UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-Q

      [X]        QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                 OF THE SECURITIES EXCHANGE ACT OF 1934

                 For the quarterly period ended March 31, 1997

      [ ]        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                 OF THE SECURITIES EXCHANGE ACT OF 1934

                 For the transition period from   ___________  to ___________

Commission file number  0-19612

                          IMCLONE SYSTEMS INCORPORATED
             (Exact name of registrant as specified in its charter)
 
             DELAWARE                                            04-2834797
  (State or other jurisdiction of                              (IRS Employer
   incorporation or organization)                            Identification No.)

     180 VARICK STREET, NEW YORK, NY                                10014
(Address of principal executive offices)                          (Zip Code)

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

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

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                              Yes    X        No
                                    ---           ---
Applicable only to corporate issuers:

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

                  Class                        Outstanding as of May 14, 1997
      -----------------------------            ------------------------------
      Common Stock, par value $.001                  24,075,930 Shares


                                       
<PAGE>

                          IMCLONE SYSTEMS INCORPORATED

                                      INDEX

                                                                        Page No.
                                                                        --------
PART I - FINANCIAL INFORMATION

   Item 1.    Financial Statements

              Balance Sheets - March 31, 1997 (unaudited)
              and December 31, 1996                                        1

              Unaudited Statements of Operations - Three months
              ended March 31, 1997 and 1996                                2

              Unaudited Statements of Cash Flows - Three months
              ended March 31, 1997 and 1996                                3

              Notes to Financial Statements                                4

   Item 2.    Management's Discussion and Analysis of
              Financial Condition and Results of Operations                5

PART II - OTHER INFORMATION

   Item 6.    Exhibits and Reports on Form 8-K                            10


<PAGE>
 
Part 1 - FINANCIAL INFORMATION
Item 1 - Financial Statements

                          IMCLONE SYSTEMS INCORPORATED

                                 Balance Sheets
                        (in thousands, except share data)
<TABLE>
<CAPTION>

                                                                                   March 31,   December 31,
                               Assets                                                 1997         1996
                                                                                   ---------    ---------
                                                                                  (unaudited)
<S>                                                                                <C>          <C>      
Current assets:
     Cash and cash equivalents..................................................   $   1,580    $   2,734
     Securities available for sale .............................................      30,788       10,780
     Prepaid expenses ..........................................................         187          122
     Other current assets ......................................................         149          479
                                                                                   ---------    ---------
                            Total current assets ...............................      32,704       14,115
                                                                                   ---------    ---------
Property and equipment:
     Land ......................................................................         340          340
     Building and building improvements ........................................       8,969        8,969
     Leasehold improvements ....................................................       4,832        4,832
     Machinery and equipment ...................................................       5,281        5,159
     Furniture and fixtures ....................................................         536          536
     Construction in progress ..................................................         534          320
                                                                                   ---------    ---------
                            Total cost .........................................      20,492       20,156

       Less accumulated depreciation and amortization ..........................     (10,012)      (9,606)
                                                                                   ---------    ---------
                            Property and equipment, net ........................      10,480       10,550
                                                                                   ---------    ---------
Patent costs, net ..............................................................         976          977
Deferred financing costs, net ..................................................          62           65
Amount due from officer and stockholder ........................................         113          101
Other assets ...................................................................          77           77
                                                                                   ---------    ---------
                                                                                   $  44,412    $  25,885
                                                                                   =========    =========
                                 Liabilities and Stockholders' Equity
Current liabilities:
    Accounts payable............................................................   $     869    $   1,059
    Accrued expenses and other .................................................         777        1,366
    Interest payable ...........................................................         342          238
    Current portion of long-term liabilities ...................................       3,732        3,858
                                                                                   ---------    ---------
                            Total current liabilities ..........................       5,720        6,521
                                                                                   ---------    ---------
Long-term debt .................................................................       2,200        2,200
Other long-term liabilities, less current portion ..............................         240          575
                                                                                   ---------    ---------
                            Total liabilities ..................................       8,160        9,296
                                                                                   ---------    ---------
Commitments and contingencies

Stockholders' equity:
    Preferred stock, $1.00 par value; authorized 4,000,000 shares;
         none issued and outstanding ...........................................        --           --
    Common stock, $.001 par value; authorized 30,000,000 shares;
         issued 23,724,122 and 20,248,122 at  March 31, 1997 and
         December 31, 1996, respectively; outstanding 23,690,199 and
         20,233,699 at March 31, 1997 and December 31, 1996, respectively ......          24           20
    Additional paid-in capital .................................................     145,118      118,760
    Accumulated deficit ........................................................    (108,326)    (101,973)
    Treasury stock, at cost; 33,923 and 14,423 shares at March 31, 1997
         and December 31, 1996, respectively ...................................        (342)        (169)
    Common stock subscription receivable .......................................        (150)        --
    Unrealized loss on securities available for sale ...........................         (72)         (49)
                                                                                   ---------    ---------
                            Total stockholders' equity .........................      36,252       16,589
                                                                                   ---------    ---------
                                                                                   $  44,412    $  25,885
                                                                                   =========    =========
</TABLE>

                 See accompanying notes to financial statements.


                                       1
<PAGE>

                          IMCLONE SYSTEMS INCORPORATED

                            Statements of Operations
                      (in thousands, except per share data)

                                   (unaudited)

                                                             Three Months Ended
                                                                 March 31,
                                                           ---------------------
                                                             1997         1996
                                                           --------     --------
Revenues:                              
     License fees from third parties ...................   $   --      $   --
     Research and development funding from third
        parties and other ..............................         75          75
                                                           --------    -------- 
               Total revenues ......................             75          75
                                                           --------    -------- 
Operating expenses:
     Research and development ..........................      5,395       2,325
     General and administrative ........................      1,083         741
                                                           --------    -------- 
               Total operating expenses .............         6,478       3,066
                                                           --------    -------- 
Operating loss .........................................     (6,403)     (2,991)
                                                           --------    -------- 
Other (income) expense:
     Interest and other income .........................       (245)       (193)
     Interest and other expense ........................        195         347
                                                           --------    -------- 
               Net interest and other (income) expense          (50)        154
                                                           --------    -------- 
Net loss ...............................................   $ (6,353)   $ (3,145)
                                                           ========    ======== 
Net loss per common share ..............................   $  (0.30)   $  (0.18)
                                                           ========    ======== 
Weighted average shares outstanding ....................     21,231      17,865
                                                           ========    ======== 

                 See accompanying notes to financial statements.
 

                                       2
<PAGE>

                          IMCLONE SYSTEMS INCORPORATED

                            Statements of Cash Flows
                                 (in thousands)

                                   (unaudited)

<TABLE>
<CAPTION>

                                                                                   Three Months Ended                 
                                                                                       March 31,
                                                                                 ---------------------
                                                                                   1997         1996
                                                                                 --------     --------
<S>                                                                              <C>         <C>      
Cash flows from operating activities:
   Net loss ..................................................................   $ (6,353)   $ (3,145)
   Adjustments to reconcile net loss to net
    cash used in operating activities:
      Depreciation and amortization ..........................................        433         453
      Expense associated with issuance
         of options and warrants ............................................       2,423        --
      Loss on sale of investments ............................................          3        --
      Changes in:
         Prepaid expenses ....................................................        (65)       (140)
         Other current assets ................................................        330         (85)
         Due from officer ....................................................        (12)          7
         Interest payable ....................................................        104         316
         Accounts payable ....................................................       (190)       (439)
         Accrued expenses and other ..........................................       (589)        (71)
                                                                                 --------    --------
                        Net cash used in operating activities ................     (3,916)     (3,104)
                                                                                 --------    --------
Cash flows from investing activities:
      Acquisitions of property and equipment .................................       (336)       (109)
      Purchases of securities available for sale..............................    (30,103)    (18,532)
      Sales of securities available for sale .................................     10,069        --
      Additions to patents ...................................................        (23)         (8)
                                                                                 --------    --------
                        Net cash used in investing activities ................    (20,393)    (18,649)
                                                                                 ========    ========
Cash flows from financing activities:
      Net proceeds from issuance of common stock .............................     23,196      13,567
      Proceeds from exercise of stock options and warrants ...................        593         223
      Purchase of treasury stock..............................................       (173)       --
      Payments of other liabilities ..........................................       (461)        (14)
                                                                                 --------    --------
                        Net cash provided by financing activities ............     23,155      13,776
                                                                                 --------    --------
Net decrease in cash and cash equivalents ....................................     (1,154)     (7,977)

Cash and cash equivalents at beginning of period .............................      2,734      10,207
                                                                                 --------    --------
Cash and cash equivalents at end of period ...................................   $  1,580    $  2,230
                                                                                 ========    ========
</TABLE>

                 See accompanying notes to financial statements.


                                       3
<PAGE>

                          IMCLONE SYSTEMS INCORPORATED
                      NOTES TO INTERIM FINANCIAL STATEMENTS
                                   (unaudited)

(1)  Basis of Presentation

     The financial statements of ImClone Systems Incorporated (the "Company") as
of March 31,  1997 and for the three  months  ended  March 31, 1997 and 1996 are
unaudited.  In the opinion of management,  these unaudited financial  statements
include  all  adjustments,  consisting  only of  normal  recurring  adjustments,
necessary for a fair presentation.  These financial statements should be read in
conjunction  with the financial  statements  and notes  thereto  included in the
Company's  Annual  Report on Form 10-K for the year ended  December 31, 1996, as
filed with the Securities and Exchange Commission.

     Results for the interim periods are not  necessarily  indicative of results
for the full years.

(2)  Related Party Transactions

     As of March  31,  1997,  a  promissory  note  given to the  Company  by its
President and CEO totaled  $113,000.  The promissory  note covers  miscellaneous
cash  advances made to the President and CEO through the date of the issuance of
the promissory  note in March 1995.  The  promissory  note bears interest at the
rate of 8%  compounded  quarterly,  and by its terms was payable in its entirety
upon the earlier of on demand by the Company or April 30, 1997.  The Company has
accepted  a new  promissory  note which  replaces  the  original  note (the "new
promissory  note") in the  aggregate  amount of $110,000  from the President and
CEO, The new promissory note is payable as to $15,000 no later than May 15, 1997
and as to the remainder upon the earlier of on demand by the Company or December
31, 1997 and bears  interest  at the rate of 5%  compounded  quarterly.  The new
promissory  note covers the  remaining  balance of the original  note,  interest
thereon and  additional  miscellaneous  cash advances made since the date of the
original note totaling  $15,000.  As of May 15, 1997 the aggregate amount of the
new promissory note, including interest totaled approximately $95,000.

(3)  Net Loss Per Share

     Net loss per share is  computed  based on the  weighted  average  number of
shares outstanding. Common stock equivalents are not included in the computation
of average shares outstanding because they are anti-dilutive.

(4)  Reclassification

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

(5)  Capital Stock

     In March 1997, the Company  completed a public sale of 3,000,000  shares of
its common stock,  $.001 par value, (the "Common Stock") at a per share price to
the  public  of  $7.875.  Net  proceeds  to the  Company  from the sale  totaled
approximately  $23,196,000  after deducting  expenses  payable by the Company in
connection with the offering and the commission paid by the Company.

     In March 1997,  the Company  extended  for a two year period the term of an
officer's  warrant to purchase 397,000 shares of the Company's Common Stock at a
per share exercise price equal to $1.50.  In connection  with this  transaction,
the Company recognized a one-time non-cash compensation expense of approximately
$2,233,000.


                                       4
<PAGE>

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
        FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     The following discussion and analysis by management is provided to identify
certain  significant factors which affected the Company's financial position and
operating  results  during the period  included  in the  accompanying  financial
statements.

Results of Operations

Three Months Ended March 31, 1997 and 1996

Revenues

     Revenues for each of the three-month  periods ended March 31, 1997 and 1996
were  $75,000 and  represented  research and  development  support fees from the
Company's  corporate  partnership  with the  Wyeth/Lederle  Vaccine  division of
American  Home Products  Corporation  ("American  Home") in  infectious  disease
vaccines.

Operating: Research and Development

     Total operating  expenses for the three-month  periods ended March 31, 1997
and March 31, 1996 were  $6,478,000 and $3,066,000,  respectively.  Research and
development  expenses for the three-month periods ended March 31, 1997 and March
31, 1996 were  $5,395,000  and  $2,325,000,  respectively.  Such amounts for the
three-month  periods ended March 31, 1997 and March 31, 1996 represented 83% and
76%,  respectively,  of total  operating  expenses.  The $3,070,000  increase in
research and  development  expenses  was  primarily  attributable  to a one-time
$2,233,000  non-cash  compensation  expense  recorded  in  connection  with  the
extension of the term of an officer's  warrant to purchase 397,000 shares of the
Company's  Common Stock.  The increase is also  attributable to costs associated
with additional  staffing and  expenditures  in the functional  areas of product
development,  manufacturing  and clinical and regulatory  affairs to support the
manufacture of C225 for human clinical trials as well as travel-related expenses
to pursue strategic  partnerships for C225 (and other product  candidates).  The
remaining  increase reflects growth in the area of discovery research for future
product candidates.

General and Administrative

     General and administrative expenses include administrative personnel costs,
costs incurred in connection with pursuing  arrangements with corporate partners
and  technology  licensors,  and expenses  associated  with  applying for patent
protection  for the Company's  technology  and  products.  Such expenses for the
three-month  periods ended March 31, 1997 and March 31, 1996 were $1,083,000 and
$741,000,  respectively, an increase of $342,000 or 46%. The increase in general
and  administrative   expenses  primarily  reflects  (i)  $129,000  in  non-cash
compensation  expense  recorded in connection with an option grant to an officer
and (ii)  additional  staffing  to support  the  expanding  research,  clinical,
development and manufacturing efforts of the Company, particularly with its lead
therapeutic   product   candidate,   C225.  The  Company   expects  general  and
administrative  expenses  to  increase  in future  periods  to  support  planned
increases in research and development.


                                       5
<PAGE>

Interest and Other Income/Expense

     Interest and other income was  $245,000  for the  three-month  period ended
March 31, 1997 compared to $193,000 for the  three-month  period ended March 31,
1996, an increase of $52,000 or 27%. The increase was primarily  attributable to
the increased  interest income earned from higher cash balances in the Company's
investment  portfolio  resulting from the proceeds  received from a public stock
offering  completed in March 1997.  Interest and other  expense was $195,000 and
$347,000 for the  three-month  periods  ended March 31, 1997 and March 31, 1996,
respectively, a decrease of $152,000 or 44%. Interest and other expense for both
periods primarily  includes interest on two outstanding  Industrial  Development
Revenue  Bonds with an aggregate  principal  amount of  $4,313,000  and interest
recorded on the  liability to Pharmacia and UpJohn Inc.  ("Pharmacia"),  for the
reacquisition  of the  worldwide  rights to IL-6m as well as  clinical  material
manufactured  and  supplied  by  Pharmacia  to the  Company.  The  decrease  was
primarily attributable to the May 1996 exchange of debt for Company Common Stock
with the Oracle Group and a Director.  See "Liquidity and Capital Resources" for
further discussion of these transactions.

Net Losses

     The  Company  had net  losses  of  $6,353,000  or $0.30  per  share for the
three-month  period ended March 31, 1997,  compared with $3,145,000 or $0.18 per
share for the three-month period ended March 31, 1996.


Liquidity and Capital Resources

     The Company's cash and cash  equivalents and securities  available for sale
totaled  $29,838,000  at May 14, 1997; on March 31, 1997 such  balances  totaled
$32,368,000. The current balances in the Company's cash and cash equivalents and
securities available for sale reflects the proceeds received from the March 1997
public offering of 3,000,000 shares of Common Stock .

     In May 1996,  the  Company  extended  its  collaboration  with  Merck  KGaA
("Merck") for the development of a therapeutic cancer vaccine, BEC-2, for use in
small-cell  carcinoma and in malignant melanoma.  The collaboration  continues a
research  and license  agreement  between the two  companies  signed in December
1990. Under the terms of the modified agreement, the Company could receive up to
$11,700,000  in license  fees,  research and  development  support and milestone
payments in addition to moneys previously received under the original agreement.
In return,  Merck will  receive  marketing  rights to BEC-2 for all  therapeutic
indications outside North America. Formerly the rights of Merck were confined to
Europe,  Australia  and New  Zealand.  Merck will also share in the  development
costs for the United  States and  Europe and will pay all  development  costs in
other territories.  The Company will be entitled to royalties based upon product
sales outside of North America.

     In December 1996,  the Company  signed an agreement with Finova  Technology
Finance, Inc. to finance the lease of laboratory and computer-related  equipment
and make certain  building and leasehold  improvements  to facilities  involving
payments aggregating  approximately  $2,500,000.  At April 30, 1997, the Company
had $2,079,000 available under this agreement.

     In December  1996,  the Company  entered into a technology  cross-licensing
agreement with Immunex  Corporation  ("Immunex")  relating to FLT-3/FLK-2 ligand
and its receptor. FLT-3 ligand is a hematopoietic growth factor. Under the terms
of the agreement,  the Company has exclusively  licensed the receptor to Immunex
for use in the manufacture of the ligand. In return,  the Company is entitled to
receive an initial  payment of $150,000 and a royalty  based on the sales of the
ligand by  Immunex  and its  sub-licensees.  Of the  initial  $150,000  payment,
$75,000 was recorded as license fee revenue for the year ended December 31, 1996
and received in March 1997. The remaining  $75,000 is anticipated to be received
during the second quarter of 1997. In addition,  Immunex has granted the Company
a  non-exclusive  license  in the United  States and Canada to use its  patented
FLT-3/FLK-2  ligand,  manufactured  by Immunex,  for ex-vivo stem cell expansion
together  with an  exclusive  license  to  distribute  the  ligand  with its own
proprietary products for ex-vivo expansion. Immunex has agreed to seek to obtain
the consent of its parent  company,  American  Home,  to expand the territory of
this license to include the world outside North America.


                                       6
<PAGE>

     In December 1996, the Company and Abbott  Laboratories  ("Abbott") modified
their  1992   diagnostic   strategic   alliance  to  provide  for  an  exclusive
sublicensing  agreement  with Chiron  Diagnostics  ("Chiron")  for the Company's
patented DNA signal amplification technology, AMPLIPROBE. Under the terms of the
agreement,  all sales of Chiron  branched DNA  diagnostic  probe  technology  in
countries  covered by Company  patents will be subject to a royalty to Abbott to
be passed through to the Company.  The initial royalty payment of  approximately
$225,000,  which covered  AMPLIPROBE  sales from January 1992 through  September
1996,  was recorded as revenue for the year ended December 31, 1996. The Company
received  the initial  royalty  payment of $225,000  from Abbott in late January
1997.  Future royalty revenue will be received  quarterly on all Chiron sales of
AMPLIPROBE.

     In May 1997,  a European  patent was issued for the  Company's  proprietary
Repair Chain Reaction  ("RCR") DNA probe technology which was licensed to Abbott
under the 1992  strategic  alliance  discussed in the preceding  paragraph.  The
issuance of the patent  entitles the Company to receive two  milestone  payments
totaling  $1,000,000 and royalty payments on sales in covered European countries
for products using the Company's RCR technology.

     In March 1997, the Company  completed a public sale of 3,000,000  shares of
Common  Stock at a per share price to the public of $7.875.  Net proceeds to the
Company from the sale totaled approximately $23,196,000 after deducting expenses
payable by the Company in connection  with the offering and the commission  paid
by the Company.

     The  Company  has  expended  and will  continue  to  expend  in the  future
substantial  funds to continue  the research and  development  of its  products,
conduct   pre-clinical  and  clinical  trials,   establish   clinical-scale  and
commercial-scale  manufacturing  in its own  facilities or in the  facilities of
others,  and  market its  products.  In  addition,  $2,113,000  and  $2,200,000,
respectively,  in  Industrial  Development  Revenue Bonds issued by the New York
Industrial  Development  Agency  ("NYIDA")  on behalf of the Company in 1986 and
1990 become due in  December  1997 and May 2004,  respectively.  The Company has
granted a security interest in substantially  all facility  equipment located in
its New York City facility to secure the obligations of the Company to the NYIDA
relating to the 1986 and 1990 Industrial Development Revenue Bonds.

     In July  1993,  the  Company  entered  into a  termination  agreement  with
Erbamont,  Inc., now a subsidiary of Pharmacia,  to acquire the worldwide rights
to IL-6m,  a blood cell growth  factor,  which had been  licensed  to  Pharmacia
pursuant to a  development  and licensing  agreement.  In  consideration  of the
return of rights and the  transfer  of certain  material  and  information,  the
Company has paid  $1,928,000  and has further  obligations  to  Pharmacia.  Such
obligations,  including those to pay for IL-6 mutein material  manufactured  and
supplied by Pharmacia,  totaled  $2,400,000 at March 31, 1996. In addition,  the
Company is required to pay Pharmacia  $2,700,000 in royalties on eventual  sales
of IL-6m, if any. In March, 1996, the Company entered into a Repayment Agreement
with Pharmacia (the  "Repayment  Agreement")  pursuant to which it agreed to pay
the  $2,400,000  over 24 months  commencing  in March 1996,  with  interest only
payable during the first six months. At April 30, 1997 the remaining  obligation
to Pharmacia totaled $1,372,000. In connection with the Repayment Agreement, the
Company signed a Confession of Judgment, which can be filed by Pharmacia with an
appropriate court in the case of default by the Company.  Pursuant to a Security
Agreement  entered into with  Pharmacia,  the Company  pledged its  interests in
patents related to IL-6m and to heparanase to secure its  obligations  under the
Repayment Agreement.

     The Company's future working capital and capital  requirements  will depend
upon numerous  factors,  including  the progress of the  Company's  research and
development  programs,  pre-clinical  testing and clinical trials, the Company's
corporate partners  fulfilling their obligations to the Company,  the timing and
cost of seeking  regulatory  approvals,  the level of resources that the Company
devotes to the development of manufacturing,  marketing and sales  capabilities,
technological advances, the status of competitors and the ability of the Company
to maintain  existing and establish new  collaborative  arrangements  with other
companies to provide funding to the Company to support these activities.


                                       7
<PAGE>

     The  Company  expects to incur  substantial  funding  requirements  for the
expansion of operations,  including (i) the expansion of the clinical  trials of
C225 and the related  manufacturing  program to support these trials and (ii) in
an effort to develop new  product  candidates  the  expansion  of  research  and
development  activities  including among other things,  increased staffing,  the
acquisition  of  equipment,   and  the  consumation  of  new  outside   research
agreements.  In addition, the entire $1,504,000 of outstanding debt to Pharmacia
is payable ratably  throughout the period ending February 1998 and $2,113,000 of
the  Industrial  Development  Revenue  Bonds issued by the NYIDA  becomes due in
December 1997.  The Company  expects that its capital  resources,  including the
ongoing  research  support of its corporate  partners will be sufficient to fund
its operations for  approximately  the next two years.  However,  the receipt of
certain of such ongoing  research  support is subject to attaining  research and
development  milestones,  certain  of which  have not yet been  achieved.  These
milestones  include  the  successful  completion  of a pilot  manufacturing  run
relating to the BEC-2 cancer vaccine.  No assurance can be given that there will
be no change in projected research support  (including  research and development
milestones) or expenses that would lead to the Company's  capital being consumed
at a faster rate than  currently  expected.  In order to fund its capital  needs
beyond  approximately  the next two years, the Company will require  significant
levels of additional  capital and intends to raise the necessary capital through
additional equity or debt financings,  arrangements  with corporate  partners or
from other sources. There is no assurance that the Company will be successful in
consummating  any such  financings,  arrangements  with  corporate  partners  or
securing other sources.

     The Company has entered into  preliminary  discussions  with several  major
pharmaceutical  companies concerning the funding of research and development for
certain of its products in research.  No assurance can be given that the Company
will be successful in pursuing any such alternatives.  In addition,  the Company
may seek to enter into a significant strategic partnership with a pharmaceutical
company  for  the  development  of its  lead  product  candidate,  C225.  Such a
strategic  alliance could include an up-front equity investment and license fees
plus  milestone  fees and revenue  sharing.  There can be no assurance  that the
Company will be  successful in achieving  such an alliance,  nor can the Company
predict the amount of funds which might be  available  to it if it entered  into
such an alliance or the time at which such funds would be made available.

     The Company has outfitted and purchased equipment for a certain property to
create a  clinical-scale  production  facility  that  complies with current Good
Manufacturing  Practices regulations.  To be successful,  the Company's products
must be  manufactured  in commercial  quantities in compliance  with  regulatory
requirements  and at  acceptable  costs.  Although  the  Company  has  developed
products in the laboratory and in some cases has produced sufficient  quantities
of materials for  pre-clinical  animal trials and early stage  clinical  trials,
production in late stage clinical or commercial  quantities may create technical
challenges for the Company.  If it commercializes its products,  the Company may
adapt this  facility  for use as its  commercial-scale  manufacturing  facility.
However, the Company has limited experience in clinical-scale  manufacturing and
no experience in commercial-scale  manufacturing,  and no assurance can be given
that the Company will be able to make the  transition to late stage  clinical or
commercial  production.  The timing and any  additional  costs of  adapting  the
facility for commercial manufacturing will depend on several factors,  including
the progress of products through clinical trials, and are not yet determinable.

     Total  capital  expenditures  made during the three  months ended March 31,
1997 were $336,000 of which $295,000 related to the  refurbishment and equipping
of the  Company's  manufacturing  facility in New Jersey and  $41,000  reflected
equipment and  computer-related  purchases for the corporate office and research
laboratories in New York.


                                       8
<PAGE>

Certain Factors Affecting Forward-Looking Statements--Safe Harbor Statement

     Except for the historical  information  contained herein, this Management's
Discussion  and Analysis of Financial  Condition and Results of  Operations  and
other portions of this report contain  forward-looking  statements  that involve
certain risks and uncertainties.  The Company's actual  operations,  performance
and results could differ  materially from those reflected in, or anticipated by,
these forward-looking  statements. In evaluating the Company and its operations,
performance and results,  investors  should  consider,  among other things,  the
scientific and business risks and  uncertainties  of new product  development in
the biotechnology field, the risk of rapid and significant technological change,
the risk of  development  by one or more  competitors  of products which compete
with the Company's  proposed products and the risks and uncertainties  discussed
in the Company's public filings with the Securities and Exchange Commission (the
"Commission"),  including the  Company's  most recent Annual Report on Form 10-K
under the  captions  "Business"  and  "Management's  Discussion  and Analysis of
Financial Condition and Results of Operations."

Recently Issued Accounting Standards

     In February 1997, the Financial Accounting Standards Board issued Statement
of  Financial  Standards  No. 128 (SFAS 128),  "Earnings  Per  Share".  SFAS 128
establishes  standards  for  computing  and  presenting  earnings per share.  In
accordance  with the effective date of SFAS 128, the Company will adopt SFAS 128
as of December  31,  1997.  This  statement  is not  expected to have a material
impact on the Company's financial statements.


                                       9
<PAGE>

PART II - OTHER INFORMATION

Item 6.   Exhibits and Reports on Form 8-K

          (a)  Exhibits:

               27.1 -  Financial Data Schedule

          (b)  Reports on Form 8-K:

               On February 26,  1997,  the Company  filed with the  Commission a
          Current  Report on Form 8-K dated  February  25, 1997  relating to its
          filing with the Commission of a registration statement to register the
          public offering of 3,000,000 shares of Common Stock (Item 5).

               On February 28,  1997,  the Company  filed with the  Commission a
          Current  Report on Form 8-K dated  February  25, 1997  containing  the
          Company's audited financial statements for the year ended December 31,
          1996. (Item 5).


                                       10
<PAGE>

                                   SIGNATURES

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



                                                 IMCLONE SYSTEMS INCORPORATED
                                                 (Registrant)

Date:  May 14, 1997                         By   /s/ Samuel D. Waksal
                                                 -------------------------------
                                                 Samuel D. Waksal
                                                 President and 
                                                    Chief Executive Officer



Date: May 14, 1997                          By   /s/ Carl S. Goldfischer
                                                 -------------------------------
                                                 Carl S. Goldfischer
                                                 Vice President, Finance and 
                                                     Chief Financial Officer


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