PROSPECTUS Filed Pursuant to Rule 424(b)(3)
Registration No. 333-44501
7,447,000 Shares
IMMUNOMEDICS, INC.
Common Stock
This Prospectus relates to a maximum of 7,447,000 shares (the "Shares")
of common stock, par value $.01 per share (the "Common Stock"), of Immunomedics,
Inc., a Delaware corporation (the "Company"), consisting of (i) up to 7,272,000
shares issuable from time to time, under certain circumstances, to Cripple Creek
Securities, LLC, a Delaware limited liability company (the "Selling
Stockholder"), pursuant to the terms of the Structured Equity Line Flexible
Financing Agreement (the "Equity Line"), dated as of December 23, 1997, between
the Company and the Selling Stockholder and (ii) up to 175,000 shares of Common
Stock issuable upon exercise of certain warrants issuable to the Selling
Stockholder pursuant to the Equity Line. See "The Company - Equity Line."
The shares of Common Stock being registered hereby constitute the
maximum number of shares issuable by the Company pursuant to the Equity Line. As
more fully set forth herein, the Company may issue a significantly fewer number
of Shares and, in any event, may not issue more than $3.5 million of Common
Stock in any three-month investment period. See "The Company - Equity Line."
The Shares may be offered from time to time by the Selling Stockholder
after the date of this Prospectus. The Company will not receive any proceeds
from the sale of the Shares by the Selling Stockholder but will receive the
proceeds upon the issuance of Shares, if any, to the Selling Stockholder
pursuant to the Equity Line and upon exercise of the warrants, although there
can be no assurance that any Shares will be issued under the Equity Line or that
any warrants will be exercised. See "Use of Proceeds." The Company will pay all
expenses in connection with the registration and sale of the Shares, except that
the Selling Stockholder will pay any commissions, discounts or other fees
payable to brokers and dealers in connection with any such sale. The Company
estimates that its expenses of this offering will be approximately $100,000.
The Selling Stockholder has not advised the Company of any specific
plans for the distribution of the Shares other than as described herein, but it
is anticipated that the Shares will be sold from time to time primarily in
transactions (which may include block transactions) on The NASDAQ Stock Market
at the market price prevailing at the time of sale, although sales may also be
made in negotiated transactions or otherwise. There can be no assurances that
any of the Shares will be sold. See "Plan of Distribution."
The Selling Stockholder may be deemed to be an "Underwriter" as defined
in the Securities Act of 1933 (the "Securities Act"). If any broker-dealers are
used to effect sales, any commissions paid to such broker-dealers and, if
broker-dealers purchase any of the Shares as principals, any profits received by
such broker-dealers on the resale of the Shares, may be deemed to be
underwriting discounts or commissions under the Securities Act. In addition, any
profits realized by the Selling Stockholder may be deemed to be underwriting
commissions.
The Common Stock currently is traded on The NASDAQ National Market under
the symbol "IMMU." On February 10, 1998, the last sale price of the Common
Stock, as reported by The NASDAQ National Market, was $4-13/16 per share.
See "Risk Factors", which begins on page 6 of this Prospectus, for
certain information that should be considered by prospective investors.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is February 13, 1998
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act") and, in accordance
therewith, files periodic reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed with the Commission may be inspected and
copied at the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, at the regional offices of the Commission located
at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and at
Seven World Trade Center, Suite 1300, New York, New York 10048. Copies of such
material can be obtained from the Public Reference Section of the Commission at
prescribed rates by writing to the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. In addition, copies of such reports, proxy statements,
and other information concerning the Company also may be inspected and copied at
the library of The NASDAQ Stock Market, 1735 K Street, N.W., Washington, D.C.
20006. The Commission maintains an internet web site at http://www.sec.gov which
contains certain reports, proxy and information statements and other information
regarding registrants (including the Company) that file electronically with the
Commission.
This Prospectus constitutes a part of a Registration Statement (herein,
together with all amendments and exhibits, referred to as the "Registration
Statement") filed by the Company with the Commission under the Securities Act.
This Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information with
respect to the Company and the Common Stock, reference is hereby made to the
Registration Statement. Statements contained herein concerning the provisions of
any document are not necessarily complete and, in each instance, reference is
made to the copy of such document filed as an exhibit to the Registration
Statement or otherwise filed with the Commission. Each such statement is
qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which are on file with the Commission (File No.
0-12104), are incorporated into this Prospectus by reference and are made a part
hereof:
(a) The Company's Annual Report on Form 10-K for its fiscal year
ended June 30, 1997;
(b) The Company's Quarterly Report on Form 10-Q for its fiscal
quarter ended September 30, 1997;
(c) The Company's Proxy Statement, dated October 7, 1997, with
respect to its 1997 annual meeting of stockholders; and
(d) The description of the Common Stock contained in Item 1 of the
Company's Registration Statement on Form 8-A, filed May 7, 1984.
All documents subsequently filed by the Company with the Commission
after the date of this Prospectus pursuant to Sections 13(a), 13(c), 14, and
15(d) of the Exchange Act, and prior to the filing of a post-effective amendment
to the Registration Statement which indicates that all securities offered hereby
have been sold or which deregisters all securities then remaining unsold, shall
be deemed to be incorporated by reference into the Registration Statement and to
be part hereof from the date of filing such documents; provided, however, that
the documents enumerated above or subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act in each year during
which the offering made by the Registration Statement is in effect and prior to
the filing with the Commission of the Company's Annual Report on Form 10-K
covering such year, shall not be deemed to be incorporated by reference in the
Registration Statement or be a part hereof from and after the filing of such
Annual Report on Form 10-K.
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Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of the Registration Statement to the extent that a statement
contained herein, or in any other subsequently filed document that also is or is
deemed to be incorporated by reference herein, modifies or supersedes such
statement. Any statement contained in this Prospectus shall be deemed to be
modified or superseded to the extent that a statement contained in a
subsequently filed document, which is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of the Registration Statement.
The Company will provide without charge to each person who receives this
Prospectus, upon written or oral request of such person, a copy of any of the
information that is incorporated by reference herein (not including exhibits to
the information that is incorporated by reference unless the exhibits themselves
are specifically incorporated by reference). Such information is available upon
request from the Company, 300 American Road, Morris Plains, New Jersey 07950,
attention: Investor Relations, telephone (973) 605-8200.
THE COMPANY
General
The Company is a biopharmaceutical company applying innovative
proprietary technology in antibody selection, modification and chemistry to the
development of products for the detection and treatment of cancers and
infectious diseases. Integral to these products are highly specific monoclonal
antibodies designed to deliver radioisotopes, chemotherapeutic agents or toxins
to tumors and sites of infection.
The Company is developing a line of in vivo imaging products for the
detection of various cancers and infectious diseases. On June 28, 1996, the U.S.
Food and Drug Administration ("FDA") licensed CEA-Scan(r), the Company's
proprietary in vivo colorectal cancer imaging product, for marketing and sale in
the United States for use with other standard diagnostic modalities for the
detection of recurrent and/or metastatic colorectal cancer. On October 4, 1996,
the Company was granted authorization by the European Commission (the "EC") for
the marketing and sale of CEA-Scan (r) in the 15 countries comprising the
European Union (the "EU Countries") for the same indication as approved in the
United States. On September 16, 1997, the Company received a notice of
compliance from the Canadian Health Protection Branch permitting it to market
CEA-Scan (r) in Canada for colorectal cancer for recurrent and metastatic
colorectal cancer. In addition, Phase III clinical trials of CEA-Scan (r) for
the detection of lung cancer are continuing, and the Company is in discussion
with both the FDA and European regulatory authorities to evaluate Phase II
clinical trial data for the detection of breast cancer. However, no assurance
can be given as to if, or when, final regulatory approvals for any of these
additional indications for CEA-Scan (r) may be forthcoming.
On February 14, 1997, the Company was granted authorization by the EC
for the marketing and sale of LeukoScan(r), an in vivo infectious disease
diagnostic imaging product, in the EU Countries 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 by the
EC, 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 the EU Countries to include the acute, atypical appendicitis
indication. As with all regulatory filings, there can be no assurance that such
filings will be approved by the FDA or by the EC. Phase III trials for infected
prostheses are continuing, and the Company is examining other applications for
the product.
The Company has developed and filed an Investigational New Drug
application 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(r) for detection and diagnosis of non-Hodgkin's
lymphomas, currently in Phase III clinical trials.
The Company also is applying its expertise in antibody selection,
modification and chemistry to develop therapeutic products for cancer using
monoclonal antibodies labeled with radioisotopes or conjugated with drugs. The
Company has been conducting a multicenter Phase I/II clinical trial for
LymphoCide(r), a non-Hodgkin's B-cell lymphoma therapeutic product. This trial
was designed to obtain knowledge about targeting and dosing with the murine form
of the monoclonal antibody. The Company is now advancing the humanized form of
LymphoCide into Phase I/II clinical trials and is discontinuing trials with the
murine form.
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Equity Line
The Company and the Selling Stockholder entered into the
Structured Equity Line Flexible Financing Agreement (the "Equity Line"), dated
as of December 23, 1997 and a related Registration Rights Agreement (the
"Registration Rights Agreement"), dated as of December 23, 1997 whereby the
Company agreed to file under the Securities Act a registration statement (the
"Registration Statement") for the resale by the Selling Stockholder of shares of
Common Stock of which this Prospectus is a part. Pursuant to the terms of the
Equity Line, subject to the satisfaction of certain conditions, the Company may
require the Selling Stockholder to purchase shares of Common Stock over a period
of 36 months from the effective date of the Registration Statement, for an
aggregate purchase price of up to $30 million, and the Selling Stockholder, at
its option, may purchase Common Stock for an aggregate purchase price of up to
$12 million; provided, however, that the maximum amount purchased under the
Equity Line may not exceed $30 million. The Company may terminate the Equity
Line at any time without further obligation to the Selling Stockholder and the
Selling Stockholder may terminate the Equity Line without further obligation to
the Company if any change in law makes it impracticable or impossible for the
Selling Stockholder to fulfill its obligations under the Equity Line. Under the
terms of the Equity Line, during each three month period (each, an "Investment
Period") following the effective date of the Registration Statement, the
Company, subject to the satisfaction of certain conditions, can require the
Selling Stockholder to purchase shares of Common Stock for an aggregate purchase
price of between $1.0 million and $2.5 million and the Selling Stockholder, 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.
Prior to the beginning of each Investment Period, the Company is required to
notify the Selling Stockholder of the aggregate purchase price of shares of
Common Stock, if any, required to be purchased by the Selling Stockholder during
such Investment Period, provided that the Selling Stockholder may select the
dates on which the purchase of shares of Common Stock from the Company shall
occur. The purchase price per share to be paid by the Selling Stockholder for
the shares of 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 Selling Stockholder.
The Selling Stockholder's obligation to purchase shares of
Common Stock under the Equity Line is subject to various conditions, including,
among other things: (i) effectiveness of the Registration Statement under the
Securities Act; (ii) the price of the Common Stock being at least $4.00 per
share or such other price as the Company may from time to time set as the
minimum purchase price; (iii) continued trading of the Common Stock on the
NASDAQ National Market; and (iv) the percentage of the Common Stock beneficially
owned by the Selling Stockholder and its affiliates being not more than 4.9% of
the then outstanding Common Stock. In addition, the Selling Stockholder 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 (the "8% Limit") during
either the current or immediately preceding Investment Period.
In connection with entering into the Equity Line, the Selling
Stockholder received a four-year warrant (the "Warrant") to purchase 50,000
shares of the Common Stock at an exercise price equal to $7.5375 per share (180%
of the closing sales price of the Common Stock at the time of issuance). In
addition, the Company has agreed to issue to the Selling Stockholder, at the end
of each calendar year an additional four-year Warrant (each, an "Additional
Warrant" and collectively, the "Additional Warrants") to purchase Common Stock
in an amount equal to 5,000 shares for each $500,000 of Common Stock purchased
by the Selling Stockholder during such year, with an exercise price equal to
180% of the weighted average purchase price of the Common Stock purchased by the
Selling Stockholder during the year, provided that the number of shares issuable
upon exercise of all the Additional Warrants will not exceed 125,000. The
Company also has agreed to reimburse the Selling Stockholder for its legal fees
and expenses incurred in connection with entering into the Equity Line up to a
maximum of $25,000, and for its costs and expenses incurred in connection with
the performance of its due diligence activities up to a maximum of $40,000
initially and $6,000 quarterly thereafter.
Under the Equity Line and the related Registration Rights
Agreement, the Company agreed to file and maintain effectiveness (subject to
certain penalties for non-compliance which may be waived by the Selling
Stockholder) under the Securities Act a registration statement, of which this
Prospectus is a part, for the resale by the Selling Stockholder of the shares of
the Common Stock to be issued under the Equity Line and upon exercise of the
Warrant and the Additional Warrants.
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Recent Developments
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 countries. In April, 1996, the Company entered into a marketing
and distribution agreement with Mallinckrodt Medical, Inc., pursuant to which
Mallinckrodt Medical, Inc. undertook to market, sell and distribute CEA-Scan(r)
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 Eli Lilly Deutschland GmbH
("Lilly") will serve as the distributor for CEA-Scan in Europe under the terms
of the Distribution Agreement described below.
On November 24, 1997, the Company entered into a Distribution Agreement
with Lilly pursuant to which Lilly will package and distribute LeukoScan within
the EU 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 November 28, 1997, the Company received an arbitration award of
approximately $1.8 million (including interest of approximately $300,000) from
its dispute with Pharmacia & Upjohn ("Pharmacia"). The dispute originated when
Pharmacia (then the Adria Laboratories Division of Erbamont, Inc., which later
became Pharmacia, Inc. and subsequently Pharmacia & Upjohn) terminated its 1991
Development and License Agreement with the Company (the "1991 Agreement") in
August 1995 and the parties thereafter were unable to agree upon the amount owed
to the Company as a result of such termination. Pursuant to the 1991 Agreement,
the Company had granted Pharmacia an exclusive license to market and sell
CEA-Scan(r), AFP-Scan(r) and LymphoScan(r) products for certain specified
indications in the United States and Canada.
In November 1996, the Company filed an infringement action in The
Netherlands against Hoffmann-La Roche ("Roche") for infringement of the
Company's European patent covering specific anti-CEA antibodies, which Roche is
using in its CEA immunoassay. The patent also covers the antibody, which the
Company uses in its CEA-Scan(r) imaging product. The Company is seeking an
injunction prohibiting sale of Roche's assay in The Netherlands and other
European Union countries in which the Company's European patent has been issued.
Roche has denied infringement and has filed nullity proceedings in The
Netherlands and in Germany, seeking to invalidate the Company's patents in those
countries. The Company has filed its Statement of Defense in the Dutch and
German nullity actions. Trial on the infringement action was held on August 8,
1997 and resulted in a decision of noninfringement by the trial panel. The
Company believes that the judge misunderstood the scientific facts of the case
and filed an appeal in December 1997. However, there can be no assurance that
the Company will prevail in the appeal of the infringement suit or that its
patents will survive the nullity actions, although the Company believes that
Roche's infringement defense and nullity attacks are unlikely to succeed. See
"Risk Factors - Patents and Proprietary Rights."
Other Information
The Company was incorporated in Delaware in 1982. The Company's
principal offices are located at 300 American Road, Morris Plains, New Jersey
07950. The Company's telephone number is (973) 605-8200. The Company's
wholly-owned subsidiary, Immunomedics Europe, has offices located in Hillegom,
The Netherlands, to assist the Company in managing sales and marketing efforts
and coordinate clinical trials in Europe.
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RISK FACTORS
In addition to the other information in this Prospectus, the following
factors should be considered carefully by potential purchasers in evaluating the
Company and its business before purchasing any shares of Common Stock offered
hereby. This Prospectus contains, in addition to historical information, certain
forward-looking statements that involve significant risks and uncertainties. As
a result, the Company's actual results could differ materially from those
expressed in or implied by the forward-looking statements contained herein.
Factors that could cause or contribute to such differences include, but are not
limited to, those discussed below, as well as those discussed elsewhere in this
Prospectus or incorporated herein by reference. The Company undertakes no
obligation to release publicly the result of any revisions to these
forward-looking statements that may be made to reflect events or circumstances
after the date of this Prospectus or to reflect the occurrence of other
unanticipated events.
Lack of Significant Product Revenues and History of Operating Losses.
Since its inception in 1982, the Company has been engaged primarily in the
research and development of proprietary products relating to the detection,
diagnosis and treatment of cancer and infectious diseases and has incurred
significant operating losses. While the Company has received approval to market
and sell CEA-Scan (in the United States, Canada and the EU Countries) and
LeukoScan (in the EU Countries) for certain indications, to date the Company has
generated only limited revenues from the sale of such products. The Company has
not achieved profitable operations and does not anticipate achieving profitable
operations during the fiscal year ending June 30, 1998. At least until CEA-Scan
and/or LeukoScan are successfully commercialized, future revenues will be
dependent in large part upon the Company entering into new arrangements with
collaborative partners and upon public and private financings. 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 Equity Line or
other sales of the Company's securities, from other financings or from corporate
alliances to finance the Company's operating expenses and capital expenditures.
See "Need for Additional Capital."
Uncertainty of Product Development and Market Acceptance. With the
exception of CEA-Scan and LeukoScan, which have been licensed for certain
specific indications (as discussed above under "The Company - General"), the
Company's products are in various stages of development and face a high degree
of technological, regulatory and competitive risk. Although the Company believes
it has the expertise to develop and commercialize such products, any or all of
the Company's products may fail to be effective or may prove to have undesirable
and unintended side effects or other characteristics that may prevent their
development or regulatory approval, or limit their commercial use. There can be
no assurance that the Company will be permitted to undertake human clinical
trials for any of their development products not currently in clinical trials
or, if permitted, that such products (or any of the Company's products currently
in clinical trials) will be demonstrated to be safe and effective. In addition,
there can be no assurance that any of the Company's products under development
will obtain approval from the FDA or comparable foreign authorities for any
indication or that an approved product will be capable of being produced in
commercial quantities at reasonable costs and successfully marketed. Products,
if any, resulting from the Company's current research and development programs
are not expected to be commercially available for several years. Even if such
products become commercially available, there can be no assurance that such
products will be able to gain satisfactory market acceptance.
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Unpredictability of Preclinical and Clinical Trials. While the Company
has a number of products in various stages of preclinical testing and clinical
trials, there can be no assurance that the Company will be able to successfully
complete its ongoing clinical trials or commence the trials currently planned.
In addition, there can be no assurance that the Company will meet its
development schedule for any of its products in development. If the Company were
unable to commence clinical trials as planned, complete the clinical trials
currently underway or demonstrate the safety and efficacy of its products, the
Company's business, financial condition and results of operations would be
materially and adversely affected. There can be no assurance that if a product
from the Company's research and development programs or any other diagnostic or
therapeutic product is successfully developed according to plans, it will be
approved by the FDA or other regulatory agencies on a timely basis or at all.
Before obtaining regulatory approvals for the commercial sale of any of
its products under development, the Company must demonstrate through preclinical
studies and clinical trials that the product is safe and efficacious for use in
the indication for which approval is sought. The results from preclinical
studies and early clinical trials may not be predictive of results that will be
obtained in later-stage testing and there can be no assurance that the Company's
future clinical trials will demonstrate the safety and efficacy of any products
or will result in approval to market products. A number of companies in the
biotechnology industry have suffered significant setbacks in advanced clinical
trials, even after promising results in earlier trials. The rate of completion
of the Company's clinical trials is dependent upon, among other factors, the
rate of patient enrollment. Patient enrollment is a function of many factors,
including the size of the patient population, the nature of the protocol, the
proximity of patients to clinical sites and the eligibility criteria for the
study. Delays in planned patient enrollment may result in increased costs and
delays, which would have a material adverse effect on the Company.
Need for Additional Capital. At the present time, the Company believes
that its projected financial resources will be sufficient to fund anticipated
operating expenses and capital expenditures through the end of the current
fiscal year (June 30, 1998). However, the Company believes that it will require
additional financial resources by the end of calendar year 1998 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. Without a significant infusion of capital, the Company will be
required to significantly reduce the amount of resources devoted to marketing
and sales, product development and clinical trials, which would have a material
adverse effect on the Company. While the Company has obtained the Equity Line
pursuant to which the Company can obligate the Selling Stockholder to purchase
up to $2.5 million in each Investment Period during the term of the Equity Line
(or $30 million in the aggregate), the Selling Stockholder's obligations
thereunder are subject to certain conditions, including, among others, that (i)
the Selling Stockholder is not required to purchase shares in any such
Investment Period in an amount in excess of the 8% Limit (which, based upon the
daily average value of open market trading during calendar 1997, would have
limited the maximum amount the Selling Stockholder would have been required to
purchase during 1997 to $9.6 million had the Equity Line been in place during
all of 1997) and (ii) purchases cannot begin until the registration statement of
which this Prospectus forms a part has been declared effective (which the
Company believes will result in proceeds therefrom, if any, not being available
until the second quarter of calendar 1998). As a result of these and other
conditions, there can be no assurance that the Company will receive any proceeds
under the Equity Line or that if any proceeds are received that they will be
sufficient. See "The Company - Equity Line." Furthermore, even if the Selling
Stockholder purchases $2.5 million of shares of Common Stock during each
Investment Period, unless the Company receives significant revenues from the
sales of its products, which has not yet occurred and of which there can be no
assurance, the Company will be required to seek additional financing 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. However, there can be no assurance that such additional
financing will be available on terms acceptable to the Company or at all.
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Stock Price Volatility; Shares Eligible for Future Sale. Pursuant to the
Equity Line, the Company may issue to the Selling Stockholder up to $2.5 million
of Common Stock during each Investment Period (or $30 million in the aggregate)
at a price equal to 98% of the lowest reported sale price during the three days
immediately preceding the notice of purchase delivered by the Selling
Stockholder to the Company. In connection with the Equity Line, the Company also
issued to the Selling Stockholder the Warrant to purchase 50,000 shares of
Common Stock at $7.5375 per share and may issue the Additional Warrants to
purchase up to an additional 125,000 shares of Common Stock at a price equal to
180% of the weighted average purchase price of the Common Stock purchased during
the year with respect to which the Additional Warrant is issued. See "The
Company - Equity Line." The resale by the Selling Stockholder of the Common
Stock that it acquires could depress the market price of the Common Stock.
Moreover, as all the shares to be issued pursuant to the Equity Line as well as
the shares issuable upon exercise of the Warrant and the Additional Warrants
will be available for immediate resale, the prospects of such sales could
further adversely affect the market price for the Common Stock.
In addition, as of December 31, 1997, the Company had an
aggregate of 36,364,502 shares of Common Stock issued and outstanding, of which
27,972,952 shares were held by non-affiliates and are freely tradeable in the
public market without restriction under the Securities Act. The remaining
8,391,550 shares are held by affiliates of the Company and are considered
"restricted securities" subject to the resale limitations of Rule 144 under the
Securities Act. The prospect of the ability to publicly resell the shares of
Common Stock not currently trading in the public market may adversely affect the
prevailing market prices for the Common Stock.
Limited Marketing Capability. While the Company's marketing strategy
initially consisted of forming corporate alliances with pharmaceutical
companies for the sale and distribution of its proposed products, whereby the
partner's established marketing, sales and distribution networks would minimize
the Company's need to expend funds to develop these areas of expertise, the
Company now believes that development of a sales force, complementary to those
of its partners, will be necessary to increase the likelihood of maximizing
market penetration for its products. The Company has only recently established
a sales and marketing organization, including the addition of a specialized
sales force in the U.S. and Europe, and there can be no assurance that the
Company can successfully maintain and continue to build such sales force. See
"Government Regulation."
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The Company has notified both its United States and European
distributors of its CEA-Scan product that it will be terminating the
distribution arrangements. See "The Company - Recent Developments." While the
Company is exploring potential relationships with new distributors for CEA-Scan,
there can be no assurance that the Company will be successful in entering into a
distribution arrangement with another distributor on terms acceptable to the
Company, if at all, or that such an arrangement if entered into will be
successful. See " Dependence on Third parties for Distribution of Products" and
"Government Regulation."
The Company's commercial sale of its proposed products and its
future product development, may be dependent upon entering into arrangements
with corporate partners for the development, marketing, distribution and/or
manufacturing of products utilizing the Company's proprietary technology and
there can be no assurance that they Company will be successful in forming such
relationships.
Dependence on Third Parties for Distribution of Products. The Company
currently does not have the resources to internally develop and maintain the
operating procedures required by the FDA and comparable foreign regulatory
authorities to oversee distribution of its products. See "Government
Regulation." As a result, the Company must use third parties for such function
for the foreseeable future. A failure to have a distribution arrangement in
place with a FDA-approved distributor prior to termination of an existing
arrangement would have a material adverse effect on the Company. The Company has
given notice of termination to its current distributors of CEA-Scan and is
presently discussing alternative arrangements with other approved third parties
in order to be able to distribute its products. See "Business - Recent
Developments."
Limited Manufacturing Capability. To date, the Company has manufactured
all materials used in its clinical trial programs and currently manufactures
CEA-Scan and LeukoScan, and believes that, for the foreseeable future, it should
be able to manufacture sufficient quantities of CEA-Scan and LeukoScan. However,
in the event that other Company products are approved for marketing and sale,
there can be no assurance that the Company will continue to have the capacity
and expertise to manufacture commercial quantities of multiple products
successfully or within acceptable profit margins. In addition, the Company
relies on its distributors for product labeling and product inserts, which
currently are considered by the FDA and certain foreign regulatory authorities
to be part of the manufacturing process. While the Company believes that these
services could be replaced, no assurance can be given that such services could
be obtained or that new manufacturers could be qualified without significant
cost or delay. The Company also relies on a single third party to perform
certain end-stage portions of the manufacturing process. While the Company has
qualified a second entity in the event a second end-stage manufacturer is
required, there can be no assurance that the Company will be able to negotiate
an agreement with such entity on terms acceptable to the Company, if at all. See
"Government Regulation."
Approval of Manufacturing Facilities. While the validation and
inspection of the Company's new manufacturing facility has been substantially
completed, there can be no assurance at this time that the regulatory
authorities will approve this facility in a timely manner to meet the
manufacturing needs of the Company (although the Company has sufficient levels
of inventory to meet its needs for the foreseeable future). Failure to receive
timely approval could have a material adverse effect on the Company.
Dependence on Ascites. The Company's proposed monoclonal imaging
antibody products are currently derived from ascites fluid produced in mice, and
the Company has entered into an agreement with a third-party supplier for the
production of ascites fluid. Although CEA-Scan has been approved in the U.S.,
Canada and Europe, and LeukoScan has been approved in Europe, regulatory
authorities, particularly in Europe, have expressed concerns about the use of
ascites for the production of monoclonal antibodies. While the Company believes
that its current quality control procedures help ensure the purity of the
ascites used in its products, there can be no assurance that the regulatory
authorities will agree that these procedures will be adequate for future
products. While the Company's effort to convert to cell culture production for
certain monoclonal antibodies is progressing, products manufactured by cell
culture processes will require regulatory approval for this substantial change
in production, and will require additional manufacturing equipment and resources
for this effort. See "Need for Additional Capital."
Dependence on The Center for Molecular Medicine and Immunology. The
Company's product development has involved, to varying degrees, The Center for
Molecular Medicine and Immunology ("CMMI") (also know as the Garden State Cancer
Center), a not-for-profit cancer research center. CMMI performs pilot and
pre-clinical trials in product areas of importance to the Company. In addition,
CMMI conducts basic research and patient evaluations in a number of areas of
potential interest to the Company, the results of which are made available to
the Company pursuant to a collaborative research and license agreement. There
can be no assurance that CMMI will be successful in its research activities or
that it will develop any potential products which can be licensed by the
Company. If CMMI were no longer to conduct such research and patient
evaluations, the Company would have to make arrangements with third parties for
the performance of this aspect of its clinical research, which may prolong and
increase expenses associated with pre-clinical and initial clinical trial
efforts.
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Potential Conflicts of Interest. Dr. David M. Goldenberg, Chairman of
the Board and Chief Executive Officer of the Company, is the founder, President
and a member of the Board of Trustees of CMMI. Dr. Goldenberg devotes a
significant amount of his time to CMMI. In addition, other key personnel
currently have responsibilities both to the Company and CMMI. While certain
procedural safeguards and mechanism are in place with respect to the allocation
of research projects and licensing of proprietary rights between the Company
and CMMI, due to Dr. Goldenberg's positions with both entities, the potential
for conflicts of interest exists.
Government Regulation. The Company's proposed products will require
governmental approval before they may be manufactured, marketed and sold. In
particular, human diagnostic and therapeutic products are subject, prior to
marketing, to rigorous pre-clinical and clinical testing for approval by the
FDA. The regulatory approval process is costly and time-consuming, and there can
be no assurance that the required approvals will be obtained. Even if regulatory
approval for a product is granted, such approval may entail limitations on the
indicated uses for which the product may be marketed. Further, even if such
regulatory approval is obtained, the FDA will require post-marketing reporting
and may require surveillance programs to monitor the usage or side effects of
each drug product. A marketed product, its manufacturer and its manufacturing
facilities are subject to continual review and periodic inspections and certain
changes to the product, the manufacturer or the manufacturing process may
require approval of the FDA, which may entail substantial delay and expense. See
"Limited Marketing Capability" and "Limited Manufacturing Capability." In
addition, later discovery of previously unknown problems with a product,
manufacturer or facility, or failure to comply with applicable requirements may
result in restrictions on such product or manufacturer, potentially including
demands that production and shipment cease, and, in some cases, that products be
recalled, or to enforcement actions that can include seizures, injunctions and
criminal prosecution. Such failures, or new information reflecting on the safety
and effectiveness of the drug that comes to light after approval, can also lead
to FDA withdrawal of approval to market the product. Further, the FDA requires
that any entity responsible for distribution of drug products maintain detailed
operating procedures in accordance with FDA standards which would enable the
distributor to, among things, track the location of a product in the event a
product recall were necessary. Similar regulatory requirements exist in most
foreign countries (including the EU Countries) and, to a lesser extent, at the
state level in the United States.
Health Care Reform. The Company's ability to commercialize its products
successfully may also depend in part on the extent to which reimbursement for
the cost of such products and related treatment will be available from
government health administration authorities, private health insurers and other
organizations. Such third-party payers are increasingly challenging the price of
medical products and services. Several proposals have been made that may lead to
a government-directed national health care system. adoption of such a system
could further limit reimbursement for medical products, and there can be no
assurance that adequate third-party coverage will be available to enable the
Company to maintain price levels sufficient to realize an appropriate return on
this investment in product development. In addition, there can be no assurance
that the U.S. government will not implement a system of price controls. Any such
system might adversely affect the ability of the Company to market its products
profitably.
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Dependence on Key Personnel. The success of the Company is highly
dependent upon the continued availability of the services of Dr. Goldenberg,
both to the Company and to CMMI, the loss of which could have a materially
adverse effect on the Company. Dr. Goldenberg is employed pursuant to an
Employment Agreement which expires November 1, 1998, subject to extension for
successive one-year periods. The Company maintains a key-man life insurance
policy in the amount of $4,000,000 on the life of Dr. Goldenberg for the benefit
of the Company. The Company is also dependent on the continued services of a
limited number of executives and scientists. The loss of these individuals could
also have a material adverse effect on the Company. In addition, the Company has
an ongoing need to expand its management personnel and support staff.
Competition for qualified personnel in the biotechnology and pharmaceutical
industries is intense and there can be no assurance that the Company will be
successful in its recruitment efforts.
Technological Change and Competition. The biotechnology industry is
highly competitive, particularly in the area of cancer diagnostic and
therapeutic products. The Company is likely to encounter significant competition
with respect to its existing and proposed products currently under development.
A number of companies which are engaged in the biotechnology field, and in
particular the development of cancer diagnostic and therapeutic products, have
financial, technical and marketing resources significantly greater than those of
the Company. Some companies with established positions in the pharmaceutical
industry may be better equipped than the Company to develop, refine and market
products based on technologies applied to the diagnosis and treatment of cancers
and infectious diseases. The Company's ability to compete in the future will
depend, in part, on its ability to foster an environment in which
multi-disciplinary teams work together to develop low-cost, well-defined
processes and bring cost-beneficial products successfully through clinical
testing and regulatory approval. A significant amount of research and
antibody-based technology are also carried out at universities and other
non-profit research organizations, which are becoming increasingly aware of the
commercial value of their findings and are becoming more active in seeking
patent and other proprietary rights, as well as licensing revenues. The Company
is pursuing an area of product development in which there is the potential for
extensive technological innovation in relatively short periods of time. The
Company's competitors may succeed in developing products that are safer or more
effective than those of the Company's potential products. Rapid technological
change or developments by others may result in the Company's present products
and potential products becoming obsolete or non-competitive. However, the
Company believes that the technological attributes of its proposed diagnostic
products, including the ease of use (e.g., single vial, rapid imaging),
employment of technetium-99m (the most widely available radioisotope) and its
use of an antibody fragment (better liver imaging, decreased HAMA response) will
enable the Company to compete effectively in the marketplace.
Patents and Proprietary Rights. The commercial success of the Company is
highly dependent upon patents and other proprietary rights owned or licensed by
the Company. While the Company actively seeks patent protection both in the
United States and abroad for its proprietary technology, there can be no
assurance that the Company's key patents will not be invalidated or will provide
protection that has commercial significance. Litigation may be necessary to
protect the Company's patent positions, which could be costly and time
consuming. The invalidation of key patents owned by or licensed to the Company
could have a material adverse effect on the Company and its business prospects.
Because of differences in patent laws, the extent of protection provided by
United States patents may differ from that of their foreign counterparts. While
the Company believes that the protection of patents is important to its
business, the Company also relies on trade secrets, unpatented know-how and
continuing technological advancement to establish and maintain its competitive
position. There can be no assurance that others may not independently develop
similar trade secrets or know-how or obtain access to the Company's trade
secrets, know-how or proprietary technology. In addition to the Company, other
private and public entities, including universities, have filed applications for
or have been issued patents and obtained other proprietary rights to technology
potentially useful to the Company. The scope and validity of such patents, the
extent to which the Company may be required to seek a license under such patents
or other proprietary rights, and the cost or availability of such licenses are
currently unknown. See "The Company Recent Developments."
Control by Current Stockholder. As of December 31, 1997, Dr. Goldenberg
had voting discretion over an aggregate of 13,216,007 shares (including those
shares over which he is entitled to exercise voting discretion by powers of
attorney or proxy granting to him by his children and his former wife) or
approximately 36.4% of the currently outstanding Common Stock. As a result of
such holdings, Dr. Goldenberg may have the ability to determine the election of
all of the Company's director's, direct policies and control the outcome of
substantially all matters which may be put to a vote of the Company's
stockholders.
Product Liability. The clinical testing, marketing and manufacturing of
the Company's proposed products necessarily involves the risk of product
liability. While the Company currently has liability insurance at acceptable
rates, there is no assurance that such insurance will continue to be obtainable
in the future at an acceptable cost, if at all. In the event that the Company
does not or cannot maintain its existing or comparable liability insurance, the
Company's ability to test clinically and market its products may be
significantly impaired. Moreover, the amount and scope of any insurance coverage
or indemnification arrangements with any distributor or other third party upon
which the Company relies may be inadequate to protect the Company in the event
of a successful product liability claim.
Effect of Certain Anti-Takeover Provisions. The Company's Board of
Directors has the authority, without any further vote by the Company's
stockholders, to issue up to 10,000,000 shares of Preferred Stock in one or more
series and to determine the designations, powers, preferences and relative,
participating, optional or other rights thereof, including without limitation,
the dividend rate (and whether dividends are cumulative), conversion rights,
voting rights, rights and terms of redemption, redemption price and liquidation
preference. Issuance of Preferred Stock could have the effect of delaying,
deterring or preventing a change in control of the Company, including the
imposition of various procedural and other requirements that could make it more
difficult for holders of Common Stock to effect certain corporate actions,
including the ability to replace incumbent directors and to accomplish
transactions opposed by the incumbent Board of Directors. The rights of the
holders of Common Stock would be subject to, and may be adversely affected by,
the rights of the holders of any Preferred Stock that may be issued in the
future.
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Lack of Dividends. The Company has not paid any cash dividends to date
on its Common Stock. It is the current policy of the Board of Directors of the
Company, in view of the Company's contemplated financial requirements, to retain
earnings, if any, to provide funds for the operation and expansion of the
Company's business. Therefore, the Board of Directors does not expect to declare
cash dividends on its Common Stock in the foreseeable future.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the resale
by the Selling Stockholder of the Shares offered by this Prospectus but will
receive proceeds from the original issuance of the Shares to the Selling
Stockholder under the Equity Line and upon exercise of the Warrant and
Additional Warrants, if any. The Company could receive, before expenses, up to
$30 million under the Equity Line and up to $376,875 upon exercise of the
Warrant. In addition, the Selling Stockholder may receive Additional Warrants to
purchase up to 125,000 shares of Common Stock. The amount of gross proceeds
received will depend on the exercise price of the Additional Warrants, which is
specified in the Equity Line as 180% of the weighted average purchase price of
the Common Stock purchased during the year with respect to which an Additional
Warrant is issued. The actual amount of proceeds from the Equity Line, the
Warrant and the Additional Warrants, if any, will depend upon the market price
of the Common Stock, whether the Selling Stockholder elects to exercise the
Warrant and the Additional Warrants, if any, whether the Selling Stockholder
elects to purchase Common Stock as permitted under the terms of the Equity Line,
and whether the Company elects to require the Selling Stockholder to purchase
Common Stock as permitted under the terms of the Equity Line. However, there can
be no assurance that the Company will issue any Shares or receive any proceeds
from the Equity Line and, under the terms of the Equity Line, it is possible
that no Shares will be issued. For a description of the terms of the Equity
Line, the Warrant and the Additional Warrants, see "The Company - Equity Line."
The Company expects that any net proceeds from the Equity Line,
the Warrant and the Additional Warrants will be used for general corporate
purposes, including research and development, marketing, sales, and clinical and
regulatory activities.
SELLING STOCKHOLDER
The Selling Stockholder, Cripple Creek Securities, LLC, has not
had a material relationship with the Company within the past three years, other
than as a result of entering into the Equity Line and related agreements. See
"The Company - Equity Line." However, one of the Selling Stockholder's members,
The Palladin Group, L.P., is or was an investment manager for several entities
which, since January 1995 had purchased an aggregate of $20 million of the
Company's convertible preferred stock. As of the date hereof, none of such
entities owns any shares of Common Stock or any shares of the Company's
convertible preferred stock.
As of the date hereof, the Selling Stockholder does not own any
shares of the Common Stock, other than the Shares which it has the right to
acquire upon exercise of the Warrant and is offering hereby all of the shares of
Common Stock it may acquire pursuant to the Equity Line, the Warrant and the
Additional Warrants.
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PLAN OF DISTRIBUTION
The Selling Stockholder, acting as principal for its own
account, directly, through agents designated from time to time, or through
brokers, dealers, agents or underwriters also to be designated, may sell all or
a portion of the Shares from time to time on terms to be determined at the time
of sale. The Selling Stockholder may from time to time sell all or a portion of
the Shares in routine brokerage transactions on the NASDAQ Stock Market or
otherwise at the prices and terms prevailing at the time of the sale. The
Selling Stockholder also may make private resales directly or through brokers or
may make resales pursuant to Rule 144 under the Securities Act. The Selling
Stockholder may pay customary brokerage fees, commissions and expenses.
To the extent required pursuant to Rule 424 under the Securities
Act, a Prospectus Supplement will be filed with the Securities and Exchange
Commission with respect to a particular offering setting forth the terms of any
offering, including the name or names of any underwriters or agents, if any, any
underwriting discounts and other items constituting underwriters' compensation,
the offering price and any discounts or concessions allowed or reallowed or paid
to dealers. Any offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
If underwriters are used in a sale, shares of Common Stock will
be acquired by the underwriters for their own account and may be resold from
time to time in one or more transactions, including negotiated transactions, at
a fixed public offering price or at varying prices determined at the time of
sale. The shares may be offered to the public either through underwriting
syndicates represented by one or more managing underwriters or directly by one
or more firms acting as underwriters. The underwriter or underwriters with
respect to a particular underwritten offering of shares to be named in the
Prospectus Supplement relating to such offering and, if an underwriting
syndicate is used, the managing underwriter or underwriters, will be set forth
on the cover of such Prospectus Supplement. Unless otherwise set forth in the
Prospectus Supplement relating thereto, the obligations of the underwriters to
purchase the Shares will be subject to conditions precedent and the underwriters
will be obligated to purchase all of the shares if any are purchased.
If dealers are utilized in the sale of shares of Common Stock in
respect of which this Prospectus is delivered, the Selling Stockholder will sell
such shares to the dealers as principals. The dealers may then resell such
shares to the public at varying prices to be determined by such dealers at the
time of resale. The names of the dealers and the terms of the transaction will
be set forth in a Prospectus Supplement relating thereto.
If an agent is used, the agent will be named, and the terms of
the agency and any commissions will be set forth in a Prospectus Supplement
relating thereto. Unless otherwise indicated in the Prospectus Supplement, any
such agent will be acting on a best efforts basis for the period of its
appointment.
Shares may be sold directly by the Selling Stockholder to
institutional investors or others, who may be deemed to be underwriters within
the meaning of the Securities Act with respect to any resale thereof. The terms
of any such sales, including the terms of any bidding or auction process, will
be described in the Prospectus Supplement relating thereto.
Agents, dealers and underwriters may be entitled under
agreements entered into with the Selling Stockholder to indemnification against
certain civil liabilities, including liabilities under the Securities Act, or to
contribution with respect to payments which such agents, dealers or underwriters
may be required to make in respect thereof. Agents, dealers and underwriters may
be customers of, engage in transactions with, or perform services for the
Company or the Selling Stockholder in the ordinary course of business.
The Company will bear all costs and expenses of the registration
of the Shares under the Securities Act and certain state securities laws. The
Selling Stockholder will pay any transaction costs associated with effecting any
sales that occur.
The Selling Stockholder is not restricted as to the price or
prices at which it may resell Shares acquired pursuant to the Equity Line or
upon the exercise of the Warrant or the Additional Warrants. Such resales may
have an adverse effect on the market price of the Common Stock. Moreover, the
Selling Stockholder is not restricted as to the number of Shares that may be
sold at any one time, and it is possible that a significant number of Shares
could be sold at the same time, which also may have an adverse effect on the
market price of the Common Stock.
The Company has agreed to indemnify the Selling Stockholder
against certain civil liabilities, including liabilities under the Securities
Act.
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LEGAL MATTERS
Certain legal matters with respect to the validity of the Common Stock
offered hereby have been passed upon for the Company by Warshaw Burstein Cohen
Schlesinger & Kuh, LLP. As of the date of this Prospectus, certain partners of
such firm beneficially owned shares of Common Stock.
EXPERTS
The consolidated financial statements of the Company as of June 30, 1997
and 1996 and for each of the years in the three-year period ended June 30, 1997
have been incorporated by reference herein and in the registration statement in
reliance upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, and upon the authority of said firm as experts in accounting and
auditing.
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No person is authorized in connection with any offering made hereby to give any
information or to make any representation not contained in this prospectus, and,
if given or made, such information or representation must not be relied upon as
having been authorized by the company. This prospectus does not constitute an
offer to sell or a solicitation of an offer to buy any security other than the
common stock offered hereby, nor does it constitute an offer to sell or a
solicitation of an offer to buy any of the securities offered hereby to any
person in any jurisdiction in which it is unlawful to make such an offer or
solicitation. Neither the delivery of this prospectus nor any sale made
hereunder shall under any circumstances create any implication that the
information contained herein is correct as of any date subsequent to the date
hereof.
______________
TABLE OF CONTENTS 7,447,000 Shares
Page IMMUNOMEDICS, INC.
Available Information 2
Incorporation of Certain Common Stock
Documents by Reference 2
The Company 3 ____________________
Risk Factors 6
Use of Proceeds 12 PROSPECTUS
Selling Stockholder 12
Plan of Distribution 13 ____________________
Legal Matters 14
Experts 14 February 13, 1998
