Eli Lilly and Company and ImClone Systems Inc announced that the boards of directors of both companies have approved a definitive merger agreement under which Lilly will acquire ImClone through an all cash tender offer of $70.00 per share, or approximately $6.5 billion. The offer represents a premium of 51 per cent to ImClone's closing stock price on July 30, 2008, the day before an acquisition offer for ImClone was made public. ImClone's board recommends that ImClone's shareholders tender their shares in the tender offer. Additionally, certain entities associated with ImClone's chairman, Carl C Icahn, holding approximately 14 per cent of ImClone's outstanding common stock, have agreed to tender their shares in the tender offer.

This strategic combination will create one of the leading oncology franchises in the biopharmaceutical industry, offering both targeted therapies and oncolytic agents along with a pipeline spanning all phases of clinical development. The combined oncology portfolio will target a broader array of solid tumour types including lung, breast, ovarian, colorectal, head and neck, and pancreatic, positioning Lilly to pursue treatments of multiple cancers. Combining with ImClone will further strengthen Lilly's growing portfolio of first-in-class and best-in-class pharmaceutical products, enabling Lilly to better support oncologists, with the ultimate goal of delivering better outcomes for cancer patients. Importantly, the combination also expands Lilly's biotechnology capabilities. ImClone's state-of-the-art development and commercial manufacturing facility will provide significant flexibility to develop and manufacture complex biomolecules.

"We think very highly of ImClone's ground-breaking work in oncology, particularly its success with Erbitux a blockbuster targeted cancer therapy, and its ability to advance promising biotech molecules in its pipeline," said John C Lechleiter, Lilly's president and chief executive officer. "We are excited about the possibilities of improving outcomes for individual patients and building value for shareholders. This transaction will broaden our portfolio of marketed cancer therapies and boost Lilly's oncology pipeline with up to three promising targeted therapies in phase-III in 2009. By bringing together ImClone's and Lilly's marketed oncology products, pipelines, and biotech capabilities, we are taking a very important step forward in addressing the challenges of patent expirations we will face early in the next decade. We look forward to working with the ImClone team and their partners to ensure a smooth transition."

John H. Johnson, ImClone's chief executive officer, said, "We believe this is an important step forward in ImClone's and Lilly's shared goal of addressing the medical needs of cancer patients around the world. The significant progress ImClone has made over the last few years is a direct result of the important contributions of our employees, and joining forces at this stage of our growth will allow us to leverage Lilly's global capabilities and make even greater advancements in our proprietary pipeline."

Erbitux is marketed by ImClone's two partners, Merck KGaA and Bristol- Myers Squibb (BMS), and ImClone co-promotes Erbitux in North America together with BMS. Erbitux is indicated as both a single agent and with chemotherapy for certain types of colorectal cancers and as a single agent or in combination with radiation therapy for head and neck cancers. In 2007, worldwide sales of Erbitux grew 18 per cent to approximately $1.3 billion.

A key strategic priority for Lilly is increasing the flow of high-quality, innovative new therapies. Today, Lilly has approximately 50 molecules in clinical development and the strongest mid-stage pipeline in its history. The company continues to evaluate and execute on opportunities to help bolster its pipeline, including the in-licensing of promising molecules and targeted acquisitions. The acquisition of ImClone adds late-stage assets, early- and mid-stage prospects, and the opportunity to generate additional value from Erbitux. Importantly, it also supports the company's strategy to further increase its focus on biotechnology by increasing the proportion of its pipeline represented by biologics.

Under the terms of the agreement, Lilly (through a wholly-owned subsidiary) will acquire ImClone through an all cash tender offer of $70.00 per share, followed by a merger of Lilly's subsidiary with ImClone. Lilly is expected to commence the tender offer as soon as practicable. The transaction is conditioned upon at least a majority of the outstanding ImClone shares being tendered, as well as clearance under the Hart-Scott-Rodino Antitrust Improvements Act, similar requirements outside the U.S., and other customary closing conditions. The transaction is not subject to any financing condition and is expected to close in either the fourth quarter of 2008 or the first quarter of 2009.

Upon the closing of the transaction, Lilly will incur a one-time charge to earnings for acquired in-process research and development, but it is premature to estimate what that charge will be. The company expects the transaction to be accretive to earnings on a cash basis in 2012 and on a GAAP basis in 2013.

Erbitux (cetuximab) is a monoclonal antibody (IgG1 Mab) designed to inhibit the function of a molecular structure expressed on the surface of normal and tumour cells called the epidermal growth factor receptor (EGFR, HER1, c-ErbB-1).

ALIMTA is approved by the FDA in combination with cisplatin (another chemotherapy drug) for the initial treatment of advanced nonsquamous non-small cell lung cancer (NSCLC), a specific type of NSCLC. ALIMTA is not indicated for patients who have a different type of NSCLC called squamous cell.

ImClone Systems Incorporated is a fully integrated biopharmaceutical company committed to advancing oncology care by developing and commercializing a portfolio of targeted biologic treatments designed to address the medical needs of patients with a variety of cancers.