Annual Reports

  • 10-K (Sep 18, 2017)
  • 10-K (Aug 16, 2017)
  • 10-K (Oct 4, 2016)
  • 10-K (Aug 18, 2016)
  • 10-K (Aug 19, 2015)
  • 10-K (Aug 25, 2014)

 
Quarterly Reports

 
8-K

 
Other

Immunomedics 10-K 2017

Documents found in this filing:

  1. 10-K/A
  2. Ex-10.1
  3. Ex-31.1
  4. Ex-31.2
  5. Ex-31.2

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 


 

FORM 10-K/A

 

(Mark one)

 

x      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended June 30, 2017.

 

or

 

o         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

 

61-1009366

(State of incorporation)

 

(I.R.S. Employer Identification No.)

 

 

 

300 The American Road, Morris Plains, New Jersey

 

07950

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code: (973) 605-8200

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Name of each exchange on which registered

Common Stock, $0.01 par value

 

NASDAQ Stock Market LLC

 

Securities registered pursuant to Section 12(g) of the Act:

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes  o  No  x

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes  o  No  x

 

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 requirement for the past 90 days.  Yes x  No o

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, 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 that the registrant was required to submit and post such files).  Yes x  No o

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§299.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

 

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

 

Large accelerated filer o

Accelerated filer x

Non-accelerated filer o

Smaller reporting company o

 

 

(Do not check if a
smaller reporting company)

Emerging growth company o

 

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 13(a) of the Exchange Act. o

 

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

 

The aggregate market value of the registrant’s common stock held by non-affiliates computed by reference to the price at which the common stock was last sold as of December 31, 2016 was $388,989,000. The number of shares of the registrant’s common stock outstanding as of August 31, 2017 was 134,485,188.

 

Documents Incorporated by Reference:

 

None.

 

In this Form 10-K/A, we use the words “Immunomedics, Inc.” to refer to Immunomedics, Inc., a Delaware corporation, and we use the words “Company,” “Immunomedics,” “Immunomedics, Inc.,” “we,” “us” and “our” to refer to Immunomedics, Inc. and its subsidiaries.

 

 

 



 

EXPLANATORY NOTE

 

In its Annual Report on Form 10-K for the year ended June 30, 2017, filed with the Securities and Exchange Commission (the “SEC”) on August 16, 2017 (the “Original Filing”), Immunomedics, Inc. provided certain information required by Items 10 through 14 of Part III of the Original Filing by incorporating by reference portions of the definitive proxy statement for the Company’s 2017 Annual Meeting of Stockholders, pursuant to General Instruction G of Form 10-K. The Company is filing this Amendment No. 1 on Form 10-K/A (“Amendment No. 1”) to timely provide such Part III information and to amend the section of the cover page captioned “Documents Incorporated by Reference” to read “None”. In accordance with Rule 12b-15 under the Securities Exchange Act of 1934, as amended (“Rule 12b-15”), the cover page, Part III and Part IV of the Original Filing have been amended and restated in their entirety.

 

This Amendment No. 1 also amends the Original Filing to re-file Exhibit 10.1 in response to comments received by the SEC regarding a request for confidential treatment of certain portions of such exhibit, which was originally filed as an exhibit to the Original Filing.

 

Except as otherwise noted, information included in this Amendment No. 1 is stated as of June 30, 2017 and does not reflect any subsequent information or events.

 

As required by Rule 12b-15, new certifications of our principal executive officer and principal financial officer are being filed as exhibits to this Amendment No. 1.

 

PART III

 

Item 10.     Directors, Executive Officers, and Corporate Governance

 

 

 

Dr. Behzad Aghazadeh

 

Principal occupation: Managing Partner and Portfolio Manager, venBio Select Advisor, LLC, a SEC registered investment manager, since 2011. Chairman of the Board of Directors, Immunomedics, Inc., since April 2017.

 

 

 

Age: 46

 

Prior business experience:

 

 

 

Director: Since March 2017

 

·      Partner and Senior Analyst at Sio Capital Management from 2009 to 2011.

 

 

 

Executive Committee

 

·                  Vice President and Senior Analyst at Bernstein Value Equities from 2006 to 2009.

 

 

 

 

 

·                  From 2000 to 2006, Dr. Aghazadeh was in the healthcare practice of Booz Allen (now a unit of PricewaterhouseCoopers), where he led major strategic and operational initiatives for pharmaceutical and biotechnology clients.

 

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Scott Canute

 

Principal occupation: Principal and Founder of Magis Consulting, LLC, since July 2012.

 

 

 

Age: 57

 

Prior business experience:

 

 

 

Director: Since March 2017

 

·                  President of Global Manufacturing and Corporate Operations of Genzyme from 2010 until 2011.

Executive Committee

 

 

Audit Committee

Compensation Committee (Chair)

 

·                  President, Global Manufacturing Operations of Eli Lilly and Company from 2004 to 2007.

Governance and Nominating Committee

Research & Development Committee

 

Public company directorships: Mr. Canute has served on the Boards of Directors of Akebia Therapeutics since August 2016, Proteon Therapeutics since July 2015, Flexion Therapeutics since March 2015, and Oncobiologics Inc. since October 2011. He previously served as a Technology Advisory Board Member of Moderna Therapeutics from August 2013 to January 2016. Mr. Canute also served on the Boards of Directors of Allocure, Inc. from October 2012 to October 2014 and Inspiration Biopharmaceuticals, Inc. from September 2012 to September 2013.

 

 

 

Dr. David M. Goldenberg

 

Principal occupation: Chief Scientific Officer and Chief Patent Officer, Immunomedics, Inc.

 

 

 

Age: 79

 

Prior business experience:

 

 

 

Director: Since 1982

 

·                  Founded Immunomedics, Inc. in 1982.

 

 

 

Research & Development Committee

 

·                  Served as Chairman of the Board of Directors of Immunomedics, Inc. from 1982 to 2017.

 

 

 

 

 

·                  Chief Executive Officer from July 1982 through July 1992; February 1994 through May 1998; and July 1999 through March 2001.

 

 

 

 

 

·                  Chief Strategic Officer from July 2003 through June 2007.

 

 

 

 

 

·                  Chief Scientific Officer from March 2001 through June 2003 and from July 2007 to present.

 

 

 

 

 

·                  Chief Medical Officer from July 2007 to December 2014.

 

 

 

 

 

·                  Chief Patent Officer from August 2015 to present.

 

 

 

 

 

·                  Served as the President and Trustee of the Center for Molecular Medicine and Immunology, an independent, non-profit research center from September 1983 to June 2015.

 

 

 

 

 

·                  Served as the President and Chief Executive Officer of the Garden State Cancer Center, a subsidiary of the Center for Molecular Medicine and Immunology, and a Trustee of the Garden State Cancer Center Foundation from July 1990 to June 2015.

 

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Peter Barton Hutt

 

Principal occupation: Senior Counsel of Covington & Burling, LLP, since 1975.

 

 

 

Age: 82

 

Prior business experience:

 

 

 

Director: Since March 2017

 

·      Chief Counsel for the Food and Drug Administration from 1971 to 1975.

 

 

 

Executive Committee

Compensation Committee

Governance and Nominating Committee (Chair)

 

Public company directorships: Mr. Hutt has served on the Boards of Directors of Flex Pharma, Inc. since 2014; Suneva Medical, Inc. since 2014; Seres Therapeutics, Inc. since 2013; Moderna Therapeutics, Inc. since 2012; Selecta Biosciences, Inc. since 2010; DNIB Unwind, Inc. since 2008; Concert Pharmaceuticals, Inc. since 2007; Living Proof, Inc. since 2007; Xoma Corporation since 2005; and Q Therapeutics, Inc. since 2002. He previously served on the Boards of Directors of DBV Technologies S.A. from 2009 to 2015; NanoMedical Systems, Inc. from 2007 to 2015; Pervasis Therapeutics, Inc. from 2004 to 2012; Ista Pharmaceuticals, Inc. from 2002 to 2012; and Momenta Pharmaceuticals, Inc. from 2001 to 2014.

 

 

 

Dr. Khalid Islam

 

Principal occupation: Managing Director of Life Sciences Management GmbH, since 2014; Co-Founder and Partner of Sirius Healthcare Partners GmbH, a Swiss life sciences company, in 2009; Founder of PrevABR LLC, an American clinical-stage therapeutics company, in 2010.

 

 

 

Age: 61

 

Prior business experience:

 

 

 

Director: Since March 2017

 

·                  Chairman and Chief Executive Officer of Gentium S.p.A., from 2009 until 2014.

 

 

 

Executive Committee (Chair)

 

·      Advisor to Kurma Biofund (Paris), a venture group.

Audit Committee (Chair)

 

 

Compensation Committee

 

·      President and Chief Executive Officer of Arpida AG.

Governance and Nominating Committee

 

 

Research & Development Committee (Chair)

 

Public company directorships: Dr. Islam has served as Chairman of the Boards of Directors of Minoryx Therapeutics since 2016 and Fennec Pharma, Inc. since 2014. He is a member of the Boards of Directors of Oxthera AB since 2014 and Karolinska Development since 2015. Dr. Islam previously served as Chairman of the Boards of Directors of PCovery Aps from 2011 to 2015 and C10 Pharma A/S from 2010 to 2014, and was a member of the Board of Directors of Molmed SpA from 2014 to 2016.

 

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Brian A. Markison

 

Principal occupation: Healthcare Industry Executive at Avista Capital Partners, a leading private equity firm, since September 2012.

 

 

 

Age: 58

 

Prior business experience:

 

 

 

Director: Since 2004

 

·                President and Chief Executive Officer of Fougera Pharmaceuticals Inc. from July 2011 to July 2012.

Executive Committee

 

 

Audit Committee

 

·                  President and Chief Executive Officer of King Pharmaceuticals, Inc. from 2004 to 2011.

 

 

 

 

 

·                  President of the Oncology, Virology and Oncology Therapeutics Network Businesses of Bristol-Myers Squibb from 2002 until 2004.

 

 

 

 

 

·                  From 1998 to 2001, Mr. Markison served variously as Senior Vice President, Neuroscience/Infectious Disease; President, Neuroscience/Infectious Disease/Dermatology; and Vice President, Operational Excellence and Productivity of Bristol-Myers Squibb.

 

 

 

 

 

Public company directorships: Mr. Markison has served as Chairman of the Board of Directors for Lantheus Medical Imaging, Inc., a global leader in developing, manufacturing and distributing innovative diagnostic imaging agents, since 2012, and has served as Chairman of the Board of Directors of Rosetta Genomics, Ltd., a leading developer of microRNA-based molecular diagnostics, since April 2011. He has also been a member of the Board of Directors of Alere Inc., a global leader in enabling individuals to take charge of their health at home through the merger of rapid diagnostics and health information solutions, since 2013, and of PharmAthene, Inc., a biodefense company developing medical countermeasures against biological and chemical threats, since September 2011. From July 2011 to July 2012, Mr. Markison served on the Board of Directors of Fougera Pharmaceuticals, Inc., a company created from the acquisition of Nycomed A/S by Takeda Pharmaceuticals, (which was acquired by Novartis AG, effective July 23, 2012).

 

 

 

Cynthia L. Sullivan

 

Principal occupation: Former President and Chief Executive Officer, Immunomedics, Inc.

 

 

 

Age: 61

 

Prior business experience:

 

 

 

Director: Since 2001

 

·      Joined Immunomedics, Inc. in 1985.

 

 

 

 

 

·                  Served as President and Chief Executive Officer of Immunomedics from March 2001 to June 2017.

 

 

 

 

 

·                  Previously served as President of Immunomedics, Inc. from December 2000 to March 2001; and as Executive Vice President and Chief Operating Officer from June 1999 to December 2000.

 

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Director Experience, Qualifications, Attributes and Skills

 

We believe that the backgrounds and qualifications of our directors considered as a group, provide a broad mix of experience, knowledge and abilities that will allow the Board of Directors to fulfill its responsibilities. Our Board of Directors is composed of a diverse group of leaders in their respective fields. Many of the current directors have leadership experience at major domestic and international companies with operations inside and outside the United States, as well as experience serving on other companies’ boards, which provides an understanding of different business processes, challenges and strategies facing boards and other companies. Certain of our directors have experience as senior management of pharmaceutical and biotechnology companies which brings unique perspectives to the Board of Directors. Further, our directors also have other experience that makes them valuable members, such as prior experience with financing transactions or mergers and acquisitions that provides insight into issues faced by companies.

 

The following highlights the specific experiences, qualifications, attributes and skills of our individual directors that have led our Governance and Nominating Committee to conclude that these individuals should serve on our Board of Directors:

 

Dr. Behzad Aghazadeh, our Chairman of the Board of Directors, is a Managing Partner and Portfolio Manager of the venBio Select Fund. He brings more than 20 years of experience in the biopharmaceutical industry, including more than 10 years as an institutional investor and previously six years at Booz Allen as a general management consultant to senior executive teams in the healthcare sector.

 

Scott Canute, has more than 34 years of experience in the biopharmaceutical industry, having served as President, Global Manufacturing and Corporate Operations at Genzyme Corporation and previously as President of Global Manufacturing Operations at Eli Lilly and Company.

 

Dr. David M. Goldenberg, our founder, brings over 50 years of research and development experience in the fields of oncology and immunology. Dr. Goldenberg, a pioneer in the development of radiolabeled antibodies for various applications in the detection, diagnosis and therapy of cancer, has received numerous professional awards and recognition from scientific bodies in the United States and around the world.

 

Peter Barton Hutt, is a renowned expert in food and drug law and currently serves as Senior Counsel at Covington & Burling LLP. He began his law practice with the firm in 1960 and has remained at the firm with the exception of serving as Chief Counsel for the Food and Drug Administration from 1971 until 1975. He has been recognized by The Washingtonian magazine as one of Washington’s 50 best lawyers and one of the 40 best health care lawyers in the U.S. by the National Law Journal.

 

Dr. Khalid Islam, has over 29 years of experience in the pharmaceutical and biotechnology industry and currently serves as the Managing Director of Life Sciences Management GmbH. He also co-founded Sirius Healthcare Partners, a Swiss life sciences company, and PrevABR LLC, an American clinical-stage therapeutics company. Dr. Islam also previously served as Chairman and CEO of Gentium S.p.A., a Nasdaq-listed pharmaceutical company.

 

Brian A. Markison, is a Healthcare Industry Executive at Avista Capital Partners, a leading private equity firm. He brings extensive research and development, manufacturing and sales experience in the pharmaceuticals and life sciences industries, Previously, he served as President, Chief Executive Officer and a member of the Board of Directors of Fougera Pharmaceuticals Inc., and as President, Chief Executive Officer and Chairman of the Board of Director of King Pharmaceuticals, Inc. Mr. Markison also serves as the Chairman of the Board of Directors for Lantheus Medical Imaging Inc. and Rosetta Genomics, Ltd., and as a Director for Alere Inc. and PharmAthene, Inc.

 

Cynthia L. Sullivan, our former President and Chief Executive Officer, has over 25 years of biopharmaceutical research and development experience in the fields of oncology and immunology. Additionally, Ms. Sullivan brings extensive public company experience through her past director positions with Urigen Pharmaceuticals, Inc. and Digene

 

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Corp. Ms. Sullivan currently serves as a member of Board of Trustees for the HealthCare Institute of New Jersey, a trade association for the research-based pharmaceutical and medical technology industry in New Jersey.

 

Executive Officers

 

The following table sets forth certain information regarding our executive officers. With the exception of Dr. Goldenberg, whose agreement is described in detail below, executive officers are at-will employees.

 

Name

 

Age

 

Position(s) with the Company

Dr. David M. Goldenberg

 

79

 

Chief Scientific Officer and Chief Patent Officer

Michael R. Garone

 

59

 

Principal Executive Officer, Vice President Finance and Chief Financial Officer

 

Dr. David M. Goldenberg founded Immunomedics in July 1982 and served as Chairman of our Board of Directors until April 2017. He currently serves as our Chief Scientific Officer and Chief Patent Officer, having been our Chief Medical Officer from July 2007 to December 2014, Chief Strategic Officer from July 2003 to July 2007. Dr. Goldenberg previously served as our Chief Executive Officer from July 1982 through July 1992, from February 1994 through May 1998 and from July 1999 through March 2001. Dr. Goldenberg is a graduate of the University of Chicago College and Division of Biological Sciences (B.S.), the University of Erlangen-Nuremberg (Germany) Faculty of Natural Sciences (Sc.D.), and the University of Heidelberg (Germany) School of Medicine (M.D.). He has written or co-authored approximately 1,800 journal articles, book chapters and abstracts on cancer research, detection and treatment, and has researched and written extensively in the area of radioimmunodetection and radioimmunotherapy using radiolabeled antibodies. Dr. Goldenberg was President and a Trustee of the Center for Molecular Medicine and Immunology (“CMMI”), an independent non-profit research center, and its clinical unit, the Garden State Cancer Center. In 1985 and again in 1992, Dr. Goldenberg received an “Outstanding Investigator Grant” award from the National Cancer Institute for his work in radioimmunodetection, and in 1986 he received the New Jersey Pride Award in Science and Technology. Dr. Goldenberg was honored as the ninth Herz Lecturer of the Tel Aviv University Faculty of Life Sciences. In addition, he received the 1991 Mayneord 3M Award and Lectureship of the British Institute of Radiology and in 2002, the Elis Bervin Lectureship and Medal from the Swedish Medical Society and the Swedish Oncology Society for his contributions to the development of radiolabeled monoclonal antibodies used in the imaging and treatment of cancer. The International Society for Oncodevelopmental Biology and Medicine named Dr. Goldenberg the co-recipient of the 1994 Abbott Award. In 2005, he received the Paul Aebersold Award from the Society of Nuclear Medicine and was named the Inventor of the Year by the Research and Development Council of New Jersey. Maryann Liebert Inc., publisher of Genetic Engineering News, nominated Dr. Goldenberg in 2006 for the Forbes Enterprise Award for outstanding achievements in the scientific community.

 

Michael R. Garone joined Immunomedics as Vice President, Finance and Chief Financial Officer in June 2016 and assumed the additional role of Principal Executive Officer in July 2017. Previously, from August 2007 through June 2016, he was the Chief Financial Officer of Emisphere Technologies, Inc., a commercial stage, specialty pharmaceutical company, where he also served as Corporate Secretary since October 2008 and as Interim Chief Executive Officer from February 2011 until September 2012. Before Emisphere, Mr. Garone served as Interim Chief Executive Officer and Chief Financial Officer of Astralis, Ltd. Prior to that, he served 20 years at AT&T, where he held several positions, including Chief Financial Officer of AT&T Alascom. Mr. Garone received an MBA from Columbia University and a BA in Mathematics from Colgate University.

 

Family Relationships

 

Dr. Goldenberg and Ms. Sullivan, a director of Immunomedics, are husband and wife. There are no other family relationships between directors, executive officers and other employees.

 

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AUDIT COMMITTEE

 

Members in Fiscal 2017

 

Responsibilities

 

Meetings in Fiscal 2017

Dr. Islam,
Mr. Canute,
Dr. Cox,
Mr. Forrester,
Mr. Markison,
Mr. Oliver,
Ms. Paetzold &
Mr. Stark

 

The Audit Committee, currently comprised of Dr. Islam (Chair), Mr. Canute and Mr. Markison, consists entirely of independent directors as defined by the listing standards of the NASDAQ Global Market. Its primary functions are to assist the Board of Directors in monitoring the integrity of our financial statements, our systems of internal control, and the appointment, independence and performance of our independent registered public accounting firm. The Audit Committee is responsible for pre-approving any engagements of our independent registered public accounting firm for non-audit services. The Audit Committee also reviews our risk management practices, strategic tax planning, preparation of quarterly and annual financial reports and our ethics and compliance processes.

At each regularly-scheduled Audit Committee meeting, the Audit Committee members meet with Immunomedics’ independent registered public accounting firm without management present. As part of the regular quarterly Audit Committee meetings, representatives of management, the independent registered public accounting firm and the Audit Committee members meet to review the financial statements prior to the public release of earnings.

The Board of Directors has determined that each current member and proposed member of the Audit Committee satisfies the independence standards for Audit Committee membership as set forth in Section 10A(m)(3) of the Exchange Act and the rules promulgated thereunder. In addition, the Board of Directors has determined that Dr. Islam satisfies the SEC’s criteria for an “audit committee financial expert.”

Dr. Islam, Mr. Canute and Mr. Markison joined the Audit Committee after their election to the Board of Directors at the 2016 Annual Meeting of Stockholders on March 3, 2017 (the “2016 Annual Meeting of Stockholders”). Dr. Cox, Mr. Forrester and Mr. Oliver were appointed to the Audit Committee on January 8, 2017 and served until the 2016 Annual Meeting of Stockholders. Ms. Paetzold and Mr. Stark resigned from the Board of Directors and the Audit Committee on January 8, 2017.

You may find a more detailed description of the functions of the Audit Committee in the Audit Committee charter which can be found on our website at www.immunomedics.com.

 

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Business Ethics and Compliance

 

Our Board of Directors has a Company-wide ethics awareness program and an enhanced compliance program that has been communicated to all employees. We have adopted a code of ethics for our Chief Executive Officer and senior financial officers, which complies with Item 406(b) of SEC Regulation S-K and is available on our website at www.immunomedics.com. In addition, all of our directors, officers and employees must act ethically and in accordance with our Code of Business Conduct (the “Code of Business Conduct”). The Code of Business Conduct satisfies the definition of “code of ethics” under the rules and regulations of the SEC and the standards of the NASDAQ Global Market, and is also available on our website at www.immunomedics.com.

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who own more than 10% of our common stock, to file with the SEC initial reports of beneficial ownership and reports of changes in beneficial ownership of the common stock and any other equity securities issued by us. Executive officers, directors and greater than 10% beneficial owners are required by the SEC regulations to furnish us with copies of all Section 16(a) forms they file.

 

To our knowledge, based solely on a review of copies of such reports furnished to us, all Section 16(a) filing requirements applicable to our executive officers, directors and greater than 10% beneficial owners have been complied with, except for the following: each of Dr. Goldenberg and Ms. Sullivan filed a Form 5 on August 14, 2017, each reporting 14 transactions which were not timely filed on Forms 4.

 

Item 11.     Executive Compensation

 

Compensation Discussion and Analysis

 

This Compensation Discussion and Analysis discusses the principles underlying our compensation policies and decisions and the principal elements of compensation paid to our executive officers during fiscal year 2017. Our former Chief Executive Officer (the “CEO”), our Chief Scientific Officer and Chief Patent Officer, and our Chief Financial Officer will be referred to as the “named executive officers” for purposes of this discussion.

 

Executive Summary

 

Our overarching compensation goal is to motivate, recruit and retain executive officers in a manner that promotes superior executive performance and successful financial results for us while aligning the interests of the executive officers with the long-term interests of our stockholders. We believe this is accomplished through the following principles and processes that we follow in establishing executive compensation:

 

·                  We benchmark executive officer compensation against a peer group of comparably sized public companies in the pharmaceutical industry.

 

·                  We target compensation between the 25th and 75th percentiles for base salary and annual cash incentive amounts. Our compensation model is flexible to be adjusted upward or downward in the case of exceptional performance or as circumstances warrant in the discretion of the Compensation Committee.

 

·                  We primarily structure our total compensation in the form of base salary, annual short-term cash incentive awards, long-term equity incentive awards, benefits and perquisites and change in control and other severance benefits.

 

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·                  Our compensation structure seeks to align our executives’ compensation with our long-term growth and success by rewarding the discovery and development of new product candidates, the advancement of our existing pipeline of therapeutic product candidates and the strategic partnering for further clinical development and commercialization of our product candidates.

 

·                  We maintain severance and change in control arrangements for our executives comparable to other companies in our peer group.

 

Role of Stockholder Say-on-Pay Votes

 

We provide our stockholders with the opportunity to cast an annual, nonbinding advisory vote on executive compensation (a “say-on-pay proposal”). At the Annual Meeting of Stockholders held on March 3, 2017, the say-on-pay proposal at that meeting did not receive the requisite number of votes for approval. As such, in making its decisions regarding executive compensation for fiscal year 2017, the Compensation Committee made certain adjustments to reflect the performance of the Company and our named executive officers in fiscal year 2017. The Compensation Committee will continue to consider the outcome of the Company’s say-on-pay votes when making future compensation decisions for the named executive officers.

 

Compensation Objectives and Philosophy

 

The Compensation Committee of our Board of Directors (the “Compensation Committee”) is responsible for reviewing and approving the compensation payable to our named executive officers and other key employees. As part of such process, the Compensation Committee seeks to accomplish the following objectives with respect to our executive compensation programs:

 

·          Motivate, recruit and retain executives capable of meeting our strategic objectives;

 

·          Provide incentives to ensure superior executive performance and successful financial results for us; and

 

·          Align the interests of executives with the long-term interests of stockholders.

 

The Compensation Committee seeks to achieve these objectives by:

 

·          Establishing a compensation structure that is both market competitive and internally fair;

 

·          Linking a substantial portion of compensation to our achievement of financial objectives and the individual’s contribution to the attainment of those objectives;

 

·          Providing risk for underachievement and upward leverage for overachievement of goals; and

 

·          Providing long-term equity-based incentives.

 

Setting Executive Compensation

 

In determining the compensation of each named executive officer, the Compensation Committee considered a number of factors, including recent Company and individual performance, the CEO’s recommendations as to named executive officers other than the CEO, cost of living in the New York/New Jersey area, and internal pay equity. The Compensation Committee also considered competitive compensation data received from Arthur J. Gallagher & Co. Human Resources and Compensation Consulting Practice (“Gallagher”), formerly James F. Reda & Associates, detailing the 25th percentile, median, and 75th percentile of (i) base salary; (ii) target annual cash compensation (i.e., salary plus target cash incentive); (iii) long-term equity incentive awards; and (iv) target total direct compensation (i.e., salary plus target cash incentive plus long-term equity incentives) for executive officer positions among a group of peer

 

10



 

companies and assessed how similar compensation arrangements for the named executive officers compare to its peers. Based on Gallagher market analysis, the Compensation Committee considers base salary within the range of the 25th percentile and the 75th percentile of our peer group to be competitive and appropriate for the named executive officers. Cash incentive levels among our peer group were used to establish target cash incentive compensation for our named executive officers. The Compensation Committee did not, however, tie cash compensation to potential values realizable from equity incentive awards to measure total target direct compensation or as a means to determine the equity incentive awards it authorizes. There is no pre-established policy for allocation of compensation between cash and non-cash components or between short-term and long-term components. Instead, the Compensation Committee determines the mix of compensation for each executive officer based on its review of the competitive data and its subjective analysis of that individual’s performance and contribution to our strategic goals. We believe our approach to compensation assists in mitigating excessive risk-taking that could harm our value or reward poor judgment by our executives. We believe our approach to compensation reflects sound risk management practices and does not encourage excessive risk-taking.

 

In fiscal year 2017, the Compensation Committee engaged Gallagher to provide competitive compensation data and general advice on our compensation programs and policies for executive officers. Gallagher reports directly to the Compensation Committee, periodically participates in committee meetings and advises the Compensation Committee with respect to compensation trends and best practices, plan design, and the reasonableness of individual compensation awards. During fiscal year 2017, Gallagher performed a market analysis of the compensation paid by comparably sized publicly traded biopharmaceutical companies as described below and provided it to the Compensation Committee. In addition, the CEO provided the Compensation Committee with a detailed review of the performance of the other named executive officers and made recommendations to the Compensation Committee with respect to the compensation packages for those officers for the 2017 fiscal year. The Compensation Committee consulted with Gallagher regarding the CEO’s recommendations.

 

The peer group used for competitive comparisons in fiscal year 2017 reflects companies with which we compete for talent. Base salary, cash incentives and long-term equity incentive awards were benchmarked to these companies. Changes made to the 2016 peer group are summarized below:

 

Removed Company

 

Reason

Dyax Corp.

 

Acquired by Shire PLC

Seattle Genetics Inc.

 

Incompatible market cap

 

Added Company

 

Reason

Merrimack Pharmaceuticals, Inc.

 

A biopharmaceutical company engages in novel therapeutics paired with diagnostics for cancer

Puma Biotechnology, Inc.

 

A solid cancer-focusing biopharmaceutical company in similar stage of corporate development

 

The peer group data used by Gallagher was obtained from Kenexa’s CompAnalyst Executive®, a compensation data service, and consisted of the following twenty-four companies:

 

Company

 

Sales (Most recent fiscal year)
($ in millions)

 

Market Capitalization

(04/30/2016)
($ in millions)

 

Acorda Therapeutics Inc.

 

471

 

1,183

 

Ariad Pharmaceuticals Inc.

 

119

 

1,365

 

ArQule Inc.

 

11

 

116

 

Array BioPharma, Inc.

 

132

 

457

 

 

11



 

BioCryst Pharmaceuticals Inc.

 

48

 

240

 

Celldex Therapeutics Inc.

 

5

 

395

 

CTI BioPharma Corp.

 

16

 

141

 

Cytokinetics Inc.

 

29

 

322

 

Exelixis Inc.

 

37

 

1,054

 

Immunogen Inc.

 

86

 

596

 

Insmed Inc.

 

0

 

752

 

Mannkind Corp.

 

0

 

579

 

Merrimack Pharmaceuticals Inc.

 

89

 

889

 

Neurocrine Biosciences Inc.

 

20

 

3,948

 

PDL Biopharma, Inc.

 

486

 

622

 

Progenics Pharmaceuticals Inc.

 

9

 

371

 

Puma Biotechnology Inc.

 

0

 

997

 

Rigel Pharmaceuticals Inc.

 

29

 

256

 

Spectrum Pharmaceuticals Inc.

 

163

 

483

 

Sunesis Pharmaceuticals, Inc.

 

3

 

45

 

Synta Pharmaceuticals Corp.

 

0

 

55

 

Threshold Pharmaceuticals

 

77

 

31

 

XOMA Ltd.

 

55

 

99

 

ZIOPHARM Oncology Inc.

 

4

 

1,036

 

75th Percentile

 

86

 

916

 

50th Percentile

 

29

 

470

 

25th Percentile

 

5

 

215

 

Immunomedics

 

3

 

468

 

Immunomedics Percentile Rank

 

17

%

50

%

 

Components of Compensation

 

For the 2017 fiscal year, our executive compensation program included the following components:

 

·          Base salary;

 

·          Annual short-term cash incentives;

 

·          Long-term equity incentive awards; and

 

·          Change in control and other severance arrangements.

 

Base Salary

 

It is the Compensation Committee’s objective to set a competitive rate of annual base salary for each named executive officer for each fiscal year based on performance in the prior fiscal year. The Compensation Committee believes competitive base salaries are necessary to attract and retain top quality executives, since it is common practice for public companies to provide their executive officers with a guaranteed annual component of compensation that is not subject to performance risk. Base salary levels are designed to recognize an individual’s ongoing contribution, to be commensurate with an individual’s experience and organization level and to be competitive with market benchmarks as analyzed by Gallagher. Base salaries are not automatically increased on an annual basis if the Committee believes that a raise is not warranted by either individual or Company performance, or that other forms of compensation are more

 

12



 

appropriate to further compensation program objectives. In addition to benchmarking base salary levels, any increase in annual salary is also based on demonstrated levels of competency in skill, effectiveness and leadership, and by comparing how an individual has performed essential job requirements against what was envisioned with the position. The Compensation Committee does not use a specific formula based on these criteria, but instead makes an evaluation of each named executive officer’s contributions in light of all such criteria.

 

Based upon the performance of the named executive officers and using the compensation data provided by Gallagher, for fiscal year 2017, the Compensation Committee approved a 3.5% salary increase from fiscal year 2016 levels for Ms. Sullivan and Dr. Goldenberg. For Mr. Garone, who joined the Company on June 27, 2016, no change was made for fiscal year 2017. The Committee believes the increase would result in salaries for our named executive officers being at or near the median base salaries for comparable executive positions at our peer group companies and reasonably consistent with the average percentage increase in salaries by our peers. The table below shows fiscal year 2016 and fiscal year 2017 base salary rates for each named executive officer:

 

Name

 

Title

 

2016 Salary

 

2017 Salary

 

% Increase

 

Cynthia L. Sullivan(1)

 

Former President and Chief Executive Officer

 

$

662,980

 

$

686,184

 

3.5

%

Dr. David M. Goldenberg

 

Chief Scientific Officer and Chief Patent Officer

 

$

626,126

 

$

648,040

 

3.5

%

Michael R. Garone(2)

 

Vice President Finance and Chief Financial Officer

 

$

300,000

 

$

300,000

 

 

 


(1)         Ms. Sullivan’s employment agreement with the Company expired on July 1, 2017.

 

(2)         Mr. Garone joined the Company on June 27, 2016.

 

Annual Short-Term Cash Incentives

 

Our named executive officers have the opportunity to earn annual cash incentive awards as part of their compensation package. We do not have a formal incentive or bonus plan for our named executive officers that ties annual cash incentives or bonuses with base salary to create a formula-based target annual cash compensation. Cash incentive awards are designed to reward executive performance while reinforcing our short-term strategic operating goals. If warranted in special circumstances, individual one-time discretionary cash incentives may also be awarded to our named executive officers during the course of the year.

 

Each named executive officer has a target cash incentive opportunity that, in the case of Ms. Sullivan and Dr. Goldenberg, is determined in accordance with their respective employment agreements, or is otherwise set by the Compensation Committee each year based on its comparison of the total compensation opportunity of our named executive officers against the total compensation opportunity of similarly situated executives at the companies identified above. In assessing the total compensation opportunity, the Compensation Committee also takes into account the named executive officer’s relative experience in his or her position and in the industry generally and our overall financial position. For fiscal year 2017, the target cash incentive level set for each of our named executive officers was 50% of base salary for Ms. Sullivan and Dr. Goldenberg and 30% of base salary for Mr. Garone, with potential payouts ranging from 0% to 150% of the target amount depending upon the level of achievement of performance goals.

 

Each year, a strategic plan (as described below) is created by the Company. Based on this plan, each named executive officer prepares individual goals and objectives to be accomplished during the upcoming fiscal year. The Compensation Committee in consultation with the named executive officer reviews and finalizes such goals and objectives. At the end of each fiscal year, the Compensation Committee conducts in consultation with the CEO for each

 

13



 

named executive officer and, for named executive officers other than the CEO, a subjective review of that individual’s performance relative to our overall priorities and strategies. Cash incentive awards are then granted based upon the Compensation Committee’s informed judgment and information provided by Gallagher in view of the Company’s achievement of its annual corporate goals, operational and financial performance, the individual executive’s responsibilities and efforts and such executive’s contribution to the Company’s overall performance and success, and the complexity or difficulty of the objectives that have been achieved.

 

Our strategic plan and individual performance targets include successful partnering transactions and other strategic plan metrics, operational and financial metrics, regulatory compliance metrics, and delivery of specific programs, plans, and budgetary objectives identified by the Compensation Committee.

 

In fiscal year 2017, our strategic plan focused on:

 

·                  Advancing our pipeline of therapeutic product candidates and technologies;

 

·                  Strengthening the price-per-share value of our common stock; and

 

·                  Securing financing to ensure a sufficient cash position, including the out-licensing of our various assets.

 

The Compensation Committee weighs each of the individual performance goals established for the named executive officers separately when evaluating each named executive officer’s performance and awarding actual cash incentive amounts. Performance goals that are in the executive’s area or areas of functional responsibility are weighted heavier than others. Weighting is determined by the Compensation Committee when approving the annual goals and objectives. The actual amount of cash incentive paid is entirely discretionary; the Compensation Committee does not establish threshold levels that a named executive officer must attain before a cash incentive is awarded.

 

In fiscal year 2017, Ms. Sullivan’s individual performance goals were established to focus on her areas of responsibility which, in her capacity as our President and CEO, centered around her ability to advance our pipeline of therapeutic product candidates and technologies, implement and manage our short- and long-term strategic plan and maintain stockholder confidence in management and the Company. In addition, Ms. Sullivan’s specific performance goals included:

 

·                  Complete enrolling additional metastatic triple-negative breast cancer patients with at least 2 prior therapies, into the Phase 2, single-arm study with sacituzumab govitecan;

 

·                  Complete preparation for Phase 3 pivotal trial with sacituzumab govitecan in metastatic triple-negative breast cancer, including the validation of commercial-scale manufacturing by outside Contract Manufacturing Organizations;

 

·                  Planned initiation of a Phase 3 pivotal trial with sacituzumab govitecan in metastatic triple-negative breast cancer, subject to securing the necessary funding;

 

·                  Submit accelerated approval application for sacituzumab govitecan in triple-negative breast cancer to the FDA, subject to securing the necessary funding;

 

·                  Complete enrolling patients into the Department of Defense-funded Phase 1b study with subcutaneously-administered milatuzumab in systemic lupus erythematosus; and

 

·                  Continue enrolling patients into the Phase 1 study with IMMU-114 as a monotherapy for non-Hodgkin lymphoma and chronic lymphocytic leukemia.

 

In fiscal year 2017, Dr. Goldenberg’s individual performance goals were established to focus on his areas of responsibility which, in his capacity as our Chief Scientific Officer and Chief Patent Officer, centered around his ability to design, implement and manage our clinical and pre-clinical research and development activities and maintain the effectiveness of patent and proprietary protections over our pipeline of therapeutic product candidates and technologies.

 

14



 

In fiscal year 2017, Mr. Garone’s individual performance goals were established to focus on his areas of responsibility, which in his capacity as our Vice President, Finance and Chief Financial Officer, centered on his ability to develop, implement and manage our financial strategic plan, ensure compliance with federal and state securities reporting requirements, strengthen our cash position and maintain stockholder confidence.

 

With respect to Ms. Sullivan, the Compensation Committee determined that Ms. Sullivan achieved her performance goals of (i) completing the enrollment of additional metastatic triple-negative breast cancer patients with at least 2 prior therapies into the Phase 2, single-arm study with sacituzumab govitecan; and (ii) completing method validation for outside Contract Manufacturing Organizations; and that achievement of such goals advanced our pipeline of therapeutic product candidates and technologies in accordance with our strategic plan. However, the Company did not initiate a Phase 3 pivotal trial with sacituzumab govitecan in metastatic triple-negative breast cancer, nor submit an accelerated approval application for sacituzumab govitecan in triple-negative breast cancer to the FDA, nor did Ms. Sullivan validate commercial-scale manufacturing by outside Contract Manufacturing Organizations. The Phase 1b study with subcutaneously-administered milatuzumab in systemic lupus erythematosus, which is funded by a grant from the Department of Defense, also did not complete patient enrollment. In addition, Ms. Sullivan did not complete the goals of the Company in strengthening the price-per-share value of our common stock and securing financing to ensure a sufficient cash position by not successfully licensing out our various assets, in particular, sacituzumab govitecan.

 

With respect to Dr. Goldenberg, the Compensation Committee determined that Dr. Goldenberg achieved his performance goals by advancing our pipeline of therapeutic product candidates and discovering and developing new product candidates and technologies, including expanding the number of active U.S. patents to approximately 310. However, the Company did not introduce a new investigational product into clinical testing during fiscal year 2017, and patient enrollment into the Department of Defense-funded Phase 1b study with subcutaneously-administered milatuzumab in systemic lupus erythematosus was not completed.

 

With respect to Mr. Garone, the Compensation Committee has not yet determined whether to grant Mr. Garone a bonus and will assess his performance relative to his performance goals in the coming weeks.

 

In determining the 2017 actual cash incentives to be paid to each of our named executive officers, the Compensation Committee considered the relative significance of the performance goals for each named executive officer and whether such goals were achieved, and also considered whether the Company’s overall strategic plan had been accomplished. As discussed above, the Company’s strategic goal of out-licensing sacituzumab govitecan was not met in fiscal year 2017. Taking into account the say-on-pay proposal at the 2016 Annual Meeting of Stockholders did not receive the requisite number of votes for approval and the importance to the Company of out-licensing sacituzumab govitecan, the Compensation Committee determined that although certain individual performance goals were met, the Company’s overall strategic plan had not been accomplished and, therefore, other than with respect to a determination by the Compensation Committee regarding Mr. Garone, no cash incentives are to be paid to each of our other named executive officers for fiscal 2017 and cash incentives deferred from fiscal 2016 are cancelled.

 

15



 

The table below details fiscal year 2017 annual cash incentive targets and actual payouts for each of the named executive officers.

 

Name

 

Title

 

2017 Target

Cash

Incentive

($)

 

2017 Target

Cash

Incentive

(% Salary)

 

2017 Actual

Cash

Incentive

($)

 

2017 Actual

Cash

Incentive

(% Salary)

 

Cynthia L. Sullivan(1)

 

Former President and Chief Executive Officer

 

$

343,092

 

50

%

$

 

 

Dr. David M. Goldenberg

 

Chief Scientific Officer and Chief Patent Officer

 

$

324,020

 

50

%

$

 

 

Michael R. Garone(2)

 

Vice President Finance and Chief Financial Officer

 

$

90,000

 

30

%

$

(2)

(2)

 


(1)                                 Ms. Sullivan’s employment agreement with the Company expired on July 1, 2017.

(2)                                 Mr. Garone’s bonus, if any, has not yet been determind.

 

The table below details, for each named executive officer, the total target cash compensation established by the Compensation Committee for fiscal year 2017, as measured by the sum of salary and target cash incentive, and the total actual cash compensation paid for fiscal year 2017, as measured by the sum of salary and actual cash incentive.

 

Name

 

Title

 

2017 Total Target

Cash Compensation

($)

 

2017 Total Actual

Cash Compensation

($)

 

Cynthia L. Sullivan

 

Former President and Chief Executive Officer

 

$

1,029,276

(1)

$

686,184

(2)

Dr. David M. Goldenberg

 

Chief Scientific Officer and Chief Patent Officer

 

$

972,060

(3)

$

648,040

(4)

Michael R. Garone

 

Vice President Finance and Chief Financial Officer

 

$

390,000

(5)

$

300,000

(6)

 

16



 


(1)                                 Represents sum of (i) annual salary for fiscal year 2017 of $686,184 and (ii) target cash incentive for fiscal year 2017 of $343,092.

 

(2)                                 Represents annual salary of $686,184. No actual cash incentive was paid for fiscal year 2017.

 

(3)                                 Represents sum of (i) annual salary for fiscal year 2017 of $648,040 and (ii) target cash incentive for fiscal year 2017 of $324,020.

 

(4)                                 Represents annual salary of $648,040. No actual cash incentive was paid for fiscal year 2017.

 

(5)                                 Represents sum of (i) annual salary for fiscal year 2017 of $300,000 and (ii) target cash incentive for fiscal year 2017 of $90,000.

 

(6)                                 Represents annual salary of $300,000. No actual cash incentive was paid for fiscal year 2017.

 

Long-Term Equity Incentive Awards

 

As described above, stock-based incentives are a key component of our executive compensation program. Employee ownership is a core value of our operating culture. Management and the Compensation Committee believe that stock ownership encourages our executives to create value for our Company over the long term. We also believe that stock ownership promotes retention and affiliation with us by allowing our executives to share in our long-term success while aligning executive interests with those of our stockholders. We have used stock options, restricted stock units, or their combination as vehicles to deliver equity-based compensation for our named executive officers, due to their broad-based use in the biopharmaceutical industry. We also have evaluated from time to time the benefits of providing alternative equity-based compensation in the form of restricted stock or other vehicles based on full value shares. The Compensation Committee will continue to monitor changes in the long-term compensation practices of the companies in our peer group and, if appropriate, will re-evaluate alternative equity-based compensation vehicles in future years in light of changing or evolving practices. In certain circumstances, the Compensation Committee may determine that non-equity long-term incentives are preferable to equity-based awards.

 

Each of our named executive officers has an annual long-term equity incentive award opportunity. The actual amount of the annual long-term equity incentive award, if any, for each of our named executive officers is determined on a discretionary basis by the Compensation Committee without the use of any formalized mathematical formulas. The Compensation Committee grants the annual long-term equity incentive awards shortly after the close of each fiscal year after evaluating the performance of the Company and the named executive officers for such prior fiscal year. In determining the amount of the awards, the Compensation Committee evaluates the executive’s performance and contribution to our annual and long-term strategic goals and factors that contribute to overall corporate growth and development and to increasing long-term stockholder value, such as advancement of our pipeline of therapeutic candidates, growth in our intellectual property portfolio, development of our manufacturing and operating capabilities, enhancements to our financial reporting systems and controls, and the successful negotiation of advantageous out-licensing and other collaborative agreements. The Compensation Committee does not assign weightings to the foregoing factors. In addition, the Compensation Committee may, in its discretion, consider both the achievement of the annual Board-approved corporate goals and other significant corporate accomplishments during the year. For our named executive officers other than the CEO, the Compensation Committee also takes into account the recommendations of the CEO in determining the amount of the grant to each named executive officer.

 

In September 2016, the Compensation Committee granted long-term equity incentive awards to our named executive officers after reviewing corporate and individual performance in fiscal year 2016 in the context of the factors which the Compensation Committee believes contribute to overall corporate growth and considering overall compensation of each of our named executive officers in fiscal year 2016. When making determinations about these long-term equity incentive awards, the Compensation Committee used the same performance evaluation criteria as it

 

17



 

used for our annual cash incentive awards for fiscal year 2016. As had been done in the prior fiscal year, the Compensation Committee reviewed the recommendations of and information provided by Gallagher and consistent with those recommendations granted half of the value of the long-term equity incentive awards earned by each named executive officer based on fiscal 2016 performance in the form of stock options and half of the value in the form of RSUs.

 

Upon evaluation of each named executive officer’s performance in the 2016 fiscal year, the Compensation Committee granted equity incentive awards under the Immunomedics, Inc. 2014 Long-Term Incentive Plan (the “2014 Plan”) in August 2016 as follows:

 

Name

 

Title

 

Number of Shares

of Common Stock

Underlying Stock

Options

 

Number of Shares

of Common Stock

Underlying RSUs

 

Cynthia L. Sullivan

 

Former President and Chief Executive Officer

 

199,532

 

106,061

 

Dr. David M. Goldenberg(1)

 

Chief Scientific Officer and Chief Patent Officer

 

 

 

Michael R. Garone(2)

 

Vice President, Finance and Chief Financial Officer

 

40,000

 

 

 


(1)                                 On July 14, 2015, we entered into the Third Amended and Restated Employment Agreement with Dr. Goldenberg (the “Goldenberg Agreement”), which we amended on November 30, 2015. As part of the Goldenberg Agreement, as amended, Dr. Goldenberg was granted 1,500,000 Performance Stock Units (as such term is defined in the 2014 Plan), which shall vest, if at all, over a three-year period. Dr. Goldenberg, therefore, was not awarded any additional long-term equity incentive awards by the Compensation Committee in September 2016.

 

(2)                                 Mr. Garone joined the Company on June 27, 2016, and received 40,000 non-qualified stock options, which vest over a four-year period.

 

The numbers of equity awards granted were determined by the Compensation Committee using information supplied by Gallagher on equity awards received by executives at the peer group companies.

 

The stock options granted to our named executive officers have a seven-year term and vest, based on continued employment, 25% on the first anniversary of the date of grant and 6.25% on a quarterly basis thereafter. The stock options were granted at an exercise price equal to the closing price of our common stock on the date of grant. Accordingly, the actual value an executive will realize is tied to future stock appreciation and is therefore aligned with corporate performance and stockholder returns. The RSUs granted to our named executive officers vest with respect to 25% of the underlying shares on the first anniversary of the date of grant and with respect to 6.25% on a quarterly basis thereafter for the following three years, based on continued employment. We issue to the executive shares of our common stock when the RSUs vest. Our standard forms of stock option and RSU agreements provide for accelerated vesting of unvested awards upon a change in control of the Company, for instance if we are acquired by another company, but only if the acquirer does not agree to assume and continue the awards or grant substitute cash retention awards of similar value, measured as of the date of the change in control transaction, to the holders of our stock options and RSUs. Ms. Sullivan’s employment agreement provides for accelerated vesting of her stock options and RSUs if her employment is involuntarily terminated coincident with or within one year after a change in control of the Company. Dr. Goldenberg’s employment agreement provides for accelerated vesting of his outstanding unvested stock options and

 

18



 

RSUs upon a change in control. See the sections below entitled “Employment, Severance and Change in Control Agreements” and “Calculation of Potential Payments upon Termination or Change in Control” for more information. With a four-year vesting schedule for stock options and RSUs, and a seven-year term for stock options, we do not deem it necessary to impose holding period requirements on the shares that our named executive officers acquire under their long-term equity incentive awards.

 

Executive Benefits and Perquisites

 

The named executive officers also are provided with certain benefits and perquisites. The Compensation Committee believes that such benefits are necessary for us to remain competitive and to attract and retain top caliber executive officers because such benefits are typically provided by companies in the biopharmaceutical industry and by other companies with which we compete for executive talent.

 

We maintain a 401(k) plan for our employees, including our executive officers, to encourage our employees to save some portion of their cash compensation for their eventual retirement. Pursuant to a discretionary employer match, in fiscal year 2017, we matched all employee contributions at 25% of the employee’s contribution up to a limit of 5% of the employee’s eligible compensation up to the IRS imposed limit. The IRS maximum allowable contribution in calendar year 2017 was $18,000, or $24,000 for employees who are 50 years old or older. We also increase our employees’ base salary, including our named executive officers’ base salary, for the cost of group long-term disability insurance coverage and provide a group life insurance benefit in a coverage amount equal to 100% of the employee’s annual base salary.

 

Additional Incentive Compensation

 

In accordance with the terms of Dr. Goldenberg’s employment agreement, Dr. Goldenberg is entitled to receive incentive compensation equal to 1.5% of our Annual Net Revenue (as defined in the agreement) in each year that we record net income. With respect to any fiscal year during Dr. Goldenberg’s employment in which we record an annual net loss, Dr. Goldenberg will receive as an additional incentive compensation payment a sum equal to 0.75% of the total Consideration (as defined in the agreement) we receive from any third party transaction, with certain exceptions. In accordance with the terms of Dr. Goldenberg’s employment agreement, we pay Dr. Goldenberg a minimum of $150,000 during each fiscal year in equal quarterly payments as a credit against any amounts due to Dr. Goldenberg for additional incentive compensation payments.

 

For the fiscal years ended June 30, 2017, 2016 and 2015, we reported a net loss, therefore Dr. Goldenberg received the minimum additional incentive compensation of $150,000 paid quarterly during these fiscal years. The aggregate compensation value of this benefit is shown in the “All Other Compensation” column in the Summary Compensation Table included in this annual report.

 

Employment, Severance and Change in Control Agreements

 

We have employment agreements with Ms. Sullivan and Dr. Goldenberg and a Change in Control and Severance Agreement with Mr. Garone. These agreements are summarized in the section below entitled “Employment, Severance and Change in Control Agreements” and the change in control and severance arrangements contained in those agreements are discussed in more detail in the section below entitled “Calculation of Potential Payments upon Termination or Change in Control.” The change in control arrangements are to assure continuity of “key personnel” in a transition period following a change in control of the Company. None of the employment or severance agreements that we have with our named executive officers require us to provide tax gross-up payments to them in connection with any excise taxes for which they may become liable as a result of receiving severance benefits or other parachute payments within the meaning of Section 280G of the Internal Revenue Code.

 

19



 

Section 162(m) Compliance

 

As a result of Section 162(m) of the Internal Revenue Code, publicly-traded companies such as the Company are not allowed a federal income tax deduction for compensation, paid to the CEO and the three highest paid executive officers other than the CEO and chief financial officer, to the extent that such compensation exceeds $1 million per officer in any one year and does not otherwise qualify as performance-based compensation. The 2014 Plan is structured to enable the compensation deemed paid to an executive officer in connection with the exercise of a stock option to qualify as performance-based compensation that is not subject to the $1 million limitation. Other awards made under the 2014 Plan may or may not qualify. For instance, restricted stock units granted in fiscal year 2017 are not considered performance-based compensation, and might not be tax deductible upon vesting. In establishing the cash and equity incentive compensation programs for the named executive officers, it is the Compensation Committee’s view that the potential deductibility of the compensation payable under those programs should be only one of a number of relevant factors taken into consideration, and not the sole governing factor. For that reason the Compensation Committee may deem it appropriate to continue to provide one or more named executive officers with the opportunity to earn incentive compensation, including cash incentive programs tied to our financial performance and equity awards, which may be in excess of the amount deductible by reason of Section 162(m) or other provisions of the Internal Revenue Code. It is the Compensation Committee’s belief that cash and equity incentive compensation must be maintained at the requisite level to attract and retain the executive officers essential to our financial success, even if all or part of that compensation may not be deductible by reason of the Section 162(m) limitation.

 

COMPENSATION COMMITTEE REPORT

 

The information contained in this report shall not be deemed to be “soliciting material” or “filed” with the SEC or subject to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended, the Exchange Act, except to the extent that Immunomedics, Inc. specifically incorporates it by reference into a document filed under the Securities Act of 1933, as amended, or the Exchange Act.

 

The Compensation Committee is responsible for evaluating and approving the compensation for the executive officers. Management has primary responsibility for our Company’s financial statements and reporting process, including the disclosure of executive compensation. The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis set forth above. The Compensation Committee is satisfied that the Compensation Discussion and Analysis fairly represents the objectives and actions of the Compensation Committee. The Compensation Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this annual report for filing with the Securities and Exchange Commission and incorporated by reference into the Company’s Annual Report on Form 10-K for the year ended June 30, 2017.

 

The Compensation Committee

Mr. Scott Canute (Chair)

Mr. Peter Barton Hutt

Dr. Khalid Islam

 

Compensation Committee Interlocks and Insider Participation

 

Mr. Canute, Mr. Hutt, and Dr. Islam joined the Compensation Committee after their election to the Board of Directors at the 2016 Annual Meeting of Stockholders. Mr. Markison served as the Chairperson of the Compensation Committee until after the 2016 Annual Meeting of Stockholders. Mr. Aryeh and Dr. Cox were appointed to the Compensation Committee on January 8, 2017 and served until the 2016 Annual Meeting of Stockholders. Ms. Paetzold resigned from the Board of Directors and the Compensation Committee on January 8, 2017. No member of the Compensation Committee was at any time during fiscal 2017, or formerly, an officer or employee of Immunomedics, or any subsidiary of Immunomedics. No executive officer of Immunomedics has served as a director or member of the

 

20



 

Board of Directors or the Compensation Committee (or other committee serving an equivalent function) of any other entity while an executive officer of that other entity served as a director of or member of our Board of Directors or our Compensation Committee.

 

Summary Compensation Table

 

The following table shows the total compensation paid or accrued during the fiscal years ended June 30, 2017, 2016 and 2015 to our former President and Chief Executive Officer, our Chief Scientific Officer and Chief Patent Officer, and our Chief Financial Officer (collectively, the “named executive officers”). We did not have any other executive officers for the prior fiscal year.

 

Name and Principal
Position

 

Year

 

Salary
($)

 

Bonus
($)

 

Stock
Awards(1)($)

 

Option
Awards(1)
($)

 

Non- Equity
Incentive Plan
Compensation
($)

 

All Other
Compensation
($)

 

Total
($)

 

Cynthia L. Sullivan

 

2017

 

$

686,184

 

$

 

$

350,001

 

$

350,000

 

$

 

$

3,313

(3)

$

1,389,498

 

Former President and

 

2016

 

$

662,980

 

$

 

$

350,001

 

$

350,000

 

$

 

$

3,313

(3)

$

1,366,294

 

Chief Executive Officer(2)

 

2015

 

$

640,560

 

$

 

$

350,001

 

$

350,000

 

$

235,181

 

$

3,250

(3)

$

1,343,811

 

Dr. David M. Goldenberg

 

2017

 

$

648,040

(4)

$

 

$

 

$

 

$

 

$

153,313

(3)(5)

$

801,353

 

Chief Scientific Officer and

 

2016

 

$

626,126

(4)

$

 

$

3,420,000

 

$

350,000

 

$

 

$

153,313

(3)(5)

$

4,199,439

 

Chief Patent Officer

 

2015

 

$

604,952

(4)

$

 

$

350,001

 

$

350,035

 

$

286,403

 

$

153,250

(3)(5)

$

1,458,203

 

Michael R. Garone

 

2017

 

$

300,000

 

$

 

$

 

$

 

$

 

$

 

$

300,000

 

VP Finance and Chief

 

2016

 

$

4,615

(6)

$

 

$

 

$

42,216

 

$

 

$

 

$

46,831

 

Financial Officer

 

2015

 

$

 

$

 

$

 

$

 

$

 

$

 

$

 

 


(1)              Ms. Sullivan’s employment agreement with the Company expired on July 1, 2017.

 

(2)              Represents the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. For information regarding assumptions underlying the determination of grant date fair value of option awards in accordance with FASB ASC Topic 718, see Note 9 of the Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended June 30, 2017.

 

(3)              Includes matching contributions made by us on behalf of each of the named executive officers under our 401(k) plan of $3,313, $3,313 and $3,250 in fiscal years 2017, 2016 and 2015, respectively. In accordance with our 401(k) plan, after two years of service to the Company, 20% of the Employer’s matching contribution vests to the employee. 

 

(4)              Includes compensation of $41,000, $87,000 and $84,000 paid to Dr. Goldenberg by IBC Pharmaceuticals, our majority-owned subsidiary, for services rendered in fiscal years 2017, 2016 and 2015, respectively.

 

(5)              Includes additional incentive compensation payments in the amount of $150,000 paid to Dr. Goldenberg pursuant to his employment agreement for the 2017, 2016 and 2015 fiscal years, respectively. See “Additional Incentive Compensation” on page 19 of this annual report for a discussion of these payments.

 

(6)              Represents $4,615 paid to Mr. Garone in fiscal year 2016 subsequent to his appointment as Vice President Finance and Chief Financial Officer, effective June 27, 2016.

 

21



 

Grants of Plan-Based Awards in Fiscal Year 2017 Table

 

The table below details fiscal year 2017 grants of plan-based awards received for each of the named executive officers.

 

 

 

 

 

Estimated Future Payouts Under
Non-Equity
Incentive Plan Awards(1)

 

All Other
Stock Awards:
Number of
Shares of
Stock or

 

All Other
Option
Awards:
Number of
Securities
Underlying

 

Exercise
or
Base
Price
of Option

 

Grant Date Fair

 

 

 

Grant

 

Threshold

 

Target

 

Maximum

 

Units

 

Options

 

Awards

 

Value of Stock and

 

Name

 

Date

 

($)

 

($)

 

($)

 

(#)(2)

 

(#)(3)

 

($/Sh)

 

Option Awards(4)

 

Cynthia L. Sullivan

 

 

 

$

 

$

343,092

 

$

514,638

 

 

 

 

 

 

 

 

 

 

 

9/21/16

 

 

 

 

 

 

 

 

 

199,532

 

$

1.7541

 

$

349,999

 

 

 

9/21/16

 

 

 

 

 

 

 

106,061

 

 

 

$

3.30

 

$

350,001

 

Dr. David M. Goldenberg

 

 

 

$

 

$

324,020

 

$

486,030

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Michael R. Garone

 

 

 

$

 

$

90,000

 

$

135,000

 

 

 

 

 

 

 

 

 

 


(1)        Represents target and maximum cash incentive award opportunities for our named executive officers. The cash incentive award is prorated if performance levels are achieved between the target and maximum levels. The methodology and performance criteria applied in determining these potential cash incentive award amounts are discussed under “Compensation Discussion and Analysis—Annual Short-Term Cash Incentives” beginning on page 13 of this annual report. The actual cash incentive award which may be paid to each named executive officer for their 2017 performance is subject to satisfaction of the Company’s strategic goal of out-licensing sacituzumab govitecan, and further determination thereof, and approval by, the Compensation Committee, as discussed under “Compensation Discussion and Analysis—Annual Short-Term Cash Incentives” on page 13 of this annual report.

 

(2)        The amounts shown in this column represent RSUs (with respect to Ms. Sullivan and Mr. Garone) and Performance Rights (with respect to Dr. Goldenberg) granted under the 2014 Plan. A description of the terms of these awards is disclosed under “Compensation Discussion and Analysis—Long-Term Equity Incentive Awards” on page 17 of this annual report.

 

(3)        Represents shares of our common stock underlying options granted under the 2014 Plan. A description of the terms of the stock awards is disclosed under “Compensation Discussion and Analysis—Long-Term Equity Incentive Awards” on page 17 of this annual report.

 

(4)        Represents the grant date fair value under FASB ASC Topic 718 of equity awards granted in fiscal year 2017. For information regarding assumptions underlying the FASB ASC Topic 718 valuation of equity awards, see Note 9 of the Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended June 30, 2017.

 

22



 

Outstanding Equity Awards at Fiscal Year-End 2017 Table

 

The following table provides certain summary information concerning outstanding equity awards held by our named executive officers as of June 30, 2017.

 

 

 

 

 

Option Awards

 

Stock Awards

 

Name

 

Grant
Date(1)(2)

 

Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable

 

Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable

 

Option
Exercise
Price
($)

 

Option
Expiration
Date

 

Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)

 

Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)(3)

 

Cynthia L. Sullivan

 

08/27/2012

 

183,250

 

 

 

$

3.46

 

08/27/2019

 

 

 

$

 

 

 

 

08/16/2013

 

110,815

 

7,388

 

$

5.13

 

08/16/2020

 

 

 

$

 

 

 

 

08/14/2014

 

137,783

 

62,629

 

$

3.32

 

08/14/2021

 

 

 

$

 

 

 

 

08/20/2015

 

178,571

 

229,592

 

$

1.76

 

08/20/2022

 

 

 

$

 

 

 

 

09/21/2016

 

 

 

199,532

 

$

3.30

 

09/21/2023

 

 

 

$

 

 

Dr. David M. Goldenberg

 

08/27/2012

 

157,100

 

 

 

$

3.46

 

08/27/2019

 

 

 

$

 

 

 

 

08/16/2013

 

110,815

 

7,388

 

$

5.13

 

08/16/2020

 

 

 

$

 

 

 

 

08/14/2014

 

137,783

 

62,629

 

$

3.32

 

08/14/2021

 

 

 

$

 

 

 

 

07/14/2015

 

 

 

 

 

 

 

07/14/2022

 

500,000

(4)

$

4,415,000

 

 

 

07/14/2015

 

 

 

 

 

 

 

07/14/2022

 

500,000

(4)

$

4,415,000

 

 

 

07/14/2015

 

 

 

 

 

 

 

07/14/2022

 

500,000

(4)

$

4,415,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Michael R. Garone

 

06/27/2016

 

10,000

 

30,000

 

$

2.00

 

06/26/2026

 

 

 

 

 

 

 

23



 


(1)     Each stock option granted in fiscal years 2013 and  2012 were granted under the Immunomedics, Inc. 2006 Stock Incentive Plan (the “2006 Plan”), and each stock option granted in fiscal years 2016, 2015 and 2014 were granted under the 2014 Plan.  Each stock option granted under each of the 2006 Plan and the 2014 Plan has a term of 7 years measured from the grant date and vests ratably, 25% after the first year from the date of grant and 6.25% for each subsequent three-month period, during the first 4 years of service with us measured from its grant date. Upon a change in control, unvested stock options will become fully vested and exercisable on the date on which the change in control occurs if the acquirer does not agree to assume and continue the awards or grant substitute cash retention awards of similar value, measured as of the date of the change in control transaction, to the holders of the stock options. Ms. Sullivan’s employment agreement provides for accelerated vesting of her stock options if her employment is involuntarily terminated coincident with or within one year after a change in control of the Company. Dr. Goldenberg’s employment agreement provides for accelerated vesting of his outstanding unvested stock options upon a change in control. In addition, all stock options held by Ms. Sullivan and Dr. Goldenberg will remain exercisable for a period which is the shorter of 24 months following the end of the remaining balance of the term of their employment agreement or the original term of the stock option.

 

(2)     Stock awards granted to named executive officers have a term of four years from the date of grant and vest ratably, 25% after the first year from date of grant and 6.25% for each subsequent three-month period. Upon a change in control, all stock awards held by our named executive officers, if not assumed or continued by the acquiring company or replaced with a cash retention award of like value, will become fully vested on the date on which the change in control occurs. Ms. Sullivan’s employment agreement provides for accelerated vesting of her stock awards if her employment is involuntarily terminated coincident with or within one year after a change in control of the Company. Dr. Goldenberg’s employment agreement provides for accelerated vesting of his outstanding unvested stock awards upon a change in control.

 

(3)     Based on the $8.83 per share closing price of our common stock on June 30, 2017, as reported by the NASDAQ Global Market.

 

(4)     As part of the Amended and Restated Employment Agreement between the Company and Dr. Goldenberg, which became effective July 1, 2015, Dr. Goldenberg received a grant of 1,500,000 restricted stock units, which would vest, if at all, after the three (3) year period commencing on the grant date of July 14, 2015, provided the applicable milestones based on achievement of certain market conditions (stock prices) were met and conditioned upon Dr. Goldenberg’s continued employment through the vesting period, subject to the terms and conditions of the Restricted Stock Units Notice and the Restricted Stock Units Agreement and such other terms and conditions as set forth in the grant agreement.  The Company believes that a change in control occurred on or before May 4, 2017, as defined in Dr. Goldenberg’s employment agreement, as a result of the new Board of Directors being seated on March 3, 2017. According to the terms of his employment agreement and notice of award, the Company believes that these 1.5 million restricted stock units did not vest, since at the time of the change in control the actual price per share of the common stock had not achieved the specified target price required to trigger the vesting of the restricted stock units. The Company understands that Dr. Goldenberg contests the Company’s interpretation of both the timing of the change in control and the vesting requirements of the restricted stock units upon a change in control. The 1.5 million restricted stock units are the subject of arbitration, as disclosed in the Original Filing.

 

Fiscal Year 2017 Option Exercises and Stock Vested Table

 

The following table provides information regarding the exercise of options and the vesting of restricted stock units for each of the named executive officers during fiscal year 2017.

 

24



 

 

 

Option Awards

 

Stock Awards

 

Name

 

Number of
Shares
Acquired
on Exercise
(#)

 

Value
Realized
on Exercise(1)
($)

 

Number of
Shares
Acquired
on Vesting
(#)

 

Value
Realized
on Vesting(2)
($)

 

 

 

 

 

 

 

 

 

 

 

Cynthia L. Sullivan

 

250,000

 

656,000

 

185,397

 

794,202

 

Dr. David M. Goldenberg

 

250,000

 

820,000

 

97,500

 

451,214

 

Michael R. Garone

 

 

 

 

 

 


(1)   Based upon the difference between the closing price of our common stock on the dates of exercise, as reported by the NASDAQ Global Market, and the exercise price of the options exercised on the respective exercise dates.

 

(2)   Based on the closing price of our common stock on the applicable vesting dates, as reported by the NASDAQ Global Market.

 

Employment Contracts, Termination of Employment and Change in Control Arrangements

 

Cynthia L. Sullivan Employment Agreement

 

Effective July 1, 2014, the Company entered into the Fifth Amended and Restated Employment Agreement with Cynthia L. Sullivan pertaining to Ms. Sullivan’s service to the Company as the Company’s President and Chief Executive Officer (the “Amended Sullivan Agreement”). This agreement expired on July 1, 2017.

 

On May 3, 2017 Ms. Sullivan and other parties entered into the Term Sheet to resolve certain legal actions among the parties. Upon execution of the contemplated Settlement Agreement, Ms. Sullivan has agreed to resign from director of the Company and any of its affiliates, effective as of the date of the Settlement Agreement. The Settlement Agreement will provide that Ms. Sullivan will abide by all post-termination covenants and obligations contemplated by the Amended Sullivan Agreement. In exchange for a release of claims as required by the Sullivan Agreement and subject to compliance with the terms of the Settlement Agreement, Ms. Sullivan will be entitled to (i) termination payments in accordance with the Amended Sullivan Agreement for a termination without Good Cause after a Change in Control, (ii) accelerated vesting or extension of the exercise period for equity awards already earned, pursuant to the Amended Sullivan Agreement, and (iii) payments equal in value to the amount that the Company paid for COBRA. As of June 30, 2017 the Company recorded a $4.2 million expense for all costs that would be due to Ms. Sullivan under the terms of the Settlement Agreement. In addition to this amount, a cash payment of $0.9 million is in dispute.

 

The Parties to the Term Sheet have agreed to arbitrate disputes relating to Ms. Sullivan’s claimed entitlement to certain equity awards and severance payments, and Ms. Sullivan’s claimed rights to certain bonus payments, to the extent the Parties cannot reach agreement on such issues before execution of the Settlement Agreement. The Company has agreed to pay in full the arbitrator in such arbitration as well as reasonable attorneys’ fees and expenses incurred by Ms. Sullivan and Dr. Goldenberg in connection with any such arbitration, up to a maximum amount of $650,000 combined. As of June 30, 2017 no expenses have been incurred regarding such arbitration.

 

Dr. David M. Goldenberg Employment Agreement

 

Effective July 1, 2015, the Company entered into the Amended and Restated Employment Agreement with Dr. Goldenberg pertaining to Dr. Goldenberg’s service to the Company as the Company’s Chairman of the Board, Chief

 

25



 

Scientific Officer and Chief Patent Officer (the “Amended and Restated Goldenberg Agreement”). The Amended and Restated Goldenberg Agreement was to continue until July 1, 2020.

 

On May 3, 2017 Dr. Goldenberg and other parties entered into a binding Term Sheet, to resolve certain legal actions among the parties. Upon execution of the contemplated Settlement Agreement, Dr. Goldenberg will remain a director of the Company, but has agreed to resign from all officer and other positions of the Company and all director, officer and other positions at any of the Company’s affiliates (other than Dr. Goldenberg’s position as a member of the board of directors of IBC Pharmaceuticals, the Company’s majority owned U.S. subsidiary), effective as of the date of the Settlement Agreement. The Settlement Agreement will provide that Dr. Goldenberg will abide by all post-termination covenants and obligations contemplated by the Amended and Restated Goldenberg Agreement.  In exchange for a release of claims as required by the Amended and Restated Goldenberg Agreement and subject to compliance with the terms of the Settlement Agreement, Dr. Goldenberg will be entitled to (i) termination payments in accordance with the Amended and Restated Goldenberg Agreement for a termination without Good Cause after a Change in Control, (ii) accelerated vesting or extension of exercise period for equity awards already earned, pursuant to the Amended and Restated Goldenberg Agreement, (iii) payments equal in value to the amount that the Company paid for COBRA, and (iv) royalties or payment in accordance with existing agreements. As of June 30, 2017 the Company recorded a $2.7 million expense for this settlement cost. In addition to this amount an additional cash payment of approximately $1.8 million is in dispute. The 1.5 million Restricted Stock Units to Dr. Goldenberg under the terms of the Amended and Restated Goldenberg Agreement are the subject of arbitration, as disclosed in the Original Filing.

 

Michael R. Garone Change in Control and Severance Agreement

 

On January 8, 2017, we entered into a Change in Control and Severance Agreement with Michael R. Garone, Vice President, Finance and Chief Financial Officer. This agreement provides for severance benefits in the event that Mr. Garone’s employment with the Company is terminated pursuant to either (i) an involuntary termination within twelve (12) months following a “Change in Control” (as defined in the agreement), or (ii) a termination by the Company, other than for “Cause” (as defined in the agreement), during the “Pre-Closing Period” (as defined in the agreement). In the event of such termination, severance benefits for Mr. Garone will include: (i) a lump sum payment equal to two (2) times the sum of Mr. Garone’s annual base salary and target bonus; (ii) a lump sum payment equal to Mr. Garone’s target bonus, pro-rated for the number of full and/or partial months of the year completed prior to termination; (iii) accelerated vesting of all outstanding time-based equity awards; and (iv) continuation of health care coverage for a specified period.

 

Calculation of Potential Payments upon Termination or Change in Control

 

The following table shows potential payments to our named executive officers under their employment agreements in the form in which those agreements existed as of June 30, 2017, or change in control and severance agreement, as the case may be, for various scenarios involving a change in control or termination of employment as described above for each named executive officer. The data in the table reflects June 30, 2017 as a hypothetical termination date or change in control date and, where applicable, reflects amounts calculated using the $8.83 closing price of our common stock on June 30, 2017 (as reported on the NASDAQ Global Market). All defined terms not defined in this section have the meanings set forth in each officer’s respective employment agreement or change in control and severance agreement.

 

Name

 

Trigger

 

Salary
and Bonus
($)

 

Health and
Welfare
Benefits ($)

 

Stock Award
Vesting
Acceleration
($) (1)

 

Office and
Secretarial
Support ($)

 

Total ($)

 

Cynthia L. Sullivan

 

Termination without Cause or Resignation for Good Reason (before Change in Control)

 

$

2,058,552

 

$

29,878

 

 

 

$

2,088,430

 

 

 

Termination without Cause or Resignation for Good Reason (following a Change in Control)

 

$

3,087,828

 

$

29,878

 

$

5,324,529

 

 

$

8,442,234

 

 

 

Voluntary Termination

 

 

 

 

 

 

 

 

Disability

 

$

343,092

 

 

 

 

$

343,092

 

 

 

Death

 

$

343,092

 

 

 

 

$

343,092

 

 

26



 

Dr. David M. Goldenberg(2)

 

Termination without Cause or Resignation for Good Reason (before Change in Control)

 

$

3,366,180

 

$

39,837

 

 

$

228,693

 

$

3,637,709

 

 

 

Termination without Cause or Resignation for Good Reason (following a Change in Control)

 

$

3,366,180

 

$

59,755

 

$

13,918,650

(3)

$

343,039

 

$

17,687,624

 

 

 

Expiration or Non-renewal of Employment Agreement by Company

 

$

463,063

 

 

 

 

$

463,063

 

 

 

Voluntary Termination

 

 

 

 

 

 

 

 

Disability

 

$

463,063

 

 

 

 

$

463,063

 

 

 

Death

 

$

463,063

 

 

 

 

$

463,063

 

Michael R. Garone

 

Termination without Cause or Resignation for Good Reason (before Change in Control during the Pre-Closing Period)

 

$

780,000

 

 

 

 

$

780,000

 

 

 

Termination without Cause or Resignation for Good Reason (following a Change in Control)

 

$

780,000

 

$

28,464

 

$

204,900

 

 

$

1,013,364

 

 

 

Expiration or Non-renewal of Employment Agreement by Company

 

 

 

 

 

 

 

 

Voluntary Termination

 

 

 

 

 

 

 

 

Disability

 

 

 

 

 

 

 

 

Death

 

 

 

 

 

 

 


(1)         The amounts reflected in this column assume that all outstanding stock options and other stock-based awards become fully vested and exercisable, as applicable, upon the occurrence of a change in control. In addition, following a change in control, all stock options held by Dr. Goldenberg will remain exercisable for a period of 24 months following the end of the remaining balance of the term of his employment agreement but not beyond the original term of the stock options. Likewise, if Ms. Sullivan’s employment is terminated involuntarily coincident with or within one year following a change in control, all of her outstanding stock options will remain exercisable for a period of 24 months following the end of the remaining balance of the term of her employment agreement but not beyond the original term of the stock options.

 

(2)         The amounts reflected in the Salary and Bonus column include minimum Product Royalties as defined in the Goldenberg Agreement. Further, the amounts reflected assume the target bonus is earned.

 

(3)         These 1.5 million restricted stock units are the subject of arbitration, discussed in the footnotes to the Outstanding Equity Awards at Fiscal Year End table on page 24 and as disclosed in the Original Filing.

 

The amounts shown in the table above and the assumptions upon which those amounts are based provide reasonable estimates of the amounts that would have been due to the named executive officers in the event that any of the circumstances described above had occurred on June 30, 2017. The actual amounts due to the named executive officers upon a triggering event will depend upon the actual circumstances and the then-applicable provisions of the employment agreements, change in control and severance agreement, stock option and restricted stock unit agreements and our stock incentive plans.

 

27



 

Fiscal Year 2017 Pension Benefits Table

 

The table disclosing pension benefits is omitted because we do not have any such pension benefit plans.

 

2017 Non-Qualified Deferred Compensation Table

 

The table disclosing contributions to and aggregate earnings under or distributions from nonqualified deferred compensation is omitted because we do not have any such nonqualified deferred compensation plans.

 

DIRECTOR COMPENSATION

 

We compensate our non-employee directors for their service as directors. We do not pay directors who are also Immunomedics employees any additional compensation for their service as directors.

 

Fiscal 2017 Director Compensation Table

 

The following table shows the compensation paid to our non-employee directors for their Board service during fiscal 2017:

 

Name

 

Fees Earned or
Paid in
Cash
($)(1)

 

Stock
Awards
($)(2)

 

Option
Awards
($)(2)

 

Total
($)

 

Dr. Behzad Aghazadeh(3)

 

11,569

 

 

 

 

 

11,569

 

Jason M. Aryeh(4)

 

7,111

 

 

 

46,008

 

53,119

 

Scott Canute(3)

 

17,850

 

 

 

 

 

17,850

 

Dr. Geoff Cox(4)

 

9,333

 

 

 

46,008

 

55,341

 

Robert Forrester(4)

 

9,333

 

 

 

46,008

 

55,341

 

Peter Barton Hutt(3)

 

14,875

 

 

 

 

 

14,875

 

Dr. Khalid Islam(3)

 

19,007

 

 

 

 

 

19,007

 

Arthur Kirsch(5)

 

12,982

 

 

 

 

 

12,982

 

Brian A. Markison

 

72,238

 

 

 

 

 

72,238

 

Bob Oliver(4)

 

8,089

 

 

 

46,008

 

54,097

 

Mary E. Paetzold(6)

 

30,188

 

 

 

 

 

30,188

 

Don C. Stark(6)

 

23,888

 

 

 

 

 

23,888

 

 


(1)    Consists of amounts described below under “Cash Compensation.”

 

(2)    Represents the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. For information regarding assumptions underlying the determination of grant date fair value of option awards in accordance with FASB ASC Topic 718, see Note 8 of the Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended June 30, 2017.

 

(3)    Dr. Aghazadeh, Mr. Canute, Mr. Hutt, and Dr. Islam were elected to the Board of Directors at the 2016 Annual Meeting of Stockholders held on March 3, 2017, subject to an application filed with the Delaware Court of Chancery under Section 225 of the Delaware General Corporation Law to enter a Status Quo Order, filed by certain board nominees and incumbent directors.

 

(4)    Mr. Aryeh, Dr. Cox, Mr. Forrester and Mr.Oliver were appointed to the Board of Directors on January 8, 2017 and served until the 2016 Annual Meeting of Stockholders held on March 3, 2017.

 

(5)    Mr. Kirsch resigned from the Board of Directors on October 13, 2016.

 

(6)    Ms. Paetzold and Mr. Stark resigned from the Board of Directors on January 8, 2017.

 

28



 

Cash Compensation

 

For fiscal 2017, each non-employee director of Immunomedics received:

 

Fees*

 

Fiscal 2017*

 

For each:

 

Basic retainer:

 

$

35,000

 

Fiscal year

 

Additional retainers:

 

 

 

 

 

Lead Independent Director

 

$

25,000

 

Fiscal year

 

Chairman of the Audit Committee

 

$

14,500

 

Fiscal year

 

Member of the Audit Committee

 

$

7,500

 

Fiscal year

 

Chairman of the Compensation Committee

 

$

8,500

 

Fiscal year

 

Member of the Compensation Committee

 

$

5,000

 

Fiscal year

 

Chairman of the Governance & Nominating Committee

 

$

5,000

 

Fiscal year

 

Member of the Governance & Nominating Committee

 

$

3,000

 

Fiscal year

 

 


*      We also reimburse non-employee directors for reasonable travel and out-of-pocket expenses in connection with their service as directors. We do not pay fees on a per meeting basis.

 

Stock Compensation

 

At the Annual Meeting of Stockholders  held on December 3, 2014, our stockholders approved the 2014 Plan. The 2014 Plan replaced the 2006 Plan.  Our non-employee directors also participate in the 2014 Plan. Pursuant to the compensation policy adopted by the Compensation Committee, each individual who is first elected or appointed as a non-employee director is automatically granted, on the date of such initial election or appointment, 22,500 nonqualified stock options (only if the annual equity retainer had not already been provided). Initial option grants are fully vested on the date of grant and have an exercise price equal to the fair market value of the common stock on the date of grant, a maximum term of seven years from the date of grant and a post-termination exercise period of 12 months following the date of the non-employee director’s cessation of service on account of (i) the director’s death or (ii) upon a change in control or hostile take-over of the Company; however, in no event will the options be exercisable beyond their original term.

 

In addition to the foregoing initial grants, pursuant to the compensation policy adopted by the Compensation Committee, each individual who continues to serve as a non-employee director on the date of each annual stockholders meeting shall receive an annual grant of non-qualified stock options and restricted stock units (“RSUs”), each equal in value to $45,000. The Compensation Committee, as administrator of the 2014 Plan, will determine the actual number of stock options and RSUs at the time of each such annual grant. Annual option grants become vested within one year of grant date and have an exercise price equal to the fair market value of the common stock on the date of grant, a maximum term of seven years from the date of grant and a post-termination exercise period of 12 months following the date of the non-employee director’s cessation of service on account of the director’s death. Annual RSU grants vest in full upon the director’s completion of one year of service as a non-employee director from the date of grant. Notwithstanding the foregoing, annual RSU grants will immediately vest upon (i) a non-employee director’s cessation of service as a non-employee director by reason of death or permanent disability, or (ii) upon a change in control or hostile take-over of the Company (as defined in the 2014 Plan).

 

29



 

Option and RSU Grants to Non-Employee Directors During Fiscal Year 2017

 

During fiscal year 2017, the following non-employee directors were granted options to purchase shares of common stock and RSUs. All option and RSU grants listed below were made under the 2014 Plan.

 

 

 

Stock Options

 

RSUs

 

Director

 

Number of Shares
Underlying
Options Granted

 

Grant Date

 

Exercise Price
Per Share

 

Number of Shares
Underlying
Stock Awards (RSUs)

Granted

 

Grant Date

 

Dr. Behzad Aghazadeh

 

 

 

 

 

 

Jason M. Aryeh(1)

 

22,500

 

1/8/2017

 

$

3.73

 

 

 

 

 

Scott Canute

 

 

 

 

 

 

Dr. Geoff Cox(1)

 

22,500

 

1/8/2017

 

$

3.73

 

 

 

 

 

Robert Forrester(1)

 

22,500

 

1/8/2017

 

$

3.73

 

 

 

Peter Barton Hutt

 

 

 

 

 

 

 

 

 

 

 

Dr. Khalid Islam

 

 

 

 

 

 

Brian A. Markison(2)

 

 

 

 

 

 

 

 

 

 

 

Bob Oliver

 

22,500

 

1/8/2017

 

$

3.73

 

 

 

Mary E. Paetzold(3)

 

 

 

 

 

 

 

 

 

 

 

Don C. Stark(3)

 

 

 

 

 

 

 


(1)         Mr. Aryeh, Dr. Cox, Mr. Forrester, and Mr.Oliver were appointed to the Board of Directors on January 8, 2017 and served until the 2016 Annual Meeting of Stockholders.

 

(2)         As of June 30, 2017, Mr. Markison had, in the aggregate, 123,309 outstanding stock options.

 

(3)         Ms. Paetzold and Mr. Stark resigned from the Board of Directors on January 8, 2017.

 

30



 

Item 12.     Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 

OWNERSHIP OF OUR COMMON STOCK

 

The following table sets forth certain information with respect to the beneficial ownership of our common stock as of June 30, 2017 for: (i) the executive officers named in the “Summary Compensation Table” on page 21 of this annual report; (ii) each of our directors; (iii) all of our current directors and executive officers as a group; and (iv) each stockholder known by us to own beneficially more than five percent (5%) of our common stock. Beneficial ownership is determined in accordance with the rules of the SEC, and includes voting or investment power with respect to the securities.

 

The SEC deems shares of common stock that may be acquired by an individual or group within 60 days of June 30, 2017 pursuant to the exercise of options, warrants or other convertible securities to be outstanding for the purpose of computing the percentage ownership of such individual or group, but such securities are not deemed to be outstanding for the purpose of computing the percentage ownership of any other stockholder shown in the table. Except as indicated in footnotes to this table, we believe that the stockholders named in this table have sole voting and investment power with respect to all shares of common stock shown to be beneficially owned by them based on information provided to us by these stockholders. Percentage ownership is based on110,309,918 shares of common stock outstanding on June 30, 2017.

 

Name of beneficial owner**

 

Number of shares

 

Percentage of common

stock

 

Dr. Behzad Aghazadeh(1)

 

10,488,076

 

9.5

%

Scott Canute

 

 

*

 

Dr. David M. Goldenberg(2)

 

6,890,044

 

6.2

%

Peter Barton Hutt

 

 

*

 

Dr. Khalid Islam

 

 

*

 

Brian A. Markison(3)

 

207,487

 

*

 

Cynthia L. Sullivan(4)

 

6,984,710

 

6.3

%

Michael R. Garone(5)

 

10,000

 

*

 

All Directors and Executive Officers as a group (8 persons)(6)

 

7,732,531

 

6.6

%

venBio Select Advisor LLC(7)

 

10,488,076

 

9.5

%

120 West 45th Street, Suite 2802

New York, NY 10036

 

 

 

 

 

BlackRock Institutional Trust Company, N.A. Inc.(8)

 

7,710,426

 

7.0

%

55 East 52nd Street

New York, NY 10055

 

 

 

 

 

T. Rowe Price Associates, Inc.(9)

 

5,967,762

 

5.4

%

100 E. Pratt Street

 

 

 

 

 

Baltimore, MD 21289

 

 

 

 

 

 


*

Represents beneficial ownership of less than 1% of our outstanding shares of common stock.

 

31



 

**          Except as noted, the address of each of person listed in the above table is c/o Immunomedics, Inc., 300 The American Road, Morris Plains, New Jersey 07950. All information in the table is based upon reports filed with the SEC or upon the 2016 Questionnaire for Directors, Officers and Five Percent Stockholders submitted to us in connection with the preparation of this annual report.

 

(1)         Consists of shares held on behalf of accounts managed by venBio Select Advisor LLC, a Delaware limited liability company (the “Investment Manager”) and venBio Select Fund LLC, a Delaware limited liability company, a fund managed by the Investment Manager. Dr. Aghazadeh serves as the portfolio manager and controlling person of the Investment Manager. Dr. Aghazadeh and the Investment Manager expressly disclaim beneficial ownership of the securities reported herein except to the extent of its or his pecuniary interest in such securities.

 

(2)         Consists of (i) 1,765,119 shares held by Dr. Goldenberg; (ii) 214,129 shares held by Ms. Sullivan, Dr. Goldenberg’s wife; (iii) 635,935 shares held jointly by Dr. Goldenberg and Ms. Sullivan; (iv) 1,000,000 shares held by Dr. Goldenberg as beneficial owner of three grantor retained annuity trusts; (v) 1,933,783 shares held by the David M. Goldenberg Millennium Trust; (vi) 34,725 shares held by our majority-owned subsidiary, IBC Pharmaceuticals, Inc., of which Dr. Goldenberg is a director; (vii) 5,500 shares as to which Ms. Sullivan has voting or dispositive power as custodian of her children or as trustee for a trust for their benefit; (viii) 405,698 shares subject to stock options granted to Dr. Goldenberg which are exercisable currently or within 60 days of June 30, 2017; (ix) 610,369 shares subject to stock options granted to Ms. Sullivan which are exercisable currently or within 60 days of June 30, 2017; (x) 35,334 shares as to which Dr. Goldenberg has sole voting power pursuant to an agreement with Hildegard Gruenbaum Katz (his former wife); and (xi) 249,452 shares held by David M. Goldenberg Dynasty Trust. Dr. Goldenberg disclaims beneficial ownership with respect to an aggregate of 3,083,292 shares as listed in items (ii), (v), (vi), (vii), (ix), (x) and (xi) of the previous sentence.

 

(3)         Consists of 84,178 shares held directly by Mr. Markison, and 123,309 shares subject to stock options exercisable currently or within 60 days of June 30, 2017.

 

(4)         Consists of (i) 214,129 shares held by Ms. Sullivan; (ii) 1,765,119 shares held by Dr. Goldenberg, Ms. Sullivan’s husband; (iii) 635,935 shares held jointly by Dr. Goldenberg and Ms. Sullivan; (iv) 1,000,000 shares held as a trustee of three grantor retained annuity trusts for the benefit of Dr. Goldenberg; (v) 1,933,783 shares held by the David M. Goldenberg Millennium Trust; (vi) 34,725 shares held by IBC Pharmaceuticals, Inc., of which Ms. Sullivan is President; (vii) 5,500 shares to which Ms. Sullivan has voting or dispositive power as custodian of her children or as trustee for a trust for their benefit; (viii) 405,698 shares subject to stock options granted to Dr. Goldenberg which are exercisable currently or within 60 days of June 30, 2017; (ix) 610,369 shares subject to stock options granted to Ms. Sullivan which are exercisable currently or within 60 days of June 30, 2017; (x) 130,000 shares held as trustee of Escalon Foundation; and (xi) 249,452 shares held by David M. Goldenberg Dynasty Trust. Ms. Sullivan disclaims beneficial ownership with respect to an aggregate of 3,590,494 shares as listed in items (ii), (iv), (vi), (vii), (viii), (x) and (xi) of the previous sentence.

 

(5)         Consists of 10,000 shares subject to stock options exercisable currently or within 60 days of June 30, 2017.

 

(6)         See footnotes 1-5 above regarding shares subject to stock options exercisable currently or within 60 days of June 30, 2017 and restricted stock units which will vest within 60 days of June 30, 2017.

 

(7)         This information is based solely on a Form 13F report by venBio Select Advisor LLC for the quarter ended June 30, 2017. The securities reported are held on behalf of accounts managed by venBio Select Advisor LLC, a Delaware limited liability company (the “Investment Manager”) and venBio Select Fund LLC, a Delaware limited

 

32



 

liability company, a fund managed by the Investment Manager. Dr. Aghazadeh serves as the portfolio manager and controlling person of the Investment Manager. Dr. Aghazadeh and the Investment Manager expressly disclaim beneficial ownership of the securities reported herein except to the extent of its or his pecuniary interest in such securities.

 

(8)         This information is based solely on a Form 13F report by BlackRock, Inc. for the quarter ended June 30, 2017. BlackRock, Inc. is the parent holding company of certain institutional investment managers. For purposes of the reporting requirements under Section 13(f) of the Securities Exchange Act of 1934 (the Act), and the rules promulgated thereunder, BlackRock, Inc. itself does not exercise, and therefore disclaims, investment discretion with respect to any Section 13(f) securities positions over which its investment operating subsidiaries exercise such discretion. To the extent, however, that BlackRock Inc.’s ownership interest in such subsidiaries may nevertheless give rise to a Form 13F obligation on behalf of BlackRock, Inc., the information required by Form 13F is reported herein on behalf of all such subsidiaries.

 

(9)         This information is based solely on a Form 13F report by T Rowe Price Associates, Inc. for the quarter ended June 30, 2017.

 

Securities Authorized for Issuance Under Equity Compensation Plans

 

The following table provides information with respect to our compensation plans under which equity compensation is authorized as of June 30, 2017.

 

 

 

Number of securities to be

 

 

 

 

 

 

 

issued upon vesting of

 

Weighted-average

 

Number of securities

 

 

 

restricted shares and

 

exercise price of

 

remaining available for

 

 

 

exercise of outstanding

 

outstanding options

 

future issuance under

 

Plan Category

 

options and rights

 

and rights

 

equity compensation plans

 

Equity compensation plans approved by security holders(1)

 

4,724,569

 

$

3.45

 

9,540,417

 

Equity compensation plans not approved by security holders

 

 

 

 

Total

 

4,724,569

 

$

3.45

 

9,540,417

 

 


(1)         Refers to the 2014 Plan.

 

Item 13.     Certain Relationships and Related Transactions and Director Independence

 

Review and Approval of Related Person Transactions

 

Our Code of Business Conduct has certain policies and procedures for the review, approval or ratification of transactions involving us and any executive officer, director, director nominee, 5% stockholder and certain of their immediate family members (each of whom we refer to as a “related person”). The policy and procedures cover any transaction involving a related person (a “related person transaction”) in which the related person has a material interest and which does not fall under an explicitly stated exception set forth in the applicable disclosure rules of the SEC.

 

Any proposed related person transaction must be reported to the Company’s President and Chief Executive Officer or the Vice President of Finance and Chief Financial Officer (the “Compliance Officers”). The policy calls for the transaction to be reviewed by the Compliance Officer and, if deemed appropriate, approved by the Board of Directors of the Company (or an authorized committee of the Board of Directors). The transaction should be approved in advance

 

33



 

whenever practicable. If not practicable, the Compliance Officers and, if deemed appropriate, the Board of Directors, will review, and may, if deemed appropriate, ratify the related person transaction.

 

A related person transaction will be considered approved or ratified if it is authorized by the Compliance Officers and the Board of Directors of the Company (or an authorized committee of the Board of Directors) after full disclosure of the related person’s interest in the transaction. In considering related person transactions, the Compliance Officers and the Board of Directors (or an authorized committee of the Board of Directors) will consider any information considered material to investors and the following factors:

 

·                  the related person’s interest in the transaction;

 

·                  the approximate dollar value of the transaction;

 

·                  whether the transaction was undertaken in the ordinary course of our business;

 

·                  whether the terms of the transaction are no less favorable to us than terms that we could have
reached with an unrelated third party; and

 

·                  the purpose and potential benefit to us of the transaction.

 

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 

Certain of our affiliates, including members of our senior management and Board of Directors, as well as their respective family members and other affiliates, have relationships and agreements among themselves as well as with us and our affiliates, that create the potential for both real, as well as perceived, conflicts of interest. These include Dr. David M. Goldenberg, our Chief Scientific Officer, Chief Patent Officer, and former Chairman, Ms. Cynthia L. Sullivan, a director and the former President and Chief Executive Officer, who is the wife of Dr. David M. Goldenberg, and certain companies with which we do or has done business with, including the Center for Molecular Medicine and Immunology (“CMMI”), which has ceased operations, and IBC, the Company’s majority-owned subsidiary.

 

Dr. David M. Goldenberg

 

Dr. David M. Goldenberg founded Immunomedics in 1982 and was our Chairman of the Board of Directors through April 4, 2017. He continues to play a critical role in our business and currently serves as the Chief Scientific Officer and Chief Patent Officer. Dr. Goldenberg is a party to a number of agreements with our Company involving not only his services, but also intellectual property owned by him.

 

Relationships with The Center for Molecular Medicine and Immunology

 

Our product development has involved, to varying degrees, CMMI, for the performance of certain basic research and patient evaluations, the results of which were made available to us pursuant to a collaborative research and license agreement. Dr. Goldenberg was the founder, President and a member of the Board of Trustees of CMMI.

 

In fiscal years ended June 30, 2017, 2016 and 2015 we incurred $6 thousand, $27 thousand, and $33 thousand, respectively, of legal expenses for patent-related matters for patents licensed to Immunomedics from CMMI. However, any inventions made independently of us at CMMI are the property of CMMI. CMMI has ceased operations and is in the process of dissolution.

 

IBC Pharmaceuticals

 

IBC Pharmaceuticals, Inc. (“IBC”) is a majority-owned subsidiary of Immunomedics.

 

34



 

As of June 30, 2017, the shares of IBC were held as follows:

 

Stockholder

 

Holdings

 

Percentage
of Total

 

Immunomedics, Inc.

 

5,615,124 shares of Series A Preferred Stock

 

73.46

%

Third Party Investors

 

628,282 shares of Series B Preferred Stock

 

8.22

%

David M. Goldenberg Millennium Trust

 

1,399,926 shares of Series C Preferred Stock

 

18.32

%

 

 

 

 

100.00

%

 

In the event of a liquidation, dissolution or winding up of IBC, the Series A, B and C Preferred Stockholders of IBC would be entitled to $0.6902, $5.17 and $0.325 per share (subject to adjustment), respectively. The Series A and B stockholders would be paid ratably until fully satisfied. The Series C stockholders would be paid only after the Series A and B stockholders have been fully repaid. These liquidation payments would be made only to the extent the assets of IBC are sufficient to make such payments.

 

In each of the fiscal years 2017, 2016, and 2015, Dr. Goldenberg received $41 thousand, $87 thousand, and $84 thousand, respectively, in compensation for his services to IBC. At June 30, 2017, Dr. Goldenberg was a director of IBC, and Cynthia L. Sullivan served as the President of IBC.

 

Independence of Non-Employee Directors

 

Good corporate governance requires that a majority of the Board of Directors consist of members who are “independent.” There are different measures of director independence—independence under listing standards of the NASDAQ Global Market, under Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and under Section 162(m) of the Internal Revenue Code of 1986, as amended. Our Board of Directors has recently reviewed information about each of our non-employee directors and determined that each of Dr. Behzad Aghazadeh,  Mr. Scott Canute, Mr. Peter Barton Hutt, Dr. Khalid Islam, and Mr. Brian A. Markison are deemed “independent” under applicable law and the listing standards of the NASDAQ Global Market, and accordingly, we have a majority of independent directors on our Board.

 

Item 14.     Principal Accounting Fees and Services.

 

Fees of Our Independent Registered Public Accounting Firm

 

The following table sets forth the fees billed by KPMG LLP for professional services rendered for the audit of our fiscal 2017 financial statements and the fees billed in fiscal 2017 for the other services listed below.

 

 

 

2017

 

2016

 

Audit Fees(1)

 

$

539,000

 

$

387,250

 

Audit-related Fees(2)

 

30,000

 

30,000

 

Tax Fees

 

 

 

All Other Fees(3)

 

 

1,650

 

Total

 

$

569,000

 

$

418,900

 

 


(1)         Audit fees represent fees billed for professional services rendered for the audit of our consolidated annual financial statements, audit of internal controls over financial reporting, review of interim consolidated financial statements, comfort letters, consents and accounting and reporting consultations.

 

35



 

(2)         Audit-related fees represent audit of schedule of grant expenditures related to the proceeds received from the U.S. Department of Health and Human Services and the U.S. Department of Defense.

 

(3)         All other fees represent subscription fees for an online accounting research tool.

 

Disagreements with Accountants on Accounting and Financial Disclosure

 

None.

 

Appointment of Independent Registered Public Accounting Firm and Pre-Approval of Audit and Non-Audit Services

 

The Audit Committee charter requires approval of all audit services to be performed by our independent registered public accounting firm.

 

Prior to engaging KPMG LLP to render the above services, and pursuant to its charter, the Audit Committee approved the engagement for each of the services and determined that the provision of such services by the independent registered public accounting firm was compatible with the maintenance of KPMG LLP’s independence in the conduct of its auditing services.

 

The Audit Committee will use the following procedures for the pre-approval of all audit and permissible non-audit services provided by the independent registered public accounting firm.

 

Before engagement of the independent registered public accounting firm for the next year’s audit, the independent registered public accounting firm will submit a detailed description of services expected to be rendered during that year within each of four categories of services to the Audit Committee for approval.

 

1. Audit Services include audit work performed on the financial statements, as well as work that generally only the independent registered public accounting firm can reasonably be expected to provide, including comfort letters, statutory audits, and discussions surrounding the proper application of financial accounting and/or reporting standards.

 

2. Audit-Related Services are for assurance and related services that are traditionally performed by the independent registered public accounting firm, including due diligence related to mergers and acquisitions, employee benefit plan audits and special procedures required to meet certain regulatory requirements.

 

3. Tax Services include all services, except those services specifically related to the audit of the financial statements, performed by the independent registered public accounting firm’s tax personnel, including tax analysis; assisting with coordination of execution of tax related activities, primarily in the area of corporate development; supporting other tax related regulatory requirements; and tax compliance and reporting.

 

4. Other Services are those associated with services not captured in the other categories.

 

Prior to engagement, the Audit Committee pre-approves independent registered public accounting firm services within each category. During the year, circumstances may arise when it may become necessary to engage the independent registered public accounting firm for additional services not contemplated in the original pre-approval categories. In those instances, the Audit Committee requires specific pre-approval before engaging the independent registered public accounting firm.

 

The Audit Committee may delegate pre-approval authority to one or more of its members. The member to whom such authority is delegated must report, for informational purposes only, any pre-approval decisions to the Audit

 

36



 

Committee at its next scheduled meeting. The Audit Committee has delegated the Audit Committee Chairperson pre-approval authority of up to $25,000.

 

PART IV

 

Item 15.     Exhibits, Financial Statement Schedules

 

(a)  Documents filed as part of this Report:

 

Documents filed or furnished as part of this Amendment No. 1 to Form 10-K/A:

 

1.                                      Financial Statements:

 

None required.

 

2.                                      Financial Statements Schedules:

 

None required.

 

3.                                      List of Exhibits:

 

The exhibits that are required to be filed or incorporated by reference herein are listed in the Exhibit Index.

 

37




 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) 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.

 

 

Date: September 18, 2017

By:

/s/ MICHAEL R. GARONE

 

 

Michael R. Garone

 

 

Principal Chief Executive Officer, Vice President Finance, and Chief Financial Officer

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

Signature

 

Title

 

Date

 

 

 

 

 

 

 

/s/ Dr. BEHZAD AGHAZADEH

 

Chairman of the Board, Director

 

September 18, 2017

 

Dr. Behzad Aghazadeh

 

 

 

 

 

 

 

 

 

 

 

/s/ Dr. KHALID ISLAM

 

Director

 

September 18, 2017

 

Dr. Khalid Islam

 

 

 

 

 

 

 

 

 

 

 

/s/ SCOTT CANUTE

 

Director

 

September 18, 2017

 

Scott Canute

 

 

 

 

 

 

 

 

 

 

 

/s/PETER BARTON HUTT

 

Director

 

September 18, 2017

 

Peter Barton Hutt

 

 

 

 

 

 

 

 

 

 

 

/s/BRIAN A. MARKISON

 

Director

 

September 18, 2017

 

Brian A. Markison

 

 

 

 

 

 

 

 

 

 

 

 

 

Director

 

 

 

David M. Goldenberg

 

 

 

 

 

 

 

 

 

 

 

 

 

Director

 

 

 

Cynthia L. Sullivan

 

 

 

 

 

 

 

 

 

 

 

/s/MICHAEL R. GARONE

 

Principal Executive Officer, Vice President Finance and Chief Financial

 

September 18, 2017

 

Michael R. Garone

 

Officer (Principal Financial and Accounting Officer)

 

 

 

 

39


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