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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2003

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)

300 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

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 x     No ¨    

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ¨

No x (not an accelerated filer due to fiscal year end of June 30)

The number of shares of the Registrant’s common stock outstanding as of May 12, 2003 was 49,878,193.

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IMMUNOMEDICS, INC.

TABLE OF CONTENTS

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I MMUNOMEDICS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(unaudited)

See accompanying notes to unaudited consolidated financial statements.

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IMMUNOMEDICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND

COMPREHENSIVE (LOSS) INCOME

(unaudited)

See accompanying notes to unaudited consolidated financial statements.

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IMMUNOMEDICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

See accompanying notes to unaudited consolidated financial statements.

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IMMUNOMEDICS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

Reference is made to our Annual Report on Form 10-K for the year ended June 30, 2002, which contains, on pages 31 through 52, our audited consolidated financial statements and the notes thereto.

1.    Business Overview and Basis of Presentation

The accompanying unaudited consolidated financial statements of Immunomedics, Inc., a Delaware corporation, which incorporate our majority-owned subsidiaries, have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, the statements do not include all of the information and footnotes required by generally accepted accounting principles for complete 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 necessary for a fair presentation of the results for such interim periods have been included. The balance sheet at June 30, 2002 has been derived from our audited 2002 consolidated financial statements. Operating results for the nine-month period ended March 31, 2003 are not necessarily indicative of the results that may be expected for the full fiscal year ending June 30, 2003, or any other period. Certain adjustments and reclassifications were made to conform to the current year presentation.

We have never achieved profitable operations on an annual basis and there is no assurance that profitable operations could be sustained on a continuing basis. Further, our ability to achieve profitability will depend on numerous factors, including, without limitation, the following:

Since inception in 1982, we have relied primarily upon the private and public sale of equity securities to fund operations. We have also received limited revenues from research and development alliances, and more recently from commercial sales of two diagnostic imaging products. While we believe that our existing resources should be sufficient to meet our capital and liquidity requirements for at least the next twelve months, these resources could be expended more rapidly for many reasons, including unexpected changes in our research and development activities, as well as other factors affecting our operating expenses and capital expenditures. There can be no assurance that we will be able to obtain additional capital when needed on acceptable terms, if at all.

2.    Summary of Significant Accounting Policies

Principles of Consolidation and Presentation

The consolidated financial statements include the accounts of Immunomedics, Inc. and its majority-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Certain amounts have been reclassified to conform to the current year presentation.

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IMMUNOMEDICS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

Cash Equivalents and Marketable Securities

We consider all highly liquid investments with original maturities of three months or less, at the time of purchase, to be cash equivalents. Included in Other Current Assets at March 31, 2003 and June 30, 2002 is accrued interest earned on cash equivalents and marketable securities of approximately $181,000 and $349,000, respectively.

Our investments in cash equivalents and marketable securities are available for sale to fund growth in operations. The portfolio at March 31, 2003 consisted primarily of corporate debt securities.

Concentration of Credit Risk

Cash, cash equivalents and marketable securities are financial instruments that potentially subject us to concentration of credit risk. We invest our cash in debt instruments of financial institutions and corporations with strong credit ratings. We have 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. We have historically held the investments to maturity. However, we have the ability to sell these investments before maturity and have therefore classified the investments as available-for-sale. We have not experienced any significant losses on our investments to date.

Inventory

Inventory is stated at the lower of average cost (which approximates first-in, first-out) or market, and includes materials, labor and manufacturing overhead. As of March 31, 2003, the inventory balance consisted of $972,000 of finished goods as compared to $642,000 as of June 30, 2002.

Property and Equipment

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 life of the lease or the estimated useful life of the asset. We review 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. We assess the recoverability of long-lived assets held and to be used based on undiscounted cash flows whenever indicators of impairment exist, and measure the impairment, if any, using discounted cash flows to date.

Revenue Recognition

Research and development arrangements: 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. Payments received from the achievement of substantive at-risk research and development milestones are recognized as revenue when the milestones are achieved and there are no further performance obligations.

License fees and other revenues: Upfront non-refundable fees associated with license and development agreements where we have continuing involvement in the agreement, are recorded as deferred revenue and recognized over the estimated service period. If the estimated service period is

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IMMUNOMEDICS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

subsequently modified, the period over which the upfront fee is recognized is modified accordingly on a prospective basis. Fees for supply agreements are recorded as revenue when there is persuasive evidence that an arrangement exists, delivery has occurred, the price is fixed and determinable, collectability is reasonably assured, and all supply obligations have been satisfied to the satisfaction of both parties.

Product Sales—Revenue from the sale of diagnostic products is recognized as revenue at the time of shipment assuming all other elements of revenue recognition noted above have been satisfied.

Research and Development Costs

Research and development costs are expensed as incurred.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities relate to the expected future tax consequences of events that have been recognized in our consolidated financial statements and tax returns.

Benefits received resulting from the sale of our New Jersey state net operating losses (“NOL”) are recognized as a tax benefit when the NOL is approved for sale by the state of New Jersey. During the quarter ended March 31, 2003, the company realized a benefit of approximately $745,000 resulting from the New Jersey state program.

Net Income (Loss) Per share

Basic and diluted earnings per share is calculated in accordance with SFAS No. 128, Earnings per share. Basic earnings per share is based upon the number of weighted average shares of common stock outstanding. Diluted earnings per share is based upon the weighted average number of shares of common stock and dilutive potential shares of common stock outstanding. Potential shares of common stock are outstanding stock options which are included under the treasury stock method for the three month period ended March 31, 2003. For the nine month period ended March 31, 2003 and March 31, 2002, and three month period ended March 31, 2002, potentially dilutive securites have been excluded from the computation, as their effect is antidilutive.

The computation of basic and diluted earnings per share for the three and nine months ended March 31, 2003 and March 31, 2002 is as follows:

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IMMUNOMEDICS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

Stock Based Compensation

At March 31, 2003, the Company had one stock-based employee compensation plan, which is described more fully in Note 7 in our June 30, 2002 financial statements included in our Annual Report on Form 10-K. The Company accounts for these plans under the recognition and measurement principles of APB Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations. The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of FASB Statement No. 123, Accounting for Stock-Based Compensation, to stock-based employee compensation.

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IMMUNOMEDICS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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.

Comprehensive Income (Loss)

Comprehensive income (loss) consists of net income (loss), net unrealized gains (losses) on securities available for sale and certain foreign exchange changes and is presented in the consolidated statements of operations and comprehensive income (loss).

3.    Marketable Securities

We utilize SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities, to account for investments in marketable securities. Under this accounting standard, securities classified as available-for-sale and are carried at fair value. Unrealized holding gains and losses, on securities classified as available-for-sale are carried as a separate component of accumulated other comprehensive income (loss). All of our current investments are classified available-for-sale. The amortized cost, gross unrealized holding gains, gross unrealized holding losses and fair value of available-for-sale securities by major security type at March 31, 2003 and June 30, 2002 were as follows:

4.    Inventory

Inventory consists of the following:

5.    Property and Equipment

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IMMUNOMEDICS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

Property and equipment consists of the following:

6.    Geographic Segment

We manage our operations as one line of business focused on the use of monoclonal antibodies to detect and treat cancer and other serious diseases, which we currently report as a single industry segment. We currently market and sell one diagnostic imaging product in the United States and two diagnostic imaging products throughout Europe.

The following tables present financial information based on the geographic location of our facilities as of and for the three and nine-month periods ended March 31, 2003 and 2002 (total revenues include product sales revenue, license fee and other revenue and research and development revenue):

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IMMUNOMEDICS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

7.    Related Party Transactions

Certain of our affiliates, including members of senior management and our Board of Directors, as well as their respective family members and other affiliates, have relationships and agreements among themselves as well as with us and our affiliates, that create the potential for both real, as well as perceived, conflicts of interest. These include Dr. David M. Goldenberg, our Chairman and Chief Scientific Officer, Ms. Cynthia L. Sullivan, our President and Chief Executive Officer, and certain companies with which we do business, including the Center for Molecular Medicine and Immunology (“CMMI”) and our majority-owned subsidiary, IBC Pharmaceuticals, Inc. (“IBC”). In addition, our executive vice president, Dr. Ivan D. Horak, is married to one of our other employees. For a description of these transactions, see our Annual Report on Form 10-K for the fiscal year ended June 30, 2002 and the notes to the audited financial statements contained therein.

We have reimbursed CMMI for expenses incurred on behalf of Immunomedics, including amounts incurred pursuant to research contracts, in the amount of approximately $69,000 and $192,000 for the nine-month periods ended March 31, 2003 and 2002, respectively. We also provide, at no cost to CMMI, laboratory materials and supplies. However, any inventions made independently of us at CMMI are the property of CMMI.

During the nine-month periods ended March 31, 2003 and 2002, our Board of Directors authorized grants to CMMI of $290,000 and $155,000, respectively, to support research and clinical work being performed at CMMI, such grants to be expended in a manner deemed appropriate by the Board of Trustees of CMMI.

IBC reimburses Immunomedics for all of the research activities Immunomedics conducts on IBC’s behalf. For the nine-month period ended March 31, 2003 we received reimbursements of $870,000 from IBC with respect to these research activities. This amount is eliminated in consolidation. For the nine-month period ended March 31, 2002 we received reimbursements of $491,000 from IBC with respect to these research activities.

For each of the nine-month periods ended March 31, 2003 and 2002, Dr. Goldenberg received $41,250 in compensation for his services to IBC.

8.    License and Distribution Agreements

On December 17, 2000, we entered into a Development and License Agreement (the “Amgen Agreement”) with Amgen Inc. The Amgen Agreement grants Amgen exclusive rights to continue the clinical development and commercialization in North America and Australia of our unlabeled or “naked” CD22 antibody compound, epratuzumab, for the treatment of patients with non-Hodgkin’s lymphoma.

The up-front payment of $18,000,000 was recognized, beginning February 2001, as revenue of $750,000 per month over a period of 24 months, which was our best estimate of the period of time required for the parties to fulfill their obligations under the agreement. Accordingly, we recognized $5,250,000 and $7,500,000 as “License fee revenues” for the nine-month periods ended March 31, 2003, and 2002, respectively. As of March 31, 2003, the up-front payment was fully recognized as revenue in conjunction with the fulfillment of our obligations under the agreement.

Amgen is also obligated to pay a supply fee to us for materials shipped by us to Amgen pursuant to the Amgen Agreement. The fee was originally payable at the point in time when Amgen becomes capable of manufacturing epratuzumab in quantities sufficient to satisfy its requirements for use in the

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IMMUNOMEDICS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

conduct of all clinical trials deemed necessary by the U.S. Food and Drug Administration for approval of its United States biologics license application. If we fail to comply with our supply obligations, then Amgen does not owe the supply fee. However, Amgen has agreed that it will pay us for the materials shipped since inception of the Amgen Agreement. Accordingly, we have invoiced Amgen approximately $3.8 million for all shipments of materials made through March 31, 2003. Payments of $3.3 million received through December 2002, were recorded as deferred revenue. In March 2003 we received an additional payment of approximately $0.5 million. As of March 31, 2003, we have recognized all of $3.8 million payments as license fee and other revenues as we have satisfied our supply obligations with regard to these payments. During our fiscal quarter ended March 31, 2003, we did not ship any additional materials to Amgen.

Costs incurred relating to the manufacture of the materials supplied to Amgen are recorded as research and development expense as incurred, as there is no assurance that such amounts if supplied in the future will be reimbursed by Amgen in the event that we fail to fully perform our obligations. The reimbursement amount for materials supplied to Amgen represents the approximate personnel and materials costs associated with the manufacturing of such materials. During the nine-month periods ended March 31, 2003, and 2002 we incurred $1,317,000 and $2,036,000, respectively, of costs associated with supplying materials to Amgen as described above.

In June 2002, we granted a non-exclusive license to Daiichi Pure Chemicals Co. under our carcinoembryonic antigen, CEA, patents, which included an up-front payment and royalties.

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OPERATIONS

Overview

We are a biopharmaceutical company focused on the development, manufacture and marketing of monoclonal antibody-based products for the detection and treatment of cancer and other serious diseases. We have developed a number of advanced proprietary technologies that allow us to create humanized antibodies that can be used either alone in unlabeled form, or conjugated with radioactive isotopes, chemotherapeutics or toxins to create highly targeted agents. Using these technologies, we have built a broad pipeline of diagnostic and therapeutic product candidates that utilize several different mechanisms of action. An extensive portfolio of intellectual property that includes approximately 86 issued patents in the United States and 249 other issued patents worldwide supports our technologies.

Our most advanced therapeutic product candidate, epratuzumab, is a compound that binds to the malignant cells that comprise non-Hodgkin’s B-cell lymphoma and certain other lymphocytic leukemias. In December 2000, we granted a license to Amgen Inc. to further develop and commercialize the unlabeled form of epratuzumab in North America and Australia. Amgen is currently evaluating this compound in Phase II dual-agent clinical trials for the treatment of patients with non-Hodgkin’s lymphoma. After taking over the Phase III, single agent trial in low-grade non-Hodgkin’s lymphoma patients refractive to rituximab from us, Amgen expanded the eligible population to include patients whose last failed therapy could be chemotherapy, and found in an interim analysis that this patient population did not respond to epratuzumab to the extent as originally anticipated. Given the results with the recently approved radiolabeled anti-CD20 antibody, Zevalin, Amgen decided to terminate this trial because of the reduced commercial opportunity for epratuzumab in this particular patient population that now had different therapy options. Amgen announced that it was continuing its ongoing Phase II clinical trials of epratuzumab combined with rituximab. We are also conducting such trials at several centers in Europe, and will compare these results with those of Amgen.

We currently maintain all other rights to the unlabeled form of epratuzumab outside of the territories granted to Amgen, as well as all rights to the labeled versions of the compound worldwide. Accordingly, we are conducting clinical trials of the unlabeled and radiolabeled versions of the compound, epratuzumab and epratuzumab-Y-90, as well as clinically developing five other therapeutic product candidates. We also have five therapeutic product candidates in preclinical development. We intend to consider licensing some or all of the rights we possess in epratuzumab as well as our other product candidates if the right opportunities arise.

In addition to our therapeutic discoveries, our proprietary technologies have also enabled us to develop highly specific diagnostic imaging agents, one of which, CEA-Scan, has already been approved in the United States, Canada and the European Union and is being marketed in the United States and Europe for the detection of colorectal cancers. Our second diagnostic product, LeukoScan, has been approved in Europe and is being marketed for the detection of bone infections. We have five additional diagnostic product candidates in preclinical or clinical development. It is our hope that some day physicians will be able to use our therapeutic and diagnostic products in tandem in order to improve patient care.

Research and Development

As of March 31, 2003, we employed 47 professionals in our research and development departments. In addition to salaries and benefits, the other costs associated with research and development include the costs associated with producing biopharmaceutical compounds, laboratory equipment and supplies, the costs of conducting clinical trials, legal fees and expenses associated with pursuing patent protection, as well as facilities costs. Based on current forecasts, we expect to spend between $17.0 million and $20.0

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million in the aggregate for the fiscal year ending June 30, 2003 on research and development operating expenses.

In order to further support our research and development efforts, as well as prepare for future commercialization of our product candidates, we are expanding our facilities at a total cost of approximately $6.3 million. See “Liquidity and Capital Resources” below. Once this project is completed, we believe that our facilities, as expanded, will be adequate to support our research and development activities for at least the next two years without the need for any material capital expenditures.

Therapeutic Product Candidates

We are currently evaluating several therapeutic product candidates for the treatment of various cancers. Each antibody alone has therapeutic potential and can also have therapeutic radioisotopes, chemotherapeutics or toxins attached to it, to create unique and potentially more effective product candidates. The attachment of various compounds to the antibodies is intended to allow the delivery of these therapeutic agents to tumor sites more selectively than available radiation therapy or chemotherapeutic approaches. This treatment approach is designed to reduce the total exposure of the patient to the therapeutic agents, which potentially minimizes debilitating side effects. We are currently focused on potential therapeutics that are either naked antibodies or antibodies bound to radioisotopes, such as Yttrium-90, called Y-90, or Iodine-131, called I-131. All of our therapeutic product candidates are “humanized,” with the portion of the antibody derived from mouse DNA sequences being less than about 10%.

We currently have six product candidates in clinical development: epratuzumab, epratuzumab -Y-90, labetuzumab (CEA-Cide), labetuzumab -Y-90, labetuzumab -I-131 and AFP-Cide-Y-90, as well as five product candidates in preclinical development: our humanized CD20 antibody (hCD20), humanized PAM4 (hPAM4), humanized CD74 (hCD74), humanized RS7 (hRS7) and humanized MN3 hMN3). We have licensed the further clinical development of our most advanced product candidate, the unlabeled form of epratuzumab, to Amgen for North America and Australia. We also have a growing pipeline of other product candidates that target other cancers and diseases.

Diagnostic Imaging Products

We believe that the development of diagnostic imaging products that can complement our therapeutic pipeline will provide us with the means of diagnosing and staging disease as well as following its progress. Our imaging products allow localization of disease-specific antigens within the body using an antibody fragment bound to technetium-99m, which can be visualized by standard nuclear medicine cameras to reveal the presence, location and approximate size of the disease sites. We are considering several options for the continued development of some of our imaging products, including partnering, in order to allow us to focus on the development of our therapeutic product candidates.

Two of our diagnostic imaging products, CEA-Scan and LeukoScan, are already being marketed and we hope to bring additional products to market over the next several years. We currently have two product candidates in clinical development, LymphoScan and AFP-Scan, and three product candidates in preclinical development, ProstaScan, MelanomaScan and MyelomaScan.

IBC Pharmaceuticals, Inc.

Through our majority-owned subsidiary, IBC Pharmaceuticals, Inc., we are evaluating several advanced technologies which we believe will play a critical role in the development of radioimmunotherapy and PET imaging agents. We believe that these technologies can also be used to achieve more selective

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delivery of chemotherapeutic agents for the diagnosis and treatment of cancer, autoimmune and infectious diseases. Originally formed in 1999, IBC was operated as a joint venture in partnership with Beckman Coulter and several individual investors. We have historically provided administrative, fiscal, manufacturing and certain research services for which we were reimbursed by IBC. We acquired the equity interests of Beckman Coulter in the joint venture in the spring of 2002, and have since operated the business as a majority-owned subsidiary. As of March 31, 2003, IBC had approximately $1.0 million in cash and cash equivalents.

IBC is currently conducting late Phase I clinical trials in France with its bispecific antibody agents for the treatment of solid cancers producing carcinoembryonic antigen, or “CEA”, especially gastrointestinal, lung and medullary thyroid cancers. These trials, which are being conducted at three separate medical centers, are intended to establish the required doses for each of the two agents comprising the bispecific antibody technology, as well as the time appropriate interval between each agent’s dose. It is our hope that these trials, funded in part by the French government, will result in the commencement of at least one “pivotal” clinical trial with the intended focus being the therapy of lung and possibly other cancers.

Although IBC had approximately $1.0 million in cash and cash equivalents at March 31, 2003, it will need significant additional capital in order to continue the development and commercialization of the technologies and product candidates it currently has under investigation. Since we acquired control of IBC in Spring of 2002, we have been evaluating various opportunities to either raise the necessary capital in the form of IBC debt or equity securities, or through the licensing of one or more of IBC’s proprietary technologies or product candidates. It is also possible that we will decide to use a portion of the capital resources of Immunomedics to fund some or all of these development costs.

Strategic Partnering and Relationships

We have licensed the final clinical development, manufacturing and commercialization of the unlabeled version of our lead therapeutic product candidate, epratuzumab, to Amgen for the treatment of non-Hodgkin’s lymphoma and other diseases in North America and Australia. We have retained the right to continue the clinical development of unlabeled epratuzumab in all remaining markets, as well as the right to the clinical development of epratuzumab -Y-90 and other versions of the antibody where a radioisotope has been attached. However, Amgen has certain rights to second-generation CD22-antibody-based therapeutics in exchange for pre-determined milestone, royalty and sales-bonus payments. These rights are also limited to North America and Australia. In exchange for granting this license, we received an upfront payment of $18.0 million from Amgen on February 1, 2001. We may receive additional milestone payments totaling up to $65.0 million depending on the progress of the product candidate’s development. In addition, we are entitled to receive royalties under this agreement on any future net sales of epratuzumab by Amgen and may also receive one-time sales milestone payments. Additional compensation would be payable to us under the agreement for each second-generation product developed by Amgen, if any, using the licensed antibody in any such product.

We conduct research on a number of our programs in collaboration with a not-for-profit organization called The Center for Molecular Medicine and Immunology, or CMMI, and its clinical unit, the Garden State Cancer Center. CMMI performs contracted pilot and pre-clinical trials in scientific areas of importance to us and also conducts basic research and pre-clinical evaluations in a number of areas of potential interest to us. Dr. David Goldenberg, our Chairman of the Board and Chief Scientific Officer, is the President and a Trustee of CMMI. For the nine-month period ended March 31, 2003, we provided payments for grants and expenses to CMMI valued at approximately $359,000.

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Critical Accounting Policies

In December 2001, the U.S. Securities and Exchange Commission issued a statement concerning certain views of the Commission regarding the appropriate amount of disclosure by publicly held companies with respect to their critical accounting policies. In particular, the Commission expressed its view that in order to enhance investor understanding of financial statements, companies should explain the effects of critical accounting policies as they are applied, the judgments made in the application of these policies, and the likelihood of materially different reported results if different assumptions or conditions were to prevail. The SEC indicated that a “critical accounting policy” is one that is both important to the portrayal of the company’s financial condition and results and that requires management’s most difficult, subjective or complex judgments. Such judgments are often the result of a need to make estimates about the effect of matters that are inherently uncertain.

While our accounting policies are more fully described in Note 2 to our consolidated financial statements included in this report, we currently consider revenue recognition as a critical accounting policy. 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 we have continuing involvement in the agreement are recorded as deferred revenue and recognized over the estimated service period. If the estimated service period is subsequently modified, the period over which the upfront fees are recognized could change on a prospective basis, which could impact revenue recognition. Revenues from the achievement of research and development milestones are recognized when the milestones are achieved. Revenue from the sale of diagnostic products is recognized at the time of shipment.

Results of Operations

Our results for any interim period, such as those described in the following analysis, are not necessarily indicative of the results for the entire fiscal year or any other future period.

Three-Month Period Ended March 31, 2003 Compared to 2002

Revenues

Total revenues for the three-month period ended March 31, 2003 were $5,615,000, as compared to $3,283,000 for the same period in 2002, representing an increase of $2,332,000, or 71.0%. Product sales for the three-month period ended March 31, 2003 were $1,088,000, as compared to $965,000 for the same period in 2002, representing an increase of $123,000, or 12.7%. License fee and other revenues for the three-month period ended March 31, 2003 increased to $4,519,000 from $2,253,000 for the same period in 2002, primarily due to the recognition of previously deferred payments from Amgen, for the supply of raw materials in the amount of $3,769,000. Research and development revenues from grants for the three-month period ended March 31, 2003 decreased from $65,000 to $8,000 for the same period of 2002. Research and Development revenues are not expected to be a material source of revenues for the foreseeable future.

Costs and Expenses

Total operating expenses for the three-month period ended March 31, 2003 were $6,213,000, as compared to $5,169,000 for the same period in 2002, representing an increase of $1,044,000, or 20.2%. This was

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primarily due to increase in research and development expenses, general and administrative costs and sales and marketing expenses partially offset by decrease in cost of goods sold, all as discussed below. Research and development expenses for the three-month period ended March 31, 2003 increased by $960,000, or 24.6%, from $3,902,000 to $4,862,000 as compared to the same period in 2002. This was primarily due to increased spending in our research and development departments, increased manufacturing expenses, including lab supplies associated with producing compounds to be used in clinical trials, and costs associated with IBC Pharmaceuticals in the amount of $269,000, as IBC became a majority-owned subsidiary of Immunomedics on June 30, 2002. Cost of goods sold for the three-month period ended March 31, 2003 decreased to $159,000 from $175,000 for the same period in 2002. Sales and marketing expenses for the three-month period ended March 31, 2003 increased by $58,000 to $357,000 from $299,000 for the same period of 2002, primarily due to increased staffing levels in our European sales office and other marketing related expenses. General and administrative costs for the three-month period ended March 31, 2003 increased by $42,000 to $835,000 from $793,000, or 5.3%, for the same period of 2002. This was primarily due to increased salaries, increased regulatory compliance costs for public companies, increased legal fees and other administrative expenses also contributed to the increase as compared to the prior year.

Interest Income

Interest and other income for the three-month period ended March 31, 2003 decreased by $78,000, or 20.3%, from $385,000 to $307,000, for the same period in 2002, primarily due to lower rates of return and lower cash available for investments.

Operating Results

Net income for the three-month period ended March 31, 2003 was $453,000, or $0.01 per share, as compared to net loss of $296,000, or $0.01 per share, for the same period in 2002. The net income in 2003 as compared to a net loss in 2002 resulted primarily from increased sales and license fee revenues, partially offset by lower interest and other income and increased costs and expenses resulting from increased research and development efforts and general and administrative expenses, all as discussed above. During the three-month periods ended March 31, 2003 and 2002, we recorded a tax benefit of $745,000 and $1,206,000, as a result of our sale of approximately $9,246,000 and $15,269,000 of New Jersey state net operating losses, respectively. The lower tax benefit for the three-month period ended March 31, 2003 affected the net loss by the amount of $461,000.

Nine-Month Period Ended March 31, 2003 Compared to 2002

Revenues

Total revenues for the nine-month period ended March 31, 2003 were $11,971,000 as compared to $9,985,000 for the same period in 2002, representing an increase of $1,986,000, or 19.9%. Product sales for the nine-month period ended March 31, 2003 were $2,633,000, as compared to $2,838,000 for the same period in 2002, representing a decrease of $205,000, or 7.2%. This was principally a result of our continued transition in focus from the development of diagnostic imaging products to the development of therapeutic compounds. License fee and other revenues for the nine-month period ended March 31, 2003 increased to $9,304,000 from $6,930,000 for the same period in 2002, primarily due to the recognition of previously deferred payments from Amgen, for the supply of raw materials in the amount of $3,769,000. Research and development revenues from grants for the nine-month period ended March 31, 2003 decreased from $216,000 to $34,000 for the same period of 2002. Research and Development revenues are not expected to be a material source of revenues for the foreseeable future.

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Costs and Expenses

Total operating expenses for the nine-month period ended March 31, 2003 were $17,871,000, as compared to $13,862,000 for the same period in 2002, representing an increase of $4,009,000, or 28.9%. This was primarily due to continued growth in research and development expenses and general and administrative costs, partially offset by a decrease in sales and marketing expenses and cost of goods sold, all as discussed below. Research and development expenses for the nine-month period ended March 31, 2003 increased by $3,594,000, or 36.7% from $9,788,000 to $13,382,000 as compared to the same period in 2002. This was primarily due to increased spending in our research and development departments, increased manufacturing expenses, including lab supplies associated with producing compounds to be used in clinical trials, and costs associated with IBC Pharmaceuticals in the amount of $762,000, as IBC became a majority-owned subsidiary of Immunomedics on June 30, 2002. Cost of goods sold for the nine-month period ended March 31, 2003 decreased to $419,000 from $529,000 for the same period in 2002, primarily due to decreased sales of in-vitro diagnostic kits and other imaging products. Sales and marketing expenses for the nine-month period ended March 31, 2003 decreased by $571,000 to $1,051,000 from $1,622,000 for the same period of 2002, primarily due to lower staffing levels in our European sales office and other marketing related expenses. General and administrative costs for the nine-month period ended March 31, 2003 increased by $1,097,000 to $3,019,000 from $1,922,000, or 57.1%, for the same period of 2002. This was primarily due to the recognition of compensation expense of $360,000 associated with the issuance of a fully vested option to acquire 80,000 shares of our common stock at a purchase price of $4.94 per share to Dr. Morton Coleman, a non-employee director, in consideration for consulting services outside of his responsibilities as a Director as well as an increased number of employees and associated salary expenses, increased insurance costs, increased regulatory compliance costs for public companies and increased legal fees and other administrative expenses.

Interest Income

Interest and other income for the nine-month period ended March 31, 2003 decreased by $674,000 from $1,612,000 to $938,000 for the same period in 2002, primarily due to lower rates of return and lower cash available for investments.

Operating Results

Net loss for the nine-month period ended March 31, 2003 was $4,217,000, or $0.08 per share, as compared to $1,060,000, or $0.02 per share, for the same period in 2002. The larger net loss in 2003 as compared to 2002 resulted primarily from reduced sales, lower interest and other income and increased costs and expenses resulting from increased research and development efforts and general and administrative expenses, all as discussed above. During the nine-month periods ended March 31, 2003 and 2002, the Company recorded a tax benefit of $745,000 and $1,206,000, as a result of our sale of approximately $9,246,000 and $15,269,000 of New Jersey state net operating losses, respectively. The lower tax benefit for the nine-month period ended March 31, 2003 affected the net loss by the amount of $461,000, or $0.01 per share.

Liquidity and Capital Resources

At March 31, 2003 we had working capital of $25,998,000, which represents a decrease of $9,044,000, or 25.8%, from June 30, 2002. Our liquid asset position, measured by our cash, cash equivalents and marketable securities, was $28,411,000 at March 31, 2003, representing a decrease of $16,377,000 from June 30, 2002. The decrease in each case resulted primarily from the funding of operating expenses and

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capital expenditures associated with the expansion of our production facilities, much of which we expect to refinance once construction is completed.

We anticipate that working capital and cash, cash equivalents and marketable securities will continue to decrease during the remainder of fiscal year 2003 as a result of planned operating expenses and capital expenditures, offset in part by projected revenues from sales of diagnostic imaging products in the United States and Europe. However, there can be no assurance as to the amount of revenues, if any, these products will continue to provide and the proceeds from any credit facility we obtain.

In October 2001, we entered into a Distribution Agreement with Logosys Logistik GmbH pursuant to which Logosys packages and distributes our diagnostic imaging products, LeukoScan and CEA-Scan, within the countries comprising the European Union and certain other countries.

We believe that our existing working capital should be sufficient to meet our capital and liquidity requirements for at least the next twelve months. However, we have never generated positive cash flow from operations and actual results could differ materially from our expectations as a result of a number of risks and uncertainties, including the risks described our Annual Report on Form 10-K for the fiscal year ended June 30, 2002. Our operating expenses and capital requirements are affected by numerous factors and there is no assurance that such factors will not have a negative impact on our liquidity.

We anticipate that, in addition to our current cash resources as well as forecasted sales, licensing, royalty and other revenues, we will require a substantial amount of additional capital in order to fund: (i) our research and development programs; (ii) clinical trials of our product candidates; (iii) regulatory filings for our product candidates; and (iv) obtaining patent protection for our inventions. Accordingly, we intend to continue to engage in discussions with commercial banks and other financial institutions regarding both debt and equity financing opportunities. There can be no assurance that any additional financing will be available to us on terms we find acceptable, if at all. Even if we are able to obtain additional financing when it is needed, there can be no assurance that the terms of such financing will not cause substantial dilution to existing stockholders.

We intend to supplement our financial resources from time to time as market conditions permit through the public or private sale of debt and/or equity securities, as well as through collaborative marketing and distribution agreements. At the present time, we are unable to determine whether any of these future activities will be successful and, if so, the terms and timing of any definitive agreements.

Contractual Commitments

Our major contractual obligations relate to an operating lease for our facility and for the construction agreements to expand our manufacturing facility. We have identified and quantified the significant commitments in the following table.

Payments Due by Period

(in $000’s)

(1) In November 2001, we renewed our operating lease for the Morris Plains facility for an additional term of twenty years expiring in October 2021 at a base annual rate of $545,000, which is fixed for the first five years and increases thereafter every five years, which includes an additional 15,000 square feet.

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(2) In order to support our clinical trials and anticipated future commercial requirements, we have entered into construction agreements to expand our manufacturing facility at a cost of approximately $6.3 million of which $6.2 million was spent through March 31, 2003. We plan to finance most of the costs of this project through a credit facility once construction is completed. The production facility plan includes two distinct manufacturing suites, containing six new bioreactors, which are intended to allow flexibility in terms of the amount of therapeutic compounds that can be produced. We anticipate that the facility will be completed sometime during the third quarter of calendar year 2003.

Effects of Inflation

We do not believe that inflation has had a material impact on our business, sales or operating results during the periods presented.

Private Securities Litigation Reform Act of 1995

The Securities and Exchange Commission encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. Certain statements that we may make from time to time, including, without limitation, statements contained in this Quarterly Report on Form 10-Q, constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may be made directly in this quarterly report, and they may also be made a part of this quarterly report by reference to other documents filed with the Securities and Exchange Commission, which is known as “incorporation by reference.”

Words such as “may,” “anticipate,” “estimate,” “expects,” “projects,” “intends,” “plans,” “believes” and words and terms of similar substance used in connection with any discussion of future operating or financial performance, identify forward-looking statements. All forward-looking statements are management’s present expectations of future events and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties include, among other things: our inability 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 we may be unable to successfully finance and secure regulatory approval of and market our drug candidates; our dependence upon pharmaceutical and biotechnology collaborations; the levels and timing of payments under our collaborative agreements; uncertainties about our ability to obtain new corporate collaborations and acquire new technologies on satisfactory terms, if at all; the development of competing diagnostic and therapeutic products; our ability to protect our proprietary technologies; patent-infringement claims; risks of new, changing and competitive technologies and regulations in the United States and internationally; and other factors discussed under the heading “Factors That May Affect Our Business and Results of Operations” in our Annual Report on Form 10-K for the year ended June 30, 2002, which has been filed with the Securities and Exchange Commission.

In light of these assumptions, risks and uncertainties, the results and events discussed in the forward-looking statements contained in this Quarterly Report or in any document incorporated by reference might not occur. You are cautioned not to place undue reliance on the forward-looking statements, which speak only of the date of this Quarterly Report or the date of the document incorporated by reference in this Quarterly Report. We are not under any obligation, and we expressly disclaim any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable law. All subsequent forward-looking statements

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attributable to Immunomedics or to any person authorized to act on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section.

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The following discussion about our exposure to market risk of financial instruments contains forward-looking statements under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those described due to a number of factors, including uncertainties associated with general economic conditions and conditions impacting our industry.

Our holdings of financial instruments are comprised primarily of corporate debt. All such instruments are classified as securities available-for-sale. We do not invest in portfolio equity securities or commodities or use financial derivatives for trading purposes. Our debt security portfolio represents funds held temporarily pending use in our business and operations. We manage these funds accordingly. We seek reasonable assuredness of the safety of principal and market liquidity by investing in rated fixed income securities while at the same time seeking to achieve a favorable rate or return. Our market risk exposure consists principally of exposure to changes in interest rates. Our holdings also are exposed to the risks of changes in the credit quality of issuers. We typically invest in highly liquid debt instruments with fixed interest rates.

The table below presents the principal amounts, related weighted average interest rates by fiscal year of maturity and fair market value as of March 31, 2003 for our investment portfolio as of March 31, 2003:

(in $000’s)

ITEM 4.    CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures. Within the 90-day period prior to the filing of this report, our principal executive officer and principal financial officer evaluated the effectiveness of our quarterly disclosure controls and procedures (as defined in Exchange Act Rules 13a-14(c) and 15d-14(c)) and have concluded that, based on such evaluation, our disclosure controls and procedures were adequate and effective to ensure that material information relating to Immunomedics, including its consolidated subsidiaries, was made known to them by others within those entities, particularly during the period in which this Quarterly Report on Form 10-Q was being prepared.

(b) Changes in Internal Controls. There were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, nor were there any significant deficiencies or material weaknesses in our internal controls. Accordingly, no corrective actions were required or undertaken.