Is Immunomedics, Inc. (NASDAQ:IMMU) Rally Sustainable After Q1 Net Loss?

Immunomedics, Inc. (NASDAQ:IMMU)

Is Immunomedics, Inc. (NASDAQ:IMMU)

Immunomedics, Inc. (NASDAQ:IMMU) has been on a run ever since it raised $125 million in a private placement and announced it had terminated a licensing deal with Seattle Genetics, Inc.(NASDAQ:SGEN). While this is good news for current investors, it also raises questions as to whether the rally is sustainable given that the company posted a third-quarter net loss.

Immunomedics, Inc. (NASDAQ:IMMU)
Immunomedics, Inc. (NASDAQ:IMMU)

Licensing Deal Termination

Immunomedics, Inc. (NASDAQ:IMMU) decision to terminate its licensing deal is good news assuming that the company will now be able to negotiate better terms now that activist hedge fund VenBio has acquired four board seats. VenBio terminated the licensing deal on concern that it undervalued the company’s cancer drug candidate IMMU-132.

The termination might come as a surprise given that the deal was worth $2 billion and included a $250 million upfront payment. However VenBio remains confident of inking a better deal for the drug – being developed as a novel treatment for metastatic triple-negative breast cancer.

Fueling investor confidence on Immunomedics, Inc. (NASDAQ:IMMU) is the fact that the company remains confident of applying for accelerated approval from the FDA in metastatic triple negative breast cancer by the end of the year. The company is already planning to carry out a Phase 3 trial in the third quarter that it believes will lead to full regulatory approval.

“We now have the financial ability to fully focus on taking the steps to ensure the Company has the right leadership, organizational structure, and resources necessary to bring IMMU-132 to market and achieve our long-term objectives. The enthusiastic reception from institutional investors to invest in Immunomedics and IMMU-132 reflects the value the Company is poised to deliver to patients, employees and stockholders.”, “said the chairman of the board Behzad Aghazadeh.

Q1 Net Loss

Separately, Immunomedics, Inc. (NASDAQ:IMMU) says its net loss for the third quarter widened to (-$59.3) million from (-$14) million reported last year same period. The company attributes the increase to the $28.3 million paid in fair value warrant liabilities as well as $8.9 million increase in general and administrative expenses.

Revenues in the quarter soared to $1.3 million from $0.9 million. Immunomedics, Inc. (NASDAQ:IMMU) attributes the increase to LeukoScan product sales. The company exited the quarter with cash and cash equivalent of $46 million.

Immunomedics, Inc. (NASDAQ:IMMU) was down by 3.00% in Friday’s trading session and ended the week at $0.485 a share.

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

About the author: Monica Gray has an undergraduate degree in Accounting and an MBA – earned with Honors. She has six years of experience in the financial markets and has been a securities analyst for the past two years.

Author: Monica Gray

Monica has an undergraduate degree in Accounting and an MBA she earned - with Honors. She has six years of experience in the financial markets and has been an analyst for the past two years.

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