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 September 30, 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                   (IRS Employer Identification No.)
of incorporation or organization)              

   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 November 12, 1997
-----------------------------                -----------------------------------
Common Stock, par value $.001                         24,201,830 Shares

<PAGE>

                          IMCLONE SYSTEMS INCORPORATED

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

                  Item 1. Financial Statements

                          Balance Sheets - September 30, 1997 (unaudited)
                          and December 31, 1996                              1

                          Unaudited Statements of Operations - Three and 
                          nine months ended September 30, 1997 and 1996      2

                          Unaudited Statements of Cash Flows - Nine
                          months ended September 30, 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                   11
<PAGE>

Part 1 - FINANCIAL INFORMATION
Item 1 - Financial Statements

                          IMCLONE SYSTEMS INCORPORATED

                                 Balance Sheets
                        (in thousands, except share data)


                                                      September 30, December 31,
                        Assets                             1997         1996
                                                      ------------  -----------
                                                       (unaudited)
Current assets:                                          
  Cash and cash equivalents ........................     $   1,775    $   2,734
  Securities available for sale ....................        24,506       10,780
  Prepaid expenses .................................           337          122
  Other current assets .............................         1,799          479
                                                         ---------    ---------
                Total current assets ...............        28,417       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 ..........................         5,960        5,159
  Furniture and fixtures ...........................           536          536
  Construction in progress .........................         1,117          320
                                                         ---------    ---------
                                                        
                Total cost .........................        21,754       20,156
                                                        
  Less accumulated depreciation and amortization ...       (10,812)      (9,606)
                                                         ---------    ---------
                Property and equipment, net ........        10,942       10,550
                                                         ---------    ---------
                                                        
Patent costs, net ..................................         1,084          977
Deferred financing costs, net ......................            58           65
Amount due from officer and stockholder ............            82          101
Other assets .......................................            85           77
                                                         ---------    ---------
                                                         $  40,668    $  25,885
                                                         =========    =========
      Liabilities and Stockholders' Equity   
Current liabilities:                                 
  Accounts payable .................................     $   1,253    $   1,059 
  Accrued expenses and other .......................           617        1,366
  Interest payable .................................           277          238
  Current portion of long-term liabilities .........         2,967        3,858 
                                                         ---------    ---------
                 Total current liabilities .........         5,114        6,521
                                                         ---------    ---------
                                                        
Long-term debt .....................................         2,200        2,200
Other long-term liabilities, less current portion ..           412          575
                                                         ---------    ---------
                 Total liabilities .................         7,726        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 45,000,000 shares;                        
    issued 24,236,772 and 20,248,122 at                 
    September 30, 1997 and December 31, 1996,           
    respectively; outstanding 24,185,955 and            
    20,233,699 at September 30, 1997 and                
    December 31, 1996, respectively ................            24           20
Additional paid-in capital .........................       146,118      118,760
Accumulated deficit ................................      (112,698)    (101,973)
Treasury stock, at cost; 50,817 and 14,423              
    shares at September 30, 1997                        
    and December 31, 1996, respectively ............          (492)        (169)
Unrealized loss on securities                           
    available for sale .............................           (10)         (49)
                                                        ----------   ----------
                Total stockholders' equity .........        32,942       16,589
                                                        ----------   ----------
                                                        $   40,668   $   25,885
                                                        ==========   ==========
                                                                             
                 See accompanying notes to financial statements.


                                     Page 1
<PAGE>
                                                                             
                          IMCLONE SYSTEMS INCORPORATED

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

<TABLE>
<CAPTION>
                                                                            Three Months Ended                 Nine Months Ended   
                                                                               September 30,                     September 30,
                                                                        -------------------------         -------------------------
                                                                          1997             1996              1997            1996   
                                                                        --------         --------         --------         -------- 
<S>                                                                     <C>              <C>              <C>              <C>
Revenues:                                                                                        
  Product development milestone revenues .......................        $   --           $   --           $  2,500         $   --  
  Research and development funding from third
       parties and other .......................................             742               75            1,513              225
                                                                        --------         --------         --------         --------
               Total revenues ..................................             742               75            4,013              225
                                                                        --------         --------         --------         --------
Operating expenses:
     Research and development ..................................           3,320            2,683           11,972            7,601
     General and administrative ................................           1,039            1,031            3,394            2,618
                                                                        --------         --------         --------         --------
               Total operating expenses ........................           4,359            3,714           15,366           10,219
                                                                        --------         --------         --------         --------
Operating loss .................................................          (3,617)          (3,639)         (11,353)          (9,994)
                                                                        --------         --------         --------         --------
Other (income) expense:
     Interest and other income .................................            (414)            (241)          (1,099)            (695)
     Interest and other expense ................................             131              144              471              691
                                                                        --------         --------         --------         --------
                Net interest and other income ..................            (283)             (97)            (628)              (4)
                                                                        --------         --------         --------         --------
Net loss before extraordinary item .............................          (3,334)          (3,542)         (10,725)          (9,990)

Extraordinary loss on extinguishment of debt ...................            --               --               --              1,267
                                                                        --------         --------         --------         --------
Net loss .......................................................        $ (3,334)        $ (3,542)        $(10,725)        $(11,257)
                                                                        ========         ========         ========         ========
Net loss per common share:
  Loss before extraordinary loss on
   extinguishment of debt ......................................        $  (0.14)        $  (0.18)        $  (0.46)        $  (0.52)

  Extraordinary loss on extinguishment of debt .................            --               --               --               0.07
                                                                        --------         --------         --------         --------
                Net loss per common share ......................        $  (0.14)        $  (0.18)        $  (0.46)        $  (0.59)
                                                                        ========         ========         ========         ========
Weighted average shares outstanding ............................          24,123           19,925           23,193           19,131
                                                                        ========         ========         ========         ========
</TABLE>


                 See accompanying notes to financial statements.


                                     Page 2
<PAGE>

                          IMCLONE SYSTEMS INCORPORATED

                            Statements of Cash Flows
                                 (in thousands)
                                   (unaudited)
                                
                                                             Nine Months Ended  
                                                                September 30,
                                                           ---------------------
                                                              1997       1996   
                                                           ---------   ---------
Cash flows from operating activities:
  Net loss ..............................................  $(10,725)   $(11,257)
  Adjustments to reconcile net loss to net
     cash used in operating activities:
   Extraordinary loss on extinguishment of debt .........      --         1,267
   Depreciation and amortization ........................     1,286       1,348
   Discounted interest amortization .....................      --           156
   Expense associated with issuance
     of options and warrants ............................     2,681        --
   Loss on sale of investments ..........................         2        --
   Changes in:
     Prepaid expenses ...................................      (215)        (54)
     Other current assets ...............................    (1,320)       (273)
     Due from officer ...................................        19          17
     Other assets .......................................        (8)       --
     Interest payable ...................................        39          17
     Accounts payable ...................................       194        (595)
     Accrued expenses and other .........................      (749)       (161)
                                                           --------    --------
         Net cash used in operating activities ..........    (8,796)     (9,535)
                                                           --------    --------


Cash flows from investing activities:
     Acquisitions of property and equipment .............    (1,570)       (450)
     Proceeds from sale of equipment ....................       280        --
     Purchases of securities available for sale .........   (61,318)    (27,628)
     Sales of securities available for sale .............    47,629      13,987
     Additions to patents ...............................      (180)       (104)
                                                           --------    --------
         Net cash used in investing activities ..........   (15,159)    (14,195)
                                                           --------    --------

Cash flows from financing activities:
     Net proceeds from issuance of common stock .........    23,154      13,560
     Proceeds from exercise of stock options and warrants     1,526       1,991
     Purchase of treasury stock .........................      (323)        (19)
     Payments of other liabilities ......................    (1,361)       (209)
                                                           --------    --------
         Net cash provided by financing activities ......    22,996      15,323
                                                           --------    --------


Net decrease in cash and cash equivalents ...............      (959)     (8,407)

Cash and cash equivalents at beginning of period ........     2,734      10,207
                                                           ========    ========
Cash and cash equivalents at end of period ..............  $  1,775    $  1,800
                                                           ========    ========


                See accompanying notes to financial statements.


                                     Page 3
<PAGE>

                          IMCLONE SYSTEMS INCORPORATED
                         NOTES TO FINANCIAL STATEMENTS
                                  (unaudited)
                                                                                
(1)  Basis of Presentation

         The financial statements of ImClone Systems Incorporated  ("ImClone" or
the  "Company") as of September 30, 1997 and for the three and nine months ended
September 30, 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  (the
"Commission").

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

(2) Related Party Transactions

         As of September 30, 1997, a promissory note (the "new promissory note")
in the  original  principal  amount  of  $110,000  given to the  Company  by its
President and CEO totaled $82,000.  The new promissory note replaces an original
promissory note (the "original  promissory note") which was due upon the earlier
of on demand by the Company or April 30, 1997,  bore  interest at the rate of 8%
compounded  quarterly  and  covered  miscellaneous  cash  advances  made  to the
President  and CEO  through  the date of its  issuance  in March  1995.  The new
promissory  note was  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  promissory  note,  interest
thereon and  additional  miscellaneous  cash advances made since the date of the
original promissory note totaling $15,000. As of November 12, 1997 the aggregate
amount of the new promissory  note,  including  interest  totaled  approximately
$79,000.

(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)  Subsequent Event

         In October 1997, the Company entered into a Collaborative  Research and
License  Agreement with CombiChem,  Inc.  ("CombiChem"),  a private company,  to
discover and develop  novel small  molecules  against  selected  targets for the
treatment of cancer. The companies will utilize CombiChem's Discovery Engine(TM)
and Universal Informer  Library(TM) to generate small molecules for screening in
ImClone's assays for  identification  of lead  candidates.  ImClone will provide
CombiChem with research funding for two years,  milestone payments and royalties
on marketed  products,  if any. ImClone will have exclusive  worldwide rights to
develop  and  market  products  resulting  from  the   collaboration,   if  any.
Concurrently  with the  execution  of the  Collaborative  Research  and  License
Agreement, the Company entered into a Stock Purchase Agreement pursuant to which
the Company  purchased  1,000,000  shares of the common stock of  CombiChem  for
aggregate  consideration  of  $2,000,000.  This purchase will be recorded by the
Company at the lower of cost or net realizable value. Subsequent to the purchase
of these shares of common stock,  CombiChem  effected a 4 for 1 reverse split of
its common stock.


                                     Page 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

Nine Months Ended September 30, 1997 and 1996

Revenues

         Revenues  for the  nine-month  periods  ended  September  30,  1997 and
September 30, 1996 were $4,013,000 and $225,000, respectively.  Revenues in both
periods  included  research and  development  support fees of $225,000  from the
Company's  corporate  partnership  with the  Wyeth/Lederle  Vaccine  division of
American  Home Products  Corporation  ("American  Home") in  infectious  disease
vaccines.  Revenues  for the  nine-month  period ended  September  30, 1997 also
included  milestone  revenue of  $1,500,000  and  contract  research  support of
$1,042,000  from the Company's  research and license  agreement  with Merck KGaA
("Merck")  in  cancer  vaccines.   Additionally,  the  nine-month  period  ended
September 30, 1997 included  milestone revenue of $1,000,000 and royalty fees of
$246,000  from  the  Company's   strategic  alliance  with  Abbott  Laboratories
("Abbott") in diagnostics.

Operating: Research and Development

         Total operating expenses for the nine-month periods ended September 30,
1997 and  September 30, 1996 were  $15,366,000  and  $10,219,000,  respectively.
Research and development expenses for the nine-month periods ended September 30,
1997 and September 30, 1996 were $11,972,000 and $7,601,000,  respectively. Such
amounts for the  nine-month  periods ended  September 30, 1997 and September 30,
1996 represented 78% and 74%,  respectively,  of total operating  expenses.  The
$4,371,000  or 58%  increase  in  research  and  development  expenses  for  the
nine-month  period ended  September  30, 1997 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,  $.001 par value (the "Common Stock").  The increase
is also  attributable to costs  associated with  additional  staffing,  contract
manufacturing  and testing,  and expenditures in the functional areas of product
development,  manufacturing  and clinical and regulatory  affairs to support its
lead therapeutic  product  candidate,  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  nine-month  periods  ended  September  30, 1997 and September 30, 1996 were
$3,394,000  and  $2,618,000,  respectively,  an increase of $776,000 or 30%. The
increase in general and administrative  expenses primarily reflects (i) $279,000
in non-cash  compensation expense recorded in connection with an option grant to
an officer of the Company and (ii) additional support staffing for the expanding
research,  clinical,  development  and  manufacturing  efforts  of the  Company,
particularly with C225. The Company expects general and administrative  expenses
to increase  in future  periods to support  planned  increases  in research  and
development.


                                     Page 5

<PAGE>

Interest and Other Income/Expense

         Interest  and other income was  $1,099,000  for the  nine-month  period
ended  September 30, 1997 compared to $695,000 for the  nine-month  period ended
September  30, 1996,  an increase of $404,000 or 58%. 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
$471,000 and $691,000 for the  nine-month  periods ended  September 30, 1997 and
September 30, 1996,  respectively,  a decrease of $220,000 or 32%.  Interest and
other expense for both periods  primarily  included  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 Interleukin-6
mutein  ("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
Company Director.

Net Losses

         The  Company had net losses of  $10,725,000  or $0.46 per share for the
nine-month  period ended September 30, 1997,  compared with $11,257,000 or $0.59
per share for the  nine-month  period ended  September 30, 1996. The decrease in
the net loss for the nine-month period ended September 30, 1997 is due primarily
to the fact that the net loss for the nine-month period ended September 30, 1996
included  a  $1,267,000  or  $0.07  per  share   extraordinary   loss  on  early
extinguishment  of debt. This  extraordinary  loss resulted from the issuance of
Common Stock in lieu of cash repayment of a $2,500,000 loan due the Oracle Group
and a $180,000  long-term note owed to a Company  Director.  The decrease in net
loss per  share is due  primarily  to the  increased  number of shares of Common
Stock outstanding as a result of the March 1997 public offering.


Three Months Ended September 30, 1997 and 1996

Revenues

         Revenues  for the  three-month  periods  ended  September  30, 1997 and
September  30, 1996 were  $742,000 and $75,000,  respectively.  Revenues in both
periods  included  research  and  development  support  fees of $75,000 from the
Company's  corporate  partnership  with  American  Home  in  infectious  disease
vaccines.  Revenues for the  three-month  period ended  September  30, 1997 also
included contract  research support of $625,000 from the Company's  research and
license agreement with Merck in cancer vaccines.  Additionally,  the three-month
period  ended  September  30, 1997  included  royalty  fees of $42,000  from the
Company's strategic alliance with Abbott in diagnostics.

Operating: Research and Development

         Total operating  expenses for the  three-month  periods ended September
30, 1997 and September 30, 1996 were  $4,359,000 and  $3,714,000,  respectively.
Research and development  expenses for the  three-month  periods ended September
30, 1997 and September 30, 1996 were  $3,320,000 and  $2,683,000,  respectively.
Such amounts for the three-month  periods ended September 30, 1997 and September
30, 1996 represented 76% and 72%, respectively, of total operating expenses. The
$637,000  or  24%  increase  in  research  and  development   expenses  for  the
three-month period ended September 30, 1997 was primarily  attributable to costs
associated with additional  staffing,  contract  manufacturing and testing,  and
expenditures in the functional areas of product  development,  manufacturing and
clinical and  regulatory  affairs to support 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.


                                     Page 6

<PAGE>

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  September 30, 1997 and September 30, 1996 were
$1,039,000  and  $1,031,000,  respectively.  The  Company  expects  general  and
administrative  expenses  to  increase  in future  periods  to  support  planned
increases in research and development.

Interest and Other Income/Expense

         Interest and other income was $414,000 for the three-month period ended
September  30, 1997  compared  to  $241,000  for the  three-month  period  ended
September  30, 1996,  an increase of $173,000 or 72%. 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 for
the three-month period ended September 30, 1997 remained  relatively constant at
$131,000  compared to $144,000 for the  three-month  period ended  September 30,
1996. Interest and other expense for both periods primarily included 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,  for
the  reacquisition of the worldwide rights to IL-6m as well as clinical material
manufactured and supplied by Pharmacia to the Company.

Net Losses

         The  Company  had net losses of  $3,334,000  or $0.14 per share for the
three-month  period ended September 30, 1997,  compared with $3,542,000 or $0.18
per share for the  three-month  period ended September 30, 1996. The decrease in
the  net  loss  for the  three-month  period  ended  September  30,  1997 is due
primarily to the increase in contract  research  support revenue received by the
Company,  offset in part by the increase in research and  development  expenses.
The decrease in the net loss per share is due primarily to the increased  number
of shares of Common Stock outstanding as a result of the March 1997 public stock
offering.


Liquidity and Capital Resources

         The Company's cash and cash  equivalents  and securities  available for
sale  totaled  $22,731,000  at November 12,  1997;  on  September  30, 1997 such
balances totaled $26,281,000.

         In May 1996, the Company extended its collaboration  with Merck for the
development  of a  therapeutic  cancer  vaccine,  BEC2,  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.  Of such
$11,700,000,  as of September  30, 1997,  the Company had earned  $1,500,000  in
milestone  payments,  and  research  and support  payments of  $1,042,000  which
represents  the first  two of eight  quarterly  research  and  support  payments
totaling $4,700,000.  In return, Merck will receive marketing rights to BEC2 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, if any.

         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 October 31, 1997,
the Company had $1,258,000 available under this agreement.


                                     Page 7
<PAGE>

         In December 1996, the Company and 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. Royalties on all Chiron sales of AMPLIPROBE are paid on a quarterly
basis by Abbott and recognized upon receipt by the Company.

         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  entitled 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.  Abbott will be entitled to
deduct from  royalties  otherwise  due, 25% of such royalties due for a two-year
period and 50% thereafter  until a total of $500,000 has been deducted.  In June
1997 the Company received  $1,000,000 in milestone  payments and as of September
30, 1997 had received a total of $117,000 in royalty fees.

         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 October 1997, the Company entered into a Collaborative  Research and
License  Agreement with CombiChem,  a private  company,  to discover and develop
novel small molecules against selected targets for the treatment of cancer.  The
companies  will utilize  CombiChem's  Discovery  Engine and  Universal  Informer
Library to generate  small  molecules  for  screening  in  ImClone's  assays for
identification of lead candidates.  ImClone will provide CombiChem with research
funding for two years, milestone payments and royalties on marketed products, if
any. ImClone will have exclusive worldwide rights to develop and market products
resulting from the collaboration, if any. Concurrently with the execution of the
Collaborative  Research and License Agreement,  the Company entered into a Stock
Purchase Agreement  pursuant to which the Company purchased  1,000,000 shares of
the common stock of CombiChem for aggregate  consideration  of $2,000,000.  This
purchase will be recorded by the Company at the lower of cost or net  realizable
value.  Subsequent  to the purchase of these shares of common  stock,  CombiChem
effected a 4 for 1 reverse split of its common stock.

         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.  At March 31,  1996,  the
Company's remaining obligations in connection with the return of such rights and
certain  obligations  to pay for IL-6m  material  manufactured  and  supplied by
Pharmacia,  totaled  $2,400,000.  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 only interest payable during the first six
months.  At November  4, 1997 the  remaining  obligation  to  Pharmacia  totaled
$428,000,  including interest.  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, but not limited to, 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.


                                     Page 8
<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  consummation  of  new  outside  research
agreements. In addition, the entire $428,000 of outstanding debt to Pharmacia is
payable  ratably  throughout the period ending  February 1998, and $2,113,000 of
the  Industrial  Development  Revenue Bonds (the "1986 Bonds") issued by the New
York Industrial  Development  Agency ("NYIDA") becomes due in December 1997. The
Company is currently  negotiating the possible extension of the due date for the
1986 Bonds for an additional  one year period.  Additionally,  $2,200,000 of the
Industrial  Development Bonds issued by NYIDA in 1990 scheduled to become due in
2004 shall become due upon the  termination  of the lease (the  "Lease") for the
Company's New York facility.  The Lease is scheduled to expire in March 1999 and
the Company is currently in discussions  regarding its extension and considering
other  alternatives.  Assuming the extension of the Lease,  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  eighteen  months.  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.  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,  or that the 1986 Bonds
or the Lease will be extended.  Upon  exhaustion of its capital  resources,  the
Company will require  significant  levels of  additional  capital and intends to
raise the necessary  capital  through  additional  arrangements  with  corporate
partners, equity or debt financings or from other sources. There is no assurance
that the Company will be successful in consummating any such arrangements.

         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 technology
access 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 its  Somerville,
New Jersey facility 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 nine months ended September
30, 1997 were $1,598,000,  of which  $1,182,000  related to the expansion of the
production  capacity and pilot plant  capability of the Company's  manufacturing
facility in New Jersey and $416,000  reflected  equipment  and  computer-related
purchases for the corporate office and research laboratories in New York.


                                     Page 9
<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  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.


                                    Page 10
<PAGE>

PART II - OTHER INFORMATION

Item 6 - Exhibits and Reports on Form 8-K

          (a)  Exhibits (numbered in accordance with Item 601 of Regulation S-K)

               Exhibit No.               Description
               -----------               -----------
                 10.76*                  Collaborative Research and License 
                                         Agreement between the Company and  
                                         CombiChem, Inc. dated October 10 1997.

                 27.1                    Financial Data Schedule

          (b)  Reports on Form 8-K:

               None.

* This Exhibit is incorporated herein by reference to Exhibit 10.22 of Amendment
No. 1 to the  CombiChem,  Inc.  Registration  Statement  on Form S-1  (File  No.
333-37981).  Certain  confidential  portions  of this  Exhibit  are  omitted  by
redacting a portion of the text (the "Mark").  It has been filed separately with
the  Secretary of the  Commission  without the Mark  pursuant to an  Application
Requesting Confidential Treatment.


                                    Page 11
<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:  November 13, 1997                By /s/ Samuel D. Waksal
                                           --------------------------
                                           Samuel D. Waksal
                                           President and Chief Executive Officer

Date:  November 13, 1997                By /s/ Carl S. Goldfischer
                                           --------------------------
                                           Carl S. Goldfischer
                                           Vice President , Finance and 
                                           Chief Financial Officer


                                    Page 12