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
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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
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<TABLE>
PART I. - FINANCIAL INFORMATION
IMMUNOMEDICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<CAPTION>
December 31, June 30,
1997 1997
______________ ______________
<S> <C> <C>
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
______________ ______________
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
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>
</TABLE>
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<TABLE>
IMMUNOMEDICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH OPERATIONS
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
1997 1996 1997 1996
___________ ___________ ___________ ___________
<S> <C> <C> <C> <C>
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>
</TABLE>
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<TABLE>
IMMUNOMEDICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Six Months Ended December 31,
1997 1996
______________ ______________
<S> <C> <C>
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>
</TABLE>
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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
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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
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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
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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
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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
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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
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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
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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
<PAGE>
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
<PAGE>
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
<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: 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
Exhibit 10.26
[REDACTED COPY]*
DISTRIBUTION AGREEMENT
Dated as of November 24, 1998
Between
IMMUNOMEDICS, INC.
and
ELI LILLY DEUTSCHLAND GmbH
* Confidential portions omitted and filed separately with the Securities add
Exchange Commission
<PAGE>
Distribution Agreement
This agreement is made this 24th day of November, 1997 between:
IMMUNOMEDICS, INC., a Delaware corporation having its office at 300 American
Road, Morris Plains, New Jersey, USA ("IMMU"):
and
ELI LILLY DEUTSCHLAND GmbH, Teichweg 3, D-35396 Giessen, Germany
("LILLY")
WHEREAS:
In previous discussions between the parties, each party indicated that it
desired to enter into an Agreement by which LILLY would render certain services
with respect to the distribution within the European Union and certain other
countries of IMMU's product, LeukoScan(R) (hereinafter referred to as the
"Product"), including without limitation, importation of the Product, storage
and inventory management of the Product, label and package insert printing and
label placement for the Product, packaging into individual boxes, picking,
packing and shipping of the Product to end users and preparation of IMMU
invoices for the shipments. Accordingly, there follows the mutual understanding
between IMMU and LILLY as to the terms and conditions applicable to this
Agreement.
NOW IT IS HEREBY AGREED AS FOLLOWS:
1. Import of the Product into the European Union
1.1 The Product is manufactured in the United States of America.
IMMU warrants that the Product has the necessary regulatory
1
<PAGE>
and legal approvals for the export thereof out of the US with import,
sale, and distribution to countries in the European Union and any other
country in which the Product shall be sold. IMMU has the responsibility
to maintain these approvals. If for whatever reason, LILLY is required
to receive regulatory and legal approvals for the Product for the
activities covered in this Agreement, IMMU will provide LILLY with the
information necessary to secure such approvals.
1.2 The port of arrival of the Product is LILLY, Giessen, Germany.
1.3 IMMU shall arrange for transport of the Product (contained in
glass vials) to the port of arrival in accordance with the relevant
instructions given by LILLY with respect to the addressing of the
shipment, proper labeling in accordance with international regulations,
and the contents of the necessary documentation. Cost for transport and
insurance fees covering damage and loss of the Product to the port of
arrival shall be for the account of IMMU.
1.4 Product delivered to LILLY by IMMU hereunder for storage, labeling,
packaging and distribution will remain at all times under and subject
to the ownership, direction and control of IMMU until sold to the end
users. Title to the Product distributed by LILLY will pass directly
from IMMU to the end users who purchase the Product from IMMU. IMMU
shall bear the risk of loss of the Product not yet delivered by LILLY
to a customer, whether by fire, theft, or other casualty; provided,
however, that LILLY shall promptly reimburse IMMU [*] for each
2
<PAGE>
vial of the Product which is lost or damaged as a result of
LILLY's negligence.
1.5 LILLY shall take all reasonable steps to clear the Product through
Customs. All clearance fees and levied import duties and taxes, if
charged to LILLY as importer of the Product, are for the account of
IMMU and will be reimbursed by IMMU upon LILLY's presentation of the
corresponding invoices and/or charge notes.
2. Quality Control of the Product
2.1 IMMU warrants to LILLY that each lot of Product imported into the
European Union (and into those countries outside of the European Union
to which IMMU requests LILLY to deliver the Product) shall satisfy, at
the time of importation, all quality criteria set forth in its Summary
of Product Characteristics. Promptly following arrival of each shipment
of the Product, LILLY shall conduct all necessary quality control
inspections, according to procedures and specifications agreed with
IMMU, including without limitation, labeling, documentation, visual
inspection of each lot of the Product for external container or other
damage or loss, and inspection of the temperature recorder data
accompanying such shipment to determine that the Product was not
exposed to temperatures outside of the acceptable range defined by IMMU
during the transport thereof to the port of arrival. LILLY shall report
any such damage or loss to IMMU promptly. IMMU
3
<PAGE>
will promptly notify LILLY of any change made in quality criteria and
in quality control procedures and specifications which is relevant to
the activities and services provided by LILLY pursuant to this
Agreement.
2.2 IMMU warrants to LILLY that the packing and storage conditions required
for the Product, either in transit or during warehouse storage, are
such that the Product will continue to satisfy all quality
specifications as defined in the Summary of Product Characteristics
during the entire period of storage until a predetermined expiration
date, provided LILLY stores and ships the Product in accordance with
approved procedures.
2.3 To enable LILLY to perform its packaging and distribution function for
the Product, IMMU shall provide LILLY with those details relating to
the Product as are required by the European Union or applicable
national regulations. If required by competent authorities, IMMU shall
authorize qualified LILLY representatives (Manufacturing and/or Quality
Control) (collectively, "LILLY Representatives") to inspect the Product
facility and its operational procedures. This inspection does not imply
that IMMU has any obligation to reveal its trade secrets with respect
to the essential steps of manufacturing the Product. IMMU shall provide
LILLY with all information relevant to the release of each lot of
Product, including (but not limited to) the relevant Certificate of
Analysis for the Product provided by a European Union-qualified
laboratory. LILLY grants the right to IMMU to
4
<PAGE>
inspect LILLY's labeling, packaging, storage and shipping
facilities.
2.4 IMMU shall perform or shall have performed on all lots of Product
imported, all relevant tests required by European Union regulations, or
by the applicable national law of countries outside the European Union.
Such tests as IMMU is unable to perform itself will be executed by a
qualified third party laboratory within the European Union. No lot of
Product shall be shipped by IMMU to LILLY until the third party
laboratory shall have certified that the sample batch therefrom shall
have satisfied all required tests.
2.5 IMMU will indicate clearly in all its correspondence, documents and
product labels the item number, product name, lot number(s),
manufacturing date(s) and expiry date(s) of each shipment of Product.
2.6 Any information IMMU possesses or receives which casts doubt on the
usability of the Product, or a specific lot of the Product, shall be
promptly shared with an authorized representative of LILLY and in
consultation between IMMU and LILLY all the necessary decisions and
steps will be made and taken to control further distribution of the
Product or specific lot of the Product in question. LILLY will provide
IMMU with all necessary information and support to perform a recall, if
required. The final decision as to whether a recall is required, and
notification to end users, is the responsibility of IMMU. All costs
associated with such
5
<PAGE>
actions shall be for the account of IMMU, unless such defect shall be
due to the fault or negligence of LILLY in performing its obligations
under this Agreement, in which event such costs shall be borne by
LILLY. The recalled and returned Product shall be kept available to
IMMU to be treated in the way IMMU deems fit. IMMU cannot direct return
of whatever number of vials of the recalled material LILLY is required
by applicable law to retain.
2.7 LILLY Representatives will release the finished lots according to
current LILLY procedures and based on (but not limited to) the relevant
Certificate of Analysis provided by the authorized European
Union-qualified laboratory. If a deviation which might affect the
quality of the Product occurs, LILLY will consult with IMMU for
finished lot approval.
2.8 IMMU shall provide LILLY with all necessary information about the
Product, including but not limited to, safety data, in order to enable
the appropriate and safe handling of the Product by LILLY.
3. Storage of the Product and Inventory Management 3.1 Storage and
shipping conditions for the Product have been defined by IMMU. LILLY
has determined that these conditions can be met. IMMU shall have the
right to inspect LILLY's facilities to verify LILLY's ability to
comply therewith.
3.2 The Product shall be stored by LILLY in a chill room between 2(degree)
and 8(degree)C according to the relevant conditions as specified
6
<PAGE>
by IMMU. LILLY shall at all times reserve sufficient capacity to
satisfy IMMU's reasonable needs. LILLY shall maintain temperature
recorder charts and similar materials, reviewed and approved by LILLY,
to evidence actual storage conditions.
3.3 LILLY shall exercise all reasonable care as is usual in the industry
for similar categories of product during the handling of the Product
before and while in storage and during order picking, packing and
shipping actions, and warrants that its personnel is able to exercise
such reasonable care by experience and proper training. LILLY shall
maintain adequate insurance coverage acceptable to IMMU for the storage
of the Product under the terms of this Agreement.
3.4 LILLY will maintain records showing the quantity of each lot of Product
received, labeled, packaged, shipped to users, and still available for
distribution. LILLY will inform IMMU weekly concerning the quantity of
the Product on hand. When an agreed minimum level of stock is reached,
LILLY will inform IMMU accordingly, and IMMU will take all necessary
action to replenish the stock to a level deemed appropriate by IMMU.
3.5 LILLY will distribute Product with the earliest expiry date first,
unless otherwise directed by IMMU. No delivery to end users will take
place after the expiration date of any lot of Product or after any date
prior to that expiration date determined by IMMU and communicated to
LILLY in writing.
3.6 IMMU will be responsible for directing end users regarding
return of the Product. Product for whatever reason returned
7
<PAGE>
will not be returned to saleable inventory unless agreed to by IMMU and
promptly communicated to LILLY. Disposition of returned Product that is
not returned to inventory shall be determined by IMMU and communicated
to LILLY within 30 days. IMMU will reimburse LILLY for the costs
associated with this disposition.
3.7 LILLY will timely and regularly advise IMMU of the number of vials of
the Product and their respective lot numbers of any expired Product and
shall keep such Product at IMMU's disposal until one month after its
expiration date. After that date, unless IMMU advises LILLY that it
expects to be able to extend the expiration date, IMMU shall determine
the manner of disposition of such expired Product, which shall be at
the expense of IMMU.
3.8 LILLY will hold the necessary resources available for inspections by
the competent authorities of its premises and procedures relating to
the Product. LILLY will assist in a manner consistent with practices in
the industry to obtain satisfactory results of such inspections.
4. Package Development and Packaging of the Product 4.1 LILLY will
manage the development of packaging materials (including labels and
package leaflets) with IMMU. IMMU will provide LILLY with an approved
packaging file for each packaging presentation that LILLY will be
responsible for managing. LILLY will develop and coordinate the
creation of packaging materials according to these approved files.
8
<PAGE>
LILLY bears the responsibility for any inconsistencies in packaging
materials vis-a-vis the approved packaging files. LILLY will provide
specimens of packaging materials to IMMU promptly upon preparation.
4.2 LILLY shall maintain a sufficient inventory of labelling/packaging
materials.
4.3 IMMU will communicate to LILLY changes to the approved packaging in a
timely manner and provide an update to the approved packaging file for
each packaging presentation which is changed. IMMU and LILLY will
coordinate the introduction of the changed packaging materials into the
market. IMMU will reimburse LILLY for the costs associated with the
development of changed packaging materials and for the losses
associated with the destruction of outdated packaging materials.
4.4 LILLY will label the vials and assemble the final Product package
according the approved Product packaging file and in accordance with
internal LILLY procedures for the GMP packaging of pharmaceutical
products.
4.5 Upon request, LILLY will provide IMMU copies of internal LILLY
procedures and records related to the packaging and distribution of the
Product.
4.6 IMMU hereby grants LILLY the non-exclusive right during the term of
this Agreement to use the Immunomedics logo and the mark
"Immunomedics", in addition to its right to use the trademark
LeukoScan(R) or such other mark(s) as IMMU shall cause to be registered
for the Product (together with the marks for
9
<PAGE>
any other products of IMMU which are included in this Agreement
pursuant to Section 10) (collectively the "Marks") in the European
Union and such other countries in which LILLY shall distribute the
Product in connection with, and confined to the purpose of, the
distribution of the Product. LILLY shall use the Marks on labeling,
packaging and package inserts for the Product, and in all literature
related thereto, and LILLY shall not use any other trademarks or logos
on any labeling, packaging, package inserts or literature relating to
the Product. LILLY shall comply with and observe the reasonable
requirements of IMMU relating to (a) the marking of the Product and/or
its label, packaging, package insert or other printed materials
pursuant to any and all applicable patent laws to indicate that letters
patent have been applied for or granted in one or more countries and
(b) the use of the Marks in conformity with applicable trademark laws.
Prior to its use, LILLY shall submit all such labeling, packaging,
package inserts and related literature to IMMU for its approval of the
use of such Marks. LILLY acknowledges that the Marks are and shall
remain the property of IMMU, and LILLY disclaims any rights to such
Marks other than the rights granted by this Section. LILLY shall not
use the Marks or any other IMMU trademark, trade or brand name for any
purpose other than as provided in this Section.
5. Orders for the Product.
10
<PAGE>
5.1 The Product will be offered for sale by IMMU in countries of the
European Union and in such other countries as IMMU determines in its
sole discretion. IMMU warrants that the Product is or will be properly
approved for sale in each of the countries in which it is offered.
5.2 All sales and marketing efforts for the Product and all order entry are
the sole responsibility of IMMU and constitute no part of this
Agreement. IMMU warrants that, to the best of its knowledge, each end
user ordering and receiving the Product meets all necessary legal and
regulatory requirements to do so.
5.3 All orders will be communicated by IMMU to LILLY's customer service
representative. LILLY warrants that all orders received will be
executed in a timely manner and in accordance with agreed cut-off times
and service requirements by market, provided the available stock of
Product is sufficient.
5.4 Though all reasonable efforts shall be directed towards error- free and
reliable communications systems, LILLY shall not be liable for any
consequences for delay in filling orders due to transmission failures
or other disturbances in the communication channels beyond LILLY's
normal control.
6. Order Picking, Packing, and Shipping
6.1 Except to the extent that specific requirements are included in this
Agreement, the Product will be supplied to the end users by the
application of LILLY's standard routines, procedures, modes of
transport, routings and time schedules,
11
<PAGE>
all as used in or designed for, and with the same degree of care and
diligence as LILLY applies to, the distribution of LILLY's products to
the end users in that country. The Product shall not be stored or
repacked in, or trans-shipped from, the country of destination. LILLY
shall reimburse IMMU for any Product damaged and not saleable due to
improper shipment conditions by LILLY.
6.2 Orders for the Product will be processed and dispatched according to
agreed cut-off times and service requirements by market.
6.3 The Product will be packed in LILLY's standard transport packaging
components and will be shipped to the final destinations under the
shipping conditions established pursuant to Section 3.1 and in
accordance with LILLY's standard procedure for handling of chilled
products. Shipment shall be made via DHL or other carrier acceptable to
IMMU.
6.4 Though LILLY's distribution methods intend to minimize transit times
and to assure timely and reliable delivery, LILLY shall not be liable
for any delay in transit due to circumstances beyond its control,
including (but not limited to) modifications in legal requirements,
international regulations, changes in carrier's time schedules or
refusals to accept consignments or handling errors by freight carriers,
security quarantine, inclement weather conditions, floods, earthquakes,
wars, strikes, riots or other civil disturbances.
7. Invoicing
12
<PAGE>
7.1 End user prices for the Product, in the local currency of the end user
(unless otherwise specified by IMMU), FOB Giessen, and discount schemes
shall be determined by IMMU for each country under this Agreement.
7.2 For an initial period to be agreed upon, IMMU shall prepare invoices
for the shipments of the Product and shall transmit the invoice to the
end user.
7.3 Following the initial period, at IMMU's request, LILLY will prepare an
invoice therefor in Giessen at the time of each shipment in the name
of, and in the form approved by, IMMU. The invoice will be included in
the shipment of the Product to the end user, and a copy thereof
provided to IMMU expeditiously.
7.4 The prices and applicable taxes and fees shown on the invoice will be
those provided to LILLY by IMMU with the order data.
7.5 IMMU reserves the right to direct LILLY to withhold shipment to any end
user at its sole discretion.
8. Collection of Receivables
8.1 All collections of amounts due under the invoices for Product shipped
will be made by IMMU, and LILLY shall have no responsibility therefor.
9. Service Fee; Start-up Costs
9.1 Upon execution of this Agreement, IMMU shall advance to LILLY [*] to
cover LILLY's start-up expenses including those associated with
packaging development and systems-related activities. If this advance
payment is not adequate to cover
13
<PAGE>
all such expenses, then LILLY, promptly after the third month of its
distribution of the Product, shall present to IMMU adequate proofs of
its start-up expenses, and IMMU shall reimburse LILLY for up to an
additional [*] evidenced thereby, for a maximum aggregate amount
thereof (including the initial advance) of [*].
9.2 IMMU shall pay LILLY a service fee, in the manner provided in Section
9.6, for the services rendered under this Agreement (the "Service
Fee"). The Service Fee shall consist of a Product Packaging Fee (which
shall be LILLY's compensation for all services rendered and materials
required in connection with the importation, storage, inventory
management, labeling and packaging of the Product) and a Shipment Fee
(which shall be LILLY's compensation for all services rendered and
materials required in connection with the filling and shipment of each
order of the Product (including invoicing thereof) to the end user).
9.3 The Product Packaging Fee shall be based on the total number of vials
of the Product labeled and packaged annually by LILLY pursuant to
orders transmitted by IMMU to LILLY therefor. For the first [*] vials
labeled and packaged in a twelve month period, the Product Packaging
Fee shall be [*] per vial. For the next [*] vials labeled and packaged
in that twelve month period, the Product Packaging Fee shall be [*] per
vial. For each additional vial above [*] vials labeled and packaged
14
<PAGE>
during that twelve month period, a Product Packaging Fee of [*] shall
be due.
9.4 The Shipment Fee shall be [*] for each order shipped to an end user.
9.5 Freight costs will be negotiated by LILLY and subject to IMMU's
approval. Freight costs will be added to the end user's invoice. LILLY
will pay the freight costs and charge these back to IMMU on a monthly
basis for reimbursement.
9.6 The Service Fee shall be payable as follows:
(a) At the end of each month during the Term, IMMU shall pay
LILLY, as a downpayment on the Product Packaging Fee and the Shipment
Fee, a Monthly Service Fee of [*] provided that (in consideration of
the payment made by IMMU to Lilly pursuant to Section 9.1) no Monthly
Service Fee shall be payable in respect of the first three months of
distribution of the Product pursuant to this Agreement, but such
payments shall be deemed to have been made for purposes of paragraph
(b) below.
(b) Promptly following the end of the twelfth month of
distribution of the Product by LILLY, and following the end of each
twelve month period thereafter, the parties shall calculate the amount
of the Product Packaging Fee and the Shipment Fee actually due as
provided in Sections 9.3 and 9.4 in respect of such services rendered
during the twelve months then ended. If the amount of the Service Fee
thus calculated exceeds the aggregate Monthly Service Fee payments
previously
15
<PAGE>
made or deemed made ([*] in the first year), IMMU shall remit the
amount of such excess to LILLY within 30 days of receiving LILLY's
invoice therefor.
(c) The parties agree that following the initial calculation
under paragraph (b) above, and at the end of each annual period
thereafter, they will reevaluate the fairness and adequacy of the
Monthly Service Fee, the Product Packaging Fee and the Shipment
Fee with a view to making such adjustments thereto as shall be
mutually acceptable.
10. Addition of CEA-Scan(R) as a Product; Other Products
10.1 At the request of IMMU, Lilly shall also provide all of the services
required of it hereunder for the importation, storage, labeling,
packaging and distribution of CEA-Scan(R), an additional product of
IMMU, and the term "Product" shall then include both LeukoScan(R)
and CEA-Scan(R). In such event, the Product Packaging Fee computation
to be made under Section 9.3 shall include the total number of vials of
LeukoScan(R) and CEA- Scan(R), taken together, labeled and packaged by
Lilly. It is also the intention of the parties that other products of
IMMU can be added to this Agreement in the same manner when approved
for sale in which event the term "Product" would then also include
such other products.
11. Effectiveness, Expiration and Renewal of this Agreement
11.1 This Agreement becomes effective on the date hereof. The
parties anticipate that Lilly's distribution of the Product within
Germany will commence on or about December 1, 1997, and
16
<PAGE>
elsewhere on or about January 1, 1998, subject to any necessary
regulatory approvals.
11.2 Subject to Article 12, this Agreement shall continue in force for a
period of three years after its becoming effective, and shall be
automatically renewed unless terminated in writing by either party,
giving to the other party six months notice of such non-renewal.
11.3 The validity of this Agreement, the construction and enforcement of its
terms, and the interpretation of the rights and duties of the parties
hereunder will be governed by the laws of the State of New Jersey, USA,
excluding those laws that relate to the choice of law. The exclusive
jurisdiction and venue for any disputes arising out of or in connection
with this Agreement will be an appropriate federal court located in the
District of New Jersey, and each party hereby consents to personal
jurisdiction in such court and consents to service of process by means
of certified or registered mail, return receipt requested.
12. Termination
12.1 Either party shall be entitled to terminate this Agreement upon not
less than six months written notice to the other at any time for any
reason.
12.2 Either party shall be entitled to terminate this Agreement by written
notice to the other if that other party commits any material breach of
any of the provisions of this Agreement and, in case of a breach
capable of remedy, fails to remedy
17
<PAGE>
the same within thirty days after receipt of a written notice giving
full particulars of the breach and requiring it to be remedied.
12.3 Either party shall be entitled to terminate this Agreement upon not
less than three months written notice to the other if there is at any
time a change, either directly or indirectly, in the beneficial
ownership or control of the other party to an external third party from
that at the date of this Agreement.
12.4 IMMU shall be entitled to terminate this Agreement upon not less than
three months written notice to LILLY if IMMU shall enter into a
marketing alliance covering the European Union with any entity which,
by investment or otherwise, shall become a co-venturer with IMMU.
13. Consequences of Expiration or Termination
13.1 Upon expiration or termination of this Agreement for any reason, IMMU
shall be responsible for collecting all undelivered Product, stocks,
labels and packaging materials from LILLY within a reasonable period
and at IMMU's cost, unless agreement is reached between the parties
for the continued distribution of stock of the Product.
13.2 Upon expiration or termination of this Agreement for any reason other
than material breach of any provisions of this Agreement by LILLY, any
outstanding invoices rendered by LILLY in respect of the Product and/or
the Service Fee shall be paid
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<PAGE>
by IMMU within thirty (30) days of the effective date of such
expiration or termination.
14. No Assignment by IMMU or by LILLY
This Agreement is personal to both parties to this agreement and
neither party may, without the prior written consent of the other
party, assign or dispose of or delegate any of its rights under this
Agreement, or subcontract or otherwise delegate any of its obligations.
15. Confidentiality
15.1 Each party ("Receiving Party") shall maintain in confidence all
information heretofore or hereafter disclosed by the other ("Disclosing
Party") which such party knows or has reason to know are trade secret
and other proprietary information owned by or licensed to the other,
including, but not limited to, information relating to the Product, and
licenses, patents, patent applications, technology or processes and
business plans of the other party, including, without limitation,
information designated as confidential in writing from one party to the
other (all of the foregoing hereinafter referred to as "Confidential
Information"), and shall not use such Confidential Information except
as permitted by this Agreement or disclose the same to anyone other
than those of its officers, directors or employees as are necessary in
connection with such party's activities as contemplated by this
Agreement. Each party shall use the same efforts such party would use
to protect its own information to ensure that
19
<PAGE>
its officers, directors and employees do not disclose or make any
unauthorized use of such Confidential Information. Each party shall
notify the other promptly upon discovery of any unauthorized use or
disclosure of the other's Confidential Information.
15.2 The obligation of confidentiality contained in this Article 15 shall
not apply to the extent that: (a) the Receiving Party is required to
disclose information by applicable law, regulation or order of a
governmental agency or a court of competent jurisdiction; (b) the
Receiving Party can demonstrate that the disclosed information was at
the time of disclosure already in the public domain other than as a
result of actions or failure to act of the Receiving Party, its
officers, directors or employees, in violation hereof; (c) the
disclosed information was rightfully known by the Receiving Party (as
shown by its written records) prior to the date of disclosure to the
Receiving Party in connection with this Agreement; or (d) the disclosed
information was received by the Receiving Party on an unrestricted
basis from a source which is not under a duty of confidentiality to the
other party.
15.3 In the event that the Receiving Party shall be required to make
disclosure pursuant to the provisions of Section 15.2(a) as a result of
the issuance of a court order or other government process, the
Receiving Party shall promptly, but in no event more than forty-eight
(48) hours after learning of
20
<PAGE>
such court order or other government process, notify, by personal
delivery or facsimile, all pursuant to Article 16 hereof, the
Disclosing Party and, at the Disclosing Party's expense, the Receiving
Party shall: a) take all reasonably necessary steps requested by the
Disclosing Party to defend against the enforcement of such court order
or other government process, and b) permit the Disclosing Party to
intervene and participate with counsel of its choice in any proceeding
relating to the enforcement thereof.
15.4 The parties acknowledge that their failure to comply with the
provisions of Section 15.1 of this Article 16 may cause irreparable
harm and damage to the other party for which no adequate remedy may be
available at law. Accordingly, the parties agree that upon a breach by
a party of such provisions, the non-breaching party may, at its option,
enforce the obligations of the breaching party under those provisions
by seeking equitable remedies in a court of competent jurisdiction.
15.5 The terms of this Article 15 shall survive the expiration or
termination of the Agreement for a period of five years.
16. Notices
16.1 Any notice required or permitted to be made or given hereunder shall be
in writing and shall be made or given to the other party by personal
in-hand delivery; by telecopier communication; by first-class air mail,
postage prepaid; or by air courier to the mailing address
21
<PAGE>
or telecopier numbers set forth below:
Eli Lilly Deutschland GmbH
Teichweg 3
D-35396 Giessen, Germany
Attention: Site Director
Telecopier No. 49 641 9533111
Immunomedics, Inc.
300 American Road
Morris Plains, NJ 07950
Attention: Chief Executive Officer
Telecopier No. (973) 605-8311
or to such other address or telecopier numbers as either party shall
designate by notice, similarly given, to the other party. Notices shall
be deemed to have been sufficiently made or given: (i) if by personal
in-hand delivery, when performed; (ii) if by telecopier with confirmed
transmission, when performed (unless after usual business hours or on a
non-business day, in which event, the next business day); (iii) if
mailed, ten (10) days after being deposited in the mail, postage
prepaid; or (iv) if by air courier, three (3) days after delivery to
the air courier company.
17. Entire Understanding
This Agreement embodies the entire understanding of the parties in
respect of distribution of the Product and the matters contained or
referred to in it, and it overrides or supersedes all previous
agreements and understandings between the parties made at any time,
whether orally or in writing.
18. Unenforceable Provision
If any provision of this Agreement is or becomes illegal, void, invalid
or unenforceable in whole or in part, this
22
<PAGE>
Agreement shall continue to be valid as to its other provisions and the
remainder of the affected provision.
AS WITNESS the parties have caused this Agreement to be entered into by their
duly authorized representatives on behalf of the parties on the date first
before written.
Signed: /s/ David M. Goldenberg Signed: /s/ David A. Broecker
Date: November 24, 1997 Date: November __, 1997
Name: David M. Goldenberg, M.D. Name: David A. Broecker
Position: Chairman and Chief Position: Site Director
Chief Executive For and on behalf of:
Officer ELI LILLY DEUTSCHLAND GmbH
For and on behalf of:
IMMUNOMEDICS, INC.
23
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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