IMMUNOMEDICS INC (Form: 10-Q, Received: 05/09/2019 08:07:04)

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, 2019

( ) 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 (State or other jurisdiction of incorporation or organization)	61-1009366 (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

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 þ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes þ No☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “accelerated filer”, “large accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer þ 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 7(a)(2)(B) of the Securities Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

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

The number of shares of the registrant’s common stock outstanding as of May 6, 2019 was 191,537,309.

IMMUNOMEDICS, INC.

TABLE OF CONTENTS



PART I:	FINANCIAL INFORMATION

ITEM 1.	FINANCIAL STATEMENTS (UNAUDITED):

	Unaudited Condensed Consolidated Balance Sheets as of March 31, 2019 and December 31, 2018	3

	Unaudited Condensed Consolidated Statements of Comprehensive Loss for the Three Months Ended March 31, 2019 and 2018	4

	Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit) for the Three Months Ended March 31, 2019 and 2018	5

	Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2019 and 2018	6

	Notes to Unaudited Condensed Consolidated Financial Statements	7

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	19

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	26

ITEM 4.	CONTROLS AND PROCEDURES	26

PART II:	OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS	27

ITEM 1A.	RISK FACTORS	27

ITEM 6.	EXHIBITS	46

EXHIBIT INDEX		48

SIGNATURES		47

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)



	March 31, 2019			December 31, 2018
ASSETS
Current Assets:
Cash and cash equivalents	$	437,935		$	492,860
Marketable securities	4,741			4,941
Prepaid expenses	4,868			5,354
Other current assets	1,313			1,348
Total current assets	448,857			504,503
Property and equipment, net of accumulated depreciation of $5,113 and $4,316 at March 31, 2019 and December 31, 2018, respectively	35,448			23,469
Other long-term assets	269			68
Total Assets	$	484,574		$	528,040

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses	$	53,926		$	31,722
Liability related to sale of future royalties - current	2,657			—
Lease liability - current	298			—
Total current liabilities	56,881			31,722
Convertible senior notes, net	7,068			7,055
Liability related to sale of future royalties - non-current	228,600			221,295
Other long-term liabilities	10,221			2,119
Total Liabilities	302,770			262,191
Commitments and Contingencies (Note 10)
Stockholders' Equity:
Convertible preferred stock, $0.01 par value; authorized 10,000,000 shares; no shares issued and outstanding at March 31, 2019 and December 31, 2018	—			—
Common stock, $0.01 par value; authorized 250,000,000 shares; issued 191,509,289 shares and outstanding 191,389,668 shares at March 31, 2019; issued 190,445,795 shares and outstanding 190,411,070 shares at December 31, 2018	1,915			1,905
Capital contributed in excess of par	1,224,066			1,219,237
Treasury stock, at cost: 119,621 shares at March 31, 2019 and 34,725 shares at December 31, 2018	(2,095		)	(824		)
Accumulated deficit	(1,040,553		)	(953,216		)
Accumulated other comprehensive loss	(560		)	(351		)
Total Immunomedics, Inc. stockholders' equity	182,773			266,751
Noncontrolling interest in subsidiary	(969		)	(902		)
Total stockholders' equity	181,804			265,849
Total Liabilities and Stockholders' Equity	$	484,574		$	528,040

See accompanying notes to unaudited condensed consolidated financial statements

IMMUNOMEDICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF

COMPREHENSIVE LOSS

(Dollars in thousands, except per share amounts)

(Unaudited)



	Three Months Ended
	March 31,
	2019			2018
Revenues:
Product sales	$	—		$	450
License fee and other revenues	—			15
Research and development	—			17
Total revenues	—			482

Costs and Expenses:
Costs of goods sold	—			47
Research and development	58,172			28,843
Sales and marketing	7,881			2,366
General and administrative	13,595			6,854
Total costs and expenses	79,648			38,110
Operating loss	(79,648		)	(37,628		)
Changes in fair market value of warrant liabilities	—			9,835
Interest expense	(9,959		)	(10,900		)
Interest and other income	2,203			1,130
Insurance reimbursement	—			1,930
Foreign currency transaction gain, net	—			75
Loss before income tax	(87,404		)	(35,558		)
Income tax (expense) benefit	—			—
Net loss	$	(87,404	)	$	(35,558	)
Net loss attributable to noncontrolling interest	(67		)	(12		)
Net loss attributable to Immunomedics, Inc. stockholders	$	(87,337	)	$	(35,546	)
Loss per common share attributable to Immunomedics, Inc. stockholders (basic and diluted):	(0.46		)	(0.21		)
Weighted average shares used to calculated loss per common share (basic and diluted):	191,052			166,054
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	(9		)	(66		)
Unrealized (loss) gain on securities available for sale	(200		)	10
Other comprehensive loss, net of tax:	(209		)	(56		)
Comprehensive loss	(87,613		)	(35,614		)
Comprehensive loss attributable to noncontrolling interest	(67		)	(12		)
Comprehensive loss attributable to Immunomedics, Inc. stockholders	$	(87,546	)	$	(35,602	)

See accompanying notes to unaudited condensed consolidated financial statements

IMMUNOMEDICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

(in thousands)

(Unaudited)



	Immunomedics, Inc. Stockholders' Equity (Deficit)
	Convertible Preferred Stock								Capital Contributed in Excess of Par									Accumulated Other Comprehensive Income (Loss)
	Convertible Preferred Stock			Common Stock								Treasury Stock			Accumulated Deficit						Noncontrolling Interest
	Shares	Amount		Shares		Amount						Treasury Stock			Accumulated Deficit						Noncontrolling Interest			Total
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	—	—		—		—			17,757			—			—			—			—			17,757
Exercise of stock options, net	—	—		83		1			332			—			—			—			—			333
Exercise of common stock warrants	—	—		1,400		14			5,236			—			—			—			—			5,250
Issuance of common stock to RPI Finance Trust	—	—		4,373		44			67,740			—			—			—			—			67,784
Stock-based compensation	—	—		284		2			1,330			—			—			—			—			1,332
Conversion of RSU's for tax withholding payments	—	—		(187	)	(2		)	(1,470		)	—			—			—			—			(1,472		)
Other comprehensive loss	—	—		—		—			—			—			—			(56		)	—			(56		)
Net loss	—	—		—		—			—			—			(35,546		)	—			(12		)	(35,558		)
Balance at March 31, 2018	—	$	—	167,256		$	1,672		$	750,392		$	(458	)	$	(678,519	)	$	(457	)	$	(810	)	$	71,820

Balance at December 31, 2018	—	$	—	190,446		$	1,905		$	1,219,237		$	(824	)	$	(953,216	)	$	(351	)	$	(902	)	$	265,849
Exercise of stock options, net				1,063		10			3,086			(1,271		)	—			—			—			1,825
Stock-based compensation	—	—		—		—			1,743			—			—			—			—			1,743
Other comprehensive loss	—	—		—		—			—			—			—			(209		)	—			(209		)
Net loss	—	—		—		—			—			—			(87,337		)	—			(67		)	(87,404		)
Balance at March 31, 2019	—	$	—	191,509		$	1,915		$	1,224,066		$	(2,095	)	$	(1,040,553	)	$	(560	)	$	(969	)	$	181,804

IMMUNOMEDICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)



	Three Months Ended March 31,
	2019			2018
Cash flows from operating activities:
Net loss	$	(87,404	)	$	(35,558	)
Adjustments to reconcile net loss to net cash used in operating activities:
Changes in fair value of warrant liabilities	—			(9,835		)
Depreciation and amortization	804			313
Interest on non-recourse debt	9,962			10,626
Amortization of deferred revenue	—			13
Amortization of bond premiums	—			6
Amortization of debt issuance costs	13			(53		)
Amortization of deferred rent	—			109
Right-of-use asset amortization	64			—
Decrease in allowance for doubtful accounts	—			(11		)
Non-cash expense related to stock-based compensation	1,743			1,330
Changes in operating assets and liabilities	20,141			884
Net cash used in operating activities	(54,677		)	(32,176		)
Cash flows from investing activities
Purchases of marketable securities	—			(135		)
Proceeds from sales/maturities of marketable securities	—			26,881
Purchases of property and equipment	(2,064		)	(2,940		)
Net cash (used in) provided by investing activities	(2,064		)	23,806
Cash flows from financing activities:
Exercise of stock options, net	1,825			333
Exercise of warrants	—			5,250
Proceeds from private offering of common stock	—			67,784
Proceeds from the issuance of non-recourse debt	—			182,217
Debt conversion fees	—			(3		)
Tax withholding payments for stock-based compensation	—			(1,472		)
Net cash provided by financing activities	1,825			254,109
Effect of changes in exchange rates on cash, cash equivalents and restricted cash	(9		)	47
Net increase (decrease) in cash, cash equivalents and restricted cash	(54,925		)	245,786
Cash, cash equivalents and restricted cash beginning of period	494,173			60,960
Cash, cash equivalents and restricted cash end of period	$	439,248		$	306,746
Supplemental disclosure of cash flow information:
Interest paid	$	169		$	475
Schedule for non-cash investing and financing activities:
Non-cash component of warrant exercise	$	—		$	17,760
Accrued capital expenditures	$	3,140		$	1,439
Shares received in cashless exercise	$	1,271		$	—

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):



	March 31, 2019		March 31, 2018
Cash and cash equivalents	$	437,935	$	306,746
Restricted cash in other current assets	1,313		—
Total cash, cash equivalents and restricted cash	$	439,248	$	306,746

See accompanying notes to unaudited condensed consolidated financial statements.

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. On February 4, 2019, we received a written communication from the FDA enclosing the Establishment Inspection Report (“EIR”) from the chemistry, manufacturing and controls ("CMC") BLA pre-approval inspection conducted by the FDA at the Company’s Morris Plains, New Jersey antibody manufacturing facility for our ADC product candidate sacituzumab govitecan, which took place from August 6, 2018 through August 14, 2018. The FDA also notified the Company that the FDA will be conducting a re-inspection of the Company’s Morris Plains, New Jersey antibody manufacturing facility as part of the BLA resubmission process. The Company is finalizing its plans with respect to the matters raised in the CRL received from FDA on January 17, 2019 and the EIR. The Company met with the FDA on May 2, 2019 to review the FDA's findings and discussed the Company's BLA resubmission.

On March 29, 2019, the Company entered into a sales agreement (the "ATM Agreement") with Cowen and Company, LLC ("Cowen") to issue and sell shares of the Company’s Common Stock, par value $0.01 per share, having an aggregate offering price of up to $150,000,000 , from time to time during the term of the ATM Agreement, through an “at-the-market” equity offering program at the Company's sole discretion, under which Cowen will act as the Company’s agent and/or principal. The Company will pay Cowen a commission up to 3.0% of the gross sales proceeds of any common stock sold through Cowen under the ATM Agreement. To date, the Company has not sold any common stock under the ATM Agreement.

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-month period ended March 31, 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.

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 10 "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 current quarter 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.

2. Marketable Securities

Immunomedics considers all of its current investments to be available-for-sale. Marketable securities at March 31, 2019 , consisted of the following (in thousands):



	Amortized Cost		Gross Unrealized Gain		Gross Unrealized (Loss)			Fair Value
U.S. Government Sponsored Agencies	$	4,941	$	—	$	(200	)	$	4,741

Maturities of debt securities classified as available-for-sale were as follows at March 31, 2019 (in thousands):



	Fair Value		Net Carrying Amount
Due after one year through five years	$	4,741	$	4,754

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

3. 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 18% over a period of 20 years. As of March 31, 2019 and December 31, 2018, we determined the fair value at $231.2 million and $221.2 million , respectively. During the three months ended March 31, 2019 and 2018, the Company recognized approximately $ 10.0 million and $10.6 million in interest expense, respectively.

The following table shows the activity within the liability related to sale of future royalties during the three months ended March 31, 2019 (in thousands):




Carrying value of liability related to sale of future royalties at December 31, 2018	$	221,295
Interest expense recognized	9,962
Carrying value of liability related to sale of future royalties at March 31, 2019	$	231,257

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 March 31, 2019 .

The Convertible Senior Notes are convertible at the option of holders into approximately 19.6 million shares of common stock at any time prior to the close of business on the day immediately preceding the maturity date. The initial exchange rate was

approximately 195.8 shares of common stock per $1,000 principal amount of Convertible Senior Notes (equivalent to an initial conversion price of approximately $5.11 per share of common stock).

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.

The indenture does not limit the amount of debt that may be issued by the Company under the indenture or otherwise, does not contain any financial covenants or restrict the Company from paying dividends, selling or disposing of assets, or issuing or repurchasing its other securities, provided that such event is not deemed to be a fundamental change (as defined in the indenture governing the Convertible Senior Notes). The indenture contains customary terms and covenants and events of default.

If an event of default with respect to the Convertible Senior Notes occurs, holders may, upon satisfaction of certain conditions, accelerate the principal amount of the Convertible Senior Notes plus premium, if any, and accrued and unpaid interest, if any. In addition, the principal amount of the Convertible Senior Notes plus premium, if any, and accrued and unpaid interest, if any, will automatically become due and payable in the case of certain types of bankruptcy or insolvency events of default involving the Company.

On September 21, 2017, the Company entered into separate, privately negotiated exchange agreements, (the "September 2017 Exchange Agreements") with certain holders of the Convertible Senior Notes. Under the September 2017 Exchange Agreements, such holders agreed to convert an aggregate $80.0 million of Convertible Senior Notes held by them. In total, the Company issued an aggregate 16.8 million shares of common stock in the September 2017 Exchange Agreements. The shares represent an aggregate of 1.1 million shares more than the number of shares into which the exchanged Convertible Senior Notes were convertible under their original terms. As a result of the September 2017 Exchange Agreements, the Company recognized a loss on induced exchanges of debt of $13.0 million representing the fair value of the incremental consideration paid to induce the holders to exchange their Convertible Senior Notes for equity (i.e., 1.1 million shares of common stock), based on the closing market price of the Company's Common Stock on the date of the September 2017 Exchange Agreements.

On October 2, 2018, the Company entered into privately negotiated exchange agreements (the "October 2018 Exchange Agreements"), with a limited number of holders of the Convertible Senior Notes. Under the October 2018 Exchange Agreements, the Company exchanged, in a private placement, $12.9 million in aggregate principal amount of the Convertible Senior Notes held by such holders for 2.6 million newly issued shares of the Company's common stock, par value $0.01 per share. The shares represented an aggregate of 0.1 million shares more than the number of shares into which the exchanged Convertible Senior Notes were convertible under their original terms. As a result of the October 2018 Exchange Agreements, the Company recognized a loss on induced exchanges of debt of $0.9 million representing the fair value of the incremental consideration paid to induce the holders to exchange their Convertible Senior Notes for equity (i.e., 0.1 million shares of common stock), based on the closing market price of the Company's Common Stock on the date of the October 2018 Exchange Agreements. As a result of the October 2018 Exchange Agreements, the balance of the outstanding Convertible Senior Notes was $7.1 million with 1.4 million shares convertible into common shares of common stock at March 31, 2019, and December 31, 2018.

Total interest expense for the Convertible Senior Notes for the three months ended March 31, 2019 and 2018 was $0.1 million and $0.2 million , respectively. Included in interest expense was an immaterial amount of amortization of debt issuance costs for the three months ended March 31, 2019 , and 2018.

4. 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 three months ended March 31, 2019 or 2018.

Stock-based compensation expense included in the condensed consolidated statements of comprehensive loss were $1.7 million , and $1.3 million for the three months ended March 31, 2019 and 2018, respectively.

The following table summarizes the activity for stock options, RSUs and PSOs for the three months ended March 31, 2019 (in thousands):



	Stock Options		RSUs	PSOs
Equity awards outstanding, beginning of year	4,757		15	538
Changes during the year:
Granted	1,238		—	260
Exercised	(1,063	)	—	—
Expired or forfeited	(498	)	—	(273	)
Equity awards outstanding, end of period	4,434		15	525

On March 14, 2019, performance stock options were granted to certain eligible 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.

As of March 31, 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	$	36,921	$	1	$	3,737
Expected weighted-average period in years of compensation cost to be recognized	3.3		—		1.8

5. Estimated Fair Value of Financial Instruments

Cash equivalents and marketable securities as of:



	($ in thousands)
March 31, 2019	Level 1 ^(a)		Level 2 ^(b)		Level 3 ^(c)		Total
Money Market Funds Note ^(d)	$	328,409	$	—	$	—	$	328,409
Marketable Securities:
U.S. Government Sponsored Agencies	4,741		—		—		4,741
Total	$	333,150	$	—	$	—	$	333,150



	($ in thousands)
December 31, 2018	Level 1 ^(a)		Level 2 ^(b)		Level 3 ^(c)		Total
Money Market Funds Note ^(d)	$	326,239	$	—	$	—	$	326,239
Marketable Securities:
U.S. Government Sponsored Agencies	4,941		—		—		4,941
Total	$	331,180	$	—	$	—	$	331,180

^(a) Level 1 - Financial instruments whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market which the company has the ability to access at the measurement date.

^(b) Level 2 - Financial instruments whose values are based on quoted market prices in markets where trading occurs infrequently or whose values are based on quoted prices of instruments with similar attributes in active markets.

^(c) Level 3 - Financial instruments whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management's own assumptions about the assumptions a market participant would use in pricing the asset.

^(d) The money market funds noted above are included in cash and cash equivalents.

Convertible Senior Notes

The carrying amounts and estimated fair values (Level 2) of debt instruments are as follows (in thousands):



	As of March 31, 2019				As of December 31, 2018
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Convertible Senior Notes	$	7,068	$	26,400	$	7,055	$	20,100

The fair value of the Convertible Senior Notes, which differs from their carrying values, is influenced by interest rates, the Company’s stock price and stock price volatility, and is determined by prices for the Convertible Senior Notes observed in market trading which are Level 2 inputs.

Liability related to the sale of future royalties

The Company has determined the fair value of the liability related to the sale of future royalties is based on the Company's current estimates of future royalties expected to be paid to RPI, over the life of the arrangement, which are considered Level 3 (See Note 3 - "Debt").

There were no transfers between Level 1, Level 2, and Level 3 during the periods presented.

6. Stockholders’ Equity

Common Stock

On October 11, 2016, the Company completed an underwritten public offering of 10,000,000 shares of its common stock and accompanying warrants to purchase 10,000,000 shares of common stock at a purchase price of $3.00 per unit, comprising of one share of common stock and one warrant. The change in fair value of the warrant liabilities for the three months ended March 31, 2018, resulted in a gain of approximately $9.8 million , which has been recognized in the accompanying condensed consolidated statements of comprehensive loss. During 2018, all of the warrants were exercised. As of March 31, 2019 and December 31, 2018, there were no warrants outstanding.

Treasury Stock

During the three months ended March 31, 2019 , there were 84,896 shares received in connection with a non-cash equity transaction related to the Company's Plan.

7. Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss were as follows (in thousands):



	Currency Translation Adjustments			Net Unrealized Gains (Losses) on Available- for-Sale Securities			Accumulated Other Comprehensive Loss
Balance, December 31, 2017	$	(323	)	$	(78	)	$	(401	)
Other comprehensive (loss) income before reclassifications	(66		)	10			(56		)
Net current-period other comprehensive (loss) income	(66		)	10			(56		)
Balance, March 31, 2018	$	(389	)	$	(68	)	$	(457	)
Balance, December 31, 2018	$	(347	)	$	(4	)	$	(351	)
Other comprehensive (loss) income before reclassifications	(9		)	(200		)	(209		)
Net current-period other comprehensive (loss) income	(9		)	(200		)	(209		)
Balance, March 31, 2019	$	(356	)	$	(204	)	$	(560	)

There were no amounts reclassified from accumulated other comprehensive (loss) income. All components of accumulated other comprehensive loss are net of tax, except currency translation adjustments, which exclude income taxes related to indefinite investments in foreign subsidiaries.

8. Related Party Transactions

On January 8, 2018, Morris Rosenberg joined the Company as Chief Technology Officer and became a full-time employee. Between May 5, 2017 and January 7, 2018, Mr. Rosenberg was engaged by the Company as an independent consultant pursuant to a consulting agreement between the Company and Mr. Rosenberg’s consulting company, M Rosenberg BioPharma Consulting LLC. The Company paid M Rosenberg BioPharma Consulting LLC $0.6 million during this time and Morris Rosenberg was also granted stock options to purchase 45,000 shares of the Company's common stock pursuant to the Immunomedics, Inc. 2014 Long-Term Incentive Plan. From January 8, 2018 through March 31, 2018, the Company paid M Rosenberg BioPharma $0.5 million for services agreed upon prior to Mr. Rosenberg becoming a full-time employee. As part of his employment contract, 50% of the 45,000 shares granted to Mr. Rosenberg as a consultant were forfeited, and the remaining 50% continue to vest. Mr. Rosenberg received 104,389 stock options and was permitted to continue to provide certain limited outside consulting services through M Rosenberg BioPharma Consulting LLC based on certain restrictions outlined in the contract. Additionally, during his employment period, except with the prior written consent of the Company's Board of Directors (the "Board"), Mr. Rosenberg is not permitted to enter into any contract, agreement or other transaction arrangement to provide goods and/or services to the Company through M Rosenberg BioPharma Consulting LLC.

The Company appointed Scott Canute, a member of the Company’s Board, as the Company’s Executive Director. Upon recommendation of the Compensation Committee, the Board approved that Mr. Canute will be paid $16,667 per month for his service as Executive Director and was granted a nonqualified stock option to purchase 79,818 shares of the Company’s common stock (the “Initial Canute Compensation”). The Compensation Committee determined that in order to reflect the scope of his role and the significant time that Mr. Canute will be devoting to his role as Executive Director, Mr. Canute’s cash compensation shall be increased to $21,372 per month, and Mr. Canute was granted an additional nonqualified stock option to purchase 22,854 shares of the Company’s common stock (the “Revised Canute Compensation”). The options have a seven -year term and an exercise price equal to the fair market value of the Company’s common stock based on the closing price of the Company’s common stock on each date of grant and will be subject to the terms of a nonqualified stock option agreement (the “Canute NQSO Agreement”). Such options will vest in full upon the Company’s receipt of approval from the FDA for the Company’s BLA for sacituzumab govitecan for the treatment of patients with TNBC who have received at least two prior therapies for metastatic disease under the PDUFA. The Company and Mr. Canute entered into a letter agreement (the “Canute Letter Agreement”) to memorialize his appointment as the Company’s Executive Director, and the Initial Canute Compensation. The Canute Letter Agreement may be terminated by either party at any time upon written notice to the other party.

9. Collaboration Agreement

AstraZeneca/MedImmune

In June 2018, the Company entered into a clinical collaboration with AstraZeneca and its global biologics research and development arm, MedImmune, to evaluate in Phase 1/2 studies the safety and efficacy of combining AstraZeneca’s Imfinzi ^® (durvalumab), a human monoclonal antibody directed against PD-L1, with sacituzumab govitecan as a treatment of patients with triple-negative breast cancer (“TNBC”) and urothelial cancer ("UC"), which was broadened in October 2018 to include second-line metastatic non-small cell lung cancer ("NSCLC").

Part one of the two-part Phase 1/2 studies will be co-funded by the two companies. Immunomedics will supply the study drug and AstraZeneca will utilize its existing clinical trial infrastructure to accelerate the enrollment of the sacituzumab govitecan and durvalumab combination. The trial design allows for rapid transition into randomized Phase 2 studies should the first part of these studies show promising data and the companies agree to proceed based on efficacy and safety results obtained. The Company did not incur costs associated with the clinical collaboration during the Transition Period.

The collaboration terminates thirty days following the expiration of the study periods end-date. Either party may terminate the collaboration earlier by providing thirty days' written notice.

10. Commitments and Contingencies

Commitments and Contingencies

a. Legal Matters

Stockholder Complaints:

Class Action Stockholder Federal Securities Cases

Two purported class action cases were filed in the United States District Court for the District of New Jersey; namely, Fergus v. Immunomedics, Inc., et al., filed June 9, 2016; and Becker v. Immunomedics, Inc., et al., filed June 10, 2016. These cases arise from the same alleged facts and circumstances, and seek class certification on behalf of purchasers of our common stock between April 20, 2016 and June 2, 2016 (with respect to the Fergus matter) and between April 20, 2016 and June 3, 2016 (with respect to the Becker matter). These cases concern the Company’s statements in press releases, investor conference calls, and filings with the U.S. Securities and Exchange Commission (the "SEC") beginning in April 2016 that the Company would present updated information regarding its IMMU-132 breast cancer drug at the 2016 American Society of Clinical Oncology (“ASCO”) conference in Chicago, Illinois. The complaints allege that these statements were false and misleading in light of June 2, 2016 reports that ASCO had canceled the presentation because it contained previously reported information. The complaints further allege that these statements resulted in artificially inflated prices for our common stock, and that the Company and certain of its officers are thus liable under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. An order of voluntary dismissal without prejudice was entered on November 10, 2016 in the Becker matter. An order granting motion to consolidate cases, appoint lead plaintiff, and approve lead and liaison counsel was entered on February 7, 2017 in the Fergus matter. A consolidated complaint was filed on October 4, 2017. The Company filed a motion to dismiss the consolidated complaint on January 26, 2018. On March 31, 2019, the court granted the Company's motion to dismiss, without prejudice, and left plaintiffs with the ability to file an amended complaint within thirty (30) days. Counsel for the Company has consented to an extension of time for plaintiffs to file the proposed amended complaint for an additional thirty (30) days.

A third purported class action case was filed in the United States District Court for the District of New Jersey; namely, Odeh v. Immunomedics, Inc., et al., filed December 27, 2018. The complaint in this action alleges that the Company failed to disclose the results of observations made by the FDA during an inspection of the Company’s manufacturing facility in Morris Plains, New Jersey in August, 2018. The complaint alleges that Immunomedics misled investors by failing to disclose the Form 483 inspection report issued by the FDA which set forth the observations of the FDA inspector during the inspection. Such observations purportedly included, inter alia, manipulated bioburden samples, misrepresentation of an integrity test procedure in the batch record, and backdating of batch records. The complaint further alleges that the Company’s failure to disclose the Form 483 resulted in an artificially inflated price for our common stock, and that the Company and certain of its officers are thus liable under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.

On February 8, 2019, a purported class action case was filed in the United States District Court for the District of New Jersey; namely, Choi v. Immunomedics, Inc., et al. The complaint asserts violations of the federal securities laws based on claims that that the Company violated the federal securities laws by making alleged misstatements in various press releases and securities filings from February 8, 2018 to November 7, 2018 and by failing to disclose the substance of its interactions with the FDA in connection with the Company's submission of its BLA for sacituzumab govitecan.

Motions for the appointment of a lead plaintiff and lead counsel and to consolidate the Odeh and Choi complaints have been filed.

On April 8, 2019, a putative shareholder of the Company filed a derivative action purportedly on behalf of the Company and against the Company’s board of directors and certain Company current and former officers, in the Superior Court of New Jersey, Law Division (Morris County); namely, Crow v. Aghazadeh, et al. The Crow complaint alleges that the individual defendants breached their fiduciary duties and committed other violations of law based on the same core allegations in the Odeh and Choi actions. The Crow complaint has not been served.

Stockholder Claim in the Court of Chancery of the State of Delaware

On February 13, 2017, venBio commenced an action captioned venBio Select Advisor LLC v. Goldenberg, et al., C.A. (Del. Ch.) (the “venBio Action”), alleging that Company’s Board breached their fiduciary duties when the Board (i) amended the Company’s Amended and Restated By-laws (the “By-Laws”) to call for a plurality voting regime for the election of directors instead of majority voting, and providing for mandatory advancement of attorneys’ fees and costs for the Company’s directors and officers, (ii) rescheduled the Company’s 2016 Annual Meeting of Stockholders (the “2016 Annual Meeting”) from December 14, 2016 to February 16, 2017, and then again to March 3, 2017, and (iii) agreed to the proposed Licensing Transaction with Seattle Genetics. venBio also named Seattle Genetics as a defendant and sought an injunction preventing the Company from closing the licensing transaction with Seattle Genetics. On March 6, 2017, venBio amended its complaint, adding further allegations. The Court of Chancery entered a temporary restraining order on March 9, 2017, enjoining the closing of the Licensing Transaction. venBio amended its complaint a second time on April 19, 2017, this time adding Greenhill & Co. Inc. and Greenhill & Co. LLC (together “Greenhill”), the Company’s financial advisor on the Licensing Transaction, as an additional defendant. On May 3, 2017, venBio and the Company and individual defendants Dr. Goldenberg, Ms. Sullivan and Mr. Brian A. Markison, a director of the Company (collectively, the “Individual Defendants”) entered into the Initial Term Sheet. On June 8, 2017, venBio the Company and Greenhill entered into the Greenhill Term Sheet. On February 9, 2018, the Court of Chancery approved the Settlement, and entered an order and partial judgment releasing all claims that were asserted by venBio against the Individual Defendants and Greenhill in the venBio Action and awarding venBio fees and expenses. On May 24, 2018 the remaining parties to the venBio Action participated in a mediation of the claims against Geoff Cox, Robert Forrester, Bob Oliver, and Jason Aryeh (the "Remaining Defendants"). The mediation was unsuccessful. The Remaining Defendants filed submitted motions to dismiss the claims against them in the venBio Action. On March 18, 2019, venBio amended its complaint, adding further allegations. The Remaining Defendants filed a motion to dismiss the claims against them on May 1, 2019.

Insurance Coverage Arbitration:

The Company has initiated an arbitration with three of its management liability insurers: Starr Indemnity & Liability Company (“Starr”), Liberty Insurance Underwriters Inc. (“Liberty”), and Berkley Professional Liability (“Berkley”) (collectively, “Insurers”). The arbitration arises from the Insurers’ refusal to cover $3,402,980 in attorneys’ fees and expenses paid to venBio pursuant to a December 1, 2017, settlement agreement between venBio, the Company, Dr. Goldenberg, Ms. Sullivan, Mr. Markison, and Greenhill to partially settle the venBio Action and fully settle the Federal Action and the Delaware Section 225 Action (the “venBio Fee Award”).

The Insurers argue that the venBio Fee Award does not satisfy their policies’ definitions of covered “loss” because the policies only cover defense costs incurred by the Company. The Company counters that the venBio Fee Award is a covered settlement, not a claim for defense costs. Insurers also argue that they have no obligation to pay any defense costs or settlement incurred in the Federal Action or 225 Action because Immunomedics initiated those lawsuits. The Company’s position is that the Federal Action and 225 Action were defensive in nature and therefore covered because they were initiated to further the defense of the venBio Action. Additionally, Insurers argue the venBio Fee Award is not covered because the Company was required to obtain Insurers’ consent to enter into a binding term sheet in the venBio Action and to agree to pay the venBio Fee Award and that the Company failed to do so. The Company takes the position that Insurers at all times were aware of the developments in the venBio Action, that they sought consent to enter into the settlement, and that Insurers cannot show they were prejudiced by an any alleged failure to obtain Insurers’ consent.

Liberty also contends that the Company’s insurance claim is not covered by Liberty’s 2015-16 insurance policy and should be covered by another company’s policy in a later policy period. The Company, Starr, and Berkley take the position that the policies treat the venBio Action as a related claim to the to the Fergus v. Immunomedics class action stockholder federal securities case, which was filed in 2016. Because of the similar allegation in the venBio Action and Fergus, the policies deem the venBio Action claim to be made at the same time as Fergus and covered by the 2015-16 policies.

Starr is presently advancing the costs to defend the remaining claims in the venBio Action, i.e., those against the Company as Nominal Defendant and individual defendants Aryeh, Cox, Forrester, and Oliver. However, all Insurers have reserved their rights to contest coverage for any potential settlement of those claims.

Breach of Contract:

On November 16, 2018, Kapil Dhingra filed a complaint against Immunomedics, Inc., in the Superior Court of New Jersey, Law Division, Morris County, alleging breach of contract and breach of the implied covenant of good faith and fair dealing. In the complaint, Dhingra alleges that Immunomedics breached agreements with Dhingra entered into in 2012 and 2013 that purportedly give him the right to purchase 50,000 shares of Common Stock of Immunomedics for a strike price stated in the agreements. On January 11, 2019, Immunomedics filed a motion for summary judgment and to stay discovery while the motion for summary judgment was pending. On February 5, 2019, Dhingra filed an opposition brief and an amended complaint adding as a plaintiff Kapital Consulting, LLC (together with Dhingra, "Plaintiffs"), and Plaintiffs filed a partial cross-motion for summary judgment. On April 4, 2019, the Court denied all motions without prejudice pending discovery. Immunomedics continues to dispute the allegations and will seek expedited disposition following discovery.

b. Other matters:

Immunomedics is also a party to various claims and litigation arising in the normal course of business.

c. Our Licenses

We have obtained licenses from various parties for rights to use, develop and commercialize proprietary technologies and compounds. Currently, we have the following licenses:

Medical Research Council (“MRC”) - We entered into a license agreement with MRC in May 1994, whereby we have obtained a license for certain patent rights with respect to the genetic engineering on monoclonal antibodies. Our agreement does not require any milestone payments, nor have we made any payments to MRC to date. Our agreement with MRC, which expires at the expiration of the last of the licensed patents in 2020, provides for future royalty payments in the low single digits based on a percentage of product sales.

On April 4, 2018, we entered into a license agreement with The Scripps Research Institute ("TSRI"). Pursuant to the license agreement, TSRI granted to us an exclusive, worldwide, sub-licensable, royalty-bearing license to use certain patent rights relating to sacituzumab govitecan. The license agreement expires on a country-by-country basis on the expiration date of the last to expire licensed patent rights in such country covering a licensed product. The license agreement may be terminated by the mutual written consent of us and TSRI, and TSRI may terminate the license agreement upon the occurrence of certain events, including, but not limited to if we do not make a payment due pursuant to the license agreement and fail to cure such non-payment within 30 days after the date of TSRI's written notice of such non-payment. As consideration for the license granted, we made a cash payment of $250,000 to TSRI. Additionally, we will pay TRSI (i) product development milestone payments that range from the mid six-digit dollar figure to the low seven-digit dollar figure and (ii) royalties on net sales of licensed products in the low-single digit percentage figure range capped at an annual amount. We have agreed to use reasonable efforts to develop and market the licensed products.

d. Michael Pehl Separation

On March 13, 2019, the Company entered into a separation agreement (the “Separation Agreement”) with Michael Pehl, the Company’s former Chief Executive Officer, President and member of the Company’s Board. Mr. Pehl resigned as Chief Executive Officer, President and member of the Company’s Board effective February 23, 2019. Pursuant to the Separation Agreement, Mr. Pehl will receive cash payments of approximately $1.0 million , and such amount was accrued for as of March 31, 2019. Mr. Pehl also released the Company from any and all claims with respect to all matters arising out of or related to Mr. Pehl’s employment by the Company and his resignation.

e. Leases

Our operating lease assets primarily represent manufacturing and research and development facilities, warehouses, and offices. Our finance leases primarily represent computer equipment and are not significant. Total operating lease expense was $354,000 for the three months ended March 31, 2019. For the three months ended March 31, 2019, cash payments against operating lease liabilities totaled $327,000 . The discount rate used to determine the net present value of the leases at inception was 11.0% . This is the incremental borrowing rate that represents the rate of interest that the Company would expect to pay to borrow an amount equal to the lease payments under similar terms. Our leases both share a remaining lease term of 12.8 years , some of which may include options to extend the leases further. The Company considers these options in determining the lease term used to establish the right-of-use assets and lease liabilities.

Supplemental Unaudited Condensed Consolidated Balance Sheet information related to leases was as follows (in thousands):



Operating leases:		March 31, 2019
	Operating lease right-of-use assets	$	8,373

	Current portion of lease liabilities	$	298
	Non-current portion of lease liabilities	$	10,221
	Total operating lease liabilities	$	10,519

	Weighted average remaining lease term (years)	12.8
	Weighted average discount rate	11.0		%

Supplemental cash flow information related to leases was as follows (in thousands):



	Three months period ended March 31, 2019
Non-cash lease expense	$	64
Change in operating lease liabilities	$	37

Maturities of lease liabilities as of March 31, 2019 were as follows (in thousands):



Year 1		$	1,441
Year 2		$	1,453
Year 3		$	1,482
Year 4		$	1,523
Year 5		$	1,541
Thereafter		$	12,509
Total lease payments		$	19,949
	Less imputed interest	$	(9,430	)
Total		$	10,519

11. Subsequent Events

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 million when Cumulative Net Sales exceed certain thresholds during each of 2019 and 2020. On April 12, 2019, the Company 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.

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. In consideration for entering into the License Agreement, Everest will make a one-time, non-refundable upfront payment to the Company in the aggregate amount of $65 million within thirty days of execution of the License Agreement. The License Agreement contains a development milestone payment of $60 million based upon the Company’s achievement of FDA approval for sacituzumab govitecan. The License Agreement also contains additional development milestone payments in a total amount of up to $180 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 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% .

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Note Regarding Forward-Looking Statements

The Securities and Exchange Commission (the “SEC”) encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. This Quarterly Report on Form 10-Q contains such “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 SEC, 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, are intended to 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. This Quarterly Report on Form 10-Q, in addition to historical information, may contain forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. Such statements, including statements regarding expectations for the outcome of our planned resubmission of our BLA for sacituzumab govitecan for the treatment of patients with mTNBC who have received at least two prior therapies for metastatic disease, and expectations for the related resubmission, the FDA re-inspection of the Company’s manufacturing facility where we manufacture the monoclonal antibody for further manufacture into our antibody-drug-conjugate candidate sacituzumab govitecan, potential approval and commercial launch of sacituzumab govitecan for that indication and the Company’s development of sacituzumab govitecan for additional indications, clinical trials (including the funding therefor, anticipated patient enrollment, trial outcomes, timing or associated costs), regulatory applications and related timelines, including the filing and approval timelines for BLAs, BLA resubmissions, and BLA supplements, out-licensing arrangements, forecasts of future operating results, potential collaborations, capital raising activities, and the timing for bringing any product candidate to market, involve significant risks and uncertainties and actual results could differ materially from those expressed or implied herein. Factors that could cause such differences include, but are not limited to, the Company’s reliance on third-party relationships and outsourcing arrangements (for example in connection with manufacturing, logistics and distribution, and sales and marketing) over which it may not always have full control, including the failure of third parties on which the Company is dependent to meet the Company’s business and operational needs for investigational or commercial products and, or to comply with the Company’s agreements or laws and regulations that impact the Company’s business; the Company’s ability to meet pre-or post-approval compliance obligations; imposition of significant post-approval regulatory requirements on our product candidates, including a requirement for a post-approval confirmatory clinical study, or failure to maintain or obtain full regulatory approval for the Company’s product candidates, if received, due to a failure to satisfy post-approval regulatory requirements, such as the submission of sufficient data from a confirmatory clinical study; the uncertainties inherent in research and development; safety and efficacy concerns related to the Company’s products and product candidates; uncertainties in the rate and degree of market acceptance of products and product candidates, if approved; inability to create an effective direct sales and marketing infrastructure or to partner with third parties that offer such an infrastructure for distribution of the Company’s product candidates, if approved; inaccuracies in the Company’s estimates of the size of the potential markets for the Company’s product candidates or limitations by regulators on the proposed treatment population for the Company’s products and product candidates; decisions by regulatory authorities regarding labeling and other matters that could affect the availability or commercial potential of the Company’s products and product candidates; the Company’s dependence on business collaborations or availability of required financing from capital markets, or other sources on acceptable terms, if at all, in order to further develop our products and finance our operations; new product development (including clinical trials outcome and regulatory requirements/actions); the risk that we or any of our collaborators may be unable to secure regulatory approval of and market our drug candidates; risks associated with litigation to which the Company is or may become a party, including the cost and potential reputational damage resulting from such litigation; loss of key personnel; competitive risks to marketed products; and the Company’s ability to repay its outstanding indebtedness, if and when required, as well as the risks discussed in the Company’s filings with the SEC. The Company is not under any obligation, and the Company expressly disclaims any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise. Refer to Item 1A “Risk Factors” in this Quarterly Report on Form 10-Q for more information.

In light of these assumptions, risks and uncertainties, the results and events discussed in the forward-looking statements contained in this Quarterly Report on Form 10-Q or in any document incorporated by reference might not occur. Stockholders are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q or the date of the document incorporated by reference in this Quarterly Report on Form 10-Q, as applicable. 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 attributable to the Company or to any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section .

Overview

We are a clinical-stage biopharmaceutical company that develops monoclonal antibody-based products for the targeted treatment of cancer. Our advanced proprietary technologies allow us to create humanized antibodies that can be used either alone in unlabeled or “naked” form, or conjugated with chemotherapeutics, cytokines or toxins.

We believe that our antibodies have therapeutic potential, in some cases as a naked antibody or when conjugated with chemotherapeutics, cytokines or other toxins to create unique and potentially more effective treatment options. The attachment of effective anti-tumor compounds to antibodies is intended to allow the delivery of these therapeutic agents to tumor sites with better specificity than conventional chemotherapy. This treatment method is designed to optimize the therapeutic window through reducing the systemic exposure of the patient to the therapeutic agents, which ideally minimizes debilitating side effects while maximizing the concentration of the therapeutic agent at the tumor, potentially leading to better efficacy.

Our portfolio of investigational products includes antibody-drug conjugates ("ADCs") that are designed to deliver a specific payload of a chemotherapeutic directly to the tumor while reducing overall toxicities that are usually associated with conventional administration of these chemotherapeutic agents. Our most advanced ADCs are sacituzumab govitecan (“IMMU-132”) and labetuzumab govitecan (“IMMU-130”), which are in advanced trials for a number of solid tumors. Sacituzumab govitecan is our lead product candidate and has received Breakthrough Therapy Designation from the United States Food and Drug Administration ("FDA") for the treatment of patients with metastatic triple-negative breast cancer ("mTNBC") who have received at least two prior therapies for metastatic disease.

Our corporate strategy is to commercialize sacituzumab govitecan on our own in the United States for the benefit of patients with mTNBC and the creation of value for our stockholders. On May 21, 2018, we submitted a Biologics License Application (“BLA”) to the 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 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. On February 4, 2019, we received a written communication from the FDA enclosing the Establishment Inspection Report (“EIR”) from the chemistry, manufacturing and controls ("CMC") BLA pre-approval inspection conducted by the FDA at the Company’s Morris Plains, New Jersey antibody manufacturing facility for our ADC product candidate sacituzumab govitecan, which took place from August 6, 2018 through August 14, 2018. The FDA also notified us that the FDA will be conducting a re-inspection of our Morris Plains, New Jersey antibody manufacturing facility as part of the BLA resubmission process. We are finalizing its plans with respect to the matters raised in the CRL received from FDA on January 17, 2019 and the EIR. We met with the FDA on May 2, 2019 to review the FDA's findings and discussed our BLA resubmission.

On March 29, 2019, we entered into a sales agreement (the "ATM Agreement") with Cowen and Company, LLC ("Cowen") to issue and sell shares of our Common Stock, par value $0.01 per share, having an aggregate offering price of up to $150,000,000 , from time to time during the term of the ATM Agreement, through an “at-the-market” equity offering program at our sole discretion, under which Cowen will act as our agent and/or principal. We will pay Cowen a commission up to 3.0% of the gross sales proceeds of any common stock sold through Cowen under the ATM Agreement. To date, we have not sold any common stock under the ATM Agreement.

On April 5, 2019, we entered into a promotion agreement (the “Promotion Agreement”) with Janssen Biotech Inc., ("Janssen") pursuant to which we will provide non-exclusive product detailing services to Janssen for erdafitinib (the “Product”). Pursuant to the Promotion Agreement, we 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 we will provide product detailing services to Janssen. Following the achievement of certain sales targets in 2019 and 2020, Janssen will pay us (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 million when Cumulative Net Sales exceed certain thresholds during each of 2019 and 2020. On April 12, 2019, we were 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.

On April 29, 2019, we entered into a license agreement (the “License Agreement”) with Everest Medicines II Limited, a China limited company (“Everest”). Pursuant to the License Agreement, we 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. In consideration for entering into the License Agreement, Everest will make a one-time, non-refundable upfront payment to us in the aggregate amount of $65 million within thirty days of execution of the License Agreement. The License Agreement contains a development milestone payment of $60 million based upon our achievement of FDA approval for sacituzumab govitecan. The License Agreement also contains additional development milestone payments in a total amount of up to $180 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 million based upon the achievement of certain sales milestones. Everest will make royalty payments to us based upon percentages of net sales of sacituzumab govitecan, ranging from 14% to 20% .

As of March 31, 2019 , we had $442.7 million in cash, cash equivalents and marketable securities. We believe our projected financial resources are adequate to (i) support our clinical development plan for developing sacituzumab govitecan in mTNBC, advanced urothelial cancer ("UC"), hormone receptor-positive ("HR+")/human epidermal growth factor receptor 2-negative ("HER2-") metastatic breast cancer ("mBC"), non-small cell lung cancer ("NSCLC") and other indications of high medical need, (ii) further build our clinical and manufacturing infrastructure, and (iii) fund operations through 2020. However, in case of regulatory delays or other unforeseen events, we may require additional funding. Potential sources of funding in such a case could include (i) the entrance into potential development and commercial partnerships to advance and maximize our full pipeline for mTNBC and beyond in the United States and globally, and (ii) potential private and capital markets financing.

To accelerate the clinical and preclinical development of sacituzumab govitecan, we have entered into clinical collaborations with AstraZeneca to investigate the ADC in earlier lines of therapy for mTNBC, advanced UC and metastatic NSCLC in combination with its checkpoint inhibitor, and with Clovis to combine with its PARP inhibitor in mTNBC, advanced UC and ovarian cancer. We are also working with the University of Wisconsin on a clinical study in prostate cancer.

We also have a number of other product candidates, that target solid tumors and hematologic malignancies in various stages of clinical and preclinical development. They include other ADCs such as labetuzumab govitecan, which binds the CEACAM5 antigen expressed on CRC and other solid cancers, and IMMU-140 which targets HLA-DR for the potential treatment of hematologic malignancies. We believe that our portfolio of intellectual property provides commercially reasonable protection for our product candidates and technologies.

The development and commercialization of successful therapeutic products is subject to numerous risks and uncertainties including, without limitation, the following:


•	we may be unable to obtain additional capital through strategic collaborations, licensing, issuance of convertible debt securities or equity financing in order to continue our research and secure regulatory approval of and market our drug;


•	the type of therapeutic compound under investigation and nature of the disease in connection with which the compound is being studied;


•	our ability, as well as the ability of our partners, to conduct and complete clinical trials on a timely basis;


•	the time required for us to comply with all applicable federal, state and foreign legal requirements, including, without limitation, our receipt of the necessary approvals of the FDA, if at all;


•	the financial resources available to us during any particular period; and


•	many other factors associated with the commercial development of therapeutic products outside of our control.

See Risk Factors in Item 1A of this Quarterly Report.

Critical Accounting Policies and Accounting Estimates

A critical accounting policy is one that is both important to the portrayal of our financial condition and results of operation and requires management's most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

For a description of our significant accounting policies, refer to "Part II, Item 8. Financial Statements and Supplementary Data, Note 2 - Summary of Significant Accounting Policies" in our 2018 Transition Report on Form 10-K. Of these policies, the following are considered critical to an understanding of our Unaudited Condensed Consolidated Financial Statements as they require the application of the most difficult, subjective and complex judgments; stock-based compensation expenses, and interest expense on liability related to sale of future royalties.

Our critical accounting estimates and assumptions impacting the unaudited condensed consolidated financial statements relate to stock-based compensation expense, and interest expense on liability related to sale of future royalties. Refer to "Note 3 - Debt" and "Note 4 - Stock-based Compensation", respectively, for more information.

Recent Accounting Pronouncements

Refer to "Note 1 - Business Overview, Basis of Presentation and Recent Accounting Pronouncements” in the Notes to Unaudited Condensed Consolidated Financial Statements for a discussion of recently adopted accounting pronouncements and accounting pronouncements not yet adopted, and their expected impact on our financial position and results of operations.

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 year or any other future period.

Three-Month Period Ended March 31, 2019 Compared to Three-Month Period Ended March 31, 2018

Revenues



					($ in thousands)
					(Decrease)/Increase
Three Months Ended March 31,	2019		2018		2019 vs 2018
Product sales	$	—	$	450	$	(450	)	nm
License fee and other revenues	—		15		(15		)	nm
Research and development	—		17		(17		)	nm
Total revenues	$	—	$	482	$	(482	)	nm
nm - not meaningful

Total revenue for the three months ended March 31, 2019 , decrease d compared to the three months ended March 31, 2018, primarily due to the discontinued sale of LeukoScan ^® during February 2018 to focus on our ADC business.

Costs and Expenses



					($ in thousands)
					(Decrease)/Increase
Three Months Ended March 31,	2019		2018		2019 vs 2018
Costs of goods sold	$	—	$	47	$	(47	)	nm
Research and development	58,172		28,843		29,329			nm
Sales and marketing	7,881		2,366		5,515			nm
General and administrative	13,595		6,854		6,741			nm
Total costs and expenses	$	79,648	$	38,110	$	41,538		nm
nm - not meaningful

Total costs and expenses for the three months ended March 31, 2019 , increase d compared to the three months ended March 31, 2018, primarily due to an increase in research and development expenses of $29.3 million , an increase in general and administrative expenses of $6.7 million , and an increase in sales and marketing expenses of $5.5 million attributed primarily to preparations to launch sacituzumab govitecan for commercial sales in the United States for patients with at least two prior lines of treatment for metastatic TNBC, and to expand clinical development of sacituzumab govitecan into earlier lines of therapy and other indications.

Cost of Goods Sold

The cost of goods sold for the three months ended March 31, 2019 , decrease d compared to the three months ended March 31, 2018, primarily due to the discontinued sale of LeukoScan ^® during February 2018 to focus on the ADC business.

Research and Development

We do not track expenses on the basis of each individual compound under investigation and therefore we do not provide a breakdown of such historical information in that format. We evaluate projects under development from an operational perspective, including such factors as results of individual compounds from laboratory/animal testing, patient results and enrollment statistics in clinical trials. It is important to note that multiple product candidates are often tested simultaneously. It is not possible to calculate each antibody’s supply costs. There are many different development processes and test methods that examine multiple product candidates at the same time. We have, historically, tracked our costs in the categories discussed below, specifically “research costs” and “product development costs” and by the types of costs outlined below.

Our research costs consist of outside costs associated with animal studies and costs associated with research and testing of our product candidates prior to reaching the clinical stage. Such research costs primarily include personnel costs, facilities, including depreciation, lab supplies, funding of outside contracted research and license fees. Our product development costs consist of costs from preclinical development (including manufacturing), conducting and administering clinical trials and patent expenses.

The following table summarizes our research and development costs for the three months ended March 31, 2019 , compared to the three months ended March 31, 2018:



					($ in thousands)
					Increase/(Decrease)
For the three months ended March 31,	2019		2018		2019 vs 2018
Labor	$	11,554	$	4,786	$	6,768		nm
Manufacturing and quality costs	39,658		15,459		24,199			nm
Clinical development and operations	4,655		3,327		1,328			39.9	%
Other	2,305		5,271		(2,966		)	(56.3	)%
Total research and development costs	$	58,172	$	28,843	$	29,329		nm
nm - not meaningful

Research and development costs increase d for the three months ended March 31, 2019 , approximately $29.3 million to $58.2 million compared to the three months ended March 31, 2018. The increase in research and development costs for the three months ended March 31, 2019 , compared to the three months ended March 31, 2018, relate primarily to preparations for the approval and launch of sacituzumab govitecan in the United States for patients with mTNBC including increases in outside manufacturers' organizations services costs as we ramped-up manufacturing of sacituzumab govitecan for the Phase 3 clinical trial ADC as well as an increase in outside consulting services to improve our manufacturing and regulatory functions associated with fulfilling the FDA requirements for the Phase 3 clinical trial of sacituzumab govitecan in patients with mTNBC.

Completion of clinical trials may take several years or more. The length of time varies according to the type, complexity and the disease indication of the product candidate. We estimate that clinical trials of the type we generally conduct are typically completed over the following periods:



		Estimated Completion Period
Clinical Phase		(Years)
I		0-1
II		1-2
III		1-4

The duration and cost of clinical trials through each of the clinical phases may vary significantly over the life of a particular project as a result of, among other things, the following factors:


•	the length of time required to recruit qualified patients for clinical trials;


•	the duration of patient follow-up in light of trial results;


•	the number of clinical sites required for trials; and


•	the number of patients that ultimately participate.

Sales and Marketing

Sales and marketing expenses increase d during the three months ended March 31, 2019 , compared to the three months ended March 31, 2018 , primarily due to increased headcount and labor expenses, primarily related to sales force expenses.

General and Administrative Expenses

The following table summarizes our general and administrative expenses for the three months ended March 31, 2019 , compared to the three months ended March 31, 2018:



					($ in thousands)
					Increase/(Decrease)
For the three months ended March 31,	2019		2018		2019 vs 2018
Labor costs	$	6,813	$	2,615	$	4,198		nm
Legal and advisory fees	1,054		3,127		(2,073		)	nm
Consulting services	2,146		834		1,312			nm
Other	3,582		278		3,304			nm
Total general and administrative	$	13,595	$	6,854	$	6,741		nm
nm- not meaningful

General and administrative expenses for the three months ended March 31, 2019 , increase d compared to the three months ended March 31, 2018 , primarily due to increased labor costs and consulting services offset by a decrease in legal and advisory fees.

Changes in fair market value of warrant liabilities

We had no non-cash income or expense for the three months ending March 31, 2019 , compared to a $9.8 million non-cash gain for the three months ended March 31, 2018 , due to a decrease in the fair value of outstanding warrants. There were no outstanding warrants as of March 31, 2019 .

Interest expense

Interest expense for the three months ended March 31, 2019 , was $10.0 million , compared to $10.9 million for the three months ended March 31, 2018 . The $0.9 million decrease was due primarily to changes in the fair value of our debt balances as a result of the RPI agreement. Refer to "Note 3 - Debt" for more information.

Income tax (expense) benefit

There was no income tax expense for the three months ended March 31, 2019 and 2018.

Liquidity and Capital Resources

Since its inception in 1982, Immunomedics’ principal sources of funds have been the private and public sale of equity and debt securities, and revenues from licensing agreements, including up-front and milestone payments, funding of development programs, and other forms of funding from collaborations.

Actual results could differ materially from our expectations as a result of a number of risks and uncertainties, including the risks described in Item 1A Risk Factors, “Factors That May Affect Our Business and Results of Operations,” and elsewhere in this Quarterly Report on Form 10-Q. Our working capital and working capital requirements are affected by numerous factors and such factors may have a negative impact on our liquidity. Principal among these are the success of product commercialization and marketing products, the technological advantages and pricing of our products, the impact of the regulatory requirements applicable to us, and access to capital markets that can provide us with the resources, when necessary, to fund our strategic priorities.

Discussion of Cash Flows

The following table summarizes our cash flows for the three months ended March 31, 2019 and 2018:



	($ in thousands)
	Three Months Ended March 31,
	2019			2018
Net cash used in operating activities	$	(54,677	)	$	(32,176	)
Net cash (used in) provided by investing activities	(2,064		)	23,806
Net cash provided by financing activities	1,825			254,109

Net cash used in operating activities . Net cash used in operating activities during the three months ended March 31, 2019 , was approximately $54.7 million , compared to $32.2 million during the three months ended March 31, 2018 , an increase in cash used in operating activities of $22.5 million . The increase in cash used in operating activities for the period was primarily due to an increase in the net loss partially offset by changes in operating assets and liabilities, as well as changes in the fair value of warrant liabilities.

Net cash (used in) provided by investing activities . Net cash (used in) provided by investing activities during the three months ended March 31, 2019 , was $2.1 million , compared to cash provided by investing activities of $23.8 million during the three months ended March 31, 2018 , an increase of cash used of approximately $25.9 million , due primarily to a decrease of $26.9 million in proceeds from sales or maturities of marketable securities offset by $0.9 million decrease in purchases of property and equipment.

Net cash provided by financing activities . Net cash provided by financing activities during the three months ended March 31, 2019 , was $1.8 million , compared to $254.1 million of cash provided by financing activities during the three months ended March 31, 2018 . The decrease of $252.3 million was due primarily to cash proceeds from our agreement with RPI, as well as the sale of common stock and warrants, net of related expenses in the prior year.

Working Capital and Cash Requirements

Working capital was $392.0 million as of March 31, 2019 , compared to $472.8 million as of December 31, 2018, a $80.8 million decrease. The decrease in working capital was primarily due to increased research and development expenses in clinical trial costs as well as increases in labor related costs in connection with preparations for the approval and launch of sacituzumab govitecan in the United States for patients with mTNBC.

We expect to continue to fund our operations with our current financial resources. However, in case of regulatory delays or other unforeseen events, we may require additional funding. Potential sources of funding include (i) the entrance into various potential strategic partnerships targeted at advancing and maximizing our full pipeline for mTNBC and beyond, (ii) the sales and marketing of sacituzumab govitecan as a third-line therapy for mTNBC in the United States (pending FDA approval), and (iii) potential equity and debt financing transactions.

Until we can generate significant cash through (i) the entrance into various potential strategic partnerships towards advancing and maximizing our full pipeline for mTNBC and beyond, or (ii) the sales and marketing of sacituzumab govitecan as a third-line therapy for mTNBC in the United States (pending FDA approval), we expect to continue to fund our operations with our current financial resources. In the future, if we cannot obtain sufficient funding through the above methods, we could be required to finance future cash needs through the sale of additional equity and/or debt securities in capital markets. However, there can be no assurance that we will be able to raise the additional capital needed to complete our pipeline of research and development programs on commercially acceptable terms, if at all. The capital markets have experienced volatility in recent years, which has resulted in uncertainty with respect to availability of capital and hence the timing to meet an entity’s liquidity needs. Our existing debt may also negatively impact our ability to raise additional capital. If we are unable to raise capital on acceptable terms, our ability to continue our business would be materially and adversely affected. Actual results could differ materially from our expectations as a result of a number of risks and uncertainties, including the risks described in Item 1A Risk Factors, “Factors That May Affect Our Business and Results of Operations,” and elsewhere in our Quarterly Report on Form 10-Q. Our working capital and working capital requirements are affected by numerous factors and such factors may have a negative impact on our liquidity. Principal among these are the success of product commercialization and marketing products, the technological advantages and pricing of our products, the impact of the regulatory requirements applicable to us, and access to capital markets that can provide us with the resources, when necessary, to fund our strategic priorities.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our exposure to market risk has not changed materially since our disclosure in Item 7A, "Quantitative and Qualitative Disclosures About Market Risk" in our Transition Report on Form 10-K for the Transition Period ended December 31, 2018.

ITEM 4. CONTROLS AND PROCEDURES

(a) Disclosure Controls and Procedures: We maintain controls and procedures designed to ensure that we are able to collect the information we are required to disclose in the reports we file with the SEC, and to record, process, summarize and disclose this information within the time periods specified in the rules promulgated by the SEC. Our Chief Financial Officer and Principal Accounting Officer are responsible for establishing and maintaining these disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) and, as required by the rules of the SEC, evaluating their effectiveness. Based on their evaluation of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q, our Chief Financial Officer and Principal Accounting Officer believe that these procedures are effective to ensure that we are able to collect, process and disclose the information we are required to disclose in the reports we file with the SEC within the required time periods.

(b) Changes in Internal Controls over Financial Reporting: There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act), identified in connection with the evaluation of such internal control that occurred during the quarter, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The information called for by this item is incorporated by reference to "Note 10 - Commitments and Contingencies" of Notes to Unaudited Condensed Consolidated Financial Statements contained in Part I Item 1 of this Quarterly Report on Form 10-Q.

Item 1A. RISK FACTORS

Factors That May Affect Our Business and Results of Operations

Our business is subject to certain risks and uncertainties, each of which could materially adversely affect our business, financial condition, cash flows and results of operations.

Risks Relating to Our Business, Operations and Product Development

We have a long history of operating losses and it is likely that our operating expenses will continue to exceed our revenues for the foreseeable future.

We have incurred significant operating losses since our formation in 1982. We continue to spend our cash resources to fund our research and development programs and, subject to adequate funding, we expect these expenses to increase for the foreseeable future. Our only significant sources of revenue in recent years have been derived from collaboration agreements and sales of our LeukoScan ^® product in certain European countries. Additionally, the only product sales we have earned to date have come from the limited sales of our LeukoScan ^® diagnostic imaging product for which our (i) patent protection has expired and (ii) future sales were discontinued during February 2018. There can be no assurance that we will be profitable in future quarters or other periods. Further, we have made the strategic decision to focus on our therapeutic pipeline. We have never had product sales of any therapeutic product. We expect to experience significant operating losses as we invest further in our research and development activities while simultaneously attempting to develop and commercialize our other therapeutic product candidates. Even if we are able to develop commercially viable therapeutic products, certain obligations the Company has to third parties, including, without limitation, our obligation to pay RPI royalties on certain sacituzumab govitecan revenues pursuant to the Royalty Agreement may erode profitability of such products. If we are unable to develop commercially viable therapeutic products or to license them to third parties, it is likely that we will never achieve significant revenues or become profitable, either of which would jeopardize our ability to continue as a going concern.

We have significant future capital needs and may be unable to raise capital when needed, which could force us to delay or reduce our clinical development efforts.

We believe our projected financial resources are adequate to (i) support our clinical development plan for developing sacituzumab govitecan in mTNBC, advanced urothelial cancer ("UC"), hormone receptor-positive ("HR+")/human epidermal growth factor receptor 2-negative ("HER2-") metastatic breast cancer ("mBC"), non-small cell lung cancer ("NSCLC") and other indications of high medical need, (ii) further build our clinical and manufacturing infrastructure, and (iii) fund operations through 2020. However, in case of regulatory delays or other unforeseen events, we may require additional funding.

We may require additional funding in the future to complete our clinical trials currently planned or underway, continue research and new development programs, and continue operations. Potential sources of funding include (i) the entrance into various potential strategic partnerships targeted at advancing and maximizing our full pipeline for mTNBC and beyond, (ii) the sales and marketing of sacituzumab govitecan as a third-line therapy for mTNBC in the United States (pending FDA approval), and (iii) potential equity and debt financing transactions.

debt may also negatively impact our ability to raise additional capital. If we are unable to raise capital on acceptable terms, our ability to continue our business would be materially and adversely affected.

Other than our pending BLA for sacituzumab govitecan for patients with metastatic triple-negative breast cancer, our other most advanced therapeutic product candidates are still only in the clinical development stage, and may require us to raise capital in the future in order to fund further expensive and time-consuming studies before they can even be submitted for final regulatory approval. A failure of a clinical trial could severely harm our business and results of operations.

Clinical trials involve the administration of a product candidate to patients who are already extremely ill, making patient enrollment often difficult and expensive. Moreover, even in ideal circumstances where the patients can be enrolled and then followed for the several months or more required to complete the study, the trials can be suspended, terminated, delayed or otherwise fail for any number of reasons, including:


•	later-stage clinical trials may raise safety or efficacy concerns not readily apparent in earlier trials or fail to meet the primary endpoint;


•	unforeseen difficulties in manufacturing the product candidate in compliance with all regulatory requirements and in the quantities needed to complete the trial which may become cost-prohibitive;


•	we or any of our collaboration partners may experience delays in obtaining, or be unable to obtain, agreement for the conduct of our clinical trials from the FDA, institutional review boards ("IRBs"), or other reviewing entities at clinical sites selected for participation in our clinical trials;


•	while underway, the continuation of clinical trials may be delayed, suspended or terminated due to modifications to the clinical trial’s protocols based on interim results obtained or changes required or conditions imposed by the FDA, an IRB, a data and safety monitoring board (“DSMB”), or any other regulatory authority;


•	our third-party contractors may fail to meet their contractual obligations to us in a timely manner;


•	the FDA or other regulatory authorities may impose a clinical hold, for example based on an inspection of the clinical trial operations or trial sites;


•	we or any of our collaboration partners may suspend or cease trials in our or their sole discretion;


•	during the long trial process alternative therapies may become available which make further development of the product candidate impracticable; and


•	if we are unable to obtain the additional capital we need to fund all of the clinical trials we foresee, we may be forced to cancel or otherwise curtail such trials and other studies.

Any substantial delay in successfully completing clinical trials for our product candidates, sacituzumab govitecan and labetuzumab govitecan, could severely harm our business and results of operations.

Moreover, principal investigators for our clinical trials may serve as scientific advisers or consultants to us from time to time and receive compensation in connection with such services. Under certain circumstances, the Company may be required to report some of these relationships to the FDA. The FDA may conclude that a financial relationship between the Company and a principal investigator has created a conflict of interest or otherwise affected interpretation of the study. The FDA may therefore question the integrity of the data generated at the applicable clinical trial site and the utility of the clinical trial itself may be jeopardized. This could result in a delay in approval, or rejection, of our marketing applications by the FDA and may ultimately lead to the denial of regulatory approval of one or more of our product candidates.

Our clinical trials may not adequately show that our drugs are safe or effective, and a failure to achieve the planned endpoints could result in termination of product development.

Progression of our drug products through the clinical development process is dependent upon our trials indicating our drugs have adequate safety and efficacy in the patients being treated by achieving pre-determined safety and efficacy endpoints according to the trial protocols. Failure to achieve either of these endpoints could result in delays in our trials, require the performance of additional unplanned trials or require termination of any further development of the product for the intended indication.

These factors could result in delays in the development of our product candidates and could result in significant unexpected costs or the termination of programs.

Should the clinical development process be successfully completed, our ability to derive revenues from the sale of therapeutics will depend upon our first obtaining FDA as well as foreign regulatory approvals, all of which are subject to a number of unique risks and uncertainties.

Even if we are able to demonstrate the safety and efficacy of our product candidates in clinical trials, if we fail to gain timely approval to commercialize our product candidates from the FDA and other foreign regulatory authorities, we will be unable to generate the revenues we will need to build our business. The FDA or comparable regulatory authorities in other countries may delay, limit or deny approval of our product candidates for various reasons. For example, such authorities may disagree with the design, scope or implementation of our clinical trials; or with our interpretation of data from our preclinical studies or clinical trials; or may otherwise take the position that our product candidates fail to meet the requirements and standards for regulatory approval. There is limited FDA precedent or guidance on ADCs, and ADC product candidates may present more complex review considerations than conventional drugs, given their biologic (antibody), drug, and linker components. There are numerous FDA personnel assigned to review different aspects of a BLA, and uncertainties can be presented by their ability to exercise judgment and discretion during the review process. During the course of review, the FDA may request or require additional preclinical, clinical, chemistry, manufacturing, and control ("CMC"), or other data and information, and the development and provision of these data and information may be time consuming and expensive. Regulatory approvals may not be granted on a timely basis, if at all, and even if and when they are granted, they may not cover all the indications for which we seek approval. On May 21, 2018, we submitted a Biologics License Application (“BLA”) to the 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 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. On February 4, 2019, we received a written communication from the FDA enclosing the Establishment Inspection Report (“EIR”) from the chemistry, manufacturing and controls BLA pre-approval inspection conducted by the FDA at the Company’s Morris Plains, New Jersey antibody manufacturing facility for our ADC product candidate sacituzumab govitecan, which took place from August 6, 2018 through August 14, 2018. The FDA also notified the Company that the FDA will be conducting a re-inspection of the Company’s Morris Plains, New Jersey antibody manufacturing facility as part of the BLA resubmission process. The Company is finalizing its plans with respect to the matters raised in the CRL received from FDA on January 17, 2019 and the EIR. The Company met with the FDA on May 2, 2019 to review the FDA's findings and discussed the Company's BLA resubmission. Further, while we may develop a product candidate with the intention of addressing a large, unmet medical need, the FDA may only approve the use of the drug for indications affecting a relatively small number of patients, thus greatly reducing the market size and our potential revenues. The approvals may also contain significant limitations in the form of warnings, precautions or contraindications with respect to conditions of use, which could further narrow the size of the market. In certain countries, even if the health regulatory authorities approve a drug, it cannot be marketed until pricing for the drug is also approved. Finally, even after approval can be obtained, we may be required to recall or withdraw a product as a result of newly discovered safety or efficacy concerns, either of which would have a materially adverse effect on our business and results of operations.

In order to fund future operations, we will need to raise significant amounts of additional capital. Because it can be difficult for a mid-cap company like ours to raise equity capital on acceptable terms, we cannot assure you that we will be able to obtain the necessary capital when we need it, or on acceptable terms, if at all.

Even if our technologies and product candidates are superior, if we lack the capital needed to bring our future products to market, we will never be successful. We have obtained the capital necessary to fund our research and development programs to date primarily from the following sources:


•	upfront payments, milestone payments, and payments for limited amounts of our antibodies received from licensing partners;


•	proceeds from the public and private sale of our equity or debt securities; and


•	limited product sales of LeukoScan ^® (which were discontinued during February 2018), licenses, grants and interest income from our investments.

Over the long term, we expect to commercialize sacituzumab govitecan in mTNBC in the United States and globally, to expand sacituzumab govitecan to treat patients with other solid tumors, including UC, HR+/HER2- mBC, NSCLC and other serious cancers, to expand research and development activities to continue to expand and we do not believe we will have adequate

cash to continue commercial expansion and development of sacituzumab govitecan, or to complete development of product candidates in line with our pipeline included in our long term corporate strategy. Our capital requirements are dependent on numerous factors, including:


•	the rate of progress of commercialization of sacituzumab govitecan in mTNBC and our ability to develop it for other cancers;


•	the rate at which we progress our research programs and the number of product candidates we have in preclinical and clinical development at any one time;


•	the cost of conducting clinical trials involving patients in the United States, Europe and possibly elsewhere;


•	our need to establish the manufacturing capabilities necessary to produce the quantities of our product candidates we project we will need;


•	the time and costs involved in obtaining FDA and foreign regulatory approvals;


•	the cost of first obtaining, and then defending, our patent claims and other intellectual property rights; and


•	our ability to enter into licensing and other collaborative agreements to help offset some of these costs.

There may be additional cash requirements for many reasons, including, but not limited to, changes in our commercial expansion plans, our research and development plans, the need for unexpected capital expenditures or costs associated with any acquisitions of other businesses, assets or technologies that we may choose to undertake and marketing and commercialization of our product candidates. If we deplete our existing capital resources, we will be required to either obtain additional capital quickly, or significantly reduce our operating expenses and capital expenditures, either of which could have a material adverse effect on us.

Until we can generate significant cash through either (i) the entrance into various potential strategic partnerships targeted at advancing and maximizing the Company’s full pipeline for mTNBC and beyond, or (ii) the sales and marketing of sacituzumab govitecan as a third-line therapy for mTNBC in the United States (pending FDA approval), we expect to continue to fund our operations with our current financial resources. We believe our projected financial resources are adequate to (i) support our clinical development plan for developing sacituzumab govitecan in mTNBC, advanced urothelial cancer ("UC"), hormone receptor-positive ("HR+")/human epidermal growth factor receptor 2-negative ("HER2-") metastatic breast cancer ("mBC"), non-small cell lung cancer ("NSCLC") and other indications of high medical need, (ii) further build our clinical and manufacturing infrastructure, and (iii) fund operations through 2020. However, in case of regulatory delays or other unforeseen events, we may require additional funding. If, however, we cannot obtain sufficient funding through the entrance into various potential strategic partnerships targeted at advancing and maximizing the Company’s full pipeline for mTNBC and beyond, we could be required to finance future cash needs through the sale of additional equity and/or debt securities in capital markets. However, there can be no assurance that we will be able to raise the additional capital needed to complete our pipeline of research and development programs on commercially acceptable terms, if at all. The capital markets have experienced volatility in recent years, which has resulted in uncertainty with respect to availability of capital and hence the timing to meet an entity’s liquidity needs. The Company’s existing debt will also negatively impact the Company’s ability to raise additional capital. If the Company is unable to raise capital on acceptable terms, its ability to continue its business would be materially and adversely affected. Having insufficient funds may require us to delay, scale-back, or eliminate some or all of our programs, or renegotiate less favorable terms than we would otherwise choose. Failure to obtain adequate financing also may adversely affect our ability to operate as a going concern.

Additionally, if we raise funds by issuing equity securities, dilution to existing stockholders would result; and if we raise funds by incurring additional debt financing, the terms of the debt may involve future cash payment obligations and/or conversion to equity as well as restrictions that may limit our ability to operate our business.

If we, or any of our collaboration partners, or our or their contract manufacturers, cannot successfully and efficiently manufacture the compounds that make up our products and product candidates, our ability, and the ability of our collaboration partners, to sell products and conduct clinical trials will be impaired.

Our ability to conduct our preclinical and clinical research and development programs depends, in large part, upon our ability to manufacture our proprietary compounds in accordance with the FDA and other regulatory requirements. We have limited historical experience in manufacturing these compounds in significant quantities, and we may not be able to do so in the quantities

required to commercialize these products. Any interruption in manufacturing at this site, whether by natural acts or otherwise, could significantly and adversely affect our operations, and delay our research and development programs.

We and our collaboration partners also depend on third parties to provide certain raw materials, and contract manufacturing and processing services. All manufacturers of biopharmaceutical products must comply with current cGMPs, required by the FDA and other regulatory agencies. Such regulations address, among other matters, controls in manufacturing processes, quality control and quality assurance requirements and the maintenance of proper records and documentation. The FDA and other regulatory agencies routinely inspect manufacturing facilities, including in connection with the review of a BLA. The FDA generally will issue a notice on Form 483 if it finds issues with respect to its inspections, to which the facility must adequately respond in order to avoid escalated regulatory concerns. If our manufacturing facility or those facilities of our collaboration partners and our respective contract manufacturers or processors do not comply with applicable cGMPs and other regulatory requirements, in addition to regulatory enforcement, we may be subject to product liability claims, we may be unable to meet clinical demand for our products, and we could suffer delays in the progress of clinical trials for products under development and of potential approval and commercialization.

Although historically we have been a research and development company, we currently plan to commercialize our lead product candidate internally rather than license such asset. There can be no assurance that we will be successful in developing and expanding commercial operations or balancing our research and development activities with our commercialization activities.

We have historically been engaged primarily in research and development activities, but plan to commercialize our lead product candidate, sacituzumab govitecan, ourselves. There can be no assurance that we will be able to successfully manage the balance of our research and development operations with our planned commercialization activities. Potential investors should be aware of the problems, delays, expenses and difficulties frequently encountered by companies balancing development of product candidates, which can include problems such as unanticipated issues relating to clinical trials and receipt of approvals from the FDA and foreign regulatory bodies, with commercialization efforts, which can include problems relating to managing manufacturing and supply, reimbursement, marketing problems and additional costs. Our product candidates will require significant additional research and clinical trials, and we will need to overcome significant regulatory burdens prior to commercialization in the United States and other countries. In addition, we may be required to spend significant funds on building out our commercial operations. If we are unable to develop commercially viable therapeutic products, certain obligations the Company has to third parties, including, without limitation, our obligation to pay RPI royalties on certain sacituzumab govitecan revenues pursuant to the funding agreement may also erode profitability of this product. There can be no assurance that after the expenditure of substantial funds and efforts, we will successfully develop and commercialize any of our product candidates, generate any significant revenues or ever achieve and maintain a substantial level of sales of our products.

We may not successfully establish and maintain collaborative and licensing arrangements, which could adversely affect our ability to develop and commercialize certain of our product candidates. Any of our collaboration partners may not adequately perform their responsibilities under our agreements, which could adversely affect our development and commercialization program.

A key element of our business strategy has been to develop, market and commercialize our product candidates through collaborations with more established pharmaceutical companies. To the extent we continue to rely on this business strategy, we may not be able to maintain or expand these licenses and collaborations or establish additional licensing and collaboration arrangements necessary to develop and commercialize any of our product candidates. Even if we are able to maintain or establish licensing or collaboration arrangements, these arrangements may not be on favorable terms and may contain provisions that will restrict our ability to develop, test and market our product candidates. Any failure to maintain or establish licensing or collaboration arrangements on favorable terms could adversely affect our business prospects, financial condition or ability to develop and commercialize our product candidates.

We expect to rely at least in part on third party collaborators to perform a number of activities relating to the development and commercialization of certain of our product candidates, including the manufacturing of product materials, the design and conduct of clinical trials for certain of our product candidates, and potentially the obtaining of regulatory approvals and marketing and distribution of any successfully developed products. Our collaborative partners may also have or acquire rights to control aspects of our product development and clinical programs. As a result, we may not be able to conduct these programs in the manner or on the time schedule we currently contemplate. In addition, if any of these collaborative partners withdraw support for our programs or product candidates or otherwise impair their development, our business could be negatively affected. Our expenses may also increase as a result of our plan to undertake these activities internally to commercialize sacituzumab govitecan.

In addition, our success depends on the performance of our collaborators of their responsibilities under these arrangements. Some potential collaborators may not perform their obligations in a timely fashion or in a manner satisfactory to us. Because such agreements may be exclusive, we may not be able to enter into a collaboration agreement with any other company covering the same product field during the applicable collaborative period. In addition, our collaborators’ competitors may not wish to do business with us at all due to our relationship with our collaborators. If we are unable to enter into additional product discovery and development collaborations, our ability to sustain or expand our business will be significantly diminished.

Our future success will depend upon our ability to first obtain and then adequately protect our patent and other intellectual property rights, as well as avoiding the infringement of the rights of others.

Our future success will be highly dependent upon our ability to first obtain and then defend the patent and other intellectual property rights necessary for the commercialization of our product candidates. We have filed numerous patent applications on the technologies and processes that we use in the United States and certain foreign countries. Although we have obtained a number of issued United States patents to date, the patent applications owned or licensed by us may not result in additional patents being issued. Moreover, these patents may not afford us the protection we need against competitors with similar technologies or products. A number of jurisdictions where we have sought, or may in the future choose to seek, intellectual property protection, have intellectual property laws and patent offices which are still developing. Accordingly, we may have difficulty obtaining intellectual property protection in these markets, and any intellectual property protections which we do obtain may be less protective than in the United States, which could have an adverse effect on our operations and financial prospects.

The successful development of therapeutic products frequently requires the application of multiple technologies that may be subject to the patent or other intellectual property rights of third parties. Although we believe it is likely we will need to license technologies and processes from third parties in the ordinary course of our business, we are not currently aware of any material conflict involving our technologies and processes with any valid patents or other intellectual property rights owned or licensed by others that would affect commercial sales of sacituzumab govitecan or other products starting in 2020. In the event that a third party was to claim such a conflict existed, they could sue us for damages as well as seek to prevent us from commercializing our product candidates. It is possible that a third party could successfully claim that our products infringe on their intellectual property rights. Uncertainties resulting from the litigation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace. Any patent litigation or other proceeding, even if resolved in our favor, would require significant financial resources and management time.

Some of our competitors may be able to sustain these costs more effectively than we can because of their substantially greater financial and managerial resources. If a patent litigation or other proceeding is resolved unfavorably to us, we may be enjoined from manufacturing or selling our products without a license from the other party, in addition to being held liable for significant damages. We may not be able to obtain any such license on commercially acceptable terms, if at all.

In addition to our reliance on patents, we attempt to protect our proprietary technologies and processes by relying on trade secret laws, nondisclosure and confidentiality agreements and licensing arrangements with our employees and other persons who have access to our proprietary information. These agreements and arrangements may not provide meaningful protection for our proprietary technologies and processes in the event of unauthorized use or disclosure of such information. In addition, our competitors may independently develop substantially equivalent technologies and processes or otherwise gain access to our trade secrets or technology, either of which could materially and adversely affect our competitive position.

Expiry of our intellectual property rights could lead to increased competition.

Even where we are able to obtain and then defend patent and other intellectual property rights necessary for research, development and commercialization of our product candidates, such intellectual property rights will be for a limited term. Where patents which we own or license expire, the technology comprising the subject of the patent may be utilized by third parties in research and development or competing products (for example, biosimilars of a patented product may be manufactured by third parties once the patent expires). While we endeavor to maintain robust intellectual property protection, as our existing issued patents expire, it may materially and adversely affect our competitive position.

We face substantial competition in the biotechnology industry and may not be able to compete successfully against one or more of our competitors.

The biotechnology industry is highly competitive, particularly in the area of therapeutic oncology products. In recent years, there have been extensive technological innovations achieved in short periods of time, and it is possible that future technological changes and discoveries by others could result in our products and product candidates quickly becoming

uncompetitive or obsolete. A number of companies, including Amgen, AstraZeneca, Bayer Healthcare Pharmaceuticals, Biogen Idec, Bristol-Myers Squibb, Celgene, Eli Lilly, Genmab, GlaxoSmithKline, Immunogen, Johnson & Johnson, Merck, Merck Serono, Novartis, Pfizer, Roche, and Seattle Genetics, are engaged in the development of therapeutic oncology products. Many of these companies have significantly greater financial, technical and marketing resources than we do. In addition, many of these companies have more established positions in the pharmaceutical industry and are therefore better equipped to develop, commercialize and market oncology products. Even some smaller competitors may obtain a significant competitive advantage over us if they are able to discover or otherwise acquire patentable inventions, form collaborative arrangements or merge with larger pharmaceutical companies. Further, even if we are able to successfully develop and commercialize products, other manufacturers operating in emerging markets may also have a competitive advantage over us with respect to competing products due to their ability to manufacture with a lower cost base.

We expect to face increasing competition from universities and other non-profit research organizations. These institutions carry out a significant amount of research and development in the field of antibody-based technologies and they are increasingly aware of the commercial value of their findings. As a result, they are demanding greater patent and other proprietary rights, as well as licensing and future royalty revenues. It is possible that such competition could come from universities with which we have, or have previously had, collaborative research and development relationships, notwithstanding our efforts to protect our intellectual property in the course of such relationships.

We may be liable for contamination or other harm caused by hazardous materials that we use in the operations of our business.

In addition to laws and regulations enforced by the FDA, we are also subject to regulation under various other foreign, federal, state and local laws and regulations. Our manufacturing and research and development programs involve the controlled use of viruses, hazardous materials, chemicals and various radioactive compounds. The risk of accidental contamination or injury from these materials can never be completely eliminated, and if an accident occurs we could be held liable for any damages that result, which could exceed our available resources.

The nature of our business exposes us to significant liability claims, and our insurance coverage may not be adequate to cover any future claims.

The use of our compounds in clinical trials and any future sale exposes us to liability claims that could be substantial. These claims might be made directly by healthcare providers, medical personnel, patients, consumers, pharmaceutical companies, and others selling or distributing our compounds. While we currently have product liability insurance that we consider adequate for our current needs, we may not be able to continue to obtain comparable insurance in the future at an acceptable cost, if at all. If for any reason we cannot maintain our existing or comparable liability insurance, our ability to clinically test and market products could be significantly impaired. Moreover, the amount and scope of our insurance coverage, as well as the indemnification arrangements with third parties upon which we rely, may be inadequate to protect us in the event of a successful product liability claim. Any successful claim in excess of our insurance coverage could materially and adversely affect our financial condition and operating results.

Certain potential for conflicts of interest, both real and perceived, exist which could result in expensive and time-consuming litigation.

Certain of our former officers and directors have relationships and agreements, both with us as well as among themselves and their respective affiliates, which create the potential for both real, as well as perceived, conflicts of interest. These include Dr. David M. Goldenberg, our former Chairman of our Board of Directors, our former Chief Scientific Officer and our former Chief Patent Officer, and Ms. Cynthia L. Sullivan, a former Director and our former President and Chief Executive Officer (who is also the wife of Dr. Goldenberg). Dr. Goldenberg is also a minority stockholder of our majority-owned subsidiary, IBC. Dr. Goldenberg was the primary inventor of new intellectual property for Immunomedics and IBC and was largely responsible for allocating ownership between the two companies. Immunomedics has incurred expenses on behalf of the IBC operations, including interest, over the past thirteen years. As of March 31, 2019, IBC has a liability to Immunomedics Inc. which is eliminated in consolidation.

On January 8, 2018, Morris Rosenberg joined the Company as Chief Technology Officer and became a full-time employee and was permitted to continue to provide certain limited outside consulting services through M Rosenberg BioPharma Consulting LLC.

On March 5, 2019, we entered into a Letter Agreement with Scott Canute, a member of our Board of Directors, in connection with his appointment as Executive Director of the Company.

As a result of these and other relationships, the potential for both real and perceived conflicts of interest exists and disputes could arise over the allocation of funds, research projects and ownership of intellectual property rights. In addition, in the event that we become involved in stockholder litigation regarding these potential conflicts, we might be required to devote significant resources and management time defending the Company from these claims, which could adversely affect our results of operations.

The commercial success of our product candidates depends on the availability and sufficiency of third-party payor coverage and reimbursement. Given that recent cancer therapeutics for solid cancers such as the ones we are developing can cost approximately in excess of $12,500 a month, even if our product candidates become available for sale it is likely that federal and state governments, insurance companies and other payors of health care costs will try to first limit the use of these drugs to certain patients, and may be reluctant to provide a level of reimbursement that permits us to earn a significant profit on our investment, if any.

Our ability to successfully commercialize therapeutic products will depend, in significant part, on the extent to which hospitals and physicians can obtain appropriate reimbursement levels for the cost of our products and related treatment. Third-party payors are increasingly challenging the prices charged for diagnostic and therapeutic products and related services. In addition, legislative proposals to reform health care or reduce government insurance programs may result in lower prices or the actual inability of prospective customers to purchase our products. Furthermore, even if reimbursement is available, it may not be available at price levels sufficient for us to realize a positive return on our investment.

The United States government, state legislatures and foreign governmental entities have shown significant interest in implementing cost containment programs to limit the growth of government-paid healthcare costs, including price controls, restrictions on reimbursement and coverage and requirements for substitution of generic products for branded prescription drugs. Adoption of government controls and measures, and tightening of restrictive policies in jurisdictions with existing controls and measures, could exclude or limit our product candidates from coverage and limit payments for pharmaceuticals.

In addition, we expect that increased emphasis on managed care and cost containment measures in the United States by third-party payors and government authorities to continue and will place pressure on pharmaceutical pricing and coverage. Coverage policies and third-party reimbursement rates may change at any time. Even if favorable coverage and reimbursement status is attained for one or more product candidates for which we receive regulatory approval, less favorable coverage policies and reimbursement rates may be implemented in the future.

If we are unable to obtain and maintain sufficient third-party coverage and adequate reimbursement for our product candidates, the commercial success of our product candidates may be greatly hindered and our financial condition and results of operations may be materially and adversely affected.

Our products may not achieve market acceptance .

If any of our product candidates fail to achieve sufficient market acceptance, we may not be able to generate sufficient revenue to become profitable. The degree of market acceptance of our product candidates, if and when they are approved for commercial sale, will depend on a number of factors, including but not limited to:


•	the timing of our receipt of marketing approvals, the terms of such approvals and the countries in which such approvals are obtained;


•	the safety, efficacy, reliability and ease of administration of our product candidates;


•	the prevalence and severity of undesirable side effects and adverse events;


•	the extent of the limitations or warnings required by the FDA or comparable regulatory authorities in other countries to be contained in the labeling of our product candidates;


•	the clinical indications for which our product candidates are approved;


•	the availability and perceived advantages of alternative therapies;


•	any publicity related to our product candidates or those of our competitors;


•	the quality and price of competing products;


•	our ability to obtain third-party payor coverage and sufficient reimbursement;


•	the willingness of patients to pay out of pocket in the absence of third-party payor coverage; and


•	the selling efforts and commitment of our commercialization collaborators.

If our approved product candidates fail to receive a sufficient level of market acceptance, our ability to generate revenue from sales of our product candidates will be limited, and our business and results of operations may be materially and adversely affected.

A portion of our funding has come from federal government grants and research contracts. Due to reductions in funding, we may not be able to rely on these grants or contracts as a continuing source of funds.

During the last few years, we have generated revenues from awards made to us by the National Institutes of Health and the Department of Defense to partially fund some of our programs. We cannot rely on grants or additional contracts as a continuing source of funds. Funds available under these grants and contracts must be applied by us toward the research and development programs specified by the government rather than for all our programs generally. The government’s obligation to make payments under these grants and contracts is subject to appropriation by the United States Congress for funding in each year. It is possible that Congress or the government agencies that administer these government research programs will continue to scale back these programs or terminate them due to their own budgetary constraints, as they have recently been doing. Additionally, these grants and research contracts are subject to adjustment based upon the results of periodic audits performed on behalf of the granting authority. Consequently, the government may not award grants or research contracts to us in the future, and any amounts that we derive from existing awards may be less than those received to date. In those circumstances, we would need to provide funding on our own, obtain other funding, or scale back or terminate the affected program. In particular, we cannot assure you that any currently contemplated or future efforts to obtain funding for our product candidate programs through government grants or contracts will be successful, or that any such arrangements which we do conclude will supply us with sufficient funds to complete our development programs without providing additional funding on our own or obtaining other funding. Where funding is obtained from government agencies or research bodies, our intellectual property rights in the research or technology funded by the grant are typically subject to certain licenses to such agencies or bodies, which could have an impact on our utilization of such intellectual property in the future.

We face a number of risks relating to the maintenance of our information systems and our use of information relating to clinical trials.

In managing our operations, we rely on computer systems and electronic communications, including systems relating to record keeping, financial information, sourcing, and back-up and the Internet (“Information Systems”). Our Information Systems include the electronic storage of financial, operational, research, patient and other data. Our Information Systems may be subject to interruption or damage from a variety of causes, including power outages, computer and communications failures, system capacity constraints, catastrophic events (such as fires, tornadoes and other natural disasters), cyber risks, computer viruses and security breaches. If our Information Systems cease to function properly, are damaged or are subject to unauthorized access, we may suffer interruptions in our operations, be required to make significant investments to fix or replace systems and/or be subject to fines, penalties, lawsuits, or government action. The realization of any of these risks could have a material adverse effect on our business, financial condition and results of operations. Our clinical trials information and patient data (which may include personally identifiable information) is part of our Information Systems and is therefore subject to all of the risks set forth above, notwithstanding our efforts to code and protect such information.

Risks Related to Government Regulation of our Industry

Legislative or regulatory reform of the healthcare system may affect our ability to sell our products profitably.

In recent years, there have been numerous initiatives on the federal and state levels in the United States for comprehensive reforms affecting the payment for, the availability of, and reimbursement for, healthcare services. There have been a number of federal and state proposals during the last few years regarding the pricing of pharmaceutical and biopharmaceutical products, limiting coverage and reimbursement for drugs and other medical products, government control and other changes to the healthcare system in the United States. For example, the Patient Protection and Affordable Care Act (“ACA”) and the Health Care and Education Reconciliation Act of 2010, which amends the ACA, collectively, the United States Health Reform Laws, were signed into law in the United States in March 2010.

Among the provisions of the ACA of importance to the pharmaceutical industry are the following:

•

the Medicaid Drug Rebate Program requires pharmaceutical manufacturers to enter into and have in effect a national rebate agreement with the Secretary of the Department of Health and Human Services as a condition of Medicare Part B and Medicaid coverage of the manufacturer's outpatient drugs furnished to Medicaid patients. Effective in 2010, the ACA made several changes to the Medicaid Drug Rebate Program, including increasing pharmaceutical manufacturers' rebate liability by raising the minimum basic Medicaid rebate on most branded prescription drugs from 15.1% of average manufacturer price, or AMP, to 23.1% of AMP, establishing new methodologies by which AMP is calculated and rebates owed by manufacturers under the Medicaid Drug Rebate Program are collected for drugs that are inhaled, infused, instilled, implanted or injected, adding a new rebate calculation for "line extensions" (i.e., new formulations, such as extended release formulations) of solid oral dosage forms of branded products, expanding the universe of Medicaid utilization subject to drug rebates to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations, and expanding the population potentially eligible for Medicaid drug benefits;

•

the expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to additional individuals beginning in April 2010 and by adding new mandatory eligibility categories for certain individuals with income at or below 133.0% of the federal poverty level beginning in 2014, thereby potentially increasing both the volume of sales and manufacturers' Medicaid rebate liability;

•

in order for a pharmaceutical product to receive federal reimbursement under the Medicare Part B and Medicaid programs or to be sold directly to United States government agencies, the manufacturer must extend discounts to entities eligible to participate in the 340B drug pricing program. The required 340B discount on a given product is calculated based on the AMP and Medicaid rebate amounts reported by the manufacturer. Effective in 2010, the ACA expanded the types of entities eligible to receive discounted 340B pricing, although, under the current state of the law, with the exception of children's hospitals, these newly eligible entities will not be eligible to receive discounted 340B pricing on orphan drugs when used for the orphan indication. In addition, as 340B drug pricing is determined based on AMP and Medicaid rebate data, the revisions to the Medicaid rebate formula and AMP definition described above could cause the required 340B discount to increase. Recent proposed guidance from the United States Department of Health and Human Services Health Resources and Services Administration, if adopted in its current form, may affect manufacturers' rights and liabilities in conducting audits and resolving disputes under the 340B program;


•	the ACA imposed a requirement on manufacturers of branded drugs to provide a 50% (and 70% commencing on January 1, 2019) discount off the negotiated price of branded drugs dispensed to Medicare Part D patients in the coverage gap (i.e., the "donut hole");


•	the ACA imposed an annual, nondeductible fee on any entity that manufactures or imports certain branded prescription drugs, apportioned among these entities according to their market share in certain government healthcare programs, although this fee would not apply to sales of certain products approved exclusively for orphan indications;


•	the ACA implemented the Physician Payments Sunshine Act;


•	the ACA requires annual reporting of drug samples that manufacturers and distributors provide to physicians;


•	the ACA expanded healthcare fraud and abuse laws in the United States, including the False Claims Act and the federal Anti-Kickback Statute, new government investigative powers and enhanced penalties for non-compliance;


•	the ACA established a licensing framework for follow-on biologics;

•

the ACA established the Patient-Centered Outcomes Research Institute to oversee, identify priorities in and conduct comparative clinical effectiveness research, along with the funding for such research. The research conducted by the Patient-Centered Outcomes Research Institute may affect the market for certain pharmaceutical products by influencing decisions relating to coverage and reimbursement rates; and

•

the ACA established the Center for Medicare and Medicaid Innovation within the Centers for Medicare & Medicaid Center ("Innovation Center"), to test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending. The Innovation Center has been funded through 2019, and funding will be automatically renewed for each 10-year budget window thereafter.

Some of the provisions of the ACA have yet to be implemented, and there have been judicial and Congressional challenges to certain aspects of the ACA, as well as recent efforts by the Trump administration to repeal or replace certain aspects of the ACA. Since January 2017, President Trump has signed two Executive Orders and other directives designed to delay the implementation of certain provisions of the ACA or otherwise circumvent some of the requirements for health insurance mandated by the ACA. Concurrently, Congress has considered legislation that would repeal or repeal and replace all or part of the ACA. While Congress has not passed comprehensive repeal legislation, two bills affecting the implementation of certain taxes under the ACA have been signed into law. The Tax Cuts and Jobs Act of 2017 ("TCJA"), includes a provision repealing, effective January 1, 2019, the tax-based shared responsibility payment imposed by the ACA on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the "individual mandate". Additionally, on January 22, 2018, President Trump signed a continuing resolution on appropriations [for fiscal year 2018] that delayed the implementation of certain ACA-mandated fees, including the so-called "Cadillac" tax on certain high cost employer-sponsored insurance plans, the annual fee imposed on certain health insurance providers based on market share, and the medical device excise tax on non-exempt medical devices. Further, the Bipartisan Budget Act of 2018, or the BBA, among other things, amends the ACA, effective January 1, 2019, to close the coverage gap in most Medicare drug plans, commonly referred to as the "donut hole". In July 2018, CMS published a final rule permitting further collections and payments to and from certain ACA qualified health plans and health insurance issuers under the ACA risk adjustment program in response to the outcome of federal district court litigation regarding the method CMS uses to determine this risk adjustment. Congress may consider additional legislation to repeal or repeal and replace other elements of the ACA. More recently, the United States District Court for the Northern District of Texas struck down the ACA, deeming it unconstitutional given that Congress repealed the individual mandate in 2017. The decision has been stayed pending outcome of an appeal to the Fifth Circuit Court of Appeals. Although there is no immediate impact on the ACA, we will continue to evaluate the effect that the ACA and its possible repeal and replacement, or potential total revocation by the Supreme Court of the United States, has on our business.

In addition, other legislative changes have been proposed and adopted since the ACA was enacted. For example, in August 2011, the Budget Control Act of 2011, among other things, created measures for spending reductions by Congress. A Joint Select Committee on Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach required goals, thereby triggering the legislation's automatic reduction to several government programs. This includes aggregate reductions to Medicare payments to providers of up to 2.0% per fiscal year, which went into effect in 2013, and due to subsequent legislative amendments to the statute, including the BBA, will remain in effect through 2027 unless additional Congressional action is taken. In January 2013, then-President Barack Obama signed into law the American Taxpayer Relief Act of 2012 ("ATRA"), which, among others, delayed for another two months the budget cuts mandated by these sequestration provisions of the Budget Control Act of 2011. The ATRA also reduced Medicare payments to several providers, including hospitals, imaging centers and cancer treatment centers, and increased the statute of limitations period for the government to recover over-payments to providers from three to five years. Moreover, CMS has promulgated or amended a number of cost containment and value-based reimbursement measures in the ordinary course of business, and it is expected to continue revising its regulations and policies in response to market conditions and administration directives. These new laws may result in additional reductions in Medicare and other healthcare funding, which could have a material and adverse effect on our customers and accordingly, our financial operations.

Further, there has been increasing legislative and enforcement interest in the United States with respect to specialty drug pricing practices. Specifically, there have been several recent United States Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to drug pricing, reduce the cost of prescription drugs under Medicare, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drugs. At the federal level, the Trump administration's budget proposal for fiscal year 2019 contains further drug price control measures that could be enacted during the 2019 budget process or in other future legislation, including, for example, measures to permit Medicare Part D plans to negotiate the price of certain drugs under Medicare Part B, to allow some states to negotiate drug prices under Medicaid, and to eliminate cost sharing for generic drugs for low-income patients. Additionally, on May 11, 2018, President Trump laid out his administration's "Blueprint" to lower drug prices and reduce out of pocket costs of drugs, as well as additional proposals to increase drug manufacturer competition, increase the negotiating power of certain federal healthcare programs, incentivize manufacturers to lower the list price of their products, and reduce the out of pocket costs of product candidates paid by consumers. Although most of these, and other, proposals will require authorization through additional legislation to become effective, the United States Congress and the Trump administration have each indicated that it will continue to seek new legislative and administrative measures to control drug costs, including by addressing the role of pharmacy benefit managers in the supply chain. HHS has already started the process of soliciting feedback on some of these measures and, at the same time, is immediately implementing others under its existing authority. For example, in September 2018, CMS announced that it will allow Medicare Advantage Plans to use step therapy for Part B drugs beginning January 1, 2019 in October 2018, CMS proposed a new rule that would require direct-to-consumer television advertisements of prescription drugs and biological products, for which payment is available through or under Medicare or Medicaid to include in the advertisement

that Wholesale Acquisition Cost, or list price, of that drug or biological product and a February 6, 2019 proposed rule aims to eliminate certain Anti-Kickback safe harbor protections for drug rebates. At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

More recently, on May 30, 2018, the Trickett Wendler, Frank Mongiello, Jordan McLinn, and Matthew Bellina Right to Try Act of 2017, or Right to Try Act, was signed into law. The law, among other things, provides a federal framework for patients to access certain investigational new product candidates that have completed a Phase I clinical trial. Under certain circumstances, eligible patients can seek treatment without enrolling in clinical trials and without obtaining FDA approval under the FDA expanded access program. The Right to Try Act did not establish any new entitlement or positive right to any party or individual, nor did it create any new mandates, directives, or additional regulations requiring a manufacturer or sponsor of an eligible investigational new product candidates to provide expanded access.

We are unable to predict the future course of federal or state healthcare legislation in the United States directed at broadening the availability of healthcare and containing or lowering the cost of healthcare. The United States Health Reform Laws and any further changes in the law or regulatory framework that reduce our revenue or increase our costs could also have a material and adverse effect on our business, financial condition and results of operations.

Healthcare laws and regulations may affect the pricing of our product candidates and may affect our profitability.

In certain countries, the government may provide healthcare at a subsidized cost to consumers and regulate prices, patient eligibility or third-party payor reimbursement policies to control the cost of product candidates. Such a system may lead to inconsistent pricing of our product candidates from one country to another. The availability of our product candidates at lower prices in certain countries may undermine our sales in other countries where our product candidates are more expensive. In addition, certain countries may set prices by reference to the prices of our product candidates in other countries. Our inability to secure adequate prices in a particular country may adversely affect our ability to obtain an acceptable price for our product candidates in existing and potential markets. If we are unable to obtain a price for our product candidates that provides an appropriate return on our investment, our profitability may be materially and adversely affected.

Our industry and we are subject to intense regulation from the United States Government and such other governments and quasi-official regulatory bodies where our products are and product candidates may be sold.

Both before and after regulatory approval to market a particular product candidate, including our biologic product candidates, the manufacturing, labeling, packaging, adverse event reporting, storage, advertising, promotion, distribution and record keeping related to the product are subject to extensive, ongoing regulatory requirements, including, without limitation, submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with cGMP requirements and good clinical practice requirements for any clinical trials that we conduct post-approval. As a result, we are subject to a number of governmental and other regulatory risks, which include:


•	clinical development is a long, expensive and uncertain process; delay and failure can occur at any stage of our clinical trials;


•	our clinical trials are dependent on patient enrollment and regulatory approvals; we do not know whether our planned trials will begin on time, or at all, or will be completed on schedule, or at all;


•	the FDA or other regulatory authorities may not approve a clinical trial protocol or may place a clinical trial on hold;

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we rely on third parties, such as consultants, contract research organizations, medical institutions, and clinical investigators, to conduct clinical trials for our drug candidates and if we or any of our third-party contractors fail to comply with applicable regulatory requirements, such as current Good Clinical Practices ("cGCP") requirements, the clinical data generated in our clinical trials may be deemed unreliable and the FDA, the European Medicines Agency ("EMA") or comparable foreign regulatory authorities may require us to perform additional clinical trials;


•	if the clinical development process is completed successfully, our ability to derive revenues from the sale of therapeutics will depend on our first obtaining FDA or other comparable foreign regulatory approvals, each of which are subject to unique risks and uncertainties;


•	there is no assurance that we will receive FDA or corollary foreign approval for any of our product candidates for any indication; we are subject to government regulation for the commercialization of our product candidates;


•	we have not received regulatory approval in the United States for the commercial sale of any of our biologic product candidates;

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even if one or more of our product candidates does obtain approval, regulatory authorities may approve such product candidate for fewer or more limited indications than we request, may not approve the price we intend to charge for our products, may grant approval contingent on the performance of costly post-marketing clinical trials, or may approve with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that product candidate;


•	undesirable side effects caused by our product candidates could cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or other comparable foreign authorities;


•	later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with our third-party manufacturers or manufacturing processes, or failure to comply with the regulatory requirements of FDA and other applicable United States and foreign regulatory authorities could subject us to administrative or judicially imposed sanctions;


•	although several of our product candidates have received orphan drug designation in the United States and the EU for particular indications, we may not receive orphan drug exclusivity for any or all of those product candidates or indications upon approval, and even if we do obtain orphan drug exclusivity, that exclusivity may not effectively protect the product from competition; and

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even if one or more of our product candidates is approved in the United States, it may not obtain the 12 years of exclusivity from biosimilars for which innovator biologics are eligible, and even if it does obtain such exclusivity, that exclusivity may not effectively protect the product from competition; the FDA’s policies may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our drug candidates, and if we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained; and we may be liable for contamination or other harm caused by hazardous materials used in the operations of our business.

Healthcare providers, physicians and third-party payors often play a primary role in the recommendation and prescription of any currently marketed products and product candidates for which we may obtain marketing approval. Our current and future arrangements with healthcare providers, physicians, third-party payors and customers, and our sales, marketing and educational activities, may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations (at the federal and state level) that may constrain our business or financial arrangements and relationships through which we market, sell and distribute our products for which we obtain marketing approval. In addition, our operations are also subject to various federal and state fraud and abuse, physician payment transparency and privacy and security laws, including, without limitation:

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The federal Anti-Kickback Statute, which prohibits, among other things, persons and entities including pharmaceutical manufacturers from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, overtly or covertly, in case or in kind, to induce or reward, or in return for, or either the referral of an individual for, or the purchase, lease, order or recommendation of, an item or service reimbursable, in whole or in part, under a federal healthcare program, such as the Medicare or Medicaid programs. This statute has interpreted broadly to apply to, among other things, arrangements between pharmaceutical manufacturers on the one hand and prescribers, purchasers and formulary managers on the other hand. The term "remuneration" expressly includes kickbacks, bribes or rebates and also has been broadly interpreted to include anything of value, including, for example, gifts, discounts, waivers of payment, ownership interest and providing anything at less than its fair market value. There are a number of statutory exceptions and regulatory safe harbors protecting certain common activities from prosecution or other regulatory sanctions, however, the exceptions and safe harbors are drawn narrowly, and practices that do not fit squarely within an exception or safe harbor may be subject to scrutiny. The failure to meet all of the requirements of a particular applicable statutory exception or regulatory safe harbor does not make the conduct per se illegal under the federal Anti-Kickback Statute. Instead, the legality of the arrangement will be evaluated on a case-by-case basis based on a cumulative review of all of its facts and circumstances. Our practices may not meet all of the criteria for safe harbor protection from federal Anti-Kickback Statute liability in all cases. A person or entity does not need to have actual knowledge of the federal Anti-Kickback Statute or

specific intent to violate it to have committed a violation. In addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act.

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The federal civil and criminal false claims laws and civil monetary penalty laws, including the False Claims Act, which prohibits individuals or entities from, among other things, knowingly presenting, or causing to be presented, claims for payment to, or approval by, the federal government that are false, fictitious or fraudulent or knowingly making, using or causing to be made or used, a false record or statement material to a false or fraudulent claim to avoid, decrease or conceal an obligation to pay money to the federal government. As a result of a modification made by the Fraud Enforcement and Recovery Act of 2009, a claim includes "any request or demand" for money or property presented to the federal government. Although we do not submit claims directly to payors, manufacturers can be held liable under these laws if they are deemed to "cause" the submission of false or fraudulent claims by, for example, providing inaccurate billing or coding information to customers, promoting a product off-label, marketing products of sub-standard quality, or, as noted above, paying a kickback that results in a claim for items or services. In addition, our activities relating to the reporting of wholesaler or estimated retail prices for our products, the reporting of prices used to calculate Medicaid rebate information and other information affecting federal, state and third-party reimbursement for our products, and the sale and marketing of our products, are subject to scrutiny under this law. For example, several pharmaceutical and other healthcare companies have faced enforcement actions under these laws for allegedly inflating drug prices they report to pricing services, which in turn were used by the government to set Medicare and Medicaid reimbursement rates, and for allegedly providing free product to customers with the expectation that the customers would bill federal programs for the product. The False Claims Act also permits a private individual acting as a "whistleblower" to bring actions on behalf of the federal government alleging violations of the False Claims Act and to share in any monetary recovery. In addition, federal Anti-Kickback Statute violations and certain marketing practices, including off-label promotion, may also implicate the False Claims Act. Although the False Claims Act is a civil statute, conduct that results in a False Claims Act violation may also implicate various federal criminal statutes.

The federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which imposes criminal and civil liability for knowingly and willfully executing, or attempting to execute, a scheme to defraud or to obtain, by means of false or fraudulent pretenses, representations or promises, any money or property owned by, or under the control or custody of, any healthcare benefit program, including private third-party payors and knowingly and willfully falsifying, concealing or covering up by trick, scheme or device, a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services. Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation.

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HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, and their respective implementing regulations, including the Final Omnibus Rule published on January 25, 2013, impose, among other things, obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information held by certain healthcare providers, health plans and healthcare clearinghouses, known as covered entities, and business associates. Among other things, HITECH made certain aspects of HIPAA's rules (notably the Security Rule) directly applicable to business associates - independent contractors or agents of covered entities that receive or obtain individually identifiable health information in connection with providing a service on behalf of a covered entity. HITECH also created four new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly applicable to business associates, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal court to enforce the federal HIPAA laws and seek attorney's fees and costs associated with pursuing federal civil actions. The Department of Health and Human Services Office of Civil Rights, or the OCR, has increased its focus on compliance and continues to train state attorneys general for enforcement purposes. The OCR has recently increased both its efforts to audit HIPAA compliance and its level of enforcement, with one recent penalty exceeding $5 million.

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The federal physician payment transparency requirements, sometimes referred to as the "Physician Payments Sunshine Act," created under the United States Patient Protection and Affordable Care Act of 2010, as amended, or the ACA, and its implementing regulations, which requires applicable manufacturers of covered drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the State Children's Health Insurance Program (with certain exceptions) to annually report to the United States Department of Health and Human Services, or HHS, information related to certain payments or other transfers of value made or distributed to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, or to entities or individuals at the request of,

or designated on behalf of, the physicians and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members.

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On October 25, 2018, President Trump signed into law the “Substance Use-Disorder Prevention that Promoted Opioid Recovery and Treatment for Patients and Communities Act.” This law, in part (under a provision entitled “Fighting the Opioid Epidemic with Sunshine”), will extend the Sunshine Act to payments and transfers of value to physician assistants, nurse practitioners, and other mid-level healthcare providers (with reporting requirements going into effect in 2022 for payments made in 2021.

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According to the United States Federal Trade Commission, or the FTC, failing to take appropriate steps to keep consumers' personal information secure constitutes unfair acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act, or the FTCA, 15 USC § 45(a). The FTC expects a company's data security measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information it holds, the size and complexity of its business, and the cost of available tools to improve security and reduce vulnerabilities. Medical data is considered sensitive data that merits stronger safeguards. The FTC's guidance for appropriately securing consumers' personal information is similar to what is required by the HIPAA Security Rule.

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Analogous state laws and regulations, such as state anti-kickback and false claims laws, which may apply to items or services reimbursed by any third-party payor, including commercial insurers, some state laws require pharmaceutical companies to comply with the pharmaceutical industry's voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government in addition to requiring drug manufacturers to report pricing and marketing information, including, among other things, information related to payments to physicians and other healthcare providers or marketing expenditures, state and local laws that require the registration of pharmaceutical sales representatives, and state laws governing the privacy and security of health information and the use of prescriber-identifiable data in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.

Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available under such laws, it is possible that certain business activities could be subject to challenge under one or more of such laws. The scope and enforcement of each of these laws is uncertain and subject to rapid change in the current environment of healthcare reform, especially in light of the lack of applicable precedent and regulations. Federal and state enforcement bodies have recently increased their scrutiny of interactions between healthcare companies and healthcare providers, which has led to a number of investigations, prosecutions, convictions and settlements in the healthcare industry. Ensuring that business arrangements with third parties comply with applicable healthcare laws, as well as responding to possible investigations by government authorities, can be time- and resource-consuming and can divert management's attention from the business.

If our operations are found to be in violation of any of the health regulatory laws described above or any other laws that apply to us, we may be subject to penalties, including, but not limited to, criminal, civil and administrative penalties, damages, fines, disgorgement, individual imprisonment, possible exclusion from participation in government healthcare programs, injunctions, private qui tam actions brought by individual whistleblowers in the name of the government and the curtailment or restructuring of our operations, as well as additional reporting obligations and oversight if we become subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with these laws, any of which could adversely affect our ability to operate our business and our results of operations.

Our failure to comply with data protection laws and regulations could lead to government enforcement actions and significant penalties against us, and adversely impact our operating results.

European Union member states and other foreign jurisdictions, including Switzerland, have adopted data protection laws and regulations which impose significant compliance obligations. Moreover, the collection and use of personal health data in the European Union, which was formerly governed by the provisions of the European Union Data Protection Directive, was replaced with the European Union General Data Protection Regulation, or the GDPR, in May 2018. The GDPR, which is wide-ranging in scope, imposes several requirements relating to the consent of the individuals to whom the personal data relates, the information provided to the individuals, the security and confidentiality of the personal data, data breach notification and the use of third party processors in connection with the processing of personal data. The GDPR also imposes strict rules on the transfer of personal data out of the European Union to the United States, provides an enforcement authority and imposes large penalties for noncompliance, including the potential for fines of up to €20 million or 4% of the annual global revenues of the non-compliant company, whichever is greater. The recent implementation of the GDPR has increased our responsibility and liability in relation to personal data that we process, including in clinical trials, and we may in the future be required to put in place additional mechanisms to ensure

compliance with the GDPR, which could divert management's attention and increase our cost of doing business. In addition, new regulation or legislative actions regarding data privacy and security (together with applicable industry standards) may increase our costs of doing business. In this regard, we expect that there will continue to be new proposed laws, regulations and industry standards relating to privacy and data protection in the United States, the European Union and other jurisdictions, and we cannot determine the impact such future laws, regulations and standards may have on our business.

Our employees and our independent contractors, principal investigators, consultants or commercial collaborators, as well as their respective sub-contractors, if any, may engage in misconduct or fail to comply with certain regulatory standards and requirements, which could expose us to liability and adversely affect our reputation.

Our employees and our independent contractors, principal investigators, consultants or commercial collaborators, as well as their respective sub-contractors, if any, may engage in fraudulent conduct or other illegal activity, which may include intentional, reckless or negligent conduct that violates, among others, (a) FDA laws and regulations, or those of comparable regulatory authorities in other countries, including those laws that require the reporting of true, complete and accurate information to the FDA, (b) manufacturing standards, (c) healthcare fraud and abuse laws (d) anti-bribery and anti-corruption laws, including the FCPA, or (e) laws that require the true, complete and accurate reporting of financial information or data. For example, such persons may improperly use or misrepresent information obtained in the course of our clinical trials, create fraudulent data in our preclinical studies or clinical trials or misappropriate our drug products, which could result in regulatory sanctions being imposed on us and cause serious harm to our reputation. It is not always possible for us to identify or deter misconduct by our employees and third parties, and any precautions we may take to detect or prevent such misconduct may not be effective. Any misconduct or failure by our employees and our independent contractors, principal investigators, consultants or commercial collaborators, as well as their respective sub-contractors, if any, to comply with the applicable laws or regulations may expose us to governmental investigations, other regulatory action or lawsuits. If any action is instituted against us as a result of the alleged misconduct of our employees or other third parties, regardless of the final outcome, our reputation may be adversely affected and our business may suffer as a result. If we are unsuccessful in defending against any such action, we may also be liable to significant fines or other sanctions, which could have a material and adverse effect on us.

Inadequate funding for the FDA, the SEC and other government agencies could hinder their ability to hire and retain key leadership and other personnel, prevent new products and services from being developed or commercialized in a timely manner or otherwise prevent those agencies from performing normal business functions on which the operation of our business may rely, which could negatively impact our business.

The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory, and policy changes. Average review times at the FDA have fluctuated in recent years as a result. In addition, government funding of the SEC and other government agencies on which our operations may rely, including those that fund research and development activities, is subject to the political process, which is inherently fluid and unpredictable.

Disruptions at the FDA and other agencies may also slow the time necessary for new drugs to be reviewed and/or approved by necessary government agencies, which would adversely affect our business. For example, over the last several years, including from December 22, 2018 until January 25, 2019, the U.S. government has shut down several times and certain regulatory agencies, such as the FDA and the SEC, have had to furlough critical FDA, SEC and other government employees and stop critical activities. If a prolonged government shutdown occurs, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business. Further, in our operations as a public company, future government shutdowns could impact our ability to access the public markets and obtain necessary capital in order to properly capitalize and continue our operations.

Risks Related to Our Securities

Conversion of the Convertible Senior Notes will dilute the ownership interest of existing stockholders and could adversely affect the market price of our common stock.

The conversion of some or all of the Convertible Senior Notes will dilute the ownership interests of existing stockholders. Any sales in the public market of the common stock issuable upon such conversion and exercise could adversely affect prevailing market prices of our common stock. In addition, the existence of the Convertible Senior Notes may encourage short selling by market participants.

Our indebtedness and debt service obligations may adversely affect our cash flow.

We intend to fulfill our current debt service obligations, including repayment of the principal from our existing cash and investments, as well as the proceeds from potential licensing agreements and any additional financing from equity or debt transactions. However, our ability to make scheduled payments of the principal of, to pay interest on, or to refinance, our indebtedness, depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control. Our business may not generate cash flow from operations in the future sufficient to service our debt and make necessary capital expenditures. If we are unable to generate such cash flow to meet these obligations, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt or obtaining additional equity capital on terms that may be onerous or highly dilutive, or delaying or curtailing research and development programs. Our ability to refinance our indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations.

We may add lease lines to finance capital expenditures and may obtain additional long‑term debt and lines of credit. If we issue other debt securities in the future, our debt service obligations will increase further.

Our indebtedness could have significant additional negative consequences, including, but not limited to:


•	requiring the dedication of a substantial portion of our existing cash and marketable securities balances and, if available, future cash flow from operations to service our indebtedness, thereby reducing the amount of our expected cash flow available for other purposes, including capital expenditures;


•	increasing our vulnerability to general adverse economic and industry conditions;


•	limiting our ability to obtain additional financing;


•	limiting our ability to sell assets if deemed necessary;


•	limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we compete; and


•	placing us at a possible competitive disadvantage to less leveraged competitors and competitors that have better access to capital resources.

We may not have the ability to raise funds necessary to purchase the Convertible Senior Notes upon a fundamental change and our future debt may contain limitations on our ability to repurchase the Convertible Senior Notes.

Following a fundamental change (which includes matters such as a change in control of the Company, approval by the Company’s stockholders of a plan of dissolution or liquidation of the Company, and the cessation of listing of the Company’s common stock on Nasdaq or The New York Stock Exchange, among others as further described in the indenture), holders of Convertible Senior Notes will have the right to require the Company to purchase their Convertible Senior Notes for cash. A fundamental change may also constitute an event of default or require prepayment under, and result in the acceleration of the maturity of, our other then-existing indebtedness. We cannot assure you that we will have sufficient financial resources, or will be able to arrange financing, to pay the fundamental change purchase price in cash with respect to any Convertible Senior Notes surrendered by holders for purchase upon a fundamental change. In addition, restrictions in the agreements governing our then-outstanding indebtedness, if any, may not allow us to purchase the Convertible Senior Notes upon a fundamental change. Our failure to purchase the Convertible Senior Notes upon a fundamental change when required would result in an event of default with respect to the Convertible Senior Notes which could, in turn, constitute a default under the terms of our other indebtedness, if any. If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and purchase the Convertible Senior Notes, which could have a material and adverse impact on our financial condition and results of operations.

Shares eligible for future sale may adversely affect our ability to sell equity securities.

Sales of our common stock (including the issuance of shares upon conversion of convertible debt) in the public market could materially and adversely affect the market price of shares. As of March 31, 2019 we had 191,509,289 shares of common stock issued, plus (1) outstanding options to purchase 4,434,745 shares of common stock with a weighted-average exercise price of $16.76 per share, (2) 15,396 outstanding restricted stock units held by certain executive officers of the Company, (3) 524,743 outstanding performance stock options held by certain executive officers and employees of the Company, (4) 6,567,666 shares of

common stock reserved for potential future grant under the Plan, and (5) $7.1 million of principal amount of Convertible Senior Notes convertible into approximately 1,393,160 shares of common stock at the conversion rate of $5.11 subject to adjustment as described in the indenture. Of the 250,000,000 shares of common stock authorized under our Certificate of Incorporation, there are 45,555,001 shares of common stock that remain available for future issuance.

Our outstanding Convertible Senior Notes, options and warrants may adversely affect our ability to consummate future equity‑based financings due to the dilution potential to future investors.

Due to the number of shares of common stock we are obligated to issue pursuant to outstanding Convertible Senior Notes, options and warrants, potential investors may not purchase our future equity offerings at market price because of the potential dilution such investors may suffer as a result of the exercise of the outstanding options and warrants or conversion of the outstanding Convertible Senior Notes.

The market price of our common stock has fluctuated widely in the past, and is likely to continue to fluctuate widely based on a number of factors, many of which are beyond our control.

The market price of our common stock has been, and is likely to continue to be, highly volatile. Furthermore, the stock market and the market for stocks of comparable biopharmaceutical companies like ours have from time to time experienced, and likely will again experience, significant price and volume fluctuations that are unrelated to actual operating performance.

From time to time, stock market analysts publish research reports or otherwise comment upon our business and future prospects. Due to a number of factors, we may fail to meet the expectations of securities analysts or investors and our stock price would likely decline as a result. These factors include:


•	Announcements by us, any collaboration partners, any future alliance partners or our competitors of pre-clinical studies and clinical trial results, regulatory developments, technological innovations or new therapeutic products, product sales, new products or product candidates and product development timelines;


•	The formation or termination of corporate alliances;


•	Developments in patent or other proprietary rights by us or our respective competitors, including litigation;


•	Developments or disputes concerning our patent or other proprietary rights, and the issuance of patents in our field of business to others;


•	Government regulatory action;


•	Period-to-period fluctuations in the results of our operations; and


•	Developments and market conditions for emerging growth companies and biopharmaceutical companies, in general.

In addition, Internet “chat rooms” have provided forums where investors make predictions about our business and prospects, oftentimes without any real basis in fact, that readers may trade on.

In the past, following periods of volatility in the market prices of the securities of companies in our industry, securities class action litigation has often been instituted against those companies. Refer to “Legal Proceedings” for more information. If we face such litigation in the future, it would result in substantial costs and a diversion of management’s attention and resources, which could negatively impact our business.

Our principal stockholders can significantly influence all matters requiring the approval by our stockholders.

As of March 31, 2019 , venBio Select Advisor LLC, (“venBio”) is the beneficial owner of approximately 9.3% of our outstanding common stock. venBio is one of our largest stockholders, and Dr. Behzad Aghazadeh, the Managing Partner and portfolio manager of the venBio Select Fund, serves as Chairman of our Board of Directors.

As a result of this voting power, venBio has the ability to significantly influence the outcome of substantially all matters that may be put to a vote of our stockholders, including the election of our directors.

There are limitations on the liability of our directors, and we may have to indemnify our officers and directors in certain instances.

Our certificate of incorporation limits, to the maximum extent permitted under Delaware law, the personal liability of our directors for monetary damages for breach of their fiduciary duties as directors. Our bylaws provide that we will indemnify our officers and directors and may indemnify our employees and other agents to the fullest extent permitted by law. These provisions may be in some respects broader than the specific indemnification provisions under Delaware law. The indemnification provisions may require us, among other things, to indemnify such officers and directors against certain liabilities that may arise by reason of their status or service as directors or officers (other than liabilities arising from willful misconduct of a culpable nature), to advance their expenses incurred as a result of certain proceedings against them as to which they could be indemnified and to obtain directors’ and officers’ insurance. Section 145 of the Delaware General Corporation Law provides that a corporation may indemnify a director, officer, employee or agent made or threatened to be made a party to an action by reason of the fact that he or she was a director, officer, employee or agent of the corporation or was serving at the request of the corporation, against expenses actually and reasonably incurred in connection with such action if he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. Delaware law does not permit a corporation to eliminate a director’s duty of care and the provisions of our certificate of incorporation have no effect on the availability of equitable remedies, such as injunction or rescission, for a director’s breach of the duty of care.

We believe that our limitation of officer and director liability assists us to attract and retain qualified employees and directors. However, in the event an officer, a director or the board of directors commits an act that may legally be indemnified under Delaware law, we will be responsible to pay for such officer(s) or director(s) legal defense and potentially any damages resulting there from. Furthermore, the limitation on director liability may reduce the likelihood of derivative litigation against directors and may discourage or deter stockholders from instituting litigation against directors for breach of their fiduciary duties, even though such an action, if successful, might benefit our stockholders and us. Given the difficult environment and potential for incurring liabilities currently facing directors of publicly-held corporations, we believe that director indemnification is in our and our stockholders’ best interests because it enhances our ability to attract and retain highly qualified directors and reduce a possible deterrent to entrepreneurial decision-making.

Nevertheless, limitations of director liability may be viewed as limiting the rights of stockholders, and the broad scope of the indemnification provisions contained in our certificate of incorporation and bylaws could result in increased expenses. Our board of directors believes, however, that these provisions will provide a better balancing of the legal obligations of, and protections for, directors and will contribute positively to the quality and stability of our corporate governance. Our board of directors has concluded that the benefit to stockholders of improved corporate governance outweighs any possible adverse effects on stockholders of reducing the exposure of directors to liability and broadened indemnification rights.

We are exposed to potential risks from legislation requiring companies to evaluate controls under Section 404 of the Sarbanes-Oxley Act.

The Sarbanes-Oxley Act requires that we maintain effective internal controls over financial reporting and disclosure controls and procedures. Among other things, we must perform system and process evaluation and testing of our internal controls over financial reporting to allow management to report on, and our independent registered public accounting firm to attest to, our internal controls over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act (“Section 404”). Compliance with Section 404 requires substantial accounting expense and significant management efforts. Our testing, or the subsequent review by our independent registered public accounting firm, may reveal deficiencies in our internal controls that would require us to remediate in a timely manner so as to be able to comply with the requirements of Section 404 each year. If we are not able to comply with the requirements of Section 404 in a timely manner each year, we could be subject to sanctions or investigations by the SEC, the Nasdaq Stock Market or other regulatory authorities that would require additional financial and management resources and could adversely affect the market price of our common stock.

We do not intend to pay dividends on our common stock. Until such time as we pay cash dividends, our stockholders, must rely on increases in our stock price for appreciation.

We have never declared or paid dividends on our common stock. We intend to retain future earnings to develop and commercialize our product candidates and therefore we do not intend to pay cash dividends in the foreseeable future. Until such time as we determine to pay cash dividends on our common stock, our stockholders must rely on increases in the market price of our common stock for appreciation of their investment.

ITEM 6. EXHIBITS

The exhibits required by Item 601 of Regulation S-K are included with this Form 10-Q and are listed on the “Exhibit Index” immediately following the Signatures.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



	IMMUNOMEDICS, INC.

May 9, 2019	/s/ Usama Malik
	Usama Malik
	Chief Financial Officer
	(Principal Executive Officer and Principal Financial Officer)

EXHIBIT INDEX



Exhibit Number		Description of Document

10.1*		Letter Agreement, dated as of March 5, 2019, by and between the Company and Scott Canute.

10.2*		Separation Agreement, dated as of March 13, 2019, by and between the Company and Michael Pehl.

10.3*		Executive Employment Agreement, dated as of August 7, 2017, by and between the Company and Usama Malik.

31.1*		Certification of Principal Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.

31.2*		Certification of Principal Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.

32.1*		Certifications of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101*		The following financial information from this Quarterly Report on Form 10-Q for the quarter ended March 31, 2019, formatted in XBRL (eXtensible Business Reporting Language) filed electronically herewith: (i) the Condensed Consolidated Balance Sheets; (ii) the Condensed Consolidated Statements of Comprehensive Loss; (iii) the Condensed Consolidated Statements of Changes in Stockholders' Equity; (iv) the Condensed Consolidated Statements of Cash Flows; and, (v) the Notes to Unaudited Condensed Consolidated Financial Statements.

* Filed herewith.

March 7, 2019

______________

Dear Scott,

This letter agreement (this “ Agreement ”), which shall be effective as of March 5, 2019 (the “ Effective Date ”), sets forth the terms of your appointment as Executive Director of Immunomedics, Inc. (the “ Company ”), which was effective as of February 23, 2019. As Executive Director, you will be expected to perform your duties as a member of the Board of Directors of the Company (the “ Board ”) as well as consult with and advise the Company’s management team at the request of the Board from time to time with respect to your knowledge, experience and expertise. This will include (1) assisting the Company’s management team with resolving the issues identified in the Complete Response Letter received from the U.S. Food and Drug Administration (the “ FDA ”) related to the Biologics License Application (“ BLA ”) seeking accelerated approval of sacituzumab govitecan for the treatment of patients with metastatic triple-negative breast cancer who have received at least two prior therapies for metastatic disease; (2) assisting the Company’s management team in the preparation and resubmission of the BLA; and (3) such other matters as they relate to the foregoing and as reasonably designated to you by the Board (the “ Services ”).

As consideration for the Services as Executive Director, you will earn and be paid $16,667 per month. The Company shall reimburse you for all reasonable expenses you incur in connection with the performance of the Services, including travel expenses, provided that you obtain the Company’s prior written approval. On the Effective date, the Company granted you, pursuant to the Immunomedics, Inc. 2014 Long-Term Incentive Plan (the “ Plan ”), an option to purchase 79,818 shares of the Company’s common stock (the “ Performance-Based Option ”) pursuant and subject to the Plan and a stock option agreement. The Performance Based Option is a nonqualified stock option, and has an exercise price per share equal to $16.96, the Fair Market Value (as defined in the Plan) of a share of common stock of the Company as of the date of grant pursuant to the terms of the Plan, and shall vest in full upon FDA approval of the BLA.

You or the Company may terminate your position as Executive Director at any time, and for any reason, by providing written notice to the other party.

As Executive Director, you will not be considered an employee of the Company. Hence, you shall not have the right to any of the pension, retirement or other benefit programs available to the Company’s regular employees.

The Company’s Board and management team are very excited about the opportunity to have you serve as Executive Director of the Company. This is a critical time for the Company and we look forward to experiencing the Company’s future successes with you. Please indicate your agreement to the foregoing by signing a copy of this Agreement where indicated below and returning it to us.

Very Truly Yours,

IMMUNOMEDICS, INC.

By: /s/ Jared Freedberg

Name: Jared Freedberg

Title: General Counsel

Date: 3/7/19

Agreed to and Acknowledged:

By: /s/ Scott Canute

Name: Scott Canute

Date: 3/7/2019

March 13, 2019

Michael Pehl

______________

Re: Separation from Employment

Dear Michael:

This confidential separation agreement and release (“ Agreement ”) sets forth the agreement reached concerning the termination of your employment with Immunomedics, Inc. (the “ Company ”).

1. Separation Date.

(a) You acknowledge that, by letter dated February 22, 2019, you resigned from your positions as Chief Executive Officer and President of the Company and resigned from the Board of Directors of the Company, which resignations were accepted by the Company and effective as of February 23, 2019.

(b) It is agreed that your last day of employment with the Company will be March 25, 2019 (the “ Separation Date ”). On the next regularly scheduled payday following the Separation Date, you will receive your final paycheck reflecting employment through the Separation Date, as well as accrued but unused vacation, less applicable withholding taxes and deductions. In addition, you will be reimbursed for all customary and appropriate business-related expenses incurred by you prior to the Separation Date, which shall be subject to and paid in accordance with the Company’s standard expense reimbursement policies applicable to senior-level executives.

(c) For the period from February 22, 2019 through the Separation Date, you will be placed on garden leave (the “ Garden Leave Period ”). During the Garden Leave Period, you will remain on Company payroll, paid at your current rate of pay, and agree to make yourself reasonably available to the Company, by phone or email, to assist in transition as the Company may deem necessary and appropriate, but you shall not report to the Company’s offices, access Company email or computer systems, or perform any work for or on behalf of the Company, except as expressly requested by the Company. For the avoidance of doubt, during the Garden Leave Period you shall continue to comply fully with and be bound by all policies and procedures in effect for executives of the Company, including but not limited to all requirements contained in the employee handbook, and shall continue to comply fully with and be bound by all laws and regulations applicable to the business of the Company. Moreover, you shall not incur any business expenses during the Garden Leave Period, absent prior written authorization of the Company.

(d) You acknowledge that, as of February 23, 2019, you no longer serve as, and from that date shall not hold yourself out as, an officer, director, executive, member, trustee, representative, or agent of the Company or of any parent, subsidiary, or affiliate of the Company, and that you no longer have authority to act on behalf of or as a legal representative of the Company or any parent, subsidiary, or affiliate of the Company. Moreover, on and after the Separation Date, you shall no longer serve or hold yourself out as an employee of the Company or any parent, subsidiary, or affiliate of the Company.

(e) Except as expressly set forth herein, all Company-provided benefits will terminate on the Separation Date, subject to the terms of the applicable benefit plans. Any accrued or vested amounts or benefits due to you will be treated in accordance with the applicable benefit plan, program, or policy. After the Separation Date, you may be eligible to elect continuation coverage under the Company’s group health insurance plans for yourself, your spouse, and your eligible dependents, in accordance with the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“ COBRA ”), or applicable state law.

2. Severance Benefits. In consideration for your signing and not revoking this Agreement and complying with its terms, and in exchange for the promises, covenants, and waivers set forth herein, Immunomedics will provide you with the following separation benefits (collectively, the “ Severance Benefits ”):

(a) Cash severance in an amount equal to: (i) $960,000, reflecting eighteen (18) months of pay at your current base salary, plus (ii) $55,759, reflecting your Target Bonus for the current fiscal year, prorated based on your

employment through the date of notice of resignation. The cash severance, less applicable withholdings and deductions, shall be paid in substantially equal installments over an 18-month period consistent with the Company’s regularly scheduled payroll, with the first installment being paid within sixty (60) days after the Separation Date, subject to your timely execution and non-revocation of this Agreement within 60-day period. Payments made under this Section 2(a) shall not be eligible to be contributed to any retirement, savings, or compensation plan and shall not be benefit-bearing compensation for purposes of any employee benefit plans of the Company.

(b) Provided that you timely and properly elect continuation coverage under COBRA, the Company shall, for a period of 18 months following the Separation Date, pay the premiums for COBRA healthcare continuation coverage for you and, as applicable, your spouse and eligible dependents, less an amount equal to the required monthly employee payment for such coverage, calculated as if you continued to be an employee of the Company throughout such period. The COBRA premiums to be paid by the Company under this Section 2(b) shall be remitted directly to the health insurance administrator. Any remaining COBRA premiums shall be your responsibility. Notwithstanding the foregoing, payments specified under this Section 2(b) shall cease if the Company’s statutory obligation to provide such COBRA healthcare continuation coverage terminates for any reason, including but not limited to your failure to timely elect continuation coverage under COBRA or your failure to timely pay your share of the COBRA premiums.

3. Equity. Your outstanding equity grants shall be governed by and subject to the applicable terms and conditions set forth in your outstanding awards and the Immunomedics, Inc. 2014 Long-Term Incentive Plan provided that for purposes of your performance-based nonqualified stock option dated December 7, 2017, your termination shall be treated as Involuntary Termination (as defined in such award agreement).

4. Acknowledgments. You agree and acknowledge that:

(a) You would not be entitled to the Severance Benefits set forth in this Agreement unless you sign and do not revoke this Agreement and comply with its terms.

(b) The Severance Benefits provided above are in lieu of and in full satisfaction of any amounts that might otherwise be payable under any contract, plan, policy or practice, past or present, of Immunomedics or any of its affiliates, including but not limited to your Executive Employment Agreement dated November 8, 2017 (the “ Employment Agreement ”) and the Immunomedics Severance Pay Plan.

(c) Except as expressly set forth herein, you are not entitled to, and will not seek, any further compensation or consideration of any kind from the Company, including wages, bonus, commissions, severance, incentive compensation, equity, or benefits.

(d) If you decline to execute this Agreement, revoke this Agreement following execution, or fail to comply with the terms and conditions of this Agreement, all payments under Section 2 shall immediately cease and you shall be required to repay immediately any cash severance previously paid by the Company thereunder.

5. Release.

(a) In consideration of the payment and arrangements described in Section 2 above and for other good and valuable consideration, you, individually and on behalf of yourself, your heirs, executors, administrators, successors, and assigns, knowingly and voluntarily hereby release and forever discharge the Company and its affiliates, related entities, parents, subsidiaries, and divisions, and each of their past, present, or future officers, directors, members, partners, managers, stockholders, employees, agents, investors, and advisors, and each of their respective predecessors, successors and assigns, and any and all employee pension or welfare benefits plans of the Company, including current and former trustees and administrators of these plans (collectively, the “ Released Parties ”) from any and all claims, liabilities, demands, causes of action, costs, expenses, attorney fees, damages, indemnities and obligations of every kind and nature, in law, equity or otherwise, known and unknown, suspected and unsuspected, disclosed and undisclosed, arising from or relating to your employment with the Company and the termination of that employment.

(b) Without limiting the generality of the foregoing, this Release includes, but is not limited to, (i) any rights or claims arising under any federal, state, or local constitution, statute, ordinance, or regulation, including without limitation, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Civil Rights Act of 1866, Section 1981 through 1988 of Title 42 of the United States Code, the Americans with Disabilities Act of 1990, the Genetic Information Nondiscrimination Act of 2008, the Family and Medical Leave Act of 1993, the Equal Pay Act, the Lilly Ledbetter Fair Pay Act, the Age Discrimination in Employment Act of 1967 (the “ ADEA ”), the Older Workers Benefit

Protection Act (“ OWBPA ”), the Rehabilitation Act of 1973, the Employee Retirement Income Security Act of 1974,the anti-retaliation provisions of the Fair Labor Standards Act, the Worker Adjustment Retraining and Notification (“ WARN ”) Act and any state WARN statutes, the Occupational Safety and Health Act, the Uniformed Services Employment and Reemployment Rights Act, the anti-retaliation provisions of the Corporate and Criminal Fraud Accountability Act of 2002, 18 U.S.C. § 1514A (also known as the Sarbanes-Oxley Act and/or Dodd-Frank Wall Street Reform Consumer Protection Act), the Fair Credit Reporting Act, the New Jersey Law Against Discrimination, the New Jersey Family Leave Act, the Conscientious Employee Protection Act, and the New Jersey Wage Laws, each of the foregoing as amended; (ii) any rights or claims under any plan, program, policy, agreement, contract, understanding or promise, express or implied, written or oral, formal or informal, between the Company or any of the Released Parties and myself, including but not limited to the Employment Agreement; (iii) any claim for unpaid compensation, wages, bonus or incentive compensation, profits, commission, equity, securities, benefits, vacation, severance pay, and/or other fringe benefit of the Company or any of the other Released Parties; (iv) any rights or claims under any common law theory, including for alleged tortious, negligent, defamatory and/or fraudulent conduct; and (v) any claim for equitable relief or recover of punitive, compensator, or other damages or monies, including attorney’s fees or costs.

(c) Notwithstanding the foregoing, nothing in this Agreement will serve to waive or impair (i) any claims or rights that, pursuant to law, cannot be legally waived or subject to a release of this kind, such as claims for unemployment or workers’ compensation benefits or claims under the ADEA that arise after you sign this Agreement, (ii) any rights you may have to vested benefits under any applicable Immunomedics retirement plan or options under any equity plans of the Company as of the Separation Date subject to the terms and conditions applicable to such outstanding options, (iii) any claims or rights you may have to indemnification and/or coverage under Company D&O policy under which you are covered as an “insured person” as of the Separation Date, or (iv) any right you may have to bring appropriate proceedings to enforce this Agreement. In addition, nothing in this letter limits or waives your right to seek a judicial determination of the validity of the Release’s waiver of claims under the ADEA.

6. No Suits. You hereby represent and warrant that you have not filed, caused to be filed or permitted to be filed any complaints, charges, lawsuits or other proceedings against the Company or any of the other Released Parties, and that no such complaints, charges, lawsuits or other proceedings are pending. You further agree not to initiate any legal action or proceeding against the Company or the Released Parties in any forum in connection with the claims released by you. That said, nothing in this letter prohibits you from filing a charge with or participating in any investigation or proceeding conducted by the Equal Employment Opportunity Commission or a comparable state or local agency (“ EEOC ”) or with the Securities and Exchange Commission. You further agree that if you, or anyone on your behalf, files a charge with the EEOC, civil action, suit or legal proceeding against the Released Parties involving any matter subject to the Release you waive your right to seek or recover any personal relief (including but not limited to monetary damages) in such proceeding; provided, however, that this limitation on recovery shall not apply to administrative proceedings before the SEC.

7. Return of Company Property. You represent and warrant that, on or before the Separation Date, you shall return to the Company all property belonging to the Company, including but not limited to computers, mobile phones, electronic devices, entry badges and keys, passwords and log-in credentials, documents, records, files, and equipment that is in your possession, custody, or control.

8. Cooperation. Following the Separation Date, and in consideration of the Severance Benefits, you agree to cooperate with the Company in (a) responding to reasonable requests by the Company for information concerning work performed or actions taken by you during your employment with the Company or with regard to any matters about which you may have knowledge; and (b) any investigation or review that may be performed by the Company or any government authority or in connection with any litigation in which the Company may become involved which relates to the business of the Company during the period of your employment or events or occurrences about which you may have knowledge. The Company will reimburse you for reasonable expenses incurred by you in providing such cooperation. Moreover, upon service on you, or anyone acting on your behalf, of any subpoena, order, directive, or other legal process in any way relating to Immunomedics, you or your attorney shall immediately notify Immunomedics in writing (unless prohibited to do so by law) of such service and of the content of any testimony or information to be provided pursuant to such a subpoena, order, directive or other legal process and within two (2) business days send to the undersigned representative of Immunomedics via email or overnight delivery (which expense shall be reimbursed by Immunomedics) a copy of said documents served upon you. You agree to cooperate with Immunomedics in any effort Immunomedics undertakes to obtain a protective order or other remedy in connection with such subpoena, order, directive, or other legal process.

9. Continuing Obligations. You agree to comply with all obligations under the Employment Agreement that survive the Separation Date, including but not limited to the obligations in Sections 5 (Confidentiality), 6 (Intellectual Property), 7 (Non-Competition), and 8 (Non-Solicitation), as further clarified by Section 9 (General Provisions) (collectively, the “ Continuing Obligations ”). You understand and acknowledge that your right to the Severance Benefits outlined herein is subject to your continued compliance with the Continuing Obligations.

10. Non-Disparagement. You agree not to make, or knowingly cause to be made, any statement or communication, written or oral, with the intention of disparaging or otherwise impugning the business or management of, or with the intention of damaging the reputation of or interfering with the normal operations of, Immunomedics or the Released Parties. You further agree not to communicate with, give interviews and/or provide statements either directly or indirectly, to any member of the media concerning any aspect of your employment or experiences with Immunomedics (including the cessation of your employment) or in any way concerning the Immunomedics’ business, its business model and/or its operations. Nothing in this Agreement will (i) affect your obligations to provide truthful information on any non-privileged subject matter in response to a valid subpoena, court order, regulatory request or other judicial, administrative or legal process or otherwise as required by law or (ii) unlawfully impair or interfere with your rights under Section 7 of the National Labor Relations Act.

11. Non-Disclosure of Agreement. You agree not to disclose the terms, content, or execution of this Agreement, except that you may disclose the terms of this Agreement: (i) to your immediate family, attorney, and tax and financial advisors, so long as such individuals agree to be bound by the confidential nature of this Agreement, (ii) pursuant to a valid subpoena, court order, regulatory request or other judicial, administrative or legal process or otherwise as required by law, or (iii) for purposes of securing enforcement of the terms and conditions of this Agreement. Nothing in this Agreement is intended to or will preclude you from reporting, without any prior authorization from or notification to Immunomedics, possible violations of federal law or regulation to any governmental agency or entity, including but not limited to the Department of Justice, the Securities and Exchange Commission, Congress, and any agency Inspector General, or making other disclosures that are protected under the whistleblower provisions of federal law or regulation.

12. Contents of Agreement, Amendment, Interpretation.

(a) This Agreement constitutes the entire agreement between Immunomedics and you, and supersedes and cancels all prior written and oral agreements, if any, between Immunomedics and you; provided, however , that nothing in this Agreement will impair your obligations under the Employment Agreement, which survive the Separation Date. You affirm that, in entering into this Agreement, you are not relying upon any oral or written promise or statement made by anyone at any time on behalf of Immunomedics.

(b) This Agreement cannot be changed or modified except by a writing signed by an authorized representative of Immunomedics and you.

(c) The headings in this Agreement are for convenience only, and both parties agree that they shall not be construed or interpreted to modify or affect the construction or interpretation of any provision of this Agreement.

(d) It is the desire and intent of the parties that the provisions of this Agreement shall be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. In the event that any one or more of the provisions of this Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby; however, if the Release in Section 5 is held to be invalid, illegal, or unenforceable, then you agree that (i) you will be required to enter into a new agreement containing an enforceable release of all legally waivable claims against the Company and the Released Parties; and (ii) the Severance Benefits will constitute sufficient consideration for your entering into such new agreement.

(e) No waiver by either party of any breach by the other party of any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of any other provision or condition at the time or at any prior or subsequent time.

13. Miscellaneous.

(a) This Agreement is binding upon and shall inure to the benefit of your successors, assigns, heirs, executors, administrators, and legal representatives, and shall be binding on and inure to the benefit of the Company’s successors and assigns.

(b) This Agreement may be executed in counterparts, each of which will be deemed an original but all of which together will constitute one and the same instrument, notwithstanding that all of the parties are not signatory to the same counterpart. This Agreement may be executed either by original, facsimile or electronic copy, each of which will be equally binding.

(c) This Agreement shall be governed by and interpreted under the laws of the State of New Jersey without giving effect to any conflicts-of-law provisions or canons of construction that construe agreements against the draftsperson. Each party hereby irrevocably submits to the exclusive jurisdiction of the United States District Court located in New Jersey or any state court located within such state, in respect of any claim arising out of or relating to this Agreement or Executive’s employment with the Company. SUBJECT TO APPLICABLE LAW, THE PARTIES HEREBY WAIVE ANY RIGHT TO A JURY TRIAL WITH RESPECT TO ANY DISPUTE ARISING FROM OR RELATING TO THIS AGREEMENT.

14. Section 409A. Although the Company makes no guarantee with respect to the tax treatment of payments hereunder, payments under this Agreement are intended to either comply with, or be exempt from, the provisions of the Internal Revenue Code Section 409A and the treasury regulations, guidance, and exemptions promulgated thereunder (collectively, “ Section 409A ”) so as not to subject you to the payment of any tax, interest, or penalty that may be imposed under Section 409A. Notwithstanding the foregoing, the Company shall have (i) no obligation to prevent, minimize, or make a gross-up payment to offset any negative consequences to you under Section 409A and (ii) no liability to you for any negative consequences if they arise.

15. Review and Acknowledgment. By signing below, you acknowledge that:

(a) You have read this Agreement and understand its terms;

(b) You are fully competent to sign this Agreement and do so freely and voluntarily without any coercion or undue influence from anyone;

(c) The payments and other consideration being provided to you are of significant value and in addition to what you otherwise would be entitled to receive from the Company, but for your execution of this Agreement;

(d) By way of this Agreement, the Company has advised you of your right to consult with an attorney of your choosing concerning the legal significance of this Agreement prior to signing it;

(e) You have been given 21 days to review and consider this letter before signing it, though you may voluntarily sign it early. If you do not sign this letter within 21 days, it shall have no effect. Any changes to this letter, whether material or otherwise, will not re-start the 21 day period;

(f) After signing this Agreement, you may revoke your acceptance by delivering written notice by email of the election to the Company, [Attn: Jared Freedberg, General Counsel], not later than 7 days after the date you sign the Agreement. If not revoked within 7 days, this Agreement will become fully effective and irrevocable on the eighth day after the date you sign the Agreement. If you revoke your acceptance, you acknowledge that this Agreement shall be null and void and you shall have no rights to arrangements or benefits set forth above.

[SIGNATURES APPEAR ON FOLLOWING PAGE]

IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have executed this Agreement as of the date first above written.

IMMUNOMEDICS, INC.

By: /s/ Jared Freedberg

Name: Jared Freedberg

Title: General Counsel

MICHAEL PEHL

/s/ Michael Pehl

Michael Pehl

Date: 03/13/2019

EXECUTIVE EMPLOYMENT AGREEMENT

THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement") is entered into effective as of the 7th day of August, 2017 (the "Effective Date") by and between Immunomedics, Inc., a Delaware corporation having its principal offices in Morris Plains, New Jersey (the "Company," which term shall include all respective subsidiaries, affiliates, and entities of the Company, and its and their respective successors and assigns), and Usama Malik (the "Executive").

WHEREAS, Executive is presently engaged by the Company as an independent consultant pursuant to a Consulting Agreement (the "Consulting Agreement");

WHEREAS, the Company desires to terminate the Consulting Agreement and employ Executive as its Chief Business Officer, and Executive desires to serve in such capacity on behalf of the Company, upon the terms and conditions hereinafter set forth;

WHEREAS, Executive acknowledges that he has had an opportunity to consider this Agreement and consult with an independent advisor of his choosing with regard to the terms of this Agreement, and enters into this Agreement voluntarily and with a full understanding of its terms; and

WHEREAS, the Company and Executive have agreed that this Agreement will supersede and replace the Consulting Agreement as of the Effective Date.

NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows:

1.0 Employment .

1.1 A t-Will Employment . Executive shall be employed by the Company on an "at will" basis, meaning either the Company or Executive may terminate Executive's employment at any time, with or without cause or advance notice. Any contrary representations that may have been made to Executive shall be superseded by this Agreement. This Agreement shall constitute the full and complete agreement between Executive and the Company on the "at will" nature of Executive's employment with the Company, which may be changed only in an express written agreement signed by Executive and a duly authorized officer of the Company. Executive's rights to any compensation following a termination shall be only as set forth in Section 2.

1.2 Duties and Responsibilities . Commencing on the Effective Date, Executive shall serve as the Chief Business Officer of the Company, reporting to the Chief Executive Officer ("CEO") and/or such executive designated by the CEO, and shall perform all duties and accept all responsibilities incident to such position as may be reasonably assigned to Executive by the

CEO and/or the Company's Board of Directors (the "Board''). Executive shall perform Executive's duties under this Agreement principally out of the Company's corporate headquarters (presently located in Morris Plains, New Jersey) and will undertake such travel within or outside of the United States as is necessary or advisable for the efficient operations of the Company. In the performance of his duties, Executive will observe and adhere to all applicable Company policies and procedures as may be interpreted, adopted, revised or deleted from time to time in the Company's sole discretion.

1.3 Extent of Services . Executive shall use Executive's best efforts to carry out Executive's duties and responsibilities under Section 1.2 hereof and, consistent with the other provisions of this Agreement, shall devote substantially all of Executive's business time, attention and energy thereto. Except with the prior written consent of the Company, Executive shall not, while employed by the Company, undertake or engage in any other employment, occupation, business, or investment activity that, in the reasonable judgment of the Board, is likely to interfere with Executive's ability to discharge Executive's duties and responsibilities to the Company; except that nothing herein shall prohibit Executive from engaging in (a) reasonable time devoted to volunteer services for or on behalf of such religious, educational, non-profit and/or other charitable organization as Executive may wish to serve, (b) reasonable time devoted to activities in the non-profit and business communities consistent with Executive's

duties, (c) such other activities as may be specifically approved by the Company. The foregoing shall not, however, preclude Executive from owning less than one percent (1 %) of the total outstanding shares of a publicly traded company.

1.4 Base Salary . For all services rendered by Executive hereunder , the Company shall pay Executive a base salary ("Base Salary") at the annual rate of Three Hundred and Fifty Thousand Dollars ($350,000) (gross), subject to all applicable withholdings and deductions and payable bi-weekly in installments at such times as the Company customarily pays its other senior

level executives.

1.5 One-Time Signing Bonus . Within thirty (30) days of the Effective Date, the Company shall pay Executive a one-time signing bonus of Ninety Thousand Dollars ($90,000) (gross), subject to applicable withholdings and deductions (the

"Signing Bonus"). For the avoidance of doubt, the Signing Bonus is intended to, among other things, compensate Executive for any costs associated with moving and/or and travel expenses reasonably anticipated to be incurred by Executive during his first year of employment in New Jersey. Notwithstanding the foregoing, Executive shall forfeit and be obligated to repay immediately the Signing Bonus if Executive does not remain employed by the Company on the one-year anniversary of the Effective Date , except in the event of a termination without Cause by the Company prior to the one-year anniversary of the Effective Date.

1.6 Annual Discretionary Cash Bonus . For each fiscal year during the period of Executive's employment with the Company commencing wi th the July 1, 2017- June 30, 2018 fiscal year , Executive shall be eligible to receive an annual discretionary cash bonus {the "Annual Bonus " ) for the services rendered by Executive under this Agreement. The amount of the Annual Bonus, if any, will be determined by the Compensation Committee of the Board (the "Compensation Committee") in its discretion, based on Executive's individual performance and Company performance as determined by the Compensation Committee. Executive's Annual Bonus target is forty percent (40%) of Executive's Base Salary earned for the applicable fiscal year. The amount of the Annual Bonus, if any, will be determined as of the end of each fiscal year during the employment period and shall be paid as soon as reasonably practicable after the end of each fiscal year to which the bonus relates , but in no event , later than 2-1/2 months after the end of such fiscal year. To be eligible to receive an Annual Bonus, or any portion thereof, the Executive must be employed by the Company both at the time the amount of the Annual Bonus, if any, is determined, and at the time the Annual Bonus, if any, is paid.

1. 7 Equity Compensation . Subject to approval of the Board following the Effective Date, and in consideration for Executive entering into this Agreement, the Company will grant the following equity awards to Executive pursuant to the Company's Immunomedics, Inc. 2014 Long-Term Incentive Plan (the "Plan") as soon as practicable after the Effective Date:

(a) A one-time award of restricted stock units for twenty thousand (20,000) shares of Company common stock (the "RSUs"), pursuant and subject to the Plan and the Company's standard restricted stock unit agreement. The RSUs shall vest upon the one-year anniversary of the Effective Date, subject to Executive's continued employment on such date, except in the event of a termination without Cause by the Company prior to the one-year anniversary of the Effective Date. Upon termination of Executive's employment (for any reason other than without Cause by the Company or for Good Reason by Executive, as provided below), any unvested RSUs shall be immediately forfeited unless otherwise expressly stated in the applicable restricted stock unit agreement.

(b) An option to purchase sixty-five thousand (65,000) shares (the "Shares") of the Company's common stock (the "Option") pursuant and subject to the Plan and the Company's standard form of stock option agreement. The Option shall be an incentive stock option to the extent permissible under Section 422 of the Internal Revenue Code of 1986, as amended (the "Code") and will have an exercise price per Share equal to the fair market value of a share of common stock of the Company as of the date of grant pursuant to the terms of the Plan. The Option shall vest as follows: upon the one-year anniversary of the Effective Date, twenty-five percent (25%) of the total number of Shares granted under the Option shall vest, and an additional II 48th of the total number of Shares shall vest on the corresponding day of each month thereafter, until all Shares have vested on the fourth anniversary of the Effective Date, subject to Executive's continued employment on each such vesting date. Upon termination of Executive's employment (for any reason other than without Cause by the Company or for Good Reason by Executive, as provided below), the unvested portion of the Option shall be immediately forfeited unless otherwise expressly stated in the applicable option agreement. Upon termination of Executive's employment, the vested portion of the Option shall remain exercisable in accordance with the terms and conditions of the applicable option agreement.

1.8 Retirement and Welfare Plans . During the period Executive is employed by the Company, Executive may participate in employee retirement and welfare benefit plans made available to the Company's senior level executives as a group or to its employees generally, as such retirement and welfare plans may be in effect from time to time and subject to the eligibility

requirements of the plans. Nothing in this Agreement shall prevent the Company from amending or terminating any retirement, welfare or other employee benefit plans or programs from time to time as the Company deems appropriate.

1.9 Vacation . Executive shall be entitled to four ( 4) weeks of annual paid vacation, which shall be subject in all respects to the terms and conditions of the Company's paid time off policies, as may be in effect from time to time.

1.10 Reimbursement of Expenses . Executive shall be reimbursed for all customary and appropriate business-related expenses actually incurred and documented in accordance with the Company's policies applicable to senior level executives; provided, however, that for the avoidance of doubt, Executive shall not be entitled to additional reimbursements (over and above

the Signing Bonus) for any costs associated with moving and/or and travel expenses incurred by Executive during his first year of employment in New Jersey.

2.0 Termination . The Parties acknowledge that Executive's employment relationship with the Company is at-will. The provisions in this Section govern the amount of compensation, if any, to be provided to Executive upon termination of employment and do not alter this at-will status.

2.1 Termination Without Cause or Resignation for Good Reason Before a Change of Control .

(a) The Company may terminate Executive at any time without Cause (as defined in Section 2.9) from the position in which Executive is employed hereunder upon not less than thirty (30) days' prior written notice to Executive. The Company shall have the discretion to terminate Executive's employment during the notice period and pay continued Base Salary in lieu of notice . In addition, Executive may initiate a termination of employment by resigning under this Section 2.1 for Good Reason (as defined in, and in accordance with the notice provisions set forth in Section 2 . 9).

(b) Upon termination under this Section 2.1, Executive shall receive (i) Executive ' s accrued but unpaid Base Salary through the date of termination, (ii) any unreimbursed business expenses incurred by Executive and payable in accordance with the Company's standard expense reimbursement policies, and (iii) benefits earned, accrued and due under any qualified retirement plan or health and welfare benefit plan in which Executive was a participant in accordance with applicable law and the provisions of such plan (collectively, the " Guaranteed Payments "). With the exception of unreimbursed business expenses, which shall be paid in accordance with Company policy, Executive will be paid the Guaranteed Payments on the Company's first payroll date after Executive's date of termination from employment, or earlier if required by applicable law.

(c) If Executive's employment terminates as described in Section 2.l(a) above and if, upon such termination, Executive (i) executes within twenty-one (21) days (or forty-five (45) days to the extent required by applicable law) or presentment and does not revoke a written release in a form provided by the Company releasing any and all claims against the Company and its affiliates, related entities, and representatives with respect to all matters arising out of or related to Executive's employment by the Company, or the termination thereof (the "Release"), (ii) complies with the terms and conditions of the Release, including, without limitation, any return of property, non - disparagement , and confidentiality provisions contained therein , and (iii) complies with the terms and conditions of Sections 4, 5, 6, and 7 below, Executive will be entitled to receive the following payments (collectively, the " Severance "):

(i) Executive shall receive severance in an amount equal to (A) two (2) months of Executive's then current annual Base Salary per each completed year of service, with a minimum of six (6) months' Base Salary and a maximum of twelve (12) months' Base Salary (such period, the " Severance Period '') plus (B) the Executive's target Annual Bonus for the

fiscal year in which Executive's employment is terminated in an amount equal to forty percent (40%) of Executive's then-current Base Salary prorated based on the number of days Executive is employed during such fiscal year. The severance amount shall be paid in separate substantially equal bi-weekly installments over the Severance Period, consistent with the Company's regularly

scheduled payroll, subject to Section 2.1 ( c )(iii) below, until the severance has been paid in full. Any outstanding unvested equity, RSUs (time-based only) and Options will also vest immediately.

(ii) The Company shall, for the duration of the Severance Period, pay Executive each month an amount equal to the monthly COBRA medical insurance cost under the Company's medical plan for Executive, and, where applicable, his spouse and eligible dependents, less an amount equal to the required monthly employee payment for such coverage

calculated as if Executive had continued to be an employee of the Company throughout such period. Notwithstanding the foregoing, payments specified under this Section 2.1(c)(ii) shall cease if the Company's statutory obligation to provide such COBRA healthcare continuation coverage terminates for any reason before the expiration of the Severance Period, including but not limited to Executive's failure to timely elect continuation coverage under COBRA.

(iii) Except as otherwise required by Section 2.10, the benefits described in subsections (i) and (ii) above shall begin within sixty (60) days after Executive's termination date, provided Executive has timely executed and not revoked the Release within such sixty (60) day period; and provided that notwithstanding any provision of this Agreement to the contrary, in no event shall the timing of Executive's execution of the Release, directly or indirectly, result in Executive designating the calendar year of payment, and if a payment that is "deferred compensation" as defined under Section 409A of the Code is subject to execution of the Release could be made in more than one taxable year, payment shall be made in the later taxable year.

The Company shall provide the Release to Executive on or before the termination date, and Executive shall execute the Release during the time period permitted by applicable law.

(d) Executive agrees and acknowledges that the Severance provided to Executive pursuant to Section 2.1 (c) is in lieu of, and not in addition to, any benefits to which Executive may otherwise be entitled under any Company severance plan, policy, or program.

(e) Executive agrees and acknowledges that if Executive fails to comply with Section 4, 5, 6 or 7 below, all payments under Section 2.l(c) shall immediately cease and Executive shall be required to repay immediately any Severance previously paid by the Company thereunder.

2.2 Termination Without Cause or Resignation for Good Reason After a Change of Control .

(a) If a Change of Control (as defined below) occurs and, during the one-year period commencing on the date of the Change of Control, the Company terminates Executive's employment without Cause or Executive resigns for Good Reason (as defined in, and in accordance with the notice provisions set forth in Section 2.9), this Section 2.2 shall apply in lieu of Section 2 . 1. The Company shall have the discretion to terminate Executive's employment during the notice period and pay continued Base Salary in lieu of notice.

(b) Upon termination under this Section 2.2, Executive shall receive the Guaranteed Payments. With the exception of unreimbursed business expenses, which shall be paid in accordance with Company policy, Executive will be paid the Guaranteed Payments on the Company's first payroll date after Executive's date of termination from employment, or earlier if required by applicable law.

(c) If Executive's employment terminates as described in Section 2.2(a) above and if, upon such termination, Executive (i) executes and does not revoke a Release (as defined in Section 2.1(c) above), (ii) complies with the terms and conditions of the Release, including, without limitation, any return of property, non-disparagement, and confidentiality provisions contained therein, and (iii) complies with the terms and conditions of Sections 4, 5, 6, and 7 below, Executive shall be entitled to receive the following payments (collectively, the " Change of Control Severance "):

(i) Executive shall receive severance in an amount equal to (A) four (4) months of Executive's then current annual Base Salary per each completed year of service, with a minimum of twelve (12) months' Base Salary and a maximum of twenty-four (24) months' Base Salary, plus (B) Executive's target Annual Bonus for the fiscal year in which Executive's employment is terminated in an amount equal to forty percent (40%) of Executive's then current annual Base Salary prorated based on the number of days Executive is employed during such fiscal year. The severance amount shall be paid in a single lump-sum payment, consistent with the Company's regularly scheduled payroll, subject to Section 2.2(c)(iii) below. Any outstanding unvested equity, RSUs (time-based only) and Options will also vest immediately.

(ii) The Company shall, for a period of twelve (12) months following the date of Executive's termination of employment (the " COBRA period ''), pay Executive each month an amount equal to the monthly COBRA medical insurance cost under the Company's medical plan for Executive, and, where applicable, his spouse and eligible dependents, less an amount equal to the required monthly employee payment for such coverage calculated as if Executive had continued to be an employee of the Company throughout such period. Notwithstanding the foregoing, payments specified under this Section 2.2(c)(ii) shall cease if the Company's statutory obligation to provide such COBRA healthcare continuation coverage terminates for any reason before the expiration of the COBRA period, including but not limited to Executive's failure to timely elect continuation coverage under COBRA.

in no event shall the timing of Executive's execution of the Release, directly or indirectly, result in Executive designating the calendar year of payment, and if a payment that is "deferred compensation" as defined under Section 409A of the Code is subject to execution of the Release could be made in more than one taxable year, payment shall be made in the later taxable year. The Company shall provide the Release to Executive on or before the termination date, and Executive shall execute the Release during the time period permitted by applicable law.

(d) Executive agrees and acknowledges that the Change of Control Severance provided to Executive pursuant to Section 2.2( c) is in lieu of, and not in addition to, any benefits to which Executive may otherwise be entitled under any Company severance plan, policy, or program.

(e) Executive agrees and acknowledges that if Executive fails to comply with Section 4, 5, 6 or 7 below, all payments under Section 2.2(c) shall immediately cease and Executive shall be required to repay immediately any Change of Control Severance previously paid by the Company thereunder.

2.3 Voluntary Termination . Executive may voluntarily terminate Executive's employment for any reason upon thirty (30) days' prior written notice. In such event, after the effective date of such termination, Executive will not receive the Severance or the Change of Control Severance any other severance compensation or benefits, except that the Company shall pay to Executive the Guaranteed Payments.

2.4 Termination by Reason of Disability . Subject to applicable state and federal law, the Company may terminate Executive's employment if Executive has been unable to perform the material duties of Executive's position for a period of ninety (90) days in the aggregate during any twelve (12) month period because of physical or mental injury or illness (" Disability "). Notwithstanding the foregoing, the Executive shall be deemed terminated for Disability if the Executive is disabled for a period of twelve (12) months. Executive agrees, in the event of a dispute under this Section 2.4 relating to Executive's Disability, to submit to a physical examination by a licensed physician jointly selected by the Board and Executive. If the Company terminates Executive's employment for Disability, Executive will not receive the Severance, the Change of Control Severance or any other severance compensation or benefits, except that the Company shall pay to Executive the Guaranteed Payments.

2.5 Termination by Reason of Death . If Executive dies while employed by the Company, all obligations of the Parties hereunder shall terminate immediately. Executive will not receive the Severance, the Change of Control Severance or any other severance compensation or benefits, except that the Company shall pay to Executive's executor, legal representative, administrator or designated beneficiary, as applicable, the Guaranteed Payments.

2.6 Cause . The Company may terminate Executive's employment at any time for Cause (as defined in Section 2.9) upon written notice to Executive, in which event all payments under this Agreement shall cease. Executive will not receive the Severance, the Change of Control Severance or any other severance compensation or benefits, except that the Company shall pay to Executive the Guaranteed Payments.

2.7 Notice of Termination . Any termination of Executive's employment shall be communicated by a written notice of termination to the other party hereto given in accordance with Section 11. The notice of termination shall (a) indicate the specific termination provision in this Agreement relied upon, (b) briefly summarize the facts and circumstances deemed to provide a basis for a termination of employment and the applicable provision hereof, and (c) specify the termination date in accordance with the requirements of this Agreement.

2.8 Cooperation with the Company After Termination . Following termination of Executive's employment for any reason, Executive agrees to cooperate with the Company in (a) all matters relating to the winding up of Executive's pending work and the order! y transfer of any such pending work to such other employees as may be designated by the Company; (b) responding to requests by the Company for information concerning work performed by Executive during the period of Executive's employment with the Company and with regard to any matters which relate to or arise out of the business of the Company during the period of his employment and about which Executive may have knowledge, (c) any investigation or review which may be performed by the Company or any government authority or in any litigation in which the Company may become involved. The Company will reimburse Executive for any reasonable travel and out of pocket expenses incurred by Executive in providing such cooperation.

2.9 Definitions .

(a) " Cause " shall mean any of the following grounds for termination of Executive's employment:

(i) Executive has been convicted of a felony or enters a plea of guilty or nolo contendere with respect thereto;

(ii) Executive fails to perform Executive's reasonably assigned duties for the Company (other than a failure resulting from Executive's incapacity due to physical or mental illness), which failure has continued for a period of at least thirty (30) days after a written notice of demand for substantial performance, signed by a duly authorized officer of the Company, has been delivered to Executive specifying the manner in which Executive has failed substantially to perform;

(iii) Executive causes material damage to the property of the Company;

(iv) Executive engages in conduct that is harmful to the public reputation of the Company, including but not limited to any act of dishonesty, fraud, or immoral or disreputable conduct;

(v) Executive engages in willful misconduct in the performance of Executive's duties; or

(vi) Executive materially breaches any covenant or condition of this Agreement (including Sections 4, 5, 6 or 7 below) or any other agreement between the Parties, or breaches Executive's fiduciary duty to the Company.

(b) " Change of Control ' shall mean:

(i) A merger, consolidation or reorganization approved by the Company's stockholders, unless securities representing more than fifty percent (50%) of the total and combined voting power of the outstanding voting securities of the successor corporation are immediately thereafter beneficially owned, directly or indirectly, by the persons who beneficially owned the Company's outstanding voting securities immediately prior to such transaction; or (ii) The sale, transfer or other disposition of all or substantially all of the Company's assets as an entirety or substantially as an entirety, occurring within a twelve (12) month period, and representing, at a minimum, not less than forty percent ( 40%) of the total gross fair market value of all assets of the Company, to any person, entity, or group of persons acting in consort, other than a sale, transfer or disposition to: (A) a stockholder of the Company in exchange for or with respect to its stock; (B) an entity, fifty percent (50%) or more of the total value or voting power of which is owned, directly or indirectly, by the Company; (C) a person, or more than one person acting as a group, that owns, directly or indirectly, fifty percent (50%) or more of the total value or voting power of the outstanding stock of the Company; or (D) an entity, at least fifty percent (50%) of the total value or voting power of which is owned by a person described in (C); or

(iii) Any transaction or series of related transactions pursuant to which any person or any group of persons comprising a "group" within the meaning of Rule 13d-5(b )(1) under the Securities Exchange Act of 1934, as amended (other than the Company or a person that, prior to such transaction or series of related transactions, directly or indirectly controls, is controlled by or is under common control with, the Company) becomes directly or indirectly the beneficial owner (within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as amended) of securities possessing (or convertible into or exercisable for securities possessing) more than fifty percent (50%) of the total combined voting power of the Company's securities outstanding immediately after the consummation of such transaction or series of related transactions, whether such transaction involves a direct issuance from the Company or the acquisition of outstanding securities held by one or more of the Company's stockholders. A transaction shall not constitute a Change of Control if its sole purpose is to change the state of the Company's incorporation or to create a holding company that will be owned in the same proportions by the persons who held the Company's securities immediately before such transaction.

(c) " Good Reason " shall mean the occurrence of any of the following events or conditions, unless Executive has expressly consented in writing thereto, or except as a result of Executive's physical or mental incapacity or as described in the last sentence of this subsection (c):

(i) A material reduction in Executive's Base Salary;

(ii) The material diminution of the Executive's duties, responsibilities, powers or authorities, including the assignment of any duties and responsibilities inconsistent with his position as Chief Business Officer, provided that Good Reason shall not exist under this clause (iii) if such material diminution of authority, duties and responsibilities is a result of: (1) the hiring of additional subordinates to fill some of Executive's duties and responsibilities, (2) any disposition or sale of any subsidiary of business of the Company, or (3) the Executive's prior written consent;

(iii) The Company requires that Executive's principal office location be moved to a location more than fifty (50) miles from Executive's principal office location immediately before the change without the Executive's prior consent;

(iv) A material breach by the Company of this Agreement

In addition, for purposes of this Agreement, Executive shall not have Good Reason for termination unless (i) the Executive reasonably determines in good faith that a "Good Reason" condition has occurred; (ii) the Executive notifies the Company in writing of the occurrence of the Good Reason condition within 60 days of such occurrence; (iii) the Executive cooperates in good faith with the Company's efforts, for a period not less than 30 days following such notice (the " Cure Period' '), to remedy the condition; (iv) notwithstanding such efforts, the Good Reason condition continues to exist; and (v) the Executive terminates his employment within 60 days after the end of the Cure Period. If the Company cures the Good Reason event during the Cure Period, Good Reason shall be deemed not to have occurred.

2.10 Required Postponement for Specified Executives. If Executive is considered a Specified Executive (as defined under Section 409A) and payment of any amounts under this Agreement is required to be delayed for a period of six months after separation from service pursuant to Section 409A of the Code, payment of such amounts shall be delayed as required by Section 409A of the Code, and the accumulated postponed amounts, shall be paid in a lump sum payment within five (5) days after the end of the six-month period. If Executive dies during the postponement period prior to the payment of benefits, the amounts

postponed on account of Section 409A of the Code, shall be paid to the personal representative of Executive's estate within sixty (60) days after the date of Executive's death.

3. Non-Exclusivity of Rights . Nothing in this Agreement shall prevent or limit Executive's continuing or future participation in or rights under any benefit, bonus, incentive or other plan or program provided by the Company and for which Executive may qualify; provided, however, that if Executive becomes entitled to and receives any payments provided for in

Section 2 of this Agreement, Executive hereby waives Executive's right to receive payments under any severance plan or similar program applicable to all employees of the Company.

4. Confidentiality . Executive agrees that Executive's services to the Company were and are of a special, unique and extraordinary character, and that Executive's position places Executive in a position of confidence and trust with the Company's customers and employees. Executive also recognizes that Executive's position with the Company will give Executive substantial access to Confidential Information (as defined below), the disclosure of which to competitors of the Company would cause the Company to suffer substantial and irreparable damage. Executive recognizes, therefore, that it is in the Company's legitimate business interest to restrict Executive's use of Confidential Information for any purposes other than the discharge of Executive's employment duties at the Company, and to limit any potential appropriation of Confidential Information by Executive for the benefit of the Company's competitors and/or to the detriment of the Company. Accordingly, Executive agrees as follows:

(a) Executive will not at any time, whether during or after the termination of Executive's employment for any reason, reveal to any person or entity any of the trade secrets or confidential information of the Company or of any third party which the Company is under an obligation to keep confidential (including but not limited to trade secrets or confidential information respecting inventions, products, designs, methods, know-how, techniques, systems, processes, software programs, works of authorship, customer lists, projects, plans and proposals) ("Confidential Information"), except as may be required in the ordinary course of performing Executive's duties as an employee of the Company, and Executive shall keep secret all matters entrusted to Executive and shall not use or attempt to use any such information in any manner which may injure or cause loss or may be calculated to injure or cause loss whether directly or indirectly to the Company.

(b) The above restrictions shall not apply to: (i) information that at the time of disclosure is in the public domain through no fault of Executive; (ii) information received from a third party outside of the Company that was disclosed without a breach of any confidentiality obligation; (iii) information approved for release by written authorization of the Company; or (iv) information that may be required by law or an order of any court, agency or proceeding to be disclosed; provided Executive shall provide the Company prior written notice of any such required disclosure once Executive has knowledge of it and will help the Company to the extent reasonable to obtain an appropriate protective order. Moreover, the foregoing shall not limit Executive's ability to (i) to discuss the terms of Executive's employment, wages and working conditions to the extent expressly protected by applicable law, (ii) to report possible violations of federal securities laws to the appropriate government enforcing agency and make such other disclosures that are expressly protected under such laws, or (iii) to respond to inquiries from, or otherwise cooperate with, any governmental or regulatory investigation.

(c) Executive agrees that during Executive's employment Executive shall not take, use or permit to be used any notes, memoranda, reports, lists, records, drawings, sketches, specifications, software programs, data, documentation or other materials of any nature relating to any matter within the scope of the business of the Company or concerning any of its dealings

or affairs otherwise than for the benefit of the Company. Executive further agrees that Executive shall not, after the termination of Executive's employment for any reason, use or permit to be used any such notes, memoranda, reports, lists, records, drawings, sketches, specifications, software programs, data, documentation or other materials, it being agreed that all of the foregoing shall be and remain the sole and exclusive property of the Company and that, immediately upon the termination of Executive's employment for any reason, Executive shall deliver all of the foregoing, and all copies thereof, to the Company, at its main office.

(d) Executive agrees that upon the termination of Executive's employment with the Company for any reason, Executive will not take or retain without written authorization any documents, files or other property of the Company, and Executive will return promptly to the Company any such documents, files or property in Executive's possession or custody, including any copies thereof maintained in any medium or format. Executive recognizes that all documents, files and property which Executive has received and will receive from the Company, including but not limited to scientific research, customer lists, handbooks, memoranda, product specifications, and other materials (with the exception of documents relating to benefits to which Executive might be entitled following the termination of Executive's employment with the Company), are for the exclusive use of the Company and employees who are discharging their responsibilities on behalf of the Company, and that Executive has no claim or right to the continued use, possession or custody of such documents, files or property following the termination of Executive's employment with the Company for any reason.

(e) Pursuant to the Defend Trade Secrets Act of 2016, Executive acknowledges that Executive will not have criminal or civil liability under any Federal or State trade secret law for the disclosure of a trade secret that (i) is made (A) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney and (B) solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. In addition, if Executive files a lawsuit for alleged retaliation by the Company for reporting a suspected violation of law, Executive may disclose the trade secret to his attorney and may use the trade secret information in the court proceeding, if Executive (i) files any document containing the trade secret under seal and (ii) does not disclose the trade secret, except pursuant to court order.

5. Intellectual Property .

(a) If at any time or times during Executive's employment Executive shall (either alone or with others) make, conceive, discover or reduce to practice any invention, modification, discovery, design, development, improvement, process, software program, work of authorship, documentation, formula, data, technique, know-how, secret or intellectual property right

whatsoever or any interest therein (whether or not patentable or registrable under copyright or similar statutes or subject to analogous protection) (herein called "Developments") that (i) relates to the business of the Company or any customer of or supplier to the Company or any of the products or services being developed, manufactured or sold by the Company or which may be used in relation therewith, (ii) results from tasks assigned to Executive by the Company or (iii) results from the use of premises or personal property (whether tangible or intangible) owned, leased or contracted for by the Company, such Developments and the benefits thereof shall immediately become the sole and absolute property of the Company and its assigns, and Executive shall promptly disclose to the Company (or any persons designated by it) each such Development, and Executive hereby assigns any rights Executive may have or acquire in the Developments and benefits and/or rights resulting therefrom to the Company and its assigns

without further compensation and shall communicate, without cost or delay, and without publishing the same, all available information relating thereto (with all necessary plans and models) to the Company.

(b) Upon disclosure of each Development to the Company, Executive will, during Executive's employment and at any time thereafter, at the request and cost of the Company, sign, execute, make and do all such deeds, documents, acts and things as the Company and its duly authorized agents may reasonably require:

(i) to apply for, obtain and vest in the name of the Company alone (unless the Company otherwise directs) letters patent, copyrights or other analogous protection in any country throughout the world and when so obtained or vested to renew and restore the same; and

(ii) to defend any opposition proceedings in respect of such applications and any opposition proceedings or petitions or applications for revocation of such letters patent, copyright or other analogous protection.

(c) In the event the Company is unable, after reasonable effort, to secure Executive's signature on any letters patent, copyright or other analogous protection relating to a Development, whether because of Executive's physical or mental incapacity or for any other reason whatsoever, Executive hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as Executive's agent and attorney-in-fact for the sole purpose of acting for and on Executive's behalf and stead to execute and file any such application or applications and to do all other lawfully permitted acts to further the prosecution and issuance of letter patents, copyright and other analogous protection thereon with the same legal force and effect as if executed by Executive.

6. Non-Competition . While Executive is employed at the Company and for a period of twelve (12) months after termination of Executive's employment (for any reason whatsoever, whether voluntary or involuntary) (the " Non-Competition Period '), Executive will not, without the prior written approval of the Board, whether alone or as a partner, officer, director, consultant, agent, employee or stockholder of any company or other commercial enterprise, directly or indirectly engage in any business or other activity in the United States or Canada which competes with the Company in the field of therapeutic antibodies for cancer.

Notwithstanding the foregoing, if Executive is considering an employment, consulting, investment, ownership or other opportunity within the Non-Competition Period that does not involve the field of therapeutic antibody-drug conjugates for cancer, Executive may contact the Company to seek a limited waiver of his restrictions to accept such employment or other opportunity, and the Company will evaluate any such waiver requests in good faith based upon its then-current and/or anticipated business and activities. The foregoing prohibition shall not prevent Executive's employment or engagement after termination of Executive's employment by any company or business organization, as long as the activities of any such employment or engagement, in any capacity, do not involve work on matters related to the products being developed, manufactured, or marketed by the Company during Executive's employment with the Company. Executive shall be permitted to own securities of a public company not in excess of five percent of any class of such securities and to own stock, partnership interests or other securities of any entity not in excess of five percent of any class of such securities and such ownership shall not be considered to be in competition with the Company.

7. Non-Solicitation . While Executive is employed at the Company and for a period of twelve (12) months after termination of such employment (for any reason, whether voluntary or involuntary), Executive agrees that Executive will not:

(a) directly or indirectly solicit, entice or induce, or attempt to solicit, entice or induce, any customer, vendor, supplier, or business development partner to become a customer, vendor, supplier, or business development partner of any other person, firm or corporation with respect to products then sold or under development by the Company or to cease doing business

with the Company, and Executive shall not approach any such person, firm or corporation for such purpose or authorize or knowingly approve the taking of such actions by any other person; or

(b) directly or indirectly solicit or recruit, or attempt to solicit or recruit, any employee, consultant or independent contractor of the Company to terminate employment or otherwise cease providing services to the Company or to work for a third party other than the Company, and Executive shall not approach any such person for such purpose or authorize or knowingly approve the taking of such actions by any other person.

8 . General Provisions .

(a) Executive acknowledges and agrees that the type and periods of restrictions imposed in Sections 4, 5, 6 and 7 of this Agreement are fair and reasonable, and that such restrictions are intended solely to protect the legitimate interests of the Company, rather than to prevent Executive from earning a livelihood . Executive recognizes that the Company competes worldwide, and that Executive's access to Confidential Information makes it necessary for the Company to restrict Executive's post-employment activities in any market in which the Company competes, and in which Executive's access to Confidential Information and other

proprietary information could be used to the detriment of the Company. In the event that any restriction set forth in this Agreement is determined to be overbroad with respect to scope, time or geographical coverage, Executive agrees that such a restriction or restrictions should be modified and narrowed, either by a court or by the Company, so as to preserve and protect the legitimate interests of the Company as described in this Agreement, and without negating or impairing any other restrictions or agreements set forth herein.

(b) Executive acknowledges and agrees that if Executive should breach any of the covenants, restrictions and agreements contained herein, irreparable loss and injury would result to the Company, and that damages arising out of such a breach may be difficult to ascertain. Executive therefore agrees that, in addition to all other remedies provided at law or at equity, the Company shall be entitled to have the covenants, restrictions and agreements contained in Sections 4, 5, 6, and 7 specifically enforced (including, without limitation, by temporary, preliminary, and permanent injunctions and restraining orders) by any state or federal court in the State of New Jersey having equity jurisdiction and Executive agrees to subject Executive to the jurisdiction of such court.

(c) Executive agrees that if the Company fails to take action to remedy any breach by Executive of this Agreement or any portion of the Agreement, such inaction by the Company shall not operate or be construed as a waiver of any subsequent breach by Executive of the same or any other provision, agreement or covenant.

(d) Executive acknowledges and agrees that the payments and benefits to be provided to Executive under this Agreement are provided as consideration for the covenants in Sections 4, 5, 6, and 7 hereof.

9. No Conflict with Existing Obligations . Executive represents and warrants that Executive has disclosed to the Company any and all prior nondisclosure, confidentiality, noncompetition, non-solicitation or other similar obligations and/or restrictive covenants to or with any prior employer, entity, or other person (together, the " Prior Restrictive Covenants "), and that no Prior Restrictive Covenant prohibits, restricts, limits or otherwise affects Executive's employment with the Company as an executive or ability to perform any of Executive's duties or responsibilities for the Company. Executive agrees that Executive will not enter into, any agreement or obligation, either written or oral, in conflict herewith.

10. Survivorship . The respective rights and obligations of the parties under this Agreement shall survive any termination of Executive's employment to the extent necessary to the intended preservation of such rights and obligations.

11. Notices . All notices and other communications required or permitted under this Agreement or necessary or convenient in connection herewith shall be in writing and shall be deemed to have been given when hand delivered or mailed by registered or certified mail, as follows (provided that notice of change of address shall be deemed given only when received):

If to the Company, to:

Immunomedics, Inc.

300 The American Road

Morris Plains, NJ 07950

If to Executive, to:

Usama Malik

1541 6th St. NW #2

Washington, DC 20001

or to such other names or addresses as the Company or Executive, as the case may be, shall designate by notice to each other person entitled to receive notices in the manner specified in this Section.

12. Contents of Agreement: Amendment and Assignment .

(a) This Agreement sets forth the entire understanding between the parties hereto with respect to the subject matter hereof and supersedes any and all prior agreements, including the Consulting Agreement, and understandings concerning Executive's employment by the Company and cannot be changed, modified, extended or terminated except upon written amendment approved by the Board and executed on its behalf by a duly authorized officer and by Executive.

(b) All of the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective heirs, executors, administrators, legal representatives, successors and assigns of the parties hereto, except that the duties and responsibilities of Executive under this Agreement are of a personal nature and shall not be assignable or delegatable in whole or in part by Executive. The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation, reorganization or otherwise) to all or substantially all of the business or assets of the Company, within 15 days of such succession, expressly to assume and agree to perform this Agreement in the same manner and to the same extent as the Company would be required to perform if no such succession had taken place.

13. Severability . If any provision of this Agreement or application thereof to anyone or under any circumstances is adjudicated to be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect any other provision or application of this Agreement which can be given effect without the invalid or unenforceable provision or application and shall not invalidate or render unenforceable such provision or application in any other jurisdiction. If any provision is held void, invalid or unenforceable with respect to particular circumstances, it shall nevertheless remain in full force and effect in all other circumstances.

14. Remedies Cumulative; No Waiver . No remedy conferred upon a party by this Agreement is intended to be exclusive of any other remedy, and each and every such remedy shall be cumulative and shall be in addition to any other remedy given under this Agreement or now or hereafter existing at law or in equity. No delay or omission by a party in exercising any right, remedy or power under this Agreement or existing at law or in equity shall be construed as a waiver thereof, and any such right, remedy or power may be exercised by such party from time to time and as often as may be deemed expedient or necessary by such party in its sole discretion.

15. Withholding . All payments under this Agreement shall be made subject to applicable tax withholding, and the Company shall withhold from any payments under this Agreement all federal, state and local taxes as the Company is required to withhold pursuant to any law or governmental rule or regulation . Executive shall bear all expense of, and be solely responsible for, all federal, state and local taxes due with respect to any payment received under this Agreement.

16. Counterparts . This Agreement may be executed in counterparts, each of which is an original. It shall not be necessary in making proof of this Agreement or any counterpart hereof to produce or account for any of the other counterparts. Facsimile signatures and signatures transmitted by PDF shall be equivalent to original signatures.

17. Governing Law; Jurisdiction . This Agreement shall be governed by and interpreted under the laws of the State of New Jersey without giving effect to any conflict of laws provisions or canons of construction that construe agreements against the draftsperson. Each Party hereby irrevocably submits to the exclusive jurisdiction of the United States District Court located in New Jersey or any state court located within such state, in respect of any claim arising out of or relating to this Agreement, and hereby waives, and agrees not to assert, as a defense in any action, suit or proceeding in which any such claim is made that it is not subject thereto or that such action, suit or proceeding may not be brought or is not maintainable in such courts or that the venue

thereof may not be appropriate or that this Agreement may not be enforced in or by such courts. Any appellate proceedings shall take place in the appropriate courts having appellate jurisdiction over the courts set forth in this Section.

18. Section 409A of the Code . This Agreement is intended to comply with or otherwise be exempt from Section 409A of the Code and its corresponding regulations, to the extent applicable, and shall be so construed. Notwithstanding anything in this Agreement to the contrary, payments may only be made under this Agreement upon an event and in a manner permitted by Section 409A of the Code, to the extent applicable. For purposes of Section 409A of the Code, all payments to be made upon the termination of the Executive's employment under this Agreement may only be made upon a "separation from service" under Section 409A of the Code. Each payment made under this Agreement shall be treated as a separate payment and the right to a series of installment payments under this Agreement is to be treated as a right to a series of separate payments. In no event shall Executive, directly or indirectly, designate the calendar year of payment, with respect to any amount that is "deferred compensation" under

Section 409A. All reimbursements provided under this Agreement shall be made or provided in accordance with Section 409A of the Code, including, where applicable, the requirement that (a) any reimbursement is for expenses incurred during the period of Executive's employment with the Company (or during such other time period specified in this Agreement), (b) the amount of

expenses eligible for reimbursement during a calendar year may not affect the expenses eligible for reimbursement in any other calendar year, (c) the reimbursement of an eligible expense will be made on or before the last day of the taxable year following the year in which the expense is incurred, and (d) the right to reimbursement is not subject to liquidation or exchange for another

benefit. Nothing herein shall be construed as having modified the time and form of payment of any amounts or payments of"deferred compensation" within the meaning Section 409A of the Code that were otherwise payable pursuant to the terms of any agreement between Company and the Executive in effect prior to the date of this Agreement.

19. Section 2800 of the Code . Notwithstanding any other provision of this Agreement or any other plan, arrangement or agreement to the contrary, if any of the payments or benefits provided or to be provided by the Company or its affiliates to the Executive or for the Executive's benefit pursuant to the terms of this Agreement or otherwise (" Covered Payments ") constitute parachute payments (" Parachute Payments ") within the meaning of Section 2800 of the Code and would, but for this Section 19 would be subject to the excise tax imposed under Section 4999 of the Code (or any successor provision thereto) or any similar tax imposed by state or local law or any interest or penalties with respect to such taxes (collectively, the " Excise Tax "), then prior to making the Covered Payments, a calculation shall be made comparing (i) the Net Benefit (as defined below) to the Executive of the Covered Payments after payment of the Excise Tax to (ii) the Net Benefit to the Executive if the Covered Payments are limited to the extent necessary to avoid being subject to the Excise Tax. Only if the amount calculated under (i) above is less than the amount under (ii) above will the Covered Payments be reduced to the minimum extent necessary to ensure that no portion of the Covered Payments is subject to the Excise Tax (that amount, the " Reduced Amount "). " Net Benefit " shall mean the present value of the Covered Payments net of all federal, state, local, foreign income, employment and excise taxes.

(a) Any such reduction shall be made in accordance with Section 409A of the Code and the following:

(i) the Covered Payments which do not constitute nonqualified deferred compensation subject to Section 409A of the Code shall be reduced first; and

(ii) all other Covered Payments shall then be reduced as follows: (A) cash payments shall be reduced before non-cash payments; and (B) payments to be made on a later payment date shall be reduced before payments to be made on an earlier payment date.

(b) Any determination required under this Section 19 shall be made in writing in good faith by the accounting firm that was the Company's independent auditor immediately before the change in control an independent accounting firm selected by the Company / an independent accounting firm selected by the Company that is reasonably acceptable to the Executive (the " Accountants "). The Company and the Executive shall provide the Accountants with such information and documents as the Accountants may reasonably request in order to make a determination under this Section 19. For purposes of making the calculations and determinations required by this Section 19, the Accountants may rely on reasonable, good faith assumptions and approximations concerning the application of Section 280G and Section 4999 of the Code. The Accountants' determinations shall be final and binding on the Company and the Executive. The Company shall be responsible for all fees and expenses incurred by the Accountants in connection with the calculations required by this Section 19.

(c) It is possible that after the determinations and selections made pursuant to this Section 19 the Executive will receive Covered Payments that are in the aggregate more than the amount provided under this Section 19 (" Overpayment ") or less than the amount provided under this Section 19 (" Underpayment ").

(i) In the event that: (A) the Accountants determine, based upon the assertion of a deficiency by the Internal Revenue Service against either the Company or the Executive which the Accountants believe has a high probability of

success, that an Overpayment has been made or (B) it is established pursuant to a final determination of a court or an Internal Revenue Service proceeding that has been finally and conclusively resolved that an Overpayment has been made, then the Executive shall pay any such Overpayment to the Company together with interest at the applicable federal rate (as defined in Section 7872(f)(2)(A) of the Code) from the date of the Executive's receipt of the Overpayment until the date of repayment.

(ii) In the event that: (A) the Accountants, based upon controlling precedent or substantial authority, determine that an Underpayment has occurred or (B) a court of competent jurisdiction determines that an Underpayment has occurred, any such Underpayment will be paid promptly by the Company to or for the benefit of the Executive together with interest at the applicable federal rate (as defined in Section 7872(f)(2)(A) of the Code) from the date the amount would have otherwise been paid to the Executive until the payment date.

[Signature Page Follows]

IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have executed this Agreement as of the date first above written.

IMMU N OMEDICS , INC.

By: /s/Michael R. Garone

Michael R. Garone

Title: VP Finance and Chief Financial Officer

EXECUTIVE

/s/Usama Malik

Usama Malik

Exhibit 31.1

CERTIFICATION

I, Usama Malik, Principal Executive Officer of Immunomedics, Inc., certify that:

1. I have reviewed this quarterly report of Immunomedics, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 9, 2019



/s/ Usama Malik
Usama Malik
Principal Executive Officer

Exhibit 31.2

CERTIFICATION

I, Usama Malik, Principal Financial Officer of Immunomedics, Inc. certify that:

1. I have reviewed this quarterly report of Immunomedics, Inc.;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 9, 2019



/s/ Usama Malik
Usama Malik
Principal Financial Officer

Exhibit 32.1

Certification

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), the undersigned officer of Immunomedics, Inc., a Delaware corporation (the “Company”), does hereby certify, to such officer’s knowledge, that:

The Form 10-Q for the quarter ended March 31, 2019, (the “Form 10-Q”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.





Dated: May 9, 2019	/s/ Usama Malik
	Usama Malik
	Principal Executive Officer and Principal Financial Officer
	Principal Executive Officer and Principal Financial Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.