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, 1997
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934. For the transition period from ____________to__________
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)
(973) 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 February 13, 1998, there were 36,414,752 shares of the registrant's common
stock outstanding.
Page 1 of 16
IMMUNOMEDICS, INC.
INDEX
Page No.
PART I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (Unaudited):
Condensed Consolidated Balance Sheets - 3
December 31, 1997 and June 30, 1997
Condensed Consolidated Statements of Operations - 4
three and six months ended December 31, 1997 and 1996
Condensed Consolidated Statements of Cash Flows - 5
six months ended December 31, 1997 and 1996
Notes to Condensed Consolidated Financial Statements - 6
December 31, 1997
Item 2. Management's Discussion and Analysis of 10
Financial Condition and Results of Operations
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURES 16
Page 2 of 16
PART I. - FINANCIAL INFORMATION
IMMUNOMEDICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
December 31, June 30,
1997 1997
______________ ______________
ASSETS
Current Assets
Cash and cash equivalents $ 4,239,644 6,013,355
Marketable securities 3,551,258 9,010,275
Inventory 655,010 690,695
Other current assets 2,932,820 1,227,000
______________ ______________
Total Current Assets 11,378,732 16,941,325
Property and equipment, net of
accumulated depreciation of
$5,325,000 and $4,852,000 at
December 31, 1997 and June
30, 1997, respectively 5,377,687 5,693,193
______________ ______________
TOTAL ASSETS $ 16,756,419 22,634,518
______________ ______________
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable $ 2,029,625 2,360,256
Other current liabilities 2,318,132 2,827,970
______________ ______________
Total Current Liabilities 4,347,757 5,188,226
Commitments and Contingencies
Preferred stock; $.01 par value,
authorized 10,000,000 shares;
series D convertible, authorized
200,000 shares; issued and
outstanding none and 4,999
shares at December 31, 1997 and
June 30, 1997, respectively 0 50
Common stock; $.01 par value,
authorized 70,000,000 shares;
issued and outstanding 36,364,502
and 36,297,170 shares at
December 31, 1997 and
June 30, 1997, respectively 363,645 362,971
Capital contributed in excess
of par 93,129,101 93,111,855
Accumulated deficit (81,082,826) (76,027,392)
Accumulated net unrealized
loss on securities (1,258) (1,192)
______________ ______________
Total stockholders' equity 12,408,662 17,446,292
______________ ______________
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 16,756,419 22,634,518
______________ ______________
<FN>
See accompanying notes to condensed consolidated financial statements.
</FN>
Page 3 of 16
IMMUNOMEDICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
December 31, December 31,
1997 1996 1997 1996
___________ ___________ ___________ ___________
REVENUES:
Product sales $ 888,498 231,085 1,859,797 270,736
Royalties and licence
fees 7,755 31,321 13,054 526,329
Research and development 760,546 215,147 906,585 267,647
Interest and other 1,953,866 325,757 2,131,784 712,058
___________ ___________ ___________ ___________
3,610,665 803,310 4,911,220 1,776,770
___________ ___________ ___________ ___________
COST AND EXPENSES:
Cost of goods sold 45,186 3,677 69,422 7,967
Research and development 3,116,310 3,364,313 6,132,847 6,637,967
Sales and Marketing 1,440,632 326,224 2,522,600 663,219
General and administrative 633,153 620,436 1,241,785 1,223,854
___________ ___________ ___________ ___________
5,235,281 4,314,650 9,966,654 8,533,007
___________ ___________ ___________ ___________
NET LOSS $(1,624,616) (3,511,340) (5,055,434) (6,756,237)
___________ ___________ ___________ ___________
Basic net loss per share $ (0.04) (0.10) (0.14) (0.19)
___________ ___________ ___________ ___________
Diluted net loss per share $ (0.04) (0.10) (0.14) (0.19)
___________ ___________ ___________ ___________
Weighted average number of
common shares outstanding 36,364,209 35,251,126 36,344,396 34,928,931
___________ ___________ ___________ ___________
<FN>
See accompanying notes to condensed consolidated financial statements.
</FN>
Page 4 of 16
IMMUNOMEDICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended December 31,
1997 1996
______________ ______________
Cash Flows From Operating Activities:
Net loss $ (5,055,434) (6,756,237)
Adjustments to reconsile net loss to
net cash used in operating
activities:
Depreciation and amortization 473,093 563,516
Change in operating assets and
liabilities (2,510,604) (1,177,181)
______________ ______________
Net Cash Used In Operating
Activities $ (7,092,945) (7,369,902)
______________ ______________
Cash Flows From Investing Activities:
Purchase of marketable securities (8,865,541) (20,280,120)
Proceeds from maturities of
marketable securities 14,324,492 17,608,581
Additions to property and
equipment (157,587) (218,359)
______________ ______________
Net Cash Provided By / (used in)
Investing Activities $ 5,301,364 (2,889,898)
______________ ______________
Cash Flows From Financing Activities:
Exercise of stock options 17,870 181,036
______________ ______________
Net Cash Provided By Financing
Activities $ 17,870 181,036
______________ ______________
Increase (Decrease) in cash
equivalents (1,773,711) (10,078,764)
Cash and cash equivalents at beginning
of period 6,013,355 13,646,000
______________ ______________
Cash and cash equivalents at end
of period $ 4,239,644 3,567,236
______________ ______________
<FN>
See accompanying notes to condenced consolidated financial statements.
</FN>
Page 5 of 16
IMMUNOMEDICS, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(1) Basis of Presentation
The accompanying unaudited condensed consolidated financial statements
of Immunomedics, Inc. (the "Company"), which incorporate the Company's
wholly-owned subsidiary Immunomedics Europe, 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 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, 1997 has been derived from the audited
financial statements at that date. Operating results for the six-month
period ended December 31, 1997 are not necessarily indicative of the
results that may be expected for the fiscal year ending June 30, 1998.
For further information, refer to the annual financial statements and
footnotes thereto included in the Company's Form 10-K for the fiscal
year ended June 30, 1997.
(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 December 31, 1997 and June 30, 1997
is accrued interest earned on cash equivalents and marketable
securities of $56,000 and $104,000, 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 1998;
therefore, no income taxes have been reflected for the six-month period
ended December 31, 1997.
(4) Net Loss Per Share
For the period ended December 31, 1997, the Company adopted the
provisions of Statement of Financial Accounting Standards No. 128,
Earnings Per Share.
Basic loss per share is based on net loss for the relevant period,
divided by the weighted average number of common shares outstanding
during the period.
Page 6 of 16
IMMUNOMEDICS, INC.
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
Diluted loss per share is based on net loss for the relevant period,
divided by the weighted average number of common shares outstanding
during the period. Common share equivalents, such as outstanding stock
options, are not included in the computations since the effect would be
antidilutive.
(5) Stockholders' Equity
On December 23, 1997, the Company entered into a structured Equity Line
Flexible Financing Agreement (the "Equity Line") with an investor (the
"Investor"), pursuant to which, subject to the satisfaction of certain
conditions, the Company may receive up to an aggregate of $30 million
over a 36-month period. During each three month period (each, an
"Investment Period") with the first Investment Period commencing March
1, 1998, the Company, subject to the satisfaction of certain
conditions, can require the Investor to purchase shares of the
Company's common stock for an aggregate purchase price of between $1.0
million and $2.5 million and the Investor, at its option, may purchase
additional shares of common stock for an aggregate purchase price of
$1.0 million, subject, in either case, to the right of the Company to
provide that no purchases shall be made in such Investment Period. The
Investor may select the dates on which the purchase of shares of the
Company's common stock will occur. The purchase price per share to be
paid by the Investor for the shares of the Company's common stock
acquired under the Equity Line will equal 98% of the lowest sales price
of the common stock during the three trading days immediately preceding
the notice of purchase by the Investor. The Investor's obligation to
purchase shares of the Company's common stock under the Equity Line is
subject to various conditions, including, among other things, the price
of the Company's common stock being at least such price as the Company
may from time to time set as the minimum purchase price. In addition,
the Investor is not required to purchase, in any Investment Period, an
amount in excess of 8% of the product of the daily average value of
open market trading of the common stock and the number of trading days
in the Investment Period during either the current or immediately
preceding Investment Period.
On June 27, 1996, the Company completed an equity financing pursuant to
Regulation S under the Securities Act of 1933, pursuant to which
several foreign investors purchased 200,000 shares of 5% Series D
Convertible Preferred Stock (the "Series D Preferred") for $10,000,000.
The terms of the transaction allow the investors, at their discretion,
to convert the Series D Preferred into shares of the Company's common
stock during a twenty-four month period beginning in June 1996, at a
price equal to 89% of the average market price per share over a 20-day
trading period surrounding the date of conversion. As of February 13,
1998, all of the 200,000 shares of Series D Preferred had been
converted into 1,795,771 shares of common stock.
Page 7 of 16
IMMUNOMEDICS, INC.
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
(6) License and Distribution Agreements
On November 24, 1997, the Company entered into a Distribution Agreement
with Eli Lilly Deutschland GmbH ("Lilly") pursuant to which Lilly will
package and distribute LeukoScan(R) within the countries comprising the
European Union and certain other countries subject to receipt of
regulatory approvals. The Company will pay Lilly a service fee based
primarily on the number of units of product packaged and shipped. The
parties contemplate that other Company products may be handled under
this arrangement when appropriate.
On August 2, 1995, the Company announced that its Development and
License Agreement with Pharmacia, Inc. (which subsequently became
Pharmacia & Upjohn Inc.- "Pharmacia") was terminated and the Company
regained the North American marketing and selling rights for CEA-Scan.
The Company and Pharmacia were subsequently unable to agree on the
amount owed to the Company as a result of termination. In June, 1996,
the Company filed a claim against Pharmacia before the American
Arbitration Association. On November 28, 1997, the Company was awarded
$1.8 million, including interest. Additionally, the Company recognized
as revenue a portion of funds previously received from Pharmacia
pertaining to CEA-Scan clinical trials for which the Company no longer
has an obligation. Such amounts had been recorded as deferred revenue.
In March 1995, the Company entered into a License Agreement with
Mallinckrodt Medical B.V., pursuant to which Mallinckrodt Medical B.V.
undertook to market, sell and distribute CEA-Scan(R)throughout Western
Europe and in specified Eastern European countries, subject to receipt
of regulatory approval in the specified Eastern European countries. In
April 1996, the Company entered into a U.S. Marketing and Distribution
Agreement with Mallinckrodt Medical, Inc., pursuant to which
Mallinckrodt Medical, Inc. undertook to market, sell and distribute
CEA-Scan for use in colorectal cancer diagnostic imaging in the U.S.
on a consignment basis. The Company has notified both Mallinckrodt
Medical B.V. and Mallinckrodt Medical Inc. that it will be terminating
the respective agreements on or before April 6, 1998. The Company is
exploring potential relationships with new distributors for CEA-Scan
in the United States. Working with its marketing consultant, the
Company has been building an oncology sales and marketing force in the
United States. The Company anticipates that Lilly will serve as the
distributor for CEA-Scan in Europe under the terms of the Distribution
Agreement described above.
(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,
Page 8 of 16
IMMUNOMEDICS, INC.
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
development and manufacturing purposes having an aggregate acquisition
cost of up to $2,200,000. The basic lease payments under the master
lease agreement are determined based on current market rates of
interest at the inception of each equipment schedule take- down, and
are payable in monthly installments over a four-year period. The lease
agreement contains an early purchase option for each equipment
schedule, at an amount which is deemed to be fair value, exercisable no
later than ninety days before the thirty-sixth installment is due. On
November 1, 1996, December 9, 1996, and April 1, 1997, the Company
exercised the early purchase options on equipment leased on February
14, 1994, April 1, 1994, and June 1, 1994, respectively. 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
December 31, 1997, the Company was not in compliance with certain of
these ratios, but the lessor has not yet declared an event of default
or requested a letter of credit. The Company does not believe that such
a request would have a material adverse effect on the Company. As of
January 31, 1998, the Company has leased equipment with a cost basis
aggregating $1,247,000 under the master lease agreement. The Company
has recorded lease expense for the three and six months ended December
31, 1997 of $87,000 and $174,000, respectively.
Page 9 of 16
IMMUNOMEDICS, INC.
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 pursuant to the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995. The Company's actual results may
differ materially from the results anticipated in these forward-looking
statements as a result of a variety of factors, including those identified in
"Business" and elsewhere in the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 1997.
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. 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 the 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 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, 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 for LeukoScan with the
FDA for the same indication approved in Europe, plus an additional indication
for the diagnosis of acute, atypical appendicitis. The Company has also been
pursuing the broadening of its approval for LeukoScan in Europe to include the
acute, atypical appendicitis indication. As with all filings, there can be no
assurance that regulatory approval for such indications will be received.
The Company is also engaged in developing other biopharmaceutical products,
which are in various states of development and clinical testing. The Company has
not achieved profitable operations and does not anticipate achieving profitable
operations during fiscal year 1998. The Company will continue to experience
operating losses until such time, if at all, that it is able to generate
sufficient revenues from sales of CEA-Scan, LeukoScan and its other proposed in
vivo products. Further, the Company's working capital will continue to decrease
until such time, if at all, that the Company is able to generate positive cash
flow from operations or until such time, if at all, that the Company receives an
additional infusion of cash from the sale of the Company's securities, from
other financing or from corporate alliances to finance the Company's operating
expenses and capital expenditures.
Page 10 of 16
Results of Operations
Revenues for the six-month period ended December 31, 1997 were $4,911,000 as
compared to $1,777,000 for the same period in 1996, representing an increase of
$3,134,000. The product sales for the six-month period ended December 31, 1997
increased by $1,589,000 as compared to the same period of 1996, as the product
launch for CEA-Scan and LeukoScan did not occur until October 1996 and April
1997, respectively. Royalties and license fees for the six-month period ended
December 31, 1997 decreased by $513,000 primarily due to the receipt of a
non-recurring $500,000 license fee from a corporate partner in July 1996.
Research and development revenue for the six-month period ended December 31,
1997 increased by $639,000 as compared to same period of 1996, due to higher
grant income and recognition of previously deferred revenue received from
Pharmacia & Upjohn. Interest and other income for the six-month period ended
December 31, 1997 increased by $1,420,000, primarily due to the receipt of an
arbitration award of $1.8 million including interest for its dispute with
Pharmacia & Upjohn, offset by a decrease in interest income of $399,000 due to
less cash available for investments.
Revenues for the three-month period ended December 31, 1997 were $3,611,000 as
compared to $803,000 for the same period in 1996, representing a increase of
$2,808,000. The product sales for the three-month period ended December 31, 1997
increased by $657,000 as compared to the same period of 1996, as the product
launch for CEA-Scan and LeukoScan did not occur until October 1996 and April
1997, respectively. Research and development revenue for the three-month period
ended December 31, 1997 increased by $545,000 as compared to same period of
1996, primarily due to the recognition of previously deferred revenue received
from Pharmacia & Upjohn. Interest and other income for the three-month period
ended December 31, 1997 increased by $1,628,000, primarily due to the receipt of
an arbitration award of $1.8 million including interest for it's dispute with
Pharmacia & Upjohn, offset by a decrease in interest income of $191,000 due to
less cash available for investments.
Total operating expenses for the six-month period ended December 31, 1997 were
$9,967,000 as compared to $8,533,000 for the same period in 1996, representing
an increase of $1,434,000. Research and development costs for the six-month
period ended December 31, 1997 decreased by $505,000 as compared to the same
period in 1996, primarily due to a decrease in the level of expenditures
required to obtain validation of the Company's new manufacturing facility. Sales
and marketing expenses for the six-month period ended December 31, 1997
increased by $1,860,000 primarily due to expenses of $832,000 associated with
the Company's full-time oncology sales force provided by MMD Specialty Services,
Inc. and operating expenses for Immunomedics Europe which increased by $884,000
as compared to the same period of 1996. General and administrative costs did not
change materially for the six-month period ended December 31, 1997 as compared
to the same period of 1996.
Total operating expenses for the three-month period ended December 31, 1997 were
$5,235,000 as compared to $4,315,000 for the same period in 1996, representing
an increase of $920,000. Research and development costs for the three-month
period ended December 31, 1997 decreased by $248,000 as compared to the same
period in 1996, primarily due to a decrease in the level of expenditures
required to obtain validation of the Company's new manufacturing facility. Sales
and marketing expenses for the three-month period ended December 31, 1997
increased by $1,115,000 primarily due to expenses of $434,000 associated with
the Company's full-time oncology sales force provided by MMD Specialty
Page 11 of 16
Results of Operations (Continued)
Services, Inc. and operating expenses for Immunomedics Europe which increased by
$652,000 as compared to the same period of 1996. General and administrative
costs did not change materially for the three-month period ended December 31,
1997 as compared to the same period in 1996.
Net loss for the six-month period ended December 31, 1997 was $5,055,000, or
$0.14 per share, as compared to a loss of $6,756,000, or $0.19 per share, for
the same period in 1996. The lower net loss of $1,701,000 in 1997 as compared to
1996 primarily resulted from higher revenues, partially offset by higher
operating expenses, as discussed above. In addition, the net loss per share for
the six-month period ended December 31, 1997 was positively impacted by the
higher weighted average number of common shares outstanding for this period, as
compared to the same period in 1996. The increase in the weighted average number
of common shares outstanding was primarily due to the conversion of Preferred
Stock into the Company's Common Stock (see Note 5 to Unaudited Condensed
Consolidated Financial Statements).
Net loss for the three-month period ended December 31, 1997 was $1,625,000, or
$0.04 per share, as compared to a loss of $3,511,000, or $0.10 per share, for
the same period in 1996. The lower net loss of $1,886,000 in 1997 as compared to
1996 primarily resulted from higher revenues, partially offset by higher
operating expenses, as discussed above. In addition, the net loss per share for
the three-month period ended December 31, 1997 was positively impacted by the
higher weighted average number of common shares outstanding for this period, as
compared to the same period in 1996. The increase in the weighted average number
of common shares outstanding was primarily due to the conversion of Preferred
Stock into the Company's Common Stock (see Note 5 to Unaudited Condensed
Consolidated Financial Statements).
Liquidity and Capital Resources
At December 31, 1997, the Company had working capital of $7,031,000, which
represents a decrease of $4,722,000 from June 30, 1997, and had no long-term
debt other than certain lease obligations (see Note 7 to Unaudited Condensed
Consolidated Financial Statements). The net decrease in working capital resulted
principally from the funding of operating expenses and capital expenditures.
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 based on 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 for each equipment schedule, at an amount which is deemed to be
fair value, exercisable no later than ninety days before the thirty-sixth
installment is due. On November 1, 1996, December 9, 1996, and April 1, 1997,
the Company exercised the early purchase options on equipment leased on February
14, 1994, April 1, 1994, and June 1, 1994, respectively. 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
Page 12 of 16
Liquidity and Capital Resources (Continued)
is generally equal to the outstanding balance of lease payments due at the time
of default. As of December 31, 1997, the Company was not in compliance with
certain of these ratios, but the lessor has not yet declared an event of default
or requested a letter of credit. The Company does not believe that such a
request would have a material adverse effect on the Company. As of January 31,
1998, the Company has leased equipment with a cost basis aggregating $1,247,000
under the master lease agreement (see Note 7 to Unaudited Condensed Consolidated
Financial Statements).
The Company's liquid asset position, measured by its cash, cash equivalents and
marketable securities, was $7,791,000 at December 31, 1997, representing a
decrease of $7,233,000 from June 30, 1997. This decrease was primarily
attributable to the funding of operating expenses and capital expenditures as
discussed above. It is anticipated that working capital and cash, cash
equivalents and marketable securities will decrease during the remainder of
fiscal year 1998 as a result of planned operating and capital expenditures. At
present, the Company believes that its projected financial resources will be
sufficient to fund anticipated operating expenses and capital expenditures
through fiscal year 1998. However, the Company believes that it will require
additional financial resources by the beginning of fiscal 1999 in order for it
to continue its budgeted levels of research and development and clinical trials
of its proposed products and regulatory filings for new indications of existing
products.
On December 23, 1997, the Company entered into a structured Equity Line Flexible
Financing Agreement (the "Equity Line") with an investor (the "Investor"),
pursuant to which, subject to the satisfaction of certain conditions, the
Company may receive up to an aggregate of $30 million over a 36- month period.
During each three month period (each, an "Investment Period") with the first
Investment Period commencing March 1, 1998, the Company, subject to the
satisfaction of certain conditions, can require the Investor to purchase shares
of the Company's common stock for an aggregate purchase price of between $1.0
million and $2.5 million and the Investor, at its option, may purchase
additional shares of common stock for an aggregate purchase price of $1.0
million, subject, in either case, to the right of the Company to provide that no
purchases shall be made in such Investment Period. The Investor may select the
dates on which the purchase of shares of the Company's common stock will occur.
The purchase price per share to be paid by the Investor for the shares of the
Company's common stock acquired under the Equity Line will equal 98% of the
lowest sales price of the common stock during the three trading days immediately
preceding the notice of purchase by the Investor. The Investor's obligation to
purchase shares of the Company's common stock under the Equity Line is subject
to various conditions, including, among other things, the price of the Company's
common stock being at least such price as the Company may from time to time set
as the minimum purchase price. In addition, the Investor is not required to
purchase, in any Investment Period, an amount in excess of 8% of the product of
the daily average value of open market trading of the common stock and the
number of trading days in the Investment Period during either the current or
immediately preceding Investment Period. The net proceeds from the Equity Line,
if and when received, will be used for general corporate purposes, including
research and development, marketing, sales, and clinical and regulatory
activities (see Note 5 to Unaudited Condensed Consolidated Financial
Statements).
Page 13 of 16
Liquidity and Capital Resources (Continued)
In addition, 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. Also, 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.
Page 14 of 16
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits
3.1 (m) Certificate of Designation of Rights
and Preferences of the Company's
Series E Junior Participating
Preferred Stock, as filed with the
Secretary of the State of the State
of Delaware on January 23, 1998. [a]
4.1 Structured Equity Line Flexible
Financing Agreement, dated as of
December 23, 1997, between the
Company and Cripple Creek
Securities, LLC. [b]
4.2 Registration Rights Agreement, dated
as of December 23, 1997, between the
Company and Cripple Creek
Securities, LLC. [b]
4.3 Common Stock Purchase Warrant issued
to Cripple Creek Securities, LLC.[b]
4.4 Form of additional Common Stock
Purchase Warrant issuable to Cripple
Creek Securities, LLC. [b]
4.5 Rights Agreement, dated as of
January 23, 1998, between the
Company and American Stock Transfer
and Trust Company, as rights agent,
and form of Rights Certificate. [a]
10.26 Distribution Agreement, dated as of
November 24, 1997, between the
Company and Eli Lilly Deutschland
GmbH (Confidential treatment has
been requested for certain portions
of the Agreement).
27 Financial Data Schedule
[a] Incorporated by reference from the exhibits
to the Company's Registration Statement on
Form 8-A, as filed with the Commission of
January 29, 1998.
[b] Incorporated by reference from the exhibits
to the Company's Registration Statement on
Form S-3, as filed with the Commission of
January 29, 1998.
(b) Reports on Form 8-K
The Company did not file a Current Report on Form 8-K
during the three-month period ended December 31,
1997.
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, 1998 /s/David M. Goldenberg
David M. Goldenberg,
Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer)
DATE: February 13, 1998 /s/Kevin F.X. Brophy
Kevin F.X. Brophy,
Vice President, Finance &
Administration (Principal Financial and
Accounting Officer)
Page 16 of 16