Share-Based Compensation

Stock Incentive Plan

The Company has a stock incentive plan, the Immunomedics, Inc. 2014 Long-Term Incentive Plan (the “Plan”). The Plan was established to promote the long-term financial interests and growth of the Company, by attracting and retaining management and other personnel and key service providers with the training, experience and ability to enable them to make a substantial contribution to the success of the Company's business. The Plan is designed to motivate management personnel by means of growth-related incentives to achieve long-range goals and further the alignment of interests with those of the stockholders of the Company through opportunities for increased stock or stock-based ownership in the Company. Toward these objectives, the Company may grant stock options, stock appreciation rights, stock awards, stock units, performance shares, performance units, and other stock-based awards to eligible individuals on the terms and subject to the conditions set forth in the Plan. There have been no significant modifications to the Plan during the fiscal years ended 2018, 2017 or 2016.

The following table summarizes the components of share-based compensation expense in the consolidated statements of comprehensive loss for the fiscal years ended June 30, 2018, 2017 and 2016 (in thousands):



	Fiscal Year Ended June 30,
	2018		2017		2016
Research and development	$	2,414	$	2,600	$	2,245
General and administrative	1,610		1,733		1,496
Total share-based compensation expense	$	4,024	$	4,333	$	3,741

Stock Options

Stock option grants provide the right to purchase a specified number of shares of Common Stock from the Company at a specified price during a specified period of time. The stock option exercise price per share is the fair market value of one share of Common Stock on the date of the grant of the stock option and generally have a vesting period of four years.

As of June 30, 2018 there was $10.5 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the plan. That cost is being recognized over a weighted-average period of 3.5 years.

The weighted average grant date fair value of the stock options granted during the years ended June 30, 2018, 2017 and 2016 was $8.76 per share, $2.21 per share and $1.08 per share, respectively. We estimated the fair value of options granted using a Black-Scholes option pricing model with the following assumptions:



	Years Ended June 30,
	2018	2017	2016
Expected dividend yield	—%	—%	—%
Expected option term (years)	4.84	5.04	5.03
Expected stock price volatility	70%	63%	58%
Risk-free interest rate	1.72% - 2.89%	1.16% - 2.15%	1.00% - 1.64%

The following table summarizes all stock option activity for the year ended June 30, 2018:



					Weighted
			Weighted		Average Remaining	Aggregate
	Options		Average Exercise		Contractual	Intrinsic Value
	(in thousands)		Price Per Option		Term (Years)	(in thousands)
Options outstanding, beginning of year	2,893		$	3.48	3.96	$	15,490
Changes during the year:
Granted	1,370		$	14.90
Exercised	(586	)	$	3.86
Expired or forfeited	(128	)	$	10.19
Options outstanding, end of year	3,549		$	7.58	4.43	$	57,123
Vested as of June 30, 2018	1,852		$	3.47	2.90	$	37,420

The total fair value of shares vested during the years ended June 30, 2018, 2017 and 2016 was $43.8 million, $17.0 million and $6.3 million, respectively. The total intrinsic value of stock options exercised during the years ended June 30, 2018, 2017 and 2016 was $7.8 million, $2.6 million and $1.2 million, respectively.

Restricted stock units ("RSU's")

The Company may grant awards of RSU's to eligible individuals. An RSU represents a contractual obligation by the Company to deliver a number of shares of Common Stock equal to the fair market value of the specified number of shares subject to the award, or a combination of shares of Common Stock and cash. Vesting requirements may include performance goals, the attainment of performance goals with continued service, or both. Information regarding the Company's RSU's for the year ended June 30, 2018 is as follows:



Non-Vested Restricted Stock Units	Share Equivalent (in thousands)	Weighted Average Grant Date Fair Value
Non-vested at June 30, 2017	1,500	$	2.28
Changes during the period:
Restricted Units Granted	35	8.46
Vested/Exercised	—	—
Non-vested at June 30, 2018	1,535	$	2.83

As of June 30, 2018, there was $0.4 million of total unrecognized compensation costs related to the awards. The cost is being recognized over a weighted-average period of 1.57 years. The RSU's vested during fiscal 2018 are currently under litigation and pertain to a former officer of the company. Refer to "Note 15 - Commitments and Contingencies" for more information.

Performance Stock Units ("PSU's")

The Company may grant awards of PSU's to eligible individuals. PSU's are shares of Common Stock that vest based on performance measured against predetermined objectives that could include performance goals, continued employment, or a combination of both over a specified performance period. PSU's may be settled in shares of Common Stock, cash, or both as determined on the settlement date. The following table summarizes the Company's performance-based restricted stock unit activity for the year ended June 30, 2018 is presented below:



Non-Vested Performance Stock Units	Share Equivalent (in thousands)	Weighted Average Grant Date Fair Value
Non-vested at June 30, 2017	—	$	—
Changes during the period:
Performance Units Granted	538	7.29
Canceled	—	—
Vested/Exercised	—	—
Non-vested at June 30, 2018	538	$	7.29

During Fiscal 2018, performance units were granted to certain key senior officers that are subject to vesting only upon the market price of our underlying public stock closing above a certain price target within four years of the date of grant. The target price must be maintained for a 15-day consecutive trading period. These non-qualified stock options with market related vesting conditions were valued using a Monte Carlo simulation model. Share-based compensation expense for each grant is recognized regardless of the number of awards that are earned based on the market condition and is recognized on a straight-line basis over the service period of four years.

As of June 30, 2018, there was $3.5 million of total unrecognized compensation costs related to the awards. The cost is being recognized over a remaining weighted-average period of 3.6 years.