ImClone Systems and Merck KGaA Expand Collaboration with North American Co-Marketing Deal for ImClone's BEC2 Cancer Vaccine.

NEW YORK--(BW HealthWire)--December 4, 1997--ImClone Systems Incorporated (Nasdaq:IMCL) and Merck KGaA, Darmstadt, Germany (DAX:MERCK) are announcing today at the annual BancAmerica Robertson Stephens Medical Conference in New York that the two companies are signing a co-marketing agreement for BEC2, ImClone Systems' therapeutic cancer vaccine. The agreement amends and expands their 1990 agreement for the development and marketing of BEC2. Under the terms of the agreement, Merck KGaA and ImClone Systems will continue to develop BEC2 for the U.S. and international markets with the intent upon registration of establishing separate ethical oncology sales forces for the co-marketing of BEC2 in North America. Merck KGaA will continue to hold an exclusive royalty bearing license to market BEC2 outside North America. Merck KGaA will also be responsible for funding the clinical development of BEC2 worldwide for a single indication, expenses for which had earlier been shared by the parties.

It is the intent of the parties that ImClone will be the manufacturer of the product worldwide. The agreement calls for $15 million in milestone fees beyond those previously established under the 1990 agreement. In addition, Merck KGaA has agreed to purchase immediately $40 million of ImClone convertible preferred stock.

"The expansion of our agreement with ImClone is an important milestone in the relationship between the two companies and is in line with Merck's long-term goal of creating a presence in the U.S. ethical pharmaceutical field," stated Edward Roberts, Head of Merck KGaA's Global Pharmaceutical Division. "This is part of our continuing strategy of strengthening Merck's global ethical pharmaceutical presence with novel proprietary biotechnology products."

Samuel D. Waksal, Ph.D., ImClone Systems' President and Chief Executive Officer, commented, "Allowing for co-marketing under our BEC2 agreement gives us the opportunity to participate directly in sales of BEC2 and provides us an important marketing partner in North America. The sale of preferred stock allows for minimal dilution to our shareholders, since conversion can not take place until established dates over the next five years." Under the terms of the convertible preferred financing, the transfer of stock can take place in up to four tranches. In the first two years, up to one-quarter of the total preferred stock may be converted into ImClone common stock at a price of $12.50 per share. In subsequent years, Merck KGaA has the option to convert additional preferred shares at varying prices related to the then market price of ImClone common stock.

This amendment modifies the 1990 Research and License Agreement between ImClone and Merck KGaA to develop therapeutic cancer vaccines, including BEC2, for the use in small cell lung carcinoma and malignant melanoma. In May 1996, ImClone announced the extension and modification of the collaboration including additional license fees and milestone payments. BEC2 is a proprietary anti-idiotypic monoclonal antibody designed to mimic GD3, a glycolipid (ganglioside) antigen which is found on the surface of a number of tumor cells, including small cell lung cancer (SCLC), melanoma and a variety of soft tissue sarcomas. BEC2 is intended to elicit a cancer-fighting immune response in patients with these tumor cells.

On May 19, 1997, at the 33rd American Society of Clinical Oncology Annual Meeting, ImClone and Merck KGaA reported data from its pilot study investigating the effects of BEC2 treatment among 15 patients with small cell lung cancer. The data from the study conducted at Memorial Sloan-Kettering Cancer Center (MSKCC) in New York supports previously reported clinical results that the compound significantly increased survival for patients with small cell lung cancer.

ImClone Systems has two oncology products in late stage clinical development and is advancing earlier drug candidates to the clinical stage. It is currently evaluating C225, an epidermal growth factor receptor (EGFr) antagonist in head and neck cancer patients in three Phase Ib/IIa dose-escalation trials in combination with other anti-cancer therapies, including both chemotherapy and radiation. ImClone is also evaluating C225 in a multi-center, open label Phase II clinical trial in renal cell carcinoma. It expects to initiate additional Phase II/III studies to evaluate C225 in various tumor types. In preclinical research, ImClone is evaluating the therapeutic potential of its anti-FLK-1/KDR monoclonal antibody as an anti-angiogenic agent, especially against tumors known to secrete vascular endothelial growth factor.

ImClone Systems Incorporated, headquartered in New York, is a biopharmaceutical company developing novel therapeutic products including interventional therapeutics, cancer vaccines and blood cell growth factors for the treatment of cancer and cancer-related disorders.

Merck KGaA, a public company, is a leading European group in the pharmaceutical, laboratory and specialty chemical business. Its major pharmaceutical research targets are cardiovascular, CNS, immulogic/oncologic and metabolic diseases as well as contrast media. The worldwide operating company, headquartered in Darmstadt, Germany, with 1996 sales of approximately 6.9 billion DM, employs approximately 28,000 people worldwide. -0-

Except for the historical information contained herein, the matters discussed in this news release may include forward-looking statements. Actual results may differ materially from those predicted in such forward-looking statements due to the risks and uncertainties inherent in the companies' business, including, without limitation, risks and uncertainties in obtaining and maintaining regulatory approval, market acceptance of and continuing demand for the products of the companies, the impact of competitive products and pricing, and the ability of the companies to obtain additional financing to support its operations. The companies undertake no obligation to revise or update this press release to reflect events or circumstances after the date hereof.

CONTACT: ImClone Systems Incorporated

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Merck KGaA

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