ImClone Systems

(IMCL)

reported a smaller-than-expected third-quarter loss on the strength of overseas license revenue and a sharp reduction in research and development expenses.

For the third quarter, the company lost $16.5 million, or 22 cents a share, on revenue of $23.6 million vs. a loss of $42 million, or 57 cents a share, in the year-ago period. Analysts polled by Thomson First Call had expected the company to lose 51 cents a share on revenue of $15 million.

Operating expenses are sharply lower from the third quarter of 2002. Research and development expenses dropped 33% while marketing expenses remained flat.

For the first three quarters of the year, the company lost $86.2 million, or $1.16 a share, on revenue of $61 million, compared with a loss of $119 million, or $1.62 a share, on revenue of $45.2 million for the first nine months of 2002. The stock has more than tripled since the beginning of the year to over $35 a share, but is off its October high of nearly $50 a share.

While the losses narrowed, the company continues to burn cash. ImClone is currently running a negative cash flow of about $34 million per quarter with about $140 million in cash and cash equivalents as of Sept. 30, 2003.

ImClone recently received $6 million from

Merck

(MRK) - Get Report

for the European Union and Swiss marketing rights to Erbitux, its colorectal cancer drug. As part of the licensing agreement, Merck was issued about 180,000 shares of ImClone common stock at a 10% premium to market value.

The company did not offer new guidance for the fourth quarter, but analysts expect the company to lose 55 cents a share on revenue of $15 million.