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J&J RESEARCH AND DEVELOPMENT FUNDING AT IMMUNOMEDICS

Executive Summary

J&J RESEARCH AND DEVELOPMENT FUNDING AT IMMUNOMEDICS is annualizing at around $ 3.3 mil. this year. The two companies have been negotiating since March on the "amount, duration and nature of Johnson & Johnson's continued funding" for certain cancer imaging and therapy products, according to Immunomedics' fiscal 1988 annual report (year ended June 30). J&J and Immunomedics first entered a licensing agreement in 1983, and J&J has been funding R&D projects at the biotech firm since 1984. J&J expanded its funding support in April 1986, Immunomedics says, "to include two cancer imaging and two cancer therapy products." Under the terms of the expansion, J&J "committed to fund this expansion by $ 3 mil. in each of year one (April 1986 to March 1987) and year two (April 1987 to March 1988)," Immunomedics says. In the current year, or year three of the expansion, J&J committed to funding levels of at least $ 5 mil., followed by $ 6 mil. in year four (April 1989 to March 1990), according to the annual report. However, "Johnson & Johnson has informed the company that certain research and development milestones have not been achieved by the company in a timely manner," the annual report says, and in March J&J proposed reducing its funding to three of the four projects, at a budget of $ 2.7 mil. with no commitment for further funding. That amount has already been raised once by $ 300,000, and will probably be raised again, Immunomedics says. The three products targeted for further development by J&J are two colorectal cancer radiopharmaceutical imaging agents, and one colorectal cancer therapeutic product. One of the two imaging agents, the CEA-RAID Iodine-123 radiolabeled monoclonal antibody product, has just completed Phase II clinicals at six institutions, an Immunomedics spokesperson said. The other two products are in very early clinicals. J&J recently sold its equity position in Immunomedics, which consisted of 1.5 mil. shares purchased privately in 1983. The company said that its purchase of the shares occurred independently of its licensing and R&D agreements with the company. During fiscal 1988, Immunomedics filed a registration statement with the Securities and Exchange Commission for an additional public offering of 2.1 mil. shares, but withdrew the proposed sale following the October 1987 stock market crash. In September 1988, Immunomedics raised $ 6 mil. from a private placement.
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