UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934.
For the period ended September 30, 1995
Commission File Number: 0-12104
IMMUNOMEDICS, INC.
(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
(Address of principal executive offices) (Zip code)
(201) 605-8200
(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 November 8, 1995, there were 32,776,919 shares of the registrant's
common stock outstanding.
IMMUNOMEDICS, INC.
Balance Sheets
(Unaudited)
September 30, June 30,
1995 1995
________________________________________________________________ _____________ _____________
ASSETS
Current Assets:
Cash and Cash Equivalents 12,197,373 7,162,837
Marketable Securities 17,184,117 15,651,369
Other Current Assets 1,039,750 687,674
_____________ _____________
Total Current Assets 30,421,240 23,501,880
Property and Equipment, net of accumulated
depreciation of $4,661,000 and $4,427,000 at
September 30, 1995 and June 30, 1995, respectively 4,671,104 4,722,604
_____________ _____________
35,092,344 28,224,484
_____________ _____________
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable 1,696,163 1,932,908
Other Current Liabilities 2,716,886 2,662,401
_____________ _____________
Total Current Liabilities 4,413,049 4,595,309
_____________ _____________
Commitments and Contingencies
Stockholders' Equity:
Preferred stock; $.01 par value, authorized 10,000,000 shares;
Series B convertible, authorized 200,000 shares;
issued and outstanding 5,271 and 124,527 shares at
September 30, 1995 and June 30, 1995, respectively 53 1,245
Series C convertible, authorized 200,000 shares;
issued and outstanding 200,000 shares at September 30,1995 2,000 0
Common stock; $.01 par value, authorized 50,000,000 shares;
issued and outstanding 32,727,749 and 30,624,585 shares
at September 30, 1995 and June 30, 1995, respectively 327,277 306,246
Capital contributed in excess of par 82,431,369 72,098,771
Accumulated deficit (52,089,715) (48,781,384)
Accumulated net unrealized gain on securities 8,311 4,297
_____________ _____________
Total Stockholders' Equity 30,679,295 23,629,175
_____________ _____________
$ 35,092,344 28,224,484
_____________ _____________
<FN>
See accompanying notes to unaudited condensed financial statements.
IMMUNOMEDICS, INC.
Condensed Statements of Operations
(Unaudited)
Three Months Ended
September 30,
1995 1994
_____________________________________ ___________ ___________
REVENUES:
Product sales and royalties $ 51,842 42,524
Research and development 67,500 593,576
Interest 324,384 227,692
___________ ___________
443,726 863,792
COSTS AND EXPENSES:
Cost of goods sold 7,000 16,861
Research and development 3,062,954 3,164,422
General and administrative 682,103 629,130
___________ ___________
3,752,057 3,810,413
___________ ___________
Net loss $ (3,308,331) (2,946,621)
___________ ___________
Net loss per share $ (0.11) (0.10)
___________ ___________
Weighted average number of
shares outstanding 31,434,581 30,055,469
___________ ___________
<FN>
See accompanying notes to unaudited condensed financial statements.
IMMUNOMEDICS, INC.
Condensed Statements of Cash Flows
(Unaudited)
Three Months Ended
September 30,
1995 1994
______________________________________________________ _____________ _____________
Net cash used in operating activities $ (3,591,874) (341,897)
Cash flows provided by/(used in) investing activities:
Purchase of marketable securities (4,029,956) 0
Proceeds from maturities of marketable securities 2,484,609 4,340,151
Additions to property and equipment (182,680) (103,536)
_____________ _____________
Net cash provided by/(used in) investing activities (1,728,027) (4,236,615)
_____________ _____________
Cash flows provided by financing activities:
Issuance of convertible preferred stock, net 9,982,500 0
Exercise of stock options 371,937 0
_____________ _____________
Net cash provided by financing activities 10,354,437 0
_____________ _____________
Increase in cash and cash equivalents 5,034,536 817,644
Cash and cash equivalents at beginning of period 7,162,837 6,371,245
_____________ _____________
Cash and cash equivalents at end of period $ 12,197,373 7,188,889
_____________ _____________
<FN>
See accompanying notes to unaudited condensed financial statements.
IMMUNOMEDICS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
(1) Basis of Presentation
The accompanying unaudited condensed financial statements of
Immunomedics, Inc. (the "Company") 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, they do not
include all of the information and footnotes required by generally
accepted accounting principles for complete 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,
1995 has been derived from the audited financial statements at that
date. Operating results for the three-month period ended
September 30, 1995 are not necessarily indicative of the results
that may be expected for the fiscal year ending June 30, 1996.
For further information, refer to the annual financial statements
and footnotes thereto included in the Company's Form 10-K for
the year ended June 30, 1995.
(2) Cash Equivalents and Marketable Securities
The Company considers all highly liquid investments with
maturities of three months or less, at the time of purchase, to be
cash equivalents. Included in other current assets at September 30,
1995 and June 30, 1995 is accrued interest earned on cash
equivalents and marketable securities of $228,000 and $231,000,
respectively.
(3) Income Taxes
The Company has never made payments of Federal or state income
taxes and does not anticipate generating book income in fiscal 1996;
therefore, no income taxes have been reflected for the three-month
period ended September 30, 1995.
(4) Net Loss Per Share
Net loss per share is based upon the weighted average number of
common shares outstanding. Common share equivalents,
consisting of outstanding stock options and convertible preferred
stock, are not included in the computations since the effect would
be antidilutive.
IMMUNOMEDICS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(5) Stockholders' Equity
On September 29, 1995, the Company completed an equity financing
in accordance with Regulation S under the Securities Act of
1933, pursuant to which a group of investors purchased 200,000
shares of non-dividend paying Series C Convertible Preferred
Stock for $10,000,000. The terms of the transaction allow the
investors, at their discretion, to convert the Preferred Stock into
shares of the Company's Common Stock during a pre-determined
period subject to extension. The conversion price will be based on
pre-determined discounts of up to 9 3/4% from the average market
price per common share over a 30-day trading period surrounding
the dates conversion notices are received.
(6) License and Distribution Agreements
On August 2, 1995, the Company announced that its Development
and License Agreement with Pharmacia, Inc. ("Pharmacia" -
formerly Adria Laboratories Division of Erbamont, Inc.) was
terminated, as a result of which the Company regained the North
American marketing and selling rights for CEA-Scan . The
Company is discussing with Pharmacia the amount of payments to
be made by Pharmacia to the Company to satisfy Pharmacia's
remaining obligations; however, no agreement has been reached on such
amounts.
(7) Commitments and Contingencies
On February 1, 1994, the Company entered into a master lease
agreement, which was subsequently amended, pursuant to which
the Company may lease equipment for research, development and
manufacturing purposes having an aggregate acquisition cost of up
to $2,200,000. The basic lease payments under the master lease
agreement will be determined on the basis of current market rates
of interest at the inception of each equipment schedule take-down,
and payable in monthly installments over a four-year period. The
lease agreement contains an early purchase option, at an amount
which is deemed to be fair value, exercisable no later than ninety
days before the thirty-sixth installment is due. Under the lease
agreement, continued compliance with certain financial ratios is
required and, in the event of default, the Company will be required
to provide an irrevocable letter of credit which is generally equal
to the outstanding balance of lease payments due at the time of
default. As of November 8, 1995, the Company has leased
equipment aggregating $1,355,000 under the master lease
agreement and recorded lease expense for the three months ended
September 30, 1995 of $95,000.
Part I - Item 2.
Management's Discussion and Analysis of Financial Condition and Results
of Operations
Overview
Since its inception, the Company has been engaged primarily in the
research and development of proprietary products relating to the detection,
diagnosis and treatment of cancer, and more recently infectious diseases.
In April 1991, the Company filed a Product License Application ("PLA")
with the U.S. Food and Drug Administration ("FDA") seeking approval to
manufacture and market, in the United States, CEA-Scan , an in vivo
colorectal cancer imaging product. In May 1994, the Company received
a letter from the FDA indicating that the PLA for CEA-Scan for
colorectal cancer imaging was not approvable at that time. In July 1994,
the Company met with FDA officials to review the status of CEA-Scan
and believed that it had reached at that time an understanding with the
FDA that the results of the Phase III pivotal clinical trial would be further
analyzed to ascertain potentially approvable claims for the product and
what additional steps would need to be taken to achieve approvability. In
March 1995, the Company submitted a response to the FDA's questions,
including an analysis suggesting that CEA-Scan will be useful in the
pre-surgical evaluation of recurrent colorectal cancer patients, particularly
in the assessment of tumor resectability for these patients. In September
1995, the FDA scheduled the Company to present clinical trial data on
CEA-Scan to the Oncologic Drugs Advisory Committee ("ODAC") on
October 17, 1995. At the same time, the FDA sent an action letter to the
Company requesting clarification of the data, additional information, and
additional analyses which the Company had provided in response to the
FDA's May 1994 letter. Accordingly, the status of the Company's PLA
remained not-yet-approvable at the time of its notification of the ODAC
presentation. On October 17, 1995, the Company presented data to the
ODAC supporting the use of CEA-Scan to better define the spread of
colorectal cancer and to provide the surgeon with more complete
diagnostic information, thereby helping to avoid unnecessary surgery in
patients who would not benefit from the procedure. At the conclusion of
the meeting, the ODAC deferred a decision on the approvability of CEA-Scan
and recommended that the product may be more suitable for
review by the Medical Imaging Drugs Advisory Committee ("MIDAC")
and select oncology consultants. The Company is now working with the
FDA to resolve certain differences in data and imaging interpretation
with the ultimate objective of preparing a cohesive presentation to MIDAC.
In February 1992, the Company filed with the Health Protection Branch
("HPB") to market CEA-Scan in Canada. In March 1992, the Company
filed with the Committee for Proprietary Medicinal Products ("CPMP") to
market the product in Europe. In December 1994, the Company received
notification from the Department of Health Medicines Control Agency
("MCA") in the United Kingdom that the Company's manufacturing
operations are in general compliance with the guidelines of Good
Manufacturing Principles ("cGMP").
Overview (Continued)
The Company continues to work diligently with the U.S. and foreign
regulatory authorities and remains fully committed to the eventual
approval of CEA-Scan in the U.S., Europe and Canada. However, no
assurance can be given as to if or when any such approvals could be
forthcoming.
The Company has not achieved profitable operations and does not
anticipate achieving profitable operations during fiscal year 1996. The
Company will continue to experience operating losses until such time as
the Company is able to generate sufficient revenues from sales of its
proposed in vivo products. Further, the Company's working capital will
continue to decrease until such time as the Company is able to generate
positive cash flow from operations or until such time, if at all, as the
Company receives an infusion of cash from the sale of the Company's
securities or from corporate alliances to finance the Company's operating
expenses and capital expenditures.
Results of Operations
Revenues for the three-month period ended September 30, 1995 were
$444,000 as compared to $864,000 for the same period in 1994,
representing a decrease of $420,000, which was due to a decrease in
research and development revenue. On August 2, 1995, the Company
announced that its Development and License Agreement with Pharmacia
had been terminate and that it had regained the North American marketing
and selling rights to CEA-Scan (see Note 6 to unaudited condensed
financial statements). Accordingly, research and development revenues
for the three months ended September 30, 1995 were significantly lower
than the $594,000 recorded for the same period in 1994, of which $500,000
was received from Pharmacia. Interest income for the three-month period
ended September 30, 1995 increased by $97,000 as compared to the same
period in 1994. This was due to an increase in cash, cash equivalents
and marketable securities resulting from the financing transaction
completed in January 1995.
Total operating expenses for the three-month period ended September 30,
1995 were $3,752,000 as compared to $3,810,000 for the same period in
1994, representing a decrease of $58,000. Research and development costs
during the three-month period ended September 30, 1995 decreased by
$101,000 as compared to the same period in 1994, principally due to lower
salary expense partially offset by an increase in costs associated with
regulatory filings.
General and administrative costs for the three-month period ended
September 30, 1995 increased by $53,000 as compared to the same period
in 1994, due to higher marketing and consulting expenses, partially offset
by lower legal expenses.
Net loss for the three-month period ended September 30, 1995 was
$3,308,000, or $0.11 per share, as compared to a loss of $2,947,000, or
$0.10 per share, for the same period in 1994, representing an increased loss
of $361,000, or $0.01 per share. The change principally resulted from
decreased revenues as noted above.
Liquidity and Capital Resources
At September 30, 1995, the Company had working capital of $26,008,000,
representing an increase of $7,101,000 from June 30, 1995, and had
virtually no long-term debt. The increase in working capital resulted
principally from a September 1995 financing transaction, pursuant to which
several foreign investors purchased 200,000 shares of non-dividend paying
Series C Convertible Preferred Stock for $10,000,000. The terms of the
transaction allow the investors, at their discretion, to convert the
Preferred Stock into shares of the Company's Common Stock during a
pre-determined period subject to extension. The conversion price will
be based on pre-determined discounts of up to 9 3/4% from the average
market price per share over a 30-day trading period surrounding the dates
conversion notices are received.
On February 1, 1994, the Company entered into a master lease agreement
which was subsequently amended, pursuant to which the Company may
lease equipment for research, development and manufacturing purposes
having an aggregate acquisition cost of up to $2,200,000. The basic lease
payments under the master lease agreement will be determined on the basis
of current market rates of interest at the inception of each equipment
schedule take-down, and payable in monthly installments over a four-year
period. The lease agreement contains an early purchase option, at an
amount which is deemed to be fair value, exercisable no later than ninety
days before the thirty-sixth installment is due. Under the lease agreement,
continued compliance with certain financial ratios is required and, in the
event of default, the Company will be required to provide an irrevocable
letter of credit which is generally equal to the outstanding balance of lease
payments due at the time of default. As of November 8, 1995, the
Company has leased equipment aggregating $1,355,000 under the master
lease agreement (see Note 7 to unaudited condensed financial statements).
The Company's liquid asset position, measured by its cash, cash
equivalents and marketable securities, was $29,381,000 at September 30,
1995, representing an increase of $6,567,000 from June 30, 1995. This
increase was principally attributable to the financing transaction discussed
above. It is anticipated that working capital and cash, cash equivalents and
marketable securities will continue to decrease during fiscal year 1996 as
a result of planned operating expenses and capital expenditures. At
present, the Company believes that its financial resources will be sufficient
to fund anticipated operating expenses and capital expenditures through
calendar year 1997. 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. In addition, 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 activities will be
successful and, if so, the terms and timing of any definitive agreements.
There can be no assurance that the Company will be able to obtain
additional funds.
PART II - Other Information:
Items 1-3. Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders:
(a) On November 8, 1995, the Annual Meeting of
Stockholders of the Company was held.
(b) All seven Directors were re-elected: David M.
Goldenberg, Albert D. Angel, A. E. Cohen, Marvin
E. Jaffe, Richard R. Pivirotto, Warren W.
Rosenthal and Richard C. Williams. The selection
of KPMG Peat Marwick LLP as the Company's
independent auditors for the fiscal year ending June
30, 1996 was ratified.
(c)1. The votes for re-election of the seven Directors were
as follows:
For David M. Goldenberg were 31,024,696 for and 87,004 withheld
For Marvin E. Jaffe were 31,024,896 for and 86,804 withheld
For Albert D. Angel were 31,024,696 for and 87,004 withheld
For A. E. Cohen were 31,024,896 for and 86,804 withheld
For Richard R. Pivirotto were 31,024,696 for and 87,004 withheld
For Warren W. Rosenthal were 31,023,796 for and 87,904 withheld
For Richard C. Williams 31,024,896 for and 86,804 withheld
2. The votes for ratification of the selection of KPMG Peat
Marwick LLP as the Company's independent auditors for the
fiscal year ending June 30, 1996 were 31,023,055 for and
45,360 against, with 43,285 shares abstaining.
(d) Not applicable.
Item 5. Not applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
4.3 Certificate of Designation of the
Registrant's Series C Convertible Preferred
Stock.
10.21 Convertible Stock Purchase Agreement
dated as of September 29, 1995, between
the Registrant and the purchasers named
therein.
(b) The Registrant filed a current report on Form 8-K,
dated October 2, 1995 with respect to Item 5 -
Other Events.
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: November 13, 1995 /s/ David M. Goldenberg
David M. Goldenberg,
Chairman of the Board
and Chief Executive Officer
(Principal Executive Officer)
DATE: November 13, 1995 /s/ Amy Factor
Amy Factor,
Executive Vice President
(Principal Accounting Officer)