Immunomedics Inc. (IMMU) filed Quarterly Report for the period ended 2009-09-30.
Immunomedics Inc. is a New Jersey-based biopharmaceutical company focused on the development of monoclonal antibody-based products for the targeted treatment of cancer autoimmune and other serious diseases. They have developed a number of advanced proprietary technologies that allow us to create humanized antibodies that can be used either alone in unlabeled or `naked` form or conjugated with radioactive isotopes chemotherapeutics or toxins in each case to create highly targeted agents. Using these technologies the company have built a pipeline of therapeutic product candidates that utilize several different mechanisms of action. They have recently licensed its lead product candidate epratuzumab to UCB S.A. for the treatment of all autoimmune disease indications worldwide. Immunomedics Inc. has a market cap of $272.1 million; its shares were traded at around $3.62 with a P/E ratio of 120.6 and P/S ratio of 9.1. Immunomedics Inc. had an annual average earning growth of 14.3% over the past 5 years.
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As a result of our assessment of a number of factors, including without limitation, market conditions and the credit quality of these securities, we determined that the estimated fair value no longer approximates par value, although we continue to earn interest on the current auction rate security investments at the maximum contractual rate. Accordingly, beginning with the three-month period ended March 31, 2008, we recorded an other than temporary impairment charge of $2.2 million to reduce the value of the ARS to their estimated fair value. Utilizing this discounted cash flow model we had determined that the change in the estimated fair value of our investments in ARS for the three-month periods ended September 30, 2009 and 2008 resulted in an unrealized gains of $0.2 million and $1.1 million, respectively. As of September 30, 2009, we estimated the fair value of these ARS at $17.7 million. We used a discounted cash flow model to determine the estimated fair value of our investment in ARS.
Revenues for the three-month period ended September 30, 2009 were $39,025,000, as compared to $4,902,000 for the same period in 2008, representing an increase of $34,123,000, or 696%. The increase for the three-month period ended September 30, 2009 is primarily the result of recording license fee revenue of $31,145,000 for the UCB Agreement and an increase of $3,069,000 in licensing fee revenue from the Nycomed Agreement for the three-month period ended September 30, 2009. There was no corresponding revenue for UCB in fiscal 2008. In August 2009, we received notice from UCB relieving us of our responsibilities for the manufacturing of epratuzumab, the only remaining obligation under the UCB agreement, thus allowing us to record the full amount of the remaining deferred license fee revenue this quarter. Product sales for the three-month period ended September 30, 2009 were $767,000, as compared to $1,062,000 for the same period in 2008, representing a decrease of $295,000, or 28%. This decrease resulted primarily from reduced sales volume of LeukoScan in Europe. Research and development revenues for the three-month period ended September 30, 2009 were $400,000 as compared to $196,000 for the previous year, due to the increased number and size of grant programs in place in the current fiscal period.
Total costs and expenses for the three-month period ended September 30, 2009 were $7,257,000, as compared to $7,294,000 for the same period in 2008, representing a decrease of $37,000. Research and development expenses for the three-month period ended September 30, 2009 were $5,533,000 as compared to $5,608,000 for the same period in 2008, a decrease of $74,000 or 1%. The reduction in research and development expenses resulted primarily from $1.4 million of increased expense reimbursements from Nycomed, offset by $706,000 of higher levels of materials, supplies and testing for Nycomed related production, $329,000 of higher spending for clinical trials as well as higher headcount and related salaries and employee benefits. Cost of goods sold for the three-month period ended September 30, 2009 was $73,000 as compared to $120,000 for the same period in 2008. Gross profit margins were 90% and 89%, respectively in the first quarter of fiscal 2010 and 2009. Sales and marketing expenses for the three-month period ended September 30, 2009 of $210,000 was comparable to the $196,000 amount for the same period in 2008, an increase of $14,000 or 7%. General and administrative expenses were $1,440,000 for the three-month period ended September 30, 2009 representing an increase of $70,000 or 5% compared to the three-month period ended September 30, 2008. This increase is primarily attributable to the accrual of $542,000 of additional incentive compensation due to our Chairman in accordance with his employment agreement, resulting from the expectation of the Company’s profitability for the 2010 fiscal year. Such expectation is primarily the result of increased licensing fee revenue recognized under the UCB and Nycomed agreements. There can be no assurance that the Company will be profitable for the 2010 fiscal year. The increase in fiscal 2010 expenses was partially offset by $300,000 of additional incentive compensation paid in the previous year to our Chairman as a result of the consummation of the Nycomed Agreement (in accordance with his employment agreement); as well as lower payroll related expenses and reduced legal expenses in the 2010 fiscal year.
Interest and other income for the three-month period ended September 30, 2009 was $236,000 as compared to $381,000 for the same period in 2008, a reduction of $145,000. This decline was primarily the result of lower levels of cash available for investments during the quarter, (the $40.0 million of proceeds from the Nycomed Agreement was received in mid-August 2008), as well as lower rates of return on investments. Included in the interest and other income for the three-month periods ended September 30, 2009 and 2008 was $144,000 and $86,000, respectively, for the amortization of the discount for the auction rate securities.
Net income for the three-month period ended September 30, 2009, was $32,012,000 or $0.43 per basic share as compared to a net loss of ($2,231,000) or ($0.03) per basic share, for the same period in 2008. The improvement in the net income in 2009 as compared to the net loss in the comparable period in 2008 resulted primarily from the increase in licensing fee revenue from the UCB and Nycomed Agreements.
At September 30, 2009, we had working capital of $12,245,000, representing an improvement of $32,450,000 from the working capital deficit of $20,205,000 at June 30, 2009. This increase in working capital is primarily a result of the recognition in fiscal year 2010 of $37,858,000 of deferred revenue from the UCB and Nycomed Agreements which were classified as current liabilities as of June 30, 2009 and $1,705,000 increase in receivables from Nycomed. Partially offsetting this increase in working capital was our use of cash in operations of $7,123,000 during the three-month period ended September 30, 2009.
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