10-K

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

FORM 10-K

(Mark One)
ý	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2007
or
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

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) Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on which Registered
Common stock, par value $0.001 and associated preferred stock purchase rights	Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

          Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act Yes ý No o

          Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act Yes o No ý

          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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ý

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

Large accelerated filer ý Accelerated filer o Non-accelerated filer o
(Do not check if a smaller reporting company) Smaller reporting company o

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

          The aggregate market value of the voting and non-voting Common Stock held by non-affiliates of the registrant as of June 30, 2007 was $2,617,234,649.

          Number of shares of Common Stock; par value $0.001, outstanding as of February 22, 2008: 86,339,741

DOCUMENTS INCORPORATED BY REFERENCE

          Portions of the registrant's definitive proxy statement to be delivered in connection with its 2008 Annual Meeting of Stockholders are incorporated by reference in Parts II and III of this report.

IMCLONE SYSTEMS INCORPORATED

2007 Annual Report on Form 10-K

TABLE OF CONTENTS

		Page
PART I
Item 1.	Business	4
Item 1A.	Risk Factors	39
Item 1B.	Unresolved Staff Comments	50
Item 2.	Properties	50
Item 3.	Legal Proceedings	52
Item 4.	Submission of Matters to a Vote of Security Holders	56
PART II
Item 5.	Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	56
Item 6.	Selected Financial Data	60
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operation	61
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	80
Item 8.	Financial Statements and Supplementary Data	81
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	81
Item 9A.	Controls and Procedures	81
Item 9B.	Other Information	83
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	84
Item 11.	Executive Compensation	84
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	84
Item 13.	Certain Relationships and Related Transactions, and Director Independence	84
Item 14.	Principal Accounting Fees and Services	84
PART IV
Item 15.	Exhibits and Financial Statement Schedules	85

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        As used in this Annual Report on Form 10-K, "ImClone Systems," "ImClone," "Company," "we," "ours," and "us" refer to ImClone Systems Incorporated, except where the context otherwise requires or as otherwise indicated.

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

        The Company considers portions of the information in this Annual Report on Form 10-K to be "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act") and the Private Securities Litigation Reform Act of 1995. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 21E of the Exchange Act and the Private Securities Litigation Reform Act of 1995. Such forward-looking statements relate to, without limitation, the Company's future economic performance, plans and objectives for future operations and projections of revenue and other financial items. Forward-looking statements can be identified by the use of words such as "may," "will," "should," "expect," "anticipate," "estimate," "continue" or comparable terminology. Forward-looking statements are inherently subject to risks, trends and uncertainties, many of which are beyond the Company's ability to control or predict and some of which the Company might not even anticipate. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions at the time made, it can give no assurance that its expectations will be achieved. Future events and actual results, financial and otherwise, may differ materially from the results discussed in the forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements.

        Important factors that may cause actual results to differ materially from forward-looking statements include, but are not limited to, risks and uncertainties associated with the development of market demand for, and continued market acceptance of, ERBITUX® (cetuximab); fluctuations in our royalty, collaborative agreement reimbursement and manufacturing revenues; our dependence on Bristol-Myers Squibb and Merck KGaA to co-promote, market and sell ERBITUX; our ability to compete effectively with other pharmaceutical and biotechnological companies and products; obtaining and maintaining regulatory approval for our compounds and complying with other governmental regulations applicable to our business; obtaining adequate reimbursement from third- party payers; expending resources on, and completing pre-clinical and clinical studies of, our compounds that demonstrate such compounds' safety and efficacy; difficulties or delays in product manufacturing and finishing, and the receipt of raw materials that may cause shortfalls in the supply of ERBITUX or our product candidates; pressure to lower the price of ERBITUX because of new and/or proposed federal legislation or competition; the importation of products from overseas; attracting and retaining key personnel; changes in law or the United States Food and Drug Administration policy that expose us to competition from "generic" or "follow-on" versions of our products; protecting our proprietary rights and obtaining patent protection for new discoveries; commercial limitations imposed by patents owned or controlled by third-parties; the use of hazardous materials in our operations; our exposure to material product liability claims that could prevent or interfere with the commercialization of products; legal costs and the duration and outcome of legal proceedings and investigations; provisions of Delaware law, our charter, bylaws and stockholder rights plan that could hinder, delay or prevent changes in our control; volatility in our stock price; compliance with covenants in the indenture for our convertible notes and with the terms of other contractual obligations; and those other factors set forth in this report in Item 1- "Business," Item 1A- "Risk Factors" and Item 7- "Management's Discussion and Analysis of Financial Condition and Results of Operations." The Company assumes no obligation to update and supplement any forward-looking statements that may become untrue because of subsequent events whether as a result of new information, future events or otherwise.

        We do not undertake to discuss matters relating to certain completed clinical studies or our regulatory strategies beyond those which have already been made public or discussed herein.

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PART I

ITEM 1.    BUSINESS

OVERVIEW

        We are 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. We focus on what we believe are two promising strategies for treating cancer: growth factor blockers and angiogenesis inhibitors.

        We were incorporated under the laws of the State of Delaware on April 26, 1984. Our corporate headquarters and research facility are located at 180 Varick Street, New York, New York 10014 and our telephone number is (212) 645-1405. We make available free of charge on our Internet website (http://www.imclone.com) our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission. In addition, our Internet website includes other items related to corporate governance matters, including among other things, our corporate governance guidelines, charters of the various committees of the Board of Directors, and our corporate compliance program (including our Code of Business Conduct and Ethics).

        Our commercially available product, ERBITUX® (cetuximab), is a first-of-its-kind antibody that was first approved by the United States Food and Drug Administration (FDA) on February 12, 2004, for use in combination with irinotecan in the treatment of patients with epidermal growth factor receptor (EGFR)-expressing, metastatic colorectal cancer who are refractory to irinotecan-based chemotherapy and for use as a single-agent in the treatment of patients with EGFR-expressing, metastatic colorectal cancer who are intolerant to irinotecan-based chemotherapy. On March 1, 2006, the FDA approved ERBITUX for use in combination with radiation therapy for the treatment of locally or regionally advanced squamous cell carcinoma of the head and neck (SCCHN) and as a single-agent in recurrent or metastatic SCCHN where prior platinum-based chemotherapy has failed. On October 2, 2007, the FDA approved an update to the ERBITUX product labeling to include overall survival data as a single-agent in EGFR-expressing metastatic colorectal cancer patients after failure of both inrinotecan-and oxaliplatin-based regimens.

        Please see full prescribing information, available at www.ERBITUX.com, for important safety information relating to ERBITUX, including boxed warnings. ERBITUX binds specifically to the EGFR (also referred to as HER1 and c-ErbB-1) on both normal and tumor cells, and competitively inhibits the binding of the epidermal growth factor (EGF) and other growth stimulatory ligands, such as transforming growth factor-alpha. The EGFR is constitutively expressed in many normal epithelial tissues, including the skin and hair follicle. Expression of EGFR is also detected in many human cancers, particularly carcinomas, including those of the head and neck, colon and rectum, pancreas, stomach, lung, and breast. We are conducting, and in some cases have completed, clinical studies evaluating ERBITUX for broader use in colorectal, head and neck, lung, pancreatic, esophageal, stomach, prostate, bladder, and other cancers, as well as other potential indications.

        In September 2005, Health Canada approved ERBITUX for use in combination with irinotecan for the treatment of EGFR-expressing metastatic colorectal carcinoma in patients who are refractory to other irinotecan-based chemotherapy regimens and for use as a single-agent for the treatment of EGFR expressing, metastatic colorectal carcinoma in patients who are intolerant to irinotecan-based chemotherapy. However, ERBITUX is not currently being actively promoted in Canada.

        On December 1, 2003, Swissmedic, the Swiss agency for therapeutic products, approved ERBITUX in Switzerland for the treatment of patients with colorectal cancer who no longer respond to standard

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chemotherapy treatment with irinotecan. Merck KGaA licensed the right to market ERBITUX outside the U.S. and Canada from the Company in 1998. In Japan, Merck KGaA has marketing rights to ERBITUX, which are co-exclusive to the co-development rights of the Company and Bristol-Myers Squibb Company (BMS). On June 30, 2004, Merck KGaA received marketing approval by the European Commission to sell ERBITUX for use in combination with irinotecan for the treatment of patients with EGFR-expressing metastatic colorectal cancer after failure of irinotecan including cytotoxic therapy. On December 22, 2005, Swissmedic approved ERBITUX in Switzerland in combination with radiation in the treatment of patients with previously untreated advanced SCCHN.

        On January 31, 2007, an application was submitted to the Japanese Pharmaceuticals and Medical Device Agency for the use of ERBITUX in treating patients with advanced colorectal cancer. ERBITUX is the first immunoglobulin G-1 (IgG1) monoclonal antibody that inhibits EGFR to be submitted for marketing authorization in Japan.

        We co-promote and otherwise support the sale of ERBITUX in the U.S. and Canada together with our development, promotion and distribution partner BMS through its wholly-owned subsidiary E.R. Squibb & Sons, L.L.C. (E.R. Squibb). We manufacture ERBITUX for clinical studies and for commercial sales. According to our agreements with BMS and Merck KGaA, each is obligated to pay us certain royalties on their sales of ERBITUX.

        In addition to achieving approval in the above indications, we also have completed a comprehensive clinical development program to evaluate the broader use of ERBITUX in colorectal cancer, including two Phase III randomized studies known as EMR-013 (also known as CRYSTAL; first-line metastatic setting), and BMS-006 (also known as EPIC; second-line metastatic setting). The first-line metastatic study EMR-013 met its primary endpoint by significantly improving progression-free survival. In the Phase III randomized study BMS-006, the primary endpoint, overall survival, was not met, possibly because a high proportion of patients in the control (irinotecan only) arm received treatment with ERBITUX following development of progressive cancer, potentially confounding the interpretation of this endpoint. However, the secondary endpoints strongly favor the ERBITUX combination arm.

        In collaboration with the National Cancer Institute (NCI) Cooperative groups, studies in first-line colorectal cancer (CALGB 80203) and a first-line pancreatic cancer Phase III study (Southwest Oncology Group (SWOG) 0205) began to enroll patients in 2004. In April 2007, SWOG announced that SWOG 0205 did not meet its endpoint of improving overall survival. Subsequently CALGB 80203 was closed to enrollment after accruing 238 patients and a new first-line colorectal cancer protocol that incorporates both ERBITUX and Avastin® (bevacizumab) developed by CALGB (80405) began enrolling patients in late 2005 by all of the NCI Cooperative groups (Intergroup). Furthermore, the NCI Cooperative groups began a Phase III randomized study to evaluate the merits of adding ERBITUX in the adjuvant setting following definitive surgical treatment of Stage C (locoregional) colorectal cancer. A similar adjuvant study (PETACC-8) was also begun in Europe and other regions outside the U.S.. In September 2007, ImClone and its partners Merck KGaA and BMS announced that its pivotal Phase III study evaluating ERBITUX in patients with advanced non-small cell lung cancer (NSCLC) met its primary endpoint of increasing overall survival. In addition, numerous registration-directed studies of ERBITUX are underway in various other locoregional and advanced disease settings (colorectal, non-small cell lung, head and neck, stomach, esophageal, pancreatic, bladder, prostate, and other cancers) and pilot studies are either underway or planned to further evaluate the development of ERBITUX for other indications and tumor types.

        In addition to our work developing and commercializing ERBITUX, we have also advanced a number of investigational fully-human IgG1 monoclonal antibodies to various stages of clinical development, including those targeting angiogenesis and growth signaling mechanisms, which can be used to treat various kinds of cancer and nonmalignant diseases.

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        We continue to conduct research, both independently and in collaboration with academic, community and corporate partners, in a number of areas related to our core focus of tumor cell growth factor inhibitors and angiogenesis inhibitors.

CLINICAL DEVELOPMENT PROGRAMS

ERBITUX Cancer Therapeutic

        ERBITUX is an IgG1 chimerized (part human, part mouse) monoclonal antibody that selectively binds to the EGFR and thereby inhibits growth of tumors dependent upon activation of the EGFR for cell division and survival. The activation of the EGFR is believed to play a critical role in the growth and survival of certain types of tumor cells and select normal cells and in vitro has been shown to be a mediator of antibody-dependent cellular cytotoxicity (ADCC). Certain cancer types are characterized by the expression of the EGFR. For example, IMCL-9923 and other studies conducted by us have indicated that approximately 75% of advanced stage refractory colorectal cancer cases have been shown by immunohistochemistry (IHC) to have detectable EGFR in tumor cells as assessed by IHC, although it appears that nearly all colorectal cancers have the genetic machinery for EGFR and manufacture EGFR mRNA. Similarly, according to the literature in this area, nearly all patients diagnosed with SCCHN have been shown to express the EGFR on the surface of the tumor cells, as assessed by IHC. Other types of cancer are also characterized, in certain patients, by expression of the EGFR, including non-small cell lung, renal, and pancreatic cancers. By preventing the binding of critical growth factors to the EGFR, we believe it is possible to inhibit the growth and survival of these and other cancers. ERBITUX may increase the anticancer activity of radiotherapy by one of two postulated mechanisms: (1) EGFR inhibition induces arrest in G1, the phase of the cell cycle in which radiosensitivity is highest and (2) irradiation induces upregulation and tryrosine phosphorylation of EGFR; irradiated cells may then become dependent on EGFR signaling for proliferation. EGFR inhibition may then impair these radioprotective responses.

ERBITUX Clinical Studies

        The charts presented below reflect potentially pivotal studies in selected tumor types that we and our partners, Merck KGaA and BMS, are developing or collaborating on with the NCI and various European cooperative groups, and are designed both for registration purposes and exploratory development in these indications. It should be noted that a large number of other clinical evaluations of ERBITUX, including investigator-initiated studies and studies sponsored by ImClone, BMS, and Merck KGaA, are progressing in a broad array of tumor types.

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Colorectal Cancer

Study	Description	Population	Target Enrollment
CALGB 80405 (Intergroup) (Ongoing)	Phase III Randomized study of chemotherapy (FOLFOX or FOLFIRI) plus Avastin® vs. ERBITUX vs. Avastin® + ERBITUX	First-line	2,289
EMR-013 (CRYSTAL) (Primary endpoint result reported)	Phase III Randomized Study of FOLFIRI +/- ERBITUX	First-line	1,220
OPUS (Primary endpoint result reported)	Phase III Randomized Study of FOLFOX +/- ERBITUX	First-line	337
680 CAIRO II (Ongoing)	Phase III Randomized Study (XELOX/Avastin® +/- ERBITUX)	First-line	750
608 COIN (Clinical Research Council, UK) (Ongoing)	Phase III Randomized Study (FOLFOX [regimen 1] vs. FOLFOX [regimen 2] vs. FOLFOX + ERBITUX)	First-line	2,400
648 NORDIC VII (Ongoing)	Phase III Randomized Study of the FOLFOX regimen given continuously or intermittently with ERBITUX	First-line	571
BMS-006 (EPIC) (Primary endpoint result reported)	Phase III Randomized Study of Irinotecan +/- ERBITUX	Second-line	1,300
SWOG (Intergroup (Ongoing)	Phase III Study of FOLFIRI + ERBITUX +/- Avastin®	Second-line (previously treated with FOLFOX/ Avastin®)	1,260
BMS-025 (Primary endpoint result reported)	Phase III Randomized Study of ERBITUX vs. Best Supportive Care	Refractory	572
NCCTG 147 (Intergroup) (Ongoing)	Phase III Randomized Study (FOLFOX +/- ERBITUX)	Adjuvant	2,648
PETACC-8 (Europe) (Ongoing)	Phase III Randomized Study (FOLFOX +/- ERBITUX)	Adjuvant	2,000

        As part of our confirmatory obligation to the FDA in regard to the approval of ERBITUX for colorectal cancer, we initiated a Phase II study enrolling 87 patients with refractory, EGFR-non-detectable (by IHC), metastatic colorectal cancer. This study, which was designed to estimate the overall response rate and duration obtained with single-agent ERBITUX use, completed accrual in the third quarter of 2007.

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        In conjunction with our U.S. partner, BMS, and our partner in the rest of the world, Merck KGaA, we have opened or expect to open additional studies in colorectal cancer, including randomized studies in first-line, second-line, and refractory settings for metastatic colorectal cancer, as well as in the adjuvant setting involving patients with locoregionally advanced disease following definitive surgical resection. Upon the approval of ERBITUX in 2004 for colorectal cancer under the accelerated approval mechanism, studies BMS-006 (EPIC) and BMS-014 (EXPLORE) were designated as studies in the second-line metastatic setting to confirm the clinical benefit of ERBITUX. BMS-006, which opened for patient enrollment in May 2003, evaluated the merits of adding ERBITUX to irinotecan in patients who have failed oxaliplatin, 5-fluorouracil, and leucovorin in the first-line of therapy. BMS-006, which was conducted in collaboration with Merck KGaA, finished patient accrual in February 2006. Preliminary toxicity data, substantiating the safety of the regimen, was presented at the annual American Society of Clinical Oncology (ASCO) meeting in 2005, and the results of efficacy evaluations were reported at the American Association of Cancer Research (AACR) meeting in 2007. In November 2006, we reported that the primary endpoint, overall survival was not met, possibly due to a high proportion of patients in the control (irinotecan only) arm receiving treatment with ERBITUX following disease progression on the study, potentially confounding the interpretation of this endpoint. However, in April 2007, we announced that the secondary endpoints of progression-free survival and response rate were significantly higher in the ERBITUX-irinotecan arm, and, at the annual ASCO meeting in June 2007, we presented results which demonstrated that patients in the ERBITUX-containing arm had a statistically significant improvement in quality of life and disease-related symptoms compared with patients who did not receive ERBITUX.

        EMR-013 (CRYSTAL), a randomized Phase III study that evaluates the merits of adding ERBITUX to irinotecan and infusional 5-fluorouracil (FOLFIRI) as first-line therapy in patients with metastatic disease, completed patient accrual in December 2005. In January 2007, we announced that EMR-013 met its primary endpoint by significantly improving progression-free survival as determined by an Independent Review Committee (IRC), and the results of the study were presented at the annual ASCO meeting in June 2007. The results also indicated that IRC-determined response rates were also significantly higher in patients treated with ERBITUX. Survival data is expected be mature in the second half of 2008. In November 2006, we also announced that BMS-025, a randomized Phase III study of ERBITUX versus best supportive care that completed patient enrollment in August 2005, met its primary endpoint of overall survival, with the results presented at the annual AACR meeting in April 2007. Many other randomized Phase III trials sponsored by either Merck KGaA, ImClone, and/or BMS, and/or various national cooperative oncology groups in US and Europe, are evaluating the merits of adding ERBITUX to many different chemotherapy regimens with or without Avastin® in the first- and second-line metastatic and adjuvant treatment settings. Also, there are many other Phase I, II and pilot studies that are evaluating alternate administration schedules (e.g. every two weeks) and utilizing ERBITUX in novel therapeutic regimens in various clinically relevant settings.

        Based on the Phase III results of BMS-025, 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.

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Head and Neck Cancer

Study	Description	Population	Target Enrollment
IMCL-9815 (Completed)	Phase III Randomized Study (Radiation +/- ERBITUX)	First-line	424
EMR-001 (Enrollment completed)	Phase II Study (Platinum + ERBITUX)	Recurrent/Refractory or Metastatic	96
EMR-008 (Enrollment completed)	Phase I/II Study ERBITUX + Platinum (Carboplatin or Cisplatin) + 5FU (Low, Medium or High Dose)	Recurrent or Metastatic	53
ECOG-5397 (Enrollment completed)	Phase III Randomized Study (Cisplatin + Placebo vs. Cisplatin + ERBITUX)	Recurrent or Metastatic	123
EMR-002 (EXTREME) (Primary endpoint result reported)	Phase III Randomized Study (Cisplatin + 5-Fluorouracil +/- ERBITUX)	Recurrent or Metastatic (no prior chemotherapy in the metastatic setting)	420
RTOG 0522 (Ongoing)	Phase III Randomized Study (Cisplatin Radiation +/- ERBITUX)	Locally Advanced	720

        The final results of IMCL-9815, a Phase III locally advanced head and neck cancer study conducted in cooperation with Merck KGaA, that were published in the New England Journal of Medicine in February 2006, demonstrate that ERBITUX, when added to definitive radiation therapy, significantly improves the duration of both locoregional disease control and overall survival. IMCL-9815 was the principal clinical trial supporting the regulatory approval of ERBITUX. On March 1, 2006, the FDA approved ERBITUX for use in combination with radiation therapy for the treatment of locally or regionally advanced SCCHN, and regulatory approval was granted subsequently in Europe and other regions worldwide. In addition, based on the results of single agent ERBITUX studies in patients with metastatic SCCHN refractory to platinum therapy, particularly EMR-016, the FDA also approved ERBITUX as a single agent in recurrent or metastatic SCCHN where prior platinum-based chemotherapy has failed.

        RTOG 0522, which opened to patient enrollment in November 2005, was designed to extend the positive results with ERBITUX reported from study IMCL-9815. In this Phase III study, patients with locally advanced head and neck cancer are being randomized to treatment with either radiation plus chemotherapy or radiation plus chemotherapy plus ERBITUX.

        The Eastern Cooperative Oncology Group (ECOG) published the final results of ECOG-5397, a randomized Phase III study of cisplatin plus ERBITUX versus cisplatin in the Journal of Clinical Oncology. In this study, the objective response rate was significantly higher for the ERBITUX arm (26.3% versus 9.8%). Both overall survival and progression-free survival were higher in patients receiving ERBITUX plus cisplatin, but the study lacked sufficient statistical power (i.e. too few patients) to demonstrate clinically relevant differences in these endpoints. Based on the results of ECOG-5397, as well as non-randomized studies demonstrating the activity of ERBITUX in patients with recurrent and metastatic head and neck cancer following treatment with platinum-based regimens,

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Merck KGaA developed EMR-002 (EXTREME), a randomized Phase III study of a platinum agent (cisplatin or carboplatin) plus 5-fluorouracil versus a platinum agent plus 5-fluorouracil plus ERBITUX. The study, which was completely accrued in February 2006, may support registering ERBITUX in this indication in both the U.S. and worldwide. In April 2007, we announced that EXTREME met the primary endpoint of increasing overall survival in patients with recurrent and/or metastatic SCCHN, and the results were presented at the annual ASCO meeting in June 2007.

        ImClone and its partners, BMS and Merck KGaA, as well as various cooperative oncology groups, are also conducting a large number of Phase I and II studies, some of which are randomized, to evaluate the merits of adding ERBITUX to a wide variety of chemotherapies, radiation and chemoradiation regimens in many different settings of SCCHN including the neoadjuvant, adjuvant, metastatic, locoregional settings.

Non-Small Cell Lung Cancer

Study	Description	Population	Target Enrollment
CP02-0452 (SELECT) (Ongoing)	Phase III, randomized study of ERBITUX in combination with docetaxel or pemetrexed compared to docetaxel or pemetrexed alone	Second-line Metastatic or Recurrent	800
EMR-011 (LUCAS) (Enrollment completed)	Phase II randomized, chemotherapy-naïve, advanced non-small cell lung cancer (ERBITUX + Cisplatin + Vinorelbine vs. Cisplatin + Vinorelbine)	First-line Stage IIIb or IV	86
BMS-012 (Enrollment completed)	Phase II single-arm study (ERBITUX)	Recurrent or progressive	100
EMR-046 (FLEX) (Primary endpoint result reported)	Phase III Cisplatin/Vinorelbine +/- ERBITUX	First-line Stage IIIb or IV	1,100
BMS-099 (Primary endpoint result reported)	Phase II Taxane/Carbo or Cisplatin +/- ERBITUX	First-line Stage IIIb or IV	660
BMS-100 (Enrollment completed)	Phase II Gemcitabine/Carbo or Cisplatin +/- ERBITUX	First-line Stage IIIb or IV	131
IMCL-0554 (Ongoing)	Phase II randomized, Taxol/Carbo two different schedules + ERBITUX/Avastin®	First-line Stage IIIb or IV	120
RTOG-0324 (Completed)	Phase II Radiation + Taxol/Carbopatin + ERBITUX	First-line Stage IIIa	84
SWOG-0342 (Completed)	Phase II Randomized Study of Taxol/Carboplatin/ERBITUX or Taxol/Carbopatin followed by ERBITUX	First-line Stage IIIb or IV	236
RTOG (TBA)	Phase III Randomized Study of Taxol/Carboplatin/Radiotherapy +/- ERBITUX	First-line Stage IIIa	TBA

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        Based on the findings of a Phase II randomized trial, EMR-011 (LUCAS), involving 61 evaluable patients with chemotherapy-naïve advanced non-small cell lung cancer, which showed that the addition of ERBITUX to cisplatin and vinorelbine significantly increased tumor response rates (53.3% versus 32.3%) and median survival (8.3 vs. 7.0 months), Merck KGaA began a Phase III randomized clinical trial (FLEX), which finished target patient accrual in the first quarter of 2006. In September 2007, we announced that FLEX met its primary endpoint of increasing overall survival compared with chemotherapy alone in patients with NSCLC. With our partners Merck KGaA and BMS, we plan to report the results of the FLEX trial at the annual meeting of ASCO in June 2008. BMS-099 and BMS-100 were initiated to provide further support for ERBITUX in the first-line treatment setting of patients with advanced NSCLC. In 2005, the size of BMS-099 was increased from 300 to 660 patients and the principal endpoint was modified from response rate to progression-free survival, whereas the size of BMS-100 was decreased from 300 to 131. FLEX, BMS-099, and BMS-100 met accrual targets in 2005-2006. In July 2007, we announced that BMS-099 did not meet is primary endpoint of progression-free survival as assessed by an IRC, however, key secondary endpoints of the study, including response rate as assessed by the IRC and progression-free survival as assessed by clinical investigators, were statistically significant and favored the ERBITUX-containing arm. The results of BMS-100, which were presented at the annual ASCO meeting in 2007, demonstrated that all efficacy parameters (response rate, progression-free survival, overall survival) favored the ERBITUX arm.

        At the annual meeting of ASCO in 2005, the Radiation Therapy Oncology Group (RTOG) presented preliminary toxicity and feasibility data on RTOG-0324 which evaluated the feasibility, safety and efficacy of ERBITUX combined with Taxol/Carboplatin and radiation, in patients with locoregionally-advanced stage IIIa NSCLC. The RTOG reported that the regimen was both safe and feasible, and that both response rates and overall survival were impressive. Based on the results of RTOG-0324, the NCI has agreed to support an RTOG Phase III trial to evaluate the merits of adding ERBITUX to chemoradiotherapy in treating patients with Stage IIIa NSCLC. In addition, SWOG completed accrual to SWOG-0342, a randomized Phase II study evaluating combined therapy with ERBITUX/paclitaxel/carboplatin (combined) versus paclitaxel/carboplatin followed by ERBITUX (sequential) in patients with stages IIIb or IV NSCLC. Both treatment arms of the study, especially the combined treatment arm, met endpoints that were predetermined by SWOG for levels for further development of ERBITUX. Both SWOG and other NCI cooperative oncology groups are developing concepts for Phase III pivotal trials that will evaluate ERBITUX in combination with various relevant chemotherapy, chemotherapy/biological, and chemoradiotherapy combination regimens in various settings of NSCLC.

        Furthermore, IMCL-0452 (SELECT), which began in 2004, is actively accruing patients to evaluate the merits of adding ERBITUX to chemotherapy in the second-line metastatic setting. In 2006-2007, the trial underwent an amendment through the Special Protocol Assessment process to modify the randomization between docetaxel and pemetrexed to physician's choice, adapting to changes in standard therapy. The amendment was officially incorporated into the protocol in the fourth quarter of 2007. The second randomization is between ERBITUX and no ERBITUX. The principal focus of the study will be on the merits of ERBITUX in patients receiving pemetrexed, and the study will also generate useful information on the merits of ERBITUX in patients receiving docetaxel. A wide range of both randomized and non-randomized Phase I and Phase II studies, sponsored by ImClone, BMS, and Merck KGaA, are also evaluating ERBITUX in combination with many chemotherapy and chemoradiation regimens in neoadjuvant, adjuvant, locoregionally-advanced, and advanced NSCLC disease settings.

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Pancreatic Cancer

Study	Description	Population	Target Enrollment
SWOG-0205 (Primary endpoint result reported)	Phase III Randomized Study (ERBITUX + Gemcitabine vs. Gemcitabine)	First-line Stage IV Pancreatic Cancer	720
ECOG-8200 (Enrollment completed)	Phase II Randomized Study of Irinotecan + Docetaxel +/- ERBITUX	First-line Stage IV Pancreatic Cancer	92
NCI-6580 (Enrollment completed)	Phase II Randomized Study Gemcitabine + Avastin® + ERBITUX or Gemcitabine + Avastin® + Erlotinib	First-line Stage IV Pancreatic Cancer	54-126
IMCL-0555 (Ongoing)	Phase II Randomized Study Gemcitabine + Avastin® + ERBITUX or Avastin® + ERBITUX	First-line Stage IV Pancreatic Cancer	120

        Based on the encouraging response rate, survival rates, and survival reported from a Phase I/II study of ERBITUX plus gemcitabine, as well as the tolerability of the regimen in patients with advanced pancreatic cancer, SWOG activated SWOG-0205, a first-line study in pancreatic cancer in January 2004. This study is a randomized comparative study comparing ERBITUX plus gemcitabine versus gemcitabine alone in first-line, stage IV, pancreatic cancer patients. Accrual completed in 2006, and in April 2007 we announced SWOG-0205 did not meet its primary endpoint of improving overall survival in patients with locally advanced unresectable or metastatic pancreatic cancer. A number of Phase II randomized studies sponsored by ImClone and BMS or the NCI cooperative oncology groups were initiated in 2006. These studies are designed to evaluate the merits of adding ERBITUX to various chemotherapy regimens consisting of either gemcitabine or irinotecan plus docetaxel, and several of these studies will evaluate ERBITUX combined with chemotherapy as well as the VEGF inhibitor Avastin®. Further, we, in collaboration with our partners BMS and Merck KGaA, as well as the NCI cooperative oncology groups are evaluating the feasibility and activity of administering ERBITUX with several other gemcitabine-based chemotherapy regimens in patients with advanced pancreatic cancer, as well as evaluating the feasibility of administering ERBITUX with chemotherapy and/or radiotherapy in earlier stages of the diseases, particularly in the neoadjuvant and adjuvant settings.

Other Cancers

        In collaboration with our partners BMS and Merck KGaA, we are in the process of supporting a wide array and large number of Phase I and II evaluations of ERBITUX administered alone or combined with other therapeutic modalities in adult malignancies that express EGFR, including carcinomas of the brain, esophagus, stomach, rectum, cervix, endometrium, ovary, bladder, prostate, and breast, as well as pediatric malignancies. In 2008, ImClone will begin to sponsor a series of multicenter randomized Phase II studies to evaluate the merits of adding ERBITUX to standard therapy used to treat patients with rectal, bladder, gastric, prostate, esophageal, and other cancers. Both non-randomized and randomized Phase II studies are and will also explore the merits of alternate ERBITUX administration schedules, particularly every two-week dosing.

        We and BMS also presented preliminary results from study BMS-045, in which tumor biopsies were performed on approximately 100 patients with refractory colorectal cancer prior to treatment with

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ERBITUX to ascertain biomarker and/or pharmacogenomic predictors of drug activity. A wide variety of genomic markers, signaling proteins, tumor oncogenes (e.g. KRAS mutations), and relevant ligands are being assessed by our scientists and our collaborators, BMS and Genomic Health, Inc.

ERBITUX Safety Information

        Grade ³/4 infusion reactions occurred in approximately 3% of patients receiving ERBITUX (cetuximab) in clinical trials with fatal outcome reported in less than 1 in 1,000. Reactions characterized by rapid onset of airway obstruction (bronchospasm, stridor, hoarseness), urticaria, hypotension, loss of consciousness, and/or cardiac arrest. Severe infusion reactions require immediate and permanent discontinuation of ERBITUX therapy.

        Most reactions (90%) were associated with the first infusion of ERBITUX despite premedication and antihistamines. Caution must be exercised with every ERBITUX infusion as there were patients who experienced their first severe infusion reaction during later infusions. Monitor patients for 1-hour following the ERBITUX infusions in a setting with resuscitation equipment and other agents necessary to treat anaphylasis (e.g. epinephrine, corticosteroids, intravenous antihistamines, bronchodilators, and oxygen). Longer observation periods may be required in patients who experience infusion reactions.

        Severe cases of interstitial lung disease (ILD), which was fatal in one case, occurred in 4 of 1,570 (less than 0.5%) of patients receiving ERBITUX in clinical trials. Permanently discontinue ERBITUX where ILD is confirmed.

        In clinical studies of ERBITUX, dermatologic toxicities, including acneform rash, skin drying and fissuring, paronychial inflammation, infectious sequelae (e.g., S. aureus sepsis, abscess formation, cellulitis, blepharitis, cheilitis) and hypertrichosis occurred in patients receiving ERBITUX therapy. Acneform rash occurred in 76-88% of 1,373 patients receiving ERBITUX in clinical trials with severe acneform rash occurring in 1-17% of patients. Acneform rash usually developed within the first two weeks of therapy and resolved in a majority of patients after cessation of treatment, although in nearly half, the event continued beyond 28 days. Monitor patients receiving ERBITUX for dermatologic toxicities and infectious sequelae. Sun exposure may exacerbate these effects.

        In women of childbearing potential, appropriate contraceptive measures must be used during treatment with ERBITUX and for 6 months following the last dose of ERBITUX, if ERBITUX is used during pregnancy or if patients become pregnant while receiving ERBITUX, patients should be apprised of the potential risk for loss of pregnancy or potential hazard to the fetus.

        Hypomagnesemia occurred in 55% (199/365) of patients receiving ERBITUX and was severe (NCI CTC Grades 3 & 4) in 6-17%. The onset of hypomagnesemia and accompanying electrolyte abnormalities occurred days to months after initiation of ERBITUX. Monitor patients periodically for hypomagnesemia, and hypocalcemia and hypokalemia, during and for at least 8 weeks following the completion of ERBITUX. Replete electrolytes as necessary.

        The most serious adverse reactions associated with ERBITUX in mCRC patients are infusion reactions, dermatologic toxicity, sepsis, renal failure, interstitial lung disease, and pulmonary embolus.

        The most common adverse reactions with ERBITUX (incidence greater than or equal to 25% in the ERBITUX + best supportive care arm (BSC)) (n=288) vs. BSC (n=274), respectively, were fatigue (89%, 76%), rash/desquamation (89%, 16%), abdominal pain (59%, 52%), pain-other (51%, 34%), dry skin (49%, 11%), dyspnea (48%, 43%), constipation (46%, 38%), pruritus (40%, 8%), diarrhea (39%, 20%), vomiting (37%, 29%), infection without neutropenia (35%, 17%), headache (33%, 11%), fever (30%, 18%), insomnia (30%, 15%), cough (29%, 19%), dermatology-other (27%, 6%), and stomatitis (25%, 10%).

        Please see full prescribing information, available at www.ERBITUX.com, for important safety information relating to ERBITUX, including boxed warnings.

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Human IgG1Monoclonal EGFR Inhibitor

        We have developed an IgG1 fully-human monoclonal antibody, referred to as IMC-11F8, which targets the human EGFR. IMC-11F8 is a high affinity antibody that blocks ligand-dependent activation of the EGFR. Pre-clinical in vitro studies have shown that IMC-11F8 inhibits EGFR activation, downstream signaling pathways and growth of human tumor cells in vitro it has been shown to be a mediator of antibody-dependent cellular cytotoxicity (ADCC). In pre-clinical human tumor xenograft models, IMC-11F8 suppresses the growth of EGFR-positive tumors and enhances the activity of chemotherapeutic drugs when used in combination. We intend to commercialize this antibody and we believe that we have rights to do so under our agreements with BMS and Merck KGaA. ImClone's full rights to develop IMC-11F8 outside the U.S. was upheld in arbitration between ImClone and Merck KGaA in 2006. Binding arbitration upheld that IMC-11F8 was not covered under the Merck KGaA development and license agreement.

        The Company received approval to begin Phase I clinical trials of IMC-11F8 from the National Institute for Public Health and the Environment (RIVM), the Dutch regulatory agency. The first patient began treatment in fourth quarter of 2004 in a Phase I clinical trial of patients with solid tumors and the trial reached its endpoints and completed enrollment in the fourth quarter of 2006. The two-center study conducted at the Free University in Amsterdam and Utrecht University in Utrecht, evaluated the safety and pharmacology of IMC-11F8 administered weekly or bi-weekly by intravenous infusion. Doses of IMC-11F8 above 800 mg were consistently associated with headache, whereas the 800 mg dose was well tolerated and achieved plasma concentrations above target levels associated with biological activity in preclinical studies. Biologically relevant plasma concentrations persisted for the entire two-week period following antibody administration. No hypersensitivity reactions were noted and major antitumor responses were noted in several patients at the lower dose levels. The final results of this trial were reported at the annual EORTC-AACR-NCI Molecular Targeting meeting in 2007. In August 2007, we announced the first disease-directed clinical trials of IMC-11F8 had commenced patient enrollment. Pivotal trials of IMC-11F8 are expected to begin in the first quarter of 2009.

Study	Description	Population	Target Enrollment
CP11-0401 (Enrollment completed)	Phase I Study of Weekly and Bi-Weekly Human Anti-Epidermal Growth Factor Receptor Monoclonal Antibody IMC-11F8	In Patients with Advanced Solid Tumors	40
CP11-0602 (Enrollment ongoing)	Phase II Study of IMC-11F8 Administered Every 2 Weeks in Combination with mFOLFOX-6	In Patients with Treatment-Naive Advanced or Metastatic Colorectal Cancer	40

Monoclonal Antibody Inhibitors of Angiogenesis

        Our general experience with growth factors, particularly the use of ERBITUX to block the EGFR, is mirrored in our pursuit of what may be another promising approach for the treatment of cancer, the inhibition of angiogenesis. Angiogenesis is the natural process of new blood vessel growth. The VEGF family of ligands are a group of molecules that helps regulate angiogenesis. Tumor cells, as well as normal cells, produce VEGF. Once produced by the tumor cells, VEGF stimulates the production of new blood vessels and ensures an adequate blood supply to the tumor, enabling the tumor to grow. KDR (VEGFR-2) is a growth factor receptor found almost exclusively on the surface of human endothelial cells, which are the cells that line all blood vessels. Various VEGF ligands recognize and bind to this receptor in order to stimulate the endothelial cells to grow and cause new blood vessels to

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form. We believe that interference with the binding of VEGF to the KDR receptor inhibits angiogenesis and potentially can be used to slow or halt tumor growth. We have identified potential inhibitors collectively known by us as IMC-KDR antibodies.

        In 2001, we concluded a Phase I clinical study with an IgG1 chimeric (part human, part mouse) anti-KDR antibody known as IMC-1C11. In 2002, we identified several fully-human IgG1monoclonal anti-KDR antibodies with potent anti-KDR activity. In 2003, we initiated pre-clinical development of one of these antibodies, IMC-1121B. This fully-human antibody replaced IMC-1C11 in our development pipeline. We filed an Investigational New Drug Application (IND) for IMC-1121B in July 2004 and initiated a clinical study assessing Phase I endpoints (safety, pharmacokinetics, preliminary activity) of IMC-1121B administered weekly in cancer patients in the fourth quarter of 2004. A second study, evaluating Phase I endpoints of IMC-1121B administered every two-weeks, was initiated in 2006. The preliminary results of the weekly study were reported at the annual meeting of ASCO in 2006 and the EORTC-AACR-NCI Molecular Targeting meeting in 2006. As a single agent, IMC-1121B treatment has been associated with tumor regression in several patients with refractory advanced cancer, whereas toxicity has not been preclusive. In addition to overt tumor regression, stable disease exceeding six months has been observed in a notable proportion of patients with refractory solid tumors. Preliminary pharmacokinetic studies indicate that biologically-relevant concentrations are achieved and persist for at least 2 weeks following treatment. One of these ongoing studies has been amended to explore Phase I endpoints of IMC-1121B on an every 3-week schedule, as well. In August 2007, we announced the first disease-directed clinical trials of IMC-1121B had commenced patient enrollment. This Phase II single-arm, multicenter study will evaluate the efficacy, safety and pharmacology of IMC-1121B administered every two weeks to patients with metastatic renal cell carcinoma whose disease has progressed during therapy with an approved VEGFR-2 tyrosine kinase inhibitor or who have developed intolerance to these agents. A second randomized Phase II study of IMC-1121B administered alone or in combination with dacarbazine in previously untreated patients with malignant melanoma began accruing patients in November 2007, and it is projected that additional disease-directed randomized Phase II and Phase III studies of IMC-1121B will begin in the first half of 2008.

        Subject to further investigation, we believe that such anti-KDR antibodies could be effective in treating other diseases, such as diabetic retinopathy and age-related macular degeneration that, like cancer, depend on the growth of new blood vessels.

Study	Description	Population	Target Enrollment
CP12-0401 (Completed)	Phase I Study of Weekly Anti-Vascular Endothelial Growth Factor Receptor 2 Monoclonal Antibody	In Patients with Advanced Solid Tumors	33
CP12-0402 (Completed)	Phase I Study of Every 2 Week Anti-Vascular Endothelial Growth Factor Receptor 2 Monoclonal Antibody	In Patients with Advanced Solid Tumors	33
CP12-0605 (Enrollment commenced)	Phase II Study of IMC-1121B Administered Every 2 Weeks	In Patients with Metastatic Renal Cell Carcinoma	36
CP12-0604 (Enrollment commenced)	Phase II Randomized Study of IMC-1121B or IMC-1121B plus Dacarbazine	In Patients with Advanced Malignant Melanoma	110

        In August 2005, the Company entered into a Collaboration and License Agreement with UCB S.A. (UCB), a company registered in Belgium, for the development and commercialization of CDP-791, UCB's novel, investigational PEGylated di-Fab antibody targeting VEGFR-2. No upfront or milestone

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payments were payable under the Agreement. In the first quarter of 2007, the Company terminated this agreement with UCB, largely due to substantial progress made in the development of IMC-1121B.

Study	Description	Population	Target Enrollment
RPCE05A3166 (Ongoing)	Phase I/II Randomized Study of Paclitaxel/ Carboplatin administered either alone or combined with CDP-791 at 10 or 20 mg/kg	In Patients with Advanced Stage IIIB or IV Non-small Cell Lung Cancer	150

Monoclonal Antibody to Insulin-Like Growth Factor Receptor-1

        In 2005, we successfully filed an IND for IMC-A12, a unique human monoclonal antibody against insulin-like growth factor-1 receptor (IGF-1R) which is expressed in diverse human tumor types. Activation of IGF-1R in cancer cells in preclinical models increases the cells' ability to survive, especially under conditions of chemotherapy or radiotherapy, and it also contributes to cancer cell growth, as well as the development of resistance to chemotherapeutics, hormones (estrogens and androgens), and signal transduction inhibitors. IMC-A12 prevents binding of insulin-like growth factor-1 to the receptor, thus preventing its activation and triggering of survival and growth mechanisms in cancer cells. The antibody also causes rapid internalization (removal from the cell surface) of IGF-1R, thus further interfering with cancer growth-supporting properties of the receptor.

        Following successful filing of an IND for IMC-A12 in 2005, we began a Phase I study of the agent on a weekly dosing schedule in patients with solid malignancies in December 2005. A second Phase I study of IMC-A12 on an every two-week dosing schedule began in 2006. The preliminary results of the initial trial, which demonstrated tolerability, preliminary evidence of antitumor activity as a single agent, and a pharmacokinetic profile supporting an every two-week dosing schedule, were reported at the EORTC-AACR-NIC Molecular Targeting meeting in 2006. In June 2007, we presented Phase I results for IMC-A12 at the annual ASCO meeting which indicated that IMC-A12 was well tolerated and showed activity in patients with advanced solid tumors. A Phase II study of IMC-A12 commenced patient enrollment in July 2007. This randomized study of IMC-A12 as a single-agent or in combination with ERBITUX in patients with metastatic colorectal cancer with disease progression demonstrated during prior treatment with ERBITUX is expected to enroll 40-72 patients and is designed to evaluate the efficacy, safety, and pharmacology of IMC-A12 administered every two weeks by intravenous infusion as a single agent or in combination with ERBITUX. In August 2007, we announced a single-arm, open-label study of IMC-A12 for patients with advanced prostate cancer had commenced enrollment. We are planning to open six additional randomized and nonrandomized Phase II studies of IMC-A12 in the first half of 2008.

        In September 2007, we announced the Cancer Therapy Evaluation Program (CTEP) of the Division of Cancer Treatment and Diagnosis (DCTD), NCI, had selected 10 proposals for Phase I/II clinical trials of IMC-A12. Additional proposals have been added to the list of studies to be conducted in the initial stage of evaluations, which will begin in the first half of 2008. Both randomized and nonrandomized Phase II trials sponsored by CTEP will explore the clinical activity, pharmacology and biological effects of IMC-A12 as a single-agent or combined with other relevant anticancer agents in a wide range of malignancies including breast, lung, pancreas, and liver cancers, as well as both adult and pediatric sarcomas. In addition, Phase I/II studies will evaluate the safety, pharmacology, anticancer

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activity and biological effects of IMC-A12 in children and adolescents with cancer, as well as in combination with other novel targeting agents in which there is a specific rationale for combined use.

Study	Description	Population	Target Enrollment
CP13-0501 (Completed)	Phase I Study of IMC-A12, an Anti-IGF-1R Human Monoclonal Antibody, Administered Weekly	In Patients with Advanced Solid Tumors	40
CP13-0502 (Completed)	Phase I Study of IMC-A12, an Anti-IGF-1R Human Monoclonal Antibody, Administered Every 2 Weeks	In Patients with Advanced Solid Tumors	40
CP13-065 (Enrollment commenced)	Phase II Randomized Study of IMC-A12 +/- ERBITUX, Administered Every 2 Weeks	In Patients with Metastatic Colorectal Cancer with Disease Progression During Prior Treatment with ERBITUX	40-72
CP13-0603 (Enrollment commenced)	Phase II Single-Arm, Open-Label Study of IMC-A12, Administered Every 2 Weeks	In Patients with Metastatic Androgen-Independent Prostate Cancer	30

Monoclonal Antibody to Vascular Endothelial Growth Factor Receptor-1 (VEGFR-1)

        Like VEGFR-2, the target of our anti-KDR antibodies, the VEGFR-1 receptor (also known as flt-1) is believed to be involved in blood vessel formation, but recent data suggest that it may function in novel ways unrelated to angiogenesis. We have discovered that VEGFR-1 is expressed by a number of human tumors, most notably breast and colorectal cancer. We have developed specific antibodies that block the function of VEGFR-1 and have conducted pre-clinical studies showing that these antibodies can inhibit the growth of human breast and colorectal tumors in pre-clinical models. It is believed that VEGFR-1 inhibitors could be useful in the treatment of VEGFR-1-positive tumors, such as breast or colorectal cancer and we are developing therapeutic antibodies against this target for future clinical studies.

        We successfully filed an IND for IMC-18F1, an IgG1 fully-human monoclonal antibody to VEGFR-1, in December 2005, for which we initiated patient accrual to a Phase I study in the first half of 2006. Disease-directed and/or proof of principal Phase II studies of IMC-18F1 are expected to begin in the fourth quarter of 2008 or the first quarter of 2009.

Study	Description	Population	Target Enrollment
CP14-0501 (Ongoing)	Phase I Study of IMC-18F1, an Anti-VEGFR-1 Human Monoclonal Antibody	In Patients with Advanced Solid Tumors	40

Monoclonal Antibody Against Platelet-Derived Growth Factor Receptor Alpha (PDGFRa)

        PDGFRa is a receptor tyrosine kinase that is activated by the binding of platelet-derived growth factors. Studies have shown that PDGFRa is expressed on ovarian, prostate, breast, lung, glial, skin and bone tumors. We have developed an IgG1 fully-human antibody, designated IMC-3G3, that effectively blocks the function of PDGFRa and inhibits the growth of glioblastoma and leiomyosarcoma tumors in animal models. We are conducting additional pre-clinical studies to evaluate if our antibody can also

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inhibit the growth of other cancers. We filed an IND for IMC-3G3 in the first half of 2006 and initiated patient accrual into a Phase I trial in the fourth quarter of 2006. Disease-directed Phase II studies of IMC-3G3 are expected to begin in the fourth quarter of 2008 or the first quarter of 2009.

Study	Description	Population	Target Enrollment
CP15-0601 (Ongoing)	Phase I Study of IMC-3G3, an Anti-PDGFa Human Monoclonal Antibody	In Patients with Advanced Solid Tumors	40

RESEARCH PROGRAMS

General

        Each of our clinical development programs has extensive continuing Research support to address associated areas, including tumor indications, mechanism of action, combination treatments, biomarkers, side effects and others. The primary function of Research, however, is to focus on the identification of antibodies with growth inhibiting activity against human tumors, thereby leveraging our strengths and expertise in the identification of new tumor targets and the selection and production of antibodies that bind and inhibit the activity of these targets. The principal areas of our ongoing research programs include growth factor blockers, other tumor cell growth inhibitors and angiogenesis inhibitors. We have assembled a scientific staff with expertise in a variety of disciplines, including oncology, immunology, molecular and cellular biology, antibody engineering, bioinformatics and protein chemistry. These scientists have the primary responsibility of identifying new targets and validating their role in tumor growth and development. New targets are both generated internally and obtained from external partners. Our primary goal is to identify a number of targets sufficient to support and expand our portfolio beyond our current level. In addition to pursuing research programs in-house, we collaborate with academic institutions and corporations to support our research and development efforts.

Research on Clinical Development Programs

        Research on ERBITUX and IMC-11F8:    Supporting research continues in-house, in collaboration with our partners and with outside collaborators on our EGFR inhibitor products. These efforts include studies to further expand the cancer indications treatable with EGFR inhibitors and the combinations of treatment to obtain the best results. Studies are also underway to determine the applicable biomarkers and their role in directing treatment. For example, both EGFR mutations and KRAS mutations are currently being explored. Finally, we have recently established a team of ImClone scientists, working together with scientists at BMS, to intensely study the underlying mechanism of action behind the skin rash observed with treatment with EGFR inhibitors.

        Research on IMC-1121B (VEGFR-2 inhibitor):    IMC-1121B is a fully human monoclonal antibody that blocks the VEGFR-2 receptor that is found on tumor endothelial cells; therefore it is an angiogenesis inhibitor. We are continuing to work with an experimental antibody known as DC101 in animal models in order to support the clinical development of IMC-1121B. DC101 neutralizes the flk-1 receptor, which is the mouse receptor to VEGF that corresponds to VEGFR-2 in humans. Tumor models in mice have shown that DC101 inhibits tumor growth as a single agent or in combination with chemotherapy or radiation therapy.

        Research on IMC-A12 (IGF-1R inhibitor):    IMC-A12 is a fully human monoclonal antibody that blocks the insulin-like growth factor receptor-1 (IGF-1R), a receptor found on many different tumor cells. Although IGF-1R is a growth factor receptor, it differs from EGFR in that it enhances the growth of tumors by blocking apoptosis (programmed cell death), thereby enhancing the tumor's

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survival mechanisms. Activation of IGF-1R in cancer cells increases the cells' ability to survive, especially under conditions of chemotherapy or radiotherapy, consequently contributing to the cancer's growth. We have developed and evaluated an antibody to IGF-1R, designated IMC-A12, that blocks binding of insulin-like growth factor-1 to the receptor, thus preventing its activation and triggering of survival and growth mechanisms in cancer cells. The antibody also causes rapid internalization (removal from the cell surface) of IGF-1R, thus further interfering with cancer growth-supporting properties of the receptor.

        Research on IMC-18F1 (VEGFR-1 inhibitor):    IMC-18F1 is a fully human monoclonal antibody that blocks the VEGFR-1 receptor, another receptor to which VEGF binds. Like VEGFR-2, the target of our anti-VEGFR-2 antibodies, the VEGFR-1 receptor is believed to be involved in blood vessel formation, but recent data suggest that it may also function in novel ways unrelated to angiogenesis. We discovered that VEGFR-1 is expressed by a number of human tumors, most notably breast and colorectal cancer, and have shown in pre-clinical animal models that these antibodies can directly inhibit the growth of human breast and colorectal tumors.

        Research on IMC-3G3 (PDGFR alpha inhibitor):    Platelet-derived growth factor receptor alpha (PDGFRa) is a receptor tyrosine kinase that is activated by the binding of platelet-derived growth factors. Studies have shown that PDGFRa is expressed on ovarian, prostate, breast, lung, glial, skin and bone tumors. We developed a fully-human antibody, designated IMC-3G3, that effectively blocks the function of PDGFRa and inhibits the growth of glioblastoma and leiomyosarcoma tumors in animal models. We are conducting additional pre-clinical studies to evaluate if our antibody can also inhibit the growth of other cancers.

Research on Growth Factor Blockers

        Research on a flt3 inhibitor:    flt3 is a receptor tyrosine kinase that is over expressed in the majority of acute myelogenous leukemias and lymphocytic leukeumia. We developed a fully-human anti-flt3 antagonist antibody named IMC-EB10. Preclinical studies have shown that IMC-EB10 significantly inhibits leukemia cell growth in human leukemia xenograft models in mice. IMC-EB10 is currently on track as an IND candidate for 2008. In parallel we are also developing an immunotoxin conjugate approach using the IMC-EB10 antibody.

        Research on a RON receptor inhibitor:    The Macrophage-Stimulating Protein receptor (RON) belongs to the c-MET family of receptor tyrosine kinases. Since its discovery in 1993, several lines of evidence suggest that RON is expressed in several major cancers and contributes to tumorigenesis. Antagonists of RON activity, however, have not been reported. Consequently, we generated several fully-human monoclonal antibodies that bind to human RON with high affinity and block ligand binding. By preventing RON signaling, these antibodies have significantly inhibited cancer cell line invasion/migration as well as tumor formation in several tumor xenograft models. These findings are the first to validate RON as a cancer target and underscore the potential of RON antibodies for therapeutic intervention in the treatment of human cancer. We have recently identified our lead antibody, RON-8, and are actively moving it forward as an IND candidate.

        Research on gp75:    gp75 is a melanoma antigen and an ideal target for antibody-based therapy. A novel fully-human antibody to gp75, 20D7, was generated. This antibody was shown to be effective against a panel of human melanomas grown as xenografts in nude mice. We are currently studying the activity of 20D7 in additional pre-clinical models and moving it forward as an IND candidate.

Research on FGFR: Dysregulation of the fibroblast growth factor (FGF) and receptor (FGFR) pathway has been linked to the development of both solid tumors and hematological malignancies. Inhibiting this pathway may therefore have therapeutic benefit. Two neutralizing antibodies were generated that target FGFR-1 and FGFR-3, respectively. These antibodies have been tested for anti-tumor effects in vitro and have shown activity in prostate and bladder carcinoma, multiple myeloma and leukemia. Significant tumor inhibition in vivo was observed in human prostate xenografts treated with anti-FGFR-1, and in human multiple myeloma xenografts treated with anti-FGFR-3.

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Research on Angiogenesis Inhibitors

Research on VE-cadherin inhibitors: In another approach to angiogenesis inhibition, we are exploring the therapeutic potential of antibodies against vascular-specific cadherin (VE-cadherin). Cadherins are a family of cell surface molecules that help organize tissue structures. VE-cadherin is believed to play an important role in angiogenesis by organizing endothelial cells into vascular tubes, which is a necessary step in the formation of new blood vessels. Advanced tumor growth is dependent on the formation of a capillary blood vessel network in the tumor to ensure an adequate blood supply to the tumor. Therefore, antibodies that inhibit VE-cadherin may inhibit such capillary formation in tumors, and help fight cancer by cutting off adequate blood supply to the tumor. Pre-clinical studies using monoclonal antibodies against VE-cadherin have demonstrated that inhibition of angiogenesis, tumor growth and metastasis occurs as a consequence of interfering with the ability of VE-cadherin to form tubular structures. We are evaluating in pre-clinical studies antibodies that are efficacious in inhibiting angiogenesis and tumor growth without negatively affecting existing vessels.

        In connection with our VE-cadherin research program, we have an exclusive license from ICOS Corporation to certain patent rights pertaining to VE-cadherin and antibodies thereto for the treatment of cancer in humans.

Research on VEGFR-3 inhibitors: Antagonist antibodies to VEGFR-3 (also known as flt-4) have several potential therapeutic uses: blocking of metastasis by inhibiting lymphangiogenesis, blocking tumor angiogenesis, inhibiting the growth of tumors stimulated by flt-4/VEGF-C or D autocrine loops and inhibiting inflammation. Systemic treatment of mice with monoclonal antibody, mF4-31C1, directed to the mouse VEGFR-3 results in inhibition of new lymphatic formation in tumor models, leading to significant inhibition of metastasis. Administration of mF4-31C1 reduces the growth of primary human tumors in mice most likely by blocking angiogenesis or tumor inflammation and this effect appears to act additively with chemotherapy. In a model of lung inflammation, this antibody greatly reduced bronchial lymphangiogenesis and regional lymphadenopathy and prolonged retinal graft survival in mice. A candidate therapeutic fully-human anti-human VEGFR-3 antibody called hF4-3C5 has been produced and its antagonist activity for VEGFR-3 has been verified.

        In connection with our VEGFR-3 research program, we have an exclusive license from the Ludwig Institute for Cancer Research to certain patent rights pertaining to VEGFR-3 and antibodies thereto for the treatment of cancer in humans.

CORPORATE COLLABORATIONS

        In addition to our collaborations in the research and clinical areas with academic and medical institutions, we have a number of collaborations with other corporations, the most significant of which are discussed below.

Collaborations with Bristol-Myers Squibb Company

        On September 19, 2001, we entered into an acquisition agreement (the "Acquisition Agreement") with BMS and Bristol-Myers Squibb Biologics Company, a Delaware corporation (BMS Biologics), which is a wholly-owned subsidiary of BMS, providing for the tender offer by BMS Biologics to purchase up to 14,392,003 shares of our common stock for $70.00 per share, net to the seller in cash. In connection with the Acquisition Agreement, we entered into a stockholder agreement with BMS and BMS Biologics, dated as of September 19, 2001 (the "Stockholder Agreement"), pursuant to which all parties agreed to various arrangements regarding the respective rights and obligations of each party with respect to, among other things, the ownership of shares of our common stock by BMS and BMS Biologics. Concurrent with the execution of the Acquisition Agreement and the Stockholder Agreement, we entered into a commercial agreement (the "Commercial Agreement") with BMS and E.R. Squibb relating to ERBITUX, pursuant to which, among other things, BMS and E.R. Squibb are

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co-developing and co-promoting ERBITUX in the U.S. and Canada with us, and are co-developing and co-promoting ERBITUX in Japan with us and either together or co-exclusively with Merck KGaA.

        On March 5, 2002, we amended the Commercial Agreement with E.R. Squibb and BMS. The amendment changed certain economics of the Commercial Agreement and expanded the clinical and strategic roles of BMS in the ERBITUX development program. One of the principal economic changes to the Commercial Agreement was that we received payments of $140.0 million on March 7, 2002, and $60.0 million on March 5, 2003. Such payments were in lieu of the $300.0 million milestone payment we would have received upon acceptance by the FDA of the ERBITUX BLA under the original terms of the Commercial Agreement.

        On July 27, 2007, the Company and BMS amended the terms of their commercial agreement for the co-development and co-promotion of ERBITUX in the U.S. and Canada (the "BMS Amendment"). Under the BMS Amendment, the companies have jointly agreed to expand the investment in the ongoing clinical development plan for ERBITUX. 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 and other costs, up to threshold amounts, are the sole responsibility of BMS, with costs in excess of the thresholds shared by both companies according to a predetermined ratio effective January 1, 2007. The terms of the Commercial Agreement, as amended on July 27, 2007, are set forth in more detail below.

Commercial Agreement

Rights Granted to E.R. Squibb—Pursuant to the Commercial Agreement, we granted to E.R. Squibb (1) the exclusive right to distribute, and the co-exclusive right to develop and promote (together with us) any prescription pharmaceutical product using the compound ERBITUX (the "product") in the U.S. and Canada, (2) the co-exclusive right to develop, distribute and promote (together with us and together or co-exclusively with Merck KGaA and its affiliates) the product in Japan, and (3) the non-exclusive right to use our registered trademarks for the product in the U.S., Canada and Japan (collectively, the "territory") in connection with the foregoing. In addition, we agreed not to grant any right or license to any third-party, or otherwise permit any third party, to develop ERBITUX for animal health or any other application outside the human health field without the prior consent of E.R. Squibb (which consent may not be unreasonably withheld).

Rights Granted to the Company—Pursuant to the Commercial Agreement, E.R. Squibb has granted to us and our affiliates a license, without the right to grant sublicenses (other than to Merck KGaA and its affiliates for use in Japan and to any third-party for use outside the territory), to use solely for the purpose of developing, using, manufacturing, promoting, distributing and selling ERBITUX or the product, any process, know-how or other invention developed solely by E.R. Squibb or BMS that has general utility in connection with other products or compounds in addition to ERBITUX or the product ("E.R. Squibb Inventions").

Up-Front and Milestone Payments—The Commercial Agreement provides for up-front and milestone payments by E.R. Squibb to the Company of $900.0 million in the aggregate, of which $200.0 million was paid on September 19, 2001, $140.0 million was paid on March 7, 2002, $60.0 million was paid on March 5, 2003, $250.0 million was paid on March 12, 2004, and $250.0 million was paid on March 31, 2006. All such payments are non-refundable and non-creditable.

Distribution Fees—The Commercial Agreement provides that E.R. Squibb shall pay us distribution fees based on a percentage of "annual net sales" of the product (as defined in the Commercial Agreement) by E.R. Squibb in the U.S. and Canada. The distribution fee is 39% of net sales in the U.S. and Canada. The Commercial Agreement also provides that, as between BMS and ImClone Systems, the distribution fees for the sale of product in Japan by E.R. Squibb or ImClone Systems shall be equal to 50% of the operating profit or loss to such sales in any calendar month.

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        During the year ended December 31, 2007, we have recorded royalty revenues of approximately $269.8 million, representing 39% of net sales of ERBITUX by BMS.

Development of the Product—Responsibilities associated with clinical and other ongoing studies are apportioned between the parties as determined by the product development committee described below. The Commercial Agreement provides for the establishment of clinical development plans setting forth the activities to be undertaken by the parties for the purpose of obtaining marketing approvals, providing market support and developing new indications and formulations of the product. After transition of responsibilities for certain clinical and other studies, each party is primarily responsible for performing the studies designated to it in the clinical development plans. In the U.S. and Canada, the Commercial Agreement, prior to the BMS Amendment, provided that E.R. Squibb was responsible for 100% of the cost of all clinical studies other than those studies undertaken post-launch which were not pursuant to an IND (e.g. Phase IV studies), the cost of which was to be shared equally between E.R. Squibb and ImClone Systems. As between E.R. Squibb and ImClone Systems, each was responsible for 50% of the costs of all studies in Japan. As a result of the BMS Amendment, clinical development costs in the U.S. and Canada, up to threshold amounts, will be the sole responsibility of E.R. Squibb with costs in excess of the threshold amounts shared by E.R. Squibb and the Company according to a pre-determined ratio. Also, under certain limited circumstances, we reserve the right to conduct certain sole-funded registrational studies. In addition, prior to the BMS Amendment, to the extent that in 2005 and 2006 ImClone Systems and BMS exceeded the contractual maximum registrational costs for clinical development, we agreed to share such cost with BMS. We have incurred approximately $3.8 million, $20.8 million and $19.9 million pursuant to such cost sharing for the years ended December 31, 2007, 2006 and 2005, respectively. We have also incurred approximately $2.3 million, $3.1 million and $1.4 million related to the agreement with respect to development in Japan for the years ended December 31, 2007, 2006 and 2005, respectively. Except as otherwise agreed upon by the parties, the Company will own all registrations for the product and will be primarily responsible for the regulatory activities leading to registration in each country. E.R. Squibb is primarily responsible for the regulatory activities in each country after the product has been registered in that country. Pursuant to the terms of the Commercial Agreement, as amended, Andrew R.J. Bonfield, Chief Financial Officer of BMS, and a member of our Board of Directors, is entitled to oversee the implementation of the clinical and regulatory plan for ERBITUX.

Distribution and Promotion of the Product—Pursuant to the Commercial Agreement, E.R. Squibb has agreed to use all commercially reasonable efforts to launch, promote and sell the product in the territory with the objective of maximizing the sales potential of the product and promoting the FDA approved therapeutic profile and benefits of the product in the most commercially beneficial manner. In connection with its responsibilities for distribution, marketing and sales of the product in the territory, E.R. Squibb is performing all relevant functions, including but not limited to the provision of all sales force personnel, marketing (including advertising and promotional expenditures), reimbursement support, warehousing and physical distribution of the product.

        However, we have the right, at our election and sole expense, to co-promote with E.R. Squibb the product in the territory. Pursuant to this co-promotion option, which we have exercised, we are entitled on and after April 11, 2002 (at our sole expense) to have our field organization participate in the promotion of the product consistent with the marketing plan and development plans agreed upon by the parties, provided that E.R. Squibb retains the exclusive rights to sell and distribute the product. Except for our expenses incurred pursuant to the co-promotion option, E.R. Squibb is responsible for 100% of the distribution, sales and marketing costs in the U.S. and Canada, and as between E.R. Squibb and ImClone Systems, each is responsible for 50% of the distribution, sales, marketing costs and other related costs and expenses in Japan. The Company established a sales force to maximize the potential commercial opportunities for ERBITUX and to serve as a foundation for the marketing of future products derived either from within our pipeline or through business development opportunities.

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Manufacture and Supply—The Commercial Agreement provides that the Company is responsible for the manufacture and supply of all requirements of ERBITUX in bulk form active pharmaceutical ingredient (API) for clinical and commercial use in the territory, and that E.R. Squibb will purchase all of its requirements of API for commercial use from the Company. The Company supplies API for clinical use at the Company's fully-burdened manufacturing cost, and supplies API for commercial use at the Company's fully-burdened manufacturing cost plus a mark-up of 10%. The agreement also specifies that the Company should use reasonable efforts to reduce the fully-burdened manufacturing cost of producing bulk ERBITUX over time. Specifically, beginning with 2006 production of bulk ERBITUX, the agreement provides that the cost of API should not exceed a predetermined price per gram. Any excess over such amount will be shared equally by the Company and BMS.

        Upon the expiration, termination or assignment of any existing agreements between ImClone Systems and third party manufacturers, E.R. Squibb will be responsible for processing API into the finished form of the product. Sales of ERBITUX to BMS for commercial use are reflected in the Company's Consolidated Statements of Income as Manufacturing revenue.

Management—The parties have formed the following committees for purposes of managing their relationship and their respective rights and obligations under the Commercial Agreement:

•

a Joint Executive Committee (the "JEC"), which consists of certain senior officers of each party. The JEC is co-chaired by a representative of each of BMS and us. The JEC is responsible for, among other things, managing and overseeing the development and commercialization of ERBITUX pursuant to the terms of the Commercial Agreement, approving the annual budgets and multi-year expense forecasts, and resolving disputes, disagreements and deadlocks arising in the other committees;



•

a Product Development Committee (the "PDC"), which consists of members of senior management of each party with expertise in pharmaceutical drug development and/or marketing. The PDC is chaired by our representative. The PDC is responsible for, among other things, managing and overseeing the development and implementation of the clinical development plans, comparing actual versus budgeted clinical development and regulatory expenses, and reviewing the progress of the registrational studies;



•

a Joint Commercialization Committee (the "JCC"), which consists of members of senior management of each party with clinical experience and expertise in marketing and sales. The JCC is chaired by a representative of BMS. The JCC is responsible for, among other things, overseeing the preparation and implementation of the marketing plans, coordinating the sales and commercial support efforts of E.R. Squibb and us, and reviewing and approving the marketing and promotional plans for the product in the territory;



•

a Joint Manufacturing Committee (the "JMC"), which consists of members of senior management of each party with expertise in manufacturing. The JMC is chaired by our representative (unless a determination is made that a long-term inability to supply API exists, in which case the JMC will be co-chaired by representatives of E.R. Squibb and us). The JMC is responsible for, among other things, overseeing and coordinating the manufacturing and supply of API and the product, and formulating and directing the manufacturing strategy for the product;



•

an Alliance Committee (the "AC"), which consists of the JEC co-chairs and one additional representative from each of BMS and the Company. The AC is responsible for reviewing any deadlocks in the JEC, the PDC, the JCC or the JMC that are referred to it and to make a recommendation to the referring committee as the appropriate resolution of the referred matter.

        Any matter that is the subject of a deadlock (i.e., no consensus decision) in the PDC, the JCC or the JMC will be referred first to the AC for its recommendation. If the AC is unable to agree on a recommendation or the deadlock continues despite the AC's recommendation, then the matter will be

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referred to the JEC for resolution. Deadlocks in the JEC may be referred to the AC if the JEC co-chairs unanimously agree and unless resolved in accordance with the AC's recommendation, such deadlock, subject to certain exceptions, will be resolved as follows: (1) if the matter was also the subject of a deadlock in the PDC, by the co-chairperson of the JEC designated by us, (2) if the matter was also the subject of a deadlock in the JCC, by the co-chairperson of the JEC designated by BMS, or (3) if the matter was also the subject of a deadlock in the JMC, by the co-chairperson of the JEC designated by us. Deadlocks relating to changes to previously approved clinical studies will generally be resolved by not making the proposed changes while deadlocks relating to the inclusion of new proposed studies will generally be resolved by not including the proposed study. All other deadlocks in the JEC will be resolved by arbitration.

Restriction on Competing Products—During the period from the date of the Commercial Agreement until September 19, 2008, the parties have agreed not to, directly or indirectly, develop or commercialize a competing product (defined as a product that has as its only mechanism of action an antagonism of the EGFR) in any country in the territory. In the event that any party proposes to commercialize a competing product or purchases or otherwise takes control of a third party which has developed or commercialized a competing product, then such party must either divest the competing product within 12 months or offer the other party the right to participate in the commercialization and development of the competing product on a 50/50 basis (provided that if the parties cannot reach agreement with respect to such an agreement, the competing product must be divested within 12 months).

Ownership—The Commercial Agreement provides that we own all data and information concerning ERBITUX and the product and, except for E.R. Squibb inventions, all processes, know-how and other inventions relating to the product and developed by either party or jointly by the parties. E.R. Squibb, however, has the right to use all such data and information, and all such processes, know-how or other inventions, in order to fulfill its obligations under the Commercial Agreement.

Product Recalls—If E.R. Squibb is required by any regulatory authority to recall the product in any country in the territory (or if the JCC determines such a recall to be appropriate), then E.R. Squibb and ImClone Systems shall bear the costs and expenses associated with such a recall (1) in the U.S. and Canada, in the proportion of 39% for ImClone Systems and 61% for E.R. Squibb and (2) in Japan, in the proportion for which each party is entitled to receive operating profit or loss (unless, in the territory, the predominant cause for such a recall is the fault of either party, in which case all such costs and expenses shall be borne by such party).

Mandatory Transfer—Each of BMS and E.R. Squibb has agreed under the Commercial Agreement that in the event it sells or otherwise transfers all or substantially all of its pharmaceutical business or pharmaceutical oncology business, it must also transfer to the transferee its rights and obligations under the Commercial Agreement.

Indemnification—Pursuant to the Commercial Agreement, each party has agreed to indemnify the other for (1) its negligence, recklessness or wrongful intentional acts or omissions, (2) its failure to perform certain of its obligations under the agreement, and (3) any breach of its representations and warranties under the agreement.

Termination—Unless earlier terminated pursuant to the termination rights discussed below, the Commercial Agreement expires with regard to the product in each country in the territory on the later of September 19, 2018 and the date on which the sale of the product ceases to be covered by a validly issued or pending patent in such country. The Commercial Agreement may also be terminated prior to such expiration as follows:

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by either party, in the event that the other party materially breaches any of its material obligations under the Commercial Agreement and has not cured such breach within 60 days after notice;

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•

by E.R. Squibb, if the JEC determines that there exists a significant concern regarding a regulatory or patient safety issue that would seriously impact the long-term viability of all products.

Stockholder Agreement

        BMS received the right to nominate two directors to our Board (each a "BMS director") so long as its ownership interest in ImClone Systems is 12.5% or greater. If BMS' ownership interest is 5% or greater but less than 12.5%, BMS will have the right to nominate one BMS director, and if BMS' ownership interest is less than 5%, BMS will have no right to nominate a BMS director. If the size of the Board is increased to a number greater than twelve, the number of BMS directors would be increased, subject to rounding, such that the number of BMS directors is proportionate to the lesser of BMS' then-current ownership interest and 19.9%. Notwithstanding the foregoing, BMS will have no right to nominate any BMS directors if (1) we have terminated the Commercial Agreement due to a material breach by BMS or (2) BMS' ownership interest were to remain below 5% for 45 consecutive days.

        Based on the number of shares of common stock acquired pursuant to the tender offer and the fact that we currently have ten directors, BMS has the right to nominate two directors. BMS designated Andrew R.J. Bonfield, BMS'Chief Financial Officer, as one of the BMS directors. The nomination of Mr. Bonfield was approved by the Board on April 25, 2007, and Mr. Bonfield was subsequently elected as a director at the Company's 2007 Annual Meeting. On May 7, 2007, Andrew G. Bodnar, M.D., J.D., a BMS-appointed director resigned from the Company's Board of Directors. BMS has not designated a second individual to serve as its nominee.

Voting of Shares—During the period in which BMS has the right to nominate up to two BMS directors, BMS and its affiliates are required to vote all of their shares in the same proportion as the votes cast by all of our other stockholders with respect to the election or removal of non-BMS directors.

Committees of the Board of Directors—During the period in which BMS has the right to nominate up to two BMS directors, BMS also has the right, subject to certain exceptions and limitations, to have one member of each committee of the Board be a BMS director. In order to maintain independence of the Audit, Nominating and Corporate Governance, and Compensation Committees, no BMS director is serving on these committees.

Transfers of Shares—Neither BMS nor any of its affiliates may transfer any shares or enter into any arrangement that transfers any of the economic consequences associated with the ownership of shares, except (1) pursuant to registration rights granted to BMS with respect to the shares, (2) pursuant to Rule 144 under the Securities Act of 1933, as amended, or (3) for certain hedging transactions. Any such transfer is subject to the following limitations: (1) the transferee may not acquire beneficial ownership of more than 5% of the then-outstanding shares of common stock; (2) no more than 10% of the total outstanding shares of common stock may be sold in any one registered underwritten public offering; and (3) neither BMS nor any of its affiliates may transfer shares of common stock (except for registered firm commitment underwritten public offerings pursuant to the registration rights described below) or enter into hedging transactions in any twelve-month period that would, individually or in the aggregate, have the effect of reducing the economic exposure of BMS and its affiliates by the equivalent of more than 10% of the maximum number of shares of common stock owned by BMS and its affiliates at any time after September 19, 2001. Notwithstanding the foregoing, BMS Biologics may transfer all, but not less than all, of the shares of common stock owned by it to BMS or to E.R. Squibb or another wholly-owned subsidiary of BMS.

Registration Rights—We granted BMS customary registration rights with respect to shares of common stock owned by BMS or any of its affiliates.

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Collaborations with Merck KGaA

ERBITUX Development and License Agreement—In December 1998, the Company entered into a development and license agreement with Merck KGaA with respect to ERBITUX. In exchange for granting Merck KGaA exclusive rights to market ERBITUX outside of the U.S. and Canada and co-exclusive development rights in Japan, the Company received $30.0 million through December 31, 2001 in up-front cash fees and early cash payments based on the achievement of defined milestones, all of which were received by December 31, 2001. An additional $30.0 million was received through December 31, 2004, based upon the achievement of further milestones for which Merck KGaA received equity in the Company. The equity interests underlying the milestone payments were priced at varying premiums to the then market price of the common stock depending upon the timing of the achievement of the respective milestones.

        Merck KGaA pays us a royalty on sales of ERBITUX outside of the U.S. and Canada. In August 2001, Merck KGaA and the Company amended this agreement to provide, among other things, that Merck KGaA may manufacture ERBITUX for supply in its territory and may utilize a third-party to do so upon our reasonable acceptance. The amendment further released Merck KGaA from its obligations under the agreement relating to providing a guaranty under a $30.0 million credit facility relating to the build-out of BB36. In addition, the amendment provides that the companies have co-exclusive rights to ERBITUX in Japan, including the right to sublicense and Merck KGaA waived its right of first offer in the case of a proposed sublicense by us of ERBITUX in our territory. In consideration for the amendment, we agreed to a reduction in royalties' payable by Merck KGaA on sales of ERBITUX in Merck KGaA's territory.

        In September 2002, the Company entered into a binding term sheet, effective as of April 15, 2002, for the supply of ERBITUX to Merck KGaA, which replaces previous supply arrangements. The term sheet provides for Merck KGaA to purchase bulk and finished ERBITUX ordered from us during the term of the December 1998 development and license agreement at a price equal to our fully-burdened manufacturing costs. The term sheet also provided for Merck KGaA to use reasonable efforts to enter into its own contract manufacturing agreements for supply of ERBITUX and obligates Merck KGaA to reimburse us for costs associated with transferring technology and any other services requested by Merck KGaA relating to establishing its own manufacturing or contract manufacturing capacity.

        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 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 this payment and is recognizing it over the estimated service period. In addition, Merck KGaA agreed to increase its fixed royalty to 9.5% on net sales of ERBITUX outside the U.S. and Canada, effective July 1, 2006. The agreements also promote freedom to operate in the development and commercialization of matuzumab outside the U.S. and Canada and of IMC-11F8 (a fully-human EGFR-targeted IgG1 monoclonal antibody being developed by ImClone Systems) within the U.S. and Canada through the granting of certain reciprocal rights, including the sharing of confidential technical information. This is in addition to the exclusive rights held by the Company to develop and commercialize IMC-11F8 outside of the U.S. and Canada. The agreements do not extend to key intellectual property rights in the U.S. and Canada, where the Company and its partner BMS continue to hold exclusive licenses to key patents covering certain uses of EGFR-targeted monoclonal antibodies.

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Collaborations Relating to the Japanese Market

        Pursuant to the Commercial Agreement and our agreement with Merck KGaA, we had granted E.R. Squibb and Merck KGaA co-exclusive rights (together or without us) to develop, distribute and promote ERBITUX in Japan. Subsequently, on October 12, 2007, the Company entered into agreements with Merck KGaA, Merck Serono Japan Company, Limited, E.R. Squibb, Bristol-Myers K.K., and BMS for the co-development and co-commercialization of ERBITUX in Japan. Under the terms of the agreements, the Company, BMS, Merck KGaA, and respective affiliates 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 this 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 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.

UCB S.A.

        In August 2005, the Company entered into a Collaboration and License Agreement with UCB S.A. (UCB), a company registered in Belgium, for the development and commercialization of CDP-791, UCB's novel, investigational PEGylated di-Fab antibody targeting VEGFR-2. No upfront or milestone payments were payable under the Agreement. In the first quarter of 2007, the Company terminated this agreement with UCB, largely due to substantial progress made in the development of IMC-1121B and agreed to pay UCB $450,000 as settlement of all previous amounts due related to expenses associated with the co-development activities under the agreement. As part of this settlement, the Company will receive a single-digit royalty on net sales worldwide upon commercialization of such indications. As of December 31, 2005, the Company had recorded an expense of approximately $2.5 million in its financial statements related to this agreement. As a result of the termination of this contract, the Company reversed approximately $2.0 million in 2006 of the previously expensed amount The Company had a liability due to UCB of $0 and $450,000 as of December 31, 2007 and 2006, respectively.

Icahn Sourcing LLC

        Icahn Sourcing LLC (Icahn Sourcing) is an entity formed and controlled by Carl C. Icahn, the Chairman of the Company's Board, in order to leverage the potential buying power of a group of entities with which Mr. Icahn either owns or otherwise has a relationship in negotiating with a wide range of suppliers of goods, services, and tangible and intangible property. The Company is a member of the buying group and, as such, is afforded the opportunity to purchase goods, services and property from vendors with whom Icahn Sourcing has negotiated rates and terms. Icahn Sourcing does not guarantee that the Company will purchase any goods, services or property from any such vendors, and the Company is under no obligation to do so. The Company does not pay Icahn Sourcing any fees or other amounts with respect to the buying group arrangement. The Company has purchased a variety of goods and services as a member of the buying group at prices and on terms that it believes are more favorable than those which would be achieved on a stand-alone basis.

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MANUFACTURING

ImClone Systems Manufacturing Facilities

        We own and operate a pilot manufacturing facility (BB22) for biologics in Branchburg, New Jersey for the manufacture of clinical study materials. At our pilot facility, we previously manufactured a portion of the ERBITUX utilized for clinical studies. We now are using our pilot facility for supporting the scale-up of ERBITUX manufacturing process improvements, developing the cell culture and purification processes for new antibodies and producing antibodies for anticipated clinical studies. Our pilot facility is operated in accordance with current Good Manufacturing Practices (cGMP), which is a requirement for product manufactured for use in clinical studies and for commercial sale.

        In July 2001, we completed construction and put into operation an 80,000 square foot manufacturing facility, BB36, on our Branchburg, New Jersey campus. BB36 contains three 10,000 liter (production volume) fermenters and is dedicated to the clinical and commercial production of ERBITUX. During 2006, we completed a 5,000 square foot expansion for additional office space in this facility. The total construction of BB36 was approximately $57.3 million.

        In December 2003, Swissmedic approved ERBITUX manufactured at BB36 for commercial use in Switzerland. On June 18, 2004, the FDA granted a license to the BB36 facility for U.S. commercial supply. In May 2005, Team Biologics conducted a routine biannual cGMP inspection. Additionally, BB36 had a satisfactory cGMP inspection by the Regierungspräsidium Darmstadt that resulted in a Product Import license being granted to Merck KGaA in April 2003, covering the period November 2003 to October 2004. In April 2007, the Regierungspräsidium jointly with the EMEA completed a successful biannual reinspection of BB36. Another reinspection will be scheduled in approximately two years from the last inspection date.

        We constructed a 250,000 square foot multiple product manufacturing facility (BB50) in Branchburg, New Jersey with capacity of up to 110,000 liters (production volume). Mechanical completion of BB50 was reached in the fourth quarter of 2005. This facility has three distinct suites capable of producing up to three different products concurrently. We also have the ability to produce multiple products at each of the three suites. We completed the commissioning and initial validation of Suite 1 during the second quarter of 2006, and began production of ERBITUX for commercial use in the second half of 2006. We have fitted Suite 2 with equipment and plan to begin commissioning and validation of this Suite during 2008. At this point, Suite 3 remains vacant until further determination of its ultimate use. The total cost of BB50 through December 31, 2007 amounted to approximately $334.1 million. In August 2007, we received FDA approval to manufacture ERBITUX in BB50.

Contract Manufacturing

        On March 17, 2005, the Company entered into a five-year multi-product supply agreement (the "Agreement") with Lonza Biologics PLC (Lonza) for the manufacture of biological material at the 5,000 liter scale. The Company has discretion over which products to manufacture, which may include later-stage clinical production of the Company's antibodies currently in Phase I clinical testing and those nearing Phase I testing. The value of producing all batches allocated under the Agreement is approximately $68.0 million, unless terminated earlier. The Agreement provides that the Company can cancel any batches at any time; however, depending on how much notice the Company provides Lonza, the Company could incur a cancellation fee that varies based on timing of the cancellation. This cancellation fee is only applicable if Lonza does not resell the slots reserved for the cancelled batches. As of December 31, 2007, our obligations under the Agreement were approximately $11.8 million.

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        We rely entirely on third-party manufacturers for filling and finishing services. 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.

MARKETING AND SALES

        Pursuant to the terms of the Commercial Agreement, E.R. Squibb has primary responsibility for distribution, marketing and sales of ERBITUX in the U.S. and Canada and will provide sales force personnel and marketing services for ERBITUX. We have the right, at our election and sole expense, to co-promote ERBITUX with E.R. Squibb. As part of our strategy to develop the capacity to market our cancer therapeutic products, we have exercised this co-promotion right and are therefore entitled to have our field organization participate in activities supporting the sale of ERBITUX. Pursuant to the terms of the Commercial Agreement, E.R. Squibb retains the exclusive rights to sell and distribute the product. Pursuant to our co-promotion rights, during the third quarter of 2004, the Company decided to establish a field force of oncology sales professionals to increase the Company's presence and prominence within the oncology community and help maximize the market potential for ERBITUX in its approved indications. During 2005 and 2007, we expanded the ImClone sales organization. As of the end of 2007, we had approximately 80 field sales people and managers in our organization. ImClone also maintains a marketing organization that works closely with our corporate partners on marketing strategy and tactical execution.

        We will continue to evaluate future arrangements and opportunities with respect to other products we may develop or additional indications that may be approved for ERBITUX in order to optimize our profits and our distribution, marketing and sales capabilities.

PATENTS AND TRADEMARKS

General

        We seek patent protection for our proprietary technology and products in the U.S. and abroad. Patent applications have been submitted and are pending in the U.S., Canada, Europe and Japan, as well as other countries. The patent position of biopharmaceutical firms generally is highly uncertain and involves complex legal questions. Our success will depend, in part, on whether we can:

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obtain patents to protect our own products;



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obtain licenses to use the technologies of third parties, which may be protected by patents;



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protect our trade secrets and know-how; and



•

operate without infringing the intellectual property and proprietary rights of others.

Patent Rights; Licenses

        We currently have exclusive licenses or assignments to numerous issued patents worldwide that relate to our proprietary technology.

        ERBITUX.    We have an exclusive license from the University of California to an issued U.S. patent for the murine form of ERBITUX, our EGFR antibody product. We believe that this patent's scope should be its literal claim scope as well as other antibodies not literally embraced but potentially covered under the patent law doctrine of equivalents. Whether or not a particular antibody is found to be an equivalent to the antibodies literally covered by the patent can only be determined at the time of a potential infringement, and in view of the technical details of the potentially infringing antibody in question. Our licensor of this patent did not obtain patent protection outside the U.S. for this antibody.

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        We are pursuing additional patent protection relating to the field of EGFR antibodies in the treatment of cancer that may limit the ability of third parties to commercialize EGFR antibodies for such use. Specifically, we are pursuing patent protection for the use of EGFR antibodies in combination with chemotherapy to inhibit tumors or tumor growth. We previously exclusively licensed from Rhone-Poulenc Rorer Pharmaceuticals, now known as Sanofi-Aventis, patent applications seeking to cover the therapeutic use of antibodies to the EGFR in conjunction with anti-neoplastic agents. A change in ownership, and subsequent relicensing, of this family of patents are described in the Yeda matter discussed in more detail under Item 3—"Legal Proceedings." A U.S. patent, a Canadian patent and a European patent were issued in this family. In December 2002, Opposition Proceedings seeking to revoke the European patent were brought by the Scripps Research Institute, Amgen Inc., Abgenix, Inc., and YM Biosciences Inc. An Opposition Proceeding is an administrative process, the outcome of which may be that the European patent will be revoked. The Company has vigorously defended its position in this matter, which was suspended pending a final determination of the Yeda matter discussed under Item 3—"Legal Proceedings." We have filed additional patent applications, based in part on our own research, that would cover the use of ERBITUX and other EGFR antibodies in conjunction with radiation therapy, and the use of ERBITUX and other EGFR inhibitors in refractory patients, either alone or in combination with chemotherapy or radiation therapy. We have also filed patent applications that include claims on the use of conjugated forms of ERBITUX, as well as humanized forms of the antibody and fragments.

        Our license agreements with the University of California, Yeda, and Sanofi-Aventis require us to pay royalties on sales of ERBITUX that are covered by these licenses. We have entered into license agreements with Genentech for rights to patents covering certain use of epidermal growth factor receptor antibodies and with both Genentech and Centocor for rights to patents covering various aspects of antibody technology. Our agreements with both Genentech and Centocor require us to pay royalties on the sale of ERBITUX that are covered by these licenses. In conjunction with the settlement of the Yeda matter in December 2007, we are required to pay a low-single digit royalty to Yeda and Sanofi-Aventis on sales of ERBITUX.

        There can be no assurance that patent applications related to the field of antibodies in the treatment of cancer to which we hold rights will result in the issuance of patents, that any patents issued or licensed to our company related to ERBITUX or its use will not be challenged and held to be invalid or of a scope of coverage that is different from what we believe the patent's scope to be, or that our present or future patents related to these technologies will ultimately provide adequate patent coverage for or protection of our present or future EGFR antibody technologies, products or processes. Until recently, patent applications were secret until patents were issued in the U.S., or corresponding applications were published in foreign countries, and because publication of discoveries in the scientific or patent literature often lags behind actual discoveries, we cannot be certain that we were the first to make our inventions, or that we were the first to file patent applications for such inventions. In addition, patents do not give the holder the right to commercialize technology covered by the patents, should our production or our use be found by a court to be embraced by the patent of another.

        In the event that we are called upon to defend and/or prosecute patent suits and/or related legal or administrative proceedings, such proceedings are costly and time consuming and could result in loss of our patent rights, infringement penalties or both. Litigation and patent interference proceedings could result in substantial expense to us and significant diversion of efforts by our technical and management personnel. An adverse determination in any such interference proceedings or in patent litigation, particularly with respect to ERBITUX, to which we may become a party could subject us to significant liabilities to third-parties or require us to seek licenses from third-parties. If required, the necessary licenses may not be available on acceptable financial or other terms or at all. Adverse determinations in a judicial or administrative proceeding or failure to obtain necessary licenses could

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prevent us, in whole or in part, from commercializing our products, which could have a material adverse effect on our business, financial condition and results of operations.

        In the event that there is patent litigation involving one or more of the patents issued to us, there can be no guarantee that the patents will be held valid and enforceable. The scope of patents may be called into question and could result in a decision by a court that the claims have a different scope than we believe them to have. Further, the outcome of patent litigation is subject to intangibles that cannot be adequately quantified in advance, including the demeanor and credibility of witnesses that will be called to testify and the identity of the adverse party. This is especially true in biotechnology-related patent cases that may turn on the testimony of experts as to technical facts upon which experts may reasonably disagree.

        There can be no assurance that we will not be subject to claims in patent suits that one or more of our products or processes infringe third parties' patents or violate the proprietary rights of third parties. Defense and prosecution of such patent suits can result in the diversion of substantial financial, management and other resources from our other activities. An adverse outcome could subject us to significant liability to third-parties, require us to obtain licenses from third-parties, or require that we cease any related product development activities or product sales.

        An adverse determination by a court in any such patent litigation, or by the U.S. Patent and Trademark Office in a patent interference proceeding, particularly with respect to ERBITUX, to which we may become a party, could subject us to significant liabilities to third-parties or require us to seek licenses from third-parties, or result in loss in whole or part of our ability to continue to sell our product. If required, the necessary licenses may not be available on acceptable terms or at all. Adverse determinations in a judicial or administrative proceeding or failure to obtain necessary licenses could prevent us, in whole or in part, from commercializing our products, which could have a material adverse effect on our business, financial condition and results of operations.

        Angiogenesis Inhibitors.    With respect to our research on inhibitors of angiogenesis based on the flk-1 receptor (VEGFR-2), we are the exclusive licensee from Princeton University of a family of patents and patent applications covering recombinant nucleic acid molecules that encode the murine flk-1 receptor and antibodies to extracellular portions of the receptor and its human homolog, KDR. We are also the assignee of a family of patents and patent applications filed by our scientists generally related to angiogenesis-inhibiting antibodies to receptors that bind VEGF, for example human flt-1 (VEGFR-1) and KDR (VEGFR-2). One of the patents licensed from Princeton University claims the use of flk-1 receptor antibodies to isolate cells expressing the flk-1 receptor on their cell surfaces. Additionally, we are a co-owner of a patent application directed to the use of flk-1/KDR receptor antibodies to isolate stem cells that express flk-1/KDR on their cell surfaces. At present, we are seeking exclusive rights to this invention from the co-owners. We have an exclusive license from the Ludwig Institute for Cancer Research for patent rights pertaining to antibodies that specifically bind flt-4 (VEGFR-3) and their use in cancer.

        Our license from Princeton University requires us to pay royalties on sales that would otherwise infringe the licensed patents, which cover antibodies to the flk-1/KDR receptor.

        IMC-1121B and other antibodies of the IMC-KDR family are fully-human monoclonal antibodies. Patents have been issued to other biotechnology companies that relate to the selection of fully human antibodies or their manufacture. Therefore, though we have licensed such patents from certain companies in this field we may be required to obtain additional licenses before we can commercialize our own fully-human monoclonal antibodies, including IMC-1121B.

        We cannot be certain that we will ever be able to obtain such additional patent licenses related to fully-human and/or phage-derived monoclonal antibodies in the U.S. or in other territories of the world where we would want to commercialize such IMC-KDR antibodies. Even if we are able to obtain other

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licenses as requested, there can be no assurance that we would be able to obtain a license on financial or other terms acceptable to us or that we would be able to successfully redesign our products or processes to avoid the scope of such patents. In either such case, such inability could have a material adverse effect on our business, financial condition and results of operations. We cannot guarantee that the cost of such licenses would not materially affect the ability to commercialize IMC-KDR antibodies.

        There can be no assurance that others will not be, or have not been, issued patents that may prevent the sale of one or more of our products or the practice of one or more of our processes, or require licensing and the payment of significant fees or royalties by us to third-parties in order to enable us to conduct business.

        There can be no assurance that we will not be subject to claims that one or more of our products or processes infringe other patents or violate the proprietary rights of third-parties. In the event that we are called upon to defend and/or prosecute patent suits, the related legal and administrative proceedings would be costly and time consuming and could result in loss of patent rights, infringement penalties or both. In addition, defense and prosecution of patent suits can result in the diversion of substantial financial, management and other resources from our other activities. An adverse outcome could subject us to significant liability to third-parties, require us to obtain licenses from third-parties, or require us to cease any related product development activities or product sales and might have a material adverse effect on our business.

        VE-Cadherin.    We have obtained an exclusive license from ICOS Corporation to certain patent rights pertaining to VE-cadherin and antibodies thereto for the treatment of cancer in humans. We are also the assignee of a family of patent applications filed by an employee related to methods of generating therapeutically valuable antibodies that bind VE-cadherins. These two families of patent applications cover cadherin molecules that are involved in endothelial cell interactions. These interactions are believed to be involved in angiogenic processes. The subject patents and patent applications also cover antibodies that bind to, and affect the cadherin molecules. Our license from ICOS requires us to pay royalties on the sale of certain VE-cadherin antibodies.

        Phage Display Technology.    A number of antibodies that we are developing, including our fully-human anti-EGFR monoclonal antibody IMC-11F8 and our fully-human anti-KDR monoclonal antibody IMC-1121B are phage-derived antibodies, which means they are made using phage technology. Since patents have been issued to biotechnology companies that relate to phage-derived antibodies and their manufacture, we may be required to obtain licenses under these patents before we can commercialize certain phage-derived antibodies. In March 2003, we entered into a license with Dyax Corp. (Dyax) for certain of Dyax's patent rights and know-how covering certain phage display technology and a proprietary phage display library. This license also includes sublicense or non-enforcement covenant rights from other companies that possess patent and other intellectual property rights relating to phage display technology. We believe, though we cannot be certain, that this license will provide us with the freedom to operate in the development of IMC-11F8 and IMC-1121B as well as certain other phage-derived antibodies.

        Trademarks.    ERBITUX, ERBITUX/cetuximab & antibody design logo, IMCLONE, IMCLONE SYSTEMS, IMCLONE SYSTEMS INCORPORATED, TARGETED ONCOLOGY and the ANTIBODY DESIGN (pantone #172 "Orange"), our corporate icon, are trademarks and/or service marks of ImClone Systems Incorporated. Applications are pending or registrations have been issued for various of these marks in the U.S. and/or foreign jurisdictions.

        Trade Secrets.    With respect to certain aspects of our technology, we rely, and intend to continue to rely, on our confidential trade secrets, unpatented proprietary know-how and continuing technological innovation to protect our competitive position. Such aspects of our technology include methods of isolating and purifying antibodies and other proteins, collections of plasmids in viable host

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systems, and antibodies that are specific for proteins that are of interest to us. We cannot be certain that others will not independently develop substantially equivalent proprietary information or techniques, or that we are free of the patent or other rights of third parties to commercialize this technology.

        Relationships between us and our employees, scientific consultants and collaborators provide these persons with access to our trade secrets, know-how and technological innovation under confidentiality agreements with the parties involved. Similarly, our employees and consultants enter into agreements with us that require that they do not disclose confidential information of ours and that they assign to us all rights to any inventions relating to our activities made while in our employ or while consulting for us.

GOVERNMENT REGULATION

        The research and development, manufacture and marketing of human therapeutic and diagnostic products are subject to regulation, primarily by the FDA in the U.S. and by comparable authorities in other countries. These national agencies and other federal, state and local entities regulate, among other things, research and development activities (including testing in animals and in humans) and the testing, manufacturing, handling, labeling, storage, distribution, import, export, record keeping, reporting, approval, advertising and promotion of the products that we are developing. Noncompliance with applicable requirements can result in various adverse consequences, including delay in approval or refusal to approve product licenses or other applications, suspension or termination of clinical investigations, revocation of approvals previously granted, fines, criminal prosecution, recall or seizure of products, injunctions against shipping products and total or partial suspension of production and/or refusal to allow a company to enter into governmental supply contracts.

        The process of obtaining requisite FDA approval has historically been costly, time consuming, and uncertain. Current FDA requirements for a new human drug or biological product to be marketed in the U.S. include: (1) the successful conclusion of pre-clinical laboratory and animal tests, if appropriate, to gain preliminary information on the product's safety; (2) filing with the FDA of an IND to conduct human clinical studies for drugs or biologics; (3) the successful completion of adequate and well-controlled human clinical investigations to establish the safety and efficacy of the product for its recommended use; (4) filing by a company and acceptance and approval by the FDA of a New Drug Application (NDA) for a drug product or a BLA for a biological product to allow commercial distribution of the drug or biologic; and (5) FDA review of whether the facility in which the drug or biologic is manufactured, processed, packed or held meets standards designed to assure the product's continued quality. Overall, conducting clinical studies is a lengthy, time-consuming and expensive process.

        Pre-clinical tests include the evaluation of the product in the laboratory and in animal studies to assess the potential safety and efficacy of the product and its formulation. The results of the pre-clinical tests are submitted to the FDA as part of an IND to support the evaluation of the product in human patients. Historically, the results from pre-clinical testing and early clinical studies have often not been predictive of results obtained in later clinical studies. A number of new drugs and biologics have shown promising results in early clinical studies, but for which there was a subsequent failure to establish sufficient safety and efficacy data to obtain necessary regulatory approvals. Data obtained from pre-clinical and clinical activities are susceptible to varying interpretations, which may delay, limit or prevent regulatory approval.

        In addition, we may encounter regulatory delays or rejections as a result of many factors, including changes in regulatory policy during the period of pre-clinical and clinical development.

        Clinical studies involve administration of the product to patients under supervision of a qualified principal investigator. Such studies are typically conducted in three sequential Phases, although the

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Phases may overlap. In Phase I, the initial introduction of the drug into human patients, the product is generally tested for safety, dosage tolerance, absorption, metabolism, distribution, and excretion. Phase II typically involves studies in a limited patient population to: (1) determine the biological or clinical activity of the product for specific, targeted indications; (2) determine dosage tolerance and optimal dosage; and (3) identify possible adverse effects and safety risks. If Phase II evaluations indicate that a product is effective and has an acceptable benefit-to-risk relationship, Phase III studies may be undertaken to further evaluate clinical efficacy and to further test for safety within an expanded patient population. Phase III studies are often the pivotal studies upon which commercial approval is sought, although earlier Phase studies can sometimes support approval, particularly in the case of products approved on an accelerated or fast track basis. Phase IV studies, or post-regulatory approval studies, may also be required to provide additional data on safety or efficacy.

        U.S. law requires that studies conducted to support approval for product marketing be "adequate and well controlled." In general, this means that either a placebo or a product already approved for the treatment of the disease or condition under study must be used as a reference control. Studies must also be conducted in compliance with all applicable laws and regulations including good clinical practice, or GCP, and informed consent requirements.

        The FDA may prevent clinical studies from beginning if, among other reasons, it concludes that clinical subjects would be exposed to an unacceptable health risk. Studies may also be prevented from beginning by institutional review boards, who must review and approve all research involving human subjects. The FDA and institutional review boards review the results of the clinical studies and may order the temporary or permanent discontinuation of clinical studies at any time if they believe the product candidate exposes clinical subjects to an unacceptable health risk. Investigational products used in clinical studies must be produced in compliance with cGMP pursuant to FDA regulations.

        Side effects or adverse events that are reported during clinical studies can delay, impede, or prevent regulatory approval. Similarly, adverse events that are reported after regulatory approval can result in additional limitations being placed on a product's use and, potentially, withdrawal of the product from the market. Any adverse event, either before or after marketing authorization, can result in product liability claims against the Company.

        During the course of, and following the completion of clinical studies, the data are analyzed to determine whether the studies successfully demonstrated safety and effectiveness, and whether a product approval application may be submitted. In the U.S., if the product is regulated as a drug, a NDA must be submitted and approved before commercial marketing may begin. If the product is regulated as a biologic, such as antibodies, a Biologics License Application, or BLA, must be submitted and approved before commercial marketing may begin. The FDA Center for Drug Evaluation and Research, or CDER, has responsibility for the review and approval of drugs and certain therapeutic biologics such as monoclonal antibodies, cytokines, growth factors, enzymes, interferons and certain proteins. The FDA Center for Biologics Evaluation and Research, or CBER, has responsibility for other biologics. Based on this re-distribution of responsibility, most of our products will be reviewed by CDER. The NDA or BLA must include a substantial amount of data and other information concerning the safety and effectiveness (and, in the case of a biologic, purity and potency) of the compound from laboratory, animal and clinical testing, as well as data and information on manufacturing, product stability, and proposed product labeling.

        Under the Prescription Drug User Fee Act, as amended, the FDA receives fees for reviewing an NDA or BLA and supplements thereto, as well as annual fees for commercial manufacturing establishments and for approved products. These fees can be significant. The NDA or BLA review fee alone can exceed $500,000, although certain limited deferrals, waivers and reductions may be available.

        Under applicable laws and FDA regulations, each NDA or BLA submitted for FDA approval is usually reviewed for administrative completeness and reviewability within 45 to 60 days following

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submission of the application. If deemed complete, the FDA will "file" the NDA or BLA, thereby triggering substantive review of the application. The FDA can refuse to file any NDA or BLA that it deems incomplete or not properly reviewable. If the FDA refuses to file an application, the FDA will retain 25% percent of the user fee as a penalty. The FDA has established performance goals for the review of NDAs and BLAs—six months for priority applications and ten months for regular applications. However, the FDA is not legally required to complete its review within these periods and these performance goals may change over time. Moreover, the outcome of the review, even if generally favorable, typically is not an actual approval but an "action letter" that describes additional work that must be done before the application can be approved. The FDA's review of an application may involve review and recommendations by an independent FDA advisory committee. Even if the FDA approves a product, it may limit the approved therapeutic uses for the product as described in the product labeling, require that warning statements be included in the product labeling, require that additional studies be conducted following approval as a condition of the approval, impose restrictions and conditions on product distribution, prescribing or dispensing in the form of a risk management plan, or otherwise limit the scope of any approval.

        Some of our cancer treatments may be used in conjunction with in vitro diagnostic products to test patients for particular traits. In vitro diagnostic products are generally regulated by the FDA as medical devices. Before a medical device may be marketed in the U.S., the manufacturer generally must obtain either clearance through a 510(k) pre-market notification (510(k)) process or approval through the pre-market approval application (PMA) process. Section 510(k) notifications may be filed only for those devices that are "substantially equivalent" to a legally marketed predicate device. If a device is not "substantially equivalent" to a legally marketed predicate device, a PMA must be filed. The pre-market approval procedure generally involves more complex and lengthy testing, and a longer review process than the 510(k) process.

        Under current law, each domestic and foreign drug and device product-manufacturing establishment must be registered with the FDA before product approval. Domestic and foreign manufacturing establishments must meet strict standards for compliance with cGMP regulations and licensing specifications after the FDA has approved an NDA, BLA or PMA for a product manufactured at such facility. The FDA and foreign regulatory authorities periodically inspect domestic and foreign manufacturing facilities where applicable.

        Significant additional legal and regulatory requirements also apply after FDA approval to market under an NDA or BLA. Along with the requirement for ongoing adherence to cGMPs, these requirements include, among other things, requirements related to adverse events and other reporting, product advertising and promotion, and the need to submit appropriate new or supplemental applications and obtain FDA approval for certain changes to the approved product, product labeling or manufacturing process.

        In the U.S., the research, manufacturing, distribution, sale, and promotion of drug and biological products are potentially subject to regulation by various federal, state and local authorities in addition to the FDA, including the Centers for Medicare and Medicaid Services, other divisions of the U.S. Department of Health and Human Services (e.g., the Office of Inspector General), and state and local governments. For example, sales and marketing and medical affairs programs must comply with a variety of federal, state and local laws, and regulations and principles, such as the Medicare-Medicaid Anti-Fraud and Abuse Act, as amended, the False Claims Act, also as amended, the privacy provisions of the Health Insurance Portability and Accountability Act, or HIPAA, and the Pharmaceutical Research and Manufacturers of America Code on Interactions with Healthcare Professionals. Pricing and rebate programs must comply with the Medicaid rebate requirements of the Omnibus Budget Reconciliation Act of 1990, as amended. If products are made available to authorized users of the Federal Supply Schedule of the General Services Administration, additional laws and requirements

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apply. All of these activities are also potentially subject to federal and state consumer protection and unfair competition laws.

        Moreover, we are now, and may become subject to, additional federal, state and local laws, regulations and policies relating to safe working conditions, laboratory practices, the experimental use of animals, and/or the use, storage, handling, transportation and disposal of human tissue, waste and hazardous substances, including radioactive and toxic materials and infectious disease agents used in conjunction with our research work.

        Sales outside the U.S. of products we develop will also be subject to regulatory requirements governing human clinical studies and marketing for drugs and biological products and devices. The requirements vary widely from country to country, but typically the registration and approval process takes several years and requires significant resources. In most cases, if the FDA has not approved a product for sale in the U.S. the product may be exported to any country if it complies with the laws of that country and has valid marketing authorization by the appropriate authority (1) in Canada, Australia, New Zealand, Japan, Israel, Switzerland or South Africa, or (2) in the European Union or a country in the European Economic Area if the drug is marketed in that country or the drug is authorized for general marketing in the European Economic Area. There are specific FDA regulations that govern this process.

        Our ability to earn sufficient returns on our products may depend in part on the extent to which government health administration authorities, private health coverage insurers and other organizations will provide reimbursement for the costs of such products and related treatments. Significant uncertainty exists as to the reimbursement status of newly approved health care products, and there can be no assurance that adequate third-party coverage will be available.

        In the U.S., debate over the reform of the health care system has resulted in an increased focus on pricing. Although there are currently no government price controls over private sector purchases in the U.S., federal legislation requires pharmaceutical manufacturers to pay prescribed rebates on certain drugs to enable them to be eligible for reimbursement under certain public health care programs. Various states have adopted mechanisms under Medicaid and otherwise that seek to control drug prices, including by disfavoring certain higher priced drugs and by seeking supplemental rebates from manufacturers. In the absence of new government regulation, managed care has become a potent force in the market place that increases downward pressure on the prices of pharmaceutical products. New federal legislation, enacted in December 2003, has altered the way in which physician-administered drugs covered by Medicare are reimbursed, generally leading to lower reimbursement for physicians. As of January 1, 2005, physicians are reimbursed for physician-administered drugs, such as ERBITUX, based on the Average Sales Price of the drug plus six (6) percent. The Average Sales Price is the average net price of a drug to all non-federal purchasers. Price discounts will affect the drug reimbursement rates. To date, the sale of ERBITUX has not been discounted to non-federal purchasers, other than routine prompt payment discounts.

        This focus on pricing has led to other government action, and may lead to other action in the future. For example, in December 2003 federal legislation was enacted to change U.S. import laws and expand the ability to import lower priced versions of pharmaceutical products from Canada, where there are government price controls. These changes to the import laws will not take effect unless and until the Secretary of Health and Human Services certifies that the changes will lead to substantial savings for consumers and will not create a public health safety issue. The current Secretary of Health and Human Services has indicated that there is not a basis to make such a certification at this time. However, it is possible that this Secretary or a subsequent Secretary could make the certification in the future. In addition, legislative proposals have been made to implement the changes to the import laws without any certification, and to broaden permissible imports in other ways. Even if the changes to the import laws do not take effect, and other changes are not enacted, imports from Canada and elsewhere

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may increase due to market and political forces, and the limited enforcement resources of the FDA, the Customs Service, and other government agencies. For example, numerous states and localities have proposed programs to facilitate Canadian imports, and at least one locality has already begun such a program, notwithstanding questions raised by FDA about the legality of such actions. We expect that pressures on pricing results will continue.

        In the European Union, governments influence the price of pharmaceutical products through their pricing and reimbursement rules and control of national health care systems that fund a large part of the cost of such products to consumers. The approach taken varies from member state to member state. Some jurisdictions operate positive and/or negative list systems under which products may only be marketed once a reimbursement price has been agreed. Other member states allow companies to fix their own prices for medicines, but monitor and control company profits. The downward pressure on health care costs in general, particularly prescription drugs, has become very intense. As a result, increasingly high barriers are being erected to the entry of new products, as exemplified by the National Institute for Clinical Excellence in the United Kingdom which evaluates the data supporting new medicines and passes reimbursement recommendations to the government. In addition, in some countries cross-border imports from low-priced markets (parallel imports) exert a commercial pressure on pricing within a country.

        In Japan, the National Health Ministry biannually reviews the pharmaceutical prices of individual products. In the past, these reviews have resulted in price reductions.

ENVIRONMENTAL AND SAFETY MATTERS

        We use hazardous chemicals, biological agents and various radioactive isotopes and compounds in our research and development and our manufacturing activities. Accordingly, we are subject to and seek to comply with, applicable regulations under federal, state and local laws regarding employee safety, environmental protection and hazardous substance control. We have made and will continue to make expenditures for environmental compliance, environmental protection and employee safety. Such expenditures have not had, and in the opinion of management are not expected to have, a material effect on our financial position, results of operation, capital expenditures or competitive position. However, these laws may change, our processes may change, or other facts may emerge which could affect our operations, business or assets and therefore the amount and timing of expenditures in the future may vary substantially from those currently anticipated.

COMPETITION

        Competition in the biopharmaceutical industry is intense and based significantly on scientific, technological and market factors. These factors include the availability of patent and other protection for technology and products, the ability to commercialize technological developments and the ability to obtain governmental approval for testing, manufacturing and marketing. We compete with specialized biopharmaceutical firms in the U.S., Europe, Asia and elsewhere, as well as a growing number of large pharmaceutical companies that are applying biotechnology to their operations. Many biopharmaceutical and large pharmaceutical companies have focused their development efforts in the human therapeutics area, including cancer. Many major pharmaceutical companies have developed or acquired internal biotechnology capabilities or made commercial arrangements with other biopharmaceutical companies. Further, such companies have substantially greater financial resources and greater access to the capital markets than we do. These companies, as well as academic institutions, governmental agencies and private research organizations, also compete with us in recruiting and retaining highly qualified scientific, technical and professional personnel and consultants.

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        We are aware of certain products under development or manufactured by competitors that are used or marketed for the prevention, diagnosis, or treatment of certain diseases that we have targeted for product development. Various companies are developing or commercializing biopharmaceutical products that potentially compete directly with our commercial product and product candidates. These include areas such as: (1) the use of biopharmaceutical and pharmaceutical products targeted to the EGFR or antibodies to that receptor to treat cancer; (2) the existence and development of inhibitors to angiogenesis; and (3) the existence and development of inhibitors to IGF. Currently there is one small molecule EGFR inhibitor approved by the FDA. OSI Pharmaceuticals, Inc. and Genentech, Inc. received approval from the FDA for Tarceva™ (erlotinib) for the treatment of patients with locally advanced or metastatic non-small cell lung cancer after failure of at least one prior chemotherapy regimen and for first-line pancreatic cancer when used in combination with Gemzar. AstraZeneca Pharmaceutical's IRESSA® (gefitinib), a small molecule EGFR inhibitor has been withdrawn from certain markets after failing its confirmatory study with non-small cell lung cancer, yet they have ongoing studies in various tumor types. In addition, several product candidates are in advanced stages of clinical studies. We are aware of several companies that have potential antibody or other product candidates in clinical testing that target the EGFR and therefore may compete with our lead product, ERBITUX. These companies include, but are not limited to: (1) Amgen, Inc. which received FDA approval in September 2006 and European Medicines Agency (EMEA) approval in 2007 for their IgG2 fully-human monoclonal antibody, panitumumab, for use as a single agent for highly refractory colorectal cancer and as a single-agent in patients with the KRAS wild type biomarker (KRAS WT), respectively; (2) Pfizer, Inc.; (3) GlaxoSmithKline plc; (4) Novartis; (5) Merck KGaA; (6) Wyeth; (7) Medarex; and (8) YM Bioscience Inc.

        On February 26, 2004, Genentech received FDA approval for Avastin® for treatment in first-line metastatic colorectal cancer. Avastin® (including second-line CRC and first-line non-small cell lung cancer indications) is an approved therapeutic antibody designed to inhibit vascular endothelial growth factor (VEGF). While Avastin® does not target the EGFR, it is indicated for patient populations (second-line CRC) that encompass the same patients as the FDA's approval for ERBITUX. In addition, Avastin® competes significantly with ERBITUX in patients beyond the FDA label of Avastin® in CRC and may compete significantly with ERBITUX as a treatment for other cancers, including NSCLC. We believe that, notwithstanding the fact that the FDA has approved Avastin® and ERBITUX for the treatment of metastatic colorectal cancer in different indications, physicians have prescribed Avastin® outside of its approved indication and within ERBITUX's approved indications. If physicians continue or accelerate such prescription of Avastin® outside of its approved indication, the prescription volume or market share of ERBITUX within its approved indication may be limited or may diminish.

        During the third quarter of 2006, Amgen received FDA approval for Vectibix™ (panitumumab), which is indicated as a monotherapy for the treatment of patients with EGFR-expressing metastatic colorectal cancer who have disease progression, on or following fluoropyrimidine-, oxaliplatin- and irinotecan- containing regimens. We believe that ERBITUX's strength and leadership in clinical data, the product's established market presence, combined with our strategic planning and tactical execution effectively positions us to address our competition within the colorectal marketplace, however this direct competitor's drug could adversely impact the continued marketability of ERBITUX.

        We expect that our products under development and in clinical studies will address major markets within the cancer sector, and potentially markets in other therapeutic areas. Our competition will be determined in part by the potential indications for which drugs are developed and ultimately approved by regulatory authorities. Additionally, the timing of market introduction of some of our potential products or of competitors' products may be an important competitive factor. Accordingly, the relative speed with which we can develop products, complete pre-clinical testing, clinical studies and approval processes and supply commercial quantities to market are expected to be important competitive factors. We expect that competition among products approved for sale will be based on various factors,

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including product efficacy, safety, convenience, availability, price, patent position, manufacturing capacity and capability, distribution capability and government action.

OUR EMPLOYEES

        We have assembled a qualified business, professional and scientific staff with a variety of complementary skills in a broad base of areas, including legal, finance, advanced research technologies, oncology, immunology, molecular and cell biology, antibody engineering, protein and medicinal chemistry and high-throughput screening. We have also recruited a staff of technical and professional employees to carry out manufacturing at our Branchburg, New Jersey facilities. Of our 1,128 full-time personnel on January 31, 2008, 997 were employed at our New Jersey facilities and 131 were employed at our New York headquarters. Our staff includes 71 persons with Ph.D.'s and 13 with M.D.'s.

INDUSTRY SEGMENT

        We operate in only one industry segment—biotechnology. We do not have any foreign operations, and our business is not seasonal.

ITEM 1A.    RISK FACTORS

Risks Relating to Our Business and Other Matters

Royalty and manufacturing revenue from sales of ERBITUX represent a substantial portion of our revenues. If ERBITUX does not receive continued market acceptance, sales may not continue and we may not earn sufficient revenues.

        Our future growth and a significant portion of our future revenues depend on the continued commercial success of ERBITUX, our only FDA-approved product. We cannot be certain that ERBITUX will continue to be licensed or approved in the U.S. or in any foreign market. A number of factors may affect the rate and level of market acceptance of ERBITUX, including:

•

The perception by physicians and other members of the healthcare community of ERBITUX's safety or efficacy or that of competing products;



•

The effectiveness of our and BMS' sales and marketing efforts in the U.S. and the effectiveness of Merck KGaA's sales and marketing efforts outside the U.S.;



•

The ability to obtain additional FDA approvals to market ERBITUX in additional treatment indications and tumor types;



•

Any unfavorable publicity concerning the Company, ERBITUX or competitive drugs;



•

The price of ERBITUX relative to other drugs or competing treatments;



•

The availability and level of third-party reimbursement for sales of ERBITUX;



•

Emerging biomarker data (e.g. mutated or wild type forms of the KRAS) and how it is interpreted by physicians;



•

A change in government regulation which would allow the entry of generic products in the market could cause a significant decline in sales;



•

The continued availability of adequate supplies of ERBITUX to meet demand; and



•

Regulatory developments related to the manufacture or continued use of ERBITUX.

        If ERBITUX does not continue to be accepted, our revenues would decline, which would impact our profitability and the price of our common stock.

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We depend on BMS and Merck KGaA to co-promote market and sell ERBITUX. If either BMS or Merck KGaA becomes unable to meet its obligations, or we fail to adequately maintain our relationship with these partners, it would negatively impact our revenues and harm our business.

        Under our agreement with BMS, BMS has the exclusive right to distribute ERBITUX in the U.S. and Canada, in exchange for which we receive royalty payments of 39% of BMS' net sales of ERBITUX in the U.S. and Canada. Under our agreement with Merck KGaA, Merck has the exclusive right to market ERBITUX outside of the U.S., Canada and Japan, in exchange for which we receive royalty payments of 9.5% of Merck KGaA's net sales of ERBITUX. These royalty payments from BMS and Merck represent a significant portion of our current revenues. In addition, we receive milestone payments and reimbursements of various regulatory and clinical expenses, as well as certain marketing and administrative expenses from BMS and Merck. Recently, we amended the Commercial Agreement with BMS to expand the on-going clinical development plan for ERBITUX by up to several hundred million dollars with development costs, up to threshold amounts, being the sole responsibility of BMS and costs in excess of the thresholds shared by both companies according to a pre-determined ratio. Our reliance on these relationships creates a number of potential risks, including the risk that our corporate partners may not devote sufficient resources to our programs or product. If either BMS or Merck becomes unable to market effectively and sell sufficient quantities of ERBITUX, or otherwise unable to meet its contractual obligations, our revenues and/or profitability may be negatively impacted due to decreased revenues or increased commercial expenses on our part.

        On February 27, 2008, the Company received verbal notification from Merck KGaA that Merck KGaA was taking the position that the Yeda Settlement Agreement of December 7, 2007 resulted in the breach of one of the Company's representations in the Development License Agreement and that, therefore, Merck KGaA was no longer obligated to reimburse a portion of the royalty payments paid by ImClone to Yeda and Sanofi-Aventis following the date of that agreement. The Company is attempting to determine the effect on it of the Merck KGaA notification and its rights and obligations relating thereto.

We operate in a highly competitive industry, including in terms of product pricing, that is subject to rapid and significant technological change.

        The pharmaceutical industry in which we operate is highly competitive. Our present and potential competitors include major pharmaceutical and biotechnology companies, as well as specialty pharmaceutical firms. Certain of these companies have considerably greater financial, research, clinical, regulatory, manufacturing, and marketing resources than we do. We have already experienced significant competition to ERBITUX from Avastin® (bevacizumab) (a non-chemotherapeutic biopharmaceutical product manufactured by Genentech, Inc. and approved by the FDA as first- and second-line treatment for patients with metastatic colorectal cancer and as first-line treatment in non-small cell lung cancer). Xeloda® (capecitabine) (a chemotherapeutic biopharmaceutical product manufactured by Roche Laboratories, Inc. and also approved by the FDA as a first-line treatment for patients with metastatic colorectal cancer), and Vectibix™ (panitumumab) (an IgG2 anti-EGFR monoclonal antibody manufactured by Amgen and approved by the FDA as a single-agent for patients where 5-fluorouracil, oxaliplatin and irinotecan have failed and in the European Union as a single-agent in patients with KRAS WT) have also presented competitive challenges. We believe that, notwithstanding the fact that the FDA has approved Avastin®, Xeloda®, Vectibix™ and ERBITUX for the treatment of metastatic colorectal cancer in different indications, physicians have prescribed each outside of their approved indications and within ERBITUX's approved indications. ERBITUX is priced at a premium to all of these agents for a monthly course of therapy. We are also aware of products in development at other biotechnology or pharmaceutical companies that, if successful in clinical trials and approved for marketing, may be priced competitively and compete with ERBITUX for the indications for which we have FDA or EMEA approval, or for indications for which we are seeking, or may seek, FDA or EMEA approval. Business arrangements among our competitors may increase competition and

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the resources available to these competitors. In addition, the pharmaceutical industry has undergone, and is expected to continue to undergo, rapid and significant technological change, and we expect competition to increase with technical advances. The development of products or processes by our competitors with significant advantages over those that we are seeking to develop could cause the marketability of our products to stagnate or decline.

We are subject to extensive governmental regulation. If we are unable to obtain or maintain regulatory approvals for our product or product candidates, we will not be able to market our product or further develop our product candidates.

        We are subject to stringent regulation with respect to product safety and efficacy by various international and U.S. federal, state and local authorities. Of particular significance are the FDA's requirements covering research and development, testing, manufacturing, quality control, labeling and promotion of drugs for human use. Any biopharmaceutical that we may develop cannot be marketed in the U.S. until it has been approved by the FDA, and then can only be marketed for the indications and claims approved by the FDA. As a result of these requirements, the length of time, the level of expenditures and the laboratory and clinical information required for approval of an NDA or a BLA, or any supplements thereto, are substantial and can require a number of years, and the ability to obtain regulatory approval is uncertain. In addition, after any of our products receives regulatory approval, it remains subject to ongoing FDA regulation, including with respect to, for example, changes to the product, its manufacturing or label, new or revised regulatory requirements for manufacturing practices, additional clinical study requirements, restricted distribution, written warnings to physicians, a product recall, and withdrawal of a previously obtained approval. Similarly, extensive regulation exists outside of the U.S., including in Europe and Japan.

        We cannot be sure that we will be able to receive necessary regulatory approvals on a timely basis, if at all, for any of the product candidates we are developing or that we can maintain or receive any additional necessary regulatory approvals for ERBITUX. Any delay in obtaining such approval or failure to maintain regulatory approvals could prevent us from marketing our product and would have a material adverse effect on our business.

        Moreover, it is possible that the current regulatory framework could change or additional regulations could arise at any stage during our product development or marketing processes, which may affect our ability to obtain or maintain approval of our products.

Our revenues will diminish if our collaborators fail to obtain acceptable prices or adequate reimbursement for ERBITUX from third-party payors.

        All our revenues from ERBITUX are based on sales of the product by our two collaborators, BMS and Merck KGaA. The continuing efforts of U.S. and foreign government and third-party payors to contain or reduce the costs of health care may limit the revenues that we earn from these sales of ERBITUX. If government and other third-party payors do not provide adequate coverage and reimbursement for our product, physicians may not prescribe it.

        In some foreign markets, pricing and profitability of prescription pharmaceuticals are subject to government control. In the U.S., there is, and we expect that there will continue to be, federal, state and local legislation aimed at imposing similar controls. In addition, we expect managed care and government initiatives in the U.S. to continue to put pressure on the pricing of pharmaceutical products. Cost control initiatives would decrease the price received by our collaborators for any of our products in the future. Further, cost control initiatives would impair or diminish our ability or incentive, or the ability or incentive of our partners or potential partners, to commercialize our other product candidates, and accordingly, our ability to earn revenues.

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        Our ability to commercialize any other product candidates, alone or with collaborators, will continue to depend in part on the availability of reimbursement from:

•

Government and health administration authorities, including Medicare and Medicaid;



•

Private health insurers; and



•

Other third-party payors.

        Third-party payors, including Medicare, are increasingly challenging the prices charged for medical products and services. Government and other third-party payors increasingly are limiting both coverage and level of reimbursement for new drugs and, in some cases, refusing to provide coverage for a patient's use of an approved drug for purposes not approved by the FDA.

Our royalty and collaborative agreement reimbursement revenues could vary significantly and may adversely impact our business.

        Royalty and collaborative agreement reimbursement revenues in future periods could vary significantly. Major factors affecting these revenues include, but are not limited to:

•

Variations in BMS' and Merck KGaA's and other licensees' sales of licensed products;



•

The expiration or termination of existing arrangements with our collaborative partners, particularly BMS and Merck KGaA, which may include development and marketing arrangements for our products in the U.S., Europe and other countries outside the U.S.;



•

The timing of U.S. and non-U.S. approvals, if any, for our products licensed to BMS, Merck KGaA and other licensees;



•

The initiation of new collaborative agreements with other companies;



•

The failure or refusal of a licensee to pay royalties;



•

The expiration or invalidation of our patents or licensed intellectual property;



•

Decreases in licensees' sales of our products due to competition, manufacturing difficulties or other factors affecting sales of products, including any safety issues; and



•

Disputes arising with respect to the interpretation of provisions in existing or future agreements with our collaborative partners.

        If we are unable to earn sufficient revenues from ERBITUX, our operating results or financial condition could be adversely affected.

We will be required to expend significant resources for research and development of our products in development and these products may not be developed successfully, which would adversely affect our prospects for future revenue growth and our stock price.

        Our only approved product is ERBITUX while our product candidates are still undergoing clinical trials and are in the early stages of development. Any successful development of our product candidates is highly uncertain and depends on a number of factors, many of which are beyond our control. In addition, each of our product candidates under development will require significant additional research and development resources to be expended prior to their commercialization. Even if we spend substantial amounts on research and development, our potential products may not be developed successfully. Products that appear promising in research or development may be delayed or fail to reach later stages of development or the market for a variety of reasons including:

•

Preclinical tests may show the product to be toxic or lack efficacy in animal models;



•

Clinical trial results may show the product to be less effective than desired or to have harmful or problematic side effects;

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•

Failure to receive the necessary regulatory approvals or a delay in receiving such approvals. Among other things, such delays may be caused by slow enrollment in clinical studies, extended length of time to achieve study endpoints, additional time requirements for data analysis or preparation of the BLA, discussions with the FDA, FDA requests for additional pre-clinical or clinical data, analyses or changes to study design, or unexpected safety, efficacy or manufacturing issues;



•

Difficulties formulating the product, scaling the manufacturing process or in getting approval for manufacturing;



•

Manufacturing costs, pricing or reimbursement issues, or other factors that make the product uneconomical;



•

The proprietary rights of others and their competing products and technologies that may prevent the product from being developed or commercialized; and



•

The contractual rights of our collaborators or others that may prevent the product from being developed or commercialized.

        If the product candidates on which we have expended significant amounts for research and development are not commercialized, we will not earn a return on the related research and development expenditures, which would adversely affect our prospects for future revenue growth and our stock price.

If third parties on which we rely for clinical trials do not perform as contractually required or as we expect, we may not be able to obtain regulatory approval for additional indications for ERBITUX or obtain regulatory approval for or commercialize our product candidates.

        We depend on independent clinical investigators and, in some cases, contract research organizations and other third party service providers to conduct the clinical trials for our product candidates and for additional indications for ERBITUX and expect to continue to do so. We rely heavily on these parties for successful execution of our clinical trials, but we do not control many aspects of their activities. Nonetheless, we are responsible for confirming that each of our clinical trials is conducted in accordance with the general investigational plan and protocol. Our reliance on these third parties that we do not control does not relieve us of our responsibility to comply with the regulations and standards of the FDA relating to good clinical practices. Third parties may not complete activities on schedule or may not conduct our clinical trials in accordance with regulatory requirements or applicable trial plans and protocols. The failure of these third parties to carry out their obligations could delay or prevent the development, approval and commercialization of our product candidates or result in enforcement action against us.

Difficulties or delays in product manufacturing and finishing could cause shortfalls in the supply of ERBITUX or our product candidates currently being developed which would harm our business and, in the case of ERBITUX, our ability to meet our financial obligations.

        We currently manufacture bulk active pharmaceutical ingredient for ERBITUX at our BB36 and BB50 manufacturing facilities. Catalent Pharma Solutions LLC (Catalent), formerly Cardinal Health Pharmaceutical Technologies and Services, and Hollister-Stier Laboratories LLC (Hollister-Stier) are currently our primary providers of filling and finishing services—the final stage of manufacturing for ERBITUX. Any prolonged interruption in the operations of our or our contractors' manufacturing and finishing facilities could result in cancellations of shipments, loss of product in the process of being manufactured, or a shortfall of available product inventory. The Catalent facility is up for sale by the Blackstone Group and that may cause a disruption to our business depending on the nature of the sale. A number of factors also could cause interruptions, including a failure of our or our contractors' manufacturing and finishing facilities to obtain FDA approval and maintain compliance with current good manufacturing practice requirements, changes in the FDA's regulatory requirements or standards

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that require modifications to our manufacturing processes, action by the FDA that results in the halting of production of one or more of our products due to regulatory issues, a contract manufacturer going out of business, natural or other disasters, or other similar factors. Because our manufacturing and finishing processes and those of our contractors are highly complex and are subject to a lengthy FDA approval process and extensive ongoing regulation, alternative qualified production capacity may not be available on a timely basis or at all. We may also experience insufficient available capacity to manufacture existing or new products which could cause shortfalls of available product inventory. Difficulties or delays in our and our contractors' manufacturing and supply of existing or new products could increase our costs, cause us to lose revenue or market share and damage our reputation.

        During the second half of 2007, we transitioned our BB50 manufacturing facility from the production of ERBITUX to certain of our pipeline products. During the first quarter of 2008, we have transitioned back to producing ERBITUX in BB50. This facility is approved by the FDA as a single-product manufacturing facility for the production of ERBITUX. Therefore, we are required to file an sBLA with the FDA for approval of the procedures and controls in the operation of BB50 as a multi-product manufacturing facility, which we intend to do during 2008. However, there are no guarantees that the FDA will approve these procedures and controls in the operation of BB50 as a multi-product manufacturing facility. If the FDA does not approve the procedures and controls that were used during 2007 in the operation of BB50 as a multi-product manufacturing facility we will not be able to sell the ERBITUX produced since the transition back to the production of ERBITUX in 2008.

        Although the FDA has approved our BB36 and BB50 manufacturing facilities and the BB36 facility has passed multiple subsequent inspections, if we are unable to maintain FDA approval for BB36 and BB50, it may cause shortfalls in our product inventory which would negatively impact our revenues and our business.

Our marketing partners may experience pressure to lower the price of ERBITUX because of new and/or proposed federal legislation, which would reduce our royalty revenue and may harm our business.

        Federal legislation has altered the way in which physician administered drugs covered by Medicare, such as ERBITUX, are reimbursed, generally leading to lower reimbursement levels. This legislation also added an outpatient prescription drug benefit to Medicare, effective January 2006. The outpatient prescription drug benefit is provided primarily through private entities, which will attempt to negotiate price concessions from pharmaceutical manufacturers, including our collaborators. These negotiations may increase pressures to lower pricing for ERBITUX. While the law specifically prohibits the U.S. government from interfering in price negotiations between manufacturers and Medicare drug plan sponsors, some members of Congress are pursuing legislation that would permit the U.S. government to use its enormous purchasing power to demand discounts from pharmaceutical companies, thereby creating de facto price controls on prescription drugs, such as ERBITUX. In addition, the new law contains triggers for Congressional consideration of cost containment measures for Medicare in the event Medicare cost increases exceed a certain level. These cost containment measures could include some limitations on prescription drug prices that our collaborators charge for ERBITUX which would reduce our royalty revenue and harm our business.

If we become subject to importation of products from Canada and other countries, it will affect our profitability and harm our business.

        ERBITUX and other products that we may develop may become subject to competition from lower priced imports from Canada, Mexico and other countries where government price controls or other market dynamics have resulted in lower priced products. The ability of patients and other customers to obtain these lower priced imports has grown significantly as a result of the Internet, an expansion of pharmacies in Canada and elsewhere targeted to American purchasers, the increase in U.S.-based businesses affiliated with Canadian pharmacies marketing to American purchasers and other

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factors. Many of these foreign imports are illegal under current law. However, the volume of imports continues to rise due to the limited enforcement resources of the FDA and the U.S. Customs Service, and the pressure in the current political environment to permit the imports as a mechanism for expanding access to lower priced medicines.

        In addition, in December 2003, federal legislation was enacted to modify U.S. import laws and expand the ability for lower priced pharmaceutical products to be imported from Canada, where government price controls have been enacted. These changes to the import laws will not take effect unless and until the Secretary of Health and Human Services certifies that the changes will lead to substantial savings for consumers and will not create a public health safety issue. The current Secretary of Health and Human Services has indicated that there is not a basis to make such a certification at this time. However, it is possible that this Secretary or a subsequent Secretary could make such a certification in the future.

        In addition, legislation has been proposed to implement the changes to the import laws without any requirement for certification from the Secretary of Health and Human Services, and to broaden permissible imports in other ways. Even if these changes to the import laws do not take effect, and other changes are not enacted, lower priced imports of products from Canada and elsewhere may continue to increase due to market and political forces, and the limited enforcement resources of the FDA, the U.S. Customs Service, and other government agencies. For example, state and local governments have suggested that they may import drugs from Canada for employees covered by state health plans or others, and some have already enacted such plans.

        Lower priced imports will adversely affect our profitability. This impact could become more significant in the future, and the impact could be even greater if there is a further change in the law or if state or local governments take further steps to permit lower priced imports from abroad.

We depend on key employees in a competitive market for skilled personnel, and the loss of the services of any of our key employees would affect our ability to develop our business.

        We are highly dependent on the principal members of our management, operations and scientific staff. We experience intense competition for qualified personnel. Our future success depends in part on the continued service of our executive management and scientific personnel and our ability to recruit, train and retain highly qualified management, scientific, manufacturing and sales and marketing personnel. If we lose the services of any of these personnel, our research and product development and marketing goals, including the maintenance of relationships with leading research institutions and key collaborators, could be delayed or curtailed. In addition, we do not maintain "key man" life insurance on any of our employees. As a result, we may be unable to minimize the negative impact on our business stemming from the loss of a key employee.

The law or FDA policy could change and expose us to competition from "generic" or "follow-on" versions of our products, which may impact our market share and harm our business.

        We could be adversely affected by competition from manufacturers of generic drugs in the future both within the U.S. as well as in international markets. Under current U.S. law and FDA policy, generic versions of conventional chemical drug compounds, sometimes referred to as small molecule compounds, may be approved through an abbreviated approval process. In general terms, the generic applicant references an approved innovator product for which full clinical data demonstrating safety and effectiveness exist for the approved conditions of use. The generic applicant in turn need only demonstrate that its product has the same active ingredient(s), dosage form, strength, route of administration, and conditions of use (labeling) as the referenced innovator drug, and that the generic product is absorbed in the body at the same rate and to the same extent as the referenced innovator drug (this is known as bioequivalence). In addition, the generic application must contain information regarding the manufacturing processes and facilities that will be used to ensure product quality, and must contain certifications to patents listed with the FDA for the referenced innovator drug.

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        There is no such abbreviated approval process under current law for biological products approved under the Public Health Service Act through a BLA, such as monoclonal antibodies, cytokines, growth factors, enzymes, interferons and certain other proteins. However, various proposals have been made to establish an abbreviated approval process to permit approval of generic or follow-on versions of these types of biological products. The proposals include proposals for legislation, and proposals for the FDA to extend its existing authority to this area. For example, some have proposed that the FDA allow a generic or follow-on copy of certain therapeutic biologics to be approved under an existing mechanism known as a 505(b)(2) application. A 505(b)(2) application is a form of an NDA, where the applicant does not have a right to reference some of the data being relied upon for approval. Under current regulations, 505(b)(2) applications can be used where the applicant is relying in part on published literature or on findings of safety or effectiveness in another company's NDA 505(b)(2) applications that have not been used to date for therapeutic biologic products. In addition, the use of 505(b)(2) applications, even for conventional chemical drug products, is the subject of ongoing legal challenge. It is thus not clear what the permitted use of a 505(b)(2) application might be in the future for biologics products, or whether any other proposals on generic or follow-on biologics will be adopted. However, if the law is changed or if the FDA somehow extends its existing authority in new ways, and third parties are permitted to obtain approvals of versions of our products through an abbreviated approval mechanism and without conducting full clinical studies of their own, it could adversely affect our business. Such products would be significantly less costly than ours to bring to market, and could lead to the existence of multiple lower priced competitive products. This would substantially limit our ability to obtain a return on the investments we have made in those products.

Our investment portfolio contains auction rate securities (ARS) which have recently failed at auction and have unrealized losses. These investments could be subject to further unrealized losses and impairment losses if credit and capital markets continue to deteriorate.

        As of December 31, 2007, the Company has $168.8 million of principal invested in ARS with long-term nominal maturities for which interest rates are reset through a dutch-auction each month. These monthly auctions have historically provided a liquid market for these securities. The Company's investments in ARS all currently have AAA/Aaa credit ratings and interest continues to be paid by the issuers of the securities. The Company's investments in ARS represent interests in synthetic collateralized debt obligations referencing portfolios of corporate bonds. The Company does not have any investments which are backed by sub-prime mortgages. As a result of the liquidity issues experienced in the global credit and capital markets, certain of the ARS, which were primarily underwritten by one investment bank, with a total principal value of $149.2 million held by the Company at December 31, 2007, have experienced multiple failed auctions since August 2007. The estimated fair market value at December 31, 2007 of the Company's ARS with continuing auction failures totaled approximately $109.0 million based on indicative prices from the investment bank, which reflects unrealized losses of $40.2 million. As of February 27, 2008, the unrealized losses on these securities based on indicative prices from the investment bank increased to approximately $65.8 million due to the continuing liquidity issues in the global credit and capital markets. The Company has concluded that the ARS have experienced a temporary decline in value and has reflected the unrealized losses as a component of other comprehensive loss in stockholders' equity in its consolidated balance sheet as of December 31, 2007.

        Historically, these ARS had liquidity created by auctions and were classified as current assets under securities available for sale on the Company's consolidated balance sheets. As a result of the failed auctions on these securities, the fair value of these ARS totaling approximately $109.0 million has been reclassified from current assets to non-current assets in the Company's consolidated balance sheet at December 31, 2007.

        If uncertainties in the credit and capital markets continue and these markets deteriorate further or the Company's investment in ARS experience ratings downgrades due to higher than anticipated losses in reference portfolios or for other reasons, the Company may incur further unrealized losses or conclude that the decline in value is other than temporary and incur realized losses, including up to the full amount of the investments in ARS, which could negatively affect the Company's financial condition, cash flow and results of operations.

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Risks Relating to Intellectual Property and Legal Matters

Protecting our proprietary rights is difficult and costly. If we fail to adequately protect or enforce our proprietary rights, we could lose revenue.

        Our success depends in large part on our ability to obtain, maintain and enforce our patents. Our ability to commercialize any product successfully will largely depend on our ability to obtain and maintain patents of sufficient scope to prevent third parties from developing similar or competitive products. In the absence of patent protection, competitors may cause a negative impact to our business by developing and marketing substantially equivalent products and technology.

        Patent disputes are frequent and can preclude the commercialization of products. We have in the past been, are currently, and may in the future be, involved in material patent litigation, such as the matters discussed under "Part I—Item 3. Legal Proceedings". Patent litigation is time-consuming and costly in its own right and could subject us to significant liabilities to third parties. In addition, an adverse decision could force us to either obtain third-party licenses at a material cost or cease using the technology or product in dispute.

        The existence of patents or other proprietary rights belonging to other parties may lead to our termination of the research and development of a particular product or cause us to obtain third-party licenses at potentially material costs. We believe that we have strong patent protection or the potential for strong patent protection for our product and product candidates. However, it is for the courts and/or other governmental agencies in the U.S. and in other jurisdictions ultimately to determine the strength of that patent protection. We hold patents or licenses to patents relating to murine antibodies as well as patents and licenses relating to the therapeutic use of EGFR antibodies. These patents expire on various dates, the earliest of which was in 2007. Risks related to our patent position with respect to ERBITUX and our product candidates are more fully discussed under "Item 1—Business—Patents and Trademarks".

Several lawsuits have been filed against us which may be costly to defend and the outcome of which are uncertain and may harm our business.

        Litigations or arbitrations to which we are currently or have been subjected relate to, among other things, our patent and other intellectual property rights, licensing arrangements with other persons and those other claims more fully described under "Part I—Item 3. Legal Proceedings", including an action brought by Yeda Research and Development Company Ltd. (Yeda) in which the U.S. District Court for the Southern District of New York ruled that three individuals associated with Yeda be named as sole inventors on U.S. Patent No. 6,217,866 relating to the therapeutic use of EGFR antibodies. We settled this matter in December 2007, which is more fully described under "Part I—Item 3. Legal Proceedings."

        We cannot provide any assurance as to the outcome of these pending lawsuits or arbitrations. Any conclusion of these matters in a manner adverse to us could have a material adverse effect on our business and operating results. In addition, the costs to us of defending these claims or any other proceedings, even if resolved in our favor, could be substantial. Uncertainties resulting from the initiation and continuation of any litigation or other proceedings could also harm our ability to compete in the marketplace.

Our operations use hazardous materials, which may lead to environmental liability, and may harm our business.

        We use certain hazardous materials in connection with our research and manufacturing activities. These hazardous materials include various flammable solvents, corrosives, oxidizers and toxics. We also use radioactive isotopes in our scientific research. In the event such hazardous materials are stored, handled or released into the environment in violation of law or any permit, or in a manner that

47

adversely affects the environment, we could be subject to loss of our permits, government fines or penalties and/or other adverse governmental or third party action. We do not maintain any specific insurance to cover any accidents associated with the hazardous materials that we use in our manufacturing and research activities. The levy of a substantial fine or penalty, the payment of significant environmental remediation costs or the loss of a permit or other authorization to operate or engage in our ordinary course of business could materially adversely affect our business.

We could be exposed to material product liability claims that could prevent or interfere with the commercialization of any other products that we may develop.

        The testing, manufacturing, marketing and sale of medical products entail an inherent risk of product liability. Liability exposures for biopharmaceuticals, such as ERBITUX, could prevent or interfere with continued sales of ERBITUX or the commercialization of any other products that we may develop. Product liability claims could require us to spend significant time and money in litigation or to pay significant damages. We currently have $20.0 million of aggregate product liability insurance coverage. Our business may be materially and adversely affected by a successful product liability claim or claims in excess of or outside our insurance coverage.

Insurance coverage is increasingly more difficult and costly to obtain and maintain.

        While we currently have a certain amount of insurance to minimize our direct exposure to certain business risks, premiums are generally increasing and coverage is narrowing in scope. As a result, we may be required to assume more risk in the future or make significantly greater expenditures to maintain our current levels of insurance. If we are subject to claims by third parties or suffer a loss or damages in excess of our insurance coverage, we will be liable for that excess. Furthermore, any claims made on our insurance policies may affect our ability to obtain or maintain insurance coverage at reasonable rates.

Risks Relating to our Common Stock and Related Matters

Certain provisions of Delaware law, our charter and bylaws and our stockholder rights plan could hinder, delay or prevent changes in control.

        Certain provisions of Delaware law, our charter and our bylaws, as well as our stockholder rights plan have the effect of discouraging, delaying or preventing transactions that involve an actual or threatened change in control. These provisions include the following:

        Stockholder Rights Plan.    We adopted a stockholder rights plan on February 15, 2002. Our stockholder rights plan, as amended May 4, 2006, may discourage any potential acquirer from acquiring more than 19.9% of our outstanding common stock since, subject to certain exceptions, upon this type of acquisition without approval of our Board of Directors, all other common stockholders will have the right to purchase a specified amount of our common stock at a substantial discount from market price, thus significantly increasing the acquisition cost to a potential acquirer.

        Special Meetings.    According to our bylaws, special meetings of stockholders may be called only by our Board of Directors.

        Removal of Directors.    Subject to the rights of BMS to elect at least one director, our bylaws provide that a director can be removed with or without cause only by the affirmative vote of at least a majority of all votes entitled to be cast.

        Advance Notice Provisions for Stockholder Nominations and Proposals.    Our bylaws require advance written notice for stockholders to nominate persons for election as directors at, or to bring other business before, any meeting of stockholders. This bylaw provision limits the ability of stockholders to

48

make nominations of persons for election as directors or to introduce other proposals unless we are notified in a timely manner prior to the meeting.

        Preferred Stock.    Under our charter, our Board of Directors has authority to issue preferred stock from time to time in one or more series and to establish the terms, preferences and rights of any such series of preferred stock, all without approval of our stockholders.

        Delaware Business Combinations.    We are subject to Section 203 of the Delaware General Corporation Law which, subject to certain exceptions, restricts certain transactions and business combinations between a corporation and a stockholder owning 15% or more of the corporation's outstanding voting stock for a period of three years from the date the stockholder becomes a 15% stockholder.

        In addition to discouraging a third party from acquiring control of us, the foregoing provisions could impair the ability of existing stockholders to remove and replace our management and/or our Board of Directors.

The recent changes in the composition of our Board of Directors do not constitute a "change in control." However, if in the future additional persons are added to the Board of Directors who are not deemed incumbent directors under certain of our employee benefit plans, a "change in control" may occur, which may adversely affect our business.

        The recent changes in the composition of our Board of Directors did not constitute a "change in control" for purposes of certain severance and compensation agreements entered into by the Company. However, if in the future additional persons who are not deemed incumbent directors for purposes of such agreements are added to the Board of Directors, a "change in control" may occur. Those agreements define incumbent directors as the directors serving on the date of the agreement and directors whose election was approved by two-thirds vote of the incumbent directors; provided that directors initially elected as a result of an actual or threatened proxy solicitation or election will not be deemed incumbent directors. If a "change in control" is deemed to occur, covered employees may become eligible for additional compensation if their employment is terminated without cause or if they leave the Company for good reason (as defined in the relevant agreements and plan documents) following such change of control. In addition, under certain circumstances, covered employees' equity awards may also vest in full. If this occurs, we may bear additional expenditures to retain or replace the services of covered employees.

Our stock price is highly volatile. It may be difficult to resell our common stock.

        The market price of our common stock has been and may continue to be volatile. In addition, the following factors may have a significant impact on the market price of our common stock:

•

Announcements of technological innovations or new commercial products by us or our competitors;



•

Publicity regarding actual or potential medical results relating to products under development or being commercialized by us or our competitors;



•

Developments or outcomes of investigations and litigation generally, including litigation relating to proprietary rights and patents;



•

Regulatory developments or delays concerning our products in the U.S. and foreign countries;



•

Issues concerning the safety of our products or of biotechnology products generally;



•

Economic and other external factors or a disaster or crisis; and



•

Period-to-period fluctuations in our financial results.

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Future sales of our common stock by BMS could cause the price of our common stock to decline.

        As of December 31, 2007, BMS owned 14,392,003 shares of our common stock, or approximately 16.9% of our outstanding shares. We have agreed that, upon BMS's request, we will file one or more registration statements under the Securities Act in order to permit BMS to offer and sell shares of our common stock. Under the Stockholders Agreement between us and BMS, BMS may not sell more than 10% of our outstanding common stock at one time in a registered underwritten public offering or otherwise sell more than approximately 1.44 million shares in any twelve-month period, subject to compliance with the applicable securities laws. Sales of a substantial number of shares of our common stock by BMS in the public market could adversely affect the market price of our common stock.

ITEM 1B.    UNRESOLVED STAFF COMMENTS

        None

ITEM 2.    PROPERTIES

180 Varick Street, New York, New York

        We have occupied certain leased space at 180 Varick Street in New York City since 1986. The property serves as our corporate headquarters and biologics research facility. The original lease for two floors (sixth and seventh, totaling 45,000 square feet) was effective as of January 1, 1999. From 1999 to 2003 we have added additional space on the fifth and eighth floors of 11,786 square feet. In August 2004, we modified our existing operating lease to extend the term of the lease, which was to expire on December 31, 2004, for an additional ten years (with renewal rights) for a portion of the premises and by an additional three years (with renewal rights) for the space that currently houses our research department. The modification also added additional space on the fifth and eighth floors of 4,286 square feet in 2004 and granted us the right to add additional space in the future. In 2007, our rent expense was approximately $2.1 million.

325 Spring Street, New York, New York

        On October 5, 2001, we entered into a 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 just under 22 years, expiring on April 29, 2023, followed by two five-year renewal option periods. The future minimum lease payments remaining at December 31, 2007, are approximately $44.1 million over the term of the sublease. In order to induce the sub landlord to enter into the sublease, we made a loan to the sub landlord in the principal amount of a $10.0 million note receivable, of which approximately $7.9 million is outstanding as of December 31, 2007. The loan is secured by a leasehold mortgage on the prime lease as well as a collateral assignment of rents by the sub landlord. The loan is payable by the sub landlord 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, we 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 approximately $1.7 million. In 2007, our rent expense was approximately $2.4 million for this sublease.

22 ImClone Drive, Branchburg, New Jersey

        In 1992, we acquired a 5.1 acre parcel of land and a 54,400 square foot building located at 22 ImClone Drive, Branchburg, New Jersey at a cost of approximately $4.7 million, including expenses. We have retrofitted the building to serve as our pilot facility for biologics manufacturing. When purchased, the facility had in place various features, including clean rooms, air handling, electricity, and water for

50

injection systems and administrative offices. The cost for completion of facility modifications was approximately $5.4 million. We currently operate the facility to develop and manufacture biologics for a portion of our clinical studies. In January 1998, we completed the construction and commissioning of a 1,750 square foot process development center at this facility dedicated to manufacturing process optimization for existing products and the pre-clinical and Phase I development of new biological therapeutics. The cost of this construction activity was approximately $1.7 million.

33 ImClone Drive, Branchburg, New Jersey

        On May 20, 2002, we purchased a 45,800 square foot warehouse on 6.94 acres of property located at 33 ImClone Drive. The purchase price for both land and building was $4.5 million. We have incurred approximately $4.5 million, for the renovation and fit-out of this facility. The location houses the clinical, regulatory, field operations, marketing, human resources, legal, project management and information technology departments, as well as certain executive offices and other campus amenities.

36 ImClone Drive, Branchburg, New Jersey

        In July 2001, we completed the construction and placed into operation our 80,000 square foot manufacturing facility, BB36, adjacent to the pilot facility in Branchburg, New Jersey. BB36 was built on a 5.7 acre parcel of land we purchased in December 1999 for $700,000. During 2006, we completed a 5,000 square foot expansion for additional office space in this facility. BB36 contains three 10,000 liter (production volume) fermenters and is dedicated to the production of ERBITUX. BB36 cost a total of approximately $57.3 million.

50 ImClone Drive, Branchburg, New Jersey

        The facility was built on a 7.12 acre parcel of land that we purchased in July 2000 for $950,000. The BB50 facility is a 250,000 square foot multiple product manufacturing facility with capacity of up to 110,000 liters (production volume). Mechanical completion of BB50 was reached in the fourth quarter of 2005. This facility has three distinct suites capable of producing up to three different products concurrently. We also have the ability to produce multiple products at each of the three suites. We completed the commissioning and initial validation of Suite 1 during the second quarter of 2006, and began production of ERBITUX for commercial use in the second half of 2006. We have fitted Suite 2 with equipment and plan to begin commissioning and validation of this Suite during 2008. At this point, Suite 3 remains vacant until further determination of its ultimate use. The total cost of BB50 through December 31, 2007 amounted to approximately $334.1 million. In August 2007, we received FDA approval to manufacture ERBITUX in BB50.

41 ImClone Drive, Branchburg, New Jersey

        This facility consists of approximately 7,600 square feet of office space that is leased by the Company. Effective September 1, 2005, we amended the lease for a five-year term to expire August 31, 2010, with the option to renew for two additional five-year terms, so the lease will automatically renew each term for up to two additional terms, unless terminated by our notice three months prior to the expiration of that term. The location houses the finance department. In 2007, our rent expense was approximately $104,000 for this lease.

59-61 ImClone Drive, Branchburg, New Jersey

        In June 2004, we entered into an operating lease for a 54,247 square foot facility located at 59-61 ImClone Drive in Branchburg, New Jersey. This lease expires on December 31, 2022, with no option to renew or extend beyond such date. Extensive interior renovations of approximately 24,000 square feet of the facility began in August 2004. The newly renovated areas house various laboratories used by our

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Quality Control and Clinical Pharmacology departments, as well as office space occupied by the Quality Assurance organization. The administrative area of the facility and the laboratories were put in operation in December 2004. The Phase I renovation and fit-out of this facility was completed in 2005 and had a total cost of approximately $5.4 million. The Phase II renovation of this facility was completed in 2007 and had a total cost of approximately $12.7 million. In 2007, our rent expense was approximately $686,000 for this lease.

1181 Route 202N, Branchburg, New Jersey

        On January 31, 2002, we purchased a 7.36 acre parcel of land located at 1181 Route 202. The parcel includes a 51,400 square foot building, 39,000 square feet of which is warehouse space and 12,000 square feet of which is office space. The purchase price for the property, initial improvements and renovation was approximately $8.1 million. Extensive renovations to the 12,000 square feet of office area were completed in the first quarter of 2003 to accommodate the relocation and consolidation of engineering, warehousing, logistics and quality assurance personnel from other campus locations. Interior renovations included office space, as well as the construction of a raw materials sampling laboratory, associated temperature-controlled storage locations and the addition of emergency power generation. We are currently using this property for warehousing and logistics for our Branchburg campus.

ITEM 3.    LEGAL PROCEEDINGS

A. Litigation

1. Federal Securities Actions

        As previously reported, beginning in January 2002, a number of complaints asserting claims under the federal securities laws against the Company and certain of the Company's directors and officers were filed in the U.S. District Court for the Southern District of New York. Those actions were consolidated under the caption Irvine v. ImClone Systems Incorporated, et al., No. 02 Civ. 0109 (RO). In the corrected consolidated amended complaint plaintiffs asserted claims against the Company, its former President and Chief Executive Officer, Dr. Samuel D. Waksal, its former Chief Scientific Officer and then-President and Chief Executive Officer, Dr. Harlan W. Waksal, and several of the Company's other present or former officers and directors, for securities fraud under sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Securities and Exchange Commission Rule 10b-5, on behalf of a purported class of persons who purchased the Company's publicly traded securities between March 27, 2001 and January 25, 2002. The complaint also asserted claims against Dr. Samuel D. Waksal under section 20A of the Exchange Act on behalf of a separate purported sub-class of purchasers of the Company's securities between December 27, 2001 and December 28, 2001. The complaint sought to proceed on behalf of the alleged classes described above, sought monetary damages in an unspecified amount and sought recovery of plaintiffs' costs and attorneys' fees. On January 24, 2005, the Company announced that it had reached an agreement in principle to settle the consolidated class action for a cash payment of $75.0 million, a portion of which would be paid by the Company's insurers. The parties signed a definitive stipulation of settlement and as provided for under the stipulation of settlement, on March 11, 2005, the Company paid $50.0 million into an escrow account, subject to Court approval of the proposed settlement. On July 29, 2005 the Court approved the proposed settlement and on August 5, 2005, the Company paid the remaining $25.0 million into the escrow account, with such funds to be held and distributed pursuant to the terms of the settlement documents. The Company received $20.5 million from its insurers with respect to these matters. The foregoing $20.5 million included $8.75 million, less attorneys fees of $875,000, that was paid to the Company under the derivative settlement discussed below.

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2. Derivative Actions

        As previously reported, beginning on January 13, 2002, and continuing thereafter, nine separate purported shareholder derivative actions were filed against members of the Company's board of directors, certain of the Company's present and former officers, and the Company, as nominal defendant, advancing claims based on allegations similar to the allegations in the federal securities class action complaints. Four of these derivative cases were filed in the Delaware Court of Chancery and have been consolidated in that court under the caption In re ImClone Systems Incorporated Derivative Litigation, Cons. C.A. No. 19341-NC. Three of these derivative actions were filed in New York State Supreme Court in Manhattan. All of these state court actions were stayed in deference to the proceedings in the U.S. District Court for the Southern District of New York, which were consolidated under the caption In re ImClone Systems, Inc. Shareholder Derivative Litigation, Master File No. 02 CV 163 (RO). A supplemental verified consolidated amended derivative complaint in these consolidated federal actions was filed on August 8, 2003. It asserted, purportedly on behalf of the Company, claims including breach of fiduciary duty by certain current and former members of the Company's board of directors, among others, based on allegations including that they failed to ensure that the Company's disclosures relating to the regulatory and marketing prospects for ERBITUX were not misleading and that they failed to maintain adequate controls and to exercise due care with regard to the Company's ERBITUX application to the FDA. On January 24, 2005, the Company announced that it had reached an agreement in principle to settle the consolidated derivative action. The parties entered into a definitive stipulation of settlement on March 14, 2005, which was subject to Court approval. On July 29, 2005, the Court approved the proposed settlement. Thereafter, the Company was paid $8.75 million by its insurers, which the Company has contributed toward the settlement of the Irvine securities class action described above after deducting $875,000 for Court awarded plaintiffs' attorney's fees and expenses. Following Court approval of the settlement of the consolidated derivative action, all of the state court derivative actions that had been pending in Delaware and New York were dismissed with prejudice, with no further payment required by the Company.

B. Government Inquiries and Investigations

        In January 2003, New York State notified the Company that the Company was liable for the New York State and City income taxes that were not withheld because one or more the Company's employees who exercised certain non-qualified stock options in 1999 and 2000 failed to pay New York State and City income taxes for those years. On March 13, 2003, the Company entered into a closing agreement with New York State, paying $4.5 million to settle the matter. The Company believes that substantially all of the underpayment of New York State and City income tax identified by New York State is attributable to the exercise of non-qualified stock options by the Company's former President and Chief Executive Officer, Dr. Samuel D. Waksal. At the same time, the Company informed the IRS, the SEC and the United States Attorney's Office, responsible for the prosecution of Dr. Samuel D. Waksal, of this issue. In order to confirm whether the Company's liability in this regard was limited to Dr. Samuel D. Waksal's failure to pay income taxes, the Company contacted current and former officers and employees who had exercised non-qualified stock options to confirm that those individuals had properly reported and paid their personal income tax liabilities for the years 1999 and 2000 in which they exercised options, which would reduce or eliminate the Company's potential liability for failure to withhold income taxes on the exercise of those options. In the course of doing so, the Company became aware of another potential income and employment tax withholding liability associated with the exercise of certain warrants granted in the early years of the Company's existence that were held by certain former officers, directors and employees, including the Company's former President and Chief Executive Officer, Samuel D. Waksal, the Company's former General Counsel, John B. Landes, the Company's former Chief Scientific Officer, Harlan W. Waksal, and the Company's former director and Chairman of the Board, Robert F. Goldhammer. Again, the Company promptly informed the IRS, the SEC and the United States Attorney's Office of this issue. The Company also

53

informed New York State of this issue. On June 17, 2003, New York State notified the Company that based on this issue, they were continuing a previously conducted audit and were evaluating the terms of the closing agreement to determine whether it should be re-opened. On March 31, 2004, the Company entered into a new closing agreement pursuant to which the Company paid New York State an additional $1.0 million in full satisfaction of all the deficiencies and determinations of withholding taxes for the years 1999-2001.

        After disclosure to the IRS in 2003, the IRS commenced audits of the Company's income tax and employment tax returns for the years 1999-2001. The Company cooperated in full with this audit and responded to all requests for information and documents received from the IRS. On February 8, 2006, the Company received a draft of the IRS's report of its preliminary findings with respect to the employment tax audit. The draft report indicated that the IRS, in addition to imposing liability on the Company for taxes not withheld, intended to assert penalties with respect to both the failure to withhold on non-qualified stock options and the failure to report and withhold on the warrants described above. On March 14, 2006, the Company reached an agreement in principle with the IRS to resolve the employment tax audit, which included the Company's agreement to the imposition of an accuracy-related penalty under Section 6662 of the Internal Revenue Code. Under this agreement in principle, the Company made a total payment of approximately $31.7 million to the IRS. The Company had previously recorded a withholding tax liability of $18.1 million and a withholding tax asset of $274,000 in its consolidated Balance Sheet as of December 31, 2004. Based on the agreement in principle reached with the IRS, the Company eliminated the withholding tax asset of $274,000 and recorded an additional withholding tax liability of approximately $13.9 million, or a total of $32.0 million, in its Consolidated Balance Sheet as of December 31, 2005. As a result, the Company recorded a net withholding tax expense of approximately $14.2 million in the fourth quarter of 2005. In the fourth quarter of 2006, the Company reversed the remaining $264,000 of excess liability related to this settlement.

C. Actions Against Dr. Samuel D. Waksal

        As previously reported, on August 14, 2002, after the federal grand jury indictment of Dr. Samuel D. Waksal had been issued but before Dr. Samuel D. Waksal's guilty plea to certain counts of that indictment, the Company filed an action in New York State Supreme Court seeking recovery of certain compensation, including advancement of certain defense costs, that the Company had paid to or on behalf of Dr. Samuel D. Waksal and cancellation of certain stock options. That action was styled ImClone Systems Incorporated v. Samuel D. Waksal, Index No. 02/602996. On July 25, 2003, Dr. Samuel D. Waksal filed a Motion to Compel Arbitration seeking to have all claims in connection with the Company's action against him resolved in arbitration. By order dated September 19, 2003, the Court granted Dr. Samuel D. Waksal's motion and the action was stayed pending arbitration. On September 25, 2003, Dr. Samuel D. Waksal submitted a Demand for Arbitration with the American Arbitration Association (the "AAA"), by which Dr. Samuel D. Waksal asserts claims to enforce the terms of his separation agreement, including provisions relating to advancement of legal fees, expenses, interest and indemnification, for which Dr. Samuel D. Waksal claims unspecified damages of at least $10.0 million.

        As previously reported, on March 10, 2004, the Company commenced a second action against Dr. Samuel D. Waksal in the New York State Supreme Court. That action is styled ImClone Systems Incorporated v. Samuel D. Waksal, Index No. 04/600643. Specifically, by this action, the Company seeks to recover: (a) $4.5 million that the Company paid to the State of New York in respect of exercises of non-qualified stock options and certain warrants in 2000; (b) at least $16.6 million that the Company paid to Samuel D. Waksal in the form of ImClone common stock, in lieu of withholding federal income taxes from exercises of non-qualified stock options and certain warrants in 2000; and (c) approximately $1.1 million that the Company paid in the form of ImClone common stock to Samuel D. Waksal and

54

his beneficiaries, in lieu of withholding federal, state and local income taxes from certain warrant exercises in 1999-2001. The complaint asserts claims for unjust enrichment, common law indemnification, moneys had and received and constructive trust. On June 18, 2004, Dr. Samuel D. Waksal filed an Answer to the Company's Complaint.

        On December 21, 2005, the Company and Dr. Samuel D. Waksal entered into a settlement agreement with respect to the foregoing actions, providing for, among other things, judgments in both actions in the Company's favor. The settlement agreement includes the payment of director and officer legal fee expense indemnification by the Company, for which the Company paid approximately $2.0 million in the fourth quarter of 2005.

D. 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. (now Sanofi-Aventis SA or Sanofi- Aventis) in the U.S. District Court for the Southern District of New York (03 CV 8484). On September 20, 2006, the Company 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 (the "'866 Patent") is invalid. 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. 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. 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. 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. On December 7, 2007, Yeda, Sanofi-Aventis, and the Company signed a settlement agreement to end worldwide litigation related to the '866 Patent and its foreign counterparts. Pursuant to the terms of the settlement agreement, the Company and Sanofi-Aventis each paid Yeda $60.0 million in settlement of all the claims and counterclaims with respect to all worldwide litigation related to the '866 Patent. Further, the companies released all claims against each other. Under the terms of the settlement agreement, the Company was granted an exclusive worldwide license to technology under the '866 Patent with respect to certain licensed products and the Company will pay Yeda low single-digit royalties on sales of the licensed products in and outside of the U.S. and the Company will pay Sanofi-Aventis a low single-digit royalty on sales of licensed products outside of the U.S. The Company entered into a separate agreement with Sanofi-Aventis in which the Company paid $3.0 million to Sanofi-Aventis in settlement of certain disputes between the two companies.

        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. An Opposition Proceeding is an administrative process, the outcome of which may be that the patent will be revoked. 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, Inc., Merck KGaA, Oncoscience AG, Genmab A/S, and Hoffmann La-Roche Inc.

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        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 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 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 the Company for patent infringement on February 5, 2007.

        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 and January 10, 2008, to this complaint denying all claims. A court ordered mediation hearing occurred on December 20, 2007. The Company, having had the advice of its patent counsel, plans to vigorously defend against the claims asserted.

        No reserve has been established in the financial statements for any of the items described in this "Part I—Item 3. Legal Proceedings, D. 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 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

        Not applicable.

PART II

ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

(a) MARKET INFORMATION

        Our common stock is traded on the Nasdaq Global Select Market ("Nasdaq") under the symbol "IMCL".

        The following table sets forth, for the periods indicated, the range of high and low sale prices for our common stock on the Nasdaq Global Select Market, as reported by Nasdaq. The quotations shown

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represent inter-dealer prices without adjustment for retail mark-ups, mark-downs or commissions, and may not necessarily reflect actual transactions.

	High		Low
Year ended December 31, 2007
First Quarter	$	41.07	$	26.80
Second Quarter	$	47.11	$	35.00
Third Quarter	$	47.22	$	30.34
Fourth Quarter	$	47.94	$	39.30
Year ended December 31, 2006
First Quarter	$	39.17	$	33.26
Second Quarter	$	43.08	$	32.67
Third Quarter	$	39.80	$	27.40
Fourth Quarter	$	33.74	$	26.28

        On February 22, 2008, the closing price of our common stock as reported by Nasdaq was $42.02.

(b) STOCKHOLDERS

        As of the close of business on February 22, 2008, there were 306 holders of record of our common stock. We believe that the number of beneficial owners is substantially greater than the number of holders of record because a large portion of our common stock is held in broker "street names."

(c) DIVIDENDS

        We have never declared cash dividends on our common stock and have no present intention to declare any cash dividends in the foreseeable future.

(d) SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

        The information regarding securities authorized for issuance under our equity compensation plans is disclosed in Item 12- "Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters."

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(e) PERFORMANCE GRAPH

        The following graph compares total stockholder returns from December 31, 2002 through December 31, 2007 to The Nasdaq Stock Market (U.S. Companies) Total Return Index and The Nasdaq Pharmaceutical Stocks Total Return Index. The Nasdaq Stock Market (U.S. Companies) Total Return Index comprises all domestic common shares traded on the Nasdaq Composite Index. The Nasdaq Pharmaceutical Stocks Total Returns Index represents all companies, including biotechnology companies, trading on Nasdaq classified under the Standard Industrial Classification Code for pharmaceuticals.

        The graph assumes that the value of the investment in the Company's Common Stock and in the above referenced indices was $100.00 at December 31, 2002 and that all dividends were reinvested. The Company's Common Stock price on December 31, 2002 (on which the graph is based) was $10.62. The stockholder return shown on the following graph is not necessarily indicative of future performance.

	ImClone		Nasdaq US		Nasdaq Pharmaceutical Stocks
December 31, 2002	$	100.00	$	100.00	$	100.00
December 31, 2003		373.45		150.39		143.78
December 31, 2004		433.90		167.26		154.06
December 31, 2005		322.41		188.67		175.95
December 31, 2006		251.98		207.29		172.25
December 31, 2007		404.90		224.78		181.13

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(f) RECENT SALES BY THE COMPANY OF UNREGISTERED SECURITIES

        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 an obligation under his employment agreement to purchase $500,000 worth of Company common stock within three months of his commencement of employment. We did not sell any unregistered securities in the years ended December 31, 2006 or 2005.

(g) PURCHASES OF EQUITY SECURITIES

        We did not repurchase any shares of the Company's common stock during the fourth quarter of 2007.

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ITEM 6.    SELECTED FINANCIAL DATA.

        The following selected consolidated financial information for the five years ended December 31, 2007 has been derived from the audited consolidated financial statements. The information below is not necessarily indicative of results of future operations, and should be read in conjunction with Item 7- "Management's Discussion and Analysis of Financial Condition and Results of Operation" of this Form 10-K and the consolidated financial statements and related notes thereto included in Item 8 of this Form 10-K in order to fully understand factors that may affect the comparability of the information presented below.

	2007		2006		2005		2004		2003
	(in thousands, except per share data)
Revenues(1)	$	590,833	$	677,847	$	383,673	$	388,690	$	80,830
Operating expenses(2)		539,381		388,622		316,894		263,424		189,681
Net income (loss)(3)		39,799		370,674		86,496		113,563		(112,502	)
Basic earnings (loss) per common share		0.46		4.40		1.03		1.43		(1.52	)
Diluted earnings (loss) per common share		0.46		4.11		1.01		1.33		(1.52	)
Total assets		1,769,259		1,839,836		1,343,415		1,434,776		381,595
Long-term obligations		612,208		603,391		602,491		603,434		242,979
Deferred revenue		283,787		379,877		359,025		457,808		337,232
Accumulated deficit		30,478		71,785		442,459		528,955		642,608
Total stockholders' equity (deficit)(4)		783,789		759,649		252,404		178,838		(270,593	)

We have paid no dividends.

(1)

Revenues in 2007, 2006, 2005 and 2004 include royalties related to the sales of ERBITUX by our corporate partners BMS and Merck KGaA and manufacturing revenue related to sales of ERBITUX to these partners for commercial use. Revenues in 2006 include the recognition of approximately $112.7 million of revenue for a one-time catch-up adjustment related to the achievement of a $250.0 million milestone from BMS.

(2)

Operating expenses include charges in 2007 of $110.0 million related to patent litigation settlements, charges in 2005 of approximately $14.2 million related to withholding taxes and approximately $6.2 million related to the discontinuation of our small molecule research program, and a charge in 2004 of approximately $55.4 million related to a stockholders' litigation settlement.

(3)

Net income in 2007 includes the recording of approximately $18.6 million of discrete charges, primarily related to the establishment of additional valuation allowance against deferred taxes. Net income in 2006 includes the recognition of approximately $112.7 million of revenue for a one-time catch-up adjustment related to the achievement of a $250.0 million milestone from BMS, as well as a release of approximately $111.3 million related to a portion of the valuation allowance against deferred taxes.

(4)

In 2005, the Company's Board of Directors approved a share repurchase plan permitting the repurchase of the Company's common stock during the two years following up to a total aggregate amount of $100.0 million. During 2005, we purchased 811,416 shares at an average price of $30.62 per share, for aggregate consideration of approximately $24.8 million.

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ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.

        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. This discussion should be read in conjunction with the consolidated financial statements and the accompanying notes included in this 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" set forth in Item 1A and elsewhere in this 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 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, for the potential treatment of lung and pancreatic cancers, as well as other potential indications.

        On February 12, 2004, the FDA approved ERBITUX for use in combination with irinotecan in the treatment of patients with EGFR-expressing, metastatic colorectal cancer who are refractory to irinotecan-based chemotherapy and for use as a single agent in the treatment of patients with EGFR-expressing, metastatic colorectal cancer who are intolerant to irinotecan-based chemotherapy. In September 2005, Health Canada approved the use of ERBITUX for use in combination with irinotecan for the treatment of EGFR-expressing metastatic colorectal carcinoma in patients who are refractory to other irinotecan-based chemotherapy regimens and for use as a single agent for the treatment of EGFR-expressing, metastatic colorectal carcinoma in patients who are intolerant to irinotecan-based chemotherapy. On March 1, 2006, the FDA approved ERBITUX for use in combination with radiation therapy for the treatment of locally or regionally advanced squamous cell carcinoma of the head and neck (SCCHN) and as a single agent in recurrent or metastatic SCCHN where prior platinum-based chemotherapy has failed. On October 2, 2007, the FDA approved an update to the ERBITUX product labeling to include overall survival data as a single-agent in epidermal growth factor receptor (EGFR) -expressing metastatic colorectal cancer patients after failure of both inrinotecan- and oxaliplatin-based regimens. Please see full prescribing information, available at www.ERBITUX.com, for important safety information relating to ERBITUX, including boxed warnings.

        On December 1, 2003, Swissmedic, the Swiss agency for therapeutic products, approved ERBITUX in Switzerland for the treatment of patients with colorectal cancer who no longer respond to standard chemotherapy treatment with irinotecan. Merck KGaA licensed the right to market ERBITUX outside the U.S. and Canada from the Company in 1998. In Japan, Merck KGaA has marketing rights to ERBITUX, which are co-exclusive to the co-development rights of the Company and BMS. On June 30, 2004, Merck KGaA received marketing approval by the European Commission to sell ERBITUX for use in combination with irinotecan for the treatment of patients with EGFR-expressing metastatic colorectal cancer after failure of irinotecan including cytotoxic therapy. On December 22, 2005, Swissmedic approved ERBITUX in Switzerland in combination with radiation in the treatment of patients with previously untreated, advanced SCCHN. On April 3, 2006, Merck KGaA was granted marketing authorization by the European Commission to extend the use of ERBITUX, in combination with radiotherapy, to the treatment of patients with locally advanced SCCHN. In Japan, Merck KGaA has marketing rights to ERBITUX, which are co-exclusive to the co-development rights of the

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Company and BMS. In February 2007, an application was submitted with the Japanese Pharmaceuticals and Medical Devices Agency for the use of ERBITUX in treating patients with advanced colorectal cancer. ERBITUX is the first IgG1 monoclonal antibody that inhibits EGFR to be submitted for marketing authorization in Japan.

        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.

        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

        In 2007, ImClone made a great deal of progress in its strategic transition, which began in 2006 when the Company's Board of Directors concluded that ImClone should remain independent. ImClone continues to make progress from being a company with one product and two larger corporate partners to a company that is becoming more fully-integrated while seeking out new growth opportunities. ERBITUX continues to be the engine that will drive this growth. Throughout the year we made many key clinical, commercial, regulatory and legal achievements, and as a result are entering 2008 with greatly enhanced strategic and operational flexibility, with better control over how we choose to grow the Company in the future. We continue to be focused on three goals: (1) continued expansion of ERBITUX sales; (2) accelerating our internal pipeline of novel antibodies; and (3) building upon our current capabilities to facilitate the execution of our strategies. These goals are the cornerstones of our recently developed strategic plan for the Company, with the intent to become a global, fully-integrated, biopharmaceutical company. To oversee the Company's strategic plan, John H. Johnson, an executive with more than two decades of operational management experience in the biopharmaceutical and healthcare industries, was appointed as the Company's Chief Executive Officer in August 2007.

        In October 2007, we received FDA approval that makes ERBITUX the only approved biologic therapy to demonstrate overall survival as a single-agent in patients with metastatic colorectal cancer. In our effort to continue to expand the global commercialization of ERBITUX, during the fourth quarter of 2007 we established a co-development and co-commercialization agreement with our corporate partners, BMS and Merck KGaA for Japan. If we receive approval from the Japanese regulators, ERBITUX would be the only EGFR antibody available in this large market. Worldwide

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sales of ERBITUX increased by approximately 25% during 2007, to approximately $1.3 billion, and we expect to file additional supplemental biologics license applications (sBLA) with the FDA during 2008. While we do not expect these indications to impact our 2008 financial results, we are committed to expanding the use of ERBITUX in the U.S. and abroad.

        During 2007, we made progress in our clinical development and registrational activities for ERBITUX, as well as advancement of our early-stage clinical pipeline. We intend to file a sBLA for the use of ERBITUX in treating patients with recurrent and/or metastatic head and neck cancer based on the EXTREME trial during the first half of 2008. EXTREME demonstrated that ERBITUX plus chemotherapy conferred a profound survival advantage over chemotherapy alone. If approved, this would be the third approved indication for ERBITUX in head and neck cancer. We expect to file a second sBLA for the use of ERBITUX in first-line non-small cell lung cancer based on the FLEX study during second half of 2008. FLEX met its primary endpoint of increasing overall survival in patients treated with ERBITUX plus platinum-based chemotherapy compared to those receiving chemotherapy alone. Assuming the balance of data we are awaiting supports it, we also intend to file a sBLA for the use of ERBITUX in the early-stage advanced colorectal setting based on the significant improvement in progression-free survival, the primary endpoint of the CRYSTAL study. In addition, two large adjuvant studies in colorectal cancer will likely close accrual in 2008, and we expect the efficacy results of the CAIRO II study of first-line colorectal cancer in the first half of 2008. With regard to clinical development of ERBITUX, a Phase III pivotal trial of chemo-radiation with or without ERBITUX in patients with both locally advanced esophageal and non-small cell lung cancers will begin in 2008. Randomized Phase II signal finding studies have already begun in patients with rectal and gastric cancers and similar studies in bladder and prostate cancers are due to begin in the first half of 2008.

        Our clinical stage pipeline currently consists of five fully-human IgG1 antibodies. During 2007, we made steady progress on advancing all five antibodies through various stages of clinical development. A randomized Phase II study of IMC-1121B, which binds to the VEGFR-2 receptor and blocks all receptor signaling, began accruing patients during the fourth quarter of 2007, and additional Phase II trials in lung, colorectal, prostate, ovarian, and liver cancers are expected to begin in the first half of 2008. Phase II studies of IMC-A12, which targets the insulin-like growth factor receptor, are accruing patients with colorectal and prostate cancers. In addition, the National Cancer Institute (NCI) has committed to eleven other studies and indications that do not overlap with those selected by ImClone. Most of the NCI studies should begin accruing patients in the first half of 2008, and six of them could serve as the foundation for future registrational efforts including cooperative group studies in pancreatic, breast, lung, and liver cancers. These studies should provide a strong foundation of information from which we intend to select the top pivotal indications in 2009. During the last half of 2007, we initiated a Phase II study of our anti-EGFR therapeutic IMC-11F8 combined with chemotherapy in colorectal patients in Europe and this 40-patient study is more than half accrued. We have decided to take IMC-11F8 further into two pivotal indications based on the knowledge ascertained from other EGFR-targeted therapeutics to date. We expect these Phase III studies of IMC-11F8 will begin in the first half of 2009. Lastly, progress continues to be made in Phase I studies of IMC-18F1, which targets VEGFR-1 expressed by both malignant blood vessels and tumors alike, and IMC-3G3, which targets tumor growth and survival of platelet-derived growth factor receptor alpha. We anticipate completing the studies of IMC-18F1 and IMC-3G3 during the first half of 2008, with disease directed evaluations planned for second half of the year.

        ERBITUX remains the driver of the Company and the principal focus of our efforts. We are continually evaluating the optimal internal investment relative to the opportunities we see for its continued growth and development. 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 the BMS Amendment, the companies have jointly agreed to expand the

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investment in the ongoing clinical development plan for ERBITUX by up to several hundred million dollars. Development costs, up to threshold amounts, will be the sole responsibility of BMS; costs in excess of the threshold amounts 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 Amendment will allow us to significantly reduce our clinical and regulatory expenses for ERBITUX while at the same time expanding the antibody's development. We believe that ERBITUX's future remains very attractive, and we are committed to ensuring the most effective commercial strategy and clinical development plan. The Company's pipeline is just as critical and we continue to believe the potential of each of ImClone's antibodies is promising, particularly in light of the stepped-up development plans we began during 2007.

        In August 2007, ImClone Systems received FDA approval for a second facility to manufacture ERBITUX. The approval of this 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 the Massachuesetts Instititue of Technology (MIT) and Repligen Corporation (Repligen) to end litigation related to U.S. Patent No. 4,663,281, which is owned by MIT and exclusively licensed to Repligen. Under the terms of the agreements, ImClone paid Repligen $65.0 million for full and final settlement of the claims against ImClone in the matter and 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 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 in early 2007.

        In December 2007, ImClone Systems signed a settlement agreement with Yeda Research and Development Company Ltd. (Yeda) and Sanofi-Aventis SA (Sanofi) to end worldwide litigation related to U.S. Patent No. 6,217,866 (the "866 Patent") and its foreign counterparts. Under the terms of the settlement agreement, ImClone paid Yeda $60.0 million for full and final settlement of the claims and counterclaims in the matter. ImClone was granted a worldwide license to technology patented under the 866 Patent. ImClone will make contingent payments to Yeda consisting of low single-digit royalties on sales of ERBITUX in and outside of the U.S. and will pay Sanofi a low single-digit royalty on sales outside of the U.S.

        With respect to financial guidance for 2008, we expect a steady increase in sales of ERBITUX in the U.S. for 2008 and we do not anticipate a sharp acceleration until future indications of ERBITUX are approved. We anticipate that milestone revenues will range between $100 to $110 million, depending on the actual level of clinical development plan spending for ERBITUX. As we progress with our investment in both ERBITUX and our pipeline, we anticipate research and development expenses will increase by approximately 25% to 30% in 2008. With the full year impact of the expanded sales force in 2008, as well as other planned growth to support our stepped-up research and development activities, we expect selling, general and administrative expenses in 2008 as a percentage of our total revenues to increase marginally in 2008. We are projecting royalty expenses as a percentage of total U.S. and international in-market sales of ERBITUX to be in the mid-6% range for 2008. From a cash tax perspective, it is important to note that we anticipate having sufficient net operating losses to offset taxable income on our federal tax return, thereby substantially reducing our need to pay cash taxes in 2008. From a financial statement perspective, we expect that our effective tax rate in 2008 will be in the range of 40%-45%. This rate is calculated assuming no material change in the valuation allowance in 2008 related to projections of future income. It should be noted that the guidance above assumes continuation of our current operating structure, without the impact of any possible business development opportunities.

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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: royalties, license fees and milestone payments, manufacturing, and collaborative agreement reimbursements.

        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.

        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 agreements 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, to date, relates to the $900.0 million in license fees and milestone payments received from BMS under the Commercial Agreement. We recognize license fees and milestones received from BMS based upon actual ERBITUX clinical development and other costs incurred as a percentage of the estimated costs to be incurred over the projected performance period. 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, approximately $102.1 million was recognized as revenue in 2007 and approximately $627.9 million from the commencement of the Commercial Agreement in 2001 through December 31, 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 fee 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 $64.0 million and $253.1 million as revenue for 2007 and from the commencement of the Commercial Agreement, respectively, through December 31, 2007. Management believes that the current 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 projected performance period. 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

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KGaA will be performed over the estimated performance 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 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 selling and administrative costs. Collaborative agreement reimbursement revenue is recorded as earned based on the performance requirements under the respective contracts.

Inventories—Until February 12, 2004, all costs associated with the manufacturing of ERBITUX were included in research and development expenses when incurred. Effective February 13, 2004, the date after the Company received approval from the FDA for ERBITUX, we began to capitalize in inventory the cost of manufacturing ERBITUX and have expensed such costs as cost of manufacturing revenue at the time of sale. Since we had previously expensed all inventory produced, the costs of manufacturing revenue in 2004 reflected minimal costs that primarily consisted of shipping and storage charges. In 2005, we continued to sell inventory that was previously expensed and gradually began to sell inventory that was partially expensed, since there was inventory in process on the date that we received FDA approval of ERBITUX. In the first quarter of 2006, we sold all partially expensed inventory. Fluctuations in our margin are based on various circumstances such as the level of demand from our partners, the formulation used in the production of ERBITUX, the costs of filling and finishing the product (which does not include a markup when selling to BMS), as well as the cost used for the computation of manufacturing revenue which is contractually based, may be different than the cost used in calculating manufacturing revenue.

        Inventories are stated at the lower of cost or market. Cost is determined on a first-in first-out basis. 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.

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        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 Item 3- "Legal Proceedings" and as disclosed in the notes to the consolidated financial statements. As of December 31, 2007, we have not established a legal reserve in our financial statements because we do not believe that such a reserve is required to be established at this time, in accordance with Statement of Financial 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 at that time, we will establish such a reserve. Thus, it is possible that legal proceedings 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. As noted under Item 2- "Properties," 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, as well as operating loss and tax credit carryforwards. Significant estimates are required in determining our provision for income taxes. In 2006, the Company released a portion of its valuation allowance against its total deferred tax assets. The partial release was based on expectations of projected income, which caused the Company to conclude that it was more likely than not that a portion of these deferred tax assets would be realized. During 2007, the Company updated its expectations of projected income. These updated projections were impacted by management's strategic plan to accelerate the development of our internal pipeline as well as by the BMS Amendment. As a result of these updated projections, the Company recorded additional valuation allowance. The financial projections used to evaluate the need for our valuation allowance contain significant assumptions 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. The Company will continue to monitor its current performance and future financial projections, including market share and competitive landscape, in order to determine the effect on the valuation allowance.

        The Company records contingencies related to uncertain income tax positions in accordance with FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes." These contingencies arise due to the positions taken or expected to be taken on tax returns that may not ultimately be sustainable upon audit by a governmental agency. It should be noted that there is a significant amount of judgment required in order to determine certain positions on tax returns, including the decision as to whether a tax return filing is required at all.

Investments in Securities—We classify our investments in debt and marketable equity securities as available-for-sale. We invest primarily in asset-backed securities, auction rate securities, government sponsored entities and corporate notes. Generally, we do not invest in equity investments, however, we may make these investments depending upon our needs. Securities available-for-sale are recorded at fair value. Unrealized holding gains and losses on securities available-for-sale are excluded from earnings and are reported as a separate component of accumulated other comprehensive income (loss)

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until realized. Realized gains and losses from the sale of securities available-for-sale are determined on a specific identification basis. If the fair value of a security in the portfolio is below its carrying value, we evaluate whether we have the intent and ability to retain the investment for a period of time sufficient to allow for recovery in the market value of the investment. In making a determination of whether a decline in market value is other-than-temporary we consider a number of factors, including the liquidity position, credit-worthiness of the issuer of such securities, the nature of the investment, the cause of the decline, the severity and duration of the decline, as well as any other information that may be deemed relevant. A decline in the market value of any security available-for-sale below cost that is deemed to be other than temporary results in a reduction in carrying amount to fair value. This reduction is charged to Other income (expense) in the Consolidated Statements of Income and a new cost basis for the security is established. Dividend and interest income are recognized when earned.

        During 2007, liquidity issues began to affect the global credit and capital markets. As a result, securities known as auction rate securities (ARS), which historically have had a liquid market and had their interest rates reset periodically (e.g. monthly) through dutch auctions, began to fail at auction. These auction failures have caused ARS to become illiquid since investors are hesistant to purchase these types of investments, which in turn has caused the fair market values for these securities (which are based on indicative prices from the auction agent) to decline. As of December 31, 2007, we have $168.8 million of principal invested in ARS with long-term nominal maturities. Certain of these ARS, which were primarily underwritten by one investment bank, with a total principal value of $149.2 million have experienced continuing failed auctions since August 2007. The estimated fair market value at December 31, 2007 of ARS with continuing auction failures was approximately $109.0 million at December 31, 2007, which was based on indicative prices from the investment bank and reflects unrealized losses of $40.2 million. As of February 27, 2008, the unrealized losses on these securities increased to approximately $65.8 million due to the continuing liquidity issues in the global credit and capital markets. Our investments in ARS all currently have AAA/Aaa credit ratings and interest continues to be paid by the issuers of the securities. Our investments in ARS represent interests in synthetic collateralized debt obligations referencing portfolios of corporate bonds. We do not have any investments which are backed by sub-prime mortgages. Based on the factors above and because we have the intent and ability to hold these securities until a recovery in fair market value, we have concluded that these investments have experienced a temporary decline in value which is reflected as unrealized losses in our consolidated balance sheet as of December 31, 2007.

        During 2007, we made investments in equity securities of approximately $43.6 million and had an unrealized loss of $10.8 million at December 31, 2007. We evaluated the unrealized loss position on our equity securities and determined that we do not consider this decrease in value to be other-than-temporary. In making this determination we considered a number of factors, including the nature of the investment, the cause of the decline in fair value, the severity and duration of the decline in fair value, the financial position and prospects of the company whose securities are held, analyst reports, as well as other factors. This temporary decline in value is reflected as an unrealized loss in our consolidated balance sheet as of December 31, 2007.

        We will review any investments with a market value less than our carrying value each reporting period. If uncertainties in the credit and capital markets continue for a prolonged period or these markets were to deteriorate further, or the ARS or the equity securities in the Company's investment portfolio experience ratings downgrades, or another triggering event were to occur that causes the fair market values of these investments to decline further, we would re-evaluate these investments to determine if such decline in market value is other than temporary in nature. Should we determine an impairment existed that was other than temporary based on future circumstances, we would be required to record realized losses on these investments, which could have a material adverse effect on our financial position, results of operations and cash flow.

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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. With the exception of certain provisions that have been deferred for an additional year, SFAS 157 is effective for fiscal years beginning after November 15, 2007. The Company does not anticipate that the adoption of SFAS 157 will have a material impact on its financial statements.

        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 does not anticipate that the adoption of SFAS 159 will have a material impact on its financial statements.

        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 does not anticipate that the adoption of this consensus will have a material impact on its financial statements.

        In November 2007, the Emerging Issues Task Force reached a consensus on Issue No. 07-1, "Accounting for Collaborative Arrangements." This Issue establishes accounting for costs incurred and revenues generated on sales to third parties should be reported by partners to joint development agreements in each of their respective income statements, how sharing payments made to or received by a partner pursuant to a collaboration arrangement should be presented in the income statement, and disclosures related to the combined sales and expenses of the partners to a collaboration arrangement that are used to compute the payments made/received. This Issue will be effective for fiscal years beginning after December 15, 2008, and earlier adoption is not permitted. This consensus is to be applied prospectively for new collaborative arrangements entered into after that date and the modified retrospective method that requires reclassification in all periods presented for collaborative arrangements existing at the date of adoption. The Company is currently evaluating the potential impact of this consensus on its financial statements.

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RESULTS OF OPERATIONS

        Selected financial and operating data for the three years ended December 31, 2007, 2006 and 2005 are as follows: (in thousands)

		2007		2006			2005		2007 vs. 2006 Variance			2006 vs. 2005 Variance
Royalties		$	332,182	$	290,599		$	177,440	$	41,583		$	113,159
License fees and milestones			102,910		232,269			97,239		(129,359	)		135,030
Manufacturing			85,109		86,476			44,090		(1,367	)		42,386
Collaborative agreement reimbursements			70,632		68,503			64,904		2,129			3,599
	Total revenues	$	590,833	$	677,847		$	383,673	$	(87,014	)	$	294,174
Research and development		$	194,118	$	162,764		$	145,430	$	31,354		$	17,334
Selling, general and administrative			80,681		76,101			76,343		4,580			(242	)
Royalties			71,544		73,958			58,376		(2,414	)		15,582
Cost of manufacturing revenue			83,038		76,063			16,367		6,975			59,696
Litigation settlements			110,000		—			—		110,000			—
Discontinuation of small molecule program			—		—			6,200		—			(6,200	)
Withholding tax (recovery) expense			—		(264	)		14,178		264			(14,442	)
	Total operating expenses	$	539,381	$	388,622		$	316,894	$	150,759		$	71,728

        Certain previously reported amounts have been reclassified to conform to the current year's presentation.

Years Ended December 31, 2007 and 2006

Revenues

Royalties

        Royalty revenue consists 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 U.S. and Canada. Under our agreement with Merck KGaA, beginning in July 2006, we are entitled to 9.5% of Merck's KGaA net sales outside of the U.S. and Canada. In 2007, global in-market sales of ERBITUX were approximately $1.3 billion, as compared to approximately $1.1 billion during the prior year. In the U.S. and Candada, in-market net sales by BMS in 2007 amounted to approximately $691.7 million compared to approximately $652.2 million in 2006. Approximately $15.6 million of this increase resulted from BMS' switch from a drop-shipment methodology to a more traditional wholesaler distribution model during 2007 whereby currently three domestic wholesalers are now maintaining an inventory of ERBITUX for distribution in the U.S. Outside of the U.S. and Canada, in-market net sales by Merck KGaA in 2007 amounted to approximately $656.0 million compared to approximately $428.2 million in 2006.

        In 2007, total royalty revenue increased by approximately $41.6 million or 14% from 2006 primarily due to an increase in net sales of ERBITUX and the change in royalty rate earned under the Merck KGaA agreement.

License Fees and Milestones

        License fees and milestone revenue consists 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 2007, total license fee and milestone revenue consisted of approximately $102.1 million earned from BMS and approximately $772,000 earned from Merck KGaA as compared to 2006, in which approximately $231.9 million was earned from BMS and approximately $348,000 was earned from Merck KGaA.

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        In 2007, total license fees and milestone revenue decreased by approximately $129.4 million or 56% from 2006 primarily due to the receipt of $250.0 million in March 2006 from BMS as a result of obtaining FDA approval for ERBITUX for use in the treatment of head and neck cancer, which resulted in 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 being recorded during 2006.

        In 2008, license fees and milestone revenue is estimated to range between $100.0 million to $110.0 million for the full year.

Manufacturing

        Manufacturing revenue consists 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. In 2007, purchases by BMS amounted to approximately $77.7 million and purchases by Merck KGaA amounted to approximately $7.4 million.

        In 2007, total manufacturing revenue decreased by approximately $1.4 million or 2% from 2006 primarily due to efficiencies in the manufacturing of ERBITUX, resulting in a decrease in the price we charge our partners for ERBITUX. Total volume purchases from our partners for the full year 2007 increased by approximately 14% from the prior year.

Collaborative Agreement Reimbursements

        Collaborative agreement reimbursement revenue consists 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. Of the total $70.6 million in collaborative agreement reimbursement revenues earned in 2007, approximately $47.6 million was earned from BMS and approximately $22.4 million was earned from Merck KGaA and $600,000 was received as final payment from a former corporate partner. In comparison, of the $68.5 million in collaborative agreement revenues earned in 2006, approximately $50.9 million was earned from BMS and approximately $17.6 million was earned from Merck KGaA.

        In 2007, total collaborative agreement reimbursement revenue increased by approximately $2.1 million or 3% from 2006 primarily due to an increase in reimbursement of clinical drugs of approximately $4.0 million, clinical and regulatory costs of approximately $6.1 million and $600,000 received as final payment from a former corporate partner. These increases were partially offset by a decrease in reimbursements for royalty expenses of approximately $8.6 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.

Expenses

Research and Development

        Research and development expenses consist of costs associated with our in-house research programs, product and process development expenses, costs to manufacture product candidates for clinical studies, quality assurance and quality control infrastructure, costs to conduct clinical studies and associated regulatory activities. Research and development expenses also include our cost of inventory supplied to our partners for use in clinical studies and certain clinical and regulatory amounts that are reimbursable from our corporate partners. As a result, a total of approximately $42.0 million in 2007

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and approximately $31.9 million in 2006 of these expenses are also reflected as revenues under collaborative agreement reimbursement revenue.

        In 2007, total research and development expenses increased by approximately $31.4 million or 19% from 2006. The 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 inventory production costs for pipeline products being recorded as research and development expense as compared to the prior year when these costs were capitalized into the production of ERBITUX inventory. As part of this transition, we also experienced increased material costs associated with the development of our pipeline products of approximately $9.5 million which were expensed. In addition, we had an increase in shipments of ERBITUX to our partners for clinical studies of approximately $5.8 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 a decrease in costs that we were responsible to pay as a result of the BMS Amendment in July 2007.

        In 2008, as we progress with our investment in both ERBITUX and our pipeline, we anticipate research and development expenses will increase by approximately 25% to 30%.

Selling, General and Administrative

        Selling, general and administrative expenses consist of 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 also include certain amounts that are reimbursable from our corporate partners. As a result, a total of approximately $1.3 million in 2007 and $1.2 million in 2006 of these expenses are also reflected as revenues under collaborative agreement reimbursement revenue.

        In 2007, total selling, general and administrative expenses increased by $4.6 million or 6% from 2006 primarily due to a increases in legal costs as a result of settling the Repligen/MIT and Yeda matters, as well as the increase in sales force personnel. These increases were partially offset by a reduction in personnel costs as a result of the turnover of executive level employees, some of whom were not replaced for the entire year.

        With the full year impact of the expanded sales force in 2008, as well as other planned growth to support our stepped-up research and development activities, we expect that selling, general and administrative expenses as a percentage of total revenues to increase marginally during the year.

Royalties

        Royalty expenses consist of obligations related to certain licensing agreements related to ERBITUX. Our effective royalty rate for 2007 on global in-market sales of ERBITUX was approximately 5.3%. In 2007, we received reimbursements from our corporate partners of 2.5% on net sales in the U.S. and Canada and a single-digit percentage on net sales outside of the U.S. and Canada, which is reflected in collaborative agreement revenues. As a result, a total of approximately $26.7 million in 2007 and $35.4 million in 2006 of these expenses are also reflected as revenues under collaborative agreement revenue.

        In 2007, total royalty expenses decreased by approximately $2.4 million, or 3% from 2006 primarily due to (1) the partial reversal of royalties previously accrued but not paid to Sanofi-Aventis in conjunction with the patent litigation settlement agreement; (2) effective in the second quarter of 2006, our obligation to pay royalties on domestic net sales decreased by 3%; and (3) the expiration in July 2007 of a patent we licensed. These decreases were partially offset by the additional royalties resulting from the increase in net sales as described in royalty revenue above.

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        We expect royalty expense as a percentage of global in-market sales of ERBITUX to be in the mid-6% range for 2008. This rate will increase if net sales outside of the U.S. and Canada consist of ERBITUX produced in the U.S.

Cost of Manufacturing Revenue

        We sell ERBITUX to BMS at our costs 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, the costs of filling and finishing ERBITUX bulk (for which we do not charge a 10% markup when selling to BMS), and as the cost used for the computation of manufacturing revenue is contractually based, which may be different than the cost of manufacturing revenue,our gross margins on sales of ERBITUX may fluctuate from quarter to quarter.

        In 2007, cost of manufacturing revenue amounted to $83.0 million representing a gross margin of approximately 2% compared to costs of manufacturing revenue for 2006 of approximately $76.1 million, or a gross margin of 12%. The fluctuation in our gross margin is based on the explanation noted above as well as due to the fact that we sold previously expensed inventory in the first quarter of 2006.

Litigation Settlements

        During 2007 we settled two separate matters related to intellectual property. In September we paid a total of $65.0 million to settle a matter with Repligen and the MIT, of which $50.0 was attributed to an expired Religen patent and expensed during the third quarter of 2007 and $15.0 million was attributed to sublicensed Abbott patents. In December 2007 we paid $60.0 million to settle a matter with Yeda, which was expensed.

Other Income (Expense)

        In 2007, interest income increased by approximately $11.7 million or 29% from 2006 primarily due to higher average interest rates and higher average cash and securities balances during 2007 as compared with 2006, due to receiving a $250.0 million milestone payment from BMS in March 2006.

        Interest expense in 2007 increased by approximately $2.7 million or 29% from 2006 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 this facility at that time.

        Other income for 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 (Benefit) for Income Taxes

        The effective tax rate for the year ended December 31, 2007 amounted to approximately 58.2%, which includes the effect of discrete charges of approximately $18.6 million, primarily related to the establishment of a valuation allowance against our deferred tax assets. The effective tax rate for 2007 is greater than the federal statutory rate of 35%, mainly due to the establishment of the valuation allowance described below as well as state taxes. A reconciliation of the total tax provision to the tax provision using the federal statutory rate for each period is included in the notes to the consolidated financial statements. The recording of this valuation allowance has no effect on our cash taxes and total net cash tax payments in 2007 were approximately $3.2 million.

        In 2006, the Company released a portion of its valuation allowance against its total deferred tax assets. The partial release was based on expectations of projected income, which caused the Company to conclude that it was more likely than not that a portion of these deferred tax assets would be realized. During 2007, the Company updated its expectations of projected income. These updated

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projections were impacted by management's strategic plan to accelerate the development of our internal pipeline as well as by the BMS Amendment. As a result of these updated projections, the Company recorded additional valuation allowance. The financial projections used to evaluate the need for our valuation allowance contain significant assumptions 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. The Company will continue to monitor its current performance and future financial projections, including market share and competitive landscape, in order to determine the effect on the valuation allowance.

        We expect that our effective tax rate in 2008 will be in the range of 40%-45%. This rate is calculated assuming no material change in the valuation allowance in 2008 related to projections of future income. From a cash tax perspective, we anticipate having sufficient net operating losses to offset taxable income on our federal tax return, thereby substantially reducing our need to pay cash taxes in 2008.

Net Income

        We had net income of approximately $39.8 million, or $0.46 per basic common share and diluted common share for the year ended December 31, 2007, compared with net income of approximately $370.7 million, or $4.40 per basic common share and $4.11 per diluted common share for the year ended December 31, 2006. The fluctuation in results was due to the factors noted above.

Years Ended December 31, 2006 and 2005

Revenues

Royalties

        In 2006, global in-market sales of ERBITUX reached $1.1 billion. In the U.S. and Canada, in-market net sales by BMS in 2006 amounted to approximately $652.2 million compared to approximately $413.1 million in 2005. Outside of the U.S. and Canada, in-market net sales by Merck KGaA in 2006 amounted to approximately $428.2 million compared to approximately $265.3 million in 2005.

        In 2006, total royalty revenue increased by approximately $113.2 million or 64% from 2005 primarily due to an increase in net sales of ERBITUX and the change in royalties earned under the Merck KGaA agreement.

License Fees and Milestones

        In 2006, total license fee and milestone revenue consisted of approximately $231.9 million earned from BMS and $348,000 earned from Merck KGaA as compared to 2005 in which approximately $94.2 million was earned from BMS and approximately $3.0 million was earned from Merck KGaA.

        In 2006, total license fees and milestone revenue increased by approximately $135.0 million or 139% from 2005 primarily due to the receipt of $250.0 million in March 2006 from BMS as a result of obtaining FDA approval for ERBITUX in head and neck indication. The milestone revenue earned in the first quarter of 2006 included a "catch-up" adjustment of approximately $112.7 million related to the actual product clinical development costs to be incurred from inception through December 31, 2005 as a percentage of estimated costs to be incurred. The remaining increase is due primarily to the higher amount of deferred revenue being recognized through year-end as a result of the receipt of the $250.0 million milestone payment from BMS. These increases were partially offset by a decrease in amortization related to the Merck KGaA development and license agreements of approximately $2.7 million related to the termination of the BEC2 and gp75 antigen agreement in the fourth quarter of 2005.

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Manufacturing

        In 2006, purchases by BMS amounted to approximately $82.4 million and purchases by Merck KGaA amounted to approximately $4.0 million. Total manufacturing revenue increased by $42.4 million or 96% from 2005 primarily due to increased commercial sales of ERBITUX to BMS of approximately $38.4 million and to Merck KGaA of approximately $4.0 million.

Collaborative Agreement Reimbursements

        Of the total $68.5 million in collaborative agreement reimbursement revenue earned in 2006, approximately $50.9 million was earned from BMS and approximately $17.6 million was earned from Merck KGaA. In comparison, of the $64.9 million in collaborative agreement reimbursement revenues earned in 2005, approximately $42.9 million was earned from BMS and approximately $22.0 million was earned from Merck KGaA.

        In 2006, total collaborative agreement reimbursement revenue increased by approximately $3.6 million or 6% from 2005 primarily due to an increase in royalty expense reimbursement of approximately $14.5 million, partly offset by decreases in reimbursement of clinical drugs of approximately $7.9 million, clinical and regulatory costs of approximately $2.3 million, and reimbursement for certain selling, general and administrative expenses of $749,000.

Expenses

Research and Development

        As previously noted, research and development expenses also include certain amounts that are reimbursable from our corporate partners. As a result, a total of approximately $31.9 million in 2006 and approximately $42.1 million in 2005 of research and development expenses are also reflected as revenues under collaborative agreement reimbursement revenue.

        In 2006, total research and development expenses increased by approximately $17.3 million or 12% from 2005 primarily due to an increase in third-party costs associated with manufacturing some of our pipeline products of approximately $9.9 million, an increase in shipments of ERBITUX to our partners for clinical studies of approximately $4.3 million, and during the last half of 2006, we made significant efforts to increase personnel and add to the infrastructure in the clinical and regulatory functions resulting in an increase in cost of approximately $6.1 million. The increase in the manufacturing of pipeline products in 2006 is part of the overall clinical development strategy related to our pipeline candidates, which we planned to take from Phase I to Phase II, beginning in 2007. The production of these products provides the Company with the ability to have sufficient product available for the various clinical trials that we planned to begin for a number of our pipeline candidates. These increases in 2006 were partially offset by a decrease of approximately $2.0 million, related to the termination of our collaborative agreement with UCB.

Selling, General and Administrative

        As previously noted, selling, general and administrative expenses also include certain amounts that are reimbursable from our corporate partners. As a result, a total of approximately $1.2 million in 2006 and $2.0 million in 2005 of these expenses are also reflected as revenues under collaborative agreement reimbursement revenue.

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        In 2006, total selling, general and administrative expenses decreased by $242,000 or less than 1% from 2005 primarily due to decreases in severance expense of approximately $2.9 million related to the resignation of our former chief executive officer in October 2005, and a decrease in legal expenses from the prior year. This decrease was primarily offset by increases in salaries and benefits of approximately $6.0 million, including share-based compensation of approximately $5.2 million, due to increased headcount and merit increases from the prior year.

Royalties

        Royalty expenses consist of obligations related to certain licensing agreements related to ERBITUX. Our effective royalty rate for 2006 on global in-market sales of ERBITUX was approximately 6.8%. In 2006, we received reimbursements from our corporate partners of 4.5% on net sales in the U.S. and Canada and a single-digit percentage on net sales outside of the U.S. and Canada, which is reflected in collaborative agreement reimbursement revenues. As a result, a total of approximately $35.4 million in 2006 and $20.9 million in 2005 of these expenses are also reflected as revenues under collaborative agreement reimbursement revenue.

        In 2006, total royalty expenses increased by approximately $15.6 million, or 27% from 2005 primarily due to the increase in net sales as described in royalty revenue above, partially offset by a decrease in our obligation to pay royalties on domestic net sales by 3% in the second quarter of 2006.

Cost of Manufacturing Revenue

        We began to capitalize in inventory the cost of manufacturing ERBITUX after we received approval in February of 2004. In 2005, we continued to sell inventory that was previously expensed as well as inventory that was partially expensed, since there was inventory in process on the date that we received FDA approval of ERBITUX. It took nearly two years to sell all inventory that was previously expensed or partially expensed. In the first quarter of 2006, we exhausted the remaining batches of ERBITUX with partial costs.

        In 2006, cost of manufacturing revenue amounted to $76.1 million representing a gross margin of approximately 12% compared to costs of manufacturing revenue for 2005 of approximately $16.4 million, or a gross margin of 63%. The fluctuation in our gross margin is based on the explanation noted above.

Discontinuation of Small Molecule Program

        On May 11, 2005, we announced a plan to discontinue our small molecule research program. This decision was made after evaluating our investment in such program against the time horizon before commercial benefits would be realized. As a result of this decision, we reflected $6.2 million of costs associated with the discontinuation of this program in the Consolidated Statements of Income for the year ended December 31, 2005. Such costs included approximately $2.2 million of costs related to severance for 45 employees that were terminated, approximately $3.7 million of costs related to the write-off of fixed assets used in such program (shown net of $227,000 from the subsequent sale of equipment that was previously written off as part of this discontinuance), approximately $60,000 of contract termination costs related to the cancellation of the lease at the Brooklyn facility where the employees were conducting such research and approximately $282,000 of other shutdown expenses. We had no additional other shutdown expenses and paid the remaining amount of $12,000 that was accrued at December 31, 2005 during the year ended December 31, 2006 to complete the disposition of this program.

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Withholding Tax (Recovery) Expense

        The Company had recorded a liability of $32.0 million as of December 31, 2005 to resolve a previously pending withholding tax matter. Payments totaling approximately $31.7 million were made during the year as final settlement of this matter. During the fourth quarter of 2006, the Company recorded a recovery of the remaining liability of $264,000 into income.

Other Income and (Expense)

        In 2006, interest income increased by approximately $12.5 million or 45% from 2005 primarily due to increases in interest rates and higher average cash and securities balances during 2006 as compared with 2005, due to receiving a $250.0 million milestone payment from BMS in April 2006.

        Interest expense in 2006 increased by approximately $2.8 million or 42% from 2005 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 this facility.

Provision (Benefit) for Income Taxes

        The effective tax rate for the year ended December 31, 2006 amounted to approximately 19.0%, excluding the effect of the partial release of our valuation allowance described below. The effective tax rate for 2006 is less than the federal statutory rate of 35%, mainly due to the utilization of fully reserved deferred tax assets. A reconciliation of the total tax provision to the tax provision using the federal statutory rate for each period is included in the notes to the consolidated financial statements.

        In 2006, we released a portion of our valuation allowance against our total deferred tax assets. This partial release was based on expectations of projected income, which caused us to conclude that it was more likely than not that a portion of the benefit of these deferred tax assets would be realized. This release resulted in a net tax benefit of approximately $111.3 million.

Net Income

        We had net income of approximately $370.7 million, or $4.40 per basic common share and $4.11 per diluted common share for the year ended December 31, 2006, compared with net income of approximately $86.5 million, or $1.03 per basic common share and $1.01 per diluted common share for the year ended December 31, 2005. The fluctuation in results was due to the factors noted above.

LIQUIDITY AND CAPITAL RESOURCES

        At December 31, 2007, our principal sources of liquidity consisted of cash and cash equivalents and securities available for sale of approximately $1.0 billion. Historically, we have financed our operations through a variety of sources, most recently through the issuance of convertible notes, the receipt of license fees and milestone payments and from reimbursement of certain expenses 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 positive cash flows from operations in 2006 and 2007. As we continue to generate revenues from royalties and sales of ERBITUX for commercial distribution, our cash flows from operating activities are expected to increase as a source to fund our operations. As previously discussed, we are planning to continue investing significantly in the development of our pipeline candidates in 2008, while also continuing to develop ERBITUX in other indications. Therefore, the utilization of our existing cash will be dependent on the level of in-market sales for ERBITUX in 2008, which will have a direct impact on whether we will generate positive or negative cash flows from operations in 2008.

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SUMMARY OF CASH FLOWS

	Years Ended December 31,								Variance
	2007		2006			2005			2007 vs. 2006			2006 vs. 2005
	(Thousands of dollars)
Cash provided by (used in):
Operating activities	$	13,486	$	205,100		$	(64,592	)	$	(191,614	)	$	269,692
Investing activities		538,745		(312,460	)		(5,053	)		851,205			(307,407	)
Financing activities		29,428		124,525			(6,273	)		(95,097	)		130,798
Net increase (decrease) in cash and cash equivalents	$	581,659	$	17,165		$	(75,918	)	$	564,494		$	93,083

        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 year ended December 31, 2007, we generated approximately $13.5 million in cash from operating activities, as compared to approximately $205.1 million in 2006. The decrease in operating cash flows in 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. The fluctuation in operating cash flows is also due to the fact that in 2007 we paid $125.0 million to settle two patent litigation matters, which was partially offset by an increase in net royalties received of approximately $38.6 million. The increase in cash provided by operations of $205.1 million in 2006 as compared to the cash used in operations of approximately $64.6 million in 2005 was primarily due to the receipt of a $250.0 million milestone payment from BMS in March 2006, partly offset by payments to the IRS of approximately $31.7 million for withholding taxes related to an employment tax audit for the years 1999-2001. The fluctuation in operating cash flows was also due to the fact that in 2005 we paid approximately $55.4 million in litigation expenses, net of insurance reimbursements related to the securities class action settled in January 2005, and approximately $30.0 million of royalty payments to Genentech and Centocor related to 2004 for license agreements that we finalized during January 2005. These uses of cash from operations in 2005 were partially offset by cash generated from operations due to increased royalty income in 2005 as a result of higher in-market net sales of ERBITUX by our partners BMS and Merck KGaA. As we continue to earn revenues and operating income from the sale of ERBITUX, we expect that our operating cash flows will continue to experience significant fluctuations from prior period results.

        Our primary sources and uses of cash under 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 year ended December 31, 2007, we generated net cash from investing activities of approximately $538.7 million, comprised primarily of net proceeds from the sale and maturity of investments of approximately $564.4 million and acquisition of fixed assets of approximately $10.7 million. During the year ended December 31, 2006, we used net cash from investing activities of approximately $312.5 million comprised of net purchases of investments of approximately $266.6 million and acquisition of fixed assets of approximately $45.9 million. During the year ended December 31, 2005, we used net cash from investing activities of approximately $5.1 million, comprised of approximately $84.3 million in acquisition of fixed assets, primarily related to the construction of our BB50 manufacturing facility, offset by net proceeds from the sale and maturity of securities in our investment portfolio of approximately $79.2 million.

        Net cash flows generated from financing activities in 2007 were approximately $29.4 million, of which approximately $28.9 million of proceeds were generated from the exercise of stock options and sales under the Company's employee stock purchase plan, and $500,000 was received for the sale of treasury stock. In 2006 we generated approximately $124.5 million from financing activities, of which

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approximately $29.8 million of proceeds were generated from the exercise of stock options and sales under the Company's employee stock purchase plan and $94.7 million from tax benefits associated with equity net operating losses that were taken as a reduction on our tax returns. In 2005, we used approximately $6.3 million for financing activities due to the purchase of 811,416 shares of our common stock at an average price of $30.62 per share for aggregate consideration of approximately $24.8 million, which was partially offset by proceeds from the exercise of stock options and sales under the Company's employee stock purchase plan of approximately $18.6 million.

        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;



•

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;



•

status of current liquidity crisis in the financial markets; and



•

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

        Below is a table that presents our contractual obligations and commercial commitments as of December 31, 2007: (in thousands)

	Payments due by Year(1),(2)
	Total		2008		2009		2010		2011		2012		2013 and Thereafter
Long-term debt(3)	$	600,000	$	—	$	—	$	—	$	—	$	—	$	600,000
Interest on long-term debt		135,094		8,250		8,250		8,250		8,250		8,250		93,844
Operating leases		63,388		5,670		5,445		4,206		4,084		4,236		39,747
Purchase obligations		11,198		11,198		—		—		—		—		—
Contract services obligations		11,790		7,470		1,350		2,970		—		—		—
Total contractual cash obligations	$	821,470	$	32,588	$	15,045	$	15,426	$	12,334	$	12,486	$	733,591

(1)

Amounts in the above table do not include milestone-type payments payable by us under development agreements, if the achievement of that milestone is uncertain or the obligation amount is not determinable.

(2)

Amounts in the above table do not include a reserve of approximately $39.2 million related to uncertain tax positions. The Company is not able to reasonably estimate when, if ever, these reserves would result in actual cash tax payments.

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(3)

On May 15 of 2009, 2014 and 2019, or upon the occurrence of certain designated events, holders may require the Company to repurchase the notes at a repurchase price equal to 100% of the principal amount of the notes plus accrued and unpaid interest.

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 7A.    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 securities, 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.

        During 2007, liquidity issues began to affect the global credit and capital markets. As a result, securities known as auction rate securities (ARS), which historically have had a liquid market and had their interest rates reset periodically (e.g. monthly) through dutch auctions, began to fail at auction. These auction failures have caused ARS to become illiquid since investors are hesistant to purchase these types of investments, which in turn has caused the fair market values for these securities to decline. As of December 31, 2007, the Company has $168.8 million of principal invested in ARS with long-term nominal maturities for which interest rates are reset through a dutch-auction each month. These monthly auctions have historically provided a liquid market for these securities. The Company's investments in ARS all currently have AAA/Aaa credit ratings and interest continues to be paid by the issuers of the securities. The Company's investments in ARS represent interests in synthetic collateralized debt obligations referencing portfolios of corporate bonds. The Company does not have any investments which are backed by sub-prime mortgages. As a result of the liquidity issues experienced in the global credit and capital markets, certain of the ARS, which were primarily underwritten by one investment bank, with a total principal value of $149.2 million held by the Company at December 31, 2007, have experienced multiple failed auctions since August 2007. The estimated fair market value at December 31, 2007, of the Company's ARS with continuing auction failures totaled approximately $109.0 million based on indicative prices from the investment bank, which reflects unrealized losses of $40.2 million. As of February 27, 2008, the unrealized losses on these securities increased to approximately $65.8 million due to the continuing liquidity issues in the global credit and capital markets. Based on the factors above and because we have the intent and ability to hold these investments until recovery of fair value, which may be maturity, we do not consider these investments to be other-than-temporarily impaired. The Company has reflected the unrealized losses as a component of other comprehensive loss in stockholders' equity in its consolidated balance sheet as of December 31, 2007.

        During 2007, we made investments in equity securities of approximately $43.6 million and had an unrealized loss of $10.8 million at December 31, 2007. We evaluated the unrealized loss position on our equity securities and determined that we do not consider this decrease in value to be other-than-temporary. In making this determination we considered a number of factors, including the

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nature of the investment, the cause of the decline in fair value, the severity and duration of the decline in fair value, the financial position and prospects of the company whose securities are held, analyst reports, as well as other factors. This temporary decline in value is reflected as an unrealized loss in our consolidated balance sheet as of December 31, 2007.

        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 December 31, 2007: (in thousands, except interest rates)

	2008			2009			2010			2011		2012			2013 and Thereafter			Total			Fair Value
Fixed Rate	$	115,011		$	55,000		$	70,045		$	—	$	10,012		$	—		$	250,068		$	250,347
Average Interest Rate		4.08	%		4.33	%		5.19	%		—		5.65	%		—			4.51	%
Variable Rate		1,800			—			—			—		—			168,820	(1)		170,620			130,466
Average Interest Rate		6.0	%		—			—			—		—			5.64	%		5.64	%
	$	116,811		$	55,000		$	70,045		$	—	$	10,012		$	168,820		$	420,688		$	380,813

(1)

These holdings primarily consist of auction rate securities. Interest on the securities is adjusted monthly, quarterly or semi-annually, depending on the instrument, using prevailing interest rates.

        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 adjustment and 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 $564.8 million at December 31, 2007.

ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

        The response to this item is submitted as a separate section of this report as Part II commencing on Page F-1.

ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

        Not Applicable.

ITEM 9A.    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, the 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.

Management's Annual Report on Internal Control Over Financial Reporting

        Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f). Under the supervision and

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with the participation of our management, including our Chief Executive Officer and Interim Vice President, Finance, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework in Internal Control—Integrated Framework, our management concluded that our internal control over financial reporting was effective as of December 31, 2007.

        KPMG LLP, an independent registered public accounting firm, has audited the consolidated financial statements included in this Annual Report on Form 10-K and, as part of their audit, has issued their report, included herein, on the effectiveness of our internal control over financial reporting.

Changes in Internal Control Over Financial Reporting

        There has been no change in our internal control over financial reporting during the fourth quarter of 2007 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders
ImClone Systems Incorporated:

        We have audited ImClone Systems Incorporated's internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). ImClone Systems Incorporated's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

        We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on this assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

        A company's internal control over financial reporting is a process designed 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. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

        Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

        In our opinion, ImClone Systems Incorporated maintained, in all material respects, effective internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

        We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of ImClone Systems Incorporated as of December 31, 2007 and 2006, and the related consolidated statements of income, stockholders' equity and comprehensive income (loss), and cash flows for each of the years in the three-year period ended December 31, 2007, and our report dated February 29, 2008 expressed an unqualified opinion on those consolidated financial statements.

/s/ KPMG LLP

Princeton, New Jersey
February 29, 2008

ITEM 9B.    OTHER INFORMATION.

        Not Applicable.

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PART III

ITEM 10.    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

        The information required by Item 10 is incorporated into Part III of this Annual Report on Form 10-K by reference to our definitive Proxy Statement for the 2008 Annual Meeting of Stockholders.

ITEM 11.    EXECUTIVE COMPENSATION.

        The information required by Item 11 is incorporated into Part III of this Annual Report on Form 10-K by reference to our definitive Proxy Statement for the 2008 Annual Meeting of Stockholders.

ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

        The information required by Item 12 is incorporated into Part III of this Annual Report on Form 10-K by reference to our definitive Proxy Statement for the 2008 Annual Meeting of Stockholders.

ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

        The information required by Item 13 is incorporated into Part III of this Annual Report on Form 10-K by reference to our definitive Proxy Statement for the 2008 Annual Meeting of Stockholders.

ITEM 14.    PRINCIPAL ACCOUNTING FEES AND SERVICES.

        The information required by Item 14 is incorporated into Part III of this Annual Report on Form 10-K by reference to our definitive Proxy Statement for the 2008 Annual Meeting of Stockholders.

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PART IV

ITEM 15.    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a)(1) and (2)	The response to this portion of Item 15 is submitted as a separate section of this report commencing on page F-1.
(a)(3)	Exhibits (numbered in accordance with Item 601 of Regulation S-K).

Exhibit No.		Description	Incorporated by Reference
	3.1	Certificate of Incorporation, as amended through December 31, 1998	C(3.1)
	3.2	Amendment dated June 4, 1999 to the Company's Certificate of Incorporation, as amended	F(3.1A)
	3.3	Amendment dated June 12, 2000 to the Company's Certificate of Incorporation, as amended	H(3.1A)
	3.4	Amendment dated August 9, 2002 to the Company's Certificate of Incorporation, as amended	N(3.1C)
	3.5	By-Laws of ImClone Systems Incorporated as amended and restated on December 10, 2007	V(3.1)
	4.1	Rights Agreement dated as of February 15, 2002 between the Company and EquiServe Trust Company, N.A., as Rights Agent, as amended May 4, 2006	J(Ex-1,Ex-2)
	4.2	Stockholder Agreement, dated as of September 19, 2001, among Bristol-Myers Squibb Company, Bristol-Myers Squibb Biologics Company and the Company	I(99.2D2)
	4.3	Indenture dated as of May 7, 2004 by and between the Company and The Bank of New York, as Trustee and Form of 13/8% Convertible Notes Due 2024	R(4.5)
	4.4	Registration Rights Agreement dated as of May 7, 2004 by and between the Company, as Issuer, and Morgan Stanley & Co., Incorporated and UBS Securities LLC, as the Initial Purchasers	R(4.6)
10.1		1996 Incentive Stock Option Plan, as amended	L(99.1)
10.2		1996 Non-Qualified Stock Option Plan, as amended	L(99.2)
10.3		ImClone Systems Incorporated 1998 Non-Qualified Stock Option Plan, as amended	L(99.2)
10.4		ImClone Systems Incorporated 2002 Stock Option Plan	N(99.8)
10.5		ImClone Systems Incorporated 1998 Employee Stock Purchase Plan	G(99.4)
10.6		License Agreement between the Company and the Regents of the University of California dated April 9, 1993	A(10.48)
10.7		License Agreement between the Company and Rhone-Poulenc Rorer dated June 13, 1994	B(10.56)
10.8		Development and License Agreement between the Company and Merck KGaA dated December 14, 1998	D(10.70)

85

10.9	Lease dated as of December 15, 1998 for the Company's premises at 180 Varick Street, New York, New York	E(10.69)
10.10	Amendment dated March 2, 1999 to Development and License Agreement between the Company and Merck KGaA	E(10.71)
10.11	Acquisition Agreement dated as of September 19, 2001, among the Company, Bristol-Myers Squibb Company and Bristol-Myers Squibb Biologics Company	I(99.D1)
10.12	Development, Promotion, Distribution and Supply Agreement, dated as of September 19, 2001, among the Company, Bristol-Myers Squibb Company and E.R. Squibb & Sons, L.L.C.	I(99.D3)
10.13	Agreement of Sublease dated October 5, 2001, by and between 325 Spring Street LLC and the Company	L(10.86)
10.14	Promissory Note in the principal amount of $10,000,000, dated October 5, 2001, executed by 325 Spring Street LLC in favor of the Company	L(10.86.1)
10.15	Amendment No. 1 to Development, Promotion, Distribution and Supply Agreement, dated as of March 5, 2002, among the Company, Bristol-Myers Squibb Company and E.R. Squibb & Sons, L.L.C.	K(99.2)
10.16	Amendment, dated as of August 16, 2001 to the Development and License Agreement between the Company and Merck KGaA	M(10.88)
10.17	Agreement of Sale and Purchase between Building Associates, LP and ImClone Systems Incorporated pertaining to 33 Chubb Way, Branchburg, New Jersey executed as of March 1, 2002	N(10.92)
10.18	Target Price Contract, dated as of July 15, 2002, between ImClone Systems Incorporated and Kvaerner Process, a division of Kvaerner U.S. Inc., for the Architectural, Engineering, Procurement Assistance, Construction Management and Validation of a Commercial Manufacturing Project in Branchburg, New Jersey	O(10.93)
10.19	Modifications Agreement dated as of December 15, 2000 by an between 180 Varick Street Corporation and the Company	P(10.94)
10.20	Amendment number 4 to the Company's lease at 180 Varick Street dated August 13, 2004 by and between 180 Varick Street Corporation and the Company	S(10.28)
10.21	ImClone Systems Incorporated Annual Incentive Plan	Q(A.C)
10.22	Supply Agreement between the Company and Lonza Biologics PLC dated March 17, 2005	U(10.30)
10.23	ImClone Systems Incorporated Senior Executive Severance Plan	T(10.29)
10.24	ImClone Systems Incorporated Change in Control Plan, as amended	BB(10.32)
10.25	Terms of inducement stock option grants to Dr. Eric Rowinsky on February 21, 2005, as approved by the Compensation Committee of Board of Directors	W

86

10.26	†	Collaboration and License Agreement between the Company and UCB S.A. dated August 15, 2005	Y
10.27		Approval by Board of Directors of certain compensation related matters and Company stock repurchase program	X
10.28		Terms of accelerated Company stock options and form of lock-up agreement	ZZ(10.1)
10.29		ImClone Systems Incorporated 2006-2008 Retention Plan	AA(10.1)
10.30		ImClone Systems Incorporated Transition Severance Plan	BB(10.40)
10.31		Approval by the Compensation Committee of the Board of Directors of performance criteria for executive officer cash bonus awards under the Company's Annual Incentive Plan for the year ended December 31, 2006	CC
10.32	†	Settlement Agreement, dated July 19, 2006, by and between ImClone Systems Incorporated and Merck KGaA, including an amendment to the Development and License Agreement between the Company and Merck KGaA, as amended	DD(10.38)
10.33		ImClone Systems Incorporated 2006 Stock Incentive Plan	EE(10.39)
10.34	†	Letter Agreement between the Company and UCB S.A. dated February 1, 2007	EE(10.40)
10.35	†	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.	FF(10.41)
10.36		Employment Agreement between the Company and John H. Johnson dated August 8, 2007	FF(10.42)
10.37	†*	Amended and Restated Co-Development and Co-Commercialization Agreement for ERBITUX® in Japan, dated as of October 12, 2007, among Bristol-Myers Squibb Company, E.R. Squibb & Sons, LLC, Bristol-Myers K.K., Merck KGaA, Merck Serono Japan Company, Limited and the Company
10.38	†*	BMS-ImClone Japan Agreement, dated as of October 12, 2007, among Bristol-Myers Squibb Company, E.R. Squibb & Sons, LLC, Bristol-Myers K.K. and the Company
10.39	†*	Letter Agreement, dated as of October 12, 2007, between the Company and Merck KGaA relating to the Amended and Restated Co-Development and Co-Commercialization Agreement for ERBITUX® in Japan
10.40	†*	Settlement Agreement and Mutual Release, dated as of December 7, 2007, by and among Aventis Pharmaceuticals, Inc., Aventis Holdings, Inc., the Company and Yeda Research and Development Co. Ltd.
10.41	†*	Amended and Restated License Agreement by and between Aventis Holdings, Inc. and the Company dated December 7, 2007
12.1	*	Calculation of Ratio of Earnings to Fixed Charges
21.1	*	Subsidiaries of the Company

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23.1	*	Consent of KPMG LLP, Independent Registered Public Accountants
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.

*

Filed herewith.

†

A request for confidential treatment was filed for certain portions of the indicated document. Confidential portions have been omitted and filed separately with the Commission as required by Rule 24b-2 of the Commission.

(A)

Previously filed with the Commission; incorporated by reference to the Company's Annual Report on Form 10-K, File No. 0-19612, for the fiscal year ended December 31, 1993. Confidential Treatment was granted for a portion of this Exhibit.

(B)

Previously filed with the Commission; incorporated by reference to the Company's Annual Report on Form 10-K, File No. 0-19612, for the fiscal year ended December 31, 1994.

(C)

Previously filed with the Commission; incorporated by reference to the Company's Quarterly Report on Form 10-Q, File No. 0-19612, for the quarter ended June 30, 1997.

(D)

Previously filed with the Commission; incorporated by reference to the Company's Registration Statement on Form S-3, File No. 333-67335. Confidential treatment was granted for a portion of this Exhibit.

(E)

Previously filed with the Commission; incorporated by reference to the Company's Annual Report on Form 10-K, File No. 0-19612, for the fiscal year ended December 31, 1998.

(F)

Previously filed with the Commission; incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1999.

(G)

Previously filed with the Commission; incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1999.

(H)

Previously filed with the Commission; incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2000.

(I)

Previously filed with the Commission; incorporated by reference to the Company's Schedule 14D-9 filed on September 28, 2001.

(J)

Previously filed with the Commission; incorporated by reference to the Company's Current Report on Form 8-K dated May 4, 2006.

(K)

Previously filed with the Commission; incorporated by reference to the Company's Current Report on Form 8-A/A dated March 6, 2002.

(L)

Previously filed with the Commission; incorporated by reference to the Company's Annual Report on Form 10-K, for the year ended December 31, 2001.

88

(M)

Previously filed with the Commission; incorporated by reference to the Company's Annual Report on Form 10-K, for the year ended December 31, 2001, and Confidential Treatment has been requested for a portion of this exhibit.

(N)

Previously filed with the Commission; incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2002.

(O)

Previously filed with the Commission; incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2002.

(P)

Previously filed with the Commission; incorporated by reference to the Company's Annual Report on Form 10-K, for the year ended December 31, 2002.

(Q)

Previously filed with the Commission; incorporated by reference to the Company's Proxy Statement for its 2003 Annual Meeting of Shareholders, filed August 21, 2003, as appendix C.

(R)

Previously filed with the Commission; incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2004.

(S)

Previously filed with the Commission; incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2004.

(T)

Previously filed with the Commission; incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 2004.

(U)

Previously filed with the Commission; incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended March 31, 2005.

(V)

Previously filed with the Commission; incorporated by reference to the Company's Current Report on Form 8-K dated December 14, 2007.

(W)

Previously filed with the Commission; incorporated by reference to the Company's Current Report on Form 8-K dated July 15, 2005.

(X)

Previously filed with the Commission; incorporated by reference to the Company's Current Report on Form 8-K dated September 19, 2005.

(Y)

Previously filed with the Commission, incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 2005.

(Z)

Previously filed with the Commission, incorporated by reference to the Company's Current Report on Form 8-K dated December 21, 2005.

(AA)

Previously filed with the Commission; incorporated by reference to the Company's Current Report on Form 8-K dated January 23, 2006.

(BB)

Previously filed with the Commission; incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 2005.

(CC)

Previously filed with the Commission; incorporated by reference to the Company's Current Report on Form 8-K dated March 22, 2006.

(DD)

Previously filed with the Commission; incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2006.

(EE)

Previously filed with the Commission; incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 2006.

(FF)

Previously filed with the Commission; incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2007.

89

SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) 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
Date: February 29, 2008	By:	/s/  JOHN H. JOHNSON John H. Johnson Chief Executive Officer

        Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated.

Name	Title	Date
/s/  JOHN H. JOHNSON John H. Johnson	Chief Executive Officer (Principal Executive Officer)	February 29, 2008
/s/  PETER R. BORZILLERI Peter R. Borzilleri	Interim Vice President, Finance (Principal Financial Officer)	February 29, 2008
/s/  ANDREW R.J. BONFIELD Andrew R.J. Bonfield	Director	February 29, 2008
Alexander J. Denner	Director
/s/  THOMAS F. DEUEL Thomas F. Deuel	Director	February 29, 2008
/s/  JULES HAIMOVITZ Jules Haimovitz	Director	February 29, 2008
Carl C. Icahn	Director

90

/s/  PETER S. LIEBERT Peter S. Liebert	Director	February 29, 2008
Richard C. Mulligan	Director
/s/  DAVID SIDRANSKY David Sidransky	Director	February 29, 2008
/s/  CHARLES WOLER Charles Woler	Director	February 29, 2008

91

INDEX TO FINANCIAL STATEMENTS

Audited Financial Statements:
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets at December 31, 2007 and 2006	F-3
Consolidated Statements of Income for the Years Ended December 31, 2007, 2006 and 2005	F-4
Consolidated Statements of Stockholders' Equity and Comprehensive Income (Loss) for the Years Ended December 31, 2007, 2006 and 2005	F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 2007, 2006 and 2005	F-6
Notes to Consolidated Financial Statements	F-7

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders
ImClone Systems Incorporated:

        We have audited the consolidated financial statements of ImClone Systems Incorporated and subsidiary as listed in the accompanying index. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

        We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

        In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of ImClone Systems Incorporated and subsidiary as of December 31, 2007 and 2006, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2007, in conformity with U.S. generally accepted accounting principles.

        As discussed in notes 2(i) and 11(d) to the consolidated financial statements, the Company adopted the provisions of Statement of Financial Accounting Standards No. 123R, "Share-based Payment," effective January 1, 2006.

        We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), ImClone Systems Incorporated's internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February 29, 2008 expressed an unqualified opinion on the effectiveness of the Company's internal control over financial reporting.

/s/ KPMG LLP

Princeton, New Jersey
February 29, 2008

F-2

IMCLONE SYSTEMS INCORPORATED

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share and share data)

					December 31,
					2007			2006
ASSETS
Current assets:
	Cash and cash equivalents				$	602,227		$	20,568
	Securities available for sale					304,534			1,023,609
	Prepaid expenses					3,632			3,972
	Amounts due from corporate partners					95,838			78,030
	Inventories					116,153			102,215
	Deferred income taxes, net					14,582			29,715
	Other current assets					11,696			12,123
		Total current assets				1,148,662			1,270,232
Property, plant and equipment, net						397,682			423,000
Deferred financing costs, net						5,105			8,818
Deferred income taxes, net						82,043			124,033
Securities available for sale						109,060			—
Notes receivable, less current portion						7,350			7,844
Other assets						19,357			5,909
				Total assets	$	1,769,259		$	1,839,836
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Accounts payable (including $1,387 and $4,765 due Bristol-Myers Squibb Company ("BMS") at December 31, 2007 and 2006, respectively)				$	30,528		$	26,421
	Accrued expenses (including $1,758 and $21,705 due BMS at December 31, 2007 and 2006, respectively)					54,374			69,080
	Current portion of deferred revenue					107,182			142,013
	Other current liabilities					4,573			1,418
		Total current liabilities				196,657			238,932
Deferred revenue, less current portion						176,605			237,864
Long-term debt						600,000			600,000
Share-based compensation, less current portion						—			261
Other liabilities						12,208			3,130
			Total liabilities			985,470			1,080,187
Commitments and contingencies (Notes 14 and 15)
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 87,314,181 and 86,143,604 at December 31, 2007 and 2006, respectively; outstanding 86,323,116 and 85,138,930 at December 31, 2007 and 2006, respectively					87			86
	Additional paid-in capital					893,613			865,560
	Accumulated deficit					(30,478	)		(71,785	)
	Treasury stock, at cost; 991,065 and 1,004,674 shares at December 31, 2007 and 2006, respectively					(28,754	)		(29,149	)
	Accumulated other comprehensive loss:
		Net unrealized loss on securities available for sale				(50,679	)		(5,063	)
			Total stockholders' equity			783,789			759,649
				Total liabilities and stockholders' equity	$	1,769,259		$	1,839,836

See accompanying notes to consolidated financial statements.

F-3

IMCLONE SYSTEMS INCORPORATED

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

				Year Ended December 31,
				2007			2006			2005
Revenues:
	Royalties			$	332,182		$	290,599		$	177,440
	License fees and milestones				102,910			232,269			97,239
	Manufacturing				85,109			86,476			44,090
	Collaborative agreement reimbursements				70,632			68,503			64,904
		Total revenues			590,833			677,847			383,673
Operating expenses:
	Research and development				194,118			162,764			145,430
	Selling, general and administrative				80,681			76,101			76,343
	Royalties				71,544			73,958			58,376
	Cost of manufacturing revenue				83,038			76,063			16,367
	Litigation settlements				110,000			—			—
	Discontinuation of small molecule research program				—			—			6,200
	Withholding tax (recovery) expense				—			(264	)		14,178
		Total operating expenses			539,381			388,622			316,894
			Operating income		51,452			289,225			66,779
Other income (expense):
	Interest income				52,117			40,418			27,877
	Interest expense				(12,053	)		(9,323	)		(6,569	)
	Other gain (loss)				3,775			—			(13	)
		Other income, net			43,839			31,095			21,295
		Income before income taxes			95,291			320,320			88,074
		Provision (benefit) for income taxes			55,492			(50,354	)		1,578
		Net income		$	39,799		$	370,674		$	86,496
Earnings per common share:
	Basic			$	0.46		$	4.40		$	1.03
	Diluted			$	0.46		$	4.11		$	1.01
Shares used in calculation of earnings per common share:
	Basic				85,804			84,235			83,582
	Diluted				86,812			92,012			92,183

See accompanying notes to consolidated financial statements.

F-4

IMCLONE SYSTEMS INCORPORATED

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

AND COMPREHENSIVE INCOME (LOSS)

Years Ended December 31, 2007, 2006 and 2005

(in thousands, except share data)

			Preferred Stock			Common Stock									Treasury Stock
									Additional Paid-in Capital			Accumulated Deficit								Accumulated Other Comprehensive Loss
			Shares	Amount		Shares	Amount								Shares		Amount						Total
Balance at December 31, 2004			—	$	—	83,250,146	$	83	$	712,819		$	(528,955	)	193,258		$	(4,300	)	$	(809	)	$	178,838
Options exercised						1,128,642		1		17,643														17,644
Issuance of shares through employee stock purchase plan						33,620		—		932														932
Tax benefit of stock options										1,675														1,675
Purchase of Treasury shares															811,416			(24,849	)					(24,849	)
Comprehensive income:
Net income													86,496											86,496
Other comprehensive loss:
	Unrealized loss on available for sale securities arising during the year																				(8,345	)		(8,345	)
	Less: Reclassification adjustment for realized loss included in net income																				(13	)		(13	)
		Total other comprehensive loss																			(8,332	)		(8,332	)
Comprehensive income																								78,164
Balance at December 31, 2005			—		—	84,412,408		84		733,069			(442,459	)	1,004,674			(29,149	)		(9,141	)		252,404
Options exercised						1,701,447		2		28,998														29,000
Issuance of shares through employee stock purchase plan						29,749		—		806														806
Share-based compensation expense										8,798														8,798
Tax benefit of stock options										93,889														93,889
Comprehensive income:
Net income													370,674											370,674
Other comprehensive income:
	Unrealized gain on available for sale securities arising during the year																				4,078			4,078
		Total other comprehensive income																			4,078			4,078
Comprehensive income																								374,752
Balance at December 31, 2006			—		—	86,143,604		86		865,560			(71,785	)	1,004,674			(29,149	)		(5,063	)		759,649
Options exercised						1,148,665		1		28,180														28,181
Issuance of shares through employee stock purchase plan						21,912		—		747														747
Share-based compensation expense										6,833														6,833
Tax effect of stock options										(6,304	)													(6,304	)
Adjustment for implementation of FIN 48										(1,508	)		1,508											—
Sale of Treasury shares										105					(13,609	)		395						500
Comprehensive loss:
Net income													39,799											39,799
Other comprehensive loss:
	Unrealized loss on available for sale securities arising during the year																				(45,616	)		(45,616	)
		Total other comprehensive loss																			(45,616	)		(45,616	)
Comprehensive loss																								(5,817	)
Balance at December 31, 2007			—	$	—	87,314,181	$	87	$	893,613		$	(30,478	)	991,065		$	(28,754	)	$	(50,679	)	$	783,789

See accompanying notes to consolidated financial statements.

F-5

IMCLONE SYSTEMS INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

					Year Ended December 31,
					2007			2006			2005
Cash flows from operating activities:
	Net income				$	39,799		$	370,674		$	86,496
	Adjustments to reconcile net income to net cash provided by (used in) operating activities:
		Depreciation and amortization				32,091			29,616			13,227
		Amortization of deferred financing costs				3,713			3,713			3,713
		Share-based compensation				6,833			8,798			—
		Tax effect of share-based compensation				—			(94,719	)		1,675
		Loss on disposal of fixed assets				4,689			2			3,668
		Loss on securities available for sale, net				—			—			13
		Deferred income taxes				57,123			(153,748	)		—
		Other				40			(183	)		438
		Changes in:
			Prepaid expenses			340			(206	)		288
			Amounts due from corporate partners			(17,808	)		(18,759	)		10,482
			Inventories			(13,938	)		(20,821	)		(40,776	)
			Other current assets			427			(3,812	)		19,929
			Other assets			1,198			1,216			1,182
			Accounts payable			4,107			(9,109	)		(2,962	)
			Accrued expenses			(21,010	)		102,035			(243	)
			Other current liabilities			3,155			387			—
			Share-based compensation			(261	)		261			—
			Withholding tax liability			—			(31,736	)		13,904
			Litigation settlements			—			—			(75,900	)
			Deferred revenue			(96,090	)		20,852			(98,783	)
			Other liabilities			9,078			639			(943	)
				Net cash provided by (used in) operating activities		13,486			205,100			(64,592	)
Cash flows from investing activities:
	Acquisitions of property, plant and equipment					(10,654	)		(45,902	)		(84,263	)
	Acquisitions of intellectual property					(15,000	)		—			—
	Purchases of securities available for sale					(1,241,611	)		(1,595,970	)		(574,072	)
	Proceeds from sale of securities available for sale					1,346,550			1,130,990			575,598
	Proceeds from maturities of securities available for sale					459,460			198,422			77,607
	Other					—			—			77
				Net cash provided by (used in) investing activities		538,745			(312,460	)		(5,053	)
Cash flows from financing activities:
	Proceeds from exercise of stock options					28,181			29,000			17,644
	Proceeds from issuance of common stock under the employee stock purchase plan					747			806			932
	Tax benefit of share-based compensation					—			94,719			—
	Proceeds from sale of treasury stock					500			—			—
	Repurchase of common stock					—			—			(24,849	)
				Net cash provided by (used in) financing activities		29,428			124,525			(6,273	)
				Net increase (decrease) in cash and cash equivalents		581,659			17,165			(75,918	)
Cash and cash equivalents at beginning of year						20,568			3,403			79,321
Cash and cash equivalents at end of year					$	602,227		$	20,568		$	3,403

See accompanying notes to consolidated financial statements.

F-6

IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) Business Overview and Basis of Preparation

        ImClone Systems Incorporated (the "Company") 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. A substantial portion of the Company's efforts and resources are devoted to research and development conducted on its own behalf and through collaborations with corporate partners and academic research and clinical institutions. The Company does not operate separate lines of business or separate business entities and does not conduct any of its operations outside of the U.S. 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.

        On February 12, 2004, the United States Food and Drug Administration (FDA) approved ERBITUX® (cetuximab) for use in combination with irinotecan in the treatment of patients with EGFR-expressing, metastatic colorectal cancer who are refractory to irinotecan-based chemotherapy and for use as a single agent in the treatment of patients with EGFR-expressing, metastatic colorectal cancer who are intolerant to irinotecan-based chemotherapy. In September 2005, Health Canada approved the use of ERBITUX for use in combination with irinotecan for the treatment of EGFR-expressing metastatic colorectal carcinoma in patients who are refractory to other irinotecan-based chemotherapy regimens and for use as a single agent for the treatment of EGFR expressing, metastatic colorectal carcinoma in patients who are intolerant to irinotecan-based chemotherapy. On March 1, 2006, the FDA approved ERBITUX for use in combination with radiation therapy for the treatment of locally or regionally advanced squamous cell carcinoma of the head and neck (SCCHN) and as a single agent in recurrent or metastatic SCCHN where prior platinum-based chemotherapy has failed. Please see full prescribing information, available at www.ERBITUX.com, for important safety information relating to ERBITUX, including boxed warnings.

        On December 1, 2003, Swissmedic, the Swiss agency for therapeutic products, approved ERBITUX in Switzerland for the treatment of patients with colorectal cancer who no longer respond to standard chemotherapy treatment with irinotecan. Merck KGaA licensed the right to market ERBITUX outside the U.S. and Canada from the Company in 1998. On June 30, 2004, Merck KGaA received marketing approval from the European Commission to sell ERBITUX for use in combination with irinotecan for the treatment of patients with EGFR-expressing metastatic colorectal cancer after failure of irinotecan including cytotoxic therapy. On December 22, 2005, Swissmedic approved ERBITUX in Switzerland in combination with radiation in the treatment of patients with previously untreated, advanced SCHHN. On April 3, 2006, Merck KGaA was granted marketing authorization by the European Commission to extend the use of ERBITUX, in combination with radiotherapy, to the treatment of patients with locally advanced SCCHN. In Japan, Merck KGaA has marketing rights to ERBITUX, which are co-exclusive to the co-development rights of the Company and BMS. In February 2007, an application was submitted with the Japanese Pharmaceuticals and Medical Devices Agency for the use of ERBITUX in treating patients with advanced colorectal cancer. ERBITUX is the first IgG1 monoclonal antibody that inhibits EGFR to be submitted for marketing authorization in Japan.

        The Company relies entirely on third-party manufacturers for filling and finishing services with respect to ERBITUX. If the Company's current third-party manufacturers or critical raw material suppliers fail to meet the Company's expectations, the Company cannot be assured that it will be able to enter into new agreements with other suppliers or third-party manufacturers without an adverse effect on the Company's business.

F-7

IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(2) Summary of Significant Accounting Policies

(a)

Principles of Consolidation

        The consolidated financial statements include the financial statements of ImClone Systems Incorporated and its wholly-owned subsidiary, Endoclone Incorporated. All intercompany balances and transactions have been eliminated in consolidation.

(b)

Cash Equivalents

        Cash equivalents may consist of money market funds, commercial paper and other readily marketable debt instruments. The Company considers all highly liquid debt instruments with maturities at date of purchase not exceeding three months to be cash equivalents.

(c)

Investments in Securities

        The Company classifies its investments in debt and marketable equity securities as available-for-sale. The Company invests primarily in asset-backed securities, auction rate securities, government sponsored entities and corporate notes. Generally, we do not invest in equity investments, however, we may make these investments depending upon our needs. Securities available-for-sale are recorded at fair value. Unrealized holding gains and losses on securities available-for-sale are excluded from earnings and are reported as a separate component of accumulated other comprehensive income (loss) until realized. Realized gains and losses from the sale of securities available-for-sale are determined on a specific identification basis. If the fair value of a security in the portfolio is below its carrying value, the Company evaluates whether it has the intent and ability to retain the investment for a period of time sufficient to allow for recovery in the market value of the investment. In making a determination of whether a decline in market value is other-than-temporary the Company considers a number of factors, including the liquidity position, credit-worthiness of the issuer of such securities, the nature of the investment, the cause of the decline, the severity and duration of the decline, as well as any other information that may be deemed relevant. A decline in the market value of any security available-for-sale below cost that is deemed to be other than temporary results in a reduction in carrying amount to fair value. This reduction is charged to Other income (expense) in the Consolidated Statements of Income and a new cost basis for the security is established. Dividend and interest income are recognized when earned.

(d)

Inventories

        Inventories are stated at the lower of cost or market. Cost is determined on the first-in first-out (FIFO) basis. The Company's policy is to capitalize inventory product costs when, based on management's judgment, future economic benefit is expected to be realized. The Company's 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 Financial Accounting Standards Board (FASB) Concepts Statement No. 6. If applicable, the Company assesses the regulatory and approval process including any known constraints and impediments to approval. The Company also considers the shelf-life of the product in relation to the expected timeline for approval. The Company reviews its inventory for excess or obsolete inventory and writes down obsolete or otherwise unmarketable inventory to its estimated net realizable value.

(e)

Long-Lived Assets

        Property, plant and equipment are stated at cost. Equipment under capital leases are stated at the present value of the minimum lease payments. Leasehold improvements are amortized on the

F-8

IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(2) Summary of Significant Accounting Policies (Continued)

straight-line method over the related lease term or the useful life of the improvement, whichever is shorter. Depreciation of fixed assets is provided on the straight-line method over the estimated useful life of the asset. Estimated useful lives are generally as follows: buildings 20 to 50 years; manufacturing equipment 10 to 20 years; laboratory and other machinery and equipment 3 to 10 years; and furniture and fixtures 8 years.

        Patent and patent application costs that have been capitalized are amortized on a straight-line basis over their respective expected useful lives, up to a 15-year period and are recorded in Other assets on the Company's Consolidated Balance Sheet. Gross patent costs were $16,692,000 and $1,888,000 at December 31, 2007 and 2006, respectively. Accumulated amortization was $1,870,000 and $1,218,000 at December 31, 2007 and 2006, respectively. Amortization expense was $808,000, $121,000 and $161,000 for the three years ended December 31, 2007, 2006 and 2005, respectively. Amortization expense is estimated to be $2.2 million for each of the next five years. During the year ended December 31, 2007, the Company capitalized $15.0 million related to patents sublicensed from Repligen Corporation, which is being amortized on a straight-line basis over the remaining life of the sublicensed patents, which is approximately seven years. For the years ended December 31, 2007, 2006 and 2005 the Company had write-offs of net patent costs of $39,000, $81,000, and $288,000, respectively, reflected in Selling, general and administrative expenses on the Consolidated Statements of Income.

        The Company reviews 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 are written down to fair value if expected associated undiscounted cash flows are less than the carrying amounts. Fair value is generally determined as the present value of the expected associated cash flows.

(f)

Deferred Financing Costs

        Costs incurred in issuing the 1³/8% convertible senior notes are amortized using the straight-line method over the shorter of: the term of the related instrument or the initial date on which the holders can require repurchase of the notes. The amortization of deferred financing costs is included in Interest expense in the Consolidated Statements of Income.

(g)

Revenue Recognition

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

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

        The Company recognizes all non-refundable up-front license fees as revenues in accordance with the guidance provided in the Securities and Exchange Commission's (SEC) Staff Accounting Bulletin No. 104, "Revenue Recognition, corrected copy" (SAB 104) and Emerging Issues Task Force (EITF) Issue No. 00-21, "Revenue Arrangements with Multiple Deliverables" (EITF 00-21). Non-refundable fees received upon entering into license and other collaborative agreements where the Company has continuing involvement are recorded as deferred revenue and recognized over the estimated performance period. Payments received under the Commercial Agreement with BMS are being

F-9

IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(2) Summary of Significant Accounting Policies (Continued)

deferred and recognized as revenue based on actual ERBITUX clinical development costs incurred as a percentage of the estimated total of such costs to be incurred over the projected performance period. Any future changes in the estimated total costs of the clinical development plan will be addressed on a prospective basis. Other than the Commercial Agreement, non-refundable milestone payments, which represent the achievement of a significant step in the research and development process, pursuant to collaborative agreements, are recognized as revenue upon the achievement of the specified milestone.

        Manufacturing revenue consists of revenue earned on the sale of ERBITUX to the Company's corporate partners for subsequent commercial sale. The Company recognizes manufacturing revenue when the product is shipped which is when the Company's 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.

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

        Pursuant to the guidance in EITF Issues No. 99-19, "Reporting Revenue Gross as a Principal versus Net as an Agent," and No. 01-14, "Income Statement Characterization of Reimbursements Received for 'Out-of-Pocket' Expenses Incurred," the Company characterizes reimbursements received for research and development, clinical and regulatory, royalty expense and selling and administrative expenses incurred as Collaborative agreement reimbursements revenue in the Consolidated Statements of Income. In analyzing whether to categorize reimbursed expenses from the Company's corporate partners as a) the gross amount billed or b) the net amount retained, the Company has analyzed the relevant facts and circumstances related to these expenses and considered the factors, as specified in the EITF Issues noted above. These expenses, which are associated with ERBITUX, are broader than would ordinarily result in central ongoing operations. These expenses have been incurred as a result of entering into the collaborative agreements that the Company has in place with its partners. In assessing whether revenue should be reported gross or net, the Company considered various factors, among them: (1) the Company is the primary obligor with respect to all expenses incurred and reimbursed; (2) the Company bears credit risk and inventory risk; (3) the Company bears responsibility for manufacturing the product and its specification; and (4) the Company has pricing latitude and supplier discretion. Based on the factors considered, the Company has concluded that costs reimbursed by its corporate partners should be characterized as revenue in its Consolidated Statements of Income.

        Revenue recognized in the accompanying Consolidated Statements of Income is not subject to repayment. Payments received that are related to future performance are classified as deferred revenue and recognized when the revenue is earned. Amounts receivable from the sale of inventories, reimbursement of expenses and royalty receivable are reflected in the Company's Consolidated Balance Sheet as Amounts due from corporate partners and the cash flows associated with such revenues are classified in the Company's Consolidated Statements of Cash Flows as operating activities.

(h)

Foreign Currency Transactions

        Gains and losses from foreign currency transactions, such as those resulting from the translation and settlement of receivables and payables denominated in foreign currencies, are included in the

F-10

IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(2) Summary of Significant Accounting Policies (Continued)

Consolidated Statements of Income. The Company does not currently use derivative financial instruments to manage the risks associated with foreign currency fluctuations. The Company recorded gains on foreign currency transactions of approximately $20,000 for the year ended December 31, 2005, and losses on foreign currency transactions of approximately $213,000 and $10,000 for the years ended December 31, 2007 and 2006, respectively. Gains and losses from foreign currency transactions are included as a component of operating expenses.

(i)

Share-Based Compensation Plans

        The Company has three types of share-based compensation plans: stock incentive plans, an employee stock purchase plan, and effective as of January 1, 2006, a retention plan. On January 1, 2006, the Company adopted FASB Statement No. 123 (revised 2004), "Share-Based Payment" ("SFAS 123R") using the modified prospective transition method. Under this method, prior periods are not revised for comparative purposes and the Company recognizes compensation cost using a fair-value based method for all share-based payments granted after December 31, 2005, plus any awards granted to employees prior to December 31, 2005 that remain unvested at that time. Prior to January 1, 2006, the Company accounted for its share-based compensation plans in accordance with the provisions of Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued to Employees" (APB No. 25), and related interpretations including FASB Interpretation No. 44, "Accounting for Certain Transactions Involving Stock Compensation—An Interpretation of APB Opinion No. 25" (FIN 44). On November 10, 2005, the FASB issued FASB Staff Position No. FAS123(R)-3, "Transition Election Related to Accounting for Tax Effects of Share-Based Payment Awards." The Company has elected to adopt the alternative transition method provided in this FASB Staff Position for purposes of calculating the pool of excess tax benefits available to absorb tax deficiencies recognized subsequent to the adoption of SFAS 123R.

(j)

Research and Development Expenses

        This expense line now includes the Company's clinical and regulatory expenses for all periods, which had previously been reported separately. Research and development expenses are comprised of the following types of costs: salaries and benefits, allocated overhead and occupancy costs, clinical trial and related clinical manufacturing costs, contract services and other outside costs. These expenses also include costs related to activities performed on behalf of corporate partners that are subject to reimbursement. Research and development, including clinical and regulatory costs are expensed as incurred. The Company is producing clinical and commercial grade ERBITUX in its BB36 and BB50 manufacturing facilities. Prior to the receipt of approval of ERBITUX for commercial sale on February 12, 2004, the Company had expensed all costs associated with the production of ERBITUX to research and development expense.

(k)

Interest

        Interest costs are expensed as incurred, except to the extent such interest is related to construction in progress, in which case interest is capitalized. Interest costs capitalized for the years ended December 31, 2007, 2006 and 2005 were approximately $19,000, $2.6 million, and $5.4 million, respectively. Interest expense includes the amortization of deferred financing costs associated with the Company's 1³/8% convertible senior notes.

F-11

IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(2) Summary of Significant Accounting Policies (Continued)

(l)

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. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income or expense in the period that includes the enactment date of the rate change.

(m)

Use of Estimates

        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 U.S. generally accepted accounting principles. Actual results could differ materially from those estimates.

(n)

Earnings 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; (2) the conversion of convertible debt which is calculated using an "if-converted" basis; and (3) the dilutive effect of restricted stock units (RSU) which is calculated under 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. 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. 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 additional paid-in capital, if any, are assumed to be used to repurchase shares in the current period.

(o)

Comprehensive Income (Loss)

        Comprehensive income (loss) consists of net income and net unrealized gains (losses) on securities and is presented in the Consolidated Statements of Stockholders' Equity. The tax (provision) benefit on the items included in Other comprehensive income (loss), assuming they were recognized in income, would be approximately $17.6 million, $(772,000) and $108,000 for the years ended December 31, 2007, 2006 and 2005, respectively.

F-12

IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(2) Summary of Significant Accounting Policies (Continued)

(p)

Legal Defense Costs

        Legal defense costs are expensed as incurred.

(q)

Impact of Recent Accounting Pronouncements

        In September 2006, the 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 generally accepted accounting principles, and expands disclosure about fair value measurements. With the exception of certain provisions that have been deferred for an additional year, SFAS 157 is effective for fiscal years beginning after November 15, 2007. The Company does not anticipate that the adoption of SFAS 157 will have a material impact on its financial statements.

        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 does not anticipate that the adoption of SFAS 159 will have a material impact on its financial statements.

        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 does not anticipate that the adoption of this consensus will have a material impact on its financial statements.

        In November 2007, the Emerging Issues Task Force reached a consensus on Issue No. 07-1, "Accounting for Collaborative Arrangements." This Issue establishes accounting for costs incurred and revenues generated on sales to third parties should be reported by partners to joint development agreements in each of their respective income statements, how sharing payments made to or received by a partner pursuant to a collaboration arrangement should be presented in the income statement, and disclosures related to the combined sales and expenses of the partners to a collaboration arrangement that are used to compute the payments made/received. This Issue will be effective for fiscal years beginning after December 15, 2008, and earlier adoption is not permitted. This consensus is to be applied prospectively for new collaborative arrangement entered into after that date and the modified retrospective method that requires reclassification in all periods presented for collaborative arrangements existing at the date of adoption. The Company is currently evaluating the potential impact of this consensus on its financial statements.

(r)

Reclassification

        Certain previously reported amounts have been reclassified to conform to the current year's presentation. Clinical and regulatory expenses that were previously reported separately in the Consolidated Statements of Income for the years ended December 31, 2006 and 2005, have been included within Research and development expenses. Certain administrative expenses of approximately

F-13

IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(2) Summary of Significant Accounting Policies (Continued)

$3.6 million, and $4.0 million for years ended December 31, 2006, and 2005, respectively, that were previously reported within Research and development expenses have been reclassified to Selling, general and administrative expenses.

(3) Securities Available for Sale

        Securities available for sale by major security type at December 31, 2007 and 2006 were as follows: (in thousands)

December 31, 2007	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Fair Value
Asset-backed securities	$	250,068	$	527	$	(248	)	$	250,347
Foreign corporate debt		1,800		5		—			1,805
Auction rate securities		168,820		—		(40,159	)		128,661
Equity securities		43,585		—		(10,804	)		32,781
Total securities available for sale	$	464,273	$	532	$	(51,211	)	$	413,594

December 31, 2006	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Fair Value
Asset-backed securities	$	397,400	$	—	$	(5,062	)	$	392,338
Foreign corporate debt		1,802		—		(1	)		1,801
Auction rate securities		629,470		—		—			629,470
Total securities available for sale	$	1,028,672	$	—	$	(5,063	)	$	1,023,609

        Unrealized loss positions for which other-than-temporary impairments have not been recognized at December 31, 2007 and 2006, are summarized below (in thousands):

	Less Than 12 Months					12 Months or Greater					Total
December 31, 2007	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Asset-backed securities	$	10,000	$	(37	)	$	99,789	$	(211	)	$	109,789	$	(248	)
Auction rate securities		109,060		(40,159	)		—		—			109,060		(40,159	)
Equity securities		32,781		(10,804	)		—		—			32,781		(10,804	)
Total	$	151,841	$	(51,000	)	$	99,789	$	(211	)	$	251,630	$	(51,211	)

	Less Than 12 Months					12 Months or Greater					Total
December 31, 2006	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Asset-backed securities	$	210,374	$	(2,026	)	$	181,964	$	(3,036	)	$	392,338	$	(5,062	)
Foreign corporate debt		—		—			1,801		(1	)		1,801		(1	)
Total	$	210,374	$	(2,026	)	$	183,765	$	(3,037	)	$	394,139	$	(5,063	)

        Unrealized losses relating to asset-backed securities are primarily due to increases in interest rates. As of December 31, 2007, the Company has $168.8 million of principal invested in auction rate

F-14

IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(3) Securities Available for Sale (Continued)

securities (ARS) with long-term nominal maturities for which interest rates are reset through a dutch-auction each month. These monthly auctions have historically provided a liquid market for these securities. The Company's investments in ARS all currently have AAA/Aaa credit ratings and interest continues to be paid by the issuers of the securities. The Company's investments in ARS represent interests in synthetic collateralized debt obligations referencing portfolios of corporate bonds. The Company does not have any investments which are backed by sub-prime mortgages. As a result of the liquidity issues experienced in the global credit and capital markets, certain of the ARS, which were primarily underwritten by one investment bank, with a total principal value of $149.2 million held by the Company at December 31, 2007, have experienced multiple failed auctions since August 2007. The estimated fair market value at December 31, 2007 of the Company's ARS with continuing auction failures totaled approximately $109.0 million based on indicative prices from the investment bank, which reflects unrealized losses of $40.2 million. As of February 27, 2008, the unrealized losses on these securities increased from approximately $40.2 million to approximately $65.8 million due to the continuing liquidity issues in the global credit and capital markets. Because the Company has the ability and intent to hold these investments until recovery of fair value, which may be maturity, it does not consider these investments to be other-than-temporarily impaired as of December 31, 2007. The estimated fair value of these auction rate securities of $109.0 million at December 31, 2007 has been classified as a long-term investment in the Company's Consolidated Balance Sheet given that these securities are illiquid until there is a successful auction for them, the timing of which is not knowable at this time.

        The Company evaluated its unrealized loss position on its equity securities and determined that it does not consider this decrease in value to be other-than-temporary. In making this determination the Company considered a number of factors, including the nature of the investment, the cause of the decline in fair value, the severity and duration of the decline in fair value, the financial position and prospects of the company whose securities are held, analyst reports, as well as other factors. The fair value of the Company's equity securities was determined using the December 31, 2007 closing market price of the securities.

        Maturities of fixed and variable rate debt securities classified as available for sale were as follows at December 31, 2007: (in thousands)

	Amortized Cost		Fair Value
2008	$	116,811	$	116,659
2009		55,000		55,034
2010		70,045		70,381
2011		—		—
2012		10,012		10,078
2013 and thereafter		168,820		128,661
	$	420,688	$	380,813

        Gross realized gains included in income in the years ended December 31, 2007, 2006 and 2005 were approximately $0, $0 and $3,000, respectively, and gross realized losses included in income in the years ended December 31, 2007, 2006 and 2005 were approximately $0, $0 and $16,000, respectively. These gains and losses were determined on a specific identification basis. Interest rates on certain

F-15

IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(3) Securities Available for Sale (Continued)

securities are adjusted monthly, quarterly or semi-annually, depending on the instrument, using prevailing interest rates. All holdings are denominated in U.S. currency.

(4) Inventories

        Inventories consist of the following: (in thousands)

		December 31, 2007		December 31, 2006
Raw materials and supplies		$	19,357	$	17,818
Work in process			79,859		79,048
Finished goods			16,937		5,349
	Total	$	116,153	$	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 FDA for the manufacture of ERBITUX in BB50, and therefore is now able to sell the ERBITUX inventory produced in BB50. In July 2007, the Company transitioned its BB50 plant from the production of ERBITUX to the production of pipeline products and has expensed the cost of manufacturing these products as Research and development expense.

(5) Property, Plant and Equipment

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

			December 31, 2007			December 31, 2006
Land			$	4,899		$	4,899
Building				283,415			281,556
Leasehold improvements				24,369			14,595
Machinery and equipment				176,109			164,869
Furniture and fixtures				7,016			6,368
Construction in progress				27,237			45,924
		Total cost		523,045			518,211
Less accumulated depreciation				(125,363	)		(95,211	)
	Property, plant and equipment, net		$	397,682		$	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 Income for the year ended December 31, 2007. The Company is in the process of evaluating alternative uses for this facility.

        The process of preparing consolidated financial statements in accordance with U.S. generally accepted accounting principles 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. Based on management's current estimates, the Company expects to recover the carrying value of such assets.

F-16

IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(6) Accrued Expenses

        The following items are included in accrued expenses: (in thousands)

	December 31, 2007		December 31, 2006
Salaries and employee benefits	$	18,309	$	13,964
Research and development contract services		6,841		23,802
License fee and royalty expenses		26,701		21,159
Other		2,523		10,155
	$	54,374	$	69,080

(7) Withholding Tax Assets and Liability

        On March 14, 2006, the Company reached an agreement in principle with the IRS to resolve the employment tax audit related to the years 1999-2001, which included the Company's agreement to the imposition of an accuracy-related penalty under Section 6662 of the Internal Revenue Code. Under this agreement, the Company's liability to the IRS was calculated to be approximately $32.0 million. The Company had previously recorded a withholding tax liability of $18.1 million and a withholding tax asset of $274,000 in its consolidated Balance Sheet as of December 31, 2004. Based on the agreement in principle reached with the IRS, the Company eliminated the withholding tax asset of $274,000 and recorded an additional withholding tax liability of approximately $13.9 million, or a total of $32.0 million, in its consolidated Balance Sheet as of December 31, 2005. As a result, the Company recorded in the fourth quarter of 2005 a net withholding tax expense of approximately $14.2 million. On April 19, 2006, the Company signed an agreement with the IRS to resolve the employment tax audit. Pursuant to such agreement the Company paid approximately $28.7 million to the IRS on April 21, 2006, and on April 28, 2006, the Company paid the IRS approximately $3.1 million consisting of interest. The remaining $264,000 of excess withholding tax liability was reversed into income during the fourth quarter of 2006 after the Company had concluded that the payments were accepted by the IRS and the matter had been finalized.

(8) Long-Term Debt

        The Company's long-term debt was $600.0 million at December 31, 2007 and 2006.

        In May 2004, the Company completed a private placement of $600.0 million in convertible senior notes due 2024. The notes bear interest at 1³/8% per annum payable semi-annually. The Company received net proceeds from this offering of approximately $581.4 million. Holders may convert the notes into shares of the Company's common stock at a conversion rate of 10.5613 shares per $1,000 principal amount of notes which is equivalent to a conversion price of $94.69 per share, subject to adjustment, before the close of business on the business day immediately prior to May 15, 2024, subject to prior redemption or repurchase of the notes, only under the following circumstances: (1) on or prior to May 15, 2019, during any calendar quarter commencing after June 30, 2004, if the closing sale price of the Company's common stock exceeds 120% of the conversion price for at least 20 trading days in the 30 consecutive trading days ending on the last trading day of the preceding calendar quarter and after May 15, 2019, if the closing sale price of the Company's common stock exceeds 120% of the conversion price on the immediately preceding trading day; (2) during the five business day period after any five consecutive trading day period in which the trading price per note for each day of that period was less than 98% of the product of the closing sale price of the Company's common stock and the conversion rate; (3) if the notes have been called for redemption; or (4) upon the occurrence of certain

F-17

IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(8) Long-Term Debt (Continued)

corporate events. Beginning May 20, 2009, the Company may redeem all or any portion of the notes at a redemption price equal to 100% of the principal amount of the notes, plus accrued and unpaid interest. On May 15 of 2009, 2014 and 2019, or upon the occurrence of certain designated events, holders may require the Company to repurchase the notes at a repurchase price equal to 100% of the principal amount of the notes plus accrued and unpaid interest. The notes are unsubordinated unsecured debt and will rank on a parity with all of the Company's other existing and future unsubordinated unsecured debt and prior to all of the Company's existing and future subordinated debt. Deferred financing costs of approximately $18.6 million associated with the issuance of this debt are being amortized over five years.

        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 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 December 31, 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.

F-18

IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(9) Earnings Per Common Share

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

				Year Ended December 31,
				2007		2006		2005
EPS Numerator—Basic:
	Net income			$	39,799	$	370,674	$	86,496
EPS Denominator—Basic:
	Weighted-average number of shares of common stock outstanding				85,804		84,235		83,582
EPS Numerator—Diluted:
	Net income			$	39,799	$	370,674	$	86,496
	Adjustment for interest, net of amounts capitalized and income tax effect				—		7,557		6,484
		Net income, adjusted		$	39,799	$	378,231	$	92,980
EPS Denominator—Diluted:
	Weighted-average number of shares of common stock outstanding				85,804		84,235		83,582
	Effect of dilutive securities:
			Stock options		937		1,441		2,265
			Restricted stock units		71		—		—
			Convertible subordinated notes		—		6,336		6,336
	Dilutive potential common shares				1,008		7,777		8,601
	Weighted-average common shares and dilutive potential common shares				86,812		92,012		92,183
Basic earnings per common share				$	0.46	$	4.40	$	1.03
Diluted earnings per common share				$	0.46	$	4.11	$	1.01

        For the years ended December 31, 2007, 2006, and 2005, there were an aggregate of 8,471,000, 8,671,000 and 8,277,000, respectively, potential common shares related to share-based instruments, excluded from the diluted earnings per share computation, because their inclusion would have had an anti-dilutive effect. In 2007, there was an additional 6,336,000 potential common shares, which are attributable to the convertible subordinated notes, excluded from the diluted earnings per share computation because their inclusion would have had an anti-dilutive effect.

(10) Collaborative Agreements

(a)

Merck KGaA

        In April 1990, the Company entered into an agreement with Merck KGaA relating to the development and commercialization of BEC2 and the recombinant gp75 antigen. Under this agreement, the Company:

•

granted Merck KGaA a license, with the right to sublicense, to make, have made, use, sell, or have sold BEC2 and gp75 antigen outside the U.S. and Canada;



•

granted Merck KGaA a license, without the right to sublicense, to use, sell, or have sold, but not to make, BEC2 within the U.S. and Canada in conjunction with ImClone Systems;

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(10) Collaborative Agreements (Continued)

•

retained the rights, (1) without the right to sublicense, to make, have made, use, sell, or have sold BEC2 in the U.S. and Canada in conjunction with Merck KGaA and (2) with the right to sublicense, to make, have made, use, sell, or have sold gp75 antigen in the U.S. and Canada; and



•

was required to give Merck KGaA the opportunity to negotiate a license in the U.S. and Canada to gp75 antigen before granting such a license to any third party.

        In return, Merck KGaA:

•

made research support payments to us totaling $4.7 million;



•

was required to make milestone payments to us of up to $22.5 million, of which $5.0 million was received through December 31, 2005 based on milestones achieved in the product development of BEC2;



•

was required to make royalty payments to us on all sales of the licensed products outside the U.S. and Canada, if any, with a portion of the earlier funding received under the agreement being creditable against the amount of royalties due.

        Following an analysis of the results of various clinical studies involving BEC2 and work on the recombinant gp75 antigen, the Company and Merck KGaA determined to discontinue their further development and terminated the related agreement in the fourth quarter of 2005. Approximately $1.6 million of deferred revenue related to this agreement was recorded as revenue upon the cancellation of the contract. The Company incurred expenses of approximately $0, $0 and $19,000 for the years ended December 31, 2007, 2006 and 2005, respectively, related to this contract.

        In December 1998, the Company entered into a development and license agreement with Merck KGaA with respect to ERBITUX. In exchange for granting Merck KGaA exclusive rights to market ERBITUX outside of the U.S. and Canada and co-exclusive development rights in Japan, the Company received $30.0 million in up-front cash fees and early cash payments based on the achievement of defined milestones, all of which were received by December 31, 2001. An additional $30.0 million was received through December 31, 2004, based upon the achievement of further milestones for which Merck KGaA received equity in the Company. The equity interests underlying the milestone payments were priced at varying premiums to the then-market price of the common stock depending upon the timing of the achievement of the respective milestones.

        Merck KGaA pays the Company a royalty on its sales of ERBITUX outside of the U.S. and Canada. In August 2001, the Company and Merck KGaA amended this agreement to provide, among other things, that Merck KGaA may manufacture ERBITUX for supply in its territory and may utilize a third-party to do so upon the Company's reasonable acceptance. The amendment further released Merck KGaA from its obligations under the agreement relating to providing a guaranty under a $30.0 million credit facility relating to the build-out of BB36. In addition, the amendment provides that the companies have co-exclusive rights to ERBITUX in Japan, including the right to sublicense and Merck KGaA waived its right of first offer in the case of a proposed sublicense by the Company of ERBITUX in the Company's territory. In consideration for the amendment, the Company agreed to a reduction in royalties' payable by Merck KGaA on sales of ERBITUX in Merck KGaA's territory.

        In September 2002, the Company entered into a binding term sheet, effective as of April 15, 2002, for the supply of ERBITUX to Merck KGaA, which replaced previous supply arrangements. The term sheet provided for Merck KGaA to purchase bulk and finished ERBITUX ordered from the Company during the term of the December 1998 development and license agreement at a price equal to the

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(10) Collaborative Agreements (Continued)

Company's fully loaded cost of goods. The term sheet also provided for Merck KGaA to use reasonable efforts to enter into its own contract manufacturing agreements for supply of ERBITUX and obligates Merck KGaA to reimburse the Company for costs associated with transferring technology and any other services requested by Merck KGaA relating to establishing its own manufacturing or contract manufacturing capacity.

        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 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 performance period. In addition, Merck KGaA agreed to increase its fixed royalty to 9.5% on net sales of ERBITUX outside the U.S. and Canada, effective July 1, 2006. The agreements also promote freedom to operate in the development and commercialization of matuzumab outside the U.S. and Canada and of IMC-11F8 (a fully-human EGFR-targeted IgG1 monoclonal antibody being developed by ImClone Systems) within the U.S. and Canada through the granting of certain reciprocal rights, including the sharing of confidential technical information. This is in addition to the exclusive rights held by the Company to develop and commercialize IMC-11F8 outside of the U.S. and Canada. The agreements do not extend to key intellectual property rights in the U.S. and Canada, where the Company and its partner BMS continue to hold exclusive licenses to key patents covering certain uses of EGFR-targeted monoclonal antibodies. The Company has a liability due Merck KGaA of approximately $2.2 million and $58,000 as of December 31, 2007 and 2006, respectively.

(b)

Bristol-Myers Squibb Company

        On September 19, 2001, the Company entered into an acquisition agreement (the "Acquisition Agreement") with BMS and Bristol-Myers Squibb Biologics Company, a Delaware corporation (BMS Biologics), which is a wholly-owned subsidiary of BMS, providing for the tender offer by BMS Biologics to purchase up to 14,392,003 shares of the Company's common stock for $70.00 per share, net to the seller in cash. In connection with the Acquisition Agreement, the Company entered into a stockholder agreement with BMS and BMS Biologics, dated as of September 19, 2001 (the "Stockholder Agreement"), pursuant to which all parties agreed to various arrangements regarding the respective rights and obligations of each party with respect to, among other things, the ownership of shares of the Company's common stock by BMS and BMS Biologics. Concurrent with the execution of the Acquisition Agreement and the Stockholder Agreement, the Company entered into the Commercial Agreement with BMS and E.R. Squibb, relating to ERBITUX, pursuant to which, among other things, BMS and E.R. Squibb are co-developing and co-promoting ERBITUX in the U.S. and Canada with the Company, and are co-developing and co-promoting ERBITUX in Japan with the Company and either together or co-exclusively with Merck KGaA.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(10) Collaborative Agreements (Continued)

        On March 5, 2002, the Company amended the Commercial Agreement with E.R. Squibb and BMS. The amendment changed certain economics of the Commercial Agreement and expanded the clinical and strategic roles of BMS in the ERBITUX development program. One of the principal economic changes to the Commercial Agreement was that the Company received payments of $140.0 million on March 7, 2002, and $60.0 million on March 5, 2003. Such payments were in lieu of the $300.0 million milestone payment the Company would have received upon acceptance by the FDA of the ERBITUX BLA under the original terms of the Commercial Agreement.

        On July 27, 2007, the Company and BMS amended the terms of their commercial agreement for the co-development and co-promotion of ERBITUX in the U.S. and Canada (the "BMS Amendment"). Under the BMS Amendment, the companies have jointly agreed to expand the investment in the ongoing clinical development plan for ERBITUX. 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 and other costs, up to threshold amounts, are the sole responsibility of BMS, with costs in excess of the thresholds shared by both companies according to a predetermined ratio effective January 1, 2007. The terms of the Commercial Agreement, as amended on July 27, 2007, are set forth in more detail below.

Commercial Agreement

        Rights Granted to E.R. Squibb—Pursuant to the Commercial Agreement, as amended on March 5, 2002, the Company granted to E.R. Squibb (1) the exclusive right to distribute, and the co-exclusive right to develop and promote (together with the Company) any prescription pharmaceutical product using the compound ERBITUX (the "product") in the U.S. and Canada, (2) the co-exclusive right to develop, distribute and promote (together with the Company and together or co-exclusively with Merck KGaA and its affiliates) the product in Japan, and (3) the non-exclusive right to use the Company's registered trademarks for the product in the U.S., Canada and Japan (collectively, the "territory") in connection with the foregoing. In addition, the Company agreed not to grant any right or license to any third party, or otherwise permit any third party, to develop ERBITUX for animal health or any other application outside the human health field without the prior consent of E.R. Squibb (which consent may not be unreasonably withheld).

        Rights Granted to the Company—Pursuant to the Commercial Agreement, E.R. Squibb has granted to the Company and the Company's affiliates a license, without the right to grant sublicenses (other than to Merck KGaA and its affiliates for use in Japan and to any third party for use outside the territory), to use solely for the purpose of developing, using, manufacturing, promoting, distributing and selling ERBITUX or the product, any process, know-how or other invention developed solely by E.R. Squibb or BMS that has general utility in connection with other products or compounds in addition to ERBITUX or the product ("E.R. Squibb Inventions").

        Up-Front and Milestone Payments—The Commercial Agreement provided for up-front and milestone payments by E.R. Squibb to the Company of $900.0 million in the aggregate, of which $200.0 million was paid on September 19, 2001, $140.0 million was paid on March 7, 2002, $60.0 million was paid on March 5, 2003, $250.0 million was paid on March 12, 2004, and $250.0 million was paid on March 31, 2006, as a result of obtaining FDA approval on March 1, 2006 of

F-22

IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(10) Collaborative Agreements (Continued)

ERBITUX for use in the treatment of SCCHN. All such payments are non-refundable and non-creditable.

        Distribution Fees—The Commercial Agreement provides that E.R. Squibb shall pay the Company distribution fees based on a percentage of "annual net sales" of the product (as defined in the Commercial Agreement) by E.R. Squibb in the U.S. and Canada. The distribution fee is 39% of net sales in the U.S. and Canada. The Commercial Agreement also provides that, as between BMS and ImClone Systems, the distribution fees for the sale of product in Japan by E.R. Squibb or ImClone Systems shall be equal to 50% of the operating profit or loss to such sales in any calendar month.

        Development of the Product—Responsibilities associated with clinical and other ongoing studies are apportioned between the parties as determined by the product development committee described below. The Commercial Agreement provides for the establishment of clinical development plans setting forth the activities to be undertaken by the parties for the purpose of obtaining marketing approvals, providing market support and developing new indications and formulations of the product. After transition of responsibilities for certain clinical and other studies, each party is primarily responsible for performing the studies designated to it in the clinical development plans. In the U.S. and Canada, the Commercial Agreement, prior to the BMS Amendment, provided that E.R. Squibb was responsible for 100% of the cost of all clinical studies other than those studies undertaken post-launch which were not pursuant to an IND (e.g. Phase IV studies), the cost of which was to be shared equally between E.R. Squibb and ImClone Systems. As between E.R. Squibb and ImClone Systems, each was responsible for 50% of the costs of all studies in Japan. As a result of the BMS Amendment, clinical development costs in the U.S. and Canada, up to threshold amounts, will be the sole responsibility of E.R. Squibb with costs in excess of the threshold amounts shared by E.R. Squibb and the Company according to a pre-determined ratio. In addition, under certain limited circumstances, the Company reserves the right to conduct certain sole-funded registrational studies. In addition, prior to the BMS Amendment, to the extent that in 2005 and 2006 the Company and BMS exceed the contractual maximum registrational costs for clinical development, the Company agreed to share such cost with BMS. The Company has incurred approximately $3.8 million, $20.8 million and $19.9 million pursuant to such cost sharing for the years ended December 31, 2007, 2006 and 2005, respectively. The Company has also incurred approximately $2.3 million, $3.1 million and $1.4 million for the years ended December 31, 2007, 2006 and 2005, respectively, related to the agreement with respect to development in Japan. Except as otherwise agreed upon by the parties, the Company will own all registrations for the product and is primarily responsible for the regulatory activities leading to registration in each country. E.R. Squibb will be primarily responsible for the regulatory activities in each country after the product has been registered in that country. Pursuant to the terms of the Commercial Agreement, as amended, Andrew R.J. Bonfield,, Chief Financial Officer of BMS, and a member of the Company's Board of Directors, is entitled to oversee the implementation of the clinical and regulatory plan for ERBITUX.

        Distribution and Promotion of the Product—Pursuant to the Commercial Agreement, E.R. Squibb has agreed to use all commercially reasonable efforts to launch, promote and sell the product in the territory with the objective of maximizing the sales potential of the product and promoting the therapeutic profile and benefits of the product in the most commercially beneficial manner. In connection with its responsibilities for distribution, marketing and sales of the product in the territory, E.R. Squibb is performing all relevant functions, including but not limited to the provision of sales

F-23

IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(10) Collaborative Agreements (Continued)

force personnel, marketing (including advertising and promotional expenditures), reimbursement support, warehousing and physical distribution of the product.

        However, the Company has the right, at its election and sole expense, to co-promote with E.R. Squibb the product in the territory. Pursuant to this co-promotion option, which the Company has exercised, the Company is entitled on and after April 11, 2002 (at the Company's sole expense) to have the Company's field organization participate in the promotion of the product consistent with the marketing plan agreed upon by the parties, provided that E.R. Squibb retains the exclusive rights to sell and distribute the product. Except for the Company's expenses incurred pursuant to the co-promotion option, E.R. Squibb is responsible for 100% of the distribution, sales and marketing costs in the U.S. and Canada, and as between E.R. Squibb and ImClone Systems, each is responsible for 50% of the distribution, sales, marketing costs and other related costs and expenses in Japan. The Company established a sales force to maximize the potential commercial opportunities for ERBITUX and to serve as a foundation for the marketing of future products derived either from within the Company's pipeline or through business development opportunities.

        Manufacture and Supply—The Commercial Agreement provides that the Company is responsible for the manufacture and supply of all requirements of ERBITUX in bulk form active pharmaceutical ingredient (API) for clinical and commercial use in the territory, and that E.R. Squibb will purchase all of its requirements of API for commercial use from the Company. The Company supplies API for clinical use at the Company's fully-burdened manufacturing cost, and supplies API for commercial use at the Company's fully-burdened manufacturing cost plus a mark-up of 10%. The agreement also specifies that the Company should use reasonable efforts to reduce the fully burdened manufacturing cost of producing bulk ERBITUX over time. Specifically, beginning with 2006 production of bulk ERBITUX, the agreement provides that the cost of API should not exceed a predetermined price per gram. Any excess over such amount will be shared equally by the Company and BMS.

        Upon the expiration, termination or assignment of any existing agreements between ImClone Systems and third party manufacturers, E.R. Squibb will be responsible for processing API into the finished form of the product. Sales of ERBITUX to BMS for commercial use are reflected in the Company's Consolidated Statements of Income as Manufacturing revenue.

        Management—The parties have formed the following committees for purposes of managing their relationship and their respective rights and obligations under the Commercial Agreement:

•

a Joint Executive Committee (the "JEC"), which consists of certain senior officers of each party. The JEC is co-chaired by a representative of each of BMS and the Company. The JEC is responsible for, among other things, managing and overseeing the development and commercialization of ERBITUX pursuant to the terms of the Commercial Agreement, approving the annual budgets and multi-year expense forecasts, and resolving disputes, disagreements and deadlocks arising in the other committees;



•

a Product Development Committee (the "PDC"), which consists of members of senior management of each party with expertise in pharmaceutical drug development and/or marketing. The PDC is chaired by the Company's representative. The PDC is responsible for, among other things, managing and overseeing the development and implementation of the clinical development plans, comparing actual versus budgeted clinical development and regulatory expenses, and reviewing the progress of the registrational studies;

F-24

IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(10) Collaborative Agreements (Continued)

•

a Joint Commercialization Committee (the "JCC"), which consists of members of senior management of each party with clinical experience and expertise in marketing and sales. The JCC is chaired by a representative of BMS. The JCC is responsible for, among other things, overseeing the preparation and implementation of the marketing plans, coordinating the sales efforts of E.R. Squibb and the Company, and reviewing and approving the marketing and promotional plans for the product in the territory;



•

a Joint Manufacturing Committee (the "JMC"), which consists of members of senior management of each party with expertise in manufacturing. The JMC is chaired by the Company's representative (unless a determination is made that a long-term inability to supply API exists, in which case the JMC will be co-chaired by representatives of E.R. Squibb and the Company). The JMC is responsible for, among other things, overseeing and coordinating the manufacturing and supply of API and the product, and formulating and directing the manufacturing strategy for the product'



•

an Alliance Committee (the "AC"), which consists of the JEC co-chairs and one additional representative from each of BMS and the Company. The AC is responsible for reviewing any deadlocks in the JEC, the PDC, the JCC or the JMC that are referred to it and to make a recommendation to the referring committee as the appropriate resolution of the referred matter.

        Any matter that is the subject of a deadlock (i.e., no consensus decision) in the PDC, the JCC or the JMC will be referred first to the AC for its recommendation. If the AC is unable to agree on a recommendation or the deadlock continues despite the AC's recommendation, then the matter will be referred to the JEC for resolution. Deadlocks in the JEC may be referred to the AC if the JEC co-chairs unanimously agree and unless resolved in accordance with the AC's recommendation, such deadlock, subject to certain exceptions, will be resolved as follows: (1) if the matter was also the subject of a deadlock in the PDC, by the co-chairperson of the JEC designated by us, (2) if the matter was also the subject of a deadlock in the JCC, by the co-chairperson of the JEC designated by BMS, or (3) if the matter was also the subject of a deadlock in the JMC, by the co-chairperson of the JEC designated by us. Deadlocks relating to changes to previously approved clinical studies will generally be resolved by not making the proposed changes while deadlocks relating to the inclusion of new proposed studies will generally be resolved by not including the proposed study. All other deadlocks in the JEC will be resolved by arbitration.

        Restriction on Competing Products—During the period from the date of the Commercial Agreement until September 19, 2008, the parties have agreed not to, directly or indirectly, develop or commercialize a competing product (defined as a product that has as its only mechanism of action an antagonism of the EGFR) in any country in the territory. In the event that any party proposes to commercialize a competing product or purchases or otherwise takes control of a third party which has developed or commercialized a competing product, then such party must either divest the competing product within 12 months or offer the other party the right to participate in the commercialization and development of the competing product on a 50/50 basis (provided that if the parties cannot reach agreement with respect to such an agreement, the competing product must be divested within 12 months).

        Ownership—The Commercial Agreement provides that the Company owns all data and information concerning ERBITUX and the product and (except for the E.R. Squibb Inventions) all processes,

F-25

IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(10) Collaborative Agreements (Continued)

know-how and other inventions relating to the product and developed by either party or jointly by the parties. E.R. Squibb, however, has the right to use all such data and information, and all such processes, know-how or other inventions, in order to fulfill its obligations under the Commercial Agreement.

        Product Recalls—If E.R. Squibb is required by any regulatory authority to recall the product in any country in the territory (or if the JCC determines such a recall to be appropriate), then E.R. Squibb and ImClone Systems shall bear the costs and expenses associated with such a recall (1) in the U.S. and Canada, in the proportion of 39% for ImClone Systems and 61% for E.R. Squibb and (2) in Japan, in the proportion for which each party is entitled to receive operating profit or loss (unless, in the territory, the predominant cause for such a recall is the fault of either party, in which case all such costs and expenses shall be borne by such party).

        Mandatory Transfer—Each of BMS and E.R. Squibb has agreed under the Commercial Agreement that in the event it sells or otherwise transfers all or substantially all of its pharmaceutical business or pharmaceutical oncology business, it must also transfer to the transferee its rights and obligations under the Commercial Agreement.

        Indemnification—Pursuant to the Commercial Agreement, each party has agreed to indemnify the other for (1) its negligence, recklessness or wrongful intentional acts or omissions, (2) its failure to perform certain of its obligations under the agreement, and (3) any breach of its representations and warranties under the agreement.

        Termination—Unless earlier terminated pursuant to the termination rights discussed below, the Commercial Agreement expires with regard to the product in each country in the territory on the later of September 19, 2018 and the date on which the sale of the product ceases to be covered by a validly issued or pending patent in such country. The Commercial Agreement may also be terminated prior to such expiration as follows:

•

by either party, in the event that the other party materially breaches any of its material obligations under the Commercial Agreement and has not cured such breach within 60 days after notice;



•

by E.R. Squibb, if the JEC determines that there exists a significant concern regarding a regulatory or patient safety issue that would seriously impact the long-term viability of all products.

Stockholder Agreement

        BMS received the right to nominate two directors to the Company's Board (each a "BMS director") so long as its ownership interest in ImClone Systems is 12.5% or greater. If BMS' ownership interest is 5% or greater but less than 12.5%, BMS will have the right to nominate one BMS director, and if BMS' ownership interest is less than 5%, BMS will have no right to nominate a BMS director. If the size of the Board is increased to a number greater than twelve, the number of BMS directors would be increased, subject to rounding, such that the number of BMS directors is proportionate to the lesser of BMS' then-current ownership interest and 19.9%. Notwithstanding the foregoing, BMS will have no right to nominate any BMS directors if (1) the Company has terminated the Commercial Agreement

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IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(10) Collaborative Agreements (Continued)

due to a material breach by BMS or (2) BMS' ownership interest were to remain below 5% for 45 consecutive days.

        Based on the number of shares of common stock acquired pursuant to the tender offer and the fact that we currently have ten directors, BMS has the right to nominate two directors. BMS designated Andrew R.J. Bonfield, BMS' Chief Financial Officer, as one of the BMS directors. The nomination of Mr. Bonfield was approved by the Board on April 25, 2007, and Mr. Bonfield was subsequently elected as a director at the Company's 2007 Annual Meeting. On May 7, 2007, Andrew G. Bodnar, M.D., J.D., a BMS-appointed director resigned from the Company's Board of Directors. BMS has not designated a second individual to serve as its nominee.

        Voting of Shares—During the period in which BMS has the right to nominate up to two BMS directors, BMS and its affiliates are required to vote all of their shares in the same proportion as the votes cast by all of the Company's other stockholders with respect to the election or removal of non-BMS directors.

        Committees of the Board of Directors—During the period in which BMS has the right to nominate up to two BMS directors, BMS also has the right, subject to certain exceptions and limitations, to have one member of each committee of the Board be a BMS director. In order to maintain independence of the Audit, Nominating and Corporate Governance, and Compensation Committees, no BMS director is serving on these committees.

        Transfers of Shares—Neither BMS nor any of its affiliates may transfer any shares or enter into any arrangement that transfers any of the economic consequences associated with the ownership of shares, except (1) pursuant to registration rights granted to BMS with respect to the shares, (2) pursuant to Rule 144 under the Securities Act of 1933, as amended or (3) for certain hedging transactions. Any such transfer is subject to the following limitations: (1) the transferee may not acquire beneficial ownership of more than 5% of the then-outstanding shares of common stock; (2) no more than 10% of the total outstanding shares of common stock may be sold in any one registered underwritten public offering; and (3) neither BMS nor any of its affiliates may transfer shares of common stock (except for registered firm commitment underwritten public offerings pursuant to the registration rights described below) or enter into hedging transactions in any twelve-month period that would, individually or in the aggregate, have the effect of reducing the economic exposure of BMS and its affiliates by the equivalent of more than 10% of the maximum number of shares of common stock owned by BMS and its affiliates at any time after September 19, 2001. Notwithstanding the foregoing, BMS Biologics may transfer all, but not less than all, of the shares of common stock owned by it to BMS or to E.R. Squibb or another wholly-owned subsidiary of BMS.

        Registration Rights—The Company granted BMS customary registration rights with respect to shares of common stock owned by BMS or any of its affiliates.

(c)

Collaborations Relating to the Japanese Market

        Pursuant to the Commercial Agreement and our agreement with Merck KGaA, we had granted E.R. Squibb and Merck KGaA co-exclusive rights (together or without the Company) to develop, distribute and promote ERBITUX in Japan. Subsequently, on October 12, 2007, the Company entered into agreements with Merck KGaA, Merck Serono Japan Company, Limited, E.R. Squibb, Bristol-Myers K.K., and BMS for the co-development and co-commercialization of ERBITUX in Japan. Under

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IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(10) Collaborative Agreements (Continued)

the terms of the agreements, the Company, BMS, Merck KGaA, and respective affiliates 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 this 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 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 reflects 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.

(d)

UCB S.A.

        In August 2005, the Company entered into a Collaboration and License Agreement with UCB S.A. (UCB), a company registered in Belgium, for the development and commercialization of CDP-791, UCB's novel, investigational PEGylated di-Fab antibody targeting the vascular endothelial growth factor receptor-2 (VEGFR-2). No upfront or milestone payments were payable under the Agreement. In the first quarter of 2007, the Company terminated this agreement with UCB, largely due to substantial progress made in the development of IMC-1121B and agreed to pay UCB $450,000 as settlement of all previous amounts due related to expenses associated with the co-development activities under the agreement. As part of this settlement, the Company will receive a single-digit royalty on net sales worldwide upon commercialization of such indications. The Company had recorded as of December 31, 2005, an expense of $2.5 million in its financial statements related to the agreement. As a result of the termination of this contract, the Company reversed approximately $2.0 million in 2006 of previously expensed amounts. The Company had a liability due to UCB of $0 and $450,000 as of December 31, 2007 and 2006, respectively.

Collaborative Agreement Tables

        Royalty revenue consists of the following: (in thousands)

		Year Ended December 31,
		2007		2006		2005
BMS—ERBITUX		$	269,771	$	254,359	$	161,116
Merck KGaA—ERBITUX			62,324		35,971		16,229
Other			87		269		95
	Total royalties	$	332,182	$	290,599	$	177,440

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IMCLONE SYSTEMS INCORPORATED

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(10) Collaborative Agreements (Continued)

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

		Year Ended December 31,
		2007		2006		2005
BMS—ERBITUX		$	102,138	$	231,921	$	94,232
Merck KGaA—ERBITUX and BEC2			772		348		3,007
	Total license fees and milestones	$	102,910	$	232,269	$	97,239

        Manufacturing revenue consists of the following: (in thousands)

		Year Ended December 31,
		2007		2006		2005
BMS—ERBITUX		$	77,675	$	82,428	$	44,090
Merck KGaA—ERBITUX			7,434		4,048		—
	Total manufacturing	$	85,109	$	86,476	$	44,090

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

			Year Ended December 31,
			2007		2006		2005
BMS—ERBITUX:
	Drug supplied for clinical trials		$	10,602	$	8,026	$	8,926
	Clinical and regulatory expenses			18,545		12,424		13,748
	Selling, general and administrative expenses			1,183		1,093		1,594
	Royalty expenses			17,293		29,349		18,591
		Total BMS		47,623		50,892		42,859
Merck KGaA—ERBITUX:
	Drug supplied for clinical trials			12,844		11,468		18,455
	Clinical and regulatory expenses			—		—		928
	Selling, general and administrative expenses			120		110		358
	Royalty expenses			9,445		6,018		2,292
		Total Merck KGaA		22,409		17,596		22,033
Other				600		15		12
	Total collaborative agreement reimbursements		$	70,632	$	68,503	$	64,904

        Amounts due from corporate partners in the table below are net of allowance for doubtful accounts in 2007, 2006 and 2005 of $0. There were no write-offs of amounts due from corporate partners in 2007 or 2006 and no additions to the allowance in 2007, 2006 or 2005. In 2005, amounts

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IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(10) Collaborative Agreements (Continued)

due from corporate partners of $430 were written-off against an allowance that was established in 2004. All amounts including the table below are in thousands:

		December 31, 2007		December 31, 2006
BMS—ERBITUX		$	74,326	$	64,991
Merck KGaA—ERBITUX			21,512		13,039
	Total amounts due from corporate partners	$	95,838	$	78,030

        Deferred revenue consists of the following: (in thousands)

		December 31, 2007			December 31, 2006
BMS—ERBITUX commercial agreement		$	272,078		$	374,215
Merck KGaA—ERBITUX development and license agreement			11,709			5,662
	Total deferred revenue		283,787			379,877
Less: current portion			(107,182	)		(142,013	)
	Total long-term deferred revenue	$	176,605		$	237,864

(11) Stockholder' Equity

(a) Common Stock

        The Company is authorized to issue 200,000,000 shares of common stock.

(b) Stockholder Rights Plan

        On February 15, 2002, the Company's Board of Directors approved a Stockholder Rights Plan and declared a dividend of one right for each share of the Company's common stock outstanding at the close of business on February 19, 2002. In connection with the Board of Directors' approval of the Stockholders Rights Plan Series B Participating Cumulative Preferred Stock was created. Under certain conditions, each right entitles the holder to purchase from the Company one-hundredth of a share of Series B Participating Cumulative Preferred Stock at an initial purchase price of $175 per share. The Stockholder Rights Plan is designed to enhance the Board's ability to protect stockholders against, among other things, unsolicited attempts to acquire control of the Company which do not offer an adequate price to all of the Company's stockholders or are otherwise not in the best interests of the Company and the Company's stockholders.

        Subject to certain exceptions, rights become exercisable (i) on the tenth day after public announcement that any person, entity, or group of persons or entities has acquired ownership of 19.9% or more of the Company's outstanding common stock, or (ii) 10 business days following the commencement of a tender offer or exchange offer, other than certain qualifying tender offers, by any person which would, if consummated, result in such person acquiring ownership of 19.9% or more of the Company's outstanding common stock, (collectively an "Acquiring Person").

        In such event, each right holder (other than the Acquiring Person and its affiliates) will have the right to receive the number of shares of common stock having a then-current market value equal to two times the aggregate exercise price of such rights. If the Company were to enter into certain

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IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(11) Stockholder' Equity (Continued)

business combination or disposition transactions with an Acquiring Person, each right holder will have the right to receive shares of common stock of the acquiring company having a value equal to two times the aggregate exercise price of the rights.

        The Company may redeem these rights in whole at a price of $0.001 per right. The rights expire on February 15, 2012.

(c) 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 an obligation under his employment agreement to purchase $500,000 worth of Company common stock within three months of his commencement of employment.

        On September 19, 2005, the Company announced the approval by the Board of Directors of a stock repurchase program permitting the repurchase of up to $100.0 million in aggregate principal amount of outstanding shares of the Company's common stock during a two year period. The stock repurchase program was to be employed for general corporate purposes, including offsetting dilution resulting from future grants of stock options or other dilutive incentive compensation granted to the Company's employees and directors. Stock repurchases under the program could be made through open market or privately negotiated transactions at such times and in such amounts as the Company deems appropriate, based on a variety of factors such as price, corporate and regulatory requirements and overall market conditions. The stock repurchase program could be limited or terminated at any time without prior notice. As of December 31, 2006 the Company had repurchased 811,416 shares at an average price of $30.62 per share for aggregate consideration of approximately $24.8 million under the program. No additional shares were repurchased during 2007. The two year period approved by the Board of Directors on September 19, 2005 has now expired.

(d) Share-Based Compensation Plans

        The Company has three types of share-based compensation plans: stock incentive plans, an employee stock purchase plan and, effective as of January 1, 2006, a retention plan.

Stock Incentive Plans

        In February 1996, the Company's Board of Directors adopted and the shareholders thereafter approved an Incentive Stock Option Plan and Non-Qualified Stock Option Plan (the "96 Plans"). In May 1998, the Company's Board of Directors adopted an additional Non-Qualified Stock Option Plan (the "98 Plan"), which shareholders were not required to approve. On June 11, 2002, the shareholders approved and the Company adopted the 2002 Stock Option Plan (the "02 Plan"). Effective with the adoption of the 02 Plan, the Company will not award new grants from the 96 Plans or the 98 Plan. The 02 Plan provides for the granting of both incentive stock options and non-qualified stock options to purchase, subject to adjustment under the plan, 3,300,000 shares of the Company's common stock to employees, directors, consultants and advisors of the Company. Any common stock subject to an option which is cancelled, forfeited or expires prior to exercise whether such option was granted under this plan or the 96 Plans or the 98 Plan, shall again become available for grant under the 02 Plan. Options granted under the 02 Plan become fully vested and exercisable upon the occurrence of a change in

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IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(11) Stockholder' Equity (Continued)

control, as defined. Incentive stock options granted under the 02 Plan may not exceed 825,000 shares of common stock, may not be granted at a price less than the fair market value of the stock at the date of grant and may not be granted to non-employees. In September 2003, the shareholders approved an amendment to the 02 Plan that increased the maximum total number of shares of common stock currently available for grant of options under the plan from 3,300,000 shares to 6,600,000 shares, and increased the number of shares of common stock with respect to which incentive stock options may be granted under the plan from 825,000 shares to 1,650,000 shares.

        In November 2001, the Board of Directors approved the amendment of the 96 Plans and the 98 Plan whereby upon the occurrence of a change in control, as defined in the amended plan documents, each outstanding option under the 96 Plans and the 98 Plan shall become fully vested and exercisable.

        On October 17, 2005, the Compensation Committee of the Board of Directors approved the adoption of a stock option plan for the sole purpose of making one-time grants of stock options to newly hired key employees who have not previously been employees or directors of the Company as an inducement to such persons entering into employment with the Company (the "Inducement Plan"), in accordance with NASDAQ Marketplace Rule 4350(i)(1)(A)(iv). The Inducement Plan permitted the Company to issue up to a total of 600,000 "inducement" options to eligible participants to purchase shares of common stock of the Company on terms and conditions set forth therein and in individual award agreements under the Inducement Plan, in each case on terms commensurate with options granted under the Company's 2002 Stock Option Plan. The Inducement Plan was cancelled on September 20, 2006.

        On September 20, 2006, the shareholders approved and the Company adopted the 2006 Stock Incentive Plan (the "06 Plan"). Under the 06 Plan, the Company has the ability to grant (i) stock options; (ii) stock appreciation rights; (iii) restricted stock awards; (iv) restricted stock unit awards (RSU); (v) performance awards; and (vi) other stock-based awards. Effective with the adoption of the 06 Plan, the Company will not award new grants from the 02 Plan. Any common stock option which is cancelled, forfeited or expires prior to exercise whether such option was granted under this plan, the 96 Plans, the 98 Plan or the 02 Plan, shall again become available for grant under the 06 Plan. Options granted under the 06 Plan generally vest over one-to-four-year periods and unless earlier terminated, and expire ten years from the date of grant. The aggregate number of shares of common stock that may be granted or used for reference purposes under the 06 Plan shall not exceed 5,500,000 shares plus common stock available for grant under prior plans. Any shares of common stock that are subject to awards of stock options or stock appreciation rights will be counted against this limit as one share for every share granted. Any shares of common stock that are subject to awards other than stock options or stock appreciation rights will be counted against this limit as two shares for every share granted.

        As of December 31, 2007, the number of remaining shares authorized and currently available for grant under plans discussed above is approximately 6,371,000. Incentive stock options may not be granted at a price less than the fair market value of the stock at the date of grant and may not be granted to non-employees. Options under all the plans, unless earlier terminated, expire ten years from the date of grant. Options granted under these plans generally vest over one-to-four-year periods.

        In September 2001, and in connection with the Board of Directors' approval of certain employment the Company granted options to purchase, in the aggregate, 2,450,000 shares of its common stock to its former President and Chief Executive Officer, Dr. Samuel D. Waksal, its then-current Chief Operating Officer, and now-former Chief Scientific Officer, Dr. Harlan W. Waksal

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IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(11) Stockholder' Equity (Continued)

and its then-current Senior Vice President, Finance, and Chief Financial Officer and former Chief Executive Officer, Daniel S. Lynch. The options have a per-share exercise price equal to $50.01, the last reported sale price of the common stock preceding the date Board of Director approval was obtained. The terms of the options granted to Dr. Samuel D. Waksal and Dr. Harlan W. Waksal provided that they vest in their entirety three years from the date of grant, but may vest earlier as to 33.33% of the shares if certain targets in the Company's common stock price were achieved. The options granted to Daniel S. Lynch vested equally over three years. In connection with the resignation of Dr. Samuel D. Waksal, and the associated May 24, 2002 Separation Agreement between the Company and Dr. Samuel D. Waksal, the Company amended Dr. Samuel D. Waksal's September 2001 stock option award such that the then unvested portion totaling 833,332 shares would vest immediately as of the date of termination. In December 2005, the Company and Dr. Samuel D. Waksal entered into a settlement agreement providing for the return to the Company of 416,667 of stock options that were previously issued to Dr. Samuel D. Waksal. Such options were returned to the Company and were cancelled as of December 31, 2005.

        The Company's employee stock option plans generally permit option holders to pay for the exercise price of stock options and any related income tax withholding with shares of the Company's common stock that have been held by the option holders for at least six months.

        During the years ended December 31, 2007, 2006 and 2005, the Company granted options to non-employee members of its Board of Directors to purchase 0, 310,000 and 255,000 shares, respectively, of its common stock. The annual grant of stock options to non-employee members of the Board of Directors vest quarterly, however if a Board member ceases to be a Director, the stock options vest pro rata up to the last day the Board member serves as a Director of the Company.

        On December 16, 2005, the Company's Board of Directors approved the acceleration of vesting of unvested stock options with exercise prices equal to or greater than $33.44 per share outstanding as of December 16, 2005 that had been previously awarded to Company employees and other eligible participants, including officers and non-employee directors. Options to purchase 2,805,169 shares of the Company's common stock were subject to this acceleration. Of this amount, 163,750 options were held by non-employee directors, with a weighted average exercise price of $45.00 per share, and 628,347 options were held by officers of the Company with a weighted average exercise price of $44.32 per share. The Board required each non-employee director and, as a condition to continued employment, each officer of the Company, to agree to refrain from selling, transferring, pledging or otherwise disposing of shares of Company common stock acquired upon any exercise of subject stock options (other than sales by such persons to fund the exercise price or to satisfy minimum statutory withholding on such exercise, each in accordance with the applicable Plan and the Company's existing policies and procedures) until the date on which the exercise would have been permitted under the stock option's pre-acceleration vesting terms or pursuant to the Company's Change-in-Control Plan or, if earlier, the officer's last day of employment with, or director's last day of service as a director of, the Company. The decision to accelerate vesting of these stock options, which were "out-of-the-money" was made primarily to minimize future compensation expense that the Company would otherwise have been required to recognize in its Consolidated Statements of Operations pursuant to FAS123R, which the Company adopted on January 1, 2006. The Company estimated at the time of the acceleration that the aggregate future expense that will be eliminated as a result of this acceleration of vesting was approximately $22.5 million in 2006 and $9.5 million in 2007.

F-33

IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(11) Stockholder' Equity (Continued)

Employee Stock Purchase Plan

        In April 1998, the Company's Board of Directors adopted the ImClone Systems Incorporated 1998 Employee Stock Purchase Plan (ESPP), subject to shareholders' approval, which was received in May 1998. This plan has a term of ten years and expires in May 2008. The Company plans to request approval for a new plan at its next annual meeting. The ESPP, as amended, allows eligible employees to purchase shares of the Company's common stock through payroll deductions at the end of quarterly purchase periods. To be eligible, an individual must be an employee, work more than 20 hours per week for at least five months per calendar year and not own greater than 5% of the Company's common stock. Pursuant to the ESPP, the Company has reserved 1,000,000 shares of common stock for issuance. Prior to the first day of each quarterly purchase period, each eligible employee may elect to participate in the ESPP. The participant is granted an option to purchase a number of shares of common stock determined by dividing each participant's contribution accumulated prior to the last day of the quarterly period by the purchase price. The participant has the ability to withdraw from the ESPP until the second-to-last day of the quarterly purchase period. The purchase price is equal to 85% of the market price per share on the last day of each quarterly purchase period. An employee may purchase stock from the accumulation of payroll deductions up to the lesser of 15% of such employee's compensation or $25,000 in aggregate purchase price, per year.

Retention Plan

        In January 2006, the Compensation Committee of the Board of Directors approved a Retention Plan, effective as of January 1, 2006, for performance periods ending December 31, 2007 and December 31, 2008 (each, a "Performance Period"). The Plan is intended to reward employees for achieving specified performance goals over specified performance periods. Specifically, the Compensation Committee approved the share performance criteria that will be used to determine cash bonus awards under the Retention Plan, and the terms of the individual awards to eligible employees under the Retention Plan for each of the two Performance Periods. Cash awards under the Retention Plan will depend on the performance of the Company's common stock against specified targets, generally measured by comparing the Company's share price at the beginning of the Performance Period to the Company's share price at the conclusion of the Performance Period, in each case based on a 30-day average. In particular, at the end of an applicable Performance Period, the percentage of the cash award earned (if any) and, correspondingly, the amount of the actual award payouts to an employee for such Performance Period will be (i) equal to the employee's target award opportunity, (ii) greater than the target award opportunity (but in no event more than 150% of the target award opportunity), or (iii) zero, in each case directly corresponding to actual Company common stock performance at the conclusion of the Performance Period compared to the beginning of the Performance Period. No awards will be payable in respect of a Performance Period if the Company's share price at the conclusion of the Performance Period is less than the share price at the beginning of the Performance Period. The Company's share price at the beginning of the Performance Periods was calculated to be $32.99. Special measurement dates and payment conditions apply in the event of a change in control of the Company occurring during a Performance Period. The Company has determined that awards granted under this plan should be classified as liability awards.

F-34

IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(11) Stockholder' Equity (Continued)

        The following table summarizes the effect of compensation cost arising from share-based payment arrangements on the Company's Consolidated Statements of Income for the years ended December 31, 2007 and 2006 for the Company's Stock Incentive Plans, ESPP, and the Retention Plan: (in thousands)

	2007			2006
Research and development	$	6,629		$	4,291
Selling, general and administrative		3,096			5,155
Total cost of share-based compensation for the year		9,725			9,446
Amount capitalized in inventory and fixed assets during the year		(1,659	)		(1,328	)
Amount recognized in income for amounts previously capitalized in inventory and fixed assets		1,113			326
Amounts charged against income, before income tax benefit	$	9,179		$	8,444

        Prior to the adoption of SFAS 123R, all tax benefits for deductions resulting from the exercise of stock options were presented as operating cash flows on the Consolidated Statements of Cash Flows. Upon adoption of SFAS 123R, cash flows resulting from the tax benefits of tax deductions are classified as financing cash flows.

Determining Fair Value

        Valuation and Amortization Method:    The fair value of stock options granted under the Company's Stock Incentive Plans and the ESPP is estimated using the Black-Scholes option pricing model. The fair value of stock options granted after January 1, 2006 is amortized on a straight-line basis. The fair value of stock options granted before January 1, 2006 is amortized using the graded vesting attribution approach. Compensation expense is amortized over the requisite service periods of the awards, which are generally the vesting periods. The fair value of awards granted under the Retention Plan are calculated using a Monte-Carlo simulation pricing model. The fair value of RSU is calculated by multiplying the number of RSU granted by the closing price of the Company's stock on the date of grant. The fair value of these awards is being amortized based on the proportionate amount of the requisite service period that has been rendered to date for each respective performance period.

        Expected Term:    The expected term of an employee share option is the period of time for which the option is expected to be outstanding. The Company has made a determination of expected term by analyzing employees' historical exercise experience and post-vesting employment termination behavior from its history of grants and exercises in the Company's option database. The historical pattern of option exercises has been analyzed in an effort to determine if there were any discernable patterns of activity based on certain demographic characteristics such as employees' length of service, salary and job level.

        Expected Volatility:    Volatility is a measure of the amount by which a financial variable, such as share price, has fluctuated (historical volatility) or is expected to fluctuate (expected volatility). The expected volatility of stock option awards at the date of grant is estimated based on the implied volatility of greater than one-year publicly traded options. The decision to use implied volatility was based upon the availability of actively traded options on the Company's common stock and the assessment that implied volatility is more representative of future stock price trends than historical

F-35

IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(11) Stockholder' Equity (Continued)

volatility. Prior to the adoption of SFAS 123R, the Company calculated expected volatility using only historical stock price volatility.

        Risk-Free Interest Rate:    The risk-free interest rate used in the Black-Scholes option pricing model is based on the implied yield available on U.S. Treasury zero-coupon issues with a remaining term equal to the expected term used. The risk free rate used in the Monte-Carlo valuation model is based on the implied yield in effect at the time of grant from the constant maturity treasury yield curve over the contractual terms of the award.

        Dividends:    Cash dividends have never been declared on the Company's common stock and the Company has no present intention to declare cash dividends in the foreseeable future. Consequently, an expected dividend yield of zero was used in both the Black-Scholes and Monte-Carlo valuation models.

        Forfeitures:    The Company uses historical data to estimate pre-vesting option and Retention Plan forfeitures. Share-based compensation expense is recorded only for those awards that are expected to vest.

        The following assumptions were used to estimate the fair value of options granted under the Company's Stock Option Plans:

	Year Ended December 31,
	2007		2006		2005
Expected term (years)	4.81–5.64		3.95–5.72		4.49
Risk-free interest rate	3.78–5.02	%	4.31–5.21	%	3.62	%
Expected volatility	39.73–42.23	%	27.45–42.70	%	82.92	%
Expected dividend rate	0	%	0	%	0	%

        The assumptions used in the Monte-Carlo simulation modeling to estimate the fair value of awards under the Retention Plan for the year ended December 31, 2007 were: expected volatility of 41.17%, risk-free interest rates ranging from 3.23% to 3.45% and expected dividend yield of 0%. The assumptions used in the Monte-Carlo simulation modeling to estimate the fair value of awards under the Retention Plan for the year ended December 31, 2006 were: expected volatility of 42.23%, risk-free interest rates ranging from 4.87% to 5.03% and expected dividend yield of 0%. The fair value of the Company's ESPP awards during the years ended December 31, 2007 and 2006 were calculated using the intrinsic value of the common stock purchased on the end of each quarter based on the fact that the Company's offering period is three months and the ESPP does not contain a look-back provision.

F-36

IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(11) Stockholder' Equity (Continued)

Stock Option Activity and Share-Based Compensation Expense

        Stock option activity for the years ended December 31, 2007 and 2006 is summarized as follows:

		Number of Options		Weighted Average Exercise Price Per Option		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
						(Years)	(in thousands)
Outstanding at December 31, 2006		10,509,294		$	38.55
	Granted	1,070,400			35.36
	Exercised	(1,148,665	)		24.53
	Forfeitures	(816,501	)		44.65
Outstanding at December 31, 2007		9,614,528		$	39.36	5.63	$	62,722
Vested and expected to vest		9,201,812		$	39.56	5.48	$	59,280
Exercisable at December 31, 2007		7,795,123		$	40.43	4.85	$	47,586

        The weighted average fair value of options granted during the years ended December 31, 2007, 2006 and 2005 was $15.27, $14.64 and $25.34, respectively. The aggregate intrinsic value of options outstanding at December 31, 2007 is calculated as the difference between the exercise price of the options and the market price of the Company's common stock for the 5,673,471 shares that had exercise prices that were lower than the $43.00 market price of the Company's common stock at December 31, 2007. The aggregate intrinsic value of options outstanding at December 31, 2006 is calculated as the difference between the exercise price of the options and the market price of the Company's common stock for the 1,486,837 shares that had exercise prices that were lower than the $26.76 market price of the Company's common stock at December 31, 2006. The total intrinsic value of options exercised during the years ended December 31, 2007, 2006 and 2005 was approximately $17.1 million, $27.3 million and $22.5 million, respectively, determined as of the date of exercise.

        The Company recognized for the years ended December 31, 2007 and 2006 approximately $4.2 million and $7.4 million, respectively, in share-based compensation expense, net of amounts capitalized, for stock options granted under the Company's stock incentive plans. As of December 31, 2007, there was approximately $16.4 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the Company's stock incentive plans. This amount assumes the Company's expected forfeiture rate. That cost is expected to be recognized over a weighted average period of approximately 2.8 years. The Company utilizes newly issued shares to satisy the exercise of stock options.

        On February 15, 2007, the Company awarded, for no consideration, 268,283 RSU to its employees under its 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 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.

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IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(11) Stockholder' Equity (Continued)

        RSU activity for the year ended December 31, 2007 is summarized as follows:

		Number of Units		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2006		—
	Granted	299,630
	Forfeitures	(43,655	)
Outstanding at December 31, 2007		255,975		1.25	$	11,007
Expected to vest		209,194		1.17	$	8,995

        The weighted average grant date fair value of the RSU was $29.84. The aggregate intrinsic value of RSU outstanding as of December 31, 2007 is calculated as the number of shares multiplied by the closing market price of the Company's common stock on that date, which was $43.00.

        For the year ended December 31, 2007 the Company recognized approximately $1.3 million in share-based compensation expense, net of amounts capitalized, for RSUs granted under the 06 Plan. As of December 31, 2007, there was $4.4 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 2.3 years. The Company will utilize newly issued shares to satisfy the vesting of RSU.

        Upon issuance of the awards, the grant date fair value for the Retention Plan was approximately $3.7 million. The fair value (based on the December 31, 2007 and 2006 valuations before forfeiture assumptions) of the Retention Plan awards outstanding at December 31, 2007 and December 31, 2006 was approximately $4.3 million and $1.8 million, respectively. The combined fair value of the Retention Plan awards that were cancelled during the years ended December 31, 2007 and 2006 was approximately $3.1 million and $591,000 (based on the December 31, 2007 and 2006 valuations, respectively). The aggregate intrinsic value of the awards outstanding at December 31, 2007 and 2006 is $5.0 million and $0, respectively, calculated using the ratio of the amount that the 30-day average closing stock price preceeding December 31, 2007 was in excess of $32.99. The value was $0 at December 31, 2006 because the 30-day average closing stock price preceding December 31, 2006 did not exceed the trigger price of $32.99. The aggregate intrinsic value at December 31, 2007 of the awards expected to vest is $2.2 million. This excludes amounts from the first performance period which vested at December 31, 2007. The weighted average remaining contractual term for the awards that are expected to vest at December 31, 2007 is 1.0 year. There is no remaining term for the awards from the first performance period as they vested at December 31, 2007. The Company has a liability for the retention plan of $3.5 million as of December 31, 2007, $2.5 million of which was paid in January 2008 related to settlement of the first performance period.

        The Company recognized for the years ended December 31, 2007 and 2006 approximately $2.5 million and $557,000, respectively, in share-based compensation expense, net of amounts capitalized, for the Retention Plan. As of December 31, 2007, there was approximately $539,000 of total unrecognized compensation cost related to non-vested share-based compensation arrangements

F-38

IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(11) Stockholder' Equity (Continued)

granted under the Retention Plan. This amount assumes the Company's expected forfeiture rate. The costs associated with the awards are expected to be recognized over one year.

        During the year ended December 31, 2007, the Company granted 21,912 shares for the ESPP for a total of 235,056 shares that have been issued under the plan and recognized approximately $112,000 in share-based compensation expense, net of amounts capitalized. During the year ended December 31, 2006, the Company granted 29,749 shares for the ESPP for a total of 213,144 shares that had been issued under the plan and recognized approximately $122,000 in share-based compensation expense, net of amounts capitalized. The Company utilizes newly issued shares to satisfy the issuance of shares under the ESPP.

Comparable Disclosures

        The following table illustrates the effect on net income and earnings per share for the year ended December 31, 2005, as if the compensation cost for the Company's stock option grants had been determined based on the fair value at the grant dates for awards consistent with the fair value method of Statement of Financial Accounting Standards No. 123 "Accounting for Stock-Based Compensation" (SFAS 123). The stock-based employee compensation expense determined under the fair value based method was calculated using the graded vesting attribution approach.

		Year Ended December 31, 2005 (in thousands, except per share amounts)
Net income, as reported		$	86,496
Add: Stock-based employee compensation expense included in net income, tax effected			—
Deduct: Total stock-based employee compensation expense determined under fair value based method, tax effected			(89,365	)
	Pro forma net loss	$	(2,869	)
Net earnings (loss) per common share:
	Basic, as reported	$	1.03
	Basic, pro forma	$	(0.03	)
	Diluted, as reported	$	1.01
	Diluted, pro forma	$	(0.03	)

        For the year ended 2005 there were 19,552,000 of potential common shares excluded from the pro forma 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 shares related to the 1³/8% convertible notes for the year ended December 31, 2005. The pro forma effect on the net income (loss) for the year ended December 31, 2005 is not necessarily indicative of the effect on future years' operating results. Pro-forma stock-based compensation expense in 2005 includes expenses associated with the accelerated vesting of options in the fourth quarter of 2005.

F-39

IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(12) Income Taxes

        The provision (benefit) for income taxes includes the following: (in thousands)

		Year Ended December 31,
		2007			2006			2005
Current:
	Federal	$	(2,060	)	$	78,993		$	861
	State and local		429			24,401			717
Total current provision (benefit) for income taxes			(1,631	)		103,394			1,578
Deferred:
	Federal		48,809			(130,846	)		—
	State and local		8,314			(22,902	)		—
Total deferred provision (benefit) for income taxes			57,123			(153,748	)		—
Provision (benefit) for income taxes		$	55,492		$	(50,354	)	$	1,578

        The Company recorded as increases (decreases) to additional paid-in capital approximately $(6.3) million, $93.9 million and $1.7 million of tax effects from the exercise of stock options for the years ended December 31, 2007, 2006 and 2005, respectively. As a result of legislation in New Jersey passed in 2002 an Alternative Minimum Assessment (AMA) tax is computed. This AMA tax impacted the Company's tax provision for the year ended December 31, 2005.

        Reconciliations between the total tax provision (benefit) and the tax provision based on the federal statutory rate are presented below: (in thousands)

	Year Ended December 31,
	2007			2006			2005
Pre-tax income	$	95,291		$	320,320		$	88,074
Tax provision at federal statutory rate of 35%		33,352			112,112			30,826
State and local income taxes (net of federal benefit)		5,765			5,159			338
Change in valuation allowance		18,344			(161,095	)		(28,418	)
Research and development credits		(2,331	)		(5,989	)		(4,331	)
Non-deductible expenses and other items		362			(541	)		3,163
Provision (benefit) for income taxes	$	55,492		$	(50,354	)	$	1,578

F-40

IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(12) Income Taxes (Continued)

        The tax effects of temporary differences that give rise to significant portions of the gross deferred tax assets and gross deferred tax liabilities are presented below: (in thousands)

		December 31,
		2007			2006
Gross deferred tax assets:
	Research and development credit carryforwards and other credits	$	86,363		$	73,619
	Share-based compensation		5,729			3,413
	Net operating loss carryforwards		54,762			49,614
	Deferred revenue		116,628			156,118
	Capital loss carryforward		3,909			3,909
	Unrealized loss on securities available for sale		20,827			2,081
	Other		14,423			10,137
Total gross deferred tax assets			302,641			298,891
	Less valuation allowance		(189,845	)		(133,589	)
	Deferred tax assets, net of valuation allowance		112,796			165,302
Gross deferred tax liabilities:
	Other		11,065			3,538
	State taxes		5,106			8,016
	Net deferred tax assets	$	96,625		$	153,748

        In 2006, the Company released a portion of its valuation allowance against its total deferred tax assets. The partial release was based on expectations of projected income, which caused the Company to conclude that it was more likely than not that a portion of these deferred tax assets would be realized. During 2007, the Company updated its expectations of projected income. These updated projections were impacted by management's strategic plan to accelerate the development of our internal pipeline as well as by the BMS Amendment. As a result of these updated projections, the Company recorded additional valuation allowance. As of December 31, 2007, the Company believes that it is more likely than not that results of future operations will generate sufficient income to realize our deferred tax assets net of the valuation allowance. The financial projections used to evaluate the need for our valuation allowance contain significant assumptions 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. The Company will continue to monitor its current performance and future financial projections, including market share and competitive landscape, in order to determine the effect on the valuation allowance.

        The net change in the valuation allowance was an increase of approximately $56.3 million for the year ended December 31, 2007, and decreases of approximately $281.9 million and $14.6 million for the years ended December 31, 2006 and 2005, respectively. Approximately $157.8 million of the valuation allowance at December 31, 2007 pertains to tax deductions relating to stock option exercises for which any subsequently recognized tax benefit will be recorded as an increase to additional paid-in capital.

F-41

IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(12) Income Taxes (Continued)

        At December 31, 2007, the Company had net operating loss carryforwards for federal and certain state income tax purposes of approximately $138.0 million, which expire at various dates from 2010 through 2027. At December 31, 2007, the Company had research credit carryforwards for federal and New Jersey state purposes of $58.0 million and $16.8 million, respectively, and federal alternative minimum tax credits of $9.2 million. The federal and state research credits expire at various dates from 2008 through 2027. Amounts expected to expire in 2008 are immaterial.

        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, approximately $36.1 million would have impacted the effective income tax rate. A portion of the $36.1 million if recognized could have required additional valuation allowance to be recorded. As of December 31, 2007, the Company had unrecognized tax benefits of approximately $39.2 million. Of this amount, approximately $37.9 million would have impacted the effective income tax rate. A portion of the $37.9 million if recognized could have required additional valuation allowance to be recorded.

        A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: (in thousands)

Balance at January 1, 2007	$	38,257
Reductions in unrecognized tax benefits as a result of tax positions taken during a prior year		(2,017	)
Additions in unrecognized tax benefits as a result of tax positions taken during the current year		3,708
Reductions in unrecognized tax benefits related to settlements with taxing authorities during the year		(77	)
Reductions in unrecognized tax benefits as a result of a lapse of applicable statute of limitations during the year		(681	)
Balance at December 31, 2007	$	39,190

        The Company recognizes both interest and penalties accrued related to unrecognized tax benefits as elements of income tax expense in the Consolidated Statements of Income. As of the adoption date, the total amount of accrued interest and penalties was approximately $787,000. During the year ended December 31, 2007, the Company recorded approximately $1.2 million of net interest and penalties in its Consolidated Statements of Income as income tax expense.

        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 2003 has expired. During 2007, a New Jersey State audit was 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. In addition, the statute of limitations for certain tax returns is expected to expire within twelve months, which could result in a decrease in the unrecognized tax benefits of approximately $2 to $3 million.

F-42

IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(13) Discontinuation of Small Molecule Program

        On May 11, 2005, the Company announced a plan to discontinue its small molecule research program. This decision was made after evaluating the Company's investment in such program against the time horizon before commercial benefits would be realized. As a result of this decision, the Company reflected $6.2 million of costs associated with the discontinuation of this program in the Consolidated Statements of Income for the year ended December 31, 2005. Such costs included approximately $2.2 million of costs related to severance for 45 employees that were terminated, approximately $3.7 million of costs related to the write-off of fixed assets used in such program (shown net of $227,000 from the subsequent sale of equipment that was previously written off as part of this discontinuance), approximately $60,000 of contract termination costs related to the cancellation of the lease at the Brooklyn facility where the employees were conducting such research and approximately $282,000 of other shutdown expenses. The Company had no additional other shutdown expenses and paid the remaining amount of $12,000 that was accrued at December 31, 2005 during the year ended December 31, 2006 to complete the disposition of this program.

(14) Contingencies

        In January 2002, a number of complaints asserting claims under the federal securities laws against the Company and certain of the Company's directors and officers were filed in the U.S. District Court for the Southern District of New York. Those actions were consolidated under the caption Irvine v. ImClone Systems Incorporated, et al., No. 02 Civ. 0109 (RO). In the corrected consolidated amended complaint, plaintiffs asserted claims against the Company, its former President and Chief Executive Officer, Dr. Samuel D. Waksal, its former Chief Scientific Officer and then-President and Chief Executive Officer, Dr. Harlan W. Waksal, and several of the Company's other present or former officers and directors, for securities fraud under sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Securities and Exchange Commission Rule 10b-5, on behalf of a purported class of persons who purchased the Company's publicly traded securities between March 27, 2001 and January 25, 2002. The complaint also asserted claims against Dr. Samuel D. Waksal under section 20A of the Exchange Act on behalf of a separate purported sub-class of purchasers of the Company's securities between December 27, 2001 and December 28, 2001. The complaint sought to proceed on behalf of the alleged classes described above, sought monetary damages in an unspecified amount and sought recovery of plaintiffs' costs and attorneys' fees. On January 24, 2005, the Company announced that it had reached an agreement in principle to settle the consolidated class action for a cash payment of $75.0 million, a portion of which would be paid by the Company's insurers. Therefore, the Company recorded in its Consolidated Balance Sheet as of December 31, 2004, as Litigation settlement, a liability of approximately $75.9 million and a receivable from our insurers of approximately $20.5 million, included in Other assets. Net expense of approximately $55.4 million was recorded in the fourth quarter of 2004 and reflected in the Consolidated Statement of Income as Litigation settlement. The parties signed a definitive stipulation of settlement and as provided for under the stipulation of settlement, on March 11, 2005, the Company paid $50.0 million into an escrow account, subject to Court approval of the proposed settlement. On July 29, 2005 the Court approved the proposed settlement and on August 5, 2005, the Company paid the remaining $25.0 million into the escrow account, with such funds to be held in and distributed pursuant to the terms of the settlement. The Company has collected from its insurers all of the outstanding receivable amounting to $20.5 million. The amount received from the insurers includes $8.75 million, less attorneys fees of $875,000, that was paid to the Company under the derivative settlement discussed below.

F-43

IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(14) Contingencies (Continued)

        On January 13, 2002, and continuing thereafter, nine separate purported shareholder derivative actions were filed against members of the Company's board of directors, certain of the Company's present and former officers, and the Company, as nominal defendant, advancing claims based on allegations similar to the allegations in the federal securities class action complaints. Four of these derivative cases were filed in the Delaware Court of Chancery and were consolidated in that court under the caption In re ImClone Systems Incorporated Derivative Litigation, Cons. C.A. No. 19341-NC. Three of these derivative actions were filed in New York State Supreme Court in Manhattan. All of these state court actions were stayed in deference to the proceedings in the U.S. District Court for the Southern District of New York, which have been consolidated under the caption In re ImClone Systems, Inc. Shareholder Derivative Litigation, Master File No. 02 CV 163 (RO). A supplemental verified consolidated amended derivative complaint in these consolidated federal actions was filed on August 8, 2003. It asserted, purportedly on behalf of the Company, claims including breach of fiduciary duty by certain current and former members of the Company's board of directors, among others, based on allegations including that they failed to ensure that the Company's disclosures relating to the regulatory and marketing prospects for ERBITUX were not misleading and that they failed to maintain adequate controls and to exercise due care with regard to the Company's ERBITUX application to the FDA. On January 24, 2005, the Company announced that it had reached an agreement in principle to settle the consolidated derivative action. The parties entered into a definitive stipulation of settlement on March 14, 2005, which was approved by the Court on July 29, 2005. In August 2005, the Company received $8.75 million from its insurers, which was contributed toward the settlement of the Irvine securities class action described above, after deducting $875,000 for Court awarded plaintiffs' attorney's fees and expenses. Following Court approval of the settlement of the consolidated derivative action, all of the state court derivative actions that had been pending in Delaware and New York were dismissed with prejudice, with no further payment required by the Company.

        On August 14, 2002, after the federal grand jury indictment of Dr. Samuel D. Waksal had been issued but before Dr. Samuel D. Waksal's guilty plea to certain counts of that indictment, the Company filed an action in New York State Supreme Court seeking recovery of certain compensation, including advancement of certain defense costs, that the Company had paid to or on behalf of Dr. Samuel D. Waksal and cancellation of certain stock options. That action was styled ImClone Systems Incorporated v. Samuel D. Waksal, Index No. 02/602996. On July 25, 2003, Dr. Samuel D. Waksal filed a Motion to Compel Arbitration seeking to have all claims in connection with the Company's action against him resolved in arbitration. By order dated September 19, 2003, the Court granted Dr. Samuel D. Waksal's motion and the action was stayed pending arbitration. On September 25, 2003, Dr. Samuel D. Waksal submitted a Demand for Arbitration with the American Arbitration Association (the "AAA"), by which Dr. Samuel D. Waksal asserted claims to enforce the terms of his separation agreement, including provisions relating to advancement of legal fees, expenses, interest and indemnification, for which Dr. Samuel D. Waksal claimed unspecified damages of at least $10.0 million. On March 10, 2004, the Company commenced a second action against Dr. Samuel D. Waksal in the New York State Supreme Court. That action was styled ImClone Systems Incorporated v. Samuel D. Waksal, Index No. 04/600643. Specifically, by this action, the Company sought to recover: (a) $4.5 million that the Company paid to the State of New York in respect of exercises of non-qualified stock options and certain warrants in 2000; (b) at least $16.6 million that the Company paid to Samuel D. Waksal in the form of ImClone common stock, in lieu of withholding federal income taxes from exercises of non-qualified stock options and certain warrants in 2000; and (c) approximately $1.1 million that the

F-44

IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(14) Contingencies (Continued)

Company paid in the form of ImClone common stock to Samuel D. Waksal and his beneficiaries, in lieu of withholding federal, state and local income taxes from certain warrant exercises in 1999-2001. The complaint asserted claims for unjust enrichment, common law indemnification, moneys had and received and constructive trust. On June 18, 2004, Dr. Samuel D. Waksal filed an Answer to the Company's Complaint.

        On December 21, 2005, the Company and Dr. Samuel D. Waksal entered into a settlement agreement with respect to the foregoing actions, providing for, among other things, judgments in both actions in the Company's favor. The settlement agreement included the payment of director and officer legal fee expense indemnification by the Company, for which the Company paid approximately $2.0 million in the fourth quarter of 2005. The settlement agreement also provided for the return to the Company of 416,667 of stock options that were previously issued to Dr. Samuel D. Waksal. Such options were returned to the Company and were cancelled as of December 31, 2005.

        On October 28, 2003, a complaint was filed by Yeda Research and Development Company Ltd. (Yeda) against ImClone Systems and Aventis Pharmaceuticals, Inc. (now Sanofi-Aventis SA or Sanofi- Aventis) in the U.S. District Court for the Southern District of New York (03 CV 8484). On September 20, 2006, the Company 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 (the "'866 Patent") is invalid. 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. 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. 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. 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. On December 7, 2007, Yeda, Sanofi-Aventis, and the Company signed a settlement agreement to end worldwide litigation related to the '866 Patent and its foreign counterparts. Pursuant to the terms of the settlement agreement, the Company and Sanofi-Aventis each paid Yeda $60.0 million in cash in settlement of all the claims and counterclaims with respect to all worldwide litigation related to the '866 Patent. Further, the companies released all claims against each other. Under the terms of the settlement agreement, the Company was granted an exclusive worldwide license to technology under the '866 Patent with respect to certain licensed products and the Company will pay Yeda a low single-digit royalty on sales of the licensed products in and outside of the U.S. and the Company will pay Sanofi-Aventis a low single-digit royalty on sales of licensed products outside of the U.S. The Company entered into a separate agreement with Sanofi-Aventis in which the Company paid $3.0 million to Sanofi-Aventis in settlement of certain disputes between the two companies.

        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. An Opposition Proceeding is an administrative process, the outcome of which may be that the patent will be revoked. 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

F-45

IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(14) Contingencies (Continued)

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, Inc., Merck KGaA, Oncoscience AG, Genmab A/S and Hoffmann La-Roche Inc.

        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 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 on February 5, 2007.

        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, and January 10, 2008, to this complaint denying all claims. A court ordered mediation hearing occurred on December 20, 2007 which did not result in a resolution of the matter. The Company, having had the advice of its patent counsel, plans to vigorously defend against the claims asserted.

        No reserve has been established in the financial statements for any of the legal proceedings described above, which have not been settled, 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 at that time, 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.

        The Company is developing a fully-human monoclonal antibody, referred to as IMC-11F8. The Company believes it has the right to do so under its existing development and license agreement with Merck KGaA. However, Merck KGaA had advised the Company that it believed that IMC-11F8 was covered under the development and license agreement with Merck KGaA and that it could therefore have the exclusive rights to market IMC-11F8 outside the U.S. and Canada and co-exclusive development rights in Japan, for which it would pay the same royalty as it pays for ERBITUX (see Note 10-Collaborative Agreements—Collaborations with Merck KGaA). In agreement with Merck KGaA, the Company submitted this dispute to binding arbitration through an expedited process outside of the provisions of the development and license agreement. Merck KGaA subsequently took the position that the expedited arbitration provision was no longer valid and the Company sued Merck KGaA in federal court in the Southern District of New York to either enforce the arbitration provision

F-46

IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(14) Contingencies (Continued)

previously agreed to or to have the court decide the question of whether IMC-11F8 is or is not covered under the development and license agreement with Merck KGaA. On November 29, 2005, the Court granted the Company's motion to enforce the expedited arbitration provision previously agreed to, and subsequently appointed a new arbitrator to hear and decide this dispute. On March 31, 2006, the arbitrator decided the matter in favor of the Company, finding that Merck KGaA had no rights to IMC-11F8. That decision is binding and unappealable pursuant to the parties' arbitration agreement and the parties have subsequently confirmed the arbitration award.

(15) Commitments

Leases

        The Company leases office, operating and laboratory space, fleet vehicles, and miscellaneous office equipment under various operating lease agreements. The effects of scheduled and specified rent increases or any "rent holidays" are recognized on a straight-line basis over the lease term. Lease expense was approximately $5.8 million, $5.7 million and $5.6 million for the years ended December 31, 2007, 2006 and 2005, respectively.

        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 approximately $7.9 million is outstanding as of December 31, 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 approximately $1.7 million which is being amortized, as a reduction in lease expense, over the respective term of the Sublease. The future minimum lease payments remaining at December 31, 2007, are approximately $44.1 million.

F-47

IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(15) Commitments (Continued)

        Future minimum lease payments under all of the Company's operating leases are as follows: (in thousands)

Year ending December 31,
2008	$	5,670
2009		5,445
2010		4,206
2011		4,084
2012		4,236
2013 and thereafter		39,747
	$	63,388

Employment Agreements

        On March 19, 2004, the Company entered into an employment agreement with Daniel S. Lynch in regards to his employment as Chief Executive Officer. In connection with Mr. Lynch's resignation effective November 10, 2005 by mutual agreement with the Company's Board of Directors, such resignation was treated as a termination by the Company without cause under Mr. Lynch's employment agreement. As a result, the Company has recorded severance benefit expense due Mr. Lynch of approximately $2.9 million in Selling, general and administrative expenses in the fourth quarter of 2005. Payment of this severance was made in 2006.

Supported Research

        The Company has entered into various research and license agreements with certain academic institutions and others to supplement the Company's research activities and to obtain rights to certain technologies. The agreements generally require the Company to fund the research, to pay milestones upon the achievement of defined events, such as the submission or approval of regulatory filings and to pay royalties based upon percentages of revenues, if any, on sales of products developed from technology arising under these agreements.

Contract Services

        On March 17, 2005, the Company entered into a five year multi-product supply agreement with Lonza Biologics PLC (Lonza) for the manufacture of biological material at the 5,000 liter scale. The Company has discretion over which products to manufacture, which may include later-stage clinical production of the Company's antibodies currently in Phase I clinical testing and those nearing Phase I testing. The value of producing all batches under the Agreement is $68.0 million, unless terminated earlier. The Agreement provides that the Company can cancel any batches at any time; however, depending on how much notice the Company provides Lonza, the Company could incur a cancellation fee that varies based on timing of the cancellation. This cancellation fee is only applicable if Lonza does not resell the slots reserved for the cancelled batches. As of December 31, 2007, our obligations under the Agreement were approximately $11.8 million.

F-48

IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(15) Commitments (Continued)

License Agreements

        The Company has an exclusive license from the University of California to an issued U.S. patent for the murine form of ERBITUX, the Company's EGFR antibody product. The Company previously exclusively licensed from Rhone-Poulenc Rorer Pharmaceuticals, now known as Sanofi-Aventis, patent applications seeking to cover the therapeutic use of antibodies to the EGFR in conjunction with anti-neoplastic agents. A change in ownership, and subsequent licensing, of this family of patents are described in the Yeda matter discussed in more detail under Note 14-"Contingencies." The agreements with the University of California, Yeda and Sanofi-Aventis require the Company to pay royalties on sales of ERBITUX that are covered by these licenses. The Company has license agreements with Genentech, Inc. (Genentech) for rights to patents covering certain use of epidermal growth factor receptor antibodies and with both Genentech and Centocor, Inc. (Centocor) for rights to patents covering various aspects of antibody technology. These agreements with both Genentech and Centocor require us to pay royalties on the sale of ERBITUX that are covered by these licenses. The Company's effective royalty rate can vary from quarter to quarter due to various factors including the mix of domestic and foreign in-market sales as well as the fact that some of the Company's license agreements are therapy specific and some are country specific. In 2007, the Company received reimbursements from its corporate partners of 2.5% on North American net sales and a single-digit percentage on net sales outside of North America.

        The Company's effective royalty rate on global in-market sales of ERBITUX for the years ended December 31, 2007, 2006, and 2005 was 5.3%, 6.8%, and 8.6%. The decrease for the year-ended 2007 as compared to 2006 was due primarily to the reversal of a portion of amounts previously accrued as due to Sanofi-Aventis as a result of the agreements signed in December 2007. The decrease for the year-ended 2006 as compared to 2005 was due primarily to a decrease in the second quarter of 2006 in the royalty rate the Company is obligated to pay on in-market sales in the U.S. and Canada.

(16) 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 percent 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 approximately $2.0 million, $2.2 million and $1.9 million for the years ended December 31, 2007, 2006 and 2005, respectively.

Change in Control Plan

        During 2004, the Board of Directors of the Company adopted a Change in Control Plan to maintain the focus of certain key employees of the Company on the business, mitigate the distractions that could be caused if the Company were to become the target of an acquisition strategy, and provide certain benefits to the covered employees if a change in control of the Company (as such term is defined in the plan) occurs and/or the employee's employment is terminated in connection with such

F-49

IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(16) Employee Benefit Plans (Continued)

change in control. Participants in the Change in Control Plan are determined by the Compensation Committee.

        In the event of a change in control, all equity-based compensation awards held by the plan participants will vest in full (unless the Compensation Committee determines that the participants' awards will be substituted for equity awards in the surviving entity of equivalent economic value) and any deferred compensation of participants will become nonforfeitable. In addition, if a participant in the Change in Control Plan is terminated in connection with a change in control by the Company without cause or by the participant for good reason (as such terms are defined in the plan), the Company will pay to the participant a cash payment equal to the participant's earned but unpaid base salary and bonus, unreimbursed expenses, any other accrued obligations, a pro rata bonus based on target bonus for the year of termination, and a multiple of base salary and bonus (with the multiplier ranging from 0.5 to three based on the tier assigned to the participant under the plan).

        In connection with a termination described in the preceding sentence, if the participant signs a waiver and release of claims against the Company, each participant will vest in full in all long-term incentive arrangements he or she has with the Company and be entitled to continued health coverage for six to 18 months (based on the participant's plan tier) and outplacement services for six months. These benefits are reduced by any other severance amounts for which the participants are eligible under any other arrangement of the Company or its subsidiary. As a condition to receipt of these benefits, each participant agrees to be bound by noncompetition, nonsolicitation, confidentiality, return of Company property, and cooperation covenants contained in the plan. If a plan participant becomes subject to the change-in-control golden parachute excise tax under Section 4999 of the Internal Revenue Code and the aggregate parachute payment exceeds the safe harbor amount by ten percent or more, the plan provides that the Company shall pay to the participant a tax gross-up payment such that after payment by the participant of all federal, state and local excise, income, employment, Medicare and other taxes resulting from the payment of the parachute payments and the tax gross-up payments, the participant retains an after-tax amount equal to the amount that he or she would have retained in the absence of the parachute excise tax.

Severance Plans

        The Compensation Committee of the Board of Directors approved on February 10, 2005, a Senior Executive Severance Plan (the "Plan") to enhance the predictability of treatment for executives at the level of Vice President, Senior Vice President and Executive Vice President whose employment with the Company is terminated by the Company without cause (as such concept is explained in the Plan).

        As a condition to receipt of benefits under the Plan, a participating employee must sign an agreement and general release in a form acceptable to the Plan administrator under which the participant agrees to certain confidentiality and non-solicitation provisions for a period of one year following his or her employment termination date, agrees to certain non-competition provisions for the duration of the employee's receipt of severance pay, and releases and discharges the Company and related entities (as well as any third party for whom the employee provides services on the Company's behalf) from any and all claims and liabilities relating to the employee's employment with the Company or the termination of the employee's employment. Receipt of benefits under the Plan is also contingent upon the employee's continued employment through the employment termination date designated by the Company. The severance amounts payable to an employee under the Plan will be reduced,

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IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(16) Employee Benefit Plans (Continued)

dollar-for-dollar, by the amount of any other termination payments paid or payable to the employee under any other plan, program or law (excluding any right to exercise stock options, any unemployment benefits payable in accordance with state law and payment for accrued but unused vacation).

        The Senior Vice Presidents and Executive Vice Presidents who participate in the Plan and sign the above-described agreement and release upon their termination without cause are entitled to receive an amount equal to one year's base salary as severance and, if the employee would otherwise be eligible to elect employee-paid continued coverage under COBRA, Company-provided health insurance coverage for one year following a termination without Cause, subject to cessation upon the employee's becoming eligible for similar coverage offered by another employer. Senior Vice Presidents and Executive Vice Presidents would also be entitled continue their non-voluntary life insurance coverage provided by the Company with the premiums paid by the Company for 12 months after a termination without cause, subject to cessation when the employee becomes eligible for coverage under a life insurance plan or policy of another employer. Vice Presidents who meet the above criteria are entitled to the greater of six months base salary or two weeks base salary for each year of service with the Company, as well as six months Company-paid health and life insurance coverage, subject to the conditions described above.

Annual Incentive Plan

        In September 2003, the shareholders approved and the Company adopted the Annual Incentive Plan. The plan permits the Compensation Committee to grant performance awards based upon pre-established performance goals to executives of the Company and its subsidiaries selected by the Compensation Committee, whether or not such executives, at the time of grant, are subject to the limit on deductible compensation under Section 162(m) of the Internal Revenue Code. The Annual Incentive Plan became effective as of January 1, 2003.

(17) Supplemental Cash Flow Information and Non-cash Investing and Financing Activities:
(in thousands)

	Year Ended December 31,
	2007			2006		2005
Cash paid for:
Interest, net of amounts capitalized of $19, $2,640 and $5,394 for the years ended December 31, 2007, 2006 and 2005, respectively	$	8,340		$	5,610	$	2,856
Income taxes, net of refunds received of $614, $0 and $0 for the years ended December 31, 2007, 2006 and 2005, respectively		3,173			5,358		1,400
Non-cash investing and financing activities:
Change in net unrealized gain (loss) in securities available-for-sale		(45,616	)		4,078		(8,345	)

(18) Fair Value of Financial Instruments

        The carrying amounts of cash and cash equivalents, receivables from corporate partners, accounts payable, and other current liabilities at December 31, 2007 and 2006 approximate fair value because

F-51

IMCLONE SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(18) Fair Value of Financial Instruments (Continued)

maturities are less than one year in duration. The fair value of the 1³/8% convertible senior notes of $600.0 million was approximately $564.8 million and $545.6 million at December 31, 2007 and 2006, respectively, based on their quoted market price. See Note 3 for the fair value disclosures of securities available for sale.

(19) Other Gain (Loss)

        Other gain (loss) for the year ended December 31, 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. For the year ended December 31, 2005, other gain (loss) is comprised of $13,000 of realized losses on securities available for sale.

(20) Quarterly Financial Data (Unaudited)

        The tables below summarize the Company's unaudited quarterly operating results for 2007 and 2006 (in thousands, except per share data):

	Three months ended
	March 31, 2007		June 30, 2007		September 30, 2007			December 31, 2007
Revenues	$	141,500	$	150,432	$	147,547		$	151,354
Net income (loss)	$	28,755	$	31,905	$	(916	)	$	(19,945	)
Basic earnings (loss) per share allocable to common stockholders	$	0.34	$	0.37	$	(0.01	)	$	(0.23	)
Diluted earnings (loss) per share allocable to common stockholders	$	0.33	$	0.36	$	(0.01	)	$	(0.23	)

	Three months ended
	March 31, 2006		June 30, 2006		September 30, 2006		December 31, 2006
Revenues	$	245,131	$	149,856	$	150,697	$	132 163
Net income	$	229,591	$	37,209	$	57,316	$	46,558
Basic earnings per share allocable to common stockholders	$	2.75	$	0.44	$	0.68	$	0.55
Diluted earnings per share allocable to common stockholders	$	2.51	$	0.42	$	0.65	$	0.53

F-52

QuickLinks

IMCLONE SYSTEMS INCORPORATED 2007 Annual Report on Form 10-K TABLE OF CONTENTS
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
PART I

ITEM 1. BUSINESS

ITEM 1A. RISK FACTORS

ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 2. PROPERTIES
ITEM 3. LEGAL PROCEEDINGS
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

ITEM 6. SELECTED FINANCIAL DATA.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
ITEM 9A. CONTROLS AND PROCEDURES.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

ITEM 9B. OTHER INFORMATION.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
ITEM 11. EXECUTIVE COMPENSATION.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

SIGNATURES
INDEX TO FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
IMCLONE SYSTEMS INCORPORATED CONSOLIDATED BALANCE SHEETS (in thousands, except per share and share data)
IMCLONE SYSTEMS INCORPORATED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share data)
IMCLONE SYSTEMS INCORPORATED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME (LOSS) Years Ended December 31, 2007, 2006 and 2005 (in thousands, except share data)
IMCLONE SYSTEMS INCORPORATED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)

EX-10.37

Exhibit 10.37

[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 TWO ASTERISKS ENCLOSED IN BRACKETS (i.e., [**]).  THE CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.]

AMENDED AND RESTATED

CO-DEVELOPMENT AND CO-COMMERCIALIZATION AGREEMENT FOR

ERBITUX ® IN JAPAN

AMONG

1.BRISTOL-MYERS SQUIBB COMPANY

2.E.R. SQUIBB & SONS, LLC

3.BRISTOL-MYERS K.K.

4.MERCK KGAA

5.MERCK SERONO JAPAN COMPANY, LIMITED
           AND

6.IMCLONE SYSTEMS INCORPORATED

DATED AS OF

October 12, 2007

Table of Contents

1.	DEFINITIONS	2
	1.1 Defined Terms	2
	1.2 Additional Defined Terms	19
2.	MANAGEMENT OF COLLABORATION	20
	2.1 General	20
	2.2 Steering Committee Japan	21
	2.3 Subcommittees	24
	2.4 Membership and Meetings of the Committees	31
	2.5 Decision-making	32
	2.6 Minutes	33
	2.7 Term	34
	2.8 Certain Committees and Boards	34
	2.9 Alliance Managers	35
	2.10 Cooperation	35
3.	DEVELOPMENT	36
	3.1 The Long-Term Development Plan	36
	3.2 Allocation of Development Responsibilities	39
	3.3 Interactions with Japanese Regulatory Authorities and Ethics Committees	41
	3.4 Conduct of the Co-Development	42
	3.5 Process Flows and Study Instructions	43
	3.6 Databases and Ownership of Results	43
	3.7 Reporting of Safety Information	44
4.	PAYMENT COSTS, AND REPORTING FOR DEVELOPMENT AND COMMERCIALIZATION PURPOSES	45
	4.1 General Obligations of the Parties	45

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	4.2 Development Costs	47
	4.3 Equal Sharing of Non-Sales Force Commercialization Activities Costs	49
	4.4 Reporting	50
	4.5 Reimbursements of Costs and Payment of Profit Or Loss	51
	4.6 Mode of Payment	53
	4.7 Records Retention	53
	4.8 Payment Audits	53
	4.9 Taxes	54
5.	OWNERSHIP OF INVENTIONS; USE OF RESULTS; PATENTS	54
	5.1 Ownership of Inventions made by the Parties	54
	5.2 Ownership of Inventions made by Third Parties	55
	5.3 Use of Inventions and Results	55
	5.4 Patent Enforcement, Patent Maintenance and Infringement	55
6.	COMMERCIALIZATION	56
	6.1 Generally	56
	6.2 Commercialization Plans and Budgets	56
	6.3 Equal Sharing of Sales Force Commercialization Efforts	60
	6.4 Diligent Efforts; Sales Efforts and Sales Representative Deployment	61
	6.5 Sales Force Capabilities; Training	66
	6.6 Co-Promotion Advertising and Promotional Materials	67
	6.7 Sales and Distribution in Japan	69
	6.8 Incentive Plans for Sales Representatives	69
	6.9 Sales Representatives	70
	6.10 Government, Group Purchasing and Other Accounts	72
7.	SHARING OF PROFIT OR LOSS	72
	7.1 Profit Or Loss	72
	7.2 Copromotion Term	72

Confidential Treatment has been requested by ImClone Systems Incorporated for portions of this document.

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	7.3 Profit-Sharing Adjustment	72
	7.4 Payments to our Reports by Affiliates	75
	7.5 Non-Cash Considerations	75
8.	MANUFACTURE AND SUPPLY	75
	8.1 General Manufacturing Structure: Manufacturing Plan and Budget	75
	8.2 Manufacturing Responsibilities	79
	8.3 Specifications, Forecasts, and Terms of Supply	80
	8.4 Shortage of Supply	81
	8.5 Inventory	82
	8.6 Manufacturing Costs and Fees	82
	8.7 Product Recall	83
	8.8 Post-Termination Manufacturing	83
	8.9 Other Covenants	86
9.	TRADEMARKS; PRODUCT MARKING	86
	9.1 Product Trademarks	86
	9.2 Other Proprietary Trademarks	87
	9.3 Product Trademark Infringement	88
	9.4 Patent Marking	89
10.	SUBLICENSING; COMMERCIALIZATION OF A COMPETING PRODUCT	89
	10.1 No Effect on Existing Agreements	89
	10.2 Effect of Commercialization of a Competing Product	89
	10.3 Sublicensing	91
	10.4 Maintenance of Third Party Agreements	92
11.	REPRESENTATIONS AND WARRANTIES	93
	11.1 Representations and Warranties of the Parties	93
	11.2 Disclaimer	94
12.	PUBLICATION; CONFIDENTIALITY	94

Confidential Treatment has been requested by ImClone Systems Incorporated for portions of this document.

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	12.1 Notification	94
	12.2 Review	94
	12.3 Confidentiality; Exceptions	95
	12.4 Exceptions to Obligation	96
	12.5 Limitations on Use	96
	12.6 Remedies	96
13.	INDEMNIFICATION; LIABILITY	96
	13.1 Mutual Indemnification	96
	13.2 Shared Liability Claims	96
	13.3 Procedure	98
14.	TERM; TERMINATION	99
	14.1 Term	99
	14.2 Termination of BMS-ImClone Agreement	100
	14.3 Termination of Merck-ImClone Agreement	102
	14.4 Termination of this Agreement for Cause	104
	14.5 Termination by Merck or BMS without Cause	105
	14.6 Effect of Expiration of Agreement or Termination Prior to First Approval	105
	14.7 Other Consequences of Termination	106
	14.8 Accrued Rights; Surviving Obligations	111
15.	FORCE MAJEURE	111
16.	MISCELLANEOUS	111
	16.1 Relationship of Parties	111
	16.2 Assignment	111
	16.3 Affiliates of the Parties	112
	16.4 Books and Records	112
	16.5 Further Actions	112
	16.6 Notice	112

Confidential Treatment has been requested by ImClone Systems Incorporated for portions of this document.

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16.7 Use of Name	114
16.8 Public Announcements	114
16.9 Waiver	114
16.10 Severability	114
16.11 Amendment	114
16.12 Governing Law; Submission to Jurisdiction	114
16.13 Arbitration	115
16.14 Entire Agreement	117
16.15 Parties in Interest	117
16.16 Descriptive Headings; Construction	117
16.17 Counterparts	118

Confidential Treatment has been requested by ImClone Systems Incorporated for portions of this document.

vi

THIS AMENDED AND RESTATED CO-DEVELOPMENT AND CO-COMMERCIALIZATION AGREEMENT FOR ERBITUX® IN JAPAN (this “Agreement”), effective as of October 12, 2007 (the “Restatement Effective Date”), is entered into by and among Bristol-Myers Squibb Company, a corporation organized and existing under the laws of the State of Delaware, having offices located at Route 206 & Province Line Road, Princeton, New Jersey (“Bristol”), 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 & Province Line Road, Princeton, New Jersey (“ERS”) (Bristol and ERS, collectively, “BMS”), Bristol-Myers K. K., a Japanese corporation, with its principal place of business at Shinjuku I-Land Tower, 5-1, Nishi-Shinjuku 6-chome, shinjuku-ku, Tokyo, 163-1328, Japan (“BMKK”), Merck KGaA, a German corporation with general partners organized and existing under the laws of the Federal Republic of Germany, having offices located at Frankfurter Straße 250, 64293 Darmstadt, Federal Republic of Germany (“Merck”), Merck Serono Japan Company, Limited, a Japanese corporation, with its principal place of business at 6F Meguro Tokyu Bldg., 2-13-17 Kamiosaki, Meguro-ku, Tokyo, 141-0021, Japan (“MJ”), 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 (“ImClone”).

PRELIMINARY STATEMENTS

WHEREAS, ImClone and Merck entered into that certain Development and License Agreement, dated December 14, 1998 (and, as amended heretofore or hereafter, hereinafter referred to as the “Merck-ImClone Agreement”), with respect to the development and marketing of ImClone’s chimerized monoclonal antibody to EGFR, known as C-225 (IMC-225, cetuximab), which is the active pharmaceutical ingredient in the product sold under the Erbitux® trademark;

WHEREAS, ImClone has granted to Merck under such Merck-ImClone Agreement worldwide outside of Canada, Japan and the United States of America (including all territories and possessions thereof) exclusive rights to develop and market Cetuximab;

WHEREAS, with respect to Japan, the Merck-ImClone Agreement provides that ImClone and Merck have co-exclusive rights to develop and market, with certain rights to sublicense, Cetuximab in Japan;

WHEREAS, ImClone, BMS and ERS entered into that certain Development, Promotion, Distribution and Supply Agreement, dated September 19, 2001 and as heretofore amended, pursuant to which, among other things, ImClone and BMS shall (i) co-develop and co-promote Cetuximab in the United States of America and Canada, and (ii) co-develop and co-promote Final Product in Japan, together with Merck (such agreement, as amended heretofore or hereafter, and hereinafter referred to as the “BMS-ImClone Agreement” and collectively with the Merck-ImClone Agreement, the Merck-ImClone Japan Agreement and the BMS-ImClone Japan Agreement, the “Existing Agreements”);

WHEREAS, MJ, a fully owned subsidiary of Merck, has expertise, amongst other fields, in the development and marketing of drugs in Japan;

WHEREAS, BMKK, a fully owned subsidiary of BMS, has expertise, amongst other fields, in the development and marketing of drugs in Japan and has a substantial presence in Japan with which to do so;

Confidential Treatment has been requested by ImClone Systems Incorporated for portions of this document.

WHEREAS, the Parties (as hereinafter defined), recognizing that drafting, negotiating and concluding the terms and conditions of a full and complete co-development and co-commercialization agreement for Final Product in Japan would be time consuming, entered into a Co-Development Agreement for Cetuximab in Japan effective as of December 15, 2004 (the “Co-Development Agreement”), which the Parties acknowledge and agree remained in full force and effect until amended and restated by this Agreement; and

WHEREAS, the Parties would like to amend and restate the Co-Development Agreement in order to provide for co-commercialization by the Parties of Final Product in Japan on the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the foregoing Preliminary Statements and the mutual agreements and covenants set forth herein, the Parties hereby agree as follows:

1.DEFINITIONS.

1.1Defined Terms.  As used in this Agreement, the following terms shall have the meanings set forth in this Article 1 unless context clearly and unambiguously dictates otherwise:

“Affiliate” with respect to any Party, shall mean any Person directly or indirectly controlling, controlled by or under common control with, such Party, for only so long as such control exists; provided that for purposes of this Agreement, neither ImClone nor any of its subsidiaries shall be deemed an Affiliate of BMS or its subsidiaries.  For the purposes of this definition, “control” when used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“Allowable Expenses” means, subject to the terms and conditions of this Agreement (including Section 3.1(c)), the following expenses that are specifically identifiable or reasonably allocable to the Commercialization of the Final Product in Japan:

[**]

“Alternative Final Product” means a product that incorporates the drug IMC-C225 (C225, cetuximab), in all forms, dosages, and presentations, and that is formulated, packaged, finished, labeled, and released for commercial sale and distribution in Japan under the Alternative Trademark.

“Antibody” means any antibody, or fragment thereof, whether human, humanized, chimeric, murine or from any other source (and including bispecific antibodies, single chain antibodies, and immunoconjugated antibodies), that (a) has been raised, engineered or otherwise optimized to bind specifically and directly to the Target (whether exclusively or in addition to any other target to which such Antibody may directly bind), and (b) once bound to the Target, competitively inhibits the binding of epidermal growth factor (EGF) (and other ligands, such as transforming growth factor-alpha) to the Target.  For clarification, any fusion protein comprised of a fragment of an Antibody and that uses such fragment in order to bind to the Target shall be considered an Antibody for purposes of this Agreement.  For sake of clarity and avoidance of doubt, Merck’s EMD72000 antibody and ImClone’s IMC-11F8 antibody are Antibodies within the meaning of this definition.

“API” means bulk cetuximab drug substance.

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“Applicable Law” means the applicable laws, rules and regulations, including any rules, regulations, guidelines, or other requirements of the Japanese Regulatory Authorities or other Regulatory Authorities, that may be in effect from time to time and apply to the activities contemplated under this Agreement.

“Approval” means receipt from the Japanese Regulatory Authorities of any and all approvals, licenses, registrations or authorizations necessary to market Final Product, including receipt of pricing/reimbursement approval, where applicable.

“Approved Commercialization Plan” means the then current Annual Commercialization Plan and Budget and the then current Long-Term Commercialization Plan and Budget, in each case as adopted or approved hereunder, as the case may be.

“Approved Indications” means those indications for which Final Product has received Approval in Japan.

“Approved Plan” means any of the then current Annual Commercialization Plan and Budget, the Long-Term Commercialization Plan and Budget, the Japan Manufacturing Plan and Budget, the Long-Term Development Plan, and the Annual Development Plan and Budget, in each case as adopted or approved by the SCJ hereunder, as the case may be and as the context may require. “Approved Plans” means all of the foregoing.  Where references in this Agreement refer to the conduct or performance of activities in accordance with an Approved Plan, such references shall be deemed not to refer to those non-binding components of the Long-Term Development Plan.

“Bad Debts” means amounts actually written off by MJ by reason of uncollectible Net Sales.  Should a Bad Debt which was written off be collected, such amount shall be included in Net Sales in the Quarter in which received.

“BMS-ImClone Japan Agreement” means that separate agreement executed between ImClone, BMKK and BMS dated as of the Restatement Effective Date, as the same may be amended or supplemented hereafter.

 “Business Day” means a day that is not a Saturday, Sunday or a day on which banking institutions in Tokyo, Japan are required by law to remain closed.

“Call Center” means the customer support center established in Japan by the Parties under the direction of the SCJ.

“Canada” shall mean Canada, including its possessions and territories.

“Cetuximab” shall mean a product that incorporates the chimeric antibody IMC-C225 (C225, cetuximab), in all forms of administration, dosages, and presentations.  For clarity, Cetuximab does not include humanized or human forms of C225.

“Change of Control” means, with respect to a Party, any of the following transactions with a Third Party (a “Third Party Acquirer”):  (a) a merger or consolidation of such Party (or of any of its Affiliates) with the Third Party Acquirer which results in the holders of the voting securities of such Party outstanding immediately prior thereto (other than the Third Party Acquirer, its “affiliates” and “associates” (as such terms are used in the Securities Exchange Act of 1934, as amended)) ceasing to represent, directly or indirectly, at least fifty percent (50%) of the combined voting power of the surviving entity (or, if applicable, its parent company) immediately after such merger or consolidation; (b) the sale to the Third Party Acquirer of all or substantially all of the business of such Party to which this Agreement relates

Confidential Treatment has been requested by ImClone Systems Incorporated for portions of this document.

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(whether by merger, consolidation, sale of stock, sale of assets or other similar transaction); or (c) the Third Party Acquirer (which shall not be any trustee or other fiduciary holding securities under an employee benefit plan of such Party, or any corporation owned directly or indirectly by the stockholders of such Party, in substantially the same proportion as their ownership of stock of such Party), together with any of the Third Party Acquirer’s “affiliates” or “associates”, as such terms are used in the Securities Exchange Act of 1934, as amended, becoming the beneficial owner of fifty percent (50%) or more of the combined voting power of the outstanding securities of such Party (or, if applicable, its parent company.  For purposes of this definition only, a Third Party, (i) with respect to BMS or BMKK, includes Merck, ImClone and their respective Affiliates, (ii) with respect to Merck or MJ, includes BMS, ImClone and their respective Affiliates, and (iii) with respect to ImClone, includes BMS, Merck and their respective Affiliates.

“Clinical Trial” means, with respect to Cetuximab or Final Product, a Phase I Clinical Trial, a Phase II Clinical Trial, a Phase III Clinical Trial (including a Phase IIIb Clinical Trial), or a Phase IV Clinical Trial, as the case may be, that (x) is conducted in Japan pursuant to an Annual Development Plan and Budget or (y) is conducted outside of Japan pursuant to an Annual Development Plan and Budget in support of registration of Cetuximab or Final Product in Japan and whose principal objective is to support registration in Japan as opposed to other geographies.  A Clinical Trial involving study subjects shall be deemed to have commenced when the first patient in such study has been enrolled.

“Commercialize” means to promote, market, distribute, sell (and offer for sale or contract to sell), import, provide product support for Final Product, or otherwise commercially exploit or use Final Product in Japan, including by way of example:

(a)detailing and other promotional activities in support of Final Product;

(b)advertising and public relations in support of Final Product, including market research, development and distribution of selling, advertising and promotional materials, field literature, direct-to-consumer advertising campaigns, media/journal advertising, and exhibiting at seminars and conventions;

(c)developing reimbursement programs and information and data specifically intended for national accounts, large health care organizations, governmental agencies (e.g., federal, state and local), and other group purchasing organizations, including pull-through activities;

(d)Co-Promotion activities not included in the above; and

(e)conducting journal advertising.

“Commercializing”, “Commercialization” and “Commercial” shall be interpreted accordingly.  To “Commercialize” is exclusive of manufacturing activities.

“Competing Product” means any pharmaceutical product (other than Final Product) for which marketing authorization has been filed with the Japanese Regulatory Authorities for an oncology Indication that is the same as any oncology Indication for which a marketing authorization is or has been filed or received for Final Product in Japan, and wherein such pharmaceutical product is comprised in whole or in part of any (i) Antibody or (ii) any compound or other substance that (A) has been developed, synthesized, engineered or optimized to bind specifically and directly to the Target and (B) once bound to the Target, competitively inhibits the binding of epidermal growth factor (EGF) (and other ligands, such as transforming growth factor-alpha) to the Target.  For sake of clarity and avoidance of doubt, (1)

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the conduct of preclinical research and clinical development are not activities that, for purposes of this definition and this Agreement only, would cause a product to be treated as a Competing Product; and (2) the determination of whether a product is a Competing Product shall be made without regard to the timing of the filing or Approval of such Competing Product and the Final Product (i.e., it shall not be affected by whether the Competing Product or the Final Product was the first to file or receive approval for an overlapping oncology Indication).

“Co-Promote” means to perform jointly those activities normally undertaken by a pharmaceutical company’s sales force to implement marketing plans and strategies aimed at encouraging the appropriate use of a product under such product’s Trademark.  It is agreed that this definition is not intended to alter the Diligent Efforts obligations that a Party is or may be required to devote under this Agreement or any Existing Agreement.  “Co-Promotion” shall be interpreted accordingly.

 “Corporate Names” means (a) in the case of ImClone, the Trademark ImClone® and the ImClone corporate logo or such other names and logos as ImClone may designate in writing from time to time, and (b) in the case of BMS, the Trademarks Bristol-Myers Squibb®, E.R. Squibb®, and the BMS corporate logo or such other names and logos as BMS may designate in writing from time to time, and (c) in the case of Merck, the Trademark Merck® and the Merck corporate logo or such other names and logos as Merck may designate in writing from time to time, and, in each case ((a), (b) and (c)), together with any variations and derivatives thereof.

“CRO” means a Third Party clinical research organization.

“Detail” means, with respect to Final Product, a face-to-face contact (including a live video presentation or a group presentation, if in accordance with an Annual Commercialization Plan and Budget) between a Sales Representative and a physician or other medical professional licensed in Japan to prescribe drugs, during which a Primary Position Detail or Secondary Position Detail is made to such person, in each case as measured by each Party’s internal recording of such activity in accordance with Section 6.4(e); provided, that such meeting is in compliance with Applicable Law and this Agreement.  When used as a verb, “Detail” shall mean to engage in a Detail.  For the avoidance of doubt, any contact or presentation between a Sales Representative and a large health care organization (as distinguished from calls on individual physicians or other medical professionals licensed to prescribe drugs who may be affiliated with a large health care organization, in connection with their professional prescribing decisions (but not with respect to the large health care organization’s formulary)) shall not be considered a Detail for purposes of this Agreement.

“Develop” means, with respect to Cetuximab or Final Product, those activities that, in general, are necessary for the development of Cetuximab and Final Product for registration in Japan (including as encompassed by the definition of Clinical Trials under this Agreement), to obtain and maintain Approval(s) for Final Product in Japan (including to support pricing/reimbursement), and to support appropriate usage for Final Product in Japan, including analysis, testing, any necessary pre-clinical studies required by Japanese Regulatory Authorities, and development activities pertaining to lifecycle management (including the conduct of Phase IIIb Clinical Trials and Phase IV Clinical Trials not explicitly for registrational purposes), new indications, and, if applicable, new formulations developed specifically for the Japan market, including, by way of example, the activities listed in the definition of Development Costs below.  “Developing” and “Development” shall have correlative meanings.

“Development Costs” has the meaning set forth in Section 4.2(a).

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“Diligent Efforts” means, for a Party, the performance of obligations in a sustained manner consistent with the efforts such Party devotes to a product of similar market potential  resulting from its own research efforts, based on conditions then prevailing and taking into account the terms of this Agreement, but without regard to whether such Party is also developing a potential Competing Product or commercializing a Competing Product; provided, however, if, with respect to the Commercialization or manufacture of Final Product, a Party does not have any such product of similar market potential, such Party shall use commercially reasonable efforts in the performance of its obligations hereunder.  Notwithstanding the forgoing, the applicable Diligent Efforts that a Party is required to apply under this Agreement shall not alter or supersede, or modify the interpretation of, the Diligent Efforts that a Party may be required to exercise under the Existing Agreements.  For emphasis, the diligence obligation owed to ImClone under this Agreement by Merck, on the one hand, and by BMS, on the other, shall be determined by the diligence obligations owed to ImClone by Merck and BMS, respectively, under the Existing Agreements.

“Distribution Costs” means the [**] as an expense by a Party or any of its Affiliates after the Restatement Effective Date that are specifically identifiable or reasonably allocable to the Commercial distribution of Final Product in Japan by a Party during the Co-Promotion Term, including: [**].

“Existing Committees” shall mean the Joint Executive Committee established under the BMS-ImClone Agreement and the Merck/ImClone Steering Committee established pursuant to the Merck-ImClone Agreement.

“Experienced Arbitrator” means a mutually acceptable, disinterested, conflict-of-interest-free individual not affiliated with any of the Parties or their Affiliates who (a) with respect to disputes of a primarily legal, scientific, technical or regulatory nature hereunder shall be an individual with appropriate legal, scientific, technical or regulatory expertise to resolve such disputes, or (b) with respect to disputes of a primarily business or financial nature (e.g., disputes referred for resolution pursuant to “baseball arbitration” under Section 16.13(a)) shall be an individual who possesses appropriate expertise to resolve such disputes.  The arbitrator shall not be or have been at any time an Affiliate, employee, officer or director of any of the Parties or any of their respective Affiliates, or, at any time within the five years preceding the arbitration, a consultant of any of the Parties or any of their respective Affiliates.

“FDA” shall mean the United States Food and Drug Administration, or any successor thereto.

“Final Product” means a product that incorporates Cetuximab, in all forms, dosages, and presentations, and that is formulated, packaged, finished, labeled, and released for commercial sale and distribution in Japan under the Erbitux® Trademark.

“Fully Burdened Manufacturing Costs” for any component or item comprising API or Final Product means 100% of a Party’s fully burdened manufacturing cost (as defined in the Party’s generally accepted accounting policies consistently applied) that is (x) supplied by a Third Party and/or (y) directly manufactured or supplied by a Party or an Affiliate of such Party, determined as follows:

In the case of clause (x) above, Fully Burdened Manufacturing Costs means those amounts that are payable to a Third Party and incurred by a Party or its Affiliates in connection with the manufacture or supply of API or Final Product, including [**].

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Fully-Burdened Manufacturing Costs incurred by a Party or its Affiliates (other than Fully-Burdened Manufacturing Costs that are payable to a Third Party, as discussed above) shall comprise the sum of:

(a)For API:

Cost of Raw Materials

The purchase unit cost of raw materials multiplied by [**].

Direct Labor and Allocable Overhead Costs:

The cost of direct labor and manufacturing overhead resources consumed in the production process [**].

Costs will include any efficiency, activity and spending variances from standards as well as any underabsorbed overhead expenses incurred during the startup of the biologic operation for the Final Product or caused by subsequent evolution of the Final Product’s volumes sold in Japan, [**].

Manufacturing overhead includes the following costs:

-Normal depreciation of building, machinery and equipment

-Plant management

-Plant services and utilities

-Plant maintenance

-Quality control at all stages

-Freight and storage costs at all stages

-Cost accounting and data processing services

-Any taxes and duties other than VAT and income tax

(b)For the Processing of API into Final Product:

Cost of Raw Materials

The purchase unit cost of any materials and packaging components necessary to make the finished goods (including the API) [**].

Direct Labor and Overhead Costs

The cost of direct labor and overhead resources consumed in the manufacturing process, [**].

[**]

The manufacturing overhead will include:

-Normal depreciation of fixed assets

-Plant management

-Plant common services and utilities

-Plant maintenance

-Quality control at all stages

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-Subject to Section 8.6(b), reasonable manufacturing plant capacity reservation fees to the extent reasonably allocable to binding forecasts of production of Final Product for sale or use in Japan

-Freight and storage costs at all stages

-Cost accounting and data processing services

-Any taxes and duties other than VAT and income tax.

For the avoidance of doubt, Fully Burdened Manufacturing Cost shall in both cases described in subsections (a) and (b) above (as well as for purposes of item (x) in the first paragraph of this definition of Fully Burdened Manufacturing Cost), [**].

“FTE” means the equivalent of the work of one (1) employee full time for one (1) year (consisting of at least a total of [*] hours per year, or such other number as may be agreed by the SCJ) of work directly related to the Commercialization of Final Product or any other activities contemplated under this Agreement.  No additional payment shall be made with respect to any person who works more than [*] hours per year (or such other number as may be agreed by the SCJ), and any person who devotes less than [*] hours per year (or such other number as may be agreed by the SCJ) shall be treated as an FTE on a pro-rata basis, to be calculated upon the actual number of hours worked divided by [*] (or such other number as may be agreed by the SCJ).

“FTE Cost”, for a given employee performing services under this Agreement, means the FTE Rate for such category of employee as established under Section 4.1(e) and as adjusted subsequently in accordance with Section 4.1(e), multiplied by the percentage of time devoted by such employee to the applicable task.

“GAAP” shall mean generally accepted accounting principles in the United States, consistently applied by ImClone or BMS, as the case may be.

“Good Manufacturing Practices” or “cGMP” means current good manufacturing practices for biological and other pharmaceutical products (and components thereof) as described in regulations promulgated by the Japanese Regulatory Authorities or other Regulatory Authorities (such as FDA), as updated and applicable  from time to time.

“IFRS” shall mean International Financial Reporting Standards, consistently applied by Merck.

“Indication” shall mean a specific disease indication and which, in the case of oncology, shall be differentiated by tumor type (e.g., colorectal cancer, non-small cell lung cancer and the like are separate Indications).  Any lines of therapy within a given tumor type shall not be deemed separate Indications.  For the sake of clarity, approval of new lines of therapy within a given tumor type (e.g., 1^st line, 2^nd line, 3^rd line or adjuvant) shall not be considered as new Indications for purposes of this Agreement, including for purposes of Section 3.1(c) and Article 6 of this Agreement (including Section 6.4(b)(i)).

“Invention” shall mean any new or useful process, compound, composition of matter, improvements, discoveries, claims, formulae, processes, trade secrets, technologies and know-how (including confidential data and Confidential Information), to the extent relating to, derived from and useful for the manufacture, use or sale of Final Product (including the formulation, delivery or use thereof in pharmaceutical applications for human health), including synthesis, preparation, recovery and purification processes and techniques, control methods and assays, chemical data, toxicological and pharmacological data and techniques, clinical data, medical uses, product forms and product formulations and specifications, whether

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patentable or unpatentable; and in each case, limited to those Inventions conceived or first reduced to practice or demonstrated to have utility in the performance of activities undertaken under, and in direct connection with the co-development and/or co-commercialization activities undertaken by or on behalf of a Party or two or more Parties pursuant to and during the term of, this Agreement, as contemplated herein.

“Japan” shall mean Japan, including its possessions and territories.

“Japanese Regulatory Authorities” shall mean the health regulatory authority(ies) in Japan, and any successor(s) thereto.

“JNDA” means a regulatory filing made with the Japanese Regulatory Authorities that seeks Approval to market and sell a Final Product in Japan for a given Indication.

“Launch” means the first commercial sale of a Final Product to the general public in Japan after Approval for the marketing and sale of such Final Product has been obtained for its first Indication in Japan.

“Long-Term Development Plan” means the written Development plan then approved by the SCJ for Development in Japan, which plan shall include:

(A)a binding section, which shall indicate those specific Clinical Trials that the Parties have agreed to conduct under this Agreement with respect to Japan, and which shall include, where agreed upon:  (i) a budget for such Clinical Trials (or a good faith estimate if a firm budget is not reasonably practicable), (ii) any plans involving a CRO for such Clinical Trials, (iii) to the extent known, estimated timelines for the initiation and completion of such Clinical Trials, (iv) to the extent known, key endpoints for such Clinical Trials, (v) to the extent known, any specific allocation of responsibilities among the Parties with respect to the implementation of such Clinical Trials, (vi) if applicable, any go/no-go criteria for a given study, and (vii) if applicable, any clinical studies being conducted outside the Development Plan (and which will not be shared as Development Costs under this Agreement) that will be used to bridge to or support the Clinical Trials; and

(B)a non-binding section, which shall indicate those Indication(s), new line(s) of therapy within an Indication, preclinical studies and/or Clinical Trials that the Parties are contemplating but have not yet agreed to conduct with respect to Japan, which section may include (i) a good faith estimate of the budget for the Development of the Indications, lines of therapy, and/or conduct of those studies, (ii) any other or related significant Development related activities contemplated for Japan, (iii) any plans involving a CRO, (iv) to the extent known, estimated timelines, (v) to the extent known, key regulatory activities and any material regulatory strategies relating to such Indications, lines of therapy, and/or studies, and (vi) any contemplated allocation of responsibilities among the Parties with respect to the implementation of the Long-Term Development Plan.

Where references in this Agreement refer to the implementation of, or the conduct or performance of activities in accordance with, or subject to, an Approved Plan or a Long-Term Development Plan, such references shall be deemed to refer only to the binding components of the Long-Term Development Plan and not to those non-binding components of the Long-Term Development Plan.

“Marketing Costs” means, subject to Sections 4.1, 4.3(a) and 4.3(b), [**].

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“Medical Education Activities” means activities designed to ensure or improve appropriate medical use of, conduct medical education of, or further research regarding, Final Product sold in Japan, including by way of example:

[**]

“Medical Education Costs” means, subject to Sections 4.1, 4.3(a) and 4.3(c), [**] an expense by BMKK, MJ or any of their Affiliates after the Restatement Effective Date that are approved by the SCJ or incurred in accordance with an Annual Commercialization Plan and Budget and that are specifically identifiable or reasonably allocable to Medical Education Activities with respect to Final Product Commercialization efforts of MJ and BMKK in Japan during the Co-Promotion Term, together with any such costs incurred in excess of the budget set forth in the Annual Commercialization Plan and Budget for same that are approved by the JJCC or SCJ.

“Merck-ImClone Japan Agreement” means that separate agreement executed between ImClone and Merck, dated as of the Restatement Effective Date, as the same may be amended or supplemented hereafter.

“Net Sales” means the amount billed or otherwise charged by the final billing Party, an Affiliate or any permitted (sub)licensee for sales or other dispositions of Final Product to a Third Party, less (to the extent not reimbursed or refunded to the final billing Party):

(a)normal and customary discounts (including cash discounts and quantity discounts), retroactive price reductions, charge-back payments (or their equivalent) and rebates allowed, paid, or granted to managed health care organizations or to national, state/provincial, local and other governments in Japan, their agencies, and purchasers and reimbursers or to trade customers as accrued by such Party in accordance with its customary practices in accordance with GAAP or IFRS, as applicable to such Party;

(b)credits or allowances accrued for claims, damaged goods, rejections or returns of such Final Product, including Final Product returns in connection with recalls or withdrawals (to the extent the recall or withdrawal is not attributable to the negligence of the Party booking the Net Sale);

(c)freight out, postage, shipping and insurance charges for delivery of Final Product (excluding such charges that are included in Distribution Costs), to the extent that such items are included in the gross amount billed; and

(d)taxes or duties levied on, absorbed or otherwise imposed on sale of such Final Product, including value-added taxes, tariffs, excise taxes, or other governmental charges otherwise imposed upon the billed amount, as adjusted for rebates and refunds, to the extent not paid by the Third Party or otherwise reimbursed (but not including taxes assessed against the income derived from such sale.

Net Sales shall not include sales between a Party and its Affiliates, but shall arise upon the sale by a Party or its Affiliates to unrelated Third Parties, such as end users, wholesalers and retailers.  Net Sales, as set forth in this definition, shall be calculated applying, in accordance with GAAP or IFRS, as applicable to such Party, the standard accounting practices that a Party customarily applies to other products sold by it.  [**].

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“Other Operating Expenses” means other operating costs recorded as an expense by BMKK, MJ or any of their Affiliates after the Restatement Effective Date that relate to the manufacture or Commercialization of Final Product by a Party in Japan, that fall within the following cost categories, and that are specifically identifiable to or reasonably allocable to the manufacture of Final Product by a Party for use or sale in Japan or to Final Product Commercialization efforts of a Party in Japan:

[**]

The methodology used to determine the amount of each item set forth above shall be developed by the JJFC and approved by the SCJ.

“Packaging and Release” means those activities undertaken in connection with this Agreement to place a label on filled vials, package (both primary and secondary packaging) such vials, conduct QA/QC, and release Cetuximab or Final Product for use or sale in Japan.  Packaging and Release also includes the conduct of a market life stability program, whether performed in or outside of Japan, including, without limitation, the timely preparation and delivery of summary tables and reports to support regulatory filing submissions for Finished Product for Commercialization in Japan according to stability protocols and other requirements that are agreed to by the JJMC and as may be modified by the JJMC from time to time.

“Party” shall mean, as applicable, Merck, MJ, ImClone, BMS, or BMKK and, when used in the plural, shall mean Merck, MJ, ImClone, BMS, and BMKK.

“Party Group” shall mean either (i) Merck and MJ, or (ii) ImClone, BMS, and BMKK.

“PDC” shall mean the Product Development Committee established pursuant to the BMS-ImClone Agreement.

“PDE” or “Primary Detail Equivalent” means a primary Detail equivalent where (a) a Primary Position Detail has a value of [**] PDE, and (b) a Secondary Position Detail has the value of [**] PDE.  The procedures for determining PDEs in a group presentation are set forth on Exhibit 1.1(b) hereto.

“PDE Rate” means the fully-burdened cost of providing an oncology PDE in Japan, as initially established and thereafter adjusted in accordance with Section 6.3(b).

“Person” shall mean an individual or a corporation, partnership, association, trust, or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

“Phase IIIB Clinical Trial” means (a) a product support human clinical trial of Final Product (i.e., a clinical trial that is not required for receipt of Approval for an Indication in Japan or new line of therapy within an Indication, but which may be useful in providing additional drug profile data in support of such Approval in Japan for such Indication or new line of therapy) that is commenced before receipt of Approval for such Indication (or new line of therapy) in Japan, or (b) a clinical trial that is required or advised by a Japanese Regulatory Authorities as a condition of or in connection with obtaining or maintaining a regulatory approval for an Indication  or new line of therapy (and that is commenced after receipt of such regulatory approval).

“Phase IV Clinical Trial” means (a) a human clinical trial, or other test or study, of Final Product commenced after receipt of initial Approval for an Indication (or for a new line of therapy within an Indication) in Japan that is conducted within the parameters of the labeling

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approved for the Final Product, other than Phase IIIB Clinical Trials, and (b) investigator sponsored clinical trials of Final Product that are not set forth in the Annual Development Plan.  Phase IV Studies may include clinical trials, or other tests and studies, conducted in support of pricing/reimbursement for an initial Approval, epidemiological studies, modeling and pharmacoeconomic studies, and post-marketing surveillance studies.  For clarity, the funding, the design, and the scientific integrity (and related matters) of any Phase IV studies are to be approved by the JJDC and not the JJCC.

“Primary Position Detail” means a Detail in which [**].

“Profit Or Loss” means, subject to Sections 3.1(c), 6.4(f), 7.2 and 7.3, Net Sales of Final Product in Japan, less Allowable Expenses in Japan.  For sake of clarity, Profit Or Loss shall be determined prior to application of any income taxes, and if such terms are used individually, “Profit” shall mean a positive Profit Or Loss, and “Loss” shall mean a negative Profit Or Loss.

“QA” means quality assurance activities conducted in accordance with Good Manufacturing Practices.

“QC” means quality control activities conducted in accordance with Good Manufacturing Practices.

“Quarter” means each of the three (3) month periods ending on March 31, June 30, September 30 and December 31; provided that the first Quarter during the term of this Agreement shall commence on the Restatement Effective Date and end on December 31, 2007.

“Regulatory Authority” means any national (for example, the FDA in the United States) or supra-national (for example, the European Agency for the Evaluation of Medicinal Products) agency or other governmental entity authorized and empowered to grant regulatory approvals necessary to market Cetuximab outside of Japan.

“Regulatory Costs” means [**] an expense by a Party or any of its Affiliates after the Restatement Effective Date (including filing, user, maintenance and other fees paid to Japanese Regulatory Authorities) (i) that are incurred in accordance with an Approved Commercialization Plan, the Japan Manufacturing Plan and Budget, or an Approved Annual Development Plan and Budget, or are otherwise approved by the SCJ, and (ii) that are specifically identifiable or reasonably allocable to the preparation of regulatory submissions for, and the obtaining and maintenance of any Approval of, any Final Product in Japan, including [**].  Such Regulatory Costs shall be appropriately allocated between the Approved Commercialization Plan and the Approved Development Plan.  For sake of clarity, Regulatory Costs relating to Development activities for the purpose of obtaining regulatory Approval for an Indication (or new line of therapy within an existing approved Indication) for Cetuximab or Final Product in Japan to be considered Development Costs, while Regulatory Costs incurred in connection with obtaining pricing or reimbursement approval, maintenance of Approvals, or Phase IV Clinical Trials to be considered Allowable Expenses.

“Representative” means such individual as a Party is entitled to and has appointed to the SCJ, a Subcommittee or Working Group from time to time in accordance with this Agreement.  Each Party will endeavor to appoint individuals who are appropriate to, and have pertinent experience with respect to, the functions of the SCJ, Subcommittee or Working Group.  For clarity, the appointment or qualifications of a Party’s Representatives are not subject to approval by the other Parties.

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“Results” shall mean all data and information discovered or developed under or in connection with a Study, the Annual Development Plan and Budget, and/or the Development activities contemplated under this Agreement.

“Sales Costs” means [**] an expense by a Party or any of its Affiliates after the Restatement Effective Date that are approved by the SCJ or incurred in accordance with the then Approved Commercialization Plan and Budget and that are specifically identifiable or reasonably allocable to the sales efforts during the Co-Promotion Term for Final Product to all markets in Japan, together with any such costs incurred in excess of the budget set forth in the Annual Commercialization Plan and Budget for same that are approved by the JJCC or SCJ.  Subject to the foregoing, for sake of clarity, Sales Costs shall include the following costs paid or incurred by a Party associated with the following:

[**]

“Sales Representative” of a Party means (a) an employee of such Party or an Affiliate of such Party or (b) an individual independent contractor engaged by such Party or Affiliate (but only to the extent expressly permitted by Section 6.9(b) of this Agreement or by agreement of the BMKK/BMS and MJ/Merck members of the JJCC) to Co-Promote Final Product on behalf of such Party, in either case (i) who is responsible for meeting in person with customers and others who can buy or prescribe (or influence the buying or prescribing process and decisions regarding buying or prescribing) the Final Product in Japan, and (ii) whose success at such activities is a significant factor in the ongoing employment or engagement, and compensation, of the individual, excluding in each case (x) those employees or independent contractors of either Party or such an Affiliate that are solely engaged in telemarketing, professional education or other indirect activities in support of direct selling and (y) Medical Liaisons.

“Secondary Position Detail” means a Detail in which [**].

“Semi-Annual Period” means any period consisting of two (2) consecutive Quarters; provided that each Semi-Annual Period shall begin on the day following the last day of a previous Semi-Annual Period.

“Specifications” means the specifications for the manufacture, labeling, packaging, storage, shipment, and release of the Final Product, as set forth in an applicable JNDA or other regulatory filing (e.g., a drug master file (as defined in the Code of Federal Regulations)) or Approval then in effect from time to time.

“Target” means the extracellular domain of the human epidermal growth factor receptor (EGFR, HER1, c-ErbB-1).

“Third Party” shall mean any Person who or which is neither a Party nor an Affiliate of a Party.

“Third Party Milestone Payments” means up-front fees (including any fees paid in installments) and milestones and other payments  payable to a Third Party in consideration for rights necessary or useful for (i) the Commercialization or use of the Final Product in Japan, or (ii) the manufacture of the API or Final Product anywhere in the world for the purpose of, but only to the extent fairly and reasonably allocable to, the Commercialization or use of the Final Product in Japan, but excluding amounts paid in the form of Third Party Royalties.

“Third Party Payments” means Third Party Milestone Payments and Third Party Royalties.  The Third Party Payments as of the Restatement Effective Date are listed on Exhibit 1.1(a).

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“Third Party Royalties” means royalties (but excluding any royalties or other payments that are not tied to sales of Final Product) payable to a Third Party in consideration for rights necessary or useful for (i) the Commercialization or use of the Final Product in Japan, or (ii) the manufacture of Final Product anywhere in the world for the purpose of, and to the extent fairly and reasonably allocable to, the Commercialization or use of the Final Product in Japan.

“Trademark” shall include any word, name, symbol, color, designation or device or any combination thereof, including any trademark, trade dress, service mark, service name, brand mark, trade name, brand name, logo or business symbol, that is used in connection with distribution, marketing, promotion and sale of the Final Product in Japan, but excluding the Corporate Names of any Party and its Affiliates and variants thereof.

“United States” or “U.S.” shall mean the United States of America, including its possessions and territories.

1.2Additional Defined Terms.  The following additional defined terms shall have the meanings set forth in the sections of this Agreement listed below:

Defined Term	Section Where Defined
“Agreement”	Preliminary Statement
“Alliance Manager”	2.9
“Alternative Trademark”	3.2(c)(iv)
“Annual Commercialization Plan and Budget”	6.1(a)
“Annual Development Plan and Budget”	3.1(a)
“Audited Party(ies)”	4.8(b)
“Auditing Party(ies)”	4.8(b)
“Bankrupt Party”	4.9(a)
“Benefit Plans”	6.9(h)
“BMKK”	Preliminary Statement
“BMKK/MJ NSF Commercialization Activities Costs”	4.3(a)
“BMS”	Preliminary Statement
“BMS-ImClone Agreement”	Preliminary Statement
“BMS Manufactured Component”	8.8(b)
“Breaching Party(ies)”	14.2
“Claims”	13.2
“Clinical Trial Expense Overrun”	4.2(c)
“Co-Development Agreement”	Preliminary Statement
“Collaboration”	2.1(b)
“Company Invention”	5.1
“Competing Product Party”	10.2(a)
“Confidential Information”	12.3
“Co-Promotion Term”	7.2
“Courts”	16.12(b)
“CSO”	6.9(b)
“CTNs”	3.2(c)(ii)
“Declining Party”	7.3(a)(ii)
“Duplicate Database”	3.6(a)
“Existing Agreements”	Preliminary Statement
“fill/finish”	8.2(c)(i)
“FM Shortage”	8.4
“FTE Rate”	4.1(e)

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Defined Term	Section Where Defined
“General Invention”	5.2
“Good Faith Challenge”	10.4
“Hiring Party”	6.9(h)
“ImClone”	Preliminary Statement
“ImClone Manufactured Component”	8.8(c)
“Indemnifying Party”	13.3(c)
“Indemnifying Party”	13.3(c)
“Initial Training Period”	6.5(c)(i)
“Interested Party”	3.1(c)
“Japan Agency Agreement”	3.2(b)
“Japan Manufacturing Plan and Budget”	8.1(a)
“Joint Japan Commercialization Committee” or “JJCC”	2.1(b)
“Joint Japan Development Committee” or “JJDC”	2.1(b)
“Joint Japan Finance Committee” or “JJFC”	2.1(b)
“Joint Japan Manufacturing Committee” or “JJMC”	2.1(b)
“Long-Term Commercialization Plan and Budget”	6.1(a)
“Losses”	13.1
“Manufacturing Cost Worksheet”	8.1(c)(iii)
“Marketing Expense Overrun”	4.3(b)
“Marketing Materials”	6.6(a)
“Master Database”	3.6(a)
“Medical Education Expense Overrun”	4.3(c)
“Merck”	Preliminary Statement
“Merck-ImClone Agreement”	Preliminary Statement
“Merck Manufactured Component”	8.8(a)
“MJ”	Preliminary Statement
“Non-breaching Party(ies)”	14.2
“Non-Interested Party”	3.1(c)
“Non-Qualifying Details”	6.4(b)(ii)
“Party” or “Parties”	Preliminary Statement
“Product Trademark”	9.1(a)
“Promotional Data”	6.4(e)
“Providing Party”	6.2(b)(v)(1)
“Quarterly PDE Amount”	6.4(b)(i)
“Reassigned”	6.2(b)v)(3)
“Recall”	8.7(a)
“Related Invention”	5.2
“Requesting Party”	6.2(b)(v)(1)
“Restatement Effective Date”	Preliminary Statement
“Shortfall Party”	6.4(f)(iii)
“Steering Committee Japan” or “SCJ”	2.1(b)
“Subcommittee”	2.1(b)
“Sublicense Proposing Party”	10.3(c)
“Sublicensee”	10.3(c)
“Third Party Acquirer”	Definition of Change of Control
“Trademark Infringement Claims”	9.3(a)

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Defined Term	Section Where Defined
“Uncured Material Default”	14.4(a)
“Working Group”	2.8(a)

2.MANAGEMENT OF COLLABORATION.

2.1General

(a)General Scope.  The collaboration among the Parties set forth in this Agreement shall be composed of and limited to:

(i)the co-Development and regulatory activities of the Parties undertaken with the intention to obtain marketing authorizations for Final Product in Japan.  The Clinical Trials described in detail in the Annual Development Plan and Budget and the binding portion of the Long-Term Development Plan attached as Exhibit 3.1(a) hereto are those Clinical Trials with respect to which the Parties have currently agreed to pursue for Final Product in Japan;

(ii)the co-Commercialization by BMKK and MJ of Final Product in Japan; and

(iii)the manufacture and supply of Cetuximab for co-development, and of Final Product for co-Commercialization, in Japan.

(b)Committees and Subcommittees.  Subject to the terms and conditions of this Agreement, the Parties have established or shall establish (i) a joint steering committee (the “Steering Committee Japan” or “SCJ”) that will oversee the Parties’ activities under this Agreement (the “Collaboration”) and facilitate communications between the Parties with respect to the Development, Approval, manufacturing and Commercialization of the Final Products hereunder, and (ii) four (4) specialized joint subcommittees (“Subcommittees”) consisting of one to focus on each of the following areas:  Development and Approval and other regulatory matters (such Subcommittee, the “Joint Japan Development and Regulatory Committee” or “JJDC”), Commercialization (such committee, the “Joint Japan Commercialization Committee” or “JJCC”), manufacturing (such committee, the “Joint Japan Manufacturing Committee” or “JJMC”), and financial (such committee, the “Joint Japan Financial Committee” or “JJFC”), respectively, arising out of the Collaboration.  Each Committee shall have the responsibilities and authority allocated to it in this Article 2 and elsewhere in this Agreement.  The Parties intend that their respective organizations will work together to assure the success of the Collaboration.

(c)Reservation of Rights in a Party.  Notwithstanding the Committee structure established pursuant to Section 2.1(b) to oversee the Collaboration, each Party shall retain the rights, powers and discretion granted to it under this Agreement, and no such rights, powers, or discretion shall be delegated to or vested in the SCJ or a Subcommittee unless such delegation or vesting of rights is expressly provided for in this Agreement or the Parties expressly so agree in writing.  The Parties hereby agree that the following matters are outside the jurisdiction and authority of the SCJ and the Subcommittees:  (i) the amendment, modification or waiver of compliance with this Agreement, which shall require mutual written agreement of the Parties, and (ii) such other matters as are expressly reserved to the consent, approval, agreement or other decision-making authority of any one or more Parties in this Agreement, whether or not required by this Agreement to be considered by the SCJ one or more Subcommittees prior to the exercise of such consent, approval or other decision-making authority.

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(d)No Effect on Existing Agreements.  Except as provided in Section 16.14(c), no decision by the SCJ or any Subcommittee may affect, alter or modify a Party’s obligations under any of the Existing Agreements, as amended by this Agreement.

2.2Steering Committee Japan.  The Steering Committee Japan shall be responsible for overseeing and coordinating each Party’s co-Development and co-Commercialization activities as set forth in, and subject to the terms of, this Agreement. Subject to the terms of this Agreement, the SCJ shall have overall responsibility for the success of the Collaboration, and its general areas of responsibility shall be: (i) to determine the Development, regulatory, Commercialization, and manufacturing strategy for the Collaboration, (ii) to coordinate the Parties’ activities hereunder, and (iii) as applicable, to review, comment on, approve, and resolve disputes with respect to, plans and budgets for, and the implementation of, the Collaboration, including the specific responsibilities of the SCJ outlined below.  The SCJ shall have the membership and shall operate by the procedures set forth in Sections 2.4, 2.5 and 2.6.  In particular, and subject to Sections 3.1(c) and 10.2 and to Article 14 of this Agreement, the SCJ shall have the following specific responsibilities:

(a)Development and Regulatory Responsibilities.  Subject to Section 3.1(c), the SCJ shall:  (1) approve the Development and regulatory strategy for the Final Product, (2) provide a forum for coordination of the Parties’ Development and regulatory activities under this Agreement, and (3) as applicable, review, comment on, approve, and seek to resolve disputes with respect to, Development plans and budgets for, and the implementation of, the Development and regulatory strategy for, the Final Product.  The Long-Term Development Plan, as of the Restatement Effective Date, is as set forth in Exhibit 3.1(a) hereto.  The SCJ may amend or supplement the Long-Term Development Plan, and make any decision necessary to fulfill the Long-Term Development Plan in accordance with this Agreement.  In particular, the SCJ shall have the following specific responsibilities with respect to the Development and registration of the Final Product in Japan:

(i)subject to Section 3.1(c), review and approve all Annual Development Plans and Budgets, and all updates, amendments and modifications to, and waivers of provisions of, each Annual Development Plan and Budget and the Long-Term Development Plan, including whether to pursue the Development of an additional Indication (or a new line of therapy within an existing approved Indication), the termination of an Indication (or line of therapy) then being developed, or the initiation or cessation of other additional Development activities;

(ii)review and approve each Annual Development Plan and Budget or any changes thereto approved by the JJDC, and resolve any disputes at the JJDC with respect to the Annual Development Plan and Budget or any changes thereto;

(iii)monitor progress of the ongoing Clinical Trials and any future Clinical Trials added to the binding and non-binding sections of the Long-Term Development Plan, identify issues and provide necessary resources, tools and ideas to solve such issues;

(iv)establish and develop common working structures (e.g., use of common databases, investigator brochures, exchange of safety information);

(v)review and comment upon interactions with the Japanese Regulatory Authorities pursuant to Article 3 hereof;

(vi)review, modify and approve, and ensure consistency between, draft JNDAs for Cetuximab proposed by BMKK, as agent for ImClone, and MJ;

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(vii)create, monitor, oversee and direct working groups as necessary or useful to carry out the implementation of the binding portions of  the Long-Term Development Plan;

(viii)determine a publication strategy and oversee publications pursuant to Sections 12.1 and 12.2;

(ix)review and approve all key regulatory and key clinical Development strategies;

(x)review, modify and approve (including funding for) compassionate use and early access programs; and

(xi)approve Final Product labeling and all changes thereto.

(b)Commercialization and Manufacturing Responsibilities.  The SCJ shall:  (1) determine the Commercialization, and manufacturing, quality control and product release strategy for Final Product, (2) provide a forum for coordination of the Parties’ Commercialization activities under this Agreement, and (3) as applicable, review, comment on, approve, and seek to resolve disputes with respect to, plans and budgets for, and the implementation of, the Commercialization, manufacturing, quality control and product release aspects of and strategy for Final Product.  The Long-Term Commercialization Plan and Budget as of the Restatement Effective Date is as set forth in Exhibit 6.2(a) hereto, and has been approved by the SCJ.  The manufacturing plan portion of the Manufacturing Plan and Budget as of the Restatement Effective Date is as set forth in Exhibit 8.1(a) hereto, and has been approved by the SCJ.  Subject to applicable terms of this Agreement, the SCJ may amend or supplement the Long-Term Commercialization Plan and Budget and the Manufacturing Plan and Budget, and make any decision necessary to fulfill or implement same in accordance with this Agreement.   In particular, the SCJ shall have the following specific responsibilities with respect to the Commercialization of Final Product and the manufacture of API and Final Product for sale in Japan:

(i)review and approve (1) each Long-Term Commercialization Plan and Budget, (2) each Annual Commercialization Plan and Budget, and (3) all updates, amendments and modifications thereto, and waivers of provisions thereof;

(ii)review and approve (1) each Japan Manufacturing Plan and Budget, and (2) all updates, amendments and modifications thereto, and waivers of provisions thereof);

(iii)determine whether to recall or withdraw Final Product in the circumstances set forth in Section 8.7;

(iv)review and approve long-term (i.e., for the ensuing three-to-five years) Commercial strategy for Final Product;

(v)subject to the Existing Agreements and this Agreement, review and approve strategies for obtaining and maintaining patent and Trademark protection, enforcing such patents and Trademarks, and defending Third Party claims relating to patents and Trademarks;

(vi)determine and approve pricing/reimbursement strategy with respect to large health care providers, governmental agencies (e.g., national, state, regional, and local), and other group purchasing accounts;

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(vii)review and approve the parameters of any terms and conditions relating to or affecting the price at which Final Product will be sold in Japan, including discounts available to large health care providers, governmental agencies (e.g., federal, state and local), and other group purchasing accounts; discounts attributable to payments on receivables; and credits, price adjustments, other discounts and allowances to be granted or refused;

(viii)subject to Section 10.2(a), review and approve the specific terms and conditions with respect to which MJ may offer Final Product for sale in Japan.

(ix)approve the methodology used to determine the amount of each item of Operating Expenses;

(x)resolve any disputes at the JJFC regarding the calculation of Profit and Loss or any other amount due a Party under this Agreement or the reconciliation of payments between the Parties;

(xi)evaluate performance of the Parties under this Agreement;

(xii)coordinate and oversee the activities of the Parties and Committees hereunder and resolve any disputes at the JJMC, JJDC and JJCC; and

(xiii)review recommendations submitted by the JJCC concerning, and approve, patient assistance and indigent access programs and any changes thereto.

(c)Generally.  The SCJ shall also:

(i)provide guidance to the JJDC, the JJCC, JJFC and the JJMC with respect to any other Development, Commercialization, financial, and manufacturing activities, strategies, plans and budgets (or portions thereof);

(ii)review any matter that falls within the responsibilities of the JJDC, JJCC JJFC, or JJMC, if any Party’s members of such Subcommittee believe that a matter should be reviewed by the SCJ following review by such Subcommittee;

(iii)perform such other responsibilities related to the Parties’ co-Development and co-Commercialization activities contemplated hereunder as have been or may be assigned to the SCJ pursuant to this Agreement or as may be mutually agreed upon by the Parties from time to time;

(iv)periodically, as a Party may request, evaluate the performance of the Development, manufacturing and Commercialization activities against its related Plan goals;

(v)coordinate the activities of the Parties hereunder, including oversight of the JJDC, JJCC, and JJMC as provided herein;

(vi)seek to resolve any disputes or disagreements within or between the JJDC, JJCC, JJFC or JJMC;

(vii)approve winning bids to manufacture Final Product (or any component thereof) pursuant to Section 8.1(c); and

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(viii)review any matter that falls within the responsibilities of the JJDC, JJCC, JJFC or JJMC if a Party’s members of such Subcommittee (where such Party has a vote on such Subcommittee) believe that a matter should be reviewed by the SCJ following review by such Subcommittee.

2.3Subcommittees.  Unless already established, the following Subcommittees shall also be established by the Parties within thirty (30) days after the Restatement Effective Date, each of which shall have, subject to Sections 3.1(c) and 10.2 and to Article 14, the following specific responsibilities:

(a)Joint Japan Commercialization Committee (JJCC).  The JJCC shall be responsible for preparing and submitting to the SCJ for its approval, on an annual basis consistent with Article 6 hereof, each Annual Commercialization Plan and Budget and each Long-Term Commercialization Plan and Budget.   Each such Plan shall be consistent with applicable terms of this Agreement.  The JJCC shall be charged with taking any action and making any decision necessary to implement each such Annual Commercialization Plan and Budget approved by the SCJ.  In particular, the JJCC shall be responsible for the following Commercialization activities with respect to Final Product in Japan:

(i)establish a strategy for Commercialization of Final Product in Japan, including product positioning, consistent where achievable with the Parties’ respective strategies in other major market countries in which they Commercialize ERBITUX;

(ii)make recommendations to the SCJ with respect to the SCJ’s review and approval of each Long-Term Commercialization Plan and Budget, and all updates, amendments and modifications to, and waivers of provisions of, each such Long-Term Commercialization Plan and Budget;

(iii)developing and recommending for approval by the SCJ each Annual Commercialization Plan and Budget, and all updates, amendments and modifications thereto, and waivers of provisions thereof, in each case consistent with the Long-Term Commercialization Plan and Budget;

(iv)develop and provide to the JJMC market, unit sales, and Net Sales forecasts for Final Product, broken down by approved Indication and updated quarterly, in sufficient detail and length of time as to enable the JJMC to determine its own forecasts under Section 8.3(b);

(v)determine and approve the allocation of responsibilities among the Parties applicable to the Development activities contemplated under this Agreement in a manner consistent with this Agreement and the Annual Commercialization Plan and Budget;

(vi)monitor progress and compliance under, and oversee the implementation of, each Long-Term Commercialization Plan and Budget and each Annual Commercialization Plan and Budget;

(vii)monitor, review and comment on costs incurred by the Parties in connection with their respective Commercialization activities, to the extent practicable, on an Indication-by-Indication basis;

(viii)review and recommend for approval by the SCJ packaging designs and provide input to the SCJ regarding Product labeling;

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(ix)review and approve Final Product marketing, advertising and promotional strategies and materials, including all Marketing Materials, developed by the Parties for the Parties’ Sales Representatives, for compliance with this Agreement and applicable Law;

(x)endeavor to coordinate Final Product marketing, advertising and promotional activities, where practicable, on a worldwide basis;

(xi)approve the selection of major or key marketing vendors (e.g., public relations agencies, advertising agencies and/or medical education agencies);

(xii)recommend reimbursement strategies for approval by the SCJ;

(xiii)review and approve strategies for, and key specific, market research plans and journal advertising, in each case in accordance with this Agreement, the applicable Annual Commercialization Plan and Budget and the Long-Term Commercialization Plan and Budget, and approve and assign responsibilities for implementation of same;

(xiv)review and approve, assign responsibilities for, and coordinate all sales force activities, including Sales Representative training, the number of Sales Representatives to be assigned to Final Product promotion, the number of PDEs to be devoted to Final Product promotion, and the territory alignment of Sales Representatives, in each case in accordance with this Agreement, the applicable Annual Commercialization Plan and Budget and the Long-Term Commercialization Plan and Budget;

(xv)plan and oversee promotional programs, including speaker and peer-to-peer activity programs, and the funding of educational and professional symposia, in each case in accordance with this Agreement, the applicable Annual Commercialization Plan and Budget and the Long-Term Commercialization Plan and Budget;

(xvi)discuss and recommend to the SCJ for its approval a range of suggested prices and discount strategies for the sale of Final Product to unaffiliated Third Parties;

(xvii)receive and review each Party’s sales, pricing, and financial reports pertaining to Sales Costs, Marketing Costs and other Allowable Expenses;

(xviii)make recommendations to the SCJ with respect to patient assistance and indigent access programs, and provide input to the SCJ with respect to early access and compassionate use programs;

(xix)review and approve any significant agreements (including any agreement or series or group of related agreements with an aggregate expense of more than one hundred thousand dollars ($100,000)) with Third Parties to be entered into by a Party with respect to the Commercialization of Final Product in Japan;

(xx)facilitate the flow of Commercialization information;

(xxi)review MJ’s or BMKK’s plans for detailing a product to be detailed in the third position, where Final Product is detailed in the first or second position;

(xxii)coordinate with the Existing Committees and the JJDC, JJFC and JJMC as appropriate; and

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(xxiii)provide updates to the SCJ on its activities no less frequently than once each Quarter after the Restatement Effective Date and during the term of this Agreement.

Except as otherwise provided in Article 6, the JJCC shall, in allocating responsibilities between the Parties with respect to Commercialization activities:  (A) endeavor to take advantage of the respective resources, capabilities and expertise of MJ and BMKK, and (B) endeavor to (i) maintain, to the extent reasonably practical and commercially appropriate, continuity in functions and commitments of personnel and physical resources of MJ and BMKK, (ii) avoid duplication of efforts by the Parties, and (iii) foster efficient use by the Parties of resources and personnel, consistent with this Agreement, the applicable Annual Commercialization Plan and Budget and the Long-Term Commercialization Plan and Budget.

(b)Joint Japan Development and Regulatory Committee (JJDC).  Subject to the terms of this Agreement, the JJDC shall be responsible, in consultation with the JJCC and the JJMC, as applicable, for preparing and submitting to the SCJ for its approval any key regulatory strategies for the Development and Commercialization of Final Product in Japan, for proposing amendments to the Long-Term Development Plan for review and approval by the SCJ, for approving an Annual Development Plan and Budget for review and/or modification by the SCJ, for overseeing and coordinating the Development of, and the making of regulatory filings for, Final Product in Japan, for facilitating the flow of information with respect to Development activities, for overseeing the conduct of Phase I-IIIA Clinical Trials, and, where necessary or appropriate, for collaborating with the JJCC  to oversee any Phase IIIB Clinical Trials and Phase IV Clinical Trials.  Subject to the terms of this Agreement, the JJDC shall be charged with taking any action and making any decision necessary to implement the binding portion of the Long-Term Development Plan and each approved strategy in cooperation with the Existing Committees, the JJCC, JJFC, and the JJMC, as applicable.  In particular, subject to the terms of this Agreement, the JJDC shall be responsible for the following Development and regulatory activities with respect to Final Product in Japan:

(i)recommending a strategy for the Development and Approval of Final Product in Japan, on an Indication-by-Indication basis, for review and approval by the SCJ;

(ii)making recommendations to the SCJ with respect to its review and approval of the Long-Term Development Plan and all updates, amendments and modifications thereto, and waivers of provisions thereof;

(iii)preparing and recommending each Annual Development Plan and Budget for review and approval by the SCJ, and all updates, amendments and modifications thereto, and waivers of provisions thereof, in each case consistent with the binding portion of the Long-Term Development Plan;

(iv)determine and approve the allocation of responsibilities among the Parties applicable to the Development activities contemplated under this Agreement in a manner consistent with this Agreement, the Annual Development Plan and Budget, and the binding portion of the Long-Term Development Plan;

(v)overseeing the implementation of, and monitoring the progress of, the clinical and regulatory program, consistent with the Long-Term Development Plan, including making proposals to the SCJ whether to conduct, cease or suspend any Phase I-IIIA Clinical Trials;

(vi)reviewing and approving the scientific integrity and protocols of all Clinical Trials included in the Annual Development Plan and Budget, and the binding

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portion of the Long-Term Development Plan, and supervising the use and dissemination of the resulting data;

(vii)recommend for approval by the SCJ a budget for all Clinical Trials that is consistent with the binding portion of the Long-Term Development Plan and the Annual Development Plan and Budget;

(viii)formulating and proposing for inclusion in the Long-Term Development Plan, a regulatory strategy, schedule, and plan for filing and obtaining Approvals, on an Indication-by-Indication basis (it being understood that any such inclusion shall not control or affect a Party’s decision as to whether it will agree (or not agree) to include a given Clinical Trial in the Annual Development Plan and Budget or the binding portion of the Long-Term Development Plan);

(ix)overseeing and monitoring regulatory aspects of the Development with respect to obtaining Approval, including all regulatory actions, communications and filings and submissions (including filings and submissions of supplements and amendments to Approvals) to or with the Japanese Regulatory Authorities;

(x)overseeing and making recommendations to the SCJ and JJCC with respect to Final Product labeling;

(xi)coordinating preparation for and attendance at meetings of Japanese Regulatory Authorities with respect to Final Product;

(xii)coordinating responses to additional requirements and inquiries of Japanese Regulatory Authorities with respect to Final Product;

(xiii)drafting, or having drafted, the contents of the Chemistry, Manufacturing and Controls section of any JNDA with respect to Final Product;

(xiv)facilitating the exchange of all critical Final Product regulatory information and data between the Parties, as well as ensuring that significant issues concerning Final Product adverse event information and safety issues are addressed in a timely manner, consistent where practicable, to the manner in which such issues are addressed by the Parties with Regulatory Authorities in other countries;

(xv)reviewing and approving the content, strategies for, and other aspects (other than level of funding) for (A) Product labeling, (B) early access and compassionate use programs for a given Indication or line of therapy (prior to launch in Japan for such Indication or line of therapy), and (C) Medical Education Activities, as well as approve and assign responsibilities for implementation of same; and

(xvi)providing updates at least quarterly on its activities to the SCJ, JJCC, and Existing Committees.

(c)Joint Japan Manufacturing Committee (JJMC).  The JJMC shall be responsible for preparing and submitting the Japan Manufacturing Plan and Budget annually to the SCJ for its approval.  The JJMC shall be charged with taking any action and making any decision necessary to implement each such Japan Manufacturing Plan and Budget approved by the SCJ.  As soon as practicable after the Restatement Effective Date, the first annual Japan Manufacturing Plan and Budget shall be prepared by the JJMC consistent with the long-term Japan Manufacturing Plan and Budget and forwarded to the SCJ for review, comment and approval.  In particular, subject to the terms of this Agreement and the Existing

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Agreements, the JJMC shall be responsible for the following manufacturing and supply activities with respect to Final Product in Japan:

(i)delineate requirements and responsibilities for development and licensure of manufacturing processes and facilities for the supply of Final Product in Japan;

(ii)develop a manufacturing strategy for the Long-Term Development Plan, the Long-Term Commercialization Plan and Budget and the Annual Commercialization Plan and Budget, to enable development and licensure of manufacturing processes and facilities for Final Product in Japan that includes all aspects of manufacture and release, including bulk drug substance (API), intermediate(s), dosage form (formulations), devices, product characterization studies, stability studies and manufacturing plans and forecasts;

(iii)prepare and submit to the SCJ annually a long-term and annual Japan Manufacturing Plan and Budget, and allocate responsibilities for and oversee the implementation thereof;

(iv)prepare and submit to the SCJ on a quarterly basis updated forecasts for requirements of API, Cetuximab, and Final Product for Commercialization in Japan in the manner set forth in Section 8.3;

(v)oversee and approve process development plans prior to the manufacture of registration batches;

(vi)review quality assurance efforts, including those efforts with respect to the establishment of Specifications and quality standards;

(vii)approve the terms of any supply or quality agreement involving any Party or its Affiliates that affects (or may affect) the supply of bulk drug substance (API) , any intermediates or Final Product;

(viii)approve the Chemistry, Manufacturing and Controls (CMC) section of each JNDA and any revisions to same, and coordinate with the JJDC the drafting and contents of the CMC section of each JNDA and any revisions to same;

(ix)review and approve technology transfer plans for any changes in manufacturing sites, testing sites, and responsibilities in the bulk drug substance (API), intermediates, or Final Product supply chain, it being understood that decisions regarding the selection of which of a Party’s own manufacturing and testing sites shall be used to manufacture any component of Final Product, if a Party manufactures any component of Final Product pursuant to this Agreement or any related supply agreement, shall remain in the sole control of such Party;

(x)prepare for regulatory inspections and ensure adherence to compliance standards;

(xi)ensure that future logistical strategies and capacity planning for bulk drug substance (API), intermediates, fill/finish, QC/QA and Final Product are consistent with applicable forecasts, as well as determine inventory levels that an applicable Party or Third Party contract manufacturers should maintain for bulk drug substance (API), intermediates, Final Product and any components used in connection therewith;

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(xii)review quality-related issues pertaining to bulk drug substance (API), intermediates, fill/finish, QC/QA and Final Product;

(xiii)provide updates on its activities to the SCJ, as appropriate;

(xiv)review and approve each Party’s Fully-Burdened Manufacturing Cost that is used in the determination of Profit and Loss;

(xv)initiate and review all bids for Final Product (or any component thereof) as provided in Section 8.1(c), and recommend bidders to be selected for approval by the SCJ; and

(xvi)review and approve any significant agreements, purchase orders or amendments with Third Parties to be entered into by any Party that cover the manufacture of bulk drug substance (API), any intermediates, or Final Product for sale and use in Japan.

The JJMC shall meet at such times and in such manner as is necessary to perform its responsibilities.

(d)Joint Japan Finance Committee (JJFC).  The JJFC shall provide support to the SCJ and all other Subcommittees and Working Groups with respect to accounting and financial matters relating to the importation, use and sale of Final Product in Japan and the manufacture of the Cetuximab and Final Product for use and sale in Japan.  In particular, subject to the terms of this Agreement and the Existing Agreements, the JJMC shall be responsible for the following activities with respect to Final Product in Japan:

(i)work with the SCJ and other (sub)committees to assist in financial, budgeting and planning matters as required, including assisting in the preparation of budgets and annual and long-term plans;

(ii)recommend for approval by the SCJ procedures, formats and timelines consistent with this Agreement for reporting financial data and assist in resolving differences that relate to the financial terms of this Agreement;

(iii)recommend for approval by the SCJ a procedure for monitoring and reporting to the SCJ and the other applicable Subcommittees the rate of spending compared to budget under the applicable Development Plan and Budget, Japan Manufacturing Plan and Budget and Annual Commercialization Plan and Budget, as the case may be, and report such performance to the SCJ or such other Subcommittees as directed;

(iv)review MJ reporting of Net Sales, and the Parties’ reporting of BMKK/MJ NSF Commercialization Costs and Development Costs under this Agreement, and recommend, for approval by the SCJ, any changes to reporting procedures;

(v)compute adjustments to the FTE rates and PDE Rates in accordance with this Agreement, evaluate the methodology for determining and accounting for FTEs and associated costs used by each Party, and seek to resolve any differences between the Parties in connection with the performance of , and subject to the terms of, this Agreement;

(vi)recommend, for approval by the SCJ, additional or alternative reporting procedures concerning financial aspects of the Collaboration including templates and timing, and develop a format for reports required by this Agreement or otherwise requested by the SCJ for the implementation of the financial aspects of the Collaboration;

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(vii)review the appropriate allocation of costs and expenses under this Agreement;

(viii)make recommendations to the SCJ, if necessary, concerning the exchange of information between the Parties on a Quarterly (or more frequent) basis with respect to Development Costs, Allowable Expenses, BMKK/MJ NSF Commercialization Activities Costs (but only when and to the extent each Party is required to do so under this Agreement), Profit and Loss, and Net Sales in furtherance of a Party’s obligations under this Agreement or pursuant to applicable law (such as SEC or stock exchange reporting obligations);

(ix)recommend, for approval by the SCJ, a means of reconciling, one to the other, the internal reporting and accounting standards of each of the Parties where necessary and methods of charging costs and expenses of each of the Parties;

(x)review and approve the calculations of the amount of any payments to be made by the Parties (or their Affiliates) hereunder and review and approve the reconciliation of payments;

(xi)coordinate audits of data where appropriate and required or allowed by this Agreement;

(xii)perform such other finance-related functions as the SCJ may request from time to time; and

(xiii)provide Quarterly updates on the JJFC’s activities and achievements to the SCJ.

2.4Membership and Meetings of the SCJ and Subcommittees.

(a)SCJ.  Subject to the terms of this Agreement, the SCJ shall consist of six members, with one Representative designated by each of Merck, MJ, BMS and BMKK and two Representatives designated by ImClone.  The Representatives of the SCJ and its current chairperson as of the Restatement Effective Date are set forth on Exhibit 2.4(a) hereto.

(b)Subcommittees.  Subject to the terms of this Agreement, the JJDC, JJCC, JJFC and JJMC shall each consist of up to two Representatives from each of BMS/BMKK, ImClone, and Merck/MJ.  The Representatives on each such Subcommittee and the current chairs of each such Subcommittee, to the extent known as of the Restatement Effective Date, are set forth on Exhibit 2.4(a) hereto.

(c)Representative Replacement; Non-Member Representatives.  Each Party may replace any or all of its Representatives on the SCJ or any Subcommittee at any time upon written notice to the other Parties in accordance with Section 16.6 of this Agreement.  Any Representative of the SCJ or any Subcommittee may designate an appropriate substitute to attend and perform the functions of that Representative, as applicable, at any meeting of such committee.  Each Party may, in its discretion, invite a reasonable number of non-member representatives from such Party to attend meetings of the SCJ or any Subcommittee; provided that any such non-member representatives who are not employed by a Party are under obligations of confidentiality and non-use applicable to the Confidential Information of each Party that are at least as stringent as those set forth in Article 12, and subject in the case of non-employees of a Party to the consent of the other Parties, which shall not be unreasonably withheld or delayed.

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(d)Chairperson.  The chair function of the SCJ and each Subcommittee will be rotated among the Parties every twelve months for the first four years following the Restatement Effective Date, as follows: for first twelve months following the Restatement Effective Date: Merck/MJ; for months 13-24 following the Restatement Effective Date: BMS/BMKK; for months 25-36 following the Restatement Effective Date: Merck/MJ; and for months 37-48 following the Restatement Effective Date: ImClone.  In each four year period thereafter, the chair function of the SCJ and each Subcommittee will continue to be rotated every twelve months among the Parties in the same manner as it was rotated for the initial 48-month period following the Restatement Effective Date. The chair of the SCJ and of each Subcommittee shall be appointed by the applicable Party from one of its Representatives to the SCJ or such Subcommittee.  The chairpersons of the SCJ and of each Subcommittee shall be responsible for calling meetings, preparing an agenda in advance of each meeting of such Committee, and sending written notice of all meetings of such committee to all of its members together with the agenda for the meeting (such notice of the meeting to be given, where practicable, no less than 30 days before the date of each meeting and the agenda to be provided no less than seven days before the date of each meeting).  The chairperson shall also be responsible for the preparation of meeting minutes as set forth in Section 2.6 below.

(e)Meetings of the SCJ.  Commencing upon the Restatement Effective Date and thereafter while Development and Commercialization activities under this Agreement are ongoing, the SCJ shall meet in person at least once each calendar year and by means of telecommunications or video conferences at least once each Quarter, and more frequently as the SCJ deems appropriate, on such dates, and at such places and times, as the SCJ shall agree.  Meetings of the SCJ that are held in person shall take place in Japan, or such other place as the SCJ may agree.

(f)Meetings of Subcommittees.  Commencing upon the Restatement Effective Date and thereafter while Development and regulatory, manufacturing, finance, and Commercialization activities under this Agreement are ongoing, the JJDC, JJCC, JJFC, and JJMC, as the case may be, shall meet in person at least once each calendar year and by means of telecommunications or video conferences at least once each Quarter, and more frequently as such Subcommittee deems appropriate, on such dates, and at such places and times, as such Subcommittee may agree.  Meetings of any such Subcommittee shall take place in Japan or such other place as any such Subcommittee may agree.

(g)Expenses.  Each Party shall be responsible for all travel and related costs and other expenses for its Representatives and its invitees to attend meetings of, and otherwise participate on, the SCJ and each Subcommittee.

(h)Teleconferences.  Meetings of the SCJ and any Subcommittee may be held by audio or video teleconference with the consent of each Party, which shall not be unreasonably withheld or delayed; provided that at least one (1) meeting per year of the SCJ and such Subcommittee shall be held in person.

2.5Decision-making.  Subject to Sections 3.1(c) and 10.2 and to Article 14:

(a)Authority.  The SCJ and each Subcommittee may make decisions with respect to any subject matter that is within such committee’s decision-making authority under this Agreement, provided, (i) that such decision does not conflict with the Section 2.1 and any other provisions of this Agreement; and (ii) each Subcommittee’s decisions are consistent with any applicable guidance or directives of the SCJ.

(b)Consensus.  Decisions made by the SCJ and any Subcommittee shall be made by unanimous consensus of the Representatives entitled to vote on the SCJ or

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such Subcommittee who are present (in person or otherwise) at the meeting.  No action taken at any meeting of the SCJ or any Subcommittee shall be effective unless a voting Representative of each Party entitled to vote is participating.

(c)Disagreements on Subcommittees.  Except for matters outside the jurisdiction and authority of the Subcommittees as provided in Section 2.1, and in any event without limiting the other rights and obligations of the Parties under this Agreement, any disagreement between the Representatives of the Parties on the JJDC, JJCC, JJFC, or JJMC as to matters within such Subcommittee’s jurisdiction shall, at the election of any Party having voting rights on such Subcommittee, be addressed, first, with the Alliance Managers, and, if the dispute is not resolved within ten (10) Business Days after such referral to the Alliance Managers, then it shall, upon written notice by such Party to the other Parties, be submitted to the SCJ for resolution.  The SCJ, in consultation with the Alliance Managers, shall endeavor to resolve any such matter submitted to it for resolution within twenty (20) Business Days after such submission.

(d)Dispute.  If, with respect to a matter (i) that is subject to the SCJ’s jurisdiction under Section 2.2 as to which the SCJ cannot reach a decision or (ii) that is otherwise referred to it for resolution pursuant to Section 2.5(c), the SCJ cannot reach a decision within twenty (20) Business Days after such submission of such matter to it, then, in each case (i) and (ii), the matter shall be resolved in accordance with Section 2.5(f); provided, that if the BMS/BMKK and Merck/MJ members of the SCJ wish to implement (x) an increase to a budget item (not tied to a decrease in any other item) and the dispute involves the absolute amount of the increase, then the JJCC and SCJ will immediately implement the undisputed amount of the increase during the period that the dispute over the disputed amount of the increase that is desired by the one, but not the other, Party may be resolved or (y) a decrease to a budget item (not tied to a increase in any other item) and the dispute involves the absolute amount of the decrease, then JJCC and SCJ will immediately implement the undisputed amount of the decrease during the period that the dispute over the disputed amount of the decrease that is desired by the one, but not the other, Party may be resolved.

(e)Referral to Existing Committees.  At any time, any member of the SCJ may refer any matter on which there is significant disagreement at the SCJ for discussion by the Existing Committees for a period not to exceed sixty (60) days after such referral, after which the matter shall return to the SCJ for resolution.

(f)Unresolved Dispute at SCJ.  In the event a dispute at the SCJ cannot be resolved by agreement of the SCJ and the matter has been previously referred to the Existing Committees for discussion or if all Parties agree not to refer the matter to the Existing Committees for discussion, then such dispute shall be referred to the following senior management of the Parties for resolution:

For BMS and BMKK:	BMS President - International or a direct report
For Merck and MJ:	Merck President of Pharma Ethicals or a direct report
For ImClone:	ImClone CEO or a direct report

In the event that such dispute is not resolved within 20 Business Days by such senior management of the Parties, then, subject to Sections 3.1(c) and 10.2(a), any Party may, subject to the terms and conditions of Section 16.13, submit the matter to arbitration pursuant to Section 16.13 of this Agreement.

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2.6Minutes.

(a)Preparation.  Definitive minutes of all meetings of the SCJ and of each Subcommittee shall be finalized promptly following the meeting to which the minutes pertain, as follows:

(i)After the committee meeting, the chairperson of the committee shall promptly prepare and distribute to all Representatives of the committee draft minutes of the meeting.  Such minutes shall record all determinations and other matters acted upon and approved or disapproved by the committee, and any matters the committee failed to resolve (with a description, in reasonable detail, of each Party’s differences with respect to such unresolved matter).

(ii)The chairperson of the committee shall promptly collect comments thereon from the Representatives representing each Party on such committee.

(iii)The committee shall then promptly discuss the comments of all of the Parties and finalize the minutes; provided, that such minutes will not be deemed finalized until at least one voting Representative from each Party on such committee confirms in writing the accuracy of such minutes.

(b)Dispute.  If at any time during the preparation and finalization of the meeting minutes of the JJDC, JJCC, JJFC or JJMC, as applicable, a Representative of a Party entitled to vote at such Subcommittee does not agree on the content of any decision made by such Subcommittee to be reflected in such minutes, such issue shall be resolved by a decision of the SCJ.  If the SCJ cannot resolve such dispute, or if at any time during the preparation and finalization of a SCJ’s meeting minutes, any such Party does not agree on any content of any decision to be reflected in the minutes, such issue shall be resolved in accordance with Section 2.5(d).

2.7Term.  The SCJ and the JJDC, JJMC, JJFC and JJCC shall each exist throughout the term of this Agreement.

2.8Certain Committees and Boards.

(a)Working Groups.  From time to time, the SCJ, the JJCC, JJFC, JJDC and/or JJMC may establish and delegate duties to other committees, sub-committees or directed teams, including data safety monitoring boards, radiology review boards (each, a “Working Group”), on an “as-needed” basis to oversee particular projects or activities, which delegation shall be reflected in the minutes of the meetings of the applicable Subcommittee.  Each such Working Group shall be constituted and shall operate as the SCJ, JJDC, JJCC, JJFC, or JJMC, as the case may be, determines; provided that each Working Group shall have equal representation from each Party entitled to vote on the applicable delegating committee.  Working Groups may be established on an ad hoc basis for purposes of a specific project, for the life of a Product, or on such other basis as the applicable committee may determine.  Each Working Group and its activities shall be subject to the oversight, review and approval of, and shall report to, the committee that established such Working Group.  In no event shall the authority of the Working Group exceed that specified for the relevant committee in this Article 2.  Any disagreement between the designees on a Working Group shall be referred to the applicable committee for resolution.

(b)Interactions Between Committees and Internal Teams.  The Parties recognize that each Party possesses an internal structure (including various committees, teams and review boards) that will be involved in administering such Party’s activities under

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this Agreement.  Each Subcommittee (and Working Group) shall establish procedures to facilitate communications between such Subcommittee (and Working Group) and the relevant internal committee, team or board of each of the Parties in order to maximize the efficiency of the Collaboration, including by requiring appropriate members of such Subcommittee (or Working Group) to be available at reasonable times and places and upon reasonable prior notice for making appropriate oral reports to, and responding to reasonable inquiries from, the relevant internal committee, team or board.

(c)Costs.  The costs of creating and operating such Working Groups shall be part of [**].  The costs of creating and operating the SCJ, JJCC, JJDC and JJMC shall not be shared among the Parties (it being understood and agreed that each Party shall bear its own costs for operating, and participating as a member of, the SCJ, JJCC, JJDC, JJFC, and JJMC), except that the costs of non-employees of any Party or its Affiliates from whom the applicable Subcommittee has agreed to seek advice shall be shared.

2.9Alliance Managers.   Each of ImClone, BMS and BMKK collectively, and MJ and Merck collectively, shall appoint one senior representative who possesses a general understanding of clinical, regulatory, manufacturing and marketing issues to act as its respective alliance manager for this relationship (each, an “Alliance Manager”).  The Alliance Managers as of the Restatement Effective Date are set forth on Exhibit 2.4(a) hereto.  A Party may replace its respective Alliance Manager at any time upon written notice to the other Parties in accordance with Section 16.6 of this Agreement.  Any Alliance Manager may designate a qualified substitute to temporarily perform the functions of that Alliance Manager.  Each Alliance Manager shall be charged with creating and maintaining a collaborative work environment within and among the SCJ and its Subcommittees.  Each Alliance Manager, in conjunction with that Party’s project team leader, will also be responsible for:

(a)coordinating the relevant functional representatives of the Parties, in developing and executing strategies and plans for Cetuximab in an effort to ensure consistency and efficiency within Japan, and if practicable, with the Parties territories in other parts of the world;

(b)providing a single point of communication for seeking consensus both internally within the respective Party’s organizations and together regarding key strategy and plan issues;

(c)identifying and raising cross-country, cross-Party and/or cross-function disputes relating to Final Product and Japan to the appropriate committee in a timely manner; and

(d)planning and coordinating: (i) cooperative efforts in Japan for Final Product; and (ii) internal and external communications.

The Alliance Managers shall be entitled to attend meetings of the SCJ and its Subcommittees, but shall not have, or be deemed to have, any rights or responsibilities of a member of any such committee.  Each Alliance Manager may bring any matter to the attention of the SCJ and any of its Subcommittees, where such Alliance Manager reasonably believes that such matter requires such attention.

2.10Cooperation.

(a)Global Development Cooperation.  BMKK and MJ expressly understand and agree that the Development activities under this Agreement shall be closely

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coordinated and in line, to the maximum practical extent, with the global development efforts of BMS and Merck in their respective territories under the Existing Agreements.

(b)Global Commercialization and Manufacturing Cooperation.  BMKK and MJ understand and agree that the Commercialization activities under this Agreement shall be closely coordinated and in line, to the maximum practical extent, with the Commercialization efforts of BMS/ImClone and Merck in their respective territories pursuant to the Existing Agreements.  Each Party expressly understands and agrees that the manufacturing activities under this Agreement shall be closely coordinated, to the maximum practical extent, with the global manufacturing efforts for Cetuximab of ImClone, BMS and Merck (and their respective Affiliates).  Each Party agrees that any and all material Commercialization and manufacturing activities undertaken by it or its Affiliates pursuant to this Agreement shall be subject to review by applicable Existing Committees as and to the extent provided for under the Existing Agreements.

3.DEVELOPMENT.

3.1The Long-Term Development Plan.

(a)Current Long-Term Development Plan.  The Long-Term Development Plan as of the Restatement Effective Date is attached to this Agreement as Exhibit 3.1(a), and may be revised or modified  from time to time as provided in this Agreement.

(b)Annual Development Plan and Budget.

(i)In General.  The Development of the Final Product in Japan for a given calendar year shall be governed by a detailed and specific annual development plan and budget covering all material Development and regulatory activities to be performed for such year, as well as budgets covering all Development Costs for those Development activities, by Indication, to be conducted in support of Approvals in Japan (each such plan, when approved by the SCJ and/or JJDC, an “Annual Development Plan and Budget”).  Each Annual Development Plan and Budget shall be initially prepared by either MJ or BMKK, as designated by the JJDC, in consultation with the other Party, for approval by the JJDC. Each Annual Development Plan and Budget for an Indication, and any modifications thereto, shall cover, and be consistent in all material respects with, all the Development and regulatory activities and budgets in the then-current Development Plan for such Indication that are to be performed in that particular calendar year.  The Parties will endeavor to prepare and propose each Annual Development Plan and Budget for a calendar year to the JJDC for its review, comment and approval by not later than September 30 of the immediately preceding calendar year with a goal of having the Annual Development Plan and Budget approved, and any disputes resolved, by October 31 of such immediately preceding calendar year.

(c)Continuation of Development

(i)New Lines of Therapy.  Subject to Section 3.1(c)(i)(3) below, in the event that BMS/BMKK (as one party) or Merck/MJ (as the other party) (the “Interested Party”) wishes to initiate a Clinical Trial program, and thereafter seek Approval, for a new line of therapy within either a new, or an existing approved (for example, second line therapy once third line therapy has been approved), Indication for Final Product in Japan, and the other Party (BMS/BMKK or Merck/MJ) does not, subject to Section 3.1(c)(i)(3), wish to amend the Long-Term Development Plan to include the activities necessary to seek Approval in Japan for such new line of therapy in Japan (the “Non-Interested Party”), then the Interested Party shall have the right, but not the obligation, to conduct such Clinical Trial program and to perform all other

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necessary activities to seek and obtain Approval for such specific new line of therapy for Final Product in Japan, at the Interested Party’s sole cost and expense, provided that if the SCJ by majority vote reasonably determines that there are good grounds to believe that the proposed course of activities are reasonably likely to be significantly detrimental to the product profile or marketing of Final Product for any one or more Indications or lines of therapy that have been previously approved (or that have been previously filed and are awaiting regulatory approval) in Japan (by way of example, and without limitation, because the proposed protocol is poorly designed or is likely to yield poor results), or to materially adversely impact the Commercialization of Final Product in the EU or the U.S., or that the proposed course of activities presents a medical risk/benefit that is so unfavorable as to be incompatible with the welfare of patients, then the Interested Party shall not proceed.  The Interested Party shall be entitled to cross-reference any data generated or controlled by a Non-Interested Party anywhere in the world in support of such new line of therapy for Development and registration of same in Japan.

(1)Subject to Section 3.1(c)(i)(4), in the event the Interested Party obtains Approval for such additional line of therapy within a given Indication, and there are no other lines of therapy within such Indication that (x) have been approved by the Japanese Regulatory Authorities and (y) BMKK and MJ are then Co-Promoting, then the Interested Party, but not the Non-Interested Party, shall (A) be solely responsible for the Commercialization of Final Product for such Indication (it being understood that, if BMS or BMKK is the Interested Party, then MJ shall continue to provide the services set forth in Section 6.7 with respect to Final Product for such Indication), (B) [**], (C) be solely entitled to develop the Annual Commercialization Plan and Budget for such Indication, provided, that such Annual Commercialization Plan and Budget for such Indication must be consistent in all key respects (including product positioning, reimbursement strategies, and pricing and discount strategies) with the Annual Commercialization Plan and Budget approved by the SCJ for other Indications that BMKK and MJ are Co-Promoting; (D) if Merck/MJ is the Interested Party, reimburse the other Parties quarterly for any Allowable Expense incurred by any of them in connection with, and that is attributable to, such additional Indication that is not otherwise reimbursed under other sections of this Agreement, (E) [**].  If the Interested Party is BMKK/BMS, then Merck/MJ shall pay such Profit, and BMKK/BMS shall pay Merck/MJ for any Loss, attributable to such Indication on a quarterly basis (with an annual reconciliation of same).  [**].

(2)In the event the Interested Party obtains Approval for such a new line of therapy within an existing approved Indication in Japan where at least one of the approved lines of therapy within such existing approved Indication had been co-Developed and co-funded by BMKK and MJ and is then being Co-Promoted by BMKK and MJ, then (A) the Interested Party and the Non-Interested Party shall both Co-Promote and provide PDEs such Final Product for such new line of therapy within such existing Indication as though it had been developed by both the Interested and Non-Interested Parties, (B) the determination of which Party shall be responsible for the performance of Marketing Activities, Medical Education Activities, sales activities (other than the provision of PDEs) and regulatory activities attributable to such new line of therapy shall be determined in the same manner as though such new line of therapy within such existing Indication had been developed by both the Interested and Non-Interested Parties, (C) the Annual Commercialization Plan and Budget for such new line of therapy shall be approved in the same manner as the Annual Commercialization Plan and Budget for all other approved lines of therapy; (D) [**].  Such Profit Or Loss percentage for such new line of therapy within such Indication shall be determined by the SCJ, [**] by taking in account, among other pertinent factors that may be considered: [**].

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(3)This Section 3.1(c)(i) shall only apply where a Non-Interested Party (i.e., BMS/BMKK or Merck/MJ, as the case may be) has agreed in writing that it will not Develop a new line of therapy or, based on objective facts and circumstances, it is reasonably certain that such Party is not willing to Develop such new line of therapy.  For clarity, this Section 3.1(c)(i) shall not apply (x) if such Party is willing to Develop the new line of therapy subject to specific go/no criteria applicable to same (and the Parties cannot agree on same) or to successful Development of a lower line (e.g., third line prior to second line) of therapy, or (y) if there is a significant difference of opinion between BMS/BMKK and Merck/MJ, if both Parties would otherwise wish to Develop such new line of therapy, as to the nature, cost, trial design, and/or extent of any studies that would be required to Develop such new line of therapy, or (z) if a Party wishes to await the outcome of bridging studies before making a determination whether to proceed with the Development of a new line of therapy.

(4)In the event that Section 3.1(c)(i)(1) should apply, but Merck/MJ and BMS/BMKK thereafter co-fund and co-develop, and receive Approval for, another line of therapy within the same Indication as that within which an Interested Party had previously developed and obtained Approval for a line of therapy pursuant to Section 3.1(c)(i)(1), then Section 3.1(c)(1) shall no longer apply to such Indication and Section 3.1(c)(i)(2) shall apply to such Indication thereafter as though the timing of the receipt of the Approvals for said lines of therapy within such Indication had been reversed.

(ii)Continuation of Development of Indications that do not Meet Go Criteria.  No Party may continue a Clinical Trial program for a new line of therapy being developed for a Final Product in Japan pursuant to the Long-Term Development Plan for which one or more pertinent go/no-go studies set forth in the Long-Term Development Plan for such new line of therapy have not met specific go criteria that either are set forth in the Long-Term Development Plan or have otherwise been agreed to in writing by BMS/BMKK and Merck/MJ, without the prior written consent of the other Parties (to be given or withheld in such Party’s sole discretion).

(d)CROs.  Any agreement(s) with a CRO for the conduct of a Clinical Trial in Japan shall be agreed upon and signed jointly by the CRO on the one side and by BMKK, in its own capacity and as agent for ImClone pursuant to Section 3.2(b) below, and MJ on the other, but only after consultation, review and approval of such CRO agreement by the SCJ; provided, that BMKK may also enter into a CRO agreement without MJ and without the consent of the other Parties, and vice-versa, (x) in order to perform Development obligations undertaken by MJ or BMKK under Section 3.1(c) or (y) if and to the extent needed to cure a breach of such other Party’s Development obligations under this Agreement.  Further, except where a CRO is used, BMKK, in its own capacity and as agent for ImClone pursuant to Section 3.2(b) below, and MJ shall both sign all Clinical Trial agreements with each Clinical Trial site for studies conducted in Japan under the Annual Development Plan and Budget, unless agreed to otherwise by the JJDC or SCJ or unless and to the extent necessary in order to cure a breach of this Agreement by the other Party.

3.2Allocation of Development Responsibilities.

(a)Allocation of Responsibilities.  Subject to the remainder of this Section 3.2, the allocation of certain responsibilities of each of the Parties as of the Restatement Effective Date shall be set forth in the Long-Term Development Plan as amended from time to time.  To the extent not expressly delegated to certain Parties or otherwise provided for in this Agreement or the Long-Term Development Plan, the JJDC shall determine and approve the allocation of responsibilities applicable to the Development activities contemplated under this Agreement in a manner consistent with this Agreement and the Long-Term Development Plan.

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For the avoidance of doubt, in the event of any conflict between this Agreement and the Long-Term Development Plan, this Agreement shall govern.

(b)Japan Agency Agreement.  Under a separate agreement (the “Japan Agency Agreement”), ImClone has appointed BMKK as its agent for the sole purpose of undertaking the specific Development activities expressly set forth in this Agreement which relate to the Development of Cetuximab and Alternative Final Product containing same under the Alternative Trademark in Japan.  Unless terminated early by ImClone or BMKK pursuant to the Japan Agency Agreement, such agency shall continue during the term of this Agreement.

(c)Joint Preparation of Regulatory Filings for Final Product.  Subject to the binding portion of the Long-Term Development Plan and decisions of the JJDC and SCJ, BMKK, as agent for ImClone, and MJ shall, with respect to Final Product:

(i)jointly prepare for consultations with the Japanese Regulatory Authorities relating to the Clinical Trials to be performed according to the binding portion of the Long-Term Development Plan;

(ii)jointly sponsor all Clinical Trials which are made part of binding section of the Long-Term Development Plan, and jointly apply for all Clinical Trial notifications (“CTNs”), except where the JJDC agrees that it would be more efficient for one Party to be the sponsor and/or contracting party with an academic institution or physician with respect to a given Clinical Trial;

(iii)subject to Section 3.2(d)(vii), jointly prepare the JNDA for Final Product for each new Indication or new line of therapy within an existing Indication and all regulatory submissions thereafter to each such JNDA, with MJ to submit such jointly prepared JNDA in its (or an Affiliate’s) name;

(d)Notification.  MJ shall duly inform the Japanese Regulatory Authorities that Final Product branded with the Trademark Erbitux® is licensed from ImClone, and where appropriate, that the Parties are co-Developing and co-Commercializing such Final Product in Japan.  BMKK shall duly inform the Japanese Regulatory Authorities that Alternative Final Product branded with the Alternative Trademark is licensed from ImClone, and where appropriate, that the Parties are co-Developing and co-Commercializing such Final Product under the ERBITUX® Trademark in Japan pursuant to the JNDA filed by MJ.

(e)Alternative Final Product JNDA Submissions.  The Parties acknowledge that MJ has filed a JNDA for Final Product and that BMKK, as agent for ImClone, has filed a JNDA for Alternative Final Product using the BRICETUX trademark.  BMKK may use any Trademark for Alternative Final Product (the “Alternative Trademark”) that is clearly distinguishable from the Trademark Erbitux® and the Trademarks ONCERB, XETUXA, and ERBLOC, and that is agreed to by ImClone (it being agreed that the Alternative Trademark BRICETUX is acceptable to all Parties).   At any time, BMS and ImClone may agree to withdraw such Alternative Final Product JNDA.  Unless and until BMS and ImClone so withdraw such Alternative Final Product JNDA:

(i)BMKK, as agent for ImClone, shall be entitled to submit filings to such Alternative Final Product JNDA that mirrors in all material respects the filings made for the Final Product JNDA and shall be entitled to seek a marketing authorization for the same Indication for Alternative Final Product as for Final Product, unless the Parties agree otherwise.  The Parties agree that new data developed under this Agreement that is filed to the JNDA for Final Product may also be filed concurrently to the JNDA for Alternative Final Product.  BMKK will endeavor to assure that any related information provided by it to the Japanese

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Regulatory Authorities, as well as any responses, discussions and interactions that it has with the Japanese Regulatory Authorities regarding such Alternative Final Product JNDA, are consistent in all material respects with the Final Product JNDA and the responses, discussions and interactions had with respect to the Final Product JNDA.

(ii)Neither BMKK nor ImClone nor their respective Affiliates will apply for price listing and reimbursement for the Alternative Final Product, unless notice of termination of the Co-Promotion Term is given by a Party in accordance with this Agreement.  During the Co-Promotion Term, the Alternative Final Product will not be launched; and

(iii)BMKK shall be the primary point of contact for all communications with the Japanese Regulatory Authorities regarding the development of Alternative Final Product in Japan, all regulatory filings, and any pricing/reimbursement discussions in connection therewith.

(iv)BMKK shall promptly forward to the other Parties copies of all documents, filings and correspondence with the Japanese Regulatory Authorities regarding the development of Alternative Final Product in Japan.

Any filing or other regulatory costs for Alternative Final Product incurred by BMKK/BMS/ImClone shall be borne solely by BMKK/BMS/ImClone and shall not be deemed Allowable Expenses or Development Costs under this Agreement

3.3Interactions with Japanese Regulatory Authorities and Ethics Committees.

(a)MJ, subject to the direction of the SCJ, will apply for and obtain price listing and reimbursement for the Final Product branded with the Erbitux® Trademark.  BMKK and MJ will jointly Commercialize Final Product in Japan pursuant to this Agreement.  MJ shall use, and will permit BMKK (as agent for ImClone) and its Affiliates to use, the Trademark Erbitux® exclusively on the Final Product (i) pursuant to Article 9 hereof during the Co-Promotion Term to the extent permitted by Applicable Law or as provided in Section 6.6(a), without the addition or use of any other trademarks other than BMKK’s Corporate Name, and (ii) upon termination of this Agreement as set forth in Article 14.

(b)The Parties agree to assist one another in responding to and otherwise communicating with the Japanese Regulatory Authorities and ethics committees in connection with the Development activities contemplated hereunder during the term of this Agreement and for an additional period of five years after the termination of this Agreement, so long as the Existing Agreements to which such Party is a party has not been terminated in accordance with their terms.

(c)Subject to the Long-Term Development Plan and the Annual Development Plan and Budget, to the Long-Term Commercialization Plan and Annual Commercialization Plan and Budget, and to decisions of the SCJ, JJCC and/or JJDC, as applicable, from and after the Restatement Effective Date, MJ shall be the primary point of contact for all communications with the Japanese Regulatory Authorities regarding the Development of Final Product in Japan, all regulatory filings, and all pricing/reimbursement discussions.  Any attendees of a Party at such meetings shall be restricted to those employees of a Party who are expected to make a meaningful contribution to such meetings, plus a minimal number of observers, as reasonably determined by the JJDC or SCJ.

(d)Each Party shall promptly forward to the other Parties copies of all documents, filings and correspondence with the Japanese Regulatory Authorities regarding the Development of Final Product in Japan.  All Parties agree to assist in the preparation for

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any meetings with the Japanese Regulatory Authorities.  BMKK, as agent for ImClone, and MJ shall each be responsible for all communications with the Clinical Trial sites and ethics committees regarding the Development of Final Product in Japan depending upon which Party is designated by the JJDC as the lead Party for a given Clinical Trial protocol.  Without limiting the generality of the foregoing, BMKK, as agent for ImClone, and MJ shall (i) provide each of the Parties, whether through the JJDC or otherwise, a reasonable opportunity to review and comment on all communications with Japanese Regulatory Authorities and pricing/reimbursement authorities regarding the Development of Final Product in Japan prior to it initiating such communications (provided that this Section 3.3(d) shall not prohibit or otherwise act to prevent BMKK and MJ from promptly responding to the Japanese Regulatory Authorities’ requests for immediate information or otherwise in responding to Japanese Regulatory Authorities in circumstances where it would be unreasonable to expect BMKK and/or MJ to provide the Parties a reasonable opportunity to review and comment), and (ii) take into good faith consideration all such comments of the Parties when undertaking communications with Japanese Regulatory Authorities.  In any event, all such communications with Japanese Regulatory Authorities regarding the Development of Final Product in Japan shall be undertaken in a manner consistent with this Agreement, the Long-Term Development Plan and the Annual Development Plan and Budget, the Long-Term and Annual Commercialization Plans, and decisions of the SCJ, JJCC and/or JJDC, as applicable.

3.4Conduct of the Co-Development.  The Parties, acting in accordance with this Article 3 and the decisions made by the SCJ and/or JJDC, shall use Diligent Efforts to undertake the Development activities contemplated hereunder.  Without limiting the generality of the foregoing, each Party shall:

(a)Cooperate with the other Parties to execute the Long-Term Development Plan and complete the Developmental goals under the Long-Term Development Plan, including using Diligent Efforts to achieve marketing authorizations in Japan based on the Clinical Trials that the Parties have agreed to conduct under the Long-Term Development Plan;

(b)Use Diligent Efforts to perform the Development work (and related regulatory and manufacturing activities) required of each such Party in connection with each Approved Plan and this Agreement;

(c)Conduct Development activities (including the manufacture of Cetuximab and Final Product in connection therewith) in a good scientific manner, and in compliance in all material respects with all requirements of Applicable Laws, as well as all requirements of any applicable, definitive guidance document or guideline promulgated by the Japanese Regulatory Authorities (including MHW Ordinance No. 28 dated March 27, 1997 and any successor standards applicable to sponsoring, managing and implementing clinical studies in Japan, any current Good Manufacturing Practices, current Good Laboratory Practices and current Good Clinical Practices promulgated by the Japanese Regulatory Authorities), using Diligent Efforts to attempt to achieve the binding objectives of the Long-Term Development Plan efficiently and expeditiously;

(d)Maintain records, in sufficient detail and in good scientific manner, which shall be complete and accurate and shall fully and properly reflect all work done by such Party and results achieved by such Party in connection with the Development and manufacturing activities required of such Party under an Approved Plan in the form required under all Applicable Laws.  The other Parties shall have the right, during normal business hours and upon reasonable prior written notice, in no event, however, upon less than ten (10) Business Days prior written notice, to inspect and copy all such records at its own expense, so long as doing so is not unreasonably disruptive.  The other Parties shall maintain such records

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and information contained therein in confidence in accordance with Article 12 and shall not use such records or information except to the extent otherwise permitted by this Agreement; and

(e)Allow representatives of the other Parties, upon reasonable prior written notice and during normal business hours, to visit such Party’s facilities where any clinical or regulatory activities contemplated hereunder are being conducted, and consult, during such visits and by telephone, with such Party’s personnel performing such clinical or regulatory work on Clinical Trial activities being conducted under the Annual Development Plan and Budget or the binding portion of the Long-Term Development Plan, so long as such visits and consultations are not unreasonably disruptive.  The other Parties shall maintain any information received (whether by observation or otherwise) during such visit in confidence in accordance with Article 12 and shall not use such information except to the extent otherwise permitted by this Agreement.

3.5Process Flows and Study Instructions.

The SCJ shall determine and approve the strategic development related process flows and Clinical Trial instructions, including those relating to bulk drug substance and Final Product supply shipment, handling, testing, data query generation, resolution and Master Database (defined in Section 3.6(a) below) for each Clinical Trial required to be conducted under the Long-Term Development Plan or Annual Development Plan and Budget.  Consistent with such strategic direction, each Party to whom certain Development responsibility has been assigned shall follow its own internal standard operating procedures in carrying out such Development responsibilities consistent with local clinical practice, the SCJ-approved monitoring plans and Applicable Law, and shall develop detailed process flows and Clinical Trial instructions consistent with the foregoing, using such standard operating procedures to carry out each such Clinical Trial.  Critical functions such as, for example and not by way of limitation, Clinical Trial monitoring, analysis or results and statistical analysis plan shall be done in accordance with the detail set forth in the Long-Term Development Plan and the Annual Development Plan and Budget.

3.6Databases and Ownership of Results.   Subject to Section 3.2(c):

(a)During the conduct of the Development activities contemplated hereunder the Annual Development Plan and Budget and binding portion of the Long-Term Development Plan, the SCJ shall agree on the creation and the primary location for the database for each Clinical Trial that the Parties have agreed to conduct (the “Master Database”), which Master Database may reside with any of the Parties, or at a CRO.  The Master Database for each such Clinical Trial shall contain all of the data collected as part of the Development activities for such Clinical Trial which is intended to be included in or otherwise directly reflected in the cleaned and locked copy of the Master Database.  Copies of the Master Database shall be transferred from the Party or CRO, where the primary Master Database is located, to the other Parties on a regular basis, but no less frequently than monthly (“Duplicate Database”).

(b)The Master Database for each such Clinical Trial will be created by and reside with such Party or the CRO until the Master Database is clean and locked.  After the Master Database has been cleaned and locked, a copy of the Master Database will then be transferred to a Party designated by the SCJ for analysis according to an analysis plan determined and approved by the SCJ, with a copy to the other Parties at the same time.  The Party designated by the SCJ to conduct the analysis shall transfer such analysis to the other Party promptly upon its completion and sufficiently prior to any submission for publication as to enable the other Parties reasonable opportunity to comment thereon.

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(c)Analysis and reporting of the results of any such Clinical Trial, e.g., the generation and review of statistical analysis plans, the lock of the Master Database, the performance of interim or final analysis, Clinical Trial report writing and review, publication writing and review, performed under this Agreement shall be a joint effort of the two Party Groups (unless otherwise expressly set forth herein or otherwise mutually agreed by the Party Groups), and shall be determined and approved by the SCJ.

(d)Each Party shall have equal access to all Master Databases, which access shall survive any termination or expiration of this Agreement until all Parties in good faith certify that each of the Duplicate Databases is an exact duplicate of any Master Database(s).

(e)The Parties shall facilitate electronic data transfer of all Clinical Trial and Development related data hereunder in an industry standard format, and shall endeavor to ensure that such format is compatible with the data management systems of all of the Parties.

(f)The SCJ shall determine and approve a process flow for query handling with the aid of the data cleaning work group which shall be composed of one or more representatives of each Party Group.

(g)All Results shall be jointly owned by ImClone and Merck, and may be freely used by Merck for regulatory filings outside Japan that are in the Merck Territory (as determined by the Merck-ImClone Agreement) and by ImClone for regulatory filings in countries outside the Merck Territory (e.g., the U.S. and Canada).

(h)The Parties shall each have the right to use any and all Results in accordance with the Existing Agreements to which they are a party and this Agreement.

(i)The retention time of all data pertaining to Clinical Trials in the Master Database shall be consistent with 1st Clause of Article 26-2-3 of the Japanese Implementation Rules for the Pharmaceutical Affairs Law.  Without limiting the foregoing:

(i)Data which will be the basis for data submitted with any application for Approval relating to Final Product in Japan (or approval of Cetuximab outside of Japan) shall be preserved in the Master Database until the completion of all reexaminations by the Japanese Regulatory Authorities relating to such applications.

(ii)Data which will be the basis for data submitted with any application for reexamination of Final Product shall be preserved in the Master Database for 5 years following the date of the completion of all reexaminations of Final Product by the Japanese Regulatory Authorities.

(j)

(i)ImClone and BMS/BMKK covenant that they will not, without the consent of Merck, change the BMS-ImClone Agreement in a way that would change Merck/MJ’s ability (whether directly or through ImClone) under Section 4.1(c) thereof to obtain and use such data in Japan for Development, regulatory and Commercialization purposes in accordance with this Agreement and the Existing Agreements, and covenant that, if such section does not survive termination or expiration of said Agreement, BMS/BMKK and ImClone will continue to observe the requirements of such section following any such termination (so that Merck/MJ obtains the benefits thereof).

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(ii)ImClone and Merck/MJ covenant that they will not, without the consent of BMS, change the Merck-ImClone Agreement in a way that would change BMS/BMKK’s ability (whether directly or through ImClone) under Section 3.6 thereof to obtain and use such data in Japan for Development, regulatory and Commercialization purposes in accordance with this Agreement and the Existing Agreements and covenant that, if such section does not survive termination of said Agreement, MJ/Merck and ImClone will continue to observe the requirements of such section following any such termination (so that BMS/BMKK obtains the benefits thereof).

3.7Reporting of Safety Information.  Any and all adverse events shall be handled and reported consistent with the applicable provisions of the Pharmacovigilance Data Exchange Agreement entered into by and among ImClone, BMS and Merck as of November 1, 2006, as amended from time to time.

4.PAYMENT, COSTS, AND REPORTING FOR DEVELOPMENT AND COMMERCIALIZATION PURPOSES.

4.1General Obligations of the Parties.

(a)Cost Bearing.  Except as expressly provided in this Agreement or in the Existing Agreements, each Party shall bear all internal costs and expenses it incurs in undertaking activities relating to or as part of this Agreement.

(b)General Principles Regarding Equal Contribution of Internal FTEs.  Except as set forth in Section 3.1(c) or Article 14, each Party Group will contribute substantially equal internal personnel resources (FTEs) to Development and related regulatory activities under this Agreement.  Except as set forth in Section 3.1(c) or Article 14, BMKK and MJ shall use Diligent Efforts to equally contribute, as nearly as practicable, substantially equal internal FTEs (other than Sales Representative detailing activities) to Commercialization activities for the Final Product in Japan.  The SCJ and the Subcommittees shall apply this principle when allocating Development and Commercialization responsibilities  under the Annual Development Plan and Budget and the Annual Commercialization Plan and Budget.  The substantially equal FTE determination shall be allocated and determined separately for each Party Group for each of (x) Development and related regulatory activities and (y) such Commercialization (other than Sales Representative Detailing activities) and related regulatory activities, and not in the aggregate for (x) and (y) combined.

(c)Internal FTE Budgeting.  As part of the process of producing the Annual Commercialization Plan and Budget and the Annual Development Plan and Budget, the Parties may determine, but shall not be obligated (except as may be required pursuant to an Existing Agreement) to provide one another with their estimate of, internal FTE resources required for (1) all Development and related regulatory activities under the Annual Development Plan and Budget and (2) all non-Sales Force Commercialization and related regulatory activities under the Annual Commercialization Plan and Budget, for Final Product for such year.

If the JJDC agrees that the internal FTE efforts in the aggregate to be expended by each Party Group (including by any Affiliates of the Parties within such Party Group) for (A) for Clinical Trials conducted pursuant to the Annual Development Plan and Budget and (B) for regulatory activities reasonably allocable to the Development of Cetuximab or Final Product in Japan are expected to be essentially equivalent, then, except as provided in Section 4.1(c)(i) and 4.1(c)(ii) below, the Parties need not express any Development or related regulatory activity (whether individually or in the aggregate) in the Annual Development Plan and Budget in terms of FTEs, but shall designate within such Annual Development Plan and

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Budget those Development and related regulatory activities that will be performed by the relevant Party Group.

If the JJCC agrees that the internal FTE efforts in the aggregate to be expended by each Party Group (including by any Affiliates of the Parties within such Party Group) for all Commercialization (but not taking into account for this purpose Sales Representative Detailing activities) activities, any related regulatory activities and all Medical Education Activities are expected to be essentially equivalent (with ImClone’s FTEs to be taken into account for such purposes only with respect to those regulatory activities, if any, related to Commercialization that are to be performed by ImClone under the Annual Commercialization Plan and Budget), then, except as provided in Section 4.1(c)(i) and 4.1(c)(ii) below, the Parties need not express any individual Commercialization activities, Medical Education Activities, or related regulatory activity (whether individually or in the aggregate) in the Annual Commercialization Plan and Budget in terms of FTEs, but shall designate within such Annual Commercialization Plan and Budget those Commercialization and related regulatory activities that will be performed by the relevant Party.

Neither Party Group shall be required by this Agreement to record the actual FTE hours worked under this Agreement, except as follows:

(i)If the JJDC or JJCC, as the case may be, does not agree that the internal FTE efforts expected to be expended by each Party Group (including by any Affiliates of the Parties within such Party Group) for (x) Clinical Trials conducted pursuant to the Annual Development Plan and Budget and for regulatory activities reasonably allocable to the Development of Cetuximab or Final Product in Japan to be approved for the immediately succeeding year and/or (y) Commercialization activities (but not taking into account for this purpose Sales Force activities), Medical Education Activities, and related regulatory activities under the proposed Annual Commercialization Plan and Budget to be approved for the immediately succeeding year are expected to be essentially equivalent (as determined separately for each of (x) and (y), and not in the aggregate), then all internal personnel costs required to be taken into account under the applicable Plan and Budget (with the exception of Sales Representatives) for (x) and/or (y), as the case may be, will be tracked using actual FTEs used by a Party for such activities for such year, and the internal personnel costs will be calculated and charged either as Development Costs or as BMKK/MJ NSF Commercialization Activities Costs (based on the applicable category into which such costs fall), as the case may be, for such year using such actual FTEs and using the same FTE Rate for all Parties for a given activity.

(ii)In the event that any Party that is a member of a Party Group believes that the other Party Group is not fulfilling its obligations to complete the Development or Commercialization activities (other than Sales Representative Detailing activities) allocated to it under a given Annual Development Plan and Budget or Annual Commercialization Plan and Budget, as applicable, then such Party may notify the JJDC or JJCC, as the case may be.  If the JJDC or JJCC agrees that the activity is not being completed in accordance with the agreed Annual Development Plan and Budget or Annual Commercialization Plan and Budget, as applicable, then either (1) BMKK, if its Party Group has been fulfilling its obligation and the MJ/Merck Party Group has not or (2) MJ, if its Party Group has been fulfilling its obligation and the BMS/BMKK/ImClone Party Group has not, will have the right to step in and complete the activity not then being performed and charge the associated incremental internal personnel costs to either Development Costs or to BMKK/MJ NSF Commercialization Activities Costs (based on the applicable category into which such costs fall), as the case may be (using the actual FTE costs incurred and the applicable FTE Rate) through the end of such year (provided, that if the non-performing Party Group can reasonably demonstrate that is capable of resuming its obligations prior to the end of such year, it may do so and the Party Group that had stepped

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in to perform shall not charge any incremental costs after the date that the non-performing Party resumes performance of its obligations); provided, however, that if there is a dispute at the JJDC or JJCC as to whether an activity is being completed or the amount of the FTE costs that should be charged,  then the dispute will be elevated to the SCJ for resolution, and if the SCJ cannot agree, then BMKK or MJ may submit such dispute to submitted for baseball arbitration pursuant to Section 16.13(a), and only BMKK and MJ shall be entitled to provide offers for consideration by the arbitrator in connection with such baseball arbitration.

(d)Records.  If required in accordance with Section 4.1(c), each Party shall track, record and account for its internal FTE efforts as provided therein (and only from the point forward from when it becomes required to track such FTE efforts), and shall report such internal FTE efforts to the JJDC or JJCC, as applicable, on a Quarterly basis.  Except to the extent expressly provided otherwise in this Agreement, each Party shall calculate and maintain such records of FTE efforts incurred by it in the same manner as used for other products commercialized or developed by such Party in Japan, unless instructed by the SCJ to employ other procedures, in which case such other procedures shall be applied equally to all Parties.  The SCJ shall facilitate any reporting under this Section 4.1(d).

(e)FTE Rate Determination.  If required in accordance with Section 4.1(c), each Party’s FTE Rates shall be determined in accordance with the rates and categories set forth in Exhibit 4.1(e), as determined by the JJFC and approved by the SCJ.  Such rates shall be adjusted annually, with each annual adjustment effective as of January 1 of each year, with the first such annual adjustment to be made as of January 1, 2008, based the average of each Party’s change in the fully absorbed cost of a full-time employee in the applicable functional area in Japan from the previous January 1 (or as otherwise determined by the JJFC).  Such determination shall be approved by the SCJ.

4.2Development Costs.

(a)Determination of Development Costs.  The “Development Costs” under this Agreement shall include and be limited to:

[**]

As used in (i) and (v) above, the phrase “external costs” shall mean costs charged by unrelated, non-Affiliate Third Parties to a Party.  If any cost or expense is directly attributable or reasonably allocable to more than one activity or category within Development Costs, such cost or expense shall be counted as a Development Cost with respect to only one of such activities.

(b)Equal Sharing.  Except as set forth in Sections 3.1(c) and 4.2(c) and Article 14, and excluding, for purposes of determining the Development Costs to be shared under this Section 4.2(b), the Parties’ internal FTE Costs incurred in any Development activities (except either (x) where and to the extent such internal FTE costs are required to be taken into account pursuant to Section 4.1(c)(i) and 4.1(c)(ii) or (y) if and as otherwise agreed to by the SCJ), BMKK and Merck/MJ shall, commencing effective as of the Restatement Effective Date, share all Development Costs equally.  The Parties shall use commercially reasonable efforts to structure and effect any such Development Cost reimbursement payments in a manner that eliminates, to the maximum extent lawful, the need for any tax withholdings with respect to such payments.  The JJDC shall review the actual Development Costs incurred against budget not less than quarterly.  ImClone’s share (whatever it may be) of any such Development Costs shall be allocated and borne as between ImClone and BMS/BMKK as and to the extent provided in the BMS-ImClone Japan Agreement.

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(c)Clinical Trial/Phase IV Clinical Trial Expense Overrun.  If the Development Costs (exclusive of internal FTEs) of any given Clinical Trial identified in the Long-Term Development Plan or Annual Development Plan and Budget should, following conclusion of such Study, exceed the amounts that had been originally budgeted (under the Long-Term Development Plan for Phase I-III trials and under the applicable Annual Development Plan and Budget for Phase IV Clinical Trials for the completion of such Clinical Trial from start to finish (and taking into account any subsequent amendments to the protocol for such Clinical Trial that would have affected the budget for same) by more than [**], such excess expenses (each a “Clinical Trial Expense Overrun”) shall be borne solely by that Party who (or whose Affiliates or Third Party contractors) was responsible for performing or managing or causing to be performed the Study, but only if, and only to the extent, that any such Clinical Trial Expense Overrun was attributable to the negligence of such Party (or its Affiliates or Third Party contractors); otherwise, the entire Clinical Trial Expense Overrun shall be treated as any other Development Cost and shared as provided in Section 4.2(b).  This Section 4.2(c) shall represent the exclusive remedy under this Agreement and the Existing Agreements with respect to the sharing of any cost overruns arising out of the conduct of a Clinical Trial.

4.3Equal Sharing of Non-Sales Force Commercialization Activities Costs.

(a)Equal Sharing of Costs.   Subject to Sections 3.1(c), 4.3(b), 4.3(c) and 4.3(d) and Article 14, and excluding, for purposes of determining the costs to be shared under this Section 4.3(a), the costs incurred by a Party (using the applicable PDE Rate) to provide its budgeted PDEs in a given year, BMKK and MJ shall, commencing as of the Restatement Effective Date, equally bear all Marketing Costs, Sales Costs, Medical Education Costs and Regulatory Costs (to the extent such Regulatory Costs are reasonably related to Commercialization activities) contemplated by the Annual Commercialization Plan and Budget or otherwise agreed to by the JJCC or the SCJ (all of the foregoing, collectively, the “BMKK/MJ NSF Commercialization Activities Costs”).  The JJCC shall review the actual BMKK/MJ NSF Commercialization Activities Costs incurred against the budget set forth in the applicable Annual Commercialization Plan and Budget not less than quarterly. Any non-Sales Force internal FTE Costs shall not be taken into account in determining BMKK/MJ NSF Commercialization Activities Costs, except either where and to the extent such internal FTE costs are required to be taken into account pursuant to Sections 4.1(c)(i) or 4.1(c)(ii) or if and as otherwise agreed to by the SCJ.

(b)Marketing Expense Overrun.  If actual Marketing Costs (excluding Internal FTE costs) for all Marketing Activities delegated for performance or supervision by a given Party (either MJ or BMKK, as the case may be) in a given calendar year should exceed in the aggregate the total amount that had been budgeted in the Annual Commercialization Plan and Budget for all such Marketing Activities delegated to MJ or BMKK (and taking into account any subsequent amendments to Annual Commercialization Plan and Budget approved for such year) by more than [**] in such year, such excess expenses (each a “Marketing Expense Overrun”) shall be borne solely by that Party who was responsible for performing or managing or causing to be performed such Marketing Activities, but only if, and only to the extent, that any such Marketing Expense Overrun was attributable to the negligence of such Party (or its Affiliates or Third Party contractors); otherwise, the entire Marketing Expense Overrun shall be treated as any other BMKK/MJ NSF Commercialization Activities Cost and shared as provided in Section 4.3(a).  This Section 4.3(b) shall represent the exclusive remedy under this Agreement and the Existing Agreements with respect to the sharing of any Marketing Expense Overruns.

(c)Medical Education Expense Overrun.  If actual Medical Education Costs (excluding Internal FTE costs) for all Medical Education Activities delegated

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for performance or supervision by a given Party (either MJ or BMKK, as the case may be) in a given calendar year should exceed in the aggregate the total amount that had been budgeted for such Medical Education Activities delegated to MJ or BMKK (and taking into account any subsequent amendments to Annual Commercialization Plan and Budget approved for such year) by more than [**] in such year, such excess expenses (each a “Medical Education Expense Overrun”) shall be borne solely by Party who was responsible for performing or managing or causing to be performed such Medical Education Activities, but only if, and only to the extent, that any such Medical Education Expense Overrun was attributable to the negligence of such Party (or its Affiliates or Third Party contractors); otherwise, the entire Medical Education Expense Overrun shall be treated as any other BMKK/MJ NSF Commercialization Activities Cost and shared as provided in Section 4.3(a).  This Section 4.3(c) shall represent the exclusive remedy under this Agreement and the Existing Agreements with respect to the sharing of any Medical Expense Overruns.

4.4Reporting.

(a)Each Party shall report any Development Costs that it (or any of its Affiliates) shall have incurred in a given Quarter to the JJFC, to the JJDC, to BMKK (who will report same to BMS and ImClone), and to MJ (who will report same to Merck) within thirty (30) days following the end of each such Quarter (or for the last Quarter in a year, sixty (60) days after the end of such Quarter).  Such reports shall be a reasonably detailed account of such Development Costs setting forth the reasons for such costs and expenses.  Such reports shall be accompanied by copies of the applicable invoices or other appropriate supporting documentation for any payments to Third Parties (including CROs) that individually exceed $50,000 or such other amount as may be determined by the SCJ that qualify as Development Costs under or involve activities performed pursuant to the Annual Development Plan and Budget.  Each Party shall also provide a more detailed report of such Development Costs as may be required by Applicable Law, as may be requested by the JJFC and/or the SCJ, or as may be reasonably requested by any Party to comply with its applicable reporting and accounting requirements.  The JJFC shall be responsible for preparing a report comparing actual Development Costs incurred against budget.

(b)Each Party shall report any Allowable Expenses and BMKK/MJ NSF Commercialization Activities Costs that it (or its Affiliates) shall have incurred in a given Quarter to the JJFC, to the JJCC, to BMKK (who will report same to BMS and ImClone), and to MJ (who will report same to Merck) within thirty (30) days after the end of each Quarter (or for the last Quarter in a year, sixty (60) days after the end of such Quarter) and in a manner sufficient to enable the other Party to comply with its governmental and regulatory reporting requirements.  Such report shall specify in reasonable detail all deductions and expenses included: (i) in Allowable Expenses for the applicable Quarter and shall be accompanied by invoices or other appropriate supporting documentation for any payments to Third Parties that individually exceed [**] or such other amount as may be determined by the SCJ; and (ii) in BMKK/MJ NSF Commercialization Activities Costs.  Each Party shall also provide a more detailed report of such expenses as may be required by Applicable Law, as may be requested by the JJFC and/or the SCJ, or as may be reasonably requested by any Party to comply with its applicable reporting and accounting requirements.  Allowable Expense shall also be estimated and reported on a monthly basis within 30 days after the end of each of the first two months in a Quarter.  The first such report for the period from and after the Restatement Effective Date shall be due at the end of the first Quarter following the Restatement Effective Date and shall cover the period from the Restatement Effective Date through the end of such Quarter.  Thereafter, reports shall be made as provided in Section 4.4(a) and this Section 4.4(b).

(c)MJ shall report to the JJCC and the other Parties within thirty (30) days after the end of each Quarter with regard to Net Sales reported by MJ during such

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Quarter in Japan and in a manner sufficient to enable each other Party to comply with its reporting requirements under this Agreement.  MJ shall also estimate and report Net Sales on a monthly basis within 30 days after the end of each of the first two months in a Quarter.

(d)Each Party shall also provide a more detailed report of such expenses under Sections 4.4(a) and 4.4(b) or Net Sales under Section 4.4(c) as may be required by Applicable Law, or as may be requested by the JJFC and/or the SCJ, or as may be reasonably requested by any Party to comply with its applicable reporting and accounting requirements.

(e)Within forty-five (45) days after the end of each Quarter (or for the last Quarter in a year, sixty (60) days after the end of such Quarter), the JJFC shall review and serve as a forum for resolving and reconciling any disputes or issues arising among the Parties as to the calculation of Development Costs, Net Sales, Allowable Expenses and BMKK/MJ NSF Commercialization Activities Costs incurred or accrued in such Quarter, and shall also ascertain the Profit Or Loss for such Quarter.

(f)Development Costs and BMKK/MJ NSF Commercialization Activities Costs incurred by an Affiliate of any of BMKK, MJ, or ImClone, as the case may be, shall be deemed incurred by BMKK, MJ, or ImClone, respectively, as the case may be, for accounting purposes under this Agreement and the BMS-ImClone Japan Agreement.

(g)For purposes of determining Development Costs, BMKK/MJ NSF Commercialization Activities Costs and Profit Or Loss under this Agreement, any Allowable Expenses, Development Costs, and BMKK/MJ NSF Commercialization Activities Costs incurred by ImClone shall be deemed incurred by BMS/BMKK for purposes of such reconciliation, but shall not otherwise affect the sharing of such costs and expenses by BMS and ImClone pursuant to the BMS-ImClone Agreement and the BMS-ImClone Japan Agreement.

4.5Reimbursements of Costs and Payment of Profit Or Loss.

(a)Once BMKK, MJ and ImClone have all reviewed a Party’s cost report provided pursuant to Section 4.4(a) above, BMS/BMKK, on the one hand, and Merck/MJ, on the other, with the oversight, review and approval of the JJFC (and, in the event of a dispute at the JJFC, approval by the SCJ), shall net out the amounts due with respect to Development Costs and calculate the net balancing payments due one another such that the reported and approved Development Costs are allocated in a manner consistent with Section 4.2(b).  For purposes of the foregoing, Development Costs incurred by ImClone shall be deemed incurred by BMS/BMKK for purposes of such reconciliation, but shall not otherwise affect the sharing of such Development Costs by BMS and ImClone pursuant to the BMS-ImClone Agreement and the BMS-ImClone Japan Agreement. The Party (BMKK or MJ) that has borne less than one-half of the aggregate pertinent Development Costs shall make an adjusting payment to the other Party to assure that each such Party bears its equal share of same.  Such payments shall be made within sixty (60) days following the end of each Quarter (ninety (90) days after the end of the last Quarter in a calendar year), provided any disputed amounts shall instead be due to be paid within thirty (30) days following the resolution of the dispute (with any undisputed or uncontested amounts shall be paid within the applicable 60- or 90-day period).  Each Party shall also provide a more detailed report of such expenses as may be required by Applicable Law, as may be requested by the JJFC and/or the SCJ, or as may be reasonably requested by another Party to comply with its applicable external reporting and accounting requirements.

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(b)Once BMKK, MJ and ImClone have all reviewed a Party’s cost report provided pursuant to Section 4.4(b) above, BMS/BMKK, on the one hand, and Merck/MJ, on the other, with the oversight and review of the JJFC and the SCJ, shall net out the amounts due with respect to BMKK/MJ NSF Commercialization Activities Costs, and calculate the net balancing payments due one another such that the reported and approved BMKK/MJ NSF Commercialization Activities Costs are allocated and shared evenly between BMKK and MJ in a manner consistent with Section 4.3(a)   The Party (BMKK or MJ) that has borne less than one-half of the aggregate pertinent BMKK/MJ NSF Commercialization Activities Costs shall make an adjusting payment to the other Party to assure that each Party bears its equal share of same.  Such payments shall be made within sixty (60) days following the end of each Quarter of the year (ninety (90) days after the end of the last Quarter in a calendar year), provided any disputed amounts shall instead be due to be paid within thirty (30) days following the resolution of the dispute (with any undisputed or uncontested amounts shall be paid within the applicable 60- or 90-day period).  Each Party shall also provide a more detailed report of such expenses as may be required by Applicable Law, or as may be requested by the JJFC and/or the SCJ, or as may be reasonably requested by another Party to comply with its applicable external reporting and accounting requirements.

(c)Subject to Section 3.1(c) and Article 14, Profit Or Loss shall be paid as follows:

(i)Within sixty (60) days after the end of each Quarter (or for the last Quarter in a year, ninety (90) days after the end of such Quarter), Merck will reimburse ERS, BMKK and/or BMS (and/or any of their Affiliates, in each case to such entity as BMS may direct) for any Allowable Expense (which shall then be deemed an Allowable Expense of MJ for purposes of  determining Profit Or Loss) incurred by BMKK, ImClone or BMS (or their Affiliates) in respect of such Quarter.

(ii)If there is a Profit for such Quarter, Merck (or any of its Affiliates) shall pay to ERS, BMKK and/or BMS (and/or to any of their Affiliates, as BMS may direct) an amount equal to fifty percent (50%) of the Profits for such Quarter attributable to Commercialization of Final Product in Japan, less any payments on account of Profit received previously in respect of such Quarter.

(iii)If there is a Loss in such Quarter, then ERS, BMKK and/or BMS (and/or any of their Affiliates, as BMS may direct) shall pay to Merck (and/or to any of its Affiliates, as Merck may direct) an amount equal to fifty percent (50%) of the Loss for such Quarter attributable to Commercialization of Final Product in Japan, less any payments on account of Loss made previously in respect of such Quarter.

The payments required under subsections (i)-(iii) of this section 4.5(c) may be netted for a given Quarter as agreed to by BMS and Merck.

(d)No separate payments shall be made with respect to the last Quarter per se in any calendar year.  Instead, at the end of each such year, a final reconciliation payment for the entire year shall be made by the Party or Parties owing same within ninety (90) days after the end of the calendar year with respect to amounts due under Sections 4.4(a), 4.4(b) and 4.4(c) after taking into account all amounts (if any) previously paid to or by, or retained by, such Party for prior Quarters during such year.  The JJFC may also request that each Party provide such additional information or data as may be reasonably necessary to ensure a proper accounting and reconciliation.

(e)[**]  If a Party enters into an agreement with a Third Party for the provision of materials or services pursuant to this Agreement, and if such Party possesses a [**]

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or more ownership interest in such Third Party, then, for purposes of determining Profit and Loss only or with respect to determining Development Costs Allowable Expenses, or BMKK/MJ NSF Commercialization Activities Costs, all costs incurred for the provision of such materials or services by such Third Party that are shared by the Parties under this Agreement shall be accounted for on the basis of (i) the transfer price in effect under the agreement between such Party and such Third Party, if such transfer price is comparable to that which such Third Party agrees to with other Third Parties in the ordinary course of business, or (ii) otherwise, [**].  Nothing in this Section 4.5(e) or elsewhere in this Agreement is intended to modify or affect, or shall be interpreted to modify or affect, the actual transfer price imposed in transactions for the purchase and supply of services, materials or Products between (x) a Party (or any of its Affiliates) with one of its Affiliates, (y) a Party (or any of its Affiliates) with another Party or any of its Affiliates, or (z) a Party or any of its Affiliates with any Third Party, [**] or more of which Third Party’s voting securities are owned by a Party or its Affiliates.

4.6Mode of Payment.

(a)Each of BMKK and MJ shall make all payments required under Sections 4.5(a) and 4.5(b) of this Agreement in Japanese Yen, via wire transfer of immediately available funds as directed by the other Party from time to time, net of any out-of-pocket transfer costs or fees.  Accounting for payments and reimbursement amounts due under this Agreement shall be in Japanese Yen.  To the extent that payments are made between the other Parties to this Agreement, such shall be made pursuant to either: (a) the Existing Agreements; or (b) as has been otherwise established as a course of business conduct between such Parties.

(b)All payments of Profit Or Loss under Section 4.5(c) shall be in Japanese Yen.

(c) For the purpose of determining Allowable Expenses incurred by a Party, BMKK/MJ NSF Commercialization Activities Costs, Development Costs or other shared expenses under this Agreement which are incurred by a Party in a currency other than in Japanese Yen, such Allowable Expense, BMKK/MJ NSF Commercialization Activities Costs, Development Costs or other shared expense amounts shall be converted into Japanese Yen on a quarterly basis based on currency exchange rates quoted by the European Central Bank at the following website:
www.ecb.int/stats/exchange/eurofxref/html/index.en.html, at 5:00 p.m. EST on the last business day in an applicable calendar quarter.

4.7Records Retention.  Each of the Parties shall keep complete and accurate records pertaining to the Development Costs, Allowable Expenses, and the BMKK/MJ NSF Commercialization Activities Costs incurred by it as part of the activities contemplated hereunder, for a period of three calendar years after the year in which such activities occurred.

4.8Payment Audits.

(a)Any Party shall have the right to request that another Party’s independent, certified accounting firm perform an audit or interim review of the other Party’s books in order to express an opinion regarding such Party’s compliance with GAAP (in the case of ImClone, BMS and BMKK), and with IFRS (in the case of Merck and MJ).  Such audits or review shall be conducted at the expense of the requesting Party.

(b)During the term of this Agreement and for a period of three years thereafter, at the request and expense of the requesting Party(ies) (“Auditing Party(ies)”), the other Party(ies) (“Audited Party(ies)”) shall permit an independent, certified public accountant appointed by the Auditing Party(ies) and reasonably acceptable to the Audited Party(ies), at reasonable times and upon reasonable written notice, to examine such records as may be

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necessary to determine the correctness of any report or payment made under this Agreement; provided, however, that such accountant shall sign a confidentiality agreement in a form reasonably satisfactory to the Audited Party(ies), and, provided further, that such examination shall not be permitted more than once in any 12-month period.  Said accountant shall not disclose to the Auditing Party(ies) or any other person any information, except that such accountant may disclose to the Auditing Party the fact of a deficiency, the lack of a deficiency or any overpayment, and the degree thereof, as well as the dollar amount (and the equivalent amount in Japanese Yen).  All results of any such examination shall be made available to the Audited Party(ies).

(c)In the event that any audit reveals a deficiency in the amount that should have been paid by one Party to another Party, then the underpaid amount shall be paid within forty-five (45) days after the Party(ies) who is owed payment makes a demand therefor, plus interest thereon if such deficiency is in excess of [**] of the amount that actually should have been paid.  Such interest shall be calculated from the date such underpaid amount was due until the date such underpaid amount is actually paid, at a simple interest rate equal to the lesser of (x) the three (3) month LIBOR rate of the respective currency in which the payments was due as published by Citibank, N.A., New York, New York, or any successor thereto, at 12:01 a.m. on the first day of each Quarter in which such payments are overdue, plus [**], and (y) the maximum rate permitted by Applicable Law, calculated on the number of days such payment is delinquent.  In addition, if such underpaid amount is in excess of [**] of the amount that actually should have been paid, then the Auditing Party(ies) shall be reimbursed by the Audited Party(ies) for the reasonable cost of such audit unless this [**] underpayment threshold would not have been crossed other than as the result of the misstatement of financial data by another Party.  In the event of an overpayment, such amounts shall be deducted from future amounts due.  If such overpaid amounts have not been settled by such future deductions within one (1) year from the date originally overpaid, the Party who is owed such overpayment shall invoice the owing Party for such amounts.  Interest payments shall be made in the same currency as the underlying obligation.

4.9Taxes.

(a)In the event that a Party(ies) is mandated under the laws of a country to withhold any tax to the tax or revenue authorities in such country in connection with any payment to the other Party(ies), such amount shall be deducted from the payment to be made by such withholding Party(ies), provided that the withholding Party(ies) shall take reasonable and lawful actions to avoid and minimize such withholding and promptly notify the other Party(ies) so that the other Party(ies) may take lawful actions to avoid and minimize such withholding.

(b)The withholding Party(ies) shall promptly furnish the other Party(ies) with copies of any tax certificate or other documentation evidencing such withholding as necessary to satisfy the requirements of the United States Internal Revenue Service or any other competent tax authority related to any application by such other Party(ies) for foreign tax credit for such payment.

(c)Each Party agrees to reasonably cooperate with the other Parties in claiming exemptions from such deductions or withholdings under any agreement or treaty from time to time in effect, and, so long as the same does not prejudice or adversely affect a Party’s own tax position, obtaining the release of any withheld amounts.

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5.OWNERSHIP OF INVENTIONS; USE OF RESULTS; PATENTS.

5.1Ownership of Inventions made by the Parties.  In the event that any Party or any of its Affiliates, alone or jointly with one or more other Parties and their respective Affiliates, makes an Invention (a “Company Invention”), ImClone and Merck shall jointly own such Company Invention.  In such case, ImClone and Merck shall be joint applicants and shall mutually determine whether, how and in which countries to file for patent protection, consistent with the Existing Agreements.  Inventorship in such Company Inventions shall be determined in accordance with U.S. patent law.  In the event that Merck or ImClone intend to file an application in a country where the other does not want to maintain a patent right, the Party intending to so file may file an application on a sole basis in such a country and must bear all costs associated therewith.  In the case of joint filings, the costs will be shared equally.  Notwithstanding the foregoing, if the BMS-ImClone Agreement provides that, as between ImClone and BMS, a given Company Invention is owned by BMS, then all of ImClone’s rights and obligations with respect to such Company Invention pursuant to the foregoing four sentences shall instead be assigned to BMS with respect to such Company Invention; for the avoidance of doubt, this means, among other things, that BMS and Merck would jointly own such Company Invention.  To the extent necessary to effectuate the foregoing, each Party shall take any action reasonably necessary to effectuate ownership of Company Inventions pursuant to the foregoing.

5.2Ownership of Inventions made by Third Parties.    All Inventions made by a CRO and/or any Third Party (such as, without limitation, a clinical investigator) to the extent solely relating to Final Product (“Related Inventions”) shall be owned by ImClone, while Inventions so made that have general utility in connection with other products and/or compounds in addition to Final Product (“General Inventions”) shall be jointly owned by ImClone, BMS and Merck.  Inventorship in such Related Inventions and General Inventions shall be determined in accordance with U.S. patent law.  Any invention report submitted by a CRO or any Third Party to one of the Parties shall be forwarded by the receiving Party to the other Parties without delay.  With respect to Related Inventions, ImClone shall determine whether, how and in which country to file for patent protection, consistent with the Existing Agreements.  With respect to General Inventions, ImClone and Merck shall mutually determine whether, how and in which countries to file for patent protection.  In the event that Merck or ImClone intend to file an application in a country where the other Party does not want to maintain a patent right, the Party intending to so file may file an application on a sole basis in such a country and must bear all costs associated therewith.  In the case of joint filings, the costs will be shared equally.  To the extent necessary to effectuate the foregoing, each Party shall take any action reasonably necessary to effectuate ownership of Related Inventions and General Inventions pursuant to the foregoing.

5.3Use of Inventions and Results.   Each Party shall have the right to use the Company Inventions and Related Inventions as provided for in the Existing Agreements to which it is a party.  Each Party shall have the right to use General Inventions as it deems appropriate, including the use of same for other products and/or compounds without compensating the other Parties, and including the grant of licenses to Third Parties.  A Party’s grant of such license to a Third Parties shall not require consent of the other Parties if the license is granted for the manufacture, use or sale of a specific compound or other product developed, owned, or controlled by a Party or its Affiliates that is not a Competing Product.  Otherwise, a Party’s grant of such license to a Third Party shall require the other Parties’ prior written consent.  Each Party shall have the right to use Results as it deems appropriate, so long as such use is consistent with the Existing Agreements and all other provisions of this Agreement.

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5.4Patent Enforcement, Patent Maintenance and Infringement.  Subject to Sections 7.3(a)(ii) and 13.2 hereof, patent enforcement, patent prosecution and maintenance, and Third Party patent infringement defense shall be governed by the provisions of the Existing Agreements applicable to the Parties that are a party to such agreements.

6.COMMERCIALIZATION.

6.1Commercialization Plans and Budgets.

(a)In General.  The Commercialization of Final Product in Japan shall be governed by a comprehensive, three-year, Commercialization plan and budget for Final Product (the “Long-Term Commercialization Plan and Budget”), and by detailed Commercialization plans and budgets covering the Commercialization activities to be performed for a particular calendar year (each, an “Annual Commercialization Plan and Budget”).

(b)Limitations.  Notwithstanding anything contained in this Agreement, the Long-Term Commercialization Plan and Budget or any Annual Commercialization Plan and Budget adopted hereunder to the contrary, unless otherwise agreed to in writing by each Party to this Agreement, ImClone shall have no obligation to perform under this Agreement any Commercialization activities in Japan, but shall be responsible for such manufacturing activities and funding such Development activities with respect to Japan that it is obligated to perform under this Agreement and the Existing Agreements.

6.2Commercialization Plans and Budgets.  Subject to Section 10.2 and to applicable terms in Article 14 of this Agreement:

(a)Adoption and Content.  Each Long-Term Commercialization Plan and Budget shall set forth the performance and funding obligations for the Commercialization of Final Product in Japan, on an Indication-by-Indication basis to the extent reasonably practicable, but which shall include in any event (i) subject to Sections 3.1(c), 6.2(b)(iv), and other applicable terms of this Agreement, a non-binding estimate of the maximum and minimum number of Sales Representative FTEs required of BMKK and of MJ for the Commercialization of all Indications in Japan for each calendar year covered by such Long-Term Commercialization Plan and Budget, and (ii) subject to Section 3.1(c), a non-binding estimate of PDEs and call positions in Japan for each year covered by such Long-Term Commercialization Plan and Budget, (iii) a non-binding estimate of BMKK/MJ NSF Commercialization Activities Costs for each year covered by such Long-Term Commercialization Plan and Budget, and (iv) any additional information determined by the SCJ (and which shall be non-binding upon the Parties).  Following the adoption of the initial Long-Term Commercialization Plan and Budget, the JJCC shall thereafter prepare, during the first Quarter of each calendar year thereafter, the Long-Term Commercialization Plan and Budget for the year of adoption and for the ensuing two calendar years, using a process determined by the JJCC that will allow the SCJ a reasonable opportunity to review and comment on same before such Long-Term Commercialization Plan and Budget is adopted by the JJCC and the SCJ.

(i)Initial Long-Term Commercialization Plan and Budget.  The initial Long-Term Commercialization Plan and Budget shall cover the period from the date that is one year prior to expected Launch of Final Product in Japan through the end of the second (2nd) full calendar year following the expected Launch of Final Product in Japan, and is (or shall be) attached as Exhibit 6.2(a) hereto.

(b)Annual Commercialization Plans and Budgets.

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(i)In General.  The Commercialization of Final Product in Japan in a given calendar year shall be governed by an Annual Commercialization Plan and Budget.  The first Annual Commercialization Plan and Budget is included in Exhibit 6.2(a) hereto and covers the period from the Restatement Effective Date through December 31, 2008.  Subject to Section 3.1(c) and applicable sections of Articles 4 and 6, each Annual Commercialization Plan and Budget shall set forth the Commercialization activities to be performed in Japan for an applicable calendar year, and shall be consistent, to the extent practicable, with the most recent Long-Term Commercialization Plan and Budget covering such year.

(ii)Adoption of Annual Commercialization Plans and Budgets.   The JJCC shall prepare the Annual Commercialization Plan and Budget annually, according to a schedule and using a process determined by the JJCC, which will provide the SCJ a reasonable opportunity to review and comment on same before such Annual Commercialization Plan and Budget is adopted by the SCJ.  Each Annual Commercialization Plan and Budget shall describe the plan and budget for Commercialization of Final Product for the calendar year covered by such plan and budget, broken down, where practical, on an Indication-by-Indication basis and Quarterly basis, including, as applicable:

(1)general strategies for the Commercialization of Final Product in Japan, consistent to the maximum practical extent with the Parties’ key product positioning strategies for the other countries in which Cetuximab is Commercialized;

(2)subject to Sections 3.1(c), 4.1 and 4.3, allocation of responsibilities between BMKK and MJ for all significant Commercialization activities (other than Sales Force activities).  Unless otherwise agreed to by the BMKK and MJ Representatives of the JJCC, the foregoing matters will be allocated evenly between BMKK and MJ to the maximum practical extent or in such other fair and equitable manner as may be approved by the JJCC (taking into account all relevant factors, including  the target audience and geography) and in a manner that (A) seeks to achieve, where practicable, reasonable consistency in the allocation of such responsibilities from year to year, and (B) seeks to avoid duplication of FTE effort to the maximum practical extent;

(3)subject to Sections 3.1(c), 6.2(b)(iv), 6.2(b)(v), 6.3(a) and other applicable terms of this Agreement:  (A) the number of Sales Representative FTEs of MJ and BMKK to be used in Detailing Final Product for such year; (B) the number of PDEs to be delivered for Final Product each year by such Party (broken out by quarter and, where practicable, by month), (C) subject to Section 6.4(b), the position of such Details, call schedule and frequency of Details, target prescriber list (whether by categories of medical professionals (e.g., office-based physicians), medical care segments (e.g., primary care), specialists, and/or specific target prescriber lists); and (D) the nature of any other key promotional activities to be provided by a Party’s Sales Representatives;

(4)a general plan and strategy for the marketing, promotion and sale of Final Product to large health care providers, governmental agencies (whether national, regional, federal, state or local), and other group purchasing organizations, including contracting strategy, with the JJCC to review and discuss contract creation, government reporting, rebate processing, pricing schedules, contract compliance, monitoring and audits, and contract administration and claims processing to the extent reasonably relating thereto;

(5)market, unit sales, and Net Sales forecasts for Final Product, broken down by approved Indication and updated quarterly, in sufficient detail and length of time as to enable the JJMC to determine its own forecasts under Section 8.3(b);

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(6)plans for developing and deploying all Final Product marketing and promotional materials;

(7)subject to Sections 4.1 and 4.3, Medical Education Activities to be conducted by each of BMKK and MJ (and the budgeted spend in the aggregate for such activities for each of BMKK and MJ);

(8)subject to Sections 4.1 and 4.3, any Marketing Activities (including advertising, public relations and other promotional programs regarding Final Product and including speaker and peer-to-peer activity programs) to be conducted by each of BMKK and MJ (and the budgeted spending in the aggregate for such activities for each of BMKK and MJ); and

(9)forecast Profit Or Loss statement for Final Product for the relevant time period covered by each Annual Commercialization Plan and Budget.

(iii)Amendments.  In the event that a material event occurs that has not been adequately and/or foreseeably anticipated in a given Annual Commercialization Plan and Budget, or if any event occurs that materially affects the assumptions that were used to develop a given Annual Commercialization Plan and Budget (such as the failure to achieve Approval for an Indication or new line of therapy, a request by the Japanese Regulatory Authorities for additional Clinical Trials before it will approve an Indication or new line of therapy, an unanticipated delay in the Japanese Regulatory Authorities’ review and approval of Final Product, the failure of Phase III Clinical Trial data to support an anticipated JNDA filing, failure of the Japanese Regulatory Authorities to approve a label for Final Product that supports the Commercial Detailing levels that had been planned for an Indication or new line of therapy within an existing Indication, a material adverse change in the label (such as a black box warning) for Final Product, a material change in Applicable Law, a material delay in the launch of a new Indication or new line of therapy, or unexpected efficacy or safety data from a competing product), the JJCC will propose for review and approval by the SCJ such amendment(s) to the then current Long-Term Commercialization Plan and Budget and/or Annual Commercialization Plan and Budget to reflect the impact of same as promptly as practicable.

(iv)Number of Sales Representative FTEs.

(1)The total number of such Sales Representative FTEs required of each of MJ and BMKK for the first [**] months post-Launch in any Long-Term Commercialization Plan and Budget or any Annual Commercialization Plan and Budget shall not, unless otherwise agreed to by BMKK and MJ in writing, be less than [**] nor greater than [**] Sales Representative FTEs on average for each Quarter during such period.  It is generally anticipated that the number of Sales Representative FTEs to be provided by a BMKK or MJ thereafter will increase as additional Indications are approved for Final Product and that the number of Sales Representative FTEs will generally decline for a given Indication over the life cycle of such Indication, and the Long-Term Commercialization Plan and Budget shall set forth such additional Sales Representative FTEs and Medical Liaisons contemplated by reason of any new Indication expected to be approved for the Final Product during the period covered by the then current Long-Term Commercialization Plan and Budget.  MJ and BMKK agree to have such number of Sales Representative FTEs required of it fully trained and ready to commence Final Product promotion at Launch or at such time of Approval of a new Indication.

(2)Amendments to a Long-Term Commercialization Plan and Budget may also be proposed by a Party at any time to reflect material developments, and

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such amendments shall be subject to review and approval by the JJCC, and final review and approval of the SCJ.

(v)Borrowing of PDEs; Continuity of Sales Representatives.

(1)Borrowing of Sales Representatives.  In the event that either Party anticipates that it will have insufficient Sales Representative employees available at a given point in time to satisfy its PDE obligations for a given Quarter, it may request that the other Party provide additional PDEs to meet the PDE obligations that the requesting Party anticipates that it will be unable to provide, subject to the following terms and conditions:

(A)BMKK agrees that it will provide any insufficiency requested by MJ from the date of initial Launch of the Final Product in Japan through [**] (at which point, BMS will have no further obligation to assist MJ by making up any such insufficiency), provided, that (i) BMS shall not be obligated to provide [**] of MJ’s required PDEs in a given Quarter during such period, unless BMKK otherwise agrees to provide a higher percentage in its sole and absolute discretion; (ii) MJ gives BMS not less than [**] notice prior to Launch of the number of PDEs that it believes it will not be able to provide and the time frame for same, and (iii) the JJCC agrees on such amendments to the Annual Commercialization Plan and Budget to reflect same (e.g., the additional territories and physician groups to be called on by the BMS Sales Representatives).

(B)after [**], either Party (a “Requesting Party”) may request the other (the “Providing Party”) to provide such Sales Representatives and PDEs on a temporary basis (not to exceed three months in any twelve (12) month period) to reflect reasonably unforeseeable events warranting same; provided, that (i) the Providing Party shall not be under any obligation, express or implied, to agree to make up any portion or all of the insufficiency, and (ii) the JJCC agrees on such amendments to the Annual Commercialization Plan and Budget to reflect same (e.g., the additional territories and physician groups to be called on by the Providing Party’s Sales Representatives).

In each case (A) and (B) under this subparagraph 6.2(b)(v)(1):

(C)a Providing Party shall, subject to the terms of this Agreement and the Annual Commercialization Plan and Budget, retain the same control over the provision of such PDEs in the same manner as any other PDEs to be provided by it;

(D)any such additional Sale Representatives used by the Providing Party shall remain the employee of the Providing Party and the Providing Party shall be solely responsible for all compensation and benefits due such individual; and

(E)any failure of the Providing Party to provide the agreed upon PDEs shall not be considered a failure of either Party for purposes of section 6.4(f), and such non-provided FTEs shall simply reduce the total annual or quarterly PDEs, as the case may be, to be provided by both Parties for purposes of such Section 6.4(f);

(F)the Requesting Party shall reimburse the Providing Party for [**] (1) all PDEs that both such Parties agreed would be provided by the Providing Party or (2) the actual additional PDEs provided by the Providing Party, in

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each case (1) or (2) at [**] the then prevailing PDE Rate, but the provision of such PDEs by the Providing Party at the request of the Requesting Party shall not, in and of itself, effect any change in the applicable percentage for sharing Profit Or Loss.

(2)Continuity.  The Long-Term Commercialization Plan and Budget and the Annual Commercial Plan and Budget also shall set forth any limitations with respect to yearly and Quarterly variances from each Party’s number of Sales Representatives and, unless otherwise consented to by the other Party’s members of the JJCC, which consent will not be unreasonably withheld or delayed: (x) during any twelve-month period during the first [**] months following the Launch of Final Product in Japan for its first Indication, no more than [**] of such Party’s Sales Representatives that are assigned to sell or promote the Final Product may be Reassigned by such Party in any such twelve-month period, and (y) for any twelve-month period ending after [**] following the Launch of Final Product in Japan for its first Indication, no more than [**] of such Party’s Sales Representatives that are assigned to sell or promote the Final Product may be Reassigned by such Party in any such twelve-month period.  In the event either Party fails in any year to comply with the restrictions regarding reassignment of Sales Representatives as set forth in the immediately preceding sentence, such Party shall pay to the other Party for such year an amount equal to the product of (a) the remainder of (i) the actual percentage of Sales Representatives reassigned by such Party in such year minus (ii) the maximum allowable reassignment percentage for such year (as set forth in clause (x) or (y) above, as applicable) multiplied by (b) the Net Sales in Japan of the Final Product for such year.

(3)For purposes of Section 6.2(b)(v)(2), a Sales Representative is deemed “Reassigned” if (1) he or she was previously Detailing the Final Product in Japan, (2) in a given twelve month period, he or she does not provide at least [**] of the Details that were required to be provided by him or her in the previous twelve-month period (after taking into account any required proportionate cutback in the Details to be provided by all Sales Representatives of a Party in such period pursuant to the applicable Annual Commercialization Plans and Budgets), and (3) such failure to provide such Details in such 12-month period is not due to such individual being promoted to a district or regional sales manager for the Final Product or to such individual’s employment being terminated with a Party, whether involuntarily or voluntarily, during such twelve-month period.

6.3Equal Sharing of Sales Force Commercialization Efforts.  Subject to the applicable provisions of Article 14:

(a)Number of PDEs.

(i)Except as provided in Section 3.1(c) and 6.3(a)(ii), BMKK and MJ shall contribute the same number of PDEs to be delivered for Final Product for each year (broken out by month, where practicable), unless otherwise agreed to in writing by the BMKK and MJ Representatives of the SCJ for a given Quarter (and which shall be limited in force and effect to such Quarter only).

(ii)In the case of a line of therapy for which BMKK or MJ will be the sole Party under Section 3.1(c) who will provide PDEs for such line of therapy: (A) the cost of providing such PDEs shall be borne solely by the Party providing same (and, for clarity, such costs shall not be taken into account as an Allowable Expense), (B) such PDEs for such line of therapy shall be in addition to the PDEs for all other Indications and lines of therapy that the Parties are equally providing, and (C) any shortfall in the PDEs provided by such Party shall not be subject to any of the remedies or payments provided in Section 6.4(f) for such lines of therapy that BMKK and MJ are jointly co-Detailing.

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(b)Sales Representative PDE Rate.  The PDE Rate shall be the [**].  As of the Restatement Effective Date, the applicable PDE Rate has been determined and is attached as Exhibit 6.3(b) hereto. The PDE Rate may be adjusted subsequently from time to time by the joint agreement of the BMKK and MJ Representatives on the JJCC, subject to approval by the SCJ, and shall be adjusted whenever the FTE Rate changes.  Any amendments to such PDE Rate approved by the SCJ shall be calculated using the same methodology as was used to calculate such initial PDE Rate, as set forth on Exhibit 6.3(b).  If the SCJ cannot agree on the applicable adjustment to the PDE Rate, then BMKK or MJ may submit such dispute to submitted for baseball arbitration pursuant to section 16.13(a), and only BMKK and MJ shall be entitled to provide offers for consideration by the arbitrator in connection with such baseball arbitration.

6.4Diligent Efforts; Sales Efforts and Sales Representative Deployment.

(a)Diligent Efforts.  Subject to the terms of this Agreement, MJ and BMKK shall each use its Diligent Efforts to Commercialize Final Product in Japan in accordance with the Annual Commercialization Plan and Budget, and to perform the Commercialization activities assigned to it under each Annual Commercialization Plan and Budget in accordance with such Annual Commercialization Plan and Budget.  Each Party shall perform all Commercialization activities assigned to it under each Annual Commercialization Plan and Budget in accordance with the terms of this Agreement.

(b)Position of the Details to be Provided.  During the first [**] months post Launch, each of BMKK and MJ will provide [**] Primary Position Details for Final Product to the relevant targeted doctors on its call list, unless otherwise decided by the SCJ.  Additionally, unless otherwise decided by the SCJ, each of BMKK and MJ will each thereafter provide (i) [**] Primary Position Details for Final Product, for a period of twelve (12) months following Approval of a new Indication, to the relevant targeted doctors on its call list with respect to such Indication; and (ii) [**] Primary Position Details for Final Product, for a period of twelve (12) months following Approval of a new line of therapy within an existing approved Indication, to the relevant targeted doctors on its call list with respect to such tumor type.  Otherwise, except as may be agreed upon and set forth in the Annual Commercialization Plan and Budget, BMKK and MJ shall determine in their discretion their respective allocation of the required Annual PDEs between Primary Position Details and Secondary Position Details.  In addition and subject to the foregoing:

(i)The Annual Commercialization Plan and Budget shall also set forth how each such Party’s required annual PDEs shall be allocated on a Quarterly basis (the “Quarterly PDE Amount”) and, in the event that BMKK or MJ delivers in excess of [**] of such Party’s Quarterly PDE Amount for a particular Quarter, then the number of such Party’s PDEs in excess of such [**] threshold shall be excluded from the calculation in determining if a Party’s obligations have been met with respect to such Party’s annual PDE requirements under this Agreement (including for purposes of Sections 6.4(f)(i) and 6.4(f)(ii) below); and

(ii)Unless otherwise specified in the Annual Commercialization Plan and Budget or by the JJCC, not less than (i) [**] of the Primary Position Details and (ii) [**] of the total PDEs required to be provided by BMKK or MJ shall be presented to such Party’s specific target prescriber list.  If more than [**] of a Party’s required Primary Position Details or more than [**] of a Party’s total required PDEs are presented to health care professionals not included in the Party’s specific target prescriber list, such excess Details (referred to herein as “Non-Qualifying Details”) shall be excluded in determining whether a Party has satisfied its obligation to provide a specified number of PDEs hereunder and for purposes of determining whether there has been a shortfall in the number of PDEs provided by such Party (including for purposes of Sections 6.4(f)(i) and 6.4(f)(ii) below).

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(c)Detailing of Other Products by a Party’s Sales Force Representatives.

(i)Each of BMKK’s and MJ’s Sales Representatives who Detail the Final Product shall not Detail the following products without the consent of MJ or BMKK, respectively (such consent not to be unreasonably withheld or delayed if the products do not compete with each other or are likely to be used in combination or sequentially, as opposed to being used as competitive substitutes):

(1)any product that is not an Antibody but is approved in Japan for any of the Indications for which the Final Product is approved in Japan; and

(2)any product that is or contains an Antibody.

In the event that BMKK or MJ does not provide such consent, the other Party shall (A) ensure that its employees that have direct responsibility on a day-to-day basis for the Detailing of Cetuximab and Final Product in Japan (but not such employees’ district managers or regional managers) shall be separate from those employees that are responsible for the Detailing of the products set forth above, and (B) establish appropriate firewalls to prevent leakage of key, nonpublic commercial information from the Final Product Sales Representatives to the separate sales force that is commercializing such product in (1) or (2) above.

(d)Additional Commercialization Expertise.  Each of MJ and BMKK will in a jointly agreed approach, through its representatives and Representatives to the JJCC and SCJ, respectively, use reasonable efforts to provide reasonable assistance to each other relating to, and access to, its general Commercialization expertise, as well as to provide one another with strategies and tactics for establishing relationships with vendors, customers, prescribers and key opinion leaders in the field of oncology in Japan; provided, that no Party shall be obligated to provide any information, data or assistance where it believes in good faith that to do so would conflict with Applicable Law.  Each such Party shall be responsible for its own costs and expenses in performing its activities under this Section 6.4(d), which shall not be included in the Allowable Expenses or otherwise shared or reimbursed under this Agreement.

(e)Records.  BMKK and MJ shall each record the number of Sales Representatives assigned to promoting Final Product in Japan, the proportion of their time devoted to promotion of Final Product, and the number of sales calls and PDEs made by its Sales Representatives in the aggregate, during each calendar month for Final Product in Japan, and shall specify in such records the position of such sales calls and such other information as the SCJ may reasonably require (collectively, the “Promotional Data”).  Such records shall be maintained for at least two (2) years following the year in which such activities were performed.  Within thirty (30) days after the end of each Quarter, BMKK and MJ shall each report to the JJCC the Promotional Data for such Quarter.  Unless otherwise agreed by the JJCC, such internal reporting and record keeping, including the calculation of sales force efforts and PDEs, shall be determined in accordance with applicable self-reporting procedures customarily employed in Japan, (a) for other similarly Detailed and similarly reported pharmaceutical products to the target audience in Japan for Final Product as customarily employed by it, consistently applied, or (b) if (a) does not apply to such Party, for other similarly Detailed and similarly reported pharmaceutical products to the target audience in Japan for Final Product as customarily employed within the Japan pharmaceutical industry, consistently applied.  Any other reports or record keeping required by the JJCC relating to a Party’s sales activities under this Agreement shall apply to BMKK and MJ equally and shall not become effective for a reporting period unless the Parties have received written notice of such other requirements at least one hundred eighty (180) days (or such other period as BMS/BMKK and Merck/MJ may mutually agree in writing) in advance of the start of such

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reporting period, provided that in no event shall BMKK or MJ be required to make any unduly onerous modification to its then-current policies, procedures or systems used for its internal reporting and record keeping or otherwise engage in any reporting or record keeping that is not reasonably supported by such policies, procedures and systems.

Upon reasonable advance notice to the other Party but in no event more frequently than once per calendar year, BMKK and MJ shall each be entitled, at its expense, to have access to the other Party’s internal sales call reporting system as it relates to Final Product in Japan, for the purpose of verifying such other Party’s determination of the number of sales calls and Details and the accuracy of the Promotional Data reports for any period during the two year period prior to the date of an audit.  Should a Party discover information indicating, in its good faith opinion, an inaccuracy in the calculation of the number of sales calls or Details, it shall so notify the other Parties in writing thereof (and shall set out its preliminary conclusions in reasonable detail).  The audited Party shall advise the auditing Party in writing within ten (10) Business Days after receiving such notice, should the audited Party disagree with the determination of the auditing Party.  If the audited and auditing Parties cannot agree on a mutually acceptable resolution of any such disagreement within twenty (20) Business Days of the auditing Party’s receipt of such notice from the audited Party, then such dispute shall be submitted for “baseball arbitration” pursuant to section 16.13(a), and only the audited Party and the auditing Party shall be entitled to provide offers for consideration by the arbitrator in connection with such baseball arbitration.

(f)Failure to Provide Required PDEs.

(i)Make-Up by a Party of Other Party’s Required PDEs.  Subject to Section 6.4(f)(vi), if in any calendar year either MJ or BMKK (together with its permitted independent contractors, if any) provides less than the number of PDEs required to be provided by it pursuant to the Annual Commercialization Plan and Budget and the terms of this Agreement, then

(1)the other Party shall have the right, but shall be under no obligation, to provide such additional PDEs as may be necessary to make up such shortfall and

(2)the Party that fails to provide the requisite PDEs shall:

(x)[**] (to the extent actually replaced, if at all, up to the number of unprovided PDEs) calculated using the applicable PDE Rates; and

(y)[**]:

Percentage Range of Shortfall in the Party’s PDEs Additional Payment to the Other Party as a Percentage of the Applicable PDE Rate (whether or not such PDEs are replaced) [**]

For example, if BMKK provided [**] of the PDEs it was required to provide in a calendar year pursuant to the Annual Commercialization Plan and Budget for such calendar year (which

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would represent a [**] shortfall in BMKK’s PDEs for such calendar year), then BMKK would be obligated to pay to MJ an amount equal to [**].

(i)Continuous Shortfall Exceeding [**].  In addition to the amounts payable under Section 6.4(f)(i) above, if the shortfall in PDEs by either BMKK or MJ in any [**] exceeds [**] in each such calendar year and is less than [**] in each such calendar year, then, the Profit  payable to the non-performing Party for the [**] shall be decreased (and the Loss that it bears shall be increased) by an amount equal to the product of [**].

(ii)Shortfall Below [**].  The Parties acknowledge and agree that, while the remedies set forth in Sections 6.4(f)(i) and 6.4(f)(ii) provide an adequate measure of damages for the failure of BMKK or MJ to provide more than [**] of its required PDEs under an Annual Commercialization Plan and Budget for a given year, it may not provide a full measure of such damages for the failure of BMKK or MJ to provide less than [**] of its required PDEs.  Accordingly, notwithstanding the preceding sentence, if BMKK or MJ does not provide at least [**] of the PDEs required of it under an Annual Commercialization Plan and Budget for a given year (whichever Party that is, the “Shortfall Party”), then, [**]:

Year:	Reduction In Profit:
[**]

In the event that both Section 6.4(f)(ii) and 6.4(iii) apply in a given year, the damages set forth in this Section 6.4(f)(iii) shall apply, and no damages shall be calculated for such year under Section 6.4(f)(ii).  Damages payable under Section 6.4(iii) in a given year shall be in addition to any amounts payable under Section 6.4(f)(i) for such year.

In no event shall the Shortfall Party’s Profit in a given year under the above calculation fall below zero.

(iii)Dispute.  Any dispute as to the amount of any shortfall or any other figure required to be determined under this Section 6.4(f) shall, if the SCJ cannot agree on the applicable amount or figure, be submitted for “baseball arbitration” pursuant to Section 16.13(a), and only BMKK and MJ shall be entitled to provide offers for consideration by the arbitrator in connection with such baseball arbitration.

(iv)Exclusive Remedy.  All Parties agree that Sections 6.4(f)(i), 6.4(f)(ii), 6.4(f)(iii) and 6.4(f)(iv) provide and establish all Parties’ sole and exclusive remedies under this Agreement, and represents full and complete liquidated damages, for BMKK’s or MJ’s failure to deliver its PDE requirements in a given year (including any alleged breach of Diligent Efforts based on the failure to provide such required PDEs).

(vi)Coordination with Section 3.1(c).  This subsection 6.4(f) shall not apply to a shortfall in PDEs arising with respect to an Indication where the Indication is one that has been solely funded by such Party under Section 3.1(c) and is solely Commercialized by such Party under Section 3.1(c)(i)(1).

6.5Sales Force Capabilities; Training.

(a)Minimum Requirements.  All decisions with respect to a Party’s Sales Representatives, including the hiring, training, management, promotion and termination of such Sales Representatives, shall be the sole responsibility and decision of such Party; provided, that all BMKK and MJ Sales Representatives who Detail Final Product shall

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meet the minimum education, training, and experience requirements set forth on Exhibit 6.5(a) hereto, as modified as the JJCC may determine from time to time hereafter.

(b)General Sales Training.  Each Party shall be solely responsible, at its sole expense, for general sales training and for general oncology training of its Sales Representatives.

(c)Product-Specific Sales Training.  For Final Product:

(i)Initial Training.  Following the first JNDA filing for Final Product, BMKK and MJ shall coordinate the provision of the initial Final Product-specific sales training to their respective Sales Representatives and sales trainers for a period of [**] following such JNDA Approval (the “Initial Training Period”).  Such training program shall be subject to revision from time to time by the JJCC.  The Parties will reasonably cooperate to schedule training for its Sales Representatives in sufficient time to ensure that the necessary Sales Representatives are fully trained at least [**] prior to anticipated Launch date for Final Product in Japan, consistent with any requirements for such training as may be set forth in the applicable Annual Commercialization Plan and Budget for Final Product.  All training will be scheduled in an efficient and timely manner as determined by the JJCC.  All such training shall also include training on the proper handling and reporting of adverse drug experiences encountered for Final Product and on timely reporting to the JNDA holder for Final Product in Japan of inquiries relating to Final Product and other requests for information related to Final Product in Japan.

(ii)Product-Specific Initial Sales Training Following Initial Training Period.  Except as provided in this Section 6.5, each Party shall be responsible for providing its own Final Product-specific training to its Sales Representatives following the Initial Training Period.  Each Party shall coordinate through the JJCC with respect to any Final Product-specific training that such Party plans to provide to its Sales Representatives.  Such Sales Representative training provided by a Party shall be consistent with the training provided during the Initial Training Period (as modified for any new Indications or lines of therapy approved, and label changes made, since the end of the Initial Training Period) and with Final Product-specific training materials and program developed by both Parties for training their respective sales force.

(iii)Subsequent Training on New Indications.   As new Indications and lines of therapy are approved for Final Product in Japan, MJ and BMKK shall update the Final Product-specific training materials and coordinate the training of their trainers and existing Sales Representatives with respect to such new Indications and lines of therapy as promptly as practicable.

(iv)Training Costs.  All Sales Representative and Medical Liaison training costs incurred by MJ and BMKK shall be solely the responsibility of such Party, and shall not be included in the calculation of BMKK/MJ NSF Commercial Activities Costs.

(d)Co-Promotion-Related Meetings.  If either BMKK or MJ organizes Co-Promotion-related meetings of its employees (such as periodic briefings of its Sales Representatives) for Final Product in Japan, it shall make reasonable efforts to keep Final Product-related portions of such meetings independent from other matters and to give the other Party advance written notice of such meetings.  If requested by the other Party and agreed to by the organizing Party, such agreement not to be unreasonably withheld or delayed, the Party organizing such meeting shall permit Sales Representatives of the other Party to attend and participate in such meetings or such portions thereof that relate to the Co-Promotion of Final

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Product in Japan.  The Parties shall coordinate their respective pre-Launch meetings for Final Product in Japan.

(e)Training Materials.  The JJCC shall determine the content that it wishes to include in Final Product-specific training materials (including Final Product sales orientation assessment tests and refresher tests).  Subject to the foregoing, one Party, as determined per the Annual Commercialization Plan and Budget, shall be responsible for preparing all Final Product-specific training materials used in a given year, but all such materials shall be reviewed and approved by BMKK’s and MJ’s medical, regulatory and legal teams, and reviewed and approved by the JJCC, prior to use by either such Party.  The JJCC shall review Final Product-specific training materials from time to time and make recommendations for any revisions and updates thereto as the JJCC may deem appropriate, subject to review by BMKK’s and MJ’s medical, regulatory and legal teams, with the goal of ensuring that each such Party is providing substantially the same quality and level of Final Product-specific training to its Sales Representatives.  At the initial Final Product-specific training session for Sales Representatives, MJ shall provide to BMKK reasonable quantities of all such training materials (or provide BMKK with electronic copies that BMKK can use to make copies for itself), and such costs shall be included in Sales Costs.  BMKK and MJ shall jointly own the copyright in and to any Final Product-specific training materials authored by either such Party that directly and specifically relate to the training of Sales Representatives in the Commercialization of Final Product, and the Parties shall make such assignments to one another as are necessary to effect the foregoing.

6.6Co-Promotion Advertising and Promotional Materials.

(a)Marketing and Other Materials.  The Parties shall utilize only promotional, advertising, communication, literature and other Commercialization materials (collectively, “Marketing Materials”) relating to Final Product in Japan and only conduct Co-Promotional activities for Final Product that, in each case, have been included in the applicable Long-Term Commercialization Plan and Budget or Annual Commercialization Plan and Budget, or that are otherwise approved by the JJCC or SCJ.  BMKK or MJ, as determined per the Annual Commercialization Plan and Budget, shall prepare all Marketing Materials and any other promotional materials used in a given year to support the use of Final Product in Japan, under the direction of, and in accordance with the marketing and promotional strategy approved by the JJCC; provided, that all such materials shall be reviewed and approved by BMKK’s and MJ’s medical, regulatory and legal teams, and reviewed and approved by the JJCC, prior to use by BMKK or MJ; and provided, further, that the content of the Marketing Materials, once approved, need not be re-submitted for approval again prior to re-use within one (1) year of its initial approval, unless the Final Product labeling in the Approval applicable to such Marketing Materials has been changed since such prior approval date.  The development of all Marketing Materials relating to Final Product in Japan shall be consistent with the applicable Long-Term Commercialization Plan and Budget and Annual Commercialization Plan and Budget, with Applicable Law, and with Final Product labeling approved by the Japanese Regulatory Authorities.  In Commercializing Final Product, BMKK and MJ will be identified and described as Co-Promoting Final Product, and all Marketing Materials and other Commercialization activities, including oral presentations, direct-to-consumer advertising, patient information materials and patient benefit programs, that identify either such Party, shall identify both such Parties and shall display the MJ and BMKK Corporate Names as promoters and/or marketers with equal prominence, as permitted by Applicable Law.  In addition, as a prominent part of each communication with customers and other Third Parties, the Call Center and any patient information and benefit programs that the SCJ establishes for Final Product shall clearly identify Final Product as a joint product of MJ and BMKK, developed under license from ImClone.  In the event of a shortfall in the quantity of Marketing Materials, the available Marketing Materials shall be evenly allocated between

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the Parties’ respective sales forces.  MJ shall, in consultation with BMKK, take the lead in obtaining any approvals from Japanese Regulatory Authorities required for the use of any Marketing Materials, as well as submit all applicable Marketing Materials to the Japanese Regulatory Authorities as required by Applicable Law.  BMKK and MJ shall jointly own the copyright in any such Marketing Materials and the Parties shall make such assignments to one another as are necessary to effect the foregoing.

(b)Specific Responsibilities of the Parties.  Each Party shall:

(i)instruct its Sales Representatives to use, and shall use Diligent Efforts to train and monitor its Sales Representatives so that such Sales Representatives use, only Marketing Materials (without any addition, deletion or other modification) approved for use under Section 6.6(a) for the promotion of Final Product in Japan;

(ii)instruct its Sales Representatives to do the following, and shall use Diligent Efforts to train its Sales Representatives so that such personnel do the following:

(1)limit claims of efficacy and safety for Final Product to those that are consistent with Applicable Law and with approved promotional claims in, and not add, delete or otherwise modify claims of efficacy and safety in the promotion of Final Product in any respect from those claims of efficacy and safety that are contained in, Final Product labeling approved by the Japanese Regulatory Authorities and approved Marketing Materials;

(2)use the Marketing Materials within Japan in a manner that is consistent with the applicable Long-Term Commercialization Plan and Budget and Annual Commercialization Plan and Budget, with Applicable Law, and with the Final Product labeling approved by the Japanese Regulatory Authorities;

(3)Co-Promote Final Product in adherence in all material respects with Applicable Law, and, to the extent not inconsistent with the foregoing, such Party’s policies; and

(4)not to, directly or indirectly, pay, promise to pay, or authorize the payment of any money, or give, promise to give, or authorize the giving of anything of value to any official or employee of any  government, or of any agency or instrumentality of any government or of any of its agencies or instrumentalities), or to any political party, or official thereof, or to any candidate for political office (including any party, official, or candidate) for the purpose of promoting the sale or improper use of a Product in Japan.

(c)Approval of Materials Other Than Marketing Materials.  All written, electronic and visual communications provided by BMKK or MJ to a majority  of its own Sales Representatives Detailing Final Product in Japan regarding Co-Promotion strategy, positioning or selling messages shall be reviewed by both such Parties’ medical, regulatory and legal teams, and reviewed and approved by the JJCC; provided that a message, once approved, need not be re-submitted for approval again prior to its re-use unless the Final Product labeling in the Approval applicable to such message has been changed since such prior approval date.  MJ shall, in consultation with BMKK, take the lead in obtaining any approvals from Japanese Regulatory Authorities required for the use of any such materials.

(d)Research Data.  After the Restatement Effective Date and during the term of this Agreement, each Party shall provide the other Parties with access to primary and secondary (audited and non-audited) market research data for Final Product in Japan

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reasonably promptly if and after the same are made available to a Party and so long as such Party has the lawful right to provide same; provided that any such receiving Party shall hold such provided information as Confidential Information of the providing Party, and shall have executed such confidentiality agreement as may be requested by any Third Party provider of such information with respect to such disclosure of such provided information.

(e)Medical Education Materials.  One Party, as determined per the Annual Commercialization Plan and Budget, shall prepare all Medical Education Materials used in a given year in connection with Final Product in Japan, under the direction of the JJCC; provided, that all such materials shall be reviewed and approved by BMKK’s and MJ’s medical, regulatory and legal teams, and reviewed and approved by the JJCC prior to use by either such Party.

6.7Sales and Distribution in Japan.  MJ shall hold title to Final Product in Japan until sale to customers, and shall be responsible for invoicing and booking sales for, and warehousing and distributing, Final Product in Japan and shall perform all related distribution activities.  No other Party may accept orders for Final Products or make sales for its own account or for MJ’s account.  If any such other Party receives any orders for Final Product in Japan, it shall refer such orders to MJ for acceptance or rejection.  MJ shall also be responsible for handling all returns, recalls (subject to Section 8.7), order processing, invoicing and collection, distribution, and inventory and receivables.  Subject to any applicable guidance, parameters or other terms established by the JJCC and/or SCJ and subject to each applicable Annual Commercialization Plan and Budget and the terms of this Agreement, MJ shall have the right and responsibility for establishing and modifying the terms and conditions with respect to the sale of Final Product in Japan, including any terms and conditions relating to or affecting the price at which Final Product will be sold; discounts available to large health care providers, governmental agencies (e.g., federal, state and local), and other group purchasing accounts; discounts attributable to payments on receivables; distribution of Final Product; and credits, price adjustments, other discounts and allowances to be granted or refused.

6.8Incentive Plans for Sales Representatives.  MJ and BMKK shall each establish and implement a target bonus or sales incentive program under which a Party’s Sales Representatives are compensated for their efforts with respect to Final Product in Japan with such Party’s other programs for a similar nature product in Japan (and taking into consideration the commercial life cycle of Final Product in Japan).  In any event, all such programs shall be in compliance with all Applicable Law.  MJ and BMKK shall use good faith efforts to align their target bonus or sales incentive programs to the extent reasonably practicable under the circumstances or otherwise ensure that their respective Sales Representatives are appropriately incentivized (but shall not disclose to one another base salaries or benefits payable to its Sales Representatives or any other compensation-related information other than the target bonus or sales incentive programs); provided however, that each Party shall retain final control over all decisions relating to compensation and bonus incentives for its Sales Representatives.  Each Party shall utilize data provided by IMS International (or another recognized service provider reasonably acceptable to the other Party) to determine the actual performance of its Sales Representatives for purposes of establishing compensation and bonuses.

6.9Sales Representatives.  The following provisions shall apply to each Party’s Sales Representatives in Japan:

(a)Employees.  Except as otherwise provided in this Section 6.9, each Party’s Sales Representatives shall be full-time employees of such Party or its Affiliates or an individual acting as an independent contractor as permitted below.  Each Party shall treat its Sales Representatives employed by it or its Affiliates as its (or its Affiliate’s) own employees for all purposes, including national, federal, state and local tax and employment laws.

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(b)Independent Contractors.  Neither BMKK nor MJ shall use independent contractors, including contracts sales organizations (“CSOs”) to provide PDEs for Final Product in Japan without prior written the consent of the other Party.  Each of BMKK and MJ shall (i) be responsible for any permitted CSOs or independent contractors who serve as such Party’s Sales Representatives, (ii) use Diligent Efforts to cause such independent contractors or CSOs to perform its, his or her services as a Sales Representative in compliance with the Annual Commercialization Plan and Budget and the provisions of this Agreement, and (iii) indemnify and hold the other Party harmless against any material breach of this Agreement by such Party, or any Loss to the other Party, resulting from any material failure of any such CSOs or independent contractors to perform their services as a Sales Representatives in compliance with the Annual Commercialization Plan and Budget and the provisions of this Agreement.  All compensation, reimbursement of costs and other payments to be made to any such CSO or independent contractor shall be solely a matter between the Party engaging such CSO or independent contractor and such CSO or independent contractor, and such CSO or independent contractor shall be treated as a Sales Representative of such Party for purposes of determining Allowable Expenses under this Agreement.

(c)Allocation; Turnover.  BMKK and MJ shall each use Diligent Efforts to hire or otherwise allocate such number of Sales Representatives as may be necessary to fulfill its duties under an applicable Long-Term Commercialization Plan and Budget or Annual Commercialization Plan and Budget, to provide full training (both general and Final Product-specific training) to such Sales Representatives, and, consistent with its normal business practices but always subject to Section 6.2 (b)(v), to minimize turnover of such Sales Representatives.

(d)Inadequate Performance.  In the event that information comes to BMKK’s or MJ’s attention that provides such Party with a reasonable basis to believe that Sales Representatives of the other Party used in Japan may have (i) violated any Applicable Law, or (ii) failed to provide satisfactory service or to comply with the Annual Commercialization Plan and Budget and/or the provisions of this Agreement, then, without limiting such Party’s rights and remedies as may be available under this Agreement or under Applicable Law, such Party shall have the right to request that the other Party immediately assess the performance of such Sales Representative, and to exercise any other rights or remedies available to such Party under this Agreement or at law or in equity.  The other Party shall promptly use Diligent Efforts to evaluate and resolve such issue in accordance with its policies or as it may otherwise deem appropriate, shall keep the requesting Party informed of the progress of, and information learned during, such evaluation, and shall provide the requesting Party with a reasonably detailed written report summarizing any steps taken toward resolution of the matter, within fifteen (15) Business Days after the requesting Party first brings such information to the other Party’s attention.

(e)Compliance with Applicable Law.  Unless exempted by law from such compliance, each of MJ and BMKK shall comply with all Applicable Law with respect to the hiring, employment, and discharge of its Sales Representatives, their managers, marketing personnel and Medical Liaisons.  Each such Party represents to the other that such Party is an equal opportunity employer and it is such Party’s corporate policy not to discriminate against any person because of race, color, creed, age, sex, or national origin.

(f)Agreements with Sales Representatives.  Each Party’s Sales Representatives shall execute, or shall previously have executed, an agreement with such Party, that includes, among other terms, terms requiring that the individual:

(i)agrees to perform his/her obligations as a Sales Representative as required by Applicable Law and the terms of this Agreement; and

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(ii)agrees to perform his/her duties as a Sales Representative in accordance with such Party’s internal policies, a copy of which is provided or made available by such Party to all its Sales Representatives.

(g)Employees of Hiring Party.  Each of BMKK and MJ acknowledges and agrees that all of its respective Sales Representatives, their managers, marketing personnel and Medical Liaisons are not, and are not intended to be treated as, employees of the other Party or any of its Affiliates.  All matters of compensation, benefits and other terms of employment for any such personnel shall be solely a matter between BMKK or MJ (as the case may be) and its Sales Representatives, their managers, marketing personnel, clinical development personnel and Medical Liaisons.  Neither BMKK nor MJ shall be responsible to the other Party (the “Hiring Party”), or to any Sales Representatives, their managers, marketing personnel, clinical development personnel, and Medical Liaisons used by the Hiring Party to promote or sell Final Product, for any compensation, expense reimbursements or benefits, payroll-related taxes or withholdings, or any governmental charges or benefits that may be imposed on or be related to the performance by the Hiring Party or its Sales Representatives, their managers, marketing personnel, clinical development personnel, and Medical Liaisons of its obligations under this Agreement, all of which shall be the sole responsibility of the Hiring Party.

Notwithstanding anything to the contrary in this Section 6.9, a Hiring Party shall have no liability to any other Party, under this Section 6.9, to the extent attributable to any discriminatory, harassing or retaliatory acts of such other Party, or any tortious acts (including acts constituting assault, battery or defamation) by the such other Party, with respect to any Sales Representatives, their managers, marketing personnel, clinical development personnel, Medical Liaisons and/or other employees/contractors of the Hiring Party, or any breach of this Agreement by the such other Party.  Nothing contained in this Section 6.9 is intended to affect or limit any Profit Or Loss-sharing provided for in this Agreement.

(h)Responsibility for Employees.  Each Party shall be solely responsible for its acts and omissions and for those acts or omissions of its Sales Representatives, their managers, marketing personnel and Medical Liaisons while performing any of the services or activities to be provided by such Party under this Agreement.

(i)Responsibility for Employment Terms and Policies.  Each Party shall be solely responsible and liable for all probationary and termination actions taken by it with respect to its Sales Representatives, as well as for the formulation, content, and for the dissemination (including content) of all employment policies and rules (including written probationary and termination policies) applicable to its Sales Representatives.

6.10Government, Group Purchasing and Other Accounts.  MJ and BMKK shall be jointly responsible for implementing the strategy for large health care providers, group purchasing and other accounts for Final Product in Japan in accordance with the Long-Term Commercialization Plan and Budget and the applicable Annual Commercialization Plan and Budget and the parameters set forth therein.  Each such Party shall provide the JJCC with quarterly reports regarding the implementation of the strategy and plans with respect to such accounts, and shall furnish the JJCC with information regarding contracting and formulary status and such other information relating to specific accounts as the other Party may reasonably request; provided, that a Party shall not be required to provide information that it does not otherwise collect as part of its internal reporting system or that relates to products other than Final Product.

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7.SHARING OF PROFIT OR LOSS.

7.1Sharing/Bearing of Profit Or Loss.

(a)Subject to applicable terms of this Agreement (including Section 3.1(c)), Merck/MJ and BMS/BMKK shall evenly share Profit and evenly bear Loss with respect to the Commercialization of Final Product in Japan.  Such Profit Or Loss shall be determined and paid out, on a quarterly basis, as provided in Sections 4.5 and 4.6.

(b)ImClone’s share of such Profit Or Loss shall be determined and paid to or by ImClone pursuant to the BMS-ImClone Japan Agreement.

(c)Nothing in Agreement shall affect the determination or payment of such royalties as Merck is obligated to pay to ImClone pursuant to the Merck-ImClone Agreement, which are attributable to Net Sales in Japan.

7.2Term of Profit Sharing.  Subject to the terms of this Agreement, the Parties shall share Profit Or Loss with respect to Final Product in Japan, commencing as of the Restatement Effective Date until the date that this Agreement is terminated (the “Co-Promotion Term”).

7.3Third Party Payments.

(a)License from a Third Party.

(i)If a Party believes that the manufacture of Final Product (or any component thereof) for Commercialization in Japan, the Development of Final Product or Cetuximab in Japan, or the Commercialization of Final Product by BMKK or MJ in Japan in accordance with this Agreement, might infringe or potentially infringe any Third Party patent right (other than a patent to which a Party is granted a license or sublicense that avoids such potential infringement pursuant to an Existing Agreement or pursuant to a separate agreement existing as of the Restatement Effective Date between such Party and such Third Party), or if a Party believes it necessary or desirable to obtain a license under such Third Party’s patent rights to avoid any claims or litigation concerning a potential allegation of infringement by a Third Party against any Party with respect to Commercialization of Final Product in Japan, the Development of Final Product or Cetuximab in Japan, and/or the manufacture of Final Product for Japan, then such Party shall promptly bring such matter to the attention of the other Parties, and the Parties shall discuss same [**].  The Parties shall execute such agreements in connection with such discussions as may be reasonably necessary to preserve legal privileges and confidentiality.  If, following such discussions, a Party continues to believe that it is necessary or desirable to obtain such a license, [**].

(ii)

(1)If any one or two of BMKK/BMS, ImClone, or MJ/Merck, but not the other Party or Parties, determines that it is necessary or desirable to obtain such a license described in Section 7.3(a)(i) to avoid infringing or potentially infringing a Third Party’s patent rights, then, except as provided in Section 7.3(a)(ii)(2):  (i) no Party or its Affiliates shall seek such license, (ii) [**].

(2)If a Party is manufacturing Cetuximab or Final Product (or a component thereof) for use or Commercialization of same in Japan (or is obligated to bid on the manufacture and supply of same for use or Commercialization in Japan) and (A) has expressed to the other Parties that it desires to obtain a license from a Third Party [**] and such

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Party shall not have received the consent of the other Parties pursuant to Section 7.3(a)(i) above to pursue such a license from such Third Party, or (B) wishes either to obtain a license from a Third Party to settle patent infringement litigation brought by a Third Party against such Party claiming infringement of patent rights controlled by such Third Party that claim a manufacturing process (or the composition of an intermediate) used in the manufacture of Cetuximab or Final Product by such Party (or by its Affiliates or subcontractors), or to comply with a judgment in such litigation, then such Party may, upon written notice to the other Parties and without the consent of the other Parties, seek a license from such Third Party, on such terms as it may negotiate in good faith and at arm’s length with such Third Party; provided, that (i) such license agreement (or such set of license agreements as it may enter into for such patent rights for Japan and countries other Japan) does not inequitably, unreasonably or unfairly allocate the consideration for such license (or such set of license agreements) to Japan; and (ii) [**].  A final copy of such license agreement (or set of license agreements) shall be provided to all the Parties.  Third Party Payments under such license agreement (or such set of license agreements) that equitably, fairly and reasonably relate to the manufacture of Final Product for Commercialization in Japan shall be an Allowable Expense; provided, however, that if the Parties do not agree that the license agreement (or such set of license agreements) equitably, reasonably and fairly allocates the consideration for such license to Japan, then a decision as to the proper allocation and amount to be charged as an Allowable Expense shall be subject to arbitration under Section 16.13.  If requested by any other Party, the Party entering into such license agreement (or such set of license agreements) shall promptly provide such other Party with such financial information possessed by it that reasonably relates to (x) the methodology used to allocate Third Party Payments under such license agreement (or such set of license agreements) to Japan and other markets, (y) the calculation of the Third Party Payments allocable to Japan under such license agreement (or such set of license agreements), and (z) the fairness and reasonableness of the such allocation methodology and calculations.

(iii)If BMKK/BMS, ImClone, and MJ/Merck all agree that it is necessary or desirable to seek a license to avoid infringing or potentially infringing a Third Party’s patent rights with respect to the manufacture of Final Product for Commercialization in Japan, the Development of Final Product or Cetuximab in Japan, and/or the Commercialization of Final Product by BMKK or MJ in Japan in accordance with this Agreement, as the case may be, then (except as provided in Section 7.3(a)(ii)(2)(B) with respect to a license sought by a Party to settle patent infringement litigation brought by a Third Party against such Party or to comply with a judgment in such litigation) the three Parties shall cooperate in negotiating the terms of such license with such Third Party and shall jointly agree in writing prior to making any proposal to such Third Party regarding the terms of any such license.  Any Third Party payments payable to such Third Party under any such license agreement approved by all the Parties that are reasonably allocable to the manufacture of Final Product for Commercialization in Japan, the Development of Final Product or Cetuximab in Japan, or the Commercialization of Final Product by BMKK or MJ in Japan in accordance with this Agreement shall be taken in to account in determining Allowable Expenses.

(1)The SCJ shall determine which Party or Parties shall enter into such a license for Japan, subject to the following guidelines:    If the license relates to a method of manufacturing or an intermediate used in the manufacture of Cetuximab or Final Product, then either or both of Merck/MJ and/or ImClone shall enter into one or more licenses, as ImClone and Merck may agree best serves their respective manufacturing interests. If the license relates to a method of use or other patent not falling within the preceding sentence, then ImClone shall enter into the license agreement unless otherwise agreed to by the SCJ.

(2)If, notwithstanding agreement among all the Parties as to the desirability or necessity of seeking such a license, the Parties are unable to agree on the terms thereof, then, (x) section 7.3(a)(ii)(2) shall apply if the license relates to a method of

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manufacturing or an intermediate used in the manufacture of Cetuximab or Final Product that a Party believes it requires, and (y) section 7.3(a)(ii)(1) shall apply if the license relates to any method of use or other patent, with the Party or Parties (BMKK/BMS, ImClone, or MJ/Merck, as the case may be) that does not wish to agree to the Third Party’s terms to be treated as the Declining Party for purposes of such Section 7.3(a)(ii)(1).

(b)Except as expressly provided in this Agreement, no Party shall seek or obtain a license from a Third Party after the Restatement Effective Date of any patents or know-how of such Third Party covering the manufacture of Final Product for Commercialization in Japan, the Development Final Product or Cetuximab in Japan, or the Commercialization of Final Product by BMKK or MJ in Japan in accordance with this Agreement, without the prior written consent of the other Parties.

7.4Payments to or Reports by Affiliates.  Any payment required under any provision of this Agreement to be made to any Party, or any report required to be made by any Party, shall be made to or by an Affiliate of that Party if designated in writing by that Party as the appropriate recipient or reporting entity.

7.5Non-Cash Consideration.  MJ shall not sell Final Product for any consideration other than cash except on terms that are expressly specified in an Annual Commercialization Plan and Budget or otherwise agreed to by the JJCC or SCJ.  In the event MJ receives any non-monetary consideration in connection with the sale of Final Product, the fair market value of such other consideration shall be used to determine Net Sales, and MJ shall disclose the terms of such arrangement to the other Parties.  For sake of clarity, the provision or use of Final Product for Phase IIIB Clinical Trials/Phase IV Clinical Trials or other research purposes approved by the JJCC or SCJ to the extent permitted under this Agreement or as samples for Commercial purposes in accordance with the Long-Term Commercialization Plan and Budget or the applicable Annual Commercialization Plan and Budget shall not be considered a sale for non-monetary consideration.

8.MANUFACTURE AND SUPPLY.

8.1General Manufacturing Structure; Manufacturing Plan and Budget.

(a)Manufacturing Plan and Budget.  The manufacturing of Final Product for Development and Commercial purposes shall be governed by a comprehensive annual and a long-term Japan manufacturing plan and budget governing the manufacture and supply of bulk drug substance (API), the fill/finish thereof, and the Packaging and Release of Cetuximab and Final Product for use in Development and for Commercialization in Japan (“the Japan Manufacturing Plan and Budget”), which shall be submitted by the JJMC for approval by the SCJ and implemented by the JJMC.  The manufacturing plan portion of the Japan Manufacturing Plan and Budget in effect as of the Restatement Effective Date is attached as Exhibit 8.1(a) hereto and the budget portion of the Japan Manufacturing Plan and Budget shall be as approved by the JJMC.  The Japan Manufacturing Plan and Budget may be modified from time to time in accordance with this Agreement.

(b)JJMC.  The JJMC shall oversee the arrangements for the manufacture and supply of Final Product for Japan (including the manufacture, supply and/or conduct of API, fill/finish and the Packaging and Release of Final Product), and the Parties shall keep the JJMC apprised in reasonable detail of the status of their Final Product-related manufacturing activities for Japan, whether conducted internally or with Third Parties, including prompt notification to the members of the JJMC of any significant events that may impact the quality of Final Product or delivery schedules, or the qualification of, or any audit of, a plant manufacturing or facility storing any component of Final Product and the results

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thereof (to the extent pertaining to or affecting the manufacture of Cetuximab for Japan).  The JJMC will propose for SCJ review and approval commercially reasonable and appropriate arrangements for back up sources of supply of bulk drug substance (API) and Final Product and inventory levels of same to minimize the risk of supply shortfalls, and will implement any decisions made by the SCJ.  The JJMC may also propose for SCJ review and approval alternative arrangements to protect against shortfalls in Final Product supply, such as maintaining additional inventory beyond normal levels rather than engaging a backup supply source.

(c)General Structure of Manufacturing Responsibilities.  Subject to the terms of the Manufacturing Plan and Budget, this Agreement and relevant terms of the Existing Agreements, the Parties shall enter into, or cause to be entered into, one or more definitive manufacturing, supply and quality agreements between themselves (or their Affiliates) and/or between one or more of the Parties (or their Affiliates) and appropriate Third Parties with respect to the manufacture and supply of API, and the fill/finish and Packaging and Release of Cetuximab and Final Product; provided that the existing supply and quality assurance arrangements between the Parties shall continue to apply to the supply of Cetuximab and Final Product to Japan (as such arrangements may be amended or renewed in accordance with this Agreement to address changes in the Party manufacturing a given component of Cetuximab or Final Product or providing services in connection with Cetuximab or Final Product).  The Parties shall cooperate closely to assure a reliable supply of Cetuximab and Final Product conforming to applicable Specifications.

(i)Through End of First Year Post-Launch.  Until the end of the first twelve (12) months post-Launch, ImClone will supply all API for use in the manufacture of Cetuximab and Final Product for all uses in Japan, at ImClone’s Fully Burdened Manufacturing Cost.  During this period, Merck/MJ will, at its Fully Burdened Manufacturing Cost, provide fill/finish services (either in its own facilities and/or through [**]) using the API supplied by ImClone, and provide Packaging and Release services for Final Product supplied for use in Japan.  For purposes of this Agreement, “fill/finish” includes taking the API supplied and performing all remaining activities thereafter (including purification and rebuffering to the extent API is not supplied in “particulate free” condition) other than the performance of Packaging and Release activities.

(ii)After First Year Post-Launch.  Not later than at Launch, the JJMC will seek separate API supply, fill/finish supply and, if applicable, Packaging and Release bids for a three (3) year period that will commence as of the beginning of the thirteenth (13^th) month post-Launch (and as of each three year anniversary date thereafter of such 13^th month during the term of this Agreement).  Such bids will be sought on a timetable that takes into account the reasonable amount of time that will be needed (A) for the SCJ to provide a written request for, review of, and determination and approval of the winning bid, as well as taking into account the reasonable amount of time a winning bidder may require to plan for and supply the Collaboration’s API and/or fill/finish requirements (with the Parties to use reasonable efforts to enable the SCJ final decision to be made not later than the seventeenth (17^th) month prior to the beginning of a new three-year cycle) and (B) for the negotiation and entry into an agreement approved by the SCJ (with the Parties to use reasonable efforts to finalize and execute within three months after the SCJ determination of the winning bidder and its bid).  In making its determination for a given three-year period, the SCJ shall consider any recommendations of the JJMC, shall consider which bidding entity has the most competitive cost (taking into consideration the amount of any Third Party Payments that would need to be made with respect to such Party’s or Third Party’s bid and the Parties’ relative burdens thereof) for such three year period for the specific API formulation selected by the JJMC and approved by the SCJ, shall consider the reliability and accuracy of the forecasted, estimated  Fully-Burdened Manufacturing Costs for the relevant three-year period provided by a bidder, and

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shall consider any other customary manufacturer selection criteria (e.g., quality control, risk factors, reliability, capacity, and timeliness of supply).  The SCJ shall determine (or advise the JJMC as to or delegate to the JJMC the determination of) the process to be used for soliciting bids; provided, that the bids for a round of bidding for a given component or service of Final Product shall not be opened and reviewed by any other Party or its Affiliates that is bidding on the API supply or fill/finish, as applicable, until the bid deadline has passed for such round.  Each bidding Party shall respond promptly, but in no event in later than five (5) Business Days thereafter, to any reasonable request for additional information by any member of the JJMC or SCJ with respect to the assumptions underlying, or any facts and circumstances reasonably bearing upon, any cost component of such bid or other considerations that may be taken into account as provided hereinabove with respect to such bid.  If there is a dispute at the SCJ as to which Party or Third Party should be the winning bidder for API, fill/finish, and/or Packaging and Release within the time frame targets described hereinabove, then the matter may be referred by any Party on the SCJ for baseball arbitration under Section 16.13 as to which Party or Third Party should be the winning bidder.  In order to avoid undue delay, if the winning bidder has not been selected and approved by the SCJ within thirty (30) days after receipt of the first bid from all the Parties, any Party may refer such matter for a decision by an arbitrator using baseball arbitration under Section 16.13(a) on an expedited basis to pick the winning bidder based on the bids submitted in the round of bidding immediately preceding referral of the dispute to arbitration.  Subject to the foregoing and to Sections 8.1(c)(iii)-(v), the following shall apply in connection with the bidding process with respect to each such three year period:

(A)For API.  ImClone shall be required to bid on the supply of all API required under this Agreement for use in the manufacture of Cetuximab and Final Product for use and/or sale in Japan at a price not greater than its Fully Burdened Manufacturing Cost.  Any bid by Merck to supply such API requirements (if it elects to do so) must be at a price not greater than its Fully Burdened Manufacturing Cost.  For clarification, no Party, any of its Affiliates, nor any Third Party shall be entitled to bid for such API supply if, where a license or other right is needed to so manufacture and supply API for use in making Cetuximab and Final Product for use and sale in Japan, it does not have such a license or other right, it being understood that no such right or license is granted in this Agreement.  The Parties shall use commercially reasonable efforts to effect a smooth transition of API manufacturing responsibilities (and associated contractual relationships and responsibilities) as and when a change in API supplier is determined by the JJMC and approved by the SCJ.

(B)For fill/finish.  Merck shall be required to bid on the supply of all fill/finish services required under this Agreement needed to manufacture Cetuximab and Final Product for use and/or sale in Japan at a price not greater than its Fully Burdened Manufacturing Cost.  Any bid by Bristol/BMKK or ImClone (if either elects to bid) to provide such fill/finish requirements shall be at a price not greater than such bidding Party’s Fully Burdened Manufacturing Cost.  For clarification, no Party, any of its Affiliates, nor any Third Party shall be entitled to bid for fill/finish supply if, where a license or other right under a patent is needed to so fill/finish API for use in making Cetuximab and Final Product for use and sale in Japan, it does not have such a license or other right, it being understood that no such right or license is granted in this Agreement.  The Parties shall use commercially reasonable efforts to effect a smooth transition of fill/finish responsibilities (and associated contractual relationships and responsibilities) as and when a change in fill/finish supplier is determined by the JJMC and approved by the SCJ.

(C)For Packaging and Release.  Unless otherwise agreed to by the SCJ or the Parties, MJ/Merck will provide at its Fully-Burdened Manufacturing Cost all Packaging and Release services required under this Agreement needed to manufacture Cetuximab and Final Product for use and/or sale in Japan.  If MJ/Merck no longer wishes to provide such services and if so agreed to by the SCJ or the Parties, then such services will be

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subject to the same bidding process thereafter (which may include BMKK and Third Parties as possible bidders) as for API and fill/finish.

If there is a dispute regarding the winning bidder for the component or services described in any of items (A)-(C) above for a particular three-year cycle, then, at the election of the members of the SCJ not Affiliated with any Party that is a party in interest in such dispute, the Party or its Affiliate that is obligated to provide such component or services during the three-year period during which such bid dispute occurs shall continue to provide such services following the end of such three-year period on the same terms as such Party provided such component or services during such prior period for the length of time that it takes to resolve such dispute (either until the SCJ ratifies the winning bidder or the matter is resolved by arbitration as provided hereinabove); provided, that if the winning bidder is able to assume its duties at the end of the original three-year term or during the pendency of any such extended period following the end of the original three-year term, the winning bidder may do so upon written notice to the other Parties.

(iii)Bidding Requirements.  If only one Party is bidding to supply a given component or service (API, fill/finish or Packaging and Release, as the case may be) for a given three-year period, then no bidding process shall be required of such Party for such three year term, but it shall provide all information needed by the other Parties for budgeting and forecasting purposes.  If the preceding sentence does not apply to a given component or service (i.e., API, fill/finish or Packaging and Release) for a given three year period, and if a Party is required to or elects to bid under 8.1(c)(ii)(A)-(C) above, such Party shall provide a good faith estimate of the Fully-Burdened Manufacturing Cost reasonably expected by it for each year during such three (3) year period and the assumptions made by it in determining such cost, and shall complete and submit the “Manufacturing Cost Worksheet” in the form approved by the JJMC in connection with its bid.  [**].

(iv)Specific Responsibilities.  As of the Restatement Effective Date, the Parties contemplate that, unless otherwise approved by the SCJ, API shall be sold to Merck and its Affiliates (or to a Third Party under contract to Merck and its Affiliates), and MJ and Merck shall be responsible for arranging for the fill/finish and the Packaging and Release of Cetuximab and Final Product for use and sale in Japan; provided, that the Parties will seek to qualify a back-up supplier at all times during the term of this Agreement in order to minimize the risk of Cetuximab or Final Product shortage.  The Parties agree that [**] will be qualified as a back-up supplier of API and of filled/finished Final Product for the initial Launch supply.  In addition, the Parties agree that Merck’s Japan manufacturing facility will be submitted as a Final Product Packaging and Release facility, with Merck’s Darmstadt, Germany facility as the back-up Packaging and Release facility.  Merck shall also be responsible for performing Cetuximab and Final Product regulatory responsibilities consistent with its ownership of the JNDA for Final Product and any related Approval for Japan.  The Parties agree to implement such responsibilities through written agreements that shall include other customary terms and conditions consistent with this Agreement and applicable Existing Agreements, which agreements must be approved by the SCJ.  A Party shall be responsible for the due performance of any manufacturing obligations (whether API, fill/finish, Packaging and Release) for Cetuximab or Final Product that may be delegated by it to any of its Affiliates or to Third Party contractors.

(v)Supply or Capacity Problems.  If ImClone is the API supplier and is unable to furnish the quantity of API required under this Agreement, then Merck shall use commercially reasonable efforts to supply the shortfall of API, to the extent that Merck has available capacity, at a price equal to the higher of (A) the then-existing ImClone supply price or (B) Merck’s Fully Burdened Manufacturing Cost.  If Merck is the API supplier and is unable to furnish the quantity of API required under this Agreement, then ImClone shall use

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commercially reasonable efforts to supply the shortfall of API, to the extent that ImClone has available capacity, at a price equal to the higher of (A) the then-existing Merck supply price or (B) ImClone’s Fully Burdened Manufacturing Cost.  If ImClone or BMS is the fill/finish supplier and is unable to furnish the quantity of fill/finish required under this Agreement, then Merck shall use commercially reasonable efforts to supply the shortfall of fill/finish to the extent that Merck has available capacity and a facility that is qualified and/or approved by applicable Regulatory Authorities to provide the specific fill/finish activity for Cetuximab and Final Product to be used in Japan (and allowing for a reasonable period of time to ramp up the necessary activities and support structure), at a price equal to [*].  If Merck is the fill/finish supplier and is unable to furnish the quantity of fill/finish required under this Agreement, then ImClone or BMS (whichever is then performing fill/finish, or has contracted with a Third Party to provide fill/finish, for the U.S. market) shall use commercially reasonable efforts to supply the shortfall of fill/finish to the extent that they have available capacity and a facility that is qualified and/or approved by applicable Regulatory Authorities to provide the specific fill/finish activity for Cetuximab and Final Product to be used in Japan (and allowing for a reasonable period of time to ramp up the necessary activities and support structure, at a price equal to [*].

(vi)Particulate Free Formulation.  Unless otherwise agreed to by all of the Parties, the particulate free formulation will be used in Japan.

8.2Manufacturing Responsibilities.

(a)Each Party manufacturing or formulating (or whose Affiliates manufacture or formulate or who contracts itself or through its Affiliates with Third Parties for the manufacture or formulation of) the Final Product or any intermediates or components thereof (including API), as well as any fill/finish or Packaging and Release of Final Product, whether for Commercialization, sale or Phase IV Clinical Development use in Japan, shall be responsible for ensuring that, and represents, covenants, and warrants to the other Parties that, such Final Product or any intermediates or components thereof (including API) so manufactured or formulated by it or its Affiliates (or for it or its Affiliates by Third Parties), and any fill/finish or Packaging and Release of Final Product conducted by it or its Affiliates (or for it or its Affiliates by Third Parties), will (i) be manufactured, formulated, fill/finished, and Packaged and Released, as the case may be, in compliance with in all material respects with cGMP and all other Applicable Laws and in compliance with its own internal standards, policies, and procedures; (ii) conform to applicable Specifications therefor; (iii) not be adulterated when under the control of such Party or any of its Affiliates (or the control of a Third Party with which such Party or its Affiliates have contracted) or, for Final Product supplied by such Party or its Affiliates, be misbranded, and (iv) conform in all material respects to the certificates of analysis supplied with the shipment of the Product or components thereof by such Party (or by any of its Affiliates or Third Party contract manufacturers).

(b)Each Party manufacturing or formulating (or whose Affiliates manufacture or formulate or who contracts itself or through its Affiliates with Third Parties for the manufacture or formulation of) Cetuximab or any intermediates or components thereof (including API), as well as any fill/finishing or Packaging and Release thereof, whether for Phase I-IIIB Clinical Development or other preclinical study in Japan, shall be responsible for ensuring that, and represents, covenants, and warrants to the other Parties that, such Cetuximab or any intermediates or components thereof (including API) so manufactured or formulated by it or its Affiliates (or for it or its Affiliates by Third Parties), and any fill/finishing or Packaging and Release of Cetuximab conducted by it or its Affiliates (or for it or its Affiliates by Third Parties), will (i) be manufactured, formulated, fill/finished, Packaged and Released, as the case

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may be, in compliance with in all material respects with cGMP and all other Applicable Laws and in compliance with its own internal standards, policies, and procedures; (ii) conform to applicable Specifications therefor; and (iii) conform in all material respects to the certificates of analysis supplied with the shipment of the Product or components thereof by such Party (or by any of its Affiliates or Third Party contract manufacturers).

(c)In the event a Party desires at any time to transfer any of the API supply, fill/finish, or Packaging and Release of Final Product to one of its other sites from a site where such activity is then being conducted, then, subject to any requirements under the Existing Agreements or as may be imposed by Applicable Law, it may do so upon not less than six months’ written notice (or such shorter period to which the JJMC or SCJ may agree or as may be necessary to comply with Applicable Law) to the other Parties; provided, that except where such site transfer change was required by a change in Applicable Law that could not have been reasonably anticipated at the time its bid was accepted, or where such site transfer was contemplated and disclosed (together with the applicable Fully-Burdened Manufacturing Cost adjustment of same) as part of its bid that was accepted for the activities to be performed by it under Section 8.1(c)(ii)(A)-(C), then, [**].

(d)The development of all packaging for Final Product in Japan shall be determined and approved by the JJMC consistent with the applicable Long-Term Commercialization Plan and Budget and Annual Commercialization Plan and Budget, with the Manufacturing Plan and Budget, with Applicable Law, and with Final Product labeling approved by the Japanese Regulatory Authorities.  The Party or Parties manufacturing Final Product shall also be identified on the packaging for the Final Product as required by Applicable Law.  As of the Restatement Effective Date, the current version of the packaging design for launch of the 100 mg dose, which has not yet been finalized by the JJMC, is set forth in Exhibit 8.2(d) hereto.

8.3Specifications, Forecasts, and Terms of Supply.

(a)The JJMC shall review the Specifications from time to time, and propose for SCJ review and approval such modifications to the extent such modifications would directly affect the Development or Commercialization of Cetuximab or Final Product in Japan; provided, that if such modification is necessary to comply with required changes to Applicable Law, then no Party’s members of the SCJ or any Subcommittee thereof will unreasonably withhold or delay consent to such changes to the Specifications that are needed to implement such change in Applicable Law, and a manufacturing Party shall be entitled to proceed with implementation of such changes needed to comply with Applicable Law pending final approval of the SCJ; and provided, further, that if any such modification to the Specifications for Cetuximab or Final Product in Japan is proposed in order to comply with a voluntary (i.e., one not required by a change in applicable Law) change to the Specifications proposed by a Party that is responsible for the manufacture or provision of the component or service with respect to which the change in Specifications is proposed to made, and such change to the specifications is necessary to make the Specifications consistent with changes made or proposed to be made to Cetuximab or Final Product for commercial sale in the EU or the US, then, if such change to the EU specifications is approved by Merck (if made for the EU) or BMS (if such change is for the U.S.), then the consent of the other Parties’ members of the SCJ or any Subcommittee thereof to such change shall not be unreasonably withheld or delayed.  Any Party required to implement a required change to the Specifications shall have a reasonable period of time in which to implement such change.

(b)The JJMC shall establish procedures regarding forecasts for requirements of API, Cetuximab, and Final Product for Commercialization in Japan, and ordering procedures to be followed by the Parties for securing such supplies.  At a minimum,

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the procedure must include provision of an eighteen month rolling forecast, which forecast shall show: (i) for the first six months of such forecast, the quantities that were firm ordered pursuant to the two immediately prior forecasts, (ii) for months seven through nine of such forecast, the amount that is being firm ordered to be delivered in the months seven through nine of such forecast (with specific quantities and delivery dates by month if applicable), and (iii) for months ten through eighteen of such forecast, a good faith estimate of quarterly requirements only.  [**]  Forecasts shall be updated every three months.  Any failure of a Party to supply API or fill/finish requirements in excess of the binding forecast will not be a breach of this Agreement.  The first such forecast is attached as Exhibit 8.3 hereto, and indicates the quantities firm ordered for the next nine (9) months after the Restatement Effective Date.

(c)Each Party shall use Diligent Efforts to carry out its responsibilities under this Article 8 and will ensure timely supply of the Parties requirements for the Japan market in accordance with applicable Specifications.

8.4Shortage of Supply.  In the event that sufficient quantities of either API or Final Product are not available from a given Party (or its Affiliates) to meet the binding order set forth in Section 8.3(b) and such other countries supplied by such Party, then, notwithstanding any contrary terms that may apply in the Existing Agreements, the remaining available API or Final Product (or components or services needed to supply Final Product) will be allocated by the Party controlling the supply of API or Final Product (or such components or services needed to supply Final Product) that is in short supply in proportion to the relative gross unit volume sales levels of Final Product that are forecast for sale in Japan compared to such forecast for such other countries to be supplied by such manufacturer for the period during which such shortage is reasonably expected to last, subject to any limitations imposed by applicable laws, rules and regulatory requirements; provided, that such Party will give priority in making such allocation to existing users of the Final Product over new users, and further provided, that to the extent that any such shortage shall have occurred for reasons beyond the reasonable control of such Party and attributable to an event of Force Majeure (such shortage, a “FM Shortage”), [**] under this Agreement or any Existing Agreement for any allocation pursuant to this Section 8.4 of such FM Shortage among Japan and all the other territories under  the Existing Agreements, [**].  The Parties will provide all reasonable cooperation and information (including comparisons of actual demand to prior forecasts for the affected countries) to the Party determining such allocation.

8.5Inventory.  The JJMC shall determine appropriate levels of inventory of intermediates, API and Final Product to meet the Parties’ anticipated needs within Japan, but, in the event the JJMC fails to do so, the Party controlling the bulk drug substance (API) or Final Product shall maintain a commercially reasonable level of inventory of same.

8.6Manufacturing Costs and Fees.

(a)Subject to Section 4.5(e):  (i)(A) a Party or its Affiliate that is the API supplier shall contract with a Party (or its Affiliate) that is fill/finish supplier to supply API in accordance with this Agreement, and (B) a Party or its Affiliate that is the fill/finish supplier shall contract with a Party (or its Affiliate) that is the Packaging and Release supplier to provide the relevant fill/finish services in accordance with this Agreement, and (ii) [**].  The costs incurred by any Party for manufacturing or purchasing from a Third Party quantities of any intermediate or other component, any API, fill/finish services, Packaging and Release services, Cetuximab or Final Product for use in Japan shall be treated as Fully-Burdened Manufacturing Costs (to the extent included in such defined term).

(b)[**], and shall be included as a Manufacturing Cost for such API, Cetuximab or Final Product, as applicable.

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(c)For clarity, to the extent solely necessary for Japan:

(i)Fully-Burdened Manufacturing Costs incurred for (A) long term stability testing batches to meet specific Japan regulatory requirements and (B) activities conducted prior to the production of successful validation batches for Final Product for Japan shall be included in Development Costs for Japan.  Also, the Fully-Burdened Manufacturing Costs of any validation batches for Japan which are not used for Commercial sale shall be included in Development Costs for Japan.

(ii)Fully-Burdened Manufacturing Costs incurred for activities connected with validation batches which are used for Commercial sale in Japan and all subsequent manufacture of Final Product for Commercial sale in Japan shall be included in Fully-Burdened Manufacturing Costs for the commercial supply of Final Product in Japan and included as an element of Allowable Expenses.

8.7Product Recall.

(a)In the event that a Party obtains information that Final Product or any portion thereof should be alleged or proven not to meet the Specifications therefor, the labeling requirements applicable thereto, the Regulatory Approval for such Final Product or to be otherwise defective in the Territory, such Party shall notify the other Parties immediately and all Parties shall cooperate fully regarding the investigation and disposition of any such matter, including with respect to any recall or withdrawal of such Final Product, as appropriate (collectively, a “Recall”).  Each Party shall maintain such traceability records as are sufficient and as may be necessary to permit a recall or field correction of any Final Products.  If: (i) any applicable Japan Regulatory Authority should issue a request, directive or order that a Final Product be recalled, (ii) a court of competent jurisdiction orders such a Recall in Japan, (iii) the SCJ determines (where circumstances permit an SCJ determination) that a Recall of such Final Product is appropriate in Japan, or (iv) circumstances do not permit an SCJ determination for time and patient safety reasons such that MJ must make the determination (but only after such telephonic consultation with each Party’s members of the SCJ as circumstances permit) that a Recall of such Final Product is appropriate in Japan, then, in each case (i)-(iv), MJ shall give telephonic notice (to be confirmed in writing) to the other Parties within two (2) Business Days of the occurrence of such event.

(b)Once a decision to make a Recall has been made under Section 8.7(a), Merck shall consult with the other Parties through the JJCC, but Merck shall have sole responsibility for determining all corrective action to be taken, and for carrying out any Recall, in Japan, unless the Regulatory Approvals and dossiers for Final Product have been assigned to ImClone, BMS or BMKK, in which case such assignee shall have the responsibility.  Each Party will provide full cooperation and assistance to Merck or such other Party in connection therewith as may be requested by Merck of such other Party.  The costs of any such Recall shall be a Regulatory Expense, except to the extent that the recall or withdrawal is attributable to the negligence of a Party or failure of a Party or its contractors to manufacture Final Product or any component thereof or conduct fill/finish or Packaging and Release in accordance with Specifications in which event (x) such Party shall bear such costs and (y) such costs shall not be included in Regulatory Costs or Allowable Expenses.  Under no circumstances shall a Party unreasonably object to a recall or withdrawal requested by a Party, and no Party shall have any right to object to a recall or withdrawal requested by another Party for failure of a Final Product to meet applicable Specifications or for material safety concerns.

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8.8Post-Termination Manufacturing.

(a)By Merck.  In the event of the termination of this Agreement pursuant to Sections 14.2, 14.3, 14.4 or 14.5 and to the extent that the Final Product, any procedure in the manufacture thereof, any API or other component used for formulation of Final Product, any fill/finish or packaging, or any QC/QA or release activities is, at the time of such termination, manufactured, performed or conducted by Merck or any of its Affiliates with respect to Japan (or by Third Parties contracted to do so by or on behalf of Merck or any of its Affiliates) (collectively, “Merck Manufactured Components”), then, notwithstanding any provision to the contrary in the Existing Agreements, Merck shall use commercially reasonable efforts to manufacture and supply, perform or conduct same to or for the benefit of ImClone (for its own benefit and for the benefit of BMS) and/or BMS/BMKK, with such Merck Manufactured Components, solely for Development and Commercialization purposes in Japan of Cetuximab and Final Product (as may required by BMS/BMKK and ImClone for the Japan market during such period), for a period of not more than [**] months post-termination, at a price equal to the sum of (i) [**] of Merck’s Fully Burdened Manufacturing Costs, plus (ii) any [**] that are fairly and reasonably allocable to the manufacture by it, its Affiliates or contractors of Final Product, API or any component of the foregoing and supplied by it under this Section 8.8 for use or Commercialization in Japan on or after such termination date (other than Third Party Payments to the extent that the same would otherwise fall within Merck’s indemnification obligations under Section 13.1 or within an exclusion for which Merck is responsible under any of Sections 13.2(a)-(h)); provided, that, subject to Section 8.3: (A) Merck shall not be obligated to so supply ImClone (except where and to the extent that ImClone is obligated to supply or manufacture same for BMS/BMKK for the Japan market) if the basis for termination pursuant to Section 14.2, 14.3, or 14.4 was a material breach by ImClone or its Affiliates of this Agreement or the Merck-ImClone Agreement; and (B) Merck shall not be obligated to so supply BMS (except where and to the extent BMS or its Affiliates are obligated to supply or manufacture same for ImClone for the Japan market) if the basis for termination pursuant to Section 14.2, 14.3, or 14.4 was a material breach by BMS or its Affiliates of this Agreement or of the BMS-ImClone Agreement.  During this [**]-month period, (iii) the Parties shall, subject to Section 8.3, coordinate their forecasts in a manner such that Merck shall have reasonable advance notice of such requirements and such that ImClone and BMS/BMKK shall be assured of obtaining timely supply, and (iv) ImClone and/or BMS shall use commercially reasonable efforts to transition, and to provide and share such know-how and information on a timely basis as is needed in order to so transition, the manufacture or performance of such Merck Manufactured Components as promptly as reasonably practicable (not to exceed [**] months) to a facility approved by the applicable Regulatory Authorities (and that is owned or leased by BMS, ImClone or their Affiliates, or contractors under contract to any of them, including contractors who may have been supplying or performing such Merck Manufactured Component for Merck previously) for the manufacture of such Merck Manufactured Component for Commercial use of Final Product in Japan and, upon procurement of such approval and written acknowledgement by BMS and/or ImClone, as the case may be, that it can assume its own supply of such Merck Manufactured Component, this obligation of Merck shall cease.

(b)By ImClone.  In the event of the termination of this Agreement pursuant to Sections 14.2, 14.3, or 14.4 and to the extent that the Final Product, any procedure in the manufacture thereof, any API or other component used for formulation of Final Product, any fill/finish or packaging, or any QC/QA or release activities is, at the time of such termination, manufactured, performed or conducted by ImClone or any of its Affiliates with respect to Japan (or by Third Parties contracted to do so by or on behalf of ImClone or any of its Affiliates) (collectively, “ImClone Manufactured Components”), then, notwithstanding any provision to the contrary under the Existing Agreements, ImClone shall use commercially reasonable efforts to manufacture and supply, perform or conduct same to or for the benefit of Merck/MJ and BMS/BMKK with such ImClone Manufactured Components, solely for Development and Commercialization purposes in Japan of Cetuximab and Final Product (as may required by

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BMS/BMKK and Merck/MJ for the Japan market during such period), for a period of not more than [**] months post-termination, at a price equal to the sum of (i) [**] of ImClone’s Fully Burdened Manufacturing Costs, plus (ii) any [**] that are fairly and reasonably allocable to the manufacture by it, its Affiliates or contractors of Final Product, API or any component of the foregoing and supplied by it under this Section 8.8 for use or Commercialization in Japan on or after such termination date (other than Third Party Payments to the extent that the same would otherwise fall within ImClone’s indemnification obligations under Section 13.1 or within an exclusion for which ImClone is responsible under any of Sections 13.2(a)-(h)); provided, that, subject to Section 8.3: (A) ImClone shall not be obligated to so supply Merck (except where and to the extent that Merck or its Affiliates are obligated to supply or manufacture same for BMS/BMKK for the Japan market) if the basis for termination pursuant to Section 14.2, 14.3, or 14.4 was a material breach by Merck or its Affiliates of this Agreement or the Merck-ImClone Agreement; and (B) ImClone shall not be obligated to so supply BMS (except where and to the extent that BMS or its Affiliates are obligated to supply or manufacture same for Merck/MJ for the Japan market) if the basis for termination pursuant to Section 14.2, 14.3, or 14.4 was a material breach by BMS or its Affiliates of this Agreement or of the BMS-ImClone Agreement.  During this time, (iii) the Parties shall, subject to Section 8.3, coordinate their forecasts in a manner such that ImClone shall have reasonable advance notice of such requirements and such that Merck and BMS shall be assured of obtaining timely supply, and (iv) Merck and/or BMS shall use commercially reasonable efforts to transition, and to provide and share such know-how and information on a timely basis as is needed in order to so transition, the manufacture or performance of such ImClone Manufactured Components as promptly as reasonably practicable (not to exceed [**] months) to a facility approved by the applicable Regulatory Authorities (and that is owned or leased by BMS, Merck or their Affiliates, or contractors under contract to any of them, including contractors who may have been supplying or performing such ImClone Manufactured Component for ImClone previously) for the manufacture of such ImClone Manufactured Component for Commercial use of Final Product in Japan and, upon procurement of such approval and written acknowledgement by BMS and/or Merck, as the case may be, that it can assume its own supply of such ImClone Manufactured Component, this obligation of ImClone shall cease.

(c)By BMS.  In the event of the termination of this Agreement pursuant to Sections 14.2, 14.3, 14.4 or 14.5, and to the extent that the Final Product, any procedure in the manufacture thereof, any API or other component used for formulation of Final Product, any fill/finish or packaging, or any QC/QA or release activities is, at the time of such termination, manufactured, performed or conducted by BMS or any of its Affiliates with respect to Japan (or by Third Parties contracted to do so by or on behalf of BMS or any of its Affiliates) (collectively, “BMS Manufactured Components”), then, notwithstanding any provision to the contrary in the Existing Agreements, BMS shall use commercially reasonable efforts to manufacture and supply, perform or conduct same to or for the benefit of ImClone (for its own benefit and for the benefit of Merck/MJ) and/or MJ/Merck, with such BMS Manufactured Components, solely for Development and Commercialization purposes in Japan of Cetuximab and Final Product (as may required by MJ/Merck and ImClone for the Japan market during such period), for a period of not more than [**] months post-termination, at a price equal to the sum of (i) [**] of BMS’ Fully Burdened Manufacturing Costs, plus (ii) any [**] that are fairly and reasonably allocable to the manufacture by it, its Affiliates or contractors of Final Product, API or any component of the foregoing and supplied by it under this Section 8.8 for use or Commercialization in Japan on or after such termination date (other than Third Party Payments to the extent that the same would otherwise fall within BMS’s indemnification obligations under Section 13.1 or within an exclusion for which BMS is responsible under any of Sections 13.2(a)-(h)); provided, that, subject to Section 8.3: (A) BMS shall not be obligated to so supply ImClone (except where and to the extent that ImClone or its Affiliates are obligated to supply or manufacture same for Merck/MJ for the Japan market) if the basis for termination pursuant to Section 14.2, 14.3, or 14.4 was a material breach by ImClone or its Affiliates of this

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Agreement, the BMS-ImClone Agreement, or the Merck-ImClone Agreement; and (B) BMS shall not be obligated to so supply Merck (except where and to the extent that Merck or its Affiliates are obligated to supply or manufacture same for ImClone for the Japan market) if the basis for termination pursuant to Section 14.2, 14.3, or 14.4 was a material breach by Merck or its Affiliates of this Agreement or of the Merck-ImClone Agreement.  During this time, (iii) the Parties shall, subject to Section 8.3, coordinate their forecasts in a manner such that BMS shall have reasonable advance notice of such requirements and such that ImClone and Merck shall be assured of obtaining timely supply, and (iv) ImClone and/or Merck or their Affiliates shall use commercially reasonable efforts to transition, and to provide and share such know-how and information on a timely basis as is needed in order to so transition, the manufacture or performance of such BMS Manufactured Components as promptly as reasonably practicable (not to exceed [**] months) to a facility approved by the applicable Regulatory Authorities (and that is owned or leased by Merck, ImClone or their Affiliates, or contractors under contract to any of them, including contractors who may have been supplying or performing such BMS Manufactured Component for BMS previously) for the manufacture of such BMS Manufactured Component for Commercial use of Final Product in Japan and, upon procurement of such approval and written acknowledgement by Merck and/or ImClone, as the case may be, that it can assume its own supply of such BMS Manufactured Component, this obligation of BMS shall cease.

(d)Additional Obligations.  The Party who, pursuant to Section 8.8(a), 8.8(b) or 8.8(c) remains obligated to provide such Manufactured Components for up to [**] months,: (i) shall continue to use commercially reasonable efforts during such [**] month period to maintain, and to perform its obligations under, any separate manufacturing agreements relating to or covering the Japan market for Cetuximab and Final Product as it may have entered into prior to the termination of this Agreement (whether with the Parties hereto (or their Affiliates) or with Third Parties) in accordance with the terms thereof and shall remain entitled to any rights, benefits and compensation under such agreements; and (ii) shall continue to comply with, and abide by its obligations under, Sections 8.2, 8.3(c), 8.4 through 8.7, and 8.9 of this Agreement during such [**] period.  Nothing in Section 8.8(a)(ii), 8.8(b)(ii) or 8.8(c)(ii) is intended to alter any royalty-sharing arrangements that the Parties may have under their respective Existing Agreements.

8.9Other Covenants.

(a)During the period that any Party is responsible under this Agreement for manufacturing of API or Final Product, or conducting fill/finish, Packaging and Release or Distribution activities of Cetuximab or Final Product for use or sale in Japan, except as permitted under Section 10.4, such party shall not breach or terminate any existing agreement with a Third Party that would have a material adverse effect upon the supply, price or quality of, or timeliness of delivery of, any API, Cetuximab, or Final Product or the performance of such activities, or enter into a new agreement with a Third Party that is not consistent with the terms of such Party’s manufacturing responsibilities under this Agreement.

(b)Appropriate Manufacturing Quality and Audit agreements shall be maintained by each Party for all key steps in the manufacture of API and Final Product and the Packaging and Release and storage of same, whether supplied or purchased by it, at all times during the terms this Agreement, which agreements shall cover customary terms and conditions included in such agreements.  Any Party may request to review any such agreements at any time, and the Party who is required to have entered into same shall provide the requesting Party promptly with a copy thereof.

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9.TRADEMARKS; PRODUCT MARKING.

9.1Product Trademarks.

(a)Ownership of Product Trademarks.  The Parties shall use the ERBITUX® Trademark (the “Product Trademark”) on the Final Product during the Co-Promotion Term without the addition or use of any other trademarks other than a Corporate Name to the extent required by Applicable Law, or any of the Existing Agreements (and which in no event shall be joined to the Product Trademark in a manner that creates a new mark involving such Corporate Name).  Merck, MJ and ImClone acknowledge and agree that ImClone shall own all right, title and interest in and to said Product Trademark in Japan.   During the period commencing on the Restatement Effective Date and until the date that is ten (10) years after termination of the Co-Promotion Term: (i) BMS, BMKK and their Affiliates shall not attack, dispute or contest the validity of or ownership of such Product Trademark in Japan, and agree that no ownership rights are vested or created in any of them in such Product Trademark in Japan by virtue of any licenses and other rights granted to BMS or BMKK under this Agreement; (ii) MJ, Merck and their Affiliates shall not attack, dispute or contest the validity of or ownership of such Product Trademark in Japan, and agree that no ownership rights are vested or created in any of them in such Product Trademark in Japan by virtue of any licenses and other rights granted to MJ or Merck under this Agreement; and (iii) subject to Section 14.4(a), all uses of such Product Trademark on Final Product in Japan during the Co-Promotion Term, whether in combination with or apart from BMS’ Corporate Names and/or the Merck Corporate Names, including any goodwill generated in connection therewith, inures to the benefit of ImClone, and ImClone may call for a confirmatory assignment thereof.

(b)Use of Product Trademarks.  During the period commencing on the Restatement Effective Date and ending upon termination of the Co-Promotion Term: (i) Merck, BMKK, BMS and MJ agree that the Product Trademark will be affixed to Final Product and will be used exclusively in furtherance of the objectives of this Agreement and the Existing Agreements; (ii) MJ and BMKK shall have the co-exclusive right and license to use the Product Trademark in Japan as required and/or permitted by this Agreement; and (iii) the Parties shall comply with this Section 9.1(b) in connection with such use of the Product Trademark on Final Product in Japan.  Each Party shall use commercially reasonable efforts after the Restatement Effective Date until notice of termination is provided by any Party as to termination of the Co-Promotion Term not to do any act which endangers, destroys or similarly affects, in any material respect, the value of the goodwill pertaining to the Product Trademark.  Further, except when used in accordance with any usage guidelines agreed to by the SCJ or any applicable Subcommittee under this Agreement, or except when a use is otherwise approved in accordance with other provisions of this Agreement, BMKK and MJ shall submit to each other any materials bearing the Product Trademark for review and approval prior to the use thereof.

(c)Costs.  All costs of prosecuting and maintaining the Product Trademark in Japan shall be paid by ImClone, subject to such reimbursement by Merck as may be provided in the Merck-ImClone Agreements; provided that any such reimbursement paid by Merck shall be included in Sales Costs hereunder.

9.2Other Proprietary Trademarks.

(a)Ownership of Corporate Names.  Each Party shall retain all right, title and interest in and to its Corporate Names, and agrees that it shall not attack, dispute or contest the validity of or ownership of such other Party’s Corporate Names, or any registrations issued or issuing with respect thereto.  Each Party expressly acknowledges and agrees that no ownership rights are vested or created by the limited rights of use granted under this Agreement, and that all use of the Corporate Names in accordance therewith, including any

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goodwill generated in connection therewith, inures to the benefit of the respective owner of the Corporate Names and the owner of such Corporate Names may call for a confirmatory assignment thereof.

(b)Use of Corporate Names.  With respect to any Corporate Names licensed to a Party under or in connection with this Agreement, such Party agrees to conform to the customary guidelines of the granting Party with respect to manner of use (as provided in writing by the owner of the Corporate Name), and to maintain the quality standards of such granting Party with respect to the goods sold and services provided in connection with such Party’s Corporate Names.  Each Party shall use commercially reasonable efforts not to do any act which endangers, destroys or similarly affects the value of the goodwill pertaining to the other Parties’ Corporate Names.  Further, except when used in accordance with any usage guidelines provided by the owner of a Corporate Name or a use is otherwise approved in accordance with other provisions of this Agreement, each Party shall submit to another Party any materials bearing that other Party’s Corporate Name for review and approval prior to the use thereof and shall make no use of such Corporate Name of that other Party without that other Party’s written consent.  Neither Party shall use, or allow any of their Affiliates to use, in connection with the Final Product any other Trademark that is similar to or substantially similar to or so nearly resembles another Party’s Corporate Names as to be likely to cause deception or confusion.

(c)Cooperation.  Each Party shall execute any documents required in the reasonable opinion of another Party to be entered as a “registered user” or recorded licensee of that other Party’s Corporate Names, or to be removed as registered user or licensee thereof.

9.3Product Trademark Infringement.

(a)Trademark Infringement Asserted by Third Parties in Japan.  Each Party shall notify the other Parties through the JJCC promptly upon learning of any actual or alleged infringement of any Trademark or of any unfair trade practices, trade dress imitation, passing off of counterfeit goods, or like offenses, or any such claims (hereinafter “Trademark Infringement Claims”) brought by a Third Party against a Party in connection with a Final Product in Japan.  Upon learning of such Trademark Infringement Claim, ImClone shall take all reasonable and appropriate steps to resolve the Trademark Infringement Claim in accordance with the terms of the Existing Agreements, with the reasonable cooperation and assistance of BMKK and MJ.  All of the reasonable costs of in-house counsel, the reasonable fees and expenses paid to outside counsel, and other reasonable direct costs incurred in bringing, maintaining and prosecuting any action described in this Section 9.3(a) shall be paid by ImClone, subject to such reimbursement by MJ or Merck as is provided in the Merck-ImClone Agreement and/or by BMS or BMKK as provided in the BMS-ImClone Agreement.  No Party may settle any such Trademark Infringement Claim without the prior written consent of the other Party(ies) if and where such settlement may or would adversely affect or diminish the rights and benefits of the other Party(ies) under this Agreement, the exclusive use of the Product Trademark on Final Product in Japan, or the value of the Product Trademark in Japan, or would impose any new obligations on, or adversely affect any obligations of, such other Party(ies) under this Agreement.

(b)Product Trademark Infringement by Third Parties.  Each Party shall notify the other Parties in writing promptly upon learning of any actual or alleged infringement by a Third Party of the Product Trademark of which it becomes aware.  Upon learning of such infringement, ImClone shall take all reasonable and appropriate steps to resolve the infringement in accordance with the terms of the Existing Agreements, with the reasonable cooperation and assistance of MJ and BMKK.  No Party or its Affiliates may settle any such alleged infringement of the Product Trademark by a Third Party without the prior written

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consent of the other Party(ies), if such settlement would adversely affect or diminish the rights and benefits of any Party(ies) under this Agreement, the exclusive use of the Product Trademark on Final Product in Japan, or the value of the Product Trademark in Japan, or would impose any new obligations on, or adversely affect any obligations of, such other Party(ies) under this Agreement.  The expenses of defense, settlement and judgments in actions governed by this Section 9.3(b) shall be paid by ImClone, subject to reimbursement as provided in the Merck-ImClone Agreement and/or by BMS or BMKK as provided in the BMS-ImClone Agreement.  The costs and expenses of the Parties incurred in resolving any infringement of the Product Trademark by a Third Party under this Section 9.3(b) shall be reimbursed first out of any damages or other monetary awards recovered (if such recovery is less than the Parties’ aggregate costs and expenses incurred in such action, such recovery shall be allocated between the Parties on a pro rata basis based on their relative costs and expenses incurred in such action).  Any remaining damages shall be included in Net Sales in the year in which recovered if during the Co-Promotion Term; otherwise, it shall be deemed to have been recovered during the last year of the Co-Promotion Term and net Profit Or Loss shall be recomputed with adjusting payments to be made by the Parties based on such recomputation.

(c)Consent of Each Party to Settlements.  The consent of any Party to a settlement under Section 9.3(a) or 9.3(b) shall not be unreasonably withheld or delayed if and where such settlement (i) would not materially adversely affect or materially diminish the rights and benefits of such Party under this Agreement, the exclusive use of the Product Trademark on Final Product in Japan, or the value of the Product Trademark in Japan, or (ii) would not impose any material new obligations on, or materially adversely affect any obligations of, such Party under this Agreement.

9.4Patent Marking.  Any Final Product marketed and sold in Japan by the Parties hereunder shall be marked with appropriate patent numbers and Trademarks, as approved by the JJCC.

10.SUBLICENSING; COMMERCIALIZATION OF A COMPETING PRODUCT.

10.1No Effect on Existing Agreements.  Nothing in this Article 10 is intended to (a) alter any obligation that a Party and its Affiliates may have to any other Party or its Affiliates under any Existing Agreement (including any obligation to obtain another Party’s consent to Develop or commercialize a Competing Product in Japan or to sublicense or assign a Party’s rights to Develop or Commercialize Final Product under this Agreement), (b) alter, or imply any additional, license rights under a Party’s patent rights, Trademarks copyrights or other intellectual property rights that are granted to a Party under any Existing Agreement, except as expressly provided in this Agreement, or (c) except as provided in Sections 10.2 and 10.3, alter or restrict any Party’s or its Affiliates’ rights regarding any acquisition or commercialization of a Competing Product by a Party in Japan or for any proposed or actual sublicensing or assignment of a Party’s rights to Develop or Commercialize Final Product under this Agreement.  The Parties acknowledge that the Existing Agreements may impose additional obligations on one or more of the Parties.

10.2Effect of Commercialization of a Competing Product.

(a)By BMKK or MJ.  Should BMS/BMKK or Merck/MJ Develop (after the date that a product became a Competing Product), promote or otherwise commercialize a Competing Product in Japan (whether by itself, through an Affiliate, through co-promotion or co-marketing, or through the grant of a license or sublicense to a Third Party to manufacture or Commercialize a Competing Product), the other Parties to this Agreement shall have no right to terminate the rights granted to such Party (a “Competing Product Party”) under this Agreement with respect to Cetuximab or Final Product, provided that such Competing Product Party

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continues thereafter to fulfill its obligations and to discharge its responsibilities under this Agreement (including using its Diligent Efforts to co-Develop and co-Commercialize Final Product hereunder); provided, that (i) the foregoing shall not change or affect any obligations of a Party under, or any remedies that may be available to a Party under, the Existing Agreements with respect to such Competing Product and (ii) shall not, subject to the foregoing, affect any other rights or remedies that are otherwise available to a Party at law or in equity.

(i)Such Competing Product Party shall take immediate steps to abide by its obligations under Section 6.4(c), if it has not already done so, and further, shall (A) ensure that its clinical development employees that have direct responsibility on a day-to-day basis for the Development of Final Product (but not such employees’ managers who spend the majority of their time on products other than Final Product) shall be separate from those employees that are responsible thereafter for the development of the Competing Product (it being understood that, if Merck/MJ is the Competing Product Party, then MJ shall continue to provide the services set forth in Section 6.7 with respect to Final Product for such Indication), and (B) establish appropriate firewalls to prevent leakage of key, nonpublic Development information and strategies from such Final Product clinical development employees to the separate clinical development employees that thereafter Develop the Competing Product.  However, in the event of any dispute between the Competing Product Party and either Merck/MJ or BMS/BMKK (whichever one that is not the Competing Product Party), and if such dispute relates to the Development (other than matters relating to additional funding or resources for Development purposes to be provided by the Party with the Competing Product) or Commercialization of Final Product hereunder, then whichever of Merck/MJ or BMS/BMKK that is not the Competing Product Party shall have final decision-making authority with respect to such dispute, but only after escalation of such dispute for resolution to the senior executives of Merck/MJ and BMS/BMKK set forth in Section 2.5(f) and such executives’ failure to resolve such dispute in good faith; provided, that (1) whichever of Merck/MJ or BMS/BMKK that is not the Competing Product Party shall be entitled, if there is a dispute, to determine the terms and conditions of sale of Final Product in Japan at the SCJ without need for escalation to said senior executives of BMS/BMKK or Merck/MJ; (2) if both Merck/MJ and BMS/BMKK are Developing or Commercializing a Competing Product, this sentence shall not apply, and (3) once the Competing Product Party permanently ceases to promote or otherwise commercialize the Competing Product, this sentence shall no longer apply.

(b)By ImClone.  If ImClone, any of its Affiliates, or its or their licensees or sublicensees (other than BMS, Merck, or their respective Affiliates) acting under the authority of such license or sublicense should Develop (after the date that a product became a Competing Product), promote or otherwise commercialize a Competing Product in Japan (whether by itself, through an Affiliate, through co-promotion or co-marketing, or through the grant of a license or sublicense to a Third Party to manufacture or Commercialize a Competing Product), then the other Parties to this Agreement shall have no right to terminate the rights granted to ImClone under this Agreement with respect to Cetuximab or Final Product so long as ImClone continues thereafter to fulfill its obligations and to discharge its responsibilities under this Agreement; provided, that (x) the foregoing shall not change or affect any obligations of a Party under, or any remedies that may be available to a Party under, the Existing Agreements with respect to such Competing Product, (y) shall not, subject to the foregoing, affect any other rights or remedies that are otherwise available to a Party at law or in equity, and (z) the following shall apply:

(i)ImClone shall be removed from the JJCC and JJMC (and any other subcommittees or working groups reporting to the aforesaid Subcommittees) and shall not receive any reports or other information provided to Representatives of such Subcommittees; provided, that if ImClone is then manufacturing bulk drug substance (API) or Final Product for

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sale in Japan, ImClone shall not be removed from the JJMC and its Representatives shall continue to be entitled to vote on the JJMC for so long as it continues to so manufacture; and further provided that if it has not already done so, ImClone shall establish appropriate firewalls to prevent leakage of material nonpublic information from its representatives on the Committees, Subcommittees, and Working Groups to personnel that are involved with development and commercialization of such Competing Product.

(ii)All manufacturing agreements between the Parties and their Affiliates shall not terminate by operation of this Agreement but shall remain in place in accordance with their terms, and, if ImClone is then manufacturing API or Final Product, in whole or in part, for the Japan market, then, unless otherwise mutually agreed upon in writing by the Parties, ImClone shall continue to do so under the terms and conditions then existing at the time of such termination or expiration and shall continue to have the obligation to bid on manufacturing opportunities as provided in Article 8 of this Agreement.

(c)Clarification.  This section 10.2 shall not apply to the Development of a product prior to the time that such product becomes a Competing Product.

10.3Sublicensing.  Subject to Section 10.2 and/or the Existing Agreements, in the event that any Party would like to sublicense all of its rights and obligations under this Agreement to a Third Party, the following conditions shall apply to any such proposed sublicense or assignment:

(a)No such sublicense may be made until the date that is at least [**] after Launch of Final Product in Japan.

(b)No such sublicense may be made in part, but only as a sublicense of all of such Party’s rights and obligations under this Agreement.  Any such sublicense shall terminate upon the termination or expiration of such Party’s rights under this Agreement.

(c)The Party proposing to sublicense (the “Sublicense Proposing Party”) shall obtain the consent of the other Parties to the proposed sublicensee (“Sublicensee”) or assignee, which consent shall not be unreasonably withheld or delayed if such proposed sublicensee is an entity [**], or otherwise possesses substantial oncology commercialization experience, sufficient resources, trained employees in oncology, and other necessary capabilities to effectively Develop (to the extent then called for by the Annual Development Plan and Budget or the Long-Term Development Plan) and Commercialize Final Product in Japan.

(d)The Sublicense Proposing Party, the proposed Sublicensee, and the other Parties shall have agreed upon any necessary changes to this Agreement and any Existing Agreements required to effect such sublicense, including the terms and conditions of or relating to governance among the remaining Parties and such proposed Sublicensee.

(e)The Sublicense Proposing Party hereby guarantees the performance of this Agreement by its Affiliates and permitted Sublicensees as permitted in this Section 10.3, and the grant of any such sublicense of the Sublicense Proposing Party’s rights and obligations under this Agreement shall not relieve the Sublicense Proposing Party of its obligations under this Agreement, except to the extent they are satisfactorily performed by such Sublicensee.  Any such permitted sublicense shall be consistent with and subject to the terms and conditions of this Agreement.  A copy of any sublicense agreement executed by a Sublicense Proposing Party shall be provided to the other Parties within fourteen (14) days of its execution; provided that the financial terms of any such sublicense agreement may be redacted to the extent not

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pertinent to an understanding of a Party’s obligations or benefits under this Agreement (e.g., consideration paid to a Party for the sublicense by the Sublicensee may be redacted).

(f)Except for the foregoing, [**].

(g)Each Party acknowledges that a Party that grants a Sublicense in violation of the foregoing will cause the non-breaching Parties irreparable harm, for which monetary damages will not be an adequate remedy.  Therefore, in the event of any such breach of this Section 10.3, any non-breaching Party shall be entitled, in addition to any other remedy available to it under this Agreement, at law or in equity, to injunctive relief to prevent the grant of such Sublicense.

(h)BMS shall obtain consent from ImClone to any such Sublicense by BMS in accordance with the BMS-ImClone Japan Agreement.

10.4Maintenance of Third Party Agreements.  After the Restatement Effective Date and during the term of this Agreement, and except as expressly permitted by this Agreement, each Party covenants that it will not, and will cause its Affiliates not to:

(a)encumber or diminish the rights under any patents or know-how owned by, or licensed by any Third Party, to it or any of its Affiliates that are reasonably necessary for the manufacture (anywhere in the world) of API or Final Product for use or sale in Japan or for the use, sale or importation of a Product for Development or Commercialization purposes of Cetuximab and Final Product in Japan in accordance with the Approved Plans, provided, that a Party may contest or challenge the validity or enforceability of such rights in good faith and if, in the reasonable business judgment of such Party, so long as such Party remains responsible for (i) any damages (other than royalties) owed to the Third Party as a result of any termination, encumbrance or diminishment of rights with respect to Japan as a result of such challenge and (ii) any royalties owing in the future to such Third Party (on account of such breach or by reason of entry into a new agreement to re-license such terminated rights) with respect to Japan to the extent that such royalties exceed the royalties that would otherwise have been (I) payable by such Party with respect to Japan under the license or other agreement or in respect of the rights that are the subject of such Good Faith Challenge and (II) included in Allowable Expenses);

(b)commit or permit any acts or omissions that would cause the material breach or termination of any agreements between itself and Third Parties under which such Party obtains a license or other right under such patents or know-how for use in furtherance of the Development or Commercialization purposes of Cetuximab and Final Product in Japan in accordance with the Approved Plans, provided, that a Party may commit or permit acts or omissions in furtherance of either (x) a good faith dispute under any such agreement, or (y) a good faith dispute by a Party of the patent or other intellectual property rights that are the subject of a license or grant or rights under any such agreement, so long as such Party remains responsible for (i) any damages (other than royalties) owed to the Third Party with respect to Japan as a result of any such material breach or termination as a result of such challenge, and (ii) any royalties owing in the future to such Third Party (on account of such breach or by reason of entry into a new agreement to re-license such terminated rights) with respect to Japan to the extent that such royalties exceed the royalties that would otherwise have been (I) payable by such Party with respect to Japan under the license or other agreement or in respect of the rights that are the subject of such Good Faith Challenge and (II) included in Allowable Expenses);

(c)grant any right or license to any Third Party that would conflict to any material extent with the terms of this Agreement;

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(d)except as set forth in the provisos to clause (a) or (b) above of this Section 10.4 (collectively, “Good Faith Challenges”), breach, or fail to take any actions that would be required to prevent a breach of, any Third Party agreements (including supply agreements) necessary to perform its obligations hereunder or under which patent rights or know-how are licensed to it or any of its Affiliates and that are used in connection with the manufacture, Development, use or Commercialization of the Cetuximab and Final Product under this Agreement;

(e)fail to make any regulatory or governmental filings (including Patent and Trademark filings) required of it under this Agreement; and

(f)permit a lien, security interest or other encumbrance (excluding any licenses or sublicenses permitted by this Agreement and excluding liens, security interest and encumbrances that may attach by reason of a financing agreement entered into by ImClone) to attach to such rights to patents or know-how.

For greater clarity, the ability of a Party to make Good Faith Challenges under this Section 10.4 will not relieve such Party of its obligations under other provisions of this Agreement nor will it affect the rights and remedies of the other Parties with respect to any failure of such Party to fulfill such obligations.

11.REPRESENTATIONS AND WARRANTIES.

11.1Representations and Warranties of the Parties.  Except as set forth on Exhibit 11.1, each Party represents and warrants to the other Parties, as of the Restatement Effective Date, that:

(a)Such Party is duly organized and validly existing under the laws of the jurisdiction of its incorporation and has full corporate power and authority to enter into this Agreement and to carry out the provisions hereof, and the person executing this Agreement on its behalf has been duly authorized to do so by all requisite corporate action;

(b)This Agreement is legally binding on it, and enforceable in accordance with its terms.  The execution, delivery and performance of this Agreement by it does not conflict with any agreement, instrument or understanding, oral or written, to which it is a party or by which it may be bound, nor violate any Applicable Law or any order of any court, governmental body or administrative or other agency having jurisdiction over it;

(c)Such Party has taken all corporate action necessary to authorize the execution and delivery of this Agreement and the performance of its obligations under this Agreement;

(d)Such Party and its Affiliates has received no written notice of any pending law suit or legal action that, if decided against such Party or its Affiliates, would have a material adverse effect upon (1) its ability (A) to grant the rights or licenses granted by such other Party or its Affiliates to the other Parties under this Agreement or (B) to use the patents and know-how owned by it or licensed by a Third Party to it that are reasonably necessary to develop, manufacture or commercialize Cetuximab or Final Product for use and sale in Japan, but only to the extent contemplated under the Approved Plans as of the Restatement Effective Date, or (2) such Party’s right to enter into and perform its obligations under this Agreement.

(e)Such Party and its Affiliates have not received written notice of any threatened claims or litigation seeking to invalidate or alleging the invalidity or unenforceability of any patents and know-how owned by it or licensed by a Third Party to it as

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of the Restatement Effective Date that, as contemplated by the Approved Plans as of the Restatement Effective Date, are reasonably necessary to develop, manufacture or commercialize Cetuximab or Final Product for use and sale in Japan in accordance with such Approved Plans.

(f)Except for the license by Merck/MJ to Takeda with respect to EMD72000 in Japan and except for the Existing Agreements, neither such Party nor its Affiliates have previously entered into any agreement, whether written or oral, with respect to, or otherwise assigned, transferred, licensed, or conveyed its right, title or interest in or to, any patents or know-how owned or licensed to it that would reasonably enable, or grant any right (including by granting any covenant not to sue with respect thereto) to, a Third Party to Develop or commercialize Cetuximab, Final Product, or any Competing Product in Japan.

(g)All manufacturing, fill/finish, QA/QC and storage conducted by such Party and its Affiliates, and to its actual knowledge, by its suppliers/contractors, to the extent relating to Cetuximab and Final Product for use in Japan, have been and are currently conducted in compliance in all material respects with the JNDA for Final Product and Applicable Law.

11.2Disclaimer.  EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN THE EXISTING AGREEMENTS TO WHICH SUCH PARTY IS A PARTY, NO PARTY MAKES ANY REPRESENTATIONS OR EXTENDS ANY WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, AND EACH PARTY EXPRESSLY DISCLAIMS ALL IMPLIED WARRANTIES OF MERCHANTABILITY AND OF FITNESS FOR A PARTICULAR PURPOSE OR USE, WITH RESPECT TO THE SUBJECT MATTER OF THIS AGREEMENT.

12.PUBLICATION; CONFIDENTIALITY.

12.1Notification.

(a)The Parties recognize that each may wish to publish the Results to a Third Party.  However, the Parties also recognize the importance of acquiring patent protection and of directing the flow of information regarding Development activities.  Consequently, subject to any Applicable Laws obligating any Party to do otherwise, any proposed publication by any Party relating to a Clinical Trial, the Long-Term Development Plan  and/or the Development activities contemplated under this Agreement shall comply with this Article 12.

(b)All such publications, whether written or oral, must be prepared: (i)  in accordance with the joint publication strategy pursuant to the publication plan established under Subsection 3.2(a)(vi), and (ii) as approved by the SCJ.

(i)At least 45 days before a manuscript is to be submitted to any Third Party, the publishing Party will provide the SCJ with a copy of the manuscript, which the SCJ shall promptly disseminate to each Party’s members on the JJDC and JJCC.

(ii)If the publishing Party wishes to make an oral presentation, it will provide the SCJ with a summary of such presentation at least 30 days before such oral presentation and, if an abstract is to be published, 30 days before such abstract is to be submitted.

(iii)Any oral presentation, including any question period, shall not include any Confidential Information unless the Party(ies) whose Confidential Information would be disclosed agrees in writing in advance of such oral presentation.

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12.2Review.

(a)The SCJ will review the manuscript, abstract, text or any other material provided to it under Section 12.1 to the SCJ determine whether patentable subject matter is disclosed.  Within 30 days of receipt of the proposed publication, (1) the SCJ will notify the publishing Party if the SCJ, in good faith, determines that patentable subject matter is or may be disclosed, and (2) any Party may notify the publishing Party if, in good faith, it believes its Confidential Information is or may be disclosed (in which event the publishing Party and the objecting Party shall endeavor to reach an accommodation and if not so reached, the publishing Party shall delete the Confidential Information of the objecting Party).  Notwithstanding the foregoing, any Party may request that the SCJ undertake such review on an expedited basis in order to aid the Party that wishes to make the disclosure that wishes to make a timely submission of a proposed publication that otherwise may not be possible.

(b)If it is determined by the SCJ that patent applications should be filed, the publishing Party shall delay its publication or presentation for a period not to exceed 60 days from the SCJ’s receipt of the proposed publication or presentation to allow time for the filing of patent applications covering patentable subject matter.  In the event that the delay needed to complete the filing of any necessary patent application will exceed the 60-day period, the SCJ will discuss the need for obtaining an extension of the publication delay beyond the 60-day period.

(c)If it is determined in good faith by the SCJ that Confidential Information or proprietary information is being disclosed, the Parties will consult in good faith to arrive at an agreement on mutually acceptable modifications to the proposed publication or presentation to avoid such disclosure.

12.3Confidentiality; Exceptions.

(a)Except to the extent expressly authorized by this Agreement, the Existing Agreements or otherwise agreed to by the Parties in writing, the Parties agree that, during the term of this Agreement and for ten (10) years thereafter, the receiving Party, its Affiliates and its licensees shall, and shall ensure that their respective employees, officers, directors and other representatives shall, keep completely confidential and not publish or otherwise disclose and not use for any purpose any information furnished to it or them by the disclosing Party, its Affiliates or its licensees in connection with this Agreement relating to the Development, manufacturing or commercial activities conducted pursuant to this Agreement or developed under or in connection with this Agreement by any Party or Third Party (including  the Results), except to the extent that it can be established by the receiving Party by competent proof that such information:

(i)was already known to the receiving Party, other than under an obligation of confidentiality, at the time of disclosure by the disclosing Party;

(ii)was generally available to the public or otherwise part of the public domain at the time of its disclosure to the receiving Party;

(iii)became generally available to the public or was otherwise part of the public domain after its disclosure and other than through any act or omission of the receiving Party in breach of this Agreement;

(iv)was disclosed to the receiving Party, other than under an obligation of confidentiality, by a Third Party who had no obligation to the disclosing Party not to disclose such information to others; or

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(v)was independently developed by persons in its employ or otherwise who had no contact with and were not made aware of the content of such information.

All such information to which none of the foregoing exceptions applies shall be deemed “Confidential Information” of the disclosing Party.  Confidential Information co-developed by two or more Parties shall be deemed Confidential Information of all such Parties and shall not be disclosed to a Third Party without the consent of all such co-developing Parties, which consent will not be unreasonably withheld or delayed.

12.4Exceptions to Obligation.  The restrictions contained in Section 12.3 shall not apply to Confidential Information that:

(a)is submitted by the receiving Party to governmental authorities to facilitate the issuance of registrations for Cetuximab pursuant to the Existing Agreements or the registration of Alternative Final Product, provided that reasonable measures shall be taken to assure confidential treatment of such information;

(b)is provided by the receiving Party to Third Parties under confidentiality provisions at least as stringent as those in this Agreement (or under binding ethical rules of confidentiality applicable to attorneys), for consulting, for assistance with clinical studies or external testing in connection with Cetuximab, Final Product, or Alternative Final Product or in connection with due diligence as part of a commercial transaction or equity/debt financing; or

(c)is otherwise required to be disclosed in compliance with Applicable Law or order by a court or other regulatory body having competent jurisdiction; provided that if a Party is required to make any such disclosure of disclosing Party’s Confidential Information such Party will, except where impracticable for necessary disclosures (for example, to physicians conducting a Clinical Trial of the Final Product or to relevant health authorities), give reasonable advance notice to the disclosing Party of such disclosure requirement and, except to the extent inappropriate (e.g., in the case of patent applications), will use its Diligent Efforts to secure confidential treatment of such Confidential Information required to be disclosed.

12.5Limitations on Use.  Each Party shall use, and cause each of its Affiliates and its licensees to use, any Confidential Information obtained by such Party from the disclosing Party, its Affiliates or its licensees, pursuant to this Agreement or otherwise, solely in connection with the activities or transactions contemplated under this Agreement or the Existing Agreements.

12.6Remedies.  Each Party shall be entitled, in addition to any other right or remedy it may have, at law or in equity, to seek an injunction enjoining or restraining the disclosing Party, its Affiliates and/or its licensees from any violation or threatened violation of this Article 12.

13.INDEMNIFICATION; LIABILITY.

13.1Mutual Indemnification.  Subject to Section 7.3(a)(ii), in addition to the indemnification obligations set forth in the Existing Agreements, each Party shall indemnify, defend and hold harmless the other Parties and their respective Affiliates, and their respective directors, officers, employees, contractors (other than the Parties to this Agreement), and agents, from and against any and all liabilities, damages, losses, costs and expenses (including the reasonable fees of attorneys and other professionals) paid or payable to Third Parties (collectively, the “Losses”) to the extent arising out of or resulting from: (a) negligence,

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recklessness or willful misconduct of the indemnifying Party or its Affiliates, and their respective directors, officers, employees and agents, in connection with the activities contemplated under this Agreement; or (b) any breach of any representation or warranty made by the indemnifying Party pursuant to Sections 8.2 and/or 11.1.

13.2Shared Liability Claims.  In the event that any claim, action, lawsuit, or other proceeding (collectively, “Claim(s)”) is brought against any of MJ, Merck, BMS, BMKK, ImClone or any of their respective Affiliates by a Third Party claiming injury (including death), damage or Losses, including damages resulting from intellectual property infringement, resulting directly or indirectly from the manufacture of Cetuximab or Final Product anywhere in the world for use or Commercialization in Japan, the Development of Cetuximab or Final Product in Japan, and/or the use, handling, storage, Commercialization or other disposition of Final Product in Japan, then any resulting (or remaining) Losses (after such Losses have been offset by any insurance proceeds under a joint insurance policy, if any, that may have been collectively purchased by the Parties) incurred by any Party and arising from such Claims shall be included in Allowable Expenses, or if no Profit and Loss sharing exists at such time (e.g., post-termination of the Agreement where and to the extent that this clause survives), then, except where and to the extent such percentages shall have been adjusted pursuant to Section 3.1(c), 14.2(a)(vi) or 14.3(a)(vi),  [**]; provided, that, notwithstanding anything in this Section 13.2 or otherwise in this Agreement expressly providing that any Losses are to be included in Allowable Expenses or otherwise shared by the Parties, the following Losses shall be borne by the applicable Party without contribution from the other Parties:

(a)to the extent any such Losses resulting from such Claims fall within a Party’s indemnification obligations under Section 13.1(b), such Party shall bear such Losses; or

(b)to the extent any such Losses exceed a reasonable royalty rate equitably, reasonably and fairly applied to (i) the use or commercialization of Cetuximab or Final Product in Japan after the Restatement Effective Date or (ii) the manufacture (whether prior to or after the Restatement Effective Date) of API, Cetuximab or Final Product (including any intermediate step in the manufacture of Cetuximab or Final Product) for use or commercialization in Japan under this Agreement (for greater clarity, such reasonable royalty rate shall not include, reflect or be in lieu of treble or other special or punitive damages) and such Losses are based on alleged infringement of a Third Party’s patent by a Party in connection with (x) the use or commercialization of Cetuximab or Final Product in Japan or (y) to such Party’s manufacture of API, Cetuximab or Final Product (including any intermediate step in the manufacture of Cetuximab or Final Product) for use or commercialization in Japan, in each case (x) and (y) to the extent that such alleged infringement is the subject of litigation against such Party that is pending on the Restatement Effective Date, such Party shall bear such Losses; or

(c)to the extent that any Losses result from a Good Faith Challenge by a Party, to the extent that such Losses exceed the royalties that would otherwise have been (i) payable by such Party under the license or other agreement or in respect of the rights that are the subject of such Good Faith Challenge and (ii) included in Allowable Expenses, such Party shall bear such Losses; or

(d)to the extent that any such Losses are attributable to negligence, recklessness or willful misconduct of a Party or any of its Affiliates, or any of its or their respective directors, officers, employees, contractors (other than the Parties to this Agreement), and agents, in connection with the activities contemplated under or in connection with this Agreement, such Party shall bear such Losses to the extent they are attributable to such negligence, recklessness or willful misconduct (for greater clarity, none of (i) the infringement that is the subject of the litigation described in Section 13.2(b), (ii) the conduct of such

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litigation, or (iii) the institution or conduct of any Good Faith Challenge, shall be considered negligence, recklessness or willful misconduct for purposes of Section 13.1 or this Section 13.2(d)); or

(e)to the extent that any such Losses are attributable to a breach of this Agreement or any Existing Agreement by a Party or any of its Affiliates, or any of its or their respective directors, officers, employees, contractors (other than the Parties to this Agreement),  and agents, in connection with the activities contemplated under or in connection with this Agreement or any Existing Agreement, such Party shall bear such Losses that are attributable to such breach; or

(f)to the extent that any such Losses are attributable to a failure to comply with Applicable Law by a Party or any of its Affiliates, or any of its or their respective directors, officers, employees, contractors (other than the Parties to this Agreement), and agents, in connection with the activities contemplated under or in connection with this Agreement or any Existing Agreement, such Party shall bear such Losses that are attributable to such failure; or

(g)to the extent that any such Losses are attributable to a failure by a Party, its Affiliates or its or their Third Party contractors to manufacture, package, fill, finish, label, store or handle the Final Product, bulk drug substance (API) or any component of Final Product for use or sale in Japan in accordance with the CMC section of the JNDA, with such Party’s internal release procedures and specifications, or Applicable Law, such Party shall bear such Losses that are attributable to such failure; or

(h)to the extent that a Party is responsible for a Loss under Section 7.3(a)(ii)(1), such Party shall bear same.

The Parties shall confer through the SCJ how to respond to any such Claim and how to handle the Claim in an efficient manner.  In the absence of such an agreement, subject to this Section 13.2 and to Section 13.3, each Party shall have the right to take such action as it deems appropriate.

13.3Procedure

(a)Notices of Claims.  In the event that a Party receives notice of a potential Loss or a Claim under Section 13.1 or 13.2, such Party shall inform the other Parties as soon as reasonably practicable.

(b)For Claims Falling Within Section 13.2.  For claims falling within Section 13.2, the Parties shall confer through the SCJ as to how to respond to the Claim and how to handle the Claim in an efficient manner.  No matter which Party or Parties are required to respond to the Claim, no Party shall settle or compromise any Claim in any manner that involves the payment of any money to such Third Party claimant or any admission of liability or wrongdoing on the part of any Party or any of its Affiliates, or that has or may have any adverse effect on any Party’s rights and benefits under this Agreement, without the prior written consent of the other Parties; provided, that such consent shall not be unreasonably withheld or delayed if such settlement or compromise would not involve the payment of any material amount of money to such Third Party claimant or any admission of material liability or material wrongdoing on the part of any Party or any of its Affiliates, or that has or may have any material adverse effect on any Party’s rights and benefits under this Agreement.

(c)Claims for Indemnification Under Section 13.1.  A Party believing that it is entitled to indemnification under Section 13.1 (an “Indemnified Party”) shall give

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prompt written notification to the other Parties (the “Indemnifying Party(ies)”) of the commencement of any Claim for which indemnification may be sought or, if earlier, upon the assertion of any such Claim by a Third Party (it being understood and agreed, however, that the failure by an Indemnified Party to give notice of a Third-Party Claim as provided in this Section 13.3(c) shall not relieve the Indemnifying Party(ies) of its/their indemnification obligation under this Agreement except and only to the extent that such Indemnifying Party(ies) is/are actually materially prejudiced as a result of such failure to give notice).  Within thirty (30) days after delivery of such notification, the Indemnifying Party(ies) shall, upon written notice thereof to the Indemnified Party, assume control of the defense of such Claim with counsel reasonably satisfactory to the Indemnified Party.  If a Party(ies) believe(s) that a Claim presented to it for indemnification is one as to which the Party seeking indemnification is not entitled to indemnification under Section 13.1, it/they shall so notify the Party seeking indemnification.  In such event, or if the Indemnifying Party(ies) otherwise fail(s) or refuse(s) to assume control of the defense of a Claim within such thirty (30)-day period, the Indemnified Party shall have the right to immediately assume control of the defense.  With respect to any Claim for which the Indemnifying Party(ies) has/have assumed control of the defense, Sections 13.3(d) through 13.3(f) shall apply.

(d)The Indemnified Party may participate in such defense at its own expense; provided that if the Indemnified Party reasonably concludes, based on advice from counsel, that the Indemnifying Party(ies) and the Indemnified Party have conflicting interests with respect to such Claim, the Indemnifying Party(ies) shall be responsible for the reasonable fees and expenses of counsel to the Indemnified Party solely in connection therewith.

(e)The Indemnifying Party(ies) shall keep the Indemnified Party advised of the status of such Claim and the defense thereof and shall consider recommendations made by the Indemnified Party with respect thereto.  The Indemnified Party shall, and shall cause each other indemnitee to, at the request and expense of any Indemnifying Party, cooperate in the defense or prosecution of each such Claim and shall furnish such records, information and testimony, provide such witnesses and attend such conferences, discovery proceedings, hearings, trials and appeals as may be reasonably requested in connection therewith.  Such cooperation shall include access during normal business hours afforded to the Indemnifying Party(ies) to, and reasonable retention by the Indemnified Party of, records and information that are reasonably relevant to such Claim, and making indemnitees and other employees and agents available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder.

(f)If the Indemnifying Party(ies) has/have acknowledged in writing its responsibility to indemnify the Indemnified Party with respect to a Claim, the Indemnified Party shall not settle such Claim without the prior written consent of the Indemnifying Party(ies), not to be unreasonably withheld or delayed.  The Indemnifying Party(ies) shall not agree to any settlement of such Claim or consent to any judgment in respect thereof that does not include a complete and unconditional release of the Indemnified Party from all liability with respect thereto or that imposes any liability or obligation on the Indemnified Party or adversely affects the Indemnified Party without the prior written consent of the Indemnified Party, not to be unreasonably withheld or delayed.

14.TERM; TERMINATION.

14.1Term.

(a)This Agreement shall become effective as of the Restatement Effective Date, and, unless sooner terminated in accordance with any other sections of Article 14 of this Agreement, shall continue until the date that is the twenty-fifty (25^th) anniversary of the

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Restatement Effective Date.  To the extent that the Existing Agreements are in conflict with the foregoing sentence, this Section 14.1 shall be deemed to amend and control same solely with respect to Japan, and expiration (as opposed to any other termination) of those agreements in accordance with their terms shall not be deemed a termination for purposes of Sections 14.2 or 14.3 hereof.  For greater clarity, any termination of either Merck or MJ pursuant to this Section 14 shall have the effect of terminating both Merck and MJ as parties to this Agreement and any termination of either BMS or BMKK pursuant to this Section 14 shall have the effect of terminating both BMS and BMKK as parties to this Agreement.

(b)No Effect on Existing Agreements.  For clarity only, any expiration or termination of this Agreement pursuant to Section 14.1 shall not affect the unexpired and non-terminated Existing Agreements, and each of the Parties shall have the rights and obligations as described therein.

14.2Termination of BMS-ImClone Agreement.

(a)In the event that the BMS-ImClone Agreement is terminated for any reason during the term of this Agreement (other than as provided in Section 14.2(b)), or that BMS or BMKK is terminated under Section 14.4(a) for an Uncured Material Default, then:

(i)(1) BMS/BMKK shall no longer be a Party to this Agreement, and shall have no obligations or rights under this Agreement except with respect to its manufacturing obligations under Section 8.8 and except as provided in Sections 14.7(b) and 14.8, (2) except for the removal of BMS/BMKK as a Party to this Agreement and the removal of BMS/BMKK from the SCJ and all Subcommittees and Working Groups (whether as a non-voting or voting member) under this Agreement, this Agreement shall not be affected and shall continue until the earliest to occur of the date that (A) it expires, (B) Merck/MJ and ImClone agree to terminate same, (C) it is terminated by either Merck/MJ or ImClone as provided in Section 14.4(a) or 14.5 or (D) the Merck-ImClone Agreement (as amended and/or supplemented by the Merck-ImClone Japan Agreement) should thereafter be terminated or expire; (3) BMS/BMKK shall not be entitled to any compensation from ImClone relating to, or based on, Net Sales accruing under this Agreement following the date that such BMS-ImClone Agreement is terminated; and (4) BMS/BMKK shall neither license any rights regarding Final Product or Cetuximab in Japan to any Third Party or any BMS/BMKK Affiliate nor distribute, sell, promote or commercialize Alternative Final Product or Cetuximab itself or through any of its Affiliates in Japan, without Merck’s and ImClone’s prior written consent.

(ii)Merck/MJ and ImClone shall promptly begin good faith negotiations to revise this Agreement to reflect the termination of BMS/BMKK, taking into account such terms and conditions as Merck/MJ and ImClone may have agreed to in the Merck-ImClone Japan Agreement and/or the Merck-ImClone Agreement.  Pending such revision, and subject to the performance by BMS/BMKK of its obligations under Section 8.8 and to Sections 14.2(a)(vi), 14.7 and 14.8, Merck/MJ undertakes to ImClone that it will assume, accept, discharge and perform all of BMS’ and BMKK’s obligations that may arise under this Agreement, and that arise and are to be discharged or performed, after the date of such termination; provided, that  Merck/MJ shall have no responsibility to discharge any payment obligations that may survive and be owed by BMS under this Agreement.

(iii)Merck shall be responsible following such termination for all compensation due thereafter to ImClone with respect to Japan based solely on what it would otherwise have paid to ImClone under the Merck-ImClone Agreement, as the same may be modified by the Merck-ImClone Japan Agreement (based on a 100% share by Merck/MJ of the applicable Net Sales, Net Profits, and/or Allowable Expenses arising and accruing thereafter under this Agreement).

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(iv)Merck/MJ shall have a reasonable time (not to exceed six (6) months without good cause) in which to ramp up Sales Force personnel and other internal FTE requirements in order to perform the assumed Commercialization and Development obligations that would otherwise have been performed by BMKK/BMS.

(v)Merck/MJ shall not have any obligation to assume any manufacturing responsibilities of BMS/BMKK.

(vi)(1) Each Party, including BMS/BMKK, shall remain liable for any obligation owed by it to the other Parties under Section 13.1, (2) each Party, including BMS/BMKK, shall remain responsible for its share of any Losses arising under Section 13.2 prior to such termination date, (3) each Party, including BMS/BMKK, shall remain responsible for its share of any Losses arising under Section 13.2 after such termination date resulting from the sale of Cetuximab or Final Product to a Third Party end user in Japan prior to termination under this Section 14.2(a) or from the use of Cetuximab or Final Product in Clinical Trials in Japan prior to termination under this Section 14.2(a), (4) except as provided in subparagraph 14.2(a)(vi)(3), BMS/BMKK shall not  be liable for any such Losses arising under Section 13.2 after the termination date, except to the extent it would otherwise be obligated to bear any such Losses under Section 13.1 or subsections (a)-(h) of Section 13.2; and (5) except as provided in subparagraphs 14.2(a)(vi)(3) and 14.2(a)(vi)(4) and except as Merck/MJ may have agreed in the Merck-ImClone Agreement and/or the Merck-ImClone Japan Agreement, Merck/MJ and ImClone shall share all Losses arising under Section 13.2 (where that such Losses otherwise would be allocated among the Parties according to percentages set forth therein) following such termination date as follows: [**].

(vii)Termination shall not affect, and Merck/MJ shall retain, all rights and benefits separately granted to Merck/MJ under this Agreement.

(viii)Nothing in this section 14.2(a) shall relieve ImClone of any obligations that it may have, and ImClone shall continue to perform its obligations, with respect to Japan under this Agreement, the Merck-ImClone Agreement, the Merck-ImClone Japan Agreement and any other agreement (including manufacturing agreements) that ImClone may at such time have entered into with a Party or its Affiliates or with Third Parties relating to Japan.

(ix)ImClone shall have the same rights that BMS/BMKK had under Section 10.2(a)(i) in the event that Merck launches a Competing Product.

(x)Merck shall now report to ImClone the information previously reported to BMS under Sections 4.4 and 7.2 of this Agreement.

(b)In the event that the BMS-ImClone Agreement is terminated during the term of this Agreement with respect to Japan by reason of the acquisition by BMS of all of ImClone’s rights and obligations with respect to Japan under the BMS-ImClone Agreement or as a result of a Change of Control in which BMS (or one of its Affiliates) is the Third Party Acquirer, then (i) BMS shall succeed to all of ImClone’s rights under this Agreement after the date of such termination, (ii) BMS undertakes to Merck/MJ (A) that it will discharge or cause to be discharged all of ImClone’s liabilities arising out of the performance of this Agreement after the date of such termination, and (B) that it will perform or cause to be performed all of ImClone’s obligations arising under this Agreement, and that are to be discharged or performed, after the date of such termination; provided, that, in the event that BMS acquires all of ImClone’s rights and obligations with respect to Japan under the BMS-ImClone Agreement, BMS and ImClone may agree that ImClone shall continue to manufacture the ImClone Manufactured Components pursuant to Section 8.8(b) after the date of such termination and, if

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BMS and ImClone so agree, BMS shall not be obligated to undertake to perform such manufacturing obligations of ImClone or any of its Affiliates; (iii) Sections 10.2(b), 14.2(a) and 14.3 shall be of no further force and effect, (iv) this Agreement shall not otherwise be affected and shall continue until BMS/BMKK and Merck/MJ agree to terminate same, unless sooner terminated by BMS/BMKK or Merck/MJ as provided in Section 14.3(a), 14.4(a) or 14.5, and (v) BMS shall be entitled to receive any compensation (including royalties) following such termination of the BMS-ImClone Agreement that would otherwise have been due to ImClone from Merck and its Affiliates based on Final Product Sales (or, alternatively, on gross margin or net profits or similar financial indicia) in Japan based on the Existing Agreements, and (vi) following the date of such termination, Merck/MJ and BMS/BMKK shall [**].  For the sake of clarity, the foregoing shall not affect any rights or benefits separately granted to, or any separate obligations of, Merck/MJ and BMS/BMKK under this Agreement.

14.3Termination of Merck-ImClone Agreement.

(a)In the event that the Merck-ImClone Agreement is terminated for any reason during the term of this Agreement (other than as provided in Section 14.3(b)), or that Merck or MJ is terminated under Section 14.4(a) for an Uncured Material Default, then:

(i)(1) Merck/MJ shall no longer be a Party to this Agreement, and shall have no obligations or rights under this Agreement except with respect to its manufacturing obligations under Section 8.8 and except as provided in Sections 14.7(a) and 14.8, (2) except for the removal of Merck/MJ as a Party to this Agreement and the removal of Merck/MJ from the SCJ and all Subcommittees and Working Groups (whether as a non-voting or voting member) under this Agreement, this Agreement shall not be affected and shall continue until the earliest to occur of the date that (A) it expires, (B) BMS/BMKK and ImClone agree to terminate it, (C) it is terminated by BMS/BMKK or ImClone as provided in Section 14.4(a) or 14.5, or (D) the BMS-ImClone Agreement (as amended or supplemented by the BMS-ImClone Japan Agreement) should thereafter be terminated or expire; (3) Merck/MJ shall not be entitled to any compensation from ImClone relating to, or based on, Net Sales accruing under this Agreement following the date that such Merck-ImClone Agreement is terminated; and (4) Merck/MJ shall neither license any rights regarding Final Product or Cetuximab in Japan to any Third Party or any Merck/MJ Affiliate nor distribute, sell, promote or commercialize Alternative Final Product or Cetuximab itself or through any of its Affiliates in Japan, without BMS’s and ImClone’s prior written consent.

(ii)BMS/BMKK and ImClone shall promptly begin good faith negotiations to revise this Agreement to reflect the termination of Merck/MJ, taking into account such terms and conditions as BMS/BMKK and ImClone may have agreed to in the BMS-ImClone Japan Agreement and/or the BMS-ImClone Agreement.  Pending such revision, and subject to the performance by Merck/MJ of its obligations under Section 8.8 and to Section 14.3(a)(vi), 14.7 and 14.8, BMS/BMKK undertakes to ImClone that it will assume, accept, discharge and perform all of Merck’ and MJ’s obligations that may arise under this Agreement, and that arise and are to be discharged or performed, after the termination date; provided, that  BMS/BMKK shall have no responsibility to discharge any payment obligations that may survive and be owed by Merck under this Agreement.

(iii)BMS shall be responsible following such termination for all compensation due thereafter to ImClone with respect to Japan based solely on what it would otherwise have paid to ImClone under the BMS-ImClone Agreement, as the same may be modified by the BMS-ImClone Japan Agreement (based on a 100% share by BMS/BMKK of the applicable Net Sales, Net Profits, and/or Allowable Expenses arising and accruing thereafter under this Agreement).

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(iv)BMS/BMKK shall have a reasonable time (not to exceed six (6) months without good cause) in which to ramp up Sales Force personnel and other internal FTE requirements in order to perform the assumed Commercialization and Development obligations that would otherwise have been performed by MJ/Merck.

(v)BMS/BMKK shall not have any obligation to assume any manufacturing responsibilities of Merck/MJ.

(vi)(1) Each Party, including Merck/MJ, shall remain liable for any obligation owed by it to the other Parties under Section 13.1, (2) each Party, including Merck/MJ, shall remain responsible for its share of any Losses arising under Section 13.2 prior to such termination date, (3) each Party, including Merck/MJ, shall remain responsible for its share of any Losses arising under Section 13.2 after such termination date resulting from the sale of Cetuximab or Final Product to a Third Party end user in Japan prior to termination under this Section 14.3(a) or from the use of Cetuximab or Final Product in Clinical Trials in Japan prior to termination under this Section 14.3(a), (4) except as provided in subparagraph 14.3(a)(vi)(3), Merck/MJ shall not  be liable for any such Losses arising under Section 13.2 after the termination date, except to the extent it would otherwise be obligated to bear any such Losses under Section 13.1 or subsections (a)-(h) of Section 13.2; and (5) except as provided in subparagraphs 14.3(a)(vi)(3) and 14.3(a)(vi)(4) and except as BMS/BMKK may have agreed in the BMS-ImClone Agreement and/or the BMS-ImClone Japan Agreement, BMS/BMKK and ImClone shall share all Losses arising under Section 13.2 (where that such Losses otherwise would be allocated among the Parties according to percentages set forth therein) following such termination date as follows: [**].

(vii)Termination shall not affect, and BMS/BMKK shall retain, all rights and benefits separately granted to BMS/BMKK under this Agreement.

(viii)Nothing in this section 14.3(a) shall relieve ImClone of any obligations that it may have, and ImClone shall continue to perform its obligations, with respect to Japan under this Agreement, the BMS-ImClone Agreement, the BMS-ImClone Japan Agreement and any other agreement (including manufacturing agreements) that ImClone may at such time have entered into with a Party or its Affiliates or with Third Parties relating to Japan.

(ix)ImClone shall have the same rights that Merck/MJ had under Section 10.2(a)(i) in the event that BMS launches a Competing Product.

(x)BMS shall now report to ImClone the information previously reported to Merck under Sections 4.4 and 7.2 of this Agreement.

(b)In the event that the Merck-ImClone Agreement is terminated during the term of this Agreement with respect to Japan by reason of the acquisition by Merck of all of ImClone’s rights and obligations with respect to Japan under such Merck-ImClone Agreement or as a result of a Change of Control of ImClone where Merck (or one of its Affiliates) is the Third Party Acquirer, then (i) Merck shall succeed to all of ImClone’s rights under this Agreement after the date of such termination, (ii) Merck undertakes to BMS/BMKK and ImClone (A) that it will discharge or cause to be discharged all of ImClone’s liabilities arising out of the performance of this Agreement after the date of such termination, and (B) that it will perform or cause to be performed all of ImClone’s obligations arising under this Agreement, and that are to be discharged or performed, after the termination date; provided, that, in the event that Merck acquires all of ImClone’s rights and obligations with respect to Japan under such Merck-ImClone Agreement, Merck and ImClone may agree that ImClone shall continue to manufacture the ImClone Manufactured Components pursuant to Section

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8.8(b) after the date of such termination and, if Merck and ImClone so agree, Merck shall not be obligated to undertake to perform such manufacturing obligations of ImClone or any of its Affiliates; (iii) Sections 10.2(b), 14.2 and 14.3(a) shall be of no further force and effect, (iv) this Agreement shall not otherwise be affected and shall continue until Merck/MJ and BMS/BMKK agree to terminate same, unless sooner terminated by Merck/MJ or BMS/BMKK as provided in Section 14.4(a) or 14.5, (v) Merck shall be entitled to receive any compensation (including royalties) following such termination of the Merck-ImClone Agreement that would otherwise have been due to ImClone from BMS and its Affiliates based on Final Product Sales (or, alternatively, on gross margin or net profits or similar financial indicia) in Japan based on the Existing Agreements or the BMS-ImClone Japan Agreement, as amended, between ImClone and BMS, and (vi) following the date of such termination, Merck/MJ and BMS/BMKK shall share all Losses arising under Section 13.2 that otherwise would be allocated among the Parties according to percentages set forth therein as follows:  [**].  For the sake of clarity, the foregoing shall not affect any rights or benefits separately granted to, or any separate obligations of, BMS/BMKK and Merck/MJ under this Agreement.

14.4Termination of this Agreement for Cause.

(a)Subject to Sections 4.2(c), 4.3(b) and 6.4(f)(v), the Party(ies) that is/are not in material breach of its (their) respective obligations under this Agreement (and that are not Affiliates of the breaching Party) (the “Non-breaching Party(ies)”) shall have the right to terminate this Agreement in its entirety, in the event that any Party or Parties (the “Breaching Party(ies)”) shall have materially breached or defaulted in the performance of any of its material obligations hereunder and such breach or default shall have continued for 60 days after written notice thereof was provided to the Breaching Party(ies) by the Non-breaching Party(ies) (or, if such default cannot be cured within such 60-day period, if the Breaching Party(ies) does not commence and diligently continue actions to cure such default during such 60-day period and continue such actions thereafter until cured) (any such uncured default, an “Uncured Material Default”); provided, that if the material breach relates to (a) MJ or BMKK’s Development or Commercialization obligations under this Agreement and MJ and BMKK are not both in material breach of their Development or Commercialization obligations under this Agreement, only BMKK or MJ (whichever is a Non-breaching Party) shall be entitled to terminate this Agreement (this item (a) shall only apply if at the time of such Uncured Material Default, neither BMKK nor MJ has previously been terminated pursuant to this Section 14), and (b) a Party’s manufacturing obligations under this Agreement, termination shall not be an available remedy, but the Non-breaching Party(ies) shall be entitled to obtain such damages as may be awarded by an arbitrator pursuant to Section 16.13.  Any such termination shall become effective at the end of such 60-day period unless the Breaching Party(ies) has cured any such breach or default prior to the expiration of such 60-day period (or, if such default cannot be cured within such 60-day period, if the Breaching Party(ies) has commenced within such 60-day period, and thereafter diligently continued until cured, actions to cure such default).  The right of any Party to terminate this Agreement as provided in this Section 14.4 shall not be affected in any way by its waiver or failure to take action with respect to any previous default.  For clarity, any dispute as to whether a material breach shall have occurred shall be submitted to arbitration under Section 16.13, and, if the issue of whether a material breach has occurred is submitted to arbitration as provided in Section 16.13, then the 60-day cure period shall be tolled during the pendency of any arbitration proceedings and shall not commence until the arbitrators have rendered their decision in writing.  Notwithstanding the foregoing language in this Section 14.4(a), neither BMS/BMKK nor Merck/MJ shall terminate ImClone pursuant to this Section 14.4(a) unless both BMS/BMKK and Merck/MJ agree as to same.

(b)In the event that BMS/BMKK and Merck/MJ terminate ImClone’s rights under this Agreement pursuant to Section 14.4(a), then

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(i)(1) ImClone shall not be entitled to any compensation from Merck or MJ relating to, or based on, the performance of this Agreement or, with respect to Japan, under the Merck-ImClone Agreement following the termination of the Merck-ImClone Agreement; and (2) ImClone shall not be entitled to any compensation from BMS or BMKK relating to, or based on, the performance of this Agreement or, with respect to Japan, under the BMS-ImClone Agreement following the termination of the BMS-ImClone Agreement;

(ii)ImClone shall neither license any rights regarding Final Product, Alternative Final Product or Cetuximab in Japan to any Third Party or any ImClone Affiliate nor distribute, sell, promote or commercialize Final Product, Alternative Final Product or Cetuximab itself or through any of its Affiliates in Japan, without Merck’s and BMS’ prior written consent;

(iii)Section 3.6(j) shall survive;

(iv)(1) Each Party, including ImClone, shall remain liable for any obligation owed by it to the other Parties under Section 13.1 arising prior to such termination, (2) each Party, including ImClone, shall remain responsible for its share of any Losses arising under Section 13.2 prior to such termination, (3) each Party, including ImClone, shall remain responsible for its share of any Losses arising under Section 13.2 after such termination date resulting from the sale of Cetuximab or Final Product to a Third Party end user in Japan prior to termination under Section 14.4(a) or from the use of Cetuximab or Final Product in Clinical Trials in Japan prior to termination under Section 14.4(a), (4) except as provided in subparagraph 14.4(b)(iv)(3), ImClone shall not be liable for any such Losses arising under Section 13.2 after the termination date, except to the extent it would otherwise be obligated to bear any such Losses under subsections 13.2(a)-(h); and (5) except as provided in subparagraphs 14.4(b)(iv)(3) and 14.4(b)(iv)(4), and except as ImClone may have agreed in the BMS-ImClone Agreement and/or the BMS-ImClone Japan Agreement, BMS/BMKK and Merck/MJ shall share all Losses arising under Section 13.2 following such termination date as follows: [**].

14.5Termination by Merck or BMS without Cause.  BMS/BMKK or Merck/MJ shall be entitled to terminate this Agreement without cause, upon (a) three months prior written notice in the event that Final Product has not Launched in Japan by December 31, 2009, or (b) six months prior written notice (such notice not to be given earlier than the occurrence of a triggering event that follows) at any time beginning on or after the earlier of:  (i) the tenth anniversary of the date of this Agreement or (ii) the date that a product that is biosimilar or bioequivalent to Final Product or that contains Cetuximab is approved by the Japanese Regulatory Authorities and launches in Japan.  In the event of any termination pursuant to this Section 14.5, the rights and obligations of the Parties shall be determined thereafter in the same manner as though the Party terminating this Agreement had had its rights terminated in accordance with Section 14.2 or 14.3, as the case may be.

14.6Effect of Expiration of Agreement or Termination Prior to First Approval.

(a)Termination Prior to First Approval.  If this Agreement expires or is terminated by mutual written consent of all the Parties prior to the first Approval of a Final Product:  (i) all non-cancelable obligations of the Parties which are Development Costs that have not yet accrued shall be shared and reimbursed by the Parties in accordance with Article 4; (ii) a final accounting of Profit Or Loss shall be made and payments made to reflect the sharing/bearing of same in accordance with this Agreement; and (iii) each Party shall promptly return to each other Party all relevant records and materials in such  Party’s possession or control containing Confidential Information of such other Party(ies) to the extent practicable given any continued operation of an Existing Agreement relating to such

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Confidential Information, provided, that a Party may keep one copy of such Confidential Information for archival purposes only); and provided, further, notwithstanding the foregoing, each Party shall continue to own, and have the right to use, the Results (including the right to cross-reference the CTN under the Long-Term Development Plan), the Company Inventions, the Related Inventions, the Inventions and the General Inventions in accordance with Sections 5.1, 5.2 and 5.3, subject to the obligations set forth in Sections 12.3 through 12.6 (inclusive); (iv) BMKK, as agent for ImClone, shall be entitled to pursue the JNDA for Alternative Final Product, and Merck shall be entitled to submit its JNDA for Final Product.

(b)Exclusive Remedy.  A Party may seek any remedies available to it at law or in equity for a breach by a Party under this Agreement; provided, however, that in the event that a non-breaching Party terminates a breaching Party’s rights under this Agreement pursuant to Sections 14.2(a), 14.3(a), or 14.4, such termination remedy (and the consequences thereof set forth in Sections 14.5 and 14.7, as applicable) shall, except for payments due to a Party under this Agreement that have accrued up to and only through the date of termination and except for breaches of Sections 10.2, 12.3 and those terms and conditions under this Agreement that continue to apply to such breaching Party pursuant to this Article 14 thereafter, be the exclusive remedies available to such  Party with respect to such material breach of this Agreement by the breaching Party and, except for breaches of Section 10.2 and 12.3, such breaching Party may not seek other damages as a result of such breach.

14.7Other Consequences of Termination.

(a)Termination of MJ, Merck or any of their Affiliates.  If Merck’s and MJ’s rights under this Agreement are terminated by reason of any of Section 14.3(a), 14.4(a) or 14.5 (where Merck/MJ provides the notice of termination under Section 14.5), then:

(i)BMKK shall be responsible for making and booking sales of Final Product in Japan following such effective date of termination;

(ii)Merck and MJ shall as soon as is reasonably possible assign all their rights, title and interest in and to the any Japanese regulatory filings (including the JNDA) for Final Product to BMKK, as agent for ImClone;

(iii)Merck and MJ shall, and shall cause their applicable Affiliates to, cease to use, and assign all their rights and interest in and to, the ERBITUX® Trademark in Japan; and ImClone shall, in turn, grant to BMS an exclusive, royalty-free and fully paid-up, sublicensable license to such Trademark for use in connection with the Commercialization of Cetuximab and Final Product in Japan under this Agreement;

(iv)Subject to Section 8.8, all manufacturing agreements between any of the Parties and their Affiliates and any other Party (or its Affiliates) shall not terminate but shall remain in place until such agreements terminate or expire in accordance with their terms;

(v)MJ and Merck shall effect, and shall cause their Affiliates to effect, a smooth transition of the Commercialization responsibilities to BMS/BMKK; provided, that the foregoing shall not require any Sales Force Detailing efforts to be expended by MJ following the termination date;

(vi)An accounting, reconciliation and payment of the Parties’ respective financial obligations and benefits with respect to sharing/bearing costs (including Development Costs, Allowable Expenses and BMKK/MJ NSF Commercialization Activities

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Costs and other cost that the Parties share, either directly or through a joint Profit and Loss calculation) and Profits and Losses under the Agreement as of said termination date shall take place promptly;

(vii)MJ and Merck shall remain entitled to receive any compensation or expense reimbursement due to either of them, and shall remain obligated to pay to BMKK, ImClone and BMS any compensation or expense reimbursement due to any of them, under or with respect to this Agreement with respect to any accounting periods ending on or prior to the termination date;

(viii)All agreements specifically relating to the Commercialization of Final Product in Japan between MJ and any Third Party shall, where assignable and at BMKK’s request, be assigned to BMKK from and after such termination date; provided, that MJ shall remain responsible for the performance of and payment of any amounts due under any such agreement with respect to all periods prior to the termination date; and

(ix)All rights granted to Merck, MJ and their Affiliates to sell, promote, market and otherwise Commercialize Final Product in Japan, whether granted under this Agreement or under any Existing Agreement with ImClone, shall terminate;

(x)BMKK shall have the exclusive right to sell, promote, market and Commercialize Final Product in Japan, subject to the terms of this Agreement and its Existing Agreements with ImClone;

(xi)MJ and Merck shall have no obligation to fund Development activities in Japan that occur or arise after such termination date (but shall remain responsible for their share of Development costs incurred prior to such termination date and noncancelable Development costs existing as of the termination date that arise after such termination date), and shall effect, and shall cause their Affiliates to effect, a smooth transition of any Japan Development responsibilities then being controlled, monitored or conducted by any of them to BMKK;

(xii)MJ and Merck shall effect, and shall cause their Affiliates to effect, reasonable access to, and/or sharing of, any then existing adverse event database maintained by them for Final Product as used for reporting purposes in Japan so that BMS, BMKK and their Affiliates may continue to fulfill their regulatory responsibilities in Japan relating to same;

(xiii)At MJ’s expense, Merck and MJ shall promptly return to the other Parties all relevant records and materials in Merck/MJ’s possession or control containing Confidential Information of such other Parties to the extent relating to Japan and to the extent practicable given any continued operation of an Existing Agreement relating to such Confidential Information; provided that Merck/MJ may keep one copy of such Confidential Information for archival purposes only, and shall otherwise continue to abide by its confidentiality obligations under this Agreement as to same; and

(xiv)(1)  MJ shall assign to ImClone, and shall itself not have the right to use, the Results (including not having the right to cross-reference the CTN under the Long-Term Development Plan), the Company Inventions, and the Related Inventions; (2) Sections 5.1, 5.2 and 5.3 shall cease to apply to the extent that such Sections grant licenses to MJ and its Affiliates; (3) the obligations set forth in Sections 12.3 through 12.6 (inclusive) shall continue to apply to all Parties; (4) Merck and its Affiliates shall have [**] license to use and practice the Company Inventions and the Related General Inventions for products other than Final Product or Alternative Final Product; and (5) at the discretion of each of the other

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Parties, MJ’s, Merck’s and their Affiliate’s rights under Section 3.3(b) shall survive such expiration of this Agreement with respect to each of the other Parties.

(b)Termination of BMKK, BMS or any of their Affiliates.    If BMS’ and BMKK’s rights under this Agreement are terminated by reason of any Sections 14.2(a), 14.4(a) or 14.5 (where BMS/BMKK provides the notice of termination under Section 14.5), then:

(i)BMS and BMKK shall assign all its/their rights in and to the Alternative Trademarks to ImClone, and shall assign to ImClone the JNDA previously held by it as agent for ImClone;

(ii)BMS and BMKK shall cease to use, and shall cause their applicable Affiliates to cease to use, the ERBITUX® Trademark in Japan;

(iii)Subject to Section 8.8, all manufacturing agreements between any of the Parties and their Affiliates and any other Party (or its Affiliates) shall not terminate but shall remain in place until such agreements terminate or expire in accordance with their terms;

(iv)BMS and BMKK shall effect, and shall cause their Affiliates to effect, a smooth transition of the Commercialization responsibilities to Merck/MJ; provided, that the foregoing shall not require any Sales Force Detailing efforts to be expended by BMKK following the termination date;

(v)An accounting, reconciliation and payment of the Parties’ respective financial obligations and benefits with respect to sharing/bearing costs (including Development Costs, Allowable Expenses and BMKK/MJ NSF Commercialization Activities Costs and other cost that the Parties share, either directly or through a joint Profit and Loss calculation) and Profits and Losses under the Agreement as of said termination date shall take place promptly;

(vi)BMKK shall remain entitled to receive any compensation due it, and to pay to MJ any expense reimbursement due it and to pay to ImClone any compensation or expense reimbursement due it, under or with respect to this Agreement with respect to any accounting periods ending on or prior to the termination date;

(vii)All agreements specifically relating to the Commercialization of Final Product in Japan between BMKK and any Third Party shall, where assignable and at MJ’s request, be assigned to MJ from and after such termination date; provided, that BMKK shall remain responsible for the performance of and payment of any amounts due under any such agreement with respect to all periods prior to the termination date; and

(viii)All rights granted to BMS, BMKK and their Affiliates to sell, promote, market and otherwise Commercialize Final Product in Japan, whether granted under this Agreement or under any Existing Agreement with ImClone, shall terminate;

(ix)MJ shall have the co-exclusive right to sell, promote, market and Commercialize Final Product in Japan, subject to the terms of this Agreement and its Existing Agreements with ImClone;

(x)BMS and BMKK shall have no obligation to fund Development activities in Japan that occur or arise after such termination date (but shall remain responsible for their share of Development costs incurred prior to such termination date and noncancelable

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Development costs existing as of the termination date that arise after such termination date), and shall effect, and shall cause their Affiliates to effect, a smooth transition of any Japan Development responsibilities then being controlled, monitored or conducted by any of them to BMKK;

(xi)BMS and BMKK shall effect, and shall cause their Affiliates to effect, reasonable access to, and/or sharing of, any then existing adverse event database maintained by them for Final Product as used for reporting purposes in Japan so that Merck, MJ and their Affiliates may continue to fulfill their regulatory responsibilities in Japan relating to same;

(xii)At BMS’s expense, BMS/BMKK shall promptly return to the other Parties all relevant records and materials in BMS/BMKK’s possession or control containing Confidential Information of such other Parties to the extent relating to Japan and to the extent practicable given any continued operation of an Existing Agreement relating to such Confidential Information; provided that BMS/BMKK may keep one copy of such Confidential Information for archival purposes only and shall otherwise continue to abide by its confidentiality obligations under this Agreement as to same.

(xiii)(1)  BMKK shall assign to ImClone, and itself shall not have the right to use, the Results (including not having the right to cross-reference the CTN under the Long-Term Development Plan), the Company Inventions, and the Related Inventions; (2) Sections 5.1, 5.2 and 5.3 shall cease to apply to the extent that such Sections grant licenses to BMKK and its Affiliates; (3) the obligations set forth in Sections 12.3 through 12.6 (inclusive) shall continue to apply to all Parties; (4) BMS and its Affiliates shall have the [**] license to use and practice the Company Inventions and General Inventions for products other than Final Product and Alternative Final Product; and (5) at the discretion of each of the other Parties, BMS’s, BMKK’s and their Affiliate’s rights under Section 3.3(b) shall survive such expiration of this Agreement with respect to each of the other Parties.

(c)Termination for Material Breach by ImClone or any of its Affiliates.  If ImClone’s rights under this Agreement are terminated by reason of Sections 14.2(b), 14.2(c), 14.3(b), or 14.4, then:

(i)ImClone shall be immediately removed from the SCJ and all Subcommittees and Working Groups established under this Agreement (whether as a voting member or non-voting member), including the SCJ, the JJCC, the JJFC, JJDC and the JJMC.  ;ImClone shall not thereafter vote in any committee under an Existing Agreement in a manner that would contradict or thwart any decision mutually agreed upon by BMKK/BMS and MJ/Merck with respect to the Development and Commercialization of Final Product in Japan;

(ii)ImClone shall no longer be a Party to this Agreement except with respect to its manufacturing obligations under Section 8.8 and except as provided in Sections  14.4(b), 14.7(c)  and 14.8; provided, that except for the removal of ImClone as a Party to this Agreement as provided herein and except for the removal of ImClone from the SCJ and all Subcommittees and Working Groups (whether as a non-voting or voting member) under this Agreement, this Agreement shall not be affected and shall continue until BMS/BMKK and Merck/MJ agree to terminate this Agreement, unless sooner terminated by BMS/BMKK or Merck/MJ as provided in sections 14.4 or 14.5;

(iii)ImClone may not thereafter exercise any termination right or remedy for damages that would otherwise have been available to it under this Agreement, provided, that nothing in this Section 14.7(c)(iii) shall restrict ImClone from pursuing any

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remedies or rights available to it at any time prior to or following such termination under an Existing Agreement;

(iv)Subject to Section 8.8 and to the terms of the Existing Agreements, all manufacturing agreements between the Parties and their Affiliates shall not terminate but shall remain in place until such agreements terminate or expire in accordance with their terms;

(v)ImClone shall effect, and shall cause its Affiliates to effect, a smooth transition of any Development or Commercialization responsibilities it may then have under this Agreement in Japan to BMKK and/or MJ, as they may direct, but shall continue to use Diligent Efforts to perform such regulatory matters and filings with respect to Japan (and be reimbursed for its cost of doing so) as BMKK and/or MJ may direct;

(vi)Except where ImClone’s rights were terminated pursuant to Section 14.4, then, at ImClone’s expense, ImClone shall promptly return to the other Parties all relevant records and materials in ImClone’s possession or control containing Confidential Information of such other Parties to the extent relating to Japan; provided that ImClone may keep one copy of such Confidential Information for archival purposes only and shall otherwise continue to abide by its confidentiality obligations under this Agreement as to same;

(vii)An accounting, reconciliation and payment of the Parties’ respective financial obligations and benefits with respect to sharing/bearing costs (including Development Costs, Allowable Expenses and BMKK/MJ NSF Commercialization Activities Costs and other cost that the Parties share, either directly or through a joint Profit and Loss calculation) and Profits and Losses under the Agreement as of said termination date shall take place promptly; and

(viii)ImClone shall assign to BMS and Merck, and itself shall not have the right to use, the Results (including not having the right to cross-reference the CTN under the Long-Term Development Plan), the Company Inventions, and the Related Inventions; (2) Sections 5.1, 5.2 and 5.3 shall cease to apply to the extent that such Sections grant licenses to ImClone and its Affiliates; (3) the obligations set forth in Sections 12.3 through 12.6 (inclusive) shall continue to apply to all Parties; (4) ImClone and its Affiliates shall have the [**] license to use and practice the Company Inventions and the General Inventions for compounds and products other than Final Product and Alternative Final Product; and (5) at the discretion of each of the other Parties, BMS’s, BMKK’s and their Affiliate’s rights under Section 3.3(b) shall survive such expiration of this Agreement with respect to each of the other Parties.

(d)Upon any termination of this Agreement entitling MJ/Merck (under the ERBITUX Trademark) and/or entitling BMKK/BMS or ImClone (under the Alternative Trademark) to separately Develop Cetuximab for Commercialization in Japan, each of BMS and Merck (i) will, and will cause their Affiliates to, permit the other Party(ies) that remain entitled to Commercialize Cetuximab in Japan to have prompt access to any databases controlled by such Party or its Affiliates for use in connection with the development and registration by such other Party of Cetuximab for any Indication or line of therapy (A) anywhere in the world (other than Japan) according to the Existing Agreements, or (B) that was pursued jointly under this Agreement for Japan, including, in each case (A) and (B), rights of reference to such database for Development purposes and for regulatory filings in Japan pertaining to Cetuximab (and whether for Alternative Trademark Product or  Final Product, as the case may), and (ii) if requested by the other Party remaining so entitled to Commercialize Cetuximab in Japan, will, and will cause their Affiliates to, promptly provide an electronic copy of the database and/or right of electronic access, as reasonably required by such Party

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remaining so entitled to Develop Cetuximab and Commercialize Final Product and/or Alternative Final Product,  in Japan.

14.8Accrued Rights; Surviving Obligations.  Termination or expiration of this Agreement, or termination of the rights of any Party under this Agreement, for any reason shall be without prejudice to any rights that shall have accrued to the benefit of any of the Parties prior to such termination or expiration.  Such termination or expiration shall not relieve any of the Parties from any obligation which is expressly indicated to survive termination or expiration of this Agreement.  All of the Parties’ rights and obligations under Articles and Sections 3.4(d), 3.6(d), 3.6(g), 3.6(i), 3.6(j), 3.7, 4.7-4.9 (inclusive), 5.1, 5.2, 5.3, 6.4(f)(v), 6.9 (solely with respect to each Party’s responsibility for its own or other Persons’ compliance with Section 6.9 prior to the date of such termination or expiration), 6.9(g) through (i) (inclusive), the last sentence of 8.1(c)(iv) (solely with respect to actions by Party’s Affiliates or Third Party contractors prior to the date of such termination of expiration), 8.4 (solely with respect to binding orders for API or Final Product that are in place as of the date of such termination or expiration), 8.2(a) and (b) (solely with respect to API, Final Product or any intermediates or components thereof that are manufactured prior to the date of such termination or expiration), 8.7 (solely with respect to Final Product delivered to customers pursuant to this Agreement), 9.1(a), 9.2(a), 10.3(e) (with respect to breaches by a Sublicensee prior to the date of such termination or expiration), 12.3 through 12.6 (inclusive), 13, 14, and 16, shall survive termination or expiration of this Agreement, or termination of the rights of any Party under this Agreement.

15.FORCE MAJEURE.

No Party shall be held liable or responsible to the other Parties nor be deemed to be in default under, or in breach of any provision of, this Agreement for failure or delay in fulfilling or performing any obligation of this Agreement when such failure or delay is due to force majeure, and without the fault or negligence of the Party so failing or delaying.  For purposes of this Agreement, force majeure is defined as causes beyond the control of the Party, including acts of God; acts, regulations, or laws of any government; war; civil commotion; destruction of production facilities or materials by fire, flood, earthquake, explosion or storm; labor disturbances; epidemic; and failure of public utilities or common carriers.  In such event Merck, MJ, ImClone, BMS, or BMKK, as the case may be, shall immediately notify the other Parties, with written notice to follow, of such inability and of the period for which such inability is expected to continue.  The Party giving such notice shall thereupon be excused from such of its obligations under this Agreement as it is thereby disabled from performing for so long as it is so disabled and for 30 days thereafter.  To the extent possible, each Party shall use reasonable efforts to minimize the duration of any force majeure.

16.MISCELLANEOUS.

16.1Relationship of Parties.  Nothing in this Agreement is intended or shall be deemed to constitute a partnership, agency, employer-employee or joint venture relationship among the Parties.  No Party shall incur any debts or make any commitments for the other, except to the extent, if at all, specifically provided herein.

16.2Assignment.  This Agreement shall be assignable by a Party, if at all, (x) only to the extent that the such Party’s rights and obligations with respect to Japan under the Existing Agreements to which such Party is a party are assigned and (y) only if the consent of the other Parties to this Agreement (who are not party to such Existing Agreement) shall have been obtained as well; provided, that a Party may assign or transfer this Agreement without such prior written consent of the other Parties to (i) any of its Affiliates (but only for so long as such entity is and remains an Affiliate of such Party, it being agreed that such Party shall cause

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such assignment to terminate prior to such time, if any, as such entity ceases to be an Affiliate of such Party), or (ii) any successor to all or substantially all of the business and assets of such Party, whether in a merger, consolidation, sale of stock, sale of all or substantially all of its assets or other similar transaction.  A copy of the document (from which the financial terms of the assignment may be redacted) between the assigning Party and the Affiliate or Third Party to whom such assigning Party’s rights and obligations are assigned shall be provided by the assigning Party to the other Parties.  Any permitted successor or assignee of rights and/or obligations hereunder shall, in a writing delivered to the other Parties, expressly assume performance of such rights and/or obligations.  In the event of an assignment or transfer to an entity other than an Affiliate, the assigning or transferring Party and its Affiliates shall have no further obligations, and shall be released from any and all further obligations, under Section 10.2.  Except as set forth in the immediately preceding sentence, in the event of an assignment or transfer as permitted above in this Section 16.2, (A) if this Agreement is assigned or transferred to an Affiliate, the assigning or transferring Party shall remain responsible (jointly and severally) with such Affiliate for the performance of such assigned or transferred obligations, (B) if such assignment is pursuant to a sale of the transferring Party’s interest in the Collaboration to the another Party, then, subject to Article 14, the transferring Party shall be released from all of its obligations hereunder, and (C) if such assignment or transfer is to a Third Party, then, subject to Article 14, the transferring Party shall be released only to the extent such obligations are assumed by the transferee of such interest.  Any assignment or transfer, or attempted assignment or transfer, by either Party in violation of the terms of this Section 16.2 shall be null and void and of no legal effect.  This Agreement shall be binding on, and inure to the benefit of, each Party, its successors and permitted assigns.

16.3Affiliates of the Parties.  Each Party shall cause its applicable Affiliates to take such actions as are necessary for such Party to fulfill its obligations under this Agreement.

16.4Books and Records.  Any books and records to be maintained under this Agreement by a Party shall be maintained in accordance with GAAP, in the case of ImClone, BMS and BMKK, and IFRS, in the case of Merck and MJ.

16.5Further Actions.  Each Party shall execute, acknowledge and deliver such further instruments, and do all such other acts, as may be necessary or appropriate in order to carry out the purposes and intent of this Agreement.

16.6Notice.  Any notice or request required or permitted to be given under or in connection with this Agreement shall be deemed to have been sufficiently given if in writing and personally delivered or sent by facsimile transmission (receipt verified) or overnight express courier service (signature required), prepaid, to the Party for which such notice is intended, at the address set forth for such Party below:

(i)	in the case of Merck, to:
	Frankfurter Straße 250
	D-64293 Darmstadt
	Federal Republic of Germany
	Attention:	Jens Eckhardt, Corporate Legal Department
	Facsimile:	+49-6151-72-2373

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(ii)in the case of MJ, to:

Merck Serono Japan Company, Limited

6F Meguro Tokyu Bldg.

2-13-17 Kamiosaki, Meguro-ku

Tokyo, 141-0021

Japan

Attention:	Wayne Paterson
Facsimile:	+81-3-5434-4712
Telephone:	+81-3-5434-4704

(iii)in the case of ImClone, to:

ImClone Systems Incorporated

180 Varick Street

New York, New York 10014  USA

Attention:	General Counsel
Facsimile:	(1 212) 645-2770
Telephone:	(1 646) 638-5027

with a copy sent to the same address, to:

Attention:	Senior Vice President Regulatory Affairs, Biostatistics and Quality Assurance
Facsimile:	(1 908) 218-0555
Telephone:	(1 908) 541-2250

(iv)in the case of BMS, to:

Bristol-Myers Squibb Company

P.O.  Box  4000

Route 206 & Province Line Road

Princeton, New Jersey 08543-4000  USA

Attention:	Vice President and Senior Counsel,
	Worldwide Licensing and
	Business Development
Facsimile:	(1 609) 252-6019

with a copy sent to the same address, to:

Attention:	Vice President, Alliance Management
Facsimile:	(1 609) 252-7235

(v)in the case of BMKK, to:

Bristol-Myers K. K.

Shinjuku I-Land Tower

5-1, Nishi-Shinjuku 6-chome, shinjuku-ku

Tokyo, 163-1328

Japan

Attention:	President
Facsimile:	813-5323-8311
Telephone:	813-5323-8318

or to such other address for such Party as it shall have specified by like notice to the other Parties, provided that notices of a change of address shall be effective only upon receipt thereof. With respect to notices given pursuant to this Section 15.6, (i) if delivered personally

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or by facsimile transmission, the date of delivery shall be deemed to be the date on which such notice or request was given; and (ii) if sent by overnight express courier service, the date of delivery shall be deemed to be the next business day after such notice or request was deposited with such service.

All material correspondence, notices and other communications related to this Agreement shall be promptly provided to the other Parties.

16.7         Use of Name. Except as otherwise provided herein or in an Existing Agreement, none of the Parties shall have any right, express or implied, to use in any manner the name or other designation of the other Parties or any other trade name, Trademark, Corporate Name or logo of the other Parties for any purpose in connection with the performance of this Agreement.

16.8         Public Announcements. Except as required by law (including disclosure requirements of the U.S. Securities and Exchange Commission, Nasdaq or any other stock exchange on which securities issued by a Party are traded), none of the Parties shall make any public announcement concerning this Agreement or the subject matter hereof without the prior written consent of the other Parties, which shall not be unreasonably withheld or delayed; provided that it shall not be unreasonable for a Party to withhold consent with respect to any public announcement containing any financial terms or any of such Party’s Confidential Information. In the event of a required public announcement, to the extent practicable under the circumstances, the Party making such announcement shall provide the other Parties with a copy of the proposed text prior to such announcement sufficiently in advance of the scheduled release of such announcement to afford the other Parties a reasonable opportunity to review and comment upon the proposed text.

16.9         Waiver. A waiver by any of the Parties of any of the terms and conditions of this Agreement in any instance shall not be deemed or construed to be a waiver of such term or condition for the future, or of any subsequent breach hereof. All rights, remedies, undertakings, obligations and agreements contained in this Agreement shall be cumulative and none of them shall be in limitation of any other remedy, right, undertaking, obligation or agreement of any of the Parties.

16.10       Severability. When possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under Applicable Law, but if any provision of this Agreement is held to be prohibited by or invalid under Applicable Law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement.

16.11       Amendment. No amendment, modification or supplement of any provisions of this Agreement shall be valid or effective unless made in writing and signed by a duly authorized officer of each of the Parties.

16.12       Governing Law; Submission to Jurisdiction.

(a)           This Agreement shall be governed by and interpreted in accordance with the laws of the United States and the State of New York without regard to conflict of law principles.

(b)           Each Party, for the purpose of enforcing an award under Section 16.13(a) or for seeking injunctive or other equitable relief or legal remedies as permitted by Section 16.13(b), irrevocably submits to the non-exclusive jurisdiction of the United States District Court for the Southern District of New York and the Supreme Court of the State of New York,

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New York County (collectively, the “Courts”), for purposes of any action, suit or other proceeding arising out of this Agreement or such award (other than appeals therefrom). Each Party further agrees that service or any process, summons, notice or document by U.S. registered mail to such Party’s notice address provided for in this Agreement shall be effective service of process for any action, suit or proceeding in New York with respect to any matters to which it has submitted to jurisdiction in this Section 16.12(b).

(c)           The English original of this Agreement shall prevail over any translation hereof.

16.13       Arbitration.

(a)          Except as expressly otherwise provided in this Agreement, any dispute as to the validity or construction of, or the interpretation of, any provision of this Agreement or as to the failure of any Party to perform or comply with any obligations or conditions applicable to such Party pursuant to this Agreement, or any dispute as to a matter that is specifically and expressly referred to for arbitration under this Section, shall be finally settled by binding arbitration in accordance with the terms set forth in this Section 16.13:

(i)            The place of arbitration of any dispute shall be London, England, except that the place of arbitration for matters to be resolved by “baseball” arbitration shall be Tokyo, Japan. The Parties to the dispute may agree to another location. The arbitration proceedings shall be conducted, and the award shall be rendered, in the English language. If the dispute is between any one Party, on the one hand, and the other Parties, on the other hand, each side of such dispute shall select one Experienced Arbitrator. If the dispute is between only two of the five Parties, each of the two disputing Parties shall promptly select one Experienced Arbitrator. In each such case, the two arbitrators selected by the Parties shall promptly select a third Experienced Arbitrator from among arbitrators designated by the London Court of International Arbitration (unless the dispute is to be resolved in Tokyo, in which event ICC rules and policies shall apply). If the dispute is among all five Parties or the Parties cannot agree on which Parties are a party to the dispute, the London Court of International Arbitration (unless the dispute is to be resolved in Tokyo, in which event the Tokyo ICC) shall promptly select three Experienced Arbitrators). Subject to Section 16.13(a)(iii), the Parties shall instruct the arbitrators to render a final determination of such dispute within 30 days after the appointment of the third arbitrator.

(ii)           Any award rendered by the arbitrators shall be final and binding upon the Parties, unless modified or reversed in accordance with applicable law. Judgment upon any award rendered may be entered in any court having jurisdiction, or application may be made to such court for a judicial acceptance of the award and an order of enforcement, as the case may be. Each Party shall pay its own expenses of arbitration, and the expenses of the designated arbitrators shall be equally shared between the disputing Parties unless the arbitrators assess as part of their award all or any part of the arbitration expenses of a Party or the Parties (including reasonable attorneys’ fees) against the another Party or Parties, as the case may be.

(iii)          The Parties agree that certain arbitrable matters, as more fully set forth in the last sentence of the definition of Net Sales and in sections 3.1(c), 4.1(c)(ii), 6.3(b), 6.4(e), 6.4(f)(iv) and 8.1(c)(ii), will be resolved and determined by “baseball” arbitration. Except where otherwise indicated, such baseball arbitration shall be limited to MJ/Merck on the one hand and BMS/BMKK on the other.

Where baseball arbitration applies, the arbitration shall be conducted and determinations made, as follows:  Within ten (10) Business Days after the appointment of the

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third arbitrator under Section 16.13(a)(i), each Party to the arbitration (MJ/Merck on the one hand, and BMS/BMKK on the other, and, where provided under the applicable provision, ImClone) shall submit to the arbitrators and to the other Party such Party’s offer to the other Party to resolve the matter at issue, as well as any other information that it deems appropriate for the arbitrators to consider. Within fifteen (15) Business Days after the designation of the third arbitrator, the disputing Parties shall each simultaneously submit to the arbitrators and one another a written statement of their respective positions on such disagreement and a reasonably detailed proposed resolution. Each such Party shall have ten (10) Business Days from receipt of the other Party’s submission to submit a written response thereto, which shall include any scientific, business and/or technical information in support thereof (but not a modification of the proposed resolution). The arbitrators shall have the right to meet with the disputing Parties as necessary to make a determination, but shall not communicate with any disputing Party unless the other disputing Party(ies) is(are) present. The Parties shall request the arbitrators to make a determination not later than fifteen (15) days after submission of the response(s) to the arbitrators, although the arbitrators may take a longer period of time as they make require to make a decision. The arbitrators shall make a determination by selecting the resolution proposed by one of the disputing Parties that, as a whole, is the most nearly consistent with this Agreement and the most fair and reasonable to such Parties in light of the totality of the circumstances and the terms of this Agreement. The arbitrators shall provide the disputing Parties with a written statement setting forth the basis of the determination in connection therewith. The decision of the arbitrators shall be final and conclusive, unless modified or reversed in accordance with applicable law.

(b)           This Section 16.13 nor any other provision of this Agreement shall not prohibit a Party from (x) seeking injunctive or other equitable relief in the event of a breach or prospective breach of this Agreement as may be necessary to avoid irreparable harm to such Party, to maintain the status quo, to preserve the subject matter of the arbitration, to avoid or to collect damages for breach or threatened breach of Sections 10.2, 12.3 or 12.5 hereof or (y) subject to Section 16.12, seeking a remedy in a court of competent jurisdiction for matters not specifically reserved to arbitration under Section 16.13 of this Agreement.

(c)           The Parties agree that the following matters shall not be arbitrable matters:

(i)            For any dispute involving a Commercialization matter on which BMKK and MJ agree, the BMKK/MJ position shall control without resort to arbitration;

(ii)           Subject to Section 10.2(a), any dispute involving the determination of the Long-Term Commercialization Plan and Budget and/or the next year’s Annual Commercialization Plan and Budget, the next year’s sales force effort, the PDE Rate, or the number and/or position of the PDEs to be provided for a given next year on which BMKK and MJ do not agree, and in any such dispute occurs, the Annual Commercialization Plan and Budget for the calendar year with respect to which the disputed item occurs shall be the then current year’s agreed upon determination for such item, and such matter shall not be submitted to arbitration; provided, that, subject to Section 6.4(b), a Party may satisfy its obligations with respect to any dispute as to the position of the PDEs for any year after the first two years after Launch in Japan by providing Primary Position or Secondary Position details, so long as it meets its overall PDE requirements; and

(iii)          Decisions whether to pursue a new Indication or a new line of therapy within an existing Indication, as well as the determination of each Development Plan and Annual Development Plan and Budget for such new Indication or new line of therapy within an existing Indication, which, subject to Section 3.1(c), must be agreed upon by BMS/BMKK and Merck/MJ;

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(iv)          subject to Section 10.2(a), (A) increases or decreases in budgets and (B) decisions which would require BMS/BMKK or Merck/MJ or any of their Affiliates to change physical, financial, or personnel resources beyond those required for the applicable period in the then-current Approved Plans in order for such Party to perform its obligations under this Agreement under the then applicable year; and each such Party shall have final decision-making authority under this Agreement with respect to same;

(v)           the arbitration procedure in Section 16.13 shall not apply to any matter that a Party is expressly entitled to pursue in a court of competent jurisdiction under this Agreement, or to any matters for which an exclusive remedy is provided for under this Agreement;

(vi)          any decision whether to include, delete or modify the specific terms (A) for calculating an item of cost or expense (including changes to the definition of reasonable manufacturing capacity charges) used to determine Allowable Expenses or to expense capital equipment purchases under Section 8.6(c) or (B) for calculating Net Sales or Profit Or Loss under this Agreement.

16.14      Entire Agreement.

(a)           This Agreement, together with the Existing Agreements to which each Party is a party, all exhibits, schedules or amendments attached thereto, set forth the entire agreement and understanding between the Parties as to the subject matter hereof and merges all prior discussions and negotiations among them, and none of the Parties shall be bound by any conditions, definitions, warranties, understandings or representations with respect to such subject matter other than as expressly provided herein or therein or as duly set forth on or subsequent to the date hereof in writing and signed by a proper and duly authorized officer or representative of the Parties to be bound thereby.

(b)           This Agreement shall, from the Restatement Effective Date, replace the Co-Development Agreement such that the Co-Development Agreement shall have no further force and effect after the Restatement Effective Date.

(c)           For the avoidance of doubt, as between: (i) ImClone and BMS and/or BMKK; and (ii) ImClone and Merck and/or MJ, unless expressly provided otherwise in this Agreement, the terms of this Agreement shall prevail over any conflict with the Existing Agreements. The Parties agree that this Agreement is intended to supplement and modify the Existing Agreements with respect to Japan only, and this Agreement is not intended to and shall not in any way change or amend any other provisions of the Existing Agreements applicable to other countries within a Party’s territory.

(d)           Each Party agrees not to amend the Existing Agreements to which it is a party in any manner that is inconsistent with, or would prevent it from fully performing, its obligations under this Agreement.

16.15      Parties in Interest. All of the terms and provisions of this Agreement shall be binding upon, inure to the benefit of and be enforceable by the Parties hereto and their respective permitted successors and assigns.

16.16      Descriptive Headings; Construction.

(a)           The descriptive headings of this Agreement are for convenience only, and shall be of no force or effect in construing or interpreting any of the provisions of this Agreement. Each of the Parties acknowledges and agrees that this Agreement has been

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diligently reviewed by and negotiated by and between them, that in such negotiations each of them has been represented by competent counsel and that the final agreement contained herein, including the language whereby it has been expressed, represents the joint efforts of the Parties hereto and their counsel. Accordingly, in interpreting this Agreement or any provision hereof, no presumption shall apply against any Party hereto as being responsible for the wording or drafting of this Agreement or any such provision, and ambiguities, if any, in this Agreement shall not be construed against any Party, irrespective of which Party may be deemed to have authored the ambiguous provision.

(b)           Except where the context otherwise requires, wherever used, the singular shall include the plural, the plural the singular, and the use of any gender shall be applicable to all genders. Unless otherwise stated, references to days shall mean calendar days. The terms “include” and “including” as used herein shall mean include or including, without limiting the generality of any description preceding such term. Unless otherwise specified, (a) references in this Agreement to any Article, Section or Exhibit shall mean references to such Article, Section or Exhibit of this Agreement and to all Sections within such Article and subsections within such Section, (b) references in any section to any clause are references to such clause of such section, and (c) references to any agreement, instrument or other document in this Agreement refer to such agreement, instrument or other document as originally executed or, if subsequently varied, replaced or supplemented from time to time, as so varied, replaced or supplemented and in effect at the relevant time of reference thereto. If the consent of any Party is required under any provision of this Agreement, such consent may be given or withheld by such Party in the sole discretion of such Party unless otherwise explicitly indicated in such provision.

16.17       Counterparts. This Agreement may be executed simultaneously in any number of identical 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.

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IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed by its duly authorized representative as of the date first above written.

BRISTOL-MYERS SQUIBB COMPANY	BRISTOL-MYERS K.K.
By:	By:
E.R. SQUIBB & SONS, LLC	MERCK SERONO JAPAN COMPANY,
	LIMITED
By:	By:
IMCLONE SYSTEMS INCORPORATED	MERCK KGAA
By:	By:

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APPENDICES

Exhibit 1.1(a):	Third Party Payments Known as of the Restatement Effective Date
Exhibit 1.1(b):	Detail Allocation Guidelines in Group Settings
Exhibit 2.4(a):	Committee Representatives Known as of the Restatement Effective Date
Exhibit 3.1(a):	Long-Term Development Plan as of the Restatement Effective Date
Exhibit 4.1(e):	Applicable FTE Rates
Exhibit 6.2(a):	Initial Long-Term Commercialization Plan and Budget
Exhibit 6.3(b):	PDE Rates as of Restatement Effective Date
Exhibit 6.5(a):	Sales Representative Qualifications
Exhibit 8.1(a):	Initial Japan Manufacturing Plan
Exhibit 8.2(d):	Current Version of Initial Packaging for 100 mg Dose
Exhibit 8.3:	Initial Manufacturing Forecast
Exhibit 11.1:	Exceptions to Representations and Warranties

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Exhibit 1.1(a)

THIRD PARTY PAYMENTS KNOWN AS OF
THE RESTATEMENT EFFECTIVE DATE

The royalty rates shown below are based on ImClone’s reading of the respective agreements, and are provided in this Exhibit as an estimate and for convenience. In the event an actual royalty rate differs based on terms or interpretation of the particular agreement, the rate on this Exhibit shall be deemed amended to reflect the actual royalty rate.

Nothing in this Exhibit shall be construed to alter the terms of, or obligations under, the agreements listed below.

[**]

Confidential Treatment has been requested by ImClone Systems Incorporated for portions of this document.

111

Exhibit 1.1(b)

DETAIL ALLOCATION GUIDELINES IN GROUP SETTINGS

Final Product presentations by MJ and BMKK personnel, as the case may be, devoted primarily to a Final Product, may be made to physicians or other medical professionals licensed to prescribe drugs (collectively, “Prescribing Professionals”) in group situations.  Such presentations may be through speaker programs, dinner and lunch programs, symposia and other programs that are approved by the JJCC.  In calculating the number of PDEs resulting from such group presentations, each Prescribing Professional participating in such presentations will be considered as one (1) Primary Detail Equivalent (PDE). It is understood that for presentations held by multiple personnel of MJ or BMKK, as the case may be, or jointly by MJ and BMKK personnel, the total number of PDEs credited to each Party shall be calculated as follows:  [**]  It is understood that for symposia and other group presentations that contain full presentations on a Final Product together with other products, the number of PDEs for such presentations shall be accounted for as provided above.

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112

Exhibit 2.4(a)

KNOWN COMMITTEE REPRESENTATIVES AND ALLIANCE MANAGERS

AS OF THE RESTATEMENT EFFECTIVE DATE

SCJ:

(ImClone Representative)	Margaret Dalesandro, VP Proj/Alliance Mgmt & BD
(ImClone Representative)	Eric Rowinsky, CMO, SVP
(BMS Representative)	Martin Birkhofer, VP, Global Medical Affairs - Oncology
(BMKK Representative)	Mark Wright, President, BMS Japan
(Merck Representative)	Wolfgang Wein
(MJ Representative)	Mark Smith
JJDC:
(ImClone Representative)	Eric Rowinsky, CMO, SVP
(ImClone Representative)	Richard Crowley, SVP Biopharmaceutical Ops
(BMS Representative)	Maurizio Voi, M.D., Executive Director, Global Medical Affairs—Oncology
(BMKK Representative)	Ruiping Dong, VP, BMSPRI Japan
(Merck Representative)	Peter Mertins
(MJ Representative)	Yoshiteru Ishikawa
JJCC:
(ImClone Representative)	Michael Bailey, SVP, Commercial Ops
(ImClone Representative)	TBD, WW VP of Strategic Marketing
(BMS Representative)	Ron Gimbel, Finance Director, BMS Japan
(BMKK Representative)	Masaki Onoue, BMS Japan
(Merck Representative)	Petra Maier
(MJ Representative)	Mitsuko Shinagawa
JJFC:
(ImClone Representative)	Brian Batchelder, AVP, Finance
(ImClone Representative)	Peter Borzilleri, VP Finance (Acting)
(BMS Representative)	V. Michael Moran, Director, BMS Alliance Accounting
(BMKK Representative)	Ron Gimbel, Finance Director, BMS Japan
(Merck Representative)	Holger Piekenbrock, Sr Manager Controlling Pharm Ethicals
(MJ Representative)	Roiko Fukunaga
JJMC:
(ImClone Representative)	Richard Crowley, SVP Biopharmaceutical Ops
(ImClone Representative)	Elizabeth Yamashita, VP CMC Regulatory
(BMS Representative)	Shawn Knipple, Contract Manufacturing
(BMKK Representative)	Tetsuo Suzuki, Director, Technical Operations, Japan
(Merck Representative)	Ludwig Pfeuffer
(MJ Representative)	Akio Yamaguchi
Alliance Managers:
(BMS/BMKK Representative)	Nancy Forrest, Senior Director, Alliance Management
Merck/MJ Representatives)	Steve Axon
(ImClone Representative)	Robert Schinagl, AVP Proj/Alliance Management

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113

Exhibit 3.1(a)

LONG-TERM DEVELOPMENT PLAN AS OF
THE RESTATEMENT EFFECTIVE DATE

[**]

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114

Exhibit 4.1(e)

APPLICABLE FTE RATES – 2007 Budget*

FTE Rate	Category	Classification
[**]	A	Clinical/Technical/Research
[**]	B	Market Research
[**]	C	Medical Affairs
[**]	D	Oncology Product Manager

Type of Employee	Category
Clinical scientist and technicians	A
Clinical Medical directors	A
Patent / Trademark Counsel	A
Marketing Product Managers	B and / or D
Market Research	B and / or D
Medical Affairs	C
Final Product Safety / AEs	A
Professional Services	B and / or D

Notes:

* [**]

**  The JJCC will approve the appropriate category of staff to execute the job functions necessary to undertake commercialization in Japan, and the applicable FTE rates will be revised and included as part of the applicable Annual Development Plan and Budget or Commercialization Plan and Budget

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Exhibit 6.2(a)

INITIAL LONG-TERM COMMERCIALIZATION PLAN AND BUDGET – JAPAN

From Restatement Effective Date until End of Second Calendar Year Post-Launch

This Exhibit represents a plan that, as of the date of execution of this Agreement, estimates an appropriate level and allocation of sales force for successful commercialization of Final Product in Japan.  It is the intent of the Parties to update this schedule closer to the Launch as additional information becomes available, on  an as-needed basis, and in any case as part of the determination of any Annual Commercialization Plan and Budget.

Overview

The objective of this commercialization plan is to provide an outline of activities required to successfully launch Cetuximab in Japan. It will encompass the time from the Effective Date of the collaboration through two years post Launch and will serve to highlight key areas of work, their required timing and associated costs as well as distribute potential responsibility evenly between the BMKK and Merck Japan teams

[**]

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Exhibit 6.3(b)

PDE RATES AS OF RESTATEMENT EFFECTIVE DATE

The following represents the process for determining the PDE Rate for the initial year of the Long-Term Commercialization Plan, which shall apply to both Parties Sales Representatives:

[**]

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117

Exhibit 6.5(a)

SALES REPRESENTATIVES HIRING PROFILE

[**]

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118

Exhibit 8.1(a)

MANUFACTURING PLAN AS OF RESTATEMENT EFFECTIVE DATE

[**]

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119

Exhibit 8.2(d)

CURRENT VERSION OF INITIAL PACKAGING FOR 100 MG VIAL

[**]

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120

Exhibit 8.3

INITIAL MANUFACTURING FORECAST IN VIALS

[**]

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121

Exhibit 11.1

EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES

None.

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EX-10.38

Exhibit 10.38

EXECUTION COPY

[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 TWO ASTERISKS ENCLOSED IN BRACKETS (i.e., [**]).  THE CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.]

BMS-IMCLONE JAPAN AGREEMENT

THIS AGREEMENT (the “Agreement”), effective as of October 12, 2007 (the “Effective Date”), is entered into by and among Bristol-Myers Squibb Company, a corporation organized and existing under the laws of the State of Delaware, having offices located at Route 206 & Province Line Road, Princeton, New Jersey (“BMS”), 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 & Province Line Road, Princeton, New Jersey (“ERS”), Bristol-Myers K. K., a Japanese corporation, with its principal place of business at Shinjuku I-Land Tower, 5-1, Nishi-Shinjuku 6-chome, shinjuku-ku, Tokyo, 163-1328, Japan (“BMKK”) (BMS, ERS and BMKK, sometimes collectively, “Bristol”), 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 (“ImClone”).  BMS, ERS, BMKK and ImClone are each referred to as a “Party” (or, collectively, as the “Parties”) to this Agreement.

PRELIMINARY STATEMENTS

WHEREAS, ImClone and Merck KGaA, a general partnership limited by shares organized and existing under the laws of the Federal Republic of Germany, having offices located at Frankfurter Straße 250, 64293 Darmstadt, Federal Republic of Germany (“Merck”), entered into that certain Development and License Agreement, dated December 14, 1998, as amended (hereinafter referred to as the “Merck-ImClone Agreement”) with respect to the development and marketing of Cetuximab; and

WHEREAS, ImClone has granted to Merck under the Merck-ImClone Agreement worldwide outside of Canada, Japan and the United States of America (including all territories and possessions thereof) exclusive rights to develop and market Cetuximab; and

WHEREAS, with respect to Japan, the Merck-ImClone Agreement provides that Merck has the co-exclusive rights to develop and market, with the right to sublicense, Final Product in Japan; and

WHEREAS, ImClone, BMS and ERS entered into that certain Development, Promotion, Distribution and Supply Agreement, dated September 19, 2001 (said agreement, as amended heretofore by amendments thereto dated as of March 5, 2002 and July 27, 2007, and as the same may be hereafter amended, hereinafter referred to as the “BMS-ImClone Commercial Agreement”), pursuant to which, among other things, ImClone granted to ERS (i) the exclusive right to distribute, and a co-exclusive right (together with ImClone) to develop

Confidential treatment has been requested by ImClone Systems Incorporated for certain portions of this document.

and promote, ERBITUX (as defined in the BMS-ImClone Commercial Agreement) in North America, and (ii)  a co-exclusive right to develop, distribute and promote (together with the ImClone and the Merck Entities (as such term is defined in the BMS-ImClone Commercial Agreement) in Japan; and

WHEREAS, BMS, ERS, BMKK, ImClone, Merck and Merck Ltd., a Japanese corporation, with its principal place of business at ARCO Tower, 5 F, 8-1, Shimomeguro 1-chome, Meguro-ku, Tokyo 153-8927, Japan (“MJ”), entered into a Co-Development Agreement for the Co-Development of Cetuximab in Japan effective as of December 15, 2004 (the “Japan Co-Development Agreement”); and

WHEREAS, the parties to the Japan Co-Development Agreement have reached agreement on terms of co-Commercialization of Final Product in Japan, and have amended and restated the Co-Development Agreement, effective as of the effective date of this Agreement, to reflect such understanding and agreement (said amended and restated agreement referred to as the “Six-Party Japan Commercial Agreement”); and

WHEREAS, ImClone, BMS, ERS and BMKK desire to enter into this Agreement in order to reflect certain additional agreements among these three parties that are related to each such Party’s willingness to enter into the Six-Party Japan Commercial Agreement, all on the terms and conditions hereinafter set forth below.

NOW, THEREFORE, in consideration of the foregoing Preliminary Statements and the mutual agreements and covenants set forth herein, the parties hereto agree as follows:

1.DEFINITIONS.

Except as otherwise expressly defined in this Agreement, all capitalized terms set forth in this Agreement shall have the meaning set forth in the Six-Party Japan Commercial Agreement.  The following terms shall have the following meaning for purposes of this Agreement:

1.1“Adjusted Profit Or Loss” shall mean the sum of a – (b + c), where:

a =BMS’ share of any Profit Or Loss determined under the Six-Party Japan Commercial Agreement as set forth in Section 7.1 thereof with respect to the applicable accounting period, after taking into account any adjustments pursuant to Sections 4.5, 6.4(f)(ii) and 6.4(f)(iii) of said Agreement;

b =the Unaccounted For Bristol Expenses with respect to the applicable accounting period; and

c =the Unaccounted For ImClone Expenses with respect to the applicable accounting period.

Adjusted Profit Or Loss, as set forth in this definition, shall be calculated in accordance with GAAP (and IFRS, where used by Merck to calculate Profit Or Loss) and the standard accounting practices that a Party customarily applies to other products sold by it.  Items of cost

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or expense shall only be taken into account once in determining Adjusted Profit Or Loss.  For example, if any cost or expense is already taken into account as an Allowable Expense, such cost or expense shall not be taken into account again as an Unaccounted For Bristol Expense or as an Unaccounted For ImClone Expense.  “Adjusted Profit” means a positive Adjusted Profit Or Loss; “Adjusted Loss” means a negative Adjusted Profit Or Loss.

1.2           “Unaccounted For Bristol Expenses” means those expenses, whether paid or payable, incurred by BMS, BMKK and their Affiliates with respect to an applicable accounting period in connection with the performance of any obligations or covenants required of BMS, BMKK and their Affiliates under (i) the BMS-ImClone Commercial Agreement (with respect to Japan) and (ii) the Six-Party Japan Commercial Agreement for each of the following categories of expenses, but only where, in each case (i) and (ii), such expenses: (A) are not already taken into account as an Allowable Expense in determining Profit Or Loss for such accounting period, (B) are reasonably contemplated by and/or reasonably incurred in connection with the performance of any such obligations or covenants (and, where reasonably contemplated by a given Approved Plan, are incurred consistent with such Approved Plan after taking into account any permitted cost overruns under the BMS-ImClone Commercial Agreement (with respect to Japan) and/or the Six-Party Japan Commercial Agreement or that are approved by the SCJ, the JEC or the JCC), and (C) are specifically identifiable or reasonably allocable to the performance of the applicable activities set forth below:

[**]

As promptly as reasonably practicable following approval by the SCJ of an Approved Plan, ImClone and Bristol shall meet to arrive at an agreed upon number of FTEs that Bristol is anticipated to devote to the tasks assigned to it in the Approved Plan (the “Bristol FTE Budget”).  Unaccounted For Bristol Expenses shall be calculated using the Bristol FTE Budget for the costs set forth in Sections 1.2.1-1.2.5 regardless of the actual FTEs devoted by Bristol to such tasks in the relevant period; provided, that, if and where Bristol also tracks the actual number of FTEs in the ordinary course of its business operations devoted to such FTE task, then, if the actual number of such FTEs devoted by Bristol deviates (higher or lower) from the Bristol FTE Budget by [**], the Unaccounted For Bristol Expenses shall be calculated using [**].  By way of example, if the Bristol FTE Budget is [**] FTEs and the number of FTEs actually devoted is [**], the number used in calculating Unaccounted For Bristol Expenses is [**].  By way of further example, if the Bristol FTE Budget is [**] FTEs and the number of FTEs actually devoted is [**], the number used in calculating Unaccounted For Bristol Expenses is [**].

For clarification, no payments made by Bristol pursuant to Section 6.2(v) or 6.4(f)(i)(2)(x) or (y) of the Six-Party Japan Commercial Agreement shall be included in Unaccounted for Bristol Expenses.

1.3           “Unaccounted for ImClone Expenses” means those expenses, whether paid or payable, incurred by ImClone and its Affiliates with respect to an applicable accounting period in connection with the performance of any obligations or covenants required of ImClone and its Affiliates under (i) the BMS-ImClone Commercial Agreement (with respect to Japan) and (ii) the Six-Party Japan Commercial Agreement for each of the following categories of

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expenses, but only where, in each (i) and (ii), such expenses: (a) are not already taken into account as an allowable expense in determining Profit Or Loss or in determining unaccounted for ImClone payments for such accounting period, (b) are reasonably contemplated by and/or reasonably incurred in connection with the performance of any such obligations or covenants (and, where reasonably contemplated by a given Approved Plan, are consistent with such Approved Plan after taking into account any permitted cost overruns under the BMS-ImClone Commercial Agreement (with respect to Japan) and/or the Six-Party Japan Commercial Agreement or that are approved by the SCJ, the JEC or the JCC), and (c) are specifically identifiable or reasonably allocable to the performance of the applicable activities set forth below:

[**]

As promptly as reasonably practicable following approval by the SCJ of an Approved Plan, ImClone and Bristol shall meet to arrive at an agreed upon number of FTEs that ImClone is anticipated to devote to the tasks assigned to it in the Approved Plan (the “ImClone FTE Budget”).  Unaccounted For ImClone Expenses shall be calculated using the ImClone FTE Budget for the costs set forth in Sections 1.3.1-1.3.3 regardless of the actual FTEs devoted by ImClone to such tasks in the relevant period; provided, that, if and where ImClone also tracks the actual number of FTEs in the ordinary course of its business operations devoted to such FTE task, then, if the actual number of FTEs devoted by ImClone deviates (higher or lower) from the ImClone FTE Budget by [**], the Unaccounted For ImClone Expenses shall be calculated using [**].  By way of example, if the ImClone FTE Budget is [**] FTEs and the number of FTEs actually devoted is [**], the number used in calculating Unaccounted For ImClone Expenses is [**].  By way of further example, if the ImClone FTE Budget is [**] FTEs and the number of FTEs actually devoted is [**], the number used in calculating Unaccounted For ImClone Expenses is [**].

2.SHARING OF ADJUSTED PROFIT OR LOSS; OTHER PAYMENTS.

2.1Sharing and Payment of Adjusted Profit Or Loss.  Subject to Sections 2.3 and 3.5 of this Agreement:

2.1.1ImClone and BMS shall each receive one-half of the Adjusted Profit and each shall bear one-half of the Adjusted Loss determined hereunder.  BMS shall pay ImClone fifty percent (50%) of Adjusted Profits, and ImClone shall pay to BMS fifty percent (50%) of the Adjusted Loss, determined on a calendar year basis.  Payment shall be made under this Agreement on a Quarterly basis, it being agreed that Quarterly payments shall be reconciled as part of the year-end final determination of Adjusted Profit Or Loss for a given year concurrently with the determination of the amount of any reconciliation payments for a calendar year under Section 4.5(d) of the Six-Party Japan Commercial Agreement.

2.1.2Within 30 days of the end of each Quarter, Bristol shall provide to ImClone its calculated value for variable 1.1b and ImClone shall provide to Bristol its calculated value for variable 1.1c, along with sufficient documentation to reasonably establish the accuracy of these numbers.  Following receipt of such values and documentation, a Party will have 15 Business Days to determine whether each of the components included in such

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value are properly included therein pursuant to this Agreement and to communicate any findings to the other Party.  Each Party shall also furnish the other with (i) any information provided to Merck or MJ, or by Merck or MJ to one of the Parties hereto, that is used to determine the calculation of Profit Or Loss for such Quarter, and/or which otherwise accompany Merck’s payment of Profits to Bristol or invoice to Bristol for its share of Loss; and (ii) all documents concerning costs and/or expenses which were furnished by Bristol or ImClone to the SCJ and/or the appropriate subcommittee in connection with the formulation, verification and/or reconciliation of Approved Plans.  Each of ImClone and Bristol shall have the right to further request any other documents to which it would otherwise be entitled under the BMS-ImClone Commercial Agreement with respect to enabling ImClone to verify the accuracy and validity of any payment made to or by Bristol or ImClone pursuant to this Agreement or the Six-Party Japan Commercial Agreement.

2.1.3        Either Party may object to the calculated values of variables 1.1b and 1.1c within 15 Business Days of receipt of said calculated values and related documentation.  If there is any objection to the calculation provided, the Parties will promptly confer and endeavor to resolve any differences.  If there is an objection to any component of these calculated variables, the Parties shall promptly confer to resolve the objections.  In the case of an objection, the payments due on the remainder of the Adjusted Profit or Adjusted Loss for which there is no objection will still be due as provided in Section 2.1.4 below, with any balance with respect to the disputed portion to be paid within 30 days following resolution of the dispute.

2.1.4        Within five Business Days after receipt by Bristol of its share of any Profit (in Quarters where there is a Profit) from Merck/MJ pursuant to Section 4.5 of the Six-Party Japan Commercial Agreement, either Bristol will pay to ImClone its share of Adjusted Profit determined pursuant to this Section 2.1 or ImClone will pay to Bristol its share of Adjusted Loss determined pursuant to this Section 2.1.  Within five Business Days after payment by Bristol of its share of any Loss (in Quarters where there is a Loss) to Merck/MJ pursuant to Section 4.5 of the Six-Party Japan Commercial Agreement, either Bristol will pay to ImClone its share of Adjusted Profit determined pursuant to this Section 2.1 or ImClone will pay to Bristol its share of Adjusted Loss determined pursuant to this Section 2.1.

2.2Japan Development Costs.

2.2.1ImClone and BMS shall each bear one-quarter of the total Development Costs determined under the Six-Party Japan Commercial Agreement.  ImClone or BMS shall make a reconciling payment to the other with respect to such Development Costs, at the same time as BMS/BMKK and Merck/MJ are determining and making a payment to share same pursuant to Sections 4.4 and 4.5 of the Six-Party Japan Commercial Agreement.

2.2.2BMS and ImClone shall also each reimburse the other for one-half of any Development Costs (as such term is defined in the BMS-ImClone Commercial Agreement) that are incurred by such Party or its Affiliates pursuant to and in accordance with the BMS-ImClone Commercial Agreement with respect to development of Erbitux and Final Product in Japan and that are not taken into account in determining Development Costs (as such term is defined in the Six-Party Japan Commercial Agreement) under Section 2.2.1 above in the Six-Party Japan Commercial Agreement.  ImClone and BMS shall report to one another such costs

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and remit the amount due the other under this Section 2.2.1 for a given Quarter in accordance with the BMS-ImClone Commercial Agreement.

2.3           Royalty Cap.  Under Section 9.4(c) of the BMS-ImClone Commercial Agreement, the sharing of certain Third Party Payments for damages, milestones, royalties, license fees and similar payments by BMS and its Affiliates is capped at certain levels with respect to Japan, after which ImClone is responsible for the payment of any such Third Party Payments.  Accordingly, BMS and ImClone agree that should the damages, awards and Third Party Payments that are attributable to the manufacture (by any Party, its Affiliates or a Third Party) of Cetuximab or Final Product for use and sale in Japan or to the use or Commercialization (by any Party or its Affiliates, by Merck and its Affiliates, or by any Third Party) of Cetuximab or Final Product in Japan and that are taken into determining Profit Or Loss for a given accounting period exceed [**] of Net Sales in such accounting period, then, to the extent that BMS/BMKK is not otherwise being indemnified for such damages, awards and Third Party Payments pursuant to the Six-Party Japan Commercial Agreement, ImClone shall pay to BMS such amount as equals the difference between (x) what BMS’ share of Adjusted Profit Or Loss would have been if the damages, awards and Third Party Payments taken into account in determining Profit Or Loss for such Accounting Period had only been [**] and (y) the Adjusted Profit Or Loss determined using all the damages, awards and Third Party Payments that were taken into account for such accounting period (“Royalty Cap Payment”).  Any such Royalty Cap Payment may be taken into account by BMS to offset any payment of Adjusted Profit otherwise required to be made by BMS to ImClone pursuant to Section 2.2.1 or to increase ImClone’s share of Adjusted Loss payable by it to BMS; if not so offset or added by BMS, such payment shall be paid by ImClone within 30 days after receipt of an invoice from BMS for same.

2.4           Minimum Spend.  The Parties agree that, for 2004, 2005, 2006 and thereafter, for so long as the Six-Party Japan Commercial Agreement remains in force and effect with respect to BMS, any specific required amounts that BMS would otherwise be or have been required to spend under the BMS-ImClone Commercial Agreement with respect to Japan for Registrational Study Spend, Non-Registrational Study Spend, Marketing Budget and A&P spend (as such terms were defined in the BMS-ImClone Commercial Agreement prior to the execution of Amendment No. 2 thereto dated as of July 27, 2007), and any specific number of Sales Force Representatives that BMS would otherwise be required to devote under the BMS-ImClone Commercial Agreement with respect to Japan, shall be of no force and effect.  In the event of termination of the Six-Party Japan Commercial Agreement, such contract required amounts shall be reinstated, but any specific required amounts that BMS would otherwise be required to spend under the BMS-ImClone Commercial Agreement with respect to Japan for the year of termination (if other than effective as of December 31), shall be prorated for the year of termination based on the number of days remaining in the year of termination.  This Section 2.4 shall not otherwise affect or vary any diligence or efforts obligations with which BMS would otherwise be required to satisfy with respect to Japan under the Six-Party Japan Commercial Agreement or the BMS-ImClone Commercial Agreement.

2.5           Sharing of Penalties Paid by Merck for Failure to Provide Required PDEs.  In the event that Merck/MJ fails to provide the PDEs required pursuant to the Six-Party Japan Commercial Agreement such that Merck/MJ pays a penalty pursuant to Section 6.4(f)(i)(2)(y)

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thereof (the “PDE Penalty”), then Bristol, within 30 days after upon receipt of the PDE Penalty from Merck/MJ, shall pay [**] of the amount received to ImClone.  However, to the extent that Bristol replaces any of the unprovided PDEs then Bristol shall be entitled to retain such portion of ImClone’s share of such PDE Penalty otherwise payable to ImClone that corresponds to the percentage of the PDEs not provided by Merck/MJ that BMS replaces.  By way of example, if Merck/MJ failed to provide [**] PDEs and Bristol replaced [**] of such PDEs, then Bristol would receive [**] of the total PDE Penalty ([**])) and ImClone would receive [**] of the total PDE Penalty.  If however, Bristol replaced all [**] PDEs not provided by Merck/MJ, then Bristol would retain [**] of the total PDE Penalty and ImClone would receive [**] of the PDE Penalty.  For clarification, ImClone will not share in any payments made to Bristol pursuant to Section 6.2(v), or 6.2(b)(v) or 6.4(f)(i)(2)(x) of the Six-Party Japan Commercial Agreement, nor will ImClone be liable for any payments made by Bristol pursuant to Section 6.2(v), or 6.4(f)(i)(2)(x) or (y) of the Six-Party Japan Commercial Agreement.

3.DILIGENCE, GOVERNANCE, REPORTING AND MISCELLANEOUS MATTERS.

3.1           Diligence.  Neither this Agreement nor the Six-Party Japan Commercial Agreement varies or supersedes the diligence that Bristol (or its Affiliates) is required to exercise in Japan or elsewhere under the BMS-ImClone Commercial Agreement.

3.2           Documents.  Bristol shall furnish ImClone, on a regular and ongoing basis, with all material documents exchanged between Bristol and Merck/MJ pursuant to the Six-Party Japan Commercial Agreement relating to the performance of a Bristol or Merck/MJ obligation under the Agreement, which documents ImClone would not otherwise have access to through ImClone’s representation on the SCJ or any subcommittee thereof.

3.3           Voting.  Subject to Sections 3.5 and 3.7 below, the votes cast by Bristol and ImClone on the SCJ and its subcommittees shall be determined by each Party separately and shall be cast as provided in the Six-Party Japan Commercial Agreement, provided, that any votes cast by BMS, BMKK or ImClone thereunder shall be consistent with applicable terms of this Agreement and the BMS-ImClone Commercial Agreement and any undisputed decisions by an applicable committee under the BMS-ImClone Commercial Agreement not subject to further approval by a higher committee (i.e., decisions that have not been submitted for approval or dispute resolution to a higher committee to which it reports or for binding arbitration as permitted by the BMS-ImClone Commercial Agreement).

3.4Termination of Six-Party Japan Commercial Agreement.

3.4.1Breach by Merck/MJ.

(a)To the extent that the Six-Party Japan Commercial Agreement gives either Bristol or ImClone the right to terminate such agreement as to Merck/MJ pursuant to Section 14.3(a) or 14.4(a) thereof based on an Uncured Material Default (as such term is defined in the Six-Party Japan Commercial Agreement) by Merck or MJ (or their Affiliates), Bristol and ImClone agree that neither shall exercise such termination right unless both Bristol and ImClone agree to such termination.

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(b)           In the event that Section 14.3(a) or 14.4(a) of the Six-Party Japan Commercial Agreement should apply such that Merck/MJ rights and obligations under that Agreement are terminated, then, for so long as the BMS-ImClone Commercial Agreement remains in force and effect thereafter, ImClone will not grant any license or sublicense rights or any co-promotion or co-marketing rights to any Third Party to develop or commercialize Cetuximab or Final Product in Japan, nor shall ImClone or its Affiliates develop, commercialize, co-promote or co-market Cetuximab or Final Product in Japan except in accordance with the applicable provisions of the BMS-ImClone Commercial Agreement.  Further, subject to Section 7.2 hereof and other applicable terms and conditions of this Agreement that apply following such termination and to those terms and conditions of the Six-Party Japan Commercial Agreement that survive such termination, the Parties obligations with respect to Japan following such termination shall be governed by the terms and conditions of the BMS-ImClone Commercial Agreement thereafter with respect to Japan.

3.4.2        Termination by BMS/BMKK.  In the event that the BMS-ImClone Commercial Agreement has expired and it is commercially unreasonable for ImClone to continue to co-commercialize and co-develop Final Product in Japan under the Six-Party Japan Commercial Agreement, BMS/BMKK shall voluntarily terminate the Six-Party Japan Commercial Agreement pursuant to Section 14.5 thereof within 30 days following written notice by ImClone to BMS/BMKK requesting such termination.  As part of such notice to BMS, ImClone shall provide to BMS in writing its reasons for why it is commercially unreasonable for ImClone to so continue.  If requested by BMS or BMKK within 30 days following receipt by BMS of such notice and reasons from ImClone, BMS and ImClone will meet and confer for up to 90 ninety days thereafter in an effort to determine if a mutually acceptable agreement can be reached that would avoid the need for such termination (during which time, BMS shall not be obligated to voluntarily terminate the Six-Party Japan Commercial Agreement pursuant to Section 14.5 thereof).  It is further understood that the term “commercially unreasonable” shall be based on the facts and circumstances then prevailing with respect to Final Product in Japan (including, without limitation, the Parties’ experience under the Six-Party Japan Commercial Agreement and the relative return on the resources that ImClone is devoting to performing its obligations under the Six-Party Japan Commercial Agreement) and shall not take into consideration more financially favorable or beneficial commercial terms that would be available to ImClone (whether by co-commercializing with a Third Party, granting Merck exclusive co-commercialization rights, or co-commercializing itself with Merck) if the Six-Party Japan Commercial Agreement were to terminate.  For the avoidance of doubt, if the parties do not agree as to whether such commercially unreasonable circumstances exist, the matter shall be settled by arbitration pursuant to the terms of Section 16.13(a) of the BMS-ImClone Commercial Agreement.

3.5           Bridging Studies.  In the event that positive data is obtained from one or more Western Phase III registrational clinical trials for a given line of therapy such that the Japan Pharmaceutical and Medical Devices Agency (“PMDA”) acknowledges in writing that, based on such positive Western data, only one or more successful Bridging Studies (as defined below) would be needed and sufficient in order for the Parties to obtain approval in Japan for such line of therapy using such Western data and the successful results of such Bridging Study or Bridging Studies, then, so long as Merck/MJ is willing to co-fund and co-develop all such needed Bridging Studies, neither Party will unreasonably withhold, delay or condition its

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consent to funding its share of such Bridging Study or Bridging Studies; provided, that (x) the foregoing shall not affect a Party’s consent rights with respect to the scientific integrity, safety or design of such Bridging Study and (y) the Parties reasonably expect that such studies will have been completed, and that BMKK or MJ shall have received all data needed to be filed with the PMDA following the completion of all such Bridging Studies, for a given Indication by not later than December 31, 2014.  A “Bridging Study”, for purposes of this Section 3.5, means a Phase I or Phase II study (usually enrolling 20 to 50 patients), done in Japanese patients or other Asian patients acceptable to the PMDA and conducted in Japan (and/or such other Asian countries acceptable to the PMDA), whose purpose is to demonstrate the validity of said positive Western clinical trial results in the Japanese population.  The design and sample size of any such Bridging Study is generally discussed and agreed upon by the study sponsor with the Japan Pharmaceutical and Medical Devices Agency prior to the conduct of the Study.

3.6           Sublicense.  In the event that BMS should propose to sublicense its rights under Section 10.3 of the Six-Party Japan Commercial Agreement, then ImClone will not unreasonably withhold, delay or condition its consent to any such Sublicense under Section 10.3(h) of said Agreement or to any sublicense of BMS’ rights and obligations as they pertain to Japan under this Agreement and any BMS-ImClone Commercial Agreement, provided, that (i) any terms and conditions of Section 10.3 applicable to the grant of any such Sublicense are satisfied, (ii) BMS guarantees the performance of the obligations pertaining to Japan under this Agreement and any BMS-ImClone Commercial Agreement that are sublicensed to such Sublicensee, and (iii) the grant of any such Sublicense or any sublicense under this Agreement and the BMS-ImClone Commercial Agreement shall not relieve BMS or BMKK of its obligations under this Agreement or the BMS-ImClone Commercial Agreement as they pertain to Japan, except to the extent they are satisfactorily performed by such Sublicensee.

3.7           Competing Product.  In the event that ImClone, any of its Affiliates, or its or their licensees or sublicensees (other than BMS, Merck, or their respective Affiliates) acting under the authority of such license or sublicense should Develop (after the date that a product became a Competing Product), promote or otherwise commercialize a Competing Product in Japan (whether by itself, through an Affiliate, through co-promotion or co-marketing, or through the grant of a license or sublicense to a Third Party to manufacture or Commercialize a Competing Product) without the co-funding of, or co-participation in, such activities by BMS/BMKK, then: (i) BMS will have the deciding vote thereafter at the JEC level under the BMS-ImClone Commercial Agreement with respect to the development and/or commercialization of Cetuximab, Final Product or Alternative Final Product in Japan; and (ii) ImClone will, with respect to the development of Cetuximab, Final Product and Alternative Final Product in Japan, cast any votes to which it may be entitled at any committee or subcommittee level under the Six-Party Japan Commercial Agreement consistent with the vote cast by BMKK/BMS at such committee or subcommittee at the SCJ or any Subcommittee; provided, that the foregoing shall not apply to any vote cast by ImClone where ImClone believes in good faith that there are good grounds that the proposed course of development activities are reasonably likely to be significantly detrimental to the product profile or marketing of the Final Product for existing Indications in Japan (by way of example and without limitation because the proposed protocol is poorly designed or is likely to yield poor results), or are reasonably likely to materially adversely impact the Commercialization of the Final Product in the EU or the U.S., or that the proposed course of activities presents a medical

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risk/benefit that is so unfavorable as to be incompatible with the welfare of patients.  Nothing in the foregoing shall, or is intended to, create or imply, or is intended to create or imply, any additional right in ImClone to Develop (after the date that a product became a Competing Product), promote or otherwise commercialize a Competing Product in Japan without BMS’ consent thereto and participation in the co-development, co-promotion and/or co-commercialization thereof.

3.8           Co-Promotion Option.  For so long as the Six-Party Japan Commercial Agreement remains in force and effect, and BMS remains a party thereto, ImClone will not exercise any Co-Promotion Option with respect to Japan under Section 5.6 of the BMS-ImClone Commercial Agreement nor exercise any remedy with respect to Japan under Sections 3.9 or 5.6(e) of the BMS-ImClone Commercial Agreement.

3.9           Conflict.  In the event of a conflict between the BMS-ImClone Commercial Agreement and this Agreement, the terms of this Agreement shall control as to the specific subject matter hereof.

4.AUDIT RIGHTS.

4.1           Audit.  The respective audit rights of Bristol and ImClone under this Agreement shall be governed by the same terms and conditions as apply to audits permitted under the BMS-ImClone Commercial Agreement.

5.             REPRESENTATIONS AND WARRANTIES; DISCLAIMER OF WARRANTIES

5.1Representations and Warranties.  Each of Bristol and ImClone represents and warrants to the other, as of the Effective Date, that:

5.1.1        It is duly organized and validly existing under the laws of the jurisdiction of its incorporation and has full corporate power and authority to enter into this Agreement and to carry out the provisions hereof, and the person executing this Agreement on its behalf has been duly authorized to do so by all requisite corporate action;

5.1.2        This Agreement is legally binding on it, and enforceable in accordance with its terms.  The execution, delivery and performance of this Agreement by it does not conflict with any agreement, instrument or understanding, oral or written, to which it is a party or by which it may be bound, nor violate any Applicable Law or any order of any court, governmental body or administrative or other agency having jurisdiction over it;

5.1.3        It has taken all corporate action necessary to authorize the execution and delivery of this Agreement and the performance of its obligations under this Agreement.

5.2           Disclaimer.  Except as expressly set forth in this agreement or in the BMS-ImClone Commercial Agreement to which such Party is a party, no Party makes any representations or extends any warranties of any kind, either express or implied, and each Party expressly disclaims all implied warranties of merchantability and of fitness for a particular purpose or use, with respect to the subject matter of this agreement.

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6.CONFIDENTIALITY; EXCEPTIONS.

6.1           Reference to Commercial Agreement.  The confidentiality provisions of the BMS-ImClone Commercial Agreement shall apply to any Confidential Information exchanged between the parties under this Agreement.

6.2           Use of Confidential Information.  Each of Bristol and ImClone shall use, and cause each of its Affiliates to use, any Confidential Information obtained pursuant to this Agreement solely in connection with the activities or transactions contemplated under this Agreement, the Six-Party Japan Commercial Agreement, and the BMS-ImClone Commercial Agreement.

7.TERM.

7.1           Term; Termination.   This Agreement shall become effective as of the Restatement Effective Date. This Agreement shall continue until (a) the Six-Party Japan Commercial Agreement expires as provided in Section 14.1(a) thereof (without being terminated prior to expiration); (b) BMS, BMKK or ImClone ceases to be a party to the Six-Party Japan Commercial Agreement pursuant to Section 14.2, 14.3(b) or 14.4 of the Six-Party Japan Commercial Agreement; (c) termination by BMS/BMKK pursuant to Section 14.5 of the Six-Party Japan Commercial Agreement; or (e) the Six-Party Japan Commercial Agreement terminates for any other reason than those in (a), (b) or (c) of this Section 7.1, and BMS (and/or BMKK as the case may be) and ImClone have entered into a New Agreement as provided in Section 7.2 below.  The Parties agree that Section 13.1 of the BMS-ImClone Commercial Agreement shall not apply so as to trigger termination of the Six-Party Japan Commercial Agreement, unless such termination is triggered by reason of Section 13.2 or 13.3 of the BMS-ImClone Commercial Agreement.

7.2Effect of Certain Terminations.

7.2.1        If the Six-Party Japan Commercial Agreement is terminated based on either termination of the Merck-ImClone Agreement for any reason, for breach by Merck, MJ or their Affiliates pursuant to Section 14.3(a) or 14.4 or voluntary termination by Merck or MJ under Section 14.5 of the Six-Party Japan Commercial Agreement, then BMS/BMKK and ImClone shall promptly begin good faith negotiations to enter into a new agreement (“New Agreement”) with a view to finalizing within six months thereafter, with such New Agreement to cover the development and Commercialization of Erbitux/Final Product for, and the manufacture of Final Product for use and sale in, Japan only, with the understanding that the framework for such New Agreement will be the BMS-ImClone Commercial Agreement as it applies to Japan, except for those provisions of the Six-Party Japan Commercial Agreement that survive any termination of such Agreement and except as follows:

(a)           BMKK will provide all of the sales force detailing, marketing, and promotional effort for Final Product in Japan, and will use Diligent Efforts to provide such efforts and support as required by, and in accordance with, those Approved Commercialization Plans then agreed upon as of such termination date; provided, that BMKK shall have a reasonable time (not to exceed six months without good cause) in which to ramp up Sales Force

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personnel and other internal FTE requirements following such termination in order to perform the assumed Commercialization obligations of Merck/MJ.  Following the expiration of the time period covered by such Approved Commercialization Plans, BMS/BMKK shall exercise such Commercialization efforts obligations with respect to Japan as it would otherwise be required to devote under the BMS-ImClone Commercial Agreement;

(b)           Except for any adjustments as may be required to reflect Section 3.1(c) of the Six-Party Japan Commercial Agreement, BMS/BMKK and ImClone will evenly provide the Development effort and evenly share the Development Costs with respect to Erbitux and Final Product in Japan in accordance with the then approved Annual Development Plan and Budget and Long-Term Development Plan (and will evenly share what would otherwise have been Merck/MJ’s share of such Development Costs thereunder). Following the expiration of such Annual Development Plan and Budget and Long-Term Development Plan, or with respect to any new clinical studies to be added thereto for Japan, BMS and ImClone shall exercise such Development efforts obligations as would otherwise apply to each such Party under the BMS-ImClone Commercial Agreement with respect to Japan; provided, that there shall be no specific required amounts for BMS to spend under the BMS-ImClone Commercial Agreement with respect to Japan for Registrational Study Spend and Non-Registrational Study Spend (as such terms were defined in the BMS-ImClone Commercial Agreement prior to the execution of Amendment No. 2 thereto dated as of July 27, 2007);

(c)           Except as needed (i) to reflect Section 3.1(c) of the Six-Party Japan Commercial Agreement and BMS’ cap under Section 9.4(c) of the BMS-ImClone Commercial Agreement on the royalties or damages to be taken into account that are attributable to Net Sales in Japan, and (ii) to exclude from the calculation of Profit Or Loss amounts for which BMS and its Affiliates are not responsible pursuant to the first two sentences of the second paragraph of Section 1 of the Release, Waiver and Covenant Not to Sue, dated as of July 27, 2007, among ImClone, BMS, and E.R. Squibb & Sons, LLC, the New Agreement will provide for equal sharing of Profit Or Loss;

(d)           Sharing of Third Party Payments with respect to Japan will be as set forth in Section 9.4(c) of the BMS-ImClone Commercial Agreement;

(e)           Sections 3.7 of this Agreement and Section 10.2 of the Six-Party Japan Commercial Agreement will no longer apply;

(f)            Indemnification shall be addressed substantially as provided in Sections 12.2 and 12.3 of the BMS-ImClone Commercial Agreement; provided, that the foregoing shall not affect or supersede the application of any indemnification obligations that survive termination of the Six-Party Japan Commercial Agreement or the application of any provisions in Sections 14.2, 14.3, 14.4, 14.5, 14.6, 14.7 or 14.8 thereof, as applicable;

(g)           ImClone would supply Final Product to BMKK for use and sale in Japan, in accordance with the terms of the BMS-ImClone Commercial Agreement, as modified by applicable provisions of the Six-Party Japan Commercial Agreement and BMKK will provide, or arrange through a Third Party to provide, fill/finish and/or Packaging and Release services for Final Product for Japan; provided, that the Parties will cooperate to ensure

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an appropriate and reasonable transition period as needed to upgrade, prepare and qualify any necessary facilities with applicable regulatory authorities needed to implement same;

(h)           BMKK will provide forecasts for Japan in the manner as had been established under the Six-Party Japan Commercial Agreement;

(i)            Regulatory matters shall be handled as provided in the BMS-ImClone Commercial Agreement, as supplemented or modified by the BMS-ImClone Japan Agency Agreement among BMS, BMKK, and ImClone, dated January 25, 2007, as amended;

(j)            The New Agreement shall retain the committees and other decision making bodies, approval rights and decision making processes and procedures of the Six-Party Japan Commercial Agreement, except that (i) Merck/MJ shall not have any representation on such committees and shall not have any approval rights, (ii) Bristol and ImClone shall have equal numbers of representatives on such committees, and (iii) decision making and tie-breaking votes shall follow the procedures set forth in the then applicable BMS-ImClone Commercial Agreement for the corresponding committees set forth therein;

(k)           The New Agreement will provide for the Erbitux® Trademark to be exclusively licensed by ImClone to BMS/BMKK for use in connection with the commercialization of Final Product in Japan during the term of the New Agreement; and

(l)            The term of the New Agreement would continue until the earlier of (i) the termination or expiration of the BMS-ImClone Commercial Agreement, and (ii) the date that the Six-Party Japan Commercial Agreement would otherwise have expired (without regard to early termination other than permitted terminations under Section 14.5 thereof) pursuant to Section 14.1 thereof, subject to sooner termination for Uncured Material Default by BMS or ImClone.

7.2.2Unless specifically modified by such New Agreement (as mutually agreed by BMS/BMKK and ImClone, in its sole discretion, following any termination that results in negotiation of a New Agreement), any such New Agreement shall not affect, and each of ImClone and BMS/BMKK shall retain, all rights separately granted to each them, and obligations that are retained by them, under the Six-Party Japan Commercial Agreement that survive termination of such Six-Party Japan Commercial Agreement, including the rights and obligations set forth in Article 14 of the Six-Party Japan Commercial Agreement.  Pending the execution of any such New Agreement, each Party shall continue to perform any obligations that it may have with respect to Japan under this Agreement, the BMS-ImClone Commercial Agreement, the Six-Party Japan Commercial Agreement, and any other agreement (including manufacturing agreements) that such may at such time have entered into with a Party or its Affiliates or with Third Parties relating to Japan.

7.3           Other Terminations.  Upon termination of this Agreement pursuant to any of Sections 7.1(a), 7.1(b) or 7.1(c) of this Agreement, the Parties’ obligations with respect to Japan following such termination shall be governed by the terms and conditions of the BMS-ImClone Commercial Agreement thereafter with respect to Japan, subject to and/or as amended by the terms and conditions of this Agreement that apply following such termination and

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subject to those terms and conditions of the Six-Party Japan Commercial Agreement that survive such termination.

7.4           Accrued Rights; Surviving Obligations.  Termination of this Agreement for any reason shall be without prejudice to any rights that shall have accrued to the benefit of any of the Parties prior to such termination or expiration, including without limitation the payment of any amounts that have accrued, or that remain to determined pursuant to Article 2 of this Agreement and are reasonably allocable to the period, through the date of termination.  Such termination shall not relieve any of the Parties from any obligation which is expressly indicated to survive termination or expiration of this Agreement.  All of the Parties’ rights and obligations under Articles 4, 6, 7 and 8 and Sections 2.4, 3.6 and 5.2 shall survive termination of this Agreement.

8.MISCELLANEOUS.

8.1           Relationship of Parties.  Nothing in this Agreement is intended or shall be deemed to constitute a partnership, agency, employer-employee or joint venture relationship among the Parties.  Neither ImClone nor Bristol shall incur any debts or make any commitments for the other, except to the extent, if at all, specifically provided herein.

8.2Assignment.  Each Party may assign its rights and obligations under this Agreement, to a Person to which such Party is permitted to assign, and to which such Party has assigned, all of its rights and obligations under the Six-Party Japan Commercial Agreement.  BMS, ERS and BMKK hereby consent to any assignment by ImClone of the Six Party Japan Commercial Agreement and this Agreement to an entity that is an Affiliate of ImClone (subject to the same terms and conditions as are contained in Section 16.2 of the Six Party Japan Commercial Agreement applying to the assignment of this Agreement), it being understood that (a) ImClone will remain responsible (jointly and severally) with such Affiliate for the performance of such assigned obligations (including for the payment of any amounts owed by such Affiliate) under the Six Party Japan Commercial Agreement and this Agreement (as either such agreement may be amended or supplemented hereafter), and (b) ImClone will cause such assignment to terminate if such entity ceases to be an Affiliate of ImClone and shall immediately assume the performance of all such assigned obligations.  ImClone agrees to take such action as may be necessary to keep itself informed as to the scope and performance of such obligations.  ImClone’s joint and several responsibility will not be discharged by any extension, amendment, modification, or renewal by such ImClone Affiliate with respect to any obligation so assigned to such ImClone Affiliate. All of the terms and provisions of this Agreement shall be binding upon, inure to the benefit of and be enforceable by the parties hereto and their respective permitted successors and assigns.

8.3           Affiliates of the Parties.  Each Party shall cause its applicable Affiliates to take such actions as are necessary for such Party to fulfill its obligations under this Agreement.

8.4           Books and Records.  Any books and records to be maintained under this Agreement by a Party shall be maintained in accordance with GAAP.

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8.5           Further Actions.  Each Party shall execute, acknowledge and deliver such further instruments, and do all such other acts, as may be necessary or appropriate in order to carry out the purposes and intent of this Agreement.

8.6           Notice.  Any notice or request required or permitted to be given under or in connection with this Agreement shall be deemed to have been sufficiently given if in writing and personally delivered or sent by facsimile transmission (receipt verified) or overnight express courier service (signature required), prepaid, to the Party for which such notice is intended, at the address set forth for such Party below:

(i)            in the case of ImClone, to:

ImClone Systems Incorporated
180 Varick Street
New York, New York 10014 USA
Attention:	General Counsel
Facsimile:	(1 212) 645-2770
Telephone:	(1 646) 638-5027
with a copy to:
Attention:	Senior Vice President Regulatory Affairs,
	Biostatistics and Quality Assurance
	Facsimile:	(1 908) 218-0555
	Telephone:	(1 908) 541-2250

(ii)           in the case of Bristol (either BMS or BMKK), to:

Bristol-Myers Squibb Company
P.O.  Box 4000
Route 206 & Province Line Road
Princeton, New Jersey 08543-4000 USA
Attention:	Vice President and Senior Counsel,
	Worldwide Licensing and
	Business Development
Facsimile:	(1 609) 252-6019
with a copy to:
Attention:	Vice President, Alliance Management
Facsimile:	(1 609) 252-7235

or to such other address for such Party as it shall have specified by like notice to the other parties, provided that notices of a change of address shall be effective only upon receipt thereof.  With respect to notices given pursuant to this Section 8.6, (i) if delivered personally or by facsimile transmission, the date of delivery shall be deemed to be the date on which such notice or request was given; and (ii) if sent by overnight express courier service, the date of

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delivery shall be deemed to be the next business day after such notice or request was deposited with such service.

8.7           Use of Name.  Except as otherwise provided herein or in the BMS-ImClone Commercial Agreement, none of the parties shall have any right, express or implied, to use in any manner the name or other designation of the other parties or any other trade name, Trademark, Corporate Name or logo of the other parties for any purpose in connection with the performance of this Agreement.

8.8           Public Announcements.  Except as required by law (including, without limitation, disclosure requirements of the U.S. Securities and Exchange Commission, Nasdaq or any other stock exchange on which securities issued by a Party are traded), none of the parties shall make any public announcement concerning this Agreement or the subject matter hereof without the prior written consent of the other parties, which shall not be unreasonably withheld or delayed; provided that it shall not be unreasonable for a Party to withhold consent with respect to any public announcement containing any financial terms or any of such Party’s Confidential Information.  In the event of a required public announcement, to the extent practicable under the circumstances, the Party making such announcement shall provide the other parties with a copy of the proposed text prior to such announcement sufficiently in advance of the scheduled release of such announcement to afford the other parties a reasonable opportunity to review and comment upon the proposed text.

8.9           Waiver.  A waiver by any of the parties of any of the terms and conditions of this Agreement in any instance shall not be deemed or construed to be a waiver of such term or condition for the future, or of any subsequent breach hereof.  All rights, remedies, undertakings, obligations and agreements contained in this Agreement shall be cumulative and none of them shall be in limitation of any other remedy, right, undertaking, obligation or agreement of any of the parties.

8.10         Severability.  When possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under Applicable Law, but if any provision of this Agreement is held to be prohibited by or invalid under Applicable Law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement.

8.11         Amendment.  No amendment, modification or supplement of any provisions of this Agreement shall be valid or effective unless made in writing and signed by a duly authorized officer of each of the parties.

8.12         Governing Law.  This Agreement shall be governed by and interpreted in accordance with the laws of the United States and the State of New York without regard to conflict of law principles.

8.13         Disputes.  Any disputes under this Agreement shall be addressed by the JEC, the Finance Committee, the PDC, the JCC and/or the JMC of the BMS-ImClone Commercial Agreement (as such terms are defined in the BMS-ImClone Commercial Agreement).  Any dispute arising out of or relating to the interpretation of any provisions of this Agreement or the

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failure of either Bristol or ImClone to perform or comply with any obligations or conditions applicable to them pursuant to this Agreement shall be finally settled by arbitration pursuant to the terms of Section 16.13(a) of the BMS-ImClone Commercial Agreement.

8.14Entire Agreement.

(a)           This Agreement, together with the Six-Party Japan Commercial Agreement and the BMS-ImClone Commercial Agreement, and all exhibits, schedules or amendments attached thereto, set forth the entire agreement and understanding between the parties as to the subject matter hereof and merges all prior discussions and negotiations among them, and none of the parties shall be bound by any conditions, definitions, warranties, understandings or representations with respect to such subject matter other than as expressly provided herein or therein or as duly set forth on or subsequent to the date hereof in writing and signed by a proper and duly authorized officer or representative of the Parties to be bound thereby.

(b)           This Agreement is intended to supplement and modify the BMS-ImClone Commercial Agreement with respect to Japan only, and this Agreement is not intended to and shall not in any way change or amend any other provisions of the BMS-ImClone Commercial Agreement applicable to other countries within a Party’s territory.

(c)           The rights of Bristol and ImClone under this Agreement are cumulative to their rights under the BMS-ImClone Commercial Agreement.

(d)           Nothing in this Agreement shall, or is intended in any way to, modify or supplement the Release, Waiver and Covenant Not to Sue, dated as of July 27, 2007, among ImClone, BMS, and E.R. Squibb & Sons, LLC.

8.15         Descriptive Headings.  The descriptive headings of this Agreement are for convenience only, and shall be of no force or effect in construing or interpreting any of the provisions of this Agreement.

8.16         Counterparts.  This Agreement may be executed simultaneously in any number of identical 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.

[the next page is the signature page]

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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed by its duly authorized representative as of the date first above written.

BRISTOL-MYERS SQUIBB COMPANY	BRISTOL-MYERS K.K.
By:	By:
IMCLONE SYSTEMS INCORPORATED	E.R. SQUIBB & SONS, LLC
By:	By:

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EX-10.39

Exhibit 10.39

[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 TWO ASTERISKS ENCLOSED IN BRACKETS (i.e., [**]).  THE CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.]

[IMCLONE LETTERHEAD]

October 12, 2007

Merck KGaA

Dr. Wolfgang Wein

Frankfurter Strasse 250

64293 Darmstadt

Germany

RE:Amended and Restated Co-Development and Co-Commercialization Agreement for Erbitux in Japan (the “Japan Agreement”)

Dear Dr. Wein:

This letter agreement (this “Agreement”) is intended to clarify the rights and responsibilities of Merck KGaA, a German corporation with general partners (“Merck”), Merck Serono Japan Company, Limited, a Japanese corporation (“MJ”), and ImClone Systems Incorporated, a Delaware corporation (“ImClone”), under the Japan Agreement and under that certain Development and License Agreement, dated December 14, 1998, between Merck and ImClone (as such agreement has been amended, modified and supplemented, the “Existing Agreement”) with respect to Japan in light of their entry into the Japan Agreement.  This Agreement shall become effective upon the signing of the Japan Agreement by all of the parties thereto (the “Effective Date”).  Unless otherwise indicated, initially capitalized terms shall have the meanings given to them in the Japan Agreement.

1.Royalties for Japan; Other Matters under Japan Agreement.

(a)Royalties.  Except as otherwise provided in Section 1(c) hereof, following the Effective Date until the expiration of the Japan Agreement or the termination of Merck or MJ under Article 14 of the Japan Agreement, in lieu or the royalties required to be paid by Merck to ImClone under the Existing Agreement in respect of sales in Japan, Merck shall pay, or cause MJ to pay, to ImClone a royalty equal to 4.75% of Net Sales.  Such royalty shall be paid on a quarterly basis and at the same time as Merck is required to pay royalties to ImClone under the Existing Agreement.

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(b)Adjustments upon Termination of BMS/BMKK as a Party to the Japan Agreement.  If BMS/BMKK is terminated as a party to the Japan Agreement prior to termination of this Agreement, then (i) Section 1(a) hereof will not apply following such termination of BMS/BMKK as a party to the Japan Agreement, and (ii) ImClone, Merck and MJ shall give effect to the following provisions (the “Post-BMS Termination Adjustments”) under the Japan Agreement and not to any contrary provisions thereof following such termination of BMS/BMKK:

(A)Profit Or Loss shall be shared as follows—[**];

(B)Merck and MJ will provide all of the sales force detailing, marketing, and promotional effort for Final Product in Japan, and will use Diligent Efforts to provide such efforts and support as required by, and in accordance with, those Approved Commercialization Plans then agreed upon as of such termination date; provided, that Merck and MJ shall have a reasonable time (not to exceed six months without good cause) in which to ramp up Sales Force personnel and other internal FTE requirements following such termination in order to perform the assumed Commercialization obligations of BMS/BMKK;

(C)Commercialization Costs shall be deemed to include the costs of time spent by employees of ImClone, Merck and MJ on the Commercialization of Final Product in Japan on an equal FTE Cost basis, and Development Costs shall be deemed to include the costs of time spent by employees of ImClone, Merck and MJ on the Development of Final Product in Japan on a basis comparable to such treatment of Commercialization Costs;

(D)Merck, MJ and ImClone shall use the Long-Term Development Plan and the Annual Development Plan and Budget and update them as appropriate to reflect the termination of BMS/BMKK and other relevant circumstances, and will share the Development effort and the Development Costs thereunder as follows— [**]

(E)Merck/MJ and ImClone shall share all Losses arising under Section 13.2 of the Japan Agreement that otherwise would be allocated among the Parties according to percentages set forth therein as follows—[**]

(F)the SCJ will be eliminated and the Steering Committee (as defined in the Existing Agreement) will serve as the SCJ under the Japan Agreement;

(G)each of the Subcommittees will consist of five members, with three members designated by Merck and two designated by ImClone, the JJCC will act by majority vote with each member having one vote and the other Subcommittees will act by unanimous vote; provided, however, that in the event that unanimity cannot be achieved within 20 Business Days after a matter is first submitted to the JJDC, then the representatives to the JJDC designated by Merck will decide such matter; provided, further, that in the event that unanimity cannot be achieved within 20 Business Days after a matter is first submitted to the JJMC, the

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representatives of the Party that is responsible for the applicable manufacturing activities will decide such matter; and

(H)the Alliance Managers will mean the Alliance Managers designated by Merck/MJ and ImClone.

2.Termination; Effect of Termination.

(a)Termination.  This Agreement shall continue until (i) the Japan Agreement expires as provided in Section 14.1(a) thereof; (ii) any of Merck, MJ or ImClone is terminated as a party to the Japan Agreement pursuant to Section 14.2(b), 14.3, 14.4 or 14.5 thereof; (iii) BMS/BMKK is terminated as a party to the Japan Agreement and Merck and ImClone have entered into a New Agreement (as defined below).

(b)Survival.  Sections 2 and 3 hereof shall survive any termination of this Agreement.  The rights that have accrued to the benefit of any party hereto prior to any termination of this Agreement, including, without limitation, the rights of ImClone to payments from Merck under Section 1(a) hereof with respect to the period prior to such termination, shall survive any termination of this Agreement.

(c)Effect of Termination.  Upon termination of this Agreement pursuant to Sections 2(a)(i) or (ii) hereof, the rights and obligations of Merck and ImClone to one another with respect to Japan following such termination shall be governed by the terms and conditions of the Existing Agreement, except for the rights and obligations under this Agreement that survive such termination or the Japan Agreement that survive the events that provided the basis for such termination.  Upon termination of this Agreement pursuant to Section 2(a)(iii) hereof, the rights and obligations of Merck and ImClone to one another with respect to Japan following such termination shall be governed by the terms and conditions of the New Agreement, except for the rights and obligations under this Agreement that survive such termination.

(d)New Agreement.  If BMS/BMKK is terminated as a party to the Japan Agreement, then Merck and ImClone shall promptly begin good faith negotiations (with a view to finalizing within six months thereafter) to enter into a new agreement with respect to Japan that will replace and supersede the Japan Agreement and this Agreement (“New Agreement”), with the understanding that the framework for such New Agreement will be the Japan Agreement as in effect following the termination of BMS/BMKK, except as required to give effect to the Post-BMS Termination Adjustments.

3.Miscellaneous.

(a)Relationship of Parties.  Nothing in this Agreement is intended or shall be deemed to constitute a partnership, agency, employer employee or joint venture relationship among the parties hereto.

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(b)Assignment.  The ability of each of the parties hereto to assign its rights and obligations under this Agreement shall be governed by the terms of the Japan Agreement.  Merck and MJ hereby consent to any assignment by ImClone of the Japan Agreement and this Agreement to an entity that is an Affiliate of ImClone, it being understood that (a) ImClone will remain responsible (jointly and severally) with such Affiliate for the performance of such assigned obligations, and (b) ImClone will cause such assignment and delegation to terminate if such entity ceases to be an Affiliate of ImClone.  All of the terms and provisions of this Agreement shall be binding upon, inure to the benefit of and be enforceable by the parties hereto and their respective permitted successors and assigns

(c)Notices.  Any notice or request required or permitted to be given under or in connection with this Agreement shall be provided in the manner specified in the Existing Agreement (except that notices to MJ may be provided to Merck as agent for MJ) and the effectiveness of such notices shall be governed by the terms thereof.

(d)Amendment and Waiver.  No amendment, modification or supplement of any provisions of this Agreement shall be valid or effective unless made in writing and signed by a duly authorized officer of each of the parties hereto.  No waiver of any term or condition of this Agreement shall be valid or effective unless in writing and signed by the party hereto against which such waiver is sought to be enforced.  A waiver by any of the parties hereto of any of the terms and conditions of this Agreement in any instance shall not be deemed or construed to be a waiver of such term or condition for the future, or of any subsequent breach hereof.

(e)Severability.  When possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement.

(f)Governing Law.  This Agreement shall be governed by and interpreted in accordance with the laws of the United States and the State of New York without regard to conflict of law principles.

(g)Disputes.  Except as otherwise provided in this Agreement, any disputes under this Agreement shall be addressed in the manner set forth in the Existing Agreement.

(h)Entire Agreement.  This Agreement, together with the Japan Agreement and the Existing Agreement, and all exhibits, schedules or amendments attached thereto, set forth the entire agreement and understanding between the parties hereto as to the subject matter hereof and merges all prior discussions and negotiations among them.  This Agreement is intended to supplement and modify the Existing Agreement with respect to Japan only, and this Agreement is not intended to and shall not in any way change or amend any other provisions of the Existing Agreement applicable to other countries.

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(i)Headings.  The descriptive headings of this Agreement are for convenience only, and shall be of no force or effect in construing or interpreting any of the provisions of this Agreement.

(j)Counterparts.  This Agreement may be executed in any number of identical counterparts, any one of which need not contain the signature of more than one party hereto, but all such counterparts taken together shall constitute one and the same agreement.

***

Please sign in the space provided below to indicate your agreement to the foregoing. Upon signing of this Agreement by all of the parties hereto, each of such parties shall be legally bound.

	IMCLONE SYSTEMS INCORPORATED
	By:
	Name:
	Title:
ACKNOWLEDGED AND AGREED
AS OF OCTOBER 12, 2007 BY:
MERCK KGAA
By:
Name:
Title:
MERCK SERONO JAPAN COMPANY, LIMITED
By:
Name:
Title:

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EX-10.40

Exhibit 10.40

[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 TWO ASTERISKS ENCLOSED IN BRACKETS (i.e. [**]). THE CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.]

SETTLEMENT AGREEMENT AND MUTUAL RELEASE

THIS SETTLEMENT AGREEMENT AND MUTUAL RELEASE (the “Settlement Agreement”), is executed and entered on this day, December 7, 2007 (the “Execution Date”), by and among AVENTIS PHARMACEUTICALS, INC., a corporation duly organized and existing under the laws of the State of Delaware and having its principal office at 55 Corporate Drive, Bridgewater, NJ 08807 (hereinafter collectively referred to as “API”), AVENTIS, INC., a corporation duly organized and existing under the laws of the State of Pennsylvania and having its principal office at 3711 Kennett Pike, Suite 200, Greenville, DE 19807, successor-in-interest to RHONE-POULENC RORER INTERNATIONAL (HOLDINGS), INC., (hereinafter collectively referred to as “AI”), and AVENTIS HOLDINGS INC., a corporation duly organized and existing under the laws of the State of Delaware and having its principal office at 3711 Kennett Pike, Suite 200, Greenville, DE 19807 (hereinafter collectively referred to as “AHI”, and together with API and AI, collectively referred to as “SANOFI”), IMCLONE SYSTEMS INCORPORATED, a corporation duly organized under the laws of the STATE OF DELAWARE and having its principal office at 180 Varick Street, New York, NY 10014 (hereinafter referred to as “IMCLONE”), and YEDA RESEARCH AND DEVELOPMENT CO. LTD. a corporation duly organized and existing under the laws of the State of Israel and having its principal office at Rehovot, Israel (hereinafter referred to as “YEDA”). (SANOFI, IMCLONE and YEDA are referred to herein individually as a “Party” and collectively as the “Parties”).

WITNESSETH

WHEREAS, YEDA is the Plaintiff-Counter Defendant and IMCLONE and SANOFI are the Defendants-Counter Claimants in the action entitled Yeda Research and Development Company, Ltd. v. ImClone Systems, Inc. and Aventis Pharmaceuticals, Inc.; Civil Action No. 03 cv 8484, in the United States District Court for the Southern District of New York, with appeal 2007-1010-012 pending in the United States Court of Appeals for the Federal Circuit (collectively, the “X Action”), IMCLONE is the Plaintiff-Counter Defendant and YEDA is the Defendant-Counter Claimant in the action entitled ImClone Systems Inc. v. Yeda Research and Development Co., Ltd., Civil Action No. 06 cv 7190, pending in the United States District Court for the Southern District of New York (the “Y Action” collectively together with the X Action, the “U.S. Litigation”), YEDA is the Plaintiff and Aventis Holdings Inc. is the Defendant in the actions entitled Yeda Research and Development Company, Ltd. v. Aventis Holdings, Inc., File Nos. N 7/2005, N 18/2005 and N 19/2005, each pending in Austria (the “Austrian Actions”), YEDA has asserted a patent office entitlement action in the United Kingdom against Rhone-Poulenc Rorer International (Holdings) Inc., entitled In the matter of European Patent No. EP (UK) 0 667 165 B 1 in the name of Rhone Poulenc Rorer International (Holdings) Inc.

and a reference under s 37 (1) (the “UK Action”), YEDA is the Plaintiff in two actions pending in Munich District Court I (File No. 21 O 12091/06) and Federal Court of Justice (no file number to date) against Aventis Holdings Inc. and Rhone-Poulenc Rorer International (Holdings), Inc. respectively, each with ImClone Systems Inc. as intervener (the “German Actions”), YEDA is the Plaintiff and Rhone-Poulenc Rorer International (Holdings) Inc, Aventis Holdings Inc. and IMCLONE are Defendants in an action pending in the Paris First Instance Court under Docket No. 07/12587 (the “French Action,” collectively together with the U.S. Litigation, Austrian Actions, UK Actions and German Actions, “All Litigation Matters”).

WHEREAS, the Parties now wish to resolve all existing and potential claims and outstanding obligations in connection with All Litigation Matters and desire to settle All Litigation Matters on the terms stated herein, without any admission of liability or wrongdoing, in order to avoid the time and expense of continuing to litigate All Litigation Matters.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the Parties hereby agree as follows:

1.Closing.  Upon the completion of the payments required under Sections 5(a) and (b), this Settlement Agreement shall become effective, such date being the “Closing Date” hereunder.

2.Correction of Inventorship; Confirmation and Transfer of Ownership.

(a)SANOFI and IMCLONE shall withdraw their pending appeal in the X Action and will cooperate with YEDA in the implementation of: (i) the naming of Drs. Michael Sela, Esther Hurwitz and Esther Aboud-Pirak (the “Weizmann Inventors”) as inventors on United States Patent No. 6,217,866 (the “‘866 Patent”) and the removal of George A. Ricca, Christopher Cheadle, Victoria J. South and Joseph Schlessinger as inventors on the ‘866 Patent; (ii) the amendment of the ‘866 Patent to remove Francoise Bellot, Richard Kris and David Givol as inventors thereof; (iii) the consequential one hundred percent (100%) ownership of all right, title and interest in and to the ‘866 Patent by YEDA; and (iv) unopposed intervention by SANOFI in the Y Action for the limited purpose of enforcing this Settlement Agreement and the request to the court in the Y Action for a stipulated order of dismissal with prejudice.

(b)From and after the Closing Date, SANOFI and YEDA shall [**] ownership interest in each of the patents, patent applications, supplemental protection certificates and applications for supplemental protection certificates listed on Schedule 1 and any other non-U.S. patents and patent applications that claim priority to any one or more of the patent applications for the ‘866 Patent (the “Non-U.S. Patents” and, collectively with the ‘866 Patent, “All Patents”), and each shall make whatever transfers to the other that may be required to effectuate such ownership.

(c)From and after the Closing Date, the Parties shall execute and jointly seek entry of stipulated consent judgments or orders from the relevant patent office (or equivalent judicial orders or consents) that (i) name YEDA the owner of [**] interest in all rights and title in

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all Non-U.S. Patents, (ii) name inventors designated by YEDA as inventors on each of the Non-U.S. Patents, (iii) are consistent with continuing to have Joseph Schlessinger as inventor on each of the Non-U.S. Patents, (iv) remove George A. Ricca, Christopher Cheadle, Victoria J. South, Francoise Bellot, Richard Kris and David Givol as inventors on the Non-U.S. Patents to the extent permitted by the laws of each country involved and (v) dismiss with prejudice all other claims and counterclaims in All Litigation Matters.

(d)SANOFI and IMCLONE shall not contest (i) the rights granted under All Patents by YEDA in the License Agreement between YEDA and Amgen Inc. (“Amgen”) and the Patent License Agreement between YEDA and Merck KGaA (“Merck”), as such agreements exist as of the Execution Date, or (ii) such grants of such rights by YEDA. YEDA shall be entitled to retain for its own benefit and disposition all payments made and to be made under those agreements without any duty of accounting whatsoever.

(e)From and after the Closing Date, SANOFI and IMCLONE consent and agree that YEDA shall have the free right to dispose of, encumber or mortgage its interest in any or all All Patents either in whole or in part, and shall also have the free right to grant licenses under any or all All Patents that are either exclusive or nonexclusive (subject, however, to the licenses granted to IMCLONE in Paragraph 4 as well as any sublicenses granted thereunder, including the IMCLONE-BMS Agreement and the IMCLONE-Merck Agreement) without the need to obtain further consent of SANOFI or IMCLONE. From and after the Closing Date, all prosecution, maintenance (including defending oppositions brought by third parties) and enforcement activities with respect to All Patents shall be in the sole discretion of YEDA and YEDA shall be entitled to retain all recoveries achieved in connection therewith; provided however to the extent BMS has rights of enforcement under the IMCLONE-BMS Agreement to the extent relating to Erbitux®, BMS shall have the right to exercise such rights; provided further that YEDA shall use all commercially reasonable efforts to prosecute patent applications and extensions and reissues of issued patents within the All Patents. IMCLONE, SANOFI and YEDA shall reasonably cooperate with one another to seek SPCs and patent term extensions with respect to All Patents.

(f)SANOFI agrees that although it is a co-owner of the Non-U.S. Patents, from and after the Closing Date it will not exploit in any fashion the Non-U.S. Patents other than SANOFI’s license with IMCLONE and subject to any separate agreement entered into between YEDA and SANOFI.

3.Concession of Validity, Enforceability and Infringement.

(a)IMCLONE and SANOFI irrevocably consent and agree that: (i) the ‘866 Patent is valid and enforceable; and (ii) [**]  IMCLONE and SANOFI further irrevocably consent and agree that: (A) the Non-U.S. Patents are valid and enforceable; and (B) [**]  IMCLONE and SANOFI acknowledge that YEDA is waiving its claims for damages in the Y Action and other All Litigation Matters and any other claims it may have for damages of any type on any theory on account of both past and future activities of IMCLONE and SANOFI and as such the foregoing acknowledgment is binding and irrevocable regardless of any determination with respect to the ‘866 Patent or the Non-U.S. Patents in any other or subsequent matter. For avoidance of doubt, neither SANOFI nor IMCLONE is making any warranty or any

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covenant with respect to the validity or enforceability of any of the All Patents and shall have no cause of action in case any of those patents is invalidated through no act of SANOFI or IMCLONE.

(b)           IMCLONE and SANOFI are hereby enjoined and restrained from challenging the validity or enforceability of any or all All Patents and from supporting or assisting others in challenging such validity or enforceability, and consent to such injunction and restraint.

4.Patent License.

(a)Subject to the rights previously granted by YEDA to Merck outside the U.S. relating to Erbitux® and worldwide relating to EMD72000, in each case pursuant to the Merck Agreement, but in any event not with respect to IMC-11F8: YEDA hereby grants to IMCLONE from and after the Closing Date an exclusive license for monetary consideration, with the right to sublicense [**] (in accordance with the terms set forth in Paragraph 4(b)), under All Patents to make, have made, use, sell, offer for sale and import cetuximab (IMC-C225) (“Erbitux®”), IMC-11F8 and all product incorporating the humanized antibody of Merck, EMD72000 (“EMD72000”), (collectively referred to as “Licensed Products”), but in any event Licensed Products shall not include panitumumab (Vectibix®), nimotuzumab or HuMax-EGFr, which license shall be worldwide for Erbitux®” and IMC-11F8, and only outside the United States and Canada for EMD72000.

(b)IMCLONE shall have the right to grant sublicenses under All Patents solely with respect to Licensed Products (“Sublicenses”), provided that each Sublicense granted by IMCLONE shall contain terms set forth on Exhibit A and shall extend to YEDA auditing rights of the sublicensee consistent with those contained in Paragraph 5(j). Within thirty (30) days after execution of each Sublicense, IMCLONE shall notify YEDA of the existence of such Sublicense together with providing a redacted version of the Sublicense, with such redactions having been made in such a manner as to permit YEDA to ascertain payments due to it, the identity of the sublicensee, the identity of the Licensed Product and compliance with the sublicensing terms and conditions set forth in this Paragraph 4(b). In the event of an audit pursuant to Paragraph 5(j), IMCLONE shall also make available to YEDA on a confidential basis an unredacted copy of each such Sublicense. IMCLONE shall remain responsible for the full and complete performance of all of IMCLONE’s obligations and duties under this Settlement Agreement as well as those of any sublicensees of IMCLONE, whose actions under each Sublicense shall be deemed to be those of IMCLONE, and whose default under the Sublicense shall not relieve IMCLONE of any obligations under this Settlement Agreement. Notwithstanding the foregoing, this subsection (b) shall not apply with respect to the IMCLONE-BMS Agreement or the IMCLONE-Merck Agreement or any of the sublicences granted thereunder.

(c)YEDA shall not contest (i) the rights granted under All Patents for Licensed Products (A) by IMCLONE in the Development, Promotion, Distribution & Supply Agreement (the “IMCLONE-BMS Agreement”) among E.R. Squibb & Sons, LLC, Bristol-Myers Squibb Company (collectively, “BMS”) and IMCLONE, and the Development and License Agreement (the “IMCLONE-Merck Agreement”) between IMCLONE and Merck, (B)

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all further sublicenses granted under such agreements, and (C) such grants of such rights by IMCLONE, and that as a consequence, BMS and Merck have the rights under All Patents that are provided under those agreements. In no event shall BMS or Merck have rights as sublicensees of IMCLONE broader than the rights granted to IMCLONE under Paragraph 4(a).

5.Settlement Payments.

(a)On or before December 10, 2007, IMCLONE shall pay YEDA by wire transfer to the account listed below in Paragraph 5(g), a single lump sum payment of Sixty Million United States Dollars (US$60,000,000).

(b)On or before December 14, 2007, SANOFI will pay YEDA by wire transfer to the account listed below in Paragraph 5(g), a single lump sum payment of Sixty Million United States Dollars (US$60,000,000).

(c)Contingent Payment Obligation.  During the Contingent Payment Term, IMCLONE shall pay to YEDA contingent payment amounts based on the following rates for Net Sales (as defined below) of Licensed Products by IMCLONE or its sublicensees and other amounts received in connection with Licensed Products, on a country-by-country basis:

(i)for Erbitux®, a rate of [**] on Net Sales of Erbitux® in the U.S. (including its territories and possessions) and Canada and [**] on Net Sales of Erbitux® outside the U.S. and Canada;

(ii)for IMC-11F8, [**]; and

(iii)for EMD72000, [**].

The Parties acknowledge that it would be impractical to calculate contingent payments based solely on sales of Licensed Products that are used in connection with anti-neoplastic agents and as such for convenience have adopted a contingent payment arrangement based on sales of all Licensed Products, whether or not sold in connection with or instructed for use in connection with anti-neoplastic agents. They agree and acknowledge that the above contingent payments have been reduced with the intent to reflect the value of All Patent Rights and are not an attempt to collect contingent payments for activities not covered by All Patent Rights.

For purposes of this Settlement Agreement, “Net Sales” with respect to particular Licensed Product(s), shall mean [**]

(d)Contingent Payment Term.  IMCLONE’s obligation to pay contingent payments on Net Sales of Licensed Products shall commence around the world on October 1, 2007, and shall expire in the United States and its territories and possessions and Canada on January 17, 2017 (however, in the event there is a patent extension of the ‘866 Patent, such date shall expire in the United States and its territories and possessions and Canada on February 12, 2018) and everywhere else in the world on September 15, 2014 (the “Contingent Payment Term”).

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(e)Contingent Payments.  During the Contingent Payment Term, IMCLONE shall prepare and deliver to YEDA:

(i)within sixty (60) days of the end of each calendar quarter, a report broken down by country of sale, currency and identity of seller (i.e., either IMCLONE or its sublicensee) that: (a) lists gross and net sales of each Licensed Product; and (b) details any deductions included in the calculation of Net Sales in accordance with the breakdown of deductions set forth in Paragraph 5(c); and

(ii)within thirty (30) days after a request from YEDA, complete copies of any contingent payment reports or records submitted to IMCLONE by its sublicensees with respect to Licensed Products.

The relevant payments shall be made at the same time as the aforedescribed report in subsection (e)(i) above. Interest shall accrue on payments made more than sixty (60) days after such payments were due. Such interest will be calculated using an arithmetic average of the daily fixings for the three-month London InterBank Offering Rate (LIBOR) as reported by the British Bankers Association for the calendar quarters in which the payments were due plus [**]. IMCLONE shall use reasonable efforts in detailing the breakdown of deductions, provided, however, that the mischaracterization of any deduction(s) shall not affect IMCLONE’s right to claim such deduction(s) in accordance with the definition of Net Sales hereunder.

(f)The payments set forth in Paragraphs 5(a)-5(c) will be net amounts and not subject to withholding or offset of any kind.

(g)YEDA bank account for payments:

Bank Name:[**] Name on Account:Yeda Research and Development Co. Ltd.[**]

(h)U.S. Dollars.  All payments to be made under this Settlement Agreement shall be made in United States Dollars by wire transfer as designated by YEDA, or by such other method as YEDA shall reasonably notify IMCLONE from time to time.

(i)Currency Conversion. Net Sales received in currencies other than U.S. dollars shall be converted into the U.S. dollar equivalent using an arithmetic average rate of exchange for buying funds as reported in Bloomberg Professional, a service of Bloomberg L.P., for the calendar quarter in which such Net Sales were made, or in the event Bloomberg Professional is not available then the Wall Street Journal for the currency of the country in which the sale is made.

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(j)IMCLONE and its affiliates to which IMCLONE grants a Sublicense under this Settlement Agreement shall keep complete and accurate records of the underlying revenue and expense data relating to the calculations of Net Sales and payments required by Paragraph 5(e) for no less than [**] years after the relevant sales occurred. YEDA shall have the right, once annually at its own expense, to review any such accounting records of IMCLONE (including, without limitation, unredacted copies of each Sublicense) in a single location upon reasonable notice (which shall be no less than twenty (20) days prior written notice) and during regular business hours and under obligations of strict confidence, for the sole purpose of verifying the basis and accuracy of payments made under Paragraph 5(e). Should such inspection lead to the discovery of a discrepancy to YEDA’s detriment in an annual period, IMCLONE shall pay the amount of the discrepancy, and in the event of an overpayment, IMCLONE shall have the right to apply such overpayment against future payments due hereunder to YEDA or, if there is no such future payment obligation of IMCLONE, then YEDA shall promptly refund the amount of such overpayment to IMCLONE. YEDA shall pay the full cost of the inspection unless the validated discrepancy for any period audited is, to YEDA’s detriment, greater than [**] of the total amount due to be paid to YEDA for the period audited, in which case IMCLONE shall pay the full cost of such inspection and interest on the amount due in excess of the amount actually paid. Interest will be calculated using an arithmetic average of the daily fixings for the three-month London InterBank Offering Rate (LIBOR) as reported by the British Bankers Association for the calendar quarters in which the payments were due plus [**]. YEDA shall further have the right to cause IMCLONE to exercise its right to audit royalty payments to be made by sublicensees with respect to Licensed Products. YEDA shall pay the full cost of the audit so caused unless the discrepancy for any period audited is greater than [**] of the total amount due to be paid to IMCLONE for the period audited, in which case the sublicensee or IMCLONE shall pay the full cost of such inspection and interest on the amount due in excess of the amount actually paid. Within fifteen (15) days after receiving such report from the entity conducting the audit (whether or not at the request of YEDA), IMCLONE will provide YEDA a complete copy of any final audit report obtained from auditing IMCLONE’s sublicensees. For the avoidance of doubt, the delivery of any such report to YEDA shall not constitute a waiver of any right or privilege of IMCLONE and/or its representatives.

6.Immediate Stay;  Dismissal of All Litigation Matters.  As of the Execution Date, the Parties shall jointly through their respective counsel execute and file such documents as necessary to immediately stay All Litigation Matters.  Within five (5) business days after the settlement payments are made in accordance with Paragraphs 5(a) and 5(b) above, the Parties shall jointly through their respective counsel: (a) execute and file papers to withdraw the pending appeal in the X Action; (b) cause SANOFI to intervene in the Y Action on consent for the limited purpose of enforcing this Settlement Agreement; (c) execute and file stipulated orders of dismissal and final decision that dismiss and finally resolve the Y Action with prejudice and without costs to any Party, where such stipulated orders shall also provide that the Southern District of New York will retain jurisdiction over the Parties and the subject matter of All Litigation Matters in order to enforce the terms of this Settlement Agreement if necessary and that this Settlement Agreement is a binding obligation of each Party hereto; and (d) execute and file appropriate documents for each jurisdiction outside of the United States where there is ongoing litigation under any of the All Litigation Matters, to discontinue such litigation and enter judgment by consent without costs to any Party, except that the foregoing dismissal and the following releases shall not prejudice YEDA’s right to recover its legal costs in the UK Action.

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7.Release by YEDA.  Effective as of the Closing Date, under this Settlement Agreement, YEDA hereby forever releases and fully discharges each of IMCLONE and SANOFI, as well as each of their affiliates and with respect to IMCLONE, BMS and Merck (in their capacity as sublicensees of IMCLONE), and each of their respective successors and assigns, and the present or former officers, directors, agents, and employees of any of them (in their capacities as such) (collectively, the “YEDA-Released Parties”) from any and all actions, causes of action, suits, debts due, sums of monies, covenants, contracts, controversies, agreements, promises, trespasses, damages, judgments, claims, demands whatsoever, in law or in equity, whether in tort or contract or otherwise, known or unknown, suspected or unsuspected, which YEDA , as well as each of its affiliates (including, for the avoidance of doubt, the Weizmann Institute of Science (the “Institute”)) and their successors and assigns or, to the extent YEDA has the power to grant releases hereunder, their present or former officers, directors, partners, members or employees, in their capacities as such, ever had or now has against any of the YEDA-Released Parties for, upon, or by reason of any matter, cause or thing whatsoever from the beginning of the world to the Effective Date arising under or relating in any way to (i) All Litigation Matters (or the facts asserted in such All Litigation Matters by the Parties therein) or (ii) any of the All Patents.  For the avoidance of doubt, YEDA does not release Merck in any regard with respect to the Patent License Agreement between Merck and YEDA.  YEDA shall fully indemnify and hold harmless the YEDA-Released Parties against any such claim except with respect to any claim by Joseph Schlessinger, Francoise Bellot, Richard Kris and David Givol.

8.Release by IMCLONE.  Effective as of the Closing Date, under this Settlement Agreement, IMCLONE hereby fully and forever releases and fully discharges each of YEDA and SANOFI, as well as, each of their affiliates and with respect to YEDA, Merck and Amgen (in their capacity as sublicensees of YEDA) and each of their respective successors, and assigns, and the present or former officers, directors, agents, and employees of any of them (in their capacities as such) (including, with respect to YEDA and for the avoidance of doubt, the Institute and Weizmann Inventors) (collectively, the “IMCLONE Released Parties”) from any and all claims, causes of action, suits, debts due, sums of monies, covenants, contracts, controversies, agreements, promises, trespasses, damages, judgments, claims, demands whatsoever, in law or equity, whether in tort or contract or otherwise, known or unknown, suspected or unsuspected, which IMCLONE, as well as each of its affiliates, or their present or former officers, directors, partners, members, employees, successors and assigns, in their capacities as such, ever had or now has against any of the IMCLONE Released Parties for, upon, or by reason of any matter, cause or thing whatsoever from the beginning of the world to the Effective Date arising under or relating in any way to (i) All Litigation Matters (or the facts asserted in such All Litigation Matters by the Parties therein) or (ii) any of the All Patents.  For the avoidance of doubt, IMCLONE does not release Merck in any regard with respect to the IMCLONE-Merck Agreement.

9.Release by SANOFI.  Effective as of the Closing Date, under this Settlement Agreement, SANOFI hereby fully and forever releases and fully discharges each of YEDA and IMCLONE, as well as, each of their affiliates and with respect to IMCLONE, BMS and Merck (in their capacity as sublicensees of IMCLONE) and with respect to YEDA, Merck and Amgen (in their capacity as sublicensees of YEDA) and each of their respective successors, and assigns, and the present or former officers, directors, agents, and employees of any of them (in their

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capacities as such) (including, with respect to YEDA and for the avoidance of doubt, the Institute and Weizmann Inventors) (collectively, the “SANOFI Released Parties”) from any and all claims, causes of action, suits, debts due, sums of monies, covenants, contracts, controversies, agreements, promises, trespasses, damages, judgments, claims, demands whatsoever, in law or equity, whether in tort or contract or otherwise, known or unknown, suspected or unsuspected, which SANOFI, as well as each of its affiliates, or their present or former officers, directors, partners, members, employees, successors and assigns, in their capacities as such, ever had or now has against any of the SANOFI Released Parties for, upon, or by reason of any matter, cause or thing whatsoever from the beginning of the world to the Effective Date arising under or relating in any way to (i) All Litigation Matters (or the facts asserted in such All Litigation Matters by the Parties therein) or (ii) any of the All Patents.

10.Release of Future Obligations.  Nothing in Paragraphs 7-9 (inclusive) shall operate as a release of the Parties’ obligations or covenants under this Settlement Agreement, or with respect to any agreements signed by or among the Parties contemporaneously herewith.

11.No Admission of Wrongdoing.  The Parties expressly acknowledge that this Settlement Agreement represents a settlement of disputed rights and claims.  Nothing in the terms of this Settlement Agreement or in its execution shall be construed as an admission of liability or wrongdoing as to any matter by the Parties hereto.  IMCLONE and SANOFI affirmatively deny the allegations of the other Parties with respect to the X Action, and YEDA affirmatively denies the allegations of the other Parties with respect to the X Action.  YEDA affirmatively denies the allegations of the other Parties with respect to the Y Action, and IMCLONE affirmatively denies the allegations of the other Parties with respect to the Y Action.

12.Confidentiality.  Without limiting the Parties’ obligations under the Protective Order endorsed by Judge Buchwald on June 29, 2004 in the X Action, the Stipulation and Order Regarding the Use of Confidential Information endorsed by Judge Buchwald on September 6, 2007 in the X Action or the Protective Order endorsed by Judge Buchwald on July 24, 2007 in the Y Action, any non-public technical or business related information or materials which any Party hereto may disclose to any other shall be treated as confidential to the extent permitted by law.  Written confidential information shall be identified as confidential information.  Non-written confidential information shall be reduced to writing and identified as confidential information by the disclosing Party within forty-five (45) days of disclosure.  Confidential information and materials shall be maintained in confidence by the receiving Parties and shall not be disclosed to any third party without prior written consent of the disclosing Party, other than as contemplated by the terms of this Settlement Agreement.  This obligation of confidentiality shall not apply to information which:

(a)is publicly known prior to the disclosure through no fault of the receiving Parties;

(b)becomes publicly known subsequent to disclosure through no fault of the receiving Parties;

(c)is lawfully disclosed to the receiving Parties by a third party who is not obligated to retain such information in confidence;

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(d)is in the receiving Parties’ possession prior to disclosure as shown by reasonable proof; or

(e)lawfully becomes publicly known following disclosure to a government patent agency in connection with the prosecution of any All Patent or a regulatory agency responsible for the approval of therapeutic products.

If any subpoena or court order shall require the disclosure of confidential information by way of document production and/or testimony, each Party shall give the Party whose confidential information is at issue and its attorneys reasonable and practicable prior written notice such that the noticed Party has an opportunity to intervene and oppose the disclosure of such confidential information.  The Parties agree to take all reasonable measures to ensure that any confidential information sought by any subpoena or court order is kept confidential until the objecting Party’s opposition to the disclosure is considered and resolved by the Court or other relevant governing authority.  This provision shall survive expiration, termination and/or satisfaction of the terms of this Settlement Agreement.  Nothing herein shall preclude the Parties from disclosing such information as required by law or to their officers, directors, accountants and/or tax advisors, sublicensees or other agents, on a need-to-know basis, provided such persons comply with the confidentiality requirements of this Settlement Agreement.  Except as permitted herein, the Parties shall not offer in evidence or in any way refer to in any civil, criminal, administrative or other action or proceeding, any of the confidential information other than as may be necessary to consummate or enforce this Settlement Agreement.

13.Representations, Warranties and Covenants of the Parties.  The Parties hereby represent, warrant and agree, as of the Closing Date, as follows:

(a)YEDA represents and warrants that it has granted no licenses under All Patents that would preclude or restrict the license granted in Paragraph 4 above.  EXCEPT AS SPECIFICALLY SET FORTH IN THIS PARAGRAPH 13(a), NOTHING IN THIS SETTLEMENT AGREEMENT SHALL BE CONSTRUED AS:

(i)A WARRANTY OR REPRESENTATION BY YEDA AS TO THE VALIDITY OR SCOPE OF ANY PATENT OR APPLICATION THEREFOR;

(ii)A WARRANTY OR REPRESENTATION THAT ANY MANUFACTURE, SALE, USE OR OTHER DISPOSITION OF LICENSED PRODUCTS HEREUNDER WILL BE FREE FROM INFRINGEMENT OF PATENTS AND APPLICATIONS THEREFOR OTHER THAN THOSE UNDER WHICH LICENSES, RIGHTS AND PRIVILEGES HAVE BEEN GRANTED;

(iii)AN AGREEMENT TO BRING OR PROSECUTE ACTIONS OR SUITS AGAINST THIRD PARTIES FOR INFRINGEMENT OR CONFERRING ANY RIGHT TO BRING OR PROSECUTE ACTIONS OR SUITS AGAINST THIRD PARTIES FOR INFRINGEMENT;

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(iv)CONFERRING BY IMPLICATION, ESTOPPEL OR OTHERWISE, UPON ANY PARTY LICENSED HEREUNDER, ANY LICENSE, RIGHT OR PRIVILEGE UNDER ANY PATENT OR APPLICATIONS THEREFOR EXCEPT THE LICENSES, RIGHTS AND PRIVILEGES EXPRESSLY GRANTED HEREUNDER; OR

(v)AN OBLIGATION TO FURNISH ANY TECHNICAL INFORMATION OR KNOW-HOW.

(b)Each Party represents and warrants that it has relied upon its own judgment and that of its own legal counsel regarding the proper, complete, and agreed-upon consideration for, and the terms and provisions of, this Settlement Agreement and that no Party has relied on any representation or warranty (express or implied) made by any other Party or any of its agents, employees or legal counsel, other than as expressly set forth in this Settlement Agreement, in entering into this Settlement Agreement.

(c)This Settlement Agreement has been duly executed and delivered on behalf of each Party and constitutes a legal, valid and binding obligation of each Party and is enforceable against it in accordance with its terms subject to the effects of bankruptcy, insolvency or other laws of general application affecting the enforcement of creditor rights and judicial principles affecting the availability of specific performance and general principles of equity, whether enforceability is considered a proceeding at law or equity.

14.Indemnification and Limitation of Liability.

(a)Indemnification by IMCLONE.  IMCLONE hereby agrees to defend, hold harmless and indemnify YEDA, the Institute and their affiliates, directors, officers and employees and the YEDA inventors of the All Patents (such inventors being referred to as the “YEDA Inventors,” and all the foregoing persons being referred to collectively as the “YEDA Indemnitees”) from and against any and all claims, demands, liabilities, costs, fees, damages, expenses and/or losses, including without limitation, reasonable legal costs, expenses and attorneys’ fees for outside counsel (collectively, “Losses”) resulting directly or indirectly from claims, suits, actions or demands by any person or entity arising out of IMCLONE’s or its sublicensee’s making, using, selling, offering for sale and/or importing Licensed Products and/or the granting of Sublicenses.

(b)Disclaimer of Liability.  In no event shall any of the YEDA Indemnitees be liable for any Losses caused to or suffered by any person or entity (including IMCLONE or any sublicensee) that directly or indirectly arise out of or result from (i) claims of infringement of the patents of any third party as a result of IMCLONE’s practice of All Patents; (ii) making, using, selling, offering for sale and/or importing of Licensed Products by IMCLONE or any sublicensee; (iii) the grant by IMCLONE of any Sublicense; or (iv) the use by any customer of the Licensed Products manufactured or sold by or on behalf of IMCLONE or any of its sublicensees; provided, however, YEDA Indemnitees shall not be released from liability pursuant to this Paragraph 14(b) to the extent any such Losses arise out of or result from the gross negligence or willful misconduct of YEDA or any of the YEDA Indemnitees.

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(c)Insurance.  Within thirty (30) days after the Closing Date, IMCLONE shall at its own expense procure and maintain during the entire period that the license under Paragraph 4 is in force in any country, plus an additional period of seven (7) years, an insurance policy/policies (including products liability and general liability insurance) adequate to cover its obligations hereunder and which is/are consistent with normal business practices of prudent companies similarly situated. Such insurance shall include a waiver of subrogation in favor of the Yeda Indemnitees, to the extent Yeda is not liable for any Losses under Paragraph 14(b). Upon request by YEDA, IMCLONE shall provide certificates of insurance evidencing the insurance policies and additional insured status as required under this Settlement Agreement.

(d)Separate Obligations.  No obligation of either IMCLONE or SANOFI is a joint obligation and the breach by any one of them shall not be considered a breach by the other; IMCLONE and SANOFI are each responsible only for their own commitments.  For the avoidance of doubt, the release of SANOFI by YEDA is not dependent or conditional on IMCLONE’s performance under this Settlement Agreement or its license with YEDA. With respect to the license rights granted IMCLONE by YEDA and the financial and other terms and conditions set forth in this Settlement Agreement relating thereto, IMCLONE and YEDA shall have the right to modify or amend (or consent to modification or amendment of) or terminate any and all such rights, terms and conditions as IMCLONE and YEDA may agree from time to time in writing without any notice to or obtaining the consent of SANOFI.

15.Publicity.  The Parties agree that no publicity release or announcement to third parties concerning the provisions contemplated herein will be issued without the advance written consent of the other Parties. Notwithstanding anything in this Paragraph, and Paragraph 12 to the contrary, each Party may make filings or disclosures that are required by applicable laws (as determined to be so required by outside counsel for the disclosing Party), including filings or disclosures required by or to the Securities and Exchange Commission (and any other applicable securities exchanges) that discuss the subject matter of this Settlement Agreement or otherwise make reference to other Parties consistent with the terms of this Settlement Agreement; provided, however, that such disclosing Party provides the other Parties with no less than five (5) business days (except any filings with the Securities and Exchange Commission which require filing within a period less than (5) business days) to review and comment on such filings, or the relevant portions thereof, pertaining to the provisions contemplated herein, and the other Parties do not unreasonably reject the incorporation of such comments into such filings; provided further, however, that the disclosing Party will agree to make a confidential treatment request with the Securities and Exchange Commission in order to request the redaction of any confidential information of the other Parties that, in the opinion of such disclosing Party’s outside counsel, is not required by applicable laws from such filings or disclosures; provided further, however, that, the disclosing Party will use commercially reasonable efforts to obtain confidential treatment by such security exchanges with respect thereto; provided further, however, that IMCLONE shall be authorized to release the press release attached hereto as Exhibit B upon the execution of this Settlement Agreement. In addition, YEDA may, in its sole discretion, disclose this Settlement Agreement with financial terms redacted to current or prospective licensees under All Patents under the same terms of confidentiality as provided for hereunder.

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16.Attorneys’ Fees and Costs.  Except to the extent provided in Paragraph 6 above, the Parties shall bear their own respective attorneys’ fees and costs.

17.Entire Agreement.  This Settlement Agreement and the stipulations of dismissals filed by the Parties in connection herewith, constitutes the entire, complete and integrated agreement and understanding made among the three Parties hereto regarding the subject matter hereof.  Any other express or implied agreements and understandings among the three Parties hereto, either oral or written, with regard to the subject matter hereof, are superseded by the terms of this Settlement Agreement, along with the stipulations of dismissals filed by the Parties in connection herewith. The Parties shall confirm the accuracy of Schedules 1 and 2 within ten (10) days following the Execution Date.

18.Force Majeure.  No Party shall be responsible or liable to the other for failure or delay in performance of this Settlement Agreement due to any war, fire, accident or other casualty or any changes in government laws or regulations, labor disturbance or acts of God, or any other contingency beyond the Party’s reasonable control. In the event of the applicability of this Paragraph 18, the Party affected by such force majeure shall use its best efforts to eliminate, cure, and overcome any of such causes and resume performance of its obligations.

19.Headings.  The captions to the Paragraphs hereof are not a part of this Agreement, but are merely for convenience to assist in locating and reading the Paragraphs hereof.

20.Interpretive Rules.  For the purpose of this Settlement Agreement, except as otherwise expressly provided herein or unless the context otherwise requires: (a) defined terms include the plural as well as the singular and the use of any gender shall be deemed to include the other gender; (b) the use of the term “including” means “including but not limited to”; and (c) the words “herein”, “hereof”, “hereunder” and other words of similar import refer to this Settlement Agreement in whole and not to any particular provision.

21.No Waiver.  The failure of either Party to assert a right hereunder or to insist upon compliance with any term or condition of this Settlement Agreement shall not constitute a waiver of that right or excuse a similar subsequent failure to perform any such term or condition by the other Party.

22.Further Assurances.  All Parties hereto agree, without charge, to promptly execute and deliver such further instruments and do and cause to be done such further acts and things, including the filing of such assignments, agreements, documents, registrations and instruments, as may be necessary or as a Party may reasonably request in order to perfect any assignment or other transfer or any properties or rights contemplated hereunder and otherwise cooperate with the other Parties as may be reasonably necessary or desirable to effect the purpose of this Settlement Agreement and carry out its provisions.

23.Assignment and Successors.  No Party may assign or transfer this Settlement Agreement or any rights or obligations hereunder without the prior written consent of the other parties, except that YEDA may freely assign its right to receive payments under this Settlement Agreement and any Party may make such an assignment or assumption without the other parties’ consent to an entity that acquires all or substantially all of the business of such Party, whether in

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a merger, consolidation, corporate or bankruptcy reorganization, acquisition, sale or otherwise. Any assignment or attempted assignment by either Party in violation of the terms of this Paragraph 23 shall be null and void and of no legal effect. The assigning Party shall forward to the other parties a copy of those portions of each fully executed assignment agreement which relate to the assumption of the rights and responsibilities of the assigning Party, within sixty (60) days of the execution of such assignment agreement. This Settlement Agreement is binding upon, and shall inure to the benefit of, the Parties and their respective affiliates, subsidiaries and each of their employees, officers, directors, agents, successors and assigns.

24.Governing Law.  This Settlement Agreement shall be construed, governed, applied and interpreted in accordance with the laws of the State of New York, notwithstanding any conflict of laws analysis, except that questions affecting the construction and effect of any patent shall be determined by the patent law of the country in which such patent was granted. All claims hereunder shall be resolved exclusively in the United States District Court for the Southern District of New York (which is retaining jurisdiction to enforce this Settlement Agreement).

25.Amendments.  This Settlement Agreement may be amended, or any term hereof modified, only by a written instrument duly executed by authorized representatives of all Parties hereto.

26.Severability.  If any one or more of the provisions contained in this Settlement Agreement is held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby.  In the event that the absence of the invalidated provision(s) adversely affects the substantive rights of the Parties, the Parties shall use their best efforts to replace the invalid, illegal or unenforceable provision(s) with valid, legal and enforceable provision(s) which, as much as legally possible, implement the purposes of this Settlement Agreement as originally written.  To the extent permitted by applicable law, IMCLONE, SANOFI, and YEDA hereby waive any provision of law that would render any provision hereof prohibited or unenforceable in any respect.

27.Notices.  Any notices given hereunder shall be sent by overnight mail (confirmed receipt), facsimile (confirmed receipt), or personally delivered as follows:

If to IMCLONE:	With a copy to:
ImClone Systems Incorporated 33 ImClone Drive Branchburg, NJ 08876 Attention: General Counsel Tel:(908) 218-9588 Fax: (908) 704-2719

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If to SANOFI:	With a copy to:
Aventis Pharmaceuticals, Inc. 55 Corporate Drive Bridgewater, NJ 08807 Attention: President Tel:(908) 981-6400 Fax: (908) 981-6405	Proskauer Rose LLP 1585 Broadway New York, New York 10036-8299 Attention: Bruce Fader, Esq. Tel: (212) 969-3415 Fax: (212) 969-2900
If to YEDA:	With a copy to:
Yeda Research and Development Co. Ltd. Post Office Box 95 Rehovot 76100 Israel Attention: CEO Tel: +972-8-947-0617 Fax: +972-8-947-0739	Weil Gotshal & Manges LLP 767 5th Avenue New York, NY 10153 Attention: Nicholas Groombridge, Esq. Tel:(212) 310-8000 Fax:(212) 310-8007

28.Construction.  Neither this Settlement Agreement nor any provision in this Settlement Agreement shall be construed for or against any Party because the Settlement Agreement as a whole, or any provision of this Settlement Agreement, was requested or drafted by such Party.  Neither this Settlement Agreement nor any provision in this Settlement Agreement nor evidence of any negotiations in connection with it or them shall be offered or received in evidence or used in any way in any action or proceeding between the Parties except to enforce the terms and provisions hereof.

29.Advice of Counsel.  The Parties hereby acknowledge that they have read this Settlement Agreement and have had an opportunity to obtain advice of counsel in connection with the review, drafting and negotiation of this Settlement Agreement.

30.365(n).  All rights and licenses granted to IMCLONE by YEDA under or pursuant to any section of this Settlement Agreement are and shall otherwise be deemed to be for purposes of Section 365(n) of Title 11, United States Code (the “Bankruptcy Code”) licenses of rights to “intellectual property” as defined in Section 101(56) of the Bankruptcy Code.  IMCLONE shall retain and may fully exercise all of their respective rights and elections under the Bankruptcy Code.  Upon the bankruptcy of YEDA, IMCLONE shall further be entitled to a complete duplicate of, or complete access to all documents embodying, any such intellectual property or relating to obtaining protection of or maintaining same, and such, if not already in its possession, shall be promptly delivered to YEDA, unless the bankrupt party elects to continue, and continues, to perform all of its obligations under this Settlement Agreement.

31.Execution and Counterparts.  This Settlement Agreement may be executed in any number of counterparts, each of which, when executed and delivered, shall be deemed an original, but all of which together shall constitute one and the same instrument.  Any signatory hereto may indicate acceptance of this Settlement Agreement with a facsimile signature or PDF copy, provided that an original signature is provided to all other Parties thereafter.  The terms set forth herein will become effective and binding upon the Parties once this Settlement Agreement has been fully and duly executed.

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*  *  *

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THE SIGNATORIES HERETO DECLARE THAT THEY ARE DULY AUTHORIZED TO EXECUTE THIS AGREEMENT ON BEHALF OF THEIR RESPECTIVE ORGANIZATIONS, THE TERMS OF THIS AGREEMENT HAVE BEEN FULLY UNDERSTOOD, AND ARE VOLUNTARILY ACCEPTED FOR THE PURPOSE OF MAKING A FULL AND FINAL COMPROMISE AND SETTLEMENT.

IN WITNESS WHEREOF, the Parties have executed this Settlement Agreement:

IMCLONE SYSTEMS INCORPORATED
By:
	Name:
	Title:
	Date:      December 7, 2007
AVENTIS PHARMACEUTICALS, INC.
By:
	Name:
	Title:
	Date:      December 7, 2007
AVENTIS, INC.
By:
	Name:
	Title:
	Date:      December 7, 2007

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AVENTIS HOLDINGS INC.
By:
	Name:
	Title:
	Date:      December 7, 2007
YEDA RESEARCH AND DEVELOPMENT CO. LTD.
By:
	Name:
	Title:
	Date:      December 7, 2007

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SCHEDULE 1

Non-US Patents

[**]

SCHEDULE 2

Non-US Countries

[**]

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EXHIBIT A

Sublicensing Terms

[**]

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EXHIBIT B

Press Release

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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 TWO ASTERISKS ENCLOSED IN BRACKETS (i.e. [**]).  THE CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.]

AMENDED AND RESTATED LICENSE AGREEMENT

by and between

AVENTIS HOLDINGS, INC.

and

IMCLONE SYSTEMS INCORPORATED

Dated December 7, 2007

TABLE OF CONTENTS

Article No.	Title	Page
	RECITALS	2
	DEFINITIONS	2
1.	LICENSE AND SUBLICENSES	4
2.	DUE DILIGENCE	4
3.	FEES AND ROYALTIES	4
3.	FEES AND ROYALTIES	6
5.	PATENT PROTECTION	7
6.	TERMINATION	7
7.	REPRESENTATIONS AND WARRANTIES	8
8.	INFRINGEMENT	8
9.	PRODUCT LIABILITY	9
10.	ASSIGNMENT	9
11.	NON-USE OF NAMES	10
12.	PAYMENTS, NOTICES AND OTHER COMMUNICATIONS	10
13.	CONFIDENTIALITY	10
14.	MISCELLANEOUS PROVISIONS	11

Confidential Treatment Requested by ImClone Systems Incorporated

AMENDED AND RESTATED LICENSE AGREEMENT

This Amended and Restated License Agreement (this “Agreement”) is entered into and effective as of December 7, 2007 (the “Effective Date”) by and between AVENTIS HOLDINGS, INC., a corporation duly organized and existing under the laws of Delaware and having its principal office at 3711 Kennett Pike, Suite 200, Greenville, Delaware 19807 (hereinafter referred to as “AVENTIS”), and IMCLONE SYSTEMS INCORPORATED, a corporation duly organized under the laws of the STATE OF DELAWARE and having its principal office at 180 Varick Street, New York, NY 10014 (hereinafter referred to as “IMCLONE”).

WITNESSETH

WHEREAS, Rhône Poulenc Rorer Inc. (“RPR”) and IMCLONE have been parties to that certain License Agreement entered into as of June 13, 1994 (the “License Agreement”);

WHEREAS, RPR through a series of intercompany agreements has assigned to AVENTIS the License Agreement since April 5, 2004;

WHEREAS, AVENTIS and IMCLONE desire to amend the License Agreement and to restate the same in its entirety, as provided in this Agreement;

WHEREAS, Yeda Research and Development Co. Ltd. (“YEDA”) has initiated legal proceedings in several countries seeking to change the inventorship and/or ownership of certain of the U.S. and Non-U.S. Patents and Patent Applications assigned to RPR (“the Inventorship and Ownership Proceedings”);

WHEREAS, IMCLONE, Aventis and YEDA have reached an agreement settling the Inventorship and Ownership Proceedings (the “Three-Way Settlement”)

WHEREAS, IMCLONE desires to manufacture, use and sell products which include the use of the Know-how and are covered by the claims of the Patent Rights, and is willing to expend its good faith efforts and resources to do so in return for an exclusive license by AVENTIS to whatever rights remain in AVENTIS after implementation of the Three-Way Settlement.

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties hereto, intending to be legally bound, agree as follows:

DEFINITIONS

For the purposes of this Agreement, the following words and phrases shall have the following meanings:

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“Affiliate” shall mean any corporation, company or other entity which directly or indirectly controls or is controlled by, or is under common control with, IMCLONE or AVENTIS.

“AVENTIS” shall mean AVENTIS and any subsidiary or Affiliate of AVENTIS.

“Commercial Sale” shall mean the sale for its intended use of a Licensed Product(s) to a third party which is not an Affiliate.

“Erbitux®” shall mean cetuximab (IMC-C225, and marketed as ‘Erbitux®’).

“IMCLONE” shall mean IMCLONE and any subsidiary or Affiliate of IMCLONE.

“Know-how” means AVENTIS owned or licensed information and materials useful for the manufacture, use, regulatory approval of, or sale of the Licensed Product.

“Licensed Product(s)” shall mean Erbitux®, IMC-11F8 and matuzumab (EMD-72000) as well as all derivatives, analogs, fragments, improvements, conjugates and bioequivalents of any of the foregoing.

“Net Sales,” with respect to particular Licensed Product(s), shall mean the gross amount received by IMCLONE, its Affiliates, or its sublicensees on all sales of such Licensed Product(s) less:

[**]

“Patent Rights” shall mean any and all non-U.S. patents and non-U.S. patent applications that claim priority to (a) U.S. Patent No. 6,217,866 or (b) any one or more of the patent applications for U.S. Patent No. 6,217,866, and any continuations, continuations-in-part, and division applications thereof, all foreign equivalents thereof, foreign patents and any reissues, re-examinations or extensions based thereon or a Supplementary Protection Certificate or the like in respect thereof.

“Royalty Payment(s)” shall mean the royalties paid by IMCLONE to AVENTIS under this Agreement.

“Supplementary Protection Certificate” shall mean the supplementary protection certificate for Medicinal products provided under Council Regulation (EEC) No. 1768/92 of June 18, 1992 and their equivalents.

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ARTICLE 1 - LICENSE AND SUBLICENSES

1.1AVENTIS hereby grants to IMCLONE a worldwide exclusive right and license under Know-how, with the right to sublicense others, to make, have made, use, sell, offer for sale and import Licensed Product(s).

1.2AVENTIS hereby grants to IMCLONE an exclusive license under Patent Rights, with respect to AVENTIS’ fifty percent ownership interest in such Patent Rights, with the right to sublicense others, to make, have made, use, sell, offer for sale and import Licensed Product(s) in all jurisdictions outside the United States.

1.3In the event IMCLONE sublicenses the rights granted to it under Sections 1.1 or 1.2, IMCLONE shall remain responsible for all obligations hereunder.

1.4The license granted herein shall extend in a country until expiration in such country of the IMCLONE royalty payment obligations as described in Sections 3.3 and 3.4.

1.5Except as expressly set forth pursuant to the foregoing in this ARTICLE 1, neither party shall acquire any license or other intellectual property interest under this Agreement, by implication or otherwise, including patents, know-how, trademarks or copyrights owned or licensed by the other party or its respective Affiliates.

ARTICLE 2 - DUE DILIGENCE

2.1IMCLONE shall use its good faith efforts to bring the Licensed Product(s) to market.  This good faith efforts requirement will be considered fulfilled if IMCLONE engages in a thorough, vigorous, and diligent program to exploit Patent Rights in all appropriate fields of use, which may include the sublicensing of Patent Rights to better exploit Patent Rights, as long as such a program is justified as determined by prudent business practice.

ARTICLE 3 - FEES AND ROYALTIES

3.1With the exception of IMCLONE paying a single lump sum payment of $3,000,000 U.S. dollars to AVENTIS pursuant to the December 7, 2007 letter agreement between IMCLONE and AVENTIS (the “Side Letter”), no upfront license fees shall be due under this Agreement upon the execution of this Agreement.  AVENTIS shall retain all amounts already paid to it under the License Agreement before the Effective Date.  For the avoidance of doubt, except as expressly set forth in this ARTICLE 3, no other payments or any milestone or other royalty or other license payments shall be due from IMCLONE to AVENTIS in consideration for any licenses or other rights granted to IMCLONE under this Agreement.

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3.2No other payments or any milestone or other royalty or other license payments shall be due from IMCLONE to AVENTIS (a) in respect of any Net Sales in the United States, or (b) subject to the provisions of Section 3.3 hereunder, with respect to Net Sales in a jurisdiction outside of the United States where there is no issued patent in the Patent Right(s) licensed by AVENTIS to IMCLONE hereunder.

3.3IMCLONE shall pay to AVENTIS a royalty rate of [**] of Net Sales of Erbitux® outside the United States, in all oncological uses, and whether or not such sales are for use as a single pharmaceutical agent or in combination with any antineoplastic agent, including radiotherapy.  Such royalty obligation shall apply to Net Sales in any and all countries (other than the United States) in which there exists as of the Effective Date an unexpired issued patent in the Patent Rights.  Such royalty obligation shall commence on the Effective Date and thereafter terminate, on a country by country basis, on the later of (i) January 17, 2017 or such later date secured by a patent term extension for U.S. Patent No. 6,217,866, (ii) the expiration of the applicable issued patent in the Patent Rights including any patent term extension thereof, or (iii) ten (10) years from the grant of the marketing approval for Erbitux® in that country (and in such case, whether or not the marketing approval has been granted to Erbitux® by the competent authorities in such country as of the Effective Date).

3.4IMCLONE shall pay to AVENTIS a royalty rate of [**] on Net Sales outside the U.S. for all IMC-11F8 and matuzumab (EMD-72000), in each case in all oncological uses, and whether or not such sales are for use as a single pharmaceutical agent or in combination with any antineoplastic agent, including radiotherapy.  Such royalty obligation under this Section 3.4 shall apply to Net Sales in any and all countries in the world other than the United States in which there exists as of the Effective Date an unexpired issued or pending patent in the Patent Rights.  Such royalty obligation under this Section 3.4 shall commence on the Effective Date and thereafter terminate, on a country by country basis, on expiration of the applicable issued patent in the Patent Rights including any patent term extension thereof.

3.5No multiple royalties shall be payable because the Licensed Product(s), its manufacture, lease or sale are or shall be covered by more than one patent application or patent licensed under this Agreement.

3.6Royalty payments shall be paid in United States dollars at such place as AVENTIS may reasonably designate consistent with the laws and regulations controlling in any foreign country.  Any withholding taxes that IMCLONE or any sublicensee shall be required by law to withhold on remittance of the royalty payments shall be deducted from royalty paid to AVENTIS.  IMCLONE shall furnish AVENTIS the original copies of all official receipts for such taxes.  If any currency conversion shall be required in connection with the payment of royalties hereunder, such conversion shall be made by using the exchange rate reported in the Wall Street Journal for the last day of the reporting period to which such royalty payments relate.

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3.7The IMCLONE obligations to pay royalties to AVENTIS under Sections 3.3 and 3.4 are absolute and unconditional. IMCLONE shall have no right to withhold payments partially or totally if and when there is a dispute on the application of any provision of this Agreement.

ARTICLE 4 - REPORTS AND RECORDS

4.1(a)IMCLONE shall keep full, true and accurate books of account containing all particulars that may be necessary for the purpose of showing the amount payable to AVENTIS by way of royalty as aforesaid.  Said books of account shall be kept at IMCLONE’s principal place of business or the principal place of business of the appropriate division of IMCLONE to which this Agreement relates.  Said books and the supporting data shall be open at all reasonable times, but not exceeding [**], for [**] years following the end of the calendar year to which they pertain, to the inspection of AVENTIS and/or an independent certified public accountant retained or employed by AVENTIS for the purpose of verifying IMCLONE’s royalty statement or compliance in other respects with this Agreement.  AVENTIS shall keep information contained in such reports confidential.

(b)IMCLONE shall require all sublicensees to keep reports sufficient to show the amount payable to AVENTIS under this Agreement and to transmit such reports to IMCLONE at periodic intervals.  Such sublicensee reports shall be available to AVENTIS under the same conditions as the reports described in Section 4.1(a) above.

4.2IMCLONE, within thirty (30) days after March 31, June 30, September 30 and December 31, of each year following the first Commercial Sale of a Licensed Product, shall deliver to AVENTIS true and accurate reports, giving such particulars of the business conducted by IMCLONE during the preceding three-month period under this Agreement as shall be pertinent to a royalty accounting hereunder.  These shall include at least the following:

(a)All Licensed Products manufactured and sold.  Total billings for Licensed Product sold.

(b)Accounting for all the Licensed Products used or sold.

(c)Deductions applicable as provided in the definition of Net Sales.

(d)Total royalties due.

(e)Names and addresses of all sublicensees hereunder.

4.3With each report submitted in accordance with Section 4.2, IMCLONE shall pay to AVENTIS the royalties due and payable under this Agreement.  If no royalties shall be due, IMCLONE shall so report.

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ARTICLE 5 - PATENT PROTECTION

5.1(a)AVENTIS has transferred to IMCLONE its complete files of Patent Rights.  IMCLONE shall retain such files until this Agreement shall be terminated as hereinafter provided.  If this Agreement is so terminated, IMCLONE shall return to AVENTIS its complete files of Patent Rights, and shall keep one archive copy thereof.

(b)As between AVENTIS AND IMCLONE, IMCLONE shall pay for the filing, prosecution and maintenance of all Patent Rights.

5.2IMCLONE shall promptly furnish to AVENTIS copies of:

(a)Patent applications within the Patent Rights filed in any Patent Office; and

(b)Papers pertaining to the Patent Rights filed in or received from a Patent Office.

5.3IMCLONE shall promptly inform AVENTIS of all matters concerning the filing, prosecution and maintenance of the Patent Rights, and shall send copies to AVENTIS of any relevant documents in connection with such Patent Rights.

ARTICLE 6 - TERMINATION

6.1Upon any material breach or default of this Agreement by IMCLONE or AVENTIS, the non-breaching or non-defaulting party shall have the right to terminate this Agreement and the rights, privileges and license granted hereunder, by ninety (90) days written notice to the other party.  Such termination shall become effective unless the breaching or defaulting party shall have cured such breach or default prior to the expiration of the ninety (90) day period from receipt of notice of breach or default.

6.2Upon termination of this Agreement for any reason, nothing herein shall be construed to release either party from any non-cancelable obligation that matured prior to the effective date of such termination.  IMCLONE and/or any sublicensee thereof may, however, after the effective date of such termination, sell all Licensed Products, and complete Licensed Products in the process of manufacture at the time of such termination and sell the same, provided that IMCLONE shall pay to AVENTIS the royalties thereon as required by ARTICLE 3 of this Agreement, and shall submit the reports required by ARTICLE 4 hereof on the sales of Licensed Products.

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ARTICLE 7- REPRESENTATIONS AND WARRANTIES

7.1           AVENTIS and IMCLONE each represents and warrants that it has the power and authority to enter into and perform this Agreement.

7.2           AVENTIS represents and warrants that, subject to the Three-Way Agreement and the transactions contemplated thereunder, it has not granted or transferred and shall not grant or transfer to a third party any right or interest in any inventions, discoveries or improvements that would prevent IMCLONE from exercising or exploiting any rights granted under this Agreement.

ARTICLE 8- INFRINGEMENT

8.1           IMCLONE and AVENTIS shall promptly inform the other in writing of any alleged infringement of which it shall have notice by a third party and provide such other with any available evidence of infringement.

8.2           To the extent AVENTIS has the right to do so under the Three-Way Settlement, IMCLONE shall have the right, but shall not be obligated, to bring an action at its own expense for any infringements of the Patent Rights and, in furtherance of such right, AVENTIS hereby agrees to join IMCLONE as a nominal party plaintiff in any such suit where required for jurisdictional purposes, and to render to IMCLONE its best reasonable efforts to assist with such prosecution of IMCLONE’s rights, such as, to the extent possible, having its employees testify when requested and making available relevant records, papers, information, samples, specimens, and the like.  The total cost of any such infringement action commenced or defended solely by IMCLONE with or without AVENTIS as a nominal party plaintiff shall be borne by IMCLONE, and IMCLONE shall keep any recovery or damages for past infringement derived therefrom, except for the payment to AVENTIS of [**], from which costs and expenses of the infringement action have been deducted.

8.3           If within six (6) months after having been notified by AVENTIS or after notifying AVENTIS of any alleged infringement in accordance with Section 8.1, IMCLONE shall have been unsuccessful in persuading the alleged infringer to desist and shall not have brought and shall not be diligently prosecuting an infringement action, or if IMCLONE shall notify AVENTIS at any time prior thereto of its intention not to bring suit against any alleged infringer, then, and in these events only, AVENTIS shall have the right, but shall not be obligated, to prosecute at its own expense any infringement of the Patent Rights.  No settlement, consent judgment or other voluntary final disposition of the suit may be entered into without the consent of IMCLONE, which consent shall not be unreasonably withheld.  The total cost of any such infringement action commenced solely by AVENTIS shall by borne by AVENTIS and AVENTIS shall keep any recovery or damages for past infringement derived therefrom, except for the payment to IMCLONE of [**], from which costs and expenses of the infringement action have been deducted.  If IMCLONE joins

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AVENTIS in the enforcement of the Patent Rights by litigation under this Section 8.3, [**].

ARTICLE 9– RELEASE AND INDEMNITY

9.1           IMCLONE shall fully indemnify and hold harmless AVENTIS, as well as each of its affiliates, successors, and assigns, and its present or former officers, directors, agents, and employees (collectively, the “AVENTIS Released Parties”) from and against any third party claim or expense or cost relating in any way to any Patent Rights or to the manufacture, use or sale of Erbitux®.

9.2           IMCLONE fully and broadly releases the Aventis Released Parties from any claim of any kind, whether known or unknown, with respect to the License Agreement up to and including the date of this Amended and Restated License Agreement.  AVENTIS fully and broadly releases each of IMCLONE’s affiliates, successors, and assigns, and its present or former officers, directors, agents, and employees from any claim of any kind, whether known or unknown, with respect to the License Agreement up to and including the date of this Amended and Restated License Agreement.  For the avoidance of doubt, nothing in this Section 9.2 shall affect IMCLONE’s royalty payment obligations set forth under this Agreement going forward.

ARTICLE 10 - PRODUCT LIABILITY

10.1         IMCLONE shall defend, indemnify, and hold AVENTIS harmless from and against all liability, demands, damages, expense or losses for death, personal injury, illness or property damage arising (a) out of use by IMCLONE or its transferees of inventions licensed or Know-how furnished under this Agreement, or (b) out of any use, sale or other disposition by IMCLONE or its transferees of products made by use of such inventions or information, except to the extent that such loss, claim, damage, or liability arises in whole or in part from the gross negligence or willful misconduct of AVENTIS.  As used in this clause, “AVENTIS” includes its Officers, Agents and Employees, and “IMCLONE” includes its Subsidiaries, Contractors and Sub-contractors.

ARTICLE 11 - ASSIGNMENT

11.1         IMCLONE may assign or otherwise transfer this Agreement and the license granted hereby and the rights acquired by it hereunder so long as such assignment or transfer shall be accompanied by a sale or other transfer of IMCLONE’s entire business or of that part of IMCLONE’s business to which the license granted hereby relates.  IMCLONE shall give AVENTIS thirty (30) days prior notice of such assignment and transfer.

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ARTICLE 12 - NON-USE OF NAMES

12.1         IMCLONE shall not use the name of AVENTIS nor any adaptation thereof in any advertising, promotional or sales literature without prior written consent of AVENTIS, in each case, except that IMCLONE may state that it is licensed by AVENTIS under one or more of the patents and/or applications comprising the Patent Rights.

ARTICLE 13 - PAYMENTS, NOTICES AND OTHER COMMUNICATIONS

13.1         Any payment, notice or other communication pursuant to this Agreement shall be sufficiently made or given on the date of mailing if sent to such party by certified first class mail, postage prepaid, or on the day it is received by such party if sent by any other method, addressed to such party at its address below or as it shall designate by written notice given to the other party:

In the case of AVENTIS, to:

Aventis Holdings, Inc.

3711 Kennett Pike,

Suite 200, Greenville,

Delaware 19807

Attn: President

With a copy to:

Sanofi-Aventis U.S. LLC

55, Corporate Drive

08807 Bridgewater

UNITED STATES

Attention: General Counsel

In the case of IMCLONE, to:

ImClone Systems Incorporated

180 Varick Street

New York, NY 10014

Attention: General Counsel

ARTICLE 14 - CONFIDENTIALITY

14.1         While this Agreement is in effect, and for a period of five (5) years thereafter, any technical or business related information or materials which AVENTIS or IMCLONE may disclose to each other shall be treated as confidential to

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the extent permitted by law.  Written confidential information shall be identified as confidential information.  Non-written confidential information shall be reduced to writing and identified as confidential information by the disclosing party within forty-five (45) days of disclosure.  Confidential information and materials shall be maintained in confidence by the receiving party and shall not be disclosed to any third party without prior written consent of the disclosing party, other than as contemplated by the terms of this Agreement.  This obligation shall not apply to information which:

(a)is in the public domain prior to the disclosure through no fault of the receiving party;

(b)becomes part of the public domain subsequent to disclosure through no fault of the receiving party;

(c)is lawfully disclosed to the receiving party by a third party who is not obligated to retain such information in confidence;

(d)is in the receiving party’s possession prior to disclosure as shown by reasonable proof;

(e)lawfully becomes publicly known following disclosure to a government patent agency in connection with the prosecution of any Patent Rights or a regulatory agency responsible for the approval of therapeutic products; or

(f)must be publicly disclosed pursuant to any government statute or regulation or any court order.

ARTICLE 15 - MISCELLANEOUS PROVISIONS

15.1         This Agreement shall be construed, governed, interpreted and applied in accordance with the laws of the State of New York, except that questions affecting the construction and effect of any patent shall be determined by the patent law of the country in which such patent was granted.

15.2         The parties hereto acknowledge that this Agreement sets forth the entire Agreement and understanding of the parties hereto as to the subject matter hereof except for as set out in the Three-Way Settlement and the Side Letter.  Any other express or implied agreements and understandings, either oral or written, with regard to the subject matter hereof (including the License Agreement), are superseded by the terms of this Agreement. This Agreement may be amended, or any term hereof modified, only by a written instrument duly executed by authorized representatives of both parties hereto.

15.3         If any one or more of the provisions contained in this Agreement is held invalid, illegal or unenforceable in any respect, the validity, legality and

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enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby.  In the event that the absence of the invalidated provision(s) adversely affects the substantive rights of the parties, the parties shall use their best efforts to replace the invalid, illegal or unenforceable provision(s) with valid, legal and enforceable provision(s) which, insofar as practical, implement the purposes of this Agreement.

15.4         All Licensed Products shipped to or sold in countries other than the United States shall be marked in such manner as to conform with the patent laws and practice of the country of manufacture or sale.

15.5         The failure of either party to assert a right hereunder or to insist upon compliance with any term or condition of this Agreement shall not constitute a waiver of that right or excuse a similar subsequent failure to perform any such term or condition by the other party.

15.6         Neither party shall be responsible or liable to the other for failure or delay in performance of this Agreement due to any war, fire, accident or other casualty or any changes in government laws or regulations, labor disturbance or acts of God, or any other contingency beyond the Party’s reasonable control.  In the event of the applicability of this Section 15.6, the party affected by such force majeure shall use its best efforts to eliminate, cure, and overcome any of such causes and resume performance of its obligations.

15.7         All rights and licenses granted under or pursuant to any section of this Agreement are and shall otherwise be deemed to be for purposes of Section 365(n) of Title 11, United States Code (the “Bankruptcy Code”) licenses of rights to “intellectual property” as defined in Section 101(56) of the Bankruptcy Code.  The parties shall retain and may fully exercise all of their respective rights and elections under the Bankruptcy Code.  Upon the bankruptcy of any party, the non-bankrupt party shall further be entitled to a complete duplicate of, or complete access to all documents embodying, any such intellectual property or relating to obtaining protection of or maintaining same, and such, if not already in its possession, shall be promptly delivered to the non-bankrupt party, unless the bankrupt party elects to continue, and continues, to perform all of its obligations under this Agreement.

15.8         The captions to the Sections and Articles hereof are not a part of this Agreement, but are merely for convenience to assist in locating and reading the Sections and Articles hereof.

15.9         For the purpose of this Agreement, except as otherwise expressly provided herein or unless the context otherwise requires: (a) defined terms include the plural as well as the singular and the use of any gender shall be deemed to include the other gender; (b) references to Articles, Sections and other subdivisions and to Schedules and Exhibits without reference to a document, are to designated Articles, Sections and other subdivisions of and to Schedules and Exhibits to this Agreement; (c) the use of the term “including” means “including but not limited to”;

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and (d) the words “herein”, “hereof”, “hereunder” and other words of similar import refer to this Agreement in whole and not to any particular provision.

15.10       It is expressly agreed that each of the parties shall be independent contractors and that the relationship between the parties shall not constitute a partnership, joint venture or agency.  Neither of the parties shall have the authority to make any statements, representations or commitments of any kind, or to take any action, which shall be binding on the other party, without the prior written consent of the other party.

15.11       No remedy referred to in this Agreement is intended to be exclusive, but each shall be cumulative and in addition to any other remedy referred to in this Agreement or otherwise available under law.

15.12       Each party has had the opportunity to consult with counsel in connection with the review, drafting and negotiation of this Agreement.  Accordingly, the rule of construction that any ambiguity in this Agreement shall be construed against the drafting party shall not apply.

15.13       This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

*  *  *

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IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and seals and duly executed this License Agreement as of the Effective Date.

Aventis Holdings, Inc.	ImClone Systems Incorporated
By:	By:
Name:	Name:
Title:	Title:

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EX-12.1

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EXHIBIT 12.1

IMCLONE SYSTEMS INCORPORATED

RATIO OF EARNINGS TO FIXED CHARGES

(in thousands)

		Year Ended
		2007		2006		2005		2004		2003
Income (loss) before taxes		$	95,291	$	320,320	$	88,074	$	131,014	$	(112,011	)
Add:
	Fixed charges		13,822		13,715		13,700		15,769		16,325
	Amortization of capitalized interest		1,008		1,007		98		98		98
Less:
	Interest capitalized during the period		19		2,640		5,394		6,087		6,059
Income (loss) before income taxes, as adjusted		$	110,102	$	332,402	$	96,478	$	140,794	$	(101,647	)
Fixed Charges:
	Interest (gross), including amortization of debt issuance costs		12,072		11,963		11,963		14,520		15,184
	Portion of rent representative of the interest factor		1,750		1,752		1,737		1,249		1,141
Fixed charges		$	13,822	$	13,715	$	13,700	$	15,769	$	16,325
Deficiency of earnings available to cover fixed charges		$	—	$	—	$	—	$	—	$	(117,972	)
Ratio of earnings to fixed charges			8.0:1		24.2:1		7.0:1		8.9:1		—

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EXHIBIT 12.1

IMCLONE SYSTEMS INCORPORATED RATIO OF EARNINGS TO FIXED CHARGES (in thousands)

EX-21.1

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EXHIBIT 21.1

Subsidiary	State of Incorporation
EndoClone Incorporated	Delaware
ImClone Systems Germany GmbH (as of January 2008)	Germany

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EXHIBIT 21.1

EX-23.1

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Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

THE BOARD OF DIRECTORS
IMCLONE SYSTEMS INCORPORATED:

        We consent to the incorporation by reference in the registration statements on Form S-3 (File Nos. 333-117968, 333-37746, 333-07339, 333-21417, 333-39067 and 333-67335) and Form S-8 (File Nos. 333-38620, 333-10275, 033-95894, 333-64825, 333-64827, 333-117995, 333-30172, 333-68534,333-101492 and 333-146579) of ImClone Systems Incorporated of our reports dated February 29, 2008, with respect to the consolidated balance sheets of ImClone Systems Incorporated and subsidiary as of December 31, 2007 and 2006, and the related consolidated statements of income, stockholders' equity and comprehensive income (loss), and cash flows for each of the years in the three-year period ended December 31, 2007, and the effectiveness of internal control over financial reporting as of December 31, 2007, which reports appear in the December 31, 2007 annual report on Form 10-K of ImClone Systems Incorporated. Our report on the consolidated financial statements refers to the Company's adoption of the provisions of Statement of Financial Accounting Standards No. 123R, "Share-Based Payment."

/s/ KPMG LLP

Princeton, New Jersey
February 29, 2008

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Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

EX-31.1

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EXHIBIT 31.1

CERTIFICATION

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

1.

I have reviewed this Annual Report on Form 10-K for the year ended December 31, 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.

Date: February 29, 2008 /s/  JOHN H. JOHNSON John H. Johnson
Chief Executive Officer

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EXHIBIT 31.1

CERTIFICATION

EX-31.2

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EXHIBIT 31.2

CERTIFICATION

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

1.

I have reviewed this Annual Report on Form 10-K for the year ended December 31, 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.

Date: February 29, 2008 /s/  PETER R. BORZILLERI Peter R. Borzilleri
Interim Vice President, Finance

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EXHIBIT 31.2

CERTIFICATION

EX-32

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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 Annual Report on Form 10-K of ImClone Systems Incorporated (the "Company") for the year ended December 31, 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.

Date: February 29, 2008	/s/  JOHN H. JOHNSON John H. Johnson Chief Executive Officer
Date: February 29, 2008	/s/  PETER R. BORZILLERI Peter R. Borzilleri Interim Vice President, Finance

        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.

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EXHIBIT 32

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