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JOHNSON & JOHNSON’s $2.8 MIL. SEVERANCE PAYMENT TO IMMUNOMEDICS

Executive Summary

JOHNSON & JOHNSON's $2.8 MIL. SEVERANCE PAYMENT TO IMMUNOMEDICS will allow the Warren, N.J.-based firm to complete clinical trials on its ImmuRAID-CEA-Tc99m colorectal cancer imaging agent employing the radioisotope Technetium-99m. Immunomedics announced April 17 that it had reached an "amicable" settlement with J&J for the termination of the relationship between the two firms. Under the settlement, J&J will pay Immunomedics $2.8 mil. and will release all rights to any Immunomedics products and technology. The agreement is the capstone of negotiations that began in March 1988 when J&J said it would sever the joint research effort. Immunomedics entered a licensing agreement with J&J in 1983, and an R&D agreement the following year, for cancer imaging and therapy products. J&J's March 1988 withdrawal decision prompted protracted negotiations between the companies ("The Pink Sheet" Nov. 14, 1988, T&G-8). As of fiscal 1988 (ended June 30, 1988), J&J payments to Immunomedics were annualizing around $3.3 mil. ImmuRAID-CEA-Tc99m is in Phase III clinical trials at 15 cancer sites in the U.S. and will be tested in Europe and Asia in "the near future," according to Immunomedics. J&J's severance payment also will allow Immunomedics "to move several of our other products further along into FDA-approved clinical trials," according VP-Finance and Administration Amy Factor. Immunomedics says it plans to file four IND applications with FDA "in the next several months." For the nine months ended March 31, Immunomedics' in vitro diagnostic products generated sales of $870,000, up 63.6% from $330,000 in the same period last year. Commenting to analysts at an April 17 briefing on the terms of the deal, Immunomedics President Russell McLauchlan said the reversion of product rights from J&J to Immunomedics will allow the company to "achieve our goal of becoming a fully integrated biopharmaceutical company." He added that Immunomedics is "presently in the midst of negotiating to establish corporate alliances which will provide financial support for our clinical trials and access to premier marketing organizations."
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