PROSPECTUS Filed Pursuant to Rule 424(b)(3)
Registration No. 333-90665
IMMUNOMEDICS, INC.
15,195,446 Shares of Common Stock
THE ISSUER
Immunomedics. Inc.
300 American Road
Morris Plains, New Jersey 07950
(973) 605-8200
THE SELLING STOCKHOLDERS
The selling stockholders are offering to sell shares of common stock that they
may acquire upon conversion of shares of our Series F Convertible Preferred
Stock that we issued to them on December 9, 1998 pursuant to a Securities
Purchase Agreement. This prospectus covers an additional 9,878,463 shares of
common stock in addition to the 5,316,983 shares of common stock included in a
prior prospectus. Additional information concerning our agreement with the
selling stockholders is set forth under the caption "Immunomedics - December
1998 Financing."
TRADING SYMBOL
Nasdaq National Market - "IMMU"
THE OFFERING
The selling stockholders may sell shares of our common stock from time to time
on the Nasdaq National Market at the prevailing market price or in private,
negotiated transactions. The shares will be sold at prices determined by the
selling stockholders. We will not receive any part of the proceeds from the
sale. We are paying the expenses in connection with the registration of the
shares with the SEC. The selling stockholders may be deemed to be "underwriters"
within the meaning of the Securities Act in connection with the sale of shares
that they may receive upon conversion of the Series F Stock.
A purchase of shares involves a high degree of risk. You should purchase shares
only if you can afford a complete loss of your investment. See "Risk Factors"
beginning on page 4.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
December 6, 1999
1
<PAGE>
Table of Contents
Risk Factors...................................................................4
We Have a History of Operating Losses and May Never Become
Profitable..........................................................4
We May Not Be Able to Successfully Develop a Market for Our
Approved Products...................................................4
We May Not Receive Approval to Sell LeukoScan in the United
States in a Timely Manner...........................................4
We May Not Be Able to Bring to Market the Products We Are
Currently Developing or Sustain Their Sales After Approval..........4
If We Do Not Obtain Additional Capital, We May Be Required to
Curtail Our Operations..............................................5
Our Limited Marketing and Sales Experience and Capability
Could Impact Our Ability to Successfully Sell Our Current
Products............................................................5
We May Have to Rely on Partners to Help Us Market and Sell
Our Products Under Development......................................5
We Could Be Temporarily Unable to Sell Our Products If Our
Agreements with our Distributors Were Terminated....................5
We Could Be Temporarily Unable to Sell Our Products If Our
Agreement with our End Stage Manufacturer Was Terminated............5
Our Internal Manufacturing Capability May Limit What We Can Sell......5
We May Be Unable to Continue to Use Mouse Fluids for Future
Products Which Could Require Us to Make Expensive and Time
Consuming Changes to Our Products in Development....................6
Our Product Development Is Dependent Upon Our Continued
Relationship with The Center for Molecular Medicine and
Immunology..........................................................6
Certain Potential Conflicts of Interest Exist with The Center
for Molecular Medicine and Immunology Which Could Affect Our
Operations..........................................................6
We May Not Be Able to Obtain Government Regulatory Approval in
a Timely Manner to Market and Sell Our Products or Approval
May Be Withdrawn....................................................6
We Must Maintain Our Manufacturing Facilities in Accordance With
Government Regulatory Requirements..................................7
Changes to Health Care Reimbursement Could Adversely Affect Our
Operations..........................................................7
The Loss of Key Employees Could Adversely Affect our Operations.......7
We Face Substantial Competition in the Biotechnology Field and
May Not Be Able to Successfully Compete.............................7
Our Products May Be Rendered Obsolete By Rapid Technological Change...7
If We Are Unable to Protect Our Intellectual Property Rights,
We Could Lose Our Competitive Advantage.............................8
Our Products May Infringe Third Party Intellectual Property Rights....8
Our Operations Could Suffer If We Are Unsuccessful in Our Pending
Infringement Claims Concerning Our CEA Antibodies...................8
Product Liability Claims in Excess of the Amount of Our Insurance
Would Adversely Affect Our Financial Condition......................8
Our Principal Stockholder Can Influence Most Matters Requiring
Approval By Our Stockholders........................................8
If We Are Required to Redeem the Series F Stock or Make Penalty
Payments, Our Financial Condition Would Be Adversely Affected.......8
Stockholders May Experience Substantial Dilution From the
Conversion of the Series F Stock....................................9
Short Selling of Our Common Stock Could Further Depress the
Market Price for Our Common Stock...................................9
Resales of Shares Held By Our Directors and Executive Officers
May Lower the Market Price of Our Common Stock......................9
Our Stock Price Has Been Volatile.....................................9
Potential Loss of Our Nasdaq Listing Could Make it More Difficult
to Sell our Shares and Affect Our Liquidity........................10
Stockholders Could Be Adversely Affected By Our Anti-Takeover
Provisions.........................................................10
Our Operations Could Be Affected By Year 2000 Issues.................10
No Expectation that We Will Pay Dividends............................10
Special Note Regarding Forward-Looking Statements....................10
Where You Can Find More Information...........................................11
Immunomedics..................................................................12
Description of Our Business..........................................12
December 1998 Financing..............................................13
2
<PAGE>
Use of Proceeds...............................................................17
Selling Stockholders..........................................................17
Plan of Distribution..........................................................19
Manner of Sales; Broker-Dealer Compensation..........................19
Filing of a Post-Effective Amendment In Certain Instances............20
Certain Persons May Be Deemed to Be Underwriters.....................20
Regulation M.........................................................20
Legal Matters.................................................................21
Experts .....................................................................21
You should rely on the information incorporated by reference or provided in this
prospectus or any supplement. We have not authorized anyone to provide you with
different information. You should not assume that the information in this
prospectus or any supplement is accurate as of any date other than the date on
the front of such document. We are not making an offer of our shares in any
state where the offer is not permitted.
3
<PAGE>
Risk Factors
Investing in our common stock involves a high degree of risk. As a result,
you should be able to sustain a complete loss of your investment. In addition to
the other information in this prospectus, you should carefully consider the
following factors before purchasing any of our common stock.
We Have a History of Operating Losses and May Never Become Profitable
We have had significant operating losses since our formation in 1982 and
have not earned a profit since our inception. These operating losses and failure
to be profitable have been due mainly to the significant amount of money that we
have had to spend on research and development. As of September 30, 1999, we had
an accumulated deficit of approximately $101,600,000. We expect to continue to
experience operating losses until such time, if at all, that we are able to
generate sufficient revenues from sales of CEA-Scan(r), LeukoScan(r) and/or our
other potential products.
We May Not Be Able to Successfully Develop a Market for Our Approved Products
CEA-Scan and LeukoScan are the only products which we are licensed to
market and sell. To date, we have received only limited revenues from the sale
of these products. We cannot assure you that these products or any of our
proposed products will achieve market acceptance or generate significant sales.
We May Not Receive Approval to Sell LeukoScan in the United States in a Timely
Manner
We have not yet received approval from the FDA to market and sell LeukoScan
in the United States and cannot assure you as to when, if ever, that we will
obtain approval. In addition, the FDA could impose conditions on its approval,
which could significantly affect the commercial viability of the product or
could require us to undertake significant additional studies or otherwise expend
additional significant funds. If we do not receive approval to market and sell
LeukoScan in the United States in the near future or if the FDA imposes
significant conditions or restrictions, our business and operations could be
significantly and adversely affected.
We May Not Be Able to Bring to Market the Products We Are Currently Developing
or Sustain Their Sales After Approval
Before any of our products that we are currently developing can be marketed
and sold, we must undertake substantial research and development. All new
products face a high degree of uncertainty, including the following:
* We may not receive regulatory approval to perform human clinical trials for
the products we currently have planned or we may be unable to successfully
complete our ongoing clinical trials.
* The results from preclinical studies and clinical trials may not be
indicative of results that will be obtained in later-stage testing.
* We may be unable to timely recruit a sufficient number of patients for our
clinical trials. Delays in planned patient enrollment may result in
increased costs and delays.
* We may be unable to obtain approval from the FDA and comparable foreign
authorities because we are unable to demonstrate that the product is safe
and effective for the intended use, or obtaining regulatory approval may
take significantly more time and cost significantly more money than we
currently anticipate.
* We may discover that the product has undesirable or unintended side effects
or other characteristics that make it impossible or impracticable for us to
continue development or which may limit the product's commercial use.
* We do not expect that any new product which is currently in research and
development will be commercially available for at least several years.
* We may be unable to produce the product in commercial quantities at
reasonable cost.
4
<PAGE>
* We may be unable to successfully market the product or to find an
appropriate corporate partner, if necessary, to assist us in the marketing
of the product.
* The product may not gain satisfactory market acceptance.
* The product may be superceded by another product commercialized for the
same indication or may infringe patents issued to others, which would
prevent us from marketing and selling the product.
* After approval, the product may be recalled or withdrawn at any time as a
result of regulatory issues, including those concerning safety and
efficacy.
If we are unable to continue to develop products that we can successfully
market, our business, financial condition and results of operations will be
significantly and adversely affected.
If We Do Not Obtain Additional Capital, We May Be Required to Curtail Our
Operations
Without a significant increase in product revenues or other infusion of
capital during our current fiscal year which ends June 30, 2000, we will be
required to significantly reduce our operating expenses, including the amount of
resources devoted to marketing and sales, product development and clinical
trials, which could have a significant and adverse effect on us. We cannot
assure you that any additional financing will be available to us at all or on
terms we find acceptable or that the terms of any financing will not cause
substantial dilution to our existing stockholders.
Our Limited Marketing and Sales Experience and Capability Could Impact Our
Ability to Successfully Sell Our Current Products
We are relying, in substantial part, on our own limited sales and marketing
organization to market CEA- Scan and LeukoScan. We cannot assure you that we can
successfully maintain and continue to build our sales force. If we are unable to
continue to build and maintain our sales force, our financial condition and
operating results may be significantly and adversely affected.
We May Have to Rely on Partners to Help Us Market and Sell Our Products Under
Development
The marketing and sale of our proposed products may be dependent upon our
entering into arrangements with corporate partners. We cannot assure you that we
will be successful in forming these relationships or that these relationships,
even if formed, will be successful.
We Could Be Temporarily Unable to Sell Our Products If Our Agreements with our
Distributors Were Terminated
We currently do 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 our products. As a result, we have
entered into arrangements with third parties to perform this function for the
foreseeable future. If these agreements are terminated, we will be required to
enter into arrangements with other government approved third parties in order to
be able to distribute our products. We will be unable to continue to distribute
our products until an acceptable alternative is identified. If we were even only
temporarily unable to distribute our products, our business could be
significantly and adversely effected.
We Could Be Temporarily Unable to Sell Our Products If Our Agreement with our
End Stage Manufacturer Was Terminated
We rely on a single third party to perform certain end-stage portions of
the manufacturing process for CEA-Scan and LeukoScan which we are unable or do
not have the resources to perform. If this third party were to become
unavailable, we would be unable to complete the manufacturing process until we
entered into an agreement with another qualified entity. We cannot assure that
we will be able to negotiate an agreement with another entity on terms we
consider acceptable, if at all. Even if we were able to do so, any substantial
delay in our ability to manufacture our products could significantly and
adversely affect our operations.
Our Internal Manufacturing Capability May Limit What We Can Sell
5
<PAGE>
If demand for our approved product increases significantly, we cannot
assure you that we will continue to have the capacity to manufacture commercial
quantities successfully. In addition, if any of our other products are approved
for marketing and sale, we cannot assure you that we will continue to have the
capacity and expertise to manufacture commercial quantities of multiple products
successfully or with acceptable profit margins. If we were even only temporarily
unable to manufacture sufficient quantities of our products to meet demand, our
business could be significantly and adversely effected.
We May Be Unable to Continue to Use Mouse Fluids for Future Products Which Could
Require Us to Make Expensive and Time Consuming Changes to Our Products in
Development
CEA-Scan and certain of our other imaging agents are derived from ascites
fluid produced in mice. Regulatory authorities, particularly in Europe, have
expressed concerns about the use of mice fluid for the production of monoclonal
antibodies. We cannot assure you that regulatory authorities will agree that our
quality control procedures will be adequate for future products. While we are
continuing our development efforts to produce certain of our monoclonal
antibodies using cell culture methods, this process constitutes a substantial
production change, which will require additional manufacturing equipment and new
regulatory approval. We cannot assure you that we will have the resources to
acquire the additional manufacturing equipment and resources or that we will
receive the required regulatory approval on a timely basis, if at all. We also
have contracted with a third party for the development and production of certain
humanized antibodies, but we cannot assure that these efforts will be
successful.
Our Product Development Is Dependent Upon Our Continued Relationship with The
Center for Molecular Medicine and Immunology
The Center for Molecular Medicine and Immunology, a not-for-profit cancer
research center, performs pilot and pre-clinical trials in product areas of
importance to us. CMMI also conducts basic research and patient evaluations in a
number of areas of potential interest to us. If CMMI were no longer to provide
these services, we would have to make alternative arrangements with third
parties which could significantly delay and increase expenses associated with
pre-clinical testing and initial clinical trials.
Certain Potential Conflicts of Interest Exist with The Center for Molecular
Medicine and Immunology Which Could Affect Our Operations
Dr. David M. Goldenberg, our Chairman and Chief Executive Officer, is the
founder, President and a member of the Board of Trustees of CMMI. Dr. Goldenberg
devotes more of his time working for CMMI than for us. In addition, other key
personnel currently have responsibilities both to CMMI and us. As a result, the
potential for conflict of interest exists and disputes could arise over the
allocation of research projects and ownership of intellectual property rights.
We May Not Be Able to Obtain Government Regulatory Approval in a Timely Manner
to Market and Sell Our Products or Approval May Be Withdrawn
Regulation by governmental authorities in the United States and foreign
countries is a significant factor in the manufacture and marketing of our
presently marketed and proposed products as well as our research and development
activities. All of our proposed products will require regulatory approval by
governmental agencies prior to commercialization and our products must undergo
rigorous preclinical and clinical testing and other premarket approval
procedures by the FDA and comparable foreign authorities. In addition, since
certain of our potential products involve the application of new technologies,
regulatory approvals may take longer than for products produced using more
conventional methods. Once we begin clinical trials for a new diagnostic or
therapeutic product, it may take five to ten years or more to receive the
required regulatory approval to commercialize that product and begin to market
it to the public. Various federal and, in some cases, state statutes and
regulations also govern or influence the manufacturing, safety, labeling,
storage, record keeping and marketing of these products. The lengthy process of
seeking these approvals, and the subsequent compliance with applicable statutes
and regulations, will require us to expend substantial resources. If we fail to
obtain or are otherwise substantially delayed in obtaining, regulatory
approvals, our business and operations could be significantly and adversely
affected.
In responding to a new drug application, or a biologic license application,
government regulators may grant marketing approvals, request additional
information or further research, or deny the application if it determines that
the application does not satisfy its regulatory approval criteria. Approvals may
not be granted on
6
<PAGE>
a timely basis, if at all, or if granted may not cover all the clinical
indications for which we are seeking approval or may contain significant
limitations in the form of warnings, precautions or contraindications with
respect to conditions of use. Even after approval, we may be required to recall
or withdraw a product as a result of subsequently discovered safety or efficacy
concerns.
Our Business Involves the Use of Hazardous Materials
In addition to laws and regulations enforced by the FDA, we are also
subject to regulation under various other foreign, federal, state or local laws
and regulations. Our research and development involve the controlled use of
hazardous materials, chemicals, viruses and various radioactive compounds. The
risk of accidental contamination or injury from these materials cannot be
completely eliminated. If an accident occurs, we could be held liable for any
damages that result and any liability could exceed our resources.
We Must Maintain Our Manufacturing Facilities in Accordance With Government
Regulatory Requirements
Our facilities are subject to inspection by the FDA and comparable foreign
authorities. A separate license is sometimes required for commercial manufacture
of any product. Failure to maintain these licenses or to meet the regulatory
inspection criteria would result in disruption to our manufacturing processes
and could have a significant and adverse effect on our business and operations.
Changes to Health Care Reimbursement Could Adversely Affect Our Operations
Our ability to successfully commercialize our products will depend in part
on the extent to which reimbursement for the cost of our products and related
treatment will be available from government health administration authorities,
private health insurers and other organizations. These 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 this type of system could further limit reimbursement
for medical products, and we cannot assure you that adequate third-party
coverage will be available to enable us to maintain price levels sufficient to
realize an appropriate return on our investment in product development. In
addition, we also cannot assure you that the U.S. government or foreign
governments will not implement a system of price controls. Any system might
significantly and adversely affect our ability to market our products
profitably.
The Loss of Key Employees Could Adversely Affect our Operations
As a small biotechnology company, we are heavily dependent upon the talents
of Dr. Goldenberg and certain key scientific personnel. If Dr. Goldenberg or any
of our other key personnel leave our employ, our operations could be
significantly and adversely affected. In addition, from time to time we have a
need to expand our management and scientific personnel. Competition for
qualified personnel in the biotechnology and pharmaceutical industries is
intense and we cannot assure you that we will be successful in our recruitment
efforts. If we are unable to retain or, when needed, attract additional
qualified personnel, our operations also could be significantly and adversely
affected. We Face Substantial Competition in the Biotechnology Field and May Not
Be Able to Successfully Compete
The biotechnology industry is highly competitive, particularly in the area
of cancer diagnostic and therapeutic products. We are likely to encounter
significant competition with respect to our existing products as well as our
products currently under development. A number of companies, including IDEC
Pharmaceuticals, Genentech, SmithKline Beecham, Nycomed Amersham, and Coulter
Pharmaceutical, are engaged in the biotechnology field, and in particular the
development of cancer diagnostic and therapeutic products. Many of these
companies have significantly greater financial, technical and marketing
resources than us. In addition, many of these companies may have more
established positions in the pharmaceutical industry and may be better equipped
than us to develop, refine and market their products.
We also expect to face increasing competition from universities and other
non-profit research organizations. These institutions carry out a significant
amount of research and development in the field of antibody-based technology.
These institutions are becoming increasingly more aware of the commercial value
of their findings and more active in seeking patent and other proprietary
rights, as well as licensing revenues.
7
<PAGE>
Our Products May Be Rendered Obsolete By Rapid Technological Change
We are pursuing an area of product development in which there is the
potential for extensive technological innovations in relatively short periods of
time. We cannot assure you that our competitors will not succeed in developing
products that are safer or more effective than our products. Rapid technological
change or developments by others may result in our current products as well as
those in development becoming noncompetitive or obsolete.
If We Are Unable to Protect Our Intellectual Property Rights, We Could Lose Our
Competitive Advantage
Our commercial success is highly dependent upon patents and other
proprietary rights that we own or license. We cannot assure you that our key
patents will not be invalidated or will provide us protection that has
commercial significance. Litigation may be necessary to protect our patent
positions, which could be costly and time consuming. If any of our key patents
that we own or license are invalidated, our business may be significantly and
adversely affected. In addition, other companies may independently develop
similar trade secrets or know-how or obtain access to our trade secrets,
know-how or proprietary technology, which could significantly and adversely
affect our business.
Our Products May Infringe Third Party Intellectual Property Rights
Other companies may have filed applications for, or have been issued,
patents and obtained other proprietary rights to technology which may be
potentially useful to us. Since we do not have the resources to maintain a staff
whose primary function is to investigate the level of protection afforded to
third parties on devices and components which we use in our products, it is
possible that a third party could successfully claim that our products infringe
on their intellectual property rights. If this were to occur, we may be subject
to substantial damages, and we may not be able to obtain appropriate licenses at
a cost we could afford and we may not have the ability to timely redesign our
products. If we are required to pay damages or are unable to obtain these
rights, our business could be significantly and adversely affected. Even if we
are successful in defeating any alleged infringement claims, litigation could
result in a substantial diversion of managerial time and resources, which could
be better and more fruitfully utilized on other activities.
Our Operations Could Suffer If We Are Unsuccessful in Our Pending Infringement
Claims Concerning Our CEA Antibodies
We are involved in certain litigation with F. Hoffmann-LaRoche and its
affiliates concerning the validity our European patents covering the antibody we
use in our CEA-Scan cancer imaging product and our CEA- Cide(tm) cancer therapy
product, as well as the use of highly specific anti-CEA antibodies for a number
of other uses. We have claimed that they have infringed our patent and they have
counter-claimed seeking to nullify the patents that were issued. If we receive
an unfavorable outcome in any of these matters, our business could be
significantly and adversely affected.
Product Liability Claims in Excess of the Amount of Our Insurance Would
Adversely Affect Our Financial Condition
The clinical testing, marketing and manufacturing of our products
necessarily involve the risk of product liability. While we currently have
product liability insurance, we cannot assure that we will be able to obtain
insurance in the future at an acceptable cost, if at all. If we cannot maintain
our existing or comparable liability insurance, our ability to test clinically
and market our products may be significantly impaired. Moreover, the amount and
scope of our insurance coverage or indemnification arrangements with any
distributor or other third party upon which we rely may be inadequate to protect
us in the event of a successful product liability claim. Any claim in excess of
the amount any insurance we then had could significantly and adversely affect
our financial condition.
Our Principal Stockholder Can Influence Most Matters Requiring Approval By Our
Stockholders
As of December 6, 1999, Dr. Goldenberg, our Chairman and Chief Executive
Officer, controlled the right to vote over approximately 30% of our common
stock. As a result of this voting power, Dr. Goldenberg may have the ability to
determine the election of all of our directors, direct our policies and control
the outcome of substantially all matters which may be put to a vote of our
stockholders.
8
<PAGE>
If We Are Required to Redeem the Series F Stock or Make Penalty Payments, Our
Financial Condition Would Be Adversely Affected
As discussed below in the section "Immunomedics - December 1998 Financing"
upon the occurrence of certain circumstances, we may be required to redeem the
Series F Stock or pay significant penalties. These penalties could be as much as
15% per year of the stated value of the Series F Stock. We also may be required
to reduce the conversion price of the Series F Stock. If we are required to
redeem the Series F Stock or make the penalty payments, we may not have the
financial ability to make these payments. Even if we have the financial ability,
these payments could significantly and adversely affect our financial condition
and deplete our cash resources.
Stockholders May Experience Substantial Dilution From the Conversion of the
Series F Stock
Because the conversion price of the Series F Stock is not fixed, we may be
required to issue to the holders of the Series F Stock a significant number of
shares of our common stock. The conversion price generally will be the lower of
$2.50 and the average closing bid price of our common stock over the lowest 15
days during the 45-day period immediately prior to the applicable conversion
date. As of December 6, 1999, the conversion price would have been $1.18 per
share and we would have been required to issue approximately 6,335,014 shares of
our common stock had the holders converted all of their remaining outstanding
Series F Stock on this date. If our stock price decreases, we would be required
to issue an increased number of shares and the greater the decline in the market
price, the greater the number of shares we would be required to issue upon
conversion of our Series F Stock.
Given that the conversion price is based on the average of the lowest
closing price during a specified period, the market price for our common stock
may be significantly greater than the conversion price for the Series F Stock in
effect at the time of conversion. In this case, the conversion of a significant
number of Series F Stock into common stock during that period would
significantly dilute the percentage ownership interest of our existing common
stockholders.
Short Selling of Our Common Stock Could Further Depress the Market Price for Our
Common Stock
Subject to the limitations described below in "Immunomedics - December 1998
Financing," the holders of the Series F Stock are permitted to sell short our
common stock; that is sell shares of common stock that they do not own. The
selling stockholders could then convert their Series F Stock and use the shares
of common stock received upon conversion to cover their short position. The
perception that the selling stockholders may sell short our common stock may
cause others to sell their shares as well. An increase in the sales volume of
our common stock, whether short sales or not and whether the sales are by the
selling stockholders or others, could potentially cause the market price of our
common stock to decline further. Since the Series F Stock became convertible in
June 1999, the monthly reported short position in our common stock had increased
250% from 575,000 at June 15, 1999 to its high of 2,103,000 at September 15,
1999 and as of November 15, 1999, the short position was 1,291,399.
Resales of Shares Held By Our Directors and Executive Officers May Lower the
Market Price of Our Common Stock
As of December 6, 1999, we had a total of 42,517,107 shares of common stock
outstanding, 7,130,272 of which were held by our directors and executive
officers. These shares may only be resold in limited quantities and only within
the limitations imposed by Rule 144 under the Securities Act. The mere prospect
that these shares may be publicly resold could lower the market price for our
common stock.
Our Stock Price Has Been Volatile
We believe that a variety of factors have caused the market price of our
common stock to fluctuate substantially, and that it will continue to fluctuate
in the future. These factors include:
* actual or anticipated fluctuations in our operating results;
* the status of our products in development;
* new products or technical innovations by us or by our existing or potential
competitors;
9
<PAGE>
* the formation or termination of our corporate alliances and distribution
arrangements;
* prolonged periods of regulatory review of new products or new uses for
existing products;
* determinations regarding our patent applications and those of others;
* trading strategies occurring in the market place with respect to our common
stock; and
* general market conditions and other factors unrelated to us or outside our
control.
Potential Loss of Our Nasdaq Listing Could Make it More Difficult to Sell our
Shares and Affect Our Liquidity
If the bid price of our common stock were to fall below $1.00 per share, if
we were to have less than $4,000,000 in net tangible assets (total assets less
total liabilities and goodwill), or if the value of our common stock held by our
stockholders (other than our directors and executive officers) were to be less
than $5,000,000, our common stock could be delisted from The Nasdaq Stock
Market. If our common stock were delisted from Nasdaq, trading if any, would
thereafter be conducted in the over-the-counter market. This would make it more
difficult for an investor to dispose of, or to obtain accurate quotations for,
our common stock. Additionally, it may become more difficult for us to raise
funds through the sale of our securities. Finally, as discussed elsewhere in
this prospectus, a delisting of our common stock would also give the holders of
the Series F Stock certain redemption rights.
Stockholders Could Be Adversely Affected By Our Anti-Takeover Provisions
Our board of directors has the authority, without any further vote by our
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 the dividend rate,
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 our company, or could impose various procedural and other
requirements that could make it more difficult for holders of our 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 our 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.
Our Operations Could Be Affected By Year 2000 Issues
We have completed a review of our business systems, including our computer
systems and manufacturing equipment, and have sent written inquiries to our
customers, distributors and vendors as to their progress in identifying and
addressing problems that their systems may face in correctly interpreting and
processing date information as the year 2000 approaches and is reached. We could
encounter problems with supplier and/or revenue sources which could affect us.
We cannot accurately predict the occurrence or outcome of any these problems,
nor can we estimate the dollar amount of these problems. In addition, we cannot
assure you that a failure by a third party to ensure year 2000 compliance will
not significantly and adversely effect us.
No Expectation that We Will Pay Dividends
We have never paid any dividends on our common stock. For the foreseeable
future, we expect to retain earnings, if any, to finance the expansion and
development of our business. Any future payment of dividends will be within the
discretion of our Board of Directors and will depend upon a variety of factors,
including our earnings, capital requirements, and operating and financial
condition. In addition, we are required to obtain the approval of the holders of
the Series F Stock prior to the payment of any dividends on our common stock.
Special Note Regarding Forward-Looking Statements
We have made statements in this prospectus, and in the documents we
incorporate by reference, that are "forward-looking statements" within the
meaning of the Securities Act and the Securities Exchange Act.
10
<PAGE>
Sometimes these statements contain words like "may," "believe," "expect,"
"continue," "intend," "anticipate" or other similar words. These statements
could involve known and unknown risks, uncertainties and other factors that
might significantly alter the actual results suggested by the statements. In
other words, our performance might be quite different from what the
forward-looking statements imply. The following factors, as well as those
discussed above in this "Risk Factors" section and in the documents which we
incorporate by reference, could cause our performance to differ from the implied
results:
* inherent uncertainties accompanying the marketing of CEA-Scan
and LeukoScan.
* inherent uncertainties involving new product development and
marketing.
* inability to obtain capital for continued product development
and commercialization.
* actions of regulatory authorities concerning product approval.
* actions of government and private organizations concerning
reimbursement of medical expenses.
* impact of competitive products and pricing.
* results of clinical trials.
* loss of key employees.
* changes in general economic and business conditions.
* changes in industry trends.
We have no obligation to release publicly the result of any revisions to
any of our "forward-looking statements" to reflect events or circumstances that
occur after the date of this prospectus or to reflect the occurrence of other
unanticipated events.
Where You Can Find More Information
We publicly file annual, quarterly and current reports, proxy statements
and other documents with the SEC. You may read and copy any of these documents
at the SEC's public reference rooms in Washington, D.C., New York City and
Chicago. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms. The SEC maintains a Internet website at
http://www.sec.gov where our publicly filed documents may be obtained.
This prospectus is part of a registration statement filed with the SEC. Our
registration statement contains more information than this prospectus regarding
us and our common stock and includes supplemental exhibits and schedules. You
can obtain a copy of the registration statement from the SEC at the address
listed above or from its Internet website.
The SEC allows us to "incorporate by reference" into this prospectus the
information we file with it. This means that we are deemed to be disclosing such
information to you by referring you to those documents. This information is
important and should be reviewed. The information incorporated by reference is
considered to be part of this prospectus, and later information that we file
with the SEC will automatically update and supercede the information in this
prospectus.
We incorporate by reference into this prospectus the documents listed below
and any future filings we make with the SEC under Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act:
* Annual Report on Form 10-K for the fiscal year ended June 30,
1999;
* Proxy Statement, dated October 18, 1999, with respect to our
1999 annual meeting of stockholders;
11
<PAGE>
- Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 1999;
- Current Report on Form 8-K, dated November 24, 1999; and
* Description of the common stock contained in Item 1 of our
Registration Statement on Form 8-A, dated May 7, 1984.
You may request a copy of these filings, at no cost, by contacting us at
the following address:
Immunomedics, Inc.
300 American Road
Morris Plains, New Jersey 07950
(973) 605-8200
Attention: Investor Relations
Immunomedics
Description of Our Business
We are a biopharmaceutical company, which develops, manufactures and
markets products for the detection and treatment of cancers and other diseases.
These products, which are based on our monoclonal antibody technology, are
designed to deliver radioisotopes, chemotherapeutic agents, toxins, dyes or
other substances to a specific disease site or organ system.
We have received approval from the respective regulatory agencies in the
United States, the 15 member countries of the European Union, Canada and certain
other countries to market and sell CEA-Scan (arcitumomab), our imaging product
for the detection of recurrent and/or metastatic colorectal cancer.
We also have received approval to market and sell LeukoScan (sulesomab),
our imaging product for detection and diagnosis of osteomyelitis (bone
infection) in long bones and in diabetic foot ulcer patients, in the 15 member
countries of the European Union. We have filed an application with the FDA in
the U.S. and the comparable regulatory agency in Canada for approval to market
LeukoScan for imaging of infection in osteomyelitis as well as for the imaging
of infection in acute, atypical appendicitis. We have been advised by FDA that
there are still deficiencies with our application relating to the adequacy of
our data necessary to support final approval for these indications. Despite our
confidence that we were making progress with FDA and had adhered to all
agreements and guidelines, it is now clear to us that we need to take whatever
steps are available to us to gain a more receptive audience in order to gain
marketing approval for this product. We can not assure you that we will receive
FDA approval for this product in a timely manner, or at all.
Marketing, Sales and Distribution
CEA-Scan is marketed and sold in the U.S. directly by our limited internal
sales force, who are focused on new customers in major medical centers. Our
skilled nuclear medicine technicians work with this sales force and provide
technical support directly to our customers. We have entered into a distribution
arrangement in the U.S. with Integrated Commercialization Solutions, a division
of Bergen Brunswig Corporation, to provide product support services including
customer service, order management, distribution, invoicing and collection. We
also have agreement with Syncor International, the world's leading provider of
radiopharmacy services, under which Syncor makes CEA-Scan available to its
hospital and clinic accounts throughout the U.S., supported by our sales and
technical support specialists.
Our European operations, headquartered in Hillegom, The Netherlands,
include European management, sales and marketing, customer service and
invoicing, collection and other administrative functions. We also have
established sales representation in most major European markets. We service
other markets through the appointment of local distributors who provide sales
and marketing support as well as local product distribution. We have an
agreement with Eli Lilly Deutschland GmbH to package and distribute our products
throughout the 15 member countries of the European Union and other countries.
Imaging Products
12
<PAGE>
Our imaging products involve injecting a patient with a radioisotope
attached to an antibody fragment. An antibody is a protein that can find and
attach itself to a specific substance called an antigen. These antigens are
present on tumor cells, white blood cells that accumulate at the sites of
infections, and other disease entities. A radioisotope attached to a
disease-targeting antibody is delivered to a disease site for imaging. A
standard nuclear medicine imaging camera is then used to detect and display
radioisotope concentrations at various sites of disease.
The antibody fragment in CEA-Scan is directed against carcinoembryonic
antigen (CEA), which is abundant at the site of virtually all cancers of the
colon or rectum, whether they are primary tumors or which have spread. CEA also
is associated with many other cancers. We are conducting phase IV clinical
trials to evaluate the product following repeated administration. We also have
been performing clinical trials using CEA- Scan for imaging lung cancer and
breast cancer. We are discussing the results of these clinical trials with
European regulatory authorities to determine whether these data will support the
submission of applications for marketing approval. In addition, we are
continuing our efforts in developing cancer detection applications with CEA-Scan
utilizing hand-held radiation-detecting probes for use in colorectal cancer
surgery.
LeukoScan is a monoclonal antibody fragment, which seeks out, and binds to
white blood cells (granulocytes) associated with a potentially wide range of
infectious and inflammatory diseases.
We are studying the following two other imaging products pursuant to
Investigational New Drug applications that we have filed or plan to file with
the FDA and we have ongoing clinical trials in Europe:
* LymphoScan(r), for non-Hodgkin's B-cell lymphomas.
* AFP-Scan(r), for liver cancer and germ-cell tumors of the ovaries and
testes.
Therapeutic Products
We are applying our expertise in antibody selection, modification and
chemistry to cancer therapeutics, using monoclonal antibodies labeled with
therapeutic radioisotopes or conjugated with drugs. We are engaged in developing
anti-cancer products, principally with a technique called radioimmunotherapy.
This technique may deliver radiolabeled therapeutic agents to tumor sites more
selectively than current radiation therapy technologies, while minimizing
debilitating side effects. In addition, we are evaluating in clinical trials the
effects of our non-radioactive lymphoma antibody in non-Hodgkin's lymphoma
patients.
Research Programs
In addition to concentrating on our products in clinical development, we
conduct ongoing research in many related areas. We conduct research in-house and
in collaboration with The Center for Molecular Medicine and Immunology also
known as the Garden State Cancer Center and other academic and research centers.
In March 1999, we entered into a joint venture with Beckman Coulter to develop
the next generation of cancer therapeutics using bi-specific antibodies. We
believe our ongoing research efforts will identify new and improved products and
techniques for diagnosing and treating various cancers and infectious diseases.
Our research efforts are focused in various areas related to our core
technology, including antibody engineering and the identification of other
antibody-directed approaches to cancer therapy. We have made significant
progress in humanizing certain mouse antibodies and have reengineered the
humanized antibodies with improved characteristics. We are continuing our work
on selective coupling of therapeutic site specific agents onto antibody
fragments which will offer the advantage of loading multiple therapeutic
compounds onto antibodies at a particular disease site. We also continue to
investigate pre-targeting whereby an antibody is administered first, followed by
a radionuclide or drug administration.
We also are continuing our research into the use of alternative
radioisotopes, such as Yttrium-90 in place of Iodine-131. Our research indicates
that Yttrium-90 is retained by lymphoma cells for longer periods after antibody
metabolism, and shows greater efficacy against larger tumors. We also have
developed a technology using a compound called "DOTA" to tightly bind Yttrium-90
to antibodies.
In addition, we are continuing our efforts to scale-up our proprietary
method for technetium-99m radiolabeling of peptides, using single-vial kits.
13
<PAGE>
December 1998 Financing
On December 9, 1998, we completed a private placement of 1,250 shares of
Series F Convertible Preferred Stock to the selling stockholders and received
gross proceeds of $12,500,000.
Each share of Series F Stock has an initial stated value of $10,000, which
increases at the rate of 4% per annum and as of December 6, 1999 equaled $10,397
per share. The Series F Stock became convertible on June 8, 1999. The number of
shares of common stock issuable upon conversion of each share of Series F Stock
will be determined by dividing the stated value of $10,000 plus an accretion of
4% per annum, by the conversion price then in effect. As of December 6, 1999,
531.5 shares of the Series F Stock had been converted into 4,683,017 shares of
common stock.
The conversion price is equal to:
* the Variable Price, if the Variable Price is less than the "Trigger Price"
of $2.50; except that prior to December 9, 1999, subject to acceleration in
certain instances, if the Variable Price is greater than $1.80 and less
than $2.50, the conversion price will equal $2.50; or
* $2.50, if the Variable Price is equal to or greater than the $2.50 and less
than or equal to $3.75; or
* $2.50 plus one-half of the amount, if any, by which the Variable Price
exceeds $3.75, if the Variable Price is greater than $3.75.
The $2.50 "Trigger Price" was set based on 125% of the "Initial Fixed
Price" of $2.00, which was the average closing bid price of our common stock
during the 20 consecutive trading days ended June 6, 1999. The "Variable Price"
is equal to the average of the 15 lowest closing bid prices for our common stock
during the 45 trading days immediately preceding a conversion date. As of
December 6, 1999, the Variable Price was $1.18 per share.
At any time during the 90-day period commencing on December 6, 1999, we
may, require the selling stockholders to purchase up to an additional $7,500,000
million (750 shares) of our Series F Stock. Our right to require the selling
stockholders to purchase this additional amount is subject to certain conditions
and limitations, including that the Variable Price has been at least equal to
$2.00 for a specified period of time. Given the recent price at which our common
stock has traded, it is unlikely that this condition will be satisfied. We have
granted the selling stockholders certain participation rights if we issue any
future floating rate convertible securities. The holders of the Series F Stock
generally do not have the right to vote for the election of directors or on
other matters, except to the extent their rights would be adversely affected.
Upon the occurrence of certain events, we may be required to redeem the
Series F Stock, pay certain penalties and/or adjust the conversion price. These
events include the following:
* If we consolidate, merge or otherwise combine with another entity and as a
result the stockholders of our company immediately prior to the transaction
do not retain sufficient voting power to elect a majority of the board of
directors of the new or combined entity, then the holders of the Series F
Stock may require us to redeem their shares at a price per share equal to
the greater of
(1) 125% of the stated value of $10,000 per share plus the accretion of 4%
per annum, and
(2) the value of our common stock that would be issuable upon conversion of
the Series F Stock.
However, if the consolidation, merger or other business combination
occurs as a result of a proxy solicitation which was not approved or
recommended by our Board of Directors, then, if the holders exercise their
redemption rights, we may, in lieu of redemption,
(y) readjust the Initial Fixed Price to the lower of (A) 80% of the lowest
Variable Price during the period beginning on the date the solicitation is
announced and ending on the date the solicitation is consummated, abandoned
or terminated or (B) the Initial Fixed Price then in effect, and
(z) pay a penalty of 1% per day of the stated value of $10,000 per share
plus the accretion of 4% per annum for a maximum of 10 days in any 365-day
period.
14
<PAGE>
* If at least a specified percentage of the holders of our common stock
accept a purchase, tender or exchange offer, then the holders of the Series
F Stock may require us to redeem their shares at a price per share equal to
the greater of
(1) 125% of the stated value of $10,000 per share plus the accretion of 4%
per annum, and
(2) the value of our common stock that would be issuable upon conversion of
the Series F Stock.
However, if the purchase, tender or exchange offer was not approved or
recommended by our Board of Directors; then, if the holders exercise their
redemption rights, we may, in lieu of redemption,
(y) readjust the Initial Fixed Price to the lower of (A) 80% of the lowest
Variable Price during the period beginning on the date the offer is
announced and ending on the date the offer is consummated, abandoned or
terminated or (B) the Initial Fixed Price then in effect, and
(z) pay a penalty of 1% per day of the stated value of $10,000 per share
plus the accretion of 4% per annum for a maximum of 10 days in any 365-day
period.
* If we complete a sale of all or substantially all of our assets, then the
holders of the Series F Stock may require us to redeem their shares at a
price per share equal to the greater of
(1) 125% of the stated value of $10,000 per share plus the accretion of 4%
per annum, and
(2) the value of our common stock that would be issuable upon conversion of
the Series F Stock.
* If the registration statement ceases to be available to the selling
stockholders for the resale of their shares in accordance with the terms of
the registration rights agreement for more than 10 consecutive days, then
the holders of the Series F Stock may require us to redeem their shares at
a price per share equal to the greater of
(1) 125% of the stated value of $10,000 per share plus the accretion of 4%
per annum, and
(2) the value of our common stock that would be issuable upon conversion of
the Series F Stock.
However, if the unavailability of the registration statement does not
result from our failure to use our best efforts to maintain the
effectiveness of the registration statement and we have not taken voluntary
action, or voluntarily failed to take action, which has caused the
registration statement to lapse or become unavailable, then, if the holders
exercise their redemption rights, we may, in lieu of redemption,
(y) pay a penalty of 1% per day of the stated value of $10,000 per share
plus the accretion of 4% per annum for a maximum of 15 days in any 365-day
period, and
(z) readjust the Initial Fixed Price to the lower of (A) 80% of the lowest
Variable Price during the period commencing on the day the registration
statement became unavailable and ending on the day the registration
statement is again available for use and (B) the Initial Fixed Price then
in effect
* If our common stock is delisted or suspended from the Nasdaq National
Market for a period of five or more consecutive days, then the holder of
the Series F Stock may require us to redeem their shares at a price per
share equal to the greater of
(1) 125% of the stated value of $10,000 per share plus the accretion of 4%
per annum, and
(2) the value of our common stock that would be issuable upon conversion of
the Series F Stock.
However, if we have used our best efforts to maintain the listing and
have not taken any voluntary action, or voluntarily failed to take action
which resulted in a delisting or suspension, then, if the holders exercise
their redemption rights, we may, in lieu of redemption,
(y) readjust the Initial Fixed Price to 68% of the lower of (A) the lowest
Variable Price during the period commencing on the date of delisting and
continuing for 45 trading days thereafter and (B) the Initial
15
<PAGE>
Fixed Price then in effect, or
(z) pay a penalty of 1% per day of the stated value of $10,000 per share
plus the accretion of 4% per annum for a maximum of 15 days in any 365-day
period.
In certain cases, if the events described above occur more than once in any
365-day period, there will be a further downward adjustment of the Initial Fixed
Price.
Pursuant to our agreement with the selling stockholders, in March 1999, we
held a special meeting of stockholders at which meeting our stockholders
approved the issuance of any shares upon conversion of the Series F Stock in
excess of 20% of the number of shares of common stock we had outstanding on
December 9, 1998 (i.e., 7,577,617) in accordance with the rules and regulations
of The Nasdaq Stock Market, Inc.
Each selling stockholder has agreed that if it engages in short sales
transactions or other hedging activities during the 45 trading days immediately
preceding a conversion date which involve, among other things, sales of shares
of our common stock, the selling stockholder will place its sale orders for
common stock in the course of these activities so as not to complete or effect
any sale on any trading day during the period at a price which is lower than the
lowest sale effected on that day by persons other than the selling stockholder
and its affiliates.
Because the market price of our common stock is subject to fluctuation, we
had agreed, pursuant to the terms of a registration rights agreement, to
register for resale by the selling stockholders at least 200% of the number of
shares of common stock that would be issuable if all the Series F Stock were
converted as of the date of filing of the original registration statement and,
thereafter, maintain the registration of at least 150% of the number of shares
of common stock that would be issuable if all the Series F Stock were then
converted. Accordingly, when we originally filed our registration statement in
December 1998, the prospectus covered 10,000,000 shares of common stock, which
was our good faith estimate of this obligation at that time. As the registration
statement became insufficient to permit the resale by the selling stockholders
of all the common shares issuable upon conversion of the Series F Stock, the
selling stockholders, in addition to any other remedies, claimed they had the
right to require us to redeem all or any portion of the remaining outstanding
shares of Series F Stock (at a price equal to the greater of 125% of the stated
value of $10,000 per share plus the accretion of 4% per annum and the value of
the Common Stock which would have been issued upon conversion) as well as pay to
them a penalty of $5 per share of Series F Stock with respect to each day that
the registration statement was insufficient.
We had received a waiver, dated October 11, 1999, from the selling
stockholders with respect to the rights discussed above either to require
redemption or to receive penalties conditioned upon our (a) filing a
registration statement, on or before November 11, 1999, covering at least 200%
of the number of shares of common stock that would be issuable if all the Series
F Stock were converted as of the date of the filing of this registration
statement and (b) having this registration statement declared effective on or
before December 11, 1999.
Subject to our satisfying certain conditions, we have the right (a) upon 20
days advanced notice, to redeem all of the outstanding shares of Series F Stock
at a 20% annualized premium, (b) upon three days advanced notice, to require the
selling stockholders to convert their Series F Stock if the closing bid price of
our common stock exceeds $5.00 for a specified period of time. We would have
lost these rights if we had failed to file the registration statement by
November 11, 1999 or failed to use our best efforts to have it declared
effective by December 11, 1999, and (c) upon five days advanced notice, to
redeem any or all shares of Series F Stock presented for conversion at a
conversion price of less than $1.80 at a redemption price equal to 105% of the
stated value of $10,000 per share plus the accretion of 4% per annum.
While this registration statement covers an additional 9,878,463 shares of
our common stock in addition to the 5,316,983 shares of common stock included in
our prior prospectus, we would not be required to issue any shares which are the
subject of this additional registration statement unless the Variable Price at
the time of conversion on average is below $1.40 (increased over time due to the
4% accretion to the stated value). See "Selling Stockholders" for information
concerning the number of shares that are currently issuable.
If we were required to redeem the Series F Stock or make any of the penalty
payments, we may not have the financial ability to make these payments. Even if
we did have the financial ability to redeem the Series F Stock or pay the
required penalties, any payments could significantly and adversely affect our
financial
16
<PAGE>
condition and deplete its cash resources.
In connection with our agreement with the selling stockholders, we have
agreed to reimburse them for up to $50,000 of their legal expenses they had
incurred in connection with the issuance of the Series F Stock.
On November 24, 1999, we entered into an agreement with HFTP Investment
L.L.C. relating to the shares of Series F Stock currently held by it. Pursuant
to this agreement, (a) we honored HFTP Investment's conversion of 105 shares of
Series F Stock into 924,614 shares of our common stock, and (b) we have the
right to redeem any or all of its remaining 445 shares of Series F Stock, at any
time on or before December 15, 1999, at a redemption price that varies from 107%
to 109% of the $10,000 stated amount per preferred share, depending upon when
during this period we redeem. We are under no obligation to redeem these shares
either before or after December 15, 1999. HFTP Investment has agreed that it
will not convert any additional Series F Stock on or before December 15, 1999,
and will not increase its net short position in our common stock on or before
that date. We are seeking to conclude similar agreements with the other selling
stockholders. We also are pursuing negotiations to obtain the financing
necessary to effect the redemptions. We cannot assure you that will be able to
enter into satisfactory arrangements, or any arrangements at all, with the other
investors or with any financing source in order to be able to complete any
redemptions. Even if we do, we may determine not to complete any redemption.
Use of Proceeds
We will not receive any proceeds from the sale of our common stock by the
selling stockholders. However, we did receive net proceeds of approximately
$12,330,000 from the issuance of the Series F Stock to the selling stockholders
in December 1998.
We intend to continue to use these proceeds for general corporate purposes,
including research and development, clinical trials, regulatory filings,
manufacturing, marketing and sales, general and administrative and other
expenses, acquisitions of products and technologies, license, milestone, royalty
and similar payments, and strategic and other acquisitions.
Selling Stockholders
The table below presents the following information: (1) the number of
shares of Series F Stock owned by each selling stockholder as of the date of
this prospectus, (2) the number of shares of common stock beneficially owned by
each selling stockholder as of the date of this prospectus, (3) the number of
shares that the selling stockholder is offering under this prospectus, and (4)
the number of shares that the selling stockholder will beneficially own after
the completion of this offering.
Except as otherwise noted in the table, the number and percentage of shares
beneficially owned by each selling stockholder is determined as of the date of
this prospectus in accordance with Rule 13d-3 of the Securities Exchange Act,
and the information is not necessarily indicative of beneficial ownership for
any other purpose. Under this rule, beneficial ownership includes any shares as
to which the selling stockholder has sole or shared voting power or investment
power and also any shares which the selling stockholder has the right to acquire
within 60 days of the date of this prospectus through the conversion of the
Series F Stock or the exercise of any stock option or other right. Unless
otherwise indicated in the footnotes, each person has sole voting and investment
power with respect to the shares shown as beneficially owned.
The number of shares of our common stock shown as beneficially owned by
each selling stockholder prior to the offering and the number of shares offered
by each selling stockholder represents shares of our common stock issuable to it
assuming conversion, as of December 6, 1999, of all shares of Series F Stock
owned by that selling stockholder with respect to the $10,000 stated value of
the Series F Stock plus an accretion of 4% per year. The number of shares was
calculated using an assumed conversion price of $1.18, which represents the
average of the 15 lowest closing bid prices for our common stock during the 45
consecutive trading days ending on December 3, 1999. As described in the section
"Immunomedics - December 1998 Financing" above, the actual number of shares of
our common stock issuable upon conversion of the Series F Stock is based upon
the market price of common stock at the time of conversion. In accordance with
the provisions of the Series F Stock, the conversion price will fluctuate from
time to time based on changes in the market price of our common stock.
Therefore, the actual number of shares of common stock may be less or greater
than the number of shares shown as beneficially owned by the selling
stockholders or the number of
17
<PAGE>
shares offered by this prospectus. Under the certificate of designation for the
Series F Stock, no selling stockholder can convert Series F Stock to the extent
that the conversion would cause the selling stockholder's beneficial ownership
of our common stock to exceed 4.99% of our outstanding common stock, or
2,124,298 shares at December 6, 1999. In calculating a selling stockholder's
beneficial ownership for this purpose, the selling stockholder would exclude any
shares which it would be considered to beneficially own through ownership of
unconverted Series F Stock.
The number of shares that will ultimately be issued upon conversion of the
Series F Stock is dependent, subject to certain limitations, upon the average of
certain closing bid prices of our common stock prior to conversion as discussed
above. Accordingly, the number of shares that may be issued and the number of
shares offered hereby cannot be determined at this time. As a result, as
discussed above, we have agreed to register for resale at least 200% of the
number of shares of common stock that would be issuable if all the Series F
Stock were converted as of the date of the filing of the registration statement
of which this prospectus is a part. As of December 6, 1999, we would have been
required to issue approximately 6,335,014 shares of our common stock had the
holders converted all of their 718.5 remaining outstanding shares of Series F
Stock on this date. As discussed above, we have agreed to register a total of
15,821,153 shares of our common stock. Accordingly, the selling stockholders may
be entitled to sell approximately 8,860,432 additional shares pursuant to this
prospectus, if these shares are issued to them in accordance with the terms of
the Series F Stock.
The number of shares shown as being beneficially owned by each selling
stockholder after the offering assumes that the selling stockholder has sold all
the shares of our common stock which may be sold pursuant to this prospectus.
None of the selling stockholders has had a material relationship with us
within the past three years, other than as a result of their purchase of shares
of our Series F Stock. As of December 6, 1999, no selling stockholder owned any
shares of our common stock other than the shares they may acquire upon
conversion of the Series F Stock, other than Fisher Capital Ltd. which directly
owned 425,834 shares of our common stock, and Wingate Capital Ltd. which
directly owned 26,310 shares of our common stock.
<TABLE>
<CAPTION>
Shares of Shares of
Shares of Common Stock Common Stock
Preferred Beneficially Shares of Beneficially
Stock Owned Prior to Common Stock Owned After
Selling Stockholder Owned the Offering Being Offered Offering
<S> <C> <C> <C> <C>
AG Super Fund International Partners,
L.P.(1) 13.0 114,621 114,621 0
Fisher Capital Ltd.(2) 80.0 1,131,194 705,360 425,834
GAM Arbitrage investments, Inc.(1) 12.0 105,804 105,804 0
HFTP Investment L.L.C.(3) 445.0 3,923,565 3,923,565 0
Leonardo, L.P.(1) 84.5 745,036 745,036 0
Ramius Fund, Ltd.(1) 27.0 238,059 238,059 0
Raphael, L.P.(1) 14.0 123,438 123,438 0
Wingate Capital Ltd.(2) 43.0 405,441 379,131 26,310
- ----------------
</TABLE>
(1) Angelo, Gordon & Co., L.P. is a general partner of Leonardo, L.P., AG Super
Fund International Partners, L.P. and Raphael, L.P., and is investment
advisor to GAM Arbitrage Investments, Inc. and Ramius Fund, Ltd. and
consequently has voting control and investment discretion over securities
held by these entities. The ownership for each of these entities does not
include the ownership information for the other entities. Angelo, Gordon &
Co., L.P. and each of the referenced entities disclaims beneficial
ownership of any of our securities held by the other referenced entities.
Mr. John M. Angelo, the Chief Executive Officer of Angelo, Gordon & Co.,
L.P., and Mr. Michael R. Gordon, the Chief Operating Officer of Angelo,
Gordon & Co., L.P., are the sole general partners of AG Partners, L.P.,
which is the sole general partner of Angelo, Gordon & Co., L.P. In this
capacity, Messrs. Angelo and Gordon may be
18
<PAGE>
deemed to be the beneficial owner of any our securities deemed to be
beneficially owned by Angelo, Gordon & Co., L.P. However, Messrs. Angelo
and Gordon disclaim beneficial ownership of these securities.
(2) Citadel Limited Partnership is the trading manager of Wingate Capital Ltd.
and Fisher Capital Ltd. and consequently has voting control and investment
discretion over securities held by these entities. Citadel Limited
Partnership is indirectly controlled by Mr. Kenneth C. Griffin. The
ownership for each referenced entity does not include the ownership
information for the other referenced entity. Citadel Limited Partnership
and each of the referenced entities disclaims beneficial ownership of any
of our securities held by the other entities. Mr. Griffin may be deemed to
be the beneficial ownership of any of our securities beneficially owned by
Citadel Limited Partnership or the referenced entities. However, Mr.
Griffin disclaims beneficial ownership of these securities.
(3) Promethean Investment Group L.L.C. is the investment advisor for HFTP
Investment L.L.C. and consequently has voting control and investment
discretion over securities held by this entity. Promethean Investment Group
L.L.C. is indirectly controlled by Mr. James F. O'Brien, Jr. Promethean
Investment Group L.L.C. disclaims beneficial ownership of any of our
securities held by HFTP Investment L.L.C. Mr. O'Brien may be deemed to be
the beneficial ownership of any of our securities beneficially owned by
Promethean Investment Group L.L.C. or HFTP Investments L.L.C. However, Mr.
O'Brien disclaims beneficial ownership of these securities. As a result of
the limitation discussed above in this section, the selling stockholder
would be prevented from converting Series F Stock to the extent that the
conversion would cause the selling stockholder's beneficial ownership of
our common stock to exceed 4.99% of our outstanding common stock.
Plan of Distribution
Manner of Sales; Broker-Dealer Compensation.
The selling stockholders, or any successors in interest to the selling
stockholders, may sell any shares of common stock that they acquire when they
convert shares of Series F Stock. The sale of our common stock may be effected
in one or more of the following methods:
* ordinary brokers' transactions;
* transactions involving cross or block trades or otherwise on the Nasdaq
National Market;
* purchases by brokers, dealers or underwriters as principal and resale by
these purchasers for their own accounts pursuant to this prospectus;
* "at the market" to or through market makers or into an existing market for
our common stock;
* in other ways not involving market makers or established trading markets,
including direct sales to purchases or sales effected through agents;
* through transactions in options, swaps or other derivatives (whether
exchange-listed or otherwise);
* in privately negotiated transactions;
* to cover short sales; or
* any combination of the foregoing.
The selling stockholders also may sell the shares in reliance upon Rule 144
under the Securities Act at such times as they are eligible to do so. We have
been advised by the selling stockholders that they have not made any
arrangements for the distribution of the shares of common stock. Brokers,
dealers or underwriters who effect sales for the selling stockholders may
arrange for other brokers, dealers or underwriters to participate. Brokers,
dealers or underwriters engaged by the selling stockholders will receive
commissions or
19
<PAGE>
discounts from them in amounts to be negotiated prior to the sale. These
brokers, dealers or underwriters may act as agent or as principals.
From time to time, one or more of the selling stockholders may pledge,
hypothecate or grant a security interest in some or all of the shares of common
stock acquired by them upon conversion of the Series F Stock, and the pledgees,
secured parties or persons to whom these securities have been pledged shall,
upon foreclosure in the event of default, be considered a selling stockholders
hereunder. In addition, subject to the limitations discussed above, a selling
stockholder may, from time to time, sell short our common stock. In these
instances, this prospectus may be delivered in connection with these short sales
and the shares of our common stock issued upon conversion of Series F Stock may
be used to cover these short sales.
From time to time one or more of the selling stockholders may transfer,
pledge, donate or assign shares of our common stock that it acquired upon
conversion of Series F Stock to lenders or others and each of these persons will
be considered a selling stockholder for purposes of this prospectus. The number
of shares of our common stock beneficially owned by those selling stockholders
who so transfer, pledge, donate or assign shares of our common stock will
decrease as and when they take these actions. The plan of distribution for our
common stock by the selling stockholders' set forth herein will otherwise remain
unchanged, except that the transferees, pledgees, donees or other successors
will be considered selling stockholders hereunder.
Subject to the limitations discussed above, a selling stockholder may enter
into hedging transactions with broker-dealers and the broker-dealers may engage
in short sales of our common stock in the course of hedging the positions they
assume with this selling stockholder, including in connection with distributions
of our common stock by these broker-dealers. A selling stockholder may also
enter into option or other transactions with broker-dealers that involve the
delivery of our common stock to the broker-dealers, who may then resell or
otherwise transfer these shares. A selling stockholder also may loan or pledge
our common stock to a broker-dealer and the broker-dealer may sell our common
stock so loaned or upon a default may sell or otherwise transfer the pledged
common stock.
Filing of a Post-Effective Amendment In Certain Instances.
If any selling stockholder notifies us that it has entered into a material
arrangement (other than a customary brokerage account agreement) with a broker
or dealer for the sale of shares of common stock under this prospectus through a
block trade, purchase by a broker or dealer or similar transaction, we will file
a post- effective amendment to the registration statement under the Securities
Act. The post-effective amendment will disclose:
* The name of each broker-dealer involved in the transaction.
* The number of shares of common stock involved.
* The price at which those shares of common stock were sold.
* The commissions paid or discounts or concessions allowed to the
broker-dealer(s).
* If applicable, that these broker-dealer(s) did not conduct any
investigation to verify the information contained or incorporated by
reference in this prospectus, as supplemented.
* Any other facts material to the transaction.
Certain Persons May Be Deemed to Be Underwriters
The selling stockholders and any broker-dealers who execute sales for them
may be deemed to be "underwriters" within the meaning of the Securities Act
because of the number of shares of common stock to be sold or resold by these
persons or entities or the manner of sale of these shares, or both. If a selling
stockholder or any broker-dealer or other holders were determined to be
underwriters, any discounts, concessions or commissions received by them or by
brokers or dealers acting on their behalf and any profits received by them on
the resale of their shares of common stock might be deemed to be underwriting
discounts and commissions under the Securities Act.
Regulation M
20
<PAGE>
We have informed the selling stockholders that Regulation M promulgated
under the Securities Exchange Act may be applicable to them with respect to any
purchase or sale our common stock. In general, Rule 102 under Regulation M
prohibits any person connected with a distribution of our common stock from
directly or indirectly bidding for, or purchasing for any account in which it
has a beneficial interest, any of our common stock or any right to purchase our
common stock, for a period of one business day before and after completion of
its participation in the distribution.
During any distribution period, Regulation M prohibits the selling
stockholders and any other persons engaged in the distribution from engaging in
any stabilizing bid or purchasing our common stock except for the purpose of
preventing or retarding a decline in the open market price of our common stock.
None of these persons may effect any stabilizing transaction to facilitate any
offering at the market. As the selling stockholders will be reoffering and
reselling our common stock at the market, Regulation M will prohibit them from
effecting any stabilizing transaction in contravention of Regulation M with
respect to our common stock.
Indemnification and Other Matters
We paid all of the expenses incident to the registration, offering and sale
of our common stock by the selling stockholders to the public other than
commissions or discounts of underwriters, broker-dealers or agents. We also have
agreed to indemnify certain of the selling stockholders and certain related
persons against certain liabilities, including liabilities under the Securities
Act. Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to our directors, officers and controlling persons, we have
been advised that in the opinion of the SEC this indemnification agreement is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.
This offering will terminate on the earlier of (a) the date on which the
shares are eligible for resale without restriction pursuant to Rule 144(k) under
the Securities Act or (b) the date on which all shares offered hereby have been
sold by the selling stockholders.
Legal Matters
Warshaw Burstein Cohen Schlesinger & Kuh, LLP will give its opinion on the
validity of the common stock. As of the date of this prospectus, certain
partners of this firm beneficially own an aggregate of 1,200 shares of common
stock.
Experts
Our consolidated financial statements as of June 30, 1999 and 1998, and for
each of the years in the three-year period ended June 30, 1999 have been
incorporated by reference herein and in the registration statement in reliance
upon the report of KPMG LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing.
21
<PAGE>
