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 MARCH 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)
(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 May 7, 1997, there were 36,089,670 shares of the registrant's common stock
outstanding.
Page 1 of 13
<PAGE>
IMMUNOMEDICS, INC.
INDEX
PAGE NO.
PART I - FINANCIAL INFORMATION
- ------------------------------
Item 1. Condensed Consolidated Financial Statements (Unaudited):
Condensed Consolidated Balance Sheets - 3
March 31, 1997 and June 30, 1996
Condensed Consolidated Statements of Operations - 4
three and nine months ended March 31, 1997 and 1996
Condensed Consolidated Statements of Cash Flows - 5
nine months ended March 31, 1997 and 1996
Notes to Condensed Consolidated Financial Statements - 6
March 31, 1997
Item 2. Management's Discussion and Analysis of 9
Financial Condition and Results of Operations
PART II - OTHER INFORMATION
- ---------------------------
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
- ----------
Page 2 of 13
<PAGE>
IMMUNOMEDICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31, JUNE 30,
1997 1996
------------ -----------
<S> <C> <C>
ASSETS
Current Assets:
Cash and Cash Equivalents $ 4,988,860 13,646,000
Marketable Securities 12,986,389 15,044,821
Inventory 706,126 193,672
Other Current Assets 1,006,407 725,291
------------ -----------
Total Current Assets 19,687,782 29,609,784
Property and Equipment, net of accumulated
depreciation of $4,558,000 and $5,372,000 at
March 31, 1997 and June 30, 1996, respectively 5,802,585 6,110,191
============ ===========
$ 25,490,367 35,719,975
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable 1,621,959 1,631,071
Other Current Liabilities 3,256,457 2,935,698
------------ -----------
Total Current Liabilities 4,878,416 4,566,769
------------ -----------
Commitments and Contingencies
Stockholders' Equity:
Preferred stock; $.01 par value, authorized 10,000,000 shares;
Series C convertible, authorized 200,000 shares;
issued and outstanding 28,415 shares at June 30,1996 -- 284
Series D convertible, authorized 200,000 shares;
issued and outstanding 28,919 and 200,000 shares
at March 31, 1997 and June 30, 1996, respectively 289 2,000
Common stock; $.01 par value, authorized 70,000,000 shares at
March 31, 1997 and 50,000,000 shares at June 30, 1996;
issued and outstanding 35,989,170 and 34,305,485 shares
at March 31, 1997 and June 30, 1996, respectively 359,891 343,055
Capital contributed in excess of par 93,090,455 92,894,349
Accumulated deficit (72,889,069) (62,080,861)
Accumulated net unrealized gain/(loss) on securities 50,385 (5,621)
------------ -----------
Total Stockholders' Equity 20,611,951 31,153,206
------------ -----------
$ 25,490,367 35,719,975
============ ===========
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
Page 3 of 13
<PAGE>
IMMUNOMEDICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
1997 1996 1997 1996
------------ ----------- ------------ ----------
<S> <C> <C> <C> <C>
REVENUES:
Product sales and royalties $ 339,139 50,676 $ 1,136,204 149,648
Research and development 196,449 22,500 464,096 112,500
Interest and other 316,566 341,548 1,028,624 1,083,247
------------ ----------- ------------ -----------
852,154 414,724 2,628,924 1,345,395
------------ ----------- ------------ -----------
COSTS AND EXPENSES:
Cost of goods sold 5,570 5,209 13,537 17,093
Research and development 3,479,020 3,169,967 10,116,987 9,277,927
General and administrative 1,419,535 642,079 3,306,608 1,930,350
------------ ----------- ------------ -----------
4,904,125 3,817,255 13,437,132 11,225,370
------------ ----------- ------------ -----------
NET LOSS $ (4,051,971) (3,402,531) $(10,808,208) (9,879,975)
============ =========== ============ ===========
NET LOSS PER SHARE $ (0.11) (0.10) $ (0.31) (0.30)
============ =========== ============ ===========
Weighted average number of
shares outstanding 35,820,962 33,338,337 35,221,934 32,516,653
============ =========== ============ ===========
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
Page 4 of 13
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IMMUNOMEDICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31,
1997 1996
------------ ----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(10,808,208) (9,879,975)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 852,731 762,864
Changes in operating assets and liabilities (481,923) (56,189)
------------ -----------
Net cash used in operating activities (10,437,400) (9,173,300)
------------ -----------
Cash flows from investing activities:
Purchase of marketable securities (30,641,313) (28,907,142)
Proceeds from maturities of marketable securities 32,748,506 26,011,891
Additions to property and equipment (537,880) (2,309,096)
------------ -----------
Net cash provided by / (used in) investing activities 1,569,313 (5,204,347)
------------ -----------
Cash flows from financing activities:
Issuance of convertible preferred stock, net -- 9,982,500
Exercise of stock options 210,947 545,609
------------ -----------
Net cash provided by financing activities 210,947 10,528,109
------------ -----------
Decrease in cash and cash equivalents (8,657,140) (3,849,538)
Cash and cash equivalents at beginning of period 13,646,000 7,162,837
------------ -----------
Cash and cash equivalents at end of period $ 4,988,860 3,313,299
============ ===========
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
Page 5 of 13
<PAGE>
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, B.V., 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
condensed consolidated balance sheet at June 30, 1996 has been derived
from the audited financial statements at that date. Operating results
for the nine-month period ended March 31, 1997 are not necessarily
indicative of the results that may be expected for the fiscal year
ending June 30, 1997.
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, 1996.
(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 March 31, 1997 and June 30, 1996 is
accrued interest earned on cash equivalents and marketable securities
of $124,000 and $181,000, 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 1997;
therefore, no income taxes have been reflected for the nine-month
period ended March 31, 1997.
(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, are not included in the computations since the effect
would be antidilutive.
Page 6 of 13
<PAGE>
IMMUNOMEDICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(5) STOCKHOLDERS' EQUITY
--------------------
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 May 7, 1997,
179,159 shares of Series D Preferred had been converted into 1,533,439
shares of common stock.
(6) LICENSE AND DISTRIBUTION AGREEMENTS
-----------------------------------
In April 1996, the Company entered into a U.S. Marketing and
Distribution Agreement with Mallinckrodt, Inc. ("Mallinckrodt") for
CEA-Scan(R) for colorectal cancer diagnostic imaging. Under the terms
of the agreement, Mallinckrodt markets, sells and distributes
CEA-Scan(R) in the U.S. on a consignment basis, and is required to
commit financial resources to this effort. The Company retains
manufacturing and co-promotional rights, pays Mallinckrodt a
pre-determined amount or percentage of the net selling price, and may
commit additional financial resources to these activities.
In March 1995, the Company entered into a License Agreement with
Mallinckrodt Medical B.V. ("Mallinckrodt Medical"), pursuant to which
Mallinckrodt Medical markets, sells and distributes CEA-Scan(R)
throughout Western Europe and in specified Eastern European countries,
subject to receipt of regulatory approval in the specified countries.
In addition, the Company manufactures CEA-Scan(R), for which
Mallinckrodt Medical pays the Company a pre-determined percentage of
the net selling price per vial, on all units sold.
(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 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
Page 7 of 13
<PAGE>
IMMUNOMEDICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
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 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 April 30, 1997, 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 nine-month periods ended March 31, 1997 of $135,000 and
$404,000, respectively.
Page 8 of 13
<PAGE>
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
the Company's Annual Report on Form 10-K for the fiscal year ended June 30,
1996.
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. On June 28, 1996,
the FDA licensed CEA-Scan(R) for the detection of recurrent and/or metastatic
colorectal cancer. On October 4, 1996 the Company received final clearance from
the European Commission to market CEA-Scan(R) in all 15 countries comprising the
European Union. In February 1992, the Company filed with the Health Protection
Branch ("HPB") to market CEA-Scan(R) in Canada. This application remains under
active review.
On February 14, 1997, the European Commission granted final clearance to market
LeukoScan(R), an infectious disease imaging agent for the detection and
diagnosis of osteomyelitis in long bones and in diabetic foot ulcer patients, in
all 15 countries comprising the European Union. On December 19, 1996, the
Company submitted a Biologics License Application ("BLA") to the U.S. Food and
Drug Administration ("FDA") for approval of LeukoScan(R) for use in patients
with bone infection or with atypical appendicitis, a second indication. On
February 10, 1997, the FDA notified the Company that it had accepted the BLA for
filing and was commencing its review. The Company presently intends to sell
LeukoScan(R) in Europe through its own sales force and to use Mallinckrodt
Medical to assist in the product distribution.
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 1997. 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(R), LeukoScan(R) 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 9 of 13
<PAGE>
RESULTS OF OPERATIONS
- ---------------------
Revenues for the nine-month period ended March 31, 1997 were $2,627,000 as
compared to $1,345,000 for the same period in 1996, representing an increase of
$1,282,000. This increase was principally due to receipt of a license fee of
$500,000 from a corporate partner, sales revenues from CEA-Scan(R) and higher
government grant income.
Revenues for the three-month period ended March 31, 1997 were $852,000 as
compared to $415,000 for the same period in 1996, representing an increase of
$437,000. This increase was principally due to sales revenues from CEA-Scan(R)
and higher government grant income, partially offset by lower interest income
resulting from less cash available for investment.
Total operating expenses for the nine-month period ended March 31, 1997 were
$13,437,000 as compared to $11,225,000 for the same period in 1996, representing
an increase of $2,212,000. Research and development costs for the nine-month
period ended March 31, 1997 increased by $839,000 as compared to the same period
in 1996. The increase principally resulted from expenses attributable to ongoing
validation of the Company's new manufacturing facility and expenses related to
the filing of an application to the FDA for approval of LeukoScan(R). General
and administrative costs for the nine-month period ended March 31, 1997
increased by $1,376,000 as compared to the same period in 1996. This increase
was principally due to operating expenses for Immunomedics, B.V., marketing
expenses for CEA-Scan(R) and higher legal expenses. The higher legal expenses
were incurred in connection with the arbitration claim against Pharmacia &
Upjohn, Inc., which was filed in June 1996, and also in connection with
increased patent activity during the nine-month period ended March 31, 1997.
Total operating expenses for the three-month period ended March 31, 1997 were
$4,904,000 as compared to $3,817,000 for the same period in 1996, representing
an increase of $1,087,000. Research and development costs for the three-month
period ended March 31, 1997 increased by $309,000 as compared to the same period
in 1996, for the same reasons as discussed above. General and administrative
costs for the three-month period ended March 31, 1997 increased by $777,000 as
compared to the same period in 1996, for the same reasons as discussed above.
Net loss for the nine-month period ended March 31, 1997 was $10,808,000, or
$0.31 per share, as compared to a loss of $9,880,000, or $0.30 per share, for
the same period in 1996. Net loss for the three-month period ended March 31,
1997 was $4,052,000, or $0.11 per share, as compared to a loss of $3,403,000, or
$0.10 per share, for the same period in 1996. The higher net loss of $928,000
for the nine-month period and $649,000 for the three-month period ended March
31, 1997 as compared to the same periods in 1996, principally resulted from
higher operating expenses, partially offset by higher revenues, as discussed
above. In addition, the net loss per share for the nine- and three-month periods
ended March 31, 1997 was positively impacted by the higher weighted average
number of common shares outstanding for these periods, as compared to the same
period in 1996. The increase in the weighted average number of common shares
outstanding was principally due to the conversion of Series D Preferred Stock
into the Company's Common Stock (see Note 5 to Unaudited Condensed Consolidated
Financial Statements).
Page 10 of 13
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
At March 31, 1997, the Company had working capital of $14,809,000, which
represents a decrease of $10,234,000 from June 30, 1996, 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 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 April 30, 1997, 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 $17,975,000 at March 31, 1997, representing a
decrease of $10,716,000 from June 30, 1996. This decrease was principally
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 1997 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 at
least for the next 12 months. The Company intends to supplement its financial
resources from time to time as market conditions permit through additional
financing and/or 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 future 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 in the future.
Page 11 of 12
<PAGE>
PART II - Other Information:
Items 1-3 Not applicable
Item 6. Exhibits and reports on Form 8-K
(a) Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K
The Company did not file a Current Report on Form 8-K
during the three-month period ended March 31, 1997.
Page 12 of 13
<PAGE>
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: May 7, 1997
/s/ DAVID M. GOLDENBERG
----------------------------------
David M. Goldenberg,
Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer)
DATE: May 7, 1997
/s/ ROBERT KOMENDA
----------------------------------
Robert Komenda,
Vice President, Finance &
Administration (Principal
Accounting Officer)
Page 13 of 13
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000722830
<NAME> IMMUNOMEDICS, INC.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> MAR-31-1997
<CASH> 4,988,860
<SECURITIES> 12,986,389
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 706,126
<CURRENT-ASSETS> 19,687,782
<PP&E> 10,351,930
<DEPRECIATION> 4,558,082
<TOTAL-ASSETS> 25,490,367
<CURRENT-LIABILITIES> 4,878,416
<BONDS> 0
0
289
<COMMON> 359,891
<OTHER-SE> 20,251,771
<TOTAL-LIABILITY-AND-EQUITY> 25,490,367
<SALES> 564,880
<TOTAL-REVENUES> 2,628,924
<CGS> 13,537
<TOTAL-COSTS> 13,437,132
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (10,808,208)
<INCOME-TAX> 0
<INCOME-CONTINUING> (10,808,208)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (10,808,208)
<EPS-PRIMARY> (0.31)
<EPS-DILUTED> (0.31)
</TABLE>
