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, 1999
                                                -----------------
                                                 
     [  ]        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 Identification No.)
    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 May 13, 1999
    -----------------------------              ------------------------------
    Common Stock, par value $.001                      25,308,961 Shares

<PAGE>

                          IMCLONE SYSTEMS INCORPORATED

                                      INDEX

                                                                        Page No.
                                                                        --------

      PART I - FINANCIAL INFORMATION

            Item 1.     Financial Statements

                        Consolidated Balance Sheets - March 31, 1999
                        (unaudited) and December 31, 1998                   1

                        Unaudited Consolidated Statements of Operations -
                        Three months ended March 31, 1999 and 1998          2

                        Unaudited Consolidated Statements of Cash Flows -
                        Three months ended March 31, 1999 and 1998          3

                        Notes to Consolidated Financial Statements          4

            Item 2.     Management's Discussion and Analysis of
                        Financial Condition and Results of Operations       6

            Item 3.     Quantitative and Qualitative Disclosures About
                        Market Risk                                        11

      PART II - OTHER INFORMATION

            Item 6.    Exhibits and Reports on Form 8-K                    12



<PAGE>

Part 1 - FINANCIAL INFORMATION
Item 1 - Financial Statements

                          IMCLONE SYSTEMS INCORPORATED

                          Consolidated Balance Sheets
                (in thousands, except per share and share data)

<TABLE>
<CAPTION>
                                                                               March 31                 December
                              Assets                                             1999                     1998
                                                                          -------------------      -----------------
                                                                              (unaudited)

<S>                                                                         <C>                       <C>
Current assets:
     Cash and cash equivalents ........................................     $          842            $       3,888
     Securities available for sale ....................................             36,424                   42,851
     Prepaid expenses .................................................                459                      470
     Other current assets .............................................              1,400                    1,196
                                                                            ---------------           --------------
                            Total current assets ......................             39,125                   48,405
                                                                            ---------------           --------------
Property and equipment:
     Land..............................................................                340                      340
     Building and building improvements................................             10,525                   10,519
     Leasehold improvements ...........................................              4,878                    4,846
     Machinery and equipment ..........................................              8,162                    7,834
     Furniture and fixtures ...........................................                640                      640
     Construction in progress .........................................                659                      115
                                                                            ---------------           --------------
                           Total cost .................................             25,204                   24,294
     Less accumulated depreciation and amortization....................            (13,309)                 (12,877)
                                                                            ---------------           --------------
                            Property and equipment, net ...............             11,895                    1,417
                                                                            ---------------           --------------
Patent costs, net .....................................................                897                      860
Deferred financing costs, net .........................................                 44                       46
Other assets ..........................................................              1,468                    1,524
                                                                            ---------------           --------------
                                                                            $       53,429            $      62,252
                                                                            ===============           ==============
               Liabilities and Stockholders' Equity
Current liabilities:
    Accounts payable ..................................................     $        1,366            $       1,109
    Accrued expenses and other ........................................              2,470                    4,847
    Interest payable ..................................................                108                       45
    Deferred revenue ..................................................                 --                       75
    Fee potentially refundable from corporate partner .................              4,000                    4,000
    Current portion of long-term liabilities ..........................                749                      744
    Preferred stock dividends payable .................................              3,104                    2,512
                                                                            ---------------           --------------
                            Total current labilities ..................             11,797                   13,332
                                                                            ---------------           --------------
Long-term debt ........................................................              2,200                    2,200
Other long-term liabilities, less current portion .....................              1,342                    1,546
                                                                            ---------------           --------------
                            Total liabilities .........................             15,339                   17,078
                                                                            ---------------           --------------
Commitments and contingencies
Stockholders' equity :
    Preferred stock, $1.00 par value; authorized 4,000,000 shares;
      issued and outstanding Series A Convertible: 400,000 at
      March 31, 1999 and December 31, 1998 (preference in liquidation,
      including accrued dividends, $43,104 and $42,512, respectively)..                400                      400
    Common stock, $.001 par value; authorized 45,000,000 shares;
      issued 24,669,072 and 24,567,312 at  March 31, 1999 and
      December 31, 1998, respectively; outstanding 24,618,255, and
      24,516,495 at March 31, 1999 and December 31, 1998, 
      respectively ....................................................                 25                       25
    Additional paid-in capital ........................................            185,005                  184,853
    Accumulated deficit ...............................................           (146,924)                (138,846)
    Treasury stock, at cost; 50,817 shares at March 31, 1999
       and December 31, 1988 ..........................................               (492)                    (492)
    Note receivable - officer and stockholder .........................               (145)                    (142)
    Accumulated other comprehensive income (loss):
         Unrealized (loss) gain on securities available for sale,
            net .......................................................                221                     (624)
                                                                            ---------------           --------------
                            Total stockholders' equity ................             38,090                   45,174
                                                                            ---------------           --------------
                                                                            $       53,429            $      62,252
                                                                            ===============           ==============

</TABLE>

See accompanying notes to consolidated financial statements.

                                     Page 1


<PAGE>

                          IMCLONE SYSTEMS INCORPORATED

                     Consolidated Statements of Operations
                     (in thousands, except per share data)
                                  (unaudited)
<TABLE>
<CAPTION>

                                                                               Three Months Ended
                                                                                     March 31,
                                                                        ------------------------------------
                                                                              1999                1998
                                                                        ----------------    ----------------
<S>                                                                        <C>                 <C>        
Revenues:
     Product development milestone revenues ..........................     $         --        $     1,000
     Research and development funding from third
          parties and other ..........................................              629                850
                                                                           -------------       ------------
                   Total revenues ....................................              629              1,850
                                                                           -------------       ------------
Operating expenses:
     Research and development ........................................            6,354              4,171
     General and administrative ......................................            2,002              1,413
                                                                           -------------       ------------
                  Total operating expenses ...........................            8,356              5,584
                                                                           -------------       ------------
Operating loss .......................................................           (7,727)            (3,734)
                                                                           -------------       ------------
Other:
     Interest income .................................................             (604)              (830)
     Interest expense ................................................              123                 90
     Loss (gain) on securities available for sale ....................              832                 (1)
                                                                           -------------       ------------
                 Net interest  and other (income) loss ...............              351               (741)
                                                                           -------------       ------------
Net loss .............................................................           (8,078)            (2,993)
Preferred dividends (including assumed incremental yield 
  attributable to beneficial conversion feature of $336 
  and $266 for the three months ended March 31, 1999 
  and 1998, respectively) ............................................              928                858
                                                                           -------------       ------------
Net loss to common stockholders ......................................     $     (9,006)       $    (3,851)
                                                                           =============       ============
Basic and diluted net loss per common share ..........................     $      (0.37)       $     (0.16)
                                                                           =============       ============
Weighted average shares outstanding ..................................           24,447             24,228
                                                                           =============       ============

</TABLE>

          See accompanying notes to consolidated financial statements.


                                     Page 2

<PAGE>


<TABLE>
<CAPTION>
                          IMCLONE SYSTEMS INCORPORATED

                     Consolidated Statements of Cash Flows
                                 (in thousands)
                                  (unaudited)

                                                                                                       Three Months Ended
                                                                                                            March 31,

                                                                                                ------------------------------------
                                                                                                     1999                 1998
                                                                                                ----------------    ----------------

<S>                                                                                             <C>                  <C>            
Cash flows from operating activities:
   Net loss .................................................................................   $       (8,078)      $       (2,993)
   Adjustments to reconcile net loss to net 
     cash used in operating activities:
    Depreciation and amortization ...........................................................              464                  440
    Expense associated with issuance
     of options and warrants.................................................................              417                   80
    Loss (gain) on securities available for sale ............................................              832                   (1)
    Changes in:
         Prepaid expenses ...................................................................               11                   90
         Other current assets ...............................................................             (204)                 (90)
         Other assets .......................................................................             (119)
         Interest payable ...................................................................               63                   36
         Accounts payable ...................................................................              257                 (470)
         Accrued expenses and other .........................................................           (2,377)                (725)
         Deferred revenue ...................................................................              (75)                 150
                                                                                                ---------------       --------------
                        Net cash used in operating activities ..............................            (8,809)              (3,483)
                                                                                                ---------------       --------------
Cash flows from investing activities:
        Acquisitions of property and equipment .............................................              (910)                (428)
        Purchases of securities available for sale .........................................            (7,199)             (23,461)
        Sales and maturities of securities available for sale ..............................            13,814               28,947
        Additions to patents ...............................................................               (67)                 (24)
                                                                                                ---------------       --------------
                        Net cash provided by  investing activities .........................              5,638               5,034
                                                                                                ---------------       --------------
Cash flows from financing activities:
        Proceeds from exercise of stock options and warrants ...............................               311                   37
        Proceeds from issuance of common stock under the employee stock purchase plan ......                13
        Payments of other liabilities ......................................................              (199)                (392)
                                                                                                ---------------       --------------
                        Net cash provided by (used in) financing activities ................               125                 (355)
                                                                                                ---------------       --------------
Net (decrease) increase in cash and cash equivalents .......................................            (3,046)               1,196
Cash and cash equivalents at beginning of period ...........................................             3,888                2,558
                                                                                                ---------------       --------------
Cash and cash equivalents at end of period .................................................    $          842        $       3,754
                                                                                                ---------------       --------------

</TABLE>


          See accompanying notes to consolidated financial statements.


                                     Page 3


<PAGE>

                          IMCLONE SYSTEMS INCORPORATED
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (unaudited)

(1)  Basis of Presentation

The consolidated financial statements of ImClone Systems Incorporated ("ImClone"
or the  "Company") as of March 31, 1999 and for the three months ended March 31,
1999 and 1998 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 audited  financial  statements
and notes thereto  included in the Company's  Annual Report on Form 10-K for the
year  ended  December  31,  1998,  as filed  with the  Securities  and  Exchange
Commission.

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

(2) Commitments

The  Company  agreed  in  principle  in April  1998 and in April  1999  signed a
definitive  agreement  with  Boehringer  Ingelheim  Pharma  KG for  the  further
development,   production   scale-up  and  manufacture  of  the  Company's  lead
therapeutic product candidate,  C225, for use in human clinical trials. Services
pursuant to this  agreement  commenced in April 1998.  The total project cost is
DM8,950,000,  or at March 31,  1999  approximately  $4,926,000.  As of March 31,
1999, the Company has incurred  approximately  DM3,720,000 for services provided
under this  agreement.  Additional  material  which could be provided under this
agreement  would cost up to an  additional  DM5,790,000,  or at March 31,  1999,
approximately $3,187,000.

(3) Related Party Transactions

In January 1998, the Company  accepted a promissory note totaling  approximately
$131,000 from its President and CEO in connection with the exercise of a warrant
to purchase  87,305 shares of the Company's  common stock,  $.001 par value (the
"Common  Stock").  The note is due no later than two years from  issuance and is
full  recourse.  Interest  is  payable  on the  first  anniversary  date  of the
promissory note and on the stated  maturity or any  accelerated  maturity at the
annual  rate of 8.5%.  At March 31,  1999,  the total  amount  due the  Company,
including  interest,  is  approximately   $145,000  and  is  classified  in  the
stockholders'  equity  section of the balance  sheet as a note  receivable  from
officer and stockholder.

In October  1998,  the Company  accepted an unsecured  promissory  note totaling
$100,000  from its  Executive  Vice  President  and COO.  The note is payable on
demand  including  interest  at the annual rate of 8.25% for the period that the
loan is  outstanding.  At March 31,  1999,  the total  amount  due the  Company,
including interest, was approximately $104,000 and is included as a component of
other current assets. In April 1999, the note, including all interest,  was paid
in full.

In January  1999,  the Company  accepted an unsecured  promissory  note totaling
$60,000 from its Vice President,  Product and Process  Development.  The note is
payable upon the earlier of on demand or July 28, 1999 and bears  interest at an
annual rate of 8.75% for the period that the loan is  outstanding.  The loan was
made in  connection  with the  acceptance of  employment  and the  corresponding
relocation of the officer.  At March 31, 1999, the total amount due the Company,
including interest,  was approximately $61,000 and is included as a component of
other current assets.


                                     Page 4
<PAGE>

(4)  Earnings Per Share

Basic and diluted  Earnings Per Share ("EPS") are computed based on the net loss
for the relevant period,  adjusted for cumulative Series A Convertible Preferred
Stock dividends and the assumed incremental yield attributable to the beneficial
conversion  feature in the  preferred  stock,  divided by the  weighted  average
number of shares outstanding during the period. Potentially dilutive securities,
including  convertible  preferred  stock,  options and  warrants,  have not been
included in the diluted EPS computation because they are anti-dilutive.

(5)  Comprehensive Income (Loss)

The following table reconciles net loss to comprehensive loss:

                                                        Three Months Ended
                                                             March 31,
                                                  ----------------------------
                                                       1999           1998
                                                  ------------    ------------

Net loss                                           $(8,078,000)   $(2,993,000)

Other comprehensive income (loss):
  Unrealized holding gain arising during the
    period .....................................        13,000         70,000
  Less: Reclassification adjustment for realized
        gain (loss) included in net loss .......      (832,000)         1,000
                                                  ------------    -----------
        Total other comprehensive income .......       845,000         69,000
                                                  ------------    -----------
Total comprehensive loss........................  $ (7,233,000)  $ (2,924,000)
                                                  ============   ============

(6)  Loss on Securities Available for Sale

In October 1997, the Company entered into a  Collaborative  Research and License
Agreement with CombiChem Inc. ("CombiChem"). Concurrent with this agreement, the
Company  entered into a Stock Purchase  Agreement  pursuant to which the Company
purchased 312,500 shares of common stock of CombiChem,  as adjusted, for a total
purchase  price of $2,000,000.  The investment has been  classified as available
for sale and a long-term  asset. The market value of the investment in CombiChem
has declined  substantially  from the date of original  investment  to March 31,
1999. As of March 31, 1999,  the Company has deemed this decline in market value
to be other than  temporary.  Accordingly,  the cost basis in the  investment in
CombiChem  has been  adjusted  and a loss on  securities  available  for sale of
$828,000 was recorded.  These securities have not been sold by the Company.  The
Company will continue to monitor its cost investment in CombiChem.

(7)  Reclassification

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

(8)  Collaborative Agreements

The Company has a development and license agreement with Merck KGaA ("Merck")
with respect to its lead interventional therapeutic product for the treatment of
cancer, C225. In exchange for certain marketing and co-development rights, the
Company can receive up to $60,000,000 in milestone payments ($30,000,000 of
which are equity based) assuming the achievement of certain milestones and a
$30,000,000 secured line of credit or guaranty for the build-out of a
manufacturing facility for the commercial production of C225. The agreement
provides that in addition to other reasons, it may be terminated by either party
if the Company and Merck fail to agree on a production concept for the
manufacturing facility or if Merck fails to provide the Company with the credit
facility or guaranty by April 15, 1999. In April 1999, the parties agreed on the
production concept for the manufacturing facility and are currently working
towards securing the credit facility or guaranty.


                                     Page 5
<PAGE>

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

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

                              RESULTS OF OPERATIONS

Three Months Ended March 31, 1999 and 1998

Revenues.

Revenues for the three  months  ended March 31, 1999 and 1998 were  $629,000 and
$1,850,000,  respectively,  a decrease of $1,221,000,  or 66%.  Revenues for the
three months ended March 31, 1999 primarily consisted of (i) $75,000 in research
support from our partnership with American Home Products Corporation  ("American
Home") in  infectious  disease  vaccines,  (ii) $425,000 in research and support
payments  from our research and license  agreement  with Merck KGaA,  Darmstadt,
Germany  ("Merck")  for BEC2,  and (iii)  $124,000 in royalty  revenue  from our
strategic alliance with Abbott Laboratories ("Abbott") in diagnostics.  Revenues
for the three months  ended March 31, 1998  consisted of (i) $75,000 in research
support from our partnership with American Home in infectious  disease vaccines,
(ii)  $1,000,000  in  milestone  revenue and  $625,000  in research  and support
payments  from our  research  and  license  agreement  with Merck for BEC2 (iii)
$52,000  in  royalty  revenue  from  our  strategic   alliance  with  Abbott  in
diagnostics and (iv) $98,000 from a Phase I Small Business  Innovation  Research
grant  from the  National  Cancer  Institute  for a  program  in  cancer-related
angiogenesis. The decrease in revenues for the three months ended March 31, 1999
was  primarily  attributable  to a decrease in milestone  revenue which can vary
widely from period to period  depending  upon the timing of the  achievement  of
various research and development milestones for products under development.

Operating; Research and Development Expenses.

Total operating expenses for the three months ended March 31, 1999 and 1998 were
$8,356,000 and  $5,584,000,  respectively,  an increase of  $2,772,000,  or 50%.
Research and development  expenses for the three months ended March 31, 1999 and
1998 were $6,354,000 and $4,171,000,  respectively, an increase of $2,183,000 or
52%. Such amounts for the three months ended March 31, 1999 and 1998 represented
76% and 75%, respectively, of total operating expenses. The increase in research
and development expenses for the three months ended March 31, 1999 was primarily
attributable to (i) the costs  associated with an agreement for the supplemental
further  development  and  manufacture of clinical grade C225 to support ongoing
and future human clinical trials,  (ii) the costs associated with the initiation
of Phase III clinical  studies of C225,  (iii)  expenditures  in the  functional
areas of product  development,  manufacturing,  clinical and regulatory  affairs
associated with C225 and (iv) expenditures  associated with additional  staffing
in the area of discovery research.

General and Administrative Expenses.

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 our  technology and products.  Such expenses for the three months
ended March 31, 1999 and 1998 were $2,002,000 and $1,413,000,  respectively,  an
increase  of  $589,000,  or 42%.  The  increase  in general  and  administrative
expenses  primarily  reflected (i) additional support staffing for the expanding
research,  development,  clinical manufacturing and pre-marketing efforts of the
Company, particularly with respect to C225 and (ii) expenses associated with the
pursuit  of  strategic  corporate  alliances  and  other  corporate  development
expenses.  We expect general and  administrative  expenses to increase in future
periods to support our planned increases in research, development,  clinical and
manufacturing efforts.


                                     Page 6
<PAGE>

Interest and Other Income and Interest Expense.

Interest  income was $604,000 for the three months ended March 31, 1999 compared
to $830,000  for the three  months ended March 31, 1998, a decrease of $226,000,
or  27%.  The  decrease  was  primarily  attributable  to  the  decrease  in our
investment portfolio as a result of funding our operations. Interest expense was
$123,000  and  $90,000  for the three  months  ended  March  31,  1999 and 1998,
respectively,  an increase of $33,000 or 37%.  Interest expense for both periods
primarily included (i) interest on an outstanding Industrial Development Revenue
Bond issued in 1990 (the "1990 IDA Bond") with a principal  amount of $2,200,000
and (ii) interest recorded on various capital lease obligations under a December
1996 Financing  Agreement  (the "1996  Financing  Agreement")  and an April 1998
Financing  Agreement (the "1998  Financing  Agreement")  with Finova  Technology
Finance,  Inc. ("Finova").  The increase was primarily  attributable to entering
into additional  capital leases. We recorded losses on securities  available for
sale for the three  months  ended  March 31,  1999 in the amount of  $832,000 as
compared to gains of $1,000 for the three months ended March 31, 1998.  The loss
for the three  months  ended March 31,  1999 is  primarily  attributable  to the
$828,000  write-down of our  investment  in CombiChem  Inc.  ("CombiChem")  as a
result  of  other  than  temporary   impairment.   See  "Liquidity  and  Capital
Resources".

Net Losses.

We had net losses to common  stockholders  of  $9,006,000 or $0.37 per share for
the three  months ended March 31, 1999  compared  with  $3,851,000  or $0.16 per
share for the three months ended March 31, 1998.  The increase in the net losses
and per share net loss to common  stockholders  was due primarily to the factors
noted above and the Series A Preferred Stock dividends.

                         LIQUIDITY AND CAPITAL RESOURCES

At March 31, 1999, our principal sources of liquidity consisted of cash and cash
equivalents  and  short-term  securities  available  for  sale of  approximately
$37,266,000. We have financed our operations since inception primarily through:

      o     the  proceeds  from the  public  and  private  sales  of our  equity
            securities. 
      o     license fees.
      o     contract research and development fees.
      o     royalties  received under  agreements with  collaborative  partners.
      o     interest earned on these funds.
      o     the sale of three issues of  Industrial  Development  Revenue  Bonds
            (the "IDA Bonds") through the New York Industrial Development Agency
            (the "NYIDA").

Since inception:

      o     public  and  private   sales  of  equity   securities  in  financing
            transactions have raised approximately $163,799,000 in net proceeds.
      o     we have earned approximately $33,484,000 from license fees, contract
            research  and  development  fees and  royalties  from  collaborative
            partners,  including  approximately $629,000 earned during the three
            months ended March 31, 1999.
      o     we  have  earned   approximately   $9,067,000  in  interest  income,
            including  approximately  $604,000  earned  during the three  months
            ended March 31,1999.
      o     the sale of the IDA Bonds in each of 1985,  1986 and 1990  raised an
            aggregate  of  $6,313,000,  the proceeds of which have been used for
            the  acquisition,  construction and installation of our research and
            development  facility in New York City,  and of which  $2,200,000 is
            currently outstanding.

We agreed in  principle  in April  1998 and in April  1999  signed a  definitive
agreement  with  Boehringer  Ingelheim  Pharma KG for the  further  development,
production  scale-up and manufacture of our lead therapeutic  product candidate,
C225,  for use in human  clinical  trials.  Services  pursuant to this agreement
commenced in April 1998. The total project cost is DM8,950,000,  or at March 31,
1999  approximately   $4,926,000.  As  of  March  31,  1999,  we  have  incurred
approximately DM3,720,000 for services provided under this agreement. Additional
material  which  could be  provided  under  this  agreement  would cost up to an
additional DM5,790,000, or at March 31, 1999, approximately $3,187,000.


                                     Page 7
<PAGE>

In October 1997, we entered into a Collaborative  Research and License Agreement
with CombiChem to discover and develop novel small  molecules  against  selected
targets for the  treatment  of cancer.  At the same time as we entered into this
agreement,  we entered  into a Stock  Purchase  Agreement  pursuant  to which we
purchased 312,500 shares of common stock of CombiChem,  as adjusted, for a total
purchase price of $2,000,000.  The investment has been classified as a long-term
asset.   The  market  value  of  our   investment   in  CombiChem  has  declined
substantially from the date of our investment to March 31, 1999. As of March 31,
1999,  we have deemed this decline in market  value to be other than  temporary.
Accordingly,  we have adjusted our cost basis in the  investment  and recorded a
loss on securities  available for sale of $828,000.  These  securities  have not
been  sold by the  Company.  The  Company  will  continue  to  monitor  its cost
investment in CombiChem.

We have obligations under various capital leases for certain laboratory,  office
and computer  equipment and also certain building  improvements  primarily under
the 1996 Financing  Agreement and the 1998 Financing  Agreement with Finova. The
1996 Financing  Agreement  allowed us to finance the lease of equipment and make
certain  building and leasehold  improvements to existing  facilities  involving
amounts totaling  approximately  $2,500,000.  Each lease has a fair market value
purchase  option at the  expiration  of a 42-month  term.  Pursuant  to the 1996
Financing Agreement, we issued to Finova a warrant expiring December 31, 1999 to
purchase  23,220  shares of our common  stock at an exercise  price of $9.69 per
share.  We  recorded a non-cash  debt  discount  of  approximately  $125,000  in
connection  with this  financing,  which  discount is being  amortized  over the
42-month  term of the first  lease.  The 1996  Financing  Agreement  with Finova
expired in December 1997 and we utilized only  $1,745,000 of the full $2,500,000
under the agreement. In April 1998, we entered into the 1998 Financing Agreement
with Finova totaling approximately  $2,000,000.  The terms of the 1998 Financing
Agreement are substantially  similar to the now expired 1996 Financing Agreement
except that each lease has a 48-month term. As of March 31, 1999, we had entered
into ten individual leases under both the 1996 Financing  Agreement and the 1998
Financing  Agreement  aggregating  a total cost of  $3,069,000  and had $676,000
available under the 1998 Financing  Agreement.  The 1998 Financing Agreement was
scheduled to  terminate on March 31, 1999 and the term has been  extended for an
additional 60 day period.

We have  spent and will  continue  to spend in the future  substantial  funds to
continue the research and development of our products,  conduct pre-clinical and
clinical trials, establish clinical-scale and commercial-scale  manufacturing in
our own facilities or in the facilities of others,  and market our products.  We
have entered into  preliminary  discussions  with several  major  pharmaceutical
companies regarding various alternatives  concerning the funding of research and
development for certain of our products.  No assurance can be given that we will
be successful in consummating any such  alternatives.  Such strategic  alliances
could include  up-front  license fees plus milestone  fees and revenue  sharing.
There  can be no  assurance  that  we  will  be  successful  in  achieving  such
alliances, nor can we predict the amount of funds which might be available to us
if we entered into such  alliances or the time at which such funds would be made
available or the other terms of any such alliances.

In January 1998, we completed the construction and  commissioning of a new 1,750
square foot process development center at our Somerville, New Jersey facility at
a cost of approximately $1,650,000.  Under our agreement with Merck for C225, we
have  developed,  in  consultation  with Merck,  a production  concept for a new
manufacturing facility.  Merck is providing us, subject to certain terms, with a
$30  million  secured  line of  credit or  guaranty  for the  build-out  of this
facility.  We have  determined  to erect this  facility  adjacent to our current
manufacturing facility in New Jersey.

We rent our New York City  facility  under a lease which was scheduled to expire
in March 1999.  We renewed the entire lease for a term  commencing as of January
1, 1999 through  December 2004 and have begun to retrofit the facility to better
suit our needs at an expected cost of approximately $1,800,000.

The 1990 IDA Bond in the outstanding  principal amount of $2,200,000 becomes due
in 2004.  We will  incur  annual  interest  on the  1990  IDA  Bond  aggregating
approximately  $250,000.  We have  granted  the  NYIDA a  security  interest  in
substantially all facility  equipment located in the New York facility to secure
our obligations to the NYIDA under the 1990 IDA Bond.

The holders of the 400,000 shares of Series A Convertible  Preferred  Stock (the
"Series A  Preferred  Stock" or "Series A  Preferred  Shares")  are  entitled to
receive  cumulative  dividends  at an annual rate of $6.00 per share.  Dividends
accrue as of the issuance date of the Series A Preferred  Shares and are payable
on the outstanding Series A Preferred Shares in cash on December 31 of each year
beginning  December 31, 


                                     Page 8
<PAGE>

1999 or at the time of conversion or redemption of the Series A Preferred Shares
on which the dividend is to be paid, whichever is sooner. Accrued dividends were
$3,104,000 at March 31, 1999.  Additionally,  we have  recognized an incremental
yield on the conversion discount of 1,655,000 at March 31, 1999.

Total  capital  expenditures  made during the three  months ended March 31, 1999
were  $910,000.  Of such  expenditures,  $663,000  related  to the  purchase  of
equipment for and costs associated with the retrofit of our corporate office and
research  laboratories in New York. The balance of capital additions was related
to improving and equipping our  manufacturing  facility in New Jersey. We expect
to submit a  portion  of these  expenditures  for  reimbursement  under the 1998
Financing Agreement with Finova in May 1999.

We expect that our existing  capital  resources should enable us to maintain our
current and planned  operations  through March 2001. Certain of our research and
support  payments from corporate  partners have defined  expiration dates during
1999. Under these existing  corporate  partnerships,  we expect to receive final
research and support payments of approximately $258,000 which will be recognized
through the third quarter of 1999. Additionally,  certain milestone payments are
subject to attaining research and development milestones, many of which have not
yet  been  achieved.  There  can be no  assurance  that  we will  achieve  these
milestones. Our future working capital and capital requirements will depend upon
numerous factors, including, but not limited to:

      o     progress of our  research  and  development  programs,  pre-clinical
            testing and clinical trials. 
      o     our corporate partners fulfilling their obligations to us.
      o     timing and cost of seeking and obtaining regulatory approvals.
      o     timing   and   cost  of   manufacturing   scale-up   and   effective
            commercialization  activities and  arrangements.  
      o     level of resources that we devote to the development of marketing
            and sales capabilities.
      o     costs involved in filing,  prosecuting and enforcing  patent claims.
      o     technological advances.
      o     status of competitors.
      o     our ability to maintain  existing and  establish  new  collaborative
            arrangements  with  other  companies  to  provide  funding  to us to
            support these activities.
      o     costs of  establishing  both  clinical  scale and  commercial  scale
            manufacturing capacity in our facility and those of others.

In order to fund our capital needs after March 2001, we will require significant
levels  of  additional  capital  and we  intend  to raise  the  capital  through
additional  arrangements with corporate  partners,  equity or debt financings or
from other sources  including the proceeds of product sales, if any. There is no
assurance that we will be successful in consummating any such  arrangements.  If
adequate funds are not available,  we may be required to  significantly  curtail
our planned operations.

Uncertainties  associated  with the  length  and  expense  of  pre-clinical  and
clinical  testing of any of our product  candidates  could greatly  increase the
cost of  development  of such products and affect the timing of any  anticipated
revenues from product sales. Our failure to obtain  regulatory  approval for any
product will preclude its commercialization.  In addition, our failure to obtain
patent protection for our products may make certain of our products commercially
unattractive.

At December 31, 1998, we had net operating loss carryforwards for federal income
tax purposes of  approximately  $129,485,000  which expire at various dates from
2000 through 2018. At December 31, 1998 we had research credit  carryforwards of
approximately  $3,642,000  which expire at various  dates between years 2009 and
2018.  Pursuant to Section 382 of the Internal Revenue Code of 1986, as amended,
the annual  utilization  of a company's net operating  loss and research  credit
carryforwards may be limited if the company experiences a change in ownership of
more than 50  percentage  points  within a  three-year  period.  Since 1986,  we
experienced  two such  ownership  changes.  Accordingly,  our net operating loss
carryforwards  available to offset future federal  taxable income arising before
such ownership  changes are limited to $5,159,000  annually.  Similarly,  we are
restricted  in using our  research  credit  carryforwards  arising  before  such
ownership changes to offset future federal income tax expense.

Year 2000

The "Year 2000  problem"  involves  mainly  the  inability  of certain  computer
programs and microprocessing  devices to differentiate between the year 1900 and
the year 2000  because  two-digit  rather  than  four-digit


                                     Page 9
<PAGE>

fields were used to  identify  the year.  There are a variety of related  "date"
problems,  including the use by older  programs and devices of  algorithms  that
will fail to  correctly  identify  the year 2000 and certain  other years in the
twenty-first  century as leap years.  A Year 2000 problem could cause a computer
system or  microprocessor  that is date sensitive to  malfunction,  resulting in
system  failures.  Such  failures  could cause  disruptions  of our  operations,
including,   without  limitation,   the  systems  in  place  at  our  Branchburg
clinical-scale  manufacturing  facility,  computers,  communication  devices and
laboratory  instrumentation  and  systems  which  use dated  information  in our
research  and  development  and  scientific   testing  or,   possibly,   in  our
pre-clinical or clinical trials.

To deal with the Year 2000  problem we have  developed a year 2000  program that
has three main phases:  (i) review of information  technology  ("IT") and non-IT
systems for the purposes of assessing the  potential  impact of Year 2000 on our
business and identifying  non-Year 2000 compliant systems;  (ii) remediation and
development  of  contingency  plans;  and (iii)  testing.  These  phases are not
necessarily sequential. We have a Year 2000 team to coordinate and carry out the
various  phases  and  Reporting  Responsible  Persons  in  each  critical  area,
including computer hardware,  software,  other hardware,  laboratory  equipment,
collaborators  and  process/clinical  development.  While  we  believe  that our
program is and will be adequate to address Year 2000  problems,  there can be no
assurance  that our  operations  will not be adversely  affected.  While we have
devoted significant resources to dealing with the Year 2000 problem, our efforts
to date have not caused the deferral of any other significant IT projects.

We have  completed  phase one with regard to our own  systems.  We reviewed  the
potential  impact of the  "Y2K" bug on our  research  and  development,  product
development,   manufacturing,   financial,   communication  and   administrative
operations.  We determined  which systems are critical to our business.  We also
determined which systems were non-year 2000 compliant.

As for the second phase, we are in the process of remediating through corrective
programming  modifications  or system  replacement all mission  critical systems
that we  identified  as  non-compliant.  We  estimate  that this  process is 80%
complete and that it will be finished by June 30, 1999. In addition, for systems
that we have  identified  as  non-mission  critical,  we also  intend  to either
correct them through programming changes or replace them with compliant software
and any necessary hardware or, possibly, simply discontinue using the system.

We have  already  developed  testing  protocols  and have begun  testing for all
mission-critical  systems and have completed approximately 60% of the testing we
currently  anticipate.  We  expect  to have  completed  testing  of all  mission
critical  systems no later  than June 30,  1999.  We are also in the  process of
testing other  systems,  and expect to have completed that process no later than
June 30, 1999.

The  Company  estimates  the cost of its Year 2000  program to be  approximately
$350,000, of which approximately $280,000 has been spent through March 31, 1999.
This includes the purchase of third-party  software and required hardware to run
such  software  as well as the cost of  modifying  software.  This  estimate  is
management's  good faith estimate based on a variety of contingency  assessments
and is subject to change.  Such  expenditures  will be funded from the Company's
internal resources.

In addition to the review of internal  systems,  we have identified and begun to
make inquiries of our critical  suppliers,  corporate  partners,  manufacturers,
clinical  study  sites,  service  suppliers,  communications  providers,  lessor
utilities,  and banks whose system failures or non-compliant products could have
an adverse impact on our  operations.  We expect to complete the  identification
and assessment  process for such entities  prior to June 30, 1999.  While we are
not currently  aware of any material Year 2000 problems  involving such entities
that are likely to adversely  affect us,  there can be no  assurance  that there
will  not be  such  problems  or  that,  if  discovered,  they  will  be  timely
remediated.

We are in the  process of  developing  contingency  plans to deal with  possible
disruptions  of  important  operations  such  as  discovery  research,   product
development,  manufacturing and ongoing clinical trials.  Such disruptions could
affect the development and ultimate  marketing of potential  products as well as
put us at a competitive  disadvantage  relative to companies that have corrected
such  problems.  These  contingency  plans  may  need  to  be  refined  as  more
information becomes available.


                                     Page 10
<PAGE>

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

      Those  statements  contained  herein  that  do not  relate  to  historical
information are forward-looking  statements.  There can be no assurance that the
future  results  covered by such  forward-looking  statements  will be achieved.
Actual results may differ materially due to the risks and uncertainties inherent
in  the  Company's  business,   including  without  limitation,  the  risks  and
uncertainties associated with completing pre-clinical and clinical trials of the
Company's  compounds that demonstrate such compounds' safety and  effectiveness;
obtaining  additional financing to support the Company's  operations;  obtaining
and maintaining  regulatory approval for such compounds and complying with other
governmental regulations applicable to the Company's business; obtaining the raw
materials   necessary  in  the  development  of  such  compounds;   consummating
collaborative  arrangements  with  corporate  partners for product  development;
achieving  milestones under collaborative  arrangements with corporate partners;
developing the capacity and ability to  manufacture,  as well as market and sell
the  Company's  products,   either  directly  or  with  collaborative  partners;
developing  market  demand  for  and  acceptance  of  such  products;  competing
effectively with other pharmaceutical and biotechnological  products;  obtaining
adequate  reimbursement  from third party payors;  attracting  and retaining key
personnel;  protecting  proprietary rights; failing to remedy Year 2000 problems
by the Company or the failure by those entities associated with the Company; and
those  other  factors  set forth in  "Management's  Discussion  and  Analysis of
Financial  Condition and Results of  Operations--Overview  and Risk Factors," in
the Company's most recent Annual Report on Form 10-K.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our holdings of financial  instruments  are  comprised of U.S.  corporate  debt,
foreign  corporate  debt,  U.S.   government  debt,  foreign   government/agency
guaranteed  debt and commercial  paper.  All such  instruments are classified as
securities available for sale.  Generally,  we do not invest in portfolio equity
securities or commodities or use financial derivatives for trading purposes. 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
rated  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 typically  invest in the
shorter-end of the maturity spectrum and highly liquid investments. We also have
certain  foreign  exchange  currency risk, see footnote 2. We do not consider it
necessary  to implement a currency  hedging  program  since we do not  generally
enter into contracts denominated in foreign currencies.

The table below  presents the  principal  amounts and related  weighted  average
interest rates by year of maturity for our investment portfolio:


<TABLE>
<CAPTION>
                                                                           2004 and
                     1999          2000          2001      2002   2003    Thereafter          Total        Fair Value
                 ------------  ------------   ----------  ------- -----  -------------    ------------    ------------

<S>                 <C>           <C>          <C>          <C>    <C>    <C>               <C>             <C>
Fixed Rate          $2,000,000    $3,162,000           --    --     --               --     $5,162,000      $5,196,000
Average
Interest Rate            5.38%         5.09%           --    --     --               --          5.20%              --

Variable Rate               --    $3,995,000   $2,133,000    --     --    $24,913,000(1)   $31,041,000     $31,228,000
Average                                             
Interest Rate               --         5.25%        5.18%    --     --            5.17%          5.18%              --
                 -------------    ----------    ---------- ----   ----   -------------    ------------    ------------
                    $2,000,000    $7,157,000    $2,133,000   --     --    $24,913,000(1)   $36,203,000     $36,424,000
                 =============    ==========    ========== ====   ====   ==============   ============    ============

</TABLE>

(1) These holdings consist of U.S. corporate and foreign corporate floating rate
notes.  Interest  rates on the  securities  are  adjusted  at fixed  dates using
prevailing  interest rates. These holdings are highly liquid and we consider the
potential for loss of principal to be minimal.



                                     Page 11

<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
               -----------             -----------
               27.1                    Financial Data Schedule

         (b)   Reports on Form 8-K

               None.


                                     Page 12

<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 13, 1999    By    /s/ Samuel D. Waksal
                             -------------------------------------
                             Samuel D. Waksal
                             President and Chief Executive Officer



Date: May 13, 1999     By    /s/ Carl S. Goldfischer
                             -------------------------------------
                             Carl S. Goldfischer
                             Vice President, Finance and Chief Financial Officer



                                     Page 13



ImClone Systems Incorporated
SEC Condensed Financial
Information