Immunomedics (IMMU) reported earnings on Thur 9 Feb 2017 (a/h)

** charts after earnings **

 

• Immunomedics reports 2Q loss
• Immunomedics enters into exclusive global licensing agreement with Seattle Genetics (SGEN); agreement provides for potential payments of approximately $2 bln, SGEN to purchase 3 mln shares of IMMU common stock at $4.90/share

MORRIS PLAINS, N.J. (AP) _ Immunomedics Inc. (IMMU) on Thursday reported a loss of $24.4 million in its fiscal second quarter.

On a per-share basis, the Morris Plains, New Jersey-based company said it had a loss of 23 cents. Losses, adjusted for non-recurring costs, were 16 cents per share.

The biopharmaceutical company posted revenue of $384,200 in the period. Its adjusted revenue was $384,000.

In the final minutes of trading on Thursday, the company's shares hit $4.30. A year ago, they were trading at $2.07.

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Immunomedics enters into exclusive global licensing agreement with Seattle Genetics (SGEN); agreement provides for potential payments of approximately $2 bln, SGEN to purchase 3 mln shares of IMMU common stock at $4.90/share:

Under the agreement, Seattle Genetics will develop, fund, manufacture and commercialize IMMU-132, Immunomedics' proprietary solid tumor therapy candidate. The agreement also provides that Seattle Genetics will be responsible for initiating the Phase 3 clinical trial of IMMU-132 in patients with metastatic triple-negative breast cancer and submitting the initial Biologics License Application to the U.S. Food and Drug Administration for accelerated approval. The agreement includes the development of additional indications for IMMU-132, including urothelial cancer, small-cell lung cancer and non-small-cell lung cancer, which are currently in Phase 2 clinical studies, along with other solid tumor indications being studied in ongoing clinical trials.

• The agreement provides for potential payments of approximately $2 billion across multiple indications, plus double-digit tiered royalties on global net sales. Under the terms of the agreement, Immunomedics will receive $250 million in upfront cash payment, plus, among other milestone payments, an additional $50 million (or negotiated economic splits) relating to rights outside the U.S., Canada and the EU. The remainder of the consideration comprises approximately $1.7 billion that is contingent upon achieving certain clinical, development, regulatory and sales milestones, including an anticipated near-term milestone for acceptance of the Biologics License Application (:BLA) by the U.S. Food and Drug Administration for TNBC, additional milestones based on regulatory approval of IMMU-132 for TNBC in the U.S. and other territories, and future development and regulatory milestones for additional indications beyond TNBC. Future royalty payments are tiered double-digit royalties based on global net sales. In addition, Immunomedics will retain the right to elect to co-promote IMMU-132 in the United States by participating in 50% of the sales effort, subject to certain parameters set forth in the agreement.
• Under the terms of the agreement, for a limited period, through February 19, 2017, Immunomedics has the right to continue negotiating with a select number of parties still in the strategic process, and accept a superior proposal. Seattle Genetics has the right to match any superior proposal and if it decides not to match, Immunomedics has the right to accept the superior proposal and terminate the proposed development and license agreement upon payment of a termination fee to Seattle Genetics.
• Concurrent with the transaction, Seattle Genetics is purchasing 3,000,000 shares of common stock, representing an approximately 2.8% stake in Immunomedics, at a per share price of $4.90, which represents a 10% premium to Immunomedics' 15-day trading volume weighted average stock price of $4.45 for the period ending at the close of trading February 9, 2017, the last trading day prior to entering into the global licensing agreement.Seattle Genetics will also be issued a three-year warrant to purchase 8,655,804 shares of common stock at the same price, which shall be exercisable when the Company has sufficient authorized shares of common stock to enable the exercise of the warrant. Seattle Genetics will not be eligible to vote its stake at the upcoming 2016 Annual Meeting of Stockholders.

Immunomedics expects that the transaction will fulfill its liquidity needs such that the Company can fund itself without additional equity raises for the foreseeable future. The companies expect the transaction to close in the first quarter of 2017.