the other Committees; and

      (xiii)  have such other responsibilities as may be assigned to the JEC pursuant to this Agreement or as may be mutually agreed upon by the Parties from time to time."

        (b)   Section 2.1(d) of the Agreement is hereby deleted in its entirety and replaced with the following:

        "(d) Decision-making.

          (i)  The JEC may make decisions with respect to any subject matter that is subject to the JEC's decision-making authority and functions as set forth in Section 2.1(b). Except as otherwise specified in Section 2.1(d)(ii), (iii), (iv), (v) or (vii), all decisions of the JEC shall be made by unanimous vote or written consent, with the Company and BMS each having, collectively, one vote in all decisions. The JEC shall use reasonable best efforts to resolve the matters within its roles and functions or otherwise referred to it.

         (ii)  Subject to the provisions of Section 2.1(d)(vii), with respect to any Critical Issue (other than a Critical Issue that relates to a decision to be made pursuant to Section 2.1(b)(ii), (iii), (iv), (v) or (ix)), if the JEC cannot reach consensus within five business days after the matter has been brought to the JEC's attention, the matter shall be referred on the sixth business day: (A) if the matter is the subject of a deadlock arising in the PDC and is not the subject of Section 4.8 or 4.9, to the co-chairperson of the JEC designated by the Company for resolution, provided that any decision made by the co-chairperson of the JEC designated by the Company may not increase the aggregate Clinical Budget for such Approved Study or Contingent Approved Study through completion by [*] or more; (B) if the matter is the subject of a deadlock arising in the JCC (other than a matter under Section 2.4(b)(xiv) with respect to Trademarks), to the co-chairperson of the JEC designated by BMS for resolution, provided that any decision made by the co-chairperson of the JEC designated by BMS may only increase or decrease the overall amount of the relevant Marketing Budget within the ranges provided in and otherwise in accordance with Section 5.2; (C) if the matter is under Section 2.4(b)(xiv) with respect to Trademarks and is subject of a deadlock arising in the JCC, to the co-chairperson of the JEC designated by the Company for resolution; and (D) except as provided in Section 8.12(f), if the matter is the subject of a deadlock arising in the JMC, to the co-chairperson of the JEC designated by the Company for resolution. In the event that the co-chairperson of a Party designated to resolve a dispute

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Omitted and filed separately pursuant to a request for confidential treatment submitted to the Securities and Exchange Commission.

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under this Section 2(d)(ii) is not immediately available, then such matter shall be referred to a senior executive officer of such Party who has been designated by such Party for such resolution.

        (iii)  Subject to the provisions of Section 2.1(d)(vii), with respect to all other matters that are subject to the JEC's decision-making authority (other than any matter that relates to a decision to be made pursuant to Section 2.1(b)(ii), (iii), (iv), (v) or (ix)), if the JEC cannot reach consensus within 20 business days after it has met and attempted to reach such consensus, the matter shall be referred on the twenty-first business day: (A) if the matter is the subject of a deadlock arising in the PDC and is not the subject of Section 4.8 or 4.9, to the co-chairperson of the JEC designated by the Company for resolution, provided that any decision made by the co-chairperson of the Company may not increase the aggregate Clinical Budget for such Approved Study or Contingent Approved Study through completion by [*] or more; (B) if the matter is the subject of a deadlock arising in the JCC (other than a matter under Section 2.4(b)(xiv) with respect to Trademarks), to the co-chairperson of the JEC designated by BMS for resolution, provided that any decision made by the co-chairperson of BMS may not increase or decrease the overall amount of the relevant Marketing Budget within the ranges provided in accordance and otherwise in accordance with Section 5.2; (C) if the matter is under Section 2.4(b)(xiv) with respect to Trademarks and is the subject of a deadlock arising in the JCC, to the co-chairperson of the JEC designated by the Company for resolution; and (D) except as provided in Section 8.12(f), if the matter is the subject of a deadlock arising in the JMC, to the co-chairperson of the JEC designated by the Company for resolution.

        (iv)  Subject to the provisions of Section 2.1(d)(vii), in the event of a deadlock of the JEC with respect to a Critical Issue (other than a Critical Issue that relates to a decision to be made pursuant to Section 2.1(b)(ii), (iii), (iv), (v) or (ix)) that is not resolved pursuant to Section 2.1(d)(ii) and the matters underlying such deadlock fall into the class of disputes that may be arbitrated by the Parties in accordance with Section 16.13, then such matters shall be resolved pursuant to the Accelerated Arbitration Provisions of Section 16.13(b). Subject to the provisions of Section 2.1(d)(vii), in the event of a deadlock of the JEC with respect to any other matters that are not resolved pursuant to Section 2.1(d)(iii) and such matters fall into the class of disputes that may be arbitrated by the Parties in accordance with Section 16.13, then such matters shall be resolved pursuant to Section 16.13(a).

         (v)  Subject to the provisions of Section 2.1(d)(vii), in the event of a deadlock of the JEC with respect to any matter that relates to a decision to be made pursuant to Section 2.1(b)(ii), (iii), (iv), (v) or (ix), such deadlock shall be resolved solely as follows:

        (A)  if the matter relates to a deadlock under Section 2.1(b)(ii), the new Clinical Development Plan shall be deemed to include only (1) Approved Studies, (2) Contingent Approved Studies for which there has not been a determination pursuant to Section 2.1(b)(iv) to remove such Contingent Approved Study from the Clinical Development Plan, and (3) any other studies that the Parties have agreed unanimously in accordance with the provisions of Section 4.3(f) should be included as an Approved Study or Contingent Approved Study in the new Clinical Development Plan;

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Omitted and filed separately pursuant to a request for confidential treatment submitted to the Securities and Exchange Commission.

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        (B)  if the matter relates to a deadlock regarding an Emergency Study under Section 2.1(b)(iii), the Emergency Study shall become an Approved Study and shall be added to the then-current Clinical Development Plan, provided that if the deadlock relates to the scientific design of the Emergency Study, the Parties shall seek the advice of the Regulatory Authority on the appropriate scientific design of the Emergency Study and shall implement the Regulatory Authority's recommendations;

        (C)  if the matter relates to a deadlock regarding a Proposed Study under Section 2.1(b)(iii), the Proposed Study shall not become an Approved Study or a Contingent Approved Study;

        (D)  (1) if the matter relates to a deadlock under Section 2.1(b)(iv) (other than with respect to approval of an updated Clinical Budget), the matter shall be submitted to binding arbitration by a Scientific Expert pursuant to Section 2.1(d)(vi) and (2) if the matter relates to a deadlock under Section 2.1(b)(iv) with respect to approval of an updated Clinical Budget, such matter shall be resolved pursuant to the Accelerated Arbitration Provisions of Section 16.13(b) based on the agreed protocol for such Contingent Approved Study, provided that such arbitration may not result in an increase in the Clinical Budget of more than [*] in excess of the Clinical Budget for such Contingent Approved Study in the Clinical Development Plan as of the date of this Amendment No. 2;

        (E)  if the matter relates to a deadlock regarding a Material Modification under Section 2.1(b)(v), the amendment or modification shall not be made; and

        (F)  if the matter relates to a deadlock regarding the reallocation of funds under Section 2.1(b)(ix), the reallocation shall not be made.

For the avoidance of doubt, a deadlock of the JEC with respect to any matter that relates to a decision to be made pursuant to Section 2.1(b)(ii), (iii), (iv), (v) or (ix) shall not be a dispute that may be arbitrated pursuant to Section 16.13.

        (vi)  In the event of a deadlock of the JEC with respect to a matter described in Section 2.1(d)(v)(D), the matter shall be referred for arbitration to a Scientific Expert who is mutually agreed by the Parties. If the Parties cannot agree on a mutually acceptable Scientific Expert within 30 calendar days after the JEC has determined that it can not reach agreement, then within five business days after the expiration of such 30-calendar day period, each of ERS and the Company shall appoint one Scientific Expert who shall jointly select a third Scientific Expert within five business days after the last to occur of their respective appointments to arbitrate the referred matter. The Scientific Expert mutually agreed by the Parties or, if the Parties cannot agree, the third Scientific Expert selected by the Party-appointed Scientific Experts is referred to as the "Selected Scientific Expert". ERS and the Company shall instruct the Selected Scientific Expert to render a determination of any such dispute within 15 business days after his selection. The dispute shall be resolved by submission of documents unless the Selected Scientific Expert determines that an oral hearing is necessary. The Selected Scientific Expert shall, within the overall 15 business day time constraint, determine what shall be conclusively deemed to be fair and appropriate deadlines for submitting documents and dates, if any, of oral hearings. Each Party shall pay its own expenses of arbitration, and the expenses of the Scientific Experts shall be equally shared between ERS and the Company. Any decision rendered by the Selected Scientific Expert shall be final and binding upon the Parties. Application may be made to any court having

*

Omitted and filed separately pursuant to a request for confidential treatment submitted to the Securities and Exchange Commission.

11

jurisdiction for a judicial acceptance of the decision and an order of enforcement, as the case may be. This Section 2.1(d)(vi) shall not prohibit a Party from seeking injunctive relief from a court of competent jurisdiction in the event of a breach or prospective breach of this Agreement by any other Party which would cause irreparable harm to the first Party.

       (vii)  If the JEC cannot reach consensus with respect to any matter that is subject to the JEC's decision-making authority, and the co-chairs of the JEC unanimously agree, the matter shall be referred first to the Alliance Committee for review in accordance with the provisions of Section 2.10 before the provisions of Section 2.1(d)(ii), (iii), (iv) or (v), as applicable, shall be invoked. In the event of such referral, the periods of time set forth in Section 2.1(d)(ii), (iii), (iv) or (v), as applicable, shall be tolled during the period of the Alliance Committee's review of the referred matter. If within five business days (in the case of any referred matter that is to be resolved pursuant to Section 2.1(d)(ii)) or 20 business days (in the case of any referred matter that is to be resolved pursuant to Section 2.1(d)(iii), (iv) or (v)) after having received the Alliance Committee's response, the JEC again cannot reach consensus, the matter shall be resolved in accordance with Section 2.1(d)(ii), (iii), (iv) or (v), as applicable.

      (viii)  For all purposes under this Agreement, any decision made pursuant to this Section 2.1(d) shall be deemed to be the decision of the JEC."

        (c)   Section 2.3(b) is hereby deleted in its entirety and replaced with the following:

        "(b) Responsibilities.    The PDC shall perform the following functions:

          (i)  review and recommend, pursuant to Section 4.3(f), to the JEC for consideration and approval each Clinical Development Plan, including the related Clinical Budget for each Approved Study and Contingent Approved Study included in such Clinical Development Plan;

         (ii)  review and recommend, pursuant to Section 4.3(f) or 4.3(i), as applicable, to the JEC for consideration and approval each Proposed Study and each Emergency Study proposed to be added as an Approved Study or a Contingent Approved Study to the then-current Clinical Development Plan pursuant to Section 4.3(e) or 4.3(i), as applicable, including the proposed Clinical Budget for such Proposed Study or Emergency Study;

        (iii)  (A) review and recommend, pursuant to Section 4.3(h), to the JEC that either (1) each of the Contingencies applicable to a Contingent Approved Study has been satisfied and such Contingent Approved Study should become an Approved Study or (2) that at least one of the Contingencies related to a Contingent Approved Study has failed to be satisfied and such Contingent Approved Study should be removed from the Clinical Development Plan; and (B) review and recommend, pursuant to Section 4.3(h), the protocol and updated Clinical Budget for each Contingent Approved Study that shall become an Approved Study;

        (iv)  oversee the implementation of the Clinical Development Plans and any Sole-Funded SFI Registrational Studies;

         (v)  review and approve or, in the case of any Material Modification, recommend to the JEC for approval any amendment or modification to the Clinical Development Plan;

        (vi)  at each meeting of the PDC review a comparison of the actual Development Costs incurred to the budgeted Development Costs for the year-to-date for each Approved Study and each Contingent Approved Study, as current as practicable to a date immediately prior to the date of the meeting;

       (vii)  review and evaluate progress of each Approved Study or Contingent Approved Study and any Sole-Funded SFI Registrational Studies, provided that the PDC shall not have authority to make any determination that any Party is in breach of this Agreement;

12

      (viii)  review and approve all compassionate use of Products;

        (ix)  review and approve the joint publication strategy together with the JCC, and take the lead in coordinating such joint review and approval; and

         (x)  have such other responsibilities as may be assigned to the PDC pursuant to this Agreement or as may be mutually agreed upon by the Parties from time to time."

        (d)   Section 2.3(d) is hereby deleted in its entirety and replaced with the following:

        "(d) Decision-making.

          (i)  The PDC may make decisions with respect to any subject matter that is subject to the PDC's decision-making authority and functions as set forth in Section 2.3(b). All decisions of the PDC shall be made by unanimous vote or written consent, with the Company and BMS each having, collectively, one vote in all decisions.

         (ii)  If, with respect to any matter related to a decision under Section 2.3(b)(iii) (other than with respect to approval of an updated Clinical Budget), the PDC cannot reach consensus within twenty business days after it has first met and attempted to reach such consensus, the matter shall be referred on the twenty-first business day to each Party's most senior scientific officer for review. If within 20 business days after having received the matter from the PDC, such officers cannot reach agreement, the matter shall be referred on the twenty-first business day to the Alliance Committee for review and comment in accordance with Section 2.10. If within twenty business days after having received the Alliance Committee's response, the PDC again cannot reach consensus, the matter should be referred on the twenty-first business day to the JEC for resolution.

13

        (iii)  If, with respect to a Critical Issue that is subject to the PDC's decision-making authority (other than a Critical Issue that relates to a decision pursuant to Section 2.3(b)(iii)(A)), the PDC cannot reach consensus within five business days after it has first met and attempted to reach such consensus, the matter shall be referred on the sixth business day to the Alliance Committee for review and comment in accordance with Section 2.10. If within five business days after having received the Alliance Committee's response the PDC again cannot reach consensus, the matter shall be referred on the sixth business day to the JEC.

        (iv)  If, with respect to any other matter that is subject to the PDC's decision-making authority, the PDC cannot reach consensus within 20 business days after it has first met and attempted to reach such consensus, the matter shall be referred on the twenty-first business day to the Alliance Committee for review and comment in accordance with Section 2.10. If within 20 business days after having received the Alliance Committee's response, the PDC again cannot reach consensus, the matter shall be referred on the twenty-first business day to the JEC for resolution.

         (v)  For all purposes under this Agreement, any decision made pursuant to this Section 2.3(d) shall be deemed to be the decision of the PDC."

        (e)   Section 2.4(b) of the Agreement is hereby deleted in its entirety and replaced with the following:

        "(b) Responsibilities.    The JCC shall perform the following functions:

          (i)  oversee the preparation and implementation of the Marketing Plans;

         (ii)  oversee and coordinate the sales efforts of ERS and the Company;

        (iii)  review and approve Marketing Plans;

        (iv)  discuss the state of the markets for Products in the Territory and opportunities and issues concerning the commercialization of the Products, including consideration of marketing and promotional strategy, marketing research plans, labeling, Product positioning and Product profile issues, to determine in which countries in the Territory to launch Products, the priority for same and the amount and kind of marketing and selling effort appropriate, in accordance with the Marketing Plans;

         (v)  review and approve the total annual budget for all Phase IV Clinical Trials, but not the budget or protocol for the individual studies themselves which must be approved by the PDC and the JEC pursuant to Section 4.3(f);

        (vi)  review and approve all pricing decisions and managed care contracting strategies, in accordance with the Marketing Plans;

       (vii)  review and approve all indigent care use of Products;

      (viii)  periodically review sales mix of Products sold by ERS through various customer channels;

        (ix)  review and approve allocations within the Marketing Budgets, from time to time;

         (x)  review and approve each subsequent marketing budget in accordance with Section 5.2(c);

        (xi)  review data and reports arising from and generated in connection with the commercialization of the Products, including, but not limited to the Marketing Plans, Marketing Budgets and sales forecasts;

14

       (xii)  at each meeting of the JCC, review a comparison of actual sales and marketing expenses to the budgeted expenses in the relevant Marketing Budget for the year-to-date, as current as practicable to a date immediately prior to the date of the meeting;

      (xiii)  review and approve the general guidelines applicable to particular Products to be followed in the development of promotional materials and promotional activities to be used by ERS and the Company in the promotion of such Products (such guidelines to be consistent with the then-current Marketing Plan applicable to such Products);

      (xiv)  consider and select Trademarks to be used for the marketing and sale of the Products in each country in the Territory;

       (xv)  review and approve the joint publication strategy together with the PDC;

      (xvi)  evaluate and determine the existence or non-existence of a Co-Promotion Problem referred to the JCC in accordance with Section 5.6(e); and

     (xvii)  have such other responsibilities as may be assigned to the JCC pursuant to this Agreement or as may be mutually agreed upon by the Parties from time to time."

        (f)    Section 2.4(d) is hereby deleted in its entirety and replaced with the following:

        "(d) Decision-making.

          (i)  The JCC may make decisions with respect to any subject matter that is subject to the JCC's decision-making authority and functions as set forth in Section 2.4(b). All decisions of the JCC shall be made by unanimous vote or written consent, with the Company and BMS each having, collectively, one vote in all decisions. If, with respect to a Critical Issue that is subject to the JCC's decision-making authority, the JCC cannot reach consensus within five business days after it has first met and attempted to reach such consensus, the matter shall be referred on the sixth business day to the Alliance Committee for review and comment in accordance with Section 2.10. If within five business days after having received the Alliance Committee's response, the JCC again cannot reach consensus, the matter shall be referred on the sixth business day to the JEC for resolution.

         (ii)  If, with respect to any other matter that is subject to the JCC's decision-making authority, the JCC cannot reach consensus within 20 business days after it has first met and attempted to reach such consensus, the matter shall be referred on the twenty-first business day to the Alliance Committee for review and comment in accordance with Section 2.10. If within 20 business days after having received the Alliance Committee's response, the JCC again cannot reach consensus, the matter shall be referred on the 21st business day to the JEC for resolution.

        (iii)  For all purposes under this Agreement, any decision made pursuant to this Section 2.4(d) shall be deemed to be the decision of the JCC."

        (g)   Section 2.5(d) is hereby deleted in its entirety and replaced with the following:

        "(d) Decision-making.

          (i)  The JMC may make decisions with respect to any subject matter that is subject to the JMC's decision-making authority and functions as set forth in Section 2.5(b). All decisions of the JMC shall be made by unanimous vote or written consent, with the Company and BMS each having, collectively, one vote in all decisions. If, with respect to a Critical Issue that is subject to the JMC's decision-making authority, the JMC cannot reach consensus within five business days after it has first met and attempted to reach such consensus, the matter shall be referred on the sixth business day to the Alliance Committee for review and comment in

15

accordance with Section 2.10. If within five business days after having received the Alliance Committee's response, the JMC again cannot reach consensus, the matter shall be referred on the sixth business day to the JEC for resolution.

         (ii)  If, with respect to any other matter that is subject to the JMC's decision-making authority, the JMC cannot reach consensus within 20 business days after it has first met and attempted to reach such consensus, the matter shall be referred on the twenty-first business day to the Alliance Committee for review and comment in accordance with Section 2.10. If within 20 business days after having received the Alliance Committee's response, the JMC again cannot reach consensus, the matter shall be referred on the 21st business day to the JEC for resolution.

        (iii)  For all purposes under this Agreement, any decision made pursuant to this Section 2.4(d) shall be deemed to be the decision of the JMC."

        (h)   Section 2.6 is hereby deleted in its entirety and replaced with the following:

        "2.6    Agenda; Minutes of Committee Meetings.

        (a)   Each Party shall use reasonable efforts to provide written notice to the other Party not less than three business days prior to any Committee meeting of any agenda items it intends to raise at the respective Committee meeting.

        (b)   Subject to Section 2.6(c), definitive minutes of all Committee meetings shall be finalized no later than 30 calendar days after the meeting to which the minutes pertain, as follows:

          (i)  Within ten days after a Committee meeting, the secretary of such Committee shall prepare and distribute to all members of such Committee and each Alliance Manager draft minutes of the meeting. Such minutes shall provide a list of any actions, decisions or determinations approved by such Committee and a list of any issues yet to be resolved, either within such Committee or through the relevant escalation process. Without limiting the generality of the foregoing, all approvals by the JEC with respect to matters under Sections 2.1(b)(ii), (iii), (iv), (v) or (ix), by the PDC with respect to matters under Sections 2.3(b)(i), (ii), (iii) or (iv) or by JCC with respect to matters under Section 2.4(b)(i) shall be recorded in the minutes of the related meeting of the JEC, the PDC or the JCC, as applicable.

         (ii)  The Alliance Managers shall then have ten days after receiving such draft minutes to collect comments thereon from the Committee members of its Party and provide them to the secretary of such Committee.

        (iii)  Upon the expiration of such second ten-day period, the Alliance Managers and the secretary of such Committee shall have an additional ten days to discuss each other's comments and finalize the minutes. The secretary and chairperson(s) of such Committee shall each sign and date the final minutes. The signature of such chairperson(s) and secretary upon the final minutes shall indicate each Party's assent to the minutes.

        (c)   If at any time during the preparation and finalization of Committee meeting minutes, the secretary of such Committee and the Alliance Managers do not agree on any issue with respect to the minutes, such issue shall be submitted for resolution to the co-chairs of the applicable committee. If the co-chairs of the applicable committee do not agree within ten business days, such issue shall be resolved as provided in Section 2.3(d), 2.4(d) or 2.5(d), as the case may be. The decision resulting from the foregoing process shall be recorded by the secretary in amended finalized minutes for said meeting. All other issues in the minutes that are not subject to the foregoing process shall be finalized within the 30-calendar-day period as provided in Section 2.6(a)."

16

        (i)    Section 2 is further amended by inserting the following at the end of the Section:

        "2.10    Alliance Committee.    

        (a)    Members.    Immediately after effectivness of this Amendment No. 2, the Parties shall establish an alliance committee consisting of the JEC co-chairs and one additional representative from each of the Company and BMS (the "Alliance Committee"). Each of the Company and BMS may replace any or all its representatives on the Alliance Committee at any time upon written notice to the other in accordance with Section 16.5 of this Agreement.

        (b)    Responsibilities.    The Alliance Committee shall meet and review any matter referred to it by the JEC, the PDC, the JCC or the JMC pursuant to Section 2.1(d), 2.3(d), 2.4(d) or 2.5(d), as applicable, within ten business days of receipt of notice of such matter, and shall make a recommendation to the referring Committee as to the appropriate resolution of the referred matter. All recommendations of the Alliance Committee shall be made by unanimous vote or written consent, with the Company and BMS each having, collectively, one vote in all decisions. The Alliance Committee's recommendation shall be provided to the referring Committee within 30 calendar days after the Alliance Committee has first met and reviewed the matter. If the Alliance Committee cannot reach a unanimous agreement on a recommendation within 30 calendar days after the Alliance Committee has first met and reviewed the matter, then, unless the Alliance Committee shall otherwise unanimously agree and notify the referring Committee, the Alliance Committee shall be deemed to have responded that it cannot reach an agreement on a recommendation and the matter shall revert back to the referring Committee for further action. Minutes of the Alliance Committee shall not be required unless the Parties' members on the Alliance Committee otherwise agree, and recommendations of the Alliance Committee need not be reduced to writing except as the members of the Alliance Committee may unanimously agree. The Alliance Committee shall not have the power to make any decisions, and any recommendations of the Alliance Committee shall only be deemed advisory and for consideration by the applicable referring Committee.

        (c)    Term; Expenses.    The Alliance Committee shall exist until the termination or expiration of this Agreement, or for such longer period as necessary to perform the remaining responsibilities assigned to it under this Agreement. Each Party shall be responsible for all travel and related costs and expenses for its members and other representatives to attend meetings of, and otherwise participate on, the Alliance Committee."

        SECTION 3.    Amendment to Section 4.3 of the Agreement.    Section 4.3 of the Agreement is hereby deleted in its entirety and replaced with the following:

        "4.3    Clinical Development Plans and Clinical Budget.

        (a)   (i) The Parties intend that there shall be a Clinical Development Plan prepared each calendar year for the Territory (other than Japan) on a rolling three-year basis during the term of the Agreement. Each Clinical Development Plan shall set forth each Approved Study and each Contingent Approved Study being conducted or to be conducted (subject, in the case of any Contingent Approved Study, to the satisfaction of all applicable Contingencies) during the three-year period covered by such Clinical Development Plan. Each Clinical Development Plan shall include, for each Approved Study and Contingent Approved Study (other than any Clinical Study that was included in a Clinical Development Plan prior to the date of this Amendment No. 2), all information required by Exhibit 1.20, including a Clinical Budget. A Clinical Development Plan also may include information with respect to Proposed Studies, provided that the Parties shall not be obligated to conduct any such Proposed Studies and references in this Agreement to the Clinical Development Plan shall not be deemed to include any such Proposed Studies.

17

         (ii)  (A) Except for a Sole-Funded SFI Registrational Study, as provided in Section 4.3(g), none of the Parties (nor any of their Affiliates) shall conduct any Clinical Study involving a Compound or Product or using tissues, fluids or other materials that were obtained from a patient in a Clinical Study (or that were obtained from patients in a study in furtherance of the development of the Product that was co-funded by the Parties or was part of a Clinical Development Plan that existed prior to the date of this Amendment No. 2) related to the development, commercialization, manufacture, marketing, pricing or sale of Product in the Territory, unless such Clinical Study shall have been approved as an Approved Study or a Contingent Approved Study in accordance with provisions of Section 4.3(f) or an Emergency Study in accordance with Section 4.3(i).

        (B)  Any Party may, at its own cost and expense and without the consent of the other Party, conduct a study in furtherance of the research and/or development of the Compound other than a Clinical Study, provided that if such study relates to pharmacogenomics, allergy or hypersensitivity reactions related to the Product, prior to commencement of such study, such Party shall submit a description of such study for review and comment by the PDC. Such Party may, but shall not be required to, propose that any such study (other than any study that falls within the scope of Section 4.3(a)(iii)) be included as an Approved Study or a Contingent Approved Study in the Clinical Development Plan, provided that, if such study is proposed but is not approved as an Approved Study or a Contingent Approved Study in accordance with the provisions of Section 4.3(f), the proposing Party may proceed with such study at its own risk and expense. Except as required by applicable law, no Party shall publicly disclose or publish the results of any study conducted in accordance with this Section 4.3(a)(ii)(B) without the prior approval of the PDC.

        (iii)  Notwithstanding anything to the contrary set forth in this Agreement, either Party (or any of its Affiliates) may, at its own cost and expense and without the consent of the other Party, conduct clinical trials or any other studies for the development of any other product that is not a Competing Product and that is owned or controlled by it in which a Product is used in such study within the labeling approved for such Product by the Regulatory Authority for the country in which the clinical trial is conducted.

        (iv)  The clinical development plan for Japan shall be prepared in accordance with the applicable provisions of the Japan Co-Commercialization Agreements or, if such Japan Co-Commercialization Agreements shall no longer be in effect, as the Parties shall mutually agree.

        (b)   (i) Upon effectiveness of this Amendment No. 2, the 2007-2009 Clinical Development Plan and the Clinical Budget included in the 2007-2009 Clinical Development Plan shall replace all other pre-existing clinical development plans and clinical budgets under this Agreement.

         (ii)  The Parties agree that certain matters set forth in the 2007-2009 Clinical Development Plan with respect to Approved Studies that have not yet been finalized shall be finalized in accordance with the following provisions:

        (A)  For each Approved Study included in Exhibit A of the 2007-2009 Clinical Development Plan as of the date of this Amendment No. 2, the PDC shall be responsible for finalizing the Clinical Budget and, where the identity of the Responsible Party is "TBD", determining the Responsible Party, as applicable, as promptly as practicable. Notwithstanding anything in this Agreement to the contrary, if the PDC cannot reach consensus with respect to the Clinical Budget or the

18

Responsible Party, as applicable, for an Approved Study by August 31, 2007, then the matter shall be referred to the Alliance Committee for resolution. If the Alliance Committee cannot reach agreement by September 21, 2007, then the matter shall be referred to the JEC for resolution. If the JEC cannot reach resolution by September 30, 2007, such matter shall be resolved pursuant to the Accelerated Arbitration Provisions of Section 16.13(b) based on the agreed protocol for such Approved Study, provided that such arbitration may not result in an increase in (1) the Clinical Budget for any such individual Approved Study of more than [*] in excess of the Clinical Budget for such Approved Study in the Clinical Development Plan as of the date of this Amendment No. 2 and (2) the Clinical Budget for all such Approved Studies of more than [*] in the aggregate in excess of the Clinical Budget for all Approved Studies in the Clinical Development Plan as of the date of this Amendment No. 2.

        (B)  For each Approved Study included in Exhibit A of the 2007-2009 Clinical Development Plan as of the date of this Amendment No. 2 for which the determination whether to use a CRO to conduct such Approved Study is marked "TBD", such determination shall be made in accordance with the provisions of Section 4.5(a).

        (iii)  During the 90-calendar-day period following the execution of this Amendment No. 2, the Parties will review each currently ongoing Phase IV Clinical Trial (other than the two-week dosing study for Head and Neck Cancer) to determine whether it can be wound down more quickly or terminated. With respect to any such Phase IV Clinical Trial that the Parties agree can be wound down more quickly or terminated, the Responsible Party for such Phase IV Clinical Trial is hereby authorized to take such action as it shall deem appropriate to wind-down or terminate such Phase IV Clinical Trial, as applicable, in accordance with the agreement of the Parties. The other Party shall cooperate with the Responsible Party in such winding-down or termination, as applicable.

        (c)   Not later than October 31 of each calendar year during the term of this Agreement, commencing with and including 2008, the PDC shall develop a proposed Clinical Development Plan for the three calendar years next following each such calendar year with the goal of finalizing such proposed Clinical Development Plan not later than December 15 of such calendar year. A Clinical Development Plan shall not become finalized unless and until it is approved in accordance with the provisions of Section 4.3(f).

*

Omitted and filed separately pursuant to a request for confidential treatment submitted to the Securities and Exchange Commission.

19

        (d)   Unless otherwise unanimously agreed by the Parties pursuant to the approval process in Section 4.3(f), each subsequent Clinical Development Plan shall include: (1) each Approved Study (including each Contingent Approved Study that shall have become an Approved Study in accordance with Section 4.3(h)) unless such Approved Study will have been completed or terminated prior to the commencement of the subsequent Clinical Development Plan and (2) each Contingent Approved Study (excluding any Contingent Approved Study for which a determination has been made in accordance with Section 2.1(b)(iv) that such Contingent Approved Study shall be removed from the Clinical Development Plan). Each subsequent Clinical Development Plan shall also include the Proposed Studies that the Parties agree shall be included as Approved Studies or Contingent Approved Studies, as the case may be, in such subsequent Clinical Development Plan in accordance with the provisions of Section 4.3(g). Each subsequent Clinical Development Plan shall include for each Approved Study and Contingent Approved Study, all the information required by Exhibit 1.20.

        (e)   Each of ERS and the Company may propose to include a new study as an Approved Study or a Contingent Approved Study in a subsequent Clinical Development Plan or to amend any then-current Clinical Developmental Plan to include a new study as an Approved Study or Contingent Approved Study (any such proposed new study, a "Proposed Study") by providing written notice to the other Party, together with the information required by Exhibit 1.20 with respect to such Proposed Study, including a proposed Clinical Budget (with the Parties to so approach Merck KGaA to co-fund such Proposed Study if either Party believes it appropriate to do so, provided that such approach to Merck KGaA shall not delay such submission of such Proposed Study to the PDC for its review and recommendation in accordance with Section 4.3(f) by more than 60 calendar days). The Party seeking to add such Proposed Study also shall promptly provide the other Party such additional information with respect to the Proposed Study as the other Party shall reasonably request. The provisions of this Section 4.3(e) shall not apply to any Emergency Study (which is the subject of Section 4.3(i)). Such Proposed Study shall not be included in a subsequent Clinical Development Plan as an Approved Study or Contingent Approved Study or added to the then-current Clinical Development Plan as an Approved Study or Contingent Approved Study unless and until it is approved in accordance with the provisions of Section 4.3(f).

        (f)    In order for a proposed Clinical Development Plan developed pursuant to Section 4.3(c) to be approved as a Clinical Development Plan or for a Proposed Study to be approved as an Approved Study or a Contingent Approved Study and added to the then-current Clinical Development Plan, (i) the PDC must review and unanimously recommend such proposed Clinical Development Plan or Proposed Study, as applicable, including all protocols developed for each Approved Study or Contingent Approved Study to be included in a Clinical Development Plan, to the JEC for approval, and (ii) the JEC must unanimously approve such proposed Clinical Development Plan or Proposed Study, as applicable, including all protocols developed for each Approved Study or Contingent Approved Study to be included in a Clinical Development Plan, all in accordance with the provisions of Sections 2.1(b)(ii) and (iii) and 2.3(b)(i) and (ii). Each Party can withhold its consent in its sole and absolute discretion to the inclusion of any Proposed Study in a proposed Clinical Development Plan or the approval of any Proposed Study to be added to the then-current Clinical Development Plan.

        (g)   (i) If any of the Contingent Approved Studies set forth on Schedule 4.3(g)(i) (each a "Specified Phase III Study") shall not become an Approved Study pursuant to Section 4.3(h) but the corresponding Approved Study set forth on Schedule 4.3(g)(i) (each, a "Specified Signal Finding Study") produced positive results (e.g., it demonstrated a sufficient signal in prolongation of Progression Free Survival ("PFS") or time to progression versus standard of

20

care) such that it would be reasonable in the opinion of a Party (the "Proposing Party") to continue to the corresponding Specified Phase III Study (with any dispute between the Parties as to whether such specified Signal Finding Study did produce such positive results to be referred to a scientific advisory board with three members, one appointed by each of ERS and the Company and the third appointed by such appointees, for a non-binding recommendation), and, after proposing such Specified Phase III Study as a Proposed Study in accordance with the provisions of Section 4.3(e) and, if such Proposed Study is not approved as an Approved Study and the Proposing Party wishes to fund individually such Proposed Study as a "Sole-Funded SFI Registrational Study", the Proposing Party shall give written notice to the other Party (the "Non-Proposing Party") of its intent to conduct such Proposed Study as a Sole-Funded SFI Registrational Study, and shall provide to the Non-Proposing Party an updated Clinical Budget for such Sole-Funded SFI Registrational Study including all the budget information that would be required by Exhibit 1.20 if such Sole-Funded SFI Registrational Study were an Approved Study and any information with respect to proposed amendments or modifications that the Proposing Party proposes to make with respect to such Proposed Study that were not previously provided to the Non-Proposing Party and considered when such Specified Phase III Study was proposed as a Proposed Study but not approved as an Approved Study pursuant to Section 4.3(f). If the Non-Proposing Party again decides not to approve such Specified Phase III Study as an Approved Study, then the Proposing Party shall have the right to conduct such Specified Phase III Study as a Sole-Funded SFI Registrational Study on the same basis as it had initially proposed to conduct such Proposed Study as amended or modified by any proposed amendments or modifications disclosed to the Non-Proposing Party pursuant to the preceding sentence, and subject to the following terms:

        (A)  The Proposing Party shall pay 100% of the Development Costs related to such Sole-Funded SFI Registrational Study;

        (B)  Such Sole-Funded SFI Registrational Study shall not be conducted if in the opinion of the Non-Proposing Party the Sole-Funded SFI Registrational Study presents a medical risk/benefit that is so unfavorable as to be incompatible with the welfare or safety of patients.

        (C)  Following commencement of the Sole-Funded SFI Registrational Study, the Proposing Party shall provide written notice to the Non-Proposing Party of any proposed amendment or modification to the Sole-Funded SFI Registrational Study not less than 20 business days prior to making such modification or amendment. The Proposing Party shall have the right to make such modifications or amendments to the Sole-Funded SFI Registrational Study, provided that the Proposing Party first shall have provided the Non-Proposing Party with such additional information with respect to such proposed amendment or modification as the Non-Proposing Party shall reasonably request and a reasonable period of time to review and comment on such proposed amendments or modifications, and provided further that such proposed amendment or modification shall not be made if in the opinion of the Non-Proposing Party it presents a medical risk/benefit that is so unfavorable as to be incompatible with the welfare or safety of patients.

         (ii)  All Parties shall benefit from any Sole-Funded SFI Registrational Study to the same extent as if such Sole-Funded SFI Registrational Study had been jointly funded by the Parties, provided that if such Sole-Funded SFI Registrational Study results in regulatory approval in the U.S. or Canada of a line of therapy in a new tumor type for which regulatory approval has not previously been granted with respect to the Product not later than the date that is two years prior to the expiration of the Term (the satisfaction of such conditions resulting in a "Successful Indication" or "SFI"), then, at the

21

Non-Proposing Party's election (such election to be made by such Non-Proposing Party within 30 calendar days after the Proposing Party has delivered written notice to such Non-Proposing Party that such regulatory approval has been received), either (A) the Proposing Party shall be solely entitled to, and shall solely bear, the Incremental SFI Profit Or Loss attributable to such Successful Indication or (B) the Non-Proposing Party shall pay to the Proposing Party an amount equal to [*] of the lesser of (1) the amount of Development Costs attributable to such Sole-Funded SFI Registrational Study that the Non-Proposing Party would have been responsible to fund if such Sole-Funded SFI Registrational Study had been an Approved Study funded in accordance with the provisions of Section 4.6 (i.e., based on the Clinical Budget that was presented to the Non-Proposing Party when it made the final decision not to fund such Sole-Funded SFI Registrational Study pursuant to Section 4.3(g)(i)) and (2) the amount of Development Costs attributable to such Sole-Funded SFI Registrational Study that it would have been responsible to fund in accordance with the provisions of Section 4.6 based on the Development Costs actually incurred. If the Non-Proposing Party elects clause (A) with respect to any SFI, the Parties shall work together in good faith to finalize and implement a process for determining Incremental SFI Profit Or Loss attributable to such Successful Indication, including a methodology for determining the amount of adjustments to net sales and costs incurred by each Party and its Affiliates that are attributable to, or reasonably allocable to, such SFI and a methodology for such allocation and the mechanics for payments related to Incremental SFI Profit Or Loss and adjustments to Distribution Fees payable as a result of such election. If such Non-Proposing Party elects to make the payments in clause (B) above with respect to any SFI, such payments shall be made by wire transfer in immediately available funds in equal quarterly installments in advance over a three-year period, the first payment to made on the first day of the first calendar quarter following receipt of the applicable FDA approval. For clarity, if such Non-Proposing Party elects to make the payment referred to in clause (B) with respect to any SFI, then the Parties shall jointly co-promote such SFI and shall benefit from such SFI in each case to the same extent as if the Sole-Funded SFI Registrational Study that resulted in such SFI had been jointly funded by the Parties.

        (iii)  If the Non-Proposing Party shall have elected to allow the Proposing Party to receive/bear the Incremental SFI Profit Or Loss under Section 4.3(g)(ii)(A), then the Proposing Party, but not the Non-Proposing Party, shall:

        (A)  be solely responsible for the sales force detailing, marketing and medical education activities for such SFI, provided that ERS shall retain the right to book all sales and determine the terms and conditions of sale (including pricing and managed care contracting strategies) and amount and terms of any adjustments to net sales;

        (B)  be solely responsible for all Marketing Costs, medical education activity costs, regulatory costs, Sales Costs and other costs incurred by either Party or any of its respective Affiliates that are attributable to or reasonably allocable to such SFI;

        (C)  be solely entitled to develop the Marketing Plan and Marketing Budget for such SFI, provided that such Marketing Plan for such SFI be reviewed by the JCC and the JCC shall have determined it to be consistent in all key respects (including product positioning) with the Marketing Plan approved by the JCC for all other indications for the Product that ERS and the Company are co-promoting;

*

Omitted and filed separately pursuant to a request for confidential treatment submitted to the Securities and Exchange Commission.

22

        (D)  be solely entitled to, and shall solely bear, the entire Incremental SFI Profit Or Loss that is attributable to such SFI.

If the Proposing Party is the Company, then ERS shall pay to the Company such Incremental Profit, and the Company shall pay to ERS for any Incremental Loss, attributable to such SFI, in each case on a quarterly basis. If the Proposing Party is ERS, then ERS shall be entitled to such Incremental SFI Profit, and shall bear any Incremental SFI Loss, attributable to such SFI, but shall reimburse the Company for any costs incurred by the Company or any of its Affiliates that are included in the determination of Incremental SFI Profit Or Loss on a quarterly basis. All payments pursuant to this Section 4.3(g)(iii) shall be made by wire transfer in immediately available funds not later than seventy-five days after the end of the applicable calendar quarter in which there is any amount of Incremental SFI Profit Or Loss for such SFI. If the Proposing Party and the Non-Proposing Party cannot agree on the determination of any matter pertaining to the calculation of Incremental SFI Profit Or Loss attributable to such SFI for a given accounting period, including the determination of any amounts to be taken into account in the determination of such Incremental SFI Profit Or Loss for such SFI, then either Party may submit such dispute to arbitration pursuant to Section 16.13.

        (iv)  Each Proposing Party shall be solely responsible for, and hereby assumes, any and all risks of personal injury or property damage attributable to the acts or omissions of such Proposing Party and/or any of its Affiliates, and their respective directors, officers, employees, agents and independent contractors (e.g., CROs) for each Sole-Funded SFI Registrational Study conducted by such Proposing Party. Each Proposing Party shall indemnify, defend, and hold harmless the Non-Proposing Party and its Affiliates, and their respective directors, officers, employees, agents and independent contractors (e.g., CROs) from and against any and all liabilities, damages, losses, costs and expenses (including the reasonable fees of attorneys and other professionals) to the extent arising out of claims, actions, suits or proceedings that may be brought, in each case that are attributable to or arise out of the (A) acts or omissions of such Proposing Party or its Affiliates, and their respective directors, officers, employees, agents and independent contractors (e.g. CROs), in connection with each Sole-Funded SFI Registrational Study conducted by such Proposing Party or (B) with respect to each SFI for which such Party is the Proposing Party and the Non-Proposing Party shall have elected to allow the Proposing Party to receive/bear the Incremental SFI Profit Or Loss under Section 4.3(g)(ii)(A) for such SFI, the development, marketing, sale, use or commercialization of the Product for such SFI. Nothing in this Section 4.3(g)(iv) shall limit the indemnification obligations of any Party in Section 12.2 and 12.3. The provisions of Sections 12.4 and 12.5 with respect to claims for indemnification shall be applicable to any claim for indemnification pursuant to this Section 4.3(g)(iv).

        (h)   (i) In order for a Contingent Approved Study to become an Approved Study, (A) the PDC must review and unanimously recommend to the JEC whether a Contingent Approved Study has satisfied each of the Contingencies related to such Contingent Approved Study and shall become an Approved Study and (B) the JEC must review and unanimously approve that such Contingencies related to the Contingent Approved Study have been satisfied, all in accordance with the provisions of Sections 2.1(b)(iv) and 2.3(b)(iii). The Party designated as the Responsible Party for such Contingent Approved Study shall provide to the other Party written evidence of the satisfaction of such Contingencies. Any increase in the Clinical Budget or other proposed change in the Contingent Approved Study shall be subject to agreement by the parties pursuant to Sections 2.3(b)(v) and, if applicable, 2.1(b)(v). When it has been unanimously determined by the JEC that each of the Contingencies applicable to a Contingent

23

Approved Study has been satisfied, such Contingent Approved Study shall be designated as an Approved Study in the then-current Clinical Development Plan. If upon the unanimous recommendation of the PDC, the JEC unanimously determines that one or more of the Contingencies for a particular Contingent Approved Study has failed to be satisfied, such Contingent Approved Study shall be removed from the Clinical Development Plan. If it is determined that one or more of the Contingencies applicable to any Contingent Approved Study has failed to be satisfied, either Party may propose that further work should be supported in the tumor type that was the subject of such Contingent Approved Study and that such study should be continued with or without modification, in which event such further work would be proposed as a Proposed Study and be subject to the provisions of Sections 4.3(e) and 4.3(g). Notwithstanding the foregoing, a Contingent Approved Study shall not become an Approved Study nor shall any such further work be conducted if in the opinion of either Party the Contingent Approved Study presented a medical risk/benefit that is so unfavorable as to be incompatible with the welfare and safety of patients.

         (ii)  If the Contingent Approved Study did not specify the Responsible Party when such Contingent Approved Study was initially included in a Clinical Development Plan, the Parties shall determine the Responsible Party within sixty days after the determination that a Contingent Study has become an Approved Study, and no Party shall unreasonably withhold its consent to such determination. If the Contingent Approved Study did not specify whether a CRO would be used to conduct such Contingent Approved Study when it was initially included in the Clinical Development Plan, such determination shall be made in accordance with the provisions of Section 4.5(a). Following the later to occur of determination that a Contingent Approved Study shall have become an Approved Study and the determination of the Responsible Party for such Approved Study, the Responsible Party will be responsible for and prepare the protocol for such Approved Study and an updated Clinical Budget for such Approved Study. In order for the proposed protocol for such Approved Study and the related updated Clinical Budget to be finalized, (1) the PDC must review and unanimously recommend such proposed protocol and related updated Clinical Budget to the JEC for approval, and (2) the JEC must unanimously approve such proposed protocols and related updated Clinical Budgets, all in accordance with the provisions of Sections 2.1(b)(iv) and 2.3(b)(iii).

        (i)    At any time prior to the expiration of the Agreement, each of ERS and the Company may propose to add an Emergency Study to the then-current Clinical Development Plan by providing written notice to the other Party, including a reasonably detailed description of the reasons why the proposing Party believes such Emergency Study needs to be conducted together with the information required by Exhibit 1.20 related to such Emergency Study, including a Clinical Budget. The Party seeking to add such Emergency Study also shall promptly provide the other Party such additional information with respect to the Emergency Study as the other Party shall reasonably request. In order for an Emergency Study to become an Approved Study, (1) the PDC must review and unanimously recommend such Emergency Study to the JEC for approval, and (2) the JEC must unanimously approve such Emergency Study, all in accordance with Section 2.1(b)(iii) and 2.3(b)(ii) and subject to the provisions of Section 2.1(d)(v)(B).

        (j)    Prior to Registration in any country in the Territory, the Parties intend that the Company will be primarily responsible for implementing the regulatory strategy for the Products in such country developed by the PDC. The Parties intend that ERS will be primarily responsible for regulatory activities in a country in the Territory after Registration in such country, comprising regulatory compliance, worldwide safety surveillance, adverse event reporting and all other necessary support services."

24

        SECTION 4.    Amendment to Section 4.5 of the Agreement.    (a) Section 4.5(a) is hereby deleted in its entirety and replaced with the following:

        "(a) (i) Each of ERS and the Company shall be responsible for the preparation of all protocols and the conduct of all Approved Studies and Contingent Approved Studies for which such Party is designated as the Responsible Party. Each such Party shall submit all protocols therefor to the PDC and the JEC for approval in accordance with the provisions of Sections 4.3(f) and 4.3(h)(ii), as applicable.

         (ii)  If either the Responsible Party or the other Party desires to solicit bids to have such Approved Study or Contingent Study or a Proposed Study conducted by a CRO, the Parties shall solicit bids from CROs that are reasonably satisfactory to both Parties and that have sufficient capabilities and resources. In the case of any Approved Study included in Exhibit A of the 2007-2009 Clinical Development Plan as of the date of this Amendment No. 2 for which the determination of whether to use a CRO is marked "TBD", the Parties shall solicit such bids within 60 days after the date of this Amendment No. 2. In the case of each Proposed Study that would be an Approved Study, such solicitation and receipt of any final bids shall be completed prior to completion of the approval process for such Proposed Study contemplated by Section 4.3(f). In the case of any Contingent Approved Study, the Parties shall solicit such bids not later than sixty days after such Contingent Approved Study becomes an Approved Study. [*]"

        (b)   Section 4.5(b) is hereby deleted in its entirety and replaced with the following:

        "(b) Each of ERS and the Company shall be responsible for preparing all Regulatory Applications necessary or desirable to register the Products in all countries in the Territory for which such Party is the Responsible Party. The Company shall be responsible for filing all Regulatory Applications (whether prepared by the Company or ERS) and, thereafter, to conduct all communications with the Regulatory Authorities during the registration process (provided that, if ERS is the Responsible Party for the preparation of such Regulatory Application, it will work with the Company with respect to all such regulatory activities). Each such Party shall submit all proposed filings to the PDC for its approval. The other such Party shall provide all technical data and support necessary to assist the Responsible Party to prepare such Regulatory Applications. The Responsible Party shall keep the PDC informed as to the status of such efforts, permit the PDC to review any revisions to any filings or communications with Regulatory Authorities during their preparation, and shall confer with the PDC regarding the preparation of such filings and communications and the registration process. During such process, such Parties shall collaborate and cooperate in the preparation and filing of all documents necessary therefor and all regulatory interactions and compliance with Regulatory Authorities in the Territory. All regulatory activities (including without limitation adverse event reporting) to be performed by ERS in accordance with this Agreement and the Clinical Development Plan shall be conducted on behalf of the Company. The Company shall appoint ERS as its agent for regulatory compliance and all other regulatory activities for which ERS is responsible."

*

Omitted and filed separately pursuant to a request for confidential treatment submitted to the Securities and Exchange Commission.

25

        (c)   Section 4.5(c) is hereby deleted in its entirety and replaced with the following:

        "(c) The Company shall supply all API necessary and/or desirable for all Approved Studies, Contingent Approved Studies and Sole-Funded SFI Registrational Studies included in any Clinical Development Plan, as well as any studies that a Party proposes to conduct under Section 4.3(a)(ii)(B) that are not so included. Such API shall be supplied in accordance with, in all material respects, the Specifications, in accordance with cGMP, and in accordance with forecasts therefor provided by the PDC at least 180 days prior to the anticipated delivery date for each shipment thereof. Such API shall be supplied at the Company's Fully Burdened Manufacturing Cost without any mark-up. The Company's obligation to supply API for Phase IV Clinical Trials shall be subject, first, to fulfilling all requirements for API for the supply of Products for commercial sales pursuant to Section 8. Except as otherwise provided in this Section 4.5(c), all of the provisions of Section 8, to the extent applicable, shall apply to the supply of API for all such Approved Studies, Contingent Approved Studies, Sole-Funded SFI Registrational Studies or such other studies conducted under Section 4.3(a)(ii)(B) (including the reference to the relevant payment terms contained in Section 7)."

        (d)   Section 4.5 of the Agreement is hereby amended by inserting the following two paragraphs at the end thereof:

        "(e) Within 45 days after the end of each quarter during the term of the Agreement, commencing with the quarter ended June 30, 2007, each of ERS and the Company shall provide the other Party a quarterly analysis of actual spend versus budgeted and projected spend with respect to the Development Costs relating to the Approved Studies and Contingent Approved Studies for which ERS or the Company, as applicable, is designated as the Responsible Party.

        (f)    Each of ERS and the Company shall provide the other Party with immediate notice for any proposed change or proposed amendment or modification that constitutes a Material Modification."

        SECTION 5.    Amendment to Section 4.6 of the Agreement.    Section 4.6 of the Agreement is hereby deleted in its entirety and replaced with the following:

        "4.6 Funding of Clinical Development Plans.

        (a)   Except as provided in Section 4.6(c), Development Costs related to North America that are incurred with respect to Approved Studies and Contingent Approved Studies included in the 2007-2009 Clinical Development Plan for the period commencing on and including January 1, 2007 and ending on and including December 31, 2009, shall be funded by ERS and the Company as follows:

          (i)  ERS will fund (A) [*] of (1) the first [*] of such Development Costs incurred in 2007, (2) the first [*] of such Development Costs incurred in 2008 and (3) the first [*] of such Development Costs incurred in 2009 and (B) [*] of such Development Costs incurred in excess of (1) [*] in 2007, (2) [*] in 2008 and (3) [*] in 2009; and

^*

Omitted and filed separately pursuant to a request for confidential treatment submitted to the Securities and Exchange Commission.

26

         (ii)  the Company will fund [*] of such Development Costs incurred in excess of (1) [*] in 2007, (2) [*] in 2008 and (3) [*] in 2009.

Notwithstanding the foregoing, ERS and the Company have agreed that for the Approved Study designated as [*], ERS has agreed to fund [*] of the drug costs for [*] and the Company has agreed to fund [*] of the drug costs for [*], and that (x) ERS's [*] share of such costs shall be included in determining whether ERS satisfied its funding requirements pursuant to Section 4.6(a)(i)(A) and (y) the Company's [*] share of such costs shall be payable even if ERS shall not have satisfied its full funding requirements pursuant to Section 4.6(a)(i)(A) expended by ERS related to [*].

        (b)   Except as provided in Section 4.6(c), Development Costs related to North America that are incurred with respect to Approved Studies and Contingent Approved Studies included in any Clinical Development Plan in each calendar year thereafter, commencing with and including 2010, will be funded [*] by BMS and [*] by the Company.

        (c)   Any monies received from any Third Party, including any Merck Entity, to fund any Development Costs related to North America that are incurred in any calendar year shall be applied to reduce each Party's obligations to fund Development Costs for such calendar year as follows:

          (i)  in calendar years 2007, 2008 and 2009, such monies shall be applied first to reduce the Parties' obligations to fund such Development Costs in excess of [*] in 2007, [*] in 2008 and [*] in 2009, with [*] of such monies allocated to such Development Costs for which ERS is responsible pursuant to Section 4.6(a)(i)(B) and [*] of such monies allocated to such Development Costs for which the Company is responsible pursuant to Section 4.6(a)(ii), and thereafter to reduce ERS's obligation to fund the first [*], as applicable, of such Development Costs for which BMS is responsible pursuant to Section 4.6(a)(i)(A), and

^*

Omitted and filed separately pursuant to a request for confidential treatment submitted to the Securities and Exchange Commission.

27

         (ii)  in each calendar year thereafter, commencing with and including 2010, [*] of such monies shall be applied to reduce the Development Costs for which ERS is responsible pursuant to Section 4.6(b) and [*] of such monies shall be applied to reduce the Development Costs for which the Company is responsible pursuant to Section 4.6(b).

        (d)   Notwithstanding anything to the contrary in this Section 4.6, any portion of ERS's 2007 [*] funding obligation under Section 4.6(a)(i)(A)(1) that is not used to fund Development Costs in 2007 shall be carried over to 2008 (but not beyond 2008) and shall increase on a dollar-for-dollar basis the amount of Development Costs that ERS would otherwise be obligated to fund in 2008 under Section 4.6(a)(i)(A)(2), provided that the amount that may be carried over shall be limited to [*].

        (e)   Notwithstanding anything to the contrary in this Section 4.6, from and after January 1, 2007, all Medical Science Liaison costs reasonably allocable to the Product incurred by each of ERS and the Company shall be [*].

        (f)    Notwithstanding anything to the contrary set forth in this Agreement, if the actual Development Costs related to North America for any Approved Study or Contingent Approved Study are less than the budgeted expenses for such Approved Study or Contingent Approved Study in any calendar year or in the aggregate, neither Party shall be required to fund any amount in excess of such actual Development Costs incurred or to allocate such excess amount to any other Approved Study, Contingent Approved Study, Proposed Study or any other study.

        (g)   The funding requirements and responsibilities for Development Costs related to Japan shall be as set forth in the Japan Co-Commercialization Agreements." For clarity, Development Costs incurred by any Party in connection with the Japan Co-Commercialization Agreements are not subject to the provisions of Sections 4.6(a), (b), (c), (d), (e) and (f)."

^*

Omitted and filed separately pursuant to a request for confidential treatment submitted to the Securities and Exchange Commission.

28

        SECTION 6.    Amendment to Section 4.10 of the Agreement.    Section 4.10 of the Agreement is hereby deleted in its entirety and replaced with the following:

        "4.10    Liability.    Each Party shall be responsible for, and hereby assumes, any and all risks of personal injury or property damage attributable to the negligent or willful acts or omissions of such Party or its Affiliates, and their respective directors, officers, employees and agents and for the Approved Studies, Contingent Approved Studies and studies conducted by such Party under Section 4.3(a)(ii)(B) that the Party is responsible for conducting and the other responsibilities of such Party pursuant to this Section 4."

        SECTION 7.    Amendment to Section 6 of the Agreement.    (a) Section 6.3 is hereby deleted in its entirety and replaced with the following:

        "6.3    Distribution Fees for North America.    As further consideration to the Company for the rights granted to ERS in North America under this Agreement, ERS shall pay to the Company a Distribution Fee for North America equal to 39% of Net Sales in North America during each calendar year (or portion thereof), provided that if, pursuant to Section 4.3(g)(ii), a Proposing Party shall be solely entitled to, and shall solely bear, the entire Incremental SFI Profit Or Loss, then all Net Sales in North America that are attributable to such Successful Indication shall be excluded from Net Sales for the purpose of this Section 6.3."

        (b)   Section 6 is hereby amended by inserting at the end the following Section:

        "6.6    Settlement of Funding of Development Costs Incurred Prior to 2007.    (a) The Parties agree that ERS has satisfied all its funding obligations with respect to Development Costs for the period through and including December 31, 2006. The Parties further agree that Company's previously agreed obligation of [*] to fund certain Development Costs for 2005 and 2006 is immediately due and payable. Such payment shall be made by the Company to ERS by wire transfer in immediately available funds within three business days of the execution of this Amendment No. 2. The Parties acknowledge and agree that such amount has been calculated based on a retrospective increase in the Registrational Study (as defined by the Agreement prior to this Amendment No. 2) spend included in Amendment No. 1 by [*], from [*] to [*] in the aggregate and an allocation of that increase as follows: [*] to 2005 and [*] to 2006.

^*

Omitted and filed separately pursuant to a request for confidential treatment submitted to the Securities and Exchange Commission.

29

        (b)   The Company shall pay to ERS [*] representing the Company's share of Medical Science Liaisons expenses incurred by ERS in respect of the Product for the period through December 31, 2006. Such payment shall be made by the Company to ERS by wire transfer in immediately available funds within three business days of the execution of this Amendment No. 2.

        (c)   Upon payment of the amounts in Sections 6.6(a) and 6.6(b), the Parties agree that the Company will have satisfied its obligations with respect to Development Costs for the period through and including December 31, 2006."

        SECTION 8.    Amendments to Section 7 of the Agreement.    (a) Section 7.2 is hereby deleted in its entirety and replaced with the following:

        "7.2    Reports.    (a) Beginning with the month in which the First Commercial Sale is made in the Territory and for each month thereafter, (i) ERS shall submit on the fifth business day following the close of such month (closed in accordance with ERS's then standard practices), a net sales report regarding such month's Net Sales in the United States; (ii) ERS shall submit on the twentieth business day following the close of such month (closed in accordance with ERS's then standard practices), a net sales report regarding such month's Net Sales in Canada; (iii) each of ERS and the Company shall submit to the other on the twentieth business day following the close of such month (closed in accordance with such Party's own then standard practices), an expense report separately detailing, for such month, such Party's Development Costs for Approved Studies, Contingent Approved Studies and Sole-Funded SFI Registrational Studies in each of North America and Japan, and Operating Profit and Loss detailed and broken down into its constituent components in accordance with the Financial Appendix.

        (b)   For each SFI for which a Non-Proposing Party shall have elected to allow the Proposing Party to receive/bear the Incremental SFI Profit Or Loss under Section 4.3(g)(ii)(A), beginning with the calendar quarter in which the First Commercial Sale of Product for such SFI is made in the Territory and for each calendar quarter thereafter, within sixty days after the end of such calendar quarter, (i) ERS shall submit a net sales report regarding such quarter's Net Sales in the U.S. of Products that are attributable to each Successful Indication ("SFI Net U.S. Sales") and such quarter's Net Sales in Canada of Products that are attributable to each Successful Indication ("SFI Net Canadian Sales") and (ii) such Non-Proposing Party shall submit to the Proposing Party, an expense report detailing all costs incurred by such other Party and its Affiliates attributable to or reasonably allocable to such SFI ("Attributable Other Party SFI Expenses") with respect to such quarter.

^*

Omitted and filed separately pursuant to a request for confidential treatment submitted to the Securities and Exchange Commission.

30

        (c)   Such reports are to be made in support of the payments to be made pursuant to this Agreement and in accordance with the Financial Appendix. For the avoidance of doubt, the Parties shall also fulfill any additional reporting requirements, if any, set forth elsewhere in this Agreement."

        (b)   Section 7.4 is hereby deleted in its entirety and replaced with the following:

        "7.4    Records Retention.    ERS, the Company and each such Party's respective Affiliates shall keep complete and accurate records pertaining to the sale of Products and the Product-by-Product and Product-consolidated calculation of Net Sales in North America, Net Sales in Japan and Operating Profit or Loss in Japan and, for each SFI, SFI Net U.S. Sales, SFI Net Canadian Sales, and Attributable Other Party SFI Expenses, for each calendar quarter, including without limitation the determination of Fully Burdened Manufacturing Cost of API and of Finished Product, Development Costs, Distribution Costs, Sales Costs, Marketing Costs, General and Administrative Costs and Other Operating Income/Expense for a period of three calendar years after the year in which such sales or costs occurred, and in sufficient detail to permit the Company to confirm the accuracy of each of the foregoing and of the aggregate Distribution Fees provided by ERS under this Agreement."

        (c)   Section 7.5 is hereby deleted in its entirety and replaced with the following:

        "7.5    Audit Request.    During the term of this Agreement and for a period of three years thereafter, at the request and expense of any Party (the "Auditing Party"), the Company (in the case of a request by BMS or ERS) or ERS and BMS (in the case of a request by the Company), (the "Audited Party"), and its Affiliates shall permit an independent, certified public accountant appointed by the Auditing Party and reasonably acceptable to the Audited Party, at reasonable times and upon reasonable notice but not more often than two times each calendar year, to examine such records as may be necessary to determine the correctness of any report or payment made under this Agreement, to determine the consistency of actual expenditures versus the budgeted expenditures set forth in the Clinical Budget and/or any Marketing Budget, as the case may be, or obtain information as to the determination of Fully Burdened Manufacturing Cost of API (including, without limitation, the records of when during API production API batches failed, the cost and nature of such failures), the determination of Fully Burdened Manufacturing Cost of processing API into Finished Product and the aggregate Net Sales, Operating Profit or Loss and Distribution Fees payable for any calendar month, including without limitation, Development Costs, Distribution Costs, Sales Costs, Marketing Costs, General and Administrative Costs and Other Operating Income/Expense and, for each SFI, SFI Net U.S. Sales, SFI Net Canadian Sales and Attributable Other Party SFI Expenses, for each calendar quarter. Results of any such examination shall be made available to all Parties except that said independent, certified public accountant shall verify to the Auditing Party such amounts and shall disclose no other information revealed in such audit."

31

        SECTION 9.    Amendment to Section 8.6 of the Agreement.    (a) Section 8.6(a) of the Agreement is hereby deleted in its entirety and replaced with the following:

        "(a) The purchase price for all API supplied by the Company to ERS pursuant to this Section 8 for commercial use in North America shall be the Company's Fully Burdened Manufacturing Cost for such API plus a mark-up of 10%; provided that process development, process improvement, scale up, recovery, and qualification lots costs (although components of Fully Burdened Manufacturing Cost) shall not be subject to the mark up of 10%. Commencing with the implementation of the ERBITUX PAP (as such term is defined in the Side Letter), the purchase price for all API supplied by the Company to ERS for use in the ERBITUX PAP shall be [*] of the Company's Fully Burdened Manufacturing Cost for such API, provided that in each calendar year, commencing with and including 2007, once the aggregate purchase price paid by ERS for such API supplied by the Company to ERS during such year is [*] (i.e., the equivalent of [*] of Fully-Burdened Manufacturing Costs in the aggregate for the API so purchased by ERS), the purchase price for any additional API supplied by the Company to ERS for use in the ERBITUX PAP during such calendar year shall be [*] of Fully Burdened Manufacturing Cost. Within 45 calendar days after the end of the first calendar quarter after the ERBITUX PAP has been implemented and each calendar quarter thereafter, ERS shall provide written notice to the Company setting forth (i) the amount of Products distributed pursuant to the ERBITUX PAP in such calendar quarter and (ii) a calculation of the amount of the discount to the purchase price owed to ERS with respect to such Products, representing the difference between the purchase price actually paid for such Products and the price payable for such Products pursuant to the above provision in this Section 8.6(a). Such discount to the purchase price shall be paid by the Company to ERS by wire transfer in immediately available funds within five business days of receipt of each such written notice."

^*

Omitted and filed separately pursuant to a request for confidential treatment submitted to the Securities and Exchange Commission.

32

        (b)   Section 8.6(c) of the Agreement is hereby deleted in its entirety and replaced with the following:

        "(c) For API supplied to ERS for Approved Studies, Contingent Approved Studies, Sole-Funded SFI Registrational Studies or other studies conducted under Section 4.3(a)(ii)(B) and for commercial use in North America, the Company shall submit invoices to ERS for API promptly after shipment. Payments shall be made by ERS within 60 days after ERS's receipt of the invoice. ERS has no obligation to pay for any shipment of API that (i) ERS and the Company agree does not to meet the Specifications and/or Manufacturing Standards, or (ii) in accordance with Section 8.8(b), ERS has found not to meet the Specifications and/or Manufacturing Standards while such findings have not been contradicted by independent laboratory testing. Upon the Company's receipt of a notice from ERS claiming that a shipment of API does not meet the Specifications and/or applicable Manufacturing Standards, the time period for payment of such shipment or such batch shall toll until such time as such non-conformity questions regarding such shipment or such batch are resolved in accordance with Section 8.8. All relevant terms of Section 7 with respect to payments of Distribution Fees shall apply to the payment of invoices for the supply of API."

        (c)   Section 8.6(d) of the Agreement is hereby deleted in its entirety and replaced with the following:

        "(d) The Parties, through the co-chairs of the JMC, will work together to agree on a specific plan of action under which the Company will reduce the Fully Burdened Manufacturing Cost of manufacturing API itself to an amount equal to or less than [*] with a goal of finalizing such plan by September 30, 2007, and implementing such plan as soon as practicable thereafter. Until such time that the Company achieves such reduction in Fully Burdened Manufacturing Cost to [*] or less, any excess in the Fully Burdened Manufacturing Cost above [*] will be borne equally by ERS and the Company.

^*

Omitted and filed separately pursuant to a request for confidential treatment submitted to the Securities and Exchange Commission.

33

        (e)   It is the intention of the Parties that the Company will maintain a rolling eight-week supply of finished, packaged Product that has been quality assurance-released by the Company and received by ERS. The Parties, through the co-chairs of the JMC, will work together to agree on a specific plan of action under which the Company will maintain such supply, with a goal of finalizing such plan by September 30, 2007, and implementing such plan as soon as practicable thereafter. Following such implementation, the Company shall provide written notice to ERS promptly, and in any event within five business days, if at any time the supply of finished, packaged Product that has been quality assurance-released by the Company and received by ERS shall be less than a five-week supply. In such event, the Parties, through the co-chairs of the JMC, shall work together promptly to develop a specific plan of action to replenish such supply to an eight-week supply as contemplated by this Section 8.6(e). For purposes of this Section 8.6(e), weeks supply of finished, packaged Product by SKU shall be calculated based on the then current firm order placed by ERS pursuant to Section 8.4 of this Agreement."

        SECTION 10.    Amendment to Section 8.12 of the Agreement.    Paragraph (b) of Section 8.12(b) of the Agreement is hereby deleted in its entirety and replaced with the following:

        "(b) An "Inability to Supply" shall mean: (i) with respect to the supply of API for Approved Studies, Contingent Approved Studies or Sole-Funded SFI Registrational Studies, the Company's failure for any reason, including without limitation force majeure reasons or otherwise, to supply ERS with quantities of API meeting the Specifications and Manufacturing Standards equal to at least [*] of the quantity of API required to conduct such Approved Study, Contingent Approved Study or Sole-Funded SFI Registrational Study, as the case may be, during the applicable time period; and (ii) with respect to the supply of API for commercial sales, the Company's failure for any reason, including without limitation force majeure reasons or otherwise, to supply ERS with quantities of API meeting the Specifications and Manufacturing Standards equal to at least [*] of the quantity of API required for commercial sales during the applicable time period."

^*

Omitted and filed separately pursuant to a request for confidential treatment submitted to the Securities and Exchange Commission.

34

        SECTION 11.    Amendments to Section 12 of the Agreement.    (a) Section 12.1 is hereby deleted in its entirety and replaced with the following:

"Investigation; Recall.    In the event that the Regulatory Authority in any country in the Territory shall allege or prove that a Product does not comply with applicable rules and regulations in such country, ERS shall notify the Company immediately. The JEC, with assistance from the PDC, the JCC or the JMC, as the JEC determines is appropriate, shall conduct any appropriate investigation and shall make a determination as to the disposition of any such matter. If ERS is required or if the JEC should deem it appropriate to recall any Product, the Company and ERS shall bear the costs and expenses associated with such recall, in North America in the proportion of 39% for the Company and 61% for ERS, and in Japan in the proportion for which such Party is entitled to receive Operating Profit or Loss, as the case may be, unless: (i) the predominant cause of such recall results from or also constitutes the Company's breach of its representation and/or warranty set forth in Section 11.2(e) and/or ERS's reliance upon such breached representation and/or warranty, or unless the predominant cause of such recall results from the Company's willful wrongdoing or negligence, in each such case the Company shall bear all costs and expenses associated with such recall; or (ii) the predominant cause of such recall results from ERS's willful wrongdoing or negligence, in which case ERS shall bear all costs and expenses associated with such recall."

        (b)   Section 12.2 is hereby deleted in its entirety and replaced with the following:

"Indemnification by ERS and BMS.    ERS and BMS shall indemnify, defend and hold harmless the Company and its Affiliates, and their respective directors, officers, employees and agents, from and against any and all liabilities, damages, losses, costs and expenses (including the reasonable fees of attorneys and other professionals) to the extent arising out of or resulting from:

        (a)   negligence, recklessness or wrongful intentional acts or omissions of ERS or its Affiliates, and their respective directors, officers, employees and agents, in connection with the work performed by ERS or BMS under the Clinical Development Plans (other than with respect to any Sole-Funded SFI Registrational Study for which ERS or BMS is the Responsible Party, for which indemnification is provided in Section 4.3(g)(iv)) or the fulfillment of ERS's or BMS's obligations under the Marketing Plans;

        (b)   any manufacture, use, distribution or sale of the Products by ERS or its Affiliates or due to any negligence, recklessness, or wrongful intentional acts or omissions by or strict liability of, ERS or its Affiliates and their respective directors, officers, employees and agents.; or

        (c)   any breach of any representation or warranty made by ERS or BMS under Sections 11.1, 11.3 or 11.4.

Nothing in this Section 12.2 shall limit or restrict the indemnification obligations of ERS and BMS in Section 4.3(g)(iv)."

        (c)   Section 12.3 is hereby deleted in its entirety and replaced with the following:

"Indemnification by the Company.    The Company shall indemnify, defend and hold harmless ERS, BMS and their respective Affiliates, and their respective directors, officers, employees and agents, from and against any and all liabilities, damages, losses, costs and expenses (including the reasonable fees of attorneys and other professionals) to the extent arising out of or resulting from:

        (a)   negligence, recklessness or wrongful intentional acts or omissions of the Company or its Affiliates, and their respective directors, officers, employees and agents, in connection with the Company's fulfillment of its obligations under the Clinical Development Plans or the fulfillment of the Company's rights or obligations under the Marketing Plans (other than with respect to any

35

Sole-Funded SFI Study for which the Company is the Responsible Party, for which indemnification is provided in Section 4.3(g)(iv));

        (b)   failure of API to meet the Specifications and/or applicable Manufacturing Standards or use of Products or promotion of Products not in conformity with Product labeling, by the Company or its Affiliates, or due to any negligence, recklessness or wrongful intentional acts or omissions by, or strict liability of, the Company or its Affiliates, and their respective directors, officers, employees and agents; or

        (c)   any breach of any representation or warranty made by the Company under Section 11.1 or 11.2.

Nothing in this Section 12.3 shall limit or restrict the indemnification obligations of ERS and BMS in Section 4.3(g)(iv)."

        SECTION 12.    Amendment to Section 16.7 of the Agreement.    Section 16.7 of the Agreement is hereby deleted in its entirety and replaced with the following:

        "16.7    Public Announcements.    Except as permitted by Section 10.4, none of the Parties shall make any public announcement concerning this Agreement or the subject matter hereof without first consulting with the other Parties and providing such Party with a reasonable opportunity to comment on such proposed public announcement. In addition, in connection with any public announcement of results arising from the clinical development of any Product, it shall be the responsibility of the Party proposing to make such public announcement to comply with any rules of the organizer of any scientific congress at which such results are to be presented related to the disclosure of such data so as to ensure that such data may be presented at such scientific congress, including without limitation by obtaining the review and, if required, consent of such organizer of such scientific congress before such Party makes any public announcement of such results (or any summary thereof), in whole or in part, that will precede such congress presentation. In the event of a proposed public announcement of results by both ERS and the Company, they shall designate one Party to be responsible for complying with the preceding sentence. Nothing in this Section shall be construed as limiting or hindering any Party's efforts to comply with applicable laws and regulations regarding such Party's obligation to disclose material information."

        SECTION 13.    Amendment to Section 16.9 of the Agreement.    Section 16.9 of the Agreement is hereby amended by inserting at the end the following sentence:

"No Party shall have any obligation to breach applicable laws, rules and regulations in performing its obligations under this Agreement."

        SECTION 14.    Amendment to Amendment No. 1.    Amendment No. 1 is hereby amended by deleting in its entirety Sections 2 and 3.1 of Amendment No. 1.

        SECTION 15.    Effectiveness; Amendments; Counterparts.    This Amendment No. 2 shall become effective upon the last to occur of: (i) ERS having received payment of all amounts due under Section 6.6, (ii) the Parties having executed the Release and Waiver, (iii) all the parties thereto having executed the Letter of Intent Regarding the Japan Co-Commercialization Agreements and (iv) the Parties having executed the Side Letter. No amendment, modification or supplement of any provisions of this Amendment No. 2 shall be valid or effective unless made in writing and signed by a duly authorized officer of each Party. This Agreement may be executed simultaneously in any number of counterparts, any one of which need not contain the signature of more than one Party but all such counterparts taken together shall constitute one and the same agreement.

36

        SECTION 16.    Representations and Warranties.    Each Party represents and warrants to each of the other Parties, as of the date of this Amendment No. 2, that:

        (a)   such Party is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has full corporate power and authority to enter into this Amendment No. 2 and to carry out the provisions hereof;

        (b)   such Party has taken all corporate action necessary to authorize the execution and delivery of this Amendment No. 2 and the performance of its obligations under this Amendment No. 2; and

        (c)   this Amendment No. 2 has been duly executed by such Party and constitutes a valid and legally binding obligation of such Party, enforceable in accordance with its terms.

        SECTION 17.    Rights.    Except as specifically set forth herein, the Agreement shall remain unchanged and in full force and effect. The Parties acknowledge and agree that there are no amendments, modifications or waivers in respect of the Agreement other than those specifically set forth in this Amendment No. 2.

        SECTION 18.    Confidentiality.    The Parties hereby agree that, unless required by law, they, their Affiliates and their respective employees, officers, directors and other representatives shall not publish or otherwise disclose the contents of, or make any other public disclosure with respect to (including any disclosure with respect to the background of and negotiations leading up to), this Amendment No. 2 and its Schedules, Exhibits and Annexes, the Side Letter, the Letter of Intent Regarding the Japanese Co-Commercialization Agreements and the Release and Waiver. The Parties will work together to identify the provisions of Amendment No. 2 (including its Schedules, Exhibits and Annexes) for which they will seek confidential treatment, pursuant to Rule 24b-2 of the Securities Exchange Act of 1934 and will use commercially reasonable efforts to seek such confidential treatment. Following the execution of this Amendment No. 2, the Side Letter, the Letter of Intent Regarding the Japanese Co-Commercialization Agreements and the Release and Waiver, each of the Parties may (x) issue a press release in the form attached hereto as Exhibit 19(A), (y) file a Form 8-K referencing such press release and (z) file this Amendment No. 2 as an exhibit to a Form 10-Q.

        SECTION 19.    APPLICABLE LAW.    THIS AMENDMENT NO. 2 SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.

        SECTION 20.    Headings.    The descriptive headings of this Amendment No. 2 are for convenience only, and shall be of no force or effect in construing or interpreting any of the provisions of this Amendment No. 2.

        SECTION 21.    Entire Agreement.    The Agreement (for clarity, as amended by this Amendment No. 2), the Letter of Intent Regarding the Japan Co-Commercialization Agreements, the Side Letter and the Release and Waiver constitute the entire agreement among the Parties with respect to the subject matter of this Amendment No. 2 and supersede all prior agreements and understandings, both oral and written, among the Parties with respect to the subject matter of this Agreement.

37

        IN WITNESS WHEREOF, the Parties have caused this Amendment No. 2 to be duly executed by their respective authorized officers as of the day and year first written above.

BRISTOL-MYERS SQUIBB COMPANY,
By:
	/s/ James M. Cornelius
	Name:	James M. Cornelius
	Title:	Chief Executive Officer
IMCLONE SYSTEMS INCORPORATED,
By:
	/s/ Alexander J. Denner
	Name:	Alexander J. Denner, Ph.D.
	Title:	Chair, Executive Committee
E.R. SQUIBB & SONS, LLC,
By:
	/s/ Sandra Leung
	Name:	Sandra Leung
	Title:	Vice President & Secretary

38

Information to be provided in a Clinical Development Plan

EXHIBIT 1.20

Tumor type:
Indication:
Phase of study:
Type of study		[Approved Study], [Contingent Approved Study] or [Sole-Funded SFI Registrational Study].
Name of study:
Study design:
No. of patients:
Study endpoint:
Objective of study/deliverables:
Study start date:
Study end date:
Status/file date:
Contingencies (go/no-go criteria):
Responsible Party:
Responsibility for funding:
Clinical Budget Information (Approved Studies and Contingent Approved Studies only)
Budgeted Aggregate Development Costs through completion:
Budgeted Annual Development Costs:
	[Year 1](1):
	[Year 2]:
	[Year 3]:
Estimated Annual Development Costs through completion:
	[Year 4]:
	[Year 5]:
	[additional years as necessary]:
Budgeted grant costs (and other third-party costs including CRO costs):
	[Year 1]:
	[Year 2]:
	[Year 3]:
Budgeted aggregate costs for clinical supplies through completion:
Budgeted internal FTE costs through completion:

(1)

Years refers to years of Clinical Development Plan.

39

SCHEDULE 4.3(g)(i)

Specified Phase III Study(1)	Corresponding Specified Signal Finding Study
ID 22 [*]	ID 16 [*]
ID 23 [*]	ID 19 [*] ID 20 [*]
ID 24 [*]	ID 17 [*]

(1)

All ID references are to the studies with ID numbers set forth in Exhibit A to the Clinical Development Plan as of the date of this Amendment No. 2.

^*

Omitted and filed separately pursuant to a request for confidential treatment submitted to the Securities and Exchange Commission.

40

EXHIBIT 1.20A

2007-2009 CLINICAL DEVELOPMENT PLAN

[*]

*

Omitted and filed separately pursuant to a request for confidential treatment submitted to the Securities and Exchange Commission.

41

EX-10.42

Exhibit 10.42

EMPLOYMENT AGREEMENT

        AGREEMENT, made and entered into as of the 8th day of August, 2007, by and between ImClone Systems Incorporated, a Delaware corporation (the "Company"), and John H. Johnson (the "Executive").

W I T N E S S E T H

        WHEREAS, the Company desires to employ the Executive as its Chief Executive Officer, and the Executive desires to accept such employment; and

        WHEREAS, the Company and the Executive desire to enter into this employment agreement (the "Agreement") embodying the terms of such employment;

        NOW, THEREFORE, in consideration of the promises and mutual covenants contained herein and for other good and valuable consideration, the receipt of which is mutually acknowledged, the Company and the Executive (individually a "Party" and together the "Parties") agree as follows:

        1.    Definitions.

        (a)   "Base Salary" shall mean the Executive's base salary as determined in accordance with Section 4 below.

        (b)   "Board" shall mean the board of directors of the Company.

        (c)   "Cause" shall mean:

        (1)   an indictment for, or a conviction of the Executive for, or a plea of nolo contendere to, a felony, any crime under the federal or state securities laws or regulations, or a misdemeanor involving moral turpitude; or

        (2)   willful misconduct or gross negligence by the Executive in the performance of his duties hereunder; or

        (3)   a willful failure by the Executive to attempt in good faith to perform his duties hereunder, or a willful failure by the Executive to attempt in good faith to carry out the legal directions of the Board promptly and continuously, in either case after written notice of such failure; or

        (4)   fraud, embezzlement, theft or dishonesty by the Executive against the Company or any Subsidiary; or

        (5)   or any act of willful misconduct by the Executive bringing harm, or in the good faith judgment of the Board, likely to bring harm to the Company or any Subsidiary (economically or as to reputation); or

        (6)   a violation by the Executive of a written policy or procedure of the Company or any Subsidiary of a material nature, as determined in the good faith judgment of the Board; or

        (7)   a mispresentation by the Executive of his credentials or experience; or

        (8)   a material breach by the Executive of any provision of this Agreement, including a failure to purchase or maintain the equity ownership holdings in accordance with Section 7 of this Agreement, that is not cured (if capable of being cured) within 10 days of Executive's being given written notice from the Company specifying such breach.

        (d)   "Change of Control" shall mean when any "person" (as defined in Section 13(d) and 14(d) of the Securities Exchange Act of 1934) (other than (i) any shareholder who, as of the date hereof, has a Schedule 13D on file with the Securities and Exchange Commission, (ii) any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any Subsidiary, or (iii) any corporation owned, directly or indirectly, by the stockholders of the Company, in substantially the same

proportions as their ownership of stock of the Company), acquires, in a single transaction or a series of transactions (whether by merger, consolidation, reorganization or otherwise), "beneficial ownership" (as defined in Rule 13d-3 under the Securities Exchange Act of 1934) of securities representing 100% of voting power of the Company

        (e)   "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time.

        (f)    "Competitive Activity" shall mean the Executive's engaging in an activity—whether as an employee, consultant, principal, member, agent, officer, director, partner, sole proprietor, or shareholder (except as a less than 1% shareholder of a publicly traded company)—that is competitive with any product marketed and sold by the Company or any Subsidiary, or which would compete with any product proposed to be developed or marketed and sold by the Company or any Subsidiary and as to which the Company or any Subsidiary has devoted significant efforts, provided that such measurement shall be made at the earlier of the activity of Executive, and termination hereunder; and provided, further, that after the Executive's termination hereunder, the Executive shall not be deemed to be engaging in a Competitive Activity if he provides services to a subsidiary, division or affiliate of an entity engaged in a Competitive Activity (a) if such subsidiary, division or affiliate is not itself engaged in a Competitive Activity and not involved with therapeutic antibodies, (b) the portions of the entity engaged in Competitive Activity and/or therapeutic antibodies comprise no more than 10% of the revenues of the business enterprise as a whole in the fiscal year of the entity ending immediately prior to the activity by the Executive, and (c) the Executive does not directly or indirectly provide services to, supervise or manage the employees of, or have any responsibilities regarding, the Competitive Activity or the therapeutic antibody area.

        (g)   "Disability" shall mean the Executive's inability, due to physical or mental incapacity, to substantially perform his duties and responsibilities under this Agreement for a period of (i) 6 consecutive months or (ii)180 days in any 12-month period, as determined by the Board.

        (h)   "Effective Date" shall mean August 27, 2007.

        (i)    "Good Reason" shall mean, without the Executive's prior written consent, the occurrence of any of the following events or actions within the 30-day period preceding a notice of termination of employment delivered to the Company by the Executive:

        (1)   a reduction of the Executive's Base Salary or Target Bonus as a percentage of Base Salary, except due to an across the board reduction applicable to similarly situated senior-level executives generally;

        (2)   the failure to be elected or reelected the Chief Executive Officer of the Company and its Subsidiaries;

        (3)   a material breach by the Company of this Agreement;

        (4)   a material diminution in the Executive's titles, authority, duties or responsibilities, including but not limited to as a result of a change in the Company's by-laws that is not legally required;

        (5)   a change in the reporting structure so that the Executive reports to someone other than solely to the Board and the Chairman of the Board;

        (j)    "Subsidiary" shall mean a corporation of which the Company owns more than 50% of the voting stock or any other business entity in which the Company directly or indirectly has an ownership interest of more than 50%.

        (k)   "Term of Employment" shall mean the period specified in Section 2 below.

2

        2.    Term of Employment.

        The Company hereby employs the Executive, and the Executive hereby accepts such employment, for the period commencing on the Effective Date and ending on the fourth anniversary of the Effective Date, subject to earlier termination of the Term of Employment in accordance with the terms of this Agreement. The parties may, but shall not be obligated to, extend the Term of Employment by written agreement. If not so extended by written agreement, any employment after the fourth anniversary shall be employment at will.

        3.    Position, Duties and Responsibilities; Reporting.

        (a)   As of the Effective Date, the Executive shall be employed as the Chief Executive Officer of the Company and its Subsidiaries and shall be responsible for the general management of the affairs of the Company and its Subsidiaries as provided in the Company's by-laws. The Executive shall serve the Company and its Subsidiaries faithfully, conscientiously and to the best of the Executive's ability and shall promote the interests and reputation of the Company and its Subsidiaries. The Executive shall devote substantially all of the Executive's working time, attention, knowledge, energy and skills to the duties of the Executive's employment. The Executive, in carrying out his duties under this Agreement, shall report solely to the Board and the Chairman of the Board, and shall carry out the legal directives of the Board in good faith. With the prior written approval of the Board (which may be withheld or withdrawn at any time), the Executive may (i) serve on the boards of directors of other corporations, (ii) serve on the boards of trade associations and/or charitable organizations, and (iii) engage in charitable activities and community affairs. Additionally, the Executive may manage his passive personal investments, provided that such activities (including those in the prior sentence) do not materially interfere and are not inconsistent with the effective discharge of his duties and responsibilities to the Company and its Subsidiaries.

        (b)   It is the intention of the Parties that the Executive shall serve as a member of the Board at all times during the Term of Employment and the Company shall propose his nomination and renomination as such during the Term of Employment, except as such is in conflict with applicable law or regulations to which the Company is subject.

        4.    Base Salary

        During the Term of Employment, the Executive shall be paid an annualized Base Salary of $600,000, payable in accordance with the regular payroll practices of the Company. The Base Salary is subject to increase in the sole discretion of the Board.

        5.    Annual Incentive Compensation Programs and Sign on Bonus.

        (a)   During the Term of Employment, the Executive shall participate in the Company's annual incentive compensation plan applicable to senior-level executives as established and modified (in respect of senior-level executives generally) from time to time by the Board in its sole discretion. The Executive shall have an annual incentive compensation opportunity under such plan with an annual cash target award of 100% of Base Salary (the "Target Bonus"). Payment of annual incentive compensation awards shall be made at the same time that other senior-level executives receive their annual incentive compensation awards in the calendar year following the year earned.

        (b)   The Company shall pay the Executive a sign on bonus of $100,000 in cash within thirty (30) days after the Effective Date. In the event the Executive voluntarily resigns without Good Reason or is terminated for Cause within one (1) year of the Effective Date, he shall promptly refund such sign-on bonus.

3

        6.    Long-Term Incentive Compensation Grants.

        (a)   The Executive shall receive on the Effective Date a grant of $1,000,000 in restricted stock units in respect of the Company's common stock (the "RSU's") pursuant to the Company's 2006 Stock Incentive Plan (the "Plan"), valued at the closing price of the Company's common stock on the Effective Date. The RSU's will vest 25% on each of the first four anniversaries of the Effective Date, subject to the Executive's continuous employment, except that the RSU's shall immediately vest in full upon the earlier to occur of (i) a Change in Control and (ii) a termination of the Executive's employment hereunder without Cause, or for Good Reason. The RSU's which are vested at the time of Executive's separation from service will be settled and paid subject to Section 23 below promptly after the Executive's separation from service for any reason. Other terms and conditions relating to the RSU's shall be contained in an award agreement between the Company and the Executive in the Company's standard form, as modified to include the provisions of this Section 6(a).

        (b)   The Executive shall receive on the Effective Date a grant of an option to purchase 350,000 shares of the Company's common stock (the "Option") pursuant to the Plan. The exercise price of the Option will be the closing price of the Company's common stock on the Effective Date. The Option will vest 25% on each of the first four anniversaries of the Effective Date, subject to the Executive's continuous employment, except that the Option shall immediately vest in full upon the earlier to occur of (i) a Change in Control and (ii) a termination of the Executive's employment without Cause or for Good Reason. The Option shall expire on the 10th anniversary of the date of grant, or sooner if there is a termination of the Executive's employment and, in such case, as provided under the Plan and grant. Other terms and conditions relating to the Option shall be contained in an award agreement between the Company and the Executive in the Company's standard form, as modified to include the provisions of this Section 6(b).

        (c)   During the Employment Term, the Executive shall be eligible to participate in the Company's applicable long-term incentive compensation plan(s) on the same basis as generally available to other senior-level executives, as may be established and modified (in respect of senior-level executives generally) from time to time by the Board in its sole discretion.

        7.    Equity Purchase.

        Executive hereby agrees that, subject to compliance with applicable Federal and State securities laws, applicable Company policies and the rules of the stock exchange on which the Company's common stock is listed, including but not limited to insider trading rules (each, a "Restriction"), during the period beginning as of the date which is three (3) business days following the public announcement of the Executive's employment with the Company and ending ninety (90) days after the Effective Date, Executive shall purchase shares of common stock of the Company in the market or from the Company, as the parties mutually agree, with a market value (at the time of purchase) of $500,000, it being agreed that such ninety (90) day period shall be extended for the period of time the Executive is prevented from purchasing such shares as a result of any of the Restrictions if the Executive is unable to purchase the shares in the market and the Company is unable or unwilling to issue and sell the shares to the Executive or the Executive is prevented by the Restrictions from buying the shares from the Company. Executive shall hold such number of shares so purchased during the Term of Employment and for a period of at least one year thereafter; provided the requirement to hold such shares shall terminate on the earlier to occur of a termination of the Executive's employment without Cause, for Good Reason, or upon a death or a Disability termination. In addition, such obligation shall terminate on a corporate transaction where shares of the Company are exchanged for cash. Such shares acquired by the Executive pursuant to this Section 7 shall be legended with the restrictions and their termination as set forth herein, and the Company's books shall reflect such restrictions and their termination.

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        8.    Employee Benefit Programs.

        (a)   During the Term of Employment, the Executive shall be entitled to participate in all employee welfare and pension benefit plans, programs and/or arrangements applicable to the Company's senior-level executives generally upon the terms and conditions, as modified from time to time, of such plans, programs and arrangements. The Executive shall be entitled to participate in the Company's vacation and other time off programs in accordance with the terms thereof in effect from time to time (including but not limited to those as to carry forward of, or payment for, unused vacation), provided that his annual accrual and entitlement to vacation days over each year of vacation measurement (prorated for partial years) shall be at least four weeks.

        (b)   Notwithstanding anything elsewhere to the contrary, the Executive shall not be eligible to participate in the Company's Change-in-Control Plan, the Senior Executive Severance Plan, or any other severance plan, except as specifically agreed to by the Company; it being intended that the severance provisions herein are intended to be in lieu of benefits under any other severance program.

        9.    Reimbursement of Business Expenses.

        The Company shall reimburse the Executive for all reasonable business expenses reasonably incurred during the Employment Term in connection with carrying out the business of the Company in accordance with the Company's policy, subject to such documentation as the Company's policy may require and such reimbursement shall occur no later than June 30 of the calendar year following the calendar year in which they were incurred.

        10.    Termination of Employment.

        (a)    Termination of Employment Due to Death.    In the event of the Executive's death during the Term of Employment, the Term of Employment shall end as of the date of the Executive's death and his estate and/or beneficiaries, as the case may be, shall be entitled to the following:

        (1)   Base Salary earned but not paid through the date of termination, payable within 15 days of the date of termination;

        (2)   any incentive compensation earned for a fiscal year ending prior to the date of termination, payable when such compensation is otherwise paid to other senior executives generally in the calendar year of termination; and

        (3)   any amounts earned, accrued or owing to the Executive but not yet paid under Sections 8 and 9 (and the plans, programs or policies referred to therein), payable at the time set forth in the relevant plan, program or policy (together with (1) and (2), the "Accrued Obligations").

        (b)    Termination of Employment Due to Disability.    The Company may terminate the Executive's employment due to Disability by written notice pursuant to Section 25 hereof. In such event, the Term of Employment shall end as of the date of the termination of the Executive's employment specified in such notice, and the Executive shall be entitled to the Accrued Obligations.

        (c)    Termination of Employment by the Company for Cause.    If the Company terminates the Executive's employment for Cause during the Term of Employment, the Term of Employment shall end as of the date of the termination of the Executive's employment for Cause and the Executive shall be entitled to the amounts set forth in clauses (1) and (3) of Section 10(a) above. Notwithstanding anything elsewhere to the contrary, if the Company becomes aware of facts or circumstances which occurred or existed during the Term of Employment and which constituted "Cause," the Executive shall only be entitled to the amounts set forth in clauses (1) and (3), and the Executive shall have an obligation to repay any excess amounts (including without limitation the value of equity that would not have vested) otherwise received.

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        (d)    Termination of Employment by the Company Without Cause.    If the Executive's employment is terminated by the Company without Cause, other than due to death or Disability, the Term of Employment shall end as of the date of such termination and the Executive shall be entitled to the following, subject to Sections 10(g) and 10(k) and compliance with the Executive's obligations pursuant to Sections 11, 12(a) & (b), and 13:

        (1)   the Accrued Obligations;

        (2)   a pro rata annual cash bonus award for the year of termination, based on actual results, payable in the following calendar year at the time bonuses are paid to similarly situated senior-level executives generally;

        (3)   his annual Base Salary, at the rate in effect on the date of termination (without giving effect to any decrease in such rate which has given rise to Good Reason), payable in installments for a period of 12 months, commencing (subject to the provisos below) on the first regular payroll date after the date of termination in accordance with the Company's regular payroll practices applicable to payment of salaries, provided that no amounts shall be due prior to the effective date of the release described in Section 10(k) and the first installment thereafter shall include all payments that would otherwise have been made prior to the effective date of the release; and provided further that payments pursuant to this section shall be subject to delay in accordance with Section 23(b) hereof;

        (4)   full and immediate vesting of the Option, which shall remain exercisable for ninety days after the date of termination;

        (5)   full and immediate vesting of the RSU's, and settlement of the RSU's in accordance with the terms of the applicable award agreement which will be consistent with Section 6(a) hereof;

        (6)   provided he timely elects COBRA health continuation coverage and timely pays the amount payable by similarly situated active senior-level employees, the Company shall continue to provide medical coverage for Executive and his eligible dependents until the earliest of (x) one (1) year from his termination, (y) his (or the eligible dependent) ceasing to be eligible for COBRA coverage) or (z) he commences employment with an employer who maintains a medical plan.

The Company shall give written notice to the Executive of any termination without Cause in accordance with Section 25 below.

        (e)    Termination of Employment by the Executive for Good Reason.    The Executive may terminate his employment for Good Reason, provided that the actual date of the termination of the Executive's employment occurs during the 75-day period immediately following the date that the events or actions constituting Good Reason first become known to the Executive. Upon a termination by the Executive of his employment for Good Reason, the Term of Employment shall end as of the date of such termination and the Executive shall be entitled to the same payments and benefits as provided in Section 10(d) above. In no event shall a termination of the Executive's employment for Good Reason occur unless the Executive gives written notice to the Company in accordance with Section 25 below stating with reasonable specificity the events or actions that constitute Good Reason within 45 days of their occurrence and providing the Company with an opportunity to cure (if curable) within 30 days.

        (f)    Voluntary Termination of Employment by the Executive Without Good Reason.    The Executive may voluntarily terminate his employment without Good Reason, other than a termination of employment due to death or Disability, in which case the Term of Employment shall end as of the date of such termination and the Executive shall be entitled to the amounts set forth in clauses (1) and (3) of Section 10(a) above. In no event shall a voluntary termination of the Executive's employment without Good Reason occur unless the Executive gives written notice to the Company in accordance with Section 25 below at least 90 days prior to the date of the actual date of the termination of the Executive's employment; provided, however, that the Company may shorten such period in its sole discretion.

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        (g)    No Mitigation; Offset.    In the event of termination of his employment, the Executive shall be under no obligation to seek other employment and there shall be no offset against amounts due to him on account of any remuneration or benefits provided by any subsequent employment he may obtain. The Company's obligation to make any payment pursuant to, and otherwise to perform its obligations under, this Agreement shall be subject to setoff, counterclaim and the Company's other rights with respect to any claim the Company may have against the Executive for any reason.

        (h)    Return of Company Property.    On or immediately following the date of any termination of the Executive's employment, the Executive or his personal representative shall return all property of the Company and Subsidiaries in his possession, including but not limited to all computer equipment (hardware and software), telephones, facsimile machines, palm pilots and other communication devices, credit cards, office keys, security access cards, badges, identification cards and all copies (including drafts) of any documentation or information (however stored) relating to the business of the Company and its Subsidiaries, its customers and clients or its prospective customers and clients. Anything to the contrary notwithstanding, the Executive shall be entitled to retain (i) personal papers and other materials of a personal nature, provided that such papers or materials are not related to the business and do not include confidential information, including, but not limited to, photographs, correspondence, personal diaries, calendars and rolodexes, personal files and phone books, provided that such papers or materials are not related to the business and do not include confidential information, and provided further that only copies of personal diaries, calendars and rolodexes may be taken and the originals shall be left with the Company, (ii) information showing his compensation or relating to reimbursement of expenses, and (iii) copies of plans, programs and agreements relating to his employment, or termination thereof, with the Company which he received in his capacity as a participant.

        (i)    Resignation as an Officer and Director.    On or immediately following the date of any termination of the Executive's employment, and as a condition of receiving severance hereunder, the Executive shall submit to the Company in writing his resignation as (i) an officer of the Company and of all Subsidiaries and (ii) a member of the Board and of the board of directors of all Subsidiaries.

        (j)    Nature of Payments.    Any amounts due under this Section 10 are in the nature of severance payments considered to be reasonable by the Company and are not in the nature of a penalty.

        (k)    Waiver and Release.    As a condition precedent to receiving the compensation and benefits provided under Sections 10(d) or 10(e), as applicable, the Executive shall execute a waiver and release substantially in the form attached to this Agreement as Schedule A. Such release shall be executed by the Executive and delivered to the Company within thirty (30) days of the date of the applicable date of termination.

        (l)    Cooperation.    During and following the Term of Employment, the Executive shall give his assistance and cooperation willingly, upon reasonable advance notice, in any matter relating to his position with the Company and its Subsidiaries, or his knowledge as a result thereof as the Company may reasonably request, including his attendance and truthful testimony where deemed appropriate by the Company, with respect to any investigation or the Company's (or a Subsidiary's) defense or prosecution of any existing or future claims or litigations or other proceeding relating to matters in which he was involved or had knowledge by virtue of his employment with the Company. In any event, any request of such cooperation following the Term of Employment shall take into account the Executive's other personal and business commitments to the extent reasonably feasible. The Company will reimburse the Executive for reasonable travel costs and expenses incurred by him (in accordance with Company policy) as a result of providing such assistance, upon the submission of the appropriate documentation to the Company. Additionally, the Executive agrees to promptly inform the Company if the Executive becomes aware of any claims or litigations involving the Company or any Subsidiary that may be filed or threatened against the Company or any Subsidiary. The Executive also agrees to

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promptly inform the Company (to the extent the Executive is legally permitted to do so) if the Executive becomes aware of or is asked to assist in any investigation of the Company or any Subsidiary or any of their actions, regardless of whether a lawsuit or other proceeding has then been filed with respect to such investigation, and shall not so assist unless legally required to do so, or as otherwise otherwise authorized by the Company in writing. In the event the Executive is required following his termination of employment with the Company to assist the Company pursuant to this Section 10 for more than 10 days in any calendar year, the Company shall pay to the Executive a per diem for each day of assistance thereafter during such calendar year at a rate based on his Base Salary at the time of his termination of employment divided by 260, payable in a cash lump sum within 45 days following such assistance; provided, however that (i) assistance will be permitted to be given from the Executive's home or normal place of business in the Company's sole discretion, and (ii) such assistance, or days involving actual testimony, shall not be included for any purpose of this sentence.

        11.    Confidentiality: Assignment of Rights.

        (a)   During the Term of Employment and thereafter, the Executive shall not disclose to anyone or make use of any trade secret or proprietary or confidential information of the Company or any Subsidiary, including such trade secret or proprietary or confidential information of any customer or other entity to which the Company or any Subsidiary owes an obligation not to disclose such information, which he acquires during the Term of Employment, including but not limited to records kept in the ordinary course of business, except (i) as such disclosure or use may be required or appropriate in connection with his work as an employee of the Company or in connection with his cooperation pursuant to Section 10(l) above, (ii) when required to do so by a court of law, by any governmental agency having supervisory authority over the business of the Company or any Subsidiary or by any administrative or legislative body (including a committee thereof) with apparent jurisdiction to order him to divulge, disclose or make accessible such information, (provided that the Executive provides the Company with prior notice of the contemplated disclosure and reasonably cooperates with the Company in seeking a protective order or other appropriate protection of such information), and (iii) as to such confidential information that becomes generally known to the public or trade without his violation of this Section 11(a).

        (b)   The Executive hereby sells, assigns and transfers to the Company all of his right, title and interest in and to all inventions, discoveries, and improvements, whether or not copyrightable or patentable (the "rights") which during the Term of Employment are made or conceived by him, alone or with others, and which are within or arise out of the Company's or any Subsidiary's business or arise out of any work he performs or information he receives regarding the business of the Company while employed by the Company. The Executive shall fully disclose to the Company as promptly as available all information known or possessed by him concerning the rights referred to in the preceding sentence, and upon request by the Company and without any further compensation in any form to him by the Company, but at the expense of the Company, execute all applications for patents and for copyright registration, assignments thereof and other instruments and do all things which the Company may deem reasonably necessary to vest and maintain in it the entire right, title and interest in and to all such rights.

        12.    Noncompetition; Nonsolicitation.

        (a)   The Executive covenants and agrees that during the period commencing on the Effective Date and ending on the first anniversary of the date of the termination of the Executive's employment, he shall not at any time, without the prior written consent of the Company, directly or indirectly, engage in a Competitive Activity.

        (b)   The Executive covenants and agrees that during the period commencing on the Effective Date and ending in the case of (x) below, on the first anniversary of the date of the termination of the Executive's employment, and in the case of (y) below, on the second anniversary of the date of such

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termination, he shall not at any time, directly or indirectly, (x) solicit any customer or client of the Company or any Subsidiary with respect to a Competitive Activity or assist any person in doing so, or interfere with the Company's relationship with any customer, client or vendor, or (y) solicit or hire, or assist any person in soliciting or hiring, any employee of the Company or any Subsidiary (or any person who had been an employee of the Company or any Subsidiary within the prior six-month period). Anything to the contrary notwithstanding, the Company agrees that the following shall not be deemed a violation of this Section 12(b) the Executive's responding to an unsolicited request for an employment reference regarding any former employee of the Company or any Subsidiary from such former employee, or from a third party, by providing a reference setting forth his personal views about such former employee. For purposes hereof, the Executive shall only be deemed to have been involved "indirectly" in soliciting, hiring or identifying an employee if the Executive (x) directs a third party to solicit or hire the Employee, (y) identifies an employee to a third party as a potential recruit or (z) aids, assists or participates with a third party in soliciting or hiring an employee, or approves such hiring.

        (c)   The Parties acknowledge that in the event of a breach or threatened breach of Sections 11, 12(a) and/or Section 12(b) above, or Section 13 below, the Company shall not have an adequate remedy at law. Accordingly, and notwithstanding anything contained in this Agreement to the contrary, in the event of any breach or threatened breach of Sections 11, Section 12(a) and/or Section 12(b) above, or Section 13 below, the Company shall be entitled to such equitable and injunctive relief as may be available to restrain the Executive from the violation of the provisions of Section 11, Section 12(a) and/or Section 12(b) above, or Section 13 below. Nothing in this Agreement shall be construed as prohibiting the Company from pursuing any other remedies available at law or in equity for breach or threatened breach of Section 11, Section 12(a) and/or Section 12(b) above, or Section 13 below, including the recovery of damages.

        13.    Non-Disparagement.    During the Term of Employment and for the period of five (5) years thereafter, the Executive agrees not to disparage or encourage or induce others to disparage the Company or any Subsidiary or any of their past and present employees, officers, directors, products or services. For purposes of this Agreement, the term "disparage" includes, without limitation, comments or statements to the press, to the Company's or any Subsidiary's employees or to any individual or entity with whom the Company or any Subsidiary has a business relationship (including, without limitation, any vendor, supplier, customer or distributor of the Company or any Subsidiary), or any public statement, that would adversely affect in any manner, as applicable: (i) the conduct of any business of the Company or any Subsidiary (including, without limitation, any business plans or prospects), or (ii) the business reputation of the Company or any Subsidiary. The Company shall request of its Board members that they not disparage Executive except as they in good faith deem necessary or appropriate in fulfilling their fiduciary and legal obligations as directors. Notwithstanding the foregoing, nothing in this Section 13 shall prevent any person from (x) responding publicly to incorrect, disparaging or derogatory public statements to the extent, but only to the extent, reasonably necessary to correct or refute such public statement, or (y) making any truthful statement to the extent, but only to the extent (i) necessary with respect to any litigation, arbitration or mediation involving this Agreement, including, but not limited to, the enforcement of this Agreement, in the forum in which such litigation, arbitration or mediation properly takes place or (ii) required by law or by any court, arbitrator, mediator or administrative or legislative body (including any committee thereof) with apparent jurisdiction over the Executive or (z) making normal competitive statements during any period after the limitations in Section 12(a) cease to apply.

        14.    Assignability; Binding Nature.    This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors, heirs (in the case of the Executive) and assigns. The rights or obligations under this Agreement may be not be assigned or transferred by either party, except that such rights or obligations may be assigned or transferred pursuant to a merger or

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consolidation in which the Company is not the continuing entity, or the sale or liquidation of all or substantially all of the assets of the Company; provided, however, that the assignee or transferee is the successor to all or substantially all of the assets of the Company and such assignee or transferee assumes the liabilities, obligations and duties of the company, as contained in this Agreement, either contractually or as a matter of law.

        15.    Representation.    The Company represents and warrants that it is fully authorized and empowered to enter into and perform its obligations under this Agreement, that the performance of its obligations under this Agreement will not violate any agreement between it and any other person, firm or organization, and that upon the execution and delivery of this Agreement by the Executive and the Company, it shall be a valid and binding obligation of the Company enforceable against it in accordance with its terms, except to the extent that enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally. The Executive represents and warrants that no agreement, covenant, obligation or commitment exists between him and any other person, firm or organization that would be breached or violated by the execution of this Agreement or the performance of his obligations hereunder, or would otherwise conflict with or preclude him from the performance of his obligations hereunder. The Executive acknowledges that he has had an opportunity to consult with counsel of his choosing in connection with this Agreement.

        16.    Entire Agreement.    This Agreement contains the entire understanding and agreement between the Parties concerning the subject matter hereof and supersedes all prior agreements, understandings, discussions, negotiations and undertakings, whether written or oral, between the Parties with respect thereto.

        17.    Amendment or Waiver.    No provision in this Agreement may be amended unless such amendment is agreed to in writing and signed by the Executive and an authorized officer of the Company. No waiver by either Party of any breach by the other Party of any condition or provision contained in this Agreement to be performed by such other Party shall be deemed a waiver of a similar or dissimilar condition or provision at the same or any prior or subsequent time. Any waiver must be in writing and signed by the Executive or an authorized officer of the Company, as the case may be.

        18.    Withholding.    The Company may withhold from any amounts payable under this Agreement such federal, state and local taxes as may be required to be withheld pursuant to any applicable law or regulation.

        19.    Severability.    In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, in whole or in part, the remaining provisions of this Agreement shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law.

        20.    Survivorship.    The respective rights and obligations of the Parties hereunder shall survive any termination of the Executive's employment hereunder to the extent necessary to the intended preservation of such rights and obligations.

        21.    Beneficiaries/References.    The Executive shall be entitled, to the extent permitted under any applicable law, to select and change a beneficiary or beneficiaries to receive any compensation or benefit payable hereunder following the Executive's death by giving the Company written notice thereof. In the event of the Executive's death or a judicial determination of his incompetence, reference in this Agreement to the Executive shall be deemed, where appropriate, to refer to his beneficiary, estate or other legal representative.

        22.    Governing Law/Jurisdiction.    This Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of New York without reference to principles of conflict of laws unless superseded by federal law.

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        23.    Section 409A.

        (a)   The Parties hereto intend that all benefits and payments to be made to the Executive hereunder will be provided or paid to him in compliance with all applicable provisions of section 409A of the Internal Revenue Code of 1986 as amended, and the regulations issued thereunder, and the rulings, notices and other guidance issued by the Internal Revenue Services interpreting the same ("the Section 409A Rules"), and this Agreement shall be construed and administered in accordance with such intent. The Parties also agree that this Agreement may be modified, as reasonably requested by either party, to the extent necessary to comply with all applicable requirements of, and to avoid the imposition of any additional tax, interest and penalties under, the Section 409A Rules in connection with, the benefits and payments to be provided or paid to the Executive hereunder. Any such modification shall maintain the original intent and benefit to the Company and the Executive of the applicable provision of this Agreement, to the maximum extent possible without violating the Section 409A Rules.

        (b)   Notwithstanding the foregoing or anything to the contrary contained in any other provision of this Agreement, if the Executive is a "specified employee" within the meaning of the Section 409A Rules at the time of his "separation from service" within the meaning of the Section 409A Rules, then any payment hereunder designated as being subject to this Section 23(b) shall not be made until the first business day after (i) the expiration of six (6) months from the date of his separation from service, or (ii) if earlier, the date of his death (the "Delayed Payment Date"). On the Delayed Payment Date, there shall be paid to the Executive or, if he has died, to his estate, in a single cash lump sum, an amount equal to aggregate amount of the payments delayed pursuant to the preceding sentence.

        (c)   The Executive's rights to receive the payments referred to in Section 10(d) or Section 10(e) above shall be treated as a right to a series of separate payments under Treas. Reg. 1.409A-2(b)(2)(iii) for purposes of the Section 409A Rules.

        24.    Venue.    Any unresolved dispute arising out of this Agreement shall be litigated in any court of competent jurisdiction in the Borough of Manhattan in New York City; provided that the Company may elect to pursue a court action to seek injunctive relief in any court of competent jurisdiction to enforce Sections 11, 12 and 13 of this Agreement.

        25.    Notices.    All notices shall be in writing, shall be sent to the following addresses listed below by certified mail, return receipt requested or using a reputable overnight express delivery service, and shall be deemed to be given when received.

If to the Company:	ImClone Systems Incorporated 180 Varick Street New York, New York 10014 Attention: Chairman of the Board
	with a copy to the General Counsel of the Company
If to the Executive:	The Executive's last known address on file with the Company

        26.    Headings.    The headings of the sections contained in this Agreement are for convenience only and shall not be deemed to control or affect the meaning or construction of any provision of this Agreement.

        27.    Counterparts.    This Agreement may be executed in two or more counterparts, and such counterparts shall constitute one and the same instrument. Signatures delivered by facsimile shall be deemed effective for all purposes to the extent permitted under applicable law.

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        28.    Indemnification.    During the Term of Employment and thereafter, the Company shall (i) indemnify and hold the Executive and his heirs and representatives harmless to the extent permitted in the Company's by-laws in effect from time to time to the same extent as other senior level executives and other directors receive from the Company, and (ii) cover the Executive under directors and officers insurance policies maintained by the Company, if any, for its other officers and directors.

REMAINDER OF PAGE INTENTIONAL LEFT BLANK

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        IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first written above.

IMCLONE SYSTEMS INCORPORATED
By:	/s/ Alexander J. Denner Name:  Alexander J. Denner, Ph.D. Title:    Chairman, Executive Committee
/s/ John H. Johnson John H. Johnson

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SCHEDULE A

RELEASE

        This RELEASE ("Release") dated as of this                        day between ImClone Systems Incorporated, a Delaware corporation (the "Company"), and John H. Johnson (the "Executive").

        WHEREAS, the Company and the Executive previously entered into an employment agreement dated August 6, 2007 under which the Executive was employed to serve as the Company's Chief Executive Officer (the "Employment Agreement"); and

        WHEREAS, the Executive's employment with the Company (has been) (will be) terminated effective                        ; and

        WHEREAS, pursuant to Section 10 of the Employment Agreement, the Executive is entitled to certain compensation and benefits upon such termination, contingent upon the execution of this Release;

        NOW, THEREFORE, in consideration of the premises and mutual agreements contained herein and in the Employment Agreement, the Company and the Executive agree as follows:

        1.     Subject to Paragraph 3 below, the Executive, on his own behalf and on behalf of his heirs, estate and beneficiaries, does hereby release the Company, and any of its Subsidiaries or affiliates, and, in their respective capacities as such, each past or present officer, director, agent, employee shareholder and insurer of any such entities, from any and all claims made, to be made, or which might have been made of whatever nature, whether known or unknown, from the beginning of time, including those that arose as a consequence of or related to his employment with the Company, or arising out of or relating to the severance of such employment relationship, or arising out of or related to any act committed or omitted during or after the existence of such employment relationship, all up through and including the date on which this Release is executed, which shall not be earlier than the date of the Executive's termination of employment, but not limited to, those which were, could have been or could be the subject of an administrative or judicial proceeding filed by the Executive or on his behalf under federal, state or local law, whether by statute, regulation, in contract or tort, and including but not limited to, every claim for front pay, back pay, wages, bonus, fringe benefit, any form of discrimination (including but not limited to, every claim of race, color, sex, religion, national origin, disability or age discrimination), wrongful termination, emotional distress, pain and suffering, breach of contract or compensatory or punitive damages, interest, attorney's fees, reinstatement or reemployment, and claims under Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment Act ("ADEA"), the Older Workers Benefit Protection Act ("OWBPA"), the Americans with Disabilities Act, the Employment Retirement Income Security Act of 1974, the Family and Medical Leave Act, the Equal Pay Act, the Worker Adjustment and Retraining Notification Act, the National Labor Relations Act, the Fair Labor Standards Act, the Sarbanes-Oxley Act of 2002, each and every state or local variation of these federal laws including without limitation the New York State Human Rights Law, the New York City Human Rights Law, the New York Labor Law, the New York Civil Rights Law, the Delaware Employment Discrimination Law, the the New Jersey Law Against Discrimination, the New Jersey Conscientious Employee Protection Act, the New Jersey Equal Pay Act, and the New Jersey Family Leave Act, all as amended, and any and all other applicable federal, state, and local fair employment practices laws, individual or constitutional rights, and wage or discrimination laws (statutory or decisional). If any court rules that such waiver of rights to file, or have filed on his behalf, any administrative or judicial charges or complaints is ineffective, the Executive agrees not to seek or accept any money damages or any other relief upon the filing of any such administrative or judicial charges or complaints. The Executive relinquishes any right to future employment with the Company and the Company shall have the right to refuse to re-employ the Executive without liability.

14

The Executive acknowledges and agrees that even though claims and facts in addition to those now known or believed by him to exist may subsequently be discovered, it is his intention to fully settle and release all such claims he may have against the Company and the persons and entities described above, whether known, unknown or suspected.

        2.     The Company acknowledges and agrees that the release contained in Paragraph 1 does not, and shall not be construed to, release or limit the scope of any (i) obligation of the Company to indemnify the Executive for his acts as an officer or director of Company in accordance with the bylaws of Company and the policies and procedures of Company, or pursuant to any directors and officers liability insurance policy, (ii) obligation of the Company under any existing welfare, retirement, fringe-benefit or other plan or program of the Company in which the Executive and/or such dependents are participants, and (iii) any right the Executive may have to enforce this Agreement or the Employment Agreement. Additionally, by executing this Agreement, Executive is not waiving any claim that may not be released by law, or Executive's right to file a charge with or participate in any investigation or proceeding conducted by the U.S. Equal Employment Opportunity Commission or other government agency, except that even if Executive files a charge or participates in such an investigation or proceeding, Executive will not be able to recover damages or equitable relief of any kind from the Company or other parties released pursuant to Section 1.

        3.     The Executive acknowledges that he has been provided at least 21 days to review the Release and has been advised to review it with an attorney of his choice. In the event the Executive elects to sign this Release prior to this 21 day period, he agrees that it is a knowing and voluntary waiver of his right to wait the full 21 days. The Executive further understands that he has 7 days after the signing hereof to revoke it by so notifying the Company in writing, such notice to be received by                        within the 7-day period. The Executive further acknowledges that he has carefully read this Release, and knows and understands its contents and its binding legal effect. The Executive acknowledges that by signing this Release, he does so of his own free will and act and that it is his intention that he be legally bound by its terms.

        IN WITNESS WHEREOF, the parties have executed this Release on the date first above written.

IMCLONE SYSTEMS INCORPORATED
By:	Name: Title:
John H. Johnson

15

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, John H. Johnson, Chief Executive Officer of ImClone Systems Incorporated, certify that:

1.

I have reviewed this Quarterly Report on Form 10-Q for the quarter ended September 30, 2007 of ImClone Systems Incorporated;



2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;



3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;



4.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

        (a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

        (b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

        (c)   Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

        (d)   Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the Audit Committee of the registrant's board of directors (or persons performing the equivalent functions):

        (a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

        (b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

	/s/  JOHN H. JOHNSON John H. Johnson Chief Executive Officer Principal Executive Officer
Date: November 9, 2007

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Peter R. Borzilleri, Interim Vice President, Finance of ImClone Systems Incorporated, certify that:

1.

I have reviewed this Quarterly Report on Form 10-Q for the quarter ended September 30, 2007 of ImClone Systems Incorporated;



2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;



3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;



4.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

        (a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

        (b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

        (c)   Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

        (d)   Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the Audit Committee of the registrant's board of directors (or persons performing the equivalent functions):

        (a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

        (b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

	/s/  PETER R. BORZILLERI Peter R. Borzilleri Interim Vice President, Finance Principal Financial Officer
Date: November 9, 2007

EX-32

EXHIBIT 32

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

        In connection with the Quarterly Report on Form 10-Q of ImClone Systems Incorporated (the "Company") for the quarter ended September 30, 2007, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), John H. Johnson, Chief Executive Officer of the Company, and Peter R. Borzilleri, Interim Vice President, Finance of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and



(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	/s/  JOHN H. JOHNSON John H. Johnson Chief Executive Officer Principal Executive Officer
November 9, 2007
	/s/  PETER R. BORZILLERI Peter R. Borzilleri Interim Vice President, Finance Principal Financial Officer
November 9, 2007

        This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

        A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.