UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934. For the period ended December 31, 2000 OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934. For the transition period from
to
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Commission File Number: 0-12104
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IMMUNOMEDICS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 61-1009366
- --------------------------------- --------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
300 American Road, Morris Plains, New Jersey 07950
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(Address of principal executive offices) (Zip code)
(973) 605-8200
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(Registrant's telephone number, including area code)
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.
[X] Yes [ ] No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
As of February 13, 2001, there were 49,523,121 shares of the registrant's common
stock outstanding.
Page 1 of 16
IMMUNOMEDICS, INC. AND SUBSIDIARIES
INDEX
Page No.
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (Unaudited):
Consolidated Balance Sheets - 3
December 31, 2000 and June 30, 2000
Consolidated Statements of Operations 4
and Comprehensive Loss-
three and six months ended December 31, 2000 and 1999
Condensed Consolidated Statements of Cash Flows - 5
three and six months ended December 31, 2000 and 1999
Notes to Consolidated Financial Statements - 6
December 31, 2000
Item 2. Management's Discussion and Analysis of 10
Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risks 14
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURES 16
- ----------
IMMUNOMEDICS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
December 31, June 30,
2000 2000
------------ -----------
ASSETS
Current Assets:
Cash and cash equivalents .................................. $ 3,929,916 $ 11,114,079
Marketable securities ...................................... 34,931,387 29,751,987
Accounts receivable, net of allowance for
doubtful accounts of $66,398 and $63,398 at
December 31, 2000 and June 30, 2000, respectively ....... 1,090,684 603,398
Inventory .................................................. 780,109 1,036,900
Other current assets ....................................... 1,029,284 1,324,093
------------- -------------
Total current assets .................................. 41,761,380 43,830,457
Property and equipment, net of accumulated
depreciation of $8,236,181 and $7,760,638 at
December 31, 2000 and June 30, 2000, respectively ....... 3,698,504 3,970,680
Other long-term assets .......................................... 276,157 225,000
------------- -------------
$ 45,736,041 $ 48,026,137
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt........................... 151,315 158,058
Accounts payable ........................................... 1,731,805 1,836,283
Other current liabilities................................... 1,898,855 1,683,266
------------- -------------
Total current liabilities ............................. 3,781,975 3,677,607
------------- -------------
Long-term debt .................................................. -- 70,412
Minority interest ............................................... 182,000 182,000
Commitments and Contingencies
Stockholders' Equity:
Preferred stock; $.01 par value, authorized 10,000,000 shares;
Common stock; $.01 par value, authorized 70,000,000 shares;
issued and outstanding 49,508,621 and 49,329,121 shares
at December 31, 2000 and June 30, 2000, respectively . 495,086 493,291
Capital contributed in excess of par ....................... 154,974,470 153,242,000
Accumulated deficit ........................................ (113,706,947) (109,530,489)
Accumulated other comprehensive income (loss)............... 9,457 (108,684)
------------- -------------
Total stockholders' equity ............................ 41,772,066 44,096,118
------------- -------------
$ 45,736,041 $ 48,026,137
============= =============
See accompanying notes to consolidated financial statements.
Page 3 of 16
IMMUNOMEDICS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
Three Months Ended Six Months Ended
December 31, December 31,
2000 1999 2000 1999
---------------- ---------------- ---------------- -----------------
Revenues:
Product sales $ 934,194 $ 905,434 $ 2,172,338 $ 2,059,222
Royalties and license fee 1,931 4,133 3,647 5,571
Research and development 161,131 197,690 301,304 324,482
Interest and other 632,531 104,457 1,288,949 209,481
---------------- ---------------- ---------------- -----------------
1,729,787 1,211,714 3,766,238 2,598,756
---------------- ---------------- ---------------- -----------------
Costs and Expenses:
Cost of goods sold 305,718 76,162 362,810 137,884
Research and development 2,591,659 2,036,380 4,805,722 4,091,858
Sales and marketing 747,070 708,089 1,331,020 1,589,304
General and administrative 780,708 447,016 1,443,144 952,002
---------------- ---------------- ---------------- -----------------
4,425,155 3,267,647 7,942,696 6,771,048
---------------- ---------------- ---------------- -----------------
Net loss (2,695,368) (2,055,933) (4,176,458) (4,172,292)
---------------- ---------------- ---------------- -----------------
Preferred stock dividends - 371,684 - 496,684
---------------- ---------------- ---------------- -----------------
Net loss allocable to common shareholders $ (2,695,368) $ (2,427,617) $ (4,176,458) $ (4,668,976)
================ ================ ================ =================
Comprehensive Loss:
Net loss $ (2,695,368) $ (2,055,933) $ (4,176,458) $ (4,172,292)
---------------- ---------------- ---------------- -----------------
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments 54,291 13,714 13,687 26,522
Unrealized gain on securities
available for sale 126,092 - 104,454 -
---------------- ---------------- ---------------- -----------------
Other comprehensive income 180,383 13,714 118,141 26,522
---------------- ---------------- ---------------- -----------------
Comphrensive loss $ (2,514,985) $ (2,042,219) $ (4,058,317) $ (4,145,770)
================ ================ ================ =================
Per Share Data (Basic and Diluted):
Net loss allocable to common shareholders $ (0.05) $ (0.06) $ (0.08) $ (0.12)
================ ================ ================ =================
Weighted average number of common
shares outstanding 49,501,654 41,121,065 49,472,859 39,504,578
================ ================ ================ =================
See accompanying notes to consolidated financial statements.
Page 4 of 16
IMMUNOMEDICS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Six Months Ended
December 31,
2000 1999
----------------- ----------------
Cash flows used in operating activities:
Net loss $ (4,176,458) $(4,172,292)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation 475,543 489,425
Provision for allowance for doubtful accounts 3,000 12,000
Amortization of bond premium 33,257 -
Non-cash expense relating to issuance of warrants 508,991 -
Compensation expense on stock options 66,000 -
Changes in operating assets and liabilities 121,267 370,916
Other 13,687 26,522
----------------- ----------------
Net cash used in operating activities (2,954,713) (3,273,429)
----------------- ----------------
Cash flows from investing activities:
Purchases of marketable securities (32,993,924) (7,887,369)
Proceeds from maturities of marketable securities 27,885,721 11,674,424
Additions to property and equipment (203,367) (64,374)
----------------- ----------------
Net cash provided by (used in) investing activities (5,311,570) 3,722,681
----------------- ----------------
Cash flows from financing activities:
Issuance of common stock, net - 7,216,739
Purchase of preferred stock, net - (5,950,000)
Preferred stock dividends paid - (535,500)
Exercise of stock options 1,159,275 313,000
Payments of debt (77,155) (70,175)
----------------- ----------------
Net cash provided by financing activities 1,082,120 974,064
----------------- ----------------
Increase (decrease) in cash and cash equivalents (7,184,163) 1,423,316
Cash and cash equivalents at beginning of period 11,114,079 3,469,261
----------------- ----------------
Cash and cash equivalents at end of period $ 3,929,916 $ 4,892,577
================= ================
See accompanying notes to consolidated financial statements.
Page 5 of 16
IMMUNOMEDICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
(1) Business Overview and Basis of Presentation
The accompanying unaudited consolidated financial statements of
Immunomedics, Inc. (the "Company"), which incorporate the Company's
majority owned subsidiaries, have been prepared in accordance with
generally accepted accounting principles for interim financial
information and the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, the statements do not include all of the
information and footnotes required by generally accepted accounting
principles for complete annual financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. The
balance sheet at June 30, 2000 has been derived from the audited
financial statements at that date. Operating results for the six-month
period ended December 31, 2000 are not necessarily indicative of the
results that may be expected for the fiscal year ending June 30, 2001
or any other period.
The Company has not yet achieved profitable operations and there is no
assurance that profitable operations, if achieved, could be sustained
on a continuing basis. Further, the Company's future operations are
dependent on, among other things, the success of the Company's
commercialization efforts and market acceptance of the Company's
products.
Since its inception in 1982, the Company's source of funds has been
primarily dependent on private and public offerings of equity
securities, revenues from research and development alliances, and
product sales. The Company believes that its existing working capital
should be sufficient to meet its capital and liquidity requirements
for the foreseeable future.
For further information, refer to the annual financial statements and
footnotes thereto included in the Company's Annual Report on Form 10-K
for the fiscal year ended June 30, 2000.
(2) Cash Equivalents and Marketable Securities
The Company considers all highly liquid investments with original
maturities of three months or less, at the time of purchase, to be
cash equivalents. Included in other current assets at December 31,
2000 and June 30, 2000 is accrued interest earned on cash equivalents
and marketable securities of $466,200 and $423,300, respectively.
(3) Income Taxes
The Company has never made payments of Federal or State income taxes
and to date has not generated book income; therefore, no income taxes
have been reflected for the six-month period ended December 31, 2000.
Page 6 of 16
IMMUNOMEDICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
(4) Net Loss Per Share
Basic and diluted net loss allocable to common shareholders is based
on the net loss for the relevant period, adjusted for Preferred Stock
dividends, divided by the weighted average number of shares issued and
outstanding during the period. Preferred Stock dividends for the three
and six-month periods ended December 31, 1999 is $371,684 and
$496,684, respectively. For the six-month period ended December 31,
1999, Preferred Stock dividends consisted of $199,184, related to a 4%
per annum stated value increase in security and $297,500 premium paid
in December 1999 in connection with the redemption of Series F
Preferred Stock. The 4% per annum stated value increase in security
recorded for the three-month period ended December 31, 1999 was
$125,000. No Preferred Stock dividends have been incurred since the
redemption of the Series F Preferred Stock in December 1999. For
purposes of the diluted net loss per share calculations, the exercise
or conversion of all potential common shares is not included because
their effect would have been anti-dilutive, due to the net loss
recorded for the periods ended December 31, 2000 and 1999. The Company
has certain securities outstanding at December 31, 2000 that could
potentially dilute basic earnings per share in the future that were
not included in the computation of diluted earnings per share because
to do so would have been anti-dilutive for the periods presented.
(5) Comprehensive Income
Comprehensive income consists of net income (loss) and net unrealized
gains (losses) on securities available for sale and certain foreign
exchange changes and is presented in the unaudited consolidated
statements of operations and comprehensive loss.
(6) Recently Issued Accounting Standards
In December 1999, the staff of the Securities and Exchange Commission
issued Staff Accounting Bulletin or SAB No. 101, Revenue Recognition
in Financial Statements. SAB No. 101 summarizes certain of the Staff's
views in applying generally accepted accounting principles to revenue
recognition in financial statements, including the recognition of
non-refundable fees received upon entering into arrangements. This
SAB, as amended, must be adopted no later than the fourth quarter of
fiscal years beginning after December 15, 1999. The Company is in the
process of evaluating this SAB and the effect it will have on its
consolidated financial statements and current revenue recognition
policy.
(7) Inventory
Inventory is stated at the lower of average cost (which approximates
first-in, first-out) or market, and includes materials, labor and
manufacturing overhead. At December 31, 2000, the inventory balance
consisted of $217,528 of raw materials and $562,581 of finished goods.
At June 30, 2000, the inventory balance consisted of $373,234 of raw
materials and $663,666 of finished goods.
Page 7 of 16
IMMUNOMEDICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
(8) Stockholders' Equity
At the Company's Annual Meeting of Stockholders on December 6,2000,
the stockholders of the Company approved an amendment to the 1992
Stock Option Plan to authorize an additional five million shares of
Common Stock.
On December 16, 1999, the Company issued a warrant covering 75,000
shares of its common stock at an exercise price of $6.50 per share to
induce a financial advisor to enter into a financial advisory
agreement with the Company. The Company recognized a final
proportionate share of the general and administrative expense
associated with these warrants of approximately $276,000 and $509,000
for the three and six-month periods ended December 31, 2000,
respectively, based on the estimated value of the warrants as of the
vesting date of December 16, 2000.
(9) Debt
On October 28, 1998, the Company entered into an Equipment Financing
Agreement with the New England Capital Corporation, pursuant to which
the Company has received $450,000, at the interest rate of 9.52% per
annum, to be repaid over a 36-month period. The proceeds of such
financing were used to exercise the early purchase options for
equipment previously leased through a master lease agreement. The
financing is secured by various equipment and an irrevocable letter of
credit in the amount of $225,000. The letter of credit is
collateralized by a cash deposit of an equivalent amount which is
included in "Other long- term assets" on the accompanying consolidated
balance sheet. At December 31, 2000, the Company's indebtedness under
this agreement was $151,314 due in equal installments over the next 10
months. The Company paid $4,222 and $7,755 for the three-month periods
and $9,360 and $16,342 for the six-month periods ended December 31,
2000 and 1999, respectively, in interest under this agreement.
(10) Geographic Segment
The Company manages its operations as one line of business of
researching, developing, manufacturing and marketing biopharmaceutical
products, particularly antibody-based diagnostics and therapeutics for
cancer and infectious diseases, and it currently reports as a single
industry segment. The Company markets and sells its products in the
U.S. and throughout Europe.
The following tables present financial information based on the
geographic location of the facilities of Immunomedics, Inc. as of and
for the three and six-month periods ended December 31, 2000 and 1999:
Three Months Ended
December 31, 2000
United States Europe Total
------------- --------- -----------
Revenues $ 1,191,355 $538,432 $1,729,787
Net income (loss) (2,751,219) 55,851 (2,695,368)
December 31, 1999
United States Europe Total
------------- --------- -----------
Revenues $ 691,834 $519,880 $1,211,714
Net income (loss) (2,131,593) 75,660 (2,055,933)
Page 8 of 16
IMMUNOMEDICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
Six Months Ended
December 31, 2000
United States Europe Total
------------- --------- -----------
Revenues $ 2,442,977 $1,323,261 $3,766,238
Net income (loss) (4,669,239) 492,781 (4,176,458)
December 31, 1999
United States Europe Total
------------- -------- -----------
Revenues $1,399,375 $1,199,381 $2,598,756
Net income (loss) (4,414,282) 241,990 (4,172,292)
(11) Development and License Agreement with Amgen
On December 17, 2000, the Company signed a Development and License
Agreement with Amgen Inc. The Agreement provides Amgen with the
exclusive rights to clinical development and commercialization of the
Company's naked CD22 antibody product, epratuzumab, for the treatment
of non-Hodgkin's lymphoma in the territories of North America and
Australia. Pursuant to the Agreement, the Company was entitled to and
received an up-front payment of $18 million from Amgen on the closing
date of February 1, 2001. The Company is currently assessing the
proper accounting treatment of the up-front payment in accordance with
the Staff Accounting Bulletin No. 101, Revenue Recognition.
Page 9 of 16
Part I - Item 2.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Overview
Statements made in this Form 10-Q, other than those concerning historical
information, should be considered forward-looking and subject to various risks
and uncertainties. Such forward-looking statements are made based on
management's belief as well as assumptions made by, and information currently
available to, management. Such forward-looking statements are made pursuant to
the "safe harbor" provisions of the Private Securities Litigation Reform Act of
1995. The Company's actual results could differ materially from the results
anticipated in these forward-looking statements as a result of a variety of
factors, including (i) the risks described in Exhibit 99 to this Form 10-Q, (ii)
the risks described under the caption "Business-Business Risks" in the Company's
Annual Report on Form 10-K for the fiscal year ended June 30, 2000 (the "2000
10-K"), (iii) the risks described elsewhere under the caption "Business" in the
2000 10-K and (iv) the risks described elsewhere in the 2000 10-K. The Company
assumes no obligation to update its forward-looking statements.
Since its inception, the Company has been engaged primarily in the research and
development and, more recently, the commercialization of proprietary products
relating to the detection, diagnosis and treatment of cancer and infectious
diseases. The Company has incurred significant operating losses since its
formation in 1982 and through the quarter ended December 31, 2000, had not
earned a profit since its inception. These operating losses and failure to be
profitable have been due mainly to the significant amount of money that the
Company has spent on research and development. As of December 31, 2000, the
Company had an accumulated deficit of approximately $113,707,000. The Company
expects to continue to experience operating losses, exclusive of any license
fees, until such time, if at all, that it is able to generate sufficient
revenues from sales of CEA-Scan(R), LeukoScan(R) and its other potential
products.
On June 28, 1996, the U.S. Food and Drug Administration ("FDA") licensed
CEA-Scan for use with other standard diagnostic modalities for the detection of
recurrent and/or metastatic colorectal cancer. On October 4, 1996, the European
Commission granted marketing authorization for use of this product in the 15
countries comprising the European Union for the same indication. On September
16, 1997, the Company received a notice of compliance from the Health Protection
Branch ("HPB") permitting it to market CEA-Scan in Canada [for colorectal cancer
for recurrent and metastatic colorectal cancer.
On February 14, 1997, the Company was granted regulatory approval by the
European Commission to market LeukoScan(R), an in vivo infectious disease
diagnostic imaging product, in all 15 countries which are members of the
European Union, for the detection and diagnosis of osteomyelitis (bone
infection) in long bones and in diabetic foot ulcer patients. On December 19,
1996, the Company filed a Biologics License Application, or BLA, for LeukoScan
with the FDA for the same indication approved in Europe, plus an additional
indication for the diagnosis of acute, atypical appendicitis. As part of the
review process, the Company is in discussions with the FDA to address its
comments regarding the adequacy of the Company's data to support final approval
for these indications. Consistent with the Company's decision to focus primarily
on cancer therapeutic products, on April 12, 2000, the Company withdrew the
CEA-Scan breast cancer imaging application submitted on January 26, 1999 to the
Page 10 of 16
European Medicines Evaluation Agency (EMEA). A New Drug Submission for LeukoScan
for the same indications as in the U.S. was filed with the HPB in Canada on
March 24, 1998. The Company also has decided not to continue pursuing the
broadening of its approval for LeukoScan in Europe to include the acute,
atypical appendicitis indication, but has instead published its Phase III
efficacy data.
On December 17, 2000, the Company signed a Development and License Agreement
with Amgen Inc. The Agreement provides Amgen with the exclusive rights to
clinical development and commercialization of the Company's naked CD22 antibody
product, epratuzumab, for the treatment of non-Hodgkin's lymphoma in the
territories of North America and Australia. Pursuant to the Agreement, the
Company received an up-front payment of $18 million from Amgen on February 1,
2001. Also, pursuant to the Agreement, the Company could potentially receive
clinical milestone payments totaling $65 million. In addition, the Agreement
provides for royalties on net sales and for one-time sales milestone payments
ranging from $50 to $225 million if and when annual net sales reach $500 million
to $1 billion. Additional compensation would be payable to the Company for each
second generation product developed by Amgen. No assurances can be given as to
whether any applicable milestones will be met or with respect to the aggregate
amount that will be paid to the Company under this Agreement.
CEA-Scan and LeukoScan are the only products which the Company is currently
licensed to market and sell. To date, the Company has received only limited
revenues from the sale of these products. There can be no assurance that these
products will achieve market acceptance or generate significant sales. Unless
the Company receives substantial revenues from these products, future revenues
will be dependent in large part upon its receiving payments from corporate
partners under licensing and research agreements (such as the Amgen development
and license agreement) or from government grants. However, there can be no
assurance that the Company will receive such payments (beyond the payment made
to date under the Amgen agreement) in a timely manner, or at all.
The Company is also engaged in developing other biopharmaceutical products,
which are in various stages of development and clinical testing.
The Company has developed and filed an Investigational New Drug application
("IND") for two other in vivo cancer imaging products: AFP-Scan(R) for the
detection and diagnosis of liver and germ cell cancers, currently in Phase II
clinical trials, and LymphoScan(TM) for diagnosis and staging of non-Hodgkin's
lymphomas, currently in Phase III clinical trials.
Page 11 of 16
Results of Operations
Revenues for the six-month period ended December 31, 2000 were $3,766,000 as
compared to $2,599,000 for the same period in 1999, representing an increase of
$1,167,000 relating principally to increased interest income. Product sales for
the six-month period ended December 31, 2000 increased by $113,000 as compared
to the same period of 1999. Research and development revenue for the six-month
period ended December 31, 2000 decreased by $23,000 as compared to same period
of 1999, primarily due to lower grant revenue. Interest and other income for the
six-month period ended December 31, 2000 increased by $1,079,000, as compared to
the same period of 1999, primarily due to more cash available for investments as
a result of infusions of private equity capital during the second and third
quarters of fiscal 2000.
Revenues for the three-month period ended December 31, 2000 were $1,730,000 as
compared to $1,212,000 for the same period in 1999, representing an increase of
$518,000 relating principally to increased interest income. Product sales for
the three-month period ended December 31, 2000 increased by $29,000 as compared
to the same period of 1999. Research and development revenue for the three-month
period ended December 31, 2000 decreased by $37,000 as compared to same period
of 1999, due to lower grant revenue. Interest and other income for the
three-month period ended December 31, 2000 increased by $528,000, as compared to
the same period of 1999, primarily due to more cash available for investments as
a result of infusions of private equity capital during the second and third
quarters of fiscal 2000.
Total operating expenses for the six-month period ended December 31, 2000 were
$7,943,000 as compared to $6,771,000 for the same period in 1999, representing
an increase of $1,172,000. Research and development costs for the six-month
period ended December 31, 2000 increased by $714,000 as compared to the same
period in 1999, primarily due to increased patient enrollment in clinical trials
for therapeutic products and manufacturing expenses, including lab supplies,
associated with producing such products. Sales and marketing expenses for the
six-month period ended December 31, 2000, decreased by $258,000 primarily due to
the Company-wide reorganization/restructuring. Cost of goods sold for the
six-month period ended December 31, 2000 increased by $225,000 as compared to
the same period in 1999, primarily due to reserves recorded for previously
capitalized inventory due to approaching expiration dates. General and
administrative costs for the six-month period ended December 31, 2000 increased
by $491,000 as compared to the same period of 1999, primarily due to the
recognition of an expense of $509,000 associated with warrants issued to a
financial advisor in December 1999 (see Note 8 to Unaudited Consolidated
Financial Statements), partially offset by a reduction of other administrative
expenses.
Total operating expenses for the three-month period ended December 31, 2000 were
$4,425,000 as compared to $3,268,000 for the same period in 1999, representing
an increase of $1,157,000. Research and development costs for the three-month
period ended December 31, 2000 increased by $555,000 as compared to the same
period in 1999, primarily due to increased patient enrollment in clinical trials
for therapeutic products and manufacturing expenses, including lab supplies,
associated with producing such products. Cost of goods sold for the three-month
period ended December 31, 2000 increased by $230,000 as compared to the same
period in 1999, primarily due to reserves recorded for previously capitalized
inventory due to approaching expirations dates. Sales and marketing expenses for
the three-month period ended December 31, 2000 increased by $39,000. General and
administrative costs for the three-month period ended December 31, 2000
increased by $334,000 as compared to the same period of 1999, primarily due to
the recognition of an expense of $276,000 associated with warrants issued to a
financial advisor in December 1999 (see Note 8 to Unaudited Consolidated
Financial Statements).
Page 12 of 16
Net loss allocable to common shareholders for the six-month period ended
December 31, 2000 was $4,176,000, or $0.08 per share, as compared to $4,669,000,
or $0.12 per share, for the same period in 1999. The lower net loss allocable to
common shareholders of $493,000 in 2000 as compared to 1999 primarily due to the
Company not incurring any preferred stock dividends during the six-month period
ended December 31, 2000. In addition, the net loss per share allocable to common
shareholders for the six-month period ended December 31, 2000 was positively
impacted by the higher weighted average number of common shares outstanding for
this period, as compared to the same period in 1999. The increase in the
weighted average number of shares outstanding was primarily due to the
conversion in late 1999 of the Company's Series F Preferred Stock and the
issuance of Common Stock pursuant to the Company's equity financings during
fiscal year 2000.
Net loss allocable to common shareholders for the three-month period ended
December 31, 2000 was $2,695,000, or $0.05 per share, as compared to $2,428,000,
or $0.06 per share, for the same period in 1999. The higher net loss allocable
to common shareholders in 2000 as compared to 1999 primarily resulted from
higher expenses partially offset by increased interest income and no preferred
stock dividends. The net loss per share allocable to common shareholders for the
three-month period ended December 31, 2000 was positively impacted by the higher
weighted average number of shares outstanding for this period, as compared to
the same period in 1999. The increase in the weighted average number of shares
outstanding was primarily due to the 1999 conversion of the Company's Series F
Preferred Stock and the issuance of Common Stock pursuant to the Company's
equity financings during fiscal year 2000.
Liquidity and Capital Resources
At December 31, 2000, the Company had working capital of $37,979,000, which
represents a decrease of $2,173,000 from June 30, 2000. The decrease in working
capital resulted primarily from the funding of operating expenses.
The Company's liquid asset position, measured by its cash, cash equivalents and
marketable securities, was $38,861,000 at December 31, 2000, representing a
decrease of $2,005,000 from June 30, 2000. This decrease was primarily
attributable to the funding of operating expenses as discussed above. It is
anticipated that working capital and cash, cash equivalents and marketable
securities will increase during the remainder of fiscal year 2001 as a result of
the Amgen licensing agreement (see Note 10 to Unaudited Consolidated Financial
Statements), pursuant to which the Company received $18 million on February 1,
2001, and the projected revenues from product sales in the U.S. and Europe,
offset by planned operating expenses and capital expenditures. However, there
can be no assurance as to the amount of revenues, if any, these products will
provide.
On May 19, 2000, the Company gave notice to its landlord that it desired to
exercise its right to purchase the facilities which the Company presently leases
at 300 American Road, Morris Plains, New Jersey (see "Properties"). The purchase
price under the lease is approximately $6.5 million. The Company plans to seek
mortgage financing with respect to this purchase. If such financing is not
available to the Company on acceptable terms prior to the closing, the Company
would expect to fund the purchase price on an interim basis from its own capital
resources and would then likely seek to mortgage the acquired premises. No
assurances can be given that the Company will be able to secure favorable
financing either before or after the purchase of these facilities.
Through December 31, 2000, the Company has not generated positive cash flow from
operations. The Company believes that its existing working capital should be
sufficient to meet its capital and liquidity requirements for the foreseeable
future. This expectation represents a forward-looking statement under the
Private Securities Litigation Reform Act of 1995. Actual results could differ
materially from the Company's expectation as a result of a number of risks and
uncertainties, including the risks described in Exhibit 99 annexed hereto. The
Company's working capital and working capital requirements are affected by
numerous factors and there is no assurance that such factors will not have a
negative impact on the Company's liquidity. Principal among these are the
success of its product commercialization and selling products, the technological
advantages and pricing of the Company's products, the impact of the regulatory
requirements applicable to the Company and access to capital markets that can
provide the Company with the resources when necessary to fund its strategic
Page 13 of 16
priorities. Unless there is a significant increase in product revenues, the
Company may require additional financial resources after it utilizes its current
liquid assets in order for it to continue its projected levels of research and
development and clinical trials of its proposed products and regulatory filings
for new indications of existing products. There can be no assurance that any
additional financing will be available to the Company at all or on terms it
finds acceptable or that the terms of such financing will not cause substantial
dilution to existing stockholders.
The Company intends to supplement its financial resources from time to time as
market conditions permit through additional financing and through collaborative
marketing and distribution agreements. The Company continues to evaluate various
programs to raise additional capital and to seek additional revenues from the
licensing of its proprietary technology. At the present time, the Company is
unable to determine whether any of these future activities will be successful
and, if so, the terms and timing of any definitive agreements.
Recently Issued Accounting Standards
In December 1999, the staff of the Securities and Exchange Commission issued
Staff Accounting Bulletin or SAB No. 101, Revenue Recognition in Financial
Statements. SAB No. 101 summarizes certain of the Staff's views in applying
generally accepted accounting principles to revenue recognition in financial
statements, including the recognition of non-refundable fees received upon
entering into arrangements. This SAB, as amended, must be adopted no later than
the fourth quarter of fiscal years beginning after December 15, 1999. The
Company is in the process of evaluating this SAB and the effect it will have on
its consolidated financial statements and current revenue recognition policy.
Item 3. Quantitative and Qualitative Disclosures About Market Risks
See Item 7A of the Company's Annual Report on Form 10-K for the year ended
June 30, 2000.
Page 14 of 16
PART II
Item 4. Submission of Matters to a Vote of Security Holders.
The Company's annual meeting of stockholders was held on December 6, 2000. At
that meeting, David M. Goldenberg, Morton Coleman, Marvin E. Jaffe and Richard
R. Pivirotto were elected as directors. The stockholders ratified the selection
of KPMG LLP as the Company's independent auditors for the fiscal year ending
June 30, 2001 and amended the 1992 Stock Option Plan to authorize an additional
five million shares of Common Stock.
The following number of shares were voted with respect to the matters considered
at the annual meeting:
BROKER
FOR AGAINST ABSTENTION NON-VOTE
---------- --------- ---------- --------
Election of directors:
David M. Goldenberg 40,258,077 2,461,524 0 0
Morton Coleman 42,269,582 450,019 0 0
Marvin E. Jaffe 42,267,358 452,243 0 0
Richard R. Pivirotto 42,257,558 462,043 0 0
Selection of auditors 41,075,217 119,891 25,108 0
1992 Stock Option Plan
amendment 18,607,325 5,731,778 174,159 0
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10 1992 Stock Option Plan, as Amended
27 Financial Data Schedule
99 Risk Factors
Page 15 of 16
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.
IMMUNOMEDICS, INC.
------------------
(Registrant)
DATE: February 13, 2001 /s/ David M. Goldenberg
-------------------------------
David M. Goldenberg
Chairman and
Chief Executive Officer
(Principal Executive Officer)
DATE: February 13, 2001 /s/ Shailesh R. Asher
--------------------------
Shailesh R. Asher
Controller and Acting Chief
Financial Officer
(Principal Financial and
Accounting Officer)
Page 16 of 16