Business Overview, Basis of Presentation and Recent Accounting Pronouncements

3 Months Ended

Mar. 31, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Business Overview, Basis of Presentation and Recent Accounting Pronouncements

Reference is made to the Annual Report on Form 10-K, of Immunomedics, Inc., a Delaware corporation (“Immunomedics,” the “Company,” “we,” “our” or “us”), for the year ended December 31, 2019, which contains our audited consolidated financial statements and the notes thereto.

Business Overview, Basis of Presentation and Recent Accounting Pronouncements

Business Overview

Immunomedics, Inc., a Delaware corporation, together with its subsidiaries (collectively "we," "our," "us," "Immunomedics", or the "Company"), is a leader in next-generation antibody-drug conjugate (“ADC”) technology, committed to help transform the lives of people with hard-to-treat cancers. Immunomedics manages its operations as one line of business of researching, developing, manufacturing and marketing biopharmaceutical products, particularly antibody-based products for patients with difficult-to-treat solid tumor and blood cancers. The Company currently reports as a single industry segment with substantially all business conducted in the United States. Immunomedics conducts its research activities in the United States and runs its development studies in the United States and selected European countries.

On April 22, 2020, the United States Food and Drug Administration ("FDA") granted accelerated approval to Trodelvy™ (sacituzumab govitecan-hziy) for the treatment of adult patients with metastatic triple-negative breast cancer (“mTNBC”). Patients must have received at least two prior therapies before taking Trodelvy. Trodelvy, which was granted Breakthrough Therapy Designation and Priority Review, was approved under the FDA’s Accelerated Approval Program based on the objective response rate of 33.3 percent and duration of response of 7.7 months observed in 108 adult mTNBC patients who had previously received a median of three prior systemic therapies in the metastatic setting in a single-arm, multicenter Phase 2 study. Continued approval may be contingent upon verification of clinical benefit in the Phase 3 confirmatory ASCENT study. On April 6, 2020, we announced that the ASCENT study was halted due to compelling evidence of efficacy across multiple endpoints. This decision was based on the unanimous recommendation by the independent Data Safety Monitoring Committee during its recent routine review. Top-line data for the ASCENT study is expected to be available mid-2020.    

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Immunomedics, which incorporates our foreign subsidiary, Immunomedics GmbH in Rödermark, Germany, have been prepared in accordance with United States generally accepted accounting principles (“GAAP”), for interim financial information and the instructions to the Quarterly Report on Form 10‑Q and Regulation S‑X. Accordingly, the statements do not include all of the information and footnotes required by GAAP for complete annual financial statements. With respect to the financial information for the interim periods included in this Quarterly Report on Form 10-Q, which is unaudited, management believes that all adjustments (consisting of normal recurring accruals), considered necessary for a fair presentation of the results for such interim periods have been included. Operating results for the three month period ended March 31, 2020, are not necessarily indicative of the results that may be expected for the full calendar year ending December 31, 2020, or any other period. The preparation of the condensed consolidated financial statements requires management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates.

Our significant accounting policies are described in Note 1 of Notes to Consolidated Financial Statements included in our 2019 Annual Report on Form 10-K. Such significant accounting policies are applicable for periods prior to the adoption of the following new accounting standards.

Recent Accounting Pronouncements

Accounting Pronouncements adopted during the year:

In November 2018, the FASB issued ASU 2018-18, "Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606,"    to clarify when ASC 606 should be used for collaborative arrangements when the counterparty is a customer. The guidance precludes an entity from presenting consideration from a transaction in a collaborative arrangement as revenue from contracts with customers if the counterparty is not a customer for that transaction. The guidance is effective for

public business entities in fiscal years beginning after December 15, 2019, and interim periods therein. Adoption of ASU 2018-18 did not have any impact to our condensed consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, "Fair Value measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement," to no longer require public companies to disclose transfers between Level 1 and Level 2 of the fair value hierarchy, and to require disclosure about the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. The guidance is effective for fiscal years beginning after December 15, 2019, and for interim periods within those fiscal years. Upon adoption of ASU 2018-13, there was no material effect to the Company's disclosures in the footnotes to the condensed consolidated financial statements. For new disclosures regarding our Level 3 financial instrument please refer to Note 6 - "Estimated Fair Value of Financial Instruments".

Accounting Pronouncements yet to be adopted:

In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”. ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to the general principals in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending the existing guidance. For public business entities, the guidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2020. Early adoption is permitted, including adoption in any interim period. We are currently assessing the impact of ASU 2019-12.