On May 10, 2017 Immunomedics, Inc., (NASDAQ:IMMU) ("Immunomedics" or "the Company") reported financial results for the third quarter ended March 31, 2017 (Press release, Immunomedics, MAY 10, 2017, View Source [SID1234519032]). The Company also highlighted recent key developments and planned activities for its clinical pipeline. Schedule your 30 min Free 1stOncology Demo! "This was clearly a milestone quarter for Immunomedics," stated Behzad Aghazadeh, Chairman of the Board of Immunomedics. "While our financial results were generally in-line with expectations, what is most important is that we have made significant progress towards ensuring that the Company has the financial flexibility to focus on optimizing our organization and bringing IMMU-132, our breakthrough therapy candidate to treat metastatic triple-negative breast cancer, to market on our own. Immunomedics now has a clear strategic plan in place to become a recognized leader in the field of antibody-drug conjugates, which we believe will deliver maximum potential value to all stakeholders."
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Third Quarter Fiscal 2017 Results
Total revenues for the third quarter of fiscal 2017, which ended on March 31, 2017, were $1.3 million, compared to $0.9 million for the same quarter for the prior fiscal year, an increase of $0.4 million, or approximately 44%. The increase was due primarily to a $0.4 million increase in LeukoScan product sales.
Total costs and expenses for the quarter ended March 31, 2017 were $23.4 million, compared to $15.5 million for the same quarter in fiscal 2016, an increase of $7.9 million, or approximately 51%, due primarily to a $8.9 million increase in general and administrative expenses, including a $5.9 million increase in legal and advisory fees associated with the proxy contest, professional services in connection with the Licensing Agreement with Seattle Genetics (SGEN) (which was subsequently terminated), a $2.4 million accrual for executive severance compensation, and a $0.6 million increase in other corporate legal fees; offset partially by a $0.8 million decrease in research and development expenses.
The Company recognized a $28.3 million non-cash expense during the three-month period ended March 31, 2017, reflecting the increase in the fair value of warrant liabilities at March 31, 2017 resulting from the increase in price of our common stock during the three-months ended March 31, 2017. The Company also recognized a $7.6 million non-cash expense representing the excess of fair value of the SGEN warrant issued on February 10, 2017 over proceeds received for the issuance of common stock and the warrant. Interest expense related to the 4.75% Convertible Senior Notes due 2020 was $1.4 million for both quarters ended March 31, 2017, and March 31, 2016, including the amortization of $0.2 million debt issuance costs in each quarter.
The Company did not realize any income tax benefit for the quarter ended March 31, 2017, compared to a $1.9 million income tax benefit for the same quarter in fiscal 2016 from the sale of a portion of our New Jersey State tax net operating losses (NOLs) and research and development (R&D) tax credits.
Net loss attributable to stockholders was $59.3 million, or $0.55 per share, for the third quarter of fiscal 2017, compared to net loss attributable to stockholders of $14.0 million, or $0.15 per share, for the same quarter in fiscal 2016, an increase of $45.3 million, or approximately 324%. The increase was due primarily to the $28.3 million increase in the fair value of warrant liabilities, the $8.9 million increase in general and administrative expenses, the $7.6 million SGEN warrant-related expense, and the non-recurring $1.9 million income tax benefit received in fiscal 2016, offset partially by the $0.8 million decrease in research and development expenses.
Nine Months Fiscal 2017 Results
Total revenues for the nine-month period of fiscal 2017 were $2.4 million, compared to $2.3 million for the same period for the prior fiscal year, an increase of $0.1 million, or approximately 4%. The increase was due primarily to a $0.1 million increase in LeukoScan sales.
Total costs and expenses for the nine-month period ended March 31, 2017 were $54.9 million, compared to $46.7 million for the same period in fiscal 2016, an increase of $8.2 million, or approximately 18%, due primarily to a $9.0 million increase in general and administrative expenses, including a $7.0 million increase in legal and advisory fees associated with the proxy contest, professional services in connection with the now-terminated Licensing Agreement with SGEN, a $2.4 million accrual for executive severance compensation, and a $1.4 million increase in legal fees, offset partially by a $1.7 million adjustment for deferred unearned executive bonuses, and a $0.7 million decrease in research and development expenses.
The Company recognized a $35.6 million non-cash expense during the nine-month period ended March 31, 2017, reflecting the increase in the fair value of warrant liabilities from the increase of the common stock price from the issuance dates of February 10, 2017 and October 11, 2016 through March 31, 2017. The Company also recognized a $7.6 million non-cash expense representing the excess of fair value of the SGEN warrant issued on February 10, 2017 over the proceeds received for the issuance of common stock and the warrant. Interest expense related to the 4.75% Convertible Senior Notes due 2020 was $4.1 million for both periods ended March 31, 2017 and March 31, 2016, including the amortization of $0.5 million debt issuance costs in each period.
The Company did not realize any income tax benefit for the nine-month period ended March 31, 2017, compared to a $5.1 million income tax benefit for the same period in fiscal 2016, from the sale of a portion of our New Jersey State tax NOLs or R&D tax credits.
Net loss attributable to stockholders was $100.0 million, or $0.97 per share, for the nine-month period ending March 31, 2017, compared to net loss attributable to stockholders of $43.1 million, or $0.46 per share, for the same period last fiscal year, an increase of $56.9 million, or approximately 132%. The increase was due primarily to the $35.6 million increase in the fair value of warrant liabilities, the $9.0 million increase in general and administrative expenses, the $7.6 million SGEN warrant-related expense, and the non-recurring $5.1 million income tax benefit received in fiscal 2016.
Cash, cash equivalents, and marketable securities were $46.0 million as of March 31, 2017. On May 10, 2017, the Company closed on the previously announced $125 million private placement financing with institutional investors. This financing, along with the Company’s current cash on hand, provides Immunomedics with the capital necessary to fully support the development of IMMU-132, including the goal of filing a Biologics License Application (BLA) with the FDA for Accelerated Approval of IMMU-132 for patients with metastatic triple-negative breast cancer (mTNBC), initiate the Phase 3 confirmatory trial in mTNBC (a prerequisite to filing the BLA), continue large-scale manufacturing of IMMU-132, and begin preparations to market IMMU-132 to mTNBC patients in the United States. It will also be used to fund general corporate and operational enhancements through the third quarter of calendar year 2018, which, the Company believes, is sufficient to attain Accelerated Approval for IMMU-132 in mTNBC subject to meeting all standards, completing review and final determination by the FDA.
"The completion of this financing will give Immunomedics significant financial flexibility," stated Michael R. Garone, Vice President Finance and Chief Financial Officer. "It was highly gratifying to see the enthusiastic response from institutional investors in the market when given the opportunity to invest in the Company. Beyond allowing us to fund the development of IMMU-132, our enhanced capital position will give us the ability to further improve and invest in our organization."
"We are absolutely committed to bring IMMU-132 to the U.S. market ourselves," said Dr. Behzad Aghazadeh, Chairman of the Board of Directors. "Our immediate goals for IMMU-132 are to begin enrolling mTNBC patients in the Phase 3 confirmatory trial during the second half of 2017 and to submit a BLA in mTNBC to the FDA during the late fourth quarter of 2017 or the first quarter of 2018. We are also evaluating strategic opportunities with regional partners for IMMU-132 and plans for further development of IMMU-132 beyond mTNBC," he further stated.
During the third quarter, Immunomedics achieved the following development milestones:
Results from a Phase 2 study of IMMU-132 in patients with relapsed or refractory metastatic urothelial cancer were updated at the 2017 Genitourinary Cancers Symposium.1 Among the 36 assessable patients, an objective response rate (ORR) of 31%, including one confirmed complete response and ten confirmed partial responses, was reported. The median duration of response for these ten patients was 7.5 months. For the 41 intention-to-treat (ITT) patients, interim median progression-free survival (PFS) and interim median overall survival (OS) were 7.2 months and 15.5 months, respectively.
In patients with metastatic small-cell lung cancer, results with IMMU-132 were updated at the 2017 Annual Meeting of the American Association for Cancer Research (AACR) (Free AACR Whitepaper).2 Sixty percent of patients showed tumor shrinkage from baseline measurements. On an ITT basis (N= 50), the ORR was 14% and the median response duration was 5.7 months. Median PFS and median OS were 3.7 months and 7.5 months, respectively.
Results with IMMU-132 in heavily-pretreated patients with metastatic triple-negative breast cancer were published online in the Journal of Clinical Oncology.3