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 September 30, 2000
OR
[ ] Transition Report Pursuant to Section 13 or 15(d)of the Securities Exchange
Act of 1934. For the transition period from to
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Commission File Number: 0-12104
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IMMUNOMEDICS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 61-1009366
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
300 American Road, Morris Plains, New Jersey 07950
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(Address of principal executive offices) (Zip code)
(973) 605-8200
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(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 November 10, 2000, there were 49,507,621 shares of the registrant's common
stock outstanding.
<PAGE>
IMMUNOMEDICS, INC. AND SUBSIDIARIES
INDEX
Page No.
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (Unaudited):
Consolidated Balance Sheets - 3
September 30, 2000 and June 30, 2000
Consolidated Statements of Operations
and Comprehensive Loss- 4
three months ended September 30, 2000 and 1999
Condensed Consolidated Statements of Cash Flows - 5
three months ended September 30, 2000 and 1999
Notes to Consolidated Financial Statements - 6
September 30, 2000
Item 2. Management's Discussion and Analysis of 9
Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risks 12
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 14
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<TABLE>
<CAPTION>
IMMUNOMEDICS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
September 30, June 30,
2000 2000
ASSETS ------------ -------------
<S> <C> <C>
Cash and cash equivalents $ 8,408,862 $ 11,114,079
Marketable securities 31,620,545 29,751,987
Accounts receivable, net of allowance for
doubtful accounts of $64,898 and $63,398 at
September 30, 2000 and June 30, 2000, respectively 1,138,553 603,398
Inventory 1,023,865 1,036,900
Other current assets 1,149,191 1,324,093
------------ -------------
Total current assets 43,341,016 43,830,457
Property and equipment, net of accumulated
depreciation of $7,998,781 and $7,760,638 at
September 30, 2000 and June 30, 2000, respectively 3,867,099 3,970,680
Other long-term assets 225,000 225,000
------------ -------------
$ 47,433,115 $ 48,026,137
============ =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 161,850 $ 158,058
Accounts payable 1,509,294 1,836,283
Other current liabilities 1,794,381 1,683,266
------------ -------------
Total current liabilities 3,465,525 3,677,607
------------ -------------
Long-term debt 28,499 70,412
Minority interest 182,000 182,000
Commitments and Contingencies
Stockholders' Equity:
Preferred stock; $.01 par value, authorized 10,000,000 shares;
Common stock; $.01 par value, authorized 70,000,000 shares;
issued and outstanding 49,479,871 and 49,329,121 shares
at September 30, 2000 and June 30, 2000, respectively 494,799 493,291
Capital contributed in excess of par 154,444,797 153,242,000
Accumulated deficit (111,011,579) (109,530,489)
Accumulated other comprehensive loss (170,926) (108,684)
------------ -------------
Total stockholders' equity 43,757,091 44,096,118
------------ -------------
$ 47,433,115 $ 48,026,137
============ =============
See accompanying notes to condensed consolidated financial statements.
</TABLE>
Page 3 of 14
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<TABLE>
<CAPTION>
IMMUNOMEDICS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
Three Months Ended
September 30,
2000 1999
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<S> <C> <C>
Revenues:
Product sales $ 1,238,144 $ 1,153,788
Royalties and license fee 1,716 1,438
Research and development 140,173 126,792
Interest and other 656,418 105,024
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2,036,451 1,387,042
------------------ -------------------
Costs and Expenses:
Cost of goods sold 57,092 61,722
Research and development 2,214,063 2,055,478
Sales and marketing 583,950 881,215
General and administrative 662,436 504,986
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3,517,541 3,503,401
------------------ -------------------
Net loss (1,481,090) (2,116,359)
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Preferred stock dividends - 125,000
------------------ -------------------
Net loss allocable to common shareholders $ (1,481,090) $ (2,241,359)
================== ===================
Comprehensive Loss:
Net loss $ (1,481,090) $ (2,116,359)
------------------ -------------------
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments (40,604) 12,808
Unrealized gain / (loss) on securities available for sale (21,638) -
------------------ -------------------
Other comprehensive income (loss) (62,242) 12,808
------------------ -------------------
Comprehensive loss $ (1,543,332) $ (2,103,551)
================== ===================
Per Share Data (Basic and Diluted):
Net loss allocable to common shareholders $ (0.03) $ (0.06)
================== ===================
Weighted average number of common
shares outstanding 49,444,064 37,888,090
================== ===================
See accompanying notes to condensed consolidated financial statements.
</TABLE>
Page 4 of 14
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<TABLE>
<CAPTION>
IMMUNOMEDICS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended
September 30,
2000 1999
------------------ -----------------
<S> <C> <C>
Cash flows used in operating activities:
Net loss $ (1,481,090) $(2,116,359)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 238,143 244,549
Provision for allowance for doubtful accounts 1,500 6,000
Amortization of bond premium 4,801 -
Non-cash expense relating to issuance of warrants 232,278 -
Changes in operating assets and liabilities (564,592) 149,540
Other (40,604) 12,808
------------------ -----------------
Net cash used in operating activities (1,609,564) (1,703,462)
------------------ -----------------
Cash flows from investing activities:
Purchases of marketable securities (19,524,719) (5,722,026)
Proceeds from maturities of marketable securities 17,629,722 5,952,398
Additions to property and equipment (134,562) (24,212)
------------------ -----------------
Net cash provided by (used in) investing activities (2,029,559) 206,160
------------------ -----------------
Cash flows from financing activities:
Exercise of stock options 972,027 -
Payments of debt (38,121) (34,580)
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Net cash provided by (used in) financing activities 933,906 (34,580)
------------------ -----------------
Decrease in cash and cash equivalents (2,705,217) (1,531,882)
Cash and cash equivalents at beginning of period 11,114,079 3,469,261
------------------ -----------------
Cash and cash equivalents at end of period $ 8,408,862 $ 1,937,379
================== =================
See accompanying notes to condensed consolidated financial statements.
</TABLE>
Page 5 of 14
<PAGE>
IMMUNOMEDICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
(1) Business Overview and Basis of Presentation
The accompanying unaudited condensed consolidated financial statements
of Immunomedics, Inc. (the "Company"), which incorporate the Company's
majority owned subsidiaries, 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, 2000 has been derived from the audited
financial statements at that date. Operating results for the
three-month period ended September 30, 2000 are not necessarily
indicative of the results that may be expected for the fiscal year
ending June 30, 2001 or any other period.
The Company has not yet achieved profitable operations and there is no
assurance that profitable operations, if achieved, could be sustained
on a continuing basis. Further, the Company's future operations are
dependent on, among other things, the success of the Company's
commercialization efforts and market acceptance of the Company's
products.
Since its inception in 1982, the Company's source of funds has been
primarily dependent on private and public offerings of equity
securities, revenues from research and development alliances, and
product sales. The Company believes that its existing working capital
should be sufficient to meet its capital and liquidity requirements for
the foreseeable future.
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, 2000.
(2) Cash Equivalents and Marketable Securities
The Company considers all highly liquid investments with original
maturities of three months or less, at the time of purchase, to be cash
equivalents. Included in other current assets at September 30, 2000 and
June 30, 2000 is accrued interest earned on cash equivalents and
marketable securities of $363,500 and $423,300, 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 2001;
therefore, no income taxes have been reflected for the three-month
period ended September 30, 2000.
Page 6 of 14
<PAGE>
IMMUNOMEDICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
(4) Net Loss Per Share
--------------------
Basic and diluted net loss allocable to common shareholders is based on
the net loss for the relevant period, adjusted for Preferred Stock
dividends divided by the weighted average number of shares issued and
outstanding during the period. Preferred Stock dividends for the three
months period ended September 30, 2000 and 1999 is $0 and $125,000,
respectively, related to a 4% per annum stated value increase in
security. For the purposes of the diluted net loss per share
calculations, the exercise or conversion of all potential common shares
is not included because their effect would have been anti-dilutive, due
to the net loss recorded for the three month periods ended September
30, 2000 and 1999. The Company has certain securities outstanding at
September 30, 2000 that could potentially dilute basic earnings per
share in the future that were not included in the computation of
diluted earnings per share because to do so would have been
anti-dilutive for the periods presented.
(5) Comprehensive Income
Comprehensive income consists of net income (loss) and net unrealized
gains (losses) on securities available for sale and certain foreign
exchange changes and is presented in the unaudited condensed
consolidated statements of operations and comprehensive loss.
(6) Inventory
Inventory is stated at the lower of average cost (which approximates
first-in, first-out) or market, and includes materials, labor and
manufacturing overhead. At September 30, 2000, the inventory balance
consisted of $373,234 of raw materials and $650,631 of finished goods.
At June 30, 2000, the inventory balance consisted of $373,234 of raw
materials and $663,666 of finished goods.
(7) Stockholders' Equity
On December 16, 1999, the Company issued a warrant covering 75,000
shares of its common stock at an exercise price of $6.50 per share to
induce a financial advisor to enter into a financial advisory agreement
with the Company. The Company recognized a proportionate share of the
general and administrative expense associated with these warrants of
approximately $232,000 for the three-month period ended September 30,
2000 based on the estimated value of the warrants as of that date. The
expense will be remeasured each reporting period through December 31,
2000.
(8) Debt
On October 28, 1998, the Company entered into an Equipment Financing
Agreement with the New England Capital Corporation, pursuant to which
the Company has received $450,000, at the interest rate of 9.52% per
annum, to be repaid over a 36-month period. The proceeds of such
financing were used to exercise the early purchase options for
equipment previously leased through a master lease agreement. The
Page 7 of 14
<PAGE>
IMMUNOMEDICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
financing is secured by various equipment and an irrevocable letter of
credit in the amount of $225,000. The letter of credit is
collateralized by a cash deposit of an equivalent amount which is
included in "Other long- term assets" on the accompanying condensed
consolidated balance sheet. At September 30, 2000, the Company's
indebtedness under this agreement was $190,349 due in equal
installments over next 13 months. The Company paid $5,138 and $8,587
for the three months ended September 30, 2000 and September 30, 1999,
respectively, in interest under this agreement.
(9) Geographic Segment
-------------------
The Company manages its operations as one line of business of
researching, developing, manufacturing and marketing biopharmaceutical
products, particularly antibody-based diagnostics and therapeutics for
cancer and infectious diseases, and it currently reports as a single
industry segment. The Company markets and sells its products in the
U.S. and throughout Europe.
The following tables present financial information based on the
geographic location of the facilities of Immunomedics, Inc. as of and
for the three-month period ending:
September 30, 2000
------------------
United States Europe Total
------------- ----------- ------------
Total assets $46,236,147 $1,196,968 $47,433,115
Long-lived assets 3,844,586 22,513 3,867,099
Revenues 1,251,622 784,829 2,036,451
September 30, 1999
------------------
United States Europe Total
------------- ----------- ------------
Total assets $13,610,466 $1,016,295 $14,626,761
Long-lived assets 4,551,602 46,200 4,597,802
Revenues 707,541 679,501 1,387,042
Page 8 of 14
<PAGE>
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. Such forward-looking statements are made pursuant to
the "safe harbor" provisions of the Private Securities Litigation Reform Act of
1995. The Company's actual results could differ materially from the results
anticipated in these forward-looking statements as a result of a variety of
factors, including (i) the risks described in Exhibit 99 to this Form 10-Q, (ii)
the risks described under the caption "Business-Business Risks" in the Company's
Annual Report on Form 10-K for the fiscal year ended June 30, 2000 (the "2000
10-K"), (iii) the risks described elsewhere under the caption "Business" in the
2000 10-K and (iv) the risks described elsewhere in the 2000 10-K. The Company
assumes no obligation to update its forward-looking statements.
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. The Company has incurred significant operating losses since its
formation in 1982 and has not earned a profit since its inception. These
operating losses and failure to be profitable have been due mainly to the
significant amount of money that the Company has had to spend on research and
development. As of September 30, 2000, the Company had an accumulated deficit of
approximately $111,012,000. The Company expects to continue to experience
operating losses until such time, if at all, that it is able to generate
sufficient revenues from sales of CEA-Scan(R), LeukoScan(R) and its other
potential products.
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 this 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(R), 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, or BLA, for LeukoScan
with the FDA for the same indication approved in Europe, plus an additional
indication for the diagnosis of acute, atypical appendicitis. As part of the
review process, the Company is in discussions with the FDA to address its
comments regarding the adequacy of the Company's data to support final approval
for these indications. Consistent with the Company's decision to focus primarily
on cancer therapeutic products, on April 12, 2000, the Company withdrew the
CEA-Scan breast cancer imaging application submitted on January 26, 1999 to the
European Medicines Evaluation Agency (EMEA). A New Drug Submission for LeukoScan
for the same indications as in the U.S. was filed with the HPB in Canada on
March 24, 1998. The Company also has decided not to continue pursuing the
Page 9 of 14
<PAGE>
broadening of its approval for LeukoScan in Europe to include the acute,
atypical appendicitis indication, but has instead published its Phase III
efficacy data.
CEA-Scan and LeukoScan are the only products which the Company is currently
licensed to market and sell. To date, the Company has received only limited
revenues from the sale of these products. There can be no assurance that these
products will achieve market acceptance or generate significant sales. Unless
the Company receives substantial revenues from these products, future revenues
will be dependent in large part upon its receiving payments from corporate
partners under licensing and research agreements or from government grants.
However, there can be no assurance that the Company will receive such payments
in a timely manner, or at all.
The Company is also engaged in developing other biopharmaceutical products,
which are in various stages of development and clinical testing.
The Company has developed and filed an Investigational New Drug application
("IND") for two other in vivo cancer imaging products: AFP-Scan(R) for the
detection and diagnosis of liver and germ cell cancers, currently in Phase II
clinical trials, and LymphoScan(TM) for diagnosis and staging of non-Hodgkin's
lymphomas, currently in Phase III clinical trials.
Results of Operations
Revenues for the three-month period ended September 30, 2000 were $2,036,000 as
compared to $1,387,000 for the same period in 1999, representing an increase of
$649,000. Product sales for the three-month period ended September 30, 2000
increased by $84,000 as compared to the same period of 1999. Research and
development revenue for the three-month period ended September 30, 2000
increased by $13,000 as compared to same period of 1999, due to higher grant
revenue. Interest and other income for the three-month period ended September
30, 2000 increased by $551,000, as compared to the same period of 1999,
primarily due to more cash available for investments as a result of infusions of
private equity capital during the second and third quarters of fiscal 2000.
Total operating expenses for the three-month period ended September 30, 2000
were $3,517,000 as compared to $3,503,000 for the same period in 1999,
representing an increase of $14,000. Research and development costs for the
three-month period ended September 30, 2000 increased by $159,000 as compared to
the same period in 1999, primarily due to increased patient enrollment in
clinical trials for therapeutic products. Sales and marketing expenses for the
three-month period ended September 30, 2000 decreased by $297,000, primarily due
to Company-wide reorganization/restructuring. General and administrative costs
for the three-month period ended September 30, 2000 increased by $157,000 as
compared to the same period of 1999, primarily due to the recognition of an
expense of $232,000 associated with warrants issued to a financial advisor in
December 1999 (see Note 7 to Unaudited Condensed Consolidated Financial
Statements), partially offset by a reduction of other administrative expenses.
Net loss allocable to common shareholders for the three-month period ended
September 30, 2000 was $1,481,000, or $0.03 per share, as compared to
$2,241,000, or $0.06 per share, for the same period in 1999. The lower net loss
allocable to common shareholders in 2000 as compared to 1999 primarily resulted
from greater interest income and reduced sales and marketing expenses. In
addition, the net loss allocable to common shareholders per share for the
Page 10 of 14
<PAGE>
three-month period ended September 30, 2000 was positively impacted by the
higher weighted average number of shares outstanding for this period, as
compared to the same period in 1999. The increase in the weighted average number
of shares outstanding was primarily due to the 1999 conversion of the Company's
Series F Preferred Stock and the issuance of common stock pursuant to the
Company's equity financings during fiscal year 2000.
Liquidity and Capital Resources
At September 30, 2000, the Company had working capital of $39,875,000, which
represents a decrease of $277,000 from June 30, 2000. The decrease in working
capital resulted primarily from the funding of operating expenses.
On December 16, 1999, the Company issued a warrant covering 75,000 shares of its
Common Stock at an exercise price of $6.50 per share. The warrants were issued
to induce a financial advisor to enter into a financial advisory agreement with
the Company.
The Company's liquid asset position, measured by its cash, cash equivalents and
marketable securities, was $40,029,000 at September 30, 2000, representing a
decrease of $837,000 from June 30, 2000. This decrease was primarily
attributable to the funding of operating expenses as discussed above. It is
anticipated that working capital and cash, cash equivalents and marketable
securities will decrease during the remainder of fiscal year 2001 as a result of
planned operating expenses and capital expenditures, offset in part by projected
revenues from product sales in the U. S. and Europe. However, there can be no
assurance, as to the amount of revenues, if any, these products will provide.
On May 19, 2000, the Company gave notice to its landlord that it desired to
exercise its right to purchase the facilities which the Company presently leases
at 300 American Road, Morris Plains, New Jersey (see "Properties"). The purchase
price under the lease is approximately $6.5 million. The Company plans to seek
mortgage financing with respect to this purchase. If such financing is not
available to the Company on acceptable terms prior to the closing, the Company
would expect to fund the purchase price on an interim basis from its own capital
resources and would then likely seek to mortgage the acquired premises. No
assurances can be given that the Company will be able to secure favorable
financing either before or after the purchase of these facilities.
To date, the Company has not generated positive cash flow from operations. The
Company believes that its existing working capital should be sufficient to meet
its capital and liquidity requirements for the foreseeable future. This
expectation represents a forward-looking statement under the Private Securities
Litigation Reform Act of 1995. Actual results could differ materially from the
Company's expectation as a result of a number of risks and uncertainties,
including the risks described in Exhibit 99 annexed hereto. The Company's
working capital and working capital requirements are affected by numerous
factors and there is no assurance that such factors will not have a negative
impact on the Company's liquidity. Principal among these are the success of its
product commercialization and selling products, the technological advantages and
pricing of the Company's products, the impact of the regulatory requirements
applicable to the Company and access to capital markets that can provide the
Company with the resources when necessary to fund its strategic priorities.
Unless there is a significant increase in product revenues, the Company will
require additional financial resources after it utilizes its current liquid
assets in order for it to continue its projected levels of research and
development and clinical trials of its proposed products and regulatory filings
for new indications of existing products. There can no assurance that any
additional financing will be available to the Company at all or on terms it
finds acceptable or that the terms of such financing will not cause substantial
dilution to existing stockholders.
Page 11 of 14
<PAGE>
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. 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.
Item 3. Quantitative and Qualitative Disclosures About Market Risks
See Item 7A of the June 30, 2000, Form 10-K.
Page 12 of 14
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule
99 Risk Factors
Page 13 of 14
<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: November 13, 2000 /s/ David M. Goldenberg
-------------------------------
David M. Goldenberg
Chairman and
Chief Executive Officer
(Principal Executive Officer)
DATE: November 13, 2000 /s/ Shailesh R. Asher
--------------------------
Shailesh R. Asher
Controller and Acting Chief
Financial Officer
(Principal Financial and
Accounting Officer)
Page 14 of 14
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