Company Quick10K Filing
Immunomedics
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$0.00 192 $2,456
10-Q 2019-10-30 Quarter: 2019-09-30
10-Q 2019-08-07 Quarter: 2019-06-30
10-Q 2019-05-09 Quarter: 2019-03-31
10-Q 2018-11-07 Quarter: 2018-09-30
10-K 2018-08-23 Annual: 2018-06-30
10-Q 2018-05-09 Quarter: 2018-03-31
10-Q 2018-02-08 Quarter: 2017-12-31
10-Q 2017-11-09 Quarter: 2017-09-30
10-K 2017-08-16 Annual: 2017-06-30
10-Q 2017-05-10 Quarter: 2017-03-31
10-Q 2017-02-09 Quarter: 2016-12-31
10-Q 2016-11-02 Quarter: 2016-09-30
10-K 2016-08-18 Annual: 2016-06-30
10-Q 2016-05-04 Quarter: 2016-03-31
10-Q 2016-02-03 Quarter: 2015-12-31
10-Q 2015-11-04 Quarter: 2015-09-30
10-K 2015-08-19 Annual: 2015-06-30
10-Q 2015-05-06 Quarter: 2015-03-31
10-Q 2015-02-04 Quarter: 2014-12-31
10-Q 2014-11-05 Quarter: 2014-09-30
10-K 2014-08-25 Annual: 2014-06-30
10-Q 2014-05-07 Quarter: 2014-03-31
10-Q 2014-02-10 Quarter: 2013-12-31
10-Q 2013-11-04 Quarter: 2013-09-30
10-K 2013-08-22 Annual: 2013-06-30
10-Q 2013-05-08 Quarter: 2013-03-31
10-Q 2013-02-07 Quarter: 2012-12-31
10-K 2012-08-23 Annual: 2012-06-30
10-Q 2012-05-08 Quarter: 2012-03-31
10-Q 2012-02-08 Quarter: 2011-12-31
10-Q 2011-11-04 Quarter: 2011-09-30
10-K 2011-08-24 Annual: 2011-06-30
10-Q 2011-05-10 Quarter: 2011-03-31
10-Q 2011-02-04 Quarter: 2010-12-31
10-Q 2010-11-04 Quarter: 2010-09-30
10-K 2010-08-26 Annual: 2010-06-30
10-Q 2010-05-10 Quarter: 2010-03-31
10-Q 2010-02-02 Quarter: 2009-12-31
8-K 2019-12-26 Other Events, Exhibits
8-K 2019-12-04 Enter Agreement, Other Events, Exhibits
8-K 2019-12-03 Other Events, Exhibits
8-K 2019-10-30 Earnings, Exhibits
8-K 2019-09-28 Other Events, Exhibits
8-K 2019-08-07 Earnings, Exhibits
8-K 2019-06-05 Shareholder Vote, Other Events
8-K 2019-05-28 Officers
8-K 2019-05-09 Earnings, Exhibits
8-K 2019-04-29 Enter Agreement, Other Events, Exhibits
8-K 2019-04-24 Officers, Other Events, Exhibits
8-K 2019-04-15 Amend Bylaw, Exhibits
8-K 2019-04-15 Other Events
8-K 2019-04-05 Enter Agreement, Other Events, Exhibits
8-K 2019-03-29 Enter Agreement, Exhibits
8-K 2019-03-13 Officers
8-K 2019-03-05 Officers
8-K 2019-03-05 Officers, Other Events, Exhibits
8-K 2019-02-22 Officers, Other Events, Exhibits
8-K 2019-02-11 Other Events, Exhibits
8-K 2019-02-04 Other Events
8-K 2019-01-17 Other Events, Exhibits
8-K 2019-01-15 Other Events
8-K 2018-12-20 Enter Agreement
8-K 2018-12-19 Enter Agreement, Other Events, Exhibits
8-K 2018-12-14 Amend Bylaw
8-K 2018-11-07 Earnings, Exhibits
8-K 2018-10-02 Enter Agreement, Sale of Shares
8-K 2018-09-24 Officers
8-K 2018-09-11 Enter Agreement, Other Events, Exhibits
8-K 2018-08-23 Officers
8-K 2018-08-23 Earnings, Exhibits
8-K 2018-07-18 Other Events, Exhibits
8-K 2018-07-06 Enter Agreement
8-K 2018-06-22 Other Events, Exhibits
8-K 2018-06-12 Enter Agreement, Other Events, Exhibits
8-K 2018-06-04 Other Events, Exhibits
8-K 2018-06-01 Regulation FD, Other Events, Exhibits
8-K 2018-05-09 Earnings, Exhibits
8-K 2018-04-13
8-K 2018-04-09 Enter Agreement, Officers, Exhibits
8-K 2018-04-04 Enter Agreement
8-K 2018-04-02 Shareholder Vote
8-K 2018-02-08 Earnings, Exhibits
8-K 2018-01-07 Enter Agreement, Sale of Shares, Exhibits
IMMU 2019-09-30
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 6. Exhibits
EX-31.1 immu-09302019ex311.htm
EX-32.1 immu-09302019ex321.htm

Immunomedics Earnings 2019-09-30

IMMU 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Comparables ($MM TTM)
Ticker M Cap Assets Liab Rev G Profit Net Inc EBITDA EV G Margin EV/EBITDA ROA
NEOG 4,151 721 61 416 193 60 91 4,095 46% 44.9 8%
QDEL 2,482 846 336 506 302 69 108 2,453 60% 22.8 8%
IMMU 2,456 478 363 0 0 -344 -301 2,026 0% -6.7 -72%
MYGN 2,016 1,563 474 851 0 5 102 2,157 0% 21.1 0%
LNTH 1,112 390 298 347 177 13 49 1,255 51% 25.8 3%
NTLA 727 352 76 37 37 -89 -84 678 100% -8.1 -25%
QTNT 626 193 215 29 12 -104 -89 -89,908 40% 1,004.8 -54%
VIVO 490 322 134 203 121 26 43 511 60% 11.8 8%
OXFD 370 242 24 66 48 137 96 183 72% 1.9 56%
TRIB 235 152 108 0 0 0 0 228 0%

Document
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
(Mark One)
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended September 30, 2019

or
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from _____ to _____
 
Commission File Number:  0-12104
Immunomedics, Inc.
(Exact name of Registrant as specified in its charter) 
Delaware
61-1009366
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer Identification No.)

300 The American Road, Morris Plains, New Jersey 07950
(Address of principal executive offices) (Zip Code)
 
(973) 605-8200
(Registrant’s Telephone Number, Including Area Code)
 
Former Name, Former Address and Former Fiscal Year,
If Changed Since Last Report:  Not Applicable
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading Symbol
 
Name of each exchange on which registered
Common Stock, $0.01 par value
 
IMMU
 
Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes    No  
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period the registrant was required to submit such files).    Yes   No  
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
 
Large Accelerated Filer Accelerated Filer
Non-Accelerated Filer Smaller Reporting Company  Emerging Growth Company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes   No
 
The number of shares of the registrant’s common stock outstanding as of October 25, 2019 was 193,354,047.




IMMUNOMEDICS, INC.
 
TABLE OF CONTENTS
 
PART I:
FINANCIAL INFORMATION
   
 
 
 
 
 
ITEM 1.
FINANCIAL STATEMENTS (UNAUDITED):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


2



PART I.        FINANCIAL INFORMATION 
ITEM 1.
FINANCIAL STATEMENTS (Unaudited)

IMMUNOMEDICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amounts)
(Unaudited) 
 
September 30,
2019
 
December 31,
2018
ASSETS
 
 
 
Current Assets:
 
 
 
Cash and cash equivalents
$
364,654

 
$
492,860

Marketable securities
4,550

 
4,941

Prepaid expenses
7,560

 
5,354

Other current assets
1,313

 
1,348

Total current assets
378,077

 
504,503

Property and equipment, net of accumulated depreciation and amortization of $6,866 and $4,316 at September 30, 2019 and December 31, 2018, respectively
33,386

 
23,469

Other long-term assets
267

 
68

Total Assets
$
411,730

 
$
528,040

 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
Current Liabilities:
 
 
 
Accounts payable and accrued expenses
$
54,596

 
$
31,722

Liability related to sale of future royalties - current
3,141

 

Lease liability - current
316

 

Total current liabilities
58,053

 
31,722

Convertible senior notes, net
7,093

 
7,055

Liability related to sale of future royalties - non-current
248,176

 
221,295

Deferred revenues
65,000

 

Other long-term liabilities
10,052

 
2,119

Total Liabilities
388,374

 
262,191

Commitments and Contingencies (Note 11)


 


Stockholders' Equity:
 
 
 
Convertible preferred stock, $0.01 par value; authorized 10,000,000 shares; no shares issued and outstanding at September 30, 2019 and December 31, 2018

 

Common stock, $0.01 par value; authorized 250,000,000 shares; issued 191,995,708 shares and outstanding 191,876,087 shares at September 30, 2019; issued 190,445,795 shares and outstanding 190,411,070 shares at December 31, 2018
1,920

 
1,905

Capital contributed in excess of par
1,235,930

 
1,219,237

Treasury stock, at cost: 119,621 shares at September 30, 2019 and 34,725 shares at December 31, 2018
(2,095
)
 
(824
)
Accumulated deficit
(1,210,798
)
 
(953,216
)
Accumulated other comprehensive loss
(601
)
 
(351
)
Total Immunomedics, Inc. stockholders' equity
24,356

 
266,751

Noncontrolling interest in subsidiary
(1,000
)
 
(902
)
Total Stockholders' Equity
23,356

 
265,849

Total Liabilities and Stockholders' Equity
$
411,730

 
$
528,040


See accompanying notes to unaudited condensed consolidated financial statements


3



IMMUNOMEDICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE LOSS 
(Dollars in thousands, except per share amounts)
(Unaudited)
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2019
 
2018
 
2019
 
2018
Revenues:
 

 
 

 
 
 
 
Product sales
$

 
$

 
$

 
$
450

License fee and other revenues

 

 

 
265

Research and development

 

 

 
153

Total revenues

 

 

 
868

 
 
 
 
 
 
 
 
Costs and Expenses:
 
 
 
 
 
 
 
Costs of goods sold

 

 

 
47

Research and development
68,958

 
38,239

 
180,053

 
94,685

Sales and marketing
5,933

 
5,799

 
20,160

 
11,204

General and administrative
11,880

 
13,131

 
33,374

 
42,124

Total costs and expenses
86,771

 
57,169

 
233,587

 
148,060

Operating loss
(86,771
)
 
(57,169
)
 
(233,587
)
 
(147,192
)
Changes in fair market value of warrant liabilities

 
1,218

 

 
(47,808
)
Interest expense
(9,747
)
 
(10,142
)
 
(30,331
)
 
(30,476
)
Interest and other income
2,195

 
1,694

 
6,238

 
6,389

Insurance reimbursement

 
190

 

 
2,462

Foreign currency transaction loss, net

 

 

 
(26
)
Loss before income tax
(94,323
)
 
(64,209
)
 
(257,680
)
 
(216,651
)
Income tax expense

 

 

 
(156
)
Net loss
$
(94,323
)
 
$
(64,209
)
 
$
(257,680
)
 
$
(216,807
)
Net loss attributable to noncontrolling interest
(31
)
 
(40
)
 
(98
)
 
(63
)
Net loss attributable to Immunomedics, Inc. stockholders
$
(94,292
)
 
$
(64,169
)
 
$
(257,582
)
 
$
(216,744
)
Loss per common share attributable to Immunomedics, Inc. stockholders (basic and diluted):
(0.49
)
 
(0.34
)
 
(1.34
)
 
(1.24
)
Weighted average shares used to calculated loss per common share (basic and diluted):
191,981

 
186,937

 
191,596

 
174,752

Other comprehensive (loss) income, net of tax:
 
 
 
 
 
 
 
Foreign currency translation adjustments
(45
)
 
4

 
141

 
(12
)
Unrealized (loss) gain on securities available for sale
(191
)
 
15

 
(391
)
 
79

Other comprehensive (loss) income, net of tax:
(236
)
 
19

 
(250
)
 
67

Comprehensive loss
(94,559
)
 
(64,190
)
 
(257,930
)
 
(216,740
)
Comprehensive loss attributable to noncontrolling interest
(31
)
 
(40
)
 
(98
)
 
(63
)
Comprehensive loss attributable to Immunomedics, Inc. stockholders
$
(94,528
)
 
$
(64,150
)
 
$
(257,832
)
 
$
(216,677
)




See accompanying notes to unaudited condensed consolidated financial statements


4



IMMUNOMEDICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(in thousands)
(Unaudited)
 
Immunomedics, Inc. Stockholders' Equity
 
 
 
 
 
Convertible Preferred Stock
 
 
 
 
 
Capital Contributed in Excess of Par
 
 
 
 
 
Accumulated Other Comprehensive Income (Loss)
 
 
 
 
 
 
Common Stock
 
 
Treasury Stock
 
Accumulated Deficit
 
 
Noncontrolling Interest
 
 
 
Shares
 
Amount
 
Shares
 
Amount
 
 
 
 
 
 
Total
Three Months Ended September 30, 2019:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2019

 
$

 
191,972

 
$
1,920

 
$
1,232,575

 
$
(2,095
)
 
$
(1,116,506
)
 
$
(365
)
 
$
(969
)
 
$
114,560

Exercise of stock options, net

 

 
24

 

 
175

 

 

 

 

 
175

Stock-based compensation

 

 

 

 
3,180

 

 

 

 

 
3,180

Other comprehensive loss

 

 

 

 

 

 

 
(236
)
 

 
(236
)
Net loss

 

 

 

 

 

 
(94,292
)
 

 
(31
)
 
(94,323
)
Balance at September 30, 2019

 
$

 
191,996

 
$
1,920

 
$
1,235,930

 
$
(2,095
)
 
$
(1,210,798
)
 
$
(601
)
 
$
(1,000
)
 
$
23,356

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30, 2018:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2018

 
$

 
186,801

 
$
1,868

 
$
1,194,998

 
$
(458
)
 
$
(795,548
)
 
$
(353
)
 
$
(821
)
 
$
399,686

Reclassification of warrant liability to equity, net

 

 

 

 
1,776

 

 

 

 

 
1,776

Adjustment of noncontrolling interest

 

 

 

 
3,577

 

 

 

 
(3,577
)
 

Exercise of stock options, net

 

 
219

 
2

 
762

 
(634
)
 

 

 

 
130

Exercise of common stock warrants

 

 
100

 
1

 
374

 

 

 

 

 
375

Conversion of RSU's for tax withholding payments

 

 
(7
)
 

 
(196
)
 

 

 

 

 
(196
)
Stock-based compensation

 

 
30

 

 
1,734

 

 

 

 

 
1,734

Other comprehensive income

 

 

 

 

 

 

 
19

 

 
19

Net loss

 

 

 

 

 

 
(64,169
)
 

 
(40
)
 
(64,209
)
Balance at September 30, 2018

 
$

 
187,143

 
$
1,871

 
$
1,203,025

 
$
(1,092
)
 
$
(859,717
)
 
$
(334
)
 
$
(4,438
)
 
$
339,315









See accompanying notes to unaudited condensed consolidated financial statements



5



IMMUNOMEDICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(in thousands)
(Unaudited)
 
Immunomedics, Inc. Stockholders' Equity
 
 
 
 
 
Convertible Preferred Stock
 
 
 
 
 
Capital Contributed in Excess of Par
 
 
 
 
 
Accumulated Other Comprehensive Income (Loss)
 
 
 
 
 
 
Common Stock
 
 
Treasury Stock
 
Accumulated Deficit
 
 
Noncontrolling Interest
 
 
 
Shares
 
Amount
 
Shares
 
Amount
 
 
 
 
 
 
Total
Nine Months Ended September 30, 2019:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2018

 
$

 
190,446

 
$
1,905

 
$
1,219,237

 
$
(824
)
 
$
(953,216
)
 
$
(351
)
 
$
(902
)
 
$
265,849

Exercise of stock options, net

 

 
1,164

 
11

 
3,541

 
(1,271
)
 
 
 
 
 
 
 
2,281

Stock-based compensation

 

 
15

 

 
7,327

 

 

 

 

 
7,327

Issuance of common stock in at-the-market offering, net

 

 
371

 
4

 
5,825

 

 

 

 

 
5,829

Other comprehensive loss

 

 

 

 

 

 

 
(250
)
 

 
(250
)
Net loss

 

 

 

 

 

 
(257,582
)
 

 
(98
)
 
(257,680
)
Balance at September 30, 2019

 
$

 
191,996

 
$
1,920

 
$
1,235,930

 
$
(2,095
)
 
$
(1,210,798
)
 
$
(601
)
 
$
(1,000
)
 
$
23,356

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30, 2018:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2017

 
$

 
161,303

 
$
1,613

 
$
659,467

 
$
(458
)
 
$
(642,973
)
 
$
(401
)
 
$
(798
)
 
$
16,450

Reclassification of warrant liability to equity, net

 

 

 

 
139,752

 

 

 

 

 
139,752

Adjustment of noncontrolling interest

 

 

 

 
3,577

 

 

 

 
(3,577
)
 

Exercise of stock options, net

 

 
622

 
6

 
2,354

 
(634
)
 

 

 

 
1,726

Exercise of common stock warrants

 

 
7,500

 
75

 
28,050

 

 

 

 

 
28,125

Issuance of common stock to RPI Finance Trust

 

 
4,373

 
44

 
67,740

 

 

 

 

 
67,784

Issuance of common stock in public offering, net

 

 
13,225

 
132

 
299,335

 

 

 

 

 
299,467

Stock-based compensation

 

 
314

 
3

 
4,416

 

 

 

 

 
4,419

Conversion of RSU's for tax withholding payments

 

 
(194
)
 
(2
)
 
(1,666
)
 

 

 

 

 
(1,668
)
Other comprehensive income

 

 

 

 

 

 

 
67

 

 
67

Net loss

 

 

 

 

 

 
(216,744
)
 

 
(63
)
 
(216,807
)
Balance at September 30, 2018

 
$

 
187,143

 
$
1,871

 
$
1,203,025

 
$
(1,092
)
 
$
(859,717
)
 
$
(334
)
 
$
(4,438
)
 
$
339,315





See accompanying notes to unaudited condensed consolidated financial statements

6



IMMUNOMEDICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
 
Nine Months Ended September 30,
 
2019
 
2018
Cash flows from operating activities:
 

 
 

Net loss
$
(257,680
)
 
$
(216,807
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
Changes in fair value of warrant liabilities

 
47,808

Depreciation and amortization
2,831

 
1,261

Loss on disposal of property and equipment
1,003

 

Interest on non-recourse debt
30,022

 
29,545

Amortization of deferred revenue

 
(81
)
Amortization of bond premiums

 
39

Amortization of debt issuance costs
38

 
109

Amortization of deferred rent

 
327

Right-of-use asset amortization
196

 

Decrease in allowance for doubtful accounts

 
(13
)
Non-cash expense related to stock-based compensation
7,327

 
4,416

Changes in deferred revenue
65,000

 

Changes in other operating assets and liabilities
21,485

 
14,097

Net cash used in operating activities
(129,778
)
 
(119,299
)
Cash flows from investing activities
 
 
 
Purchases of marketable securities

 
(135
)
Proceeds from sales/maturities of marketable securities

 
73,968

Purchases of property and equipment
(6,514
)
 
(11,169
)
Net cash (used in) provided by investing activities
(6,514
)
 
62,664

Cash flows from financing activities:
 
 
 
Exercise of stock options, net
2,281

 
1,726

Exercise of warrants

 
28,125

Proceeds from private offering of common stock

 
67,784

Proceeds from the issuance of common stock in at-the-market offering
5,829

 

Proceeds of public offering of common stock, net

 
299,467

Proceeds from the issuance of non-recourse debt

 
182,216

Debt conversion fees

 
(3
)
Tax withholding payments for stock-based compensation

 
(1,668
)
Net cash provided by financing activities
8,110

 
577,647

Effect of changes in exchange rates on cash, cash equivalents and restricted cash
(24
)
 
(65
)
Net (decrease) increase in cash, cash equivalents and restricted cash
(128,206
)
 
520,947

Cash, cash equivalents and restricted cash beginning of period
494,173

 
60,960

Cash, cash equivalents and restricted cash end of period
$
365,967

 
$
581,907

Supplemental disclosure of cash flow information:
 
 
 
Interest paid
$
338

 
$
950

Schedule for non-cash investing and financing activities:
 
 
 
Non-cash component of warrant exercise
$

 
$
139,755

Accrued capital expenditures
$

 
$
2,449

Shares received in cashless exercise
$
1,271

 
$
634

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within our condensed consolidated balance sheets that sum to the total of the same amounts shown in the condensed consolidated statements of cash flows (dollars in thousands):
 
September 30, 2019
 
September 30, 2018
Cash and cash equivalents
$
364,654

 
$
580,594

Restricted cash in other current assets
1,313

 
1,313

Total cash, cash equivalents and restricted cash
$
365,967

 
$
581,907

See accompanying notes to unaudited condensed consolidated financial statements.

7



IMMUNOMEDICS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
Reference is made to the Transition Report on Form 10-K, of Immunomedics, Inc., a Delaware corporation (“Immunomedics,” the “Company,” “we,” “our” or “us”), for the six months ended December 31, 2018, which contains our audited consolidated financial statements and the notes thereto.
1.    Business Overview, Basis of Presentation and Recent Accounting Pronouncements

Business Overview
Immunomedics, Inc., a Delaware corporation, together with its subsidiaries (collectively "we," "our," "us," "Immunomedics", or the "Company"), is a clinical-stage biopharmaceutical company that develops monoclonal antibody-based products for the targeted treatment of cancer. Immunomedics manages its operations as one line of business of researching, developing, manufacturing and marketing biopharmaceutical products, particularly antibody-based products for patients with difficult to treat solid tumor and blood cancers. The Company currently reports as a single industry segment with substantially all business conducted in the United States. Immunomedics conducts its research activities in the United States and runs its development studies in the United States and selected European countries. Our corporate objective is to become a fully-integrated biopharmaceutical company and a leader in the field of antibody-drug conjugates (“ADCs”). To that end, our immediate priority is to commercialize our most advanced ADC product candidate, sacituzumab govitecan ("IMMU-132"), beginning in the United States, with metastatic triple-negative breast cancer (“mTNBC”) as the first indication. On May 21, 2018, we submitted a Biologics License Application (“BLA”) to the United States Food and Drug Administration ("FDA") for sacituzumab govitecan for the treatment of patients with mTNBC who have received at least two prior therapies for metastatic disease. On July 18, 2018, we received notification from the FDA that the BLA was accepted for filing and the original application was granted Priority Review with a Prescription Drug User Fee Act ("PDUFA") target action date of January 18, 2019. On January 17, 2019, we received a Complete Response Letter ("CRL") from the FDA for the BLA. We subsequently met with the FDA on May 2, 2019 to review the FDA’s findings and discussed our BLA resubmission. Since then, we have developed a detailed plan to address the chemistry, manufacturing, and control (“CMC”) matters raised in the CRL and in our pre-approval inspection. We held another meeting with the FDA on September 27, 2019 to update the FDA on our progress in addressing these matters and to receive feedback from the FDA on our approach. We have dedicated, and continue to commit, significant resources to address the CMC matters identified by the FDA, while, in parallel, preparing our manufacturing facility to be ready for re-inspection by the FDA for acknowledgment of receipt of the submission.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of Immunomedics, which incorporates our foreign subsidiary, Immunomedics GmbH in Rödermark, Germany, have been prepared in accordance with United States generally accepted accounting principles (“GAAP”), for interim financial information and the instructions to the Quarterly Report on Form 10‑Q and Regulation S‑X. Accordingly, the statements do not include all of the information and footnotes required by GAAP for complete annual financial statements. With respect to the financial information for the interim periods included in this Quarterly Report on Form 10-Q, which is unaudited, management believes that all adjustments (consisting of normal recurring accruals), considered necessary for a fair presentation of the results for such interim periods have been included. Operating results for the three and nine-month periods ended September 30, 2019, are not necessarily indicative of the results that may be expected for the full calendar year ending December 31, 2019, or any other period. The preparation of the condensed consolidated financial statements requires management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates.

Our significant accounting policies are described in Note 2 of Notes to Consolidated Financial Statements included in our 2018 Transition Report on Form 10-K. Such significant accounting policies are applicable for periods prior to the adoption of the following new accounting standards.


8



Recent Accounting Pronouncements

Accounting Pronouncements adopted during the year:

The Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-01, “Leases Topic 842,” requiring entities to recognize assets and liabilities on the balance sheet for all leases, with certain exceptions. Topic 842 allows for a modified retrospective application and is effective as of the first quarter of 2019. Entities are allowed to apply the new guidance using a modified retrospective approach at the beginning of the year in which new lease standard is adopted, rather than to the earliest comparative period presented in their financial statements. The modified retrospective approach includes a number of optional practical expedients that entities may elect to apply. We elected the modified retrospective approach under the new guidance and elected the available practical expedients on adoption. Upon adoption, we recognized additional operating lease liabilities of $8.4 million with a corresponding right-of-use assets of $8.4 million based on the present value of the remaining lease payments under existing operating leases. As of December 31, 2018, we had $2.1 million in deferred charges related to our real estate leases that were recorded against the lease liability asset as part of the transition, resulting in $10.5 million included in other long-term liabilities on our condensed consolidated balance sheet. In addition, the new guidance resulted in additional lease-related disclosures in the footnotes to our condensed consolidated financial statements. Our leasing portfolio is comprised entirely of operating leases, and we do not recognize right-of-use assets or related lease liabilities with a lease term of twelve months or less on our condensed consolidated balance sheet. Adoption of Topic 842 has required changes to our business processes and controls to comply with the provisions of the standard. Refer to Note 11 "Commitments and Contingencies" for additional information.

In June 2018, the FASB issued ASU 2018-07, "Compensation-Stock Compensation," to improve the usefulness of information provided to users of financial statements while reducing cost and complexity in financial reporting and provide guidance aligning the measurement and classification for share-based payments to nonemployees with the guidance for share-based payments to employees. Under the guidance, the measurement of equity-classified nonemployee awards will be fixed at the grant date. This standard is effective for fiscal years beginning after December 15, 2018, and interim periods within those annual periods. Early adoption is permitted, but no earlier than an entity's adoption date of ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).” We adopted ASU 2018-07 during the first quarter of 2019 and the adoption did not have a material impact to our condensed consolidated financial statements.

Accounting Pronouncements yet to be adopted:

In November 2018, the FASB issued ASU 2018-18, "Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606,"    to clarify when ASC 606 should be used for collaborative arrangements when the counterparty is a customer. The guidance precludes an entity from presenting consideration from a transaction in a collaborative arrangement as revenue from contracts with customers if the counterparty is not a customer for that transaction. The guidance is effective for public business entities in fiscal years beginning after December 15, 2019, and interim periods therein. Early adoption is permitted to entities that have adopted ASC 606. We are currently assessing the impact of ASU 2018-18.

In August 2018, the FASB issued ASU 2018-13, "Fair Value measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement," to no longer require public companies to disclose transfers between Level 1 and Level 2 of the fair value hierarchy, and to require disclosure about the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. The guidance is effective for fiscal years beginning after December 15, 2019, and for interim periods within those fiscal years. Entities are permitted to early adopt either the entire standard or only the provisions that eliminate or modify the requirements. We are currently assessing the impact of ASU 2018-13.


9



2.          Revenue Recognition

Pursuant to Topic 606, we recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle, Topic 606 includes provisions within a five step model that includes i) identifying the contract with a customer, ii) identifying the performance obligations in the contract, iii) determining the transaction price, iv) allocating the transaction price to the performance obligations, and v) recognizing revenue when, or as, an entity satisfies a performance obligation.

At contract inception, we assess the goods or services promised within each contract and assess whether each promised good or service is distinct and determine those that are performance obligations. We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied.

Everest Medicines II Limited:

On April 29, 2019, the Company entered into a license agreement (the “License Agreement”) with Everest Medicines II Limited, a China limited company (“Everest”). Pursuant to the License Agreement, the Company granted Everest an exclusive license to develop and commercialize sacituzumab govitecan in the People’s Republic of China, Taiwan, Hong Kong, Macao, Indonesia, Philippines, Vietnam, Thailand, South Korea, Malaysia, Singapore and Mongolia (the "Territory"). In consideration for entering into the License Agreement, Everest made a one-time, non-refundable upfront payment to the Company in the aggregate amount of $65.0 million which is recorded as deferred revenue. The License Agreement contains a development milestone payment of $60.0 million based upon the Company’s achievement of FDA approval for sacituzumab govitecan in mTNBC. The License Agreement also contains additional development milestone payments in a total amount of up to $180.0 million based upon the achievement of certain other development milestones. In addition, the License Agreement contains sales milestone payments in a total amount of up to $530.0 million based upon the achievement of certain sales milestones. Everest will make royalty payments to the Company based upon percentages of net sales of sacituzumab govitecan, ranging from 14% to 20%.

The Company assessed the arrangement in accordance with ASC 606 and concluded that the contract counterparty, Everest, is a customer based on the arrangement structure. The Company identified two material promises to deliver under the contract: (1) grant of license and the (2) clinical and commercial supply of the product. However, given the nature of the manufacturing of the product the license is not considered to be distinct from the clinical and commercial supply promise. The Company therefore concluded that there is one combined performance obligation.

The Company initially deferred and will recognize the $65.0 million over the performance obligation period of the combined performance obligation. As it relates to the upfront consideration, the $65.0 million is recorded as deferred revenue and will be recognized over the term of the of the contract performance obligation period, which the Company has concluded to be 15 years after initial sale of the product in the territory. As concluded above, the Company has a combined performance obligation, which includes delivering the license and clinical and commercial supply to Everest. As such, because the clinical and commercial supply obligation occur throughout the period of the License Agreement, the $65.0 million fixed consideration is recognized over the period in which commercial and clinical supply of product is delivered (over-time).

The future potential milestone payments are excluded from the transaction price, as the achievement of the milestone events require considerable judgment in determining whether it is probable of being achieved, and that a significant revenue reversal would not occur. As such, all milestone payments are fully constrained. The Company will reevaluate the transaction price at the end of each reporting period and as uncertain events are resolved or other changes in circumstances occur, and, if necessary, adjust its estimate of the transaction price.

Janssen Biotech Inc.:

On April 5, 2019, the Company entered into a promotion agreement (the “Promotion Agreement”) with Janssen Biotech Inc., ("Janssen") pursuant to which the Company will provide non-exclusive product detailing services to Janssen for erdafitinib (the “Product”). Pursuant to the Promotion Agreement, the Company will provide a dedicated sales team to market the Product, upon approval by the FDA, to oncologists and other targeted health care providers in the United States. Under the terms of the Promotion Agreement, Janssen maintains ownership of the New Drug Application for the Product as well as legal, regulatory, distribution, commercialization and manufacturing responsibilities for the Product, while the Company will provide product detailing services to Janssen.  Following the achievement of certain sales targets in 2019 and 2020, Janssen will pay the Company (a) a service fee equal to a percentage in the low double digits of the portion of Cumulative Net Sales (as defined in the Promotion Agreement) in excess of a baseline amount during each of 2019 and 2020, and (b) potential milestone payments of up to $15.0 million when Cumulative Net Sales exceed certain thresholds during each of 2019 and 2020. On April 12, 2019, the Company

10



was informed that the FDA granted accelerated approval to Janssen's Balversa (erdafitinib) for the treatment of adult patients with locally advanced or metastatic urothelial carcinoma that has a type of susceptible genetic alteration known as FGFR3 or FGFR2, and that has progressed during or following prior platinum-containing chemotherapy. During the three and nine months ended September 30, 2019, no revenues were recorded relating to the Promotion Agreement.

3.          Marketable Securities

Immunomedics considers all of its current investments to be available-for-sale. Marketable securities at September 30, 2019, consisted of the following (in thousands):
 
Amortized
Cost
 
Gross
Unrealized
Gain
 
Gross
Unrealized
(Loss)
 
Fair Value
U.S. Government Sponsored Agencies
$
4,941

 
$

 
$
(391
)
 
$
4,550


 
Maturities of debt securities classified as available-for-sale were as follows at September 30, 2019 (in thousands):
 
Fair Value
 
Net Carrying
Amount
Due after one year through five years
$
4,550

 
$
4,562

 

Marketable securities at December 31, 2018 consisted of the following (in thousands):
 
Amortized
Cost
 
Gross
Unrealized
Gain
 
Gross
Unrealized
(Loss)
 
Fair Value
U.S. Government Sponsored Agencies
$
4,941

 
$

 
$

 
$
4,941

 

Maturities of debt securities classified as available-for-sale were as follows at December 31, 2018 (in thousands):
 
Fair Value
 
Net Carrying
Amount
Due after one year through five years
$
4,941

 
$
4,954


 
4.    Debt

Liability Related to Sale of Future Royalties:

On January 7, 2018, the Company entered into a funding agreement with RPI Finance Trust, a Delaware statutory trust ("RPI"), under which we sold a portion of our right to receive royalties on potential net sales of the ADC sacituzumab govitecan, in exchange for $175.0 million in cash. Concurrently, we entered into a common stock purchase agreement with RPI through which RPI purchased 4.4 million shares of the Company's common stock for $75.0 million (the "Financing").

The Company concluded that there were two units of accounting in the transaction: (1) the liability related to the sale of future royalties (the "Liability") and (2) the "Financing". We allocated the consideration of $250.0 million on a relative fair value basis to the Liability for $182.2 million and the common stock for $67.8 million. We continue to accrete the Liability related to the sale of future royalties using the effective interest method with an annual interest rate of approximately 16% over a period of 20 years. As of September 30, 2019 and December 31, 2018, we determined the fair value at $251.3 million and $221.3 million, respectively. During the three months ended September 30, 2019 and 2018, the Company recognized approximately $9.6 million and $9.8 million in interest expense, respectively. During the nine months ended September 30, 2019 and 2018, the Company recognized approximately $30.0 million and $29.6 million in interest expense, respectively.


11



The following table shows the activity within the liability related to sale of future royalties during the nine months ended September 30, 2019 (in thousands):
Carrying value of liability related to sale of future royalties at December 31, 2018
$
221,295

Interest expense recognized
30,022

Carrying value of liability related to sale of future royalties at September 30, 2019
$
251,317



Convertible Senior Notes:

In February 2015, the Company issued $100.0 million of Convertible Senior Notes (the "Convertible Senior Notes") (net proceeds of approximately $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 September 30, 2019. The balance of the outstanding Convertible Senior Notes was $7.1 million convertible into 1.4 million shares of common stock at September 30, 2019, and December 31, 2018.

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.
    
Total interest expense for the Convertible Senior Notes for the three months ended September 30, 2019 and 2018 was $0.1 million and $0.2 million, respectively. For the nine months ended September 30, 2019 and 2018, interest expense was $0.3 million and $0.7 million, respectively. Included in interest expense was an immaterial amount of amortization of debt issuance costs for the three and nine months ended September 30, 2019 and 2018.

5.     Stock-based Compensation

Stock Incentive Plan
The Company has a stock incentive plan, the Immunomedics, Inc. 2014 Long-Term Incentive Plan (the “Plan”) that provides for the granting of stock options, restricted stock units (RSUs), performance stock options (PSOs), and other stock-based awards to eligible individuals on the terms and subject to the conditions set forth in the Plan. There were no significant modifications to the Plan during the nine months ended September 30, 2019 or 2018.
Stock-based compensation expense included in the condensed consolidated statements of comprehensive loss was $3.2 million, and $1.7 million for the three months ended September 30, 2019 and 2018, respectively, and $7.3 million and $4.4 million for the nine months ended September 30, 2019 and 2018.

The following table summarizes the activity for stock options, RSUs and PSOs for the nine months ended September 30, 2019 (in thousands):
 
Stock Options
 
RSUs
 
PSOs
Equity awards outstanding, beginning of year
4,757

 
15

 
538
   Changes during the year:
 
 
 
 
 
   Granted
3,305

 
58

 
650

   Exercised
(1,164
)
 
(15
)
 

   Expired or forfeited
(1,168
)
 

 
(493
)
Equity awards outstanding, end of period
5,730

 
58

 
695


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On March 14, 2019, performance stock options were granted to certain individuals that vest upon the Company’s receipt of approval from the FDA for the Company’s BLA for sacituzumab govitecan for the treatment of patients with metastatic triple-negative breast cancer who have received at least two prior therapies for metastatic disease under the Prescription Drug User Fee Act. There were additional stock options that were granted to certain eligible individuals that vest on the second anniversary of the date of grant. In addition, on April 17, 2019 performance stock options were granted to certain individuals that vest upon achievement of defined sales performance milestones.

As of September 30, 2019, total compensation cost related to unvested awards not yet recognized and the weighted-average periods over which the awards are expected to be recognized were as follows ($ in thousands):
 
Stock Options
 
RSUs
 
PSOs
Unrecognized compensation cost
$
41,872

 
$
512

 
$
4,791

Expected weighted-average period in years of compensation cost to be recognized
3.2

 
0.7

 
1.0


 
6.    Estimated Fair Value of Financial Instruments

Cash Equivalents and Marketable Securities as of:
 
(in thousands)
September 30, 2019
Level 1 (a)
 
Level 2 (b)
 
Level 3 (c)
 
Total
Money Market Funds Note (d)
$
276,226

 
$

 
$

 
$
276,226

Marketable Securities:
 
 
 
 
 
 
 

U.S. Government Sponsored Agencies
4,550

 

 

 
4,550

Total
$
280,776

 
$

 
$

 
$