Item 8.
Financial Statements and Supplementary Data
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
Immunomedics, Inc.:
We have audited the accompanying consolidated balance sheets of Immunomedics, Inc. and subsidiaries as of June 30, 2017 and 2016, and the related consolidated statements of comprehensive loss, changes in stockholders’ equity (deficit), and cash flows for each of the years in the three‑year period ended June 30, 2017. In connection with our audits of the consolidated financial statements, we also have audited financial statement schedule II. These consolidated financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Immunomedics, Inc. and subsidiaries as of June 30, 2017 and 2016, and the results of their operations and their cash flows for each of the years in the three‑year period ended June 30, 2017, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Immunomedics, Inc.’s internal control over financial reporting as of June 30, 2017, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated August 16, 2017 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
/s/ KPMG LLP
Short Hills, New Jersey
August 16, 2017
IMMUNOMEDICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
June 30
|
|
|
|
2017
|
|
2016
|
|
ASSETS
|
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
43,393,570
|
|
$
|
13,203,625
|
|
Marketable securities
|
|
|
111,508,225
|
|
|
37,424,221
|
|
Accounts receivable, net of allowance for doubtful accounts of $9,371 and $74,546 at June 30, 2017 and 2016, respectively
|
|
|
488,723
|
|
|
513,992
|
|
Inventory
|
|
|
580,016
|
|
|
350,524
|
|
Other receivables
|
|
|
13,428
|
|
|
236,768
|
|
Prepaid expenses
|
|
|
891,284
|
|
|
1,038,155
|
|
Other current assets
|
|
|
422,916
|
|
|
183,820
|
|
Total current assets
|
|
|
157,298,162
|
|
|
52,951,105
|
|
Property and equipment, net
|
|
|
5,245,230
|
|
|
3,969,163
|
|
Other long-term assets
|
|
|
30,000
|
|
|
30,000
|
|
Total Assets
|
|
$
|
162,573,392
|
|
$
|
56,950,268
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$
|
31,366,976
|
|
$
|
15,188,189
|
|
Warrant liabilities
|
|
|
90,706,206
|
|
|
—
|
|
Deferred revenues
|
|
|
170,967
|
|
|
235,372
|
|
Total current liabilities
|
|
|
122,244,149
|
|
|
15,423,561
|
|
Convertible senior notes – net of unamortized debt issuance costs of $1,915,781 and $2,645,602 at June 30, 2017 and 2016
|
|
|
98,084,219
|
|
|
97,354,398
|
|
Other liabilities
|
|
|
1,708,272
|
|
|
1,699,276
|
|
Commitments and Contingencies (Note 15)
|
|
|
—
|
|
|
—
|
|
Stockholders’ Equity (Deficit):
|
|
|
|
|
|
|
|
Convertible preferred stock, $.01 par value; authorized 10,000,000 shares; 1,000,000 shares issued and outstanding at June 30, 2017: no shares issued and outstanding at June 30, 2016
|
|
|
10,000
|
|
|
—
|
|
Common stock, $.01 par value; authorized 250,000,000 shares issued 110,344,643 shares and outstanding 110,309,918 shares at June 30, 2017; authorized 155,000,000 shares, issued 95,867,298 shares and outstanding 95,832,573 shares at June 30, 2016
|
|
|
1,103,446
|
|
|
958,672
|
|
Capital contributed in excess of par
|
|
|
462,666,366
|
|
|
311,320,651
|
|
Treasury stock, at cost: 34,725 shares at June 30, 2017 and 2016
|
|
|
(458,370)
|
|
|
(458,370)
|
|
Accumulated deficit
|
|
|
(521,710,899)
|
|
|
(368,504,954)
|
|
Accumulated other comprehensive loss
|
|
|
(302,710)
|
|
|
(132,226)
|
|
Total Immunomedics, Inc. stockholders’ deficit
|
|
|
(58,692,167)
|
|
|
(56,816,227)
|
|
Noncontrolling interest in subsidiary
|
|
|
(771,081)
|
|
|
(710,740)
|
|
Total stockholders’ deficit
|
|
|
(59,463,248)
|
|
|
(57,526,967)
|
|
Total Liabilities and Stockholders' Deficit
|
|
$
|
162,573,392
|
|
$
|
56,950,268
|
|
See accompanying notes to consolidated financial statements.
IMMUNOMEDICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
COMPREHENSIVE LOSS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years ended June 30,
|
|
|
|
2017
|
|
2016
|
|
2015
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
Product sales
|
|
$
|
2,443,388
|
|
$
|
2,260,994
|
|
$
|
2,648,657
|
|
License fee and other revenues
|
|
|
284,290
|
|
|
386,941
|
|
|
1,250,000
|
|
Research and development
|
|
|
363,572
|
|
|
585,312
|
|
|
1,754,434
|
|
Total revenues
|
|
|
3,091,250
|
|
|
3,233,247
|
|
|
5,653,091
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
Costs of goods sold
|
|
|
482,657
|
|
|
1,159,173
|
|
|
264,915
|
|
Research and development
|
|
|
51,776,395
|
|
|
53,492,471
|
|
|
41,735,888
|
|
Sales and marketing
|
|
|
873,154
|
|
|
1,027,139
|
|
|
768,871
|
|
General and administrative
|
|
|
29,108,777
|
|
|
6,562,555
|
|
|
9,102,926
|
|
Total costs and expenses
|
|
|
82,240,983
|
|
|
62,241,338
|
|
|
51,872,600
|
|
Operating loss
|
|
|
(79,149,733)
|
|
|
(59,008,091)
|
|
|
(46,219,509)
|
|
Changes in fair market value of warrant liabilities
|
|
|
(61,073,808)
|
|
|
—
|
|
|
—
|
|
Warrant related expenses
|
|
|
(7,649,395)
|
|
|
—
|
|
|
—
|
|
Interest expense
|
|
|
(5,479,821)
|
|
|
(5,479,821)
|
|
|
(2,090,750)
|
|
Interest and other income, net
|
|
|
430,595
|
|
|
337,901
|
|
|
245,705
|
|
Other financing expenses
|
|
|
(346,568)
|
|
|
—
|
|
|
—
|
|
Foreign currency transaction gain (loss), net
|
|
|
23,311
|
|
|
(39,538)
|
|
|
(1,188)
|
|
Loss before income tax
|
|
|
(153,245,419)
|
|
|
(64,189,549)
|
|
|
(48,065,742)
|
|
Income tax (expense) benefit
|
|
|
(20,867)
|
|
|
5,053,833
|
|
|
(58,229)
|
|
Net loss
|
|
|
(153,266,286)
|
|
|
(59,135,716)
|
|
|
(48,123,971)
|
|
Less: Net loss attributable to noncontrolling interest
|
|
|
(60,341)
|
|
|
(98,766)
|
|
|
(121,605)
|
|
Net loss attributable to Immunomedics, Inc. stockholders
|
|
$
|
(153,205,945)
|
|
$
|
(59,036,950)
|
|
$
|
(48,002,366)
|
|
Loss per common share attributable to Immunomedics, Inc. stockholders (basic and diluted):
|
|
$
|
(1.47)
|
|
$
|
(0.62)
|
|
$
|
(0.51)
|
|
Weighted average shares used to calculate loss per common share (basic and diluted)
|
|
|
104,535,577
|
|
|
94,770,172
|
|
|
93,314,872
|
|
Other comprehensive (loss) income, net of tax:
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
|
|
(62,085)
|
|
|
1,192
|
|
|
(434,617)
|
|
Unrealized (loss) gain on securities available for sale
|
|
|
(108,399)
|
|
|
27,674
|
|
|
11,688
|
|
Other comprehensive (loss) income, net of tax:
|
|
|
(170,484)
|
|
|
28,866
|
|
|
(422,929)
|
|
Comprehensive loss
|
|
|
(153,436,770)
|
|
|
(59,106,850)
|
|
|
(48,546,900)
|
|
Less comprehensive loss attributable to noncontrolling interest
|
|
|
(60,341)
|
|
|
(98,766)
|
|
|
(121,605)
|
|
Comprehensive loss attributable to Immunomedics, Inc. stockholders
|
|
$
|
(153,376,429)
|
|
$
|
(59,008,084)
|
|
$
|
(48,425,295)
|
|
See accompanying notes to consolidated financial statements.
IMMUNOMEDICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Immunomedics, Inc. Stockholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
Convertible
|
|
|
|
|
|
|
Capital
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
Preferred Stock
|
|
Common Stock
|
|
Contributed in
|
|
Treasury
|
|
Accumulated
|
|
Comprehensive
|
|
Noncontrolling
|
|
|
|
|
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Excess of Par
|
|
Stock
|
|
Deficit
|
|
Income (Loss)
|
|
Interest
|
|
Total
|
|
Balance, at June 30, 2014
|
|
—
|
|
$
|
—
|
|
93,113,480
|
|
$
|
931,134
|
|
$
|
300,080,804
|
|
$
|
(458,370)
|
|
$
|
(261,465,638)
|
|
$
|
261,837
|
|
$
|
(490,369)
|
|
$
|
38,859,398
|
|
Exercise of stock options, net
|
|
|
|
|
|
|
1,202,575
|
|
|
12,026
|
|
|
2,947,904
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,959,930
|
|
Stock based compensation
|
|
|
|
|
|
|
230,523
|
|
|
2,305
|
|
|
2,200,646
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,202,951
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(422,929)
|
|
|
|
|
|
(422,929)
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(48,002,366)
|
|
|
|
|
|
(121,605)
|
|
|
(48,123,971)
|
|
Balance, at June 30, 2015
|
|
—
|
|
$
|
—
|
|
94,546,578
|
|
$
|
945,465
|
|
$
|
305,229,354
|
|
$
|
(458,370)
|
|
$
|
(309,468,004)
|
|
$
|
(161,092)
|
|
$
|
(611,974)
|
|
$
|
(4,524,621)
|
|
Exercise of stock options, net
|
|
|
|
|
|
|
1,097,500
|
|
|
10,975
|
|
|
2,721,987
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,732,962
|
|
Stock based compensation
|
|
|
|
|
|
|
223,220
|
|
|
2,232
|
|
|
3,369,310
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,371,542
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,866
|
|
|
|
|
|
28,866
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(59,036,950)
|
|
|
|
|
|
(98,766)
|
|
|
(59,135,716)
|
|
Balance, at June 30, 2016
|
|
—
|
|
$
|
—
|
|
95,867,298
|
|
$
|
958,672
|
|
$
|
311,320,651
|
|
$
|
(458,370)
|
|
$
|
(368,504,954)
|
|
$
|
(132,226)
|
|
$
|
(710,740)
|
|
$
|
(57,526,967)
|
|
Issuance of preferred stock, net
|
|
1,000,000
|
|
|
10,000
|
|
|
|
|
|
|
|
121,771,941
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
121,781,941
|
|
Issuance of common stock in public offering, net
|
|
|
|
|
|
|
10,000,000
|
|
|
100,000
|
|
|
28,478,473
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,578,473
|
|
Proceeds of public offering allocated to warrant liability
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,966,435)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,966,435)
|
|
Issuance of common stock to Seattle Genetics, Inc.
|
|
|
|
|
|
|
3,000,000
|
|
|
30,000
|
|
|
14,670,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,700,000
|
|
Proceeds of share issuance to Seattle Genetics, Inc. allocated to warrant liability
|
|
|
|
|
|
|
|
|
|
|
|
|
(14,670,000)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(14,670,000)
|
|
Exercise of stock options, net
|
|
|
|
|
|
|
1,279,354
|
|
|
12,794
|
|
|
4,277,309
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,290,103
|
|
Stock based compensation
|
|
|
|
|
|
|
197,991
|
|
|
1,980
|
|
|
3,784,427
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,786,407
|
|
Other comprehensive (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(170,484)
|
|
|
|
|
|
(170,484)
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(153,205,945)
|
|
|
|
|
|
(60,341)
|
|
|
(153,266,286)
|
|
Balance, at June 30, 2017
|
|
1,000,000
|
|
$
|
10,000
|
|
110,344,643
|
|
$
|
1,103,446
|
|
$
|
462,666,366
|
|
$
|
(458,370)
|
|
$
|
(521,710,899)
|
|
$
|
(302,710)
|
|
$
|
(771,081)
|
|
$
|
(59,463,248)
|
|
See accompanying notes to consolidated financial statements.
IMMUNOMEDICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years ended June 30,
|
|
|
|
2017
|
|
2016
|
|
2015
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(153,266,286)
|
|
$
|
(59,135,716)
|
|
$
|
(48,123,971)
|
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of warrant liabilities
|
|
|
61,073,808
|
|
|
—
|
|
|
—
|
|
Warrant related expense
|
|
|
7,649,395
|
|
|
—
|
|
|
—
|
|
Depreciation and amortization
|
|
|
923,348
|
|
|
737,661
|
|
|
578,066
|
|
Amortization of deferred revenue
|
|
|
(79,292)
|
|
|
(202,088)
|
|
|
(5,712)
|
|
Amortization of bond premiums
|
|
|
218,426
|
|
|
669,858
|
|
|
544,208
|
|
Amortization of debt issuance costs
|
|
|
729,821
|
|
|
729,821
|
|
|
281,791
|
|
Amortization of deferred rent
|
|
|
8,996
|
|
|
99,516
|
|
|
99,516
|
|
Loss (gain) on sale of marketable securities
|
|
|
15,682
|
|
|
(1,844)
|
|
|
(11,015)
|
|
(Decrease) increase in allowance for doubtful accounts
|
|
|
(61,932)
|
|
|
20,369
|
|
|
(34,432)
|
|
Non-cash expense related to stock compensation
|
|
|
4,333,430
|
|
|
3,740,526
|
|
|
2,788,677
|
|
Non-cash decrease in value of life insurance policy
|
|
|
—
|
|
|
20,566
|
|
|
155,544
|
|
Non-cash financing expenses
|
|
|
346,568
|
|
|
—
|
|
|
—
|
|
Changes in operating assets and liabilities
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
102,640
|
|
|
(190,300)
|
|
|
271,820
|
|
Inventory
|
|
|
(195,958)
|
|
|
256,381
|
|
|
328,126
|
|
Other receivables
|
|
|
223,340
|
|
|
620,300
|
|
|
(553,966)
|
|
Prepaid expenses
|
|
|
146,871
|
|
|
97,948
|
|
|
478,794
|
|
Other current assets
|
|
|
(241,775)
|
|
|
761,803
|
|
|
(776,975)
|
|
Accounts payable and accrued expenses
|
|
|
15,807,887
|
|
|
3,147,606
|
|
|
4,946,099
|
|
Deferred revenues
|
|
|
14,887
|
|
|
165,793
|
|
|
37,221
|
|
Net cash used in operating activities
|
|
|
(62,250,144)
|
|
|
(48,461,800)
|
|
|
(38,996,209)
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
Purchases of marketable securities
|
|
|
(131,610,011)
|
|
|
(2,749,117)
|
|
|
(86,307,071)
|
|
Proceeds from sales/maturities of marketable securities
|
|
|
57,183,499
|
|
|
50,850,088
|
|
|
34,491,153
|
|
Purchases of property and equipment
|
|
|
(1,837,167)
|
|
|
(2,226,256)
|
|
|
(924,429)
|
|
Net cash (used in) provided by investing activities
|
|
|
(76,263,679)
|
|
|
45,874,715
|
|
|
(52,740,347)
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
Sale of preferred stock, net of related expenses
|
|
|
121,781,941
|
|
|
—
|
|
|
—
|
|
Proceeds from public offering of common stock, net of expenses
|
|
|
28,578,473
|
|
|
—
|
|
|
—
|
|
Proceeds from sale of common stock to Seattle Genetics, Inc.
|
|
|
14,700,000
|
|
|
—
|
|
|
—
|
|
Proceeds from issuance of convertible senior notes
|
|
|
—
|
|
|
—
|
|
|
100,000,000
|
|
Payment of debt issuance costs
|
|
|
—
|
|
|
—
|
|
|
(3,657,215)
|
|
Exercise of stock options
|
|
|
4,290,103
|
|
|
2,732,962
|
|
|
2,959,930
|
|
Tax withholding payments for stock compensation
|
|
|
(547,021)
|
|
|
(368,984)
|
|
|
(585,725)
|
|
Net cash provided by financing activities
|
|
|
168,803,496
|
|
|
2,363,978
|
|
|
98,716,990
|
|
Effect of changes in exchange rates on cash and cash equivalents
|
|
|
(99,728)
|
|
|
(26,043)
|
|
|
(489,153)
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
30,189,945
|
|
|
(249,150)
|
|
|
6,491,281
|
|
Cash and cash equivalents beginning of the year
|
|
|
13,203,625
|
|
|
13,452,775
|
|
|
6,961,494
|
|
Cash and cash equivalents end of the year
|
|
$
|
43,393,570
|
|
$
|
13,203,625
|
|
$
|
13,452,775
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
Interest paid
|
|
$
|
4,750,000
|
|
$
|
4,802,778
|
|
$
|
—
|
|
Income taxes paid
|
|
$
|
23,636
|
|
$
|
28,679
|
|
$
|
75,598
|
|
See accompanying notes to consolidated financial statements.
IMMUNOMEDICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
1. Business Overview
Immunomedics, Inc., a Delaware corporation (“Immunomedics” or the “Company”) is a clinical-stage biopharmaceutical company developing monoclonal antibody-based products for the targeted treatment of cancer, autoimmune and other serious diseases. The Company is focused on the acceleration of the development of its therapeutic product candidates and accordingly has transitioned away from the development and commercialization of new diagnostic imaging products to accelerate the development of its therapeutic product candidates, although the Company continues to manufacture and sell, distribute and support LeukoScan
®
(sulesomab) in territories where regulatory approvals have previously been granted. LeukoScan
®
is indicated for diagnostic imaging for determining the location and extent of infection/inflammation in bone in patients with suspected osteomyelitis, including patients with diabetic foot ulcers.
The Company has
two foreign subsidiaries, Immunomedics B.V. in the Netherlands and Immunomedics GmbH in Rodermark, Germany, to assist the Company in managing sales efforts and coordinating clinical trials in Europe.
In addition,
included in the accompanying financial statements is the majority-owned U.S. subsidiary, IBC Pharmaceuticals, Inc. (“IBC”), which has been working since 1999 on the development of novel cancer radiotherapeutics using patented pretargeting technologies with proprietary, bispecific antibodies.
Immunomedics is subject to significant risks and uncertainties, including, without limitation, the risk that the Company may be unable to further identify, develop and achieve commercial success for new products and technologies; the possibility of delays in the research and development necessary to select drug development candidates and delays in clinical trials; the risk that clinical trials may not result in marketable products; the risk that the Company may be unable to successfully finance and secure regulatory approval of and market its drug candidates; its dependence upon pharmaceutical and biotechnology collaborations; the levels and timing of payments under its collaborative agreements; uncertainties about the Company’s ability to obtain new corporate collaborations and acquire new technologies on satisfactory terms, if at all; the development of competing products; its ability to protect its proprietary technologies; patent-infringement claims; and risks of new, changing and competitive technologies and regulations in the United States and internationally.
Since its inception in 1982, Immunomedics’ principal sources of funds have been the private and public sale of equity and debt securities and revenues from licensing agreements, including up-front and milestone payments, funding of development programs, and other forms of funding from collaborations.
As of June 30, 2017 the Company has $154.9 million in cash, cash equivalents and marketable securities; which the Company believes is sufficient to support operations through September 2018, and which allows the Company to accomplish the goal of filing a BLA for Accelerated Approval of IMMU-132 in mTNBC from the FDA during the period between December 2017 and March 2018, subject to FDA input on the acceptance of the Company’s chemistry, manufacturing and controls filing plan.
The Company will require additional funding after September 2018 to secure regulatory approval from the FDA, complete commercial preparations to market IMMU-132 to mTNBC patients in the United States, complete its clinical trials currently underway or planned, continue research and new development programs, and continue operations. Potential sources of funding include the exercise of outstanding warrants, potential various strategic partnership transactions towards advancing and maximizing the Company’s full pipeline for mTNBC, and equity and potential debt financing.
Until the Company can generate significant cash through the exercise of outstanding warrants, various strategic partnership transactions towards advancing and maximizing the Company’s full pipeline for mTNBC, or commercial operations, it expects to continue to fund its operations with its current financial resources. These financial resources are adequate to sustain the Company’s operations at a level of activity sufficient to support the filing of the BLA with the FDA for accelerated approval of IMMU-132 for patients with mTNBC; to continue manufacturing IMMU-132 at large scale to prepare for commercial operations in the U.S. marketplace; to initiate a Phase 3 clinical trial of IMMU-132 for mTNBC patients to support the filing of the BLA, to initiate preparations to market IMMU-132 to mTNBC patients in the U.S. and, subject to meeting all standards, completing review and final determination of the FDA, to secure accelerated regulatory approval to market IMMU-132 for the use of patients with mTNBC in the U.S.. After September
2018, if the Company cannot obtain sufficient funding through the exercise of outstanding warrants, various strategic partnership transactions towards advancing and maximizing the Company’s full pipeline for mTNBC, it could be required to finance future cash needs through the sale of additional equity and/or debt securities in capital markets. However, there can be no assurance that the Company will be able to raise the additional capital needed to complete its pipeline of research and development programs on commercially acceptable terms, if at all. The capital markets have experienced volatility in recent years, which has resulted in uncertainty with respect to availability of capital and hence the timing to meet an entity’s liquidity needs. The Company’s existing debt may also negatively impact the Company’s ability to raise additional capital. If the Company is unable to raise capital on acceptable terms, its ability to continue its business would be materially and adversely affected.
2. Summary of Significant Accounting Policies
Principles of Consolidation and Presentation
The consolidated financial statements include the accounts of Immunomedics and its majority-owned subsidiaries. Noncontrolling interests in consolidated subsidiaries in the Consolidated Balance Sheets represent minority stockholders' proportionate share of the equity (deficit) in such subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. The Company’s significant estimates and assumptions relate to revenue recognition, allowance for doubtful accounts, valuation of inventory and property and equipment, useful lives of property and equipment, accrued liabilities, stock compensation expenses, income tax uncertainties and other contingencies.
Foreign Currencies
For subsidiaries outside of the United States that operate in a local currency environment, income and expense items are translated to United States dollars at the monthly average rates of exchange prevailing during the year, assets and liabilities are translated at year-end exchange rates and equity accounts are translated at historical exchange rates. Translation adjustments are accumulated in a separate component of stockholders' equity in the Consolidated Balance Sheets and the Consolidated Statements of Changes in Stockholders’ Equity (Deficit) and are included in the determination of comprehensive (loss) income in the Consolidated Statements of Comprehensive Loss. Transaction gains and losses are included in the determination of net loss in the Consolidated Statements of Comprehensive Loss.
Cash and Cash Equivalents
The Company considers all liquid investments purchased with an original maturity of three months or less to be cash equivalents and all investments with maturities of greater than three months from date of purchase are classified as marketable securities available-for-sale.
Marketable securities
Marketable securities, all of which are available-for-sale, consist of corporate debt securities, U.S. bonds, U.S. sponsored agencies and municipal bonds. Marketable securities are carried at fair value, with unrealized gains and losses, net of related income taxes, reported as accumulated other comprehensive (loss) income, except for losses from impairments which are determined to be other-than-temporary. Realized gains and losses, and declines in value judged to be other-than-temporary on available-for-sale securities are included in the determination of net loss and are included in interest and other income (net), at which time the average cost basis of these securities are adjusted to fair value. Fair
values are based on quoted market prices at the reporting date. Interest and dividends on available-for-sale securities are included interest and other income (net).
Accounts Receivable
Credit is extended to customers based upon an evaluation of the customer’s financial condition. Accounts receivable are recorded at net realizable value. The Company utilizes a specific identification accounts receivable reserve methodology based on a review of outstanding balances and previous activities to determine the allowance for doubtful accounts. The Company charges off uncollectible receivables at the time the Company determines the receivable is no longer collectible. The Company does not require collateral or other security to support financial instruments subject to credit risk.
Concentration of Credit Risk
Cash, cash equivalents and marketable securities are financial instruments that potentially subject the Company to concentration of credit risk. Immunomedics periodically invests its cash in corporate debt securities, U.S. bonds, U.S. sponsored agencies and municipal bonds with strong credit ratings. Immunomedics has established guidelines relative to diversification and maturities that are designed to help ensure safety and liquidity. These guidelines are periodically reviewed to take advantage of trends in yields and interest rates.
Inventory
Inventory, which consists of the raw materials, work-in-process and finished product of LeukoScan
®
, is stated at the lower of cost (on a first-in, first-out basis) or market, and includes materials, labor and manufacturing overhead.
Property and Equipment and Impairment of Assets
Property and equipment are stated at cost and are depreciated on a straight-line basis over the estimated useful lives (5 - 10 years) of the respective assets. Leasehold improvements are capitalized and amortized over the lesser of the remaining life of the lease or the estimated useful life of the asset. Immunomedics reviews long‑lived assets for impairment whenever events or changes in business circumstances occur that indicate that the carrying amount of the assets may not be recoverable. Immunomedics assesses the recoverability of long‑lived assets held and to be used based on undiscounted cash flows, and measures the impairment, if any, using discounted cash flows. To date the Company has not taken any impairment charges on property and equipment.
Revenue Recognition
The Company has accounted for revenue arrangements that include multiple deliverables as a separate unit of accounting if both of the following criteria are met: a) the delivered item has value to the customer on a standalone basis, and b) if the right of return exists, delivery of the undelivered items is considered probable and substantially in the control of the vendor. If these criteria are not met, the revenue elements must be considered a single unit of accounting for purposes of revenue recognition. The Company allocates revenue consideration, excluding contingent consideration, based on the relative selling prices of the separate units of accounting contained within an arrangement containing multiple deliverables. Relative selling prices are determined using vendor specific objective evidence, if it exists; otherwise third-party evidence or the Company’s best estimate of selling price is used for each deliverable.
Payments received under contracts to fund certain research activities are recognized as revenue in the period in which the research activities are performed. Payments received in advance that are related to future performance are deferred and recognized as revenue when the research projects are performed. Upfront nonrefundable fees associated with license and development agreements where the Company has continuing involvement in the agreement are recorded as deferred revenue and recognized over the estimated service period. The Company estimates the period of continuing involvement based on the best evidential matter
available at each reporting period.
If the estimated service period is subsequently modified, the period over which the upfront fee is recognized is modified accordingly on a prospective basis.
In order to determine the revenue recognition for contingent milestones, the Company evaluates the contingent milestones using the criteria as provided by the Financial Accounting Standards Boards (“FASB”) guidance on the milestone method of revenue recognition, as explained in ASU 2010-17, “
Milestone Method of Revenue Recognition”
, at the inception of a collaboration agreement. The criteria requires that (i) the Company determines if the milestone is commensurate with either its performance to achieve the milestone or the enhancement of value resulting from the Company’s activities to achieve the milestone, (ii) the milestone be related to past performance, and (iii) the milestone be reasonable relative to all deliverable and payment terms of the collaboration arrangement. If these criteria are met then the contingent milestones can be considered as substantive milestones and will be recognized as revenue in the period that the milestone is achieved. Royalties are recognized as earned in accordance with the terms of various research and collaboration agreements.
Revenue from the sale of diagnostic products is recorded when there is persuasive evidence that an arrangement exists, delivery has occurred, the price is fixed and determinable or collectability is reasonably assured. Allowances, if any, are established for uncollectible amounts, estimated product returns and discounts. Since allowances are recorded based on management’s estimates, actual amounts may be different in the future.
Research and Development Costs
Research and development costs are expensed as incurred. Costs incurred for clinical trials for patients and investigators are expensed as services are performed in accordance with the agreements in place with the institutions.
Reimbursement of Research and Development Costs
Reimbursement toward research and development costs under collaboration agreements are included as a reduction of research and development expenses. The Company records these reimbursements as a reduction of research and development expenses as the Company’s partner in the collaboration agreement has the financial risks and responsibility for conducting these research and development activities.
Common Stock Warrants
In connection with certain financing transactions in October 2016 and February 2017, the Company issued warrants and recorded them as liabilities due to certain net cash settlement provisions. The warrants were recorded at fair value using the Black-Scholes valuation model. The Black-Scholes valuation model takes into account, as of the valuation date, factors including the current exercise price, the term of the warrant, the current price of the underlying stock and its expected volatility, expected dividends on the stock, and the risk-free interest rate for the term of the warrant. These warrants are subject to re-measurement at each balance sheet date until the warrants are exercised or expired, and any change in fair value is recognized as “change in the fair value of warrant liability” in the consolidated statements of operations.
Income Taxes
The Company uses the asset and liability method to account for income taxes, including the recognition of deferred tax assets and deferred tax liabilities for the anticipated future tax consequences attributable to differences between financial statements amounts and their respective tax bases. The Company reviews its deferred tax assets for recovery. A valuation allowance is established when the Company believes that it is more likely than not that its deferred tax assets will not be realized. Changes in valuation allowances from period to period are included in the Company’s tax provision in the period of change.
The Company did not book an accrual for uncertain tax positions as of June 30, 2017 or 2016. The U.S. Federal statute of limitation remains open for the fiscal years 2013 onward. The Company’s tax returns filed in foreign jurisdictions remain open for the fiscal years 2013 onward. State income tax returns are generally subject to examination for a period of 3 - 5 years after filing of the respective return. The Company conducts business and files tax returns in New Jersey.
Net Loss Per Share Allocable to Common Stockholders
Basic net loss per share is calculated using the weighted average number of shares of common stock and vested restricted shares outstanding. Diluted net income per share is based upon the weighted average number of shares of common stock and dilutive potential shares of common stock outstanding. During fiscal years 2017, 2016, and 2015, no potential shares of common stock were included in the calculation since their affect would be anti-dilutive due to the operating losses. The common stock equivalents excluded from the earnings per share calculation are 66,069,081, 26,665,296 and 25,815,581 for the fiscal years ended June 2017, 2016, and 2015, respectively.
Net Comprehensive Loss
Net comprehensive loss consists of net loss, unrealized loss on available for sale securities and foreign exchange translation adjustments and is presented in the consolidated statements of comprehensive loss.
Stock-Based Compensation
The Company utilizes stock-based compensation in the form of stock options, stock appreciation rights, stock awards, stock unit awards, performance shares, cash-based performance units and other stock-based awards, each of which may be granted separately or in tandem with other awards.
The grant-date fair value of stock awards is based upon the underlying price of the stock on the date of grant. The grant-date fair value of stock option awards must be determined using an option pricing model. Option pricing models require the use of estimates and assumptions as to (a) the expected term of the option, (b) the expected volatility of the price of the underlying stock and (c) the risk-free interest rate for the expected term of the option. The Company uses the Black-Scholes-Merton option pricing formula for determining the grant-date fair value of such awards.
The fair value of restricted stock units that vest based on achievement of certain market conditions are determined using a Monte Carlo simulation technique.
The expected term of the option is based upon the contractual term and expected employee exercise and expected post-vesting employment termination behavior. The expected volatility of the price of the underlying stock is based upon the historical volatility of the Company’s stock computed over a period of time equal to the expected term of the option. The risk free interest rate is based upon the implied yields currently available from the U.S. Treasury yield curve in effect at the time of the grant. Pre-vesting forfeiture rates are estimated based upon past voluntary termination behavior and past option forfeitures.
The fair value of each option granted during the years ended June 30, 2017, 2016, and 2015 is estimated on the date of grant using the Black‑Scholes option‑pricing model with the following weighted-average assumptions in the following table:
|
|
|
|
|
|
|
|
|
|
Years ended June 30,
|
|
|
|
2017
|
|
2016
|
|
2015
|
|
Expected dividend yield
|
|
0%
|
|
0%
|
|
0%
|
|
Expected option term (years)
|
|
5.04
|
|
5.03
|
|
5.07
|
|
Expected stock price volatility
|
|
63%
|
|
58%
|
|
57%
|
|
Risk-free interest rate
|
|
1.16% - 2.15%
|
|
1.00% - 1.64%
|
|
1.37% - 1.72%
|
|
The Company uses historical data to estimate forfeitures. The expected term of options granted represents the period of time that options granted are expected to be outstanding. Expected stock price volatility was calculated based on the Company’s daily stock trading history. The risk-free rate for periods within the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant.
Changes in any of these assumptions could impact, potentially materially, the amount of expense recorded in future periods related to stock-based awards.
Financial Instruments
The carrying amounts of cash and cash equivalents, other current assets and current liabilities approximate fair value due to the short‑term maturity of these instruments. The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.
Recently Issued Accounting Pronouncements
Accounting Standard adopted during the year:
In August 2014, the FASB issued ASU 2014-15, “
Presentation of Financial Statements – Going Concern: Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern
”. This guidance clarifies that an entity’s management should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. The amendments in this update are effective for annual reporting periods ending after December 15, 2016, and annual and interim periods thereafter, and early application is permitted. Note 1 incorporates the disclosure requirements from the adoption of ASU 2014-15.
Accounting Standards yet to be adopted:
In May 2017, the FASB issued ASU 2017-09, "Stock Compensation - Scope of Modification Accounting", guidance that clarifies that all changes to share-based payment awards are not necessarily accounted for as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award changes as a result of the change in terms or conditions. The amendments in this guidance should be applied prospectively in annual periods beginning after December 15, 2017, including interim periods within those periods, with early adoption permitted. This guidance will apply to any future modifications. The Company is assessing ASU 2017-09’s impact and if applicable, will adopt it when effective.
In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows: Clarification of Certain Cash Receipts and Cash Payments”, which eliminates the diversity in practice related to the classification of certain cash receipts and payments in the statement of cash flows, by adding or clarifying guidance on eight specific cash flow issues. ASU 2016-15 is effective for annual and interim reporting periods beginning after December 15, 2017 and early adoption is permitted. ASU 2016-15 provides for retrospective application for all periods presented. The Company is assessing the impact of ASU 2016-15 and will adopt it when effective.
In March 2016, the FASB issued ASU 2016-09, “
Improvements to Employee Share- Based Payment Accounting
” which simplified several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. Public companies will be required to adopt this standard in annual reporting periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted in any interim or annual period provided that the entire standard is adopted. The Company does not expect ASU 2016-09 to have a material impact on the consolidated financial statement presentation as (a) the Company classifies cash paid when directly withholding shares for tax withholding purposes as a financing activity and (b) the Company will make an accounting policy election to continue to use its current method of using historical data to estimate forfeitures.
In February 2016, the FASB issued ASU 2016-02, “
Leases
”. This standard requires a lessee to record on the balance sheet the assets and liabilities for the rights and obligations created by lease terms of more than 12 months. The amendments in this update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, and early application is permitted. The Company is assessing the impact of ASU 2016-02 and will adopt it when effective.
On May 28, 2014, the FASB issued ASU 2014-09, “
Revenue from Contracts with Customers,
” which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes
effective. In August 2015, with the issuance of ASU 2015-14, the FASB amended the effective date of this ASU to fiscal years beginning after December 15, 2017, and early adoption is permitted only for fiscal years beginning after December 15, 2016. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is assessing the impact of ASU 2014-09 and will adopt it when effective.
3. Marketable Securities
Immunomedics considers all of its current investments to be available-for-sale. Marketable securities at June 30, 2017 consist of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
|
|
Gross
|
|
|
|
|
|
|
Amortized
|
|
Unrealized
|
|
Unrealized
|
|
|
|
|
|
|
Cost
|
|
Gain
|
|
(Loss)
|
|
Fair Value
|
|
U.S. Treasury Bonds
|
|
$
|
35,086
|
|
$
|
—
|
|
$
|
(24)
|
|
$
|
35,062
|
|
Certificate of Deposits
|
|
|
15,298
|
|
|
—
|
|
|
—
|
|
|
15,298
|
|
U.S. Government Sponsored Agencies
|
|
|
18,357
|
|
|
—
|
|
|
(13)
|
|
|
18,344
|
|
Corporate Debt Securities
|
|
|
32,692
|
|
|
—
|
|
|
(33)
|
|
|
32,659
|
|
Commercial Paper
|
|
|
10,144
|
|
|
1
|
|
|
—
|
|
|
10,145
|
|
|
|
$
|
111,577
|
|
$
|
1
|
|
$
|
(70)
|
|
$
|
111,508
|
|
Maturities of debt securities classified as available-for-sale were as follows at June 30, 2017 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Carrying
|
|
|
|
Fair Value
|
|
Amount
|
|
Due within one year
|
|
$
|
89,477
|
|
$
|
89,728
|
|
Due after one year through five years
|
|
|
22,031
|
|
|
22,149
|
|
|
|
$
|
111,508
|
|
$
|
111,877
|
|
Marketable securities at June 30, 2016 consisted of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
|
|
Gross
|
|
|
|
|
|
|
Amortized
|
|
Unrealized
|
|
Unrealized
|
|
|
|
|
|
|
Cost
|
|
Gain
|
|
(Loss)
|
|
Fair Value
|
|
U.S. Treasury Bonds
|
|
$
|
5,059
|
|
$
|
6
|
|
$
|
—
|
|
$
|
5,065
|
|
Certificate of Deposits
|
|
|
3,000
|
|
|
3
|
|
|
—
|
|
|
3,003
|
|
U.S. Government Sponsored Agencies
|
|
|
14,311
|
|
|
31
|
|
|
—
|
|
|
14,342
|
|
Corporate Debt Securities
|
|
|
15,014
|
|
|
2
|
|
|
(2)
|
|
|
15,014
|
|
|
|
$
|
37,384
|
|
$
|
42
|
|
$
|
(2)
|
|
$
|
37,424
|
|
4. Inventory
Inventory consisted of the following at June 30 (in thousands):
|
|
|
|
|
|
|
|
|
|
2017
|
|
2016
|
|
Raw Materials
|
|
$
|
—
|
|
$
|
68
|
|
Work-in-process
|
|
|
—
|
|
|
191
|
|
Finished goods
|
|
|
580
|
|
|
92
|
|
|
|
$
|
580
|
|
$
|
351
|
|
5. Convertible Senior Notes
In February 2015, the Company issued $100.0 million of Convertible Senior Notes (net proceeds of $96.3 million after deducting the initial purchasers’ fees and offering expenses) in a private offering exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), in reliance upon Rule 144A under the Securities Act. The Convertible Senior Notes will mature on February 15, 2020, unless earlier purchased or converted. The debt issuance costs of approximately $3.7 million, primarily consisting of underwriting, legal and other professional fees, are amortized over the term of the Convertible Senior Notes. The Convertible Senior Notes are senior unsecured obligations of the Company. Interest at 4.75% is payable semiannually on February 15 and August 15 of each year. The effective interest rate on the Convertible Senior Notes was 5.48% for the period from the date of issuance through June 30, 2017.
The Convertible Senior Notes are convertible at the option of holders into approximately 19.6 million shares of Immunomedics common stock at any time prior to the close of business on the day immediately preceding the maturity date. The conversion rate will initially be 195.8336 shares of common stock per $1,000 principal amount of Convertible Senior Notes (equivalent to an initial conversion price of approximately $5.11 per share of Immunomedics common stock).
If the Company undergoes a fundamental change (as defined in the indenture governing the Convertible Senior Notes), holders may require Immunomedics to purchase for cash all or part of the Convertible Senior Notes at a purchase price equal to 100% of the principal amount of the Convertible Senior Notes to be purchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change purchase date, subject to certain exceptions. In addition, if certain make-whole fundamental changes (as defined in the indenture governing the Convertible Senior Notes) occur, Immunomedics will, in certain circumstances, increase the conversion rate for any Convertible Note converted in connection with such make-whole fundamental change.
The indenture does not limit the amount of debt which may be issued by the Company under the indenture or otherwise, does not contain any financial covenants or restrict the Company from paying dividends or issuing or repurchasing its other securities. The indenture contains customary terms and covenants and events of default.
If an event of default with respect to the Convertible Senior Notes occurs, holders may, upon satisfaction of certain conditions, accelerate the principal amount of the Convertible Senior Notes plus premium, if any, and accrued and unpaid interest, if any. In addition, the principal amount of the Convertible Senior Notes plus premium, if any, and accrued and unpaid interest, if any, will automatically become due and payable in the case of certain types of bankruptcy or insolvency events of default involving the Company.
Total interest expense for the Convertible Senior Notes for the fiscal years ended June 30, 2017, 2016, and 2015 were $5.5 million, $5.5 million, and $2.1 million, respectively. Included in interest expense is the amortization of debt issuance costs of $0.7 million, $0.7 million, and $0.3 million for the fiscal years ended June 30, 2017, 2016, and 2015, respectively.
6.
Warrant Liabilities
In connection with a public offering conducted during October 2016, the Company issued warrants that contain net cash settlement provisions. Additionally, in connection with a stock purchase agreement entered into with Seattle Genetics, Inc. during February 2017 (the “SGEN Warrant”), the Company issued warrants that also have similar net cash settlement provisions. In addition, the SGEN Warrant may only be exercised, upon receiving stockholder approval to increase its authorized capital and such shares being registered with the SEC. As stated in Note 10,
at a special Stockholder Meeting on June 29, 2017 (“2017 Special Meeting”), the Company’s stockholders approved the amendment and restatement of the Company’s Certificate of Incorporation to increase the maximum number of shares of the Company’s stock authorized up to 260,000,000 shares of stock consisting of 250,000,000 shares of common stock and 10,000,000 shares of preferred stock. Such increase is considered to be sufficient for the Company to settle its obligation related to the warrants after considering all other commitments that may require the issuance of common stock through December 31, 2017, when these warrants will expire (See Note 10). The Company filed a registration statement with the SEC on Form S-3 on July 31, 2017, which is yet to be declared effective.
Accordingly, as of June 30, 2017, both warrants do not meet the criteria for classification as equity and are recorded as liabilities on the Company’s balance sheet. The Company recorded these warrants as liabilities at their fair values as calculated at their respective dates of inception. The change in fair value of each warrant is measured, and booked as an income or expense to adjust the warrant liability on a periodic basis at the end of each fiscal quarter.
The Company uses Level 2 inputs for its valuation methodology for the warrant liabilities. The estimated fair value was determined using a Black-Scholes valuation model based on various assumptions. The warrant liabilities are adjusted to reflect estimated fair value at each period end, with any changes in the fair value being recorded in changes in fair value of warrant liabilities.
7. Estimated Fair Value of Financial Instruments
The Company’s financial instruments consist of cash and cash equivalents, marketable securities, accounts receivable, accounts payable and accrued expenses, and Convertible Notes. The carrying amount of accounts receivable, accounts payable and accrued expenses are generally considered to be representative of their respective fair values because of the short-term nature of those instruments as of June 30, 2017 and 2016.
The Company has categorized its other financial instruments, based on the priority of the inputs to the valuation technique, into a three-level fair value hierarchy as set forth below. If the inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.
Financial instruments recorded on the consolidated balance sheets as of June 30, 2017 and 2016 are categorized based on the inputs to the valuation techniques as follows (in thousands):
|
·
|
|
Level 1
– Values are based on unadjusted quoted prices for identical assets or liabilities in an active market which the Company has the ability to access at the measurement date (examples include active exchange-traded equity securities and most U.S. Government and agency securities).
|
|
·
|
|
Level 2
– Values are based on quoted market prices in markets where trading occurs infrequently or whose values are based on quoted prices of instruments with similar attributes in active markets.
|
|
·
|
|
Level 3
– Values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the asset.
|
Cash equivalents and marketable securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in thousands)
|
|
June 30, 2017
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Money Market Funds Note (a)
|
|
$
|
36,776
|
|
$
|
—
|
|
$
|
—
|
|
$
|
36,776
|
|
Marketable Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury Bonds
|
|
|
35,062
|
|
|
—
|
|
|
—
|
|
|
35,062
|
|
Certificate of Deposits
|
|
|
15,298
|
|
|
—
|
|
|
—
|
|
|
15,298
|
|
U.S. Government Sponsored Agencies
|
|
|
18,344
|
|
|
—
|
|
|
—
|
|
|
18,344
|
|
Corporate Debt Securities
|
|
|
32,659
|
|
|
—
|
|
|
—
|
|
|
32,659
|
|
Commercial Paper
|
|
|
10,145
|
|
|
—
|
|
|
—
|
|
|
10,145
|
|
Total
|
|
$
|
148,284
|
|
$
|
—
|
|
$
|
—
|
|
$
|
148,284
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in thousands)
|
|
June 30, 2016
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Money Market Funds Note (a)
|
|
$
|
10,012
|
|
$
|
—
|
|
$
|
—
|
|
$
|
10,012
|
|
Marketable Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury Bonds
|
|
|
5,065
|
|
|
—
|
|
|
—
|
|
|
5,065
|
|
Certificate of Deposits
|
|
|
3,003
|
|
|
—
|
|
|
—
|
|
|
3,003
|
|
U.S. Government Sponsored Agencies
|
|
|
14,342
|
|
|
—
|
|
|
—
|
|
|
14,342
|
|
Corporate Debt Securities
|
|
|
15,014
|
|
|
—
|
|
|
—
|
|
|
15,014
|
|
Total
|
|
$
|
47,436
|
|
$
|
—
|
|
$
|
—
|
|
$
|
47,436
|
|
|
(a)
|
|
The money market funds noted above are included in cash and cash equivalents.
|
Convertible Senior Notes
The carrying amounts and estimated fair values (Level 2) of debt instruments are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2017
|
|
As of June 30, 2016
|
|
|
|
Carrying
|
|
Estimated
|
|
Carrying
|
|
Estimated
|
|
|
|
Amount
|
|
Fair Value
|
|
Amount
|
|
Fair Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible Senior Notes
|
|
$
|
98,084
|
|
$
|
180,950
|
|
$
|
97,354
|
|
$
|
71,359
|
|
The fair value of the Convertible Senior Notes, which differs from their carrying values, is influenced by interest rates, the Company’s stock price and stock price volatility and is determined by prices for the Convertible Senior Notes observed in market trading which are Level 2 inputs.
Warrant Liabilities
The Company has determined its warrant liabilities to be a Level 2 fair value measurement and used the Black Scholes valuation model to calculate the fair value as of June 30, 2017, February 10, 2017 (date of issuance of warrant liabilities in connection with stock purchase agreement) and October 11, 2016 (date of issuance of warrants in connection with public offering):
At the measurement dates, the Company estimated the fair value for the warrants based on Black-Scholes valuation model and using the following assumptions:
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
June 30,
|
|
February 10,
|
|
October 11,
|
|
|
2017
(1)
|
|
2017
(2)
|
|
2017
|
|
2016
|
Risk-free interest rate
|
|
1.14%
|
|
1.38%
|
|
1.47%
|
|
0.87%
|
Expected remaining term
|
|
0.51
|
|
1.28
|
|
3.0 years
|
|
2.0 years
|
Expected volatility
|
|
69.34%
|
|
73.85%
|
|
71.42%
|
|
75.00%
|
Dividend yield
|
|
0%
|
|
0%
|
|
0%
|
|
0%
|
|
(1)
|
|
Represents the fair value assumptions for the warrants issued in connection with February 10, 2017 stock purchase agreement.
|
|
(2)
|
|
Represents the fair value assumptions for the warrants issued in connection with October 11, 2016 public offering.
|
The following table sets forth the warrant activity for the year ended June 30, 2017 ($ in thousands):
|
|
|
|
|
|
|
|
Estimated Fair
|
|
Number of
|
|
Value
|
|
Warrants
|
|
Level 2
|
Warrants outstanding as of July 1, 2016
|
—
|
|
$
|
—
|
Additions, pursuant to October 11, 2016 public offering
|
10,000,000
|
|
|
7,313
|
Additions, pursuant to February 16, 2017 stock purchase agreement with Seattle Genetics, Inc.
|
8,655,804
|
|
|
22,319
|
Change in fair value
|
—
|
|
|
61,074
|
Warrants outstanding as of June 30, 2017
|
18,655,804
|
|
$
|
90,706
|
8. Property and Equipment
Property and equipment consisted of the following at June 30 (in thousands):
|
|
|
|
|
|
|
|
|
|
2017
|
|
2016
|
|
Machinery and equipment
|
|
$
|
9,353
|
|
$
|
9,071
|
|
Leasehold improvements
|
|
|
21,602
|
|
|
19,863
|
|
Furniture and fixtures
|
|
|
976
|
|
|
970
|
|
Computer equipment
|
|
|
2,875
|
|
|
2,703
|
|
|
|
|
34,806
|
|
|
32,607
|
|
Accumulated depreciation and amortization
|
|
|
(29,561)
|
|
|
(28,638)
|
|
|
|
$
|
5,245
|
|
$
|
3,969
|
|
Depreciation and amortization expense for the years ended June 30, 2017, 2016, and 2015 was $0.9 million, $0.7 million, and $0.6 million, respectively.
9. Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses consisted of the following at June 30 (in thousands):
|
|
|
|
|
|
|
|
|
|
2017
|
|
2016
|
|
Trade accounts payable
|
|
$
|
5,222
|
|
$
|
4,128
|
|
Contract manufacture organization expenses
|
|
|
3,769
|
|
|
1,222
|
|
Clinical trial accruals
|
|
|
2,865
|
|
|
6,087
|
|
Proxy defense-related expenses
|
|
|
6,967
|
|
|
—
|
|
Reimbursement for proxy expenses
|
|
|
4,505
|
|
|
—
|
|
Executive severance liabilities
|
|
|
5,542
|
|
|
—
|
|
Executive bonus
|
|
|
—
|
|
|
1,148
|
|
Accrued interest expense
|
|
|
1,768
|
|
|
1,768
|
|
Miscellaneous other current liabilities
|
|
|
729
|
|
|
835
|
|
|
|
$
|
31,367
|
|
$
|
15,188
|
|
10. Stockholders’ Deficit
At the June 29, 2017 Special Meeting, the Company’s stockholders approved the amendment and restatement of the Company’s Certificate of Incorporation to increase the maximum number of shares of the Company’s stock authorized up to 260,000,000 shares of stock consisting of 250,000,000 shares of common stock and 10,000,000 shares of preferred stock. Previously the Company’s Certificate of Incorporation authorized up to 165,000,000 shares of capital stock, consisting of 155,000,000 shares of common stock and 10,000,000 shares of preferred stock.
Preferred Stock
The Certificate of Incorporation of the Company authorizes 10,000,000 shares of preferred stock, $.01 par value per share. The preferred stock may be issued from time to time in one or more series, with such distinctive serial designations, rights and preferences as shall be determined by the Board of Directors.
On May 10, 2017, the Company issued in a private placement 1,000,000 shares (the “Preferred Shares”) of the Company’s Series A-1 Convertible Preferred Stock at a price of $125 per share for gross proceeds to the Company of $125 million, before deducting fees and expenses (the “Financing”). Each Preferred Share will be convertible into 23.10536 shares of common stock (or an aggregate of 23,105,348 shares of common stock). The conversion price per share of common stock is $5.41. For fiscal year ended June 30, 2016 the Company had no preferred stock outstanding.
Following the June 29 2017 Special Meeting and filing the Charter Amendment with the State of Delaware, the Company had authorized a sufficient number of unreserved shares of common stock to permit the conversion of the Preferred Shares. Preferred Shares will automatically convert to shares of common stock subsequent to the termination of the Licensing and Development Agreement entered into on February 10, 2017 by and between the Company and Seattle Genetics (the “License Agreement”); or, if such automatic conversion does not occur prior to January 1, 2018, the Purchasers may elect to convert at any time on or after January 1, 2018. On July 31, 2017, the Company filed a registration statement on Form S-3 to register the
23,105,348 shares of the Company’s common stock issuable upon the conversion of the Series A-1 Convertible Preferred Stock (in addition to
3,000,000 shares of Company’s common stock and
8,655,804 shares of common stock issuable upon the exercise of the warrants issued to Seattle Genetics, Inc as discussed below).
Common Stock
On February 10, 2017, in connection with the execution of a License Agreement, the Company entered into the Securities Purchase Agreement (“SPA”) with Seattle Genetics. Under the SPA, Seattle Genetics purchased 3,000,000 shares (the “Common Shares”) of the Company’s common stock at a price of $4.90 per share, for aggregate proceeds of $14.7 million. Concurrently with the sale of the Common Shares, pursuant to the SPA, the Company also agreed to issue the three-year warrant to purchase an aggregate of 8,655,804 shares of common stock. On July 31, 2017, the Company filed a registration statement on Form S-3 to register the 3,000,000 shares of Company’s common stock and
8,655,804 shares of common stock issuable upon the exercise of the warrants (in addition to the shares issuable upon the
conversion of our Series A-1 Convertible Preferred Stock, as discussed above).
The warrant became exercisable for cash on February 16, 2017, and will expire on January 31, 2018. The warrant was issued on February 16, 2017 and was originally exercisable until February 10, 2020. On the date of issuance, the fair value of these warrants was determined to be $22.3 million. The difference between such fair value and the proceeds of $14.7 million has been recognized as an expense and presented in the consolidated statement operations as a “warrant related expense.” On May 4, 2017, the Company and Seattle Genetics entered into the Termination Agreement, pursuant to which the Company and Seattle Genetics relinquished their respective rights under the License Agreement and agreed to amend the terms of the warrant to amend the expiration date from February 10, 2020 to December 31, 2017.
On October 11, 2016, the Company completed an underwritten public offering of 10 million shares of its common stock and accompanying warrants to purchase 10 million shares of common stock at a purchase price of $3.00 per unit, comprising of one share of common stock and one warrant. The Company received gross and net proceeds of $30.0 million and approximately $28.6 million, respectively after deducting the underwriting discounts and commissions and estimated expenses related to the offering payable. The warrants became exercisable six months following the date of issuance, and will expire on the second anniversary of the date of issuance and have an exercise price of $3.75. On the date of issuance, the fair value of these warrants was determined to be $7.3 million and recognized as a liability. The shares of common stock were sold pursuant to an effective shelf registration statement filed with the SEC. The warrants under certain situations require cash settlement by the Company.
Stock Incentive Plans
At the Annual Stockholder Meeting on December 3, 2014, the Company’s stockholders approved the Immunomedics, Inc. 2014 Long-Term Incentive Plan (the “Plan”). The Plan replaced the Company’s 2006 Stock Incentive Plan (the “2006 Plan”), which terminated on December 3, 2014. The Plan was established to promote the interests of the Company, by providing eligible persons with the opportunity to acquire a proprietary interest in the Company as an incentive to remain with the organization and to align the employee’s interest with our stockholders. The approval authorized issuance of 9,000,000 shares plus the number of unallocated share available for issuance as of the effective date under the 2006 Plan that were not subject to outstanding awards.
As under the 2006 Plan, option awards under the Plan are generally granted with an exercise price equal to the market price of the Plan, the Company’s common stock at the date of grant; those option awards generally vest based on four years of continuous service and have seven year contractual terms. Option awards that are granted to non-employee Board members under the annual option grant program are granted with an exercise price equal to the market price of the Company’s common stock at the date of grant, are vested immediately and have seven year contractual terms. Certain options provide for accelerated vesting if there is a change in control (as defined in the Plan). At June 30, 2017, there were 14,264,986 shares of common stock reserved for possible future issuance under the Plan, both currently outstanding (4,724,569 shares) and which were available to be issued for future grants (9,540,417 shares).
The Plan is divided into three separate equity incentive programs. These incentive programs consist of:
|
·
|
|
Discretionary Grant Program under which eligible persons may be granted options to purchase shares of common stock or stock appreciation rights tied to the value of the common stock;
|
|
·
|
|
Stock Issuance Program under which eligible persons may be issued shares of common stock pursuant to restricted stock awards, restricted stock shares, performance shares or other stock-based awards which vest upon completion of a designated service period or the attainment of pre-established performance milestones, or such shares of common stock may be a fully-vested bonus for services rendered; and
|
|
·
|
|
Automatic Grant Program under which eligible non-employee Board members will automatically receive grants at designated intervals over their period of continued Board service.
|
For the 2016 and 2015 fiscal years each of the Company’s outside Directors who had been a Director prior to July 1st of each year were granted, at the annual stockholder meeting of each year, options to purchase shares of the Company’s common stock at fair market value on the grant date. For fiscal years 2016 and 2015, stock options were
granted to these outside directors to purchase an aggregate of 115,284 shares and 89,204 shares, respectively. The values of the granted options were $180 thousand for the fiscal years ended June 30, 2016 and 2015. Stock options granted to outside directors were vested when granted. No stock options were granted to outside directors in fiscal year 2017 as it was decided to defer the awarding of options until a revision to the program was completed in July, 2017. When an outside Director is elected to the Board of Directors, they are awarded options for 22,500 shares of the Company’s common stock. The Company recorded $184 thousand, $201 thousand and $180 thousand for stock-based compensation expense for these non-employee Board members stock options for the years ended June 30, 2017, 2016, and 2015, respectively. For new outside Directors elected on May 4, 2017, no options were awarded until a revision to the program was completed in July, 2017.
For the 2016 and 2015 fiscal years non-employee Board members who continue to serve would receive on the date of the annual stockholders meeting an annual grant of non-qualified stock options and restricted stock units, equal in value to $45 thousand. For fiscal years 2016 and 2015, restricted stock units were granted to these outside directors in an aggregate 57,876 units and 42,656 units, respectively. The value of the units granted were $180 thousand for the 2016 and 2015 fiscal years. Restricted stock units granted to outside directors become vested within one year of grant date. The Company recorded $31 thousand, $181 thousand, and $180 thousand for stock-based compensation expense for these non-employee Board members restricted stock units for the years ended June 30, 2017, 2016, and 2015, respectively. No restricted stock units or non-qualified stock options were granted to outside directors in fiscal year 2017, as it was decided to defer the awarding of options until a revision to the program was completed in July, 2017.
Information concerning options for the years ended June 30, 2017, 2016, and 2015 is summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
Weighted Average Exercise Price
|
|
|
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
|
2015
|
|
Options outstanding, beginning of year
|
|
4,015,895
|
|
4,525,340
|
|
5,308,617
|
|
$
|
3.42
|
|
$
|
3.48
|
|
$
|
3.41
|
|
Options granted
|
|
376,032
|
|
880,681
|
|
955,361
|
|
$
|
4.07
|
|
$
|
2.15
|
|
$
|
3.82
|
|
Options exercised
|
|
(1,279,354)
|
|
(1,097,500)
|
|
(1,202,575)
|
|
$
|
3.35
|
|
$
|
2.53
|
|
$
|
2.46
|
|
Options expired or forfeited
|
|
(219,333)
|
|
(292,626)
|
|
(536,063)
|
|
$
|
4.15
|
|
$
|
3.88
|
|
$
|
4.50
|
|
Options outstanding, end of year
|
|
2,893,240
|
|
4,015,895
|
|
4,525,340
|
|
$
|
3.48
|
|
$
|
3.42
|
|
$
|
3.48
|
|
Options exercisable, end of year
|
|
2,495,650
|
|
2,733,842
|
|
3,115,798
|
|
$
|
3.42
|
|
$
|
3.64
|
|
$
|
3.27
|
|
The weighted average fair value at the date of grant for options granted during the years ended June 30, 2017, 2016 and 2015 were $2.21, $1.08 and $1.91 per share, respectively.
The aggregate intrinsic value of the outstanding stock options as of June 30, 2017 and 2016 is $15.5 million and $0.3 million, respectively. The aggregate intrinsic value of the exercisable stock options as of June 30, 2017 and 2016 is $13.5 million and $25 thousand, respectively. The aggregate intrinsic value is the sum of the amounts by which the quoted market price of the Company’s common stock exceeded the exercise price of the options at June 30, 2017, for those options for which the quoted market price was in excess of the exercise price. The total intrinsic value of options exercised during the 2017, 2016, and 2015 fiscal years was $2.6 million, $1.2 million, and $1.8 million, respectively. Included in research and development and general and administrative expense categories the Company has recorded $1.8 million, $1.5 million, and $1.4 million for stock-based compensation expense related to these stock options during the 2017, 2016, and 2015 fiscal years, respectively.
The following table summarizes information concerning options outstanding under the Plan at June 30, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
Weighted
|
|
|
|
Weighted
|
|
|
|
Number
|
|
average
|
|
average
|
|
Number
|
|
average
|
|
Range of
|
|
outstanding
|
|
exercise
|
|
remaining
|
|
exercisable
|
|
exercise
|
|
exercise price
|
|
at June 30, 2017
|
|
price
|
|
term (yrs.)
|
|
at June 30, 2017
|
|
price
|
|
$1.59 - 3.00
|
|
655,163
|
|
$
|
1.98
|
|
5.30
|
|
491,533
|
|
$
|
1.88
|
|
3.01 - 5.00
|
|
1,950,233
|
|
|
3.65
|
|
3.54
|
|
1,763,729
|
|
|
3.59
|
|
5.01 - 7.00
|
|
242,844
|
|
|
5.15
|
|
3.16
|
|
240,388
|
|
|
5.15
|
|
7.01 - 9.50
|
|
45,000
|
|
|
8.70
|
|
7.00
|
|
—
|
|
|
—
|
|
|
|
2,893,240
|
|
$
|
3.48
|
|
3.96
|
|
2,495,650
|
|
|
3.42
|
|
At the Compensation Committee meeting held on August 14, 2014, the Company awarded an additional 226,657 restricted stock units to certain executive officers of the Company at the closing market price on that date ($3.32 per share).
On August 20, 2015, the Company awarded an additional 214,205 restricted stock units to certain executive officers of the Company at the closing price on that date ($1.76 per share). On September 21, 2016, the Company awarded an additional 106,061 restricted stock units to an executive officer of the Company at the closing price on that date ($3.30 per share). These restricted stock units vest over a four year period.
As of June 30, 2017 the 331,329 outstanding restricted stock units had vested in accordance with the terms of those agreements with the change in control which occurred on or before May 4, 2017.
Consequently,
as of June 30, 2017 there was no unrecognized compensation costs related to non-vested share-based compensation arrangements granted under the Plan for these restricted stock units. The Company recorded $1.2 million, $0.6 million, and $0.8 million for stock-based compensation expense for these executive officers for the fiscal years ended June 30, 2017, 2016, and 2015, respectively.
On August 16, 2013, the Company awarded certain executive officers Performance Units of up to 389,864 of restricted stock units which are subject to attainment of certain performance milestones as well as certain continued service requirements. All or a portion of the Performance Units would vest based upon the level of achievement of the milestones set forth in each agreement, which was expected to be achieved within five years of the grant date. The Performance Units had vested were based upon attainment of the Performance milestone and were exercised based on a percentage basis on the attainment of anniversary dates. As of June 30, 2017, all of these Performance Units have vested. The Company recorded $0.1 million, $0.3 million, and $0.4 million for the stock-based compensation for the fiscal years ended June 30, 2017, 2016, and 2015, respectively.
As part of the Amended and Restated Employment Agreement with Dr. Goldenberg which became effective July 1, 2015 (see Note 13), Dr. Goldenberg received a grant of 1,500,000 Restricted Stock Units, which would vest, if at all, after the three (3) year period commencing on the grant date of July 14, 2015, provided the applicable milestones based on achievement of certain market conditions (stock prices) were met and conditioned upon Dr. Goldenberg's continued employment through the vesting period, subject to the terms and conditions of the Restricted Stock Units Notice and the Restricted Stock Units Agreement and such other terms and conditions as set forth in the grant agreement. The Company recorded $1.1 million for the stock-based compensation for the fiscal years ended June 30, 2017 and 2016 for this agreement.
The Company believes that a change in control occurred on or before May 4, 2017, as defined in Dr. Goldenberg's employment agreement as a result of the new Board of Directors being seated. According to the terms of his employment agreement and notice of award, the Company believes that these 1.5 million restricted stock units did not vest since at the time of the change in control the actual price per share of the common stock had not achieved the specified target price required to trigger the vesting of the Restricted Stock Units. The Company understands that Dr. Goldenberg contests the Company’s interpretation of both the timing of the change in control and the vesting requirements of the Restricted Stock Units upon a change in control. The 1.5 million Restricted Stock Units are the subject of arbitration, discussed above.
The Restricted Stock Units granted to Dr. Goldenberg were valued using Monte Carlo simulation technique using the following assumptions:
|
|
|
|
Expected dividend
|
|
0
|
%
|
Expected option term (years)
|
|
5
|
|
Expected stock price volatility
|
|
49.6
|
%
|
Risk-free interest rate
|
|
1.32
|
%
|
A summary of the Company’s non-vested restricted stock units at June 30, 2017, and changes during the year ended June 30, 2017 is presented below:
|
|
|
|
|
|
|
|
|
|
|
Weighted-Average
|
|
|
|
|
|
per Share of
|
|
|
|
|
|
Market Value
|
|
Non-Vested Restricted Stock
|
|
Number of Awards
|
|
on Grant Date
|
|
Non-vested at June 30, 2016
|
|
2,066,041
|
|
$
|
2.57
|
|
Restricted Units Granted
(a)
|
|
106,061
|
|
|
3.30
|
|
Cancelled
|
|
(14,469)
|
|
|
3.11
|
|
Vested/Exercised
(b)
|
|
(657,633)
|
|
|
3.33
|
|
Non-vested at June 30, 2017
|
|
1,500,000
|
|
$
|
2.28
|
|
|
(a)
|
|
For the year ended June 30, 2017, 106,061 restricted stock units were awarded to the Company’s former President and Chief Executive Officer.
|
|
(b)
|
|
Represents restricted stock units to the Company’s former President and Chief Executive Officer which vested upon her termination and pursuant to the Company’s change of control, and the Chairman which vested upon the Company’s change of control.
|
As of June 30, 2017, the Company has 1,897,590 non-vested options and restricted stock units outstanding. As of June 30, 2017, 2016, and 2015 there was $2.0 million, $5.2 million, and $4.5 million, respectively, of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the Plan. That cost is being recognized over a weighted-average period of 2.0 years. The weighted average remaining contractual terms of the exercisable shares is 1.92 years and 3.15 years as of June 30, 2017 and 2016, respectively.
The following table summarizes the stock-based compensation expense by the consolidated statements of comprehensive loss line items for the fiscal years ended June 30, 2017, 2016 and 2015 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended June 30,
|
|
|
|
2017
|
|
2016
|
|
2015
|
|
Research and development
|
|
$
|
2,600
|
|
$
|
2,245
|
|
$
|
1,673
|
|
General and administrative
|
|
|
1,733
|
|
|
1,496
|
|
|
1,116
|
|
Total expense
|
|
$
|
4,333
|
|
$
|
3,741
|
|
$
|
2,789
|
|
11
. Accumulated Other Comprehensive (Loss) Income
The components of accumulated other comprehensive (loss) income were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency
|
|
Net Unrealized Gains
|
|
Accumulated Other
|
|
|
|
Translation
|
|
(Losses) on Available-
|
|
Comprehensive
|
|
|
|
Adjustments
|
|
for-Sale Securities
|
|
(Loss) Income
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2014
|
|
|
262
|
|
|
—
|
|
|
262
|
|
Other comprehensive (loss) income before reclassifications
|
|
|
(435)
|
|
|
23
|
|
|
(412)
|
|
Amounts reclassified from accumulated other comprehensive (loss)
(a)
|
|
|
—
|
|
|
(11)
|
|
|
(11)
|
|
Net other comprehensive (loss) income for the year
|
|
|
(435)
|
|
|
12
|
|
|
(423)
|
|
Balance, June 30, 2015
|
|
|
(173)
|
|
|
12
|
|
|
(161)
|
|
Other comprehensive income before reclassifications
|
|
|
1
|
|
|
30
|
|
|
31
|
|
Amounts reclassified from accumulated other comprehensive income
(a)
|
|
|
—
|
|
|
(2)
|
|
|
(2)
|
|
Net other comprehensive income for the year
|
|
|
1
|
|
|
28
|
|
|
29
|
|
Balance, June 30, 2016
|
|
$
|
(172)
|
|
$
|
40
|
|
$
|
(132)
|
|
Other comprehensive loss before reclassifications
|
|
|
(62)
|
|
|
(125)
|
|
|
(187)
|
|
Amounts reclassified from accumulated other comprehensive loss
(a)
|
|
|
—
|
|
|
16
|
|
|
16
|
|
Net other comprehensive loss for the year
|
|
|
(62)
|
|
|
(109)
|
|
|
(171)
|
|
Balance, June 30, 2017
|
|
$
|
(234)
|
|
$
|
(69)
|
|
$
|
(303)
|
|
|
(a)
|
|
For the fiscal years ended June 30, 2017, 2016 and 2015, $16 thousand, $2 thousand, and $11 thousand, respectively, were reclassified from accumulated other comprehensive (loss) income to interest and other income, respectively.
|
All components of accumulated other comprehensive (loss) income are net of tax, except currency translation adjustments, which exclude income taxes related to indefinite investments in foreign subsidiaries.
12
. Income Taxes
The expense (benefit) for income taxes is as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended June 30,
|
|
|
|
2017
|
|
2016
|
|
2015
|
|
Federal
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
Deferred
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total Federal
|
|
|
—
|
|
|
—
|
|
|
—
|
|
State
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
2
|
|
|
(5,054)
|
|
|
2
|
|
Deferred
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total State
|
|
|
2
|
|
|
(5,054)
|
|
|
2
|
|
Foreign
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
19
|
|
|
—
|
|
|
56
|
|
Deferred
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total Foreign
|
|
|
19
|
|
|
—
|
|
|
56
|
|
Total Expense (Benefit)
|
|
$
|
21
|
|
$
|
(5,054)
|
|
$
|
58
|
|
A reconciliation of the statutory tax rates and the effective tax rates for each of the years ended June 30 is as follows:
|
|
|
|
|
|
|
|
|
|
2017
|
|
2016
|
|
2015
|
|
Statutory rate
|
|
(34.0)
|
%
|
(34.0)
|
%
|
(34.0)
|
%
|
Foreign income tax
|
|
—
|
%
|
—
|
%
|
0.1
|
%
|
Change in valuation allowance
|
|
21.9
|
%
|
30.4
|
%
|
34.7
|
%
|
State income taxes, (net of federal tax benefit)
|
|
(4.8)
|
%
|
(2.8)
|
%
|
—
|
%
|
Permanent differences, (primarily warrant-related expenses)
|
|
15.3
|
%
|
—
|
%
|
—
|
%
|
Other
|
|
1.6
|
%
|
(1.6)
|
%
|
(0.7)
|
%
|
Effective rate
|
|
—
|
%
|
(8.0)
|
%
|
0.1
|
%
|
For fiscal year 2016, the Company
sold certain State of New Jersey State Net Operating Losses (“NOL”) and Research and Development (“R&D”) tax credits through the New Jersey Economic Development Authority Technology Business Tax Certificate Transfer Program. Pursuant to such sale, for the year ended June 30, 2016, the Company recorded a tax benefit of $5.1 million, as a result of its sale of approximately $66.2 million, of New Jersey State NOL and $1.5 million of New Jersey R&D tax credits. There were no sales of NOL or R&D for the 2017 or 2015 fiscal years.
The tax effects of temporary differences that give rise to significant portions of the Company’s deferred tax assets as of June 30, 2017 and 2016 are presented below (in thousands):
|
|
|
|
|
|
|
|
|
|
2017
|
|
2016
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
NOL carry forwards
|
|
$
|
134,476
|
|
$
|
103,171
|
|
Research and development credits
|
|
|
14,357
|
|
|
15,322
|
|
Property and equipment
|
|
|
3,406
|
|
|
3,693
|
|
Other
|
|
|
7,335
|
|
|
3,734
|
|
Total
|
|
|
159,574
|
|
|
125,920
|
|
Valuation allowance
|
|
|
(159,574)
|
|
|
(125,920)
|
|
Net deferred taxes
|
|
$
|
—
|
|
$
|
—
|
|
A valuation allowance is provided when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The valuation allowances for fiscal years 2017 and 2016 have been applied to offset the deferred tax assets in recognition of the uncertainty that such tax benefits will be realized as the Company continues to
incur losses. The differences between book income and tax income primarily relate to the temporary differences from depreciation and stock compensation expenses.
At June 30, 2017, the Company has available net operating loss carry forwards for federal income tax reporting purposes of approximately $371.1 million and for state income tax reporting purposes of approximately $186.0 million, which expire at various dates between fiscal 2019 and 2037. Pursuant to Section 382 of the Internal Revenue Code of 1986, as amended, the annual utilization of a company’s net operating loss and research credit carry forwards may be limited if the Company experiences a change in ownership as defined in Section 382 of the Internal Revenue Code. The Company’s net operating loss carry forwards available to offset future federal taxable income arising before such ownership changes may be limited. Similarly, the Company may be restricted in using its research credit carry forwards arising before such ownership changes to offset future federal income tax expense.
At June 30, 2017, the Company did not have any material unrecognized tax benefits and the Company does not anticipate that its unrecognized tax benefits will significantly change in the next twelve months. The Company will recognize potential interest and penalties related to income tax positions as a component of the provision for income taxes on the Consolidated Statements of Comprehensive Loss in any future periods in which the Company must record a liability. The Company is subject to examination for U.S. Federal and Foreign tax purposes for 2012 and forward and for New Jersey 2013 and forward. The Company conducts business and files tax returns in New Jersey.
13. Related Party Transactions
Certain of the Company’s affiliates, including members of its senior management and Board of Directors, as well as their respective family members and other affiliates, have relationships and agreements among themselves as well as with the Company and its affiliates, that create the potential for both real, as well as perceived, conflicts of interest. These include Dr. David M. Goldenberg, the Company’s Chief Scientific Officer, Chief Patent Officer and former Chairman, Ms. Cynthia L. Sullivan, a director and the former President and Chief Executive Officer, who is the wife of Dr. David M. Goldenberg, and certain companies with which the Company does or has done business with, including the Center for Molecular Medicine and Immunology (“CMMI”), which has ceased operations, and IBC
, the Company’s majority-owned subsidiary.
Dr. David M. Goldenberg
Dr. David M. Goldenberg founded Immunomedics in 1982 and was the Company’s Chairman of the Board of Directors through April 4, 2017. He continues to play a critical role in the Company’s business and currently serves as the Chief Scientific Officer and Chief Patent Officer. Dr. Goldenberg is a party to a number of agreements with the Company involving not only his services, but intellectual property owned by him.
Relationships with The Center for Molecular Medicine and Immunology
The Company’s product development has involved, to varying degrees, CMMI, for the performance of certain
basic research and patient evaluations
, the results of which are made available to the
Company pursuant to a collaborative research and license agreement
. Dr. Goldenberg was the founder, President and a member of the Board of Trustees of CMMI.
In fiscal years ended June 30, 2017, 2016 and 2015, the Company incurred $6 thousand, $27 thousand, and $33 thousand, respectively, of legal expenses for patent related matters for patents licensed to Immunomedics from CMMI.
However, any inventions made independently of the Company at CMMI are the property of CMMI.
CMMI has ceased operations and is in the process of dissolution.
IBC Pharmaceuticals
IBC is a majority-owned subsidiary of Immunomedics, Inc.
As of June 30, 2017, the shares of IBC were held as follows:
|
|
|
|
|
|
Stockholder
|
|
Holdings
|
|
Percentage of Total
|
|
Immunomedics, Inc.
|
|
5,615,124 shares of Series A Preferred Stock
|
|
73.46
|
%
|
Third Party Investors
|
|
628,282 shares of Series B Preferred Stock
|
|
8.22
|
%
|
David M. Goldenberg Millennium Trust
|
|
1,399,926 shares of Series C Preferred Stock
|
|
18.32
|
%
|
|
|
|
|
100.00
|
%
|
In the event of a liquidation, dissolution or winding up of IBC, the Series A, B and C Preferred Stockholders would be entitled to $0.6902, $5.17 and $0.325 per share (subject to adjustment), respectively. The Series A and B stockholders would be paid ratably until fully satisfied. The Series C stockholders would be paid only after the Series A and B stockholders have been fully repaid. These liquidation payments would be made only to the extent the assets of IBC are sufficient to make such payments.
In each of the fiscal years 2017, 2016, and 2015, Dr. Goldenberg received $41 thousand, $87 thousand, and $84 thousand, respectively, in compensation for his services to IBC. At June 30, 2017, Dr. Goldenberg was a director of IBC, and Cynthia L. Sullivan served as the President of IBC.
14. License and Collaboration Agreement
The Bayer Group (formerly Algeta ASA)
In January 2013 the Company entered into a collaboration agreement, (the “Collaboration Agreement”), with Algeta ASA (subsequently acquired by The Bayer Group (“Bayer”), for the development of epratuzumab to be conjugated with Algeta’s proprietary thorium-227 alpha-pharmaceutical payload. Under the terms of the Collaboration Agreement, the Company manufactured and supplied clinical-grade epratuzumab to Bayer, which has rights to evaluate the potential of a Targeted Thorium Conjugate (“TTC”), linking thorium-227 to epratuzumab, for the treatment of patients with cancer. Bayer has the right to terminate the Collaboration Agreement with three months prior written notice, subject to certain provisions. Bayer will fund all non-clinical and clinical development costs up to the end of Phase 1 clinical testing. Upon successful completion of Phase 1 testing, the parties shall negotiate terms for a license agreement at Bayer’s request. The Company and Bayer have agreed to certain parameters in the Collaboration Agreement.
Under the terms of the Collaboration Agreement, as amended, Immunomedics received
an upfront cash payment and other payments aggregating $6.0 million, which have been recognized in prior periods upon the Company fulfilling its obligations under the Collaboration Agreement.
For the year ended June 30, 2015, the Company recognized $1.0 million in license and other revenue for the completion of the clinical development milestone as described in the Collaboration Agreement, which required the shipment of sufficient quantities of clinical grade material to Bayer to complete their Phase 1 clinical trial. In addition, in January 2017, 2016, and 2015, the Company recorded revenue of $0.3 million representing an anniversary payment under the agreement. This agreement has been extended to December 30, 2018.
15. Commitments and Contingencies
a. Employment Agreements
Effective July 1, 2015, the Company entered into the Amended and Restated Employment Agreement with Dr. Goldenberg pertaining to Dr. Goldenberg’s service to the Company as the Company’s Chairman of the Board, Chief Scientific Officer and Chief Patent Officer (the “Amended and Restated Goldenberg Agreement”). The Amended and Restated Goldenberg Agreement was to continue until July 1, 2020.
On May 3, 2017 Dr. Goldenberg and other parties entered into a binding Term Sheet, to resolve certain legal actions among the parties. Upon execution of the contemplated Settlement Agreement, Dr. Goldenberg will remain a
director of the Company, but has agreed to resign from all officer and other positions of the Company and all director, officer and other positions at any of the Company’s affiliates (other than Dr. Goldenberg’s position as a member of the board of directors of IBC Pharmaceuticals, the Company’s majority owned U.S. subsidiary), effective as of the date of the Settlement Agreement. The Settlement Agreement will provide that Dr. Goldenberg will abide by all post-termination covenants and obligations contemplated by the Amended and Restated Goldenberg Agreement. In exchange for a release of claims as required by the Amended and Restated Goldenberg Agreement and subject to compliance with the terms of the Settlement Agreement, Dr. Goldenberg will be entitled to (i) termination payments in accordance with the Amended and Restated Goldenberg Agreement for a termination without Good Cause after a Change in Control, (ii) accelerated vesting or extension of exercise period for equity awards already earned, pursuant to the Amended and Restated Goldenberg Agreement, (iii) COBRA payments, and (iv) royalties or payment in accordance with existing agreements. As of June 30, 2017 the Company recorded a $2.7 million expense for this settlement cost. In addition to this amount an additional cash payment of approximately $1.8 million is in dispute. The 1.5 million Restricted Stock Units to Dr. Goldenberg under the terms of the Amended and Restated Goldenberg Agreement are the subject of arbitration, discussed above.
To the extent the Parties cannot reach agreement on such issues before execution of the Settlement Agreement, the Parties to the Term Sheet have agreed to arbitrate disputes relating to Dr. Goldenberg’s claims to certain equity awards and other severance payments. The Company has agreed to pay the arbitrator in full for such arbitration, as well as reasonable attorneys’ fees and expenses incurred by Dr. Goldenberg and Ms. Sullivan in connection with any such arbitration, up to a maximum amount of $650,000 combined. As of June 30, 2017 no expenses have been incurred regarding such arbitration.
Under the existing agreements, Dr. Goldenberg is eligible to receive royalty payments on royalties received by the Company. For each fiscal year the Company shall pay Dr. Goldenberg a sum equal to a percentage of the annual royalties the Company receives on each of the products for which Dr. Goldenberg is an Inventor, and all products using, related to or derived from products for which Dr. Goldenberg is an Inventor. The percentage of royalties that the Company will pay to Dr. Goldenberg on each patented product will be determined based on the percentage of royalties that the Company must pay to external third parties and payments are to continue for the life of the patent, as defined in his employment agreement.
Dr. Goldenberg is also eligible to receive minimum payments of $150 thousand during each of the fiscal years, payable in equal quarterly payments, as an advance against the amounts due as additional incentive compensation, royalty payments and dispositions of undeveloped assets. In the event the Company completes a disposition of the Company’s undeveloped assets for which Dr. Goldenberg was an Inventor, the Company will pay Dr. Goldenberg a sum equal to at least twenty percent or more of the consideration the Company receives from each disposition. The Company’s obligation to compensate Dr. Goldenberg upon dispositions of undeveloped assets applies to all dispositions completed within the contract term or within three years thereafter even if the Company actually receives the consideration at some time after the three (3) year period elapses.
For the 2017, 2016 and 2015 fiscal years, Dr. Goldenberg received the minimum payment under the employment agreement.
Dr. Goldenberg also is compensated by IBC Pharmaceuticals as discussed in greater detail below.
Cynthia L. Sullivan
Effective July 1, 2014, the Company entered into the Fifth Amended and Restated Employment Agreement with Cynthia L. Sullivan pertaining to Ms. Sullivan’s service to the Company as the Company’s President and Chief Executive Officer (the “Amended Sullivan Agreement”). This agreement was terminated effective July 1, 2017.
On May 3, 2017 Ms. Sullivan and other parties entered into the Term Sheet to resolve certain legal actions among the parties as described in Note 15 below. Upon execution of the contemplated Settlement Agreement, Ms. Sullivan has agreed to resign from director of the Company and any of its affiliates, effective as of the date of the Settlement Agreement. The Settlement Agreement will provide that Ms. Sullivan will abide by all post-termination covenants and obligations contemplated by the Amended Sullivan Agreement. In exchange for a release of claims as required by the Sullivan Agreement and subject to compliance with the terms of the Settlement Agreement, Ms. Sullivan
will be entitled to (i) termination payments in accordance with the Amended Sullivan Agreement for a termination without Good Cause after a Change in Control, (ii) accelerated vesting or extension of the exercise period for equity awards already earned, pursuant to the Amended Sullivan Agreement, and (iii) COBRA payments. As of June 30, 2017 the Company recorded a $4.2 million expense for all costs that would be due to Ms. Sullivan under the terms of the Settlement Agreement. In addition to this amount, a cash payment of $0.9 million is in dispute.
The Parties to the Term Sheet have agreed to arbitrate disputes relating to Ms. Sullivan’s claimed entitlement to certain equity awards and severance payments, and Ms.
Sullivan’s
claimed rights to certain bonus payments, to the extent the Parties cannot reach agreement on such issues before execution of the Settlement Agreement. The Company has agreed to pay in full the arbitrator in such arbitration as well as reasonable attorneys’ fees and expenses incurred by Ms. Sullivan and Dr. Goldenberg in connection with any such arbitration, up to a maximum amount of $650,000 combined. As of June 30, 2017 no expenses have been incurred regarding such arbitration.
b. Operating Lease
Immunomedics is obligated under an operating lease for facilities used for research and development, manufacturing and office space, expiring in October 2031 at a base annual rate of $1.0 million, which is fixed through October 2021 and increases thereafter every five years. Rental expense related to this lease was approximately $0.9 million, $0.8 million and $0.8 million for fiscal years 2017, 2016, and 2015, respectively.
The minimum lease commitments for the non-cancelable term of the facility lease described above are as follows for fiscal years (in thousands):
|
|
|
|
|
2018
|
|
$
|
974
|
|
2019
|
|
$
|
974
|
|
2020
|
|
$
|
974
|
|
2021
|
|
$
|
974
|
|
2022
|
|
$
|
1,020
|
|
Thereafter
|
|
$
|
9,742
|
|
c. Change of Control Agreements
Certain employees have Change of Control Agreements, whereby if a majority of a new board of directors is constituted by newly elected board members not endorsed by the Company’s current Board of Directors, and if, subsequent to such a change, there is a significant change in the responsibilities or employment status of these executives, then severance provisions included in their Change of Control Agreements could be triggered. These severance provisions could result in accelerated vesting of equity compensation and significant, unbudgeted, cash severance payments.
d. Legal Matters
Patent litigation:
Immunomedics filed a first amended complaint on October 22, 2015, a second amended complaint on January 14, 2016, and a third amended complaint on October 12, 2016, in the United States District Court for the District of New Jersey, against Roger Williams Medical Center (“RWMC”), Richard P. Junghans, M.D., Ph.D., and Steven C. Katz, M.D. The third amended complaint alleges that RWMC and Dr. Junghans breached a Material Transfer Agreement (“MTA”) through which it provided to them a monoclonal antibody known as MN-14 and related materials. Defendants are alleged to have breached the MTA and to have been negligent by, among other things, using the materials beyond the agreed-upon Research Project, sharing confidential information, failing to provide Immunomedics with a right of first refusal, failing to notify Immunomedics of intended publications prior to publishing, and refusing to return the materials upon request. Immunomedics also asserts the following claims against some of these defendants: conversion, tortious interference, unjust enrichment, and infringement of three patents owned by Immunomedics. Defendants Junghans, Katz, and RWMC subsequently moved to dismiss for failure to state a claim on November 14, 2016, but this motion was denied on January 4, 2017. The third amended complaint also added parties named Sorrento, TNK, BDL, and CARgenix. On December 2, 2016, Sorrento, TNK, BDL, and CARgenix moved to dismiss for lack of personal
jurisdiction over them in New Jersey. The court granted this motion on January 25, 2017. On January 20, 2017, the court held a
Markman
hearing to construe the claims in the patents in suit. On February 28, 2017, the court issued an opinion and order finding,
inter alia
, that the term “effective amount” in the patents in suit is not indefinite and should be given its plain and order meaning, as proposed by Immunomedics, of “an amount capable of producing the claim result.” All other terms in the patents were given their plain and ordinary meaning. On May 11, 2017, the Court ordered the parties to mediation with former New Jersey District Court Judge Garrett Brown, and stayed the case for 90 days. A mediation took place on June 28, 2017.
The mediation was unsuccessful; and the stay of discovery will be lifted on August 9.
Stockholder complaints:
Class Action Stockholder Federal Securities Cases
Two purported class action cases have been filed in the United States District Court for the District of New Jersey; namely, Fergus v. Immunomedics, Inc., et al., No. 2:16-cv-03335, filed June 9, 2016; and Becker v. Immunomedics, Inc., et al., No. 2:16-cv-03374, filed June 10, 2016. These cases arise from the same alleged facts and circumstances, and seek class certification on behalf of purchasers of our common stock between April 20, 2016 and June 2, 2016 (with respect to the Fergus matter) and between April 20, 2016 and June 3, 2016 (with respect to the Becker matter). These cases concern the Company's statements in press releases, investor conference calls, and SEC filings beginning in April 2016 that the Company would present updated information regarding its IMMU-132 breast cancer drug at the 2016 American Society of Clinical Oncology ("ASCO") conference in Chicago, Illinois. The complaints allege that these statements were false and misleading in light of June 2, 2016 reports that ASCO had cancelled the presentation because it contained previously reported information. The complaints further allege that these statements resulted in artificially inflated prices for our common stock, and that the Company and certain of its officers are thus liable under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. An order of voluntarily dismissal without prejudice was entered on November 10, 2016 in the Becker matter. An order granting motion to consolidate cases, appoint lead plaintiff, and approve lead and liaison counsel was entered on February 7, 2017 in the Fergus matter. As of the date hereof, service of the initiating papers in the Fergus matter has not been made on the Company.
Stockholder Derivative Action in the Superior Court of New Jersey
On October 3, 2016, plaintiff commenced an action captioned Rosenfeld v. Goldenberg, et al., No. L-2200-16, alleging the same underlying facts and circumstances as in the pending federal securities class action, the Fergus matter. Specifically, this action concerns the Company’s statements in press releases, investor conference calls, and SEC filings beginning in April 2016 that the Company would present updated information regarding its IMMU-132 breast cancer drug at the 2016 ASCO conference in Chicago, Illinois. The complaint alleges that these statements were false and misleading in light of the June 2, 2016 reports that ASCO had cancelled the presentation because it contained previously reported information. The complaint further alleges that these statements resulted in artificially inflated prices for our common stock, and that certain directors and officers of the Company breached their fiduciary duties to the Company. In addition to monetary damages, the complaint seeks to require the Company to reform its corporate governance and internal procedures. Service was effectuated on all defendants on April 7, 2017. The defendants filed a motion to dismiss the complaint on June 19, 2017.
Class Action Stockholder Claim in the Court of Chancery of the State of Delaware
On December 13, 2016, plaintiff commenced an action captioned Desanctis v. Goldenberg, C.A. No. 12981-VCL (Del. Ch. Ct.), alleging that the Company's Board of Directors failed to comply with Delaware law and breached their fiduciary duties when it rescheduled the Immunomedics 2016 Annual Meeting of Stockholders from December 14, 2016 to February 16, 2017. On December 22, 2016, the Delaware Court of Chancery refused to schedule an expedited hearing in the action and concluded that plaintiff failed to carry his burden of demonstrating that he had pleaded a colorable claim and that there was a threat of irreparable harm. The Court further stated that the Complaint failed to demonstrate that the Board's actions were unreasonable when it rescheduled the Annual Meeting in response to venBio Select Advisor LLC's proxy contest.
Stockholder Claim in the Court of Chancery of the State of Delaware
On February 13, 2017, venBio commenced an action captioned
venBio Select Advisor LLC v. Goldenberg, et al.
, C.A. No. 2017-0108-VCL (Del. Ch.) (the “venBio Action”), alleging that members of the Company’s Board breached their fiduciary duties when the Board (i) rescheduled the Company’s 2016 Annual Meeting of Stockholders (the “2016 Annual Meeting”) from December 14, 2016 to February 16, 2017, and then again to March 3, 2017, and (ii) agreed to the proposed Licensing Transaction with Seattle Genetics. venBio also named Seattle Genetics as a defendant and sought an injunction preventing the Company from closing the licensing transaction with Seattle Genetics. On March 6, 2017, venBio amended its complaint, adding further allegations, including that members of the Company’s Board breached their fiduciary duties when the Board amended the Company’s Amended and Restated By-laws (the “By-Laws”) to call for a plurality voting regime for the election of directors instead of majority voting, and providing for mandatory advancement of attorneys’ fees and costs for the Company’s directors and officers. The Court of Chancery entered a temporary restraining order on March 9, 2017, enjoining the closing of the Licensing Transaction. venBio amended its complaint a second time on April 19, 2017, this time adding as an additional defendant the Company’s financial advisor on the Licensing Transaction, Greenhill.
On May 4, 2017, the Company entered into the Termination Agreement with Seattle Genetics, pursuant to which the Company and Seattle Genetics agreed to relinquish their respective rights under the Licensing Agreement and amend the term of the SGEN Warrant, and in connection therewith, the Company and venBio agreed to fully settle, resolve and release Seattle Genetics, and Seattle Genetics agreed to fully settle, resolve and release the Company and venBio, from all disputes, claims and liabilities arising from the Licensing Agreement and the transactions contemplated thereby, subject to the terms of the Termination Agreement and the related settlement agreement. The Termination Agreement will be effective thirty days following the entry on July 25, 2017 of a final judgment of the Court of Chancery approving the dismissal of Seattle Genetics from the venBio Action.
On May 3, 2017, venBio and the Company and individual defendants Goldenberg, Sullivan and Markison (collectively, the “Individual Defendants”) entered into a binding Term Sheet, which is to be reduced to a definitive settlement agreement (“Settlement Agreement”), pursuant to which, among other things, venBio and the Company will release the Individual Defendants from all certain claims described below and will submit the remaining claims against the non-settling defendants (including non-settling defendants and former directors Robert Forrester, Jason Aryeh, Geoff Cox and Bob Oliver, but excluding those claims with respect to Seattle Genetics, which the parties have agreed to settle pursuant to the Termination Agreement as described above) to non-binding mediation. Once the Parties execute the Settlement Agreement, it will be submitted to the Court of Chancery for approval.
On June 8, 2017, venBio, the Company and Greenhill entered into a binding term sheet (the “GHL Term Sheet”), which is to be reduced to a definitive settlement agreement (“GHL Settlement Agreement”), pursuant to which, among other things, venBio and the Company will release Greenhill from “all direct and derivative claims that have been or could be asserted by or on behalf of venBio, the Company, or the directors, officers, employees, affiliates and related persons of venBio or the Company, whether known or unknown, against Greenhill and Greenhill’s affiliates and related persons in connection with the claims alleged in the venBio Action, the 225 Action, the Federal Action, the Licensing Transaction, the Financing, the Company’s 2017 annual stockholder meeting, Greenhill’s 9/23/2016 and 12/14/2016 engagement letters with the Company (the “Engagement Letters”) (including any claims related to or arising in any manner out of any activities performed or services furnished pursuant to the Engagement Letters, the transactions contemplated thereby or Greenhill’s role in connection therewith), and this settlement.” Greenhill similarly agreed to release “all direct and derivative claims that have been or could be asserted by or on behalf of Greenhill, or the directors, officers, employees, affiliates and related persons of Greenhill, whether known or unknown, against venBio or the Company and their current and former directors, officers, members, employees, affiliates and related persons in connection with the claims alleged in the venBio Action, the 225 Action, the Federal Action, the Licensing Transaction, the Financing, the Company’s 2017 annual stockholder meeting, the Engagement Letters, and this settlement.” Greenhill, the Company and venBio also agreed that the Engagement Letters would be terminated and that Greenhill would forgo and not seek any and all fees, expense, reimbursement or indemnification from the Company, except that, upon final Court approval of the GHL Settlement Agreement, the Company shall reimburse Greenhill up to $200,000 for reasonable and documented expenses that Greenhill incurred in connection with services provided under the Engagement Letters. Greenhill also consented to the settlement reflected in the Term Sheet and Greenhill, the
Company and venBio agreed that Greenhill need not participate in the non-binding mediation contemplated by the Term Sheet.
Lawsuit Against venBio Select Advisor LLC in the U.S. District Court (Delaware) (the “District Court”)
On February 17, 2017, the Company commenced an action captioned
Immunomedics, Inc. v. venBio Select Advisor LLC
, No. 17-176-LPS (D. Del.) (the “Federal Action”), seeking for the District Court to invalidate the proxies solicited by venBio in furtherance of its contest for the election of directors of the Company. The Company named as defendants venBio and its then-nominees, Behzad Aghazadeh, Scott Canute, Peter Barton Hutt, and Khalid Islam. The Company alleged that venBio had conducted its proxy contest and solicited proxies in violation the federal securities laws and regulations, namely by failing timely file a Schedule 13D form indicating venBio’s intent to effectuate change at the Company, publishing early voting results of the Company’s annual election of directors, publishing improper statements about the then-incumbent Board, forming a “group” of like-minded stockholders without publicly disclosing the group, and soliciting proxies without disclosing the solicitations to the SEC. On February 21, 2017, the Company sought an injunction preventing, among other things, the venBio nominees from benefiting from allegedly illegal shadow proxy contest, including, but not limited to, by asserting any claimed right to take office as a member of the Board until venBio made corrective disclosures and the stockholders were permitted time to consider them. On March 2, 2017, the District Court denied the Company the requested relief. On April 6, 2017, the District Court entered a stipulation and order pursuant to which the Company’s claims were voluntarily dismissed without prejudice. On April 17, 2017, Dr. Goldenberg, the Company’s Chief Scientific Officer and Chief Patent Officer and director, notified the District Court that he may maintain the claims initially brought by the Company. On May 3, 2017, Goldenberg and venBio entered into a binding Term Sheet which is to be reduced to a difinitive Settlement Agreement, pursuant to which, among other things, the Parties have agreed to submit to the District Court a stipulation and proposed order dismissing all claims in the Federal Action with prejudice, including those against the individual defendants (the then-venBio nominees). The Settlement Agreement will also include a mutual release of claims that were or could have been asserted in the Federal Action.
Lawsuit Challenging the Results of the 2016 Election of Directors
On March 3, 2017, six of the seven then-incumbent members of the Company’s Board commenced an action captioned
Goldenberg, et al. vs Aghazadeh, et al.
, C.A. No. 2017-0163-VCL (Del. Ch.) (the “225 Action”), challenging the results of the election of directors at the 2016 Annual Meeting that took place on March 3, 2017, in which all four of venBio’s nominees won seats on the Company’s Board. The director-plaintiffs named as defendants venBio and its then-nominees, Behzad Aghazadeh, Scott Canute, Peter Barton Hutt, and Khalid Islam. The incumbent directors alleged the same underlying facts as the Company alleged in its lawsuit against venBio in federal court. On March 13, 2017, the Court of Chancery entered an order (the “Status Quo Order”) seating all four venBio nominees (with the three incumbent directors who secured a plurity of votes, (the “Status Quo Board”) and limiting the Company’s Board to actions within the “ordinary course of business,” unless either waived by the parties on a case-by-case basis or ordered by the Court of Chancery. On March 24, 2017, the defendants, venBio and its four nominees, moved to dismiss the action. The plaintiffs in the action have opposed this motion to dismiss, which remains pending. On April 7, 2017, the three incumbent director plaintiffs not seated on the Status Quo Board voluntarily withdrew their claims, leaving Goldenberg, Sullivan and Markison as plaintiffs. On April 20, 2017, the parties agreed to permit the Status Quo Board to explore a potential financing plan for the Company and negotiate a termination of the Licensing Transaction. On May 3, 2017, the Parties entered into the Term Sheet, pursuant to which, among other things, the Parties agreed to submit to the Court of Chancery a stipulation and proposed order lifting the Status Quo Order. On May 4, 2017, the Parties submitted that stipulation, which confirmed that the Status Quo Board is the lawful Board of the Company, provided that if the 225 Action is not dismissed, the Parties shall be restored to their positions in the 225 Action as of immediately prior to the execution of the Term Sheet. Once the Settlement Agreement is executed, the Parties will submit to the Court of Chancery another stipulation and proposed order dismissing the 225 Action with prejudice, including those against the individual defendants (the then-venBio nominees). The Settlement Agreement will also include a mutual release of all claims that were or could have been asserted in the 225 Action.
Settlement Term Sheet and Settlement Agreement
On May 3, 2017, the Company entered the Term Sheet by and among the Parties in order to resolve certain legal actions among the Parties, as described below. The Parties also agreed to cooperate and use their best efforts to reduce the Term Sheet to a definitive Settlement Agreement and, to the extent necessary, obtain the approval of the Court of Chancery.
Resolution of Litigation
Pursuant to the Term Sheet, the Parties submitted a stipulation and proposed order to the Court of Chancery lifting the Status Quo Order seating all four venBio nominees (with the three incumbent directors who also won election (based on the plurality vote standard), the “Status Quo Board”) and confirming that the Status Quo Board is the lawful Board of the Company (provided however, if the 225 Action is not dismissed, the Parties will be restored to their positions in the 225 Action as of immediately prior to the execution of the Term Sheet). The Court of Chancery entered the proposed order on the afternoon of May 4, 2017. Pursuant to the Term Sheet, the Parties also agreed to submit a stipulation and proposed order to the Court of Chancery staying the venBio Action (as described below) and removing the trial dates from the calendar of the Court of Chancery.
The Company has further agreed to reimburse venBio for reasonable fees and expenses it incurred in connection with the proxy contest between venBio and the Company, the venBio Action, the 225 Action (as described below) and the Federal Action (as described below and, together with the venBio Action and the 225 Action, the “Actions”), and Goldenberg and Sullivan have agreed to not object to such reimbursement.
The Parties have agreed, immediately upon execution of the Settlement Agreement, to submit stipulations and proposed orders dismissing with prejudice both the 225 Action and the Federal Action. The Settlement Agreement will include (i) a mutual release of all claims that were or could have been asserted in the Federal Action or in the 225 Action and (ii) a release of all direct and derivative claims that have been or could be asserted by or on behalf of (a) venBio or the Company, whether known or unknown, against Goldenberg, Sullivan and Markison and their affiliates and related persons, and (b) Goldenberg, Sullivan or Markison, whether known or unknown, against venBio or the Company and their affiliates and related persons, in both cases in connection with the claims alleged in the venBio Action, the Financing, the settlement of the venBio Action, the Licensing Transaction and the Termination Agreement. The settlement of claims against Goldenberg, Sullivan and Markison in the venBio Action will be subject to
approval of the Court of Chancery. venBio and the Company have agreed to stay the venBio Action and submit the claims asserted against the remaining individual defendants (former directors Robert Forrester, Jason Aryeh, Geoff Cox and Bob Oliver) to non-binding mediation. As part of the Termination Agreement, which is subject to the approval of the Court of Chancery, venBio will release SGEN from any claims in the venBio Action.
Financing and Termination of SGEN Transaction
Pursuant to the Term Sheet, Goldenberg and Sullivan have or will (i) vote to support the Financing, (ii) vote to terminate the Licensing Transaction with SGEN, as further discussed below, pursuant to the terms of the Termination Agreement entered into with SGEN, (iii) vote to approve an amendment to the Company’s Amended and Restated Certificate of Incorporation, as amended, to increase the number of shares of authorized Common Stock by an aggregate number of shares of Common Stock to enable conversion of all of the Preferred Shares into shares of Common Stock (the “Charter Amendment”), (iv) approve the submission of a stipulation in the 225 Action to permit the Board to consummate and enter into both the Financing and the Termination Agreement, and (v) agree to not sell any shares of the Company (with certain exceptions) until the date which is the earlier of July 31, 2017 or the date on which the Charter Amendment is approved and the shares of Common Stock issuable upon conversion of the Preferred Shares are registered and issued.
Indemnification
The Term Sheet provides that the Company will, to the extent not covered by the Company’s insurance policies, (i) indemnify Dr. Goldenberg, Ms. Sullivan and Mr. Markison from attorneys’ fees and expenses or other losses
in connection with the Actions, and (ii) reimburse and indemnify Dr. Goldenberg and Ms. Sullivan for legal fees for actions taken with respect to the Actions and negotiation of the Settlement Agreement. The Term Sheet provides that the indemnification agreements entered into between the Company and each of Dr. Goldenberg, Ms. Sullivan and Mr. Markison on or about February 9, 2017 shall be terminated and not apply to acts, transactions, legal fees or expenses incurred after approval of the Settlement Agreement by the Court of Chancery.
Intellectual Property Assignments
The Settlement Agreement shall provide that Dr. Goldenberg and Ms. Sullivan will assign global intellectual property rights, other than those subject to existing agreements with the Company and Dr. Goldenberg’s patent and related intellectual property relating to cyber space medicine, to the Company, and perform all acts reasonably requested by the Company to perfect title in and to all such assigned intellectual property.
Sullivan Resignation
The Amended Sullivan Agreement was terminated effective July 1, 2017.
Upon execution of the contemplated Settlement Agreement, Ms. Sullivan has agreed to resign from director of the Company and any of its affiliates, effective as of the date of the Settlement Agreement. The Settlement Agreement will provide that Ms. Sullivan will abide by all post-termination covenants and obligations contemplated by the Amended Sullivan Agreement. In exchange for a release of claims as required by the Amended Sullivan Agreement and subject to compliance with the terms of the Settlement Agreement, Sullivan will be entitled to (i) termination payments in accordance with the Amended Sullivan Agreement for a termination without Good Cause after a Change in Control, (ii) accelerated vesting or extension of the exercise period for equity awards already earned, pursuant to the
Amended Sullivan Agreement, and (iii) COBRA payments. The Company and Sullivan disagree over the precise amounts owed to Sullivan under the Sullivan Agreement. The foregoing cash payments accumulate to approximately $3.1 million with additional amounts in dispute).
Goldenberg Resignation
Upon execution of the Settlement Agreement, Dr. Goldenberg will remain a director of the Company, but has agreed to resign from all officer and other positions of the Company and all director, officer and other positions at any of the Company’s affiliates (other than Dr. Goldenberg’s position as a member of the board of directors of IBC Pharmaceuticals, the Company’s majority owned U.S. subsidiary), effective as of the date of the Settlement Agreement. The Settlement Agreement will provide that Dr. Goldenberg will abide by all post-termination covenants and obligations contemplated by the Amended and Restated Goldenberg Agreement. In exchange for a release of claims as required by the Amended and Restated Goldenberg Agreement and subject to compliance with the terms of the Settlement Agreement, Dr. Goldenberg will be entitled to (i) termination payments in accordance with the Amended and Restated Goldenberg Agreement for a termination without Good Cause after a Change in Control, (ii) accelerated vesting or extension of exercise period for equity awards already earned, pursuant to the Amended and Restated Goldenberg Agreement, (iii) COBRA payments, (iv) royalties and payments in accordance with existing agreements. The Company and Goldenberg disagree over the precise amount owed to Goldenberg under the Amended and Restated Goldenberg Agreement. The foregoing cash payments accumulate to approximately $2.4 million (with additional amounts in dispute). The Company and Goldenberg also dispute the vesting of 1,500,000 Restricted Stock Units granted to Dr. Goldenberg under the terms of the Amended and Restated Goldenberg Agreement.
Arbitration of Disputed Matters
The Parties have agreed to arbitrate disputes relating to Dr. Goldenberg’s claimed entitlement to certain severance payments, and Dr. Goldenberg’s and Ms. Sullivan’s claimed rights to certain bonus and equity payments, to the extent the Parties cannot reach agreement on such issues before execution of the Settlement Agreement. The Company has agreed to pay in full the arbitrator in such arbitration as well as reasonable attorneys’ fees and expenses incurred by Dr. Goldenberg and/or Ms. Sullivan in connection with any such arbitration, up to a maximum amount of $650,000.
As of June 30, 2017 no expenses have been incurred regarding such arbitration.
Termination of the SGEN Licensing Agreement
The Company entered into the Licensing Agreement with SGEN, granting SGEN a worldwide, exclusive license, including the right to sublicense subject to the terms and conditions of the License Agreement, to develop, manufacture and commercialize IMMU-132.
On May 4, 2017, the Company and SGEN entered into the Termination Agreement, pursuant to which the Company and SGEN relinquished their respective rights under the Licensing Agreement.
The Termination Agreement constitutes an agreement to terminate the License Agreement and is not in any way an admission of liability or breach by either the Company or SGEN. The Termination Agreement between the Company and SGEN and the settlement of the venBio lawsuit against SGEN remain subject to court approval of the dismissal of the venBio Action. The termination of the Licensing Transaction will be effective as of the date of the approval by the Court of Chancery. In the event the Court of Chancery declines to dismiss the venBio Action against SGEN, or if the effective date of the Termination Agreement does not occur on or before October 1, 2017, any party to the Termination Agreement may terminate the Termination Agreement upon written notice to such other party.
Directors and Officers Liability Insurance
The Company has filed claims with its insurance providers for various expenses incurred through June 30, 2017 for proxy defense-related expenses and reimbursement amounts payable to venBio for fees and expenses incurred by venBio in connection with the proxy contest between venBio and the Company.
Other matters:
Immunomedics is also a party to various claims and litigation arising in the normal course of business, which includes some or all of certain of its patents. While it is not possible to determine the outcome of these matters, the Company believes that the resolution of all such matters will not have a material adverse effect on its consolidated financial position or liquidity, but could possibly be material to its consolidated results of operations in any one accounting period.
16. Geographic Segments
Immunomedics manages its operations as one line of business of researching, developing, manufacturing and marketing biopharmaceutical products, particularly antibody-based products for cancer, autoimmune and other serious diseases, and it currently reports as a single industry segment.
Immunomedics conducts its research and development activities primarily in the United States. Immunomedics markets and sells LeukoScan® throughout Europe and in certain other countries outside the United States.
The following table presents financial information based on the geographic location of the facilities of Immunomedics as of and for the years ended (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
As of and for the year ended
|
|
|
|
June 30, 2017
|
|
|
|
United
|
|
|
|
|
|
|
|
States
|
|
Europe
|
|
Total
|
|
Total assets
|
|
$
|
161,484
|
|
$
|
1,089
|
|
$
|
162,573
|
|
Property and equipment, net
|
|
|
5,166
|
|
|
79
|
|
|
5,245
|
|
Revenues
|
|
|
648
|
|
|
2,443
|
|
|
3,091
|
|
(Loss) income before taxes
|
|
|
(153,348)
|
|
|
103
|
|
|
(153,245)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of and for the year ended
|
|
|
|
June 30, 2016
|
|
|
|
United
|
|
|
|
|
|
|
|
States
|
|
Europe
|
|
Total
|
|
Total assets
|
|
$
|
55,451
|
|
$
|
1,499
|
|
$
|
56,950
|
|
Property and equipment, net
|
|
|
3,895
|
|
|
74
|
|
|
3,969
|
|
Revenues
|
|
|
972
|
|
|
2,261
|
|
|
3,233
|
|
Loss before taxes
|
|
|
(63,688)
|
|
|
(502)
|
|
|
(64,190)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of and for the year ended
|
|
|
|
June 30, 2015
|
|
|
|
United
|
|
|
|
|
|
|
|
|
|
|
States
|
|
Europe
|
|
Total
|
|
Total assets
|
|
$
|
104,168
|
|
$
|
1,612
|
|
$
|
105,780
|
|
Property and equipment, net
|
|
|
2,234
|
|
|
8
|
|
|
2,242
|
|
Revenues
|
|
|
3,054
|
|
|
2,599
|
|
|
5,653
|
|
(Loss) income before taxes
|
|
|
(48,192)
|
|
|
126
|
|
|
(48,066)
|
|
17. Defined Contribution Plans
U.S. employees are eligible to participate in the Company’s 401(k) plan, while employees in international locations are eligible to participate in other defined contribution plans. Aggregate Company contributions to its benefit plans totaled approximately $104 thousand, $99 thousand and $99 thousand for the years ended June 30, 2017, 2016 and 2015, respectively.
18
.
Quarterly Results of Operations (Unaudited)
The following table present summarized unaudited quarterly financial data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
June 30,
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
|
|
2017
|
|
2017
|
|
2016
|
|
2016
|
|
|
|
(In thousands, except for per share amounts)
|
|
Consolidated Statements of Comprehensive Loss Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
642
|
|
$
|
1,323
|
|
$
|
384
|
|
$
|
742
|
|
Net loss attributable to Immunomedics, Inc. stockholders
|
|
|
(53,255)
|
|
|
(59,306)
|
|
|
(24,447)
|
|
|
(16,198)
|
|
Loss per common share attributable to Immunomedics Inc. stockholders – (basic and diluted)
|
|
$
|
(0.48)
|
|
$
|
(0.56)
|
|
$
|
(0.25)
|
|
$
|
(0.18)
|
|
Weighted average shares used to calculate loss per common share – (basic and diluted)
|
|
|
109,891
|
|
|
107,840
|
|
|
104,657
|
|
|
95,884
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
June 30,
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
|
|
2016
|
|
2016
|
|
2015
|
|
2015
|
|
|
|
(In thousands, except for per share amounts)
|
|
Consolidated Statements of Comprehensive Loss Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
932
|
|
$
|
899
|
|
$
|
671
|
|
$
|
731
|
|
Net loss attributable to Immunomedics, Inc. stockholders
|
|
|
(15,901)
|
|
|
(13,996)
|
|
|
(13,746)
|
|
|
(15,394)
|
|
Loss per common share attributable to Immunomedics Inc. stockholders – (basic and diluted)
|
|
$
|
(0.16)
|
|
$
|
(0.15)
|
|
$
|
(0.15)
|
|
$
|
(0.16)
|
|
Weighted average shares used to calculate loss per common share – (basic and diluted)
|
|
|
94,770
|
|
|
94,748
|
|
|
94,665
|
|
|
94,596
|
|
Immunomedics, Inc. and Subsidiaries
Schedule II – Valuation and Qualifying Reserves
For the Fiscal Years Ended June 30, 2017, 2016 and 2015
(in thousands)
Allowance for Doubtful Accounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
|
|
|
|
|
|
|
|
|
|
|
Balance at
|
|
|
|
Beginning of
|
|
Changes to
|
|
Credits to
|
|
Other
|
|
End of
|
|
Year ended:
|
|
Year
|
|
Reserve
|
|
Expense
|
|
Charges
|
|
Year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2015
|
|
$
|
(89)
|
|
$
|
35
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(54)
|
|
June 30, 2016
|
|
$
|
(54)
|
|
$
|
(21)
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(75)
|
|
June 30, 2017
|
|
$
|
(75)
|
|
$
|
66
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(9)
|
|
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A.
Controls and Procedures:
Disclosure Controls and Procedures:
We maintain controls and procedures designed to ensure that we are able to collect the information we are required to disclose in the reports we file with the SEC, and to record, process, summarize and disclose this information within the time periods specified in the rules promulgated by the SEC. Our Principal Executive Officer and Chief Financial Officer is responsible for establishing and maintaining these disclosure controls and procedures and as required by the rules of the SEC, to evaluate their effectiveness. Based on his evaluation of our disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-K, our Principal Executive Officer and Chief Financial Officer believes that these procedures are functioning effectively to provide reasonable assurance that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our Principal Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding disclosures.
Management’s Report on Internal Control Over Financial Reporting:
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of Immunomedics; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and our directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management assessed the effectiveness of our internal control over financial reporting as of June 30, 2017. In making this assessment, management used the criteria in the
Internal Control-Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on its assessment and those criteria, our management has concluded we maintained effective internal control over financial reporting as of June 30, 2017.
Our independent registered public accounting firm has issued an attestation report on the effectiveness of Immunomedics’ internal control over financial reporting.
Changes in internal controls over financial reporting:
There were no significant changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act), identified in connection with the evaluation of such internal control that occurred during our last fiscal quarter, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
Immunomedics, Inc.:
We have audited Immunomedics, Inc.’s internal control over financial reporting as of June 30, 2017, based on criteria established in
Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Immunomedics Inc.’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, Immunomedics, Inc. maintained, in all material respects, effective internal control over financial reporting as of June 30, 2017, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)
.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Immunomedics, Inc. and subsidiaries as of June 30, 2017 and 2016, and the related consolidated statements of comprehensive loss, changes in stockholders’ equity (deficit) and cash flows for each of the years in the three-year period ended June 30, 2017, and our report dated August 16, 2017 expressed an unqualified opinion on those consolidated financial statements.
/s/ KPMG LLP
Short Hills, New Jersey
August 16, 2017
Item 9B
.
Other Information
None.
PART III
Item 10.
Directors, Executive Officers, and Corporate Governance
Information required by this item is incorporated in this Annual Report on Form 10-K by reference from the sections entitled “Nominees for Directors,” “Executive Officers,” “Director Experience, Qualifications, Attributes and Skills,” “Section 16(a) Beneficial Ownership Reporting Compliance,” “Business Ethics and Compliance,” and “Committees of the Board,” contained in our definitive proxy statement for our 2017 annual meeting of stockholders scheduled to be held on December 13, 2017, which we intend to file within 120 days of the end of the fiscal year covered by this Annual Report on Form 10-K.
The text of our Code of Business Conduct, which applies to our directors and employees (including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions) is posted in the “Corporate Governance” section of our website, www.immunomedics.com. A copy of the Code of Business Conduct can be obtained free of charge on our website. We intend to disclose on our website any amendments to, or waivers from, our Code of Business Conduct that are required to be disclosed pursuant to the rules of the SEC and NASDAQ.
Item 11.
Executive Compensation
Information required to be disclosed by this Item is incorporated in this Annual Report on Form 10-K by reference from the sections entitled “Compensation Discussion and Analysis,” “Compensation Committee Report,” “Summary Compensation Table,” “Grants of Plan Based Awards in Fiscal Year 2017,” “Outstanding Equity Awards at Fiscal Year-End 2017 Table,” “Fiscal Year 2017 Option Exercises and Stock Vested Table,” “Employment Contracts, Termination of Employment and Change in Control Agreements” contained in our definitive proxy statement for our 2017 annual meeting of stockholders scheduled to be held on December 13, 2017, which we intend to file within 120 days of the end of the fiscal year covered by this Annual Report on Form 10-K.
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Securities Authorized for Issuance Under Equity Compensation Plans
The following table provides information with respect to our compensation plans under which equity compensation is authorized as of June 30, 2017.
|
|
|
|
|
|
|
|
|
|
|
Number of securities to be
|
|
|
|
|
|
|
|
|
issued upon vesting of
|
|
Weighted-average
|
|
Number of securities
|
|
|
|
restricted shares and
|
|
exercise price of
|
|
remaining available for
|
|
|
|
exercise of outstanding
|
|
outstanding options
|
|
future issuance under
|
|
Plan Category
|
|
options and rights
|
|
and rights
|
|
equity compensation plans
|
|
Equity compensation plans approved by security holders
(1)
|
|
4,724,569
|
|
$
|
3.45
|
|
9,540,417
|
|
Equity compensation plans not approved by security holders
|
|
—
|
|
|
—
|
|
—
|
|
Total
|
|
4,724,569
|
|
$
|
3.45
|
|
9,540,417
|
|
|
(1)
|
|
Refers to Immunomedics, Inc. 2014 Long-Term Incentive Plan.
|
Other information required to be disclosed by this Item is incorporated in this Annual Report on Form 10-K by reference from the sections entitled “Equity Compensation Plans,” “Ownership of Our Common Stock,” “Compensation for Executive Officers” and “Director Compensation,” contained in our definitive proxy statement for our 2017 annual meeting of stockholders scheduled to be held on December 13, 2017, which we intend to file within 120 days of the end of the fiscal year covered by this Annual Report on Form 10-K.
Item 13.
Certain Relationships and Related Transactions and Director Independence
The information required to be disclosed by this Item is incorporated in this Annual Report on Form 10-K by reference from the section(s) entitled “Certain Relationships and Related Transactions,” “Our Corporate Governance,” “Compensation for Executive Officers,” “Director Compensation,” “Compensation Committee Interlocks and Insider Participation,” and “Compensation Committee Report” contained in our definitive proxy statement for our 2017 annual meeting of stockholders scheduled to be held on December 13, 2017, which we intend to file within 120 days of the end of the fiscal year covered by this Annual Report on From 10-K.
Item 14.
Principal Accounting Fees and Services.
This information required to be disclosed by this Item is incorporated in this Annual Report on Form 10-K by reference from the section entitled “Independent Registered Public Accounting Firm” contained in our definitive proxy statement for our 2017 annual meeting of stockholders scheduled to be held on December 13, 2017, which we intend to file within 120 days of the end of the fiscal year covered by this Annual Report on Form 10-K.
PART IV
Item 15.
Exhibits, Financial Statement Schedules
|
|
|
|
(a)
Documents filed as part of this Report:
|
1.
|
|
Consolidated Financial Statements:
|
|
|
|
|
|
Consolidated Balance Sheets – June 30, 2017 and 2016
|
|
|
|
|
|
Consolidated Statements of Comprehensive Loss for the years ended June 30, 2017, 2016 and 2015
|
|
|
|
|
|
Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the years ended June 30, 2017, 2016 and 2015
|
|
|
|
|
|
Consolidated Statements of Cash Flows for the years ended June 30, 2017, 2016 and 2015
|
|
|
|
|
|
Notes to Consolidated Financial Statements
|
|
|
|
|
|
Reports of Independent Registered Public Accounting Firm – KPMG LLP
|
|
|
|
2.
|
|
Financial Statement Schedule:
|
|
|
Schedule II – Valuation and Qualifying Reserves
|
|
|
|
3.
|
|
List of Exhibits
|
|
|
|
Exhibit No.
|
|
Description
|
3.(i).1
|
|
Amended and Restated Certificate of Incorporation, incorporated by reference from Exhibit 3.1 to the Company’s Current Report on Form 8-K as filed with the Commission on June 29, 2017.
|
3.(i).2
|
|
Form of Certificate of Designation of Series A-1 Convertible Preferred Stock, incorporated by reference from Exhibit 3.1 to the Company’s Current Report on Form 8-K, as filed with the Commission on May 5, 2017.
|
3.(iii).1
|
|
Second Amended and Restated By-Laws of the Company, incorporated by reference from the Exhibits to the Company’s Current Report on Form 8-K as filed with the Commission on August 27, 2007.
|
3.(iii).2
|
|
Amendment to Second Amended and Restated By-Laws of Immunomedics, Inc., incorporated by reference from Exhibit 3.1 to the Company’s Current Report on Form 8-K, as filed with the Commission on November 28, 2016.
|
3.(iii).3
|
|
Second Amendment to Second Amended and Restated By-Laws of Immunomedics, Inc., incorporated by reference from Exhibit 3.3 to the Company’s Current Report on Form 8-K, as filed with the Commission on February 16, 2017.
|
4.1
|
|
Indenture, dated as of February 11, 2015, by and between the Company and Wells Fargo Bank, National Association, incorporated by reference from Exhibit 4.1 to the Company’s Current Report on Form 8-K as filed with the Commission on February 12, 2015.
|
4.2
|
|
Form of 4.75% Convertible Senior Note due 2020 incorporated by reference from Exhibit 4.1 to the Company’s Current Report on Form 8-K as filed with the Commission on February 12, 2015.
|
4.3
|
|
Warrant Agreement, dated as of October 11, 2016, between the Company and Broadridge Financial Solutions, Inc., as warrant agent , incorporated by reference to exhibit 4.1 to the Company’s current report on Form 8-K, as filed with the Commission on October 12, 2016.
|
4.4
|
|
Warrant Agreement, dated as of February 16, 2017, between the Company and Broadridge Financial Solutions, Inc., as warrant agent, incorporated by reference to exhibit 4.1 to the Company’s Current Report on Form 8-K, as filed with the Commission on February 16, 2017.
|
4.5
|
|
Registration Rights Agreement, dated as of February 10, 2017, between the Company and Seattle Genetics, Inc., incorporated by reference to Exhibit 4.2 to the Company’s Registration Statement on Form S-3, as filed with the Commission on July 31, 2017 (Commission File No. 333-219594).
|
10.1
|
|
Amended and Restated License Agreement among the Company, David M. Goldenberg and the Center for Molecular Medicine and Immunology, Inc., dated December 11, 1990, incorporated by reference from the Exhibits to the Company’s Registration Statement on Form S-2 effective July 24, 1991 (Commission File No. 33-41053).
|
10.2
|
|
Amendment, dated March 13, 1995, to the Amended and Restated License Agreement among the Company, David M. Goldenberg and the Center for Molecular Medicine and Immunology, Inc., dated December 11, 1990, incorporated by reference from the Exhibits to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 1995.
|
10.3
|
|
License Agreement, dated as of January 21, 1997, between the Company and the Center for Molecular Medicine and Immunology, Inc., incorporated by reference from Exhibit 10.25 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 1996.
|
10.4
|
|
License Agreement, dated March 5, 1999, between the Company and IBC Pharmaceuticals, incorporated by reference from Exhibit 10.2 to the Company’s Current Report on Form 8-K as filed with the Commission on March 24, 1999.
|
10.5
|
|
Contract for Services effective as of January 1, 2002 between the Company and Logosys Logistik GmbH, incorporated by reference from Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2001.
|
10.6
|
|
Lease Agreement with Baker Properties Limited Partnership, dated January 16, 1992, incorporated by reference from the Exhibits to the Company’s Registration Statement on Form S-2 (Commission File No. 33-44750), effective January 30, 1992.
|
10.7
|
|
First Addendum, dated May 5, 1993, of the Lease Agreement with Baker Properties Limited Partnership, dated January 16, 1992, incorporated by reference from Exhibit 10.31 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2007.
|
10.8
|
|
Second Addendum, dated March 29, 1995, of the Lease Agreement with Baker Properties Limited Partnership, dated January 16, 1992, incorporated by reference from Exhibit 10.32 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2007.
|
10.9
|
|
Letter Amendment, dated October 5, 1998, of the Lease Agreement with Baker Properties Limited Partnership, dated January 16, 1992, incorporated by reference from Exhibit 10.33 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2007.
|
10.10
|
|
Fourth Amendment Expansion/Extension Agreement dated August 15, 2001, of the Lease Agreement with Baker Properties Limited Partnership, dated January 16, 1992, incorporated by reference from Exhibit 10.34 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2007.
|
10.11
|
|
Fifth Amendment Expansion Agreement dated June 18, 2009 of the Lease with WU/LH 300 American L.L.C. a successor-in-interest to Baker Properties Limited Partnership, incorporated by reference from Exhibit 10.36 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2009.
|
10.12
|
|
Sixth Amendment Extension Agreement dated February 11, 2011 of the Lease with WU/LH 300 American L.L.C. a successor-in-interest to Baker Properties Limited Partnership, incorporated by reference from Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2011.
|
10.13#
|
|
Immunomedics, Inc. 2006 Stock Incentive Plan, incorporated by reference from Exhibit 99.1 to the Company’s Registration Statement on Form S-8 (Commission File Number 333-143420), as filed with the Commission on May 31, 2007.
|
10.14#
|
|
Amendment 2007-1 to the Immunomedics, Inc. 2006 Stock Incentive Plan, incorporated by reference from Exhibit 99.2 to the Company’s Registration Statement on Form S-8 (Commission File Number 333-143420), as filed with the Commission on May 31, 2007.
|
10.15#
|
|
Form of Stock Option Agreement under the Immunomedics, Inc. 2006 Stock Incentive Plan, as amended, incorporated by reference from Exhibit 10.24 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2007.
|
10.16#
|
|
Form of Change of Control Addendum to the Stock Option Agreement under the Immunomedics, Inc. 2006 Stock Incentive Plan, as amended, incorporated by reference from Exhibit 10.25 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2007.
|
10.17#
|
|
Form of Notice of Grant of Stock Option under the Immunomedics, Inc. 2006 Stock Incentive Plan, as amended, incorporated by reference from Exhibit 10.26 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2007.
|
10.18#
|
|
Form of RSU Issuance Agreement under the Immunomedics, Inc. 2006 Stock Incentive Plan, as amended, incorporated by reference from Exhibit 10.27 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2007.
|
10.19#
|
|
Form of Change of Control Addendum to RSU Agreement under the Immunomedics, Inc. 2006 Stock Incentive Plan, as amended, incorporated by reference from Exhibit 10.28 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2007.
|
10.20#
|
|
Form of Initial Director RSU Issuance Agreement under the Immunomedics, Inc. 2006 Stock Incentive Plan, as amended, incorporated by reference from Exhibit 10.29 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2007.
|
10.21#
|
|
Form of Annual Director RSU Issuance Agreement under the Immunomedics, Inc. 2006 Stock Incentive Plan, as amended, incorporated by reference from Exhibit 10.30 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2007.
|
10.22#
|
|
Form of Restricted Stock Unit Issuance Agreement under the Immunomedics, Inc. 2006 Stock Incentive Plan, as amended, incorporated by reference from Exhibit 10.1 to the Company’s current report on Form 8-K, as filed with the Commission on August 22, 2013.
|
10.23#
|
|
Form of Performance-Based Restricted Stock Unit Issuance Agreement under the Immunomedics, Inc. 2006 Stock Incentive Plan, as amended, incorporated by reference from Exhibit 10.2 to the Company’s current report on Form 8-K, as filed with the Commission on August 22, 2013.
|
10.24#
|
|
Immunomedics, Inc. 2014 Long-Term Incentive Plan, incorporated by reference from Exhibit 99.1 to the Company’s Registration Statement on Form S-8 (Commission File Number 333-201470), as filed with the Commission on January 13, 2015.
|
10.25#
|
|
Forms of Incentive Stock Option Notice and Incentive Stock Option Agreement under the Immunomedics, Inc. 2014 Long-Term Incentive Plan, incorporated by reference from Exhibit 99.2 to the Company’s Registration Statement on Form S-8 (Commission File Number 333-201470), as filed with the Commission on January 13, 2015.
|
10.26#
|
|
Forms of Nonqualified Stock Option Notice and Nonqualified Stock Option Agreement under the Immunomedics, Inc. 2014 Long-Term Incentive Plan, incorporated by reference from Exhibit 99.3 to the Company’s Registration Statement on Form S-8 as filed with the Commission on January 13, 2015.
|
10.27#
|
|
Forms of Restricted Stock Units Notice and Restricted Stock Units Agreement (for Officers/Employees) under the Immunomedics, Inc. 2014 Long-Term Incentive Plan, incorporated by reference from Exhibit 99.4 to the Company’s Registration Statement on Form S-8 as filed with the Commission on January 13, 2015.
|
10.28#
|
|
Forms of Restricted Stock Units Notice and Restricted Stock Units Agreement (for Directors) under the Immunomedics, Inc. 2014 Long-Term Incentive Plan, incorporated by reference from Exhibit 99.5 to the Company’s Registration Statement on Form S-8 as filed with the Commission on January 13, 2015.
|
10.29#
|
|
Amended and Restated Employment Agreement, entered into on July 14, 2015 and effective as of July 1, 2015, between the Company and Dr. David M. Goldenberg, incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K, as filed with the Commission on July 16, 2015.
|
10.30#
|
|
Restricted Stock Units Notice, entered into on July 14, 2015, between the Company and Dr. David M. Goldenberg., incorporated by reference from Exhibit 10.2 to the Company’s Current Report on Form 8-K, as filed with the Commission on July 16, 2015.
|
10.31#
|
|
Amendment No. 1 to Amended and Restated Employment Agreement, effective as of November 30, 2015, between the Company and Dr. David M. Goldenberg, incorporated by reference from Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2015.
|
10.32#
|
|
Fifth Amended and Restated Employment Agreement, dated July 1, 2011, between the Company and Cynthia L. Sullivan, incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K, as filed with the Commission on June 25, 2014.
|
10.33†
|
|
Development and License Agreement, dated as of February 10, 2017, by and between the Company and Seattle Genetics, Inc., incorporated by reference from Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2017.
|
10.34
|
|
Stock Purchase Agreement, dated as of February 10, 2017, by and between the Company and Seattle Genetics, Inc., incorporated by reference from Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2017.
|
10.35
|
|
Form of Indemnification Agreement by and between the Company and each of its directors, executive officers, and certain of its former directors and executive officers, incorporated by reference to exhibit 10.1 to the Company’s current report on Form 8-K, as filed with the Commission on February 16, 2017.
|
10.36
|
|
Securities Purchase Agreement between the Company and the Purchasers, dated as of May 4, 2017, incorporated by reference to Exhibit 10.3 to the Company’s Registration Statement on Form S-3, as filed with the Commission on July 31, 2017 (Commission File No. 333-219594).
|
10.37
*
†
|
|
Termination Agreement, dated May 4, 2017, between the Company and Seattle Genetics, Inc.
|
21.1*
|
|
Subsidiaries of the Company.
|
23.1*
|
|
Consent of Independent Registered Public Accounting Firm – KPMG LLP.
|
31.1*
|
|
Certification of the Principal Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.
|
31.2*
|
|
Certification of the Principal Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.
|
32.1*
|
|
Certification of the Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
32.2*
|
|
Certification of the Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101*
|
|
The following financial information from the Annual report on Form 10-K for the fiscal year ended June 30, 2017, formatted in XBRL (eXtensible Business Reporting Language) and furnished electronically herewith: (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Comprehensive Loss; (iii) the Consolidated Statements of Changes in Stockholders’ Equity (Deficit); (iv) the Consolidated Statements of Cash Flows; and (v) the Notes to Consolidated Financial Statements.
|
* Filed herewith.
# Management contract or compensatory plan or arrangement required to be filed as an exhibit to this Form 10-K pursuant to Item 15(a)(3) of Form 10-K.
† Confidential treatment has been granted for certain portions of this exhibit.
(Exhibits available upon request)
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
|
|
|
|
|
|
Date: August 16, 2017
|
By:
|
/s/ MICHAEL R. GARONE
|
|
|
Michael R. Garone
|
|
|
Principal Executive Officer, Vice President Finance, and Chief Financial Officer
|
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/Dr. BEHZAD AGHAZADEH
|
|
Chairman of the Board, Director
|
|
August 16, 2017
|
Dr. Behzad Aghazadeh
|
|
|
|
|
|
|
|
|
|
/s/Dr. KHALID ISLAM
|
|
Director
|
|
August 16, 2017
|
Dr. Khalid Islam
|
|
|
|
|
|
|
|
|
|
/s/SCOTT CANUTE
|
|
Director
|
|
August 16, 2017
|
Scott Canute
|
|
|
|
|
|
|
|
|
|
/s/PETER BARTON HUTT
|
|
Director
|
|
August 16, 2017
|
Peter Barton Hutt
|
|
|
|
|
|
|
|
|
|
/s/BRIAN A. MARKISON
|
|
Director
|
|
August 16, 2017
|
Brian A. Markison
|
|
|
|
|
|
|
|
|
|
|
|
Director
|
|
|
David M. Goldenberg
|
|
|
|
|
|
|
|
|
|
|
|
Director
|
|
|
Cynthia L. Sullivan
|
|
|
|
|
|
|
|
|
|
/s/MICHAEL R. GARONE
|
|
Principal Executive Officer, Vice President, Finance and Chief Financial
|
|
August 16, 2017
|
Michael R. Garone
|
|
Officer (Principal Financial and
|
|
|
|
|
Accounting Officer)
|
|
|
EXHIBIT LIST
|
|
|
Exhibit No.
|
|
Description
|
3(i).1
|
|
Amended and Restated Certificate of Incorporation, incorporated by reference from Exhibit 3.1 to the Company’s Current Report on Form 8-K as filed with the Commission on June 29, 2017.
|
3(i).2
|
|
Form of Certificate of Designation of Series A-1 Convertible Preferred Stock, incorporated by reference from Exhibit 3.1 to the Company’s Current Report on Form 8-K, as filed with the Commission on May 5, 2017.
|
3(ii).1
|
|
Second Amended and Restated By-Laws of the Company, incorporated by reference from the Exhibits to the Company’s Current Report on Form 8-K as filed with the Commission on August 27, 2007.
|
3(ii).2
|
|
Amendment to Second Amended and Restated By-Laws of Immunomedics, Inc., incorporated by reference from Exhibit 3.1 to the Company’s Current Report on Form 8-K, as filed with the Commission on November 28, 2016.
|
3(ii).3
|
|
Second Amendment to Second Amended and Restated By-Laws of Immunomedics, Inc., incorporated by reference from Exhibit 3.3 to the Company’s Current Report on Form 8-K, as filed with the Commission on February 16, 2017.
|
4.1
|
|
Indenture, dated as of February 11, 2015, by and between the Company and Wells Fargo Bank, National Association, incorporated by reference from Exhibit 4.1 to the Company’s Current Report on Form 8-K, as filed with the Commission on February 12, 2015.
|
4.2
|
|
Form of 4.75% Convertible Senior Note due 2020 incorporated by reference from Exhibit 4.1 to the Company’s Current Report on Form 8-K, as filed with the Commission on February 12, 2015.
|
4.3
|
|
Warrant Agreement, dated as of October 11, 2016, between the Company and Broadridge Financial Solutions, Inc., as warrant agent , incorporated by reference to exhibit 4.1 to the Company’s current report on Form 8-K, as filed with the Commission on October 12, 2016.
|
4.4
|
|
Warrant Agreement, dated as of February 16, 2017, between the Company and Broadridge Financial Solutions, Inc., as warrant agent, incorporated by reference to exhibit 4.1 to the Company’s Current Report on Form 8-K, as filed with the Commission on February 16, 2017.
|
4.5
|
|
Registration Rights Agreement, dated as of February 10, 2017, between the Company and Seattle Genetics, Inc., incorporated by reference to Exhibit 4.2 to the Company’s Registration Statement on Form S-3, as filed with the Commission on July 31, 2017 (Commission File No. 333-219594).
|
10.1
|
|
Amended and Restated License Agreement among the Company, David M. Goldenberg and the Center for Molecular Medicine and Immunology, Inc., dated December 11, 1990, incorporated by reference from the Exhibits to the Company’s Registration Statement on Form S-2 effective July 24, 1991 (Commission File No. 33-41053).
|
10.2
|
|
Amendment, dated March 13, 1995, to the Amended and Restated License Agreement among the Company, David M. Goldenberg and the Center for Molecular Medicine and Immunology, Inc., dated December 11, 1990, incorporated by reference from the Exhibits to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 1995.
|
10.3
|
|
License Agreement, dated as of January 21, 1997, between the Company and the Center for Molecular Medicine and Immunology, Inc., incorporated by reference from Exhibit 10.25 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 1996.
|
10.4
|
|
License Agreement, dated March 5, 1999, between the Company and IBC Pharmaceuticals, incorporated by reference from Exhibit 10.2 to the Company’s Current Report on Form 8-K as filed with the Commission on March 24, 1999.
|
|
|
|
10.5
|
|
Contract for Services effective as of January 1, 2002 between the Company and Logosys Logistik GmbH, incorporated by reference from Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2001.
|
10.6
|
|
Lease Agreement with Baker Properties Limited Partnership, dated January 16, 1992, incorporated by reference from the Exhibits to the Company’s Registration Statement on Form S-2 (Commission File No. 33-44750), effective January 30, 1992.
|
10.7
|
|
First Addendum, dated May 5, 1993, of the Lease Agreement with Baker Properties Limited Partnership, dated January 16, 1992, incorporated by reference from Exhibit 10.31 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2007.
|
10.8
|
|
Second Addendum, dated March 29, 1995, of the Lease Agreement with Baker Properties Limited Partnership, dated January 16, 1992, incorporated by reference from Exhibit 10.32 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2007.
|
10.9
|
|
Letter Amendment, dated October 5, 1998, of the Lease Agreement with Baker Properties Limited Partnership, dated January 16, 1992, incorporated by reference from Exhibit 10.33 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2007.
|
10.10
|
|
Fourth Amendment Expansion/Extension Agreement dated August 15, 2001, of the Lease Agreement with Baker Properties Limited Partnership, dated January 16, 1992, incorporated by reference from Exhibit 10.34 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2007.
|
10.11
|
|
Fifth Amendment Expansion Agreement dated June 18, 2009 of the Lease with WU/LH 300 American L.L.C. a successor-in-interest to Baker Properties Limited Partnership, incorporated by reference from Exhibit 10.36 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2009.
|
10.12
|
|
Sixth Amendment Extension Agreement dated February 11, 2011 of the Lease with WU/LH 300 American L.L.C. a successor-in-interest to Baker Properties Limited Partnership, incorporated by reference from Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2011.
|
|
|
|
10.13#
|
|
Immunomedics, Inc. 2006 Stock Incentive Plan, incorporated by reference from Exhibit 99.1 to the Company’s Registration Statement on Form S-8 (Commission File Number 333-143420), as filed with the Commission on May 31, 2007.
|
10.14#
|
|
Amendment 2007-1 to the Immunomedics, Inc. 2006 Stock Incentive Plan, incorporated by reference from Exhibit 99.2 to the Company’s Registration Statement on Form S-8 (Commission File Number 333-143420), as filed with the Commission on May 31, 2007.
|
10.15#
|
|
Form of Stock Option Agreement under the Immunomedics, Inc. 2006 Stock Incentive Plan, as amended, incorporated by reference from Exhibit 10.24 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2007.
|
10.16#
|
|
Form of Change of Control Addendum to the Stock Option Agreement under the Immunomedics, Inc. 2006 Stock Incentive Plan, as amended, incorporated by reference from Exhibit 10.25 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2007.
|
10.17#
|
|
Form of Notice of Grant of Stock Option under the Immunomedics, Inc. 2006 Stock Incentive Plan, as amended, incorporated by reference from Exhibit 10.26 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2007.
|
10.18#
|
|
Form of RSU Issuance Agreement under the Immunomedics, Inc. 2006 Stock Incentive Plan, as amended, incorporated by reference from Exhibit 10.27 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2007.
|
10.19#
|
|
Form of Change of Control Addendum to RSU Agreement under the Immunomedics, Inc. 2006 Stock Incentive Plan, as amended, incorporated by reference from Exhibit 10.28 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2007.
|
10.20#
|
|
Form of Initial Director RSU Issuance Agreement under the Immunomedics, Inc. 2006 Stock Incentive Plan, as amended, incorporated by reference from Exhibit 10.29 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2007.
|
10.21#
|
|
Form of Annual Director RSU Issuance Agreement under the Immunomedics, Inc. 2006 Stock Incentive Plan, as amended, incorporated by reference from Exhibit 10.30 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2007.
|
10.22#
|
|
Form of Restricted Stock Unit Issuance Agreement under the Immunomedics, Inc. 2006 Stock Incentive Plan, as amended, incorporated by reference from Exhibit 10.1 to the Company’s current report on Form 8-K, as filed with the Commission on August 22, 2013.
|
10.23#
|
|
Form of Performance-Based Restricted Stock Unit Issuance Agreement under the Immunomedics, Inc. 2006 Stock Incentive Plan, as amended, incorporated by reference from Exhibit 10.2 to the Company’s current report on Form 8-K, as filed with the Commission on August 22, 2013.
|
10.24#
|
|
Immunomedics, Inc. 2014 Long-Term Incentive Plan, incorporated by reference from Exhibit 99.1 to the Company’s Registration Statement on Form S-8 (Commission File Number 333-201470), as filed with the Commission on January 13, 2015.
|
10.25#
|
|
Forms of Incentive Stock Option Notice and Incentive Stock Option Agreement under the Immunomedics, Inc. 2014 Long-Term Incentive Plan, incorporated by reference from Exhibit 99.2 to the Company’s Registration Statement on Form S-8, (Commission File Number 333-201470), as filed with the Commission on January 13, 2015.
|
10.26#
|
|
Forms of Nonqualified Stock Option Notice and Nonqualified Stock Option Agreement under the Immunomedics, Inc. 2014 Long-Term Incentive Plan, incorporated by reference from Exhibit 99.3 to the Company’s Registration Statement on Form S-8, as filed with the Commission on January 13, 2015.
|
10.27#
|
|
Forms of Restricted Stock Units Notice and Restricted Stock Units Agreement (for Officers/Employees) under the Immunomedics, Inc. 2014 Long-Term Incentive Plan, incorporated by reference from Exhibit 99.4 to the Company’s Registration Statement on Form S-8, as filed with the Commission on January 13, 2015.
|
10.28#
|
|
Forms of Restricted Stock Units Notice and Restricted Stock Units Agreement (for Directors) under the Immunomedics, Inc. 2014 Long-Term Incentive Plan, incorporated by reference from Exhibit 99.5 to the Company’s Registration Statement on Form S-8, as filed with the Commission on January 13, 2015.
|
10.29#
|
|
Amended and Restated Employment Agreement, entered into on July 14, 2015 and effective as of July 1, 2015, between the Company and Dr. David M. Goldenberg, incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K, as filed with the Commission on July 16, 2015.
|
10.30#
|
|
Restricted Stock Units Notice, entered into on July 14, 2015, between the Company and Dr. David M. Goldenberg., incorporated by reference from Exhibit 10.2 to the Company’s Current Report on Form 8-K, as filed with the Commission on July 16, 2015.
|
10.31#
|
|
Amendment No. 1 to Amended and Restated Employment Agreement, effective as of November 30, 2015, between the Company and Dr. David M. Goldenberg, incorporated by reference from Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2015.
|
10.32#
|
|
Fifth Amended and Restated Employment Agreement, effective as of July 1, 2014, between the Company and Cynthia L. Sullivan, incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K, as filed with the Commission on June 25, 2014.
|
|
|
|
10.33†
|
|
Development and License Agreement, dated as of February 10, 2017, by and between the Company and Seattle Genetics, Inc., incorporated by reference from Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2017.
|
10.34
|
|
Stock Purchase Agreement, dated as of February 10, 2017, by and between the Company and Seattle Genetics, Inc., incorporated by reference from Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2017.
|
10.35
|
|
Form of Indemnification Agreement by and between the Company and each of its directors, executive officers, and certain of its former directors and executive officers, incorporated by reference to exhibit 10.1 to the Company’s current report on Form 8-K, as filed with the Commission on February 16, 2017.
|
10.36
|
|
Securities Purchase Agreement between the Company and the Purchasers, dated as of May 4, 2017, incorporated by reference to Exhibit 10.3 to the Company’s Registration Statement on Form S-3, as filed with the Commission on July 31, 2017 (Commission File No. 333-219594).
|
10.37
*
†
|
|
Termination Agreement, dated May 4, 2017, between the Company and Seattle Genetics, Inc.
|
21.1*
|
|
Subsidiaries of the Company.
|
23.1*
|
|
Consent of Independent Registered Public Accounting Firm – KPMG LLP.
|
31.1*
|
|
Certification of the Principal Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.
|
31.2*
|
|
Certification of the Principal Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.
|
32.1*
|
|
Certification of the Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
32.2*
|
|
Certification of the Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101*
|
|
The following financial information from the Annual report on Form 10-K for the fiscal year ended June 30, 2017, formatted in XBRL (eXtensible Business Reporting Language) and furnished electronically herewith: (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Comprehensive Loss; (iii) the Consolidated Statements of Changes in Stockholders’ Equity (Deficit); (iv) the Consolidated Statements of Cash Flows; and (v) the Notes to Consolidated Financial Statements.
|
* Filed herewith.
# Management contract or compensatory plan or arrangement required to be filed as an exhibit to this Form 10-K pursuant to Item 15(a)(3) of Form 10-K.
† Confidential treatment has been granted for certain portions of this exhibit.
(Exhibits available upon request)
Immunomedics (NASDAQ:IMMU)
Historical Stock Chart
From Mar 2024 to Apr 2024
Immunomedics (NASDAQ:IMMU)
Historical Stock Chart
From Apr 2023 to Apr 2024