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IMCL
4Q05 U.S. Erbitux sales +38% Y-o-Y, 13% Q-o-Q

ImClone Systems Reports Fourth Quarter and Full Year 2005 Financial Results

[Erbitux growth on a yearly and sequential-quarter basis was impressive. 4Q05 EPS was 0.15, but there are so many moving parts contributing to the bottom line that a sustainable EPS trend for IMCL is hard to discern. Please see the actual PR for financial tables.]

http://biz.yahoo.com/bw/060124/20060124005368.html?.v=1

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Tuesday January 24, 7:02 am ET

Erbitux(R) U.S. In-Market Sales Reach $121.2 Million for the Quarter and $413.1 Million for the Full Year

Diluted Earnings Per Share of $.15 in the Fourth Quarter and $1.14 for the Full Year

NEW YORK--(BUSINESS WIRE)--Jan. 24, 2006--ImClone Systems Incorporated (NASDAQ: IMCL ) announced today its financial results for the fourth quarter and full year ended December 31, 2005.

Total revenues for the fourth quarter of 2005 were $98.2 million as compared with $107.3 million for the fourth quarter of 2004. Revenues include four principal components:

• Royalty revenue of $52.6 million in the fourth quarter of 2005 compared with $36.5 million in the fourth quarter of 2004. Royalty revenue for the fourth quarter of 2005 includes $47.3 million representing 39% of Bristol-Myers Squibb's in-market Erbitux net sales of $121.2 million, compared with third quarter 2005 in-market net sales of $107.0 million, an increase of 13%, and fourth quarter 2004 net sales of $87.8 million, an increase of 38%. These in-market sales, reflecting a drop-ship distribution methodology, represent Erbitux shipments to end-user accounts only, with no wholesaler stocking;
• License fees and milestone revenue of $20.3 million in the fourth quarter of 2005 compared with $20.8 million in the fourth quarter of 2004;
• Manufacturing revenue of $14.4 million in the fourth quarter of 2005 compared with $28.8 million in the fourth quarter of 2004. The decrease principally reflects a 72% increase in volume purchases by Bristol-Myers Squibb in the fourth quarter of this year that was more than fully offset by a significantly lower selling price to Bristol-Myers Squibb in 2005 as compared with 2004. Purchases by Bristol-Myers Squibb are timed at their discretion to accommodate forecasts and safety stock needs, and are not necessarily indicative of historical in-market sales or future sales expectations. No commercial product was sold to Merck KGaA during the fourth quarter of 2005; and
• Collaborative agreement revenue [i.e. reimbursement for expenses] of $10.9 million in the fourth quarter of 2005 compared with $21.2 million in the fourth quarter of 2004. The year-to-year decline principally reflects the fact that 2004 includes reimbursement for shipments of clinical materials to Merck KGaA of approximately $9.2 million; no such shipments were included in the fourth quarter of 2005.

Total operating expenses for the fourth quarter of 2005 were $90.9 million, compared with $127.8 million in the fourth quarter of 2004. Operating expenses in the fourth quarter of 2004 included a one-time charge of $55.4 million related to the settlement, net of insurance reimbursement, of shareholder and derivative suits from 2002. Operating expenses included:

• Research and development expenses for each of the fourth quarters of 2005 and 2004 were $26.0 million;
• Clinical and regulatory expenses in the fourth quarter of 2005 were $18.8 million, compared with $9.4 million in the fourth quarter of 2004. The increase principally reflects higher clinical trial expenses associated with Erbitux and the Company's pipeline;
• Marketing, general and administrative expenses were $18.4 million in the fourth quarter of 2005 compared with $19.8 million in the fourth quarter of 2004;
• Royalty expenses were $16.3 million in the fourth quarter of 2005 compared with $16.7 million in the fourth quarter of 2004. Royalty expenses decreased, despite the fact that sales were higher, principally because of lower contractual obligations to certain of our licensors. Approximately $5.9 million of these expenses were reimbursed as a component of collaborative agreement revenue, resulting in net royalty expenses of $10.4 million for the fourth quarter of 2005; and
• Cost of manufacturing revenue was $11.4 million in the fourth quarter of 2005 compared with $.5 million in 2004, primarily because the majority of materials shipped during the fourth quarter of 2005 reflect full absorption costing.

The effective tax rate for the full year of 2005 is 1% excluding the effect of an adjustment recorded in the third quarter of 2005 of approximately $440,000, resulting from the reconciliation of the prior year's tax provision to the Company's filed tax returns. The resulting tax rates for the fourth quarter and full year of 2005, including such adjustment, are .2% and 1.3%, respectively.

Net income for the fourth quarter of 2005 was $13.1 million compared with a net loss of $13.2 million in the fourth quarter of 2004. Diluted earnings per share in the fourth quarter of 2005 were $.15, compared with a net loss per share of $.16 in the fourth quarter of 2004.

Total revenues for the full year ended December 31, 2005 were $382.9 million compared with $388.7 million for the full year 2004. Revenues in 2004 included the "catch-up" effect of the receipt of a milestone from Bristol-Myers Squibb of approximately $42.5 million. Full-year 2005 in-market sales of Erbitux were $413.1 million in the U.S. compared to $260.8 million for 2004, an increase of 58%. Operating expenses for the full year ended December 31, 2005 were $303.9 million compared with $263.4 million for 2004. Net income for the full year 2005 was $98.9 million with diluted income per share of $1.14 compared with net income in 2004 of $113.7 million, with net income per common diluted share of $1.33.

Conference Call

ImClone Systems will host a conference call with the financial community to discuss 2005 fourth quarter and full year financial results, today, January 24, 2006 at 11:00 AM Eastern Time.

The conference call will be webcast live and may be accessed by visiting ImClone Systems' website at www.imclone.com. A replay of the audio webcast will be available under "Earnings Webcast" in the "Investor Relations" section of the Company's website starting shortly after the call on January 24, 2006.

Those parties interested in participating via telephone may join by dialing [phone], or [phone] for calls outside of Canada and the United States. A telephone replay of the conference call will be available shortly after the call until February 1, 2006 at midnight Eastern Time. To access the telephone replay, dial [phone] domestically, or [phone] for calls outside of Canada and the United States, and enter passcode number 4697335.
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